EQUITY INTEREST PLEDGE AND SECURITY AGREEMENT
between
FRONTLINE CAPITAL GROUP,
as Pledgor
and
BANKERS TRUST COMPANY,
as Pledgee
Dated as of May 31, 2000
EQUITY INTEREST PLEDGE AND SECURITY AGREEMENT
EQUITY INTEREST PLEDGE AND SECURITY AGREEMENT, dated as of May 31,
2000 (this "Agreement"), is made by and between FrontLine Capital Group, a
Delaware corporation ("Pledgor"), having its chief executive office at 1350
Avenue of the Americas, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, to Bankers Trust
Company, or its assigns ("Pledgee"), having its principal office at 000
Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, on the date hereof Pledgor and Pledgee have entered into
that certain Line of Credit Agreement (Facility A) and that certain Line of
Credit Agreement (Facility B) (collectively, and as the same may be amended or
otherwise modified from time to time, the "Line of Credit Agreement"), and,
pursuant to the Line of Credit Agreement, Pledgee has agreed to issue letters
of credit for the account of, and to make loans to, Pledgor;
WHEREAS, as set forth on Schedule 1 attached hereto and made a part
hereof, Pledgor is the legal and beneficial owner of equity interests in the
entity set forth on Schedule 1 hereto (such entity and any and all successors
thereof being referred to as a "Pledged Entity"), under and subject to the
respective corporate governing documents set forth on Schedule 1 hereto next
to such Pledged Entity's name (as each of such agreements may hereafter be
amended or otherwise modified from time to time, a "Governing Document"); and
WHEREAS, the Pledgor has agreed to execute and deliver this
Agreement to Pledgee as collateral for the Obligations (as hereinafter
defined).
NOW, THEREFORE, in consideration of the foregoing, and in order to
induce the Pledgee to enter into the Line of Credit Agreement and perform its
obligations thereunder, Pledgor does hereby agree with Pledgee, as follows:
1. Definitions. Unless the context otherwise requires, capitalized
terms used herein without definition shall have the respective meanings
provided therefor in the Line of Credit Agreement and the following terms
shall have the following meanings:
"Certificate of Designation" shall mean the Certificate of
Designations of the Pledged Entity establishing and fixing the Series A
Convertible Cumulative Preferred Stock of the Pledged Entity.
"Code" shall mean the Uniform Commercial Code, as enacted in the
State of New York, as amended.
"Default" shall mean any event, act or condition which with notice
or lapse of time, or both, would constitute an Event of Default.
"Equity Interests" shall mean, collectively, all of Pledgor's right,
title and interest in and to the Pledged Entity pursuant to the Pledged Stock
specifically described on Schedule 1 attached hereto, including, without
limitation, (a) all of Pledgor's right, title and interest in, to and under
any and all agreements ancillary to such Pledged Stock; (b) all of Pledgor's
right, title and interest in and to all capital stock and/or other equity
interests issuable in connection therewith or upon the exercise thereof; (c)
any and all rights of first refusal to which Pledgor may be entitled in
connection with any Equity Interest or the applicable Governing Documents, and
(d) all of Pledgor's right, title and interest in and to the profits, capital,
surplus, assets, allocations and distributions under the applicable Governing
Documents with respect to the Pledged Stock, both during the existence of the
Pledged Entity and upon any dissolution or liquidation of the Pledged Entity,
if any shall occur.
"Event of Default" shall mean the occurrence of any one or more of
the following events:
(a) Any representation or warranty made by Pledgor contained in this
Agreement was false or misleading in any material respect on the date
when made; or
(b) Pledgor's failure: to comply with, or breach of any term,
covenant or agreement contained in any paragraph of Section 4 hereof, if
such failure or breach described in this clause shall continue for thirty
(30) days after notice shall have been given by Pledgee specifying such
failure or breach, as the case may be, and requiring such failure or
breach, as the case may be, to be remedied; or
(c) Pledgor's failure to comply with, or breach of any material
term, covenant or agreement contained in this Agreement (other than as
referred to in paragraph (b) above) if such failure or breach, as the
case may be, shall continue for thirty (30) days after notice shall have
been given by Pledgee specifying such failure or breach, as the case may
be, and requiring such failure or breach, as the case may be, to be
remedied; or
(d) An "Event of Default" under, and as defined in, the Line of
Credit Agreement.
"Investment Property" shall have the meaning ascribed thereto in the
UCC.
"Loan Documents" shall mean all agreements, documents, instruments
and certificates entered into in connection with the Line of Credit Agreement.
"Note" shall mean those certain promissory notes issued by Pledgor
to Pledgee under the Line of Credit Agreement.
"Obligations" shall mean (a) the aggregate unpaid principal amount
of, and accrued and unpaid interest on, the Note; (b) all unpaid commitment
and other fees owing by Pledgor under the Line of Credit Agreement or any of
the other Loan Documents; (c) any and all indebtedness, obligations and other
liabilities of Pledgor to Pledgee arising out of or in connection with or
otherwise relating to the Line of Credit Agreement and/or any of the Loan
Documents, and/or any agreement(s) of Pledgor with Pledgee pertaining thereto;
(d) all sums, if any, as may be expended or advanced by Pledgee pursuant to
the Loan Documents in the performance of any obligation of Pledgor under any
of the Loan Documents; and (e) any other sums and charges which may become due
and payable by Pledgor in respect of any letters of credit issued by Pledgee
at Pledgor's request pursuant to the Line of Credit Agreement, and under any
and all applications of Pledgor to, and agreements of Pledgor with, Pledgee
pertaining thereto, including, without limitation, all obligations of Pledgor
under the Applications; in each case whether now or hereafter existing, direct
or indirect, absolute or contingent, joint, several or independent, due or to
become due, liquidated or unliquidated, held or to be held by Pledgee and
whether created directly or acquired by assignment or otherwise.
"Person" shall mean any individual, limited liability company,
partnership, joint venture, firm, corporation, trust or other enterprise or
any government or political subdivision or any agency, department or
instrumentality thereof.
"Pledged Stock" shall mean (i) the issued and outstanding capital
stock of the Pledged Entity owned by the Pledgor, as more particularly
described on Schedule 1 hereto, (ii) all options, warrants and other rights to
acquire such capital stock and all capital stock and/or other securities into
which such capital stock is convertible or exchangeable, whether pursuant to a
merger or otherwise; and (iii) all Investment Property and Securities
Entitlements with respect thereto, including, without limitation, all
dividends, liquidating dividends, splits, dividends paid in stock, dividends
paid in capital stock, new or reclassified capital stock, or any other
property which the Pledgor is or may hereafter become entitled to receive on
account of such capital stock, any and all increments, substitutions,
additions or replacements thereof, and any and all proceeds thereof.
"Securities Entitlements" shall have the meaning ascribed thereto in
the UCC.
"UCC" shall mean the New York Uniform Commercial Code, as amended
from time to time and in effect.
2. Grant of Security Interest, Etc. As security for the full and
punctual payment and performance of the Obligations when due, Pledgor hereby
grants and pledges a continuing first priority lien on and security interest
in, and, as a part of such grant and pledge, hereby transfers and assigns to
Pledgee as security, all of the following (the "Collateral") whether now owned
or hereafter acquired: (i) the Equity Interests; (ii) any other equity
interest(s) now owned or hereafter acquired by Pledgor in the Pledged Entity;
(iii) all of Pledgor's right, title and interest in the undated stock powers
relating to the Pledged Stock duly executed in blank and (subject to the
provisions of Section 5 hereof) all income and profits thereof, all
distributions thereon, and all rights and privileges pertaining thereto; (iv)
all of Pledgor's right, title and interest in the Pledged Entity, including
without limitation: (a) all of Pledgor's interest in the capital of the
Pledged Entity, and Pledgor's interest in all profits and distributions to
which Pledgor shall at any time be entitled in respect of the Equity
Interests; (b) all other payments, if any, due or to become due to Pledgor in
respect of the Equity Interests, under or arising out of any Governing
Document, whether as contractual obligations, damages, insurance proceeds,
condemnation awards or otherwise; (c) all of Pledgor's claims, rights, powers,
privileges, authority, options, security interest, liens and remedies, if any,
under or arising out of any Governing Document or the ownership of any Equity
Interests pursuant thereto; (d) all present and future claims, if any, of
Pledgor against the Pledged Entity, under or arising out of the applicable
Governing Document for monies loaned or advanced, for services rendered or
otherwise; and (e) to the extent permitted by applicable law, all of Pledgor's
rights, if any, under any Governing Document or at law, to exercise and
enforce every right, power, remedy, authority, option and privilege of Pledgor
relating to the Equity Interests, including any power to terminate, cancel or
modify any Governing Documents, to execute any instruments and to take any and
all other action on behalf of and in the name of Pledgor in respect of the
Equity Interests and the Pledged Entity, to make determinations, to exercise
any election (including, but not limited to, election of remedies) or option
or to give or receive any notice, consent, amendment, waiver or approval,
together with full power and authority to demand, receive, enforce or collect
any of the foregoing or any property of the Pledged Entity, to enforce or
execute any checks, or other instruments or orders, to file any claims and to
take any action in connection with any of the foregoing; and (v) to the extent
not otherwise included, all proceeds of any or all of the foregoing.
3. Powers of Pledgor Prior to an Event of Default.
Prior to the occurrence and continuance of an Event of Default,
Pledgor shall be entitled to receive and retain all distributions with respect
to the Equity Interests. Notwithstanding anything else herein to the contrary,
unless an Event of Default shall have occurred and then be continuing, Pledgor
shall be entitled to exercise its voting, consent and other rights and
remedies under the Governing Documents or other applicable organizational
documents, as the case may be, or otherwise with respect to the Equity
Interests; provided, however, that no action shall be taken or fail to be
taken which could adversely affect Pledgee's rights to the Collateral or the
value of the Collateral.
4. Representations, Warranties and Covenants.
Pledgor hereby covenants with, and represents and warrants to,
Pledgee, as follows:
(1) Pledgor has the full power and authority to acquire, own and
pledge the Equity Interests and to execute and deliver and perform its
obligations hereunder.
(2) The execution and delivery by Pledgor of this Agreement,
Pledgor's performance of its obligations hereunder and the creation of
the security interests and liens provided for in this Agreement have been
duly authorized by all requisite action on the part of Pledgor, including
the consent of any Person where required, and will not violate any
provision of law, any order of any court or other domestic or foreign
governmental or regulatory authority, body, agency or official
(hereinafter, "Governmental Authority"), the Governing Documents, or any
indenture, agreement or other instrument to which Pledgor is a party, or
by which Pledgor is bound, or be in conflict with, result in a breach of,
or constitute (with due notice or lapse of time or both) a default under,
or except as may be provided by this Agreement, result in the creation or
imposition of any lien, of any nature whatsoever upon any of the property
or assets of Pledgor pursuant to any such indenture, agreement or
instrument. Pledgor is not required to obtain any consent, approval or
authorization from, or to file any declaration or statement with, any
Governmental Authority or other agency in connection with or as a
condition to the execution, delivery or performance of this Agreement.
(3) Effective upon the execution and delivery of this Agreement and
the pledge of Collateral hereunder, the total issued and outstanding
shares of Pledged Entity's capital stock shall be as follows: 9,755,411
shares of common stock (voting), $.01 par value (the "Voting Common
Stock"); 2,370,404 shares of Class C common stock (non-voting); and
4,782,692 shares of Series A Convertible Cumulative Preferred Stock (the
"Preferred Stock"), which Preferred Stock is convertible into, subject to
adjustments, 4,782,692 shares of the Voting Common Stock (assuming the
price per share of the Preferred Stock is the "Per Share Price" (as
defined in the Certificate of Designation) on the date of issuance of the
Preferred Stock). The Pledged Entity has also granted certain warrants
and other rights to certain parties, as more fully described in Schedule
2 hereto. Other than the securities described above, Pledged Entity has
no other outstanding securities. Effective upon the consummation of the
transactions contemplated hereby, the 11,731,543 shares of Preferred
Stock of VANTAS Incorporated have been converted into 3,013,833 shares of
the common stock of the Pledged Entity at the rate of 0.2569 shares for
each share of such VANTAS Incorporated Preferred Stock.
(4) Pledgor owns the percentage equity interest (each such equity
interest referred to herein as a "Current Equity Interest") in the
Pledged Entity set forth under Pledgor's name on Schedule 1 annexed
hereto and made a part hereof pursuant to the terms of each Governing
Document, and will at all times hereafter during the term of this
Agreement continue to hold its Current Equity Interest in the Pledged
Entity. Pledgor has no outstanding options or rights or other agreements
to sell or otherwise transfer all or any portion of its respective Equity
Interest. In the event that Pledgor, in accordance with the terms of this
Agreement, transfers all or any portion of any Equity Interest, Pledgor
agrees to enter into an amendment to this Agreement modifying Schedule 1
hereof to account for such change.
(5) Pledgor will defend Pledgee's right, title and interest in and
to the Equity Interests and in and to the Collateral pledged by it
pursuant hereto and in which it has granted a security interest pursuant
hereto against the claims and demands of all other Persons.
(6) Pledgor is the legal and beneficial owner of and has good title
to the Equity Interests relating to its ownership interest in the Pledged
Entities and in and to the Collateral in which it has granted a security
interest pursuant hereto, free and clear of all claims or security
interests of every nature whatsoever, except the security interests as
are created pursuant to this Agreement. Pledgor has the unqualified right
to pledge and grant a security interest in the same (and to transfer the
same, whether pursuant to foreclosure or otherwise) as herein provided
without the consent of any other Person other than any such consent that
has been obtained and there are no restrictions upon the exercise of the
voting rights associated with, or the transfer of, any of the Pledged
Stock.
(7) The Equity Interests have been validly acquired by, and/or
granted to, Pledgor and are duly and validly pledged hereunder. All
consents and approvals required for the execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement have been obtained.
(8) Pledgor agrees that it will not transfer, convey, dispose of,
mortgage, encumber, pledge or grant a security interest in, any of the
Collateral or any interest therein, or suffer or permit any of the same
to occur or exist, and any transfer, conveyance, disposal, mortgage,
pledge, encumbrance or security interest whatsoever made in violation of
this covenant shall be a nullity and of no force and effect, and upon
demand of Pledgee, shall forthwith be canceled or satisfied by an
appropriate instrument in writing. Without limiting the generality of the
foregoing, Pledgor will, within thirty (30) days after Pledgor has actual
notice thereof, discharge or cause to be discharged as a lien of record
by payment or filing of the bond required by law, or otherwise, any
judgment, tax or other involuntary liens filed or otherwise asserted
against the Collateral, and any proceedings for the enforcement thereof;
provided, however, so long as no Event of Default shall have occurred and
be continuing hereunder, Pledgor shall have the right to contest in good
faith and with reasonable diligence the validity of any such judgment,
liens or tax or other such involuntary liens upon the filing of such bond
or, if no such bond is required by law to be filed, establishing reserves
in accordance with GAAP. If Pledgor fails to so discharge or bond or
contest liens in the manner provided above, then Pledgee may, but shall
not be required to, procure the release and discharge of any such lien
and any judgment or decree thereon, and in furtherance thereof may effect
any reasonable settlement or compromise or furnish any security or
indemnity as may be required. Pledgor shall reimburse Pledgee, upon
demand, for any reasonable amounts expended by Pledgee in connection with
the provisions of this Paragraph (8), and all amounts expended by Pledgee
hereunder shall be secured by this Agreement. In settling, compromising
or arranging for the discharge of any liens under this Paragraph (8),
Pledgee shall not be required to establish or confirm the validity or
amount thereof.
(9) The chief executive office of Pledgor, and the principal place
where the records of Pledgor concerning the Collateral are kept, is 1350
Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000. Pledgor
shall not change such chief executive office or remove such records
unless Pledgor shall provide Pledgee with written notice thereof within
fifteen (15) days after such change (but in any event, within the period
required pursuant to the Code) and there shall have been taken such
action, satisfactory to Pledgee, as may be necessary to maintain the
security interest of Pledgee hereunder at all times fully perfected and
in full force and effect. Pledgor shall not change its name unless
Pledgor shall have given Pledgee written notice thereof within fifteen
(15) days after such change (but in any event, within the period required
pursuant to the Code) and shall have taken such action, satisfactory to
Pledgee, as may be necessary to maintain the security interest of Pledgee
in the Collateral granted hereunder at all times fully perfected and in
full force and effect.
(10) Giving effect to the aforesaid grant and assignment to Pledgee,
Pledgee has, as of the date of this Agreement, and as to Collateral
acquired from time to time after the date hereof, shall have, a valid,
perfected and continuing first priority lien upon and security interest
in the Collateral; provided, however, that no representation or warranty
is made with respect to the perfected status of the security interest of
Pledgee in the proceeds of Collateral consisting of "cash proceeds" or
"non-cash proceeds" as defined in the Code except if, and to the extent,
the provisions of Section 9-306 of the Code shall be complied with.
(11) There are no financing statements under the Code covering any
or all of the Collateral and Pledgor will not, without the prior written
consent of Pledgee, execute and, until payment in full of all of the
Obligations, there will not ever be on file in any public office, any
enforceable financing statement or statements covering any or all of the
Collateral, except financing statements filed or to be filed in favor of
Pledgee as secured party.
(12) Each of the Governing Documents has been duly executed and
delivered by Pledgor and constitutes the legal, valid and binding
obligation of Pledgor, enforceable in accordance with its terms, except
as enforceability may be limited by applicable insolvency, bankruptcy or
other laws affecting creditors rights generally, or general principles of
equity, whether such enforceability is considered in a proceeding in
equity or at law. Pledgor is not in default under or with respect to, nor
has Pledgor received any notice alleging any default that remains uncured
under or with respect to, Pledgor's obligations under any Governing
Document.
(13) Each of the Governing Documents delivered to Pledgee is a true,
correct and complete copy of a signed copy thereof of the complete and
entire Governing Document in effect on the date hereof and has not, as of
the date hereof, been further modified or amended.
(14) Pledgor shall deliver to Pledgee a copy of each notice of
default given or received by it under any Governing Document, promptly,
but in any event within ten (10) days after, Pledgor gives or receives
such notice.
(15) Pledgor shall not withdraw as a shareholder of the Pledged
Entity, or file or pursue or take any action which may, directly or
indirectly, cause a dissolution or liquidation of the Pledged Entity or
seek a partition of any property of the Pledged Entity.
(16) Pledgor shall not terminate or agree to terminate or amend or
modify, or agree to amend or modify, any Governing Documents or waive
compliance with any provision of any Governing Documents without the
prior written consent of Pledgee in each instance.
(17) None of the Collateral is, as of the date of this Agreement,
and as to Collateral which arises from time to time after such date will
be, evidenced by any instrument, note or chattel paper except such as
have been or will be duly endorsed to Pledgee or in blank, and delivered
to Pledgee by Pledgor simultaneously with the creation thereof.
(18) Pledgor shall, at its sole cost and expense, keep, observe,
perform and discharge, duly and punctually, all and singular the
obligations, terms, covenants, conditions, representations and warranties
of the Governing Documents. Pledgor shall hold Pledgee harmless and
indemnify it against any cost or expense (including reasonable attorneys'
fees and disbursements) that Pledgee may incur or sustain by reason of
the failure on Pledgor's part to so perform and observe any Governing
Document or to satisfy, perform and observe such conditions thereunder.
(19) All the shares of the Pledged Stock have been duly and validly
issued, are fully paid and non-assessable. Except as set forth on
Schedule 2 attached hereto and made a part hereof, the Pledged Entity
does not have outstanding any options or rights or other agreements to
issue stock or other equity interests not outstanding on the date hereof
or to sell or otherwise transfer all or any portion of any interests in
the Pledged Entity.
(20) The Pledged Stock is not listed on any recognized stock
exchange in the United States of America.
5. Distributions.
(a) Unless an Event of Default shall have occurred and be
continuing, Pledgor at any time may receive and retain all distributions
or dividends with respect to its interest in the capital or profits or
other cash distributions or dividends, liquidating or otherwise, with
respect to the Equity Interests.
(b) If Pledgor at any time shall be entitled to receive any cash
distributions or dividends with respect to the Equity Interests or
otherwise pursuant to any Governing Document, all such amounts shall,
immediately upon receipt by Pledgor, be remitted to Pledgee for
application to the Obligations and until so remitted shall be received
and held by Pledgor in trust for Pledgee. In the event a non-cash
distribution or dividends shall be paid or made to Pledgor, Pledgor shall
receive the same in trust for the sole purpose of forthwith delivering
the same in kind (appropriately endorsed) to Pledgee, subject to the
terms hereof, to be added to the Collateral hereunder.
(c) If Pledgor shall become entitled to receive or shall receive
from the Pledged Entity any instrument, certificate, option or right, as
an addition to and in respect of, in substitution of, or in exchange for,
that portion of the Equity Interests relating to its ownership interest
in the Pledged Entity or any part of any of the foregoing, Pledgor shall
hold the same as the agent and in trust for Pledgee, and shall deliver it
forthwith to Pledgee in the exact form received, with Pledgor's
endorsement or assignment or other instrument as Pledgee may reasonably
deem appropriate, to be held by Pledgee, as further Collateral for the
Obligations.
6. Application of Collateral. All proceeds of any Collateral now or
at any time hereafter received or retained by Pledgee pursuant to the
provisions of this Agreement (including, without limitation, any proceeds from
the sale of all or any portion of the Equity Interests and all distributions,
liquidating and otherwise, received by Pledgee in respect of the Equity
Interests shall, after an Event of Default, be applied by Pledgee to the
Obligations in such order as Pledgee, in its sole and absolute discretion,
shall determine, and, if after all of the Obligations shall have been paid in
full, any surplus then remaining shall be paid to the person or entity
lawfully entitled thereto.
7. Remedies. If an Event of Default shall occur and then be
continuing:
(a) Pledgee, without obligation to resort to any other security,
right or remedy granted under any other agreement or instrument, shall
have the right to, in addition to all rights, powers and remedies of a
secured party pursuant to the Code, at any time and from time to time,
(i) cause any or all of the Equity Interests to be registered in or
transferred into the name of Pledgee or into the name of a nominee or
nominees, or designee or designees, of Pledgee; and/or (ii) sell, resell,
assign and deliver, in its sole discretion, any or all of the Collateral
or any other collateral security for the Obligations (whether in whole or
in part and at the same or different times) and all right, title and
interest, claim and demand therein and right of redemption thereof, at
public or private sale, for cash, upon credit or for future delivery as
Pledgee may deem appropriate in a commercially reasonable manner, and in
connection therewith Pledgee may grant options and may impose reasonable
conditions such as requiring any purchaser to represent that any
"securities" constituting any part of the Collateral are being purchased
for investment only, Pledgor hereby waiving and releasing any and all
equity or right of redemption. If all or any of the Collateral is sold by
Pledgee upon credit or for future delivery, Pledgee shall not be liable
for the failure of the purchaser to purchase or pay for the same and, in
the event of any such failure, Pledgee may resell such Collateral. It is
expressly agreed that Pledgee may exercise its rights with respect to
less than all of the Collateral, leaving unexercised its rights with
respect to the remainder of the Collateral, provided, however, that such
partial exercise shall in no way restrict or jeopardize Pledgee's right
to exercise its rights with respect to all or any other portion of the
Collateral at a later time or times.
(b) Pledgee may exercise, either by itself or by its nominee or
designee, in the name of Pledgor, all of the rights, powers and remedies
granted to Pledgee in Section 2 hereof in respect of the Governing
Documents, the Equity Interests, the Pledged Entity, and the other
Collateral, and may exercise and enforce all of Pledgee's rights and
remedies hereunder and under law. Such rights and remedies shall include,
without limitation, the right to exercise all voting, consent and other
rights relating to the Equity Interests whether in the name of any
Pledgor or otherwise.
(c) Pledgee may exercise all of the rights and remedies of a secured
party under the Code.
(d) Without limiting any other provision of this Agreement, and
without waiving or releasing Pledgor from any obligation or default
hereunder, Pledgee shall have the right, but not the obligation, to
perform any act or take any appropriate action, as it, in its reasonable
judgment, may deem necessary to cure such Event of Default or cause any
term, covenant, condition or obligation required under this Agreement,
the Line of Credit Agreement, the Loan Documents or any Governing
Documents, to be performed or observed by Pledgor, to be promptly
performed or observed on behalf of Pledgor or to protect the security of
this Agreement. All amounts advanced by, or on behalf of, Pledgee in
exercising its rights under this Section 7 (including, but not limited
to, reasonable legal expenses and disbursements incurred in connection
therewith), together with interest thereon at the default rate set forth
in the Note (the "Default Rate"), shall be payable by Pledgor to Pledgee
upon demand and shall be secured by this Agreement.
8. Attorney-in-fact.
(a) Pledgor hereby irrevocably authorizes and empowers Pledgee and
its successors and/or assigns and transfers unto Pledgee, and constitutes
and appoints Pledgee its true and lawful attorney-in-fact, and as its
agent, irrevocably, with full power of substitution for it and in its
name, for the purpose of carrying out the provisions of this Agreement
and taking any action and executing any instrument which Pledgee may deem
necessary or advisable to accomplish the purposes hereof. Without
limiting the generality of the foregoing, upon the occurrence and during
the continuation of an Event or Default, Pledgee shall have the right to
exercise and enforce every right, power, remedy, authority, option and
privilege of Pledgor under the Governing Documents or with respect to the
Pledged Stock, including, without limitation, any power to subordinate,
terminate, cancel or modify any Governing Documents or to give any
notices, or to take any action resulting in such subordination,
termination, cancellation or modification and to furnish any information,
to make any demands, to execute any instruments and to take any and all
other action on behalf of and in the name of Pledgor which, in the
opinion of Pledgee, may be necessary or appropriate to be given,
furnished, made, exercised or taken under any Governing Documents or with
respect to the Pledged Stock in order to comply therewith, to perform the
conditions thereof or to prevent or remedy any default by Pledgor
thereunder or to enforce any of Pledgor's rights thereunder or with
respect to the Pledged Stock. Pledgee may, during the continuation of an
Event of Default, without notice to, or assent by, Pledgor or any other
Person (to the extent permitted by law), but without affecting any of the
Obligations, in the name of Pledgor or in the name of Pledgee, notify any
other party to any Governing Documents to make payment and performance
directly to Pledgee; extend the time of payment and performance of,
compromise or settle for cash, credit or otherwise, and upon any terms
and conditions, any obligations owing to Pledgor, or claims of Pledgor,
under any Governing Documents or with respect to the Pledged Stock; file
any claims, commence, maintain or discontinue any actions, suits or other
proceedings deemed by Pledgee necessary or advisable for the purpose of
collecting upon or enforcing any Governing Documents or with respect to
the Pledged Stock; execute and file proof claim for the full amount of
any Collateral and vote such claims for the full amount thereof (x) for
or against proposal or resolution, (y) for a trustee or trustees or for a
receiver or receivers or for a committee of creditors and/or (z) for the
acceptance or rejection of any proposed arrangement, plan or
reorganization, composition or extension, and Pledgee or its nominee may
receive any payment or distribution and give acquittance therefor and may
exchange or release Collateral; and execute any instrument and do all
other things deemed necessary and proper by Pledgee to protect and
preserve and realize upon the Collateral and the other rights
contemplated hereby. This power-of-attorney is irrevocable and coupled
with an interest, and any similar or dissimilar powers heretofore given
by Pledgor in respect of the Equity Interests to any other Person are
hereby revoked.
(b) Further, without limiting the generality of the foregoing,
Pledgee, after the occurrence and during the continuation of an Event of
Default, shall have the right and power to receive, endorse and collect
all checks and other orders for the payment of money made payable to
Pledgor representing any interest, payment of principal or other
distribution payable in respect of the Collateral or any part thereof,
and for and in the name, place and stead of Pledgor, to execute
endorsements, assignments or other instruments of conveyance or transfer
in respect of the Equity Interests or any other property which is or may
become a part of the Collateral hereunder.
9. Sales of Collateral. No demand, advertisement or notice, all of
which are hereby expressly waived by Pledgor, shall be required in connection
with any sale or other disposition of all or any part of the Collateral,
except that Pledgee shall give Pledgor at least ten (10) days' prior written
notice of the time and place of any public sale or of the time and the place
where any private sale or other disposition is to be made, which notice
Pledgor hereby agrees is reasonable, all other demands, advertisements and
notices being hereby waived. To the extent permitted by law, Pledgee shall not
be obligated to make any sale of the Collateral if it shall determine not to
do so, regardless of the fact that notice of sale may have been given, and
Pledgee may without notice or publication adjourn any public or private sale,
and such sale may, without further notice, be made at the time and place to
which the same was so adjourned. Upon each private sale of the Collateral of a
type customarily sold in a recognized market and upon each public sale, unless
prohibited by any applicable statute which cannot be waived, Pledgee (or its
nominee or designee) may purchase any or all of the Collateral being sold,
free and clear of and discharged from any trusts, claims, equity or right of
redemption of Pledgor all of which are hereby waived and released to the
extent permitted by law, and may make payment therefor by credit against any
of the Obligations in lieu of cash or any other obligations. In the case of
all sales of the Collateral, public or private, Pledgor will pay all costs and
expenses of every kind for sale or delivery, including, without limitation,
brokers' and reasonable attorneys' fees and disbursements and any stamp,
transfer or other tax imposed thereon. However, the proceeds of sale of
Collateral shall be available to cover such costs and expenses, and, after
deducting such costs and expenses from the proceeds of sale, Pledgee shall
apply any residue to the payment of the Obligations.
10. Securities Act of 1933, Etc. Pledgor recognizes that Pledgee may
be unable to effect a public sale of all or a part of the Collateral by reason
of certain prohibitions contained in the Securities Act of 1933, as amended,
as now or hereafter in effect, or in applicable Blue Sky or other state
securities laws, as now or hereafter in effect, but may be compelled to resort
to one or more private sales to a restricted group of purchasers who will be
obliged to agree, among other things, to acquire such Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. If, at the time of any sale of Collateral, the same or any part
thereof to be sold shall not, for any reason whatsoever, be effectively
registered under the Securities Act of 1933, as then in effect, Pledgee, in
its sole and absolute discretion, is hereby authorized to sell such Collateral
or such part thereof by private sale in such manner and under such
circumstances as Pledgee may reasonably deem necessary or advisable in order
that such sale may legally be effected without registration. Pledgor
acknowledges that private sales so made may be at prices and on other terms
less favorable to the seller than if such Collateral were sold at public
sales, and agrees that Pledgee has no obligation to delay the sale of any such
Collateral for the period of time necessary to permit the issuer of such
Collateral, even if such issuer would agree, to register such Collateral for
public sale under such applicable securities laws. Pledgor agrees that private
sales made under the foregoing circumstances shall not, because so made, be
deemed to have been made in a commercially unreasonable manner.
11. Waivers; Modifications. No delay on the part of Pledgee in
exercising any of its options, powers or rights, or partial or single exercise
thereof, shall constitute a waiver thereof. None of the terms and conditions
of this Agreement may be discharged, changed, waived, modified or varied in
any manner unless in a writing duly signed by the parties hereto.
12. Remedies Cumulative. All rights and remedies afforded to Pledgee
by reason of this Agreement are separate and cumulative remedies, and shall be
in addition to all other rights and remedies in favor of Pledgee existing at
law or in equity or otherwise. No one of such remedies, whether or not
exercised by Pledgee, shall be deemed to exclude, limit or prejudice the
exercises of any other legal or equitable remedy or remedies available to
Pledgee.
13. Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, telex, facsimile
transmission or similar writing) addressed to Pledgor at the address provided
on the first page of this Agreement, Attention: Xxxxx Xxxxxxx, Esq. with a
copy to: Xxxxx & Wood LLP, Xxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx Xxxxxxxxx, Esq.; and addressed to Pledgee at the address
provided on this first page of this Agreement, Attention: Xxxxx Xxxxxxx, with
a copy to Loeb & Loeb LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxxx X. Xxxxxxx, Esq., Telephone: (000) 000-0000, Telecopy:
(000) 000-0000; or in the case of any party, such other address or telecopy
number as such party may hereafter specify for the purpose by notice to the
other party. Each such notice, request or other communication shall be
effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified in this Section 13, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid or (iii) if given by any other means, when
delivered at the address specified in this Section 13.
14. Jurisdiction, Etc. Any legal action or proceeding with respect
to this Agreement and any action for enforcement of any judgment in respect
thereof may be brought in the courts of the State of New York or of the United
States of America for the Southern or the Eastern District of New York, and,
by execution and delivery of this Agreement, Pledgor hereby accepts for itself
and in respect of its property, generally and unconditionally, the
non-exclusive jurisdiction of the aforesaid courts and appellate courts.
Pledgor irrevocably consents to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to Pledgor at its address set forth in Section 13 hereof.
Pledgor hereby irrevocably waives any objection which it may now or hereafter
have to the laying of venue of any of the aforesaid actions or proceedings
arising out of or in connection with this Agreement brought in the courts
referred to above and hereby further irrevocably waives and agrees not to
plead or claim in any such court that any such action or proceeding brought in
any such court has been brought in an inconvenient forum. Nothing herein shall
affect the right of Pledgee to serve process in any other manner permitted by
law or to commence legal proceedings or otherwise proceed against Pledgor in
any other jurisdiction.
15. Successors and Assigns. This Agreement, and all representations,
warranties and covenants of Pledgor made herein, shall be binding upon and
inure to the benefit of Pledgor and its successors and assigns, provided that
nothing in this Section 15 shall be deemed to constitute the consent of
Pledgee to any transaction in this Agreement elsewhere not permitted. This
Agreement shall be binding upon and shall inure to the benefit of Pledgee and
its successors and assigns.
16. Pledgee Not Bound.
(a) Nothing herein shall be construed to make Pledgee liable as a
partner of the Pledged Entity, and Pledgee, by virtue of this Agreement
or otherwise (except as referred to in the following sentence) shall not
have any of the duties, obligations or liabilities of a partner of the
Pledged Entity. The parties hereto expressly agree that, unless and until
Pledgee shall become the absolute owner of all or any portion of the
Equity Interests pursuant hereto, this Agreement shall not be construed
as creating a partnership or joint venture between Pledgee and Pledgor.
(b) Pledgee, by accepting this Agreement, does not intend to become
a partner of the Pledged Entity or Pledgor or otherwise be deemed to be a
co-venturer with respect to the Pledged Entity or Pledgor either before
or after an Event of Default shall have occurred. Pledgee, by accepting
this Agreement, shall assume none of the duties, obligations or
liabilities of a partner of the Pledged Entity or of Pledgor.
(c) Pledgee shall not be obligated to perform or discharge any
obligation of Pledgor as a result of the collateral assignment hereby
effected.
(d) The acceptance by Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any
time or in any event obligate Pledgee to appear in or defend any action
or proceeding relating to the Collateral to which it is not a party, or
to take any action hereunder or thereunder, or to expend any money or
incur any expenses or perform or discharge any obligation, duty or
liability under the Collateral.
17. Acts of Pledgee. All Collateral at any time delivered to Pledgee
pursuant hereto shall be held by Pledgee subject to the terms, covenants and
conditions set forth in this Agreement. Neither Pledgee nor any of Pledgee's
directors, officers, agents, employees or counsel shall be liable for any
action taken or omitted to be taken by such party or parties relative to any
of the Collateral, except for such party's or parties' own gross negligence or
willful misconduct. Pledgee shall be entitled to rely in good faith upon any
writing or other document, telegram or telephone conversation reasonably
believed by it to be genuine and correct and to have been signed, sent or made
by the proper person or persons, and, with respect to any legal matter,
Pledgee may rely in acting or in refraining from acting upon the advice of
counsel selected by it concerning all matters hereunder. Pledgor hereby agrees
to indemnify and hold harmless Pledgee, its successors and assigns, and any of
Pledgee's directors, officers, agents, and employees and their respective
successors and assigns (collectively, the "Indemnified Parties") from and
against any and all claims, demands, losses, judgments and liabilities arising
out of or resulting from the sale or disposition of all or a portion of the
Collateral, including, without limitation, the Equity Interests, together with
interest on such sums at the Default Rate, from the date such expenses were
paid by Pledgee to the date of payment to Pledgee of such sums. In any action
to enforce this Agreement, the provisions of this Section 17 shall, to the
extent permitted by law, prevail notwithstanding any provision of applicable
law respecting the recovery of costs, disbursements and allowances to the
contrary.
18. Custody of Collateral; Notice of Exercise of Remedies. Pledgee
shall not have any duty as to the collection or protection of the Collateral
or any income thereon or payments with respect thereto, or as to the
preservation of any rights pertaining thereto beyond exercising reasonable
care with respect to the custody of any thereof actually in its possession.
Pledgor hereby waives notice of acceptance hereof, and except as otherwise
specifically provided herein or required by provision of law which may not be
waived, hereby waives any and all notices or demands with respect to any
exercise by Pledgee of any rights or powers which it may have or to which it
may be entitled with respect to the Collateral.
19. Severability. In case any one or more of the provisions
contained in this Agreement shall be found to be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby, and this Agreement shall continue in full force and effect
in accordance with its remaining terms.
20. Further Assurances. Pledgor agrees to do such further acts and
things and to execute and deliver to Pledgee such additional conveyances,
assignments, agreements and instruments as Pledgee from time to time may
reasonably require or deem advisable to carry into effect this Agreement or to
further assure and confirm unto Pledgee its rights, powers and remedies
hereunder. Pledgor hereby agrees to sign and deliver to Pledgee financing
statements, in form acceptable to Pledgee, as Pledgee may from time to time
reasonably request or as are necessary in the opinion of Pledgee to establish
and maintain a valid and perfected security interest in the Collateral and to
pay any filing fees relative thereto. Pledgor also authorizes Pledgee, to the
extent permitted by law, to file such financing statements without the
signature of such Pledgor and further authorizes Pledgee, to the extent
permitted by law, to file a photographic or other reproduction of this
Agreement or of a financing statement in lieu of a financing statement.
21. Headings. The Article and/or Section headings in this Agreement
are included herein for convenience of reference only and shall not constitute
a part of this Agreement for any other purpose.
22. Release. Pledgee agrees to release its security interest in the
Collateral upon satisfaction of all of the following conditions precedent:
(a) That the documents to effect such release be prepared by
Pledgor's counsel, in form and substance reasonably satisfactory to
Pledgee, at the expense of Pledgor;
(b) That the Obligations shall have been fully paid, no letters of
credit issued by Pledgee pursuant to the Line of Credit Agreement shall
be outstanding and Pledgee shall have no further obligation under the
Line of Credit Agreement or the Loan Documents to issue any such letters
of credit; and
(c) That (i) all costs, fees, expenses and other sums paid or
incurred by or on behalf of Pledgee in exercising any of its rights,
powers, options, privileges and remedies hereunder, under the Line of
Credit Agreement or under any of the Loan Documents, including, without
limitation, reasonable attorneys' fees and disbursements, and (ii) any
and all other obligations and liabilities of Pledgor to Pledgee arising
out of or in connection with or otherwise related to the Line of Credit
Agreement and any Applications shall have been fully paid.
Any such release and any documents delivered to confirm the same
shall expressly provide that such release is made without recourse and without
any representation or warranty, express or implied (except that Pledgee shall
represent that such release has been and is duly authorized, that all
necessary consents to the execution and delivery thereof have been obtained
and that it has not assigned or encumbered the Collateral or its interest
therein). If the Collateral is so released, Pledgee, at the request and sole
cost and expense of Pledgor, will execute and deliver to Pledgor a proper
instrument or instruments acknowledging the satisfaction and termination of
this Agreement, and will duly assign, transfer and deliver, without recourse
and without any representation or warranty, express or implied (except that
Pledgee shall represent that such instruments or documents have been and are
duly authorized, that all necessary consents to the execution and delivery
thereof have been obtained and that it has not assigned or encumbered the
Collateral or its interest therein), to Pledgor such of the Collateral as may
be in the possession of Pledgee and as has not theretofore been sold or
otherwise applied or released pursuant to this Agreement, together with any
moneys at the time held by Pledgee hereunder and not applied to the payment of
the Obligations.
23. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of New York applicable
to contracts entered into and to be performed entirely within such State and
without regard to the conflicts or choice of laws rules of such State. This
Agreement, together with the Line of Credit Agreement, the other Loan
Documents and the other documents and instruments entered into in connection
herewith and therewith, set forth the entire understanding of the parties
hereto and thereto with respect to the subject matter hereof and thereof and
supersedes all prior agreements and understandings, whether oral or written,
relating thereto.
24. Miscellaneous.
(a) In enforcing any rights hereunder or under the Line of Credit
Agreement or the other Loan Documents, Pledgee shall not be required to
resort to any particular security, right or remedy through foreclosure or
otherwise or to proceed in any particular order of priority, or otherwise
act or refrain from acting, and, to the extent permitted by law, Pledgor
hereby waives and releases any right to a marshalling of assets or a sale
in inverse order of alienation.
(b) Whenever any payment or performance of any obligation hereunder
shall be due on a day which is not a Business Day, such payment or
performance shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the time period
within which such payment may be made or performance rendered without an
Event of Default occurring hereunder.
(c) Pledgor hereby waives any claim for monetary damages against
Pledgee which it may have based on any assertion that Pledgee has
unreasonably withheld or unreasonably delayed any determination, consent
or approval hereunder, and Pledgor agrees that its sole remedy shall be
an action or proceeding to enforce any such provision or for specific
performance, injunction or declaratory judgment with respect thereto. In
the event of such a determination in favor of Pledgor in an action or
proceeding seeking only the relief permitted hereunder, the requested
determination, consent or approval shall be deemed to have been granted.
However, Pledgee shall have no liability to Pledgor for its refusal or
failure to give such determination, consent or approval.
(d) Pledgee agrees at any time and from time to time upon not less
than ten (10) Business Days' prior notice by Pledgor to execute,
acknowledge and deliver to Pledgor or any other party specified by
Pledgor a statement in writing certifying that this Agreement is
unmodified and in full force and effect (or if there have been
modifications, that the same, as modified, is in full force and effect
and stating the modifications), and stating whether or not to the best
knowledge of Pledgee there is a continuing Event of Default, and, if so,
specifying each such Event of Default.
(e) Pledgor agrees at any time and from time to time upon not less
than ten (10) Business Days' prior notice by Pledgee to execute,
acknowledge and deliver to Pledgee, or any other party specified by
Pledgee, a statement in writing certifying that this Agreement is
unmodified and in full force and effect (or if there have been
modifications, that the same, as modified, is in full force and effect
and stating the modifications) and stating whether or not to the best
knowledge of Pledgor there is a continuing Default or Event of Default,
and, if so, specifying each such Event of Default.
(f) This Agreement may be signed in counterparts.
25. Limits on Indebtedness. (a) It shall also be an Event of Default
if at any time the following fraction exceeds 55%: (x) the Indebtedness of the
Pledgor plus the allocable share of the Indebtedness of Controlled
Subsidiaries over (y)(i) the fully diluted number of shares of common stock of
the Pledgor multiplied by the average listed exchange price of such common
stock over the preceding thirty (30) days plus (ii) the liquidation preference
of preferred stock of the Pledgor plus (iii) the amount calculated in
accordance with the preceding clause (x).
(b) "Contingent Obligation" as to any Person means, without
duplication, (i) any contingent obligation of such Person required to be shown
on such Person's balance sheet in accordance with GAAP, and (ii) any
obligation required to be disclosed in the footnotes to such Person's
financial statements in accordance with GAAP, guaranteeing partially or in
whole any non-recourse Indebtedness, lease, dividend or other obligation,
exclusive of contractual indemnities (including, without limitation, any
indemnity or price adjustment provision relating to the purchase or sale of
securities or other assets) and guarantees of non-monetary obligations (other
than guarantees of completion) which have not yet been called on or
quantified, of such Person or of any other Person. Notwithstanding the
foregoing, any litigation required to be disclosed in the footnotes to such
Person's financial statements in accordance with GAAP shall not be included as
a "Contingent Obligation" unless the same shall have been reserved for in
accordance with GAAP. Notwithstanding anything contained herein to the
contrary, guarantees of completion shall not be deemed to be Contingent
Obligations unless and until a claim for payment has been made thereunder, at
which time any such guaranty of completion shall be deemed to be a Contingent
Obligation. Notwithstanding anything contained herein to the contrary,
"Contingent Obligations" shall not be deemed to include guarantees of loan
commitments or of construction loans to the extent the same have not been
drawn.
(c) "Contractual Obligation", as applied to any Person, means any
provision of any Securities issued by that Person or any indenture, mortgage,
deed of trust, security agreement, pledge agreement, guaranty, contract,
undertaking, agreement or instrument to which that Person is a party or by
which it or any of its properties is bound, or to which it or any of its
properties is subject.
(d) "Controlled Subsidiary" means any Subsidiary of which the
Pledgor controls a majority of the board of directors or can otherwise direct
or cause the direction of the management and policies thereof whether through
the ownership of voting equity Securities or by contract or otherwise, except
that HQ Global Holdings, Inc. and its Subsidiaries shall not be Controlled
Subsidiaries of the Pledgor.
(e) "GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the American Institute of Certified
Public Accountants' Accounting Principles Board and Financial Accounting
Standards Board or in such other statements by such other entity as may be in
general use by significant segments of the accounting profession as in effect
on the date hereof.
(f) "Indebtedness", as applied to any Person, means at any time,
without duplication, (a) all indebtedness, obligations or other liabilities of
such Person (whether consolidated or representing the proportionate interest
in any other Person) (i) for borrowed money (including construction loans) or
evidenced by debt securities, debentures, acceptances, notes or other similar
instruments, and any accrued interest and fees relating thereto, (ii) under
profit payment agreements or in respect of obligations to redeem, repurchase
or exchange any Securities of such Person or to pay dividends in respect of
any preferred stock (but only to the extent that such Person shall be
contractually obligated to pay the same), (iii) with respect to letters of
credit issued for such Person's account, (iv) to pay the deferred purchase
price of property or services, except accounts payable and accrued expenses
arising in the ordinary course of business, (v) in respect of capital leases,
(vi) which are Contingent Obligations or (vii) under indemnities but only at
such time as a claim shall have been made thereunder; (b) all indebtedness,
obligations or other liabilities of such Person or others secured by a lien on
any property of such Person, whether or not such indebtedness, obligations or
liabilities are assumed by such Person, all as of such time; (c) all
indebtedness, obligations or other liabilities of such Person in respect of
interest rate contracts and foreign exchange contracts, net of liabilities
owed to such Person by the counterparties thereon; (d) all preferred stock
subject (upon the occurrence of any contingency or otherwise) to mandatory
redemption; and (e) all Contractual Obligations with respect to any of the
foregoing.
(g) "Securities" means any stock, shares, voting trust certificates,
partnership interests, bonds, debentures, notes or other evidence of
indebtedness, secured or unsecured, convertible, subordinated or otherwise, or
in general any instruments commonly known as "securities", including, without
limitation, any "security" as such term is defined in Section 8-102 of the
Uniform Commercial Code, or any certificates of interest, shares, or
participations in temporary or interim certificates for the purchase or
acquisition of, or any right to subscribe to, purchase or acquire any of the
foregoing, but shall not include the Obligations.
(h) "Subsidiary" of a Person shall mean any corporation, limited
liability company, general or limited partnership, or other entity of which
securities or other ownership interests having ordinary voting power to elect
one or more members of the board of directors or other persons performing
similar functions are at the time directly or indirectly owned or controlled
by such Person, one or more of the other subsidiaries of such Person or any
combination thereof.
IN WITNESS WHEREOF, the parties have duly executed and delivered
this Agreement in the City of New York as of the day and year first above
written.
PLEDGOR:
FRONTLINE CAPITAL GROUP
By: _____________________________
Name:
Title:
PLEDGEE:
BANKERS TRUST COMPANY
By: _____________________________
Name:
Title:
SCHEDULE 1
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NAME OF PLEDGED ENTITY
-------------------------------------------------------------------------------------------------------------
Current Equity Interest and
Name of Pledged Entity the Holder Thereof Governing Documents
-------------------------------------------- ----------------------------- ----------------------------------
HQ Global Holdings, Inc., a Delaware 3,013,833 shares of the Certificate of Incorporation
corporation (the "Pledged Entity") common stock (voting), with
a par value of one cent
($0.01) per share, of HQ Certificate of Designation of
Global Holdings, Inc., a Pledged Series A Convertible
Delaware corporation (the Cumulative Preferred Stock)
"Pledged Entity")
representing _____% of the
issued and outstanding By-Laws of Pledged Entity
shares of capital stock of
the Pledged Entity on a
fully diluted basis. Exchange Agreement dated as of
May 31, 2000 between the Pledgor
and the Pledged Entity
Purchase Agreement dated as of
May 31, 2000 between Pledgor and
the Pledged Entity
Stockholders' Agreement dated as of
May 31, 2000, among the Pledged
Entity, the Pledgor and the other
stockholders of the Pledged Entity
party thereto.
Registration Rights Agreement dated
as of May 31, 2000, among the
Pledged Entity and the stockholders
party thereto.
All other agreements, documents and
instruments involving, related to
and/or governing the Pledged Stock
or which inure to the benefit of
the holders of Pledged Stock.
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SCHEDULE 2
----------
OUTSTANDING STOCK OPTIONS
AND SHAREHOLDER AGREEMENTS
Shareholder Agreements:
1. Stockholders Agreement, dated as of May 31, 2000, by and among
FrontLine Capital Group, HQ Global Holdings, Inc. and CarrAmerica
Realty Corporation (the "CarrAmerica Stockholders Agreement").
2. Stockholders Agreement dated May 31, 2000, by and among FrontLine
Capital Group, HQ Global Holdings, Inc. and certain holders of
Series A Preferred Stock.
Warrants and Warrant Agreements:
1. Warrants to purchase 2,143,332 shares of Common Stock (subject to
antidilution rights), dated May 31, 2000, issued to holders of
Series A Preferred Stock.
2. Warrants to purchase 1,498,538 shares of Common Stock (subject to
antidilution rights) dated May 31, 2000, issued to UBS AG Stamford
Branch.
3. Warrant Agreement dated as of March 4, 1998 by and between
OmniOffices, Inc. and Xxxxxx X. Arcoro for the purchase of 100,000
shares at $20.00 per share. Mr. Arcoro has exercised his warrant for
99,000 shares. Only 1,000 shares remain subject to this agreement.
4. Warrant Agreement dated as of March 4, 1998 by and between
OmniOffices, Inc. and Xxxxxx Xxxxxxxx for the purchase of 85,000
shares at $20.00 per share. Xx. Xxxxxxxx has exercised his warrant
for 50,000 shares. Only 35,000 shares remain subject to this
agreement.
5. Warrant Agreement dated as of March 4, 1998 by and between
OmniOffices, Inc. and Xxxxxxxx X. Xxxxxx for the purchase of 32,500
shares at $20.00 per share.
6. Warrant Agreement dated as of March 4, 1998 by and between
OmniOffices, Inc. and Xxxxxx X. Xxxxxx, Xx. for the purchase of
32,500 shares at $20.00 per share.
o The Pledged Entity is obligated to have authorized and in
reserve the shares of common stock receivable upon exercise of
each of the warrants under the Warrant Agreements.
o In the event the Pledged Entity issues non-voting common stock
of the Pledged Entity that is less than fair market value
(other than stock options or
o restricted stock pursuant to stock option plans) the
warrantholders are entitled to an adjustment of the warrant
shares purchasable under the Warrant.
o The Warrant Agreements contain antidilution provisions that are
triggered by distributions to holders of equity capital stock
(dividends) and the repurchase of common stock by the Pledged
Entity of common stock at a price that is greater than the fair
market value of common stock on the date of the repurchase.
Stock Options:
1. Purchase Right Agreement, dated as of March 4, 1998, by and among
OmniOffices, Inc., Xxxxxx X. Arcoro and Xxxxxx Xxxxxxxx pursuant to
which if immediately prior to the first date on which 20% or more of
the outstanding shares of common stock of the Pledged Entity have
been publicly distributed or registered and such shares are publicly
traded on a national exchange or over-the-counter market, the debt
ratio is less than 55.0% (the Pledged Entity is obligated to offer
the warrantholders the right to purchase up to an aggregate of 6,818
shares of common stock of the Pledged Entity per percentage point
below the 55.0% (subject to the adjustments set forth in Section
5(a) of the Warrant Agreement). This purchase right is subject to
antidilution protection for the benefit of the Pledged Entity
pursuant to Section 10 of the CarrAmerica Stockholders Agreement.
2. Pursuant to the Agreement and Plan of Merger by and among HQ Global
Workplaces, Inc. and Xxxx America Realty Corporation, on the one
hand, and VANTAS Incorporated and FrontLine Capital Group (formerly
known as Reckson Service Industries, Inc.), on the other hand, dated
as of January 20, 2000, as amended as of April 29, 2000 and as of
May 30, 2000 (collectively, the "Merger Agreement"), at the
effective time of the "Merger" (as defined in the Merger Agreement),
each outstanding option to purchase shares of VANTAS Common Stock
granted under the VANTAS 1996 Stock Option Plan (the "VANTAS 1996
Stock Options"), is automatically amended to constitute an option to
acquire the number of shares of Voting Common Stock of the Pledged
Entity as the holder of such VANTAS 1996 Stock Option would have
been entitled to receive as Merger Consideration in the Merger had
such holder exercised such VANTAS 1996 Stock Option (free of and
without regard to any limitation on the vesting of the right to
exercise such VANTAS 1996 Stock Option) immediately prior to the
effective time of the Merger at an exercise price equal to the
quotient of (a) the applicable exercise price for each such VANTAS
1996 Stock Option immediately prior to the effective time of the
Merger divided by (b) the "Conversion Ratio" (as defined in the
Merger Agreement).
The following is a list of options granted under the VANTAS 1996
Stock Option Plan that are subject to the foregoing:
o 36,750 Options at an exercise price of $2.00
o 250 Options at an exercise price of $4.75
o 40,458 Options at an exercise price of $4.00
3. As soon as practicable following the effective time of the Merger,
Xx. Xxxx Xxxxx and Xx. Xxxxx Xxxxxx will receive options to purchase
common stock of the Pledged Entity with a value equal to 6X and 4X,
respectively, of their respective "Base Compensation" (as defined in
the Agreement to Amend Employment Agreement between Xxxx Xxxxx and
HQ Global Workplaces, Inc., dated January 14, 2000), or $3,600,000
or $1,600,000, respectively, which will become exercisable over a
four-year period (37.5% after 18 months, then 12.5% every 6 months
up to 100% in total, provided in each case that the person is still
employed by the Pledged Entity on the applicable vesting date). The
exercise price per share will equal the per share valuation used for
purposes of the Merger.
4. As soon as practicable following the effective time of the Merger,
Xx. Xxxxx and Xx. Xxxxxx will receive a grant of restricted common
stock in the Pledged Entity with a value equal to 2.5X and 1.5X,
respectively, of their respective Base Compensation, or $1,500,000
or $600,000, respectively, which will become vested over a four-year
period (37.5% after 18 months, then 12.5% every 6 months up to 100%
in total, provided in each case that the person is still employed by
the Pledged Entity on the applicable vesting date).
5. It is anticipated that employee stock options and restricted stock
grants with respect to 3% and 1%, respectively, of the outstanding
common and preferred stock of the Pledged Entity will be issued in
connection with employee incentive compensation.
