Document:

toot_ex41.htm

Exhibit 4.1

Senior Secured Redeemable Debenture

 

Original Issue Date as of:  March 30, 2012

 

Maturity Date: April 9, 2013

 

Amount: $350,000.00

This Senior Secured Redeemable Debenture (the “Debenture”) is issued as of March 30, 2012 (the “Closing Date”) by Tootie Pie Company, Inc., a Nevada corporation (the “Company”), to TCA Global Credit Master Fund LP, a Cayman Islands limited partnership (together with its permitted successors and assigns, the “Holder”) pursuant to exemptions from registration under the Securities Act of 1933, as amended.

 

ARTICLE I.

 

Section 1.01 Principal and Interest.  For value received, the Company hereby promises to pay to the order of the Holder, by no later than April 9, 2013 (the “Maturity Date”), in immediately available and lawful money of the United States of America, Three Hundred Fifty Thousand and No/100 Dollars ($350,000.00), together with interest on the outstanding principal amount under this Debenture, at the rate of eleven percent (11%) per annum simple interest (the “Interest Rate”) from the date the proceeds hereof are initially funded until paid, as more specifically provided below.

 

Section 1.02 Optional Redemption.  The Company, at its option, shall have the right to redeem this Debenture in full and for cash, at any time prior to the Maturity Date, with three (3) business days advance written notice (the “Redemption Notice”) to the Holder. The amount required to redeem this Debenture in full pursuant to this Section 1.02 shall be equal to: (i) the aggregate principal amount then outstanding under this Debenture; plus (ii) all accrued and unpaid interest due under this Debenture as of the redemption date; plus (iii) all other costs, fees and charges due and payable hereunder or under any other “Transaction Documents” (as hereinafter defined); plus (iv) a redemption premium equal to the then outstanding principal amount due under this Debenture multiplied by four percent (4%) (collectively, the “Redemption Amount”).  The Company shall deliver the Redemption Amount to the Holder on the third (3rd) business day after the date of the Redemption Notice.

 

Section 1.03 Mandatory Redemption.  On or before the Maturity Date, the Company shall redeem this Debenture for the Redemption Amount, which Redemption Amount shall be due and payable to the Holder by no later than 2:00 P.M., EST, on the Maturity Date.

 

  

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Section 1.04 Payments.

 

(1) Monthly Payments.  The Company shall make monthly payments of principal, interest and the corresponding amount of redemption premium to the Holder, commencing on the first (1st) day of May, 2012, and on the first (1st) day of each consecutive calendar month thereafter while this Debenture is outstanding, until the Maturity Date, based on the payment, amortization and redemption premium schedule attached hereto as Exhibit “A”.

 

(2) Interest Calculations. Interest shall be calculated on the basis of a 360-day year, and shall accrue daily on the outstanding principal amount outstanding from time to time for the actual number of days elapsed, commencing on the Closing Date until payment in full of the outstanding principal, together with all accrued and unpaid interest and other amounts which may become due hereunder, has been made.

 

(3) Late Fee. If all or any portion of the payments of principal, interest or other charges due hereunder are not received by the Holder within five (5) days of the date such payment is due, then the Company shall pay to the Holder a late charge (in addition to any other remedies that Holder may have) equal to five percent (5%) of each such unpaid payment or sum.  Any payments returned to Holder for any reason must be covered by wire transfer of immediately available funds to an account designated by Holder, plus a $100.00 administrative fee charge.  Holder shall have no responsibility or liability for payments purportedly made hereunder but not actually received by Holder; and the Company shall not be discharged from the obligation to make such payments due to loss of same in the mails or due to any other excuse or justification ultimately involving facts where such payments were not actually received by Holder.

 

Section 1.05 Manner of Payments. All sums payable to the order of Holder hereunder shall be payable by wire transfer of lawful dollars of the United States of America to the wire instructions set forth below, or at such place as Holder, from time to time, may designate in writing.  Wire Instructions for all sums due and payable hereunder are as follows:

 

ARTICLE II.

 

Section 2.01 Secured Nature of Debenture.  This Debenture is being issued in connection with a Securities Purchase Agreement dated of even date herewith by and between the Company and the Holder (the “SPA”).  The indebtedness evidenced by this Debenture is also secured by all of the assets and property of the Company pursuant to that certain Security Agreement by and between the Company and Holder made of even date herewith (the “Security Agreement”). The SPA, this Debenture, the Security Agreement, and all other documents and instruments heretofore or hereafter executed or filed in connection with the SPA or the indebtedness evidenced by this Debenture, and all modifications, extensions, future advances, and renewals thereof, and any substitutions therefor, being herein collectively referred as the “Transaction Documents.” All of the agreements, conditions, covenants, provisions, representations, warranties and stipulations contained in any of the Transaction Documents which are to be kept and performed by the Company are hereby made a part of this Debenture to the same extent and with the same force and effect as if they were fully set forth herein, and the Company covenants and agrees to keep and perform them, or cause them to be kept or performed, strictly in accordance with their terms.

 

  

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ARTICLE III.

 

Section 3.01 Events of Default.  The occurrence of any of the following events shall constitute an “Event of Default” hereunder: (i) the Company shall fail to pay any installment of interest, principal or other charges due under this Debenture when any such payment shall be due and payable; (ii) the Company makes an assignment for the benefit of creditors; (iii) any order or decree is rendered by a court which appoints or requires the appointment of a receiver, liquidator or trustee for the Company, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (iv) any order or decree is rendered by a court adjudicating the Company insolvent, and the order or decree is not vacated within thirty (30) days from the date of entry thereof; (v) the Company files a petition in bankruptcy under the provisions of any bankruptcy law or any insolvency act; (vi) the Company admits, in writing, its inability to pay its debts as they become due; (vii) a proceeding or petition in bankruptcy is filed against the Company and such proceeding or petition is not dismissed within thirty (30) days from the date it is filed; (viii) the Company files a petition or answer seeking reorganization or arrangement under the bankruptcy laws or any law or statute of the United States or any other foreign country or state; or (ix) the Company shall fail to perform, comply with or abide by any of the stipulations, agreements, conditions and/or covenants contained in this Debenture or any of the other Transaction Documents on the part of the Company to be performed complied with or abided by, and such failure continues or remains uncured for ten (10) days following written notice from the Holder to the Company. 

 

Section 3.02 Remedies.  Upon the occurrence of an Event of Default that is not timely cured within an applicable cure period hereunder, the interest on this Debenture shall immediately accrue at an Interest Rate equal to the maximum rate permitted by applicable law, and, in addition to all other rights or remedies the Holder may have, at law or in equity, the Holder may, in its sole discretion, accelerate full repayment of all principal amounts outstanding hereunder, together with accrued interest thereon, together with all redemption premiums due hereunder, together with all attorneys’ fees, paralegals’ fees and costs and expenses incurred by the Holder in collecting or enforcing payment hereof (whether such fees, costs or expenses are incurred in negotiations, all trial and appellate levels, administrative proceedings, bankruptcy proceedings or otherwise), and together with all other sums due by the Company hereunder and under the Transaction Documents, all without any relief whatsoever from any valuation or appraisement laws, and payment thereof may be enforced and recovered in whole or in part at any time by one or more of the remedies provided to the Holder at law, in equity, or under this Debenture or any of the other Transaction Documents.  In connection with the Holder’s rights hereunder upon an Event of Default, the Holder need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Holder may immediately enforce any and all of its rights and remedies hereunder and all other remedies available to it in equity or under applicable law.

 

ARTICLE IV.

 

Section 4.01 Usury Savings Clause.  Notwithstanding any provision in this Debenture or the other Transaction Documents, the total liability for payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions, or other sums which may at any time be deemed to be interest, shall not exceed the limit imposed by the usury laws of the jurisdiction governing this Debenture or any other applicable law.  In the event the total liability of payments of interest and payments in the nature of interest, including, without limitation, all charges, fees, exactions or other sums which may at any time be deemed to be interest, shall, for any reason whatsoever, result in an effective rate of interest, which for any month or other interest payment period exceeds the limit imposed by the usury laws of the jurisdiction governing this Debenture, all sums in excess of those lawfully collectible as interest for the period in question shall, without further agreement or notice by, between, or to any party hereto, be applied to the reduction of the outstanding principal balance due hereunder immediately upon receipt of such sums by the Holder hereof, with the same force and effect as though the Company had specifically designated such excess sums to be so applied to the reduction of the principal balance then outstanding, and the Holder hereof had agreed to accept such sums as a penalty-free payment of principal; provided, however, that the Holder may, at any time and from time to time, elect, by notice in writing to the Company, to waive, reduce, or limit the collection of any sums in excess of those lawfully collectible as interest, rather than accept such sums as a prepayment of the principal balance then outstanding.  It is the intention of the parties that the Company does not intend or expect to pay, nor does the Holder intend or expect to charge or collect any interest under this Debenture greater than the highest non-usurious rate of interest which may be charged under applicable law.

 

ARTICLE V.

 

Section 5.01 No Exemption.  The Company hereby waives and releases all benefit that might accrue to the Company by virtue of any present or future laws exempting any property that may serve as security for this Debenture, or any other property, real or personal, or any part of the proceeds arising from any sale of any such property, from attachment, levy, or sale under execution, exemption from civil process, or extension of time for payment; and the Company agrees that any property that may be levied upon pursuant to a judgment obtained by virtue hereof, on any writ of execution issued thereon, may be sold upon any such writ in whole or in part in any order or manner desired by Holder.

 

Section 5.02 Exercise of Remedies.  The remedies of the Holder as provided herein and in any of the other Transaction Documents shall be cumulative and concurrent and may be pursued singly, successively or together, at the sole discretion of the Holder, and may be exercised as often as occasion therefor shall occur; and the failure to exercise any such right or remedy shall in no event be construed as a waiver or release thereof.

 

Section 5.03 Waivers.  The Company and all others who are, or may become liable for the payment hereof: (i) severally waive presentment for payment, demand, notice of nonpayment or dishonor, protest and notice of protest of this Debenture or any other Transaction Documents, and all other notices in connection with the delivery, acceptance, performance, default, or enforcement of the payment of this Debenture and the other Transaction Documents, except as specifically provided in this Debenture or any other Transaction Document; (ii) expressly consent to all extensions of time, renewals or postponements of time of payment of this Debenture and any other Transaction Documents from time to time prior to or after the maturity of this Debenture without notice, consent or further consideration to any of the foregoing; (iii) expressly agree that the Holder shall not be required first to institute any suit, or to exhaust its remedies against the Company or any other person or party to become liable hereunder or against any collateral that may secure this Debenture in order to enforce the payment of this Debenture; and (iv) expressly agree that, notwithstanding the occurrence of any of the foregoing (except the express written release by the Holder of any such person), the undersigned shall be and remain, directly and primarily liable for all sums due under this Debenture.

 

  

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Section 5.04 No Waiver.  Holder shall not be deemed, by any act of omission or commission, to have waived any of its rights or remedies hereunder unless such waiver is in writing and signed by Holder, and then only to the extent specifically set forth in the writing.  A waiver on one event shall not be construed as continuing or as a bar to or waiver of any right or remedy to a subsequent event.

 

ARTICLE VI.

 

Section 6.01 Notice.  Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Debenture must be in writing and in each case properly addressed to the party to receive the same in accordance with the information below, and will be deemed to have been delivered: (i) if mailed by certified mail, return receipt requested, postage prepaid and properly addressed to the address below, then three (3) business days after deposit of same in a regularly maintained U.S. Mail receptacle; or (ii) if mailed by Federal Express, UPS or other nationally recognized overnight courier service, next business morning delivery, then one (1) business day after deposit of same in a regularly maintained receptacle of such overnight courier; or (iii) if hand delivered, then upon hand delivery thereof to the address indicated on or prior to 5:00 p.m., EST, on a business day.  Any notice hand delivered after 5:00 p.m., EST, shall be deemed delivered on the following business day.  Notwithstanding the foregoing, notice, consents, waivers or other communications referred to in this Debenture may be sent by facsimile, e-mail, or other method of delivery, but shall be deemed to have been delivered only when the sending party has confirmed (by reply e-mail or some other form of written confirmation from the receiving party) that the notice has been received by the other party.  The addresses and facsimile numbers for such communications shall be as set forth below, unless such address or information is changed by a notice conforming to the requirements hereof.

 

	 	If to the Company:	Tootie Pie Company, Inc.
	 	 	129 Industrial Drive
	 	 	Boerne, TX 78006
	 	 	Attn: Mr. Don Merrill, Jr., CEO
	 	 	 
	 	With a copy to:	David P. Strolle, Jr., Esq.
	 	 	Law Offices of David P. Strolle, Jr.
	 	 	8000 I.H. 10 West, Suite 600
	 	 	San Antonio, Texas 78230
	 	 	 
	 	If to the Holder:	TCA Global Credit Master Fund, LP
	 	 	1404 Rodman Street
	 	 	Hollywood, FL 33020
	 	 	Attn: Mr. Robert Press
	 	 	 
	 	With a copy to:	David Kahan, P.A.
	 	 	6420 Congress Ave., Suite 1800
	 	 	Boca Raton, FL 33487
	 	 	Attn: David Kahan, Esq.

 

Section 6.02 Governing Law.  This Debenture shall be deemed to be made under and shall be construed in accordance with the laws of the State of Nevada without giving effect to the principals of conflict of laws thereof.  Each of the parties consents to the jurisdiction of the U.S. District Court sitting in the District of the State of Nevada or the state courts of the State of Nevada sitting in Clark County, Nevada in connection with any dispute arising under this Debenture and hereby waives, to the maximum extent permitted by law, any objection, including any objection based on forum non conveniens to the bringing of any such proceeding in such jurisdictions, provided, however, nothing contained herein shall limit the Holder’s ability to bring suit or enforce this Debenture or any other Transaction Documents in any other jurisdiction.

 

  

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Section 6.03 Severability.  In the event any one or more of the provisions of this Debenture shall for any reason be held to be invalid, illegal, or unenforceable, in whole or in part, in any respect, or in the event that any one or more of the provisions of this Debenture operates or would prospectively operate to invalidate this Debenture, then and in any of those events, only such provision or provisions shall be deemed null and void and shall not affect any other provision of this Debenture.  The remaining provisions of this Debenture shall remain operative and in full force and effect and shall in no way be affected, prejudiced, or disturbed thereby.

 

Section 6.04 Entire Agreement and Amendments.  This Debenture, together with the other Transaction Documents, represents the entire agreement between the parties hereto with respect to the subject matter hereof and thereof, and there are no representations, warranties or commitments, except as set forth herein and therein.  This Debenture may be amended only by an instrument in writing executed by the parties hereto.

 

Section 6.05 Binding Effect.  This Debenture shall be binding upon the Company and the successors and assigns of the Company and shall inure to the benefit of the Holder and the successors and assigns of the Holder.

 

Section 6.06 Assignment.  The Holder may from time to time sell or assign, in whole or in part, or grant participations in, this Debenture and/or the obligations evidenced hereby without the consent of the Company, provided that the Holder shall give written notice of the assignment to the Company.  The holder of any such sale, assignment or participation, if the applicable agreement between Holder and such holder so provides, shall be: (i) entitled to all of the rights, obligations and benefits of Holder (to the extent of such holder’s interest or participation); and (ii) deemed to hold and may exercise the rights of setoff or banker’s lien with respect to any and all obligations of such holder to the Company (to the extent of such holder’s interest or participation), in each case as fully as though the Company was directly indebted to such holder.  Holder may in its discretion give notice to the Company of such sale, assignment or participation; however, the failure to give such notice shall not affect any of Holder’s or such holder’s rights hereunder.

 

Section 6.07 Lost or Mutilated Debenture.  If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver, in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory to the Company.

 

Section 6.08 Waiver of Jury Trail.  THE COMPANY HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON THIS DEBENTURE, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS DEBENTURE OR ANY OTHER TRANSACTION DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OR BETWEEN ANY PARTY HERETO, AND THE COMPANY AGREES AND CONSENTS TO THE GRANTING TO HOLDER OF RELIEF FROM ANY STAY ORDER WHICH MIGHT BE ENTERED BY ANY COURT AGAINST HOLDER AND TO ASSIST HOLDER IN OBTAINING SUCH RELIEF.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER ACCEPTING THIS DEBENTURE FROM THE COMPANY.  THE COMPANY’S REASONABLE RELIANCE UPON SUCH INDUCEMENT IS HEREBY ACKNOWLEDGED.

 

Section 6.09 Non-U.S. Status.  THE HOLDER IS A NON-U.S. PERSON AS THAT TERM IS DEFINED IN THE UNITED STATES INTERNAL REVENUE CODE.  IT IS HEREBY AGREED AND UNDERSTOOD THAT THE OBLIGATIONS HEREUNDER MAY BE SOLD OR RESOLD ONLY TO NON-U.S. PERSONS.  THE INTEREST PAYABLE HEREUNDER IS PAYABLE ONLY OUTSIDE THE UNITED STATES.  ANY U.S. PERSON WHO HOLDS THIS OBLIGATION WILL BE SUBJECT TO LIMITATIONS UNDER THE UNITED STATES INCOME TAX LAW.

 

[Signatures on the following page]

 

  

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IN WITNESS WHEREOF, with the intent to be legally bound hereby, the Company as executed this Debenture as of the date first written above.

 

	  	
TOOTIE PIE COMPANY, INC.

	 
	  	  	 
	  	
By: 

	/s/ Don L. Merrill, Jr.	 
	  	
Name: 

	Don L. Merrill, Jr.	 
	  	
Title: 

	President and Chief Executive Officer	 

 

Signature page – Debenture

 

  

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Exhibit “A”

Schedule of Payments

	  	 	
Payment No.

	 	 	
Interest Payment

	 	 	
Prin. Payment

	 	 	
Redemption prem. %

	 	 	
Prem. Payable

	 	 	
Total Payable

	 	 	
Balance Outstanding

	 	 	
Principal & Interest

	 
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	(350,000.00	)	 	 	350,000.00	 	 	 	 
	
5/1/2012

	 	 	1	 	 	 	3,208.33	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	34,125.00	 	 	 	320,833.33	 	 	 	32,375.00	 
	
6/1/2012

	 	 	2	 	 	 	2,940.97	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	33,857.64	 	 	 	291,666.67	 	 	 	32,107.64	 
	
7/1/2012

	 	 	3	 	 	 	2,673.61	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	33,590.28	 	 	 	262,500.00	 	 	 	31,840.28	 
	
8/1/2012

	 	 	4	 	 	 	2,406.25	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	33,322.92	 	 	 	233,333.33	 	 	 	31,572.92	 
	
9/1/2012

	 	 	5	 	 	 	2,138.89	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	33,055.56	 	 	 	204,166.67	 	 	 	31,305.56	 
	
10/1/2012

	 	 	6	 	 	 	1,871.53	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	32,788.19	 	 	 	175,000.00	 	 	 	31,038.19	 
	
11/1/2012

	 	 	7	 	 	 	1,604.17	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	32,520.83	 	 	 	145,833.33	 	 	 	30,770.83	 
	
12/1/2012

	 	 	8	 	 	 	1,336.81	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	32,253.47	 	 	 	116,666.67	 	 	 	30,503.47	 
	
1/1/2013

	 	 	9	 	 	 	1,069.44	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	31,986.11	 	 	 	87,500.00	 	 	 	30,236.11	 
	
2/1/2013

	 	 	10	 	 	 	802.08	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	31,718.75	 	 	 	58,333.33	 	 	 	29,968.75	 
	
3/1/2013

	 	 	11	 	 	 	534.72	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	31,451.39	 	 	 	29,166.67	 	 	 	29,701.39	 
	
4/1/2013

	 	 	12	 	 	 	267.36	 	 	 	29,166.67	 	 	 	6	%	 	 	1,750.00	 	 	 	31,184.03	 	 	 	(0.00	)	 	 	29,434.03	 

 

 

7toot_ex42.htm

 

Exhibit 4.2

 

SUBORDINATION OF LOANS AGREEMENT

THIS SUBORDINATION AGREEMENT (the “Agreement”) is executed effective as of the 30th day of March, 2012, by, between and among DON L. MERRILL, JR. (the “Loan Holder”), TCA GLOBAL CREDIT MASTER FUND, LP (“TCA”) and TOOTIE PIE COMPANY, INC., a Nevada corporation (“TOOT”).

W I T N E S S E T H:

WHEREAS, TOOT has borrowed, or may in the future borrow, funds from Loan Holder, for which TOOT is or may become indebted to and in favor of Loan Holder (all present or future indebtedness of TOOT to Loan Holder, of every kind and description, direct or contingent, due or not due, secured or unsecured, original, renewed or extended and whether now in existence or hereafter arising, hereinafter collectively referred to as the “Subordinated Debt”); and

WHEREAS, the TCA has or will be purchasing debentures from TOOT of up to One Million and No/100 Dollars ($1,000,000.00) (the “Debentures”), pursuant to that certain Securities Purchase Agreement dated of even date herewith by and between TCA and TOOT (the “SPA”), which SPA and related Transaction Documents provide to TCA a first priority security interest (“TCA’s Security Interest”) in the Collateral of TOOT (throughout this Agreement, the term “Collateral” shall mean and be defined as such term is defined in the Security Agreement entered into between TCA and TOOT, as part of the SPA).  Capitalized terms used in this Agreement and not otherwise defined herein, shall have the same meanings ascribed to such terms in the SPA; and

WHEREAS, Loan Holder is a shareholder, director, officer or otherwise associated with TOOT, and will materially benefit as a result of the TCA purchasing the Debentures from TOOT; and

WHEREAS, Loan Holder acknowledges that the TCA is willing to purchase the Debentures only on the condition that the Subordinated Debt be subordinate and inferior to the obligations under the SPA, the Debentures and the other Transaction Documents, and to all other indebtedness of TOOT to TCA, whether now in existence or hereafter created; and

WHEREAS, Loan Holder has agreed to subordinate the Subordinated Debt to the lien and effect of the SPA, the Debentures and the other Transaction Documents, and TCA’s Security Interest and all security instruments securing the Debentures, and all other indebtedness of TOOT to TCA of every kind and description, direct or contingent, due or not due, secured or unsecured, original, renewed or extended, whether now in existence or hereafter arising; and

 

  

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        WHEREAS, Loan Holder acknowledges that TCA would not effectuate the purchase of the Debentures without the execution of this Agreement by Loan Holder.

NOW, THEREFORE, in consideration of, and as an inducement to TCA to purchase the Debentures, Loan Holder, TCA and TOOT do hereby agree as follows:

1.           Recitals.  The recitals set forth above are true and correct and are incorporated herein by reference.

2.           No Further Indebtedness.  Loan Holder and TOOT do hereby warrant and represent that as of the date hereof, the only Subordinated Debt currently outstanding which is due and owing from TOOT to Loan Holder is $0.00, and that no further indebtedness shall be incurred between TOOT and Loan Holder while any of the Debentures remain outstanding.

3.           Subordination.  Loan Holder does hereby unconditionally subordinate the Subordinated Debt to the debts and obligations evidenced by the SPA, the Debentures and all other Transaction Documents, and all other present and future debts and obligations of TOOT to TCA, said indebtedness including all obligations of TOOT to TCA of every kind and description, direct or contingent, due or not due, secured or unsecured, original, renewed or extended, whether now in existence or hereafter arising and to the lien and effect of TCA’s Security Interest in and to the Collateral and to all Transaction Documents and all other debts and obligations of TOOT to TCA.

4.           No Payments on Subordinated Debt; Event of Default.  Loan Holder and TOOT do hereby warrant, represent and agree that no payment (principal, interest or any other payment) shall be made, permitted or accepted under or with respect to any of the Subordinated Debt (or under any other document or agreement) while any Debentures remain outstanding.  If any payment is made by TOOT in payment of the Subordinated Debt, or if any security or proceeds thereof is received by Loan Holder on account of the Subordinated Debt contrary to the terms of this Agreement, the same shall be and constitute an Event of Default under the SPA and the other Transaction Documents.  Upon the occurrence of an Event of Default under the SPA or any other Transaction Documents, TCA shall be entitled to immediately exercise all remedies provided to TCA in connection with the Collateral and under the Transaction Documents, and each and every amount paid by or on behalf of TOOT to Loan Holder, or any payments, security, proceeds or other items received by Loan Holder (from TOOT, its subsidiaries, or from an individual or an entity on behalf of TOOT or its subsidiaries) will be forthwith paid by Loan Holder to TCA, in precisely the form received (except for Loan Holder’s endorsement, where necessary), to be credited and applied, in TCA’s sole discretion, upon any indebtedness (principal and/or interest and/or otherwise as TCA may elect, in its sole discretion) then owing to TCA by TOOT and, whether matured or unmatured, and, until so delivered, the same shall be held in trust by Loan Holder as the property of TCA.  In the event of a failure of Loan Holder to endorse any instrument for the payment of monies so received by Loan Holder payable to Loan Holder’s order, TCA, or any officer or employee of TCA, is hereby irrevocably constituted and appointed attorney-in-fact (coupled with an interest) for Loan Holder, with full power to make any such endorsement and with full power of substitution.

 

  

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5.           No Enforcement By Loan Holder.  Loan Holder will not exercise any collection rights with respect to the Subordinated Debt, will not take possession of, sell or dispose of, or otherwise deal with any Collateral, and will not exercise or enforce any right or remedy which may be available to them with respect to the Subordinated Debt, unless and until such time as the obligations evidenced by the SPA and the debentures and other Transaction Documents, as the same may be modified from time to time, including all principal, interest and other charges associated therewith, has been paid in full and no other debts or obligations are due and owing from TOOT to TCA.  Loan Holder shall immediately notify TCA, in writing, of any default by TOOT under any Subordinated Debt, and any default under or with respect to any Subordinated Debt shall be and constitute a default under the SPA and other Transaction Documents, entitling TCA to exercise all of its rights in connection with the Collateral and under the Transaction Documents.

6.           No Impairment of TCA Remedies.  TCA may exercise collection rights, may take possession of, sell or dispose of, and otherwise deal with, the Collateral and may exercise or enforce any right or remedy available to TCA under the Transaction Documents with respect to the Collateral, whether available prior to or after the occurrence of any default in connection with the Subordinated Debt.

7.           Additional Security.  In order to effectuate the foregoing subordination, Loan Holder does hereby transfer and assign to TCA, as additional collateral and security for the obligations evidenced by the SPA and the other Transaction Documents, any and all debts and obligations of TOOT to Loan Holder, all of the said claims or demands of Loan Holder against TOOT, with full right on the part of TCA, in its own name or in the name of Loan Holder, to collect and enforce said claims by suit, proof of debt in bankruptcy, or other liquidation proceedings or otherwise.

8.           Payments Upon Bankruptcy Events.  Upon any distribution of the assets or readjustment of indebtedness of the TOOT, whether by reason of reorganization, liquidation, dissolution, bankruptcy, receivership, assignment for the benefit of creditors, or any other action or proceeding involving the readjustment of all or any part of the Subordinated Debt or the application of the assets of the TOOT to the payment or liquidation thereof, either in whole or in part, TCA shall be entitled to receive payment in full of any and all indebtedness under the SPA and the other Transaction Documents or otherwise then owing to TCA by TOOT prior to the payment of all or any of the Subordinated Debt.

9.           Restrictions on Transferability of Subordinated Debt.  Loan Holder agrees that he shall not transfer, assign, encumber, hypothecate or subordinate, at any time while this Agreement remains in effect, any right, claim or interest of any kind in or to any of the Subordinated Debt, either principal or interest or otherwise, and there shall promptly be placed on each promissory note or other document or agreement constituting a portion of the Subordinated Debt, a legend reciting that the same is subject to this Agreement.

 

  

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10.           TCA’s Rights.  Loan Holder acknowledges that TCA may, at any time, in its discretion, renew or extend the time of payment of all or any portion of the obligations evidenced by the SPA and other Transaction Documents, or any other existing or future indebtedness or obligations of TOOT to TCA and/or waive or delay in enforcing any rights or release any collateral relative thereto at any time(s) and, in reference thereto, to modify or amend the Transaction Documents and/or make and enter into such agreement(s), compromise(s) and other indulgence(s), as TCA may deem proper or desirable, without notice to or further assent of Loan Holder, all without in any manner impairing or affecting this Agreement or any of TCA’s rights hereunder.

11.           Statement of Account.  Loan Holder hereby agrees that he will provide and deliver to TCA, upon demand, from time to time, a statement of the account of Loan Holder with TOOT, and that TOOT will duly comply with and conform with each and every term of this Agreement, on its part required to be performed.

12.           Entire Agreement.  This Agreement and the other Transaction Documents: (i) are valid, binding and enforceable against TOOT and Loan Holder in accordance with their respective provisions and no conditions exist as to their legal effectiveness; (ii) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof; and (iii) are the final expression of the intentions of Loan Holder, TOOT and TCA.  No promises, either expressed or implied, exist between Loan Holder, TOOT and TCA, unless contained herein or therein.  This Agreement, together with the other Transaction Documents, supersedes all negotiations, representations, warranties, commitments, term sheets, discussions, negotiations, offers or contracts (of any kind or nature, whether oral or written) prior to or contemporaneous with the execution hereof with respect to any matter, directly or indirectly related to the terms of this Agreement and the other Transaction Documents.  This Agreement and the other Transaction Documents are the result of negotiations between Loan Holder, TOOT and TCA and have been reviewed (or have had the opportunity to be reviewed) by counsel to all such parties, and are the products of all parties.  Accordingly, this Agreement and the other Transaction Documents shall not be construed more strictly against TCA merely because of TCA’s involvement in their preparation.

13.           Amendments; Waivers.  No delay on the part of TCA in the exercise of any right, power or remedy shall operate as a waiver thereof, nor shall any single or partial exercise by TCA of any right, power or remedy preclude other or further exercise thereof, or the exercise of any other right, power or remedy.  No amendment, modification or waiver of, or consent with respect to, any provision of this Agreement or the other Transaction Documents shall in any event be effective unless the same shall be in writing and acknowledged by TCA, and then any such amendment, modification, waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

  

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14.           WAIVER OF DEFENSES.  LOAN HOLDER AND TOOT, AND EACH OF THEM, WAIVES EVERY PRESENT AND FUTURE DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH EITHER OF THEM MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY TCA IN ENFORCING THIS AGREEMENT.  PROVIDED TCA ACTS IN GOOD FAITH, LOAN HOLDER AND TOOT EACH RATIFIES AND CONFIRMS WHATEVER TCA MAY DO PURSUANT TO THE TERMS OF THIS AGREEMENT.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR TCA GRANTING ANY FINANCIAL ACCOMMODATION TO TOOT.

15.           FORUM SELECTION AND CONSENT TO JURISDICTION.  TO INDUCE TCA TO MAKE FINANCIAL ACCOMODATIONS TO TOOT, LOAN HOLDER AND TOOT EACH AGREES THAT ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE FEDERAL OR STATE COURTS OF CLARK COUNTY, NEVADA; PROVIDED THAT NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE TCA FROM BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION.  LOAN HOLDER AND TOOT EACH HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF THE COURTS OF CLARK COUNTY, NEVADA, FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE.  LOAN HOLDER, TOOT AND TCA EACH FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEVADA.  LOAN HOLDER AND TOOT EACH HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

16.           WAIVER OF JURY TRIAL.  LOAN HOLDER, TOOT AND TCA, AFTER CONSULTING OR HAVING HAD THE OPPORTUNITY TO CONSULT WITH COUNSEL, EACH KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES IRREVOCABLY, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, ANY OF THE OTHER OBLIGATIONS, THE COLLATERAL, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY LENDING RELATIONSHIP EXISTING IN CONNECTION WITH ANY OF THE FOREGOING, OR ANY COURSE OF CONDUCT OR COURSE OF DEALING IN WHICH TCA, TOOT AND LOAN HOLDER ARE ADVERSE PARTIES, AND EACH AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR TCA GRANTING ANY FINANCIAL ACCOMMODATION TO TOOT.

 

 

 

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17.           Assignability.  TCA, prior to the occurrence of an Event of Default and with the consent of TOOT, which consent will not be unreasonably withheld, and after the occurrence of an Event of Default without consent from or notice to anyone, may at any time assign TCA’s rights in this Agreement, the other Transaction Documents, the Obligations, or any part thereof and transfer TCA’s rights in any or all of the Collateral, and TCA thereafter shall be relieved from all liability with respect to such Collateral.  This Agreement shall be binding upon TCA, Loan Holder and TOOT and their respective legal representatives, heirs and successors.

18.           Binding Effect.  This Agreement shall become effective upon execution by Loan Holder, TOOT and TCA.

19.           Governing Law.  This Agreement shall be delivered and accepted in and shall be deemed to be a contract made under and governed by the internal laws of the State of Nevada, without regard to conflict of laws principles.

20.           Enforceability.  Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by, unenforceable or invalid under any jurisdiction, such provision shall as to such jurisdiction, be severable and be ineffective to the extent of such prohibition or invalidity, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

21.           Time of Essence.  Time is of the essence in making payments of all amounts due TCA under the Transaction Documents and in the performance and observance by Loan Holder and TOOT of each covenant, agreement, provision and term of this Agreement and the other Transaction Documents.

22.           Counterparts; Facsimile Signatures.  This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Agreement.  Receipt of an executed signature page to this Agreement by facsimile or other electronic transmission shall constitute effective delivery thereof.  Electronic records of executed Transaction Documents maintained by TCA shall be deemed to be originals thereof for all purposes.

23.           Notices.  Except as otherwise provided herein, Loan Holder and TOOT each waives all notices and demands in connection with the enforcement of TCA’s rights hereunder.  All notices, requests, demands and other communications provided for hereunder shall be made in accordance with the terms of the SPA.

 

 

 

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24.           Costs, Fees and Expenses.  Loan Holder and TOOT, and each of them, jointly and severally, shall pay or reimburse TCA for all reasonable costs, fees and expenses incurred by TCA or for which TCA becomes obligated in connection with the enforcement of this Agreement, including costs and expenses and attorneys’ fees, costs and time charges of counsel to TCA throughout all court levels.

25.           Termination.  This Agreement shall not terminate until the termination of the SPA, the Debentures and the commitments to make any further purchases or funding commitments under the SPA thereunder and the full and complete performance and satisfaction and payment in full of all the Obligations (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted).

[Signatures on the following page]

 

 

 

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IN WITNESS WHEREOF, the undersigned have executed this Subordination Agreement as of the date first written above.

	 	
LOAN HOLDER:

	 
	 	 	 
	
 

	
 

	/s/ Don L. Merrill, Jr.	 
	 	 	Don L. Merrill, Jr.	 
	 	 	 	 
	 	 	 	 
	 	
TOOT:

	 
	 	 	 	 
	 	
TOOTIE PIE COMPANY, INC.

	 
	 	 	 	 
	 	By:	/s/ Don L. Merrill, Jr.	 
	 	Name:	Don L. Merrill, Jr.	 
	 	Its:	President and Chief Executive Officer	 
	 	 	 	 
	 	 	 	 
	 	
TCA:

	 
	 	 	 
	 	
TCA GLOBAL CREDIT MASTER FUND, LP

	 
	 	 	 
	 	By:	TCA Global Credit Fund GP, Ltd.	 
	 	Its:	General Partner	 
	 	 	 	 
	 	By:	/s/ Robert Press	 
	 	Name:	Robert Press	 
	 	Title:	Director	 

 

Subordination of Loans Agreement - Signature Page

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