EXHIBIT 2.6
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT") is made as of the
1st day of October 2002, by CRESCENT OPERATING, INC., a Delaware corporation,
("DEBTOR"), in favor of Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership ("SECURED PARTY"), whose address is 0000 Xxxx
Xxxxxx, Xxxx Xxxxx, Xxxxx 00000.
WITNESSETH:
WHEREAS, concurrently herewith, Borrower has made to the order
of Secured Party a Secured Promissory Note in the principal amount of Two
Million Nine Hundred Thousand Dollars ($2,900,000.00) (the "Note");
WHEREAS, the Note describes certain conditions under which
amounts may be advanced by Secured Party to Borrower, and the terms under which
such amounts, with interest thereon, are to be repaid by Borrower to Secured
Party; and
WHEREAS, as a condition to accepting the Note from the
Borrower, and for its agreement to advance funds in accordance with the terms of
the Note, Secured Party has required that Borrower secure its obligations under
the Note, upon the terms and conditions as hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Borrower hereby covenants and agrees for the benefit of
Secured Party as follows:
1. Collateral: As security for the prompt and complete payment and
performance when due (whether at stated maturity, or by acceleration in
accordance with the terms of the Note) of all the Obligations (as hereinafter
defined) and to induce Secured Party to advance funds pursuant to the Note to
Borrower, subject to the terms and conditions of this Agreement, Borrower hereby
grants to Secured Party a continuing first priority security interest in all of
such Borrower's right, title and interest in and to the claim, thing in action,
general intangible and other collateral more particularly described in Exhibit A
attached hereto, together with any and all profits, proceeds, products,
offspring, revenues, income, distributions, compensation, fees, payments and
settlement amounts, of any kind or nature and in any form whatsoever, of the
foregoing, and all rights to receive any of the foregoing, now or hereafter
distributable or payable to the Borrower (the "COLLATERAL").
2. Obligations: As used herein, the term "OBLIGATIONS" shall mean,
collectively:
(a) All obligations of Borrower under or in connection with
the Note and this Agreement, direct or indirect, absolute or contingent, now
existing or hereafter arising in connection therewith, including, but not
limited to, payment to Secured Party of all amounts payable under the Note,
including the unpaid principal balance of the Note, all accrued and unpaid
interest thereon, and any other amounts due thereunder, and the payment,
performance and observance of any other obligation, term or condition under the
Note or under this Agreement; or
(b) All expenditures made or incurred by Secured Party to
protect and maintain the Collateral and to enforce its rights under this
Agreement, as more fully set forth herein.
3. Representations of Borrower: Borrower represents and warrants to
Secured Party that:
(a) Borrower owns the Collateral free and clear of all liens,
security interests, adverse claims and encumbrances other than (i) the security
interest created or permitted hereby, (ii) any security interest granted to any
lender, equity investor, ground lessor or other party having an interest in the
property owned by the Borrower and disclosed to secured party prior to the date
hereof;
(b) No financing statement covering any of the Collateral is
on file in any public office except with respect to any security interest
permitted under Paragraph 3(a) above;
(c) True and correct copies of the documents governing the
claim and other collateral more particularly described in EXHIBIT A attached
hereto have heretofore been submitted to Secured Party, and the same has not
been amended and are in full force and effect; and
(d) The execution, delivery and performance of this Agreement
will not violate any law, agreement or document governing Borrower or to which
Borrower is a party, except to the extent that a written consent thereto, in
form satisfactory to Secured Party, has been obtained prior to the date thereof.
4. Warranties and Covenants of Borrower: Except as may otherwise be set
forth herein, Borrower warrants, covenants and agrees that:
(a) Borrower shall not sell, pledge, hypothecate, transfer,
lease, assign, abandon or otherwise dispose of any of the Collateral or any
interest therein.
(b) Borrower shall keep the Collateral free of liens, security
interests and encumbrances other than the security interest created or permitted
hereby.
(c) Borrower shall not use the Collateral in violation of any
applicable statute, ordinance or insurance policy.
(d) Borrower shall diligently and continuously pursue its
rights with respect to the Collateral and shall defend the Collateral against
the claims and demands of all Persons. "PERSONS" shall mean any individual,
estate, trust, corporation, association, governmental entity, limited liability
company, unincorporated association, partnership or joint venture.
(e) Borrower shall pay promptly and before delinquency all
taxes and assessments with respect to the Collateral and shall deliver to
Secured Party, on demand, a receipt or other evidence reasonably satisfactory to
Secured Party of the payment thereof.
(f) Secured Party, at its option and after reasonable notice
to Borrower (provided that the giving of such notice shall not cause Secured
Party to incur late fees, penalties or other costs related to any discharge to
which this subsection (f) applies), may discharge taxes, liens, security
interests and other encumbrances against the Collateral if not paid when due.
Borrower shall reimburse Secured Party within ten (10) days following delivery
of written notice from Secured Party for any such payments made by Secured
Party, plus interest thereon at the Default Interest Rate (as hereinafter
defined). Any such payments made by Secured Party, together with interest
thereon, shall be secured by the Collateral as provided herein. "DEFAULT
INTEREST RATE" shall mean 5.03% per annum.
(g) From time to time, Borrower shall execute financing
statements and any other documents in form satisfactory to Secured Party (and
pay the cost of filing or recording thereof in whatever public offices Secured
Party deems necessary) and perform such other acts as Secured Party may
reasonably request to perfect and maintain a valid security interest in the
Collateral, including, upon Secured Party's request, transferring to Secured
Party any Collateral in which a security interest may be perfected only by
taking possession thereof.
(h) Borrower shall not change its name or otherwise do
anything which would make the information set forth in the financing statements
relating to the Collateral materially misleading without immediately notifying
Secured Party of the same.
(i) The Borrower shall not commence or join with any of its
creditors in commencing any bankruptcy, reorganization, receivership or
insolvency proceeding against the Borrower, or become a party to any case,
action, suit or proceeding which may hinder or impair the recourse of Secured
Party to the Collateral except to the extent permitted under that certain
Settlement Agreement, dated as of February 14, 2002, as amended, to which each
of Borrower and Secured Party are parties.
5. Events Of Default: Each "Event of Default" listed in Section 6 of
the Note shall constitute an "EVENT OF DEFAULT" hereunder. In addition, any
breach or violation of any material warranty or covenant in this Agreement, or
the inaccuracy of any representation herein as of the date when it is made,
shall constitute an Event of Default hereunder.
6. Rights And Remedies: Upon the occurrence of an Event of Default,
Secured Party shall be entitled to exercise any and all rights and remedies of
secured parties under the Uniform Commercial Code ("UCC") for the State of
Texas, as well as any and all other rights and remedies available to secured
creditors at law or in equity, including actions for damages or specific
performance.
7. General Provisions:
(a) Notices. Any notice, request or other communication
required or permitted to be given hereunder shall be given in writing and shall
be made as provided in Section 10.01 of that certain Settlement Agreement, dated
as of February 14, 2002, entered into by and among the Secured Party, Crescent
Real Estate Equities Company, the Borrower, Rosestar Management LLC, Canyon
Ranch Leasing, L.L.C., Wine Country Hotel, LLC d/b/a Vintage
Resorts, LLC, Rosestar Southwest, LLC and COI Hotel Group, Inc., as amended on
the date hereof by that certain First Amendment to Settlement Agreement.
(b) Survival. To the fullest extent permitted by law, this
Agreement shall be deemed to be continuing in nature and shall remain in full
force and effect until all the Obligations have been paid and performed in full.
(c) Rights Cumulative. Secured Party's rights under this
Agreement shall be in addition to all rights of Secured Party under the Note.
(d) Attorneys' Fees. In the event it is necessary for Secured
Party to retain the services of an attorney or any other consultants in order to
enforce this Agreement, or any portion thereof, if Secured Party is the
prevailing party, Borrower agrees to pay to Secured Party any and all reasonable
costs and expenses, including, without limitation, reasonable attorneys' fees,
costs and disbursements, incurred by Secured Party as a result thereof and such
costs, fees and expenses shall be included in costs.
(e) Covenant of Borrower. Borrower covenants and agrees that,
upon the commencement of a voluntary or involuntary bankruptcy, insolvency or
reorganization proceeding by or against the Borrower, Borrower shall not oppose,
or cause any other person or entity to oppose, any request by Secured Party for
relief from any automatic stay of the enforcement by Secured Party of any of its
rights hereunder or under the Note which may arise in connection with the
commencement of any such proceeding. Borrower acknowledges that Secured Party
has given consideration for the covenant contained in this Section 7(e) and that
Secured Party has agreed to provide additional advances to Borrower in reliance
upon the covenant contained in the Section 7(e).
(f) Assignment. Secured Party may assign this Agreement to an
affiliate or in connection with an assignment of the Obligations. Borrower may
not assign its interests and obligations hereunder without Secured Party's prior
written consent, which consent may be withheld in Secured Party's sole
discretion, and any such attempted assignment without Secured Party's consent
shall be null and void.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS (EXCLUDING THE
CHOICE OF LAW PROVISIONS THEREOF THAT WOULD PROVIDE FOR THE APPLICATION OF THE
LAWS OF ANY OTHER JURISDICTION) FROM TIME TO TIME IN EFFECT.
(h) VENUE; JURISDICTION; JURY TRIAL WAIVER. SECURED PARTY AND
DEBTOR HEREBY:
A. CONSENT TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN TEXAS;
B. AGREE THAT THE EXCLUSIVE VENUE OF ANY
PROCEEDING RESPECTING THIS NOTE, THE RIGHTS
AND OBLIGATIONS OF THE PARTIES UNDER THIS
AGREEMENT, AND ANY DISPUTE BETWEEN THE
DEBTOR, ON THE ONE HAND, AND THE SECURED
PARTY, ON THE OTHER, SHALL BE A COURT OF
COMPETENT JURISDICTION LOCATED IN TARRANT
COUNTY, TEXAS, PROVIDED THAT IF NO COURT IN
TARRANT COUNTY, TEXAS, WILL ACCEPT
JURISDICTION OF ANY SUCH PROCEEDING, THE
PARTY INITIATING THE PROCEEDING SHALL HAVE
THE RIGHT TO RE-INSTITUTE SUCH PROCEEDING IN
ANY OTHER STATE OR FEDERAL COURT OF
COMPETENT JURISDICTION IN THE STATE OF
TEXAS; AND
C. IRREVOCABLY WAIVE THEIR RIGHT TO A JURY
TRIAL IN ANY ACTION OR PROCEEDING BASED
UPON, OR RELATED TO, THE SUBJECT MATTER OF
THIS AGREEMENT AND AGREE THAT THE FOREGOING
WAIVER OF TRIAL BY JURY IS KNOWINGLY,
INTENTIONALLY, AND VOLUNTARILY MADE BY THE
DEBTOR AND THE SECURED PARTY AND THE DEBTOR
ACKNOWLEDGES THAT NEITHER THE DEBTOR NOR ANY
PERSON ACTING ON BEHALF OF THE DEBTOR HAS
MADE ANY REPRESENTATIONS OF FACT TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR IN ANY WAY
TO MODIFY OR NULLIFY ITS EFFECT, AND THE
DEBTOR AND THE SECURED PARTY FURTHER
ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED
IN THE NEGOTIATION AND EXECUTION OF THIS
AGREEMENT AND IN THE MAKING OF THIS WAIVER
BY INDEPENDENT LEGAL COUNSEL, SELECTED BY
THEIR OWN FREE WILL, AND THAT THEY HAVE HAD
THE OPPORTUNITY TO DISCUSS THIS WAIVER WITH
COUNSEL, AND THE DEBTOR AND THE SECURED
PARTY FURTHER ACKNOWLEDGE THAT THEY HAVE
READ AND UNDERSTAND THE MEANING AND
RAMIFICATION OF THIS PROVISION.
(i) Defined Terms. Unless the context otherwise requires, or
unless otherwise defined herein, all terms used herein which are defined in the
UCC shall have the meanings therein stated.
(j) Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and all of which
together shall constitute a single instrument.
IN WITNESS WHEREOF, Borrower has executed this Agreement as of the day
and year first above written.
ATTEST: Crescent Operating, Inc., a Delaware
corporation
By: By: /s/ XXXXXXX X. XXXXXXX
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Name: Name: Xxxxxxx X. Xxxxxxx
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Title: Title: President
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ACCEPTED:
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP Date: October 1, 2002.
By Crescent Real Estate Equities Ltd.,
its general partner
By: /s/ XXXXX XXXX
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Name: Xxxxx Xxxx
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Title: Executive Vice President,
Law and Administration
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