EXHIBIT 10.3
SECURITY AND COLLATERAL AGENCY AGREEMENT
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THIS SECURITY AND COLLATERAL AGENCY AGREEMENT (the "Agreement") is made and
dated as of June 28, 2002, by National Golf Operating Partnership, L.P., a
Delaware limited partnership (together with its successors and permitted
assigns, "Borrower") BNY Midwest Trust Company, an Illinois corporation, not
individually but as collateral agent for the Secured Creditors (as defined
below) (in such capacity, the "Collateral Agent"), Bank One, N.A., not
individually but as agent for the lenders under the 1999 Credit Agreement
(defined below) (the "Administrative Agent"), and the Noteholders (as defined
below). Capitalized terms used herein have the respective meanings ascribed
thereto in Article I hereof.
RECITALS
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A. WHEREAS, pursuant to that certain Amended and Restated Credit Agreement
dated as of July 30, 1999 (as amended by the Extension Agreement and as further
amended, modified or supplemented from time to time in compliance with Section
22 hereof, the "1999 Credit Agreement"), among the Borrower, National Golf
Properties, Inc., a Maryland corporation (together with its successors and
permitted assigns, the "General Partner"), the Administrative Agent and the
lenders named therein (together with any successors and assigns from time to
time, the "Lenders"), the Lenders agreed to provide a term loan facility in the
principal amount of $100,000,000 (the "Term Facility") and a revolving credit
facility in the maximum aggregate principal amount of $200,000,000 (the
"Revolving Facility," and together with the Term Facility, the "Bank Loans"), as
evidenced by the promissory notes executed and delivered thereunder from time to
time (collectively, the "1999 Bank Notes").
B. WHEREAS, pursuant to that certain Note Purchase Agreement dated as of
December 15, 1994 (as amended by an amendment agreement dated as of August 31,
1995 and by the Note Purchase Override Agreement and as further amended,
modified or supplemented from time to time in compliance with Section 22 hereof,
the "1994 Note Purchase Agreement") between the Borrower and the purchasers
party thereto, the Borrower issued and such purchasers purchased $100,000,000
aggregate principal amount of the Borrower's Guarantied Senior Promissory Notes,
comprised of 8.68% Series A Notes, due December 15, 2004 in the aggregate
principal amount of $50,000,000, and 8.73% Series B Notes, due June 15, 2005, in
the aggregate principal amount of $50,000,000 (collectively, the "1994 Notes");
C. WHEREAS, pursuant to that certain Restated Note Agreement dated as of
July 1, 1996 (as amended by the Note Purchase Override Agreement and as further
amended, modified or supplemented from time to time in compliance with Section
22 hereof, the "1996 Restated Note Agreement", and, together with the 1994 Note
Agreement, the "Note Purchase Agreements") between the Borrower and the
purchasers party thereto, Borrower issued and such purchasers purchased
$75,000,000 aggregate principal amount of the Borrower's Senior Guarantied
Promissory Notes, comprised of 7.9% Senior Notes, Series A, due June 15, 2006,
in the aggregate principal amount of $40,000,000, such Series A comprised of
Series A-1 Notes, in the aggregate principal amount of $14,757,700, Series A-2
Notes, in the aggregate principal amount of $13,794,200, and Series A-3 Notes,
in the aggregate principal amount of $11,447,100, and 8% Senior Notes, Series B,
due December 12, 2006 in the aggregate principal amount of $35,000,000 (the
"1996 Notes", and together with the 1994 Notes, the "Notes");
D. WHEREAS, pursuant to the terms of a Forbearance Agreement dated as of
February 8, 2002 among the Borrower, the General Partner, the Administrative
Agent and Lenders (the "Original Forbearance Agreement"), as amended by an
Amendment and Extension of Forbearance Agreement dated as of March 29, 2002 (the
"First Amendment"), a Second Amendment and Extension of Forbearance Agreement
dated as of April 30, 2002 (the "Second Amendment"), a Third Amendment and
Extension of Forbearance Agreement dated as of May 15, 2002 (the "Third
Amendment"), a Fourth Amendment and Extension of Forbearance Agreement dated as
of May 31, 2002 (the "Fourth Amendment"), and a Fifth Amendment and Extension of
Forbearance Agreement dated as of June 14, 2002 (the "Fifth Amendment", and
collectively with the Original Forbearance Agreement, the First Amendment, the
Second Amendment, the Third Amendment and the Fourth Amendment, the "Forbearance
Agreement"), Lenders agreed to forbear from exercising their remedies under the
Loan Documents on account of certain "Specified Defaults" (as defined in Section
1 of the Original Forbearance Agreement) and to extend the Revolving Facility
Termination Date;
E. WHEREAS, by that certain Amendment and Extension of Credit Agreement of
even date herewith by and among the Administrative Agent, the Borrower, the
General Partner" and the Lenders (the "Extension Agreement") the maturity date
of a portion of the principal balance outstanding under the Bank Loans has been
extended, the 1999 Credit Agreement has been amended and certain defaults
thereunder have been waived;
F. WHEREAS, one of the requirements of the Lenders under the Extension
Agreement is that Borrower provide collateral to secure the 1999 Bank Notes in
the form of first priority mortgages or deeds of trust for the benefit of the
Lenders and the Noteholders encumbering real property owned by Borrower and
listed on Schedule 1, attached hereto and made a part hereof (together with all
improvements now or hereafter located thereon, individually a "Collateral
Project", and collectively the "Collateral Projects") and in the form of first
priority security interests in certain other assets of the Borrower as described
below, in each case subject only to Permitted Encumbrances;
G. WHEREAS, Borrower is not permitted to encumber the Collateral Projects
without obtaining the consent of the holders of a certain percentage of the 1994
Notes and the 1996 Notes;
H. WHEREAS, in exchange for a security interest in the Collateral Projects,
the holders of the required percentage of each of the 1994 Notes and the 1996
Notes have agreed to allow Borrower to encumber the Collateral Projects by
placing a mortgage or deed of trust on each Collateral Project in favor of
Collateral Agent, as agent for the Lenders, the holders of the 1994 Notes and
the holders of the 1996 Notes, collectively.
NOW, THEREFORE, in consideration of the above Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
AGREEMENT
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1. Definitions.
"1999 Bank Notes": shall have the meaning assigned thereto in recital
paragraph A hereof.
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"1999 Credit Agreement": shall have the meaning assigned thereto in recital
paragraph A hereof.
"1994 Note Purchase Agreement": shall have the meaning assigned thereto in
recital paragraph B hereof.
"1994 Noteholder Obligations": shall mean the obligations of the Borrower
under the 1994 Note Purchase Agreement and the 1994 Notes.
"1994 Noteholders": shall mean the holders of one or more 1994 Notes.
"1994 Notes": shall have the meaning assigned thereto in recital paragraph
B hereof.
"1996 Noteholder Obligations": shall mean the obligations of the Borrower
under the 1996 Restated Note Agreement and the 1996 Notes.
"1996 Noteholders": shall mean the holders of one or more 1996 Notes.
"1996 Notes": shall have the meaning assigned thereto in recital paragraph
C hereof.
"1996 Restated Note Agreement": shall have the meaning assigned thereto in
recital paragraph C hereof.
"1031 Proceeds Account": shall have the meaning assigned thereto in Section
4(a)(iii)(A) hereof.
"Administrative Agent": shall have the meaning assigned thereto in the
introductory paragraph hereof.
"Affiliate": shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person. A Person shall be deemed to control another Person if the
controlling Person owns 5% or more of any class of voting securities (or other
ownership interests) of the controlled Person or possesses, directly or
indirectly, the power to direct or cause the direction of the management or
policies of the controlled Person, whether through ownership of stock, by
contract or otherwise.
"American Golf": shall mean American Golf Corporation, a California
Subchapter S corporation, the primary tenant of the Collateral Projects.
"Anticipated 1031 Projects": shall have the meaning assigned thereto in
Section 4(a)(iii) hereof.
"Bank Loans": shall have the meaning assigned thereto in recital paragraph
A hereof.
"Bankruptcy Code": shall mean the Bankruptcy Code, Xxxxx 00, Xxxxxx Xxxxxx
Code.
"Bankruptcy Proceeding": shall mean, with respect to any Person, a general
assignment of such Person for the benefit of its creditors, or the institution
by or against such Person of any proceeding seeking relief as debtor, or seeking
to adjudicate such Person as bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment or composition of such Person or its debts,
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under any law relating to bankruptcy, insolvency, reorganization or relief of
debtors, or seeking appointment of a receiver, trustee, custodian or other
similar official for such Person or for any substantial part of its property,
including without limitation any case involving such Person as a debtor under
the Bankruptcy Code.
"Borrower": shall have the meaning assigned thereto in the introductory
paragraph hereof.
"Casualty": shall mean any fire, explosion, flood, collapse or other
casualty affecting any of the Collateral Projects.
"Code": shall mean the Internal Revenue Code of 1986, as amended.
"Collateral": shall mean all assets (including, without limitation, real
property, personal property and fixtures) of the Borrower, both tangible and
intangible (i) described below or (ii) upon which the Borrower is required
pursuant to the terms of this Agreement to grant to the Collateral Agent for the
benefit of the Secured Creditors a Lien, in each case, to the extent of any
right, title and interest of the Borrower therein, but subject in each case to
the rights of Borrower hereunder and under the other Debt Documents and
excluding in each case any property or assets constituting Excluded Assets:
(i) the real property described in Exhibit A to each of the Mortgages,
together with any greater estate therein as hereafter may be acquired by
Borrower (collectively, the "Land"),
(ii) all buildings, structures and other improvements, now or at any
time situated, placed or constructed upon the Land (the "Improvements"),
(iii) all building or construction materials, all machinery, supplies,
equipment, fixtures, apparatus and other items of personal property now
owned or hereafter acquired by Borrower and now or hereafter attached to,
installed in or used in connection with any of the Improvements or the
Land, including, without limitation, any and all partitions, window screens
and shades, drapes, rugs and other floor coverings, awnings, motors,
engines, boilers, furnaces, pipes, plumbing, cleaning, call and sprinkler
systems, fire extinguishing apparatus and equipment, water tanks, swimming
pools, heating, ventilating, plumbing, lighting, communications and
elevator fixtures, laundry, incinerating, air conditioning and air cooling
equipment and systems, gas and electric machinery and equipment, disposals,
dishwashers, furniture, refrigerators and ranges, security systems, art
work, recreational and pool equipment and facilities of all kinds, water,
gas, electrical, storm and sanitary sewer facilities of all kinds, and all
other utilities whether or not situated in easements together with all
accessions, replacements, betterments and substitutions for any of the
foregoing (the "Fixtures"),
(iv) all right, title and interest of Borrower in and to all goods,
accounts, general intangibles, instruments, documents, accounts receivable,
chattel paper and all other personal property of any kind or character,
including such items of personal property as defined in the Uniform
Commercial Code in the state where each property is located, now owned or
hereafter acquired by Borrower and now or hereafter affixed to, placed
upon, used in connection with, arising from or otherwise related to the
Land and/or the Improvements or which may be used in or relating to the
planning, development, financing or operation of
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the Land and/or the Improvements, including, without limitation, furniture,
furnishings, equipment, machinery, money, insurance proceeds, condemnation
awards, accounts, contract rights, trademarks, goodwill, chattel paper,
documents, trade names, licenses and/or franchise agreements, rights of
Borrower under leases of Fixtures or other personal property or equipment,
inventory, all refundable, returnable or reimbursable fees, deposits or
other funds or evidences of credit or indebtedness deposited by or on
behalf of Borrower with any Governmental Authorities, boards, corporations,
providers of utility services, public or private, including specifically,
but without limitation, all refundable, returnable or reimbursable tap
fees, utility deposits, commitment fees and development costs and all
refunds, rebates or credits in connection with a reduction in real estate
taxes and assessments against any of the Collateral Projects as a result of
tax certiorari or any applications or proceedings for reduction (the
"Personalty"),
(v) all right, title and interest of Borrower in and to all reserves,
escrows or impounds including without limitation the Loss Proceeds Account,
the Title-Related Account and the Project-Related Cash Collateral Account;
(vi) all right, title and interest of Borrower in and to all plans,
specifications, shop drawings and other technical descriptions prepared for
construction, repair or alteration of the Improvements, and all amendments
and modifications thereof,
(vii) all leasehold estates, leases, subleases, sub-subleases,
licenses, concessions, occupancy agreements or other agreements (written or
oral, now or at any time in effect and every modification, amendment or
other agreement relating thereto, including every guarantee of the
performance and observance of the covenants, conditions and agreements to
be performed and observed by the other party thereto) which grant a
possessory interest in, or the right to use or occupy, all or any part of
any Collateral Project, together with all related security and other
deposits (the "Leases"),
(viii) all right, title and interest of Borrower in and to all of the
rents, revenues, income, proceeds, issues, profits (including all oil or
gas or other mineral royalties and bonuses), security and other types of
deposits, and other benefits paid or payable and to become due or payable
by parties to the Leases other than Borrower for using, leasing, licensing,
possessing, occupying, operating from, residing in, selling or otherwise
enjoying any portion or portions of any Collateral Project (the "Rents"),
(ix) all right, title and interest of Borrower in and to all other
agreements, such as construction contracts, architects' agreements,
engineers' contracts, utility contracts, maintenance agreements, management
agreements, service contracts, permits, licenses, certificates and
entitlements in any way relating to the development, construction, use,
occupancy, operation, maintenance, enjoyment, acquisition or ownership of
each Collateral Project or the sale of goods or services produced in or
relating to each Collateral Project,
(x) all right, title and interest of Borrower in and to all rights,
privileges, titles, interests, liberties, tenements, hereditaments,
rights-of-way, easements, sewer rights, water, water courses, water rights
and powers, air rights and development rights, licenses, permits and
construction and equipment warranties, appendages and appurtenances
appertaining to the foregoing, and all right, title and interest, if any,
of Borrower in and to any streets, ways,
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alleys, passages, strips or gores of land adjoining the Land or any part
thereof,
(xi) all accessions, replacements, renewals, additions and
substitutions for any of the foregoing and all proceeds thereof,
(xii) all insurance policies, unearned premiums therefor and proceeds
from such policies, including, without limitation, the right to receive and
apply the proceeds of any insurance, judgments or settlements made in lieu
thereof, covering any of the above property now or hereafter acquired by
Borrower,
(xiii) all right, title and interest of Borrower in and to all
mineral, riparian, littoral, water, oil and gas rights now or hereafter
acquired and relating to all or any part of the Collateral Projects, and
(xiv) all of Borrower's right, title and interest in and to any
awards, remunerations, reimbursements, settlements or compensation
heretofore made or hereafter to be made by any Governmental Authority
pertaining to the Land, Improvements, Fixtures or Personalty.
"Collateral Agent": shall have the meaning assigned thereto in the
introductory paragraph hereof.
"Collateral Agent's Fee": shall mean collectively, all fees payable to the
Collateral Agent from time to time pursuant to the fee proposal attached hereto
as Exhibit A.
"Collateral Payments": shall have the meaning assigned thereto in Section
11(a) hereof.
"Collateral Proceeds": shall mean and include the proceeds of any sale or
disposition of any of the Collateral in connection with (i) the Enforcement of
the Liens granted pursuant to the Security Instruments or (ii) any other
exercise of the rights of the Collateral Agent on behalf of the Secured
Creditors, or by any Secured Creditor, pursuant to the Security Instruments and
this Agreement.
"Collateral Projects": shall have the meaning assigned thereto in recital
paragraph F hereof.
"Condemnation": shall mean the taking or voluntary conveyance of all or a
part of a Collateral Project or any interest therein or right accruing thereto
or use thereof, as the result of, or in settlement of, any condemnations or
other eminent domain proceeding by any Governmental Authority.
"Debt Documents": shall mean (1) the 1994 Note Purchase Agreement, (2) the
1996 Restated Note Agreement, (3) the 1999 Credit Agreement, (4) the 1999 Bank
Notes, (5) the Notes, (6) this Agreement, (7) any subordination, non-disturbance
and attornment agreement among Borrower, the Collateral Agent and American Golf,
(8) the Security Instruments, (9) all other documents now or hereafter executed
by the Borrower, or any other person or entity to evidence or secure the payment
of the Secured Obligations and (10) all modifications, restatements, extensions,
renewals and replacements of the foregoing.
"Default Notice": shall have the meaning assigned thereto in Section 12(a).
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"Default Rate": shall have the meaning assigned thereto in Section 16.
"Deferred Makewhole Payment Date": shall have the meaning assigned to such
term in the Note Purchase Override Agreement.
"Directing Creditors": shall mean (a) the Required Creditors prior to the
time specified in clause (b), and (b) any one of the following parties, from and
after the time at which such party or parties (i.e. the Lenders with respect to
clause (i), the 1994 Noteholders with respect to clause (ii), and the 1996
Noteholders with respect to clause (iii)) have accelerated their respective
portion of the Secured Obligations: (i) Administrative Agent, with respect to
the Lenders, (ii) the Required 1994 Noteholders, or (iii) the Required 1996
Noteholders.
"Disallowed Obligation": shall have the meaning assigned thereto in Section
28(a).
"Distribution": shall mean any and all payments or distributions (direct or
indirect) of any kind or character (whether such payments or distributions are
attributable to Collateral or to assets or property other than Collateral and
whether in the form of cash or any other property) in respect of any of the
Secured Obligations, including, without limitation:
(i) any voluntary payment or distribution, including any prepayment
(whether optional or otherwise) or any purchase of any of the Secured
Obligations by the Borrower, the General Partner or any Affiliate of the
Borrower or the General Partner (including any debt or equity refinancing
from any source);
(ii) any setoff or assertion of a banker's lien or similar right
(including, without limitation, any secured claim arising therefrom under
the Bankruptcy Code);
(iii) any distribution of proceeds from any exercise of rights or
remedies by any Secured Creditor (including, without limitation, any
Collateral Proceeds);
(iv) any payments or other distributions (including, without
limitation, payments made through setoff of deposit balances or otherwise
or payments or recoveries from any security interest granted to any Secured
Creditor) made pursuant to the terms of any Security Instrument or the
exercise of any rights (statutory or otherwise) with respect to the
Collateral or any Obligation; and
(v) any payment or other distribution from the estate of the Borrower,
the General Partner, or any subsidiary of the Borrower or the General
Partner in any Bankruptcy Proceeding;
provided, that, the term "Distributions" shall not include any payment or
distribution with respect to the $14,956,463 of Net Cash Proceeds currently
reserved by the Borrower for payment to the Noteholders, it being understood
that such reserved amount shall be paid exclusively to the Noteholders in
respect of principal of the Notes on or prior to the Effective Date (as such
term is defined in the Note Purchase Override Agreement).
"Eligible Investments": Shall mean any and all of the following:
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(i) direct obligations of, and obligations fully guaranteed by, the
United States of America or any agency or instrumentality of the United States
of America the obligations of which are backed by the full faith and credit of
the United States of America;
(ii) (A) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by or federal funds sold by any depository
institution or trust company (including the Collateral Agent or its agent acting
in their respective commercial capacities) incorporated under the laws of the
United States of America or any state thereof and subject to supervision and
examination by federal and/or state authorities, provided that each such
investment has an original maturity of no more than 180 days, and (B) any other
demand or time deposit or deposit which is fully insured by the Federal Deposit
Insurance Corporation;
(iii) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
State thereof which has a long term unsecured debt rating in the highest
available rating by Moody's at the time of such investment;
(iv) commercial paper having, or demand notes constituting an
investment vehicle in commercial paper having, an original maturity of less than
180 days and issued by an institution having a short term unsecured debt rating
in the highest available rating category of Moody's at the time of such
investment (the issuer of any demand notes under this paragraph (iv) must also
be an institution that satisfies the unsecured debt rating test specified in
this paragraph (iv));
(v) a guaranteed investment contract issued by an insurance company or
other corporation having a long term unsecured debt rating or a claims paying
ability rated in the highest available rating category of Moody's at the time of
such investment; and
(vi) money market funds having ratings in the highest available rating
category of Moody's at the time of such investment (any such money market funds
which provide for demand withdrawals being conclusively deemed to satisfy any
maturity requirements for Eligible Investments set forth herein), including
money market funds of the Collateral Agent at the time of such investment and
any such funds that are managed by the Collateral Agent or any of its Affiliates
or for which the Collateral Agent or any Affiliate of the Collateral Agent acts
as advisor.
Any Eligible Investments may be purchased by or through the Collateral
Agent or any of its Affiliates.
"Enforcement": shall mean taking any action seeking remedies with respect
to the Collateral or pursuing enforcement (judicial or otherwise) with respect
to any of the Liens granted under the Security Instruments. For the avoidance of
doubt, "Enforcement" shall not include (i) filing any involuntary petition of
bankruptcy or similar action with respect to the Borrower or (ii) any action
permitted by Section 14.
"Enforcement Directive": shall have the meaning assigned thereto in Section
2(b)(i).
"Environmental Laws": shall mean any and all applicable foreign, federal,
state, local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, requirements of any Governmental Authority or other
requirements of law (including common law) regulating, relating
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to or imposing liability or standards of conduct concerning protection of human
health or the environment, as now or may at any time hereafter be in effect, in
each case to the extent the foregoing are applicable to the Collateral Projects,
General Partner, the Borrower or any of their respective subsidiaries or any of
their respective assets.
"Excluded Assets": shall mean any property or assets other than the Land,
the Improvements, the Leases or the Rents, in which Borrower is prohibited from
granting any security interests by the terms of any contractual obligation, or
as to which the granting of a security interest would, under the terms of such
contractual obligation, constitute a breach or violation by Borrower or occasion
the loss of any material rights or interests of the Borrower thereunder, or the
incurrence of any material obligation by Borrower.
"Extension Agreement": shall have the meaning assigned thereto in recital
paragraph D hereof.
"Financeable Ground Lease": shall mean a ground lease satisfactory to the
Required Creditors in their reasonable discretion, which must provide
protections for a potential leasehold mortgagee which include, among other
things (i) a remaining term (including renewal options exercisable solely at the
option of the Borrower) of no less than 20 years, (ii) that the lease will not
be terminated until the leasehold mortgagee has received notice of a default and
has had a reasonable opportunity to cure or complete foreclosure, and fails to
do so, (iii) provision for a new lease on substantially the same terms to the
leasehold mortgagee as tenant if the ground lease is terminated for any reason,
(iv) non-merger of the fee and leasehold estates, (v) transferability of the
tenant's interest under the ground lease, without the ground lessor's prior
consent except for restrictions based on the satisfaction of certain objective
criteria reasonably acceptable to the Required Creditors, and (vi) that
insurance proceeds and condemnation awards (from the fee interest as well as the
leasehold interest) will be applied pursuant to the terms of this Agreement.
"Fixtures": shall have the meaning assigned thereto in the definition of
Collateral.
"General Partner": shall have the meaning assigned thereto in recital
paragraph A hereof.
"Golf Enterprises": shall mean Golf Enterprises, Inc., a Kansas
corporation.
"Governmental Authority": shall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Improvements": shall have the meaning assigned thereto in the definition
of Collateral.
"Initially Insured Projects": shall mean those twenty (20) Collateral
Projects identified on Schedule 6 attached hereto and made a part hereof, for
which Collateral Agent has received title insurance policies insuring the Liens
created by the Mortgages encumbering each such Collateral Project as first
priority liens (subject only to the Permitted Encumbrances) and containing all
agreed upon endorsements to such policies.
"Land": shall have the meaning assigned thereto in the definition of
Collateral.
"Leases": shall have the meaning assigned thereto in the definition of
Collateral.
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"Lenders": shall have the meaning assigned thereto in recital paragraph A
hereof.
"Lien": shall mean any interest in property securing any obligation owed
to, or a claim by, a Person other than the owner of the property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes.
"Loan Obligations": shall mean the obligations of the Borrower to the
Administrative Agent and the Lenders under the 1999 Credit Agreement and the
1999 Bank Notes.
"Loss Proceeds Account": shall have the meaning assigned thereto in Section
8(a) hereof.
"Major Default": shall (i) during the period to and including March 31,
2003, have the meaning assigned thereto in either the Extension Agreement or the
Note Purchase Override Agreement, and (ii) thereafter, mean either an "Event of
Default" under either of the Note Purchase Agreements or a "Default" under the
1999 Credit Agreement.
"Makewhole Amount": shall have the meaning assigned thereto in each of the
Note Purchase Agreements.
"Material Adverse Effect": shall mean a material adverse effect on (i) the
business, Property, condition (financial or otherwise), results of operations,
or prospects of the General Partner, the Borrower and their subsidiaries taken
as a whole, (ii) the ability of the General Partner or the Borrower to perform
their material obligations under the Debt Documents, or (iii) the validity or
enforceability of any of the Debt Documents or the material rights or remedies
of the 1994 Noteholders, the 1996 Noteholders or the Lenders thereunder.
"Materials of Environmental Concern": shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or any
hazardous or toxic substances, materials or wastes, defined or regulated as such
in or under any Environmental Law, including, without limitation, asbestos,
polychlorinated biphenyls and urea-formaldehyde insulation.
"Moody's": shall mean Xxxxx'x Investors Service, Inc. and its successors.
"Mortgages": shall mean those certain mortgages, deeds of trust and deeds
to secure debt encumbering the Collateral Projects, executed by the Borrower in
favor of the Collateral Agent for the benefit of the Secured Creditors, each as
amended, modified or supplemented from time to time in accordance with Section
22 of this Agreement.
"Net Cash Proceeds": shall mean, with respect to any sale, transfer or
other disposition of any asset or the sale or issuance of any indebtedness or
stock, partnership interests or other ownership interest or warrants, rights or
options to acquire any of the same by the Borrower, General Partner or any of
their subsidiaries, the aggregate amount of cash received from time to time by
or on behalf of the Borrower or the General Partner or any of their
subsidiaries, in connection with such transaction after deducting therefrom only
(a) reasonable and customary brokerage commissions, underwriting fees and
discounts, legal fees, finder's fees and other similar fees and commissions that
are (1) actually paid to a Person that is not an Affiliate of the Borrower or
the General Partner and (2) properly attributable to such transaction or to the
asset that is the
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subject thereof, (b) so long as no Major Default has occurred and is then
continuing, the amount of taxes payable in connection with or as a direct result
of such transaction, (c) in the case of a sale or disposition of assets, the
amount of any distributions required to be made in order to avoid the imposition
of any corporate level income or excise tax, (d) in the case of a sale or
disposition of assets, distributions in respect of taxes required under Section
7.1(A)(3) of the Third Amended and Restated Agreement of Limited Partnership of
the Borrower, provided that no deduction shall be made on account of any such
distributions to the General Partner, except to the extent permitted under
clauses (b) or (c) above, (e) the amount of any indebtedness secured by a lien
on such asset that, by the terms of such transaction or such indebtedness, is
required to be repaid upon such disposition which is actually paid to a Person
that is not an Affiliate of the Borrower or the General Partner, and (f) any
amount required to be paid to American Golf or Golf Enterprises in connection
with termination of a Lease on such asset, pursuant to the formula described in
Schedule 3 to the Extension Agreement.
"Non-Returning Secured Creditor": shall have the meaning assigned thereto
in Section 15(c).
"Note Purchase Agreements": shall mean the 1994 Note Purchase Agreement and
the 1996 Restated Note Agreement.
"Note Purchase Override Agreement": shall mean the Note Purchase Override
Agreement, dated as of June 28, 2002 among the Borrower, the General Partner,
the 1994 Noteholders and the 1996 Noteholders, as amended, modified or
supplemented from time to time in accordance with Section 22 hereof.
"Noteholder": shall mean a holder of one or more of the 1994 Notes or the
1996 Notes.
"Noteholder Obligations": shall mean the 1994 Noteholder Obligations and
the 1996 Noteholder Obligations.
"Notes": shall mean the 1994 Notes and the 1996 Notes collectively (as the
same may be amended, supplemented, modified, replaced and/or divided into
multiple notes and in effect from time to time).
"Permitted Encumbrances": shall mean:
(i) all Liens and other matters specifically disclosed on Schedule B
of the title insurance commitments delivered to the Administrative Agent or
its counsel on or prior to the date hereof;
(ii) Liens, if any, for taxes and other impositions not yet
delinquent;
(iii) mechanics', materialmen's or similar Liens, if any, and Liens
for delinquent taxes or impositions, in each case only if being contested
by the Borrower in good faith and by appropriate proceedings;
(iv) rights of (a) existing tenants as tenants only pursuant to
written Leases, and (b) future tenants as tenants only pursuant to written
Leases entered into in conformity with the provisions of this Agreement and
the other Debt Documents; and
11
(v) (a) zoning restrictions, building codes, land use laws and other
legal requirements regulating the use or occupancy of any Collateral
Project, and (b) easements, rights of way, covenants, conditions,
restrictions on use of real property and other similar matters affecting
any Collateral Project in addition to those described in subparagraph (i)
above, which matters described in this clause (b) do not have a material
adverse effect on the value of such Collateral Project or its fitness for
intended use.
"Person": shall mean any natural person, corporation, firm, joint venture,
partnership, limited liability company, association, enterprise, trust or other
entity or organization, or any government or political subdivision or any
agency, department or instrumentality thereof.
"Personalty": shall have the meaning assigned thereto in the definition of
Collateral.
"Policies": shall have the meaning assigned thereto in Section 6(f) hereof.
"Project": shall mean any real estate asset owned or operated by the
Borrower, General Partner, or any of their subsidiaries and operated or intended
to be operated as, or ancillary to, a golf course.
"Project-Related Cash Collateral Account": shall have the meaning assigned
thereto in Section 4(a)(iii)(C).
"Property" or "Properties": shall mean, with respect to any Person, any and
all property, whether real, personal, tangible, intangible or mixed, of such
Person.
"Rents": shall have the meaning assigned thereto in the definition of
Collateral.
"Replacement Collateral Project": shall mean real property located in the
United States of America, owned or to be owned by Borrower, and operated or
intended to be operated as, or ancillary to, a golf course as a replacement for
an identified Anticipated 1031 Project.
"Required Creditors": shall mean, as of any date, (i) the Required Lenders,
plus (ii) the Required 1994 Noteholders, plus (iii) the Required 1996
Noteholders.
"Required Lenders": shall mean, as of any date, the then current "Required
Lenders" as defined in the 1999 Credit Agreement (exclusive of the then-current
holders of any of the 1999 Bank Notes owned, directly or indirectly, by any one
or more of the Borrower, the General Partner or any subsidiary or Affiliate of
the Borrower, or General Partner, or any officer or director thereof), whose
decisions shall be communicated through Administrative Agent for all purposes
under this Agreement.
"Required Noteholders": shall mean, as of any date, the Required 1994
Noteholders and the Required 1996 Noteholders.
"Required 1994 Noteholders": shall mean, as of any date, the then current
holders of at least 66-2/3% of the outstanding principal amount of the 1994
Notes (exclusive of any
12
1994 Notes owned, directly or indirectly, by any one or more of the Borrower,
the General Partner or any subsidiary or Affiliate of the Borrower or of the
General Partner, or any officer or director thereof), provided, that, if there
is then no principal amount of the 1994 Notes outstanding (exclusive of any 1994
Notes owned, directly or indirectly, by any one or more of the Borrower, the
General Partner or any subsidiary or Affiliate of the Borrower or of the General
Partner, or any officer or director thereof), but accrued Makewhole Amounts are
still outstanding with respect to such Notes, Required 1994 Noteholders shall
mean the holders of at least 66-2/3% of the accrued Makewhole Amounts that are
outstanding with respect to such Notes (exclusive of any Makewhole Amounts
accrued with respect to any such Notes owned, directly or indirectly, by any one
or more of the Borrower, the General Partner or any subsidiary or Affiliate of
the Borrower or the General Partner, or any officer or director thereof).
"Required 1996 Noteholders": shall mean, as of any date, the then current
holders of at least 66-2/3% of the outstanding principal amount of the 1996
Notes (exclusive of any 1996 Notes owned, directly or indirectly, by any one or
more of the Borrower, the General Partner or any subsidiary or Affiliate of the
Borrower or of the General Partner, or any officer or director thereof),
provided, that, if there is then no principal amount of the 1996 Notes
outstanding (exclusive of any 1996 Notes owned, directly or indirectly, by any
one or more of the Borrower, the General Partner or any subsidiary or Affiliate
of the Borrower or of the General Partner, or any officer or director thereof),
but accrued Makewhole Amounts are still outstanding with respect to such Notes,
Required 1996 Noteholders shall mean the holders of at least 66-2/3% of the
accrued Makewhole Amounts that are outstanding with respect to such Notes
(exclusive of any Makewhole Amounts accrued with respect to any such Notes
owned, directly or indirectly, by any one or more of the Borrower, the General
Partner or any subsidiary or Affiliate of the Borrower or General Partner, or
any officer or director thereof).
"Returned Amounts": shall have the meaning assigned thereto in Section
15(c).
"Returned Amount Share": shall have the meaning assigned thereto in Section
15(c).
"Section 1031": shall mean Section 1031 of the Code.
"Secured Creditor": shall mean, as of any date, the then current
Administrative Agent, the Collateral Agent or any one of the then current
Lenders, the then current 1994 Noteholders, or the then current 1996
Noteholders.
"Secured Obligations": shall mean (i) all of the Loan Obligations; (ii) all
of the Noteholder Obligations; and (iii) all obligations of the Borrower arising
under this Agreement and the Security Instruments.
"Security Instruments": shall mean, collectively, this Agreement, the
Mortgages and all other agreements including control agreements, instruments,
mortgages and other documents, whether now existing or hereafter in effect,
pursuant to which the Borrower or any subsidiary thereof shall grant or convey
to any Secured Creditor a Lien in, or any other Person shall acknowledge any
such Lien in, property as security for all or any portion of the obligations or
liabilities arising under the Debt Documents, as any of them may be amended,
modified or supplemented from time to time in accordance with Section 22 of this
Agreement.
"Security Termination Date": shall mean the earlier of (i) the date on
which all of the Secured Obligations shall have been paid in full; and (ii) the
date all of the Secured Creditors (other than Collateral Agent) agree in writing
to the termination of this Agreement.
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"Title-Related Account" shall have the meaning assigned thereto in Section
6(i).
2. Appointment of Collateral Agent.
(a) Appointment and Authorization. The Lenders and the Noteholders hereby
appoint the Collateral Agent to act as secured party, agent, bailee and
custodian for the exclusive benefit of the Lenders and the Noteholders pursuant
to the terms hereof. The Collateral Agent hereby accepts such appointment and
agrees to maintain and hold all Collateral at any time delivered to it as
secured party, agent, bailee and custodian for the exclusive benefit of the
Secured Creditors. The Collateral Agent and the Borrower agree that the
Collateral Agent is acting and will act with respect to the Collateral for the
exclusive benefit of Secured Creditors and is not, and shall not at any time in
the future be, subject, with respect to the Collateral, in any manner or to any
extent, to the direction or control of the Borrower except as expressly
permitted hereunder and under any of the other Debt Documents. The Collateral
Agent agrees to serve as Collateral Agent and to act in accordance with this
Agreement and in accordance with any written instructions properly delivered
pursuant hereto. The Collateral Agent is hereby expressly authorized in such
capacity on behalf of the Secured Creditors, without hereby limiting the
foregoing, and subject to, and in accordance with, the terms and conditions of
this Agreement:
(i) to implement the sharing of Distributions as contemplated by this
Agreement and to receive on behalf of each of the Secured Creditors any
payment of monies paid thereto in accordance with the Security Instruments,
and to distribute to each Secured Creditor its respective share of all
payments (including the Distributions) so received in accordance with the
terms of this Agreement;
(ii) to receive all documents and items to be furnished under the
Security Instruments;
(iii) to maintain physical possession of any of the Collateral as
contemplated by any of the Security Instruments;
(iv) to act on behalf of each Secured Creditor in and under the
Security Instruments and this Agreement;
(v) to execute and deliver to the Borrower requests, demands, notices,
approvals, consents and other communications received from the Required
Creditors or a Directing Creditor (as applicable) in connection with the
Security Instruments, subject to the terms and conditions set forth herein;
(vi) to the extent permitted by this Agreement and the Security
Instruments, to exercise for its own benefit and the benefit of each
Secured Creditor all remedies of the Secured Creditors under any of the
Security Instruments as directed in writing by the Directing Creditors,
subject, however, to the right to take action described in Section
2(b)(iii) so long as consistent with the terms of the Security Instruments;
(vii) to execute and deliver releases as provided in the Security
Instruments and this Agreement; and
(viii) to take such other actions, other than as specified in Sections
2(b)(i) and
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2(b)(iii) hereof, as may be requested in writing by the Directing
Creditors.
(b) Duties.
(i) Upon the Collateral Agent's receipt of (A) a Default Notice from
the Directing Creditors giving notice of a Major Default to the Collateral
Agent, and (B) written notice from the Directing Creditors directing the
Collateral Agent to take specific action under any Security Instrument for
the benefit of the Secured Creditors (an "Enforcement Directive"), the
Collateral Agent shall undertake to proceed as directed as soon as possible
and in no event later than two (2) Business Days after receipt of both such
notices. All Enforcement actions undertaken by the Collateral Agent,
whether or not directed by the Directing Creditors, shall be in accordance
with applicable law. The Collateral Agent shall deliver a copy of any
Default Notice and any Enforcement Directive to each Secured Creditor not
signatory thereto within one (1) Business Day of its receipt by the
Collateral Agent. The Collateral Agent shall be entitled to rely and act
upon advice of counsel (including, without limitation, counsel to any
Secured Creditor), independent accountants and other experts selected by
the Collateral Agent with reasonable care concerning all matters pertaining
to any duties hereunder. The Collateral Agent has received a list of the
Noteholders and their contact information, and Borrower shall (after
receipt of such written information from the applicable Noteholders) advise
Collateral Agent in writing of any changes to the identities of, or contact
information for the Noteholders.
(ii) The Collateral Agent shall have no obligation to, nor liability
for failure to, independently verify the existence or occurrence of any
events set forth in any Default Notice it shall receive pursuant to Section
2(b)(i) hereof, and the Collateral Agent may rely thereon as to each matter
stated therein as more fully set forth in Section 2(e) hereof.
(iii) The Collateral Agent shall not release, substitute, exercise any
right or remedy, or take any other action with respect to any Collateral
without the prior written consent of the Required Creditors, except (A) as
permitted or required under Section 4(c) hereof; and (B) in connection with
an Enforcement Directive from the Directing Creditors. The Collateral Agent
shall give notice to each Secured Creditor of any substantial or material
action taken by the Collateral Agent pursuant to Section 2(b)(iii)(A) or
Section 4(c) promptly after taking such action.
(iv) The Collateral Agent undertakes to perform only such duties and
obligations as are specifically set forth in this Agreement, it being
expressly understood by the Secured Creditors and the Borrower that there
are no implied duties or obligations under this Agreement.
(c) Agents and Attorneys-in-fact. The Collateral Agent may execute any of
its duties under the Security Instruments or this Agreement by or through its
agents or attorneys-in-fact.
(d) Limitation on Liability. Neither the Collateral Agent nor any of its
officers, directors, employees or agents shall be liable, directly or
indirectly, to the Lenders, the Noteholders or the Borrower for any action
lawfully taken or omitted to be taken by it or them under or in connection with
the Security Instruments or this Agreement except for its or their own gross
negligence or willful misconduct. The Collateral Agent shall not be responsible
to the Lenders or the Noteholders
15
for any recitals, statements, representations or warranties contained herein or
in any other Debt Document; or for the execution, effectiveness, genuineness,
validity, enforceability, collectability, accuracy, completeness or sufficiency
of this Agreement or any other Debt Document or instruments executed and
delivered, or which could have been executed or delivered, in connection with
this Agreement or the other Debt Documents, including, without limitation, the
attachment, creation, effectiveness or perfection of the security interests
granted or purported to be granted hereunder in and to the Collateral.
(e) Reliance. The Collateral Agent shall be entitled to rely, and shall be
fully protected in relying, without independent investigation, upon any
certification, notice, consent or other communication (including, without
limitation, any thereof delivered by telephone or facsimile) reasonably believed
by it to be genuine and to have been signed, sent or made by the proper Person
or Persons, and upon advice and statements of legal counsel (including, without
limitation, counsel to any Secured Creditor), independent accountants and other
experts selected by the Collateral Agent with reasonable care. The Collateral
Agent shall not be deemed to have any notice of any events under any of the
agreements between the Borrower and any of the Secured Creditors unless a
corporate trust officer or a vice president of the Collateral Agent receives
written notice or obtains actual knowledge of such event.
(f) Expenditures by Collateral Agent. The Collateral Agent shall not be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder, or in the exercise of its
rights or powers, if the Collateral Agent believes that repayment of such funds
(repaid in accordance with the terms of this Agreement) or adequate indemnity
against such risk or liability is not reasonably assured to it.
(g) Investment of Funds.
(i) Upon written direction from the Borrower, the Collateral Agent
shall invest the funds in any accounts held by the Collateral Agent only in
Eligible Investments. No such Eligible Investment shall mature later than
the business day preceding the next following date of a Distribution
pursuant to Section 15 hereof and no Eligible Investment shall be sold or
disposed of prior to its maturity. In the absence of a written direction,
the Collateral Agent shall invest funds in the Collection Account in
Eligible Investments described in clause (vi) of the definition thereof.
Eligible Investments shall be made in the name of the Collateral Agent for
the benefit of the Secured Creditors. The Collateral Agent shall have no
responsibility for verifying that any such investments are Eligible
Investments.
(ii) Any interest income or other gain from investments in Eligible
Investments as outlined in subsection (i) above shall be credited to the
same account as the source of the funds for such investment and any loss
resulting from such investments shall be charged to such account; provided,
however, that the Borrower shall make or cause to be made no later than the
applicable date of distribution a deposit to the applicable account to the
extent of any losses therein caused as a result of the investment
instructions provided for herein. The Collateral Agent shall not be liable
for any loss incurred on any funds invested in Eligible Investments
pursuant to the provisions of this Section 2(g).
3. Grant of Security Interest. The Borrower hereby pledges and assigns to
the Collateral Agent for the benefit of the Secured Creditors, and grants to the
Collateral Agent for the benefit of
16
the Secured Creditors a first priority security interest in the Collateral,
subject to the Permitted Encumbrances, to secure payment of the Secured
Obligations.
4. Collateral Project Releases.
(a) So long as no Major Default has occurred and is then continuing, the
Borrower may from time to time obtain the release of one or more of the
Collateral Projects from the lien of the applicable Mortgage, provided the
following conditions are met with respect to each such Collateral Project:
(i) Borrower shall provide Collateral Agent with evidence, reasonably
satisfactory to the Required Creditors, that the Collateral Project or
Collateral Projects are being transferred (A) to a bona fide third party
purchaser, and (B) in compliance with Section 7.16 of the 1999 Credit
Agreement, Sections 6.6 and 6.11 of the 1994 Note Purchase Agreement and
Sections 6.6 and 6.11 of the 1996 Restated Note Agreement;
(ii) With respect to any Collateral Project which is not an
Anticipated 1031 Project (and with respect to any Collateral Project which
is an Anticipated 1031 Project and which is disposed of in a transaction
that does not qualify under Section 1031), the Borrower shall prepay the
1999 Bank Notes, the 1994 Notes and the 1996 Notes, on a pro rata basis in
accordance with their respective principal balances then outstanding by
paying to the Collateral Agent (for distribution by the Collateral Agent to
the Secured Creditors in accordance with Section 15 hereof) an amount equal
to 100% of the Net Cash Proceeds of the sale, transfer or disposition of
such Collateral Project; Borrower shall not dispose of any Collateral
Project which is not an Anticipated 1031 Project for consideration other
than cash;
(iii) With respect to a Collateral Project listed on Schedule 2,
attached hereto and made a part hereof, (individually an "Anticipated 1031
Project" and collectively, the "Anticipated 1031 Projects"):
(A) Borrower shall provide Collateral Agent with evidence,
reasonably satisfactory to the Required Creditors, that the Net Cash
Proceeds from the sale of such Anticipated 1031 Project will be held
by a third party Section 1031 exchange accommodator in an account or
accounts for the benefit of Borrower (individually a "1031 Proceeds
Account" and collectively with all similar accounts with respect to
other Properties, the "1031 Proceeds Accounts").
(B) The sum of (1) the Net Cash Proceeds from the sale of such
Anticipated 1031 Project, PLUS (2) the aggregate amount of Net Cash
Proceeds then or previously held in all other 1031 Proceeds Accounts
shall not exceed the maximum amount permitted by the Extension
Agreement and the Note Purchase Override Agreement.
(C) With respect to the Anticipated 1031 Projects which have not
yet been sold, at the time any such Anticipated 1031 Project is sold,
Borrower shall deposit in a separate account (the "Project-Related
Cash Collateral Account"), an amount equal to 100% of the Net Cash
Proceeds which would otherwise have been paid to Collateral Agent for
application to the Secured Obligations if such Collateral Project was
not an Anticipated 1031 Project. The Project-Related Cash Collateral
Account
17
shall be pledged to Collateral Agent, and, in connection therewith,
Borrower shall execute any and all customary and reasonable documents,
including without limitation any UCC financing statements and an
account control agreement, required to grant to the Collateral Agent a
perfected security interest in the Project-Related Cash Collateral
Account. Borrower shall be deemed to have retained all rights to the
actual Net Cash Proceeds held in a 1031 Proceeds Account, including
the right to cause the release of such funds on the terms and subject
to the conditions of Borrower's exchange agreement with the applicable
third party Section 1031 exchange accommodator and use them for any
purpose Borrower deems appropriate, and such security interest shall
attach only to the amount deposited into the Project-Related Cash
Collateral Account.
(D) Collateral Agent shall release the applicable funds from the
Project-Related Cash Collateral Account to Borrower upon written
request, provided the following conditions are met: (1) no Major
Default shall then exist and be continuing, (2) such Replacement
Collateral Project or Replacement Collateral Projects shall have an
aggregate gross acquisition price (inclusive of transaction costs and
expenses) paid by Borrower therefor which is equal to or greater than
the Net Cash Proceeds of the Collateral Project or Collateral Projects
transferred to initiate such Section 1031 transaction, (3) Borrower
shall grant a Mortgage to Collateral Agent encumbering one or more
Replacement Collateral Projects for such Anticipated 1031 Project or
Anticipated 1031 Projects, (4) Borrower shall provide Collateral Agent
with (a) a title insurance policy, insuring the lien of such Mortgage
as a first lien on the Replacement Collateral Project(s) subject only
to such title exceptions as may be reasonably approved by the Required
Creditors, together with copies of all material underlying documents
relating thereto, and containing all such endorsements as Required
Creditors shall reasonably request, (b) a copy of the survey of the
Replacement Collateral Project(s), (c) a copy of the zoning letter (to
the extent that such letters are reasonably obtainable from the local
municipality or other appropriate governmental agency) or zoning
report obtained by or on behalf of Borrower covering the Replacement
Collateral Project(s), (d) a copy of the environmental report or
environmental reports obtained by or on behalf of Borrower covering
the Replacement Collateral Project(s), and (e) such other customary
and reasonable documentation consistent with the Debt Documents as the
Required Creditors shall reasonably request.
(E) Upon the occurrence of (1) the first business day after the
expiration of the Section 1031 identification period (if Borrower has
not identified Replacement Collateral Project(s) by the end of the
Section 1031 identification period), (2) the first business day after
the expiration of the Section 1031 exchange period (if Borrower has
not acquired title to Replacement Collateral Project(s)), or (3) a
Major Default, Collateral Agent shall, at the direction of the
Required Creditors or any Directing Creditor, as applicable, withdraw
funds in the Project-Related Cash Collateral Account (which, in the
case of (1) and (2) above shall not exceed 100% of the Net Cash
Proceeds from the sale of the applicable Collateral Project) and pay
the same to the Secured Creditors for application toward the reduction
or discharge of the Secured Obligations, as set forth in Section 15,
below. Borrower shall not dispose of any Anticipated 1031 Project in
exchange for consideration other than
18
cash and property permitted pursuant to Section 1031(a) of the Code to
be received without the recognition of gain. In the event that any
cash is received by Borrower (excluding amounts deposited for the
benefit of the Borrower in a 1031 Proceeds Account) in connection with
a disposition of an Anticipated 1031 Project, the Borrower shall
prepay the 1999 Bank Notes, the 1994 Notes and the 1996 Notes, on a
pro rata basis in accordance with their respective principal balances
in an amount equal to 100% of the Net Cash Proceeds (determined on the
basis of such cash received by Borrower) from the disposition of such
Anticipated 1031 Project.
(b) The Borrower agrees to give the Secured Creditors at least 10 business
days' prior written notice of any release of Collateral Projects under this
Section 4, or any other transaction with respect to any other Property that is
anticipated to give rise to Net Cash Proceeds, specifying the amount of the
Notes and 1999 Bank Notes to be prepaid or the amount of funds which will be
deposited in the Project-Related Cash Collateral Account, as applicable. Whether
or not such release or other transaction is consummated, Borrower shall remain
obligated to pay to the Collateral Agent all actual, reasonable, out-of-pocket
expenses payable to third parties incurred by such party in connection with such
release and/or replacement and to pay all reasonable fees and expenses of
counsel to the Administrative Agent and counsel to the Noteholders' group.
(c) Upon satisfaction of the requirements contained in this Section 4 (or
provisions reasonably satisfactory to the Required Creditors for the
satisfaction of such requirements upon the consummation of such transaction),
Collateral Agent will execute and deliver to Borrower such instruments, prepared
by Borrower and reasonably approved by the Required Creditors, as shall be
necessary to release the applicable Collateral Project from the lien of the
applicable Mortgage (such release to be effective only upon satisfaction of such
requirements and consummation of such transaction).
5. Representations and Warranties. Borrower hereby represents and warrants
to the Secured Creditors that, as of the date hereof, and, as to such
Replacement Collateral Project, as of the date any Replacement Collateral
Project becomes part of the Collateral:
(a) Title. The Borrower owns good title to the Land and Improvements, in
each case free and clear of all liens whatsoever except the Permitted
Encumbrances. The Borrower enjoys peaceful and undisturbed possession under all
of the ground leases under which it operates, and all such ground leases are
valid and subsisting and in full force and effect and the Borrower has not
received any notice of any material default in the performance and observance of
its respective obligations under any of the ground leases. The Mortgages, when
properly recorded in the appropriate land records together with any UCC
financing statements required to be recorded and/or filed in connection
therewith, will create (i) valid, perfected liens on the Collateral Projects
subject only to the Permitted Encumbrances, and (ii) perfected security
interests in and to, and perfected collateral assignments of, all material
personalty, included within the Collateral including any Leases, all in
accordance with the terms thereof, in each case subject only to any applicable
Permitted Encumbrances. NOTHING IN THIS PARAGRAPH MAY BE RELIED ON BY ANY TITLE
INSURANCE COMPANY ISSUING A TITLE INSURANCE POLICY. No Person other than the
Borrower owns any interest in any payments due under any Leases affecting the
Collateral Projects that is superior to or of equal priority with Collateral
Agent's interest therein.
(b) Environmental Matters. Each of the following representations and
warranties is true and
19
correct on and as of the date hereof, except to the extent that the facts and
circumstances giving rise to any such failure to be so true and correct, in the
aggregate, would not reasonably be expected to have a Material Adverse Effect:
(i) the Collateral Projects do not contain, and have not previously
contained, any Materials of Environmental Concern in amounts or
concentrations which constitute or constituted a violation of, or could
reasonably be expected to give rise to liability under, Environmental Laws.
In making this statement, the General Partner and the Borrower are assuming
(except to the extent that either of them has actual knowledge to the
contrary) that any Person handling any Materials of Environmental Concern
at any Project will do so in a reasonable manner and in accordance with all
legal requirements.
(ii) the Collateral Projects and all operations at the Collateral
Projects are in material compliance, and have in the last two years been in
material compliance, with all applicable Environmental Laws, and there is
no material contamination at, under or about the Collateral Projects, or
violation of any Environmental Law with respect to the Collateral Projects.
(iii) Borrower has not received any written notice of violation,
alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Collateral Projects, nor does it have knowledge or
reason to believe that any such notice will be received or is being
threatened.
(iv) Materials of Environmental Concern have not been transported or
disposed of from the Collateral Projects in violation of, or in a manner or
to a location which could reasonably be expected to give rise to liability
under, Environmental Laws, nor have any Materials of Environmental Concern
been generated, treated, stored or disposed of at, on or under any of the
Collateral Projects in violation of, or in a manner that could reasonably
be expected to give rise to liability under, any applicable Environmental
Laws.
(v) no judicial proceedings or governmental or administrative action
is pending, or, to the knowledge of Borrower, threatened, under any
Environmental Law to which Borrower or any of its subsidiaries is or will
be named as a party with respect to the Collateral Projects, nor are there
any consent decrees or other decrees, consent orders, administrative orders
or other orders, or other administrative or judicial requirements
outstanding under any Environmental Law with respect to the Collateral
Projects.
(vi) there has been no release or threat of release of Materials of
Environmental Concern at or from the Collateral Projects, or arising from
or related to the operations of the Borrower or its tenants in connection
with the Collateral Projects violation of or in amounts or in a manner that
could reasonably be expected to give rise to liability under Environmental
Laws.
6. Affirmative Covenants of the Borrower.
(a) Impositions and Other Claims. Borrower shall pay and discharge (or
require to be paid and discharged), prior to their becoming delinquent, all
taxes, assessments, insurance premiums, charges, encumbrances and liens now or
hereafter imposed upon or affecting any Collateral to the
20
extent that failure to do so could result in a Material Adverse Effect.
(b) Litigation. Borrower shall give prompt written notice to Collateral
Agent of any litigation or governmental proceedings pending or threatened in
writing against Borrower or any Collateral Project which is reasonably likely to
have a Material Adverse Effect.
(c) Cooperate in Legal Proceedings. Except with respect to any claim by
Borrower against any Secured Creditors, Borrower shall cooperate fully with the
Secured Creditors with respect to any proceedings before any Governmental
Authority which may in any material way affect the rights of the Secured
Creditors hereunder or under any of the Debt Documents and, in connection
therewith, the Secured Creditors may, at their election and expense (except
Borrower shall reimburse the Collateral Agent for all actual, reasonable,
out-of-pocket expenses payable to third parties incurred by the Collateral Agent
in connection with such participation and shall pay all reasonable fees and
expenses of counsel to the Administrative Agent and counsel to the Noteholders'
group), participate or designate a representative to participate in any such
proceedings.
(d) Leases.
(i) Borrower's right, title and interest under any bond or other
instrument which Borrower is permitted to hold in lieu of cash security
deposits under any applicable laws shall (to the extent permitted under the
terms of such bond or instrument) be included as Collateral. Borrower
shall, upon Collateral Agent's request (made at the direction of the
Required Creditors), provide Collateral Agent with evidence reasonably
satisfactory to the Required Creditors of Borrower's compliance with the
foregoing. During the continuance of any Major Default, Borrower shall,
upon Collateral Agent's request (made at the direction of the Required
Creditors or any Directing Creditor, as applicable), if not prohibited by
any applicable laws, remit to Collateral Agent an amount equal to the
aggregate security deposits (if any) held by Borrower (including any
interest theretofore earned thereon) with respect to all of the Collateral
Projects or such portion of the Collateral Projects as Collateral Agent
shall specify, to be held by Collateral Agent subject to the terms of the
Leases and the rights of the depositors thereof.
(ii) Borrower will use commercially reasonable efforts to cause
American Golf and Golf Enterprises to provide Collateral Agent with a
Subordination, Non-Disturbance and Attornment Agreement (in the form
previously provided by Administrative Agent to Borrower) which agreement
will confirm that the Leases between American Golf and Golf Enterprises, as
the case may be, and Borrower at the Collateral Projects are subject and
subordinate to the Mortgages, pursuant to Section 24.1 and 24.2 of such
Leases. Borrower will request such Subordination Agreement from American
Golf and Golf Enterprises within thirty (30) days after the date hereof.
(e) Further Assurances. Borrower shall, at Borrower's sole cost and expense
(other than in connection with the replacement of the Collateral Agent in the
event the Collateral Agent is replaced by the Required Creditors without cause,
which shall be at the sole cost and expense of the Secured Creditors other than
the Collateral Agent), from time to time as reasonably requested by Collateral
Agent, execute, acknowledge, record, register, file and/or deliver to Collateral
Agent such other instruments, agreements, certificates and documents (including
UCC financing statements and amended or replacement mortgages) as Collateral
Agent may reasonably request (at the direction of
21
the Required Creditors) to evidence, confirm, perfect and maintain the liens
securing or intended to secure the obligations of the Borrower under the
Mortgages or the other Debt Documents or to facilitate a replacement of the
Collateral Agent if requested by Secured Creditors, and do and execute all such
further lawful and reasonable acts, conveyances and assurances for the better
and more effective carrying out of the intents and purposes of this Agreement,
the Mortgages and the other Debt Documents as the Required Creditors shall
reasonably require from time to time. Borrower hereby authorizes and appoints
Collateral Agent as its attorney-in-fact to execute, acknowledge, record,
register and/or file such instruments, agreements, certificates and documents,
and to do and execute such acts, conveyances and assurances, should such
Borrower fail to do so itself in violation of this Agreement following written
request from Collateral Agent, in each case without the signature of Borrower.
The foregoing grant of authority is a power of attorney coupled with an interest
and such appointment shall be irrevocable for the term of this Agreement.
Borrower hereby ratifies all actions that such attorney shall lawfully take or
cause to be taken in accordance with this Section 6(e).
(f) Insurance.
(i) The Borrower shall obtain and maintain with respect to each
Collateral Project for the mutual benefit of the Borrower and Collateral
Agent at all times, policies of insurance in accordance with Schedule 3,
attached hereto and made a part hereof.
(ii) All policies of insurance (the "Policies") required pursuant to
this Section 6(f):
(A) shall be maintained so long as any of the Secured Obligations
remain outstanding without cost to Collateral Agent or any Secured
Creditor;
(B) with respect to liability policies, shall name the Collateral
Agent, and its successors and assigns, and the Secured Creditors as
additional insureds;
(C) shall contain an endorsement providing that no party shall be
a co-insurer under said policies, and that Collateral Agent shall
receive at least 30 days' prior written notice of any change in
coverage and/or cancellation;
(D) shall contain an endorsement providing that no act or
negligence of the Borrower, General Partner or of a tenant or other
occupant of a Collateral Project shall affect the validity or
enforceability of the insurance insofar as a mortgagee is concerned;
and
(E) shall contain a waiver of subrogation against the Secured
Creditors.
Any policies of insurance maintained by the Borrower but not required
hereunder shall comply with clauses (A), (B), (C), (D), and (E) above.
(iii) Borrower shall pay or cause to be paid the premiums for all
policies as the same become due and payable. Certificates of such policies
shall be delivered to Collateral Agent promptly upon request made by the
Collateral Agent upon the direction of any Secured Creditor (and, promptly
after request following the occurrence of a Casualty the proceeds of which
are expected to exceed $5,000,000 copies of any policies related to the
22
Casualty loss in question, certified as true and correct by the Borrower,
shall be delivered to Collateral Agent). Not later than 30 days prior to
the date on which coverage would be cancelled in the absence of payment of
the applicable premiums, Borrower shall deliver to Collateral Agent
evidence, reasonably satisfactory to the Required Creditors, of its
renewal.
(g) Casualty and Condemnation.
(i) In the event of any Casualty or Condemnation, Borrower shall give
prompt notice thereof to Collateral Agent. Collateral Agent (at the
direction of the Required Creditors) may, after the occurrence and during
the continuation of a Major Default, settle and adjust any claims without
the consent or cooperation of Borrower. The reasonable expenses incurred by
Collateral Agent in the adjustment and such proceeds of a Casualty or
Condemnation shall become part of the Secured Obligations and shall be
reimbursed by the Borrower to the Collateral Agent upon demand therefor,
and Borrower shall pay all reasonable fees and expenses of counsel to the
Administrative Agent and counsel to the Noteholder's group.
(ii) All proceeds from any Casualty or Condemnation in excess of
$5,000,000 with respect to any one event or occurrence shall be immediately
deposited into the Loss Proceeds Account. All other proceeds from any
Casualty or Condemnation shall be paid to Borrower to restore the affected
Collateral Project. Provided that no Major Default shall have occurred and
be then continuing, the proceeds of any Casualty or Condemnation shall be
disbursed by Collateral Agent from the Loss Proceeds Account to the
Borrower from time to time to fund the replacement or restoration of the
affected property upon Collateral Agent's being furnished with (a) evidence
reasonably satisfactory to the Required Creditors of the estimated cost of
completion of the restoration or replacement of the affected Collateral
Project, (b) funds, or assurances reasonably satisfactory to the Required
Creditors that such funds are available and sufficient in addition to the
remaining proceeds of any Casualty or Condemnation, to complete the
proposed restoration or replacement, and (c) such architect's certificates,
waivers of lien, contractor's sworn statements, title insurance
endorsements, bonds, plats of survey and such other evidences of cost,
payment and performance as the Required Creditors may reasonably require
and as are customarily provided to mortgage lenders in the applicable
region as a condition to disbursing property insurance proceeds for
restoration or replacement. With respect to disbursements made pursuant to
clause (b) above, (1) no payment shall exceed 90% of the value of the work
performed from time to time until such time as 50% of the restoration
(calculated based on anticipated aggregate cost of the work) has been
completed, and amounts retained prior to completion of 50% of the
restoration shall not be paid prior to the final completion of the
restoration, and (2) funds other than proceeds of any Casualty or
Condemnation shall be disbursed prior to disbursement of such proceeds, and
at all times the undisbursed balance of such proceeds remaining in the Loss
Proceeds Account, together with any additional funds irrevocably and
unconditionally deposited therein or irrevocably and unconditionally
committed for that purpose, shall be at least sufficient in the reasonable
judgment of the Required Creditors to pay for the cost of completion of the
restoration free and clear of all liens or claims for lien.
(iii) Borrower shall cooperate with Collateral Agent in obtaining for
Collateral Agent the benefits of any such proceeds payable to Collateral
Agent in connection with the
23
affected Collateral Project under the terms hereof and the other Debt
Documents. Collateral Agent shall be reimbursed for any actual expenses
reasonably incurred in connection therewith (including reasonable
attorneys' fees and disbursements, and, if reasonably necessary to collect
such proceeds, the expense of an appraisal on behalf of Collateral Agent)
out of such proceeds, to the extent that Borrower is not duly and
diligently seeking payment of such proceeds.
(iv) In the event of any Casualty or Condemnation affecting a
Collateral Project in respect of which the proceeds therefrom are not
applied toward restoration or replacement, such proceeds shall be paid by
Collateral Agent to the other Secured Creditors to be applied toward
repayment of the Secured Obligations in accordance with Section 15 of this
Agreement.
(v) Notwithstanding anything to the contrary in this Section 6(g), the
provisions of this Section 6(g) are subject to any provisions of the Leases
regarding the settlement, collection, payment, use or distribution of
insurance or condemnation proceeds following a Casualty or Condemnation.
(h) General Indemnity. Borrower shall indemnify, reimburse, defend and hold
harmless the Secured Creditors and their respective officers, directors,
employees and agents (collectively, the "Indemnified Parties") for, from and
against any and all liabilities, obligations, losses, damages, penalties,
assessments, actions, or causes of action, judgments, suits, claims, demands,
costs, expenses (including reasonable attorneys' fees and legal expenses whether
or not suit is brought and settlement costs) and disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Indemnified Parties, in any way relating to or arising out of the making or
holding or Enforcement of the Mortgages or other Debt Documents by any Secured
Creditors or the administration of the transactions contemplated hereby and by
the Debt Documents to the extent resulting, directly or indirectly, from any
claim made (whether or not in connection with any legal action, suit, or
proceeding) by or on behalf of any Person other than the Secured Creditors;
provided, however, that no Indemnified Party shall have the right to be
indemnified hereunder for its own fraud, bad faith, gross negligence or willful
misconduct. The provisions of and undertakings and indemnification set forth in
this Section 6(h) shall survive the satisfaction and payment in full of the
Secured Obligations and termination of this Agreement.
(i) Title-Related Account. Borrower shall, on or before the date hereof,
deposit in a separate account with the Collateral Agent the following amounts
(the "Title-Related Account"):
(i) $217,482.53 (which is 150% of the aggregate amount of the
unreleased mechanics' Liens against the Collateral Projects as of the date
hereof, all of which are being contested by the Borrower pursuant to
Section 7(e) hereof) to be held until (x) all of the title policies have
been issued (as set forth in subsection (ii) of this Section 6(i)), and (y)
such Liens (and any other Liens on a Collateral Project which arise between
the date hereof and the date the final title policies with respect to all
Collateral Projects have been issued, as applicable) have been (or
contemporaneously with the issuance of such title policies will be) either
released or insured against by the title insurer;
(ii) $619,553.09 to be used solely as reimbursement of the Collateral
Agent's cost of causing the title insurer to issue title policies and
endorsements on the Collateral
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Projects (other than the Initially Insured Projects) which the
Administrative Agent may cause to be issued, by written direction to the
title insurer given at any time on or after the first to occur of (i) a
Major Default or (ii) August 31, 2002.
(j) Post Closing Obligations. Borrower agrees to promptly commence by
ordering by the dates set forth below and diligently and in good faith work to
complete the following at Borrower's expense and deliver copies thereof to
Collateral Agent:
(i) updated boundary surveys for each Collateral Project in form
customarily requested by and available to a mortgage lender making a loan
on such Collateral Project, such surveys to be ordered within thirty (30)
days after the date hereof;
(ii) zoning letters (to the extent that such letters are reasonably
obtainable from the local municipality or other appropriate governmental
agency) or zoning reports for each Collateral Project, such zoning letters
or zoning reports to be ordered within thirty (30) days after the date
hereof;
(iii) updated title reports showing title in a condition that would be
reasonably acceptable to a mortgage lender making a loan on such Collateral
Project along with approval from the title insurer for the issuance of
title endorsements as are customarily requested by and available to a
mortgage lender making a loan on such Collateral Project;
(iv) updated environmental reports for each Collateral Project, such
environmental reports to be ordered within thirty (30) days after the date
hereof;
(v) copies of all material permits required for the use and operation
of each Collateral Project, along with a certificate of occupancy for each
Collateral Project; and
(vi) Borrower shall use reasonable commercial efforts to obtain
amendments to each of the ground leases covering the Collateral Projects
known as The Vineyard at Escondido, Bear Creek Golf World, Ridgeview Ranch
Golf Course and Stone Creek Golf Course, so that such ground leases satisfy
the conditions for a Financeable Ground Lease, along with an estoppel
certificate from the lessor under such ground leases, in form and substance
reasonably acceptable to the Required Creditors, such amendments and
estoppels to be requested within thirty (30) days after the date hereof;
provided, however, that following such requests, Borrower shall not be
required to take any action in connection with obtaining such amendments or
estoppel certificates that, in Borrower's reasonable judgment, could
adversely affect Borrower's continued undisturbed use and occupancy under
the applicable ground lease.
(k) Environmental Matters. The Borrower (and the General Partner) will and
will cause each of their subsidiaries to:
(i) comply with, and use its best efforts to ensure compliance by all
tenants and subtenants, if any, with all applicable Environmental Laws and
obtain and comply with and maintain, and use its best efforts to ensure
that all tenants and subtenants obtain and comply with and maintain, any
and all licenses, approvals, notifications, registrations or permits
required by applicable Environmental Laws, except to the extent that
failure to do so could not be reasonably expected to have a Material
Adverse Effect;
25
(ii) conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all
lawful orders and directives of all Governmental Authorities regarding
Environmental Laws, except to the extent that (a) the same are being
contested in good faith by appropriate proceedings and the pendency of such
proceedings could not be reasonably expected to have a Material Adverse
Effect, or (b) the General Partner has determined in good faith that
contesting the same is not in the best interests of the General Partner,
the Borrower and their Subsidiaries and the failure to contest the same
could not be reasonably expected to have a Material Adverse Effect; or
(iii) defend, indemnify and hold harmless each Secured Creditor and
their respective employees, agents, officers and directors, from and
against any claims, demands, penalties, fines, liabilities, settlements,
damages, costs and expenses of whatever kind or nature known or unknown,
contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Laws
applicable to the operations of the General Partner, the Borrower, their
subsidiaries or the Projects, or any orders, requirements or demands of
Governmental Authorities related thereto, including, without limitation,
attorney's and consultant's fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent
that any of the foregoing arise out of the gross negligence or willful
misconduct of the party seeking indemnification therefor. This indemnity
shall continue in full force and effect regardless of the termination of
this Agreement; and
(iv) prior to the acquisition of a new Project after the date hereof,
perform or cause to be performed an environmental investigation, which
investigation shall at a minimum comply with the specifications and
procedures attached as Exhibit G to the 1999 Credit Agreement. In
connection with any such investigation, Borrower shall cause to be prepared
a report of such investigation, to be made available to any Lender upon
request, for informational purposes and to assure compliance with the
specifications and procedures.
(l) Right of Entry and Disclosure of Environmental Reports. Borrower hereby
grants to the Collateral Agent and its agents, employees, consultants and
contractors, authorization to, upon the direction of the Required Creditors,
cause a third party consultant to enter upon and inspect the Collateral Projects
at reasonable times and upon reasonable advance notice, and conduct such
environmental audits and tests, including, without limitation, subsurface
testing, soils and groundwater testing, and other tests which may physically
invade the Collateral Projects, which such parties, in their sole and absolute
discretion, determine are necessary or desirable. With respect to invasive
testing, such as soil borings, the Secured Creditors shall consult with Borrower
in advance of such tests, and any such tests shall be conducted in a manner that
minimizes interference with Borrower's (or any tenant's) operations at the
Collateral Projects. Notwithstanding anything to the contrary contained in this
Section 6(l), the Secured Creditors agree that they shall not direct the
Collateral Agent to conduct any such audits, inspections or tests unless a Major
Default exists or the Secured Creditors have reason to believe that such audit,
inspection or test is likely to disclose the presence or release of Materials of
Environmental Concern in violation of Environmental Laws, or unless an
environmental audit deems further testing necessary. All reasonable
out-of-pocket costs and expenses incurred by Collateral Agent in connection with
any inspection, audit or testing conducted in accordance with this Section 6(l)
shall be paid by Borrower. The results of all investigations and reports
prepared on behalf of the Collateral Agent
26
for the benefit of the Secured Creditors shall be and at all times remain the
property of the Secured Creditors and under no circumstances shall the Secured
Creditors have any obligation whatsoever to disclose or otherwise make available
to Borrower or any other party such results or any other information obtained by
it in connection with such investigations and reports; provided, however, that
if there exists no Major Default, if requested by Borrower, the Secured
Creditors shall provide to Borrower a copy of the written report with respect to
any inspection, audit or testing for which Borrower has paid hereunder.
Collateral Agent hereby reserves the right, and Borrower hereby expressly
authorizes Collateral Agent to make available to any party in connection with a
sale of the Collateral Projects by Collateral Agent at a foreclosure sale or
subsequent to foreclosure, any and all such environmental reports whether
prepared on behalf of the Secured Creditors or by Borrower which Collateral
Agent may have with respect to the Collateral Projects. Borrower further agrees
that the Secured Creditors may disclose such environmental reports to any
governmental agency or authority if they are required to disclose any matter
contained therein to such agency or authority; provided that the Secured
Creditors shall give Borrower at least 48 hours prior written notice before so
doing. Borrower acknowledges that no Secured Creditors can control or otherwise
assure the truthfulness or accuracy of such environmental reports, and that the
release of such environmental reports, or any information contained therein, to
prospective bidders at any foreclosure sale of the Collateral Projects may have
a material and adverse effect upon the amount which a party may bid at such
sale. Borrower agrees that no Secured Creditors shall have any liability
whatsoever as a result of delivering any or all of such reports or any
information contained therein to any third party, and Borrower hereby releases
and forever discharges the Secured Creditors from any and all claims, damages,
or causes of action arising out of connected with or incidental to such reports
or the delivery thereof in compliance with the terms of this Section 6(l).
(m) Provision of Information to Collateral Agent. Borrower shall submit to
the Collateral Agent a copy of the notices and certificates it is required to
deliver to the Noteholders pursuant to Section 2.3 of the Note Purchase Override
Agreement and to the Administrative Agent pursuant to Section 2.8(b)(iv) of the
1999 Credit Agreement.
7. Negative Covenants of the Borrower.
(a) Liens. Borrower shall not permit the existence of any Lien on any of
the Collateral, other than (i) the Liens in favor of the Collateral Agent for
the benefit of the Lenders and the Noteholders pursuant to this Agreement, the
Mortgages and any other Security Documents, and (ii) Permitted Encumbrances.
(b) Transfer. Borrower shall not transfer any of the Collateral Projects
(other than the replacement or other disposition of obsolete or non-useful
personal property and fixtures in the ordinary course of business) other than in
compliance with this Agreement and the other Debt Documents.
(c) Zoning and Uses. Without the consent of the Required Creditors,
Borrower shall not initiate or support any limiting change in the permitted uses
of any Collateral Project (or to the extent applicable, zoning reclassification
of any Collateral Project) or any portion thereof, seek any variance under
existing land use restrictions, laws, rules or regulations (or, to the extent
applicable, zoning ordinances) applicable to any Collateral Project, or use or
permit the use of any Property in a manner that would have a Material Adverse
Effect;
27
(d) Waste. Borrower shall not commit or permit any material waste on any
Collateral Project, nor take any actions that might invalidate any insurance
carried on any Collateral Project.
(e) Right to Contest. Notwithstanding anything to the contrary in this
Agreement, after prior written notice to Collateral Agent, Borrower, at its
expense may contest, or cause to be contested, by appropriate legal proceedings
conducted in good faith and with due diligence, the amount or validity or
application, in whole or in part, of any taxes or other impositions, legal
requirement or insurance requirement, or any lien, encumbrance or charge
referred to in Section 7(a), provided, that (i) in the case of an unpaid
imposition, lien, encumbrance or charge, such proceedings shall suspend the
collection thereof from Borrower, Collateral Agent, the Collateral and any rent
or other income therefrom and shall not interfere with the payment of any such
rent or income, (ii) neither the Collateral nor any rent or other income
therefrom nor any part thereof or interest therein would be in any material
danger of being sold, forfeited, lost or interfered with, (iii) in the case of a
legal requirement, neither Borrower nor Collateral Agent would be in any
material danger of any civil or criminal liability for failure to comply
therewith, (iv) Borrower shall have furnished such security, if any, as may be
required in the proceedings or as may reasonably be requested by the Required
Creditors, (v) the nonpayment of the whole or any part of any such tax,
assessment or charge will not result in the delivery of a tax deed to the Land
and Improvements or any part thereof because of such non-payment, (vi) the
payment of any sums required to be paid in respect of the Secured Obligations
(other than any unpaid imposition, lien, encumbrance or charge at the time being
contested in accordance with this Section 7(e)) shall not be interfered with or
otherwise affected, and (vii) in the case of any insurance requirement, the
failure of Borrower to comply therewith shall not affect the validity of any
insurance required to be maintained by Borrower under Section 6(f).
8. Loss Proceeds Account.
(a) Promptly after the occurrence of a Casualty or Condemnation, Borrower
shall, to the extent required under Section 6(g) of this Agreement, establish
and thereafter maintain with the Collateral Agent a segregated trust account for
the purpose of depositing any proceeds from such Casualty or Condemnation (the
"Loss Proceeds Account").
(b) Provided no Major Default is continuing, funds in the Loss Proceeds
Account shall be applied in accordance with Section 6(g) of this Agreement.
(c) During the continuation of a Major Default, Collateral Agent shall, at
the direction of the Directing Creditors, withdraw funds in the Loss Proceeds
Account and pay the same to the Secured Creditors for application toward the
reduction or discharge of the Secured Obligations, as set forth in Section 15,
below.
9. Fees and Expenses. The Borrower agrees to pay to the Collateral Agent,
from time to time upon demand, all reasonable fees (including the Collateral
Agent's Fee), costs and expenses of the Collateral Agent, counsel to the
Noteholders' group and counsel to the Administrative Agent, to the extent (i)
arising in connection with the administration or enforcement of any of the
provisions of this Agreement or the Security Instruments (including the
reasonable expenses of the Collateral Agent in furnishing any reports and
information requested by the Secured Creditors), (ii) incurred or required to be
advanced in connection with the administration of the Collateral, the sale or
other disposition of the Collateral pursuant to any Security Instruments and the
preservation, protection or
28
defense of the Collateral Agent's rights under this Agreement and the Security
Instruments, or (iii) incurred by the Collateral Agent pursuant to Section 18.
10. Additional Covenants of the Borrower. The Borrower hereby agrees: (a)
to procure, execute and deliver from time to time any endorsements, assignments,
financing statements and other writings reasonably deemed necessary or
appropriate by the Required Creditors to perfect, maintain and protect its
security interest hereunder and the priority thereof and to deliver promptly to
the Collateral Agent all originals of any documents evidencing proceeds of the
Collateral consisting of chattel paper or instruments; (b) not to surrender
possession of, sell, encumber (other than to the Collateral Agent), or otherwise
dispose of or transfer, any Collateral or right or interest therein other than
as permitted under this Agreement or the other Debt Documents; (c) after the
occurrence and during the continuance of a Major Default (and at all other times
expressly provided for in this Agreement) to account fully for and promptly to
deliver to the Collateral Agent, in the form received, all proceeds of
Collateral received, endorsed to the Collateral Agent as appropriate and
accompanied by such assignments and powers, duly executed, as the Required
Creditors shall reasonably request, and until so delivered all Collateral and
proceeds thereof shall be held in trust for the Collateral Agent for the benefit
of the Secured Creditors; (d) at any reasonable time, upon demand by the
Collateral Agent (as directed by the Required Creditors), to exhibit to and
allow inspection by the Collateral Agent (or Persons designated by the
Collateral Agent) of the Collateral and the records concerning the Collateral;
(e) to keep the records concerning the Collateral at the location(s) set forth
in Section 24 below and not to remove such records from such location(s) without
thirty (30) days prior written notice to the Collateral Agent; (f) not knowingly
to use any Collateral or permit any Collateral to be used unlawfully or in
violation of any provision of this Agreement or the other Debt Documents or any
applicable statute, regulation or ordinance or any policy of insurance covering
the Collateral; (g) to notify the Secured Creditors before any such change shall
occur of any change in the Borrower's name, identity or structure through
merger, consolidation or otherwise; (h) to appear in and defend, at the
Borrower's cost and expense, any action or proceeding which may affect its title
to or the Collateral Agent's interest for the benefit of the Secured Creditors
in the Collateral unless the failure to do so would not have a Material Adverse
Effect; and (i) to keep accurate and complete records of the Collateral and to
provide the Collateral Agent with such records and such reports and information
relating to the Collateral as the Collateral Agent may reasonably request from
time to time.
11. Collection of Collateral Payments
(a) The Borrower shall, at its sole cost and expense, endeavor to obtain
payment, when due and payable, of all sums due or to become due with respect to
any Collateral ("Collateral Payments" or a "Collateral Payment"), consistent
with all requirements of law and contractual obligations binding upon the
Borrower, but subject to Borrower's reasonable business judgment and right to
contest as set forth in Section 7(e) above. Upon the request of the Required
Creditors following the occurrence of a Major Default (and subject to the
requirements of applicable law), the Borrower will notify and direct any party
who is or might become obligated to make any Collateral Payment to make payment
thereof to the Collateral Agent (or to the Borrower in care of the Collateral
Agent) at such address as the Collateral Agent may designate. The Borrower will
reimburse the Collateral Agent promptly upon demand for all reasonable
out-of-pocket costs and expenses, including reasonable attorneys' fees and
litigation expenses, incurred by the Collateral Agent in seeking to collect any
Collateral Payment.
29
(b) Following the occurrence of a Major Default, upon the request of the
Required Creditors the Borrower will transmit and deliver to the Collateral
Agent, forthwith upon receipt and in the form received, all cash, checks, drafts
and other instruments for the payment of money (properly endorsed where required
so that such items may be collected by the Collateral Agent) which may be
received by the Borrower at any time as payment on account of any Collateral
Payment and if such request shall be made, until delivery to the Collateral
Agent, such items will be held in trust for the Collateral Agent for the benefit
of the Secured Creditors and will not be commingled by the Borrower with any of
its other funds or property. Thereafter, the Collateral Agent is hereby
authorized and empowered to endorse the name of the Borrower on any check, draft
or other instrument for the payment of money received by the Collateral Agent on
account of any Collateral Payment if the Collateral Agent believes such
endorsement is necessary or desirable for purposes of collection.
(c) The Borrower hereby agrees to indemnify, defend and save harmless the
Collateral Agent and its agents, officers, employees and representatives from
and against all liabilities and reasonable expenses on account of any adverse
claim asserted against the Collateral Agent relating to any moneys received by
the Collateral Agent on account of any Collateral Payment (other than as a
direct result of the gross negligence or willful misconduct of the Collateral
Agent) and such obligation of the Borrower shall continue in effect after and
notwithstanding the discharge of the Secured Obligations and/or the release of
the security interest granted in Section 3 above.
12. Enforcement and Priority.
(a) Enforcement With Respect to Collateral. The Directing Creditors shall
have the right to deliver a written notice of a Major Default, clearly
identified as a Default Notice (a "Default Notice") identifying the nature of
such Major Default and specifying the Debt Document under which such Major
Default arose, to the Collateral Agent to the extent a Major Default shall have
occurred under a Debt Document to which Directing Creditors are party (except
that the Lenders (acting in such capacity) shall act solely as a group through
direction to the Administrative Agent). Upon and after the delivery to the
Collateral Agent of (i) a Default Notice by the Directing Creditors and (ii) an
Enforcement Directive from the Directing Creditors, the Collateral Agent shall
undertake Enforcement pursuant to this Section 12(a), and proceed to protect and
enforce rights or remedies granted under the Security Instruments as directed in
the Enforcement Directive, either by suit in equity or by action at law, or
both, whether for the specific performance of any covenant, agreement or other
provision contained herein or in the Security Instruments, or to enforce any
other legal or equitable right or remedy provided herein or therein. Each
Secured Creditor (other than Collateral Agent) that is a party hereto hereby
agrees that it shall not take any action of Enforcement in respect of or
affecting any Collateral except through the delivery of an Enforcement Directive
from the Directing Creditors to the Collateral Agent.
(b) Cooperation of Secured Creditors. Each Secured Creditor that is a party
hereto hereby agrees and covenants with each other Secured Creditor that:
(i) promptly after having actual knowledge of the occurrence of a
Major Default, such Secured Creditor (or, with respect to the Lenders, the
Administrative Agent) will deliver to each Secured Creditor written notice
of such Major Default, identifying the nature of such Major Default and
specifying the Debt Document under which such Major Default arose;
provided, however, that no such notice shall be required to be given if (A)
such Major
30
Default is waived or cured by amendment prior to the time such notice is
delivered, or (B) notice of such Major Default has previously been
delivered to the Collateral Agent; provided further, that the failure to
give such notice shall not impair any rights hereunder or under any of the
Security Instruments or the other Debt Documents;
(ii) it will from time to time provide such information to the
Collateral Agent as may be necessary to enable the Collateral Agent to make
any calculation hereunder or otherwise reasonably required and requested
for any other purpose hereof; and
(iii) it will from time to time consult with the Collateral Agent and
the other Secured Creditors in good faith regarding the Enforcement of its
rights with a view to recovering amounts due under any of the Debt
Documents.
(c) Priority of Interests; Pari Passu Nature of Secured Obligations.
Notwithstanding any agreements or arrangements in existence prior to the date
hereof or hereafter arising or the existence or priority of any Lien in any of
the Collateral held by a Secured Creditor or any other Person on behalf of a
Secured Creditor on the date hereof or hereafter arising without giving effect
to this Agreement, the rights and interests of such Secured Creditor in the
Collateral, and any Lien therein, shall be subject to this Agreement and treated
as among the Secured Creditors as having such priority as set forth herein and
shall be shared at all times among the Secured Creditors in accordance herewith,
and the proceeds of any sale, transfer or other disposition of the Collateral
for any reasons whatsoever shall be distributed in accordance with this
Agreement. Each Secured Creditor acknowledges and agrees that the portions of
each of the Secured Obligations share the benefit and Lien priority of and to
the Security Instruments, the Collateral and the Collateral Proceeds and the
Distributions on the basis specified in Section 15(b).
(d) Remedies of Collateral Agent. Upon the occurrence of a Major Default,
Collateral Agent shall have the rights and remedies set forth herein and in the
Mortgages and other Security Instruments, including without limitation, the
right, upon the direction of any Directing Creditor, to foreclose upon and sell
any or all of the Collateral Projects. Whether or not the Collateral Agent
exercises any such right, upon the occurrence of any Major Default and following
the acceleration of any part of the Secured Obligations, the Collateral Agent on
behalf of the Secured Creditors shall have as to any Collateral, all other
rights and remedies provided for herein and in the Security Instruments, and all
rights and remedies of a secured party under the New York Uniform Commercial
Code and, in addition thereto and not in lieu thereof, all other rights or
remedies at law or in equity existing or conferred upon the Collateral Agent on
behalf of the Secured Creditors by other jurisdictions or other applicable law
or given to the Collateral Agent on behalf of the Secured Creditors pursuant to
the Security Instruments, including any security agreement or other instrument
or agreement heretofore, now, or hereafter given as security for the Borrower's
obligations hereunder.
(e) Waivers of Rights. Until the occurrence of the Security Termination
Date, each of the Secured Creditors and the Administrative Agent hereby waives
any and all rights each may individually (i.e., other than through the
Collateral Agent, the Required Creditors or the Directing Creditors, as
applicable) now or hereafter have to exercise any Enforcement action. Each of
the Secured Creditors and the Administrative Agent hereby agrees not to take any
action whatsoever to enforce any term or provision of the Security Instruments
or to enforce any right with respect to the Collateral in conflict with the
provisions of this Agreement or the terms and provisions of the
31
Security Instruments. Nothing set forth above or otherwise contained in this
Agreement shall be interpreted as a waiver of any rights of setoff (by contract,
law or otherwise) of any Secured Creditor (except that any right of setoff with
respect to amounts owing in respect of any Secured Obligation shall be subject
to the sharing provisions set forth herein).
(f) Additional Collateral. Each Secured Creditor hereby covenants and
agrees that such Secured Creditor will not take, accept or obtain, as security
for such Secured Creditor's Secured Obligations, any Lien upon any assets of any
of the Borrower or any subsidiary or Affiliate thereof (other than assets which,
if obtained by the Secured Creditor, would constitute Collateral to secure the
payment and performance of the Secured Obligations) unless the Collateral Agent
on behalf of all Secured Creditors is granted a priority Lien upon such assets
and such assets become Collateral subject to this Agreement, in either case,
pursuant to documents in form and substance satisfactory to all of the Secured
Creditors.
(g) Payments to Secured Creditors. All payments to be made by the
Collateral Agent to the Noteholders pursuant to the terms and provisions of this
Agreement shall be made in the manner set forth in Schedule 4 hereto (such
Schedule to correspond with the current version of Annex 1 of each of the
respective Note Purchase Agreements), or at such other place within the United
States and in such other manner as each Noteholder may designate for the purpose
by notice to the Collateral Agent in writing. All payments to be made by the
Collateral Agent to the Lenders pursuant to the terms and provisions of this
Agreement shall be made by electronic funds transfer of immediately available
funds to the bank account for the Administrative Agent for the benefit of the
Lenders as described in Schedule 5 hereto or to such other bank account as the
Administrative Agent shall instruct the Collateral Agent in writing.
13. Actions by Collateral Agent Under the Mortgages. The Collateral Agent
shall only take such actions under the Mortgages as are authorized by the
Required Creditors or any Directing Creditor in accordance with this Agreement,
and the Required Creditors hereby authorize and direct the Collateral Agent, and
the Collateral Agent agrees, to perform and observe each and every covenant or
obligation contained in the Mortgages and required to be performed or observed
by Collateral Agent under the Mortgages.
14. Independent Actions by Secured Creditors. Nothing contained in this
Agreement shall prohibit any Secured Creditor, in accordance with the Debt
Documents, from accelerating the maturity of, or demanding payment from the
Borrower on, any Secured Obligation of the Borrower to such Secured Creditor or
from instituting legal action against the Borrower to obtain a judgment or other
legal process in respect of such Secured Obligation, but any funds received from
the Borrower in connection with any recovery therefrom shall constitute
Distributions and shall be subject to the terms of this Agreement.
15. Distributions.
(a) Sharing / Distributions.
(i) Each Secured Creditor (other than Collateral Agent) agrees to
share with the other Secured Creditors (other than Collateral Agent) all
Distributions at all times and to apply all Distributions received by such
Secured Creditor (in each case whether or not a Major Default shall have
occurred and be continuing and whether or not any Bankruptcy
32
Proceeding shall have commenced or be continuing) according to the
priorities and in the manner provided in this Section 15. In furtherance of
the foregoing, any and allpayments and other Distributions required to be
made by the Borrower in respect of the Secured Obligations shall at all
times be paid by the Borrower to the Collateral Agent for distribution in
accordance with paragraph (b) of this Section 15. Each Secured Creditor
agrees that if it shall receive any Distributions (including payments
received by setoff of deposit balances or otherwise or payments or
recoveries from any security interest granted to any Secured Creditor or to
the Administrative Agent on behalf of the Lenders) other than from a
distribution by the Collateral Agent pursuant to paragraph (b) of this
Section 15, such Secured Creditor shall promptly (in no event later than
five (5) Business Days after receipt thereof) pay the same over to the
Collateral Agent in the same form as received (with such endorsements as
may be necessary), and that until such Secured Creditor shall have made
such payment it will hold such Distributions in trust for all the Secured
Creditors.
(ii) Promptly following receipt of any Distributions, the Collateral
Agent shall distribute to each other Secured Creditor such Secured
Creditor's share of the Distributions so received in accordance with
paragraph (b) of this Section 15, provided that each Lender's share of the
Distributions shall be paid to the Administrative Agent for the benefit of
the Lenders. Until such Distributions are so applied, the Collateral Agent
shall hold such amounts in its custody in accordance with its regular
procedures for handling deposited funds.
(iii) Promptly after making any Distributions on any date under clause
THIRD, or any clause beneath clause THIRD, of any of the "waterfall"
provisions set forth in Section 15(b), below, the Collateral Agent shall
give notice to each of the Secured Creditors and the Borrower of all such
Distributions.
(b) Order of Application.
(i) Until the earlier to occur of (A) a Major Default and (B) March
31, 2003, all Distributions received by the Collateral Agent shall be
applied promptly by the Collateral Agent in the following order as of any
date of distribution:
FIRST: to:
(i) payment of the Collateral Agent's Fee and any reasonable expenses
incurred by the Collateral Agent in connection with enforcing the rights
and remedies of the Secured Creditors hereunder and under the Security
Instruments and with any or all of the retaking, holding, preserving,
processing, advertising, maintaining, preparing for or consummating any
sale, lease or other disposition of any Collateral, including trustee's
fees and commissions, court costs and reasonable attorney's fees and legal
expenses pertaining thereto; and then
(ii) the ratable payment of, or ratable reimbursement of a Secured
Creditor for, the reasonable fees and expenses of counsel to the
Noteholders' group and counsel to the Administrative Agent; and then
(iii) the ratable payment in respect of any costs, fees, expenses or
other amounts then due and payable by the Borrower to any Secured Creditor,
pursuant to the Debt
33
Documents, in respect of the Secured Obligations not provided for above or
below;
SECOND: to the ratable payment in respect of all accrued and unpaid
interest then due and payable by the Borrower in respect of the
Secured Obligations, provided that payment of interest that would
otherwise be made by the Collateral Agent pursuant to this clause
SECOND may be made by the Borrower directly to the Secured Creditors
so long as this clause SECOND is otherwise applicable to such payment
and such payment is otherwise made in strict compliance with this
clause SECOND;
THIRD: to the ratable payment in respect of all outstanding principal
(whether or not then due and payable) in respect of the Secured
Obligations (for the avoidance of doubt, all outstanding principal in
respect of the Secured Obligations shall not include the Makewhole
Amount);
FOURTH: to the ratable payment of all Makewhole Amounts (whether or
not then due and payable); and
FIFTH: to the Borrower or as otherwise required by applicable law.
As used in clauses FIRST and SECOND of Section 15(b)(a)(i), "ratable"
shall mean with respect to each Secured Creditor, a ratio equal to (x)
the amount then due and payable to such Secured Creditor under such
clause to (y) the aggregate amount then due and payable to all Secured
Creditors under such clause. As used in clauses THIRD and FOURTH of
Section 15(b)(a)(i), "ratable" shall mean with respect to each Secured
Creditor, a ratio equal to (x) the total amount owing (whether or not
then due and payable) to such Secured Creditor under such clause to
(y) the total amount owing (whether or not then due and payable) to
all Secured Creditors under such clause.
(ii) Upon or after the earlier to occur of (A) a Major Default and (B)
March 31, 2003, all Distributions received by the Collateral Agent shall be
applied promptly by the Collateral Agent in the following order as of any
date of distribution:
FIRST: to:
(i) payment of the Collateral Agent's Fee and any reasonable expenses
incurred by the Collateral Agent in connection with enforcing the rights
and remedies of the Secured Creditors hereunder and under the Security
Instruments and with any or all of the retaking, holding, preserving,
processing, advertising, maintaining, preparing for or consummating any
sale, lease or other disposition of any Collateral, including trustee's
fees and commissions, court costs and reasonable attorney's fees and legal
expenses pertaining thereto; and then
34
(ii) the ratable payment, or ratable reimbursement of a Secured
Creditor for, the reasonable fees and expenses of counsel to the
Noteholders' group and counsel to the Administrative Agent; provided that,
if either the Required Lenders or the Required Noteholders shall have
delivered written notice to the Collateral Agent on any date electing to
treat all fees and expenses of both counsel to the Noteholders' group and
counsel to the Administrative Agent in this clause (ii) as subject to the
priority set forth in clause FIFTH below, then all such fees and expenses
of both counsel to the Noteholders' group and counsel to the Administrative
Agent incurred from and after such date shall be payable under clause FIFTH
below rather than this clause FIRST;
SECOND: to the ratable payment in respect of all accrued and unpaid
interest then due and payable by the Borrower in respect of the
Secured Obligations;
THIRD: to the ratable payment in respect of all outstanding principal
(whether or not then due and payable) in respect of the Secured
Obligations (for the avoidance of doubt, all outstanding principal in
respect of the Secured Obligations shall not include the Makewhole
Amount);
FOURTH: to the ratable payment of all Makewhole Amounts to the
Noteholders and breakage costs (if any) to the Lenders (whether or not
then due and payable);
FIFTH: to the ratable payment in respect of any costs, fees, expenses
or other amounts then due and payable by the Borrower to any Secured
Creditor, pursuant to the Debt Documents, in respect of the Secured
Obligations not provided for above or below; and
SIXTH: to the Borrower or as otherwise required by applicable law.
As used in clauses FIRST, SECOND and FIFTH of Section 15(b)(ii),
"ratable" shall mean with respect to each Secured Creditor, a ratio
equal to (x) the amount then due and payable to such Secured Creditor
under such clause to (y) the aggregate amount then due and payable to
all Secured Creditors under such clause. As used in clauses THIRD and
FOURTH of Section 15(b)(ii), "ratable" shall mean with respect to each
Secured Creditor, a ratio equal to (x) the total amount owing (whether
or not then due and payable) to such Secured Creditor under such
clause to (y) the total amount owing (whether or not then due and
payable) to all Secured Creditors under such clause.
(iii) Notwithstanding anything in the Agreement to the contrary:
(i) the Collateral Agent shall not be obligated to make a payment
pursuant to this Section 15(b) until it shall have received a threshold
amount of at least $100,000 of Distributions that are to be distributed at
such time pursuant to this Section 15, unless such
35
lesser amount would be the final amount to be paid to satisfy the Secured
Obligations; and
(ii) any amounts withheld, pursuant to Section 15(c), by the
Collateral Agent from a Distribution to be otherwise made to a
Non-Returning Secured Creditor shall be deemed to have been paid to such
Non-Returning Secured Creditor for purposes of determining each Secured
Creditor's ratable share of any Distribution hereunder.
(c) Returned Amounts. If at any time the Collateral Agent or any Secured
Creditor shall be required to restore or return, or if such party (with the
consent of the Required Creditors) restores or returns in good faith settlement
of pending or threatened avoidance claims, to the Borrower or any other Person
other than to another Secured Creditor any Distributions made on or after the
Effective Date or any portion thereof, whether by reason of the insolvency,
reorganization or other similar event in respect of the Borrower or such Person
or otherwise (a "Returned Amount"), then, (i) the Collateral Agent shall
promptly give notice of the Returned Amount to each Secured Creditor, and (ii)
each of the Secured Creditors shall promptly transfer to the Collateral Agent
(for reimbursement to the Collateral Agent or such Secured Creditor, as the case
may be) such amounts as are necessary such that each Secured Creditor shall have
received and retained the amount it would have received under Section 15(b) had
the Returned Amount not previously been distributed (its "Returned Amount
Share"). If any Secured Creditor (a "Non-Returning Secured Creditor") fails to
tender payment of its Returned Amount Share, then the Collateral Agent is hereby
expressly granted the right thereafter to, and shall, withhold from any
Distributions (including, without limitation, Collateral Proceeds) otherwise
payable to such Non-Returning Secured Creditor an amount equal to its Returned
Amount Share remaining unpaid at such time of receipt of such Distributions
(including, without limitation, Collateral Proceeds) and apply such amount
withheld in satisfaction of such Returned Amount Share. The Collateral Agent
shall also have the right to collect from such Non-Returning Secured Creditor,
and/or withhold from any Distributions to otherwise be made to such
Non-Returning Secured Creditor, the Collateral Agent's reasonable costs and
expenses incurred in collecting such Non-Returning Secured Creditor's Returned
Amount Share, plus interest on any unpaid portion of such Returned Amount Share
at the federal judgment rate from the date the Collateral Agent first requested
payment of such Returned Amount Share. The agreements in this Section 15(c))
shall survive the payment of the Bank Loans and Notes and the termination of the
Security Instruments, the Debt Documents and this Agreement.
(d) No Waiver of Default. The Borrower acknowledges and agrees that if any
payment default exists in respect of the Secured Obligations after the making of
any Distribution hereunder, nothing set forth herein shall constitute a waiver
of such payment default.
16. Default Interest. All amounts due to any of the Lenders hereunder and
under the Mortgages and other Security Instruments and not paid when due shall
bear interest from and after the due date thereof at the Default Rate (as such
term is defined in Section 2.12 of the 1999 Credit Agreement), which rate shall
be deemed to be the "Default Rate" hereunder with respect to all amounts due to
the Lenders. All amounts due to any of the Noteholders hereunder and under the
Mortgages and other Security Instruments and not paid when due shall bear
interest from and after the due date thereof at the interest rate under the Note
Purchase Agreements applicable to defaulted principal in respect of Notes held
by such Noteholder (except as otherwise provided in the Note Purchase Override
Agreement with respect to deferred Makewhole Amounts for the period ending on
the Deferred Makewhole Payment Date), which rate shall be deemed to be the
"Default Rate" hereunder with respect to all amounts due to the Noteholders.
36
17. Waiver by Borrower. No Secured Creditor shall incur any liability as a
result of the sale of the Collateral, or any part thereof, at any public or
private sales pursuant to the Mortgages. The Borrower hereby waives (to the
extent permitted by law) any claims it may have against such Secured Creditor
arising by reason of the fact that the price at which the Collateral may have
been sold at any such private sale was less than the price which might have been
obtained at a public sale or was less than the aggregate amount of the Secured
Obligations then outstanding.
18. Resignation and Removal of Collateral Agent.
(a) If the Collateral Agent shall resign as Collateral Agent under this
Agreement (or be removed pursuant to Section 18(b)), such resignation (or
removal) to be effective upon the appointment of a successor Collateral Agent
and the payment to the outgoing Collateral Agent of all amounts owed to it
hereunder, then the Secured Creditors (other than the Collateral Agent) may
appoint a successor Collateral Agent for the Secured Creditors, which successor
Collateral Agent shall be a commercial bank, insurance company or trust company
organized under the laws of the United States of America or any state thereof
having a combined surplus and capital of not less than $100,000,000, whereupon
such successor Collateral Agent shall succeed to the rights, powers and duties
of the former Collateral Agent and the obligations of the former Collateral
Agent shall be terminated and canceled, without any other or further act or deed
on the part of such former Collateral Agent or any of the parties to this
Agreement; provided, however, that if the Secured Creditors (other than the
Collateral Agent) cannot agree as to a successor Collateral Agent within fifteen
(15) days after notice of such resignation (or removal), then the resigning (or
removed) Collateral Agent may appoint an interim Collateral Agent (which shall
not be a Lender, a Noteholder or any Affiliate of any thereof) meeting the
qualifications set forth above to act as Collateral Agent pending the
appointment of a successor Collateral Agent through the procedure described
herein.
(b) The Collateral Agent may be removed without cause at any time by the
vote of the Required Creditors and written notice thereof delivered to the
Collateral Agent. If the Collateral Agent is so removed, the Required Creditors
may appoint a successor Collateral Agent in accordance with Section 18(a)
hereof.
(c) After the effective date of the resignation or removal of the
Collateral Agent hereunder, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Collateral Agent under the Security Instruments and this Agreement; provided,
however, that any liability of such Collateral Agent arising from the
performance of its obligations hereunder prior to such resignation or removal
shall survive such resignation or removal.
(d) Each of the parties hereto, including any resigning or removed
Collateral Agent, agrees to execute whatever documents are necessary or
reasonably requested, including without limitation amendments to or assignments
of any of the Security Instruments, to effect the resignation or removal of the
Collateral Agent under this Agreement or any other document executed pursuant to
this Agreement and to continue the perfection of the Liens on the Collateral.
19. Confidentiality. The Collateral Agent agrees to take normal and
reasonable precautions and exercise due care to maintain the confidentiality of
all non-public information provided to it by the Borrower or by any other party
on the Borrower's behalf in connection with this Agreement or
37
the other Debt Documents and agrees and undertakes that neither it nor any of
its affiliates shall disclose to any Person (other than any Secured Creditor)
any such information for any purpose or in any manner other than pursuant to the
terms contemplated by this Agreement or the other Debt Documents. The Collateral
Agent, its affiliates and their respective employees, officers and directors may
disclose such information (1) at the request of any regulatory authority or in
connection with an examination of such Person by any such authority, (2)
pursuant to subpoena or other court process, (3) when required to do so in
accordance with the provisions of any applicable law, (4) at the express
direction of any other Governmental Authority of any State of the United States
of America or of any other jurisdiction in which such Person conducts its
business, (5) to such Person's independent auditors, attorneys and other
professional advisors, (6) if such information has become public other than
through disclosure by such Person, (7) in connection with any litigation
involving such Person, so long as due care is taken by Collateral Agent, its
affiliates and their respective officers and directors to comply with the
provisions of this Section 19, including, but not limited to filing any
documents containing such information under seal, and (8) to any Affiliate of
such Person. Notwithstanding anything herein to the contrary, nothing herein
shall impose any additional confidentiality restriction on any Secured Creditor
(beyond those confidentiality restrictions to which such Secured Creditor is
already subject pursuant to the other Debt Documents) with respect to any
information provided by the Collateral Agent to such Secured Creditor.
20. Binding Upon Successors. All rights of the Secured Creditors under this
Agreement shall inure to the benefit of the Secured Creditors and their
successors and assigns, and all obligations of the Borrower shall bind its
successors and assigns.
21. Entire Agreement. This Agreement and the Mortgages contain the entire
security agreement and collateral agency agreement with respect to the
Collateral among Secured Creditors and the Borrower, and, except as otherwise
provided, this Agreement may not be altered, amended or modified except in a
writing executed in accordance with Section 22. All waivers by the Borrower
provided for in this Agreement have been specifically negotiated by the parties
with full cognizance and understanding of their rights.
22. Amendments, Waivers and Consents.
(a) All amendments, waivers or consents of any provision of this Agreement
shall be effective only if the same shall be in writing and signed by the
Required Creditors and, in the case of amendments, by the Borrower, provided
that any amendment, modification, supplement or waiver of Sections 12, 15 or 22
or the definitions of Directing Creditors, Distribution, Loan Obligations,
Noteholder Obligations, Required Lenders, Required Creditors, Required
Noteholders, Secured Obligations or Secured Creditor shall require the unanimous
written consent of all the Secured Creditors (other than the Collateral Agent).
Any amendments, waivers or consents of any provision of this Agreement affecting
the rights or obligations of the Collateral Agent shall also require the prior
written consent of the Collateral Agent.
(b) All amendments or waivers of any provision of or consent pursuant to or
under any Security Instrument shall be effective only if the same shall be in
writing and signed by the Collateral Agent and the Required Creditors and, in
the case of amendments, by the Borrower. Notwithstanding the foregoing, the
release of all or substantially all of the Collateral prior to the Security
Termination Date (except in connection with property releases permitted pursuant
to
38
Section 4) shall require the written consent of each of the Secured Creditors
(other than the Collateral Agent).
(c) Each Secured Creditor hereby agrees and covenants with each other
Secured Creditor that it will not amend or modify any term or provision of any
other Debt Document (i.e., other than this Agreement and any other Security
Instrument covered above in subsections (a) and (b), respectively) without the
prior written consent of the Required Creditors; provided, however, that nothing
in this Section 22 shall, or shall be deemed to, affect the voting requirements
set forth in each such agreement for such amendments and modifications.
(d) The maximum aggregate outstanding principal balance of the indebtedness
secured by the Mortgages and this Agreement shall not exceed $400,000,000
without the prior written agreement of the Required Creditors.
(e) Where this Agreement contains a reference to a matter that must be
"reasonably approved" or is "subject to the reasonable approval of" a Person (or
a similar phrase requiring "reasonable" approval or discretion), then such
Person shall not unreasonably withhold or delay its consent or approval to such
matter.
23. Choice of Law. This Agreement shall be construed in accordance with and
governed by the laws of the State of New York and, where applicable and except
as otherwise defined herein, terms used herein shall have the meanings given
them in the New York Uniform Commercial Code.
24. Place of Business; Records. The Borrower represents and warrants that
its chief place of business is at the address set forth beneath its signature
below, and that its books and records concerning the Collateral are kept at its
chief place of business and at other offices of the Borrower in Los Angeles
County, California.
25. Notice. Any written notice, consent or other communication provided for
in this Agreement shall be delivered or sent and all notices and other
communications provided to any party hereto under this Agreement, in writing or
by telex or by facsimile and addressed or delivered to such party, with copies
to each other party hereto (but failure to provide any such copies shall not
invalidate such notice), in each case at its address set forth below its
signature hereto or at such other address as may be designated by such party in
a notice to the other parties. Any notice shall be deemed given when transmitted
(answerback confirmed in the case of telexes).
26. Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one Agreement, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
27. Sale of Interest. No Secured Creditor will sell, transfer or otherwise
dispose of any interest in the Secured Obligations to any party other than the
sale of a participation interest to a "Participant" (as such term is defined in
the 1999 Credit Agreement) unless such purchaser or transferee shall agree, in
writing, to be bound by the terms of this Agreement.
28. Severability; Repurchase in the Event of Avoidance Actions.
(a) If for any reason, the allocation of Distributions among the Secured
Creditors in accordance with Section 15(b) of this Agreement is finally
determined by a court of competent
39
jurisdiction to be unenforceable in whole or in part, then the Lenders, the 1994
Noteholders and the 1996 Noteholders will purchase and exchange such
participations in the 1999 Bank Notes, the 1994 Notes and the 1996 Notes as may
be required so that each Lender, 1994 Noteholder and 1996 Noteholder, after
giving effect to all such purchases and exchanges, shall have received and
retained cash payments in respect of the amounts distributable under Section
15(b) equal to the amount such Lender, 1994 Noteholder or 1996 Noteholder would
have received if the amounts had been applied in accordance with such Section
15(b); provided, however, if in connection with a Bankruptcy Proceeding of the
Borrower, any portion of the Secured Obligations or the Borrower's obligations
under the Security Instruments referred to in clauses SECOND, THIRD, FOURTH or
FIFTH of Section 15(b)(i) is determined to be unenforceable or is disallowed
(such portion to be hereinafter referred to as a "Disallowed Obligation"), then
this Section 28(a) shall not be applied or construed in such manner to enable
the holder of any such Disallowed Obligation to receive any Distribution on
account of such Disallowed Obligation. It is the intent of this Section 28(a) to
establish an alternative mechanism to preserve as among the parties hereto the
distribution priorities and the sharing calculation formulas set forth in
Section 15(b) the same as if this Agreement had been given effect among the
parties hereto and the same as if the Secured Obligations were allowed or
enforced against the Borrower in accordance with their terms. It is not,
however, the intent of this Section 28(a) to enable any party hereto to receive
or retain any Distribution with respect to any Disallowed Obligation to the
extent such Disallowed Obligation has been disallowed or is otherwise determined
to be unenforceable as against the Borrower.
(b) Except to the extent contemplated by subsection (a) hereof, in case any
one or more of the provisions contained in this Agreement shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions of this Agreement shall not in any
way be affected or impaired thereby.
29. Termination of Agreement. This Agreement shall terminate on the
Security Termination Date; provided, however, that such termination shall not
relieve any party of its accrued obligations and liabilities, and all
representations and warranties herein, and any provision expressly stated herein
to survive termination of this Agreement, shall survive such termination.
30. Captions. The descriptive headings of the various Sections or parts of
this Agreement are for convenience only and shall not affect the meaning or
construction of any of the provisions hereof.
EXECUTED the day and year first above written.
40
COLLATERAL AGENT: BNY MIDWEST TRUST COMPANY, an
Illinois corporation, as Collateral Agent
By: /s/ Xxxx X. Xxxxxxx
-----------------------------------
Name: Xxxx X. Xxxxxxx
Title: Vice President
0 Xxxxx XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention:
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
BORROWER: NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
By: National Golf Properties, Inc.,
its General Partner
By: /s/ Xxxx X. Xxxxxx
------------------------------
Print Name: Xxxx X. Xxxxxx
Title: CFO and Secretary
c/o National Golf Properties, Inc.
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Attention: Principal Accounting Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
41
SECURED CREDITORS: BANK ONE, N.A., individually and as Agent
for the Lenders
By: Xxxxxxx X. Xxxxxx
-------------------------------
Print Name: Xxxxxxx X. Xxxxxx
Title: Vice President
Mail Code IL1-0631
1 Bank Xxx Xxxxx - 00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
The foregoing Agreement is hereby accepted as of the date first above written:
1994 NOTEHOLDERS
THE EQUITABLE LIFE ASSURANCE
SOCIETY OF THE UNITED STATES
By: /s/ Xxxx Xxxxxxxxxxx
---------------------
Name: Xxxx Xxxxxxxxxxx
Title: Investment Officer
FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN,
as successor to FB Annuity Company
By: Advantus Capital Management, Inc.
By: /s/ Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
FARM BUREAU LIFE INSURANCE COMPANY OF MICHIGAN
By: Advantus Capital Management, Inc.
By: /s/ Xxxxx X. Xxxxxx
------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice President
-42-
NATIONAL LIFE INSURANCE COMPANY
By: /s/ R. Xxxxx Xxxxxxx
------------------------
Name: R. Xxxxx Xxxxxxx
Title: Vice President, NL Capital Management
THE OHIO NATIONAL LIFE INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President, Investments
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By: /s/ Roi X. Xxxxxx
------------------------
Name: Roi X. Xxxxxx
Title: Director - Special Situations
THE TRAVELERS INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Investment Officer
1996 NOTEHOLDERS
AUSA LIFE INSURANCE COMPANY, INC.
By: /s/ Xxxx Xxxxxx
------------------------
Name: Xxxx Xxxxxx
Title: Vice President
TRANSAMERICA LIFE INSURANCE COMPANY
By: /s/ Xxxx Xxxxxx
------------------------
Name: Xxxx Xxxxxx
Title: Vice President
JEFFERSON-PILOT LIFE INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxx, XX
------------------------
Name: Xxxxxx X. Xxxxxx, XX
Title: Vice President
-43-
FORTIS ASSET MANAGEMENT,
a division of Fortis, Inc.
By: /s/ Xxxxx Xxxxx
------------------------
Name: Xxxxx Xxxxx
Title: Vice President - Fixed Income
OXFORD LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxx
------------------------
Name: Xxxxx X. Xxxx
Title: Treasurer
NATIONAL LIFE INSURANCE COMPANY
By: /s/ R. Xxxxx Xxxxxxx
------------------------
Name: R. Xxxxx Xxxxxxx
Title: Vice President, NL Capital Management
LIFE INSURANCE COMPANY OF THE SOUTHWEST
By: /s/ R. Xxxxx Xxxxxxx
------------------------
Name: R. Xxxxx Xxxxxxx
Title: Vice President, NL Capital Management
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
By: /s/ Roi X. Xxxxxx
------------------------
Name: Roi X. Xxxxxx
Title: Director - Special Situations
THE TRAVELERS INSURANCE COMPANY
By: /s/ Xxxxxx X. Xxxxxx
------------------------
Name: Xxxxxx X. Xxxxxx
Title: Investment Officer
-44-
