SECURITY AGREEMENT 1. Recitals. This agreement is entered into on ____________, 20__ between ______________________________________ (the “Debtor") of ________________________ ______________, and ______________________________________ (the “Secured Party"), with a place of business at ______________________________________, Massachusetts, to secure the payment and performance of a promissory note (the “Note") of _______________ _______________________ in the amount of ______________________________________ Dollars ($_________) and the payment and performance of all other liabilities and obligations (collectively with the Note called the “Obligations") of the Debtor to the Secured Party of every kind and description, direct or indirect, absolute or contingent, due or to become due, now existing or hereafter arising. 2. Security Agreement. The Debtor hereby grants to the Secured Party to secure performance of all of the obligations of the Debtor under this Agreement and the prompt and complete payment and performance of all of the Obligations, a security interest in the following property (the “Collateral"): (a) all of the Debtor’s interest as a general partner in __________________ ____________________ (the “Partnership"), a Massachusetts general partnership with a usual place of business at ____________________ Massachusetts, (b) Debtor, and (c) all distributions made or available to be made by the Partnership to the any proceeds of any of the foregoing.
Provided there is then no default under any of the Obligations which has not been waived by the Secured Party, the Secured Party shall release its security interest in the Collateral upon satisfaction of the Note. 3. Partnership Distributions. The Debtor shall not accept any return of capital, distribution of cash flow or any other distribution or payment, whether in cash or in kind directly or indirectly from the Partnership without the prior written consent of the Secured Party. The Debtor agrees that all distributions of capital or income or of any nature whatsoever to which the Debtor is entitled from the Partnership shall instead be paid to the Secured Party. The Secured Party shall be entitled to apply any amounts received by the Secured Party pursuant to this Section 3 against any amount then due and payable to the Secured Party and, in addition, shall be entitled to apply to amounts outstanding under the Note such amount as is necessary to reduce the aggregate amount of principal and interest owing thereunder to an amount not in excess of _______________ percent (_____%) of the value of the Debtor’s interest in the Partnership, as reasonably determined by the Secured Party, taking into account such distribution. So long as there has been no default under this Agreement or any of the Obligations which has not been waived by the Secured Party, the Secured Party shall remit the balance to the Debtor. 4. Financing Statements and Other Action. The Debtor agrees to do all acts which the Secured Party deems necessary or desirable to protect the Security Interest or to otherwise 2
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carry out the provisions of this Agreement, including, but not limited to, the execution of financing statements and similar instruments. The Debtor appoints the Secured Party as the Debtor’s attorney irrevocable to do all acts which the Debtor may be required to do under this Agreement. 5. Debtor’s Place of Business. The Debtor warrants that the Debtor’s principal place of business in Massachusetts is located at ________________________, Massachusetts, and that the records concerning the Collateral are located at ________________________, Massachusetts. The Debtor covenants to give the Secured Party written notice of the addition or discontinuance of any place of business or any change in the information contained in this Section 5. 6. Ownership Encumbrances and Other Agreements. The Debtor warrants to the Secured Party that it holds a ____________________ interest in the Partnership. The Debtor warrants that the Debtor has title to the Collateral and that there are no sums owing to the Partnership from the Debtor or claims, liens, security interests or other encumbrances against the Collateral and that the grant of a security interest in the Collateral to the Secured Party does not violate any agreement between the Debtor and the Partnership or result in any change of any term or condition of any such agreement. The Debtor covenants to notify the Secured Party of any claim, lien, security interest or other encumbrance made against the Collateral and shall defend the Collateral against any claim, lien, security interest or other encumbrance adverse to the Secured Party. 7. Maintenance of Collateral. The Debtor shall preserve the Collateral for the benefit of the Secured Party. Without limiting the generality of the foregoing, the Debtor shall not sell, pledge or otherwise dispose of the Collateral and shall not permit any change in the terms of the Partnership’s agreement of partnership. 8. Maintenance of Records. The Debtor covenants to keep accurate and complete records concerning the Collateral. When requested by the Secured Party, the Debtor shall give the Secured Party a certificate in such form as the Secured Party may reasonably request listing and describing the Collateral and setting forth the total value of the Collateral. The Debtor shall deliver to the Secured Party financial statements and tax returns of the Partnership within one hundred and fifteen (115) days after the end of the fiscal year of the Partnership. The Secured Party shall have the right at any time to inspect the Collateral and to audit and make copies of any records or other writings which relate to the Collateral or the general financial condition of the Debtor. If the Debtor refuses to furnish copies of records and materials to the Secured Party promptly after materials are requested, the Secured Party may remove such records and writings for the purpose of having copies made thereof. 9. Powers as General Partner. The Debtor agrees to use the Debtor’s powers as general partner of the Partnership to maintain the value of the Collateral. Without limiting the generality of the foregoing, the Debtor shall use its best efforts, in regard to the Partnership and its assets: (a) to develop the property owned by the Partnership in a commercially prudent manner; 3
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(b)
to preserve all beneficial contract rights of the Partnership;
(c) to take commercially reasonable steps to collect all accounts of the Partnership; and (d) Partnership. 10. Default: to pay all taxes, assessments, or other charges required to be paid by the
Events of Default. Any one or more of the following shall constitute an Event of
(a) any representation or warranty made by the Debtor or any maker of the Note herein or in writing in connection with the Note is untrue in any material respect; (b) any amounts due under any of the Obligations are not paid when due and such failure continues for a period of seven (7) days; (c) the Debtor fails to observe or perform any covenant, warranty or agreement to be performed by the Debtor under (i) this Agreement and such failure continues for a period of thirty (30) days after written notice of such default from Lender to Debtor, provided, however, that if any breach of any covenant, warranty or agreement to be performed by Borrower under this Agreement cannot be cured within thirty (30) days but can be cured through the exercise of reasonable diligence, such period shall be extended so long as such default remains curable by the exercise of such reasonable diligence and the Debtor continues to exercise reasonable diligence to cure such default or (ii) any other document executed by the Debtor in connection with the Obligations and such failure shall not be remedied within the time permitted under such document; (d) the Debtor shall be in default under any obligation undertaken by the Debtor which default has a material adverse effect on the financial condition of the Debtor or on the value of the Collateral; and (e) the Debtor or any maker of the Note is involved in any financial difficulty as evidenced by: (i) creditors, or (ii) an assignment, composition or similar device for the benefit of inability to pay debts when due, or
(iii) an attachment or receivership of assets not dissolved or bonded to the Secured Party’s reasonable satisfaction within thirty (30) days, or (iv) the filing by the Debtor of a petition under any chapter of the Federal Bankruptcy Code or the institution by the Debtor or any maker of the Note of any other proceeding under any law relating to bankruptcy, bankruptcy reorganization, insolvency or relief of debtors, or (v) the filing against the Debtor or any maker of the Note of an involuntary petition under any chapter of the Federal Bankruptcy Code or the 4
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institution of any other proceedings under any law relating to bankruptcy, bankruptcy reorganization, insolvency or relief of debtors where such petition or proceeding is not dismissed within sixty (60) days from the date on which it is filed or instituted. 11. Rights After Event of Default. If an Event of Default shall occur and is not waived by the Secured Party, the Secured Party may: (a) by written notice to the Debtor declare the Obligations, or any of them, to be immediately due and payable without presentment, demand, protest or notice of any kind, all of which, with all suretyship defenses generally, are hereby expressly waived; (b) exercise the rights and remedies accorded a secured party by the Uniform Commercial Code or by any document securing the Obligations; (c) perform any warranty, covenant or agreement which the Debtor has failed to perform under this Agreement; (d) take any other action which the Secured Party deems necessary or desirable to protect the Collateral or the Security Interest. The Secured Party may exercise any or all of its rights on default concurrently with or independently of and without regard to the provisions of any other document which secures an Obligation. 12. Waivers by Secured Party. No course of dealing or delay in accelerating the Obligations or in taking or failing to take any other action with respect to any event of default shall affect the Secured Party’s right to take such action at a later time. No waiver as to any one default shall affect the Secured Party’s rights upon any other default. 13. Notices of Sale. The requirement of the Uniform Commercial Code that the Secured Party give the Debtor reasonable notice of any proposed sale or disposition of the Collateral shall be met if such notice is given to the Debtor at least ten (10) days before the time of such sale or disposition. 14. Expenses. Any payment made or expense incurred by the Secured Party (including, without limitation, reasonable attorneys’ fees and disbursements) in connection with the preparation of this Agreement, any other document executed in connection with the Obligations and any amendment thereto, or in connection with the exercise of any right on default shall be added to the indebtedness of the Debtor to the Secured Party, shall earn interest at the rate set forth in the Note as being applicable after defaults, shall be payable upon demand and shall be secured by this Agreement. 15. Notices. Any notice required or permitted to be delivered hereunder shall be in writing and shall be deemed to be delivered on the earlier of (i) the date received, or (ii) the date of delivery, refusal, or non-delivery indicated on the return receipt, if deposited in a United States Postal Service depository, postage prepaid, sent registered or certified mail, return receipt requested, addressed to the party to receive the same at the address of such party set forth at the
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beginning of this Agreement, or at such other address as may be designated in a notice delivered or mailed as herein provided. 16. Interpretation and Binding Effect. Reference to the singular or the plural shall be deemed to include the other where the context requires. In particular, the use of the term “Debtor" in the singular shall include all debtors and the default of any debtor shall be deemed to be a default of all debtors. If any provision of this Agreement shall for any reason be held invalid or unenforceable in any respect, the enforcement of any other provision shall be deemed modified to the extent necessary to be enforceable or if such modification is not practicable, such provision shall be deleted from this Agreement. This Agreement shall have the effect of an instrument under seal and shall be governed by and construed under the laws of The Commonwealth of Massachusetts and shall be binding upon and inure to the benefit of the respective successors and assigns of the parties hereto. [Debtor]
[Secured Party] By:
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