EXHIBIT 7
SECURITY AGREEMENT AND ASSIGNMENT
---------------------------------
1. Parties
-------
This Security Agreement and Assignment ("Agreement"), dated April 10, 1998,
is entered into by and between Xxxxx X. Xxxxx, ("Lender") and Xxxxxxx X. Xxxxxx
an individual ("Debtor").
2. Recitals
--------
1. Concurrently herewith, Debtor has executed and delivered that certain
promissory note in favor of Lender in the principal amount of $30,000 (the
"Note").
2. Debtor is the owner of 8,930 units of limited partnership interest in
National Golf Operating Partnership, L.P., a Delaware limited partnership (the
"Partnership") pursuant to that certain Amended and Restated Agreement of
Limited Partnership of National Golf Operating Partnership dated as of March 4,
1998 (the "Partnership Agreement").
3. As security for Debtor's performance of her obligations under the
Note, Debtor desires to pledge and grant to Lender, and to create, or cause to
be created, a security interest in 4,465 units of limited partnership interest
held by Debtor in the Partnership (the "OP Units"), including without
limitation, in all cash or property distributed or due to her by the Partnership
on account of the OP Units, any capital, profits or surplus attendant to her OP
Units in the Partnership, any claims against the Partnership related to her OP
Units, and/or any proceeds of money or property to be received by her on sale,
exchange or other disposition of her OP Units (collectively, the "Collateral"),
on the terms and conditions hereinafter set forth.
3. Grant of Security Interest
--------------------------
As security for the full, punctual and prompt performance of her
obligations under the Note, and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Debtor hereby grants to Lender a
security interest in the Collateral as now held and to any additional extent
acquired hereafter, and any and all proceeds thereof.
4. Perfection of Security Interest
-------------------------------
In connection with the grant of the security interest set forth in Section
3 above, Debtor shall execute and deliver to Lender a Financing Statement on
Form UCC-1, reflecting said security interest, in form and substance
satisfactory to Lender.
5. Assignment
----------
1. Concurrently with the execution hereof, Debtor has delivered to
Lender a fully executed assignment of the Collateral (the "Assignment") in the
form attached hereto as Exhibit "A" and incorporated herein by this reference.
2. Debtor agrees that the Assignment shall be held by Lender as security
until Debtor's obligations under the Note have been fully performed, satisfied
or discharged. In the event of a default, as defined in Section 9 hereof,
Lender shall be authorized to use the Assignment in accordance with the terms
hereof.
6. Distribution Rights Reserved to Debtor; Voting Rights Assigned to Lender;
-------------------------------------------------------------------------
Exchange and Put Rights Assigned to Lender
------------------------------------------
So long as Debtor is not in default, as defined in Section 9 hereof, Debtor
shall have the right to continue to receive all cash distributions or
distributions in kind to which Debtor is entitled by virtue of her interest in
the Partnership. Notwithstanding the foregoing, until Debtor's obligations
under the Note have been fully performed, satisfied or discharged, Lender shall
be deemed the record owner of the Collateral and, except for the right to
receive cash distributions as described above, shall have all rights and powers
as a partner of the Partnership, including the right to vote. Debtor also
assigns to Lender the right to exercise the Exchange and Put options provided
for under the Partnership Agreement; however, the net proceeds from the Exchange
or Put shall not exceed the amount of principal and accrued interest outstanding
at the time of Lender's exercise of the Exchange or Put. By executing this
Agreement, Debtor hereby assigns such voting rights, Exchange and Put rights to
Lender and agrees to take all actions, including notifying the general partner
of the Partnership in writing, of Debtor's assignment to Lender of Debtor's
voting rights in connection with the OP Units. In the event of a default, as
defined in Section 9 hereof, Lender shall acquire all of Debtor's rights, but
none of Debtor's obligations, duties, or liabilities, as a partner of the
Partnership, as provided in Section 10.7 hereof.
7. Debtor's Representations and Warranties.
---------------------------------------
Debtor hereby represents and warrants as follows:
1. The Collateral is, and at all times hereafter shall be, free and clear
of any and all mortgages, liens, pledges, charges, encumbrances, equities,
claims, interests or restrictions of any nature whatsoever, other than those
created pursuant to this Agreement;
2. The security interest granted to Lender pursuant to this Agreement is,
and hereafter at all times shall be, a valid, perfected, first priority security
interest in the Collateral;
2
3. Debtor is the absolute owner of the OP Units, with full right to
pledge, sell, transfer, and create a security interest therein;
4. Neither the obligations of Debtor called for in this Agreement nor the
grant of the security interest provided for herein will result in or constitute
a default, or an event that with notice or lapse of time or both, would be a
default, breach or violation of any agreement, instrument or arrangement to
which Debtor is party or by which Debtor or any of Debtor's property is bound.
8. Covenants of Debtor
-------------------
Debtor hereby covenants as follows:
1. To immediately notify the general partner of the Partnership of the
granting of the security interest and assignment of Collateral hereunder and to
obtain any and all necessary consents to the grant of security interest and
assignment of Collateral provided for therein;
2. To procure, execute and deliver from time to time any endorsements,
assignments, financing statements, or other writings deemed necessary or
appropriate by Lender to perfect, maintain or protect his security interest
hereunder and the priority thereof;
3. Not to permit any lien or secured interest other than that created
hereby to attach to the Collateral;
4. At her own cost or expense, to appear in and defend any action or
proceeding which may affect her title to, or Lender's interest in the
Collateral; and
5. Not to sell, transfer, hypothecate, encumber, or otherwise dispose of
or transfer the Collateral, without Lender's written consent.
9. Event of Default
----------------
Each of the following shall constitute a default hereunder:
1. A default under the Note; or
2. Debtor's breach of, or failure to perform any obligation, covenant,
condition, representation or warranty, contained in this Agreement.
10. Lender's Rights Upon Default
----------------------------
1. Upon the happening of any default, as defined in Section 9 hereof,
Lender may, at his sole option, pursue any or all of the remedies and exercise
any or all rights set forth in this Section 10.
3
2. Lender may exercise all remedies of a secured party under the Uniform
Commercial Code of California (the "UCC") including the following:
(a) Lender may elect to retain the Collateral or any part
thereof in satisfaction of Debtor's obligations under the Note in accordance
with UCC Section 9505. Lender may notify Debtor of his election to so retain
the Collateral in a written notice sent to Debtor after default.
(b) Lender may sell or otherwise dispose of the Collateral or
any part thereof at a private sale or public sale. Lender may notify Debtor of
his election to so dispose of the Collateral in a written notice sent to Debtor
after default. Lender's notice to Debtor of his election to dispose of the
Collateral shall include notice of the time on or after which such private sale
or other intended disposition is to be made, or the date of any public sale.
Debtor shall remain liable for any deficiency following disposition of the
Collateral or any part thereof pursuant to this Section.
3. Lender's delay or failure to exercise the remedies described in
Section 10.2 shall not be deemed a waiver of his rights to exercise the right of
sale following a default. The rights and duties of Lender and Debtor, the
mechanics for sale and retention of the Collateral following a default, and the
disposition or application of the proceeds of the sale of the Collateral shall
be as set forth in the UCC.
4. Lender may proceed against Debtor by bringing an action under the Note
and reduce his claim on the obligations secured hereby to judgment. In this
connection, Debtor hereby expressly waives any and all rights she may have to
require Lender to exhaust the Collateral or to proceed against any other party
or to pursue any other remedy which Lender may have.
5. Lender may do any and all other acts, and take any proceedings,
allowed by law or in equity to enforce Lender's rights to collect the
obligations secured by this Agreement.
6. Debtor hereby irrevocably appoints Lender as her attorney-in-fact with
such power to be effective upon any default by Debtor hereunder. In this
capacity, Lender may exercise all rights and powers as Debtor might exercise
with respect to the Collateral, including, without limitation, the right to
transfer the Collateral to Lender's name or to the name of her nominee or that
of any party to whom Lender conveys the Collateral, and the right to execute any
documents to effectuate a transfer of Debtor's partnership interests in the
Partnership. Lender shall not be required to make any presentment, demand, or
protest, or give any notice, and Lender need not take any action to preserve any
rights against any prior party or any other person in connection with the
Collateral.
7. Upon Debtor's default, and until such time as Lender disposes of the
Collateral in accordance with the provisions of this Section 10, Lender shall be
entitled to exercise or receive any and all of Debtor's rights as a partner of
the Partnership, including, but not limited to all rights to capital, profit,
distributions and properties and the right to vote as a partner of the
Partnership, and
4
to request and obtain information from the Partnership. In this connection,
Lender shall have the right to immediately notify the Partnership of Debtor's
default, and the Partnership shall remit all payments or other distributions to
which Debtor otherwise would be entitled directly to Lender.
8. The parties hereby agree that all rights and remedies hereunder shall
be separate and cumulative and in addition to any rights or remedies available
at law, and Lender shall have the right to enforce one or more remedies under
this Agreement or pursuant to law successively or concurrently, and no action or
proceeding shall operate to, or be deemed to, estop or prevent Lender from the
pursuit of any further remedy which it may have by this Agreement or by law.
11. Termination
-----------
This Agreement shall terminate, and the Assignment shall be returned to
Debtor, when Debtor has paid or caused to be paid to Lender all amounts due and
owing to Lender under Note and this Agreement.
12. Notices
-------
1. Any notice given hereunder shall be in writing and shall be deemed to
have been duly given if transmitted by facsimile; delivered by hand; or
delivered either by certified or registered mail, postage prepaid to the
addresses set forth below. Such notice shall be deemed to have been given or
delivered or made on the date of the transmittal, if transmitted by facsimile,
or on the date of delivery, if delivered by hand, or three days after mailing if
delivered by certified or registered mail, so long as the notice is transmitted,
delivered, or mailed as follows:
(a) If to Lender:
Xxxxx X. Xxxxx
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxx
Fax No.: (000) 000-0000
(b) If to Debtor:
Xxxxxxx X. Xxxxxx
0000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
Fax No.: (000) 000-0000
5
2. Any party may change the address to which notices are to be sent by
notification given to the other party of such change of address in writing in
accordance with the provisions hereof.
3. Pursuant to her obligation under Section 8.1 hereof, Debtor shall
deliver written notice of this Agreement, the Assignment, and all amendments
thereto, together with copies thereof, to the general partner of the Partnership
at the notice address set forth in the Partnership Agreement. Lender may, upon
Debtor's failure to comply with her obligation under Section 8.1, deliver the
written notices and copies described in this Section to the general partner of
the Partnership.
13. Indemnification
---------------
Debtor shall defend, indemnify and hold Lender free and harmless from and
against, and in respect of, any and all loss, cost, damage, liability or expense
(including, but not limited to, actual attorney's fees and costs) that Lender
shall incur or suffer, which arise or result from, or relate to, Lender's
entering into this Agreement, or any breach of or failure by Debtor to perform
her representations, warranties, covenants, obligations or agreements set forth
herein or in the Note.
14. Miscellaneous
-------------
1. The subject headings of the Sections of this Agreement are included
for purposes of convenience only and shall not affect the construction or
interpretation of any of its provisions.
2. No supplement, modification, or amendment of this Agreement shall be
binding unless executed in writing by the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
3. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4. Nothing in this Agreement, whether express or implied, is intended to
confer any rights or remedies under or by reason of this Agreement on any
persons other than the parties to it and their respective successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provision give any third persons any right of subrogation or action
over against any party to this Agreement.
5. Nothing contained herein shall be construed to require the commission
of any act contrary to law. Should there be any conflict between any provision
hereof or any present or future
6
statute, law, ordinance or regulation, the latter shall prevail, but the
provisions of this Agreement affected thereby shall be curtailed and limited
only to the extent necessary to bring it within the requirements of the law, and
the remaining provisions of this Agreement shall remain in full force and
effect.
6. Debtor shall reimburse Lender, upon demand, for any and all costs and
expenses, including, without limitation, attorneys' fees, that Lender may incur
in pursuing any remedies hereunder, which costs and expenses are secured hereby.
7. This Agreement shall be binding on, and shall inure to the benefit of,
the parties to it and their respective heirs, legal representatives, successors
and assigns.
8. This Agreement shall be construed in accordance with, and governed by,
the laws of the State of California.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
"LENDER"
/s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx
"DEBTOR"
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
7
EXHIBIT "A"
ASSIGNMENT OF COLLATERAL
1. Parties
-------
This Assignment of Partnership Interest (the "Assignment"), dated April 10,
1998, is entered into by and between Xxxxxxx X. Xxxxxx ("Assignor") and Xxxxx X.
Xxxxx ("Assignee").
2. Recitals
--------
1. Assignor is the owner of 8,930 units of limited partnership interest
in National Operating Partnership, L.P. a Delaware limited partnership (the
"Partnership") pursuant to the certain Amended and Restated Agreement of Limited
Partnership of National Golf Operating Partnership dated as of March 4, 1998
(the "Partnership Agreement").
2. As security for the performance of her obligations under that certain
Secured Promissory Note dated April 10, 1998 in the principal amount of $30,000
(the "Note"), Assignor is entering into that certain Security Agreement and
Assignment (the "Agreement"), pursuant to which Assignor is pledging and
assigning a security interest in 4,465 units of limited partnership interest
held by Assignor in the Partnership (the "OP Units"), including without
limitation, an interest in all cash or property distributed or due to her by the
Partnership, any capital, profits or surplus attendant to the OP Units, any
claims against the Partnership related to the OP Units, and/or any proceeds of
money or property to be received by her on sale, exchange or other disposition
of the OP Units (the "Collateral").
3. Assignor now desires to execute, in favor of Assignee, this assignment
of the Collateral, and shall deliver this fully executed Assignment to Assignee.
3. Assignment
----------
1. For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Assignor hereby assigns to Assignee all of her
right, title, and interest in and to the Collateral and all proceeds thereof.
2. This Assignment does not include, nor is it intended to include, a
delegation of any of Assignor's debts, liabilities, duties, or obligations as a
partner in the Partnership.
4. Further Documents
-----------------
Assignor and Assignee agree to execute, acknowledge, and deliver any
further documents and to perform any further actions in order to fulfill the
intention hereof.
5. Acceptance
----------
Assignee hereby accepts this Assignment.
"ASSIGNOR"
____________________________________
Xxxxxxx X. Xxxxxx
"ASSIGNEE"
____________________________________
Xxxxx X. Xxxxx
2
