EXHIBIT 99.7
SECURITY AGREEMENT AND ASSIGNMENT
1. PARTIES.
This Security Agreement and Assignment ("Agreement"), dated June 1,
1996, is entered into by and between Angeles Mortgage Investment Trust, a
California business trust ("Lender") and Angeles Partners XIV, a California
limited partnership ("Debtor").
2. RECITALS.
2.1. Concurrently herewith, Debtor has executed and delivered to Lender
that certain Amended and Restated Secured Promissory Note (Glenwood) in favor of
Lender in the original principal amount of $1,915,127.94 (the "Glenwood Note"),
a copy of which is attached hereto as Exhibit "1" and incorporated herein by
this reference.
2.2. Concurrently herewith, Debtor has executed and delivered to Lender
that certain Amended and Restated Secured Promissory Note (Waterford) in favor
of Lender in the original principal amount of $458,847.95 (the "Waterford
Note"), a copy of which is attached hereto as Exhibit "2" and incorporated
herein by this reference.
2.3. Debtor and Angeles Realty Corporation II, a California corporation
("ARC") are the only partners in Waterford Square Apartments, a California
general partnership (the "Waterford Partnership").
2.4. As security for payment of the Glenwood Note and the Waterford
Note and the performance of its obligations thereunder, Debtor desires to
pledge and grant to Lender, or cause to be pledged and granted to Lender, and to
create, or cause to be created, a security interest in its partnership interest
in the Waterford Partnership on the terms and conditions hereinafter set forth.
3. GRANT OF SECURITY INTEREST.
As security for the full, punctual and prompt payment of the Glenwood
Note and the Waterford Note and the performance of its obligations thereunder,
and for good and valuable consideration, the receipt and-adequacy of which are
hereby acknowledged, Debtor hereby grants to Lender a security interest in
Debtor's partnership interest in the Waterford Partnership including any income,
profits, distribution rights and capital accounts relating thereto (collectively
the "Collateral") , as now held and to any additional extent acquired hereafter.
4. PERFECTION OF SECURITY INTEREST.
In connection with the grant of the security interest set forth in
Section 3 above, Debtor shall execute and deliver to Lender Financing Statements
on Form UCC-1, securing said security interest, in the form attached as Exhibit
"G" to the Master Agreement entered into between Debtor, Lender and the
Waterford Partnership simultaneously herewith (the "Loan Agreement").
5. ASSIGNMENT.
5.1. Concurrently with the execution hereof, Debtor has delivered to
Lender a fully executed assignment of certain of its rights to and interests in
the Collateral (the "Assignment") in the form attached hereto as Exhibit "3" and
incorporated herein by this reference.
5.2. Debtor agrees that the Assignment shall be held by Lender as
security until the Glenwood Note and the Waterford Note and any amounts owing
thereunder have been fully repaid to Lender. In the event of a default, as
defined in Section 9 hereof, Lender shall be authorized to use the Assignment in
accordance with the terms hereof.
6. RIGHTS RESERVED TO DEBTOR AND ASSIGNMENT OF DISTRIBUTIONS.
So long as Debtor is not in default, as defined in Section 9 hereof,
Debtor shall remain the record owner of the Collateral and shall retain all
rights and powers as a partner of the Waterford Partnership including any right
to vote; provided, however, that until the Glenwood Note and the Waterford Note
are repaid in full, all cash distributions or distributions in kind to which
Debtor would otherwise be entitled by virtue of its interest in the Waterford
Partnership shall be distributed directly to Lender to be credited as payments
on the Waterford Note and then the Glenwood Note, and Debtor by executing this
Agreement hereby assigns such distributions to Lender and irrevocably instructs
any person acting on behalf of the Waterford Partnership to make such
distributions to which Debtor is otherwise entitled directly to Lender. In the
event of such a default, Lender shall acquire all of Debtor's rights, but none
of Debtor's obligations, duties, or liabilities, as a partner of the Waterford
Partnership, as provided in Section 10.6 hereof.
7. DEBTOR'S REPRESENTATIONS AND WARRANTIES.
Debtor hereby represents and warrants as follows:
7.1. The Collateral is, and at all times hereafter shall be, free and
clear of any and all mortgages, liens, pledges, charges, encumbrances, equities,
claims, interests or restrictions of any nature whatsoever, other than those
created pursuant to this Agreement;
7.2. The security interest granted to Lender pursuant to this Agreement
is, and hereafter at all times shall be, a valid, perfected, first priority
security interest in the Collateral;
7.3. Debtor is the absolute owner of the Collateral with full right to
pledge, sell, transfer, and create a security interest therein free and clear of
any and all mortgages, liens, pledges, charges, encumbrances, whatsoever, other
than those created pursuant to this Agreement;
7.4. Debtor and ARC are the only partners in the Waterford Partnership
and ARC is the managing partner of the Waterford Partnership;
7.5. Neither the obligations of Debtor called for in this Agreement nor
the grant of the security interest provided for herein will result in or
constitute a default, or an event that with notice or lapse of time or both,
would be a default, breach or violation of any agreement,
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instrument or arrangement to which Debtor is party or by which Debtor or any of
Debtor's property is bound; and
7.6. Attached as Exhibit "4" is a true and correct copy of the
Waterford Partnership partnership agreement and all amendments, if any, thereto
(collectively the "Partnership Agreements").
8. COVENANTS OF DEBTOR.
Debtor hereby covenants as follows:
8.1. To immediately notify ARC of the granting of the security interest
and assignment of partnership interest hereunder and to obtain any and all
necessary consents to the grant of security interest and assignment of
partnership interest provided for herein, as well as a waiver of ARC's right of
first refusal, if any, with regard to the Collateral;
8.2. To procure, execute and deliver from time to time any
endorsements, assignments, financing statements, or other writings deemed
necessary or appropriate by Lender to perfect, maintain or protect its security
interest hereunder and the priority thereof;
8.3. Not to permit any lien or security interest other than that
created hereby to attach to the Collateral;
8.4. At Debtor's own cost or expense, to appear in and defend any
action or proceeding which may affect Debtor's title to, or Lender's interest
in, the Collateral;
8.5. If Lender gives value to enable Debtor to acquire additional
rights or interests in connection with the Collateral, to use such value for
such purpose;
8.6. Not to sell, transfer, hypothecate, encumber, or otherwise dispose
of or transfer Debtor's interests in the Waterford Partnership or any right or
interest therein, without Lender's prior written consent;
8.7. Not to take any action, or exercise any right or power as an
individual or as a partner of the Waterford Partnership which would contravene
the provisions of this Agreement or-which would result in a breach of the
partnership agreement of the Waterford Partnership, or which, would result in
any of the Waterford Partnership being, with notice, lapse of time or otherwise,
in breach of, or in default under, any agreement by which the Waterford
Partnership is bound; and
8.8. To permit no amendment or modification to the Partnership
Agreement without Lender's prior written consent, and if such amendment or
modification is made without Lender's consent, it shall be null and void.
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9. EVENT OF DEFAULT.
9.1. At the option of Lender, the occurrence of any of the following
events shall constitute a default by Debtor under this Agreement:
9.1(a) Failure of Debtor to make full payment of the principal
and interest due under the Glenwood Note in accordance with the terms
thereof;
9.1(b) Failure of Debtor to make full payment of the principal
and interest due under the Waterford Note in accordance with the terms
thereof;
9.1(c) Debtor's breach of, or its failure to perform, any-
obligation, covenant, condition, representation or warranty contained
in this Agreement, the Loan Agreement, the Glenwood Note, or the
Waterford Note.
9.2. Lender shall give written notice to Debtor upon the occurrence of
any default hereunder (the "Notice of Default"). In the event that Debtor fails
to cure any default within ten (10) days of the giving of the Notice of Default,
Lender shall have all of the rights and remedies provided in Section 10 below.
10. LENDER'S RIGHTS UPON DEFAULT.
10.1. Upon the happening of any default, as defined in Section 9
hereof, which has not been cured by Debtor within the time provided in Section
9, Lender may, at its sole option, declare the entire unpaid balance of
principal and interest owing under the Glenwood Note and the Waterford Note
immediately due and payable. In addition, Lender may pursue any or all of the
remedies and exercise any or all rights set forth in this Section 10.
10.2. Lender may exercise all remedies of a secured party under the
Uniform Commercial Code of California (the "UCC") including, but not limited to,
the following:
10.2(a) Retention of Collateral. Lender may elect to retain
the Collateral or any part thereof in satisfaction of Debtor's
obligations under the Note in accordance with UCC Section 9505. Lender
may notify Debtor of his election to so retain the Collateral in the
Notice of Default, or in a separate written notice sent to Debtor after
its default.
10.2(b) Disposition of Collateral. Lender may sell or
otherwise dispose of the Collateral or any part thereof at a private
sale. Lender may notify Debtor of its election to so dispose of the
Collateral in the Notice of Default, or in a separate written notice
sent to Debtor after its default. Lender's notice to Debtor of its
election to dispose of the Collateral shall include notice of the time
on or after which such private sale or other intended disposition is to
be made.
10.3. Lender's delay or failure to exercise the remedies described
herein shall not be deemed a waiver of its rights to exercise the right of sale
following a default. The rights and duties of Lender and Debtor, the mechanics
for sale and retention of the Collateral following a
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default, and the disposition or application of the proceeds of the sale of the
Collateral shall be as set forth in the UCC.
10.4. Except as otherwise limited by the Note, Lender may do any and
all other acts, and take any proceedings, allowed by law or in equity to enforce
Lender's rights to collect the obligations secured by this Agreement.
10.5. Debtor hereby irrevocably appoints Lender as its attorney-in-fact
with such power to be effective upon any default by Debtor hereunder which is
not cured within the time permitted under Section 9 hereof. In this capacity,
Lender may exercise all rights and powers as Debtor might exercise with respect
to the Collateral, including, without limitation, the right to transfer the
Collateral to Lender's name or to the name of its nominee or that of any party
to whom Lender conveys the Collateral, and the right to execute any documents to
effectuate a transfer of Debtor's partnership interest in the Waterford
Partnership. Lender shall not be required to make any presentment, demand, or
protest, or give any notice, and Lender need not take any action to preserve any
rights against any prior party or any other person in connection with the Note
or with respect to the Collateral.
10.6. Upon Debtor's default, and until such time as Lender disposes of
the Collateral in accordance with the provisions of this Section 10, Lender
shall (subject to paragraph 10.7 hereof with regard to voting rights) be
entitled to exercise any and all of Debtor's rights as a partner in the
Waterford Partnership, including, but not limited to all rights to capital,
profit, distributions and properties, and to request and obtain information from
the Waterford Partnership. In this connection, Lender may immediately notify the
Waterford Partnership of any default by Debtor, and the Waterford Partnership
shall remit all payments or other distributions to which Debtor otherwise would
be entitled directly to Lender.
10.7. In addition to all other rights and remedies granted to Lender
hereunder, upon the occurrence of an Event of Default as described in paragraph
9 hereof, Lender may, by written notice to Debtor and Angeles Realty Corporation
II, as managing general partner of the Waterford Partnership, be entitled to
become a substitute partner in the Waterford Partnership in place of Debtor and
have all rights and remedies, including but not limited to, voting rights
inuring to Debtor under the Partnership Agreement. Provided, however, that
unless and until Lender elects in writing to become a substitute partner in the
Waterford Partnership, Lender shall not assume or be deemed to assume any
obligations or duties as a partner in the Waterford Partnership. Debtor shall
indemnify, defend, and hold Lender harmless from all claims or damages which may
arise from the Collateral.
10.8. The parties hereby agree that all rights and remedies hereunder
shall be separate and cumulative and in addition to any rights or remedies
available at law, and Lender shall have the right to enforce one or more
remedies under this Agreement or pursuant to law successively or concurrently,
and no action or proceeding shall operate to, or be deemed to, estop or prevent
Lender from the pursuit of any further remedy which it may have by this
Agreement or by law.
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11. TERMINATION.
This Agreement shall terminate, and the Assignment shall be returned to
Debtor, when Debtor has paid or caused to be paid to Lender all amounts due and
owing to Lender under the Glenwood Note and the Waterford Note, the Loan
Agreement and this Agreement, and has tendered any and all non-monetary
obligations due Lender under the Glenwood Note and the Waterford Note, the Loan
Agreement and this Agreement.
12. NOTICES.
12.1. Any and all notices, requests or demands shall be in writing.
They may be served either personally or by certified mail. If served personally,
such service shall be deemed made at the time of service. If served by certified
mail, service conclusively shall be deemed made forty-eight (48) hours after the
deposit thereof in the U.S. Mail, postage prepaid, addressed to the person to
whom such notice or demand is to be given, addressed as follows:
If to Lender:
Angeles Mortgage Investment Trust
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx Xxxxxxx, XX 00000
If to Debtor:
Angeles Partner XIV
c/o Insignia Financial Group, Inc.
One Insignia Financial Xxxxx
Xxxxxxxxxx, XX 00000
12.2. Any party may change the address to which notices are to be sent
by notification given to the other party of such change of address in writing in
accordance with the provisions hereof.
13. INDEMNIFICATION.
Debtor shall defend, indemnify and hold Lender free and harmless from
and against, and in respect of, any and all loss, cost, damage, liability or
expense (including, but not limited, actual attorneys fees and costs) that
Lender shall incur or suffer, which arise or result from, or relate to any
breach of or failure by Debtor to perform its representations, warranties,
covenants, obligations or agreements set forth herein, in the Glenwood Note or
the Waterford Note, or in any document executed pursuant to this Agreement, the
Glenwood Note or the Waterford Note.
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14. MISCELLANEOUS.
14.1. The subject headings of the Sections of this Agreement are
included for purposes of convenience only and shall not affect the construction
or interpretation of any of its provisions.
14.2. No supplement, modification, or amendment of this Agreement shall
be binding unless executed in writing by the parties. No waiver of any of the
provisions of this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver shall be binding unless executed in writing by the
party making the waiver.
14.3. This Agreement may be executed simultaneously in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
14.4. Nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this Agreement
on any persons other than the parties to it and their respective successors and
assigns, nor is anything in this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party to this Agreement, nor
shall any provision give any third persons any right of subrogation or action
over against any party to this Agreement.
14.5. Nothing contained herein shall be construed to require the
commission of any act contrary to law. Should there be any conflict between any
provision hereof or any present or future statute, law, ordinance or regulation,
the latter shall prevail, but the provisions of this Agreement affected thereby
shall be curtailed and limited only to the extent necessary to bring it within
the requirements of the law, and the remaining provisions of this Agreement
shall remain in full force and effect.
14.6. Debtor shall reimburse Lender, upon demand, for any and all costs
and expenses, including, without limitation, attorneys' fees, that Lender may
incur in enforcing its rights or pursuing any remedies hereunder, which costs
and expenses are secured hereby.
14.7. This Agreement shall be binding on, and shall inure to the
benefit of, the parties to it and their respective heirs, legal representatives,
successors and assigns.
14.8. This Agreement shall be construed in accordance with, and
governed by, the laws of-the State of California.
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IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
"LENDER"
ANGELES MORTGAGE INVESTMENT TRUST,
a California Business Trust
By: /s/ Xxx Xxxxxxxxxx
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Its: Vice President
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"DEBTOR"
ANGELES PARTNERS XIV,
a California limited partnership
By: Angeles Realty Corporation, a California
Corporation, Its General Partner
By: /s/ Xxxxxx X. Xxxx, Xx.
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Its: Vice President
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ACKNOWLEDGEMENT AND CONSENT
TO PLEDGE AND ASSIGNMENT OF PARTNERSHIP
INTEREST AND WAIVER OF RIGHT OF FIRST REFUSAL
The undersigned, Angeles Realty Corporation II, a California
corporation, being the managing general partner in Waterford Square Apartments,
a California general partnership (the "Waterford Partnership"), hereby
acknowledges and consents to the foregoing pledge by Angeles Partner XIV ("AP
XIV") to Angeles Mortgage Investment Trust ("AMIT") of AP XIV's partnership
interest and related rights in the Waterford Partnership on the terms set forth
in the foregoing Security Agreement and Assignment, and exhibits thereto. The
undersigned hereby waives its right of first refusal and all other rights
related thereto as provided in Section 7.2(b) of the Amended and Restated
Agreement of Partnership of Waterford Square Apartments, a California general
partnership dated April 1, 1993 (the "Partnership Agreement"). The undersigned
further covenants and agrees that, notwithstanding the provisions of Section 6.1
of the Partnership Agreement, until such time as the obligations referred to in
the foregoing Security Agreement and Assignment as the "Waterford Note" and the
"Glenwood Note," are paid in full, the undersigned shall not exercise its powers
under Section 6.1(c) (except in the ordinary course of the Waterford
Partnership's business), (d), (e), (f), (g) (except in the ordinary course of
the Waterford Partnership's business), or (i) of the Partnership Agreement,
without AMIT's prior written consent.
EXECUTED as of June 1, 1996.
ANGELES REALTY CORPORATION II,
a California corporation
By: /s/ Xxxxxx X. Xxxx, Xx.
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Its: Vice President
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