Exhibit 99.7
FIRST AMENDMENT TO SECURITY AGREEMENT
This First Amendment to Security Agreement, dated as of March
15, 2002 (this "Amendment"), is made and entered into by and between Shelbourne
Properties I, L.P., a Delaware limited partnership ("Pledgor"), and Shelbourne
Management Company, LLC, a Delaware limited liability company ("Secured Party).
RECITALS:
WHEREAS, in consideration of the execution and delivery of
that certain Secured Promissory Note, dated as of February 14, 2002 (the
"Note"), by Pledgor in favor of Secured Party and Secured Party's execution and
delivery of that certain Purchase and Contribution Agreement, dated as of
February 14, 2002 (the "Purchase Agreement"), by and among Pledgor, Secured
Party and certain other parties, the parties hereto entered into that certain
Security Agreement, dated as of February 14, 2002 (the "Security Agreement");
WHEREAS, pursuant to that certain Joint Venture Agreement of
Seattle Landmark Joint Venture, dated as of November 24, 1986, by and between
Integrated Resources High Equity Partners, Series 85, a California limited
partnership, as predecessor by merger to Pledgor, and High Equity Partners L.P.
-Series 86, a Delaware limited partnership, as predecessor by merger to
Shelbourne Properties I, L.P., a Delaware limited partnership ("Shelbourne II"),
that certain joint venture (the "Seattle Landmark Joint Venture") was formed,
and the Seattle Landmark Joint Venture owns certain real property commonly known
as the Seattle Tower, located at 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx (the
"Seattle Property");
WHEREAS, pursuant to that certain Joint Venture Agreement of
Century Park I Joint Venture, dated as of September 2, 1986, by and between
Integrated Resources High Equity Partners, Series 85, a California limited
partnership, as predecessor by merger to Pledgor, Shelbourne II, that certain
joint venture (the "Century Park I Joint Venture") was formed, and the Century
Park I Joint Venture owns certain real property commonly known as Century Park
I, located at 8315, 8333, 0000 Xxxxxxx Xxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx (the
"San Diego Property");
WHEREAS, in lieu of Pledgor granting mortgages to Secured
Party encumbering (i) the Seattle Property and (ii) the San Diego Property
pursuant to Section 5.6 of the Purchase Agreement, Pledgor has agreed to pledge,
and grant a security interest in, Pledgor's ownership interest to Secured Party
in (i) the Seattle Landmark Joint Venture and (ii) the Century Park I Joint
Venture to Secured Party as security for Pledgor's obligations under the Note
and the Purchase Agreement;
WHEREAS, Pledgor and Secured party desire to amend the terms
of the Security Agreement as provided in this Amendment; and
WHEREAS, the foregoing recitals are intended to be an integral
part of this Amendment.
NOW, THEREFORE, in consideration of Ten Dollars ($10.00) paid
in hand the foregoing premises and other good and valuable consideration, the
receipt an sufficiency of which are hereby acknowledged, Pledgor and Secured
Party agree to amend the Security Agreement on the date hereof in the following
particulars:
1. Capitalized terms used in this Amendment and not defined herein
shall have the meaning provided in the Security Agreement.
2. Definitions. The Security Agreement is hereby amended by adding the
following definitions to Section 6.1(b):
"Joint Ventures" means collectively the following joint
ventures: (i) 000 Xxxxxxxx Joint Venture, a Delaware general
partnership; (ii) the Seattle Landmark Joint Venture, a Delaware
general partnership; and (iii) the Century Park I Joint Venture, a
Delaware general partnership.
"Lien" means any mortgage, lien, charge, restriction,
pledge, security interest, option, lease or sublease, claim, proxy,
right of any third party, easement, encroachment or encumbrance.
"Permitted Real Property Liens" means
(a) Liens in favor of carriers, warehousemen, mechanics,
materialmen and landlords granted in the ordinary course of
business for amounts not overdue or being diligently
contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have
been set aside on Pledgor's books;
(b) Liens incurred or deposits made in the ordinary course of
business in connection with worker's compensation,
unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders,
statutory obligations, bids, leases or other similar
obligations (other than for borrowed money) entered into in
the ordinary course of business or to secure obligations on
surety and appeal bonds or performance bonds;
(c) judgment Liens in existence for less than 45 days after the
entry thereof or with respect to which execution has been
stayed or the payment of which is covered in full (subject
to a customary deductible) by insurance maintained with
responsible insurance companies;
(d) easements, rights-of-way, zoning restrictions, minor defects
or irregularities in title and other similar encumbrances
not interfering in any material respect with the value or
use of the property to which such Lien is attached;
(e) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable
without penalty or being diligently contested in good faith
by appropriate proceedings and for which adequate
reserves in accordance with GAAP shall have been set aside
on Pledgor's books; and
(f) any Liens in existence as of the date hereof and which would
be shown on a title commitment prepared by a nationally
recognized title insurance company.
"Properties" means collectively the following properties:
(i) the property commonly know as 568-578 Broadway, located at 000-000
Xxxxxxxx, Xxx Xxxx Xxxx, Xxx Xxxx; (ii) the property commonly known as
the Seattle Tower, located at 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxx;
and (iii) the property commonly known as Century Park I, located at
8315, 8333, 0000 Xxxxxxx Xxxx Xxxxx, Xxx Xxxxx, Xxxxxxxxxx.
3. Collateral. The Security Agreement is hereby amended by deleting
from Section 6.1(b) the definition of "Collateral" in its entirety and
substitution the following in place therefore:
"Collateral" shall mean all right, title and interest in, to
and under the interests in: (i) 000 Xxxxxxxx Joint Venture, a Delaware
general partnership, the joint venture owning 000-000 Xxxxxxxx xx Xxx
Xxxx Xxxx; (ii) the Seattle Landmark Joint Venture, a Delaware general
partnership, the joint venture owning certain real property commonly
known as the Seattle Tower, located at 0000 Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxx; and (iii) the Century Park I Joint Venture, a Delaware
general partnership, owning certain real property commonly known as
Century Park I, located at 8315, 8333, 0000 Xxxxxxx Xxxx Xxxxx, Xxx
Xxxxx, Xxxxxxxxxx.
4. Preservation of Status of Security. The Security Agreement is
hereby amended by adding the following new subsections (c)(iii) and (d) at the
end of Section 3.1 as follows:
(c) (iii) Other than Permitted Real Property Liens, without
the prior written consent of the Secured Party, the Pledgor will not
sell, assign, transfer, pledge or otherwise dispose of or encumber any
of its rights in or to the Collateral or any legal or beneficial
interest therein, directly or indirectly or consent to or authorize
the sale, assignment, transfer, pledge, mortgage or other disposition
of or encumbrance of any of the Properties.
(d) Other Financing Statements. The Pledgor shall not file,
or suffer to be on file, or authorize or permit to be filed or to be
on file, in any jurisdiction, any financing statement, mortgage, deed
of trust or like instrument with respect to the Collateral or any of
the Properties in which the Secured Party is not named as the sole
secured party, mortgagee or beneficiary other than Permitted Real
Property Liens.
5. Additional Covenants. The Security Agreement is hereby amended by
adding the following new Section 3.4, Section 3.5 and Section 3.6 to the end of
Article III as follows:
Section 3.4 Taxes; Compliance. The Pledgor shall (a) pay or
cause to be paid when due all Taxes, assessments and governmental
charges levied or assessed or imposed upon or with respect to the
Collateral or any of the Properties or its sale or other disposition
and (b) comply with or cause to be complied with all applicable laws
relating to the Collateral and each of the Properties.
Section 3.5 Ownership and Defense of Collateral and
Properties.
(a) The Pledgor shall at all times (a) have good title to,
and be the sole owner of, each asset that is Collateral, free of all
of the following (i) all Liens other than Permitted Liens, (ii) in the
case of any Collateral that is a financial asset, any adverse claim
(as defined in Section 8-102(a)(1) of the Uniform Commercial Code),
and (iii) in the case of any Collateral that is an instrument, any
claim referred to in Section 3-305(1) of the Uniform Commercial Code
and (b) defend the Collateral against the claims and demands of all
third Persons.
(b) The Pledgor shall at all times cause the Joint Ventures
to have good title to and be the sole owner of its respective Property
free of all Liens other than Permitted Real Property Liens.
Section 3.6 No Amendments, Etc. of Collateral. The Pledgor
shall not enter into, permit to exist, consent to or authorize any
restriction with respect to the transferability of or any rights under
or in respect of the Collateral or the Properties (other than
Permitted Real Property Liens), or any other such asset, other than
restrictions arising under the Loan Documents.
6. Except as amended by this Amendment, the Security Agreement shall
continue to remain in full force and effect.
7. This Amendment shall be governed by the laws of the State of New
York, without regard to choice of law rules.
8. This Amendment may be executed in one or more counterparts, each of
which shall constitute an original and all of which when taken together shall
constitute one binding agreement.
9. The provisions of this Amendment are severable, and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part, then such invalidity or unenforceability shall affect only such clause or
provision, or part thereof, and not any other clause or provision of this
Amendment.
10. This Amendment shall be deemed to constitute an amendment to the
Purchase Agreement to the extent necessary.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
IN WITNESS WHEREOF, the parties hereto have entered into this
Amendment on the date first written above.
PLEDGOR:
SHELBOURNE PROPERTIES I, L.P.
By: SHELBOURNE PROPERTIES I GP, LLC, as General Partner
By: SHELBOURNE PROPERTIES I, INC., as Sole Member
By: /s/Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Director
SECURED PARTY:
SHELBOURNE MANAGEMENT LLC
By: PRESIDIO INVESTMENT CAPITAL COMPANY, LLC
By: /s/Xxxxxx X. Xxxxx
--------------------------------
Name:
Title:
