EXHIBIT 10.4
EXECUTION COPY
NEWCO MEMBER PLEDGE AGREEMENT
This NEWCO MEMBER PLEDGE AGREEMENT (this "Agreement") is dated as of
January 14, 2003 and entered into by and between CRIIMI NEWCO MEMBER, 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 Initial Purchaser and CRIIMI MAE Inc., a Maryland
corporation ("Company")).
PRELIMINARY STATEMENTS
A. Pledgor (i) is a wholly-owned Subsidiary of Company and (ii) is the
legal and beneficial owner of the limited liability company interests in CRIIMI
NEWCO, LLC, a Maryland limited liability company (the "Issuer"), described in
Schedule I annexed hereto (the "Pledged Interests").
B. Company and Investor have entered into the Investment Agreement pursuant
to which (i) Company has agreed to issue and sell, and Investor has agreed to
purchase, the 15% Subordinated Notes, and (ii) at the option of Company as more
fully described in the Investment Agreement, Company 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 Interests and the certificates or other instruments, if
any, representing the Pledged Interests 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 Interests; 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 Company 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
Company, would accrue on such obligations, whether or not a claim is allowed
against Company 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 Company and 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
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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.
SECTION 4. Representations and Warranties. Pledgor represents and warrants
as follows:
(a) Due Authorization, etc. of Pledged Collateral. All of the Pledged
Interests 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 Interests constitute all
of the issued and outstanding limited liability company interests 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 Interests.
(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. Except as provided in Section 4(e), 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, together with the filing of a UCC financing statement with the
Secretary of State of the State of Maryland describing the Pledged Collateral,
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 D07168131.
(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.
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(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 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 membership interests or other
securities in addition to or in substitution for the Pledged Interests, except
to Pledgor, or (ii) pledge hereunder, immediately upon its acquisition (directly
or indirectly) thereof, any and all additional membership interests 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
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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
membership interests 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 Interests to be pledged pursuant to this
Agreement. Upon each delivery of a Pledge Amendment to Secured Party, 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 Interests 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 Interests 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 Interests for or
Pledgor's consent to the election of directors at a regularly scheduled annual
or other meeting of members 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,
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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
(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).
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(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 Interests and to exercise
all other rights, powers, privileges and remedies to which a holder of the
Pledged Interests 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
Interests 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
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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 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,
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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 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.
(b) Anything contained in this Agreement to the contrary notwithstanding,
if the proceeds of any sale or other disposition of the Pledged Collateral are
insufficient to pay all the Secured Obligations, Pledgor shall not be liable for
the deficiency.
(c) 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.
(d) 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
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time to furnish to Secured Party all such information as Secured Party may
request in order to determine the number of membership interests 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:
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.
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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 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 Investor
and 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
11
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
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.
12
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 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
13
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.
SECTION 25. Suretyship Waivers by Pledgor, etc.
(a) Pledgor agrees that its obligations hereunder are irrevocable,
absolute, independent and unconditional and shall not be affected by any
circumstance which constitutes a legal or equitable discharge of a guarantor or
surety other than payment in full of the Secured Obligations. In furtherance of
the foregoing and without limiting the generality thereof, Pledgor agrees as
follows: (i) Secured Party, Investor or any Holder may from time to time,
without notice or demand and without affecting the validity or enforceability of
this Agreement or giving rise to any limitation, impairment or discharge of
Pledgor's liability hereunder, (A) renew, extend, accelerate or otherwise change
the time, place, manner or terms of payment of the Secured Obligations, (B)
settle, compromise, release or discharge, or accept or refuse any offer of
performance with respect to, or substitutions for, the Secured Obligations or
any agreement relating thereto and/or subordinate the payment of the same to the
payment of any other obligations, (C) request and accept guaranties of the
Secured Obligations and take and hold other security for the payment of the
Secured Obligations, (D) release, exchange, compromise, subordinate or modify,
with or without consideration, any other security for payment of the Secured
Obligations, any guaranties of the Secured Obligations, or any other obligation
of any Person with respect to the Secured Obligations, (E) enforce and apply any
other security now or hereafter held by or for the benefit of Secured Party or
Investor or any Holder in respect of the Secured Obligations and direct the
order or manner of sale thereof, or exercise any other right or remedy that
Secured Party, Investor or Holders, or any of them, may have against any such
security, as Secured Party in its discretion may determine consistent with the
Subordinated Note Agreement and any applicable security agreement, including
foreclosure on any such security pursuant to one or more judicial or nonjudicial
sales, whether or not every aspect of any such sale is commercially reasonable,
and (F) exercise any other rights available to Secured Party, Investor or
Holders, or any of them, under the Investment Agreement, the Subordinated Note
Agreement and the Collateral Agreements, at law or in equity; and (ii) this
Agreement and the obligations of Pledgor hereunder shall be valid and
enforceable and shall not be subject to any limitation, impairment or discharge
for any reason (other than payment in full of the Secured Obligations),
including without limitation the occurrence of any of the following, whether or
not Pledgor shall have had notice or knowledge of any of them: (A) any failure
to assert or enforce or agreement not to assert or enforce, or the stay or
enjoining, by order of court, by operation of law or otherwise, of the exercise
or enforcement of, any claim or demand or any right, power or remedy with
respect to the Secured Obligations or any agreement relating thereto, or with
respect to any guaranty of or other security for the payment of the Secured
Obligations, (B) any waiver, amendment or modification of, or any consent to
departure from, any of the terms or provisions (including without limitation
provisions relating to events of default) of the Investment agreement, the
Subordinated Note Agreement, any of the Collateral Agreements or any agreement
or instrument executed pursuant thereto, or of any guaranty or other security
for the Secured Obligations, (C) the Secured Obligations, or any agreement
relating thereto, at any time being found to be illegal, invalid or
unenforceable in any respect, (D) the application of payments received from any
14
source to the payment of indebtedness other than the Secured Obligations, even
though Secured Party, Investor or Holders, or any of them, might have elected to
apply such payment to any part or all of the Secured Obligations, (E) any
failure to perfect or continue perfection of a security interest in any other
collateral which secures any of the Secured Obligations, (F) any defenses,
set-offs or counterclaims which Company may allege or assert against Secured
Party, Investor or any Holder in respect of the Secured Obligations, including
but not limited to failure of consideration, breach of warranty, payment,
statute of frauds, statute of limitations, accord and satisfaction and usury,
and (G) any other act or thing or omission, or delay to do any other act or
thing, which may or might in any manner or to any extent vary the risk of
Pledgor as an obligor in respect of the Secured Obligations.
(b) Pledgor hereby waives, for the benefit of Holders, Investor and Secured
Party: (i) any right to require Secured Party, Holders or Investor, as a
condition of payment or performance by Pledgor, to (A) proceed against Company,
any guarantor of the Secured Obligations or any other Person, (B) proceed
against or exhaust any other security held from Company, any guarantor of the
Secured Obligations or any other Person, (C) proceed against or have resort to
any balance of any deposit account or credit on the books of Secured Party,
Investor or any Holder in favor of Company or any other Person, or (D) pursue
any other remedy in the power of Secured Party, Investor or any Holder
whatsoever; (ii) any defense arising by reason of the incapacity, lack of
authority or any disability or other defense of Company including, without
limitation, any defense based on or arising out of the lack of validity or the
unenforceability of the Secured Obligations or any agreement or instrument
relating thereto or by reason of the cessation of the liability of Company from
any cause other than payment in full of the Secured Obligations; (iii) any
defense based upon any statute or rule of law which provides that the obligation
of a surety must be neither larger in amount nor in other respects more
burdensome than that of the principal; (iv) any defense based upon Secured
Party's, Investor's or any Holder's errors or omissions in the administration of
the Secured Obligations, except behavior which amounts to bad faith; (v) (A) any
principles or provisions of law, statutory or otherwise, which are or might be
in conflict with the terms of this Agreement and any legal or equitable
discharge of Pledgor's obligations hereunder, (B) the benefit of any statute of
limitations affecting Pledgor's liability hereunder or the enforcement hereof,
(C) any rights to set-offs, recoupments and counterclaims, and (D) promptness,
diligence and any requirement that Secured Party, Investor or any Holder
protect, secure, perfect or insure any other security interest or lien or any
property subject thereto; (vi) notices, demands, presentments, protests, notices
of protest, notices of dishonor and notices of any action or inaction, notices
of default under the Investment Agreement or the Subordinated Note Agreement or
any agreement or instrument related thereto, notices of any renewal, extension
or modification of the Secured Obligations or any agreement related thereto,
notices of any extension of credit to Company and notices of any of the matters
referred to in Section 25(a) and any right to consent to any thereof; and (vii)
to the fullest extent permitted by law, any defenses or benefits that may be
derived from or afforded by law which limit the liability of or exonerate
guarantors or sureties, or which may conflict with the terms of this Agreement.
(c) Until the Secured Obligations shall have been paid in full, Pledgor
shall withhold exercise of (i) any claim, right or remedy, direct or indirect,
that Pledgor now has or may hereafter have against Company or any of its assets
in connection with this
15
Agreement or the performance by Pledgor of its obligations hereunder, in
each case whether such claim, right or remedy arises in equity, under contract,
by statute, under common law or otherwise and including without limitation (A)
any right of subrogation, reimbursement or indemnification that Pledgor now has
or may hereafter have against Company, (B) any right to enforce, or to
participate in, any claim, right or remedy that Secured Party, Investor or any
Holder now has or may hereafter have against Company, and (C) any benefit of,
and any right to participate in, any other collateral or security now or
hereafter held by Secured Party, Investor or any Holder, and (ii) any right of
contribution Pledgor may have against any guarantor of any of the Secured
Obligations. Pledgor further agrees that, to the extent the waiver of its rights
of subrogation, reimbursement, indemnification and contribution as set forth
herein is found by a court of competent jurisdiction to be void or voidable for
any reason, any rights of subrogation, reimbursement or indemnification Pledgor
may have against Company or against any other collateral or security, and any
rights of contribution Pledgor may have against any such guarantor, shall be
junior and subordinate to any rights Secured Party, Investor or Holders may have
against Company, to all right, title and interest Secured Party, Investor or
Holders may have in any such other collateral or security, and to any right
Secured Party, Investor or Holders may have against any such guarantor.
(d) Holders, Investor and Secured Party shall have no obligation to
disclose or discuss with Pledgor their assessment, Pledgor's assessment, of the
financial condition of Company. Pledgor has adequate means to obtain information
from Company on a continuing basis concerning the financial condition of Company
and its ability to perform its obligations under the Investment Agreement, the
Subordinated Note Agreement and the Collateral Agreements, and Pledgor assumes
the responsibility for being and keeping informed of the financial condition of
Company and of all circumstances bearing upon the risk of nonpayment of the
Secured Obligations. Pledgor hereby waives and relinquishes any duty on the part
of Secured Party, Investor or any Holder to disclose any matter, fact or thing
relating to the business, operations or condition of Company now known or
hereafter known by Secured Party, Investor or any Holder.
16
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 NEWCO MEMBER, INC.
/s/Xxxxx X. Xxxxxxxxx
---------------------------------
Name: Xxxxx X. Xxxxxxxxx
Title: Executive Vice President
Notice Address for Pledgor:
CRIIMI Newco Member, Inc.
c/o 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 NEWCO MEMBER, 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
Issuer Interest Shares Pledged
=========================== ======================= ================== ============ ============== ===================
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------
--------------------------- ----------------------- ------------------ ------------ -------------- -------------------
SCHEDULE II-1
SCHEDULE II
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 NEWCO MEMBER, 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 Interests listed on this Pledge Amendment shall be deemed to be
part of the Pledged Interests and shall become part of the Pledged Collateral
and shall secure all Secured Obligations.
CRIIMI NEWCO MEMBER, INC.
By: ___________________________
Title:
Class of Stock or Stock Certi- Par Number of
Issuer other equity interests ficate Nos. Value Shares
------ ---------------------- ------------ ----- ---------
SCHEDULE V-1
