Exhibit 5
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Agreement") dated May 24, 2004, is
entered into by and between The Madison Avenue Capital Group II Trust, a
trust formed under the laws of Colorado, Madison Liquidity Investors 104,
LLC, Madison Liquidity Investors 100, LLC, Madison Liquidity 112, LLC,
Madison Liquidity Investors 120, LLC, Windy City Investment, LLC, Madison
Liquidity Investors 103, LLC, Madison Liquidity Investors 111, LLC, Madison
Liquidity Investors 119, LLC (all Delaware limited liability companies,
unless otherwise indicated), as grantors (each a "Grantor", collectively
the "Grantors"), and KALMIA INVESTORS, LLC, a Delaware limited liability
company, as secured party (the "Secured Party").
W I T N E S S E T H T H A T :
WHEREAS:
The Grantors, Madison Capital Management, LLC, a Nevada limited
liability company ("Holdco") and the Secured Party have entered into a
Purchase Agreement dated May 24, 2004 (the "Purchase Agreement"), whereby,
inter alia, each Grantor has transferred to the Secured Party all of such
Grantor's respective rights, title and interest in, and claims to, any
profits and losses of Westin Hotels Limited Partnership (the
"Partnership"), cash distributions, voting rights and other benefits of any
nature whatsoever, distributable or allocable to 10,512 Units, in the
aggregate, sold pursuant to the Purchase Agreement under the partnership
agreement of the Partnership, and any rights attributable to claims,
damages, recoveries, including recoveries from class action lawsuits, and
causes of action accruing to the ownership of such Units, and the proceeds
thereof (the "Collateral") (Collateral not including any proceeds due to
the Grantors from the sale of the Units pursuant to the Purchase
Agreement).
(A) As a condition to the Secured Party's purchase of the Units
and payment therefor, the Secured Party requires that each Grantor
individually and not jointly executes and delivers to the Secured Party
this Agreement and grants the security interests contemplated hereby in
order to create in favor of the Secured Party a valid and perfected
security interest, as that term is defined in the Uniform Commercial Code
of Delaware (the "Code"), in the Collateral, as security for the payment
and performance of all of the individual obligations of such Grantor
jointly and severally with Holdco, not jointly or severally with any of the
other Grantors, under or in connection with the Purchase Agreement,
including the obligation to cause the general partner of the Partnership to
transfer the Units to the name of the Secured Party and registration of the
Units in the name of the Secured Party on the books of the Partnership
(such obligations of each individual Grantor and Holdco are hereinafter
referred to as the "Secured Obligations").
NOW, THEREFORE, in consideration of the premises, the parties
hereby agree as follows:
1. Grant of Security. As security for the Secured Obligations,
each Grantor individually, as legal and beneficial owner, hereby assigns,
pledges, transfers and sets over to the Secured Party and its successors
and assigns, and hereby grants to the Secured Party a security interest in,
all of such Grantor's right, title and interest in and to the Collateral.
2. Security for Secured Obligations. This Agreement secures the
payment and performance of all of the Secured Obligations of each Grantor
individually and is not intended to cause any one Grantor to secure the
payment or performance obligations of any other Grantor.
3. Negative Pledge. Each Grantor does hereby, individually and
not jointly, warrant and represent that it has not assigned or pledged, and
hereby covenants that it will not assign or pledge so long as this
Assignment shall remain in effect, any of its respective right, title or
interest in the whole or any part of the Collateral hereby assigned to
anyone other than the Secured Party, and it will take or omit to take any
action, the taking or omission of which might result in an alteration or
impairment of the rights hereby assigned or any of the rights created in
this Agreement; and such Grantor does hereby irrevocably appoint and
constitute the Secured Party as such Grantor's true and lawful
attorney-in-fact with full power (in the name of such Grantor or otherwise)
to ask, require, demand, receive, compound and give acquittance for any and
all moneys and claims for moneys assigned hereby, to endorse any checks or
other instruments or orders in connection therewith, to file any claims or
take any action or institute any proceedings which the Secured Party may
deem to be necessary or advisable in the premises and to file any and all
Uniform Commercial Code (the "Code") financing statements or renewals
thereof in connection with this Agreement without the signature of such
Grantor which the Secured Party may deem to be necessary or advisable in
order to perfect or maintain the security interest granted hereby.
4. Application of Proceeds. All moneys collected or received from
time to time by the Secured Party pursuant to this Agreement shall be dealt
with by the Secured Party in its sole discretion.
5. Remedies. The security constituted by this Agreement shall be
enforceable against a Grantor if a default in the Secured Obligations of
such Grantor shall have occurred and be continuing with respect to such
Grantor. (Such Grantor is hereinafter referred to as a "Defaulted
Grantor.") It is the express understanding of the parties hereto that a
default in the Secured Obligation of one Defaulted Grantor PER SE shall not
permit the Secured Party to enforce any rights with respect to any other
Grantor or the Collateral of any other Grantor.
In such case, the Secured Party may exercise, in respect of the
Collateral of a Defaulted Grantor, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights and
remedies of a secured party on default under the Code (whether or not the
Code shall be applied by the court in the jurisdiction in which enforcement
of the security interest contained herein is sought) and also may (i)
require the Defaulted Grantor to, and the Grantors hereby agree that, at
such time as they become a Defaulted Grantor, they will at their own
expense and upon request of the Secured Party forthwith, assemble all or
any part of their Collateral as directed by the Secured Party and make it
available to the Secured Party, at a place to be designated by the Secured
Party which is reasonably convenient to the parties, and (ii) without
notice, except as specified below, sell the Defaulted Grantor's Collateral
or any part thereof in one or more parcels at public or private sale, at
any of the Secured Party's offices or elsewhere, for cash, and at such
price or prices and upon such other terms as the Secured Party may deem
commercially reasonable. The Secured Party shall give the Defaulted Grantor
at least ten days' notice of the time and place of any public sale. The
Grantors agree that, should they become a Defaulted Grantor, ten days'
notice of any such sale is commercially reasonable notification. The
Secured Party shall not be obligated to make any sale of the Collateral
regardless of notice of sale having been given. The Secured Party may
adjourn any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further notice,
be made at the time and place to which it was so adjourned.
6. Non-Interference with Remedies; Specific Performance. (a) Each
Grantor individually agrees that following the occurrence and during the
continuance of a default by such Grantor in its respective Secured
Obligations, it will not, at any time, pledge, claim or take the benefit of
any appraisal, valuation, stay, extension, moratorium or redemption law now
or hereafter in force in order to prevent or delay the enforcement of this
Agreement, or the absolute sale of the whole or any part of such Grantor's
Collateral or the possession thereof by any purchaser at any sale
hereunder, and each Grantor individually waives the benefit of all such
laws to the extent they lawfully may do so. The Grantors agree they will
not interfere with any right, power or remedy of the Secured Party provided
for in this Agreement now or hereafter existing at law or in equity or by
statute or otherwise, or with the exercise or beginning of the exercise by
the Secured Party of any one or more of such rights, powers or remedies.
(b) The Grantors agree that a breach of any of the agreements or
covenants contained in this Agreement will cause irreparable injury to the
Secured Party, that the Secured Party has no adequate remedy at law in
respect of such breach and, as a consequence, agrees that each and every
agreement and covenant of a Grantor contained in this Agreement shall be
specifically enforceable against such Grantor and only such Grantor,
individually and not jointly, and the Grantors hereby waive and agree not
to assert any defenses against an action for specific performance of such
agreements or covenant.
7. Further Assurances. The Grantors agree that at any time and
from time to time, upon the written request of the Secured Party, the
Grantors will promptly and duly execute and deliver any and all such
further instruments and documents as the Secured Party may deem desirable
in obtaining the full benefits of this Agreement and of the rights and
powers herein granted.
8. Remedies Cumulative and Not Exclusive; No Waiver. Each and
every right, power and remedy herein given to the Secured Party shall be
cumulative and shall be in addition to every other right, power and remedy
of the Secured Party now or hereafter existing at law, in equity or by
statute, and each and every right, power and remedy, whether herein given
or otherwise existing, may be exercised from time to time, in whole or in
part, and as often and in such order as may be deemed expedient by the
Secured Party, and the exercise or the beginning of the exercise of any
right, power or remedy shall not be construed to be a waiver of the right
to exercise at the same time or thereafter any other right, power or
remedy. No delay or omission by the Secured Party in the exercise of any
right or power or in the pursuance of any remedy accruing upon any breach
or default by any person shall impair any such right, power or remedy or be
construed to be a waiver of any such right, power or remedy or to be an
acquiescence therein; nor shall the acceptance by the Secured Party of any
security or of any payment of or on account of any of the amounts due from
any person under or in connection with the Purchase Agreement or any
document delivered in connection therewith and maturing after any breach or
default or of any payment on account of any past breach or default be
construed to be a waiver of any right to take advantage of any future
breach or default or of any past breach or default not completely cured
thereby.
9. Invalidity. If any provision of this Agreement shall at any
time for any reason be declared invalid, void or otherwise inoperative by a
court of competent jurisdiction, such declaration or decision shall not
affect the validity of any other provision or provisions of this Agreement,
or the validity of this Agreement as a whole. In the event that it should
transpire that by reason of any law or regulation, or by reason of a ruling
of any court, or by any other reason whatsoever, the Agreement herein
contained is either wholly or partly defective, the Grantors hereby
undertake to furnish the Secured Party with an alternative Agreement or
alternative security and/or to do all such other acts as, in the sole and
reasonable opinion of the Secured Party, shall be required in order to
ensure and give effect to the full intent of this Agreement.
10. Continuing Security. It is declared and agreed that the
security created by this Agreement in the Collateral of a Grantor shall be
held by the Secured Party as a continuing security for performance of all
the Secured Obligations of such Grantor and no other Grantor and that the
security so created shall not be satisfied by an intermediate satisfaction
of any part of such Grantor's obligations and that the security so created
shall be in addition to and shall not in any way be prejudiced or affected
by any collateral or other security of a Grantor now or hereafter held by
the Secured Party for all or any part of the moneys hereby secured.
11. Security Interest Absolute. All rights of the Secured Party
and the security interest granted hereunder, and all Secured Obligations,
shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of the Purchase
Agreement, or any other agreement or instrument
relating thereto;
(ii) any change in the time, manner of, or in any other term
of, all or any of the obligations of any Grantor and
Holdco or any other person under or in connection with
the Purchase Agreement or any other amendment or waiver
of or any consent to any departure from the Purchase
Agreement or the terms thereof; or
(iii) any other circumstances which might otherwise
constitute a defense available to, or a discharge of,
the Grantors in respect of the Secured Obligations or
this Agreement.
12. Waiver; Amendment. None of the terms and conditions of this
Assignment may be changed, waived, modified or varied in any manner
whatsoever unless in writing duly signed by the Secured Party and the
Grantors.
13. Notices. Notices and other communications hereunder shall be
in writing and may be sent by fax as follows:
If to the Grantors:
Madison Capital Management, LLC
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxx
Tel: 000 000 0000
Fax: 000 000 0000
Copy to:
Xxxxxxxx Xxxx
00 Xxxxxxxxxx Xxxxxx
Xxxxx Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Tel: 000 000 0000
Fax: 000 000 0000
If to the Secured Party:
Kalmia Investors, LLC
000 Xxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
Tel; 000 000 0000
Fax: 000-000-0000
or to such other address as a party shall from time to time specify in
writing to the other parties. Any notice sent by facsimile shall be
confirmed by letter dispatched as soon as practicable thereafter. Every
notice or other communication shall, except so far as otherwise expressly
provided by this Assignment, be deemed to have been received (provided that
it is received prior to 2 p.m. New York time; otherwise it shall be deemed
to have been received on the next following Business Day) in the case of a
facsimile on the date of dispatch thereof (provided further that if the
date of dispatch is not a Business Day in the locality of the party to whom
such notice or demand is sent, it shall be deemed to have been received on
the next following Business Day in such locality), and in the case of a
letter, at the time of receipt thereof.
14. Successors and Assigns. Whenever in this Agreement reference
is made to any person, such reference shall be deemed to include the
successors and assigns of such person.
15. Waiver of Jury Trial. IT IS MUTUALLY AGREED BY AND BETWEEN
THE PARTIES HERETO THAT EACH OF THEM HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY EITHER PARTY HERETO AGAINST
THE OTHER PARTY HERETO ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY
WAY CONNECTED WITH THIS AGREEMENT AND ANY SECURITY DOCUMENT TO WHICH THE
GRANTORS OR THE SECURED PARTY MAY BE A PARTY OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE DELAWARE WITHOUT ANY
REFERENCE TO CONFLICTS OF LAWS PRINCIPLES OF THAT STATE.
17. Headings. In this Assignment, Section headings are inserted
for convenience of reference only and shall be ignored in the
interpretation hereof.
18. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be deemed to be duplicate originals and
which shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed on the day and year first above written.
THE MADISON AVENUE CAPITAL GROUP II
TRUST
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx
Managing Director
MADISON LIQUIDITY INVESTORS 104, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
MADISON LIQUIDITY INVESTORS 100, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
MADISON LIQUIDITY INVESTORS 112, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
MADISON LIQUIDITY INVESTORS 120, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
WINDY CITY INVESTMENT, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
MADISON LIQUIDITY INVESTORS 103, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
MADISON LIQUIDITY INVESTORS 111, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
MADISON LIQUIDITY INVESTORS 119, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
MADISON CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Xxxxx X. Xxxxxx
Managing Director
KALMIA INVESTORS, LLC
By: Smithtown Bay, LLC
Manager
By: Global Capital Management, Inc.
Manager
By: /s/ Xxxxxx Xxxxxxx
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Xxxxxx Xxxxxxx
Vice President
21919.0001 #479864v3
