SECURITY AGREEMENT
(Collateral Pledge Agreement)
Date: January 15, 1998
Debtor: THE XXXXXXXX INVESTMENT FUND, L.P.
Business
Or Residence Suite 300
Address: 000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxx, Xxxxx
& Zip Code: Morrow, Ga., 30260
Secured Party: KILLEARN, INC.
Address: 000 Xxxxx'x Xxxxxxx Xxx
Xxxx, Xxxxx
& Zip Code: Stockbridge, Ga., 30281
1. SECURITY INTEREST AND COLLATERAL.
To secure the debt, liability or obligation of the Debtor to secured party
evidence by the following: Promissory note dated January 15, 1998 in the
amount of $2,092,712.50 between the parties and any extensions, renewals or
replacements thereof therein referred to as the "Obligations").
Debtor hereby grants Secured Party a security interest (herein called the
"Security Interest") in the property owned by Debtor and held by Secured
Party that is described as follows: 288,650 shares of the common stock of
KILLEARN PROPERTIES, INC. together with all rights in connection with such
property (herein called the "Collateral").
2. REPRESENTATIONS, WARRANTIES AND COVENANTS. DEBTOR REPRESENTS,
WARRANTS AND COVENANTS THAT:
(a) Debtor will duly endorse, in blank, each and every instrument
constituting Collateral by signing on said instrument or by signing a
separate document of assignment or transfer, if required by Secured Party.
(b) Debtor is the owner of the Collateral free and clear of all
liens, encumbrances, security interests and restrictions, except the Security
Interest and any restrictive legend appearing on any instrument constituting
Collateral.
(c) Debtor will keep the Collateral free and clear of all liens,
encumbrances and security interests, except the Security Interest.
(d) Debtor will pay, when due, all taxes and other governmental
charges levied or assessed upon or against any Collateral.
(e) At any time, upon request by Secured Party, Debtor will
deliver to Secured Party all notices, financial statements, reports or other
communications received by Debtor as an owner or holder of the Collateral.
(f) Debtor will upon receipt deliver to Secured Party in pledge
ass additional Collateral all securities distributed on account of the
Collateral such as stock dividends and securities resulting from Stock
splits, reorganizations and recapitalizations.
THIS AGREEMENT CONTAINS ADDITIONAL PROVISIONS SET FORTH ON PAGES 2 AND 3
HEREOF, ALL OF WHICH ARE MADE A PART HEREOF.
DEBTOR'S NAME:
THE XXXXXXXX INVESTMENT FUND, L. P.
By: /s/ XXXXX X. XXXXX
------------------------------------
Title: President of G. P.
---------------------------------
ADDITIONAL PROVISIONS
3. RIGHTS OF SECURED PARTY. Debtor agrees that Secured Party may at
any time, whether before or after the occurrence of an Event of Default and
without notice or demand of any kind, (i) notify the obligor on or issuer of
any Collateral to make payment to Secured Party of any amounts due or
distributable thereon, (ii) in Debtor's name or Secured Party's name enforce
collection of any Collateral by suit or otherwise, or surrender, release or
exchange all or any part of it, or compromise, extend or renew for any period
any obligation evidenced by the Collateral, (iii) receive all proceeds of the
Collateral, and (iv) hold any increase or profits received from the
Collateral as additional security for the Obligations, except that any money
received from the Collateral shall, at Secured Party's option, be applied in
reduction of the Obligations, in such order of application as Secured Party
may determine, or be remitted to Debtor.
4. EVENTS OF DEFAULT. Each of the following occurrences shall
constitute an event of default under this Agreement (herein called "Event of
Default"); (i) Debtor shall fail to pay any or all of the Obligations when
due or (if payable on demand) on demand, or shall fail to observe or perform
any covenant or agreement herein binding on it; (ii) any representation or
warranty by Debtor set forth in this Agreement or made to Secured Party in
any financial statements or reports submitted to Secured Party by or on
behalf of Debtor shall prove materially false or misleading; (iii) a
garnishment summons or a writ of attachment shall be issued against or served
upon the Secured Party for the attachment of any property of the Debtor or
any indebtedness owing to Debtor; (iv) Debtor or any guarantor of any
Obligation shall (A) be or become insolvent (however defined); (B)
voluntarily file, or have filed against it involuntarily, a petition under
the United States Bankruptcy Code; or (C) if a corporation, partnership or
organization, be dissolved or liquidated or, if a partnership, suffer the
death of a partner or, if an individual, die; or (D) go out of business; (v)
Secured Party shall in good faith believe that the value then realizable by
collection or disposition of the Collateral, after deduction of expenses of
collection and disposition, is less than the aggregate unpaid balance of all
Obligations then outstanding; (vi) Secured Party shall in good faith believe
that the prospect of due and punctual payment of any or all of the
Obligations is impaired.
5. REMEDIES UPON EVENT OF DEFAULT. Upon the occurrence of an Event of
Default and at any time thereafter, Secured Party may exercise any one or
more of the following rights or remedies: (i) declare all unmatured
Obligations to be immediately due and payable, and the same shall thereupon
be immediately due and payable, without presentment or other notice or
demand; (ii) exercise all voting and other rights as a holder of the
Collateral; (iii) exercise and enforce any or all rights and remedies
available upon default to a secured party under the Uniform Commercial Code,
including the right to offer and sell the Collateral privately to purchasers
who will agree to take the Collateral for investment and not with a view to
distribution and who will agree to the imposition of restrictive legends on
the certificates representing the Collateral, and the right to arrange for a
safe which would otherwise qualify as exempt from registration under the
Securities Act of 1933; and if notice to Debtor of any intended disposition
of the Collateral or any other intended action is required by law in a
particular instance, such notice shall be deemed commercially reasonable if
given at least 10 calendar days prior to the date of intended disposition or
other action; (iv) exercise or enforce any or all other rights or remedies
available to Secured Party by law or agreement against the Collateral,
against Debtor or against any other person or property. Upon the occurrence
of the Event of Default described in Section 4(iv)(B), all Obligations shall
be immediately due and payable without demand or notice thereof.
6. MISCELLANEOUS. Any disposition of the Collateral is the manner
provided in Section 5 shall be deemed commercially reasonable. This
Agreement can be waived, modified, amended, terminated or discharged, and the
Security Interest can be released, only explicitly in a writing signed by
Secured Party. A waiver signed by Secured Party shall be effective only in
the specific instance and for the specific purpose given. Mere delay or
failure to act shall not preclude the exercise or enforcement of any of
Secured Party's rights or remedies. All rights and remedies of Secured Party
shall be cumulative and may be exercised singularly or concurrently, at
Secured Party's option, and the exercise or enforcement of any one such right
or remedy shall neither be a condition to nor bar the exercise or enforcement
of any other. All notices to be given to Debtor shall be deemed sufficiently
given if delivered or mailed by registered or certified mail, postage
prepaid, to Debtor at its address set forth above or at the most recent
address shown on Secured Party's records. Secured Party's duty of care with
respect to Collateral in its possession (as imposed by law) shall be deemed
fulfilled if Secured Party exercises reasonable care in physically
safekeeping such Collateral or, in the case of Collateral in the custody or
possession of a bailee or other third person, exercises reasonable care in
the selection of the bailee or other third person, and Secured Party need not
otherwise preserve, protect, insure or care for any Collateral. Secured Party
shall not be obligated to preserve any rights Debtor may have against prior
parties, to exercise at all or in any particular manner any voting rights
which may be available with respect to any Collateral, to realize on the
Collateral at all or in any particular manner or order, or to apply any cash
proceeds of Collateral in any particular order of application. Debtor will
reimburse Secured Party for all expenses (including reasonable attorney's
fees and legal expenses) incurred by Secured Party in the protection, defense
or enforcement of the Security Interest, including expenses incurred in any
litigation or bankruptcy or insolvency proceedings. This Agreement shall be
binding upon and inure to the benefit of Debtor and Secured Party and their
respective heirs, representatives, successors and assigns and shall take
effect when signed by Debtor and delivered to Secured Party, and Debtor
waives notice of Secured Party's acceptance hereof. This Agreement shall be
governed by laws of the state in which it is executed and, unless the context
otherwise requires, all terms used herein which are defined in Articles 1 and
9 of the Uniform Commercial Code, as in effect in said state, shall have the
meanings therein stated. If any provision or application of this Agreement
is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications which can
be given effect, and this Agreement shall be construed as if the unlawful or
unenforceable provision or application had never been contained herein or
prescribed hereby. All representations and warranties contained in this
Agreement shall survive the execution,
delivery and performance of this Agreement and the creation and payment of
the Obligations. If this Agreement is signed by more than one person as
Debtor, the term "Debtor" shall refer to each of them separately and to both
or all of them jointly, all such persons shall be bound both severally and
jointly with the other(s); and the Obligations shall include any debts,
liabilities and obligations owed to Secured Party by a Debtor solely or by
both or several or all Debtors jointly or jointly and severally, and all
property described in Section 1 shall be included as part of the Collateral,
whether it is owned jointly by both or all Debtors or is owned in whole or in
part by one (or more) of them.
