JUNIOR PERSONAL PROPERTY SECURITY AGREEMENT
THIS JUNIOR PERSONAL PROPERTY SECURITY AGREEMENT (the
"SECURITY AGREEMENT") is made effective as of June 23, 1997, and is entered into
by ATLANTIC GULF COMMUNITIES CORPORATION, a Delaware corporation ("COMPANY"),
and each of the undersigned Subsidiaries of Company (the "SUBSIDIARY GRANTORS;"
the Company and the Subsidiary Grantors each individually a "GRANTOR" and
collectively, the "GRANTORS"), in favor of FOOTHILL CAPITAL CORPORATION, a
California corporation, as collateral agent (in such capacity herein called
"COLLATERAL AGENT"), for AP-AGC, LLC, a Delaware limited liability company
("OBLIGEE").
R E C I T A L S
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WHEREAS, Company, Obligee and Collateral Agent are parties to that
certain Secured Agreement dated February 7, 1997, and amended and restated as of
May 15, 1997 (as hereafter amended, supplemented or otherwise modified from time
to time, the "SECURED AGREEMENT"; capitalized terms used herein without
definition shall have the meanings given such terms in the Secured Agreement);
WHEREAS, Company, Grantors and Obligee are parties to that certain
Investment Agreement dated February 7, 1997, amended as of March 20, 1997, and
amended and restated as of May 15, 1997 (as hereafter amended, supplemented or
otherwise modified from time to time, the "INVESTMENT AGREEMENT");
WHEREAS, Company and Obligee are parties to that certain Due Diligence
Fee Agreement dated of even date herewith (as hereafter amended, supplemented or
otherwise modified from time to time, the "FEE AGREEMENT");
WHEREAS, it is a condition precedent to Obligee entering into the
Secured Agreement, the Investment Agreement, the Fee Agreement and all other
Secured Instrument Documents and investing capital thereunder that the Grantors
herein execute and deliver this Security Agreement, and the Grantors desire to
enter into this Security Agreement.
NOW, THEREFORE, in consideration of the premises set forth herein and
in order to induce Obligee to enter into the Secured Agreement, the Investment
Agreement, the Fee Agreement and all other Secured Instrument Documents, the
Grantors hereby agree as follows:
SECTION 1. DEFINED TERMS. The following terms shall have the following
meanings:
"AG ASIA" means Atlantic Gulf Asia Holdings N.V., a
Netherlands Antilles corporation.
"BANK ACCOUNTS" means any and all deposit accounts, money
market accounts and any other deposits and investments of Grantors held
in any bank or other financial institution, any brokerage firm or any
other Person and all money, instruments, securities, documents and
other investments held pursuant thereto, whether now existing or owned
or hereafter created or acquired (exclusive of all but the residual,
remainder or beneficial interest of Grantors in all escrow, restricted,
custodial and fiduciary accounts the pledge of which by Grantors is
prohibited by agreements existing as of the date hereof or by law, as
set forth in Schedule 7.17 to the Secured Agreement and hereby made a
part hereof (which may be amended from time to time by written notice
to Collateral Agent and Obligee to include other restricted accounts)).
"CAPITAL STOCK" means any and all shares, interests, or other
equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants or options to purchase any of the
foregoing.
"CLAIMS DISBURSEMENT ACCOUNT" means the segregated account
established for purposes of holding funds borrowed to pay
Administrative Claims, Priority Claims, and Convenience Claims pursuant
to SECTION 3.2.4 and 8.1.1 of the Reorganization Plan.
"COLLATERAL" has the meaning assigned such term in SECTION 2
of this Agreement.
"COMMERCIAL RECEIVABLES" means all promissory notes and
mortgages and deeds of trust payable to, or held by, Grantors, and all
other documents, instruments and agreements executed in connection
therewith, whether currently existing or hereafter created or acquired,
arising from the sale of single-family homesites (as defined in the
Secured Agreement) or arising from the sale of other Real Property and
all cash and non-cash proceeds thereof.
"CONDEMNATION AWARDS" means any and all proceeds (including,
without limitation, proceeds in the form of promissory notes or other
agreements for the payment of proceeds) from (a) the taking by eminent
domain, condemnation or otherwise, or acquisition pursuant to contract,
of any property of any Grantor by the United States of America, the
State of Florida or any political subdivision thereof, or any agency,
department, bureau, board, commission or instrumentality of any of
them, including, without limitation, any awards and/or other
compensation awarded to any Grantor whether as a result of litigation,
arbitration, settlement or otherwise, or (b) any sale by any Grantor of
a water and utility system to a Person, whether now owned or hereafter
created or acquired.
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"EXCLUDED PROPERTY" means (a) the Capital Stock of General
Development Acceptance Corporation and GDV Financial Corporation, (b)
34% of the Capital Stock of AG Asia, (c) all money or property now or
hereafter deposited into a Reserve Account pursuant to the
Reorganization Plan (exclusive of the residual, remainder or beneficial
interest of Company and its Subsidiaries therein), (d) any portions of
payments made on Homesite Contracts Receivable which are, as a matter
of law or pursuant to such Homesite Contracts Receivable, required to
be placed in a restricted account for the payment of utility charges or
paid toward real estate taxes on the lots subject to the respective
Homesite Contracts Receivable giving rise to such payments, and (e) the
Trust Property.
"HOMESITE CONTRACTS RECEIVABLE" means all contracts for deed,
unsecured promissory notes, and other agreements, currently existing or
hereafter created or acquired, pursuant to which any Grantor has the
right to receive payment in any form whatsoever for the sale of
single-family homesites (excluding Commercial Receivables), including
any and all accounts, contract rights, chattel paper, general
intangibles and unpaid seller's rights, relating to the foregoing or
arising therefrom, reserves and credit balances arising thereunder and
cash and non-cash proceeds of any and all of the foregoing.
"HOMESITE PROGRAM" has the meaning assigned such term in
Article I of the Reorganization Plan.
"INTELLECTUAL PROPERTY" means all now existing or hereafter
created or acquired trademarks, trade names, copyrights, technology,
know-how and processes necessary for the conduct of any Grantor's
business, and any and all licenses to use any of the foregoing.
"INVESTMENTS" means any and all promissory notes, Capital
Stock (other than Subsidiary Stock), bonds, debentures and securities,
held by Grantors, whether now owned or hereafter acquired.
"PERSONAL PROPERTY" means the following personal property of
Grantors:
(a) the Bank Accounts;
(b) the Investments;
(c) any and all accounts, contract rights,
chattel paper, instruments and documents, including, without
limitation, any right to payment for goods sold or leased or
services rendered, whether now owned or hereafter acquired;
(d) any and all machinery, apparatus, equipment,
fittings, furniture, fixtures, motor vehicles and other
tangible personal property of every kind and
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description, whether now owned or hereafter acquired, and
wherever located, and all parts, accessories and special tools
and replacements therefor (collectively, "EQUIPMENT");
(e) any and all general intangibles, whether now
owned or hereafter created or acquired, including, without
limitation, all choses in action, causes of action, rights in
and to any and all Condemnation Awards, corporate or other
business records, deposit accounts, inventions, designs,
patents, patent applications, trademarks, trade names, trade
secrets, goodwill, copyrights, registrations, licenses,
franchises, customer lists, tax refund claims, computer
programs, any other Intellectual Property, all claims under
guaranties, security interests or other security to secure
payment of any accounts by an account debtor, all rights to
indemnification and all other intangible property of every
kind and nature, including, without limitation, (i) the
interests, if any, of any Grantor in payments proceeds,
residuals, and remainders from, or as a beneficiary of the
Reserve Accounts, Claims Disbursement Account, or other such
accounts, (ii) any and all beneficial interests in the trusts
pursuant to which title to the Trust Property is held, and
(iii) any proceeds or choses in action with respect to, or
rights to receive proceeds from, any condemnation of any Real
Property or Personal Property of any Grantor, whether now in
existence or hereafter created or acquired;
(f) any and all goods which are, or may at any
time be, goods held for sale or lease or furnished under
contracts of service or raw materials, work-in-process or
materials used or consumed in business, wheresoever located
and whether now owned or hereafter created or acquired,
including, without limitation, all such property the sale or
other disposition of which has given rise to accounts and
which has been returned to or repossessed or stopped in
transit (collectively, "INVENTORY");
(g) all monies, cash, residues and property of
any kind, now or at any time hereafter in the possession or
under the control of Collateral Agent or Obligee or any agent
or bailee of Collateral Agent or Obligee;
(h) all Homesite Contracts Receivable and
Commercial Receivables;
(i) all accessions to, all substitutions for,
and all replacements, products and proceeds of, the foregoing,
including, without limitation, proceeds of insurance policies
insuring the aforesaid property and documents covering the
aforesaid property, all property received wholly or partly in
trade or exchange for such property, and all rents, revenues,
issues, profits and proceeds arising from the sale, lease,
license, encumbrance, collection or any other temporary or
permanent disposition of such items or any interest therein
whether or not they constitute "PROCEEDS" as defined in the
Code; and
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(j) all books, records, documents and ledger
receipts pertaining to any of the foregoing, including,
without limitation, customer lists, credit files, computer
records, computer programs, storage media and computer
software used or acquired in connection with generating,
processing and storing such books and records or otherwise
used or acquired in connection with documenting information
pertaining to the aforesaid property.
"REAL PROPERTY" means any and all real property and fixtures
and interests in real property and fixtures now owned or hereafter
acquired by any Grantor.
"REORGANIZATION PLAN" means the Restated Second Amended Joint
Plan of Reorganization of General Development Corporation jointly
proposed in the Reorganization Proceedings by Company and the Official
Unsecured Creditors' Committee, filed on October 9, 1991 with the Clerk
of the Bankruptcy Court, as modified by Modification filed March 9,
1992.
"REORGANIZATION PROCEEDINGS" means the cases commenced on
April 6 and April 12, 1990 under Chapter 11 of Title 11 of the United
States Code in the Bankruptcy Court by GDC (Case No. 90-12231-BKC-AJC),
General Development Financial Services, Inc. (Case No.
90-12232-BKC-AJC), General Development Resorts, Inc. (Case No. 90-12233
BKC-AJC), Town & Country II, Inc. (formerly Florida Residential
Communities, Inc.) (Case No. 90-12234-BKC-AJC), Five Star Homes Group,
Inc. (Case No. 90-12235-BKC-AJC), Five Star Homes, Inc. (Case No.
90-12338-BKC-AJC), GDV Financial Corporation (Case No. 90-12236--
BKC-AJC) and Environmental Quality Laboratory, Incorporated (Case No.
90-12237-BKC-AJC).
"RESERVE ACCOUNTS" means the Disbursement Account (as defined
in SECTION 8.4 of the Reorganization Plan); the Disputed Claims Reserve
Account (as defined in SECTION 8.7 of the Reorganization Plan); any
reserve of securities, utility-satisfied lots, cash or other assets
that is established pursuant to the Reorganization Plan, the Homesite
Program, or any agreement resolving a claim of the State of Florida in
the Reorganization Proceedings, to satisfy requests for utility
service; and any reserve of securities or cash established to fund road
or other improvements pursuant to any agreement resolving a claim of
the State of Florida in the Reorganization Proceedings, including,
without limitation, the Division Class 14 Utility Fund Trust Agreement
and the Improvement Fund Trust Agreement, executed by and among the
State of Florida, Department of Business Regulation, Division of
Florida Land Sales, Condominiums and Mobile Homes, Company and the
trustee thereunder, the Class 14 Utility Fund Trust Agreement and the
Homesite Program and Utility Fund Trust Agreement executed by and
between Company and the trustee thereunder, the Class 14 Utility Lot
Trust Agreement executed by and between Company and the trustee
thereunder, as described in SECTION 7.6 of the Reorganization Plan.
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"SUBSIDIARY" means, as to any Person, a corporation,
partnership, trust (exclusive of any trust created in connection with a
Reserve Account) or other entity of which shares of stock, partnership
interests, beneficial interests or other ownership interests having
ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership, trust (exclusive of a trust
created in connection with a Reserve Account) or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly, through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a
"SUBSIDIARY" or to "SUBSIDIARIES" in this Agreement shall refer to a
Subsidiary or Subsidiaries of Company. Unless otherwise indicated, all
references to a Subsidiary or Subsidiaries of Company shall not mean,
include, or refer to the Unrestricted Subsidiaries, the Excluded
Subsidiaries, or the Joint Ventures.
"SUBSIDIARY STOCK" means the Capital Stock of any and all
Subsidiaries.
"TRUST PROPERTY" means the real property held in trust
pursuant to (a) Trust Agreement No. 06-01-009-6082101, dated as of
January 17,1991, by and between NCNB National Bank of Florida, as
Trustee for the benefit of Company, the Beneficiary; (b) Trust
Agreement No. 06-01-009-6081954, dated as of January 17,1991, by and
between NCNB National Bank of Florida, as Trustee for the benefit of
Company, the Beneficiary; (c) Trust Agreement No. 06-01-009-6082655,
dated as of January 17, 1991, by and between NCNB National Bank of
Florida, as Trustee for the benefit of Company and General Development
Financial Services, Inc., the Beneficiaries; and (d) Trust Agreement
No. 2, dated as of May 31, 1991, by and between Xxxx Xxxxxx, Esq., as
successor Trustee for the benefit of Company and Cumberland Cove, Inc.,
the Beneficiaries, as subsequently amended.
SECTION 2. GRANT OF SECURITY. (a) Each Grantor, in order to secure the
Secured Obligations (as defined in SECTION 3), hereby assigns and pledges to
Collateral Agent for benefit of Obligee and hereby grants to Collateral Agent
for the benefit of Obligee a junior security interest, subject to Permitted
Liens (as hereinafter defined in SECTION 5(c) hereof), in all of the Grantor's
right, title and interest in and to the following, in each case whether now or
hereafter existing or in which the Grantor now has or hereafter acquires an
interest and wherever the same may be located and all proceeds thereof (the
"COLLATERAL"):
(i) All of the Personal Property (other than the Excluded
Property); and
(ii) All proceeds of any and all of the foregoing Collateral
and, to the extent not otherwise included, all payments under insurance
(whether or not Collateral Agent or Obligee is the loss payee thereof),
or any indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the
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foregoing Collateral. For purposes of this Agreement, the term
"proceeds" includes whatever is receivable or received when Collateral
or proceeds are sold, collected, exchanged or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes,
without limitation, all rights to payment, including returned premiums,
with respect to any insurance relating thereto.
(b) At such time as any Personal Property comprising Excluded Property
is freed of contractual or legal restrictions against becoming subject to a Lien
to secure the Secured Obligations, such Excluded Property shall, automatically,
become subject to the Lien hereof, PROVIDED that in no event shall a lien be
granted on any assets required to be placed in a Reserve Account pursuant to the
Reorganization Plan or the Homesite Program.
SECTION 3. SECURITY FOR OBLIGATIONS. This Agreement secures, and the
Collateral is collateral security for, (a) after the issuance of the Preferred
Stock, the joint and several obligations of the Company, the Grantors and other
subsidiaries of the Company pursuant to SECTION 8 of the Certificate of
Designation to repurchase Preferred Stock on the happening of certain conditions
set forth in the Certificate of Designation at a repurchase price equal to the
Liquidation Preference in respect thereof, as defined in the Certificate of
Designation, consisting of, at any time, $10.00 per share of Preferred Stock,
plus accumulated and unpaid dividends thereon through the date of such
determination, whether or not funds are legally available therefor, the
aggregate amount of which, upon issuance of the 2,500,000 shares of Preferred
Stock to be issued pursuant to the Investment Agreement, shall be $25,000,000,
plus accumulated and unpaid dividends, and (b) after the occurrence of an Event
of Default, as defined in the Certificate of Designation, the joint and several
obligations of the Company, Grantors and other subsidiaries of the Company to
indemnify Obligee from and against any and all losses, claims, damages, expenses
(including reasonable fees, disbursements and other charges of counsel) or other
liabilities resulting from any breach of any covenant, agreement, representation
or warranty of the Company in this Security Agreement or in any other Secured
Instrument Document pursuant to SECTION 7.2 of the Investment Agreement, as
evidenced by that certain Secured Evidence of Joint and Several Repurchase
Obligations dated of even date herewith, executed by the Company, Grantors, and
other subsidiaries of the Company to and for the benefit of Obligee (together
with any and all additions, modifications, amendments, renewals, and extensions
thereof, the "INSTRUMENT"), whether or not from time to time decreased or
extinguished and later increased, created or incurred and all or any portion of
such obligations that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Obligee or Collateral Agent as
a preference, fraudulent transfer or otherwise, and all obligations of every
nature (whether of payment, of performance or otherwise) of the Company, the
Grantors and other subsidiaries of the Company from time to time owed to Obligee
or Collateral Agent or either of them under the Secured Agreement or any other
Secured Instrument Document, whether for principal, interest (including interest
accruing after the commencement of a bankruptcy case, whether or not enforceable
in such case), repurchase or redemption obligations, dividend obligations, fees,
costs, expenses, indemnification liabilities or other obligations, of
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whatsoever nature and whether now or hereafter made, incurred or created,
whether absolute or contingent, liquidated or unliquidated, regardless of class,
whether due or not due, and however arising (the foregoing being hereinafter
collectively referred to as the "SECURED OBLIGATIONS").
SECTION 4. GRANTORS REMAIN LIABLE. Anything herein to the contrary
notwithstanding, (a) each Grantor shall remain liable under any contracts and
agreements included in the Collateral, to the extent set forth therein, to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed, (b) the exercise by Collateral Agent of
any of the rights hereunder shall not release the Grantor from any of its duties
or obligations under the contracts and agreements included in the Collateral and
(c) Collateral Agent or Obligee shall not have any obligation or liability under
any contracts and agreements included in the Collateral by reason of this
Agreement, nor shall Collateral Agent or Obligee be obligated to perform any of
the obligations or duties of the Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
SECTION 5. REPRESENTATIONS AND WARRANTIES. Each Grantor represents and
warrants as follows:
(a) LOCATION OF EQUIPMENT AND INVENTORY; OFFICE LOCATIONS;
FICTITIOUS NAMES. As of the Effective Date, all of the Equipment and
Inventory of Grantor is located at the places specified on SCHEDULE I
hereto. As of the Effective Date, the chief place of business and the
chief executive office of the Grantor is specified on SCHEDULE I
hereto. As of the Effective Date, the offices where the Grantor keeps
its material records regarding the Collateral and all originals of all
chattel paper that evidence Collateral are set forth on SCHEDULE II
hereto. As of the Effective Date, the Grantor does not do business
under any trade name or fictitious business name except as set forth on
SCHEDULE II hereto.
(b) DELIVERY OF CERTAIN COLLATERAL. All chattel paper, notes
and other instruments (excluding checks) comprising any or all of the
items of Collateral of Grantor have been delivered to Collateral Agent
duly endorsed and accompanied by duly executed instruments of transfer
or assignment in blank.
(c) OWNERSHIP OF COLLATERAL. Except for the security interest
created by this Agreement and Liens permitted by each of the agreements
governing the Secured Obligations from time to time in effect,
including, without limitation, Liens of Foothill Capital Corporation,
as AG Collateral Agent, as defined in the Intercreditor Agreement
(collectively, "PERMITTED LIENS"), the Grantor owns the Collateral
pledged by the Grantor hereunder free and clear of any Lien. Except as
may have been filed in favor of Collateral Agent relating to this
Agreement or in connection with
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Permitted Liens, no effective financing statement or other instrument
similar in effect covering all or any part of the Collateral is on file
in any filing or recording office.
(d) PERFECTION. Subject only to Permitted Liens, in the case
of existing Collateral, this Agreement creates, and in the case of
after acquired Collateral, at the time the Grantor first has rights in
such after acquired Collateral, this Agreement will create, in each
case upon the making of the filings described in clause (e) below or
the taking of possession by Collateral Agent with respect to security
interests in Collateral which can only be perfected by taking
possession of such Collateral, for all Collateral, a valid, perfected,
first priority security interest, in each case securing the payment and
performance of the Secured Obligations. Upon making the filings
described in clause (e) below or the taking of possession by Collateral
Agent with respect to security interests in Collateral which can only
be perfected by taking possession of such Collateral, in each case for
all Collateral, all filings and other actions necessary or desirable to
protect and to perfect the security interests referenced above shall
have been duly taken.
(e) GOVERNMENTAL AUTHORIZATIONS. No authorization, approval or
other action by, and no notice to or filing with, any governmental
authority or regulatory body is required either (i) for the grant by
the Grantor of the security interest granted hereby or for the
execution, delivery or performance of this Agreement by the Grantor or
(ii) for the perfection of (except as otherwise specified in paragraph
(d) of this SECTION 5), or the exercise by, Collateral Agent of its
rights and remedies hereunder, except for the filing of (x) a Uniform
Commercial Code financing statement with the appropriate authorities in
the jurisdictions listed on SCHEDULE III hereto, (y) certificates of
title with respect to motor vehicles of the Grantor in the appropriate
jurisdictions and (z) notifications and/or transfer documents with
respect to certain regulatory permits of the Grantor in the appropriate
jurisdictions.
(f) OTHER INFORMATION. All information heretofore, herein or
hereafter supplied to Collateral Agent by, or on behalf of, the Grantor
with respect to the Collateral (in each case as such information has
been amended, supplemented or updated as of the date this
representation is deemed made) is accurate and complete in all material
respects.
SECTION 6. FURTHER ASSURANCES.
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(a) Each Grantor agrees that from time to time, at the expense of the
Grantor, the Grantor will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable,
or that Collateral Agent may reasonably request, in order to perfect and protect
any security interest granted or purported to be granted hereby or to enable
Collateral Agent to exercise and enforce its rights and remedies hereunder with
respect to any Collateral. Without limiting the generality of the foregoing,
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each Grantor will: (i) at the reasonable request of Collateral Agent, xxxx
conspicuously each chattel paper and each material contract included in the
Collateral and each of its material records pertaining to the Collateral with a
legend, in form and substance reasonably satisfactory to Collateral Agent,
indicating that such items are subject to the security interest granted hereby;
(ii) if any Collateral shall be evidenced by a promissory note or other
instrument (excluding checks), deliver and pledge to Collateral Agent hereunder
for the benefit of Obligee such note or instrument duly endorsed and accompanied
by duly executed instruments of transfer or assignment, all in form and
substance satisfactory to Collateral Agent; (iii) at the request of Collateral
Agent, deliver and pledge to Collateral Agent all promissory notes and other
instruments (including checks if an Event of Default shall have occurred and be
continuing) and all original counterparts of chattel paper constituting
Collateral duly endorsed and accompanied by duly executed instruments of
transfer or assignment, all in form and substance satisfactory to Collateral
Agent; (iv) upon the reasonable request of Collateral Agent, execute and file
with the registrar of motor vehicles or other appropriate authority of any
jurisdiction under the law of which indication of a security interest on a
certificate of title is required as a condition of perfection an application or
other document requesting the notation or other indication of the security
interest created hereunder on such certificate of title and will deliver to
Collateral Agent copies of all such applications or other documents filed and
copies of all such certificates of title issued indicating the security interest
created hereunder in such Collateral; (v) execute and file such financing or
continuation statements, or amendments thereto, and such other instruments or
notices, as may be necessary or desirable, or as Collateral Agent may reasonably
request, in order to perfect and preserve the security interests granted or
purported to be granted hereby; (vi) at any reasonable time and upon reasonable
notice, upon demand by Collateral Agent exhibit the Collateral to and allow
inspection of the Collateral by Collateral Agent, or persons designated by
Collateral Agent; and (vii) at Collateral Agent's reasonable request, appear in
and defend any action or proceeding that may affect the Grantor's title to or
Collateral Agent's security interest in the Collateral.
(b) Each Grantor hereby authorizes Collateral Agent 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 the Grantor where permitted
by law. A carbon, photographic or other reproduction of this Agreement or a
financing statement signed by such Grantor shall be sufficient as a financing
statement where permitted by law.
(c) Each Grantor will furnish to Collateral Agent from time to time
statements and schedules further identifying and describing the Collateral and
such other reports in connection with the Collateral as Collateral Agent may
reasonably request, all in reasonable detail.
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SECTION 7. COVENANTS OF THE GRANTORS. Each Grantor shall:
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(a) Not use or permit any Collateral to be used in violation of any
provision of this Agreement, or any applicable statute, regulation or ordinance
or any policy of insurance covering the Collateral (unless such violation
together with all other violations does not and could not reasonably be expected
to have a material adverse effect on the value or use of any material portion of
the Collateral);
(b) Notify Collateral Agent of any change in the Grantor's name, trade
names, fictitious business names, identity or corporate structure at least 30
days prior to such change;
(c) Give Collateral Agent 30 days' prior written notice of any change
in the location of the Grantor's (i) chief place of business, (ii) chief
executive office and (iii) offices where the Grantor's records regarding
Collateral and the originals of all chattel paper that evidence Collateral are
kept;
(d) Keep the Equipment and Inventory (other than Inventory sold in the
ordinary course of business and other than such Equipment and Inventory which,
either singly or in the aggregate, is not material) at the places therefor
specified on SCHEDULE I hereto or at such other places in jurisdictions where
all action has been taken that may be necessary or desirable, or that Collateral
Agent may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable Collateral Agent
to exercise and enforce its rights and remedies hereunder with respect to such
Equipment and Inventory;
(e) Keep records of the Inventory which are correct and accurate in all
material respects, itemizing and describing the kind, type and quantity of
Inventory and the Grantor's cost therefor all in accordance with the past
practices of the Grantor;
(f) If any Inventory is in possession or control of any of the
Grantor's agents or processors, then upon the occurrence of an Event of Default,
at the request of Collateral Agent, instruct such agent or processor to hold all
such Inventory for the account of Collateral Agent and subject to the
instructions of Collateral Agent;
(g) Keep its chief place of business and chief executive office and the
office where it keeps its material records concerning the Collateral, and all
originals of all chattel paper that evidence Collateral, at the location
therefor specified in SECTION 5(a) or at such other locations in a jurisdiction
where all action that may be necessary or desirable, or that Collateral Agent
may request, in order to perfect and protect any security interest granted or
purported to be granted hereby or to enable Collateral Agent to exercise and
enforce its rights and remedies hereunder with respect to such Collateral has
been taken. Each Grantor will hold and preserve such material records and
chattel paper in accordance with Grantor's past practice and will permit
representatives of Collateral Agent at any time during normal
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business hours and upon reasonable notice to inspect and make abstracts from
such material records and chattel paper and each Grantor agrees to render to
Collateral Agent, at the Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto; and
(h) Perform and comply in all material respects with all contractual
obligations relating to the Collateral.
SECTION 8. INSURANCE.
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(a) Unless otherwise agreed in writing by Collateral Agent, each
insurance policy covering the Collateral shall in addition (i) name the Grantor
and Collateral Agent as insured parties thereunder (without any representation
or warranty by or obligation upon Collateral Agent) as their interests may
appear, (ii) contain an agreement by the insurer that, to the extent PROVIDED in
the Collateral Documents, any loss thereunder shall be payable to Collateral
Agent notwithstanding any action, inaction or breach of representation or
warranty by the Grantor, (iii) have attached thereto a lender's loss payable
endorsement or its equivalent, or a loss payable clause acceptable to Collateral
Agent, for the benefit of Obligee, (iv) provide that there shall be no recourse
against Collateral Agent for payment of premiums or other amounts with respect
thereto and (v) provide that at least 30 days' prior written notice of
cancellation or lapse, material amendment, or material reduction in scope or
limits of coverage shall be given to Collateral Agent by the insurer. Each
Grantor shall, if so requested by Collateral Agent, deliver to Collateral Agent
original or duplicate policies of such insurance and, as often as Collateral
Agent may reasonably request (but, unless an Event of Default shall have
occurred and be continuing, in no event more than once each calendar year), a
report of a reputable insurance broker with respect to such insurance. Further,
each Grantor shall, at the request of Collateral Agent, duly execute and deliver
instruments of assignment of such insurance policies to comply with the
requirements of SECTION 6 hereof and use its best efforts to cause the
respective insurers to acknowledge notice of such assignment.
(b) Reimbursement under any liability insurance maintained by a Grantor
pursuant to this SECTION 8 may be paid directly to the person who shall have
incurred liability covered by such insurance. In case of any material loss
involving damage to Equipment or Inventory when subsection (c) of this SECTION 8
is not applicable, any proceeds of insurance maintained by the Grantor shall be
paid to the Grantor and the Grantor shall use such proceeds to make necessary
repairs or replacements of such Equipment and Inventory or to purchase
additional Equipment or Inventory or other property of equivalent value and
constituting Collateral hereunder.
(c) Upon the occurrence and during the continuance of an Event of
Default, at the request of Collateral Agent, all insurance payments in respect
of such Equipment and Inventory shall be paid to and applied by Collateral Agent
as specified in SECTION 16.
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(d) Prior to the expiration of each insurance policy with respect to
the Equipment and Inventory, upon written request of Collateral Agent, each
Grantor shall furnish Collateral Agent with evidence satisfactory to Collateral
Agent of the reissuance of a policy continuing insurance in force as required by
this Agreement and at or prior to the date payment of the premium therefor is
due, evidence satisfactory to Collateral Agent of such payment. In the event a
Grantor fails to provide, maintain, keep in force or deliver and furnish to
Collateral Agent the policies of insurance required by this SECTION 8,
Collateral Agent, upon 30 days' prior written notice to such Grantor, may (but
shall not be obligated to) procure such insurance or single interest insurance
for such risks covering Obligee's interests, and such Grantor will pay all
premiums thereon promptly upon demand by Collateral Agent, together with
interest thereon at the Default Rate, from the date of expenditure by Collateral
Agent until reimbursement by such Grantor.
SECTION 9. LICENSE OF TRADEMARKS AND TRADE NAMES. Each Grantor hereby
assigns, transfers and conveys to Collateral Agent, effective upon the
occurrence of, and during the continuance of, any Event of Default, the
nonexclusive right and license to use all trademarks, trade names and copyrights
owned or used by the Grantor that relate to the Collateral and any other
collateral granted by the Grantor as security for the Secured Obligations,
together with any goodwill associated therewith, all to the extent necessary to
enable Collateral Agent to use, possess and realize on the Collateral and any
successor or assignee to enjoy the benefits of the Collateral. This right and
license shall inure to the benefit of Collateral Agent and its successors,
assigns and transferees, whether by voluntary conveyance, operation of law,
assignment, transfer, foreclosure, deed in lieu of foreclosure or otherwise.
Such right and license is granted free of charge, without requirement that any
monetary payment whatsoever be made to the Grantor. If (a) an Event of Default
shall have occurred and, by reason of waiver, modification, amendment or
otherwise, no longer be continuing, (b) no other Event of Default shall be
continuing, (c) an assignment to Collateral Agent shall have been previously
made pursuant to this SECTION 9, and (d) the Secured Obligations shall not have
become immediately due and payable, upon the written request of the Grantor,
Collateral Agent shall promptly execute and deliver to the Grantor such
assignments as may be necessary to reassign to the Grantor any rights, title and
interests as may have been assigned pursuant to this SECTION 9, subject to any
disposition thereof that may have been made by Collateral Agent pursuant hereto;
PROVIDED that, after giving effect to such reassignment, Collateral Agent's
security interest and conditional assignment granted pursuant to this SECTION 9,
as well as all other rights and remedies of Collateral Agent granted hereunder,
shall continue to be in full force and effect; and PROVIDED, FURTHER, that the
rights, title and interests so reassigned shall be free and clear of all Liens
other than Liens (if any) encumbering such rights, title and interest at the
time of their assignment to Collateral Agent.
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SECTION 10. TRANSFERS AND OTHER LIENS. Each Grantor shall not:
-------------------------
(a) Except as permitted by the Secured Agreement, sell, assign
(by operation of law or otherwise) or otherwise dispose of any of the
Collateral.
(b) Except for the Permitted Liens, create or suffer to exist
any Lien upon or with respect to any of the Collateral to secure the
indebtedness or other obligations of any person or entity.
SECTION 11. COLLATERAL AGENT. Collateral Agent has been appointed as
Collateral Agent hereunder pursuant to the Secured Agreement. Collateral Agent
shall be obligated, and shall have the right hereunder, to make demands, to give
notices, to exercise or refrain from exercising any rights, and to take or
refrain from taking action (including, without limitation, the release or
substitution of Collateral) in accordance with the Secured Agreement and the
Intercreditor Agreement. Collateral Agent may resign and a successor Collateral
Agent may be appointed in the manner provided for in the Secured Agreement for
resignation and appointment of a successor Collateral Agent. Upon the acceptance
of any appointment as Collateral Agent by a successor Collateral Agent, the
successor Collateral Agent shall thereupon succeed to and become vested with all
the rights, powers, privileges and duties of the retiring Collateral Agent under
this Agreement, and the retiring Collateral Agent shall thereupon be discharged
from its duties and obligations under this Agreement and shall deliver any
Collateral in its possession to the successor Collateral Agent. After any
retiring Collateral Agent's resignation, the provisions of this Agreement shall
inure to its benefit as to any actions taken or omitted to be taken by it under
this Agreement while it was Collateral Agent.
SECTION 12. COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Each Grantor
hereby irrevocably appoints Collateral Agent the Grantor's attorney-in-fact,
with full authority in the place and stead of the Grantor and in the name of the
Grantor, Collateral Agent or otherwise, from time to time in Collateral Agent's
reasonable discretion to take any action and to execute any instrument that
Collateral Agent may deem necessary or advisable, subject to the terms and
conditions of this Agreement, to accomplish the purposes of this Agreement,
including, without limitation:
(a) Subject to the last sentence of SECTION 8(d) hereof, to
obtain and adjust insurance required to be maintained by the Grantor or
paid to Collateral Agent pursuant to SECTION 8 hereof;
(b) Upon the occurrence of, and during the continuance of, an
Event of Default, to ask, demand, collect, xxx for, recover, compound,
receive and give acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
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(c) Upon the occurrence of, and during the continuance of, an
Event of Default, to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clauses
(a) and (b) above;
(d) Upon the occurrence of, and during the continuance of, an
Event of Default, to file any claims or take any action or institute
any proceedings that Collateral Agent may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the
rights of Collateral Agent with respect to any of the Collateral;
(e) To pay or discharge taxes (other than taxes not then
required to be paid or discharged by any of the agreements governing
the Secured Obligations, from time to time in effect including without
limitation the Secured Agreement) or Liens (other than Permitted
Liens), levied or placed upon or threatened against the Collateral, the
legality or validity thereof and the amounts necessary to discharge the
same to be determined by Collateral Agent in its reasonable discretion,
and such payments made by Collateral Agent to become obligations of the
Grantor to Collateral Agent, due and payable immediately without
demand;
(f) Upon the occurrence of, and during the continuance of, an
Event of Default, 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
(g) Upon the occurrence of, and during the continuance of, an
Event of Default, generally to sell, transfer, pledge, make any
agreement with respect to or otherwise deal with any of the Collateral
as fully and completely as though Collateral Agent were the absolute
owner thereof for all purposes, and to do, at Collateral Agent's option
and the Grantor's expense, at any time, or from time to time, all acts
and things that Collateral Agent deems necessary to protect, preserve
or realize upon the Collateral and Collateral Agent's security interest
therein, in order to effect the intent of this Agreement, all as fully
and effectively as the Grantor might do.
The Grantors hereby ratify all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
SECTION 13. COLLATERAL AGENT MAY PERFORM. If any Grantor fails to
perform any agreement contained herein, Collateral Agent may, upon 30 days'
notice to the Grantor (unless otherwise expressly set forth in this Agreement or
an Event of Default shall have occurred and be continuing, in which case, no
such notice shall be required), itself perform,
15
or cause performance of, such agreement, and the expenses of Collateral Agent
incurred in connection therewith shall be payable by such Grantor under SECTION
17 hereof.
SECTION 14. COLLATERAL AGENT'S DUTIES AND LIABILITIES.
-----------------------------------------
(a) The powers conferred on Collateral Agent hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for moneys actually received by it hereunder,
Collateral Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other rights
pertaining to any Collateral. Collateral Agent shall be deemed to exercise
reasonable care in the custody and preservation of such Collateral if such
Collateral is accorded treatment substantially equivalent to that which
Collateral Agent accords its own property.
(b) Collateral Agent shall not be liable to any Grantor (i) for any
loss or damage sustained by it, or (ii) for any loss, damage, depreciation or
other diminution in the value of any of the Collateral, that may occur as a
result of, in connection with or that is in any way related to (x) any exercise
by Collateral Agent of any right or remedy under this Agreement or (y) any other
act of or failure to act by Collateral Agent, except to the extent that the same
shall be determined by a judgment of a court of competent jurisdiction to be the
result of acts or omissions on the part of Collateral Agent constituting gross
negligence or willful misconduct.
(c) Except to the extent resulting from acts or omissions on the part
of Collateral Agent or its affiliates, directors, officers, employees,
attorneys, or agents constituting gross negligence or willful misconduct, no
claim may be made by any Grantor against Collateral Agent or its affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
or consequential damages in respect of any breach or wrongful conduct (whether
the claim therefor is based on contract, tort or duty imposed by law) in
connection with, arising out of or in any way related to the transactions
contemplated and relationship established by this Agreement, or any act,
omission or event occurring in connection therewith. Except to the extent
resulting from acts or omissions on the part of Collateral Agent or its
affiliates, directors, officers, employees, attorneys, or agents constituting
gross negligence or willful misconduct, each Grantor hereby waives, releases and
agrees not to xxx upon any such claim for any such damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
SECTION 15. REMEDIES UPON DEFAULT.
---------------------
(a) EVENTS OF DEFAULT. The occurrence of any "EVENT OF DEFAULT" as
defined in the Secured Agreement (whether or not any Secured Obligations shall
be at the time outstanding thereunder or the Secured Agreement shall have
terminated for some other purpose) or the occurrence of any default under the
Certificate of Designation between the Company and
16
Obligee dated of even date herewith which default has continued beyond any
applicable cure period, shall constitute an Event of Default under this
Agreement.
(b) REMEDIES UPON AN EVENT OF DEFAULT. If any Event of Default shall
have occurred and be continuing, Collateral Agent may exercise in respect of the
Collateral, (i) all the rights and remedies of a secured party on default under
the Uniform Commercial Code of the State of New York (the "CODE") (whether or
not the Code applies to the affected Collateral), (ii) all of the rights and
remedies provided for in this Agreement, the Secured Agreement and any other
agreement between any Grantor and Obligee and (iii) such other rights and
remedies as may be provided by law or otherwise (such rights and remedies of
Obligee to be cumulative and non-exclusive). If an Event of Default shall have
occurred and be continuing, Collateral Agent also may (i) require each Grantor
to, and each Grantor hereby agrees that it will, at its expense and upon request
of Collateral Agent forthwith, assemble all or part of the Collateral as
directed by Collateral Agent and make it available to Collateral Agent at a
place to be designated by Collateral Agent that is reasonably convenient to both
parties, (ii) enter onto the property where any Collateral is located and take
possession thereof with or without judicial process, (iii) prior to the
disposition of the Collateral, store, process, repair or recondition the
Collateral or otherwise prepare the Collateral for disposition in any manner to
the extent Collateral Agent deems appropriate, (iv) take possession of any
Grantor's premises or place custodians in exclusive control thereof, remain on
such premises and use the same and any of such Grantor's equipment for the
purpose of completing any work in process, taking any actions described in the
preceding clause (iii) and collecting any Secured Obligation, and (v) without
notice except as specified below, sell the Collateral or any part thereof in one
or more parcels at public or private sale, at any of Collateral Agent's offices
or elsewhere, for cash, on credit or for future delivery, and at such price or
prices and upon such other terms as Collateral Agent may deem commercially
reasonable. Each Grantor agrees that, to the extent notice of sale shall be
required at law, at least 10 days' notice to the Grantor of the time and place
of any public sale or the time after which any private sale is to be made shall
constitute reasonable notification. Collateral Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been given.
Collateral Agent 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.
If an Event of Default shall have occurred and be continuing,
Collateral Agent may retain any of the directors, officers and employees of any
Grantor, in each case upon such terms as Collateral Agent and any such person
may agree, notwithstanding the provisions of any employment, confidentiality or
non-disclosure agreement between any such person and any such Grantor, and each
Grantor hereby waives its rights under any such agreement and consents to each
such retention.
SECTION 16. APPLICATION OF PROCEEDS. All proceeds received by
Collateral Agent in respect of any sale of, collection from or other realization
upon all or any part of the
17
Collateral may, in the discretion of Collateral Agent, be held by Collateral
Agent as Collateral for, and/or then, or at any other time thereafter applied,
in full or in part by Collateral Agent against the Secured Obligations in the
following order of priority:
FIRST: To the payment of all costs and expenses of such sale,
collection or other realization and all other expenses, liabilities and
advances made or incurred by Collateral Agent in connection therewith
and all amounts for which Collateral Agent is entitled to
indemnification hereunder and all advances made by Collateral Agent
hereunder for the account of the Grantors and for the payment of all
costs and expenses paid or incurred by Collateral Agent in connection
with the exercise of any right or remedy hereunder, all in accordance
with SECTION 17 hereof;
SECOND: To the payment of the Secured Obligations in the order
set forth in the Secured Agreement and in accordance with the
Intercreditor Agreement; and
THIRD: After payment in full of the amounts specified in the
preceding subparagraphs, to the payment to, or upon the order of, the
Grantors, or whosoever may be lawfully entitled to receive the same or
as a court of competent jurisdiction may direct, of any surplus then
remaining from such proceeds.
SECTION 17. INDEMNITY AND EXPENSES.
----------------------
(a) Each Grantor agrees to indemnify Collateral Agent and Obligee and
each of the officers, directors, agents, employees and affiliates of each of
them (each an "INDEMNITEE") from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting from the gross negligence or willful misconduct of the Indemnitee
seeking indemnification.
(b) Each Grantor will upon demand pay to Collateral Agent the amount of
any and all reasonable expenses, including the reasonable fees and disbursements
of its counsel and of any experts and agents, that Collateral Agent may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Collateral Agent hereunder or (iv) the failure by the
Grantor to perform or observe any of the provisions hereof.
(c) The obligations of Grantor in this SECTION 17 hereof shall survive
termination of this Agreement and the discharge of Grantor's other obligations
under this Agreement, the Secured Agreement and the other Secured Instrument
Documents.
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SECTION 18. CONTINUING SECURITY INTEREST; TERMINATION. This Agreement
shall create a continuing security interest in the Collateral and shall (a)
remain in full force and effect until the indefeasible payment in full of the
Secured Obligations and termination of Obligee's obligations to lend and extend
credit under the Secured Agreement, (b) be binding upon each Grantor, its
successors and assigns and (c) inure, together with the rights and remedies of
Collateral Agent and Obligee hereunder, to the benefit of Collateral Agent and
Obligee and the successors, transferees and assigns of each. Without limiting
the generality of the foregoing clause (c), Obligee may, subject to the
provisions of the Secured Agreement, assign or otherwise transfer the Note, or
portion thereof, or any other obligations secured hereby and any agreements or
instruments executed in connection therewith to any other person or entity, and
such other person or entity shall thereupon become vested with all the benefits
in respect thereof granted to Obligee herein or otherwise. Upon the indefeasible
payment in full of the Secured Obligations and termination of Obligee's
obligations to lend or extend credit under the Secured Agreement, the security
interest granted hereby shall terminate and all rights to the Collateral shall
revert to the Grantors. Upon any such termination, Collateral Agent will, at the
Grantors' expense, execute and deliver to the Grantors, against receipt and
without recourse to or warranty by Collateral Agent, such documents as the
Grantors shall reasonably request to evidence such termination.
SECTION 19. SECURITY INTEREST ABSOLUTE. All rights of Collateral Agent
on its behalf and on behalf of Obligee, assignments and pledges made and created
hereunder, and all obligations of the Grantors, shall be absolute and
unconditional, irrespective of:
(a) Any lack of validity or enforceability of any of the
Secured Obligations or any agreement or instrument relating thereto;
(b) Any change in the time, manner or place of payment of, or
in any other term of, all or any of the Secured Obligations, or any
other amendment or waiver of, or any consent to any departure from, any
agreement or instrument relating to the Secured Obligations;
(c) Any exchange, release, subordination or nonperfection of
any other collateral, or any release or amendment or waiver of or
consent to any departure from any guaranty, for all or any of the
Secured Obligations; or
(d) Any other circumstance, other than indefeasible payment in
full of the Secured Obligations (including, but not limited to, any
statute of limitations) which might otherwise constitute a defense
available to, or a discharge of, the Grantors or a third party grantor
or a security interest.
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SECTION 20. PARTIAL RELEASES. Collateral Agent shall execute and
deliver partial releases of the Liens created pursuant thereto, pursuant to, and
as expressly provided in the Secured Agreement.
SECTION 21. AMENDMENTS; ETC. No amendment or waiver of any provision of
this Agreement nor consent to any departure by any Grantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by
Collateral Agent on behalf of Obligee, and then such waiver or consent shall be
effective only in the specified instance and for the specific purpose for which
given.
SECTION 22. ADDRESSES FOR NOTICES. Unless otherwise specifically
provided herein, any notice or other communication herein required or permitted
to be given shall be in writing and may be personally served, telecopied,
telexed or sent by United States mail or courier service and shall be deemed to
have been given when delivered in person, upon confirmed receipt (in the case of
telecopy or telex) or 5 Business Days after depositing it in the United States
mail, registered or certified, with postage prepaid and properly addressed;
PROVIDED that any notice sent to Collateral Agent or Obligee shall not be
effective until received. For purposes hereof, the addresses of the parties
hereto (until notice of a change thereof) is delivered as provided in this
SECTION 22) shall be as set forth under each party's name on the signature pages
hereof or in the Secured Agreement.
SECTION 23. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. All
judicial proceedings brought against each Grantor with respect to this Agreement
may be brought in any state or Federal court of competent jurisdiction sitting
in New York, New York and by execution and delivery of this Agreement each
Grantor accepts for itself and in connection with the Collateral, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
irrevocably agrees to be bound by any judgement rendered thereby in connection
with this Agreement. Each Grantor agrees that service of process sufficient for
personal jurisdiction in any action against Grantor in the State of New York may
be made by registered or certified mail, return receipt requested, to Grantor at
its address provided in SECTION 22 and Grantor hereby acknowledges that such
service shall be effective and binding in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or shall
limit the right of Collateral Agent to bring proceedings against any Grantor in
the courts of any other jurisdiction.
SECTION 24. GOVERNING LAW; TERMS. THIS AGREEMENT SHALL BE GOVERNED BY,
AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
20
CONFLICTS OF LAWS PRINCIPLES, EXCEPT AS REQUIRED BY MANDATORY PROVISION OF LAW
AND EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Secured Agreement, terms
used in Article 9 of the Uniform Commercial Code in the State of New York are
used herein as therein defined.
SECTION 25. WAIVER OF JURY TRIAL. EACH GRANTOR AND COLLATERAL AGENT
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including without limitation, contract claims, tort claims, breach of duty
claims, and all other common law and statutory claims. Each Grantor and
Collateral Agent each (a) acknowledge that this waiver is a material inducement
for the Grantor and Collateral Agent to enter into a business relationship, that
the Grantor and Collateral Agent have already relied on the waiver in entering
into this Agreement and that each will continue to rely on the waiver in their
related future dealings and (b) further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 26. WAIVER. Except as otherwise expressly provided herein, each
Grantor hereby waives promptness, diligence, notice of acceptance and any other
notice with respect to any of the Secured Obligations and this Agreement and any
requirement that Collateral Agent or Obligee protect, secure, perfect or insure
any security interest or lien or any property subject thereto or exhaust any
right or take any action against the Grantor or any other person or entity or
any of the Collateral.
SECTION 27. NO WAIVER. No failure on the part of Collateral Agent to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; and no
single or partial exercise by Collateral Agent of any right, power or remedy
hereunder shall preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies herein
21
provided are to the fullest extent permitted by law cumulative, and are not
exclusive of any remedies provided by law.
SECTION 28. MARSHALLING; PAYMENT SET ASIDE. Collateral Agent shall not
be under any obligation to marshal any assets in favor of the Grantors or any
other party or against or in payment of any or all of the Secured Obligations.
To the extent that any Grantor makes a payment or payments to Collateral Agent
or Agent enforces its security interests or exercises its rights of setoff, and
such payment or payments or the proceeds of such enforcement or setoff or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, state or federal law, common law or
equitable cause, then to the extent of such recovery, the obligation or part
thereof originally intended to be satisfied, and all Liens, rights and remedies
therefor, shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
SECTION 29. HEADINGS. Section and subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement or be given any substantive effect.
SECTION 30. SEVERABILITY. In case any provision in or obligation under
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation and in any other jurisdiction,
shall not in any way be affected or impaired thereby.
SECTION 31. COUNTERPARTS. This Agreement, and any amendments, waivers,
consents or supplements, may be executed in one or more counterparts, each of
which when so executed and delivered shall be deemed an original and all of
which together shall constitute one and the same Agreement.
SECTION 32. ADDITIONAL GRANTORS. The initial Grantors hereunder shall
be Company and such of the Subsidiaries of Company as are signatories hereto on
the date hereof. From time to time subsequent to the date hereof, additional
Subsidiaries of Company, as required by the Secured Agreement, may become
parties hereto, as additional Grantors (each an "ADDITIONAL GRANTOR"), by
executing and delivering (a) a joinder agreement substantially in the form of
EXHIBIT A attached hereto, pursuant to which each such Additional Grantor shall
agree to join in and become bound by the provisions of this Agreement as a
Grantor and (b) such documents as Collateral Agent may request in order to
22
grant the Collateral Agent for the benefit of Obligee a perfected security
interest in the personal property of such Additional Grantor.
SECTION 33. INTERCREDITOR AGREEMENT. Obligee, Collateral Agent and
Foothill Capital Corporation, as AG Collateral Agent (as defined in the
Intercreditor Agreement), are parties to the Intercreditor Agreement which,
among other things, concerns priorities of Liens in the Collateral and the
exercise of remedies by the parties thereto, and the manner and priority of
distribution of the proceeds of the Collateral among Obligee and Foothill
Capital Corporation, as AG Collateral Agent and the terms of this Agreement are
subject to the terms and provisions of the Intercreditor Agreement.
IN WITNESS WHEREOF, each Grantor and Collateral Agent have caused this
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized effective as of the date first above written.
GRANTORS: ATLANTIC GULF COMMUNITIES CORPORATION,
a Delaware corporation,
ATLANTIC GULF COMMUNITIES MANAGEMENT CORPORATION,
a Florida corporation,
GENERAL DEVELOPMENT RESORTS, INC.,
a Florida corporation,
ENVIRONMENTAL QUALITY LABORATORY, INCORPORATED,
a Florida corporation,
CUMBERLAND COVE, INC.,
a Tennessee corporation,
GENERAL DEVELOPMENT UTILITIES, INC.,
a Florida corporation,
TOWN & COUNTRY II, INC.,
a Florida corporation,
FIVE STAR HOMES, INC.,
a Florida corporation,
AG TITLE CORPORATION,
a Florida corporation,
ATLANTIC GULF COMMERCIAL REALTY, INC.,
a Florida corporation,
AGC SANCTUARY CORPORATION,
a Florida corporation,
ATLANTIC GULF OF TAMPA, INC.,
a Florida corporation,
OCEAN GROVE, INC.,
a Florida corporation,
ATLANTIC GULF UTILITIES, INC.,
a Florida corporation,
SUNSET LAKES DEVELOPMENT CORPORATION,
a Florida corporation,
EQL ENVIRONMENTAL SERVICES, INC.,
a Florida corporation,
AGC CL LIMITED PARTNER, INC.,
a Florida corporation,
23
AG SANCTUARY OF ORLANDO, INC.,
a Florida corporation,
AGC HOMES, INC.,
a Florida corporation,
ATLANTIC GULF COMMUNITIES SERVICE CORPORATION,
a Florida corporation,
ATLANTIC GULF REALTY, INC.,
a Florida corporation
By:
-------------------------------------
Xxxx X. Xxxxxxx
Vice President
Address:
c/o ATLANTIC GULF COMMUNITIES
CORPORATION
0000 Xxxxx Xxxxxxxx Xxxxx, 0xx Xxxxx
Xxxxx, Xxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxxx, Vice President
Facsimile: (000) 000-0000
COLLATERAL AGENT: FOOTHILL CAPITAL CORPORATION, a
California corporation, as Collateral Agent
By:
-------------------------------------
Xxxxxxxx X. Silver
Assistant Vice President
Address:
00000 Xxxxx Xxxxxx Xxxx. Xxxxx 0000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxxx X. Silver
Facsimile: (000) 000-0000
24
Copy to: Apollo Real Estate Advisors II, L.P.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxxxxxxxx
Telecopy: (000) 000-0000
Copy to: Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxx, Esq.
Telecopy: (000) 000-0000
Copy to: Carlton, Fields, Xxxx, Xxxxxxxx, Xxxxx
& Xxxxxx, P.A.
Xxxx Xxxxxx Xxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx XxXxxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
Copy to: Annis, Mitchell, Xxxxxx, Xxxxxxx &
Roehn, P.A.
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx X. Xxxxx, III, Esq.
Telecopy: (000) 000-0000
25
SCHEDULE I
TO JUNIOR PERSONAL PROPERTY SECURITY AGREEMENT
Locations of Equipment:
Locations of Inventory:
SCHEDULE II
TO JUNIOR PERSONAL PROPERTY SECURITY AGREEMENT
Address of offices where records regarding Payment Rights and Chattel Paper are
maintained:
Trade names and/or fictitious business names under which business is conducted:
SCHEDULE III
TO JUNIOR PERSONAL PROPERTY SECURITY AGREEMENT
Filing Jurisdictions
--------------------
EXHIBIT A
TO JUNIOR PERSONAL PROPERTY SECURITY AGREEMENT
Subsidiary Joinder
------------------
___________, 199_
FOOTHILL CAPITAL CORPORATION
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention:___________________________
Re: Subsidiary Joinder
------------------
Ladies and Gentlemen:
Reference hereby is made to that certain Junior Personal Property
Security Agreement (the "SECURITY AGREEMENT"), dated effective as of June 23,
1997, by and among FOOTHILL CAPITAL CORPORATION, as collateral agent (in such
capacity herein called "COLLATERAL AGENT"), for AP-AGC, LLC, a Delaware limited
liability company ("OBLIGEE"), on the one hand, and Atlantic Gulf Communities
Corporation, a Delaware corporation ("COMPANY"), and the Subsidiaries of Company
signatory thereto from time to time, on the other hand. Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to them
in the Security Agreement.
This Subsidiary Joinder is executed and delivered this ___ day of
__________, 199_ by each entity identified as an Additional Grantor on the
signature page hereof (individually, an "ADDITIONAL GRANTOR," and collectively,
the "ADDITIONAL GRANTORS") in favor of Collateral Agent.
SECTION 1. JOINDER. Pursuant to SECTION 32 of the Security Agreement,
each Additional Grantor hereby joins in and agrees to be bound by each and all
of the provisions of the Security Agreement and, in so doing, hereby becomes a
Grantor. Without limiting the generality of the foregoing, each Additional
Grantor, as a Grantor, hereby grants to Collateral Agent, pursuant to SECTION 2
of the Security Agreement, a continuing security interest in all currently
existing and hereafter acquired or arising Collateral and hereby agrees to
execute and deliver such documents as Collateral Agent may request in order to
grant, affirm, perfect, or continue perfected such security interests under
applicable law.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each Additional Grantor
hereby represents and warrants to Collateral Agent that: (a) the execution,
delivery, and performance of this Subsidiary Joinder, the Security Agreement,
and any other Secured
Instrument Document to which such Additional Grantor is party are within its
corporate powers, have been duly authorized by all necessary corporate action,
and are not in contravention of any law, rule, or regulation, or any order,
judgment, decree, writ, injunction, or award of any arbitrator, court, or
governmental authority, or of the terms of its charter or bylaws, or of any
contract or undertaking to which it is a party or by which any of its properties
may be bound or affected; (b) this Subsidiary Joinder, the Security Agreement,
and any and all other Secured Instrument Documents to which such Additional
Grantor is party constitute its legal, valid, and binding obligations,
enforceable against such Additional Grantor in accordance with their respective
terms; (c) the chief executive office and federal employer identification number
of such Additional Grantor are identified on SCHEDULE 1 attached hereto; and (e)
each other representation and warranty applicable to such Additional Grantor as
a Grantor under the Secured Instrument Documents is and will be true and correct
as of the date hereof.
SECTION 3. BINDING EFFECT. This Subsidiary Joinder is binding upon and
enforceable against each Additional Grantor and its successors and assigns. It
shall inure to the benefit of and may be enforced by Collateral Agent and its
successors and assigns.
SECTION 4. NOTICES. Notices to the Additional Grantors shall be given
in the manner set forth in SECTION 22 of the Security Agreement.
SECTION 5. SECURED INSTRUMENT DOCUMENT. This Subsidiary Joinder is a
Secured Instrument Document.
SECTION 6. SECURED INSTRUMENT DOCUMENT REFERENCES. (a) Each reference
in the Security Agreement and the other Secured Instrument Documents to
"Grantors," or words of like import referring to the Grantors shall include and
refer to each of the Additional Grantors; (b) each reference in the Security
Agreement to "this Agreement," "hereunder," "herein," "hereof" or words of like
import referring to the Security Agreement shall mean and refer to the Security
Agreement as supplemented by this Subsidiary Joinder; and (c) each reference in
the Secured Instrument Documents to the "Security Agreement," "thereunder,"
"therein," "thereof" or words of like import referring to the Security Agreement
shall mean and refer to the Security Agreement as supplemented by this
Subsidiary Joinder.
SECTION 7. COUNTERPARTS. This Subsidiary Joinder may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument and any of the parties hereto may execute this Subsidiary
Joinder by signing any such counterpart.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, each of the undersigned has caused this
Subsidiary Joinder to be duly executed and delivered by its officer thereunto
duly authorized as of the date first above written.
ADDITIONAL GRANTORS:
[ADDITIONAL GRANTOR]
By:
-------------------------------------
Name:
Title:
[ADDITIONAL GRANTOR]
By:
-------------------------------------
Name:
Title:
Acknowledged and Agreed:
ATLANTIC GULF COMMUNITIES CORPORATION,
a Delaware corporation, for itself
and each of the other Grantors
By:
------------------------------------
Title:
------------------------------------
FOOTHILL CAPITAL CORPORATION,
a California corporation, as Collateral Agent
By:
------------------------------------
Title:
------------------------------------
SCHEDULE 1
TO SUBSIDIARY JOINDER
Chief Executive Office/Federal Employer Identification Number
-------------------------------------------------------------
