EXHIBIT II TO
AMENDMENT No. 9
4(f)(Fortress)
FIRST AMENDMENT TO PLEDGE AND SECURITY AGREEMENT
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(Stock and Warrants)
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This First Amendment to Pledge and Security Agreement (this
"Amendment"), dated as of July 31, 2001, is between Capital Trust Inc., a
Maryland corporation ("Secured Party") having an address at 000 Xxxx Xxxxxx,
00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and Prometheus Homebuilders LLC, a
Delaware limited liability company ("Pledgor"), having an address at 00
Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Preliminary Statement
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Secured Party and Pledgor are parties to a certain Pledge and Security
Agreement, dated as of February 8, 2001 ("Original Pledge Agreement"),
constituting a portion of the collateral for a loan made by secured party to
LSFRI II SPV REIT Corp., a Delaware corporation, and Senior Quarters Funding
Corp., a Delaware corporation (collectively "Borrowers"), in the aggregate
principal amount of $110,000,000 (the "Loan"). Borrowers and Pledgor have
requested the Secured Party to release a portion of the collateral pledged under
the Original Pledge Agreement in connection with the sale by Pledgor of a
portion of such collateral, and to accept a repayment of the cash proceeds of
such sale in the amount of $1,750,000, and a lien and security interest in
certain new collateral as hereinafter described.
Capitalized terms used and not otherwise defined in this First
Amendment shall have the respective meanings given to such terms in the Original
Pledge Agreement.
Now, therefore, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Pledgor hereby represents, warrants, covenants and agrees with
Secured Party as follows:
1. Pledgor hereby pledges, hypothecates, assigns and delivers to
Secured Party and grants to Secured Party a security interest in and lien on all
of Pledgor's right, title and interest now owned or hereafter acquired in and to
the following (the "Additional Collateral"):
(a) That certain Secured Promissory Note, dated July 31, 2001,
made by Xxxxxx Xxxxx in favor of Prometheus Homebuilders LLC in the principal
amount of $1,750,000 (the "Pledged Note");
(b) That certain Pledge, Security and Voting Trust Agreement,
dated July 31, 2001, between Prometheus Homebuilders LLC and Xxxxxx Xxxxx (the
"PSVT Agreement");
(c) That certain Recognition Agreement, dated July 31, 2001,
between Prometheus Homebuilders LLC, Xxxxxx Xxxxx and the Company (the
"Recognition Agreement");
(d) all cash, securities, dividends, interest payments,
principal repayments, distributions, Proceeds, and other property at any time
and from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the Pledged Note, the PSVT Agreement and the
Recognition Agreement, and any fees, commissions or other compensation payable
to Pledgor as a holder of the Pledged Note, the PSVT Agreement and the
Recognition Agreement (all of the foregoing, collectively, "Distributions");
(e) all contract rights, general intangibles, rights, claims,
powers, privileges, benefits and remedies arising from or in any way related to
ownership of the Interest, any certificates and other instruments representing
the Pledged Note, the PSVT Agreement and the Recognition Agreement and the other
collateral described above in paragraphs (a), (b), (c) and (d), including,
without limitation, all rights to vote or consent, or to receive any notice, or
to inspect or review any books, records or other information;
(f) all additions to the collateral described in the foregoing
clauses (a), (b), (c), (d) and (e), including, without limitation, any tangible
or intangible right in the Company obtained in the future by Pledgor, all
substitutions therefor and all replacements thereof;
(g) all Proceeds of any of the foregoing.
2. The Original Pledge Agreement is hereby amended to include the
Additional Collateral in the definition of "Collateral".
3. Pledgor represents to Secured Party that (i) Pledgor has sold 3,500
shares of Preferred Stock together with 729,167 Warrants to Xxxxxx Xxxxx
("Short"), a member of the Board of Directors of the Company for a price equal
to $3,500,000 payable $1,750,000 in cash and $1,750,000 by delivery to Pledgor
of the Pledged Note, and (ii) Pledgor retains ownership of 5,208,333 Warrants;
provided that the number of Warrants held by Short and Pledgor is subject to
change pursuant to the Supplemental Warrant Agreement, dated February 4, 1999,
as amended by the Recognition Agreement. Pledgor shall notify Secured Party of
any such change promptly after becoming aware thereof . Secured Party
acknowledges receipt of the $1,750,000 cash proceeds of such sale, which
proceeds have been applied by Secured Party to amounts due from Pledgor under
the Notes and further acknowledges that although the 3,500 shares of Preferred
Stock sold to Short continue to be held in the name of Pledgor pursuant to the
PSVT Agreement and the Recognition Agreement, Pledgor is no longer the
beneficial owner of such 3,500 shares. Secured Party hereby releases such 3,500
shares and the 729,167 Warrants (subject to adjustment as aforesaid) from the
lien of the Original Pledge Agreement, and the definition of "Collateral"
contained therein is modified accordingly. Secured Party agrees promptly to
release the certificates representing the Preferred Stock and Warrants in
Secured Party's possession, or held for Secured Party's account, in exchange for
replacement certificates issued by the Company separately representing the
Preferred Stock and Warrants owned by Short and by Pledgor (as provided in
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Section 4(c)(ii) of the Recognition Agreement), and if circumstances so require,
to make further exchanges in accordance with Section 4(c)(iii) of the
Recognition Agreement. Secured Party further acknowledges that (x) the Preferred
Shares and Warrants owned by Short which were delivered to Secured Party by
Pledgor pursuant to this Amendment are held by Pledgor as collateral under the
PSVT Agreement and are subject to the provisions thereof, and (y) upon receipt
by Secured Party from or on behalf of Short of any amounts due Pledgor under the
Secured Note, such amounts shall be applied to the amounts due from Borrowers in
accordance with the Loan Agreement, and that upon receipt by Secured Party from
or on behalf of Short of all amounts due Pledgor under the Secured Note, Secured
Party shall release the Additional Collateral to Pledgor for delivery to Short,
including certificates of the Preferred Stock and Warrants registered in the
name of Short and in Secured Party's possession.
4. Pledgor hereby remakes the representations and warranties contained
in Section 4 of the Original Pledge Agreement as of the date hereof, after
giving effect to and as modified by the provisions of Sections 1, 2 and 3 above.
5. Pledgor represents and warrants to Secured Party as follows:
(a) No consent of any other person or entity (including,
without limitation, any owner or creditor of Pledgor) which has not been
obtained is required in connection with the execution, delivery, performance,
validity or enforceability of this Amendment.
(b) Pledgor has taken all necessary legal and other action to
authorize the execution, delivery and performance of this Amendment, and this
Amendment constitutes the valid and binding obligation and agreement of Pledgor,
enforceable in accordance with its terms, subject to limitations as to
enforceability imposed by bankruptcy, reorganization, moratorium, insolvency and
other laws of general application relating to or affecting the enforceability of
creditors' rights and to equitable principles.
(c) Neither the execution and delivery of this Amendment nor
the compliance by Pledgor with the terms and provisions hereof are events which
of themselves, or with the giving of notice or the passage of time, or both,
would constitute, on the part of Pledgor, a violation of or conflict with, or
result in any breach of, or default under, the terms, conditions or provisions
of, or require any consent, permit, approval, authorization, declaration or
filing (other than filings now or hereinafter made by Pledgor as required under
the Securities and Exchange Act of 1934, as amended, as a result hereof) which
has not been made or obtained under or pursuant to, any statute, law, judgment,
decree, order rule or regulation applicable to Pledgor, the organizational and
charter documents of Pledgor, if any, or, any other agreement or instrument to
which Pledgor is a party or by which Pledgor, or Pledgor's assets, are bound, or
result in the creation or imposition of any Lien (other than the Lien imposed by
this Amendment) on any of the assets of Pledgor, no such condition or event of
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itself, or with the giving of notice or the passage of time, or both, will
result in the acceleration of the due date of any obligation of Pledgor or by
which any of Pledgor's assets are bound; provided, however, that the compliance
by Pledgor with the terms and provisions hereof is subject to all applicable
Federal and state securities laws.
6. Pledgor authorizes Secured Party to file UCC financing statements in
the State of Delaware and such other jurisdictions as Secured Party may require
in order to perfect and provide notice of liens and security interests created
hereunder.
7. Except as expressly set forth herein, all terms and provisions of
the Original Pledge Agreement remain in full force and effect, unmodified.
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IN WITNESS WHEREOF, Secured Party and Pledgor have duly executed this
First Amendment the date first above written.
SECURED PARTY: CAPITAL TRUST, INC.
By:/s/ Xxxxxx Xxxxxxxxxx
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Name: Xxxxxx Xxxxxxxxxx
Title: Managing Director
PLEDGOR: PROMETHEUS HOMEBUILDERS LLC
By: LF Strategic Realty
Investors II L.P., Its Managing Member
By: Lazard Freres Real Estate
Investors L.L.C., its General Partner
By:/s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Principal and Chief Financial Officer
