PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement"), dated as
of December 30, 1997, is made by INSIGNIA PROPERTIES TRUST, a Maryland real
estate investment trust (the "Pledgor"), in favor of FIRST UNION NATIONAL BANK,
a national banking association, as Administrative Agent (the "Agent") for the
ratable benefit of itself, Xxxxxx Commercial Paper Inc. ("Xxxxxx") as
Syndication Agent, and the financial institutions (the "Lenders") as are, or
may from time to time become, parties to the Credit Agreement (as hereinafter
defined).
STATEMENT OF PURPOSE
Pursuant to the terms of the Credit Agreement of even date among
Insignia Properties, L.P. (the "Borrower"), the Lenders, the Agent and Xxxxxx
(as amended, restated, modified or otherwise supplemented from time to time,
the "Credit Agreement"), the Lenders extended a certain credit facility to the
Borrower as more particularly described therein.
Pursuant to the terms and conditions of the Unconditional Guaranty
Agreement of even date executed by the Pledgor as guarantor in favor of the
Agent for the benefit of the Agents and the Lenders, the Pledgor guaranteed the
Obligations of the Borrower under the Credit Agreement (as supplemented, the
"Guaranty"). The Pledgor is the general partner of the Borrower, and all Loans
to the Borrower will inure directly or indirectly to benefit the Pledgor.
The Pledgor is the legal and beneficial owner of (a) the shares of
Pledged Stock (as hereinafter defined) issued by the issuers (the "Issuers")
listed on Schedule I hereto, (b) the Membership Interests (as hereinafter
defined) in the limited liability companies (the "Companies") listed on
Schedule I hereto, and (c) the Partnership Interests (as hereinafter defined)
in the partnerships (the "Partnerships") listed on Schedule I hereto.
In connection with the transactions contemplated by the Credit
Agreement and as a condition precedent to the extensions of credit thereunder,
the Lenders have requested, and the Pledgor has agreed to execute and deliver,
this Pledge Agreement.
NOW, THEREFORE, in consideration of the premises, the Pledgor hereby
agrees with the Agent for the ratable benefit of itself, Xxxxxx and the Lenders
as follows:
1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Credit Agreement and used herein (including the preamble and
statement of purpose) are so used as so defined, and the following terms shall
have the following meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of South Carolina.
"Collateral" means the Stock Collateral, the LLC Collateral
and the Partnership Collateral.
"LLC Collateral" means all of the Membership Interests of the
Pledgor in the Companies and all Proceeds therefrom.
"Membership Interests" means the entire membership interest
of the Pledgor in each Company listed on Schedule I hereto, including
without limitation, the Pledgor's capital account, its interest as a
member in the net cash flow, net profit and net loss, and items of
income, gain, loss, deduction and credit of the Companies, its
interest in all distributions made or to be made by the Companies to
the Pledgor and all of the other economic rights, titles and interests
of the Pledgor as a member of the Companies, whether set forth in the
membership agreement of the Companies, by separate agreement or
otherwise.
"Obligations" means the Guaranteed Obligations under the
Guaranty.
"Partnership Collateral" means all of the Partnership
Interests of the Pledgor in the Partnerships and all Proceeds
therefrom.
"Partnership Interests" means the entire partnership interest
of the Pledgor in each Partnership listed on Schedule I hereto,
including without limitation, Pledgor's capital account, its interest
as a partner in the net cash flow, net profit and net loss, and items
of income, gain, loss, deduction and credit of the Partnerships, its
interest in all distributions made or to be made by the Partnerships
to the Pledgor and all of the other economic rights, titles and
interests of the Pledgor as a partner of the Partnerships, whether set
forth in the partnership agreement of the Partnerships, by separate
agreement or otherwise.
"Permitted Liens" means Liens permitted pursuant to Section
9.3 of the Credit Agreement.
"Pledge Agreement" means this Pledge and Security Agreement,
as amended or modified.
"Pledged Stock" means the shares of capital stock of each
Issuer listed on Schedule I hereto, together with all stock
certificates, options or rights of any nature whatsoever that may be
issued or granted by any Issuer to the Pledgor while this Pledge
Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in
Section 9-306(1) of the Code on the date hereof.
"Stock Collateral" means the Pledged Stock and all Proceeds
therefrom and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock, collections thereon,
proceeds of sale thereof or distributions with respect thereto.
2
2. Pledge and Grant of Security Interest. The Pledgor hereby delivers
to the Agent, for the ratable benefit of the Agents and the Lenders, all the
Pledged Stock and hereby grants to the Agent, for the ratable benefit of the
Agents, and Lenders, a first priority security interest in the Collateral, as
collateral security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or otherwise) of the
Obligations.
3. Stock Powers; Register of Pledge.
(a) Concurrently with the delivery to the Agent of each
certificate representing one or more shares of Pledged Stock, the
Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank by the Pledgor;
(b) Concurrently with the execution of this Pledge Agreement,
the Pledgor shall send to each Company and Partnership listed on
Schedule I hereto written instructions substantially in the form of
Exhibit A hereto and shall cause each such Company or Partnership to,
and each such Company or Partnership shall, deliver to the Agent the
Transaction Statement in the form of Exhibit B hereto, confirming that
each such Company or Partnership has registered the pledge effected by
this Pledge Agreement on its books.
4. Pledgor Remains Liable. Anything herein to the contrary
notwithstanding, (a) the Pledgor shall remain liable to perform all of its
duties and obligations as a member of the Companies to the same extent as if
this Pledge Agreement had not been executed, (b) the exercise by the Agent or
any Lender of any of its rights hereunder shall not release the Pledgor from
any of its duties or obligations as a member of the Companies, and (c) neither
the Agent nor any Lender shall have any obligation or liability as a member of
the Companies by reason of this Pledge Agreement.
5. Representations and Warranties. To induce the Agent and Lenders to
execute the Credit Agreement and to accept the security contemplated hereby and
the Lenders to make extensions of credit under the Credit Agreement, the
Pledgor hereby represents and warrants that:
(a) the shares of Pledged Stock listed on Schedule I
constitute all the issued and outstanding shares of all classes of the
capital stock of the Issuers;
(b) all the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable;
(c) the Pledgor is the record and beneficial owner of, and
has good and marketable title to, the Collateral listed on Schedule I,
free of any and all Liens or options in favor of, or claims of, any
other Person, except the Lien created by this Pledge Agreement or
Permitted Liens;
(d) the jurisdiction in which the Pledgor is located for
purposes of Sections 9-103 and 9-401 of the UCC is the address set
forth on Schedule II; and
(e) upon delivery to the Agent of the stock certificates
evidencing the Pledged Stock and the filing of properly completed
financing or other statements in all necessary
3
jurisdictions, the Lien on the Collateral granted pursuant to this
Pledge Agreement will constitute a valid, perfected first priority
Lien on the Collateral, enforceable as such against all creditors of
the Pledgor.
6. Certain Covenants. The Pledgor covenants and agrees with the Agent
for the ratable benefit of the Agents and Lenders that, except as permitted
under the Credit Agreement, from and after the date of this Pledge Agreement
until the Obligations are paid in full and the Commitments are terminated:
(a) The Pledgor will not without thirty (30) days prior
written notice to the Agent change its name, identity or corporate
structure so as to make any financing or other statement filed as
provided herein become seriously misleading. The Pledgor will, upon
reasonable request of the Agent, execute such financing statements,
notices of lien, notices of assignment and continuations or amendments
to any of the foregoing, and other documents (and pay the costs of
filing or recording the same in all public offices deemed necessary by
the Agent) and do such other acts and things, all as the Agent may
from time to time reasonably request to establish and maintain a valid
perfected pledge and security interest in the Collateral. The Pledgor
hereby constitutes and appoints the Agent (and any of its officers) as
its attorney-in-fact with full power and authority to execute and
deliver all documents necessary to perfect and keep perfected the
security interests created hereby. This power of attorney hereby
granted is a special power of attorney coupled with an interest and
shall be irrevocable by the Pledgor.
(b) The Pledgor agrees that as a member of the Companies it
will abide by, perform and discharge each and every material
obligation, covenant and agreement to be abided by, performed or
discharged by a member under the terms of the articles of organization
and operating agreements of the Companies, at no cost or expense to
the Agent and the Lenders.
(c) If the Pledgor shall, as a result of its ownership of the
Collateral, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights,
whether in addition to, in substitution of, as a conversion of, or in
exchange for any of the Collateral, or otherwise in respect thereof,
the Pledgor shall accept the same as the agent of the Agent, hold the
same in trust for the Agent and deliver the same forthwith to the
Agent in the exact form received, duly indorsed by the Pledgor to the
Agent, if required, together with an undated stock power covering such
certificate duly executed in blank by the Pledgor to be held by the
Agent, subject to the terms hereof, as additional collateral security
for the Obligations. In addition, any sums paid upon or in respect of
any Collateral upon the liquidation or dissolution of any Issuer shall
be paid over to the Agent to be held by it hereunder as additional
collateral security for the Obligations, and upon the recapitalization
or reclassification of any Issuer, any new securities issued in
connection with or in exchange for any Collateral shall be delivered
to the Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid
or distributed in respect of any Collateral shall be received by the
4
Pledgor, the Pledgor shall, until such money or property is paid or
delivered to the Agent, hold such money or property in trust for the
Agent, segregated from other funds of the Pledgor, as additional
collateral security for the Obligations.
(d) Without the prior written consent of the Agent, the
Pledgor will not (i) vote to enable, or take any other action to
permit, any Issuer to issue any stock or other equity securities of
any nature or to issue any other securities convertible into or
granting the right to purchase or exchange for any stock or other
equity securities of any nature of such Issuer, (ii) sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, or (iii) create, incur or permit to exist
any Lien or option in favor of, or any claim of any Person with
respect to, any of the Collateral, or any interest therein, except for
the Permitted Liens. The Pledgor will defend the right, title and
interest of the Agent in and to the Collateral against the claims and
demands of all Persons whomsoever.
(e) At any time and from time to time, upon the reasonable
written request of the Agent, and at the sole expense of the Pledgor,
the Pledgor will promptly and duly execute and deliver such further
instruments and documents and take such further actions as the Agent
may reasonably request for the purposes of obtaining or preserving the
full benefits of this Pledge Agreement and of the rights and powers
herein granted. If any amount payable under or in connection with any
of the Collateral shall be or become evidenced by any promissory note,
other instrument or chattel paper, such note, instrument or chattel
paper shall be immediately delivered to the Agent, duly endorsed in a
manner satisfactory to the Agent, to be held as Collateral pursuant to
this Pledge Agreement.
(f) The Pledgor agrees to pay, and to save the Agent and the
Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales
or other taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of the
transactions contemplated by this Pledge Agreement.
7. Cash Dividends and Distributions; Voting Rights. Unless an Event of
Default shall have occurred and be continuing and the Agent shall have given
notice to the Pledgor of the Agent's intent to exercise its rights pursuant to
Section 8 below, the Pledgor shall be permitted to receive all cash dividends
and other distributions paid in accordance with the terms of the Credit
Agreement in respect of the Collateral and to exercise all voting and
corporate, membership or partnership rights, as applicable, with respect to the
Collateral; provided, that no vote shall be cast or corporate, membership or
partnership right exercised or other action taken which would constitute an
Event of Default.
8. Rights of the Agent.
(a) If an Event of Default shall occur and be continuing and the Agent
shall give ten (10) Business Days prior written notice of its intent to
exercise such rights to the Pledgor, (i) the Agent shall have the right to
receive any and all cash dividends and distributions paid in respect of the
Collateral and make application thereof to the Obligations in the order set
forth in the Credit Agreement and (ii) all shares of the Pledged Stock shall be
registered in the name of the Agent or its
5
nominee, and the Agent or its nominee may thereafter exercise (A) all voting,
corporate and other rights pertaining to such shares of the Pledged Stock at
any meeting of shareholders of each Issuer or otherwise and (B) any and all
rights of conversion, exchange, subscription and any other rights, privileges
or options pertaining to such shares of the Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of any Issuer, or upon the exercise by the Pledgor or the Agent of
any right, privilege or option pertaining to such shares of the Pledged Stock,
and in connection therewith, the right to deposit and deliver any and all of
the Pledged Stock with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as it may determine),
all without liability except to account for property actually received by it,
but the Agent shall have no duty to the Pledgor to exercise any such right,
privilege or option and shall not be responsible for any failure to do so or
delay in so doing.
(b) The rights of the Agent and the Lenders hereunder shall not be
conditioned or contingent upon the pursuit by the Agent or any Lender of any
right or remedy against the Borrower, the Guarantors or against any other
Person which may be or become liable in respect of all or any part of the
Obligations or against any collateral security therefor, guarantee therefor or
right of offset with respect thereto. Neither the Agent nor any Lender shall be
liable for any failure to demand, collect or realize upon all or any part of
the Collateral or for any delay in doing so, nor shall the Agent be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Pledgor or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof.
9. Remedies. If an Event of Default shall occur and be continuing,
with the consent of the Required Lenders, the Agent may, and upon the request
of the Required Lenders, the Agent shall, exercise on behalf of itself and the
Lenders, all rights and remedies granted in this Pledge Agreement and in any
other instrument or agreement securing, evidencing or relating to the
Obligations, and in addition thereto, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing with
regard to the scope of the Agent's remedies, the Agent, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by Section 8 hereof or any Applicable Law)
to or upon the Pledgor, any Issuer or any other Person (all and each of which
demands, defenses, advertisements and notices (except any notice required by
Section 8 hereof or any Applicable Law) are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, assign, give option
or options to purchase or otherwise dispose of and deliver the Collateral or
any part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, in the over-the-counter market, at
any exchange, broker's board or office of the Agent or any Lender or elsewhere
in a commercially reasonable manner. The Agent or any Lender shall have the
right upon any such public sale or sales, and, to the extent permitted by law,
upon any such private sale or sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of redemption in the Pledgor,
which right or equity is hereby waived or released. The Agent shall apply any
Proceeds from time to time held by it in a collateral account to be held by the
Agent for the benefit of itself and the other Lenders; and the net proceeds of
any such collection, recovery, receipt, appropriation, realization or sale,
after deducting all reasonable costs and expenses of every kind incurred in
respect thereof or incidental to the care or
6
safekeeping of any of the Collateral or in any way relating to the Collateral
or the rights of the Agent and the Lenders hereunder, including, without
limitation, reasonable attorneys' fees and disbursements of counsel thereto, to
the payment in whole or in part of the Obligations, in the order set forth in
the Credit Agreement, and only after such application and after the payment by
the Agent of any other amount required by any provision of law, including,
without limitation, Section 9-504(1)(c) of the Code, need the Agent account for
the surplus, if any, to the Pledgor. To the extent permitted by applicable law,
the Pledgor waives all claims, damages and demands it may acquire against the
Agent or any Lender arising out of the exercise by them in good faith of any
rights hereunder. Notice of a proposed sale or other disposition of Collateral
shall be given in writing to the Pledgor and deemed reasonable and proper if
given at least 10 Business Days before such sale or other disposition. The
Pledgor shall remain liable for any deficiency if the proceeds of any sale or
other disposition of Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the Agent or any Lender to
collect such deficiency.
10. Private Sales. () The Pledgor recognizes that the Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The Agent shall
be under no obligation to delay a sale of any of the Pledged Stock for the
period of time necessary to permit such Issuer thereof to register such
securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.
(b) The Pledgor further agrees to use commercially reasonable efforts
to do or cause to be done all such other acts as may be reasonably necessary to
make such sale or sales of all or any portion of the Pledged Stock pursuant to
this Section 10 valid and binding and in compliance with any and all other
Applicable Laws.
11. No Subrogation. Notwithstanding any payment or payments made by the
Pledgor hereunder, or any setoff or application of funds of the Pledgor by the
Agent or any Lender, or the receipt of any amounts by the Agent or any Lender
with respect to any of the Collateral, the Pledgor shall not be entitled to be
subrogated to any of the rights of the Agent or any Lender against the Borrower
or the other Guarantors or against any other collateral security held by the
Agent or any Lender for the payment of the Obligations, nor shall the Pledgor
seek any reimbursement from the Borrower or the other Guarantors in respect of
payments made by the Pledgor in connection with the Collateral, or amounts
realized by the Agent or any Lender in connection with the Collateral, until
all amounts owing to the Agent and Lenders on account of the Obligations are
paid in full and the Commitments are terminated. If any amount shall be paid to
the Pledgor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by the
Pledgor in trust for the Agent, segregated from other funds of the Pledgor, and
shall, forthwith upon receipt by the Pledgor, be turned over to the Agent in
the exact form received by the Pledgor (duly indorsed by the Pledgor to the
Agent, if required) to be applied
7
against the Obligations, whether matured or unmatured, in such order as set
forth in the Credit Agreement.
12. Amendments, etc. With Respect to the Obligations. The Pledgor shall
remain obligated hereunder, and the Collateral shall remain subject to the Lien
granted hereby, notwithstanding that, without any reservation of rights against
the Pledgor, and without notice to or further assent by the Pledgor, any demand
for payment of any of the Obligations made by the Agent or any Lender may be
rescinded by the Agent or such Lender, and any of the Obligations continued,
and the Obligations, or the liability of the Borrower or any other Person upon
or for any part thereof, or any collateral security or guarantee therefor or
right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered, or released by the Agent or any Lender, and the Credit
Agreement, the Notes, any other Loan Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or part, as the Lenders (or the Required Lenders, as the
case may be) may deem advisable from time to time, and any guarantee, right of
offset or other collateral security at any time held by the Agent or any Lender
for the payment of the Obligations may be sold, exchanged, waived, surrendered
or released. Neither the Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any other Lien at any time held by it as
security for the Obligations or any property subject thereto. The Pledgor
waives any and all notice of the creation, renewal, extension or accrual of any
of the Obligations and notice of or proof of reliance by the Agent or any
Lender upon this Pledge Agreement; the Obligations, and any of them, shall
conclusively be deemed to have been created, contracted or incurred in reliance
upon this Pledge Agreement; and all dealings between the Pledgor, on the one
hand, and the Agent and the Lenders, on the other, shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Pledge Agreement. The Pledgor waives diligence, presentment, protest, demand
for payment and notice (except as required by the Credit Agreement) of default
or nonpayment to or upon the Pledgor with respect to the Obligations.
13. Limitation on Duties Regarding Collateral. The Agent's sole duty
with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Agent deals with similar
securities and property for its own account. Neither the Agent, any Lender nor
any of their respective directors, officers, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Pledgor or otherwise.
14. Irrevocable Authorization and Instruction to Issuers. The Pledgor
hereby authorizes and instructs each Issuer, Partnership and Company to comply
with any instruction received by it from the Agent in writing that (a) states
that an Event of Default has occurred and (b) is otherwise in accordance with
the terms of this Pledge Agreement, without any other or further instructions
from the Pledgor, and the Pledgor agrees that each Issuer, Partnership and
Company shall be fully protected in so complying.
15. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral constitute irrevocable powers
coupled with an interest.
8
16. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
17. Section Headings. The section headings used in this Pledge
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.
18. No Waiver; Cumulative Remedies. Neither the Agent nor any Lender
shall by any act (except by a written instrument pursuant to Section 19 hereof)
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Agent or any Lender, any right, power or privilege hereunder shall
operate as a waiver thereof. No single or partial exercise of any right, power
or privilege hereunder shall preclude any other or further exercise thereof or
the exercise of any other right, power or privilege. A waiver by the Agent or
any Lender of any right or remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the Agent or such Lender would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative, may be exercised singly or concurrently and are not exclusive
of any other rights or remedies provided by law.
19. Waivers and Amendments; Successors and Assigns. None of the terms
or provisions of this Pledge Agreement may be amended, supplemented or
otherwise modified except by a written instrument executed by the Pledgor and
Agent; provided that (a) any provision of this Pledge Agreement may be waived
by the Agent in a letter or agreement executed by the Agent or by telex or
facsimile transmission from the Agent and (b) any consent or waiver by the
Agent to any amendment, supplement or modification hereto shall be subject to
approval thereof by each of the Lenders or Required Lenders, as applicable, in
accordance with Section 12.9 of the Credit Agreement. This Pledge Agreement
shall be binding upon the successors and assigns of the Pledgor and shall inure
to the benefit of the Agent and the Lenders and their respective successors and
assigns.
20. Governing Law, etc. () This Pledge Agreement, unless otherwise
expressly set forth herein, shall be governed by, construed and enforced in
accordance with the laws of the State of South Carolina, without reference to
the conflicts or choice of law principles thereof.
(b) The Pledgor hereby irrevocably consents to the personal
jurisdiction of the state and federal courts located in Greenville County,
South Carolina, in any action, claim or other proceeding arising out of any
dispute in connection with this Pledge Agreement, any rights or obligations
hereunder, or the performance of such rights and obligations. The Pledgor
hereby irrevocably consents to the service of a summons and complaint and other
process in any action, claim or proceeding brought by the Agent in connection
with this Pledge Agreement or any rights or obligations hereunder, or the
performance of such rights and obligations, on behalf of itself or its
property, by registered or certified mail, return receipt requested, otherwise
in the manner specified in Section 21. Nothing in this Section 20 shall affect
the right of the Agent to serve legal process in any
9
other manner permitted by Applicable Law or affect the right of the Agent to
bring any action or proceeding against the Pledgor or its properties in the
courts of any other jurisdictions.
(c) TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE AGENT AND EACH
LENDER BY THEIR ACCEPTANCE OF THIS PLEDGE AGREEMENT OR THE BENEFITS HEREOF AND
THE PLEDGOR HEREBY IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL
WITH RESPECT TO ANY ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF OR ANY
DISPUTE IN CONNECTION WITH THIS PLEDGE AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
21. Notices. All notices and communications hereunder shall be given
to the addresses and otherwise in accordance with Section 12.1 of the Credit
Agreement.
22. Authority of Agent. The Pledgor acknowledges that the rights and
responsibilities of the Agent under this Pledge Agreement with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, voting right, request, judgment or other right or remedy provided for
herein or resulting or arising out of this Pledge Agreement shall, as between
the Agent and the Lenders, be governed by the Credit Agreement and by such
other agreements with respect thereto as may exist from time to time among
them, but, as between the Agent and the Pledgor, the Agent shall be
conclusively presumed to be acting as agent for itself and the Lenders with
full and valid authority so to act or refrain from acting, and neither the
Pledgor nor any Issuer, Partnership or Company shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.
IN WITNESS WHEREOF, the undersigned has caused this Pledge Agreement
to be duly executed under seal and delivered as of the date first above
written.
INSIGNIA PROPERTIES TRUST
By: ________________________________
Name:___________________________
Title: _______________________
10
SCHEDULE I
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
Class of Stock No. of
Issuer Stock Certificate No. . Shares
------ -------- ------------------- ------
DESCRIPTION OF MEMBERSHIP INTEREST
LLC No. of
Company Certificate No. Shares
------- --------------- ------
DESCRIPTION OF PARTNERSHIP INTEREST
Partnership Partnership Interest
----------- --------------------
SCHEDULE II
To Pledge
Agreement
Address of the Pledgor
One Insignia Financial Xxxxx
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Supplement to Pledge Agreement
PLEDGE AGREEMENT SUPPLEMENT, dated as of __________, 199__ (the
"Supplement"), made by INSIGNIA PROPERTIES TRUST, a Maryland real estate
investment trust (the "Pledgor"), in favor of First Union National Bank, a
national banking corporation, as Administrative Agent (in such capacity, the
"Agent"), under the Credit Agreement (as defined in the Pledge Agreement
referred to below) for the benefit of itself and the Lenders (as so defined).
1. Reference is hereby made to that Pledge Agreement, dated as of
December 30, 1997, made by the Pledgor in favor of the Agent (as amended,
restated, modified or otherwise supplemented from time to time as of the date
hereof, the "Pledge Agreement"). This Supplement supplements the Pledge
Agreement, forms a part thereof and is subject to the terms thereof. Terms
defined in the Pledge Agreement are used herein as therein defined.
[2. The Pledgor hereby confirms and reaffirms the security interest in
the Collateral granted to the Agent for the ratable benefit of itself and the
Lenders under the Pledge Agreement, and, as additional collateral security for
the prompt and complete payment when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations and in order to induce the
Lenders to make their Loans under the Credit Agreement, the Pledgor hereby
delivers to the Agent, for the benefit of the Lenders, all of the issued and
outstanding shares of capital stock of [INSERT NAME OF NEW SUBSIDIARY] (the
"New Issuer") listed below, together with all stock certificates, options, or
rights of any nature whatsoever which may be issued or granted by the New
Issuer in respect to such stock which the Pledge Agreement, as supplemented
hereby, is in force (the "Additional Pledged Stock"; as used in the Pledge
Agreement as supplemented by this Supplement, "Pledged Stock" shall be deemed
to include the Additional Pledged Stock) and hereby grants to the Agent, for
the ratable benefit of itself and the Lenders, a first priority security
interest in the Additional Pledged Stock and all Proceeds thereof.]
or
[2. The Pledgor hereby confirms and reaffirms the security interest in
the Collateral granted to the Agent for the ratable benefit of itself and the
Lenders under the Pledge Agreement, and, as additional collateral security for
the prompt and complete payment when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations and in order to induce the
Lenders to make their Loans under the Credit Agreement, the Pledgor hereby
grants to the Agent, for the ratable benefit of itself and the Lenders, a first
priority security interest in the entire partnership interest of Pledgor (the
"Additional Partnership Interest") in [INSERT NAME OF NEW PARTNERSHIP] (the
"New Partnership") listed below and all Proceeds thereof (as used in the Pledge
Agreement as supplemented by this Supplement, "Partnership Interests" shall be
deemed to include the Additional Partnership Interest).]
or
[2. The Pledgor hereby confirms and reaffirms the security interest in
the Collateral granted to the Agent for the ratable benefit of itself and the
Lenders under the Pledge Agreement, and, as additional collateral security for
the prompt and complete payment when due (whether at stated maturity, by
acceleration or otherwise) of the Obligations and in order to induce the
Lenders to make their Loans under the Credit Agreement, the Pledgor hereby
delivers to the Agent, for the ratable benefit of the Agents and the Lenders,
all of the certificates of limited liability company interests issued by
[INSERT NAME OF NEW LIMITED LIABILITY COMPANY] (the "New Company") listed
below, and hereby grants to the Agent, for the ratable benefit of the Agents
and Lenders, a first priority security interest in the Membership Interest of
the Pledgor (the "Additional Membership Interest") in the New Company, and all
Proceeds thereof (as used in the Pledge Agreement as supplemented by this
Supplement, "Membership Interest" shall be deemed to include the Additional
Membership Interest).]
3. The Pledgor hereby represents and warrants that the representations
and warranties contained in paragraph 5 of the Pledge Agreement are true and
correct on the date of this Supplement with references therein to the ["Pledged
Stock" to include the Additional Pledged Stock] or ["Membership Interests" to
include the Additional Membership Interest], with references therein to the
["Issuer" to include the New Issuer] or "Company" to include the New Company],
and with references to the "Pledge Agreement" to mean the Pledge Agreement as
supplemented by this Supplement.
4. The Additional [Pledged Stock] or [Partnership Interest] or
[Membership Interest] pledged hereby is as follows which [Pledged Stock] or
[Partnership Interest] or [Membership Interest] shall be deemed part of
Schedule 1 thereto:
DESCRIPTION OF PLEDGED STOCK
Class of Stock No. of
Issuer Stock Certificate No. . Shares
------ -------- ------------------- ------
New Issuer
DESCRIPTION OF PARTNERSHIP INTEREST
Partnership Partnership Interest
----------- --------------------
New Partnership
DESCRIPTION OF MEMBERSHIP INTEREST
LLC No. of
Issuer Certificate No. Shares
------- --------------- ------
New Company
5. The Pledgor hereby agrees to deliver to the Agent such certificates
and other documents and take such other action as shall be reasonably requested
by the Agent in order to effectuate the terms hereof and the Pledge Agreement.
6. The address for notices for the [New Issuer] or [New Partnership]
or [New Company] is as follows:
______________________________
______________________________
______________________________
Attention:____________________
Telephone No.:________________
Telecopy No.:_________________
IN WITNESS WHEREOF, the Pledgor has caused this Supplement to be duly
executed under seal and delivered as of the date first above written.
[CORPORATE SEAL] INSIGNIA PROPERTIES TRUST
By: ____________________________________
Name: ___________________________
Title: ___________________________
EXHIBIT A
Authorization Statement
____________ __, 199__
To: [Company or Partnership]
You are hereby instructed to register the pledge of the following
uncertificated security:
All [membership] or [partnership] and other ownership interests of the
undersigned in the [Company or Partnership] in favor of:
First Union National Bank,
as Administrative Agent
One Insignia Financial Xxxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Portfolio Management and
Relationship Manager
Very truly yours,
INSIGNIA PROPERTIES TRUST
By: _______________________________
Name: ______________________
Title: ______________________
EXHIBIT B
Transaction Statement
___________ __, 199__
To: [Pledgor]
and
First Union National Bank,
as Administrative Agent
One Insignia Financial Xxxxx
Xxxx Xxxxxx Xxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Portfolio Management and
Relationship Manager
This statement is to advise you that a pledge of the following
uncertificated securities has been registered in the name of First Union
National Bank, as Administrative Agent:
1. Uncertificated Security: All [membership] or [partnership]
and other ownership interests of [Pledgor] in the
undersigned.
2. Registered Owner:
[Pledgor]
Taxpayer Identification Number: ______________
3. Registered Pledgee:
First Union National Bank,
as Administrative Agent
One Insignia Financial Xxxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Portfolio Management and
Relationship Manager
Taxpayer Identification Number: _____________
4. There are no liens, restrictions or other encumbrances on the
interests of [Pledgor] in the undersigned, other than
Permitted Liens (as defined in the Pledge and Security
Agreement by [Pledgor] to First Union National Bank as
Administrative Agent for the ratable benefit of itself,
Xxxxxx Commercial Paper Inc. as Syndication Agent and the
Lenders referenced therein), and no adverse claims to which
the uncertificated security is or may be subject are known to
the undersigned.
5. The pledge was registered on __________ __, 199__.
THIS STATEMENT IS MERELY A RECORD OF THE RIGHTS OF THE ADDRESSEES AS
OF THE TIME OF ITS ISSUANCE. DELIVERY OF THIS STATEMENT, OF ITSELF, CONFERS NO
RIGHTS ON THE RECIPIENT. THIS STATEMENT IS NEITHER A NEGOTIABLE INSTRUMENT NOR
A SECURITY.
Very truly yours,
[Company or Partnership]
By: ______________________________
Name: _____________________
Title: _____________________
