EXHIBIT 13
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SECURITIES PLEDGE AND SECURITY AGREEMENT
SECURITIES PLEDGE AND SECURITY AGREEMENT ("AGREEMENT") is dated as of
June 10, 2004, and is entered into by and between THE 520 GROUP, LLC, a
California limited liability company ("BORROWER"), and XXXXX FARGO BANK,
NATIONAL ASSOCIATION, as pledgee ("LENDER").
WITNESSETH:
WHEREAS, contemporaneously herewith, Lender has agreed to loan certain
funds to Borrower pursuant to a Loan Agreement ("LOAN AGREEMENT") dated as of
the date hereof and certain other Loan Documents. (All capitalized terms used
and undefined herein shall have the meanings given to them in such Loan
Agreement.);
WHEREAS, as a condition to the Loan, Lender requires a pledge by
Borrower of its interest in the Pledged Securities (namely, consisting of the
common stock of PLRE) referred to in the Loan Agreement as security for
Borrower's obligations under the Loan Documents (as used herein, "PLEDGED
SECURITIES" shall include all rights of the holder and proceeds of the Pledged
Securities);
WHEREAS, to facilitate perfection and priority of the Lender's security
interest in the Pledged Securities, Borrower shall deliver the original share
certificates evidencing such Pledged Shares, along with fully executed stock
powers in blank with respect thereto, to Xxxxx Fargo Institutional Securities
LLC ("WFS") to hold, as collateral security for the Loan, in the WFS securities
account referred to in SECTION 1 below, and Borrower, WFS and Lender shall enter
into a Securities Account Control Agreement of even date herewith ("CONTROL
AGREEMENT"); and
WHEREAS, it is a condition precedent to the effectiveness of the Loan
Agreement that the parties hereto shall have executed and delivered this
Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lender to enter into the Loan Agreement and advance the funds thereunder and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereby agree as follows:
1. GRANT OF SECURITY INTEREST. Borrower hereby irrevocably and
unconditionally grants a first lien security interest in, and assigns, pledges,
and transfers to Lender, the following:
(a) Account number 00000000 established by Borrower with WFS
subject to this Agreement and the Control Agreement, and all successor and
replacement accounts, regardless of the numbers of such accounts or the offices
at which such accounts are maintained (the "SECURITIES ACCOUNT") and all rights
of Borrower in connection with the Securities Account; and
(b) All investment property, security entitlements,
financial assets, certificated securities, uncertificated securities, money,
deposit, securities accounts, general intangibles, and all other investments or
property now or hereafter held in the Securities Account or pledged by Borrower
to Lender, including, without limitation, the Pledged Securities,
together with all rollovers, renewals or reinvestments of any of the foregoing
property, all stock or conversion rights, rights to subscribe, liquidation
dividends or preferences, stock dividends, dividends, rights to interest,
interest payments, dividends paid in stock, rights under hedge or derivative
transactions, equity swaps, caps, floors or collars, new securities or other
property which Borrower is or may hereafter become entitled to receive on
account of or related to any of the foregoing property; and the proceeds,
increase and products of any of the foregoing or replacements thereof or
substitutions therefor (including, without limitation, any and all sums on
deposit in the Securities Account, and all successor and replacement accounts,
regardless of the numbers of such accounts or the offices at which such accounts
are maintained and all rights of Borrower in connection with such account); and
(c) all of Borrower's rights under the Registration Rights
Agreement,
all of which property referenced in subsections (a) through (c) above,
and all other property at any time pledged to Lender hereunder (whether
described herein or not), and all income therefrom and proceeds thereof, are
herein collectively referred to as the "COLLATERAL".
2. PERFECTION. In connection with this Agreement, Borrower hereby
agrees at all times while the Obligations, as defined herein, are outstanding to
hold the Pledged Securities in the Securities Account and to provide the
original certificates evidencing such Pledged Securities, along with fully
executed stock powers in blank with respect thereto, in order to perfect
Lender's lien under this Agreement.
3. OBLIGATIONS SECURED. The Collateral secures and will secure all
debts, obligations or liabilities now or hereafter existing, absolute or
contingent, to Lender under the Loan Agreement and the other Loan Documents,
including any amendments, renewals or replacements thereof (collectively, the
"OBLIGATIONS").
4. MINIMUM COVERAGES; ADDITIONAL PLEDGED SECURITIES; DAILY
RE-MARGIN.
(a) At all times while the Loan remains outstanding, (i)
there shall be not less than one million (1,000,000) common stock shares
(adjusted for any stock splits, if applicable) of PLRE constituting the Pledged
Securities, (ii) the market value of the Pledged Securities shall not be less
than eleven million five hundred thousand dollars ($11,500,000), AND (iii) the
market value of the Pledged Securities shall equal or exceed two hundred percent
(200%) (each of the foregoing, a "REQUIRED MINIMUM COVERAGE"), as calculated in
accordance with Regulation U of the Federal Reserve Board, of the then
outstanding principal balance under the Loan.
(b) Lender shall monitor and measure compliance with the
covenant set forth in subsection (a) above on a daily basis and, in the event
that Lender determines that the market value of the Pledged Securities is less
than any Required Minimum Coverage, Borrower shall, within two (2) Business Days
following written demand from Lender, either (i) repay principal outstanding
under the Loan or (ii) deposit or deliver additional registered and unencumbered
common stock shares of PLRE into the Securities Account (by delivering the
original of any certificates evidencing such shares along with a fully executed
stock power in blank), in either case such that, following such repayment or
deposit, each Required Minimum Coverage is achieved.
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(c) So long as there then exists no Default or Potential
Default under the Loan Agreement, Borrower shall be entitled to disbursements of
interest and/or cash dividends earned on financial assets maintained in the
Securities Account.
5. RELEASE OF COLLATERAL.
(a) In the event that the market value of the Pledged
Securities equals or exceeds two hundred twenty-five percent (225%), as
calculated in accordance with Regulation U of the Federal Reserve Board, of the
then outstanding principal balance under the Loan, for a period of three (3)
consecutive calendar months, upon Borrower's request Lender shall transfer to
Borrower (and release its lien with respect to) a portion of the Pledged
Securities as is appropriate so that the market value of the Pledged Securities,
following such release and transfer, is not less than each Required Minimum
Coverage; PROVIDED, HOWEVER, that the value of the Pledged Securities, following
any such release, shall equal or exceed two hundred five percent (205%) of the
then outstanding principal balance of the Loan.
(b) If Borrower makes or causes to be made to Lender a
permitted principal repayment in excess of ten million dollars ($10,000,000) in
accordance with the provisions of the Loan Agreement, then Lender shall release
a portion of the Pledged Securities as is appropriate so that the market value
of the Pledged Securities, following such release and transfer, are not less
than each Required Minimum Coverage. In no event shall Lender's lien on any
Collateral be released unless Lender shall have received the appropriate
repayment of the principal amount of the Loan and all other sums due Lender
under the Loan Documents. Lender shall, in a timely manner, execute and deliver
all documents and instruments (reasonably necessary to evidence the release of
such lien) prepared by Borrower at Borrower's cost and expense.
(c) If Borrower makes or causes to be made to Lender a
payment in full of the Loan in accordance with the provisions of the Loan
Agreement, then Lender shall release the Pledged Securities. In no event shall
Lender's lien on any Collateral be released unless Lender shall have received
the appropriate repayment of the principal amount of the Loan and all other sums
due Lender under the Loan Documents. Lender shall, in a timely manner, execute
and deliver all documents and instruments (reasonably necessary to evidence the
release of such lien) prepared by Borrower at Borrower's cost and expense.
6. RIGHTS OF LENDER.
(a) Lender shall have no liability hereunder with respect to
the Collateral other than as a result of Lender's gross negligence or willful
misconduct, it being understood that Lender shall not be liable for failure to
collect or realize upon the Obligations or any collateral security or guarantee
therefor, or any part thereof, or for any delay in so doing nor shall Lender be
under any obligation to take any action whatsoever with regard thereto. If a
Default under the Loan Agreement has occurred and is continuing, Lender may,
with any notice by Lender as provided for in the Loan Agreement, exercise all
rights, privileges or options pertaining to any Collateral as if it were the
absolute owner thereof, upon such terms and conditions as it may determine, all
without liability except to account for property actually received by it, but
Lender shall have no duty to exercise any of the aforesaid rights, privileges or
options and shall not be responsible for any failure to do so or delay in so
doing.
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(b) For the purpose of enabling the Lender to exercise its
rights under this SECTION 6 or otherwise in connection with this Agreement,
Borrower hereby (i) constitutes and appoints the Lender (and any of the Lender's
officers, employees or agents designated by the Lender) its true and lawful
attorney in fact, with full power and authority to execute any notice,
assignment, endorsement or other instrument or document, and to do any and all
acts and things for and on behalf of Borrower, which the Lender may deem
necessary or desirable (including, without limitation, exercise of rights under
the Registration Rights Agreement) to protect, collect, realize upon and
preserve the Pledged Securities, to enforce the Lender's rights with respect to
the Pledged Securities and to accomplish the purposes hereof, and (b) revokes
all previous proxies with regard to the Pledged Securities and appoints the
Lender as its proxyholder with respect to the Pledged Securities to attend and,
following a Default under the Loan Agreement, notice of which Default has been
provided by Lender to Borrower, vote at any and all meetings of the
shareholders, partners or members of PLRE held on or after the date of this
proxy and prior to the termination hereof, with full power of substitution to do
so and agrees, if so requested, to execute or cause to be executed appropriate
proxies therefor. Each such appointment is coupled with an interest and
irrevocable so long as any portion of the Loan remains outstanding or the
Obligations have not been indefeasibly paid and performed in full. Borrower
hereby ratifies, to the extent permitted by law, all that Lender shall lawfully
and in good faith do or cause to be done by virtue of and in compliance with
this SECTION 6.
7. REMEDIES.
(a) GENERAL REMEDIES. Upon the occurrence of any Default
under the Loan Agreement or other Loan Documents, notice of which Default has
been provided by Lender to Borrower, Lender shall have, in addition to all other
rights and remedies granted to it in this Agreement or any other Loan Document,
all rights and remedies of a secured party under the Uniform Commercial Code of
the State of California ("UCC") and other applicable laws. Without limiting the
generality of the foregoing, Borrower agrees that any item of the Pledged
Securities may be sold for cash or on credit or for future delivery without
assumption of any credit risk, in any number of lots at the same or different
times, at any exchange, brokers' board or elsewhere, by public or private sale,
and at such times and on such terms, as the Lender shall determine, and Lender
may, in its sole discretion, determine the appropriate amount of Pledged
Securities to sell in order to satisfy the Obligations in full; PROVIDED,
HOWEVER, that Borrower shall be credited with the net proceeds of sale only when
such proceeds are finally collected by Lender. Lender shall give Borrower such
notice of any private or public sales as may be required by the UCC or other
applicable law. Subject to the requirements of applicable law, Borrower agrees
that Lender need not give notice of the time and place of any public sale or of
the time after which a private sale or other intended disposition is to take
place. No notification need be given to Borrower if it has signed, after Default
under the Loan Documents which has not been cured within the applicable cure
period, if any, a statement renouncing or modifying any right to notification of
sale or other intended disposition. Borrower recognizes that Lender may be
unable to make a public sale of any or all of the Pledged Securities, by reason
of prohibitions contained in applicable securities laws or otherwise, and
expressly agrees that a private sale to a restricted group of purchasers for
investment and not with a view to any distribution thereof shall be considered a
commercially reasonable sale. Lender shall have the right upon any such public
sale, and, to the extent permitted by law, upon any such private sale, to
purchase the whole or any part of the Pledged Securities so sold, free of any
right or equity of
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redemption, which right or equity of redemption Borrower hereby releases to the
extent permitted by law.
(b) PROCEEDS ACCOUNT. To the extent that any of the
Obligations may be contingent, unmatured or unliquidated at such time as there
may exist a Default under the Loan Agreement, Lender may, at its election, (a)
retain the proceeds of any sale, collection, disposition or other realization
upon the Collateral (or any portion thereof) in a special purpose non-interest
bearing restricted deposit account (the "PROCEEDS ACCOUNT") created and
maintained by Lender for such purpose (as to which Borrower hereby grants a
security interest and which shall constitute part of the Collateral hereunder)
until such time as Lender may elect to apply such proceeds to the Obligations,
and Borrower agrees that such retention of such proceeds by Lender shall not be
deemed strict foreclosure with respect thereto, (b) in any manner elected by
Lender, estimate the liquidated amount of any such contingent, unmatured or
unliquidated claims and apply the proceeds of the Collateral against such
amount, or (c) otherwise proceed in any manner permitted by applicable law.
Borrower agrees that the Proceeds Account shall be a blocked account and that
upon the irrevocable deposit of funds into the Proceeds Account, Borrower shall
not have any right of withdrawal with respect to such funds. Accordingly,
Borrower irrevocably waives until the termination of this Agreement in
accordance with its terms, the right to make any withdrawal from the Proceeds
Account and the right to instruct Lender to honor drafts against the Proceeds
Account.
(c) APPLICATION OF PROCEEDS. Subject to subsection (b)
above, the cash proceeds actually received from the sale or other disposition or
collection of Collateral, and any other amounts of the Collateral (including any
cash contained in the Securities Account) the application of which is not
otherwise provided for herein, shall be applied to repay the Obligations. Any
surplus thereof which exists after payment and performance in full of the
Obligations shall be promptly paid over to Borrower or otherwise disposed of in
accordance with the UCC or other applicable law. Borrower shall remain liable to
Lender for any deficiency which exists after any sale or other disposition or
collection of Collateral.
(d) REGISTRATION RIGHTS. If Lender shall determine to
exercise its right to sell any or all of the Collateral pursuant to this SECTION
7, and if Lender shall determine, in its sole discretion, that it is necessary
or advisable to have the Collateral, or that portion thereof to be sold,
registered under the provisions of the Securities Act of 1933, as amended
("SECURITIES ACT"), or in the event that Lender determines that it is necessary
or advisable to arrange an underwritten sale of all or a portion of the
Collateral, Lender shall have the right to exercise, pre-foreclosure and in
Borrower's name or in Lender's name (at Lender's sole discretion), any and all
registration rights under the Registration Rights Agreement (with respect to an
appropriate amount of Pledged Securities, as determined by Lender in its sole
discretion, necessary to sell in order to satisfy the Obligations in full) and
to cause, in the name of Borrower or in the name of Lender (in Lender's sole
discretion), sales of the Pledged Securities pursuant to such registration, and
Borrower shall execute and deliver, and shall use its best efforts to cause
PLRE's and Borrower's respective directors and officers to execute and deliver,
all such instruments and documents, and to do or cause to be done all such other
acts and things as may, in the view of Lender, be advisable to (i) register such
Collateral under the provisions of the Securities Act and/or the Registration
Rights Agreement (including, without limitation, any necessary or advisable
amendment to such Registration Rights Agreement) and to cause the registration
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statement relating thereto to become effective and to remain effective for such
period as prospectuses are required by law to be furnished, and to make all
amendments and supplements thereto and to the related prospectus which, in the
view of Lender, are necessary or be necessary or advisable, all in conformity
with the requirements of the Securities and Exchange Commission applicable
thereto, and (ii) enable and facilitate a third-party underwritten sale of such
Collateral, including, without limitation, exercise of demand registration
rights pursuant to the Registration Rights Agreement. In connection therewith,
Borrower authorizes the incurrence of, and agrees to pay, all related "selling
costs," as such term is defined in the Registration Rights Agreement. Borrower
agrees to comply, and to use its best efforts to cause PLRE to comply, with the
provisions of the securities or "Blue Sky" laws of any jurisdiction which Lender
shall designate, and to use its best efforts to cause PLRE to make available to
its security holders, as soon as practicable, an earnings statement (which need
not be audited) which shall satisfy the provisions of Section 11(a) of the
Securities Act. Borrower shall cause to be furnished to Lender such number of
copies as Lender may request of each preliminary prospectus and prospectus,
shall promptly notify Lender of the happening of any event (upon becoming aware
thereof) as a result of which any then effective prospectus includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of then existing circumstances and shall cause Lender to be furnished with
such number of copies as Lender may reasonably request of such supplement to or
amendment of such prospectus as is necessary to eliminate such untrue statement
or correct such omission.
(e) NO OBLIGATION TO DELAY SALE. Lender shall be under no
obligation to delay a private sale of any of the Collateral for the period of
time necessary to permit the issuer thereof to register such Collateral for
public sale under the Securities Act, or under applicable state securities laws
or pursuant to any "black-out" or similar restriction in the Registration Rights
Agreement, even if such issuer would agree to do so.
(f) FURTHER ACTS. Borrower further agrees to do or to use
its best efforts to cause to be done all such other acts and things as may be
necessary to make any sales of all or any portion of the Collateral pursuant to
this Section valid and binding and in compliance with any and all applicable
laws (including the Exchange Act), regulations, orders, writs, injunctions,
decrees or awards of any and all Government Authorities having jurisdiction over
any such sale or sales.
(g) EQUITABLE RELIEF. Borrower acknowledges that a breach of
any of the covenants contained in this SECTION 7 will cause irreparable injury
to Lender, that Lender has no adequate remedy at law in respect of such breach
and, as a consequence, agrees that each and every covenant contained in this
SECTION 7 shall be specifically enforceable against Borrower, and Borrower
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Default has
occurred under the provisions of the Loan Agreement.
(h) COSTS AND EXPENSES. Borrower shall bear all costs and
expenses of carrying out its obligations under this SECTION 7, including any
costs associated with a third-party underwritten sale of the Collateral.
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8. REPRESENTATIONS AND WARRANTIES OF BORROWER. Borrower represents
and warrants that, to the best of its knowledge:
(a) On the date of delivery to Lender of the Collateral
described herein, no party other than Borrower and Lender will have any right,
title or interest in and to the Collateral.
(b) Borrower has, and on the date of delivery to Lender of
any Collateral will continue to have, full power, authority and legal right to
own the Collateral and to pledge all of the right, title and interest of
Borrower in and to the Collateral.
(c) This Agreement has been duly authorized, executed and
delivered by Borrower and constitutes a legal, valid and binding obligation of
Borrower, enforceable in accordance with its terms.
(d) No consent of any other party (including, without
limitation, creditors of Borrower) and no consent, license, permit, approval or
authorization of, exemption by, notice or report to, or registration, filing or
declaration with, any governmental authority, domestic or foreign, is required
to be obtained by Borrower in connection with the execution, delivery or
performance of this Agreement.
(e) The execution, delivery and performance of this
Agreement will not violate or conflict with any provision of any applicable law
or regulation or of any order, judgment, writ, award or decree of any court,
arbitrator or governmental authority, domestic or foreign, or of any material
mortgage, indenture, lease, contract, or other agreement, instrument or
undertaking to which Borrower is a party or which purports to be binding upon
Borrower or upon its assets and will not result in the creation or imposition of
any lien, charge or encumbrance on or security interest in any of the assets of
Borrower except as contemplated by this Agreement.
(f) The pledge, assignment and delivery of the Collateral
pursuant to this Agreement will create a valid first lien on and a first
perfected security interest in, all right, title or interest of Borrower in or
to the Collateral, and the proceeds thereof, subject to no prior pledge, lien,
mortgage, hypothecation, security interest, charge, option or encumbrance or to
any agreement purporting to grant to any third party a security interest in the
property or assets of Borrower which would include, without limitation, the
Collateral.
(g) Borrower has, and at all times shall have obtained, all
permits, licenses, exemptions, and approvals necessary to own the Collateral,
and shall maintain compliance with all governmental requirements applicable to
the Collateral and the making of the Borrower Loan and all other applicable
statues, laws, regulations and ordinances necessary for the transaction of
Borrower's business.
(h) All financial statements and information heretofore
delivered to Lender by Borrower with respect to the Collateral, the financial
condition of Borrower and, to the best of Borrower's knowledge, the Property
fairly and accurately represent the subject thereof and have been prepared
(except as noted therein) in accordance with generally accepted accounting
principles consistently applied. Borrower acknowledges and agrees that Lender
may request and
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obtain additional information from third parties regarding any of the above,
including, without limitation, credit reports of Borrower.
(i) To the best of Borrower's knowledge, all reports,
documents, instruments, information and forms of evidence delivered to Lender
concerning the Loan, Collateral, the Property or otherwise required by the Loan
Documents are accurate, correct and sufficiently complete to give Lender true
and accurate knowledge of their subject matter, and do not contain any material
misrepresentation or omission.
(j) Borrower has filed all required federal, state, county
and municipal tax returns and has paid all taxes and assessments owed and
payable, and Borrower has no knowledge of any basis for any additional payment
with respect to any such taxes and assessments.
(k) Borrower is familiar with and in compliance with all
governmental requirements for the ownership of the Collateral and the making of
the Borrower Loan and will conform to and comply with all governmental
requirements applicable thereto.
9. COVENANTS OF BORROWER. Borrower covenants and agrees as follows:
(a) Borrower will defend Lender's right, title and security
interest in and to the Collateral and the proceeds thereof against the claims
and demands of all persons whomsoever; and covenants and agrees that it will
have like title to and right to pledge any other property at any time hereafter
pledged to Lender as Collateral hereunder and will likewise defend Lender's
right thereto and security interest therein.
(b) Without the prior written consent of Lender, Borrower
will not sell, assign, transfer, exchange or otherwise dispose of, or grant any
option with respect to, the Collateral, nor will it create, incur or permit to
exist any pledge, lien, mortgage, hypothecation, security interest, charge,
option or any other encumbrance with respect to any of the Collateral, or any
interest therein, or any proceeds thereof, except for the lien and security
interest provided for by this Agreement.
(c) Borrower will not withdraw funds from the Securities
Account, or exercise any dominion or control over the Securities Account except
in accordance with this Agreement and the Control Agreement. Without in any way
limiting the foregoing, Borrower will not invest or cause the investment of any
funds in the Securities Account except as may be approved by Lender in writing.
(d) Promptly upon receipt or delivery thereof, Borrower
shall cause to be delivered to Lender true and complete copies of all written
notices, reports and other communications received or delivered by Borrower or
any Affiliate, in connection with the Collateral.
(e) Upon Lender's request and at Borrower's sole cost and
expense, Borrower shall execute, acknowledge and deliver any other instruments
and perform any other acts reasonably necessary, desirable or proper, as
reasonably determined by Lender, to carry out the purposes of this Agreement.
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10. BORROWER'S WAIVERS AND AUTHORIZATIONS.
(a) Borrower hereby expressly waives, to the full extent
legally permissible: (i) diligence, presentment, demand for payment and protest;
(ii) the benefit of any statute of limitations in connection with the
Obligations; (iii) discharge of the Obligations due to any disability of
Borrower, or any Person; (iv) any defenses of Borrower or any Person to the
Obligations or to any other obligations not arising under the express terms of
the documents relating thereto or from a material breach thereof by Lender which
under the law has the effect of discharging Borrower or any Person from the
Obligations as to which this Agreement is sought to be enforced; (v) the benefit
of any act or omission by Lender which directly or indirectly results in or aids
the discharge of Borrower or any Person from any of the Obligations, by
operation of law or otherwise; (vi) the cessation or limitation from any cause
whatsoever, other than payment and performance in full, of the Obligations;
(vii) all notices whatsoever, including, without limitation, notice of
acceptance of this Agreement and the incurring of the Obligations; and (viii)
any requirement that Lender exhaust any right, power or remedy or proceed
against the Borrower or any Person or any other security for, or any other
guarantor of, or any other party liable for, any of the Obligations or any
portion thereof. Borrower specifically agrees that it will not be necessary or
required, and Borrower shall not be entitled to require, that Lender file suit
or proceed to assert or obtain a claim for personal judgment against any Person
for the Obligations or to make any effort at collection or enforcement of the
Obligations from any Person or foreclose against or seek to realize upon any
security now or hereafter existing for the Obligations or file suit or proceed
to obtain or assert a claim for personal judgment against Borrower or any other
guarantor or other party liable for the Obligations or make any effort at
collection of the Obligations from any such party or exercise or assert any
other right or remedy to which Lender is or may be entitled in connection with
the Obligations or any security or guaranty relating thereto or assert or file
any claim against the assets of any Person, before or as a condition of
enforcing the liability of Borrower under this Agreement.
(b) Borrower authorizes Lender, either before or after
revocation hereof, without notice or demand and without affecting Borrower's
other liability hereunder, from time to time and at any time, subject to the
terms of the Agreement:
1. to compromise, renew or extend any or all of the
terms of the Obligations, including but not limited to the time for
payment thereof and the rate of interest applicable thereto;
2. to take and hold security, other than the
Pledged Securities, for payment of the Obligations or any part of either
thereof, to perfect or fail to perfect any security interest in the
Pledged Securities or any such other security, and to exchange, enforce,
waive and release the Pledged Securities, or any part thereof, or any
such other security;
3. after the occurrence and during the continuance
of an Event of Default, to apply the Pledged Securities, or any other
security, and direct the order or manner of sale thereof, including,
without limitation, a non-judicial sale permitted by the terms of the
controlling security agreement or deed of trust, as Lender in its
discretion may determine, without any obligation to marshal assets;
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4. to release or compromise the obligations of, or
substitute, any pledgor of security for, or guarantor of, the
Obligations or any part of either thereof, or any other Person; and
5. to permit or suffer the creation of secured or
unsecured credit or debt under Bankruptcy Code Section 364 in a case by
or against any other Person; and to permit or suffer the disallowance,
avoidance or subordination of any of the Obligations or any other Person
or collateral for any of the Obligations.
(c) No obligation of Borrower hereunder shall be altered,
limited or affected by any proceeding, voluntary or involuntary, involving the
bankruptcy, insolvency, receivership, reorganization, liquidation or arrangement
of any other Person or by any defense which any other Person may have by reason
of the order, decree or decision of any court or administrative body resulting
from any such proceeding. Borrower acknowledges and agrees that any interest on
the Obligations which accrues after the commencement of any such proceeding (or,
if interest on any portion of the Obligations ceases to accrue by operation of
law by reason of the commencement of said proceeding, such interest as would
have accrued on any such portion of the Obligations if said proceedings had not
been commenced) shall be included in the Obligations because it is the intention
of the parties that the Obligations should be determined without regard to any
rule of law or order which may relieve any other Person of any portion of the
Obligations. Borrower shall permit any trustee in bankruptcy, receiver, debtor
in possession, assignee for the benefit of creditors or similar person to pay
Lender, or allow the claim of Lender in respect of, any such interest accruing
after the date on which such proceeding is commenced. This Agreement shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment of any of the Obligations or any part thereof is rescinded or must
otherwise be restored or returned by Lender upon the insolvency, bankruptcy,
reorganization, moratorium or other debtor relief proceeding of Borrower, or
otherwise, all as though such payment had not been made. Borrower waives any
right of the deferral or modification of Borrower's obligations hereunder by
virtue of any such proceeding.
11. FURTHER ASSURANCES. Borrower agrees that at any time and from
time to time upon the written request of Lender, Borrower will execute and
deliver such further documents and do such further acts and things as Lender may
reasonably request in order to effect the purposes of this Agreement.
12. AMENDMENTS; ETC. No amendment, modification, termination or
waiver of any provision of this Agreement, and no consent to any departure by
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by Lender and, in the case of any such amendment or
modification, by Borrower. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
13. NOTICES. Unless otherwise specifically provided herein, any
notice or other communication herein required or permitted to be given shall be
in writing and shall be delivered to the appropriate party at the address or
facsimile number set forth on the signature page of this Agreement (subject to
change from time to time by written notice to all other parties to this
Agreement, and provided that any notice sent by facsimile shall be concurrently
delivered by an alternate permitted delivery method). All communications shall
be deemed served upon delivery
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of, or if mailed, upon the first to occur of receipt or the expiration of three
(3) days after the deposit in the United States Postal Service mail, postage
prepaid and addressed to the address of Borrower or Lender at the address
specified, or if sent by facsimile, upon sender's notification of successful
transmission; PROVIDED, HOWEVER, that non-receipt of any communication as the
result of any change of address of which the sending party was not notified or
as the result of a refusal to accept delivery shall be deemed receipt of such
communication.
14. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
failure or delay on the part of Lender 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 in the event of a default are
cumulative to, and not exclusive of, any rights or remedies otherwise available
to Lender under the Loan Documents.
15. INDEMNIFICATION. Borrower hereby agrees to indemnify Lender, any
Affiliate thereof, and their respective directors, officers, employees, agents,
counsel and other advisors (each an "INDEMNIFIED PERSON") against, and hold each
of them harmless from, any and all liabilities, obligations, losses, claims,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever, including the reasonable fees and
disbursements of counsel to an Indemnified Person, which may be imposed on or
incurred by any Indemnified Person, or asserted against any Indemnified Person
by any third party or by Borrower, in any way relating to or arising out of, in
connection with, or as a result of (a) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or thereunder, the
transactions contemplated hereby or the Collateral or (b) any actual or
prospective claim, litigation, investigation or proceeding relating to any of
the foregoing, whether based on contract, tort or any other theory, whether
brought by a third party or by Borrower, including, without limitation, any
alleged violations of the Securities Act (the "INDEMNIFIED LIABILITIES");
provided that Borrower shall not be liable to any Indemnified Person for any
portion of such Indemnified Liabilities to the extent they are found by a final
decision of a court of competent jurisdiction to have resulted from such
Indemnified Person's gross negligence or willful misconduct. If and to the
extent that the foregoing indemnification is for any reason held unenforceable,
Borrower agrees to make the maximum contribution to the payment and satisfaction
of each of the Indemnified Liabilities which is permissible under applicable
law.
16. DISCLOSURE OF INFORMATION. Borrower acknowledges that Lender has
the right to sell, assign, transfer, negotiate or grant participations in all or
any part of, or any interest in, any Obligations of Borrower to Lender and any
obligations with respect thereto, including this Agreement. In connection
therewith, Lender may disclose all documents and information which Lender now
has or hereafter acquires relating to Borrower and this Agreement, whether
furnished by Borrower, Borrower or otherwise. Borrower further agrees that
Lender may disclose such documents and information to Borrower. In the event of
any such sale, assignment, transfer or participation, Lender and the parties to
such transaction shall share in the rights and obligations of Lender as set
forth in this Agreement only as and to the extent they agree among themselves.
In connection with any such sale, assignment, transfer or participation,
Borrower further agrees that this Agreement shall be sufficient evidence of the
obligations of
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Borrower to each purchaser, assignee, transferee or participant, and upon
written request by Lender, Borrower shall enter into such amendment or
modification to this Agreement as may be reasonably required in order to
evidence any such sale, assignment, transfer or participation. The indemnity
obligations of Borrower under this Agreement shall also apply with respect to
any purchaser, assignee, transferee or participant.
17. 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.
18. 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.
19. 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
CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT
THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST HEREUNDER,
OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY
THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA. Unless otherwise
defined herein or in the Loan Agreement, terms used in Articles 8 and 9 of the
UCC are used herein as therein defined.
20. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. Borrower
consents to the jurisdiction of any Federal or State Court within the State of
California having proper venue and also consent to service of process by any
means authorized by California or Federal Law.
21. WAIVER OF JURY TRIAL. EACH PARTY TO THIS AGREEMENT HEREBY
EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION (a) ARISING UNDER THE LOAN DOCUMENTS, INCLUDING, WITHOUT
LIMITATION, ANY PRESENT OR FUTURE MODIFICATION THEREOF OR (b) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS (AS NOW OR HEREAFTER MODIFIED) OR
ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION
HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER
SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION IS NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO
THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH
ANY COURT AS WRITTEN EVIDENCE OF THE
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CONSENT OF THE PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE
HAVE TO TRIAL BY JURY.
22. 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.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties have caused this Pledge Agreement to be
duly executed and delivered on the day and year first above written.
"LENDER" XXXXX FARGO BANK,
NATIONAL ASSOCIATION
By:
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
"BORROWER" THE 520 GROUP, LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
By:
----------------------------------
Name: Xxxx Xxxxxx
Its: Manager
By:
----------------------------------
Name: Xxxxx XxXxxxx
Its: Manager
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