<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Amendment No. 2)
Under the Securities Exchange Act of 1934
NATIONAL GOLF PROPERTIES, INC.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 par value per share
- --------------------------------------------------------------------------------
(Title of Class of Securities)
63623G-10-9
- --------------------------------------------------------------------------------
(CUSIP Number)
William C. Regan
National Golf Properties, Inc.
2951 28th Street, Suite 3001
Santa Monica, CA 90405
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 1, 1998
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is subject of this Schedule 13D, and is filing this
statement because of Rule 13d-1(b)(3) or (4), check the following box: .
(Continued on the following page)
Page 1 of 9 Pages
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP NO. 63623G-10-9 PAGE 2 OF 9 PAGES
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NAME OF REPORTING PERSON
1
David G. Price
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CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
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SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States
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SOLE VOTING POWER
7
NUMBER OF
1,419,768 shares
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 0
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
1,419,768 shares
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1, 419,768 shares
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
10.4%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
IN
- ------------------------------------------------------------------------------
<PAGE>
SCHEDULE 13D
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CUSIP NO. 63623G-10-9 PAGE 3 OF 9 PAGES
- ----------------------- ---------------------
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NAME OF REPORTING PERSON
1
David G. Price Trust
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
California
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
1,419,768 shares
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 0
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
1,419,768 shares
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
1,419,768 shares
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
10.4%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON
14
OO
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<PAGE>
ITEM 1. SECURITY AND ISSUER.
-------------------
This statement relates to shares of common stock, par value $.01 per
share (the "Common Stock"), of National Golf Properties, Inc., a Maryland
corporation (the "Company"). The principal executive offices of the Company are
located at 2951 28th Street, Suite 3001, Santa Monica, California 90405.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
(a) This statement is being filed jointly by David G. Price, an
individual, and the David G. Price Trust (the "David Price Trust"), of which Mr.
Price is the sole trustee (the "Reporting Persons"). The Reporting Persons are
filing this statement jointly pursuant to a Joint Filing Agreement attached
hereto as Exhibit 1.
(b) The business address for both Reporting Persons is c/o National
Golf Properties, Inc., 2951 28th Street, Suite 3001, Santa Monica, CA 90405.
(c) Mr. Price is Chairman of the Board of the Company and Chairman of
the Board of American Golf Corporation, a private golf course management company
the address of which is 2951 28th Street, Suite 3000, Santa Monica, CA 90405.
(d) During the last five years, neither of the Reporting Persons has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
(e) During the last five years, neither of the Reporting Persons has
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and, as a result of such proceeding, was or is subject to
a judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
(f) Mr. Price is a citizen of the United States of America. The
David Price Trust is a trust created under the laws of the State of California.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
-------------------------------------------------
See Item 4.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
Pursuant to a divorce settlement (the "Divorce Settlement") between
Mr. Price and his former wife Dallas P. Price, effective as of July 2, 1998 and
approved by the Los Angeles Superior Court on September 1, 1998, Ms. Price
received 336,737 shares of Common Stock and 3,869,627 partnership units ("OP
Units") representing limited partnership interests in National Golf Operating
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership"),
which were previously owned by the Price Revocable Trust Amendment in its
Entirety, February 9, 1987 (the "Old Trust"). On July 9, 1998, Mr. Price caused
625,000 OP Units owned by the Old Trust to be donated to a charitable
organization. Mr. Price subsequently caused the Old Trust to transfer all of
the remaining 3,244,626 OP Units and all 336,738 shares of Common Stock to the
David Price Trust.
<PAGE>
The Reporting Persons have no present plans or proposals which relate
to or would result in any of the following:
(a) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Company or any of its subsidiaries;
(b) A sale or transfer of a material amount of assets of the Company
or any of its subsidiaries;
(c) Any change in the present board of directors or management of the
Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(d) Any material change in the present capitalization or dividend
policy of the Company;
(e) Any other material change in the Company's business or corporate
structure;
(f) Changes in the Company's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any person;
(g) Causing a class of securities of the Company to be delisted from
a national securities exchange;
(h) A class of equity securities of the Company becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(i) Any action similar to those enumerated above.
Notwithstanding the foregoing, it is possible that in the future the
Reporting Persons may buy or dispose of additional shares of Common Stock and/or
OP Units, through open market or privately negotiated transactions. Any such
future decision will be made by the Reporting Persons in light of the then
current financial condition and prospects of the Company, the market price of
the Common Stock, the financial position of the Reporting Persons and other
relevant factors.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
(a) The David Price Trust beneficially owns directly and Mr. Price
beneficially owns indirectly (as sole trustee of the David Price Trust) an
aggregate of 336,738 shares of Common Stock and 3,244,626 OP Units (of which
1,081,542 OP Units are exchangeable for 1,081,542 shares of Common Stock within
60 days). The 336,738 shares of Common Stock presently owned, together with the
1,081,542 shares of Common Stock issuable within 60 days upon exchange of OP
Units, constitute 10.4% of the outstanding Common Stock (based on 12,509,895
shares of Common Stock outstanding, as set forth in the Company's most recent
quarterly report on Form 10-Q).
Mr. Price also may be deemed to beneficially own 4,465 OP Units (of
which 1,488 OP Units are exchangeable for 1,488 shares of Common Stock within 60
days) in which Mr. Price has a security interest (in support of a loan made by
Mr. Price) and the right to vote and effect an exchange of such OP Units for
shares of Common Stock.
Page 5 of 9
<PAGE>
(b) The David Price Trust has sole voting power and sole dispositive
power with respect to all shares of the Common Stock and OP Units owned by the
David Price Trust. Mr. Price, as the sole trustee of the David Price Trust, has
the sole power to vote or direct the vote, and to dispose or to direct the
disposition of, such shares of Common Stock and OP Units. Mr. Price also has
sole voting power with respect to, and, under certain circumstances, the power
to dispose of, the OP Units in which he has a security interest.
(c) The following sets forth the information with respect to all
transactions of Common Stock involving Mr. Price or the David Price Trust during
the past 60 days (other than the shares of Common Stock and OP Units covered by
the divorce settlement). The following purchases all were made by the David
Price Trust.
<TABLE>
<CAPTION>
DATE OF TRANSACTION NUMBER OF SHARES TYPE OF TRANSACTION PRICE PER SHARE
<S> <C> <C> <C>
9/25/98 3,400 Open Market Purchase $27.46
9/28/98 5,000 Open Market Purchase $27.50
9/29/98 1,000 Open Market Purchase $27.31
9/29/98 3,200 Open Market Purchase $27.50
9/30/98 4,600 Open Market Purchase $27.20
10/01/98 1,000 Open Market Purchase $27.01
</TABLE>
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
----------------------------------------------------------
Under the terms of a Pledge Agreement, dated as of July 30, 1996, by
and between David G. Price, Trustee of The Price Revocable Trust Amendment in
Entirety, Executed February 9, 1987, as amended (the "Old Trust"), and Bank of
America National Trust and Savings Association ("Bank of America"), all of the
shares of Common Stock and 639,601 OP Units held by the Old Trust prior to the
Divorce Settlement (of which 336,738 shares of Common Stock and 319,800 OP Units
are now held by the David Price Trust) are pledged to Bank of America in support
of certain loan obligations described in such pledge agreement, and, in
connection therewith, Bank of America received a proxy to vote such pledged
shares of Common Stock and OP Units in the event of a default described in such
pledge agreement.
Under the terms of a Pledge Agreement, dated as of July 30, 1996, by
and between the Old Trust and NationsBank of Texas, N.A. ("NationsBank"),
1,547,389 OP Units held by the Old Trust prior to the Divorce Settlement (of
which 773,694 OP Units are now held by the David Price Trust) are pledged to
NationsBank in support of certain loan obligations described in such pledge
agreement, and, in connection therewith, NationsBank received a proxy to vote
such pledged OP Units in the event of a default described in such pledge
agreement.
Page 6 of 9
<PAGE>
The rights of Bank of America and NationsBank under the pledge
agreements referred to in the two preceding paragraphs are subject to the terms
and conditions of an Intercreditor Agreement, dated July 30, 1996, between Bank
of America, NationsBank, Mr. Price, Dallas P. Price, Mr. Price, Trustee of the
Price Revocable Trust Amendment in Entirety Executed on February 9, 1987, as
amended, Golf Enterprises, Inc., the Company, and the Operating Partnership.
Under the Second Amended and Restated Agreement of Limited Partnership
of the Operating Partnership, dated as of April 20, 1998 (the "Partnership
Agreement"), the David Price Trust, as a limited partner of the Operating
Partnership, has the right exercisable once in each twelve-month period
commencing September 19, 1994 to (a) exchange up to one-third of its OP Units
for shares of Common Stock or (b) sell up to one-third of its OP Units to the
Company for cash, in each case pursuant to the terms and conditions set forth in
the Partnership Agreement.
Under the terms of a Director Designation Agreement, dated as of
August 18, 1993, by and among the Company, the Operating Partnership and David
G. Price, David G. Price is entitled to designate one less than a majority of
the Company's Board of Directors so long as David G. Price and his family (a)
continue to serve as directors of the Company and (b) together own at least 20%
of the outstanding shares of Common Stock (including shares issuable upon
exchange of OP Units).
Under the terms of a Shareholders and Partners Agreement, dated as of
July 2, 1998, by and between Dallas Price and Mr. Price (the "Shareholders
Agreement"), Dallas Price and Mr. Price agreed, among other things, (a) to grant
each other a right of first refusal with respect to any sale or transfer of any
portion of the other party's ownership interest in certain business entities,
including the Operating Partnership (but not the Company), (b) to take all
actions required (including voting their shares of Common Stock or OP Units) to
maintain the Company's REIT status, and (c) to grant each other certain "tag
along" and "drag along" rights with respect to the sale of the other party's
ownership interests in certain business entities, including the Operating
Partnership (but not the Company).
Pursuant to a Security Agreement and Assignment, dated April 10, 1998,
by and between Mr. Price and Barbara M. Colton. Mr. Price has a security
interest in, and the right to vote and exercise exchange rights with respect to,
4,465 OP Units owned by Ms. Colton.
Except as set forth above, to the best knowledge of Mr. Price and the
David Price Trust, there are no other contracts, arrangements, understanding or
relationships (legal or otherwise) among persons named in Item 2 and between
such persons including but not limited to, transfer or voting of any of the
securities of the Company, finder's fees, joint ventures, loan or option
arrangements, puts or calls, guarantees or profits, division of profits or loss,
or the giving or withholding of proxies, or a pledge or contingency the
occurrence of which would give another person voting power over the securities
of the Company.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
Exhibit 1. Joint Filing Agreement, dated as of October 26, 1998.
Exhibit 2. Pledge Agreement, dated as of July 30, 1996, by and between
David G. Price, Trustee of The Price Revocable Trust
Amendment in Entirety, Executed February 9, 1987, as
amended, and Bank of American National Trust and Savings
Association.
Exhibit 3. Pledge Agreement, dated as of July 30, 1996, by and between
the Price Revocable Trust, a trust organized under the laws
of California pursuant to the Price Revocable Trust
Amendment in Entirety, dated February 9, 1987, as amended,
and NationsBank of Texas, N.A.
Page 7 of 9
<PAGE>
Exhibit 4. Intercreditor Agreement, dated July 30, 1996, between Bank
of America, NationsBank, David G. Price, Dallas P. Price,
David G. Price, Trustee of the Price Revocable Trust
Amendment in Entirety Executed on February 9, 1987, as
amended, Golf Enterprises, Inc., National Golf Properties,
Inc., and National Golf Operating Partnership, L.P.
Exhibit 5. Second Amended and Restated Agreement of Limited Partnership
of National Golf Operating Partnership, L.P., dated as of
April 20, 1998 (incorporated by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q dated March 31,
1998).
Exhibit 6. Director Designation Agreement, dated as of August 18, 1993,
by and among National Golf Properties, Inc., National Golf
Operating Partnership, L.P. and David G. Price (incorporated
by reference to Exhibit 10.9 to the Company's Annual Report
on Form 10-K dated February 29, 1996).
Exhibit 7. Shareholders and Partners Agreement, dated as of July 2,
1998, by and between Dallas Price and David Price.
Exhibit 8. Security Agreement and Assignment, dated April 10, 1998, by
and between David G. Price and Barbara M. Colton.
Page 8 of 9
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certify that the information set forth in this statement is
true, complete and correct.
Dated: October 27, 1998 /s/ DAVID G. PRICE
----------------------------
DAVID G. PRICE
DAVID G. PRICE TRUST
Dated: October 27, 1998
By: /s/ David G. Price
------------------------
David G. Price
Trustee
Page 9 of 9
<PAGE>
EXHIBIT 1
JOINT FILING AGREEMENT
----------------------
The undersigned hereby agree to jointly file a statement on Schedule
13D, together with any amendments thereto (collectively, the "Schedule 13Ds"),
with the Securities and Exchange Commission pursuant to the requirements of Rule
13d-1(f) under the Securities Exchange Act of 1934, as amended.
Date: October 26, 1998 /s/ DAVID G. PRICE
-----------------------
DAVID G. PRICE
DAVID G. PRICE TRUST
Date: October 26, 1998
By: /s/ David G. Price
-------------------
David G. Price
Trustee
<PAGE>
EXHIBIT 2
PLEDGE AGREEMENT
----------------
(Price Trust)
THIS PLEDGE AGREEMENT (this "Agreement") is entered into as of July
30, 1996, by and between DAVID G. PRICE, TRUSTEE OF THE PRICE REVOCABLE TRUST
AMENDMENT IN ENTIRETY, EXECUTED ON FEBRUARY 9, 1987, AS AMENDED ("Pledgor") and
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking
association ("Bank"), with reference to the following:
RECITALS
--------
A. Pledgor and Bank are parties to a certain Credit Agreement dated
as of July 30, 1996 (as amended, restated, supplemented or otherwise modified
from time to time, the "Credit Agreement"). In addition, Pledgor may from time
to time guarantee interest rate protection agreements between David G. Price,
as an individual, and Bank.
B. Pursuant to a Continuing Guaranty dated as of eve date herewith
(the "Mountaingate Guaranty"), Pledgor is guarantying the obligations of
Mountaingate Land L.P. under a promissory note dated as of even date herewith in
the principal amount of $20,000,000 in favor of Bank given by Mountaingate Land,
L.P. (the "Mountaingate Note").
C. Pledgor owns or has the right to own certain shares of common
stock of National Golf Properties, Inc., a Maryland corporation and
self-administered real estate investment trust (the "REIT").
D. Pledgor owns certain partnership units in National Golf
Operating Partnership, L.P., a Delaware limited partnership (the "Partnership"),
formed pursuant to the terms and conditions of that certain Agreement of Limited
Partnership dated as of August 18, 1993, as amended (the "Partnership
Agreement").
E. NationsBank of Texas, N.A. ("NationsBank") is extending credit
to Golf Enterprises, Inc. secured by the units in the Partnership. To
facilitate any disposition of such shares and units by NationsBank with any
disposition of the Pledged Collateral (as defined below) hereunder by Bank,
NationsBank and Bank are concurrently herewith entering into an intercreditor
agreement (as amended from time to time, the "Intercreditor Agreement").
F. To induce Bank to enter into the Credit Agreement take the
Mountaingate Note and enter into interest rate
PRICE TRUST PLEDGE AGREEMENT
- 1 -
<PAGE>
protection agreements from time to time, Pledgor has agreed to execute and
deliver this Agreement and to pledge hereunder the collateral described herein.
Agreement
---------
NOW, THEREFORE, in consideration of the above recitals, to induce Bank to
enter into and extend credit under the Credit Agreement, the Mountaingate Note
and interest rate protection agreements, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Pledgor hereby agrees as follows:
1. Pledge of REIT Shares. To secure the payment and performance of
---------------------
Pledgor's obligations under the Credit Agreement, the Mountaingate Guaranty, any
guaranty of interest rate protection agreements between David G. Price and Bank
and Pledgor's independent obligations hereunder (collectively the
"Obligations"), Pledgor hereby pledges and grants to Bank a security interest in
all of Pledgor's right, title and interest in and to the following (the "Pledged
Stock Collateral"):
(a) All shares of stock in the REIT listed in Schedule I hereto,
together with all other stock of the REIT which is now owned or hereafter
acquired by Pledgor and pledged to Bank, together with all new, substituted and
additional shares issued at any time with respect to those shares and the
certificates representing those shares (collectively, the "Pledged Shares");
(b) All now existing or hereafter arising rights of the holder of
Pledged Shares with respect thereto, including, without limitation, all voting
rights and all rights to payment of any kind, including cash and non-cash
dividends and redemptions, instruments and other property, from time to time
received, receivable or otherwise distributed on account of, or in exchange for,
the Pledged Shares; and
(c) All proceeds of the foregoing Pledged Stock Collateral. For
purposes of this Agreement, the term "proceeds" includes whatever is receivable
or received when Pledged Collateral (as defined below) is sold, collected,
exchanged or otherwise disposed of whether such disposition is voluntary or
involuntary, and includes, without limitation, all rights to payment, including
return premiums, with respect to any insurance relating thereto and also
includes all interest, dividends and other property receivable or received on
account of the Pledged Collateral (as defined below) or proceeds thereof.
PRICE TRUST PLEDGE AGREEMENT
- 2 -
<PAGE>
2. Pledge of Partnership Units. To secure the Obligations, Pledgor
---------------------------
hereby pledges and grants to Bank a security interest in all of Pledgor's right,
title and interest in and to the following (the "Pledge Partnership
Collateral"):
(a) All limited partnership units in the Partnership listed in
Schedule I hereto, together with all new, substituted and additional units
issued at any time with respect to those limited partnership units and the
certificates representing those limited partnership units (collectively, the
"Pledged Partnership Units");
(b) All now existing or hereafter arising right of the holder
of Pledged Partnership Units and any rights that may become otherwise
exercisable by Bank with respect thereto, including, without limitation, all Put
and Exercise (as defined in the Partnership Agreement) rights, voting rights,
put rights, exchange rights, any other rights (other than registration rights)
and all rights to payment of any kind, including cash and non-cash distributions
and redemptions, instruments and other property, from time to time received,
receivable or otherwise distributed on account of, or in exchange for, the
Pledged Partnership Units (collectively, the "Rights" and individually,
"Right"); and
(c) All proceeds of the foregoing Pledged Partnership
Collateral.
The Pledged Stock Collateral and the Pledged Partnership
Collateral are hereinafter referred to as the "Pledged Collateral."
3. Delivery of Pledged Collateral. Except as permitted by the Credit
------------------------------
Agreement or Bank in writing, any certificates or instruments representing or
evidencing any part of the Pledged Collateral shall be delivered to and held by
or on behalf of Bank pursuant hereto and shall be in suitable form for transfer
by delivery, or shall be accompanied by a duly executed form attached hereto as
Schedule II. Subject to the Intercreditor Agreement if in effect, Bank shall
have the right at any time in its discretion, to transfer to or to register in
its name all or any portion of the Pledged Collateral, subject to the other
provisions of this Agreement, including without limitation those contained in
Paragraph 6, and subject to the terms of the Partnership Agreement.
4. Representations and Warranties. Pledgor represents and warrants
------------------------------
to Bank as follows.
(a) Pledgor has the full power, authority and legal right, and
has taken all necessary action to authorize the
PRICE TRUST PLEDGE AGREEMENT
- 3 -
<PAGE>
execution and delivery by Pledgor of this Agreement, to pledge the Pledged
Collateral and perform Pledgor's obligations under this Agreement;
(b) The execution, delivery and performance of this Agreement and
the pledging of the Pledged Collateral hereunder by Pledgor will not violate any
law or regulation or any contractual obligation applicable to or binding upon
Pledgor that could materially adversely affect Pledgor's ability to carry out
Pledgor's obligations hereunder or prevent or require rescission of the
transactions contemplated hereunder, and will not result in, or require, the
creation or imposition of any lien on any part of the Pledged Collateral
pursuant to any law, regulation, or contractual obligation, other than pursuant
hereto;
(c) This Agreement constitutes a legal, valid and binding obligation
of Pledgor, enforceable in accordance with its terms, and the pledge of the
Pledged Collateral pursuant to this Agreement creates and grants to Bank a
valid, enforceable security interest in, and lien upon, the Pledged Collateral,
securing the payment of the Obligations which, when perfected as required by
applicable law, will constitute a fully perfected first priority lien on
Pledgor's right, title and interest in and to the Pledged Collateral,
enforceable as such against present and future creditors of and purchasers from
Pledgor;
(d) Pledgor is or, with respect to Pledged Collateral not described
on Schedule I hereto, will be on the date Pledgor acquire rights in such Pledged
Collateral, the sole owner of the Pledged Collateral;
(e) Pledgor or Bank is the record owner and Pledgor is the
beneficial owner of, and have good and marketable title, free and clear of all
liens (except those in favor of Bank created hereby and such liens, if any, as
are specifically permitted pursuant to the Credit Agreement), charges and
encumbrances of whatsoever nature, to, the Pledged Shares;
(f) In the aggregate, the Pledged Shares described in Paragraph 1(a)
constitute approximately the percentage of the issued and outstanding shares of
common stock of the REIT described on Schedule I hereto and there are no
outstanding options or warrants or other agreements with respect thereto except
for the Intercreditor Agreement if in effect;
(g) In the aggregate, the Pledged Partnership Units described in
Paragraph 2(a) constitute approximately the percentage of the issued and
outstanding Partnership Units of the Partnership described on Schedule I hereto
and there are no
PRICE TRUST PLEDGE AGREEMENT
- 4 -
<PAGE>
outstanding options or warrants or other agreements with respect thereto except
for the Intercreditor Agreement if in effect;
(h) The Pledged Shares and the Pledged Partnership Units have been
validly issued and are fully paid and nonassessable.
5. Further Assurances. Pledgor agrees that at any time and from time to
------------------
time, at the expense of Pledgor, Pledgor will promptly execute and deliver all
further instruments and documents, and will take all further action, that may
reasonably be necessary or desirable, or that Bank may reasonably request, in
order to perfect and protect any rights of Bank under any pledge or security
interest granted or purported to be granted hereby or to enable Bank to exercise
and enforce its rights and remedies hereunder with respect to any Pledged
Collateral.
6. Administration of Pledged Shares and Pledged Partnership Units. In
--------------------------------------------------------------
addition to any provisions of this Agreement which govern the administration of
the Pledged Collateral generally, the following provisions shall govern the
administration of the Pledged Shares and Pledged Partnership Units, subject to
the Intercreditor Agreement if in effect:
(a) Subject to the following provisions of this Paragraph 6, Pledgor
irrevocably constitutes and appoints Bank, whether or not the Pledged Shares and
Pledged Partnership Units have been transferred into the name of Bank, as
Pledgor's proxy with full power, in the same manner, to the same extent and with
the same effect as if Pledgor were to do the same, to exercise any and all
voting and other consensual rights pertaining to the Pledged Shares and Pledged
Partnership Units, giving Bank full power of substitution and revocation. This
irrevocable proxy shall terminate at such time as this Agreement is no longer in
full force and effect and all Obligations are paid in full. The foregoing proxy
is coupled with an interest sufficient in law to support an irrevocable power.
Pledgor hereby revokes any proxy or proxies heretofore given to any person or
persons and agree not to give any other proxies in derogation hereof until such
time as this Agreement is no longer in full force and effect.
(b) The foregoing irrevocable proxy shall be exercisable by Bank
only upon the occurrence and continuation of an Event of Default under the
Credit Agreement, the Mountaingate Note, any interest rate agreement secured
hereby or event specified in Paragraph 11(a) below, and until such time:
(i) Pledgor shall be entitled to exercise any and all voting
and other rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement, the
PRICE TRUST PLEDGE AGREEMENT
- 5 -
<PAGE>
Credit Agreement, the Mountaingate Note, any interest rate agreement
secured hereby or any document or instrument delivered or to be
delivered pursuant to or in connection herewith or therewith;
(ii) Bank shall execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies and other
instruments as Pledgor may reasonably request for the purpose of
enabling Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to Paragraph (i) above.
(c) Except as otherwise provided in this Agreement, Pledgor
shall be entitled to receive all cash and non-cash dividends, distributions,
redemptions, and other payments of any kind in respect of the Pledged Shares
and the Pledged Partnership Units. After the occurrence and during the
continuation of an Event of Default under the Credit Agreement, the Mountaingate
Note, any interest rate agreement secured hereby or event specified in Paragraph
11(a) below, in the event that Pledgor, as owners of the Pledge Shares and
Pledged Partnership Units, shall receive or shall become entitled to receive,
any dividend, redemption payment or any other distribution whether in securities
or property, then and in each case, Pledgor shall deliver to Bank and Bank shall
be entitled to receive and retain all such distributions as part of the Pledged
Collateral as security for the payment and performance of the Obligations. All
dividends, redemption payments and other distributions which are received by
Pledgor contrary to the provisions of this Paragraph 6 shall be received in
trust for the benefit of Bank, shall be segregated from other funds of Pledgor
and shall be forthwith paid over to Bank as Pledged Collateral in the same form
as so received (with any necessary endorsement).
7. Covenants of Pledgor. Pledgor hereby covenants and agrees, so long
--------------------
as any amounts remain outstanding pursuant to the Credit Agreement, the
Mountaingate Note or any interest rate agreement secured hereby, (a) to do all
acts that may be necessary to maintain, preserve and protect any part of the
Pledged Collateral required to be delivered prior to the delivery of such
Pledged Collateral to Bank, (b) to pay promptly when due all taxes, assessments,
charges, encumbrances and liens now or hereafter imposed upon or affecting the
Pledged Collateral, (c) to procure, execute and deliver from time to time any
endorsements, assignments, financing statements and other writings deemed
necessary or appropriate by Bank, in its reasonable judgment, to perfect,
maintain and protect the security interest granted hereunder and the priority
thereof, (d) to appear in and defend any action or proceeding which may have a
material adverse effect on Pledgor's title to or Bank's interest in the Pledged
Collateral, (e) to keep separate, accurate and
PRICE TRUST PLEDGE AGREEMENT
- 6 -
<PAGE>
complete records of the Pledged Collateral and to provide Bank with such records
or copies thereof and such other reports and information relating to the Pledged
Collateral as Bank may reasonably request from time to time, (f) without the
written approval of Bank, not to transfer any Pledged Shares or Pledged
Partnership Units or proceeds thereof or otherwise surrender or lose possession
of, sell, encumber or otherwise dispose of or transfer any Pledged Collateral or
right or interest therein, and to keep the Pledged Collateral free of all liens
(except for the security interests created hereby), and (g) after the occurrence
and during the continuation of an Event of Default under the Credit Agreement,
the Mountaingate Note, any interest rate agreement secured hereby, or event
specified in Paragraph 11(a) below, to account fully for and promptly deliver to
Bank, in the form received, all proceeds of the Pledged Collateral endorsed to
Bank as appropriate, and until so delivered all proceeds shall be held by
Pledgor in trust for Bank, separate from all other property of Pledgor and
identified as the property of Bank.
8. Bank Appointed Attorney-in-Fact.
-------------------------------
(a) Pledgor hereby irrevocably appoints Bank as its
attorney-in-fact, with full authority in the place and stead of Pledgor and in
the name of Pledgor or otherwise, from time to time in Bank's discretion to take
any action and to execute any instrument which Bank may deem necessary or
advisable to accomplish the purposes of this Agreement including, without
limitation, to execute and file financing statements on Pledgor's behalf, to
receive, endorse and collect all instruments made payable to Pledgor
representing any dividend or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same, which
irrevocable appointment shall become and remain effective without further action
upon the occurrence of an Event of Default and notice to Pledgor. Pledgor agrees
to execute and deliver to Bank the Irrevocable Power of Attorney set forth as
Exhibit A hereto.
(b) Pledgor hereby irrevocably appoints Bank as its attorney-in-fact
to do (but Bank shall not be obligated to and shall incur no liability to
Pledgor or any third party for failure to do so), at any such time as there has
occurred an Event of Default under the Credit Agreement, the Mountaingate Note,
any interest rate agreement secured hereby, or an event specified in Paragraph
11(a) below, any act which Pledgor is obligated by this Agreement to do, and to
exercise all Rights and powers as Pledgor might exercise with respect to the
Pledged Collateral, including, without limitation, the right to (i) collect by
legal proceedings or otherwise and endorse, and receive all dividends,
distributions, interests, payments, proceeds and other sums and property now or
hereafter payable on or on account of the Pledged Collateral; (ii) enter into
any
PRICE TRUST PLEDGE AGREEMENT
- 7 -
<PAGE>
extension, reorganization, deposit, merger, reorganization (not including a
reorganization pursuant to any filing for protection under applicable bankruptcy
laws), consolidation or other agreement pertaining to, or deposit, surrender,
accept, hold or apply other property in exchange for the Pledged Collateral;
(iii) insure, process and preserve the Pledged Collateral; (iv) transfer the
Pledged Collateral to Bank's own or its nominee's name; (v) make any compromise
or settlement, and take any other action it deems advisable with respect to the
Pledged Collateral to the extent permitted hereunder; and (vi) exercise any and
all Rights. Pledgor agrees to reimburse Bank upon demand for any reasonable
costs and expenses, including, without limitation, attorneys' fees (including,
without limitation, the allocated cost of in-house counsel), Bank may incur
while acting as Pledgor's attorney-in-fact hereunder, all of which costs and
expenses are included in the Obligations secured hereby. It is further agreed
and understood between the parties hereto that such care as Bank gives to the
safekeeping of its own property of like kind shall constitute reasonable care of
the Pledged Collateral when in Bank's possession; provided, however, that Bank
shall not be required to make any presentment, demand or protests, or give any
notice and need not take any action to preserve any rights against any prior
party or any other person in connection with the Obligations or with respect to
the Pledged Collateral.
9. Bank May Perform. If Pledgor fails to perform any agreement
----------------
contained herein, Bank may itself perform, or cause performance of, such
agreement, and the reasonable expenses of Bank incurred in connection therewith
shall be payable by Pledgor under Paragraph 14 below.
10. Preservation of Collateral. Bank shall not have any
--------------------------
responsibility for (i) ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Pledge Collateral, whether or not Bank has or is deemed to have knowledge of
such matters, or (ii) taking any necessary steps to preserve such rights against
any parties with respect to any Pledged Collateral.
11. Default and Remedies. Subject to the Intercreditor Agreement if
--------------------
in effect:
(a) Upon the occurrence of any of the following: (i) Pledgor
shall fail to pay any amounts payable by Pledgor pursuant to Paragraph 14
hereof; (ii) any representation or warranty of Pledgor contained herein shall be
false or misleading in any material respect on or as of the date made; (iii)
Pledgor shall fail to observe or perform any of the covenants or agreements
contained in Paragraphs 7(a), (f), or (g) of this Agreement, (iv) Pledgor shall
fail to observe or perform any
PRICE TRUST PLEDGE AGREEMENT
- 8 -
<PAGE>
other covenant or agreement contained in this Agreement and such failure shall
continue for a period of thirty (30) days after Bank shall have given written
notice thereof to Pledgor, or (v) an Event of Default shall occur under (and as
defined in) the Credit Agreement, the Mountaingate Note or any interest rate
agreement secured hereby, then Bank may, at its option, and without notice
(except as provided below) to or demand on Pledgor and in addition to all rights
and remedies at law or in equity or otherwise, (A) foreclose or otherwise
enforce Bank's security interest in the Pledged Collateral in any manner
permitted by law, or provided for in this Agreement; (B) sell or otherwise
dispose of the Pledged Collateral or a part thereof at one or more public or
private sales at Bank's place of business or any other place or places,
including, without limitation, any broker's board or securities exchange,
whether or not such Pledged Collateral is present at the place of sale, for cash
or credit or future delivery, on such terms and in such manner as Bank may
determine in accordance with the applicable provisions of the Uniform Commercial
Code in effect in any applicable jurisdiction; (C) require Pledgor to assemble
the Pledged Collateral and/or books and records relating thereto and make such
available to Bank at a place to be designated by Bank; (D) recover from Pledgor
all reasonable costs and expenses, including, without limitation, reasonable
attorneys' fees (including the allocated cost of in-house counsel), incurred or
paid by Bank in exercising any right, power or remedy provided by this Agreement
or by law; (E) enter onto property where any Pledged Collateral or books and
records relating thereto are located and take possession thereof with or without
judicial process; and (F) prior to the disposition of the Pledged Collateral,
prepare it for disposition in any manner and to the extent Bank deems
appropriate in its reasonable judgment. Notwithstanding any other provision
herein to the contrary, Pledgor shall be given at least five (5) business days'
prior notice of the time and place of any public sale or of the time after which
any private sale or other intended disposition is to be made, which notice
Pledgor hereby agrees shall be deemed reasonable notice thereof. Upon any sale
or other disposition pursuant to this Agreement, Bank shall have the right to
deliver, assign and transfer to the purchaser thereof the Pledged Collateral or
the portion thereof so sold or disposed of. Each purchaser (including, without
limitation, Bank, if applicable) at any such sale or other disposition shall
hold the Pledged Collateral free from any claim or right of whatever kind,
including any equity or right of redemption of Pledgor and Pledgor specifically
waives (to the fullest extent permitted by law), all rights of redemption, stay
or appraisal which Pledgor has or may have under any rule of law or statute now
existing or hereafter adopted.
PRICE TRUST PLEDGE AGREEMENT
- 9 -
<PAGE>
(b) Upon the occurrence of any event specified in Paragraph 11(a) above
and notice to Pledgor, Bank is authorized to sell the Pledged Shares and Pledged
Partnership Units and, at any such sale of any of the Pledged Shares and Pledged
Partnership Units, if it deems it advisable to do so, to restrict the
prospective bidders or purchasers to persons or entities who (i) will represent
and agree that they are purchasing for their own account, for investment, and
not with a view to the distribution or sale of any of the Pledged Shares and
Pledged Partnership Units; and (ii) satisfy the offeree and purchaser
requirements for a valid private placement transaction under Section 4(2) of the
Securities Act of 1933, as amended (the "Act"), and under Securities and
Exchange Regulation D, or under any similar state or federal statute, rule or
regulation. Pledgor agrees that disposition of the Pledged Shares and Pledged
Partnership Units pursuant to any private sale made as provided above may be at
prices and on other terms less favorable than if the Pledged Shares and Pledged
Partnership Units were sold at public sale (provided that any sale to an
affiliate of Bank shall be on terms no less favorable than the Bank would have
obtained in a comparable arm's length transaction with a person not an
affiliate), and that Bank has no obligation to delay the sale of any Pledged
Shares and Pledged Partnership Units for the period of time necessary to permit
the registration of the Pledged Shares and Pledged Partnership Units for public
sale under the Act. Pledgor agrees that a private sale or sales made under the
foregoing circumstances shall be deemed to have been made in a commercially
reasonable manner. In the event that Bank elects to sell the Pledged Shares and
Pledged Partnership Units, or part of them, and there is a public market for the
Pledged Shares and Pledged Partnership Units, in a public sale Pledgor shall use
their best efforts to register and qualify the Pledged Shares and Pledged
Partnership Units, or applicable parts thereof, under the Act and all state Blue
Sky or securities laws required by the proposed terms of sale and all reasonable
expenses thereof shall be payable by Pledgor, including, but not limited to, all
costs of (x) registration or qualification of, under the Act or any state Blue
Sky or securities laws or pursuant to any applicable rule or regulation issued
pursuant thereto, any Pledged Shares and Pledged Partnership Units, and (y) sale
of such Pledged Shares and Pledged Partnership Units including, but not limited
to, reasonable brokers' or underwriters' commissions, fees or discounts,
accounting and legal fees, costs of printing and other reasonable expenses of
transfer and sale.
(c) If any consent, approval or authorization of any state, municipal or
other governmental department, agency or authority shall be necessary to
effectuate any sale or other disposition of the Pledged Shares and Pledged
Partnership Units, or any part thereof, Pledgor will execute such applications
and other instruments as may be required in connection with securing
PRICE TRUST PLEDGE AGREEMENT
-10-
<PAGE>
any such consent, approval or authorization, and will otherwise use its best
efforts to secure the same. Notwithstanding anything to the contrary herein,
nothing herein shall authorize or permit Bank to exercise any right or take any
action, the exercise or taking of which requires the prior approval or consent
of a governmental authority, until such consent or approval has been obtained.
(d) Amounts received by Bank on account of the Obligations, any
cash held by Bank as Pledged Collateral, and all cash proceeds received by Bank
in respect of any sale of, collection from, or other realization upon all or any
part of the Pledged Collateral, upon the occurrence of an event specified in
Paragraph 11(a) above, shall be promptly applied first to the payment of any
-----
amounts payable to Bank pursuant to Paragraph 14 hereof, next, to the payment
----
in full of, first, accrued interest included in the Obligations, second,
principal included in the Obligations, and third, all other amounts included in
the Obligations, and finally, to the payment to the persons legally entitled
-------
thereto, any surplus remaining from such amounts received, cash or cash
proceeds. Notwithstanding any payments made by or for the account of Pledgor
pursuant to this Agreement Pledgor shall not be subrogated to any rights of Bank
until such time as Bank shall have received payment of the full amount of all
the Obligations and all obligations of Pledgor under this Agreement.
(e) All of the rights and remedies of Bank contained in this
Paragraph 11 shall be subject to the terms of the Certificate of Incorporation
and By-laws of the REIT (as may be amended from time to time), the terms of the
Partnership Agreement (as may be amended from time to time), and all applicable
federal and state securities laws.
12. Waiver of Exhaustion of Collateral, etc. Pledgor waives, to the
---------------------------------------
fullest extent permitted by law, any right to require Bank to proceed against
Pledgor or to proceed against or exhaust any collateral or security held by Bank
pursuant to any other security agreements or to pursue any remedy in Bank's
power.
13. Cumulative Rights. The rights, powers and remedies of Bank under
-----------------
this Agreement shall be in addition to all rights, powers and remedies given to
Bank by virtue of any statute of rule of law, any other security agreements or
any other agreements, all of which rights, powers and remedies shall be
cumulative and may be exercised successively or concurrently in any order as
Bank shall deem appropriate, without impairing Bank's security interest in the
Pledged Collateral.
PRICE TRUST PLEDGE AGREEMENT
- 11 -
<PAGE>
14. Expenses. Pledgor will pay, upon demand, to Bank all reasonable
--------
costs and expenses, including, without limitation, reasonable attorneys' fees
(including, without limitation, the allocated cost of in-house counsel) incurred
by Bank in connection with the exercise or enforcement of any of the rights of
Bank hereunder, including without limitation the sale of, collection from, or
other realization upon, any of the Pledged Collateral. All such costs and
expenses shall be included in the obligations secured hereby.
15. Amendments, Waivers. No amendment or waiver of any provision of this
-------------------
Agreement, nor consent to any departure by Pledgor herefrom, shall in any event
be effective unless the same shall be in writing and signed by Bank and, in the
case of any amendment, Pledgor, and then such amendment, waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given. Any forbearance, failure or delay by Bank in exercising, or the
exercise or beginning of exercise by Bank of, any right, power or remedy shall
not preclude the further, simultaneous or later exercise thereof, and every
right, power or remedy of Bank shall continue in full force and effect until
such right, power or remedy is specifically waived in a writing executed by
Bank.
16. Entire Agreement; Severability. This Agreement and any Intercreditor
------------------------------
Agreement if in effect contain the entire agreement between Bank and Pledgor
concerning the subject matter hereof. If any of the provisions of this Agreement
shall be held invalid or unenforceable, this Agreement shall be construed as if
not containing those provisions, and the rights and obligations of the parties
hereto shall be construed and enforced accordingly.
17. Arbitration. (a) Any controversy or claim between or among the
-----------
parties, including but not limited to those arising out of or relating to this
Agreement or any agreements or instruments relating hereto or delivered in
connection herewith and any claim based on or arising from an alleged tort,
shall at the request of any party be determined by arbitration. The arbitration
shall be conducted in accordance with the United States Arbitration Act (Title
9, U.S. Code), notwithstanding any choice of law provision in this Agreement,
and under the Commercial Rules of the American Arbitration Association ("AAA").
The arbitrators shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrators. Judgment upon the arbitration award may be
entered in any court having jurisdiction. The institution and maintenance of
an action for judicial relief or pursuit of a provisional or ancillary remedy
shall not constitute a waiver of the right of any party, including the
plaintiff, to submit the controversy or
PRICE TRUST PLEDGE AGREEMENT
- 12 -
<PAGE>
claim to arbitration if any other party contests such action for judicial
relief.
(b) Notwithstanding the provisions of subparagraph (a), no
controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such controversy or
claim arises from or relates to an obligation to Bank which is secured by real
property collateral. If all parties do not consent to submission of such a
controversy or claim to arbitration, the controversy or claim shall be
determined as provided in subparagraph (c).
(c) A controversy or claim which is not submitted to arbitration as
provided in subparagraph (b) shall, at the request of any party, be determined
by a reference in accordance with California Code of Civil Procedure Sections
638 et seq. If such an election is made, the parties shall designate to the
-- ---
court a referee or referees selected under the auspices of the AAA in the same
manner as arbitrators are selected in AAA-sponsored proceedings. The presiding
referee of the panel, or the referee if there is a single referee, shall be an
active attorney or retired judge. Judgment upon the award rendered by such
referee or referees shall be entered in the court in which such proceeding was
commenced in accordance with California Code of Civil Procedure Sections 644 and
645.
(d) No provision of this Paragraph shall limit the right of any
party to this Agreement to exercise self-help remedies such as setoff, to
foreclose against or sell any real or personal property collateral or security
or to obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At Bank's option, foreclosure under a deed
of trust or mortgage may be accomplished either by exercise of power of sale
under the deed of trust or mortgage or by judicial foreclosure.
18. Addresses for Notices. All notices and other communications provided
---------------------
for hereunder to be effective shall be in writing or by telegraph, telecopier,
overnight courier or telex and, unless otherwise expressly provided herein,
shall be deemed to have been duly given or made when delivered by hand or, when
deposited in the mail, certified mail, return receipt requested, postage
prepaid, three days after being so deposited or, in the case of telex or
telecopy notice, when sent, addressed as follows, or to such other address as
may be hereafter notified in writing by either of them to the other:
PRICE TRUST PLEDGE AGREEMENT
- 13 -
<PAGE>
If to Pledgor:
David G. Price, as Trustee
c/o American Golf Corporation
1633 26th Street, 2nd Floor
Santa Monica, California 90404
Attn: Chief Financial Officer and
Legal Department
If to Bank:
Bank of America National Trust and
Savings Association
c/o Century City Regional Commercial Banking
Office #1417
2049 Century Park East, 2nd Floor
Los Angeles, California 90067
Attn: Sheryl Bond
Vice President
19. Continuing Security Interests. This Agreement shall create a
-----------------------------
continuing security interest in the Pledged Collateral and shall (a) remain in
full force and effect until payment in full of the Obligations, (b) be binding
upon Pledgor, Pledgor's respective successors and assigns, to the benefit of
Bank and its successors transferees and assignees. Subject to Paragraph 10.3 of
the Credit Agreement, Bank may transfer its rights under this Agreement,
including its rights to payment of the Obligations and its security interest
herein, to any other person, whether such person is acting in a representative
capacity or as owner of the Obligations. Upon the payment in full of the
Obligations, Pledgor shall be entitled to the return, upon Pledgors' request of
such of the Pledged Collateral as shall not have been sold or otherwise applied
pursuant to the terms hereof.
20. Governing Law; Terms. This Agreement shall be governed by and
--------------------
construed in accordance with the laws of the State of California. Unless
otherwise defined herein or in the Credit Agreement, terms defined in Divisions
8 and 9 of the California Uniform Commercial Code are used herein as therein
defined.
21. Counterparts. This Agreement may be executed by one or more of the
------------
parties to this Agreement on any number of separate counterparts and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument.
23. Termination of Prior Pledge Agreement. Upon the effectiveness of
-------------------------------------
this Agreement, the Pledge Agreement dated as of February 9, 1987, as amended,
by and between David G. Price, as Trustee of the Price Revocable Trust Amendment
in Entirety
PRICE TRUST PLEDGE AGREEMENT
- 14 -
<PAGE>
Executed as of February 9, 1987, as Amended, and Bank shall be deemed terminated
and of no further force or effect.
24. Taking Direction. Upon the occurrence and during the continuance of
----------------
an Event of Default, Pledgor shall take such actions under the Partnership
Agreement as may be directed by Bank. Such actions may include, without
limitation, the Put or Exchange of all the Bank Pledged Partnership Collateral,
subject only to those provisions of the Partnership Agreement that may limit the
ability of Bank to Put or Exchange the Pledged Partnership Collateral.
25. Payment of Put Proceeds. In the event of a Put of all or any portion
------------------------
of the Pledged Partnership Collateral, the REIT and the Partnership agree to pay
the Put Amount directly to Bank in accordance with Bank's instructions.
26. Consent to Security Interest. The Partnership acknowledges and
-----------------------------
consents to granting to the Bank of a security interest in shares of the stock
of the REIT and the Pledged Partnership Collateral, as applicable. The parties
hereto acknowledge and confirm that Bank shall have the right as an Assignee
under the Partnership Agreement to effect a Put or Exchange on its own behalf.
27. Release of Collateral. Bank will release the Pledged Collateral as
----------------------
set forth in Paragraph 5.2 of the Credit Agreement.
28. INTERCREDITOR AGREEMENT. THIS AGREEMENT IS, AT THE TIME OF
------------------------
EXECUTION, SUBJECT TO THE PROVISIONS OF A PLEDGE, COLLATERAL AGENCY AND
INTERCREDITOR AGREEMENT DATED AS OF JULY 30, 1996, BY AND AMONG BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION, AS COLLATERAL AGENT, THE PRICE REVOCABLE
TRUST DATED FEBRUARY 9, 1987, AS AMENDED, DAVID G. PRICE AS SOLE TRUSTEE,
AMERICAN GOLF CORPORATION, GOLF ENTERPRISES, INC., THE PURCHASERS REFERRED TO
THEREIN AND BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION (THE "PLEDGE
AGREEMENT"). THE PLEDGE AGREEMENT GOVERNS THE TAKING OF REMEDIES AGAINST THE
STOCK PLEDGED HEREBY AND THE ALLOCATION AND DISTRIBUTION OF ANY PROCEEDS OF SUCH
STOCK. BANK, AND ANY ASSIGNEE OF BANK, BY ITS ACCEPTANCE HEREOF, SHALL AGREE TO
BE BOUND BY THE PROVISIONS OF THE PLEDGE AGREEMENT AS IF IT WERE AN ORIGINAL
SIGNATORY THERETO. A COPY OF THE PLEDGE AGREEMENT MAY BE OBTAINED FROM THE PRICE
REVOCABLE TRUST, DAVID G. PRICE AS SOLE TRUSTEE, AMERICAN GOLF CORPORATION OR
GOLF ENTERPRISES, INC. UPON REQUEST BY BANK OR ANY SUCH ASSIGNEE.
PRICE TRUST PLEDGE AGREEMENT
- 15 -
<PAGE>
IN WITNESS WHEREOF, Pledgor and Bank have causesd this Agreement to be duly
executed and delivered by their respective representatives thereunto duly
authorized as of the date first above written.
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Sheryl Bond
---------------------------------
Sheryl Bond
Vice President
/s/ David G. Price
------------------------------------
DAVID G. PRICE, TRUSTEE OF THE
PRICE REVOCABLE TRUST AMENDMENT
IN ENTIRETY, EXECUTED ON
FEBRUARY 9, 1987, AS AMENDED
Consent and Acknowledgment,
including Section 25:
NATIONAL GOLF PROPERTIES, INC.
By: /s/ Edward R. Sause
-------------------------------
Name:
Title:
NATIONAL GOLF OPERATING PARTNERSHIP, L.P.
By: NATIONAL GOLF PROPERTIES, INC.
General Partner
By: /s/ Edward R. Sause
---------------------------
Name:
Title:
PRICE TRUST PLEDGE AGREEMENT
- 16 -
<PAGE>
EXHIBIT A
---------
IRREVOCABLE POWER OF ATTORNEY
-----------------------------
KNOW ALL MEN BY THESE PRESENTS that the undersigned hereby constitutes and
appoints Bank of America National Trust and Savings Association (the "Bank") the
true and lawful agent and attorney-in-fact of the undersigned, with full power
to appoint a substitute or substitutes to act hereunder, with respect to all
matters arising in connection with the put, sale or exchange of (a) the shares
of common stock of National Golf Properties, Inc. ("REIT") ("Common Stock") or
(b) the partnership units of National Golf Operating Partnership, L.P. a
Delaware limited partnership (the "Partnership") ("Partnership Units") in each
case which have been or will be pledged to the Bank as security, and the put,
sale or exchange of any other securities received in any such exchange,
including, without limitation, the sale of any and all shares of such Common
Stock or Partnership Units in any offering of securities of the Company or the
Partnership registered or to be registered under the Securities Act of 1933
pursuant to a registration statement filed with the Securities and Exchange
Commission, with full power and authority to execute and deliver for and on
behalf of the undersigned all such demands, notices, agreements, consents and
documents in connection therewith as said agent and attorney-in-fact may deem
advisable. The undersigned hereby gives to said agent and attorney-in-fact full
power and authority to act in the premises, including, without limitation, the
power of authority to apply the proceeds of any sale of such Common Stock,
Partnership Units or other securities to reduce or satisfy any amounts
outstanding on any obligation of the undersigned to the Bank, whether now
existing or hereafter incurred and to reimburse the Bank for any expenses
incurred in connection therewith or incurred in connection with acting for the
undersigned under this power of attorney. The undersigned hereby ratifies and
confirms all that said agent and attorney-in-fact or any substitute or
substitutes, may do by virtue hereof.
This power of attorney is granted to the Bank to enable it to take action
to cause the sale on behalf of the undersigned of any or all of such Common
Stock, Partnership Units or other securities, should the Bank deem such sale
necessary to reduce or satisfy any amounts outstanding on any obligation of the
undersigned to the Bank, after default thereon. Therefore, this power of
attorney is irrevocable and may not be modified, terminated or rescinded
without the written consent of the Bank for so long as any obligation of the
undersigned to the Bank shall remain outstanding.
PRICE TRUST PLEDGE AGREEMENT
- 1 -
<PAGE>
WITNESS the due execution hereof at Los Angeles, California as of this
____ day of July, 1996.
_______________________________
DAVID G. PRICE, TRUSTEE OF THE
PRICE REVOCABLE TRUST AMENDMENT
IN ENTIRETY, EXECUTED ON
FEBRUARY 9, 1987, AS AMENDED
Sworn to before me this _____ day of July, 1996,
_______________________________
Notary Public
PRICE TRUST PLEDGE AGREEMENT
- 2 -
<PAGE>
SCHEDULE I
----------
Attached to and forming a part of that certain Pledge Agreement dated as
of July 30, 1996 by and between Bank of America National Trust and Savings
Association and David G. Price, Trustee of the Price Revocable Trust Amendment
in Entirety, executed on February 9, 1987, as amended.
Schedule of Pledged Stock
Issued by National Golf Properties, Inc.
----------------------------------------
Stock
Class Certi - Par Value No. of
of Stock No.(s) (if any) Shares
- -------- ----------------- -------- ------
Common SD30534 $0.01 673,475
Schedule of Pledged Partnership Units
Issued by National Golf Operating Partnership, L.P.
---------------------------------------------------
Class Unit Certificate No. of
of Units No.(s) Units
-------- ----------------- ------
Limited 55 879,320
Limited 56 155,280
-------
Total 1,034,600
PRICE TRUST PLEDGE AGREEMENT
- 1 -
<PAGE>
SCHEDULE II
-----------
IRREVOCABLE ASSIGNMENT
SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, the undersigned does hereby sell, assign, and
transfer to
----------------------------------------------------------------
[shares] [partnership units] of
--------------------------------------------,
represented by Certificate No. , standing in the name of the undersigned
-------
on the books of .
-------------------------------------
The undersigned does hereby irrevocably constitute and appoint
- ------------------------------------------------- as its attorney-in-fact to
transfer the said on the books of
----------------------------- -------------,
with full power of substitution in the premises.
Dated:
---------------------------
-----------------------------------
PRICE TRUST PLEDGE AGREEMENT
- 1 -
<PAGE>
EXHIBIT 3
PLEDGE AGREEMENT
PLEDGE AGREEMENT (as it may be amended, supplemented or otherwise
modified from time to time, this "Agreement") dated as of July 30, 1996, made by
---------
the PRICE REVOCABLE TRUST, a trust organized under the laws of California
pursuant to the Price Revocable Trust Amendment in Entirety, dated February 9,
1987, as amended to date and as the same may hereafter by amended, supplemented
or otherwise modified from time to time (the "Pledgor"), to NATIONSBANK OF
-------
TEXAS, N.A. (the "Lender").
------
PRELIMINARY STATEMENTS
(1) The Lender has entered into a Credit Agreement dated as of July 30,
1996 (said Agreement, as it may hereafter be amended or otherwise modified from
time to time, being the "Credit Agreement", the terms defined therein and not
----------------
otherwise defined herein being used herein as therein defined) with Golf
Enterprises, Inc., a Kansas corporation (the "Borrower"). The Pledgor, as owner
--------
of 100 percent of the outstanding shares of stock of the Borrower, will derive
substantial direct and indirect benefit from the transactions contemplated by
the Credit Agreement.
(2) The Pledgor is the owner of the partnership units evidencing limited
partnership interests (the "Pledged Units") in National Golf Operating
-------------
Partnership, L.P., a Delaware limited partnership (the "Operating Partnership")
---------------------
described on Schedule I.
(3) It is a condition precedent to the making of Advances by the Lender
under the Credit Agreement that the Pledgor shall have made the pledge
contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
the Lender to make Advances under the Credit Agreement, the Pledgor hereby
agrees as follows:
Section 1. Pledge. The Pledgor hereby pledges and assigns to the Lender,
------
and grants to the Lender a security interest in, the following (the "Pledged
-------
Collateral"):
- ----------
(i) the Pledged Units and the certificates evidencing the
Pledged Units, and all rights of the Pledgor appurtenant to the Pledged
Units, including, without, limitation:
(A) the right of the Pledgor with respect to the Pledged Units
to (x) exchange (the "Exchange Rights") the Pledged Units for shares
---------------
of the Common Stock, par value $.01 per share ("NGP Common Stock"), of
----------------
National Golf Properties, Inc., a Maryland corporation ("NGP"), and
---
(y) put (the "Put Rights") the Pledged Units to NGP, as general
----------
partner of the Operating Partnership, for cash, in each case pursuant
to the Agreement of Limited Partnership of the Operating Partnership
dated as of August 18, 1993 (as amended as of July 25, 1996 and July
29, 1996 and as the same may hereafter be amended, supplemented or
otherwise modified from time to time, the "Partnership Agreement");
---------------------
PLEDGE AGREEMENT
<PAGE>
2
(B) all rights of the Pledgor to receive moneys due and all
distributions, income, cash, instruments and other property received or
receivable in respect of, or in exchange for, the Pledged Units
(including, without limitation, NGP Common Stock), whether under or
pursuant to the Partnership Agreement or otherwise;
(C) claims of the Pledgor for damages arising out of or for breach
of or default under the Partnership Agreement to the extent attributable
to the Pledged Units; and
(D) the right of the Pledgor to terminate the Partnership
Agreement, to perform thereunder and to compel performance and otherwise
exercise any rights, powers or remedies thereunder; and
(ii) all proceeds of any and all of the foregoing Pledged Collateral
(including, without limitation, proceeds that constitute property of the
types described above).
Section 2. Security for Secured Obligations. This Agreement secures the
--------------------------------
payment of all obligations of the Borrower now or hereafter existing under the
Loan Documents, whether direct of indirect, absolute or contingent, including
any extensions, modifications, substitutions, amendments and renewals thereof,
whether for principal (including reimbursement for amounts drawn under, and the
obligation to provide cash collateral in respect of, Letters of Credit),
interest, premiums, penalties, fees, indemnifications, contract causes of
action, costs, expenses or otherwise (all such Obligations secured hereby being
the "Secured Obligations"). Without limiting the generality of the foregoing,
-------------------
this Agreement secures the payment of all amounts which constitute part of the
Secured Obligations and would be owed by the Borrower to the Lender under the
Loan Documents but for the fact that they are unenforceable or not allowable due
to the existence of a bankruptcy, reorganization or similar proceeding.
Section 3. Delivery of Pledged Collateral. All certificates, instruments
------------------------------
and other documents, if any, representing or evidencing the Pledged Collateral
shall be delivered to and held by or on behalf of the Lender pursuant hereto and
shall be in suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Lender. All Pledged Collateral existing on the
date hereof shall be delivered to the Lender on or prior to the date hereof. Any
Pledged Collateral in which the Pledgor obtains rights after the date hereof
shall be pledged and delivered to the Lender hereunder within 5 Business Days of
obtaining such rights. The Lender shall the right, at any time in its discretion
and without notice to the Pledgor, to transfer to or to register in the name of
the Lender or any of its nominees any or all of the Pledged Collateral, subject
only to the revocable rights specified in Section 5(a). In addition, the Lender
shall have the right at any time to exchange certificates, instruments or other
documents, if any, representing or evidencing Pledged Collateral for
certificates, instruments or other documents, if any, of smaller or larger
denominations.
Section 4. Representations and Warranties. The Pledgor represents and
------------------------------
warrants as follows:
(a) Pledgor is a trust duly formed, validly existing and in good
standing under the laws of the State of California.
PLEDGE AGREEMENT
<PAGE>
3
(b) The execution, delivery and performance of this Agreement by the
Pledgor are within the Pledgor's power and authority, have been duly authorized
by all necessary action and do not and will not (i) contravene the Price
Revocable Trust Amendment in Entirety dated February 9, 1987 by and between
David G. Price and Dallas P. Price as "Grantors" and David G. Price as
"Trustee," as amended to date, or any applicable trust or other laws, (ii)
conflict with or result in the breach of, or constitute a default under, any
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument binding on or affecting the Pledgor or any of its properties or (iii)
result in or require the creation or imposition of any Lien upon or with respect
to the Pledged Collateral (other than Liens in favor of the Lender). David G.
Price is the sole trustee of the Pledgor and has full authority, acting alone in
such capacity, to bind the Pledgor hereto and to grant the security interests
and pledge contemplated hereby.
(c) This Agreement has been duly executed and delivered by the Pledgor
and is the legal, valid and binding obligation of the Pledgor, enforceable
against the Pledgor in accordance with its terms.
(d) Neither the execution, delivery and performance of this Agreement by
the Pledgor nor the exercise by the Lender of its rights in respect of the
Pledged Units will cause (i) the dissolution, winding-up, liquidation or
termination of the Operating Partnership or (ii) any breach or default under the
Partnership Agreement.
(e) The chief place of business and chief executive office of the
Pledgor and the office where Pledgor keeps its records concerning the
Pledged Collateral and original copies of the Partnership Agreement are located
at its address specified in Section 22 hereof.
(f) The Partnership Agreement has been duly authorized, executed and
delivered by Pledgor, has not, prior to the date hereof, been amended except as
set forth in the definition thereof and has not, after the date hereof, been
amended, altered, supplemented or modified except as not prohibited hereunder
and is in full force and effect and is binding upon and enforceable against
Pledgor in accordance with its terms. There exists no default under the
Partnership Agreement by Pledgor. Pursuant to the Partnership Agreement, all
interests of the Pledgor in the Operating Partnership are expressed as
partnership units (including the Pledged Units), each of which are evidenced by
certificates in the form attached as an exhibit to the Partnership Agreement as
of the date hereof, and no transfer of partnership units (including the Pledged
Units) will be recognized by the Operating Partnership without a corresponding
delivery to the transferee of such certificates evidencing such partnership
units (including the Pledged Units).
(g) The Partnership Agreement and the certificate of partnership of the
Operating Partnership are the only agreements and instruments governing the
affairs and operation of the Operating Partnership.
(h) The Pledgor is the legal and beneficial owner of the Pledged
Collateral free and clear of all Liens (other than Liens in favor of the Lender
hereunder). All Pledged Units have been duly authorized and validly issued and
are fully paid and non assessable.
PLEDGE AGREEMENT
<PAGE>
4
(i) The pledge of the Pledged Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in the Pledged
Collateral, securing the payment of the Secured Obligations. No financing
statements covering any of the Pledged Collateral are on file in any public
office, except financing statements in favor of the Lender.
(j) The Pledged Units evidence limited partnership interests in the
Operating Partnership owned by the Pledgor. The Cash Amount (as defined in the
Partnership Agreement) of the Pledged Units as of the Closing Date (calculated
as if a Notice of Put (as defined in the Partnership Agreement) with respect to
all of the Pledged Units was received by the General Partner (as defined in the
Partnership Agreement) on the Closing Date) equals or exceeds $40,000,000.
(k) The aggregate number of Partnership Units (such term being used
herein as defined in the Partnership Agreement) pledged to Bank of America NT&SA
("BofA") is 1,034,600 (the "BofA Pledged Units"). The maximum number of
Partnership Units with respect to which the Pledgor could exercise an "Exchange"
or a "Put" (as such terms are defined in the Partnership Agreement) at any one
time in accordance with the terms of the Partnership Agreement is at least
2,672,702. The maximum number of Partnership Units with respect to which David
G. Price could exercise an "Exchange" or a "Put" (as such terms are defined in
the Partnership Agreement) at any one time in accordance with the terms of the
Partnership Agreement is at least 2,672,702. Assuming the Lender was authorized
pursuant to the terms hereof, and BofA was authorized pursuant to the terms of
the pledge agreement governing the BofA Pledged Units, each of the Lender and
BofA acting alone (if authorized pursuant to the terms of the Intercreditor
Agreement), or the Lender and BofA acting jointly, would be entitled pursuant to
the terms of the Partnership Agreement to exercise, at such time, the "Exchange"
or the "Put" with respect to all Pledged Units (in the case of the Lender) and
all BofA Pledged Units (in the case of BofA) and, if the Put was so exercised,
the General Partner (as defined in the Partnership Agreement) would be required
to purchase all Pledged Units from the Lender and all BofA Pledged Units from
BofA for cash in an amount equal to the Put Amount (as defined in the
Partnership Agreement as in effect on the date hereof).
(l) The originals (including duplicate originals, if any) of all
certificates, instruments and other documents representing or evidencing the
Pledged Collateral have been delivered to the Lender.
(m) No bankruptcy, insolvency or similar proceedings of any nature are
pending against the Pledgor or the Operating Partnership.
(n) The Pledgor has not taken any action, and is not aware of any other
event or circumstance, that may or would impair or otherwise interfere with the
rights or interests of the Lender under this Agreement.
(o) No consent of any other person or entity, including, without
limitation, any partner of the Operating Partnership, and no authorization,
approval, or other action by, and no notice to or filing with, any governmental
authority or regulatory body is required (i) for the
PLEDGE AGREEMENT
<PAGE>
5
pledge by the Pledgor of the Pledged Collateral pursuant to this Agreement
or for the execution, delivery or performance of this Agreement by the
Pledgor, (ii) for the perfection or maintenance of the security interest
created hereby (including the first priority nature of such security
interest) or (iii) for the exercise by the Lender of the voting or other
rights (including, without limitation, the exercise by the Lender of the
Exchange Rights and the Put Rights with respect of the Pledged Units)
provided for in this Agreement or the remedies in respect of the Pledged
Collateral pursuant to this Agreement (except as may be required in
connection with any disposition of any portion of the Pledged Collateral by
laws affecting the offering and sale of securities generally and except,
with respect to Pledged Collateral other than the Pledged Units, for the
filing of a UCC-1 financing statement naming the Pledgor as Debtor and the
Lender as Secured Party and describing the Pledged Collateral with the
Secretary of State of the State of California).
(p) There are no conditions precedent to the effectiveness of this
Agreement that have not been satisfied or waived.
(q) The Pledgor has, independently and without reliance upon the
Lender and based on such documents and information as it has deemed
appropriate, made its own credit analysis and decision to enter into this
Agreement.
Section 5. Voting Rights; Dividends; Etc. (a) So long as no Event of
-----------------------------
Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise or refrain from exercising
any and all voting and other consensual rights (other than the Exchange
Rights and the Put Rights) pertaining to the Pledged Collateral or any part
thereof for any purpose not inconsistent with the terms of this Agreement or
the Credit Agreement.
(ii) The Pledgor shall be entitled to receive and retain any and all
dividends and other distributions and payments paid in respect of the
Pledged Collateral, provided, however, that any and all
-------- -------
(A) dividends and other distributions and payments paid or payable
other than in cash in respect of, and instruments and other property
received, receivable or otherwise distributed in respect of, or in
exchange for, any Pledged Collateral,
(B) dividends and other distributions and payments paid or payable
in cash in respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in connection with a
reduction of capital, capital surplus or paid-in-surplus, and
(C) cash paid, payable or otherwise distributed in respect of
principal of, or in redemption of, or in exchange for, any Pledged
Collateral,
shall be, and shall be forthwith delivered to the Lender to hold as, Pledged
Collateral and shall, if received by the Pledgor, be received in trust for
the benefit of the Lender, be segregated from
PLEDGE AGREEMENT
<PAGE>
6
the other property or funds of the Pledgor, and be forthwith delivered to
the Lender as Pledged Collateral in the same form as so received by the
Pledgor (with any necessary indorsement or assignment).
(iii) The Lender shall execute and deliver (or cause to be executed
and delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise
pursuant to paragraph (i) above and to receive the dividends and other
distributions and payments which it is authorized to receive and retain
pursuant to paragraph (ii) above.
(b) Upon the occurrence and during the continuance of an Event of
Default:
(i) All rights of the Pledgor (A) to exercise or refrain from
exercising the voting and other consensual rights which it would otherwise
be entitled to exercise pursuant to Section 5(a)(i) shall, upon notice to
the Pledgor by the Lender, cease and (B) to receive the dividends and other
distributions and payments which it would otherwise be authorized to receive
and retain pursuant to Section 5(a)(ii) shall automatically cease, and all
such rights shall thereupon become vested in the Lender who shall thereupon
have the sole right to exercise or refrain from exercising such voting and
other consensual rights and to receive and hold as Pledged Collateral such
dividends and other distributions and payments.
(ii) All dividends and other distributions and payments which are
received by the Pledgor contrary to the provisions of paragraph (i) of this
Section 5(b) shall be received in trust for the benefit of the Lender,
shall be segregated from other funds of the Pledgor and shall be forthwith
paid over to the Lender as Pledged Collateral in the same form as so
received the Pledgor (with any necessary indorsement).
Section 6. Maintenance, Enforcement and Administration of Pledged
------------------------------------------------------
Collateral. Unless the Lender otherwise consents in writing, the Pledgor shall:
- ----------
(a) take all action necessary or appropriate from time to time to
maintain this Agreement as an indefeasible first priority perfected Lien in
the Pledged Collateral;
(b) take all action reasonably necessary or appropriate to maintain and
enforce its rights, title and interests in respect of the Pledged
Collateral;
(c) comply in all material respects with its obligations in respect of
the Pledged Collateral;
(d) pay all taxes which are or may become a Lien affecting any of the
Pledged Collateral;
(e) not permit or agree to any supplement, modification, amendment,
renewal, extension or termination of, or consent or agree to any waiver of
or departure from the terms of, or otherwise release any interest in or
rights under or in connection with or increase any obligations of the
Pledgor in respect of, any of the Pledged collateral;
PLEDGE AGREEMENT
<PAGE>
7
(f) not sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the
Pledged Collateral;
(g) not create or permit to exist any Lien upon or with respect
to any of the Pledged Collateral, except for the security interest
under this Agreement;
(h) with respect to Pledged Collateral evidenced by a
certificate, instrument or other document, if any, deliver and assign
to the Lender such certificate or instrument duly endorsed and
accompanied by duly executed instruments of transfer or assignment in
blank, all in form and substance satisfactory to the Lender;
(i) execute and file such financing or continuation statements,
or amendments thereto, and such other instruments or notices, as may
be necessary or desirable, or as the Lender may request, in order to
perfect and preserve the pledge, assignment and security interest in
the Pledged Collateral;
(j) mark or cause to be marked conspicuously, at the request of
the Lender, each of the Pledgor's records pertaining to the Pledged
Collateral with a legend, in form and substance reasonably
satisfactory to the Lender, indicating that Pledged Collateral is
subject to the Lien granted hereby; and
(k) not take any other action with respect to any Pledged
Collateral which is inconsistent with the purposes of this Agreement
or which would adversely affect the rights or interest of the Lender
hereunder;
provided that (i) any foreclosure, legal action or other proceeding instituted
- -------- ----
by any Pledgor in connection with any Pledged Collateral shall be subject to the
prior written consent of the Lender, (ii) the Lender may require that any sale
or foreclosure of any Pledged Collateral be conducted in the name of the Pledgor
or the Lender (as the Lender may determine in its sole and absolute discretion)
and on such other terms and conditions as the Lender may require, in its sole
and absolute discretion, and may further require that the proceeds of any such
sale or foreclosure (including any property acquired at such sale or
foreclosure) be delivered directly to the Lender to be held as additional
Pledged Collateral for the Secured Obligations or applied to the Secured
Obligations pursuant to the terms hereof, and (iii) if an Event of Default shall
have occurred and be continuing and the Pledgor has received notice from the
Lender terminating such rights in accordance with Section 5(b)(i) hereof, the
Pledgor's rights to vote or grant any consent in respect of, the Pledged
Collateral shall cease and all such rights shall thereafter by vested solely in
the Lender.
SectioN 7. Transfers by the Pledgor; Amendment of Partnership
--------------------------------------------------
Agreement; Revaluation of Deemed Partnership Unit Value. (a) The Pledgor
- -------------------------------------------------------
agrees that it will not, and will cause its Affiliates (as defined in the
Partnership Agreement) not to, without the prior written consent of the Lender
(a) sell, lease, assign, pledge, mortgage, hypothecate, encumber, transfer or
otherwise dispose of, or suffer any Lien to exist on (other than Liens in favor
of the Lender and Liens in favor of BofA in respect of the BofA Pledged Units),
any of the Pledged Collateral or any other Partnership Units, (b) exercise the
Exchange Rights or Put Rights with respect to the Pledged Units or any other
Partnership Units, or (c) agree to, amend, alter, supplement or modify the
Partnership Agreement, nor permit to
PLEDGE AGREEMENT
<PAGE>
8
occur any such amendment, alteration, supplement or modification if such
amendment, alteration, supplement or modification could limit the Lender's
ability to exercise the Exchange or the Put (as such terms are defined in the
Partnership Agreement as in effect on the date hereof) or could reduce the Put
Amount (as defined in the Partnership Agreement as in effect on the date hereof)
payable in respect of the Pledged Units or could otherwise adversely effect the
rights and remedies of the Lender hereunder or under any other Loan Document;
provided, however, that the Pledgor may and may permit its Affiliates (as
- -------- -------
defined in the Partnership Agreement) to (i) sell or otherwise transfer
Partnership Units not constituting Pledged Collateral if such sale or other
transfer would not reduce the maximum number of Partnership Units with respect
to which the Pledgor could exercise an "Exchange" or a "Put" (as such terms are
defined in the Partnership Agreement) at any one time and if (except in the case
of a sale or other transfer to an Affiliate (as defined in the Partnership
Agreement) of the Pledgor) the exercise of any such Exchange or Put by the
purchaser or other transferee of such Partnership Units would not reduce or
restrict the Lender's ability to exercise such an Exchange or Put if an Event of
Default occurred, and (ii) pledge, mortgage, hypothecate, encumber, or suffer
Liens to exist on Partnership Units not constituting Pledged Collateral if the
lienholder thereof has agreed with the Lender on terms, and pursuant to an
agreement in form and substance, reasonably satisfactory to the Lender (A) to
limit such lienholder's rights to exercise an Exchange or Put under the
Partnership Agreement to the extent necessary so that if the Lender, BofA and
all such lienholders acted jointly to exercise a Put under the Partnership
Agreement, the Lender would be entitled to exercise such Put with respect to
Pledged Units having a Cash Amount (as defined in the Partnership Agreement) as
of the date such agreement becomes effective (calculated as if a Notice of
Put (as defined in the Partnership Agreement) with respect to the Pledged Units
was received by the General Partner (as defined in the Partnership Agreement) on
such date) equals or exceeds an amount equal to the product of 1.33333 times the
sum of the principal amount then outstanding of the Term Advance plus the
----
Revolving Commitment in effect at such time, and (B) to give not less than 30
days prior notice of the exercise of by such lienholder of any Exchange or Put
rights in respect of Partnership Units, and (C) to act jointly with the Lender
in exercising any such Exchange or Put rights unless the right to act jointly is
waived by the Lender.
(b) Upon any redetermination of the "Deemed Value of the
Partnership" as contemplated by the definition of such term in the Partnership
Agreement, the Pledgor shall promptly deliver to the Lender a certificate
setting forth in reasonable detail the calculation of the REIT Shares Amount (as
defined in the Partnership Agreement) with respect to the Pledged Units (as if
all such Pledged Units were Tendered Units (as defined in the Partnership
Agreement)) immediately prior to and immediately after giving effect to such
redetermination. If such REIT Shares Amount immediately prior to such
redetermination exceeds such REIT Shares Amount immediately after giving effect
to such redetermination, the Pledgor shall deliver with such certificate a
certificate or certificates, duly indorsed in blank, representing Partnership
Units equal to the amount of such excess, which Partnership Units shall be and
become Pledged Collateral hereunder. If such REIT Shares Amount immediately
after such redetermination exceeds such REIT Shares Amount immediately prior to
such redetermination, the Lender shall release from the Lien hereof Pledged
Units in an amount equal to such excess upon delivery of a certificate or
certificates, duly indorsed in blank, representing Partnership Units in a number
permitting such release to be effected.
Section 8. Actions and Further Assurances. The Pledgor shall
------------------------------
appear in and defend any claim or any action or other proceeding purporting to
affect any of the Pledged Collateral or the rights or interests of the Lender
under this Agreement, and give the Lender prompt written notice of any
PLEDGE AGREEMENT
<PAGE>
9
such claim, action or proceeding, and the Lender may, at the Pledgor's expense,
appear in and defend any such claim, action or proceeding and any claim, action
or other proceeding asserted or brought against the Lender in connection with or
relating to any of the Pledged Collateral or this Agreement. The Pledgor shall
also take or cause to be taken such further action and execute and deliver or
cause to be executed and delivered such further certificates, instruments and
other documents as the Pledgor from time to time may reasonably require to
maintain, perfect, maintain the priority of, protect, assure and confirm the
Lender's rights, powers, remedies and interests, the Pledgor's obligations and
the intention of the parties under this Agreement.
Section 9. Lender Appointed Attorney-in-Fact. The Pledgor hereby
---------------------------------
appoints the Lender the Pledgor's attorney-in-fact, will full authority in the
place and stead of the Pledgor and in the name of the Pledgor or otherwise, from
time to time in the Lender's discretion upon the occurrence and during the
continuance of any Event of Default to take any action and to execute any
instrument which the Lender may deem necessary or advisable to accomplish
the purposes of this Agreement (subject to the rights of the Pledgor under
Section 5), including, without limitation, (a) to deliver to the General Partner
(as defined in the Partnership Agreement), on behalf of and in the name of the
Pledgor, a Notice of Exchange or a Notice of Put (as such terms are defined in
the Partnership Agreement) with respect to the Pledged Units and to direct the
General Partner to distribute all REIT Shares (as defined in the Partnership
Agreement) directly to, and register such REIT Shares in the name of, the Lender
in the case of an Exchange (as defined in the Partnership Agreement) and pay the
Put Amount (as defined in the Partnership Agreement) directly to the Lender in
the case of a Put (as defined in the Partnership Agreement), and (b) to receive,
indorse and collect all instruments made payable to the Pledgor representing
any dividend or other distribution or payment in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same.
Section 10. Lender May Perform. If the Pledgor fails to perform any
------------------
agreement contained herein, the Lender may itself perform, or cause performance
of, such agreement, and the expenses of the Lender incurred in connection
therewith shall be payable by the Pledgor under Section 13.
Section 11. The Lender's Duties. The powers conferred on the Lender
-------------------
hereunder are solely to protect its interest in the Pledged Collateral and
shall not impose any duty upon it to exercise any such powers. Except for the
safe custody of any Pledged Collateral in its possession and the accounting for
moneys actually received by it hereunder, the Lender shall have no duty as to
any Pledged Collateral, as to ascertaining or taking action with respect to
calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Collateral, whether or not the Lender has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to any
Pledged Collateral. The Lender shall be deemed to have exercised reasonable care
in the custody and preservation of any Pledged Collateral in its possession if
such Pledged Collateral is accorded treatment substantially equal to that which
the Lender accords its own property.
Section 12. Remedies upon Default. If any Event of Default shall
---------------------
have occurred and be continuing:
PLEDGE AGREEMENT
<PAGE>
10
(a) The Lender may exercise in respect of the Pledged
Collateral, in addition to other rights, powers and remedies provided
for herein or otherwise available to it, all the rights, powers and
remedies of a secured party on default under the Uniform Commercial
Code in effect in the State of California at that time (the "Code")
----
(whether or not the Code applies to the affected Collateral), and may
also, without notice except as specified below, sell the Pledged
Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the
Lender's offices or elsewhere, for cash, on credit or for future
delivery, and upon such other terms as the Lender may deem
commercially reasonable. The Pledgor hereby authorizes the Lender to
exercise or refrain from exercising the Exchange Rights and/or the Put
Rights in the sole discretion of the Lender and agrees that, upon the
request of the Lender, the Pledgor will promptly deliver to the
General Partner (as defined in the Partnership Agreement) a Notice of
Exchange or a Notice of Put (as such terms are defined in the
Partnership Agreement) with respect to the Pledged Units as directed
by the Lender and direct the General Partner to distribute all REIT
Shares (as defined in the Partnership Agreement) directly to, and
register such REIT Shares in the name of, the Lender in the case of an
Exchange (as defined in the Partnership Agreement) and pay the Put
Amount (as defined in the Partnership Agreement) directly to the
Lender in the case of a Put (as defined in the Partnership Agreement).
The Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten days' notice to the Pledgor of the time
and place of any public sale or the time after which any private sale
is to be made shall constitute reasonable notification. The Lender
shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. The Lender may adjourn
any public or private sale from time to time by announcement at the
time and place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
(b) Any cash held by the Lender as Pledged Collateral and all
cash proceeds received by the Lender in respect of any sale of,
collection from, or other realization upon all or any part of the
Pledged Collateral may, in the discretion of the Lender, be held by
the Lender as collateral for, and/or then or at any time thereafter
be applied (after payment of any amounts payable to the Lender
pursuant to Section 13) in whole or in part by the Lender against, all
or any part of the Secured Obligations in such order as the Lender
shall elect. Any surplus of such cash or cash proceeds held by the
Lender and remaining after payment in full of all the Secured
Obligations shall be paid over to the Pledgor or to whomsoever may be
lawfully entitled to receive such surplus.
Each of the rights, powers and remedies provided in this Agreement is cumulative
and not exclusive of, and shall not prejudice, any other right, power or remedy
provided in this Agreement or by applicable laws or under any other Loan
Document. Each right, power or remedy may be exercised from time to time as
often as deemed necessary by the Lender, and in such order and manner as the
Lender may determine. No failure or delay on the part of the Lender in
exercising any right, power or remedy shall operate as a waiver of such right,
power or remedy nor shall any single or partial exercise of any right, power or
remedy preclude any other or further exercise of such right, power or remedy or
of any other right, power or remedy.
SECTION 13. EXPENSES. The Pledgor will upon demand pay to the
--------
Lender the amount of any and all reasonable expenses, including the reasonable
fees and expenses of its counsel and of any
PLEDGE AGREEMENT
<PAGE>
11
experts and agents, which the Lender may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of the Lender
hereunder or (iv) the failure by the Pledgor to perform or observe any of the
provisions hereof.
Section 14. Action with Respect to Obligations or Collateral. The
------------------------------------------------
Pledgor authorizes the Lender, without notice or demand and without affecting
the Pledgor's liability under or the enforceability of this Agreement or any
Pledged Collateral, from time to time to: (a) supplement, modify, amend, renew,
extend, accept partial payments or performance on or otherwise change the time,
manner or place of payment or performance or the interest rate or other terms or
the amount of, or release, reconvey, terminate, waive, abandon, subordinate,
exchange, substitute, transfer or consent to the transfer of or enter into or
give any other agreement, approval, waiver or consent with respect to or in
exchange for any Secured Obligations or any Collateral or any of the Loan
Documents; (b) receive and hold additional Collateral or guaranties; (c) release
any other Loan Party from any personal liability with respect to any Secured
Obligations and participate in any bankruptcy or reorganization of any other
Loan Party in such manner as the Lender may determine; and (d) accelerate,
settle, compromise, compound, sue for, collect or otherwise liquidate, enforce
or deal with any Secured Obligations or any Collateral (including judicial or
nonjudicial sale or other disposition of any Collateral), bid and purchase at
any sale or other disposition of any Collateral and apply any Collateral and any
proceeds or other payments received by the Lender, in each case in such order
and manner as the Lender may, in its sole and absolute discretion, determine in
compliance with applicable law.
Section 15. Security Interest Absolute; Waiver of Defenses. (a) The
----------------------------------------------
obligations of the Pledgor under this Agreement are independent of the Secured
Obligations, and a separate action or actions may be bought and prosecuted
against the Pledgor to enforce this Agreement, irrespective of whether any
action is brought against the Borrower or any other Loan Party or whether the
Borrower or any other Loan Party is joined in any such action or actions. All
rights of the Lender and security interests hereunder, and all obligations of
the Pledgor hereunder, shall be absolute and unconditional irrespective of;
(i) any lack of validity or enforceability of the Credit
Agreement, the Notes or any other agreement or instrument relating hereto;
(ii) any present or future law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award affecting the terms
of, or the Lender's rights, powers or remedies with respect to, all or any
of the Secured Obligations or Collateral;
(iii) any change in the time, manner or place of payment of, or in
any other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Credit
Agreement or the Notes, including, without limitation, any increase in the
Secured Obligations resulting from the extension of additional credit to
the Borrower or any of its Subsidiaries or otherwise;
(iv) any taking, exchange, discharge, release or non-perfection of
any other Collateral, or any taking, discharge, release or amendment or
waiver of or consent to departure from any guaranty, for all or any of the
Secured Obligations;
PLEDGE AGREEMENT
<PAGE>
12
(v) any manner of application of Collateral, or proceeds
thereof, to all or any of the Secured Obligations, or any manner of
sale or other disposition of any Collateral for all or any of the
Secured Obligations or any other assets of the Borrower or any of its
Subsidiaries;
(vi) any change, restructuring or termination of the corporate
structure of existence of the Borrower or any of its Subsidiaries or
any other Loan Party;
(vii) any failure of the Lender to disclose to the Pledgor any
information relating to the financial condition, operations,
properties or prospects of any other Loan Party now or in the future
known to the Lender (the Pledgor hereby waiving any duty on the part
of the Lender to disclose such information); or
(viii) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Borrower or a third party
pledgor.
(b) The Pledgor hereby waives promptness, diligence, notice of
acceptance and any other notice (except for any such other notice specifically
required by the terms of any Loan Document) with respect to any of the Secured
Obligations and this Agreement and any requirement that the Lender protect,
secure, perfect or insure any Lien or any property subject thereto or exhaust
any right or take any action against the Borrower or any other Person or any
Collateral.
(c) The Pledgor acknowledges that the Lender may, without
notice to or demand upon the Pledgor and without affecting the liability of the
Pledgor under this Agreement, foreclose under any Mortgage by nonjudicial sale,
and the Pledgor hereby waives all rights and defenses (including, without
limitation, any defense to the recovery by the Lender against the Pledgor of any
deficiency after such nonjudicial sale and any defense or benefits that may be
afforded by applicable law (including, without limitation, Sections 580a and
580d of the California Code of Civil Procedure or any statute or law in any
other jurisdiction having similar effect)) arising out of an election of
remedies by the Lender, even though that election of remedies, such as a
nonjudicial foreclosure with respect to security for a Secured Obligation, has
destroyed the Pledgor's rights of subrogation and reimbursement against the
principal by the operation of Section 580d of the California Code of Civil
Procedure or otherwise.
(d) The Pledgor hereby further irrevocably waives, to the
fullest extent permitted under applicable law, any suretyship defense that may
be derived from or under the laws of any jurisdiction (including any such
defenses afforded by California Civil Code Sections 2808, 2809, 2819, 2845, 2849
or 2850).
Section 16. Waiver of Subrogation. The Pledgor agrees that it
---------------------
will not exercise any rights that it may now or hereafter acquire against the
Borrower or any other insider guarantor that arise from the existence, payment,
performance or enforcement of the Secured Obligations under this Agreement or
any other Loan Document, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and any
right to participate in any claim or remedy of the Lender against the Borrower
or any other insider guarantor or any collateral, whether or not such claim,
remedy or right arises in equity or under contract, statute or common law,
including, without limitation, the right to take or receive from the Borrower or
any other insider guarantor, directly or indirectly, in cash or other property
or by set-off or in any other manner, payment or security on
PLEDGE AGREEMENT
<PAGE>
13
account of such claim, remedy or right, unless and until all of the Secured
Obligations and all other amounts payable under this Agreement shall have been
paid in full in cash, all Bank Hedge Agreements shall have expired or terminated
and the Commitments shall have expired or terminated. If any amount shall be
paid to the Pledgor in violation of the preceding sentence at any time prior to
the latest of (i) the payment in full in cash of the Secured Obligations and all
other amounts payable under this Agreement, (ii) the Termination Date and (iii)
the expiration or termination of all Bank Hedge Agreements, such amount shall be
held in trust for the benefit of the Lender and shall forthwith be paid to the
Lender to be credited and applied to the Secured Obligations and all other
amounts payable under this Agreement, whether matured or unmatured, in
accordance with the terms of the Loan Documents, or to be held as collateral for
any Secured Obligations or other amounts payable under this Agreement thereafter
arising. If (i) the Pledgor shall make payment to the Lender of all or any part
of the Secured Obligations, (ii) all of the Secured Obligations and all other
amounts payable under this Agreement shall be paid in full in cash and (iii) the
Termination Date shall have occurred and all Bank Hedge Agreements shall have
expired or terminated, the Lender will, at the Pledgor's request and expense,
execute and deliver to the Pledgor appropriate documents, without recourse and
without representation or warranty, necessary to evidence the transfer by
subrogation to the Pledgor of an interest in the Secured Obligations resulting
from such payment by the Pledgor.
Section 17. Subordination. (a) As used herein, (i) the term
-------------
"Subordinated Debt" means all indebtedness and other obligations of the Borrower
-----------------
to the Pledgor whether now or hereafter existing (whether created directly or
acquired by assignment or otherwise), and interest and premiums, if any, thereon
and other amounts payable in respect thereof or in connection therewith; and
(ii) the term "Insolvency Proceeding" means any dissolution, winding up,
liquidation, arrangement, reorganization, adjustment, protection, relief or
composition of the Borrower or its debts, whether voluntary or involuntary, in
any bankruptcy, insolvency, arrangement, reorganization, receivership, relief or
other similar proceeding under any bankruptcy or similar law or upon an
assignment for the benefit of creditors or any other marshalling of the assets
and liabilities of the Borrower or otherwise.
(b) The Pledgor agrees that the Subordinated Debt is and shall be
subordinate, to the extent and in the manner hereinafter set forth, to the prior
payment in full in cash of all Obligations of the Borrower and the Pledgor now
or hereafter existing under the Loan Documents, whether for principal, interest
(including interest accruing after the filing of a petition initiating any
Insolvency Proceeding, whether or not such interest accrues after the filing of
such petition for purposes of the Bankruptcy Code or is an allowed claim in such
proceeding), fees, expenses or otherwise.
(c) Except for payments specifically permitted under the Credit
Agreement, (i) no payment (including any payment that may be payable by reason
of any other indebtedness of the Borrower being subordinated to payment of the
Subordinated Debt) shall be made by or on behalf of the Borrower for or on
account of any Subordinated Debt, and (ii) the Pledgor agrees that it will not
demand, take or receive from the Borrower, directly or indirectly, in cash or
other property or by set-off or in any other manner, including from or by way of
collateral, payment of all or any of the Subordinated Debt, unless and until the
Obligations of the Borrower under the Credit Agreement and the other Loan
Documents shall have been finally paid in full in cash and all obligations of
the Lender under the Credit Agreement shall have been terminated.
<PAGE>
14
(d) All payments or distributions upon or with respect to the
Subordinated Debt which are received by the Pledgor contrary to the provisions
of this Agreement shall be received in trust for the benefit of the Lender,
shall be segregated from other funds and property held by the Pledgor and shall
be forthwith paid over to the Lender in the same form as so received (with any
necessary indorsement) to be applied (in the case of cash) to, or held as
collateral (in the case of non-cash property or securities) for, the payment of
the Secured Obligations in accordance with the terms hereof.
(e) The Pledgor shall not: (i) sell, assign, pledge, encumber or
otherwise dispose of any of the Subordinated Debt, or (ii) permit the terms of
any of the Subordinated Debt to be changed in such a manner as to have an
adverse effect upon the rights or interests of the Lender hereunder.
Section 18. Place of Perfection; Records. The Pledgor shall keep its
----------------------------
chief place of business and chief executive office and the office where it keeps
its records concerning the Pledged Collateral and original copies of the
Partnership Agreement, at the location specified in Section 22 hereof, or, upon
30 days' prior written notice to the Lender, at any other locations in a
jurisdiction where all actions required by Sections 6 and 8 hereof shall have
been taken with respect to the Pledged Collateral. The Pledgor shall hold and
preserve such records and Partnership Agreement and shall permit representatives
of the Lender at any time during normal business hours and upon advance notice
to inspect and make abstracts from such records and Partnership Agreement.
Section 19. Estoppel Certificates and Notices. The Pledgor shall use
---------------------------------
reasonable efforts to obtain from the Operating Partnership such estoppel
certificates as the Lender may reasonably request from time to time.
Section 20. Amendments, Etc. No amendment or waiver of any provision
----------------
of this Agreement, and no consent to any departure by the Pledgor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by the Lender, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.
Section 21. Continuing Security Interest; Assignments under Credit
-----------------------------------------------------
Agreement. This Agreement shall create a continuing security interest in
- ----------
the Pledged Collateral and shall (i) remain in full force and effect until the
latest of (A) the payment in full of the Secured Obligations and all other
amounts payable under this Agreement, (B) the Termination Date, and (C) the
expiration or termination of all Bank Hedge Agreements, (ii) be binding upon the
Pledgor, its successors and assigns, and (iii) inure to the benefit of, and be
enforceable by, the Lender and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (iii), the Lender may, to the
extent permitted by Section 8.07 of the Credit Agreement, assign or otherwise
transfer all or any portion of its rights and obligations under the Credit
Agreement (including, without limitation, all or any portion of the Commitment,
the Advances and the Notes) to any other person or entity, and such other person
or entity shall thereupon become vested with all the benefits in respect thereof
granted to the Lender herein or otherwise. Upon the later of the payment in full
of the Secured Obligations and all other amounts payable under this Agreement
and the expiration or termination of the Commitment, the security interest
granted hereby shall terminate and all rights to the Pledged Collateral shall
revert to the Pledgor. Upon any such termination, the Lender will, at the
Pledgor's expense, return to the Pledgor such of the Pledged Collateral as shall
not have been sold or otherwise applied pursuant to the terms hereof and execute
and
PLEDGE AGREEMENT
<PAGE>
15
deliver to the Pledgor such documents as the Pledgor shall reasonably request to
evidence such termination.
Section 22. Addresses for Notices. All notices and other
---------------------
communications provided for hereunder shall be in writing (including telecopier,
telegraphic, telex or cable communication) and mailed, telecopied, telegraphed,
telexed, cabled or delivered to it, if to the Pledgor, at its address at 1633
26th Street, Santa Monica, California 90404, Telecopier No. (310) 828-5169,
Attention: David G. Price, Trustee, and if to the Lender, at its address
specified in the Credit Agreement, or, as to either party, at such other address
as shall be designated by such party in a written notice to the other party. All
such notices and other communications shall, when mailed, telecopied,
telegraphed, telexed or cabled, be effective when deposited in the mails,
telecopied, delivered to the telegraph company, confirmed by telex answerback or
delivered to the cable company, respectively.
Section 23. Governing Law; Terms. This Agreement shall be governed by,
--------------------
and construed in accordance with, the laws of the State of California, except as
required by mandatory provisions of law and except to the extent that the
validity or perfection of the security interest hereunder, or remedies
hereunder, in respect of any particular Pledged Collateral are governed by the
laws of a jurisdiction other than the State of California. Unless otherwise
defined herein or in the Credit Agreement, terms defined in Division 9 of the
Code are used herein as therein defined.
Section 24. Jurisdiction; Waiver of Jury Trial, Etc. (a) The Pledgor
---------------------------------------
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any California State court or federal court of
the United States of America sitting in Los Angeles, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement or any of the other Loan Documents to which it is or is to be a party,
or for recognition or enforcement of any judgment, and hereby irrevocably and
unconditionally agrees that all claims in respect of any action or proceeding
may be heard and determined in any such California State court or, to the extent
permitted by law, in such federal court. The Pledgor agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement shall affect any right that any party
may otherwise have to bring any action or proceeding relating to this Agreement
or any of the other Loan Documents to which it is or is to be a party in the
courts of any jurisdiction.
(b) The Pledgor irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or any of the other Loan Documents to which
it is or is to be a party in any California State or federal court. The Pledgor
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) The Pledgor hereby irrevocably waives all right to trial by jury in
any action, proceeding or counterclaim (whether based on contract, tort or
otherwise) arising out of or relating to any of the Loan Documents, the
transactions contemplated thereby or the actions of the Lender in the
negotiation, administration, performance or enforcement thereof.
<PAGE>
S-1
IN WITNESS WHEREOF, the Pledgor has caused this Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.
PRICE REVOCABLE TRUST,
a Trust formed under the laws of California
By: /s/ David G. Price
--------------------------------------
David G. Price
Trustee
<PAGE>
Schedule I
----------
Pledged Units
1. 1,547,389 partnership units expressing limited partnership interests in
National Golf Operating Partnership, L.P., certificate No. 57.
1
<PAGE>
EXHIBIT 4
INTERCREDITOR AGREEMENT
-----------------------
This INTERCREDITOR AGREEMENT (this "Agreement"), dated July 30, 1996,
is made between BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION ("BofA"),
Nationsbank of Texas, N.A., ("NationsBank," BofA and NationsBank are sometimes
collectively to referred herein as the "Banks" and individually as a "Bank"),
DAVID G. PRICE, DALLAS P. PRICE, DAVID G. PRICE, TRUSTEE OF THE PRICE REVOCABLE
TRUST AMENDMENT IN ENTIRETY EXECUTED ON FEBRUARY 9, 1987 AS AMENDED
(collectively, the "Prices"), GOLF ENTERPRISES, INC., a Kansas corporation)
("GEI"), NATIONAL GOLF PROPERTIES, INC., a Maryland corporation ("NGP"), and
NATIONAL GOLF OPERATING PARTNERSHIP, L.P., a limited partnership organized under
the laws of the State of Delaware ("NGOP").
RECITALS:
--------
A. The Banks are extending, and may in the future extend, loans and
other financial accommodations to the Prices and/or GEI which may in certain
circumstances be secured by limited partnership interests in NGOP (the "NGOP
Units"). In connection therewith, certain put rights, exchange rights and other
rights relating to the sale, transfer or exchange of the NGOP Units, including
without limitation Put and Exchange rights (under and as defined in the
Partnership Agreement, as hereafter defined) have been pledged to the Banks or
may become otherwise exercisable by a Bank in connection with NGOP Units pledged
to a Bank (collectively, the "Rights" and individually, a "Right"). The term
Rights shall not include the sale of the NGOP units by a Bank that does not
involve the exercise of a Right.
B. BofA and NationsBank now desire to set forth in this Agreement
their relative rights and obligations with respect to the Rights.
AGREEMENT
---------
1. Capitalized terms used herein and not otherwise defined shall
have the respective meanings set forth in the Agreement of Limited Partnership,
dated as of August 18, 1993, as amended, supplemented or otherwise modified from
time to time, by and among NGP as General Partner and the persons named therein
as Limited Partners (the "Partnership Agreement").
2. (a) Neither Bank shall exercise any Right, make any demand on any
person, or request that another person exercise any Right, or take any action
with respect to any Right,
BOFA/NATIONSBANK INTERCREDITOR AGREEMENT
- 1-
<PAGE>
including without limitation submitting any notice or demand to NGOP or any
other person, in its or any other person's name or on behalf of any other
person, directly, through a power of attorney or otherwise, without first giving
the other Bank at least 30 days notice of its intention to do so. The Bank
receiving such notice (the "Recipient Bank") shall have until 30 days after its
receipt of such notice to notify the Bank sending such notice (the "Sending
Bank") whether or not it also desires to exercise such Right(s).
(b) If the Recipient Bank indicates it desires to exercise such
Right(s) in response to such notice within such time period, the Banks shall
cooperate in exercising such Right(s) with a view towards exercising such Rights
for all NGOP Units pledged to both Banks. If, for whatever reason, such Rights
cannot be exercised for all pledged NGOP Units, the Banks further agree to
cooperate in exercising such Right(s) for the maximum amount of NGOP Units
pledged to both banks, pro rated on the basis of the respective number of NGOP
Units pledged to each Bank on the date hereof as set forth in Schedule I. Such
cooperation may take the form of acting jointly, separately, simultaneously, in
a coordinated fashion or otherwise, as the facts and circumstances may at such
time dictate. The Banks shall cooperate in exercising such Right(s) in a timely
fashion.
(c) If the Recipient Bank indicates it does not desire to exercise
such Right(s), or fails to respond to the Sending Bank within such 30-day
period, the Sending Bank shall be free to exercise the Right so notified without
any further duty or regard to other Bank.
(d) Notwithstanding any provisions to the contrary in either Bank's
pledge agreement, each Bank hereby consents to any of the Prices following the
instructions of the other Bank with respect to exercising Put and Exchange
rights with respect to NGOP Units pledged to such other Bank if such
instructions are given as permitted by the terms of this Agreement.
3. NationsBank acknowledges and agrees that it has no interest in or to
any of the currently issued and outstanding shares of stock of NGP pledged to
BofA. BofA acknowledges and agrees that it will have no interest in or to any
shares of stock of NGP that may be subsequently pledged or transferred to
NationsBank, whether as a result of exercising any Rights or otherwise.
4. Nothing contained in this Agreement shall be construed to give either
Bank the right to limit or otherwise interfere with the exercise by the other
Bank of any of its
BOFA/NATIONSBANK INTERCREDITOR AGREEMENT
- 2 -
<PAGE>
rights or remedies with respect to any other collateral held by such Bank,
including without limitation any shares of stock of NGP pledged or otherwise
transferred to such Bank and any NGOP Units (to the extent no Right is
exercised). Neither Bank shall be entitled to share in any proceeds of any of
the other Bank's collateral.
5. Each Bank consents to the other Bank, without notice or demand
and without affecting or impairing any party's obligations hereunder, from time
to time to (i) renew, compromise, extend, increase, accelerate or otherwise
change the time for payment of, or otherwise change any of the other terms of
any indebtedness owing to such Bank or any part thereof secured by the Rights or
any other collateral, including without limitation to increase or decrease the
rate of interest thereon; (ii) take and hold security for the payment of any
indebtedness and exchange, enforce, waive, release and fail to perfect any such
security; and (iii) apply such security and direct the order or manner of sale
thereof as any Bank in its sole discretion may determine.
6. Each Bank acknowledges and agrees that it shall have the sole
responsibility for obtaining from any borrowers such information concerning any
borrower's financial condition or business operations as such Bank may require,
and that neither Bank has any duty at any time to disclose to the other Bank any
information relating to the business operations or financial condition of any
borrower.
7. All notices and other communications provided for hereunder to be
effective shall be in writing and shall be delivered in person (by personal
delivery, delivery service or overnight courier service) with receipt
acknowledged, or telecopied and confirmed immediately in writing by a copy
mailed by registered or certified mail, return receipt requested, postage
prepaid, in each case to the addresses on the signature page of this Agreement,
or to such other addresses as the parties hereto may specify from time to time
in writing. Such notices shall be deemed given and received on the date so
delivered or mailed.
8. Each party hereto agrees to execute and deliver to any other
party any additional agreements reasonably deemed necessary by such party to
effect or confirm the agreement set forth herein.
9. This agreement shall be governed by the laws of the State of
California. The provisions of this Agreement are independent of and separable
from each other. If any provision of this Agreement shall for any reason be held
invalid or
BOFA/NATIONSBANK INTERCREDITOR AGREEMENT
- 3 -
<PAGE>
unenforceable, it is the intent of the parties that such invalidity or
unenforceability shall not affect the validity or enforceability of any other
provision hereof, and that this Agreement shall be construed as if such invalid
or unenforceable provision had never been contained herein.
10. This Agreement constitutes and expresses the entire understanding
between the Banks with respect to the subject matter hereof, and supersedes all
prior and contemporaneous agreements and understandings, inducements or
conditions, whether express, implied, oral or written. This Agreement shall
extend to and be binding upon the successors and assigns of each of the parties
hereto.
11. Either Bank may transfer or assign in whole or in part any
interest it may have in the Rights and under this Agreement, provided the
transferee or assignee agrees in writing to be bound by the restrictions in this
Agreement as if a Bank party hereto.
12. Neither this Agreement nor any portion or provision hereof may be
changed, waived or amended orally or in any manner other than by an agreement in
writing signed by the Banks. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and
any party hereto may execute this Agreement by signing any such counterpart.
BOFA/NATIONSBANK INTERCREDITOR AGREEMENT
- 4 -
<PAGE>
This Agreement is executed as of the date stated at the top of the first
page.
BANK OF AMERICA NATIONAL TRUST /s/ David G. Price
AND SAVINGS ASSOCIATION ---------------------------
DAVID G. PRICE, TRUSTEE OF THE
PRICE REVOCABLE TRUST
AMENDMENT IN ENTIRETY EXECUTED
By: /s/ Sheryl Bond ON FEBRUARY 9, 1987 AS AMENDED
----------------------------
Sheryl Bond
Vice-President GOLF ENTERPRISES, INC.
Address where notices to BofA
are to be sent: By: /s/ James M. Stanich
--------------------------
c/o Century City Regional Name: James M. Stanich
Commercial Banking Office Title: Vice President & Secretary
#1417
2049 Century Park East, 2nd Address where notices to
Floor NationsBank are to be sent:
Los Angeles, CA 90067
NATIONAL GOLF PROPERTIES, INC.
NATIONSBANK OF TEXAS, N.A.
By: /s/ Edward R. Sause
----------------------------
By:____________________________ Name: Edward R. Sause
Name: Title: Executive Vice President &
Title: Chief Financial Officer
NATIONAL GOLF OPERATING
PARTNERSHIP, L.P.
Address where notices to
NationsBank are to be sent:
By: /s/ Edward R. Sause
----------------------------
/s/ David G. Price Name: Edward R. Sause
- ------------------------------- Title: Executive Vice President &
DAVID G. PRICE Chief Financial Officer
Address where notices to NGP
and NGOP are to be sent:
/s/ Dallas P. Price
- -------------------------------
DALLAS P. PRICE
BOFA/NATIONSBANK INTERCREDITOR AGREEMENT
- 5 -
<PAGE>
This Agreement is executed as of the date stated at the top of the
first page.
BANK OF AMERICA NATIONAL TRUST /s/ David G. Price
AND SAVINGS ASSOCIATION ---------------------------------
DAVID G. PRICE, TRUSTEE OF THE
PRICE REVOCABLE TRUST
AMENDMENT IN ENTIRETY EXECUTED
By: /s/ Sheryl Bond ON FEBRUARY 9, 1987 AS AMENDED
--------------------------
Sheryl Bond
Vice President GOLF ENTERPRISES, INC.
Address where notices to BofA
are to be sent: By: /s/ James M. Stanich
--------------------------
c/o Century City Regional Name: James M. Stanich
Commercial Banking Office #1417 Title: Vice President & Secretary
2049 Century Park East, 2nd Floor
Los Angeles, CA 90067 Address where notices to
NationsBank are to be sent:
NATIONSBANK OF TEXAS, N.A. NATIONAL GOLF PROPERTIES, INC.
By: /s/ Edward R. Sause
By: /s/ Tom F. Scharfenberg ----------------------------
-------------------------- Name: Edward R. Sause
Name: Tom F. Scharfenberg Title: Executive Vice President &
Title: Vice President Chief Financial Officer
Address where notices to NATIONAL GOLF OPERATING
NationsBank are to be sent: PARTNERSHIP, L.P.
/s/ David G. Price
- ------------------------------ By: /s/ Edward R. Sause
DAVID G. PRICE ----------------------------
Name: Edward R. Sause
/s/ Dallas P. Price Title: Executive Vice President &
- ------------------------------ Chief Financial Officer
DALLAS P. PRICE
Address where notices to NGP
and NGOP are to be sent:
BOFA/NATIONSBANK INTERCREDITOR AGREEMENT
- 5 -
<PAGE>
Schedule I
Number of Units Pledged
Bank of America 1,034,600
NationsBank 1,547,389
<PAGE>
EXHIBIT 7
SHAREHOLDERS AND PARTNERS AGREEMENT
This Shareholders and Partners Agreement (the "Agreement") is made
effective as of July 2, 1998 by and between Dallas Price ("Wife"), and David
Price ("Husband").
RECITALS
A. The parties hereto have entered into that certain Marital Settlement
Agreement dated July 2, 1998 (the "Settlement Agreement"), concurrently
herewith, in order to settle fully and completely their respective rights in and
claims to all property, or business relationships, of whatever kind and nature
now owned by them, or either of them, or which may hereafter be acquired by
either of them, and the settlement of any and all other claims, past, present
and future that each now has or may have against the other, his or her estate,
executors, administrators, successors and assigns whether arising out of their
material relationship or otherwise.
B. Among the property rights and claims to be divided pursuant to the
Settlement Agreement are several ongoing business enterprises and real estate,
including "Subchapter S" corporations, "C" corporations and partnerships, owned
in whole or in part by the parties hereto and listed in Exhibit A hereto (the
"Businesses"). The parties acknowledge that the provisions of this Agreement do
not apply to National Golf Properties, Inc., except for the provisions of
Section 3, which shall apply.
C. Husband and Wife desire that before either party sells an interest in any
of the Businesses (an "Ownership Interest") to a third party, that they each
give the other the opportunity to purchase the interest to be sold pursuant to a
right of first refusal; that no sale or other transfer by either of them
invalidate the favorable tax treatment accorded to the Subchapter "S"
corporations or jeopardize the favorable treatment as a "REIT" that one of the
Businesses has.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the terms,
covenants and conditions hereinafter set forth, the parties hereto mutually
agree as follows:
1. Right of First Refusal.
----------------------
(a) Right of First Refusal. Subject to the terms and conditions
----------------------
specified in this Section 1, Husband and Wife shall each have a right of first
refusal with respect to the future sale, or transfer of any portion of the other
party's Ownership Interest in any of the Businesses (the "Offered Interest").
Husband and Wife further agree that any encumbrance of any such Ownership
Interest will be made subject to this Right of First Refusal so that any
encumbrance holder must, before it obtains an Ownership Interest pursuant to the
exercise of any rights arising as a result of the encumbrance, offer the other
party the opportunity to purchase such Ownership Interest for the amount of the
encumbrance (including accrued interest and costs) and, if it does obtain an
Ownership Interest, it must, before reselling such Ownership Interest, offer it
to the other party pursuant to this Right of First Refusal. In the event a party
proposes to sell or otherwise transfer such interest (the "Selling Party"), he
or she must first give written notice (the "Right of First Refusal Notice"), to
the other party (the "Other Party"), specifying as applicable (i) his or her
intention to sell or transfer such Offered Interest to a third party, (ii) the
name and
<PAGE>
address of the proposed purchaser(s) or recipient(s), (iii) the nature of
Offered Interest he or she proposes to sell, transfer or otherwise encumber,
(iv) the price for which the Offered Interest is proposed to be sold,
transferred or encumbered, and (v) all other material terms and conditions of
the proposed sale or transfer. Each party shall notify the other party if and
when any Ownership Interest is encumbered, specifying the nature of the
encumbrance, the party to whom the encumbrance is given and confirming such
third parties' agreement to comply with the provisions hereof.
Within thirty (30) days of receipt of the Right of First Refusal
Notice, the Other Party may elect to purchase all of the Offered Interest at the
price and on the terms and conditions set forth in the Right of First Refusal
Notice by delivery of written notice to the Selling Party. Within sixty (60)
days after delivery of such notice, the parties shall arrange for the delivery
of payment to the Selling Party at the price as set forth in the Right of First
Refusal Notice, the execution of the appropriate sale documents and the delivery
of the appropriate transfer documents; and shall each use their best reasonable
efforts to consummate the transaction as soon as reasonably possible thereafter.
The Selling Party shall be entitled to sell or transfer the Offered
Interest not purchased by the Other Party to the purchaser(s) named in the Right
of First Refusal Notice at the price specified in the Right of First Refusal
Notice and on the terms and conditions set forth in the Right of First Refusal
Notice; provided, however, that such sale or transfer must be consummated within
ninety (90) days from the date of the Right of First Refusal Notice.
(b) Revival of Right of First Offer and Right of First Refusal. If
----------------------------------------------------------
the Other Party does not exercise its Right of First Refusal and the Offered
Interest is not sold to the specified third party within the 90 day period set
forth above, the right of first refusal provided by this Section 1 shall be
deemed to be revived and such Offered Interest shall not be sold or transferred
to any third party unless first reoffered to the Other Party in accordance
herewith.
2. Maintaining Subchapter S Status.
-------------------------------
(a) Preservation of Status. If requested by a party, the other party
----------------------
shall execute such documents and consents and shall cause any of the Businesses
to execute such documents as are necessary in order to preserve the election, if
the Business is designated on Exhibit A as a "Subchapter S Corporation", to be
taxed as a Small Business Corporation under Subchapter S of the Internal Revenue
Code (the "Subchapter S Election"). In order to prevent the inadvertent
termination of the Subchapter S Election, the parties each agree to vote their
shares, execute any necessary documents, take any other required action and
otherwise exert their best efforts at all times in good faith to accomplish the
objective of a Subchapter S Corporation in maintaining the Subchapter S
Election, including taking actions with respect to Operations. If any documents
evidencing such consent or other actions required for filing under the
provisions of the Internal Revenue Code (the "Code") are required in order to
effectuate such objectives, and if any party is unable or unwilling or otherwise
fails to execute such documents or take such other action in a timely manner,
then such party hereby irrevocably appoints any officer of any such corporation
as such person's attorney-in-fact to execute such documents and to take such
action in such person's place and stead.
2
<PAGE>
(b) No Gifts in Violation. Each party hereby covenants and agrees
---------------------
that, so long as this Agreement is in effect, such party shall not, by gift,
bequest, sale or otherwise, transfer any shares to any person or entity whose
ownership of such shares would cause any such Business' Subchapter S Election to
terminate.
(c) Subchapter S Termination. The parties shall terminate or revoke
------------------------
any Subchapter S Election only in accordance with a determination to do so made
by Board of Directors of the Subchapter S Corporation which would lose the
Subchapter S status.
(d) Inadvertent Termination. If any Subchapter S Corporation's
-----------------------
Subchapter S status is terminated inadvertently and such corporation wishes to
obtain a ruling under Section 1362(f) of the Code, each party agrees to make any
adjustments required pursuant to Section 1362(f)(4) of the Code and approved by
such Subchapter S Corporation's Board of Directors. A party's obligation to make
such adjustments shall continue after such shareholder has ceased to own stock
in such Subchapter S Corporation and after this Agreement has terminated.
3. Maintaining REIT Status.
-----------------------
(a) Preservation of Status. In order to prevent the inadvertent
----------------------
termination of the status of National Golf Properties, Inc. ("NGP") as a Real
Estate Investment Trust ("REIT") under the Code, the parties each agree to vote
their shares in NGP or their partnership interest in National Golf Operating
Partnership, L.P. ("NGOP"), execute any necessary documents, take any other
required action and otherwise exert their best efforts at all times in good
faith to accomplish the objective of maintaining NGP's REIT status. If any
documents evidencing such consent or other actions required for filing under the
provisions of the Code are required in order to effectuate such objectives, and
if any party is unable or unwilling or otherwise fails to execute such documents
or take such other action in a timely manner, then such party hereby irrevocably
appoints any officer of NGP or general partner of NGOP as such person's
attorney-in-fact to execute such documents and to take such action in such
person's place and stead.
(b) No Gifts in Violation. Each party hereby covenants and agrees
---------------------
that, so long as this Agreement is in effect, such party shall not, by gift,
bequest, sale or otherwise, transfer any shares of NGP or partnership interests
of NGOP to any person or entity whose ownership, or percentage ownership, of
such shares or partnership interests would cause the NGP's REIT status to
terminate.
(c) Inadvertent Termination. If NGP's REIT status is terminated
-----------------------
inadvertently, each party agrees to take such steps as NGP shall reasonably
request of such party in order to reinstate such REIT status; provided that
neither party shall be obligated to incur any significant expense to do so; and
provided, further, that neither NGP nor NGOP nor any other person or entity
shall be deemed a third party beneficiary hereof, or of Section 2 or Section 4
hereof, it being understood that the provisions of this Agreement are intended
only for the benefit of the parties. A party's obligation to provide such
cooperation shall continue after this Agreement has terminated.
3
<PAGE>
4. Sale to a Competitor.
--------------------
(a) Added Time. Wife acknowledges that if she desires to sell all or
----------
any part of her Ownership Interest in any of the Businesses to a "Competitor" of
any such Business (a "Sale to Competitor"), that the provisions of Section 1
(right of First Refusal) set forth above shall apply but that (i) Husband will
have 60 days (instead of 30) after receipt of the Right of First Refusal Notice
to elect to purchase all of the Offered Interest and (ii) Husband will have 90
days after delivery of such notice electing to make the purchase, instead of the
60 days otherwise provided for.
(b) Determination of Who Is A Competitor. The Business Decision
------------------------------------
Makers (the Board of Directors of such Business, if it is a corporation,
equivalent governing body if it is not) shall promptly determine if any proposed
transferee of an Ownership Interest is a "Competitor" after being requested to
do so by either party. The other party agrees to use reasonable efforts to
assist in obtaining a prompt decision from the Business Decision Makers on such
issue.
5. Dispute Resolution.
------------------
(a) Any and all claims, grievances, demands, controversies, causes of
action or disputes of any nature whatsoever (including but not limited to tort
and contract claims, and claims upon any law, statute, order, or regulation)
(hereinafter "Claims"), arising out of, in connection with, or in relation to
(i) the interpretation, performance or breach of this Agreement, (ii) the
arbitrability of any Claims under this Agreement, or (iii) any relationship
before, at the time of entering, during the term of, upon or after expiration or
termination of this Agreement, by and among the parties, shall be resolved in
accordance with a two-step dispute resolution process administered by
JAMS/Endispute involving, first, mediation before a retired judge from the
JAMS/Endispute panel, following, if necessary, by final and binding arbitration
before the retired judge, or if requested by an aggrieved party, another retired
judge from the JAMS/Endispute panel. Such dispute resolution process shall be
confidential and shall be conducted in accordance with California Evidence Code
Section 1119.
(b) Mediation. In the event any Claim is not resolved by an informal
---------
negotiation between the Company and the aggrieved party within 30 days after the
aggrieved party notifies the Company and other parties that a Claim exists, the
matter shall be referred to the Los Angeles offices of JAMS/Endispute for an
informal, non-binding mediation consisting of one or more conferences between
the aggrieved parties in which a retired judge will seek to guide the aggrieved
parties to a resolution of the Claims. The aggrieved parties shall select a
mutually acceptable neutral from among the JAMS/Endispute panel of mediators. In
the event the aggrieved parties cannot agree on a mediator, the Administrator of
JAMS/Endispute will appoint a mediator. The mediation process shall continue
until the earliest to occur of the following: (i) the Claims are resolved, (ii)
the mediator makes a finding that there is no possibility of resolution through
mediation, or (iii) 30 days have elapsed since the Claim was first scheduled for
mediation.
(c) Arbitration. Should any Claims remain after the completion of the
-----------
mediation process described above, each party agrees to submit all remaining
Claims to final and
4
<PAGE>
binding arbitration before one arbitrator administered by JAMS/Endispute in
accordance with the then existing JAMS/Endispute Arbitration Rules. Neither
party nor the arbitrator shall disclose the existence, content, or results of
any arbitration hereunder without the prior written consent of all parties.
Except as provided herein, the California Arbitration Act shall govern the
interpretation, enforcement and all proceedings pursuant to this subparagraph
(c). The arbitrator shall render an award and a written, reasoned opinion in
support thereof. Such award may include reasonable attorneys' fees to the
prevailing party. Judgment upon the award may be entered in any court having
jurisdiction thereof.
(d) Exclusivity. This dispute resolution procedure is intended to be
-----------
the exclusive method of resolving any Claims arising out of or relating to this
Agreement.
(e) Survival. This dispute resolution process shall survive the
--------
termination of the Agreement. If any provision in the Agreement is adjudged to
be void or otherwise unenforceable, in whole or in part, such adjudication shall
not affect the validity of the remainder of the Agreement. The parties expressly
acknowledge that by signing this Agreement, they are giving up their respect
right to a jury trial.
6. Tag Along Rights
----------------
(a) Neither party may sell or otherwise transfer in any transaction
or series of related transactions (a "Sale") an amount which exceeds the lower
of five percent (5%) or $2,500,000 of an Ownership Interest in any of the
Businesses held by them at the time of such Sale without triggering application
of this Section 6.
(b) If any party (the "Selling Party"), intends to effect a Sale,
such party shall give written notice (the "Seller's Notice"), to the other party
(the "Recipient"), stating that the Selling Party intends to effect such a Sale,
identifying the party who made the subject offer (the "Proposed Transferee"),
specifying the size of the Ownership Interest proposed to be sold, transferred
or otherwise affected under such offer (the "Sale Interest"), and specifying the
per share or unit price and any other consideration that the Proposed Transferee
has offered to pay for the Sale and all other terms of such offer (the "Sale
Price and Terms"). A written copy of the offer shall be attached to the Seller's
Notice.
(c) The Recipient shall have the right upon written notice to the
Selling Party within (10) business days after receiving the Seller's Notice, and
the obligation following giving such notice, to participate on a pro rata basis
(based on each party's then respective Ownership Interests) in the Selling
Party's Sale at and upon the Sale Price and Terms.
(d) The exercise or non-exercise of the right of a party to
participate in one or more Sales made by the other party shall not adversely
affect such party's rights to participate in subsequent Sales by the other
party.
7. Drag Along Rights.
-----------------
(a) If Husband agrees to engage in a Sale of at least 80% of the
Ownership Interest in any Business then held by him in a bona fide arm's-length
transaction with a third party, then Husband may elect to require Wife to vote
affirmatively for the transaction and to sell
5
<PAGE>
to the proposed purchaser (the "Proposed Purchase") on a pro rata basis, her
Ownership Interest in such Business, concurrently with the Sale by Husband and
at the same price and on the same terms.
(b) Such election shall be made by Husband by delivering to Wife a
written notice (the "Drag Along Notice') informing her of the material terms of
the proposed Sale, including, without limitation, the identity of the Proposed
Transferee, the number of shares or units of the Business proposed to be sold or
otherwise transferred, the per share or unit price that the Proposed Transferee
has offered to pay (the "Offered Price") and the scheduled closing date for the
Sale transaction (the "Sale Date").
(c) At least three (3) days prior to the Sale Date specified in the
Drag Along Notice, Wife shall deliver to Husband certificate(s) evidencing the
number of shares or unit of Business to be sold by Wife, duly endorsed for
transfer to the Proposed Transferee. On the Sale Date, and provided that Husband
consummates such Sale, Husband shall deliver to the Proposed Purchaser
certificate(s) evidencing the sales of stock or units being sold by Wife and
Husband against payment of the aggregate Offered Price therefor, and Husband
shall promptly remit to Wife her share of such payments.
8. Wife's Corporate Benefits. Husband agrees that he will use his best
-------------------------
reasonable efforts to cause American Golf Corporation ("AGC") to continue to
provide to Wife the following benefits that AGC is currently providing to her:
for so long as Husband and Wife own, in the aggregate, greater than 50% of the
equity of AGC, (in substantially the same amounts or such lower amounts as may
be then provided to Husband and the other senior AGC officers) an office;
secretarial assistance; gas credit cards for use in the AGC business; Hertz and
Avis car rental cards for use in the AGC business; health insurance and medical
liability coverage; Corporate American Express card for use in the AGC business;
and car phones and hand held cellular phone expenses to the extent used for AGC
business; and excess liability insurance. If, at any time, any of the Businesses
provides a company car and expenses thereof to Husband, such Business will
provide a similar automobile benefit to Wife.
9. Directorships. Husband and Wife agree that each shall vote his or her
-------------
shares in order to support the election of the other to the Board of Directors
of any of the Businesses of which such party presently serves.
10. Miscellaneous.
-------------
(a) Integration. This Agreement, the Revocable Business Management
-----------
Agreement (the "Other Agreement"), the Agreement Regarding Certain Jointly Owned
Receivables, Taxes and Joint Payables and the Settlement Agreement represent the
entire understanding of the parties with respect to the management of the
Businesses and related matters and is intended to be a full, complete, final and
integrated agreement between the parties hereto with respect to the subject
matter hereof, superseding any other agreements or understandings between the
parties entered into prior to the date of execution hereof with respect thereto.
In the event of any conflict between this Agreement and the Other Agreement,
this Agreement shall be followed.
6
<PAGE>
(b) Assignment. This Agreement may not be altered, amended or
----------
modified, except by an instrument in writing signed by both Husband and Wife.
(c) Headings. Paragraph headings and other titles contained in this
--------
Agreement are for reference purposes only and are in no way intended to
describe, interpret, define or limit the scope, extent or meaning of this
Agreement or any provision hereof.
(d) California Law. This Agreement shall be interpreted under and in
--------------
accordance with the laws of the State of California.
(e) Continuation. In the event of a marital reconciliation between
------------
the parties hereto, this Agreement nevertheless shall continue in full force and
effect until modified, altered or terminated by an agreement in writing signed
by each of the parties hereto.
(f) Notice. All notices and demands of any kind which either party
------
hereto may be required to or desire to serve upon any other party hereto under
the terms of this Agreement shall be in writing and shall be served upon such
other party by personal service or by leaving a copy of such notice or demand at
the address hereinafter set forth, whereupon such service shall be deemed
complete, or by mailing a copy thereof by certified or registered mail, postage
prepaid with return receipt requested, addressed as follows:
If to Wife: Dallas Price
14181 Alisal Lane
Santa Monica, CA 90402
With a copy to: Daniel J. Jaffe
Jaffe & Clemens
433 N. Camden Dr., Suite 100
Beverly Hills, CA 90210
If to Husband: David G. Price
2951 28th Street, Suite 300
Santa Monica, CA 90405
With a copy to: Latham & Watkins
633 West 5th Street
Los Angeles, CA 90071
Attn: Bruce Lederman
In the case of service by mail, it shall be deemed complete on the
date of delivery as shown on the addressee's registry or certification receipt,
or at the expiration of the fifth calendar day after the date of mailing,
whichever occurs first. The addresses to which notices and demands shall be
delivered or sent may be changed from time to time by notice addressed as herein
provided by any party upon all other parties.
(g) Full Force and Effect; Independent Application. If any provision
----------------------------------------------
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions shall nevertheless continue in
full force and effect without being impaired
7
<PAGE>
or invalidated in any way. If any provision of this Agreement is held by a court
of competent jurisdiction to be too great in scope or duration, such provision
shall be reformed by such court in order that it shall comply with the laws or
regulations applicable to such provision. The provisions of Sections 1, 2, 3, 4,
6 and 7 shall each be applied independently to any sale, assignment or other
transfer, so that, for example, the failure of a party to exercise such party's
Right of First Refusal shall not affect such party's tag along rights; and the
right to prevent the sale to a competitor shall be applied independently of the
other rights or obligations hereunder.
(h) Binding on Successors. This Agreement is binding upon and shall
---------------------
inure to the benefit of the parties hereto and to their respective successors,
assigns, personal representatives, heirs and legatees.
(i) Additional Documents. The parties hereto shall execute any
--------------------
additional documents or amendments to documents and shall take any further
actions that may be necessary to carry out the terms of this Agreement.
(j) Non-Complying Transfer Not Effective. Any transfer made without
------------------------------------
complying with the provisions hereof shall be null and void and of no force and
effect, and any transferee of the Offered Interest who obtains an interest other
than in full compliance with the provisions of this Agreement shall, in any
event, take subject to the provisions of this Agreement.
(k) Term. This Agreement shall terminate, on a Business by Business
----
basis, as to any of the Businesses, on the first to occur of the following: (i)
the expiration of 10 years from the execution date hereof; or (ii) the sale or
transfer by one party of all of such party's interest in any such Business.
(l) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original but all of which
together shall constitute one and the same instrument.
(m) NGOP Conversions. Other than Section 3 hereof, which shall apply,
----------------
nothing contained herein shall prevent Wife from converting her partnership
interest in NGOP into shares of NGP in accordance with the rights associated
with that partnership interest.
(n) Financial Reports. Wife shall be entitled to receive copies of
-----------------
the financial statements and tax returns prepared in the ordinary course of
business of the Businesses within a reasonable time, and shall have the right,
upon notice to the applicable Business(es) to review, at her expense, the books
and records thereof.
(SIGNATURE PAGE FOLLOWS)
8
<PAGE>
IN WITNESS WHEREOF, this Agreement is effective as of the date first
above written.
/s/ Dallas Price
_______________________________
Dallas Price
/s/ David G. Price
_______________________________
David G. Price
Approved as to form:
Jaffe & Clemens
By:___________________________
Daniel J. Jaffe
Attorney for Wife
Latham & Watkins
By:___________________________
Bruce R. Lederman
Attorney for Husband
9
<PAGE>
EXHIBIT 8
SECURITY AGREEMENT AND ASSIGNMENT
---------------------------------
1. Parties
-------
This Security Agreement and Assignment ("Agreement"), dated April 10, 1998,
is entered into by and between David G. Price, ("Lender") and Barbara M. Colton
an individual ("Debtor").
2. Recitals
--------
1. Concurrently herewith, Debtor has executed and delivered that certain
promissory note in favor of Lender in the principal amount of $30,000 (the
"Note").
2. Debtor is the owner of 8,930 units of limited partnership interest in
National Golf Operating Partnership, L.P., a Delaware limited partnership (the
"Partnership") pursuant to that certain Amended and Restated Agreement of
Limited Partnership of National Golf Operating Partnership dated as of March 4,
1998 (the "Partnership Agreement").
3. As security for Debtor's performance of her obligations under the
Note, Debtor desires to pledge and grant to Lender, and to create, or cause to
be created, a security interest in 4,465 units of limited partnership interest
held by Debtor in the Partnership (the "OP Units"), including without
limitation, in all cash or property distributed or due to her by the Partnership
on account of the OP Units, any capital, profits or surplus attendant to her OP
Units in the Partnership, any claims against the Partnership related to her OP
Units, and/or any proceeds of money or property to be received by her on sale,
exchange or other disposition of her OP Units (collectively, the "Collateral"),
on the terms and conditions hereinafter set forth.
3. Grant of Security Interest
--------------------------
As security for the full, punctual and prompt performance of her
obligations under the Note, and for good and valuable consideration, the receipt
and adequacy of which are hereby acknowledged, Debtor hereby grants to Lender a
security interest in the Collateral as now held and to any additional extent
acquired hereafter, and any and all proceeds thereof.
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 a Financing Statement on
Form UCC-1, reflecting said security interest, in form and substance
satisfactory to Lender.
<PAGE>
5. Assignment
----------
1. Concurrently with the execution hereof, Debtor has delivered to
Lender a fully executed assignment of the Collateral (the "Assignment") in the
form attached hereto as Exhibit "A" and incorporated herein by this reference.
2. Debtor agrees that the Assignment shall be held by Lender as security
until Debtor's obligations under the Note have been fully performed, satisfied
or discharged. 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. Distribution Rights Reserved to Debtor; Voting Rights Assigned to Lender;
-------------------------------------------------------------------------
Exchange and Put Rights Assigned to Lender
------------------------------------------
So long as Debtor is not in default, as defined in Section 9 hereof, Debtor
shall have the right to continue to receive all cash distributions or
distributions in kind to which Debtor is entitled by virtue of her interest in
the Partnership. Notwithstanding the foregoing, until Debtor's obligations
under the Note have been fully performed, satisfied or discharged, Lender shall
be deemed the record owner of the Collateral and, except for the right to
receive cash distributions as described above, shall have all rights and powers
as a partner of the Partnership, including the right to vote. Debtor also
assigns to Lender the right to exercise the Exchange and Put options provided
for under the Partnership Agreement; however, the net proceeds from the Exchange
or Put shall not exceed the amount of principal and accrued interest outstanding
at the time of Lender's exercise of the Exchange or Put. By executing this
Agreement, Debtor hereby assigns such voting rights, Exchange and Put rights to
Lender and agrees to take all actions, including notifying the general partner
of the Partnership in writing, of Debtor's assignment to Lender of Debtor's
voting rights in connection with the OP Units. In the event of a default, as
defined in Section 9 hereof, Lender shall acquire all of Debtor's rights, but
none of Debtor's obligations, duties, or liabilities, as a partner of the
Partnership, as provided in Section 10.7 hereof.
7. Debtor's Representations and Warranties.
---------------------------------------
Debtor hereby represents and warrants as follows:
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;
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;
2
<PAGE>
3. Debtor is the absolute owner of the OP Units, with full right to
pledge, sell, transfer, and create a security interest therein;
4. 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, instrument or arrangement to
which Debtor is party or by which Debtor or any of Debtor's property is bound.
8. Covenants of Debtor
-------------------
Debtor hereby covenants as follows:
1. To immediately notify the general partner of the Partnership of the
granting of the security interest and assignment of Collateral hereunder and to
obtain any and all necessary consents to the grant of security interest and
assignment of Collateral provided for therein;
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 his security interest
hereunder and the priority thereof;
3. Not to permit any lien or secured interest other than that created
hereby to attach to the Collateral;
4. At her own cost or expense, to appear in and defend any action or
proceeding which may affect her title to, or Lender's interest in the
Collateral; and
5. Not to sell, transfer, hypothecate, encumber, or otherwise dispose of
or transfer the Collateral, without Lender's written consent.
9. Event of Default
----------------
Each of the following shall constitute a default hereunder:
1. A default under the Note; or
2. Debtor's breach of, or failure to perform any obligation, covenant,
condition, representation or warranty, contained in this Agreement.
10. Lender's Rights Upon Default
----------------------------
1. Upon the happening of any default, as defined in Section 9 hereof,
Lender may, at his sole option, pursue any or all of the remedies and exercise
any or all rights set forth in this Section 10.
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2. Lender may exercise all remedies of a secured party under the Uniform
Commercial Code of California (the "UCC") including the following:
(a) 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 a written notice sent to Debtor after default.
(b) Lender may sell or otherwise dispose of the Collateral or
any part thereof at a private sale or public sale. Lender may notify Debtor of
his election to so dispose of the Collateral in a written notice sent to Debtor
after default. Lender's notice to Debtor of his 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, or the date of any public sale.
Debtor shall remain liable for any deficiency following disposition of the
Collateral or any part thereof pursuant to this Section.
3. Lender's delay or failure to exercise the remedies described in
Section 10.2 shall not be deemed a waiver of his 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 default, and the
disposition or application of the proceeds of the sale of the Collateral shall
be as set forth in the UCC.
4. Lender may proceed against Debtor by bringing an action under the Note
and reduce his claim on the obligations secured hereby to judgment. In this
connection, Debtor hereby expressly waives any and all rights she may have to
require Lender to exhaust the Collateral or to proceed against any other party
or to pursue any other remedy which Lender may have.
5. 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.
6. Debtor hereby irrevocably appoints Lender as her attorney-in-fact with
such power to be effective upon any default by Debtor hereunder. 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 her 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 interests in the
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
Collateral.
7. 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 be
entitled to exercise or receive any and all of Debtor's rights as a partner of
the Partnership, including, but not limited to all rights to capital, profit,
distributions and properties and the right to vote as a partner of the
Partnership, and
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to request and obtain information from the Partnership. In this connection,
Lender shall have the right to immediately notify the Partnership of Debtor's
default, and the Partnership shall remit all payments or other distributions to
which Debtor otherwise would be entitled directly to Lender.
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.
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 Note and this Agreement.
12. Notices
-------
1. Any notice given hereunder shall be in writing and shall be deemed to
have been duly given if transmitted by facsimile; delivered by hand; or
delivered either by certified or registered mail, postage prepaid to the
addresses set forth below. Such notice shall be deemed to have been given or
delivered or made on the date of the transmittal, if transmitted by facsimile,
or on the date of delivery, if delivered by hand, or three days after mailing if
delivered by certified or registered mail, so long as the notice is transmitted,
delivered, or mailed as follows:
(a) If to Lender:
David G. Price
2951 28th Street
Suite 3000
Santa Monica, CA 90405
Attn: Edward R. Sause
Fax No.: (310) 664-6165
(b) If to Debtor:
Barbara M. Colton
7747 Palacio Drive
Carlsbad, CA 92009
Fax No.: (760) 436-7290
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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.
3. Pursuant to her obligation under Section 8.1 hereof, Debtor shall
deliver written notice of this Agreement, the Assignment, and all amendments
thereto, together with copies thereof, to the general partner of the Partnership
at the notice address set forth in the Partnership Agreement. Lender may, upon
Debtor's failure to comply with her obligation under Section 8.1, deliver the
written notices and copies described in this Section to the general partner of
the Partnership.
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 to, actual attorney's fees and costs) that Lender
shall incur or suffer, which arise or result from, or relate to, Lender's
entering into this Agreement, or any breach of or failure by Debtor to perform
her representations, warranties, covenants, obligations or agreements set forth
herein or in the Note.
14. Miscellaneous
-------------
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.
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.
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.
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.
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
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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.
6. Debtor shall reimburse Lender, upon demand, for any and all costs and
expenses, including, without limitation, attorneys' fees, that Lender may incur
in pursuing any remedies hereunder, which costs and expenses are secured hereby.
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.
8. This Agreement shall be construed in accordance with, and governed by,
the laws of the State of California.
IN WITNESS WHEREOF, the parties to this Agreement have duly executed it
as of the day and year first above written.
"LENDER"
/s/ David G. Price
------------------------------------
David G. Price
"DEBTOR"
/s/ Barbara M. Colton
------------------------------------
Barbara M. Colton
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EXHIBIT "A"
ASSIGNMENT OF COLLATERAL
1. Parties
-------
This Assignment of Partnership Interest (the "Assignment"), dated April 10,
1998, is entered into by and between Barbara M. Colton ("Assignor") and David G.
Price ("Assignee").
2. Recitals
--------
1. Assignor is the owner of 8,930 units of limited partnership interest
in National Operating Partnership, L.P. a Delaware limited partnership (the
"Partnership") pursuant to the certain Amended and Restated Agreement of Limited
Partnership of National Golf Operating Partnership dated as of March 4, 1998
(the "Partnership Agreement").
2. As security for the performance of her obligations under that certain
Secured Promissory Note dated April 10, 1998 in the principal amount of $30,000
(the "Note"), Assignor is entering into that certain Security Agreement and
Assignment (the "Agreement"), pursuant to which Assignor is pledging and
assigning a security interest in 4,465 units of limited partnership interest
held by Assignor in the Partnership (the "OP Units"), including without
limitation, an interest in all cash or property distributed or due to her by the
Partnership, any capital, profits or surplus attendant to the OP Units, any
claims against the Partnership related to the OP Units, and/or any proceeds of
money or property to be received by her on sale, exchange or other disposition
of the OP Units (the "Collateral").
3. Assignor now desires to execute, in favor of Assignee, this assignment
of the Collateral, and shall deliver this fully executed Assignment to Assignee.
<PAGE>
3. Assignment
----------
1. For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Assignor hereby assigns to Assignee all of her
right, title, and interest in and to the Collateral and all proceeds thereof.
2. This Assignment does not include, nor is it intended to include, a
delegation of any of Assignor's debts, liabilities, duties, or obligations as a
partner in the Partnership.
4. Further Documents
-----------------
Assignor and Assignee agree to execute, acknowledge, and deliver any
further documents and to perform any further actions in order to fulfill the
intention hereof.
5. Acceptance
----------
Assignee hereby accepts this Assignment.
"ASSIGNOR"
____________________________________
Barbara M. Colton
"ASSIGNEE"
____________________________________
David G. Price
2
