EXHIBIT 99.13
EXECUTION VERSION
SECURITY AGREEMENT
This SECURITY AGREEMENT (this "AGREEMENT") is dated as of July 19, 2002
and entered into by and among AMERICAN GOLF CORPORATION, a California
corporation ("DEBTOR" or "GRANTOR") and BNY MIDWEST TRUST COMPANY, an Illinois
corporation, as collateral agent for the ratable benefit of Bank of America,
N.A. ("BANK") and Purchasers (as defined below) (in such capacity, "SECURED
PARTY").
RECITALS
WHEREAS, pursuant to a Restructuring Agreement and Limited Waiver,
dated as of July 1, 2002, among Grantor, Bank and Purchasers (as defined
therein) and various certificates, instruments and documents delivered in
connection therewith (collectively, the "RESTRUCTURING AGREEMENT"), Grantor has
requested Bank and Purchasers (collectively, "CREDITORS") to restructure the
indebtedness owing pursuant to their respective Debt Documents (as defined
therein) and waive certain events of default existing thereunder. Unless
otherwise defined herein, all capitalized terms used in this Agreement shall
have the meanings ascribed to such terms in the Restructuring Agreement; and
WHEREAS, each Creditor is willing to enter into the Restructuring
Agreement, upon the terms and subject to the conditions thereof, including,
without limitation, the execution and delivery of this Agreement to Secured
Party and the grant of the security interest contemplated hereby.
NOW, THEREFORE, Debtor hereby agrees with Secured Party as follows:
SECTION 1. GRANT OF SECURITY.
(a) Debtor hereby grants to Secured Party a security interest in all of
Debtor's right, title and interest in and to the following, in each case whether
now or hereafter existing, whether tangible or intangible, or in which Grantor
now has or hereafter acquires an interest and wherever the same may be located
(collectively, the "COLLATERAL"): (i) all of Debtor's right, title and interest
in and to that certain Management Services Agreement, dated as of July 30, 1996,
between Debtor and GEI; (ii) all proceeds, products, rents and profits (the
"PROCEEDS") thereof or therefrom, including, but not limited to, accounts,
accounts receivable, cash, chattel paper, contract rights, general intangibles,
payment intangibles, installment contracts, documents, instruments,
letter-of-credit rights and promissory notes (the "ACCOUNTS") arising therefrom,
and all rights in, to and under all security agreements, leases and other
contracts securing or otherwise relating to the Accounts; (iii) all rights to
insurance and the proceeds thereof covering any of the above property; and (iv)
all now existing and hereafter acquired books, records, writings, data bases,
information and other property relating to, used or useful in connection with,
embodying, incorporating or referring to, any of the above property; provided
that the Collateral shall not include any Collateral Payments (as defined below)
owing from GEI to Debtor pursuant to the agreements described in the foregoing
clause (i) to the extent such Collateral Payments arose prior to the occurrence
of a Major Default (as defined in the Restructuring Agreement).
(b) For purposes of this Agreement, the term "PROCEEDS" includes
whatever is receivable or received when the Collateral or proceeds are sold,
exchanged, collected or otherwise disposed of, whether such disposition is
voluntary or involuntary.
(c) Each item of the Collateral listed in this Section 1 that is
defined in Articles 8 or 9 of the UCC shall have the meaning set forth in the
UCC, it being the intention of Grantor that the description of the Collateral
set forth above be construed to include the broadest range of assets.
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral assigned by Grantor is collateral security for, the prompt payment
and performance in full when due, whether at stated maturity, by required
prepayment, declaration, acceleration, demand or otherwise (including without
limitation the payment of amounts that would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code), of all Secured
Obligations of Grantor. "Secured Obligations" means the Indebtedness of Debtor
owing to Bank and Purchasers.
SECTION 3. REPRESENTATIONS AND WARRANTIES.
Grantor represents and warrants as follows:
(a) OWNERSHIP OF COLLATERAL. Except for the security interest created
by this Agreement, Grantor is the sole owner and has good and marketable title
of the Collateral, which is free and clear of any and all Liens, claims,
encumbrances, and the like.
(b) OFFICE LOCATIONS, TYPE AND JURISDICTION OF ORGANIZATION. The chief
place of business, the chief executive office and the office where Grantor keeps
its records regarding the Accounts and all originals of all chattel paper that
evidence the Accounts are, as of the date hereof, and have been for the four
month period preceding the date hereof located at the locations set forth on
Schedule 3(b), and the type (i.e. corporation, limited partnership, etc.),
jurisdiction of organization and organization number (provided by the relevant
government authority of the jurisdiction of organization) are as listed on
Schedule 3(b).
(c) NAMES. Grantor (or predecessor by merger or otherwise of Grantor)
has not, within the four month period preceding the date hereof, had a different
name from the name of Grantor listed on the signature page hereof. The exact
legal name of Grantor is as set forth on the signature page hereof.
(d) PERFECTION. The security interest in the Collateral granted to
Secured Party hereunder constitutes a valid and binding security interest in the
Collateral, securing the payment of the Secured Obligations. Upon the filing of
UCC financing statements naming Grantor as "debtor", naming Secured Party as
"secured party" and describing the Collateral in the filing offices with respect
to Grantor set forth on Schedule 3(d), the security interest in the Collateral
granted to Secured Party will constitute perfected security interest therein
prior to all other liens (except for the Permitted Encumbrances), and all
filings and other actions necessary or desirable to perfect and protect such
security interest have been duly made or taken.
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(e) AUTHORITY. 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.
(f) CONSENTS. Grantor has obtained all consents, approvals and waivers
from third parties (including governmental entities, if any) relating to the
Collateral necessary to execute and deliver this Agreement and to perform its
obligations hereunder and the transactions contemplated hereby.
(g) ENFORCEABILITY. This Agreement constitutes a legal, valid and
binding obligation of Grantor, enforceable against Grantor in accordance with
its terms, and this Agreement grants to the Secured Party a valid,
first-priority, perfected and enforceable Lien on the Collateral.
SECTION 4. FURTHER ASSURANCES.
Grantor agrees that from time to time, at the expense of Grantor,
Grantor will promptly authenticate, execute or sign and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that Secured Party may reasonably request, in order to perfect and
protect any security interest granted or purported to be granted hereby or to
enable Secured Party to exercise and enforce its rights and remedies hereunder
with respect to the Collateral. Without limiting the generality of the
foregoing, Grantor will at Secured Party's request, appear in and defend any
action or proceeding that may affect Grantor's title to or Secured Party's
security interest in all or any part of the Collateral.
Grantor hereby authorizes Secured Party to file one or more financing
or continuation statements, and amendments thereto, relative to all or any part
of the Collateral without the signature of Grantor. Grantor agrees that a
carbon, photographic or other reproduction of this Agreement or of a financing
statement authenticated, executed or signed by Grantor shall be sufficient as a
financing statement and may be filed as a financing statement in any and all
jurisdictions.
SECTION 5. CERTAIN COVENANTS OF GRANTOR.
Grantor covenants as follows:
(a) Grantor shall not sell or offer to sell, or otherwise transfer the
Collateral.
(b) Grantor shall keep the Collateral free from any adverse Lien,
security interest or encumbrance and in good order and repair and shall not
waste, destroy or dispose of the Collateral or any part thereof. Secured Party
may examine and inspect the Collateral at any reasonable time wherever located.
Debtor agrees to promptly notify Secured Party in writing of any event that
materially and adversely affects the value of the Collateral, the ability of
Debtor or Secured Party to dispose of the Collateral, or the rights and remedies
of Secured Party in relation thereto.
(c) Grantor shall notify Secured Party of any change in Grantor's name,
identity or corporate structure within 10 days of such change and within 20 days
of such change, take all
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action that may be necessary or desirable, or that Secured Party may reasonably
request, in order to perfect and protect any security interest granted or
purported to be granted hereby, or to enable Secured Party to exercise and
enforce its rights and remedies hereunder.
(d) Grantor shall give Secured Party 30 days' prior written notice of
any change in Grantor's chief place of business, chief executive office or the
office where Grantor keeps its records regarding the Accounts and all originals
of all chattel paper that evidence the Accounts or a reincorporation,
reorganization or other action that results in a change of the jurisdiction of
organization of Grantor, and within 30 days thereafter, take all action that may
be necessary or desirable, or that Secured Party may reasonably request in order
to perfect and protect any security interest granted or purported to be granted
hereby, or to enable Secured Party to exercise and enforce its rights and
remedies hereunder.
(e) Grantor shall pay promptly when due all taxes, assessments and
governmental charges or levies imposed upon, and all claims against, the
Collateral, except to the extent the validity thereof is being contested in good
faith; provided that Grantor shall in any event pay such taxes, assessments,
charges, levies or claims not later than five days prior to the date of any
proposed sale under any judgment, writ or warrant of attachment entered or filed
against Grantor or any of the Collateral as a result of the failure to make such
payment. At its option Secured Party may discharge taxes, liens, security
interests, or other encumbrances at any time levied or placed on the Collateral,
may pay for insurance on the Collateral and may pay for the maintenance and
preservation of the Collateral. Debtor agrees to reimburse Secured Party on
demand for any payment made or any expense incurred by Secured Party pursuant to
this Paragraph. Any and all sums so advanced by Secured Party for Debtor shall
bear interest at the highest lawful rate and such sum and interest shall be
secured by the Collateral and subject to this Agreement.
(f) Grantor shall (i) maintain the contracts evidencing the Collateral
in full force and effect, and (ii) not terminate or otherwise replace such
contracts.
(g) Grantor shall notify the Secured Party of any material claim made
or asserted in respect of the Collateral by any person.
(h) Upon the occurrence of a Major Default, Grantor shall, at its sole
cost and expense, take all reasonably necessary action to obtain payment, when
due and payable, of all sums due or to become due with respect to any Collateral
("COLLATERAL PAYMENTS" or a "COLLATERAL PAYMENT"), including, without
limitation, the taking of such action with respect thereto as the Secured Party
or the Required Creditors may reasonably request, or, in the absence of such
request, as Grantor may reasonably deem advisable; provided, however, upon the
occurrence of a Major Default, or if otherwise prohibited by the Restructuring
Agreement, the Grantor shall not, without the prior written consent of the
Required Creditors, grant or agree to any rebate, refund, compromise or
extension with respect to any Collateral Payment or accept any prepayment on
account thereof. Upon the request of the Secured Party at the direction of the
Directing Creditors following a Major Default, Grantor will (i) notify and
direct any party who is or might become obligated to make any Collateral
Payment, to make payment thereof to the Secured Party (or to Grantor in care of
the Secured Party) at such address as the Secured Party may designate, which
payment shall be deposited into the Collateral Proceeds Account (as
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defined in the AGC Collateral Agency Agreement); (ii) forthwith upon receipt,
transmit and deliver to the Secured Party, in the form received, all cash,
checks, drafts and other instruments for the payment of money (properly endorsed
where required so that such items may be collected by the Secured Party) which
may be received by Grantor at any time as payment on account of any Collateral
Payment that arose on or after the occurrence of such Major Default and if such
request shall be made, until delivery to the Secured Party, such items will be
held in trust for the Secured Party and will not be commingled by Grantor with
any of its other funds or property. The Secured Party is hereby authorized and
empowered to endorse the name of Grantor on any check, draft or other instrument
for the payment of money received by the Secured Party on account of any
Collateral Payment if the Secured Party reasonably believes such endorsement is
necessary or desirable for purposes of collection. Grantor will reimburse the
Secured Party promptly upon demand for all reasonable out-of-pocket costs and
expenses, including reasonable attorneys' fees and litigation expenses, incurred
by the Secured Party in seeking to collect any Collateral Payment. Grantor
hereby indemnifies and saves harmless the Secured Party and its agents, officers
and employees from and against all liabilities and reasonable expenses on
account of any adverse claim asserted against the Secured Party (except for the
Secured Party's own gross negligence or willful misconduct) relating to any
moneys received by the Secured Party on account of any Collateral Payment, and
such obligation of Grantor shall continue in effect after and notwithstanding
the discharge of the Secured Obligations and the release of the security
interest granted herein. This indemnity shall survive the termination of this
Agreement and the resignation or removal of the Secured Party.
SECTION 6. SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Grantor hereby irrevocably appoints Secured Party as Grantor's
attorney-in-fact, with full authority in the place and stead of Grantor and in
the name of Grantor, Secured Party or otherwise, from time to time in Secured
Party's discretion to take any action and to execute any instrument that Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation: (a) to pay taxes or liens levied upon
or threatened against the Collateral, any such payments made by Secured Party to
become obligations of Grantor to Secured Party, due and payable immediately
without demand; and (b) upon the occurrence and during the continuance of a
Major Default (as defined in the Restructuring Agreement): (i) to obtain and
adjust insurance (including, without limitation, any claims thereunder) required
to be maintained by Grantor or paid to Secured Party herein; (ii) to demand and
give receipts for moneys due and to become due under or in respect of the
Collateral; (iii) to receive any drafts or other instruments, documents and
chattel paper in connection with clauses (i) and (ii) above; (iv) to file any
claims or take any action that Secured Party may deem necessary or desirable for
the collection of the Collateral or otherwise to enforce the rights of Secured
Party with respect to the Collateral; (v) to sign and endorse any invoices,
freight or express bills, bills of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications and notices in connection with
Accounts and other documents relating to the Collateral; and (vi) to sell or
otherwise deal with the Collateral as though Secured Party were the absolute
owner thereof for all purposes, and to do, at Secured Party's option and
Grantor's expense, all acts that Secured Party deems necessary to protect the
Collateral and Secured Party's security interest therein.
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SECTION 7. MAJOR DEFAULT.
Debtor shall be in default under this Agreement upon the happening of
any Major Default under the Restructuring Agreement.
SECTION 8. REMEDIES.
Subject to the terms of the AGC Collateral Agency Agreement, (i) upon
the occurrence and during the continuance of a Major Default, Secured Party may
declare all the Secured Obligations secured hereby immediately due and payable
and (ii) Secured Party may exercise in respect of the Collateral, in addition to
all 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 UCC (whether
or not the UCC applies to the affected Collateral), and also may sell the
Collateral in one or more parcels at public or private sale at such times and at
such prices and upon such other terms as Secured Party may deem commercially
reasonable. Secured Party may be the purchaser of the Collateral and Secured
Party may apply any of the Secured Obligations as a credit on account of the
purchase price. Grantor hereby waives all rights of redemption, stay and/or
appraisal which it now has or may have at any time in the future. Grantor agrees
that at least ten (10) days' notice to Grantor of the time and place of any
public or private sale shall constitute reasonable notification. Secured Party
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. Secured Party may adjourn any public or private sale. If
the proceeds of any sale of the Collateral are insufficient to pay all the
Secured Obligations, Grantor shall be liable for the deficiency and the fees of
any attorneys employed by Secured Party to collect such deficiency. Said amounts
of attorneys' fees, legal expenses and costs shall be added to the Secured
Obligations secured hereby and shall be due and owing from Grantor to Secured
Party.
SECTION 9. CUMULATIVE RIGHTS; INDEMNITY, ETC. The rights, powers and
remedies of the Secured Party under this Agreement shall be in addition to all
rights, powers and remedies given to the Secured Party by virtue of any statute
or rule of law, the AGC Collateral Agency Agreement or any other agreement, all
of which rights, powers and remedies shall be cumulative and may be exercised
successively or concurrently without impairing the Secured Party's security
interest in the Collateral. Grantor shall indemnify and save the Secured Party
harmless from and against any and all liabilities, losses and damages which it
may incur in the lawful and proper exercise or performance of any of its rights
or powers as authorized herein (except for the Secured Party's own gross
negligence or willful misconduct). This indemnity shall survive the termination
of this Agreement and the resignation or removal of the Secured Party as
collateral agent for Bank and Purchasers.
SECTION 10. ASSIGNMENT.
This Agreement shall be binding upon Grantor and its successors and
assigns, and inure, together with the rights and remedies of Secured Party
hereunder, to the benefit of Secured Party and its successors, transferees and
assigns.
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SECTION 11. AMENDMENTS.
No amendment, modification, termination or waiver of any provision of
this Agreement, and no consent to any departure by Grantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by Secured
Party and, in the case of any such amendment or modification, by Grantor. Any
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which it was given.
SECTION 12. NOTICES.
Any notice or other communication herein required or permitted to be
given shall be in writing and may be personally served or sent by telefacsimile
or United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of telefacsimile,
or three business days after depositing it in the United States mail with
postage prepaid and properly addressed; provided, however, that notices to
Secured Party shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
on the signature page hereof or such other address as shall be designated by
such party in a written notice delivered to the other party hereto.
SECTION 13. FAILURE NOT WAIVER.
No failure or delay on the part of Secured Party in the exercise of any
right or remedy hereunder shall impair such right or remedy or be construed to
be a waiver of any default or acquiescence therein, nor shall any single or
partial exercise of any such right or remedy preclude any other or further
exercise thereof or of any other right or remedy.
SECTION 14. SEVERABILITY.
Wherever possible, each provision of this Agreement shall be
interpreted in a manner so as to be effective and valid under applicable law. If
any provision of this Agreement shall be held to be prohibited by or invalid
under applicable law, such provision shall be ineffective only to the extent of
such provision, and the remaining provisions of this Agreement shall remain
unaffected and in full force and effect.
SECTION 15. GOVERNING LAW; TERMS; RULES OF CONSTRUCTION.
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF
LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE PERFECTION
OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
CALIFORNIA.
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SECTION 16. CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST GRANTOR ARISING OUT OF OR
RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN THE
COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE CENTRAL
DISTRICT OF CALIFORNIA. BY EXECUTING AND DELIVERING THIS AGREEMENT, GRANTOR, FOR
ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY
AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL
PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR
CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO GRANTOR AT ITS ADDRESS PROVIDED IN
ACCORDANCE WITH SECTION 11; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III)
ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER GRANTOR IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT; (V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST GRANTOR IN THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT
THE PROVISIONS OF THIS SECTION 15 RELATING TO JURISDICTION AND VENUE SHALL BE
BINDING AND ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER CALIFORNIA LAW.
SECTION 17. REINSTATEMENT. This Agreement and the security interest
created hereunder shall automatically be reinstated if and to the extent that
for any reason any payment by or on behalf of Grantor in respect of the Secured
Obligations is rescinded or must otherwise be restored by any holder of the
Secured Obligations, whether as a result of any proceedings in bankruptcy or
reorganization or otherwise, and Grantor shall indemnify the Secured Party on
demand for all reasonable costs and expenses (including, without limitation,
fees of counsel) incurred by the Secured Party in connection with such
rescission or restoration.
SECTION 18. TERMINATION OF AGREEMENT. This Agreement shall terminate
upon full and final payment and performance of the Secured Obligations. At such
time, the Secured Party shall, at the request and expense of Grantor, execute
and deliver to Grantor such documents and instruments reasonably required by
Grantor as shall be necessary to evidence termination of the security interests
given by Grantor to the Secured Party hereunder; provided, however, that the
indemnification obligations of Grantor herein shall survive such termination.
SECTION 19. COUNTERPARTS.
This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. Delivery by
telecopier of an executed counterpart of and signature page to this Agreement
shall be effective as delivery of an originally executed counterpart of this
Agreement.
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[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, Grantor and Secured Party have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.
AMERICAN GOLF CORPORATION, as Debtor and Grantor
By:/s/ Xxxxxx X. Xxxxx
--------------------------------
Name: Xxxxxx X. Xxxxx
Title: CFO
BNY MIDWEST TRUST COMPANY, in its
capacity as collateral agent for Bank
and Purchasers, as Secured Party
By:/s/ Xxxxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Assistant Treasurer
