EXHIBIT 10.3
EXECUTION COPY
COMPANY PLEDGE AGREEMENT
This COMPANY PLEDGE AGREEMENT (this "Agreement") is dated as of January 14,
2003 and entered into by and between CRIIMI MAE INC., a Maryland corporation
("Pledgor"), and BRASCAN REAL ESTATE FINANCE FUND I, L.P. ("Initial Purchaser"),
as collateral agent for and representative of (in such capacity herein called
"Secured Party") Brascan Real Estate Financial Investments LLC ("Investor") and
the holders of the Notes (capitalized terms used herein without definition shall
have the meanings assigned to such terms in the Senior Subordinated Secured Note
Agreement dated as of January 14, 2003 (as amended, supplemented or otherwise
modified from time to time, the "Subordinated Note Agreement") between Investor
and Pledgor).
PRELIMINARY STATEMENTS
A. Pledgor is the legal and beneficial owner of the stock of CRIIMI NEWCO
MEMBER, Inc., a Maryland limited liability company (the "Issuer"), described in
Schedule I annexed hereto (the "Pledged Shares").
B. Pledgor and Investor have entered into the Investment Agreement pursuant
to which (a) Pledgor has agreed to issue and sell, and Investor has agreed to
purchase, the 15% Subordinated Notes, and (b) at the option of Pledgor as more
fully described in the Investment Agreement, Pledgor may issue and sell, and
Investor has agreed to purchase (and/or to cause one or more of its Affiliates
to purchase), up to $10,000,000 in aggregate principal amount of Additional
Subordinated Notes, in each case on the terms and conditions set forth in the
Investment Agreement and the Subordinated Note Agreement.
C. Initial Purchaser is an Affiliate of Investor, and Investor has selected
Initial Purchaser to enter into the Subordinated Note Agreement and to be the
purchaser of the 15% Subordinated Notes.
D. It is a condition precedent to the consummation of the transactions
contemplated by the Investment Agreement and the Subordinated Note Agreement
that Pledgor shall have granted the security interests and undertaken the
obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Initial Purchaser and/or one or more Affiliates of Investor to purchase the
Notes, and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Pledgor hereby agrees with Secured Party as
follows:
SECTION 1. Pledge of Security. Pledgor hereby pledges to Secured Party, and
hereby grants to Secured Party a security interest in, all of Pledgor's right,
title and interest in and to the following (the "Pledged Collateral"):
(a) the Pledged Shares and the certificates or other instruments, if any,
representing the Pledged Shares and any interest of Pledgor in the entries on
the books of any securities intermediary pertaining thereto, and all dividends,
distributions, returns of capital, cash, warrants, options, rights, instruments,
and all other property or proceeds from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the Pledged
Shares; and
(b) to the extent not covered by clause (a) above, all proceeds of any or
all of the foregoing Pledged Collateral. For purposes of this Agreement, the
term "proceeds" includes whatever is receivable or received when Pledged
Collateral or proceeds are sold, exchanged, collected or otherwise disposed of,
whether such disposition is voluntary or involuntary, and includes, without
limitation, proceeds of any indemnity or guaranty payable to Pledgor or Secured
Party from time to time with respect to any of the Pledged Collateral.
SECTION 2. Security for Obligations. This Agreement secures, and the
Pledged Collateral is collateral security for, the prompt payment or performance
in full when due, whether at stated maturity, by required prepayment,
declaration, acceleration, demand or otherwise (including the payment of amounts
that would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. ss.362(a)), of all obligations and
liabilities of every nature of Pledgor now or hereafter existing under or
arising out of or in connection with the Investment Agreement and the
Subordinated Note Agreement, in each case together with all extensions or
renewals thereof, whether for principal, interest (including without limitation
interest that, but for the filing of a petition in bankruptcy with respect to
Pledgor, would accrue on such obligations, whether or not a claim is allowed
against Pledgor for such interest in the related bankruptcy proceeding), fees,
expenses, indemnities or otherwise, whether voluntary or involuntary, direct or
indirect, absolute or contingent, liquidated or unliquidated, whether or not
jointly owed with others, and whether or not from time to time decreased or
extinguished and later increased, created or incurred, and all or any portion of
such obligations or liabilities that are paid, to the extent all or any part of
such payment is avoided or recovered directly or indirectly from Secured Party
or any Holder as a preference, fraudulent transfer or otherwise, and all
obligations of every nature of Pledgor now or hereafter existing under this
Agreement (all such obligations of Pledgor being the "Secured Obligations").
SECTION 3. Delivery of Pledged Collateral. All certificates or instruments
representing or evidencing the Pledged Collateral shall be delivered to and held
by or on behalf of Secured Party pursuant hereto and shall be in suitable form
for transfer by delivery or, as applicable, shall be accompanied by Pledgor's
endorsement in blank, where necessary, or duly executed instruments of transfer
or assignment in blank, all in form and substance satisfactory to Secured Party.
After the occurrence and only during the continuation of an Event of Default,
Secured Party shall have the right, without notice to Pledgor, to transfer to or
to register in the name of Secured Party or any of its nominees any or all of
the Pledged Collateral, subject to the revocable rights specified in Section
7(a). In addition, Secured Party shall have the right at any time to exchange
certificates or instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
2
SECTION 4. Representations and Warranties. Pledgor represents and warrants
as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
Shares described on Schedule I have been duly authorized and validly issued and
are fully paid and non-assessable.
(b) Description of Pledged Collateral. The Pledged Shares constitute all of
the issued and outstanding shares of capital stock of the Issuer, and there are
no outstanding warrants, options or other rights to purchase, or other
agreements outstanding with respect to, or property that is now or hereafter
convertible into, or that requires the issuance or sale of, any Pledged Shares.
(c) Ownership of Pledged Collateral. Pledgor is the legal, record and
beneficial owner of the Pledged Collateral free and clear of any Lien except for
Permitted Liens.
(d) Governmental Authorizations. No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for either (i) the pledge by Pledgor of the Pledged Collateral
pursuant to this Agreement and the grant by Pledgor of the security interest
granted hereby, (ii) the execution, delivery or performance of this Agreement by
Pledgor, or (iii) the exercise by Secured Party of the voting or other rights,
or the remedies in respect of the Pledged Collateral, provided for in this
Agreement (except as may be required in connection with a disposition of Pledged
Collateral by laws affecting the offer and sale of securities generally).
(e) Perfection. The pledge of the Pledged Collateral pursuant to this
Agreement creates a valid and perfected first priority security interest in the
Pledged Collateral, securing the payment of the Secured Obligations.
(f) Office Locations; Type and Jurisdiction of Organization. The chief
place of business, the chief executive office and the office where Pledgor keeps
its records regarding the Pledged Collateral are located at 00000 Xxxxxxxxx
Xxxx, Xxxxxxxxx, Xxxxxxxx 00000; Pledgor is a Maryland corporation whose
organizational number is D03684461.
(g) Margin Regulations. The pledge of the Pledged Collateral pursuant to
this Agreement does not violate Regulation T, U or X of the Board of Governors
of the Federal Reserve System.
(h) Other Information. All information heretofore, herein or hereafter
supplied to Secured Party by or on behalf of Pledgor with respect to the Pledged
Collateral is accurate and complete in all respects.
SECTION 5. Transfers and Other Liens; Additional Pledged Collateral; etc.
Pledgor shall:
(a) not, except as expressly permitted by the Subordinated Note Agreement,
(i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or
grant
3
any option with respect to, any of the Pledged Collateral, (ii) create or
suffer to exist any Lien upon or with respect to any of the Pledged Collateral,
or (iii) permit the Issuer to merge or consolidate with any Person;
(b) (i) cause the Issuer not to issue any stock or other securities in
addition to or in substitution for the Pledged Shares, except to Pledgor, (ii)
pledge hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional shares of stock or other securities of the
Issuer;
(c) promptly notify Secured Party of any event of which Pledgor becomes
aware causing loss or depreciation in the value of the Pledged Collateral;
(d) promptly deliver to Secured Party all written notices received by it
with respect to the Pledged Collateral; and
(e) pay promptly when due all taxes, assessments and governmental charges
or levies imposed upon, and all claims against, the Pledged Collateral, except
to the extent the validity thereof is being contested in good faith; provided
that Pledgor shall in any event pay such taxes, assessments, charges, levies or
claims not later than five days prior to the date of any proposed sale under any
judgement, writ or warrant of attachment entered or filed against Pledgor or any
of the Pledged Collateral as a result of the failure to make such payment.
SECTION 6. Further Assurances; Pledge Amendments.
(a) Pledgor agrees that from time to time, at the expense of Pledgor,
Pledgor will promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or reasonably desirable, or
that Secured Party may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable Secured
Party to exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral. Without limiting the generality of the foregoing,
Pledgor will: (i) execute and file such financing or continuation statements, or
amendments thereto, and such other instruments or notices, as may be necessary
or reasonably desirable, or as Secured Party may reasonably request, in order to
perfect and preserve the security interests granted or purported to be granted
hereby and (ii) at Secured Party's reasonable request, appear in and defend any
action or proceeding that may affect Pledgor's title to or Secured Party's
security interest in all or any part of the Pledged Collateral. Pledgor hereby
authorizes Secured Party to file one or more financing or continuation
statements, and amendments thereto, relative to all or any part of the Pledged
Collateral.
(b) Pledgor further agrees that it will, upon obtaining any additional
shares of stock or other securities required to be pledged hereunder as provided
in Section 5(b), promptly (and in any event within five Business Days) deliver
to Secured Party a Pledge Amendment, duly executed by Pledgor, in substantially
the form of Schedule I annexed hereto (a "Pledge Amendment"), in respect of the
additional Pledged Shares to be pledged pursuant to this Agreement. Upon each
delivery of a Pledge Amendment to Secured Party,
4
the representations and warranties contained in Section 4 hereof shall be
deemed to have been made by Pledgor as to the Pledged Collateral described in
such Pledge Amendment. Pledgor hereby authorizes Secured Party to attach each
Pledge Amendment to this Agreement and agrees that all Pledged Shares listed on
any Pledge Amendment delivered to Secured Party shall for all purposes hereunder
be considered Pledged Collateral; provided that the failure of Pledgor to
execute a Pledge Amendment with respect to any additional Pledged Shares pledged
pursuant to this Agreement shall not impair the security interest of Secured
Party therein or otherwise adversely affect the rights and remedies of Secured
Party hereunder with respect thereto.
SECTION 7. Voting Rights; Dividends; Etc.
(a) So long as no Event of Default shall have occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all voting and other
consensual rights pertaining to the Pledged Collateral or any part thereof for
any purpose not inconsistent with the terms of this Agreement or the
Subordinated Note Agreement; provided, however, that Pledgor shall not exercise
or refrain from exercising any such right if Secured Party shall have notified
Pledgor that, in Secured Party's judgment, such action would have a material
adverse effect on the value of the Pledged Collateral or any part thereof; and
provided, further, that Pledgor shall give Secured Party at least two Business
Days' prior written notice of the manner in which it intends to exercise, or the
reasons for refraining from exercising, any such right (it being understood,
however, that neither (A) the voting by Pledgor of any Pledged Shares for or
Pledgor's consent to the election of directors at a regularly scheduled annual
or other meeting of stockholders or with respect to incidental matters at any
such meeting, nor (B) Pledgor's consent to or approval of any action otherwise
permitted under this Agreement and the Subordinated Note Agreement shall be
deemed inconsistent with the terms of this Agreement or the Subordinated Note
Agreement within the meaning of this Section 7(a)(i), and no notice of any such
voting or consent need be given to Secured Party);
(ii) Pledgor shall be entitled to receive and retain, and to utilize free
and clear of the lien of this Agreement, any and all dividends, other
distributions and interest paid in respect of the Pledged Collateral; provided,
however, that any and all
(A) dividends, other distributions and interest paid or payable other than
in cash in respect of, and instruments and other property received, receivable
or otherwise distributed in respect of, or in exchange for, any Pledged
Collateral,
(B) dividends and other distributions paid or payable in cash in respect of
any Pledged Collateral in connection with a partial or total liquidation or
dissolution or in connection with a reduction of capital, capital surplus or
paid-in-surplus, and
5
(C) cash paid, payable or otherwise distributed in respect of principal or
in redemption of or in exchange for any Pledged Collateral,
shall be, and shall forthwith be delivered to Secured Party to hold as,
Pledged Collateral and shall, if received by Pledgor, be received in trust for
the benefit of Secured Party, be segregated from the other property or funds of
Pledgor and be forthwith delivered to Secured Party as Pledged Collateral in the
same form as so received (with all necessary indorsements); and
(iii) Secured Party shall promptly execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies, dividend payment orders and
other instruments as Pledgor may from time to time reasonably request for the
purpose of enabling Pledgor to exercise the voting and other consensual rights
which it is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends, other distributions, principal or interest payments which it is
authorized to receive and retain pursuant to paragraph (ii) above.
(b) After the occurrence and only during the continuation of an Event of
Default:
(i) upon written notice from Secured Party to Pledgor, all rights of
Pledgor to exercise the voting and other consensual rights that they would
otherwise be entitled to exercise pursuant to Section 7(a)(i) shall cease, and
all such rights shall thereupon become vested in Secured Party who shall
thereupon have the sole right to exercise such voting and other consensual
rights;
(ii) all rights of Pledgor to receive the dividends, other distributions
and interest payments that they would otherwise be authorized to receive and
retain pursuant to Section 7(a)(ii) shall cease, and all such rights shall
thereupon become vested in Secured Party who shall thereupon have the sole right
to receive and hold as Pledged Collateral such dividends, other distributions
and interest payments; and
(iii) all dividends, principal, interest payments and other distributions
which are received by Pledgor contrary to the provisions of paragraph (ii) of
this Section 7(b) shall be received in trust for the benefit of Secured Party,
shall be segregated from other funds of Pledgor and shall forthwith be paid over
to Secured Party as Pledged Collateral in the same form as so received (with any
necessary indorsements).
(c) In order to permit Secured Party to exercise the voting and other
consensual rights that it may be entitled to exercise pursuant to Section
7(b)(i) and to receive all dividends and other distributions which it may be
entitled to receive under Section 7(a)(ii) or Section 7(b)(ii), (i) Pledgor
shall promptly execute and deliver (or cause to be executed and delivered) to
Secured Party all such proxies, dividend payment orders and other instruments as
Secured Party may from time to time reasonably request and (ii) without limiting
the effect of the immediately preceding clause (i), Pledgor hereby grants to
Secured Party an irrevocable proxy to vote the Pledged Shares and to exercise
all other rights, powers,
6
privileges and remedies to which a holder of the Pledged Shares would be
entitled (including, without limitation, giving or withholding written consents
of members, calling special meetings of members and voting at such meetings),
which proxy shall be effective, automatically and without the necessity of any
action (including any transfer of any Pledged Shares on the record books of the
Issuer) by any other Person (including the Issuer or any officer or agent
thereof), after the occurrence and only during the continuation of an Event of
Default and which proxy shall only terminate upon the payment in full of the
Secured Obligations.
SECTION 8. Secured Party Appointed Attorney-in-Fact. Pledgor hereby
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including without
limitation:
(a) to file one or more financing or continuation statements, or amendments
thereto, relative to all or any part of the Pledged Collateral;
(b) after the occurrence and only during the continuance of an Event of
Default, to ask, demand, collect, xxx for, recover, compound, receive and give
acquittance and receipts for moneys due and to become due under or in respect of
any of the Pledged Collateral;
(c) after the occurrence and only during the continuance of an Event of
Default, to receive, endorse and collect any instruments made payable to Pledgor
representing any dividend or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the same;
(d) after the occurrence and only during the continuance of an Event of
Default, to file any claims or take any action or institute any proceedings that
Secured Party may deem necessary or desirable for the collection of any of the
Pledged Collateral or otherwise to enforce the rights of Secured Party with
respect to any of the Pledged Collateral;
(e) to pay or discharge taxes or Liens (other than Liens permitted under
this Agreement or the Subordinated Note Agreement) levied or placed upon or
threatened against the Pledged Collateral, the legality or validity thereof and
the amounts necessary to discharge the same to be determined by Secured Party in
its sole discretion, any such payments made by Secured Party to become
obligations of Pledgor to Secured Party, due and payable immediately without
demand; and
(f) after the occurrence and only during the continuance of an Event of
Default, generally to sell, transfer, pledge, make any agreement with respect to
or otherwise deal with any of the Pledged Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes, and to
do, at Secured Party's option and Pledgor's expense, at any time or from time to
time, all acts and things that Secured Party deems necessary to protect,
preserve or realize upon the Pledged Collateral and Secured
7
Party's security interest therein in order to effect the intent of this
Agreement, all as fully and effectively as Pledgor might do.
SECTION 9. Secured Party May Perform. If Pledgor fails to perform any
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 13(b).
SECTION 10. Standard of Care. The powers conferred on Secured Party
hereunder are solely to protect its interest in the Pledged Collateral and shall
not impose any duty upon it to exercise any such powers. Except for the exercise
of reasonable care in the custody of any Pledged Collateral in its possession
and the accounting for moneys actually received by it hereunder, Secured Party
shall have no duty as to any Pledged Collateral, it being understood that
Secured Party shall have no responsibility for (a) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relating to any Pledged Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, (b) taking any necessary steps
(other than steps taken in accordance with the standard of care set forth above
to maintain possession of the Pledged Collateral) to preserve rights against any
prior parties or any other rights pertaining to any Pledged Collateral, (c)
taking any necessary steps to collect or realize upon the Secured Obligations or
any guarantee therefor, or any part thereof, or any of the Pledged Collateral,
or (d) initiating any action to protect the Pledged Collateral against the
possibility of a decline in market value. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Pledged Collateral
in its possession if such Pledged Collateral is accorded treatment substantially
equal to that which Secured Party accords its own property consisting of
negotiable securities.
SECTION 11. Remedies.
(a) If any Event of Default shall have occurred and be continuing, Secured
Party may exercise in respect of the Pledged Collateral, in addition to all
other rights and remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the UCC (whether or
not the UCC applies to the affected Pledged Collateral), and Secured Party may
also in its sole discretion, without notice except as specified below, sell the
Pledged Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange or broker's board or at any of Secured Party's
offices or elsewhere, for cash, on credit or for future delivery, at such time
or times and at such price or prices and upon such other terms as Secured Party
may deem commercially reasonable, irrespective of the impact of any such sales
on the market price of the Pledged Collateral. Secured Party or any Holder may
be the purchaser of any or all of the Pledged Collateral at any such sale, and
Secured Party, as agent for and representative of Holders (but not any Holder in
its individual capacity unless Investor and the Holders of a majority in
outstanding principal amount of the Notes shall otherwise agree in writing),
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price for all or any portion of the Pledged Collateral sold at
any such public sale, to use and apply any of the Secured Obligations as a
credit on account of the purchase price for any Pledged Collateral payable by
Secured Party at such sale. Each purchaser at any such sale shall hold the
8
property sold absolutely free from any claim or right on the part of Pledgor,
and Pledgor hereby waives (to the extent permitted by applicable law) all rights
of redemption, stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or hereafter enacted.
Pledgor agrees that, to the extent notice of sale shall be required by law, at
least ten days' notice to Pledgor of the time and place of any public sale or
the time after which any private sale is to be made shall constitute reasonable
notification. Secured Party shall not be obligated to make any sale of Pledged
Collateral regardless of notice of sale having been given. Secured Party may
adjourn any public or private sale from time to time by announcement at the time
and place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned. Pledgor hereby waives any
claims against Secured Party arising by reason of the fact that the price at
which any Pledged Collateral may have been sold at such a private sale was less
than the price which might have been obtained at a public sale, even if Secured
Party accepts the first offer received and does not offer such Pledged
Collateral to more than one offeree. If the proceeds of any sale or other
disposition of the Pledged Collateral are insufficient to pay all the Secured
Obligations, Pledgor shall be liable for the deficiency and the fees of any
attorneys employed by Secured Party to collect such deficiency.
(b) Pledgor recognizes that, by reason of certain prohibitions contained in
the Securities Act and applicable state securities laws, Secured Party may be
compelled, with respect to any sale of all or any part of the Pledged Collateral
conducted without prior registration or qualification of such Pledged Collateral
under the Securities Act and/or such state securities laws, to limit purchasers
to those who will agree, among other things, to acquire the Pledged Collateral
for their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable than those obtainable through a public sale
without such restrictions (including, without limitation, a public offering made
pursuant to a registration statement under the Securities Act) and,
notwithstanding such circumstances, Pledgor agrees that any such private sale,
if otherwise conducted in a commercially reasonable manner, shall be deemed to
have been made in a commercially reasonable manner and that Secured Party shall
have no obligation to engage in public sales and no obligation to delay the sale
of any Pledged Collateral for the period of time necessary to permit the Issuer
to register it for a form of public sale requiring registration under the
Securities Act or under applicable state securities laws, even if the Issuer
would, or should, agree to so register it.
(c) If Secured Party determines to exercise its right to sell any or all of
the Pledged Collateral, upon written request, Pledgor shall and shall cause the
Issuer from time to time to furnish to Secured Party all such information as
Secured Party may request in order to determine the number of shares of stock
and other instruments included in the Pledged Collateral which may be sold by
Secured Party in exempt transactions under the Securities Act and the rules and
regulations of the Securities and Exchange Commission thereunder, as the same
are from time to time in effect.
SECTION 12. Application of Proceeds. Except as expressly provided elsewhere
in this Agreement, all proceeds received by Secured Party in respect of any sale
of, collection from, or other realization upon all or any part of the Collateral
shall be applied in the following order of priority:
9
FIRST: To the payment of all costs and expenses of such sale, collection or
other realization, including reasonable compensation to Secured Party and its
agents and counsel, and all other expenses, liabilities and advances made or
incurred by Secured Party in connection therewith, and all amounts for which
Secured Party is entitled to indemnification hereunder and all advances made by
Secured Party hereunder for the account of Pledgor, and to the payment of all
costs and expenses paid or incurred by Secured Party in connection with the
exercise of any right or remedy hereunder;
SECOND: To the payment of all other Secured Obligations (for the ratable
benefit of the holders thereof), and
THIRD: To the payment to or upon the order of Pledgor, or to whosoever may
be lawfully entitled to receive the same or as a court of competent jurisdiction
may direct, of any surplus then remaining from such proceeds.
SECTION 13. Indemnity and Expenses.
(a) Pledgor agrees to indemnify Secured Party and each Holder from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including, without limitation, enforcement of this
Agreement), except to the extent such claims, losses or liabilities result
solely from Secured Party's or such Holder's gross negligence or willful
misconduct as finally determined by a court of competent jurisdiction.
(b) Pledgor agrees to pay to Secured Party upon demand the amount of any
and all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the preservation or sale of, collection from, or other
realization upon, any of the Pledged Collateral, (ii) the exercise or
enforcement of any of the rights of Secured Party hereunder, or (iii) the
failure by Pledgor to perform or observe any of the provisions hereof.
(c) The obligations of Pledgor in this Section 13 shall survive the
termination of this Agreement and the discharge of Pledgor's other obligations
under this Agreement, the Investment Agreement and the Subordinated Note
Agreement.
SECTION 14. Continuing Security Interest; Transfer of Loans. This Agreement
shall create a continuing security interest in the Pledged Collateral and shall
(a) remain in full force and effect until the payment in full of all Secured
Obligations, (b) be binding upon Pledgor, its successors and assigns, and (c)
inure, together with the rights and remedies of Secured Party hereunder, to the
benefit of Secured Party and its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), but subject to the
provisions of Section 2.04 of the Subordinated Note Agreement, any Holder may
assign or otherwise transfer any Note held by it to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to Holders herein or otherwise. Upon the payment in full of all
Secured Obligations, the security interest granted hereby shall terminate and
all rights to the Pledged Collateral shall
10
revert to Pledgor. Upon any such termination Secured Party will, at
Pledgor's expense, execute and deliver to Pledgor such documents as Pledgor
shall reasonably request to evidence such termination.
SECTION 15. Secured Party as Agent.
(a) Secured Party has been appointed to act as Secured Party hereunder by
Holders. Secured Party shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including without
limitation the release or substitution of Pledged Collateral), solely in
accordance with this Agreement and the Subordinated Note Agreement; provided
that Secured Party shall exercise, or refrain from exercising, any remedies
provided for in Section 11 in accordance with the instructions of the Investor
and the Holders of a majority in outstanding principal amount of the Notes.
(b) In the event Investor desires to resign as Secured Party, the Holders
of a majority in outstanding principal amount of the Notes shall appoint a
successor Secured Party. Upon the acceptance of any appointment as Secured Party
by a successor Secured Party, that successor Secured Party shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Secured Party under this Agreement, and the retiring Secured
Party under this Agreement shall promptly (i) transfer to such successor Secured
Party all sums, securities and other items of Pledged Collateral held hereunder,
together with all records and other documents necessary or appropriate in
connection with the performance of the duties of the successor Secured Party
under this Agreement, and (ii) execute and deliver to such successor Secured
Party such amendments to financing statements, and take such other actions, as
may be necessary or appropriate in connection with the assignment to such
successor Secured Party of the security interests created hereunder, whereupon
such retiring Secured Party shall be discharged from its duties and obligations
under this Agreement. After any retiring Secured Party's resignation hereunder
as Secured Party, the provisions of this Agreement shall inure to its benefit as
to any actions taken or omitted to be taken by it under this Agreement while it
was Secured Party hereunder.
SECTION 16. Amendments; Etc. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
Pledgor therefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 17. Notices. Any notice or other communication herein required or
permitted to be given shall be in writing and may be personally served or sent
by telefacsimile or United States mail or courier service and shall be deemed to
have been given when delivered in person or by courier service, upon receipt of
telefacsimile, or three Business Days after depositing it in the United States
mail with postage prepaid and properly addressed; provided that notices to
Secured Party shall not be effective until received. For the purposes hereof,
the address of each party hereto shall be as set forth under such party's name
11
on the signature pages hereof or as such other address as shall be designated by
such party in a written notice delivered to the other party hereto.
SECTION 18. Failure or Indulgence Not Waiver; Remedies Cumulative. No
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege. All
rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
SECTION 19. Severability. In case any provision in or obligation under this
Agreement shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 20. Headings. Section and subsection 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 or be given any substantive effect.
SECTION 21. Governing Law; Terms. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW
YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW
OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES,
EXCEPT TO THE EXTENT THAT THE UCC PROVIDES THAT THE PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR PLEDGED
COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF
NEW YORK. Unless otherwise defined herein or in the Subordinated Note Agreement,
terms used in Articles 8 and 9 of the Uniform Commercial Code in the State of
New York are used herein as therein defined. The rules of construction set forth
in Section 1.03 of the Subordinated Note Agreement shall be applicable to this
Agreement mutatis mutandis.
SECTION 22. Consent to Jurisdiction and Service of Process. ALL JUDICIAL
PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS
AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL
COURT OF COMPETENT JURISDICTION IN THE STATE , COUNTY AND CITY OF NEW YORK. BY
EXECUTING AND DELIVERING THIS AGREEMENT, PLEDGOR, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY (I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (II) WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; (III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN
RECEIPT REQUESTED, TO PLEDGOR AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH
12
SECTION 17; (IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER PLEDGOR IN ANY SUCH PROCEEDING
IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN
EVERY RESPECT; (V) AGREES THAT SECURED PARTY RETAINS THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST PLEDGOR IN
THE COURTS OF ANY OTHER JURISDICTION; AND (VI) AGREES THAT THE PROVISIONS OF
THIS SECTION 22 RELATING TO JURISDICTION AND VENUE SHALL BE BINDING AND
ENFORCEABLE TO THE FULLEST EXTENT PERMISSIBLE UNDER NEW YORK GENERAL OBLIGATIONS
LAW SECTION 5-1402 OR OTHERWISE.
SECTION 23. Waiver of Jury Trial. PLEDGOR AND SECURED PARTY HEREBY AGREE TO
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
without limitation contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. Pledgor and Secured Party acknowledge
that this waiver is a material inducement for Pledgor and Secured Party to enter
into a business relationship, that Pledgor and Secured Party have already relied
on this waiver in entering into this Agreement and that each will continue to
rely on this waiver in their related future dealings. Pledgor and Secured Party
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 23 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 24. Counterparts. This Agreement may be executed in one or more
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
13
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
CRIIMI MAE INC.
/s/Xxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President
Notice Address for Pledgor:
CRIIMI MAE Inc.
00000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
Attention: Chief Financial Officer
BRASCAN REAL ESTATE FINANCE
FUND I, L.P.
/s/Xxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Secretary and Treasurer
Notice Address for Secured Party:
Brascan Real Estate Finance Fund I, L.P.
c/o Brascan Real Estate Financial Investments LLC
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxx, Managing Partner
S-1
SCHEDULE I
Attached to and forming a part of the Pledge Agreement dated as of January
14, 2003 among CRIIMI MAE Inc., as Pledgor, and Brascan Real Estate Finance Fund
I, L.P., as Secured Party.
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------
Class Stock Par Number of Percentage of
of Stock or Equity Certificate Nos. Value Shares Outstanding
Stock Issuer Interest Shares Pledged
=========================== ======================= ================== ============ ============== ===================
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------
----------------------------------------------------------------------------------------------------------------------
SCHEDULE II-1
SCHEDULE III
PLEDGE AMENDMENT
This Pledge Amendment, dated ____________, 200_, is delivered pursuant to
Section 6(b) of the Pledge Agreement referred to below. The undersigned hereby
agrees that this Pledge Amendment may be attached to the Pledge Agreement dated
January 14, 2003, among CRIIMI MAE Inc., as Pledgor, and Brascan Real Estate
Finance Fund I, L.P., as Secured Party (the "Pledge Agreement," capitalized
terms defined therein being used herein as therein defined), and that the
Pledged Shares listed on this Pledge Amendment shall be deemed to be part of the
Pledged Shares and shall become part of the Pledged Collateral and shall secure
all Secured Obligations.
CRIIMI MAE INC.
By: ___________________________
Title:
Class of Stock or Stock Certi- Par Number of
Stock Issuer other equity interests ficate Nos. Value Shares
------------ ---------------------- ------------ ----- ---------
SCHEDULE V-1
