EXHIBIT 10.28
SECURITY AGREEMENT
THIS SECURITY AGREEMENT, dated as of April 18, 2000, is made by PRIME
GROUP OUTDOOR, LLC, a Delaware limited liability company ("Grantor"), in favor
of HORIZON GROUP PROPERTIES, L.P. ("Lender").
W I T N E S S E T H:
A. Pursuant to a certain Promissory Note dated as of even date herewith in
the principal amount of One Million, Five Hundred Thousand Dollars ($1,500,000)
(the "Note"), Lender has agreed to make a loan (the "Loan"), to Grantor in the
principal amount of the Note.
B. Lender has required, as a condition to making the Loan, that Grantor
execute and deliver this Security Agreement to Lender, in order to secure its
obligations hereunder, under the Note and under any document, instrument or
agreement executed and delivered in connection with the Note (collectively, the
"Obligations").
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. DEFINED TERMS. The following terms shall have the following meanings
(such meanings being equally applicable to both the singular and plural forms of
the terms defined):
"ACCOUNT DEBTOR" shall mean any "account debtor," as such term is
defined in section 9-105(1)(a) of the UCC.
"ACCOUNTS RECEIVABLE" shall mean any "account," as such term is
defined in section 9-106 of the UCC, now owned or hereafter acquired by
Grantor and, in any event, shall include, without limitation, all
accounts, accounts receivable, other receivables, contract rights, chattel
paper, instruments, documents, notes, and other forms of obligations now
owned or hereafter received or acquired by or belonging or owing to
Grantor (including, without limitation, under any trade names, styles or
divisions thereof) whether arising out of goods sold or services rendered
by Grantor or from any other transaction, whether or not the same involves
the sale of goods or services by Grantor (including, without limitation,
any such obligation which might be characterized as an account or contract
right under the UCC) and all of Grantor's rights in, to and under all
purchase orders or receipts now owned or hereafter acquired by it for
goods or services, and all of Grantor's rights to any goods represented by
any of the foregoing (including, without limitation, unpaid seller's
rights of rescission, replevin, reclamation and stoppage in transit and
rights to returned, reclaimed or repossessed goods), and all moneys due or
to become due to Grantor under all contracts for the sale of goods or the
performance of services or both by Grantor (whether or not yet earned by
performance on the part of Grantor or in connection with any other
transaction), now in existence or hereafter occurring, including, without
limitation, the right to receive the proceeds of said purchase orders and
contracts, and all collateral security and guarantees of any kind given by
any person with respect to any of the foregoing.
"CHATTEL PAPER" shall mean any "chattel paper," as such term is
defined in section 9-105(1)(b) of the UCC, now owned or hereafter acquired
by Grantor.
"COLLATERAL" shall have the meaning assigned to such term in Section
2 of this Security Agreement.
"CONTRACTS" shall mean all contracts, undertakings, or other
agreements (other than rights
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evidenced by Chattel Paper, Documents or Instruments) in or under which
Grantor may now or hereafter have any right, title or interest, including,
without limitation, with respect to an Account, any agreement relating to
the terms of payment or the terms of performance thereof.
"DOCUMENTS" shall mean any "documents," as such term is defined in
section 9-105(1)(f) of the UCC, now owned or hereafter acquired by
Grantor.
"EQUIPMENT" shall mean any "equipment," as such term is defined in
section 9-109(2) of the UCC, now owned or hereafter acquired by Grantor
and, in any event, shall include, without limitation, all machinery,
equipment, furnishings, fixtures, vehicles and computers and other
electronic data-processing and other office equipment now owned or
hereafter acquired by Grantor and any and all additions, substitutions and
replacements of any of the foregoing, wherever located, together with all
attachments, components, parts, equipment and accessories installed
thereon or affixed thereto.
"EVENT OF DEFAULT" shall have the meaning set forth in Section 9.
"INSTRUMENTS" shall mean any "instrument," as such term is defined
in section 9-105(1)(i) of the UCC, now owned or hereafter acquired by
Grantor, other than instruments that constitute, or are a part of a group
of writings that constitute, Chattel Paper.
"INTANGIBLE ASSETS" shall mean any "general intangibles," as such
term is defined in section 9-106 of the UCC, now owned or hereafter
acquired by Grantor and, in any event, shall include, without limitation,
all right, title and interest which Grantor may now or hereafter have in
or under any Contract, all customer lists, trademarks, patents, rights in
intellectual property, licenses, permits, copyrights, trade secrets,
proprietary or confidential information, inventions (whether patented or
patentable or not), technical information, procedures, designs, knowledge,
know-how, software, data bases, data, skill, expertise, experience,
processes, models, drawings, materials and records now owned or hereafter
acquired by Grantor, goodwill and rights of indemnification.
"INVENTORY" shall mean any "inventory," as such term is defined in
section 9-109(4) of the UCC, now owned or hereafter acquired by Grantor
and, in any event, shall include, without limitation, all inventory,
merchandise, goods and other personal property now owned or hereafter
acquired by Grantor which are held for sale or lease or are furnished or
are to be furnished under a contract of service or which constitute raw
materials, work in process or materials used or consumed or to be used or
consumed in Grantor's business, or the processing, packaging, delivery or
shipping of the same, and all finished goods.
"INVESTMENT PROPERTY" shall mean all "investment property" as such
term is defined in the UCC, now or hereafter owned or acquired by,
Grantor, wherever located and, in any event, including, without
limitation, (a) stocks, bonds, interests in limited liability companies,
partnership interests, treasuries, certificates of deposit and mutual fund
shares; (b) all securities entitlements of Grantor, including, without
limitation, all rights of Grantor to any securities account and any free
credit balance or other money owing by any securities intermediary with
respect to any such account; (c) all securities accounts held by Grantor;
(d) all commodity contracts held by Grantor; and (e) all commodity
accounts held by Grantor.
"NOTE" shall have the meaning set forth in the Recitals.
"OBLIGATIONS" shall have the meaning set forth in the Recitals.
"PROCEEDS" shall mean "proceeds," as such term is defined in section
9-306(1) of the UCC and, in any event, shall include, without limitation,
(i) any and all proceeds of any insurance, indemnity, warranty or guaranty
payable to Grantor from time to time with respect to any of the
Collateral, (ii) any and all
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payments (in any form whatsoever) made or due and payable to Grantor from
time to time in connection with any requisition, confiscation,
condemnation, seizure or forfeiture of all or any part of the Collateral
by any governmental body, authority, bureau or agency (or any person
acting under color of governmental authority), (iii) any claim of Grantor
against third parties (A) for past, present or future infringement of any
patent or patent license or (B) for past, present or future infringement
or dilution of any trademark or trademark license or for injury to the
goodwill associated with any trademark, trademark registration or
trademark licensed under any trademark license, and (iv) any and all other
amounts from time to time paid or payable under or in connection with any
of the Collateral.
"SECURITY AGREEMENT" shall mean this Security Agreement, as the same
may from time to time be amended, modified or supplemented and shall refer
to this Security Agreement as in effect of the date such reference becomes
operative.
"UCC" shall mean the Uniform Commercial Code as the same may, from
time to time, be in effect in the State of Illinois; PROVIDED, HOWEVER, in
the event that, by reason of mandatory provisions of law, any or all of
the attachment, perfection or priority of Lender's security interest in
any Collateral is governed by the Uniform Commercial Code as in effect in
a jurisdiction other than the State of Illinois, the term "UCC" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for
purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions related to such provisions.
2. GRANT OF SECURITY INTEREST.
(a) As collateral security for the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations, Grantor hereby assigns, conveys, mortgages,
pledges, hypothecates and transfers to Lender, and hereby grants to
Lender, a security interest in, all of Grantor's right, title and interest
in, to and under the following (all of which being hereinafter
collectively called the "Collateral"):
(i) all Accounts Receivable of Grantor;
(ii) all Chattel Paper of Grantor;
(iii) all Contracts of Grantor;
(iv) all Documents of Grantor;
(v) all Equipment of Grantor;
(vi) all Intangible Assets of Grantor;
(vii) all Instruments of Grantor;
(viii) all Inventory of Grantor;
(ix) all Investment Property of Grantor;
(x) to the extent not otherwise included, all Proceeds of
each of the foregoing and all accessions to,
substitutions and replacements for, and rents, profits
and product of each of the foregoing.
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(b) In addition, as collateral security for the prompt and complete
payment when due of the Obligations and in order to induce Lender as
aforesaid, Lender is hereby granted a lien and security interest in all
property of Grantor held by Lender, including, without limitation, all
property of every description, now or hereafter in the possession or
custody of or in transit to Lender for any purpose, including safekeeping,
collection or pledge, for the account of Grantor, or as to which Grantor
may have any right or power.
(c) The Collateral shall not include any assets of Grantor in which
Grantor has granted Old National Bank a security interest pursuant to that
certain Commercial Security Agreement dated April 14, 2000 between Grantor
and Old National Bank, which Grantor represents and warrants consist
solely of the assets described on EXHIBIT A attached hereto, to the extent
that a breach of or a default under such Commercial Security Agreement
would result by including any such assets within the definition of the
Collateral.
3. RIGHTS OF LENDER; LIMITATIONS ON LENDER'S OBLIGATIONS.
(a) It is expressly agreed by Grantor that, anything herein to the
contrary notwithstanding, Grantor shall remain liable under each of its
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder and Grantor shall perform all of
its duties and obligations thereunder, all in accordance with and pursuant
to the terms and provisions of each such Contract. Lender shall not have
any obligation or liability under any Contract by reason of or arising out
of this Security Agreement or the granting to Lender of a security
interest therein or the receipt by Lender of any payment relating to any
Contract pursuant hereto, nor shall Lender be required or obligated in any
manner to perform or fulfill any of the obligations of Grantor under or
pursuant to any Contract, or to make any payment, or to make any inquiry
as to the nature or the sufficiency of any payment received by it or the
sufficiency of any performance by any party under any Contract, or to
present or file any claim, or to take any action to collect or enforce any
performance or the payment of any amounts which may have been assigned to
it or to which it may be entitled at any time or times.
(b) Grantor hereby authorizes Lender, at any time or times after the
occurrence and during the continuance of an Event of Default, to (i)
notify any or all Account Debtors that the Accounts Receivable have been
assigned to Lender and that Lender has a security interest therein and
(ii) direct such Account Debtors to make all payments due from them to
Grantor upon the Accounts Receivable directly to Lender or to a lock box
designated by Lender. Lender shall promptly furnish Grantor with a copy of
any such notice sent. Any such notice, in Lender's sole discretion, may be
sent on Grantor's stationery, in which event Grantor shall co-sign such
notice with Lender.
(c) Lender shall have the right to make test verifications of the
Accounts Receivable in any manner and through any commercially reasonable
medium that it considers advisable, and Grantor agrees to furnish all such
assistance and information as Lender may require in connection therewith.
Grantor at its expense will cause certified independent public accountants
satisfactory to Lender to prepare and deliver to Lender at any time and
from time to time promptly upon Lender's request, the following reports:
(i) a reconciliation of all its Accounts Receivable, (ii) an aging of all
its Accounts Receivable, (iii) trial balances, and (iv) a test
verification of such Accounts Receivable as Lender may request.
4. REPRESENTATIONS AND WARRANTIES. Grantor hereby represents and warrants
that:
(a) Except for the security interest granted to Lender pursuant to
this Security Agreement, Grantor is the sole owner of each item of the
Collateral in which it purports to grant a security interest hereunder,
having good and marketable title thereto, free and clear of any and all
liens and encumbrances. No material amounts payable under or in connection
with any of its Accounts Receivable or Contracts are
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evidenced by Instruments which have not been delivered to Lender.
(b) No effective security agreement, financing statement, equivalent
security or lien instrument or continuation statement covering all or any
part of the Collateral has been executed by Grantor or is on file or of
record in any public office, except such as may have been filed by Grantor
in favor of Lender pursuant to this Security Agreement.
(c) Upon the filing of appropriate financing statements, this
Security Agreement shall be effective to create a valid and continuing
first priority lien on and first priority perfected security interest in
the Collateral with respect to which a security interest may be perfected
by filing pursuant to the UCC in favor of Lender prior to all other liens,
and is enforceable as such as against creditors of and purchasers from
Grantor. All action necessary or desirable to protect and perfect such
security interest in each item of the Collateral has been duly taken.
(d) Grantor's principal place of business and the place where its
records concerning the Collateral are kept is located at the address of
Grantor set forth in Section 12 hereof, and Grantor will not change such
principal place of business or remove such records unless it has taken
such action as is necessary to cause the security interest of Lender in
the Collateral to continue to be perfected. Grantor will not change its
principal place of business or the place where its records concerning the
Collateral is kept without giving thirty (30) days' prior written notice
thereof to Lender.
(e) Grantor is a limited liability company, duly formed, validly
existing and in good standing under the laws of the State of Delaware;
Grantor is properly qualified to do business and is in good standing under
the laws of each state in which it either owns property or transacts
business; the execution, delivery and performance of this Security
Agreement, the Note and all other related documents and agreements have
been authorized by all necessary actions of Grantor's Board of Managers
and member; the Note, this Agreement and all other related documents and
agreements have been duly executed and delivered by Grantor and constitute
the legal, valid and binding obligations of Grantor enforceable in
accordance with their respective terms.
(f) Grantor is the owner of all assets and property relating to the
outdoor billboard advertising business described in that certain Business
Plan of Prime Outdoor Group prepared by Xxxx Xxxxxx and Xxxx Xxxxx; a
true, correct and complete list of all of Grantor's assets is attached
hereto as Exhibit B.
(g) Neither the execution, delivery and performance of the Note or
this Security Agreement, nor the exercise of Lender's rights and remedies
thereunder or hereunder, shall violate, conflict with, breach or cause a
default under any document, instrument or agreement applicable to or
relating to Grantor or any portion of the Collateral or to which Borrower
is a party or by which it is bound.
5. COVENANTS. Grantor covenants and agrees with Lender that from and after
the date of this Security Agreement and until the Obligations are fully
satisfied:
(a) FINANCING STATEMENTS AND FURTHER DOCUMENTATION. Grantor will
join with Lender in the execution and filing of such financing statement
or statements in the form and content reasonably required by Lender.
Grantor will pay all costs of filing any financing, continuation or
termination statements with respect to the security interest created by
this Agreement, together with costs and expenses of any lien search
required by Lender, during the term hereof, either as a condition
precedent to the extension of the Loan or as a condition precedent to any
advance made by Lender to Grantor hereunder. At any time and from time to
time, upon the written request of Lender, and at the sole expense of
Grantor, Grantor will promptly and duly execute and deliver any and all
such further instruments and documents and
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take such further action as Lender may reasonably deem desirable to obtain
the full benefits of this Security Agreement and of the rights and powers
herein granted, including, without limitation, using its best efforts to
secure all consents and approvals necessary or appropriate for the
assignment to Lender of any Contract held by Grantor or in which Grantor
has any rights not heretofore assigned, the filing of any financing or
continuation statements under the UCC with respect to the liens and
security interests granted hereby, transferring Collateral to the Lender's
possession (if a security interest in such Collateral can be perfected by
possession), placing the interest of Lender as lienholder on the
certificate of title of any vehicle and using its best efforts to obtain
waivers of liens from landlords and mortgagees. Grantor also hereby
authorizes Lender to file any such financing or continuation statement
without the signature of Grantor to the extent permitted by applicable
law.
(b) SPECIAL COLLATERAL. Immediately upon Grantor's receipt of that
portion of the Collateral which is or becomes evidenced by an agreement,
instrument and/or document, including, without limitation, promissory
notes, trade acceptances, documents of title and warehouse receipts (the
"Special Collateral"), Grantor shall deliver the original thereof to
Lender, together with appropriate endorsements or other specific evidence
(in form and substance reasonably acceptable to Lender) of assignment
thereof to Lender.
(c) MAINTENANCE OF RECORDS. Grantor will keep and maintain at its
own cost and expense satisfactory and complete records of the Collateral,
including, without limitation, a record of all payments received and all
credits granted with respect to the Collateral and all other dealings with
the Collateral. Grantor will xxxx its books and records pertaining to the
Collateral to evidence this Security Agreement and the security interests
granted hereby. All Chattel Paper will be marked with the following
legend: "This writing and the obligations evidenced or secured hereby are
subject to the security interest of Horizon Group Properties, Inc. (or any
successor lender)". For Lender's further security, Grantor agrees that
Lender shall have a special property interest in all of Grantor's books
and records pertaining to the Collateral and, upon the occurrence and
during the continuation of any Event of Default, Grantor shall deliver and
turn over true, correct and complete copies of any such books and records
to Lender or to its representatives at any time on demand of Lender. Prior
to the occurrence of an Event of Default and upon reasonable notice from
Lender, Grantor shall permit any representative of Lender to inspect such
books and records and will provide photocopies thereof to Lender.
(d) INDEMNIFICATION. In any suit, proceeding or action brought by
Lender relating to any Account Receivable, Chattel Paper, Contract,
Intangible Asset or Instrument for any sum owning thereunder, or to
enforce any provision of any Account Receivable, Chattel Paper, Contract,
Intangible Asset or Instrument, Grantor will save, indemnify and keep
Lender harmless from and against all expense, loss or damage suffered by
reason of any defense, setoff, counterclaim, recoupment or reduction of
liability whatsoever of the obligor thereunder, arising out of a breach by
Grantor of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to, or in favor of,
such obligor or its successors from Grantor, and all such obligations of
Grantor shall be and remain enforceable against and only against Grantor
and shall not be enforceable against Lender.
(e) COMPLIANCE WITH LAWS, ETC. Grantor will comply, in all material
respects, with all acts, rules, regulations, orders, decrees and
directions of any governmental authority, applicable to the Collateral or
any part thereof or to the operation of Grantor's business; PROVIDED,
HOWEVER, that Grantor may contest any act, regulation, order, decree or
direction in any reasonable manner which shall not in the sole opinion of
Lender, adversely affect Lender's rights hereunder or adversely affect the
first priority of its security interest in the Collateral.
(f) PAYMENT OF OBLIGATIONS. Grantor will pay promptly when due all
charges imposed upon the Collateral or in respect of its income or profits
therefrom and all claims of any kind (including, without limitation,
claims for labor, material and supplies).
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(g) COMPLIANCE WITH TERMS OF ACCOUNTS, ETC. In all material
respects, Grantor will perform and comply with all obligations in respect
of Accounts Receivable, Chattel Paper and Contracts and all other
agreements to which it is a party or by which it is bound.
(h) LIMITATION ON LIENS ON COLLATERAL. Except for the liens
previously granted to Old National Bank, Grantor will not create, permit
or suffer to exist, and will defend the Collateral and any real property
now or hereafter owned by Grantor against and take such other action as is
necessary to remove, any lien on the Collateral or any of its real
property, and will defend the right, title and interest of Lender in and
to any of Grantor's rights under the Chattel Paper, Contracts, Documents,
Intangible Assets and Instruments and to the Equipment and Inventory and
real property and in and to the Proceeds thereof against the claims and
demands of all persons whomsoever.
(i) MAINTENANCE OF INSURANCE. Grantor will maintain, with
financially sound and reputable companies, insurance policies (i) insuring
its Inventory and Equipment against loss by fire, explosion, theft and
such other casualties as are usually insured against by companies engaged
in the same or similar businesses and (ii) insuring Grantor and Lender
against liability for personal injury and property damage relating to such
Inventory and Equipment, such policies to be in such amounts and against
at least such risks as are usually insured against, in the same general
area by companies engaged in the same or a similar business, naming Lender
as an additional insured with losses payable to Grantor and Lender, as
their respective interests may appear, under a standard non-contributory
"mortgagee", "lender" or "secured party" clause. Grantor shall, if so
requested by Lender, deliver to Lender as often as Lender may reasonably
request, a report of a reputable insurance broker satisfactory to Lender
with respect to the insurance on its Inventory and Equipment. All
insurance with respect to the Inventory and Equipment shall (i) contain a
clause which provides that Lender's interest under the policy will not be
invalidated by any act or omission of, or any breach of warranty by, the
insured, or by any change in the title, ownership or possession of the
insured property, or by the use of the property for purposes more
hazardous than is permitted in the policy, and (ii) provide that no
cancellation, reduction in amount or change in coverage thereof shall be
effective until at least thirty (30) days after receipt by Lender of
written notice thereof.
(j) LIMITATIONS ON DISPOSITION. Grantor will not sell, lease,
transfer or otherwise dispose of any significant portion of the
Collateral, without Lender's prior written consent.
(k) FURTHER IDENTIFICATION OF COLLATERAL. Grantor will, if so
requested by Lender, furnish to Lender, as often as Lender reasonably
requests, statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
Lender may reasonably request, all in reasonable detail.
(l) NOTICES. Grantor will advise Lender promptly, in reasonable
detail, (i) of any material lien, security interest, encumbrance or claim
made or asserted against any of the Collateral, (ii) of any material
change in the composition of the Collateral, and (iii) of the occurrence
of any other event which would have a material adverse effect on the
aggregate value of the Collateral or on the security interests created
hereunder.
(m) RIGHT OF INSPECTION. During regular business hours and upon
reasonable prior notice (unless an Event of Default has occurred and is
continuing, in which case at all times), Lender shall have full and free
access to all the books and records and correspondence of Grantor, and
Lender or its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and Grantor agrees to render to
Lender, at Grantor's cost and expense, such clerical and other assistance
as may be reasonably requested with regard thereto. Lender and its
representatives shall also have the right to enter into and upon any
premises where any of the Equipment or Inventory is located for the
purpose of
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inspecting the same, observing its use or otherwise protecting its
interests therein.
(n) CONTINUOUS PERFECTION. Grantor will not change its name,
identity or corporate structure in any manner which might make any
financing or continuation statement filed in connection herewith seriously
misleading within the meaning of section 9-402(7) of the UCC (or any other
then applicable provision of the UCC) unless Grantor shall have given
Lender at least thirty (30) days' prior written notice thereof and shall
have taken all action (or made arrangements to take such action
substantially simultaneously with such change if it is impossible to take
such action in advance) necessary or reasonably requested by Lender to
amend such financing statement or continuation statement so that it is not
seriously misleading.
(o) REAL PROPERTY. In the event Grantor hereafter acquires any real
property or any interest in real property, Grantor shall notify Lender in
writing in advance of the acquisition thereof, and if requested by Lender
shall grant Lender a first priority mortgage lien on such property
concurrently with the acquisition thereof, and agrees not to grant any
lien, encumbrance, mortgage or security interest in such real property to
any other person without Lender's prior written consent. In the event
Grantor currently owns any real property or any interest in real property,
Grantor shall promptly notify Lender in writing, and upon Lender's request
shall grant Lender a first priority mortgage lien on such property.
6. LENDER'S APPOINTMENT AS ATTORNEY-IN-FACT.
(a) Grantor hereby irrevocably constitutes and appoints Lender and
any officer or agent thereof, with full power of substitution, as its true
and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of Grantor and in the name of Grantor or in its own
name, from time to time in Lender's discretion, for the purpose of
carrying out the terms of this Security Agreement, to take any and all
appropriate action and to execute and deliver any and all documents and
instruments which may be necessary or desirable to accomplish the purposes
of this Security Agreement and, without limiting the generality of the
fore going, hereby gives Lender the power and right, on behalf of Grantor,
without notice to or assent by Grantor to do the following:
(i) to ask, demand, collect, receive and give acquittances and
receipts for any and all moneys due and to become due under
any Collateral and, in the name of Grantor or its own name or
otherwise, to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other Instruments for
the payment of moneys due under any Collateral and to file any
claim or to take any other action or proceeding in any court
of law or equity or otherwise deemed appropriate by Lender for
the purpose of collecting any and all such moneys due under
any Collateral whenever payable and to file any claim or to
take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by Lender for the
purpose of collecting any and all such moneys due under any
Collateral whenever payable;
(ii) to pay or discharge taxes, liens, security interests or other
encumbrances levied or placed on or threatened against the
Collateral, to effect any repairs or any insurance called for
by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) (A) to direct any party liable for any payment under any of
the Collateral to make payment of any and all moneys due, and
to become
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due thereunder, directly to Lender or as Lender shall direct;
(B) to receive payment of and receipt for any and all moneys,
claims and other amounts due, and to become due at any time,
in respect of or arising out of any Collateral; (C) to sign
and indorse 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 constituting or relating to the
Collateral; (D) to commence and prosecute any suits, actions
or proceedings at law or in equity in any court of competent
jurisdiction to collect the Collateral or any part thereof and
to enforce any other right in respect of any Collateral; (E)
to defend any suit, action or proceeding brought against
Grantor with respect to any Collateral; (F) to settle,
compromise or adjust any suit, action or proceeding described
above and, in connection therewith, to give such discharges or
releases as Lender may deem appropriate; and (G) 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 Lender were the absolute owner thereof
for all purposes, and to do, at Lender's option and Grantor's
expense, at any time, or from time to time, all acts and
things which Lender reasonably deems necessary to protect,
preserve or realize upon the Collateral and Lender's lien
therein, in order to effect the intent of this Security
Agreement, all as fully and effectively as Grantor might do.
(b) Grantor hereby ratifies, to the extent permitted by law, all
that said attorneys shall lawfully do or cause to be done by virtue
hereof. The power of attorney granted pursuant to this Section 6 is a
power coupled with an interest and shall be irrevocable until the
Obligations are indefeasibly paid in full. Lender hereby agrees that it
shall not exercise the power of attorney granted to it under this Section
6 unless or until an Event of Default has occurred.
(c) The powers conferred on Lender hereunder are solely to protect
Lender's interests in the Collateral and shall not impose any duty upon it
to exercise any such powers. Lender shall be accountable only for amounts
that it actually receives as a result of the exercise of such powers and
neither it nor any of its officers, directors, employees or agents shall
be responsible to Grantor for any act or failure to act, except for its
own gross negligence or willful misconduct.
(d) Grantor also authorizes Lender, at any time and from time to
time upon the occurrence and during the continuation of any Event of
Default, (i) to communicate in its own name with any party to any Contract
with regard to the assignment of the right, title and interest of Grantor
in and under the Contracts hereunder and other matters relating thereto
and (ii) to execute, in connection with the sale provided for in Section 8
hereof, any endorsements, assignments or other instruments of conveyance
or transfer with respect to the Collateral.
7. PERFORMANCE BY LENDER OF GRANTORS' OBLIGATION. If Grantor fails to
perform or comply with any of its agreements contained herein (after notice, to
the extent required to be delivered by Lender hereunder) and Lender, as provided
for by the terms of this Security Agreement, shall itself perform or comply, or
otherwise cause performance or compliance, with such agreement, the reasonable
expenses of Lender incurred in connection with such performance or compliance,
together with interest thereon at the rate then in effect in respect of the
Loan, shall be payable by Grantor to Lender on demand and shall constitute
Obligations secured hereby.
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8. REMEDIES, RIGHTS UPON DEFAULT.
(a) If an Event of Default shall occur and be continuing, Lender may
accelerate the Obligations and declare the Obligations to be immediately
due and payable, without notice or demand, exercise all other rights and
remedies granted to it in this Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the
Obligations, and exercise all rights and remedies of a secured party under
the UCC. Without limiting the generality of the foregoing, Grantor
expressly agrees that in any such event Lender, without demand of
performance or other demand, advertisement or notice of any kind (except
the notice specified below of time and place of public or private sale) to
or upon Grantor or any other person (all and each of which demands,
advertisements and/or notices are hereby expressly waived to the maximum
extent permitted by the UCC and other applicable law), may forthwith
collect, receive, appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give an option or
options to purchase, or sell or otherwise dispose of and deliver said
Collateral (or contract to do so), or any part thereof, in one or more
parcels at public or private sale or sales, at any exchange or broker's
board or at any of Lender's offices or elsewhere at such prices as it may
deem best, for cash or on credit or for future delivery without assumption
of any credit risk. Lender shall have the right upon any such public sale
or sales, and, to the extent permitted by law, upon any such private sale
or sales, to purchase the whole or any part of said Collateral so sold,
free of any right or equity of redemption, which equity of redemption
Grantor hereby releases. Grantor further agrees, at Lender's request, to
assemble the Collateral and make it available to Lender at places which
Lender shall reasonably select, whether at Grantor's premises or
elsewhere. Lender shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, as provided in
Section 8(d) hereof, Grantor remaining liable for any deficiency remaining
unpaid after such application, and only after so paying over such net
proceeds and after the payment by Lender of any other amount required by
any provision of law, including section 9-504(1)(c) of the UCC, need
Lender account for the surplus, if any, to Grantor. To the maximum extent
permitted by applicable law, Grantor waives all claims, damages, and
demands against Lender arising out of the repossession, retention or sale
of the Collateral except such as arise out of the gross negligence or
wilful misconduct of Lender. Grantor agrees that the Lender need not give
more than ten (10) days' notice (which notification shall be deemed given
when mailed or delivered on an overnight basis, postage prepaid, addressed
to Grantor at its address referred to in Section 12 hereof) of the time
and place of any public sale or of the time after which a private sale may
take place and that such notice is reasonable notification of such
matters. Grantor shall remain liable for any deficiency if the proceeds of
any sale or disposition of the Collateral are insufficient to pay all
amounts to which Lender is entitled, Grantor also being liable for the
fees of any attorneys employed by Lender to collect such deficiency.
(b) Grantor also agrees to pay all costs of Lender, including,
without limitation, reasonable attorneys' fees, incurred in connection
with the enforcement of any of its rights and remedies hereunder.
(c) Grantor hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in
connection with this Security Agreement or any Collateral.
(d) The Proceeds of any sale, disposition or other realization upon
all or any part of the Collateral shall be distributed by Lender in the
following order of priorities:
FIRST, to Lender in an amount sufficient to pay in full the
reasonable expenses of
10
Lender in connection with such sale, disposition or other
realization, including all expenses, liabilities and advances
incurred or made by Lender in connection therewith, including,
without limitation, reasonable attorney's fees;
SECOND, to Lender (or such other holder of the Obligations) in
an amount equal to the then unpaid Obligations;
FINALLY, upon payment in full of all of the Obligations, to
pay to Grantor, or its representatives or as a court of competent
jurisdiction may direct, any surplus then remaining from such
Proceeds.
9. EVENTS OF DEFAULT. An Event of Default shall be deemed to have occurred
upon the occurrence of any of the following events:
(a) Grantor shall fail to make any payment when due under the terms
of the Note or an Event of Default shall occur under the Note;
(b) Grantor shall fail to perform any obligation or observe any
covenant arising under this Security Agreement or any other document,
instrument or agreement executed and delivered in connection with or
relating to the Obligations and such failure is not cured within fifteen
(15) business days after notice from Lender, or should any representation
or warranty made by Grantor prove to be untrue or misleading in any
material respect when made;
(c) Any of the assets of Grantor with a value in excess of $50,000
shall be attached, seized, levied upon or subjected to a writ or distress
warrant, or come within the possession of any receiver, trustee, custodian
or assignee for the benefit of creditors of Grantor and shall remain
unstayed or undismissed for 10 consecutive days; or any person shall apply
for the appointment of a receiver, trustee or custodian for any of the
assets of Grantor and shall remain unstayed or undismissed for 10
consecutive days; or Grantor shall have concealed, removed or permitted to
be concealed or removed, any part of its property with intent to hinder,
delay or defraud its creditors or any of them or made or suffered a
transfer of any of its property or the incurring of an obligation which
may be fraudulent under any bankruptcy, fraudulent conveyance or other
similar law;
(d) A case or proceeding shall have been commenced against Grantor
in a court having competent jurisdiction seeking a decree or order in
respect of Grantor (i) under the Bankruptcy Code, or any other applicable
Federal, state or foreign bankruptcy or other similar law, (ii) appointing
a custodian, receiver, liquidator, assignee, trustee or sequestrator (or
similar official) of Grantor or of any substantial part of its properties,
or (iii) ordering the winding-up or liquidation of the affairs of Grantor
and such case or proceeding shall remain undismissed or unstayed for 30
consecutive days or such court shall enter a decree or order granting the
relief sought in such case or proceeding;
(e) Grantor shall (i) file a petition seeking relief under the
Bankruptcy Code, or any other applicable Federal, State or foreign
bankruptcy or other similar law, (ii) consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or similar official) of Grantor or of
any substantial part of its properties, (iii) fail generally to pay its
debts as such debts become due, or (iv) take any corporate action in
furtherance of any such action; or
(f) Grantor shall fail to deliver any documents, instruments or
agreements required by Lender to perfect a security interest, mortgage or
lien on any of the Collateral or its interests in
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real property within two business days after delivery of such documents,
instruments or agreements to Grantor.
10. LIMITATION ON LENDER'S DUTY IN RESPECT OF COLLATERAL. Lender shall use
reasonable care with respect to the Collateral in its possession or under its
control. Lender shall not have any other duty as to any Collateral in its
possession or control or in the possession or control of any agent or nominee of
it or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. Upon request of Grantor, Lender
shall account for any moneys received by it in respect of any foreclosure on or
disposition of the Collateral.
11. REINSTATEMENT. This Agreement shall remain in full force and effect
and continue to be effective should any petition be filed by or against Grantor
for liquidation or reorganization, should Grantor become insolvent or make an
assignment for the benefit of creditors or should a receiver or trustee be
appointed for all or any significant part of Grantor's assets, and shall
continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to
applicable law, rescinded or reduced in amount, or must otherwise be restored or
returned by any obligee of the Obligations, whether as a "voidable preference",
"fraudulent conveyance", or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
12. NOTICES. Except as otherwise provided herein, whenever it is provided
herein that any notice, demand, request, consent, approval, declaration or other
communication shall or may be given to or served upon any of the parties by any
other party, or whenever any of the parties desires to give or serve upon any
other communication with respect to this Security Agreement, each such notice,
demand, request, consent, approval, declaration or other communication shall be
in writing and shall be delivered in person with receipt acknowledged, or sent
via overnight courier, addressed as hereafter set forth, or mailed by registered
or certified mail, return receipt requested, postage prepaid, addressed as
follows:
If to Grantor: Prime Outdoor Group, LLC
0000 Xxxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx
Attn: Xxxx Xxxxx
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxx
If to Lender: Horizon Group Properties, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxxxx
13. SEVERABILITY. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such
12
provision in any other jurisdiction.
14. NO WAIVER; CUMULATIVE REMEDIES. Lender shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder, and no waiver shall be valid unless in writing, signed by Lender and
then only to the extent therein set forth. A waiver by Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Lender would otherwise have had on any future occasion. No
failure to exercise nor any delay in exercising on the part of Lender, any
right, power or privilege hereunder, shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or future exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies hereunder provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights and remedies provided by law. None of the terms or provisions of this
Security Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by Lender and, where applicable by Grantor.
15. SUCCESSOR AND ASSIGNS; GOVERNING LAW.
(a) This Security Agreement and all obligations of Grantor hereunder
shall be binding upon the successors and assigns of Grantor, and shall,
together with the rights and remedies of Lender hereunder, inure to the
benefit of Lender, and all future holders of instruments or agreements
evidencing the Obligations and their respective successors and assigns. No
sales of participations, other sales, assignments, transfers or other
dispositions of any agreement governing or instrument evidencing the
Obligations or any portion thereof or interest therein shall in any manner
affect the security interest granted to Lender hereunder.
(b) This Security Agreement shall be governed by, and be construed
and interpreted in accordance with, the laws of the State of Illinois.
16. FURTHER INDEMNIFICATION. Grantor agrees to pay, and to save Lender
harmless from, any and all liabilities with respect to, or resulting from any
delay in paying, any and all excise, sales or other similar taxes which may be
payable or determined to be payable with respect to any of the Collateral or in
connection with any of the transactions contemplated by this Security Agreement.
17. WAIVER OF JURY TRIAL AND WAIVER. GRANTOR WAIVES ALL RIGHT TO TRIAL BY
JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS OR REMEDIES
HEREUNDER, UNDER THE NOTE OR UNDER ANY OTHER DOCUMENT, INSTRUMENT OR AGREEMENT
RELATED TO THE OBLIGATIONS. AS PART OF THE CONSIDERATION FOR VALUE THIS DAY
RECEIVED, GRANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE COUNTY OF XXXX, STATE OF ILLINOIS, AND WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON GRANTOR, AND CONSENTS THAT ALL SUCH SERVICE
OF PROCESS BY MADE BY REGISTERED MAIL DIRECTED TO GRANTOR AT THE ADDRESSES
PROVIDED IN SECTION 12 ABOVE AND SERVICE SO MADE SHALL BE DEEMED TO BE COMPLETED
FIVE (5) BUSINESS DAYS AFTER THE SAME SHALL HAVE BEEN DEPOSITED IN THE UNITED
STATES MAILS, POSTAGE PREPAID. GRANTOR WAIVES ANY OBJECTION TO VENUE OF ANY
ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT.
[INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, each of the parties hereto has caused this Security
Agreement to be executed and delivered by its duly authorized officer on the
date first set forth above.
PRIME OUTDOOR GROUP, LLC
By: /s/ Xxxx X. Xxxxxx
-----------------------
Name: Xxxx X. Xxxxxx
---------------------
Title: President
--------------------
Accepted and acknowledged by:
HORIZON GROUP PROPERTIES, L.P.
By: Horizon Group Properties, Inc., general partner
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------------------
Title: CFO
---------------------------------------------
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