EXHIBIT 99.16
MOUNTAINGATE
SECURITIES ACCOUNT SECURITY AND CONTROL AGREEMENT
This SECURITIES ACCOUNT SECURITY AND CONTROL AGREEMENT dated as of this
19th day of July, 2002 (this "Agreement"), between MOUNTAINGATE LAND, L.P. a
California limited partnership (the "Grantor"), and BNY MIDWEST TRUST COMPANY,
an Illinois corporation, as securities intermediary (in such capacity, the
"Securities Intermediary") and as collateral agent (in such capacity, the
"Secured Party") under the AGC Collateral Agency Agreement (as defined in
Recital C).
RECITALS
A. American Golf Corporation, a California corporation (the "Company") is
indebted to the Bank of America, N.A. (the "Bank") pursuant to a Credit
Agreement dated as of July 30, 1996, as amended, restated or modified from time
to time, and any agreements, instruments, certificates or other documents
entered into in connection therewith (the "Credit Agreement"). The Bank agreed
to temporarily forbear from exercising its remedies under the Credit Agreement
pursuant to a Forbearance Agreement dated as of March 8, 2002 (collectively with
the Credit Agreement, the "Credit Documents").
B. The Company is indebted to the Purchasers pursuant to a Note Purchase
Agreement dated as of July 30, 1996 (as amended, restated or modified from time
to time, the "Purchase Agreement") and any agreements, instruments, certificates
or other documents entered into in connection therewith (collectively with the
Purchase Agreement, the "Purchase Documents"). The Bank and the Purchasers are
hereinafter collectively referred to as the "Secured Creditors." The Credit
Documents and the Purchase Documents are hereinafter collectively referred to as
the "Debt Documents."
C. The Company, Xxxxx X. Xxxxx, the Grantor, Golf Enterprises, Inc., Xxx
Xxxxxxx Golf, Inc., and the Secured Party, as collateral agent, have entered
into that certain Collateral Agency and Intercreditor Agreement, dated as of
even date herewith (the "AGC Collateral Agency Agreement"), which sets forth the
rights and duties of the Secured Party with respect to certain collateral for
the ratable benefit of the Secured Creditors.
D. In connection with the AGC Collateral Agency Agreement, the Grantor has
entered into (i) that certain Limited Recourse Mountaingate Guaranty, dated as
of even date herewith (the "Mountaingate Guaranty"), made by the Grantor in
favor of the Secured Party as collateral agent for the Secured Creditors and
pursuant to which the Grantor agreed to guaranty certain obligations of the
Company described therein (the "Guaranteed Obligations"), and (ii) that certain
Deed of Trust, dated as of even date herewith (the "Mountaingate Second Deed of
Trust"), between the Grantor, as trustor and Xxxxxxx Title of California, Inc.,
as trustee, for the benefit of the Secured Party, as collateral agent, pursuant
to which the Grantor agreed to secure the Mountaingate Guaranty by granting a
lien on the premises commonly known as the Mountaingate Country Club.
E. Pursuant to Section 14(a) of the AGC Collateral Agency Agreement, the
Grantor has the obligation to provide certain collateral to the Secured Party.
This Agreement is intended to govern the rights and obligations of the parties
thereto with respect to the Alternate Mountaingate Collateral (as defined below)
to the extent it is provided in cash and cash equivalents.
F. Pursuant to the AGC Collateral Agency Agreement, in consideration for the
timely delivery by the Grantor of either a letter of credit or cash and cash
equivalents in the amount of $10 million (the "Alternate Mountaingate
Collateral"), the Secured Creditors have agreed to release and reconvey the
Mountaingate Second Deed of Trust.
G. To the extent that the Grantor provides the Alternate Mountaingate
Collateral in the form of cash and cash equivalents, Grantor desires to deposit
such cash and cash equivalents in an account to be established and maintained by
the Securities Intermediary for the Grantor (the "Account").
H. Terms defined in Article 8 or 9 of the Uniform Commercial Code in effect
in the State of California ("California UCC") are used in this Agreement as such
terms are defined in such Article 8 or 9. Capitalized terms used herein but not
otherwise defined shall have the meanings given to them in the AGC Collateral
Agency Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements contained herein, the parties hereto hereby agree as follows:
AGREEMENT
Section 1. The Account. The parties agree that:
(a) The Securities Intermediary maintains the Account for the Secured
Party, and all property held by the Securities Intermediary for the account of
the Secured Party is, and will continue to be, credited to the Account.
(b) The Account is a securities account. The Securities Intermediary is
the securities intermediary with respect to the property credited from time to
time to the Account. The Secured Party is the entitlement holder with respect to
the property credited from time to time to the Account.
(c) The Securities Intermediary's jurisdiction with respect to the
Account is, and will continue to be for so long as the security interest shall
be in effect, the State of California.
(d) The value of the cash and cash equivalent assets initially
deposited into the Account shall be in an amount of not less than $10 million
(the "Minimum Threshold Amount").
Section 2. Creation of Security Interest.
(a) In order to secure prompt payment and performance in full when due,
whether at stated maturity, by acceleration or otherwise of the Company's
Guaranteed
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Obligations, the Grantor hereby assigns and grants to the Secured Party for the
ratable benefit of the Secured Creditors a first priority security interest in
all of the Grantor's right, title and interest in and to the Collateral.
(b) The term "Collateral" shall consist of the Alternate Mountaingate
Collateral, the Account, all assets credited from time to time to the Account
(including any interest earned and gains realized in excess of losses suffered
by the Account due to the investment of funds deposited therein) and all
proceeds thereof. For purposes of this Agreement, the term "proceeds" includes
whatever is receivable or received when the Collateral or proceeds are sold,
collected, exchanged or otherwise disposed of, whether such disposition is
voluntary or involuntary.
Section 3. Control by Secured Party.
(a) Except as provided in Section 3(b), the Securities Intermediary
will not comply with any notifications originated by the Grantor directing the
Securities Intermediary to transfer or redeem any property in the Account (each
an "Entitlement Order").
(b) Subject to Section 12(a), and so long as the Secured Party has not
received a Notice of Exclusive Control (as defined below), the Securities
Intermediary will comply with all Entitlement Orders from the Grantor directing
that any cash or cash equivalents held in the Account maintained hereunder be
invested, at the Grantor's risk, in Permitted Investments (as defined below).
(i) As used herein, "Permitted Investments" shall mean the
following: (1) securities issued or directly and fully guaranteed or insured
by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof) having a maturity not exceeding one year from
the date of issuance; (2) time deposits and certificates of deposit of any
Bank or any domestic commercial bank rated at least A-1 or the equivalent
thereof by S&P or at least P-1 or the equivalent thereof by Xxxxx'x
Investors Service, Inc. ("Moody's") having capital and surplus in excess of
$500,000,000 and having a maturity not exceeding 90 days from the date of
acquisition; (3) fully secured repurchase obligations with a term of not
more than seven days for underlying securities of the types described in
clause (1) above entered into with any bank meeting the qualifications
established in clause (2) above, and (4) money market mutual funds whose
investment criteria are substantially similar to items (1) through (3) of
this definition.
(ii) Permitted Investments purchased upon the direction of the
Grantor under the provisions of this Agreement shall be deemed at all times
to be a part of the Account and shall be deemed to constitute funds on
deposit in and credited to such Account, and the income or interest earned
and gains realized in excess of losses suffered by the Account due to the
investment of funds deposited therein shall be credited and retained in the
Account in respect of which the Permitted Investment was purchased, except
as expressly provided by the terms hereof.
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(iii) All earnings on funds in the Account maintained hereunder
shall be credited to Grantor for tax reporting purposes. The Securities
Intermediary shall provide to the Grantor a statement with respect to all
interest earned on the Account as of the close of each calendar year for
which income is earned on the Account. The Grantor shall provide the
Securities Intermediary with its taxpayer identification number, documented,
to the extent necessary, by an appropriate executed Form W-9, upon execution
of this Agreement. The Form W-9 shall, to the extent necessary, be renewed
as required by the Internal Revenue Service of the United States and
provided to the Securities Intermediary.
(iv) Permitted Investments credited to the Account shall be valued
at their then current market value.
(c) Subject to Section 2(d), and so long as the account balance in the
Account is equal to or greater than the Minimum Threshold Amount, the Securities
Intermediary shall on a monthly basis distribute to the Grantor all interest and
regular cash dividends on property in the Account.
(d) Upon the occurrence and continuation of a Major Default, then upon
the written direction of the Directing Creditors the Secured Party shall deliver
to the Securities Intermediary a notice from the Secured Party that the Secured
Party will exercise exclusive control over the Account (a "Notice of Exclusive
Control"), whereupon the Securities Intermediary will cease (i) distributing
monthly interest and cash dividend income as set forth in Section 2(c) and (ii)
complying with Entitlement Orders or other directions relating to the Account
originated by the Grantor. The Securities Intermediary will thereupon take all
instructions from the Secured Party relating to the investment of the Collateral
in Permitted Investments.
(e) Upon (1) the occurrence of a Specified Event and (2) the occurrence
and continuation of a Major Default, the Grantor will relinquish all right,
title and interest in all assets credited at that time to the Account, and the
Secured Party at its sole discretion may deliver to the Securities Intermediary,
and the Securities Intermediary shall comply with, a notice directing the
disposition of such assets.
Section 4. Priority of Secured Party's Security Interest.
(a) The Securities Intermediary subordinates in favor of the Secured
Party any security interest, lien, or right of setoff it may have, now or in the
future, against the Account or property in the Account, except that the
Securities Intermediary will retain its prior lien on property in the Account to
secure payment for property purchased for the Account and normal commissions and
fees for the Account.
(b) The Securities Intermediary will not agree with any third party
that the Securities Intermediary will comply with Entitlement Orders originated
by the third party.
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Section 5. Statements, Confirmations, and Notices of Adverse Claims.
(a) The Securities Intermediary will send copies of all statements and
confirmations for the Account simultaneously to the Grantor and the Secured
Party.
(b) When the Securities Intermediary knows of any claim or interest in
the Account or any property credited to the Account other than the claims and
interests of the parties referred to in this Agreement, the Securities
Intermediary will promptly notify the Secured Party and the Grantor of such
claim or interest.
Section 6. The Securities Intermediary's Responsibility.
(a) Except for permitting a withdrawal, delivery, or payment in
violation of Section 3, the Securities Intermediary will not be liable to the
Secured Party for complying with Entitlement Orders or other directions
concerning the Account from the Grantor that are received by the Securities
Intermediary before the Securities Intermediary receives and has a reasonable
opportunity to act on a Notice of Exclusive Control.
(b) The Securities Intermediary will not be liable to the Grantor for
complying with a Notice of Exclusive Control or other direction concerning the
Account originated by the Secured Party, even if the Grantor notifies the
Securities Intermediary that the Secured Party is not legally entitled to issue
the Notice of Exclusive Control or Entitlement Order or such other direction
unless the Securities Intermediary takes the action after it is served with an
injunction, restraining order, or other legal process enjoining it from doing
so, issued by a court of competent jurisdiction, and had a reasonable
opportunity to act on the injunction, restraining order or other legal process.
(c) This Agreement does not create any obligation of the Securities
Intermediary except for those expressly set forth in this Agreement and in Part
5 of Article 8 of the California UCC. In particular, the Securities Intermediary
need not investigate whether the Secured Party is entitled under the Secured
Party's agreements with the Grantor to give an Entitlement Order or other
direction concerning the Account or a Notice of Exclusive Control. The
Securities Intermediary may rely on notices and communications it believes given
by the appropriate party.
Section 7. Representations and Warranties.
(a) The Grantor is the sole owner of, and has the power to transfer the
Alternate Mountaingate Collateral to the Secured Party, and except as created by
this Agreement, its title to the Alternate Mountaingate Collateral is free of
all adverse claims, Liens, security interests and restrictions on transfer or
pledge.
(b) The execution, delivery and performance of this Agreement by the
Grantor and the consummation of the transactions contemplated hereby will not:
(i) conflict with or result in a breach of any of the terms and provisions of,
or constitute a default (or an event which with the giving of notice or the
lapse of time or both would constitute a default) under, any agreement,
indenture, mortgage, deed of trust, equipment lease, instrument or other
document to which the Grantor is a party; or (ii) conflict with any law, order,
rule or regulation
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of any court or any federal or state government, regulatory body or
administrative agency, or any other governmental body having jurisdiction over
the Grantor or its properties.
(c) The Grantor has full power, authority, and legal right and has
obtained all approvals and consents necessary, to execute, deliver and perform
this Agreement and the transactions contemplated hereby.
(d) This Agreement constitutes a legal, valid and binding obligation of
the Grantor, enforceable against the Grantor in accordance with its terms, and
this Agreement grants to the Secured Party for the ratable benefit of each
Secured Creditor a valid, first-priority and perfected and enforceable lien on
the Collateral.
(e) Except for security interests in favor of the Secured Creditors
granted in connection herewith, no person has (or, in the case of after-acquired
Collateral, at the time the Grantor acquires rights therein, will have) any
right, title, claim or interest (by way of security interest or other lien or
charge) in, against or to the Collateral.
Section 8. Covenants.
(a) The Grantor covenants and agrees as follows:
(i) Except for the grant of the security interest described herein,
the Grantor shall not grant a security interest or lien or charge in,
against or to the Collateral.
(ii) The Grantor shall do all acts that may be reasonably necessary
to maintain, preserve and protect the Collateral and to preserve the Grantor
as sole owner of the Collateral.
(iii) The Grantor shall pay promptly when due all material taxes,
assessments, charges, encumbrances and Liens now or hereafter imposed upon
or affecting any Collateral.
(b) The Secured Party covenants and agrees that the Secured Party
shall not release, substitute, exercise any right or remedy, or take any
other action with respect to any Collateral without the prior written
consent of the Required Creditors (as defined in the AGC Collateral Agency
Agreement). The Secured Party shall give notice to each Secured Creditor of
any substantial or material action taken by the Secured Party with respect
to the Collateral promptly after taking such action.
(c) Except as provided herein, the Grantor agrees that the Secured
Party and the Securities Intermediary shall have the same rights and
protections as those provided to the Collateral Agent as set forth in the
AGC Collateral Agency Agreement.
Section 9. Indemnity. The Grantor will indemnify the Securities
Intermediary and its officers, directors, employees and agents against claims,
liabilities and expenses arising out of this Agreement (including, without
limitation, reasonable attorney's fees and disbursements), except to the extent
the claims, liabilities or expenses are caused by the
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Securities Intermediary's gross negligence or willful misconduct as found by a
court of competent jurisdiction in a final, non-appealable judgment.
Section 10. Remedies. Upon (1) the occurrence of a Specified Event and
(2) the occurrence and continuation of a Major Default, then upon notice thereof
to the Securities Intermediary, in addition to all rights and remedies available
to the Secured Party under any other agreement, the Secured Party may do any one
or more of the following:
(a) Foreclose or otherwise enforce the Secured Party's security
interest in the Collateral and distribute the proceeds thereof in any manner
permitted by law or otherwise provided for in this Agreement and pursuant to
Section 15 of the AGC Collateral Agency Agreement;
(b) Recover from the Grantor all reasonable costs and expenses,
including, without limitation, reasonable attorneys' fees (including the
allocated costs of inside counsel), incurred or paid by the Secured Party in
exercising any right, power or remedy provided by this Agreement or by law; and
(c) Upon any sale or other disposition of the Collateral pursuant to
this Agreement, the Secured Party shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral or portion thereof so sold or
disposed of. Each purchaser at any such sale or other disposition (including the
Secured Party or the Bank or the Purchasers) shall hold the Collateral free from
any claim or right of whatever kind, including any equity or right of redemption
of the Grantor, and the Grantor specifically waives (to the extent permitted by
law) all rights of redemption, stay or appraisal which he has or may have under
any rule of law or statute now existing or hereafter adopted. The Secured Party
shall not be required to marshal any Collateral with respect thereto in any
particular order, and the Grantor hereby waives any and all rights thereof.
Section 11. Further Assurances. The Grantor shall procure, execute and
deliver from time to time any endorsements, notifications, registrations,
assignments, financing statements, and other writings deemed reasonably
necessary by the Secured Party to perfect, maintain and protect the Secured
Party's security interest in the Collateral and the priority thereof; and to
take such other actions as the Secured Party may reasonably request or as is
otherwise reasonably necessary to protect the value of the Collateral and of the
Secured Party's security interest in the Collateral.
Section 12. Termination; Survival.
(a) Upon the Security Termination Date (as defined in the AGC
Collateral Agency Agreement), the Secured Party shall terminate this Agreement
by notice thereof to the Grantor and the Securities Intermediary; whereupon,
this Agreement will immediately terminate and all collateral not previously
applied to meet the Secured Obligations shall be returned to Grantor.
(b) The Securities Intermediary may terminate this Agreement on 60
days' prior notice to the Secured Party and the Grantor, provided, that before
such termination the Securities Intermediary and the Grantor shall make
arrangements to transfer the property in the
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Account to another securities intermediary that shall have executed, together
with the Grantor, a control agreement in favor of the Secured Party in respect
of such property in substantially the form of this Agreement or otherwise in
form and substance satisfactory to the Secured Party.
(c) Sections 6, 7 and 9 will survive termination of this Agreement.
Section 13. Governing Law. This Agreement and the Account will be
governed by the law of the State of California. The Securities Intermediary and
the Grantor may not change the law governing the Account without the Secured
Party's express prior written agreement.
Section 14. Entire Agreement. This Agreement is the entire agreement,
and supersedes any prior agreements, and contemporaneous oral agreements, of the
parties concerning its subject matter.
Section 15. Amendments. No amendment of, or waiver of a right under,
this Agreement will be binding unless it is in writing and signed by the party
to be charged.
Section 16. Financial Assets. The Securities Intermediary agrees with
the Secured Party and the Grantor that, to the fullest extent permitted by
applicable law, all property credited from time to time to the Account will be
treated as financial assets under Article 8 of the California UCC.
Section 17. Notices. A notice or other communication to a party under
this Agreement will be in writing (except that Entitlement Orders may be given
orally), will be sent to the party's address set forth under its name below or
to such other address as the party may notify the other parties and will be
effective on receipt.
Section 18. Binding Effect. This Agreement shall become effective when
it shall have been executed by the Grantor, the Secured Party and the Securities
Intermediary, and thereafter shall be binding upon and inure to the benefit of
the Grantor, the Secured Party and the Securities Intermediary and their
respective successors and assigns.
Section 19. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of an original executed counterpart of
this Agreement.
Section 20. Limited Recourse. NOTWITHSTANDING ANY OTHER PROVISION OF
THIS AGREEMENT TO THE CONTRARY, THE OBLIGATIONS OF THE GRANTOR HEREUNDER ARE
LIMITED TO, AND THE RIGHTS OF THE SECURED PARTY AND SECURED INTERMEDIARY
HEREUNDER SHALL BE RECOURSE SOLELY TO, ANY AMOUNTS DEPOSITED INTO THE ACCOUNT AS
DEFINED HEREIN.
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IN WITNESS WHEREOF, the parties hereto have caused this Mountaingate
Securities Account Security and Control Agreement to be executed by their
respective officers thereunto duly authorized, as of the date first above
written.
MOUNTAINGATE LAND, L.P.,
a California limited partnership
By: Mountaingate Land, Inc.
a California corporation
Its: General Partner
By:/s/ Xxxxx X. Xxxxx
-------------------------------
Name: Xxxxx X. Xxxxx
Title: President
Address:
0000 00xx Xxxxxx
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
BNY MIDWEST TRUST COMPANY,
an Illinois corporation, as
Secured Party
By:/s/ Xxxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Assistant Treasurer
Address:
0 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Structured Finance Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BNY MIDWEST TRUST COMPANY,
an Illinois corporation, as
Securities Intermediary
By:/s/ Xxxxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Assistant Treasurer
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MOUNTAINGATE SECURITIES ACCOUNT SECURITY AND CONTROL AGREEMENT
