Exhibit 3
4(c) (ARV warrants)
PLEDGE AND SECURITY AGREEMENT
(WARRANTS)
THIS PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") dated as of July 11,
2002 is by and among CTMPII FC LF (MS), a Cayman Islands exempted company
("SECURED PARTY"), having an address at c/o Capital Trust, 410 Park Avenue,
14th Floor, New York, N.Y. 10022, LFSRI II ASSISTED LIVING LLC, a Delaware
limited liability company ("PLEDGOR"), having an address at 00 Xxxxxxxxxxx
Xxxxx, Xxx Xxxx, X.X. 00000.
PRELIMINARY STATEMENT
A. Secured Party has agreed to make a loan to LFSRI II SPV REIT CORP.,
a Delaware corporation ("LFSRI II BORROWER"), and SENIOR QUARTERS FUNDING
CORP., a Delaware corporation ("SENIOR QUARTERS BORROWER"; Senior Quarters
Borrower collectively with LFSRI II Borrower, the "BORROWER"), in the
aggregate principal sum of up to $65,000,000 (the "LOAN"), in accordance
with the provisions of a certain Loan Agreement (the "LOAN AGREEMENT")
dated of even date herewith, which Loan shall be evidenced by, and payable,
together with interest thereon, in accordance with a certain promissory
note, the "NOTE". The Note, the Loan Agreement, this Agreement and all
other documents of any nature whatsoever evidencing, securing or
guaranteeing the Loan in whole or in part, or otherwise executed and
delivered in connection with the Loan or relating thereto, as the same may
be modified or amended from time to time, are hereinafter referred to
collectively as the "LOAN DOCUMENTS".
B. Capitalized terms used and not otherwise defined herein shall have
the respective meanings given to such terms in the Loan Agreement.
C. As of the date hereof, Pledgor owns warrants to purchase 750,000
shares of common stock of ARV ASSISTED LIVING, INC., a Delaware corporation
("COMPANY"), at $3.00 per share (the "INTEREST").
D. Pledgor has previously entered into that certain Pledge and
Security Agreement dated as of February 8, 2001 (as amended or modified
from time to time, the "ORIGINAL ARV PLEDGE AGREEMENT"), whereby Pledgor
has pledged to Capital Trust, Inc., the Interest and any certificates
representing the Interest, along with certain other collateral, as set
forth in the Original ARV Pledge Agreement.
E. Secured Party was willing to make the Loan only if Pledgor agreed
to execute and deliver this Agreement as additional security for the
payment of all principal, interest, additional interest and other sums of
any nature whatsoever which may or shall become due under the Note, the
Loan Agreement and the other Loan Documents (collectively, the "DEBT") and
the observance and performance by Borrower, Pledgor and the other members
of the Borrower Control Group of all the terms, covenants and provisions of
the Loan Documents on the part of Pledgor to be observed and performed.
F. Pledgor will derive substantial economic benefit from the Loan and,
therefore, Pledgor desires to execute this Agreement in order to satisfy
the condition described in the foregoing paragraph E.
G. Borrower has agreed to make available a portion of the proceeds
from the Loan to the Pledgor.
NOW, THEREFORE, in consideration of the foregoing and Secured Party's
agreement to make the Loan and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Pledgor hereby
represents and warrants to and covenants and agrees with Secured Party as
follows:
SECTION 1. SECURITY INTEREST. As security for the due and punctual
payment in full of the Debt and for the due and punctual performance by
Borrower, Pledgor, and the other members of the Borrower Control Group of
all of the terms, covenants and provisions of the Loan Documents (the Debt,
the payment thereof and the performance of the terms, covenants and
provisions of the Loan Documents being hereinafter collectively called the
"OBLIGATIONS"), Pledgor hereby pledges, hypothecates, assigns, and delivers
to Secured Party and grants to Secured Party a security interest in and
lien on all of Pledgor's right, title and interest now owned or hereafter
acquired in and to the following described property (the "COLLATERAL"):
(a) the Interest and any certificates representing the Interest;
(b) all cash, securities, dividends, distributions, Proceeds, and
other property at any time and from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
of the Interest, and any fees, commissions or other compensation
payable to Pledgor as a stockholder or warrant holder of Company (all
of the foregoing, collectively, "DISTRIBUTIONS");
(c) all contract rights, general intangibles, rights, claims,
powers, privileges, benefits and remedies arising from or in any way
related to ownership of the Interest, any certificates and other
instruments representing the Interest and the other Collateral
described above in paragraphs 1(a) and (b), including, without
limitation, all rights to vote or consent, or to receive any notice,
or to inspect or review any books, records or other information;
(d) all additions to the Collateral described in the foregoing
clauses (a) through (c) including without limitation any tangible or
intangible property in the Company obtained in the future by Pledgor,
all substitutions therefor and all replacements thereof;
(e) all Proceeds of any of the foregoing.
Notwithstanding any contrary provision contained herein, as used in
this Agreement, the terms "Collateral" and "Distributions" shall not
include any money properly released from the Deposit Account or other
Collateral released by Secured Party pursuant to the terms of this
Agreement or the Deposit Account Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor hereby
represents and warrants to Secured Party as of the date hereof as follows:
(a) No consent of any other person or entity (including, without
limitation, any owner or creditor of Pledgor) which has not been
obtained, is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement other than
the consent of the Senior Lender with respect to the Senior Loan,
which consent of Senior Lender has been obtained contemporaneously
herewith.
(b) Pledgor is duly organized, validly existing and in good
standing under the laws of the state of its formation and has all
requisite power and authority under the laws of such state and under
its organizational and charter documents to enter into and perform its
obligations under this Agreement.
(c) Pledgor has taken all necessary legal and other action to
authorize the execution, delivery and performance of this Agreement,
and this Agreement constitutes the valid and binding obligation and
agreement of Pledgor, enforceable in accordance with its terms,
subject to limitations as to enforceability imposed by bankruptcy,
reorganization, moratorium, insolvency and other laws of general
application relating to or affecting the enforceability of creditors'
rights and to equitable principles.
(d) Pledgor has not received any notice of default under any
agreement or instrument to which Pledgor is a party or by which
Pledgor or Pledgor's assets may be bound which default would have a
material adverse effect on Pledgor's business, assets, property or
financial or other condition, and Pledgor is not in default under any
order, judgment, award or decree of any court, arbitrator or other
governmental authority binding upon or affecting Pledgor or by which
any of Pledgor's assets may be bound or affected.
(e) Neither the execution and delivery of this Agreement nor the
compliance by Pledgor with the terms and provisions hereof are events
which of themselves, or with the giving of notice or the passage of
time, or both, would constitute, on the part of Pledgor, a violation
of or conflict with, or result in any breach of, or default under, the
terms, conditions or provisions of, or require any consent, permit,
approval, authorization, declaration or filing (other than filings now
or hereinafter made by Pledgor required under the Securities Exchange
Act of 1934, as amended, as a result hereof) which has not been made
or obtained under or pursuant to, (i) any statute, law, judgment,
decree, order, rule or regulation applicable to Pledgor, (ii) the
organizational and charter documents of Pledgor, if any, or, (iii)any
other agreement or instrument to which Pledgor is a party or by which
Pledgor (other than the Senior Loan had the consent of the Senior
Lender not been obtained with respect hereto, such consent of Senior
Lender having been so obtained contemporaneously herewith), or
Pledgor's assets, are bound, or result in the creation or imposition
of any Lien, on any of the assets of Pledgor, no such condition or
event of itself, or with the giving of notice or the passage of time,
or both, will result in the acceleration of the due date of any
obligation of Pledgor or by which any of Pledgor's assets are bound;
provided, however, that the compliance by Pledgor with the terms and
provisions hereof is subject to all applicable Federal and state
securities laws.
(f) There are no judgments presently outstanding and unsatisfied
against Pledgor or any of Pledgor's assets, and neither Pledgor nor
any of Pledgor's assets is a party to or the subject of any actions or
suits or proceedings in equity or by any governmental authorities, and
no such litigation or proceeding has been threatened against Pledgor
or against any of Pledgor's assets, and no investigation in
contemplation of such litigation or proceeding has begun or is pending
or has been threatened.
(g) Intentionally Deleted.
(h) The financial statements of Pledgor and Company furnished to
Secured Party are true, correct and complete in all material respects
and fairly present the financial condition of Pledgor and Company as
at the end of and for the reporting periods covered thereby. Except
for the Permitted Indebtedness of Pledgor or the Company or as shown
on such financial statements, no borrowings (other than the Senior
Loan) have been made or indebtedness incurred by Pledgor or Company
which is outstanding and which might give rise to a lien or claim
against any assets of Pledgor or Company. Except for the Permitted
Indebtedness of Pledgor, there are no liabilities, contingent or
otherwise, or any unrealized or anticipated losses from unfavorable
commitments, whether arising before or after the date of such
financial statements, which are not disclosed in such financial
statements. Notwithstanding the foregoing, the representations and
warranties in this Section 2(h) as they relate to Company are made to
Pledgor's actual knowledge.
(i) As of the date hereof, Pledgor has filed or caused to be
filed all United States, state, local and foreign income tax returns
(if any) which are required to be filed and all United States, state,
local and foreign tax returns other than income tax returns which are
required to be filed and has paid or caused to be paid all taxes shown
on such returns or on any assessment made against it and all other
taxes, fees or other charges imposed on it by any governmental
authority, agency or instrumentality which have become due and
payable. No tax liens have been filed against Pledgor or against any
of its assets, and no material claims are being asserted against
Pledgor or any of its assets in respect of any taxes.
SECTION 3. Intentionally omitted.
SECTION 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PLEDGOR.
Pledgor hereby represents and warrants to Secured Party as follows with
respect to the Interest as of the date hereof:
(a) (i) Pledgor is the sole record and beneficial owner of the
Interest (except to the extent any direct or indirect equity owners of
Pledgor is deemed to be a beneficial owner of the Interest), free and
clear of all Liens (other than as created hereunder, under the
Original ARV Pledge Agreement and the Senior Loan Agreement); Pledgor
has legal title to the Interest and good right and lawful authority to
grant a security interest and lien in the same in the manner hereby
done or contemplated, after giving effect to the consent of the Senior
Lender, such consent having been given contemporaneously herewith.
(ii) The execution and delivery of this Agreement by Pledgor is not
restricted in any way by (x) any agreement or instrument to which
Pledgor is a party (other than the Senior Loan had the consent of the
Senior Lender not been obtained with respect hereto, such consent of
Senior Lender having been so obtained contemporaneously herewith),
except for such restrictions as have been waived, by proper steps
taken in compliance with such restrictions or (y) any applicable law
governing Company. (iii) The transferability of the Interest, with
respect to either the grant of a security interest and lien in the
Collateral to Secured Party or to any foreclosure sale of the
Collateral by Secured Party (where Secured Party or its affiliates
purchases the Collateral) is not restricted in any way by (x) any
agreement or instrument to which Pledgor is a party (other than the
Senior Loan Documents), except for such restrictions as have been
waived, by proper steps taken in compliance with such restrictions, or
(y) any law governing the Company (other than applicable Federal and
state securities laws). (iv) The Interest is not subject to any option
or similar arrangement; and no consent or approval of any governmental
body or regulatory authority, or of any securities exchange, is
necessary to the validity of the rights created hereunder; and all
action has been taken by Pledgor to create and perfect, in favor of
Secured Party, a security interest and lien in the Interest, and
Secured Party has acquired a second priority perfected security
interest and lien therein, subject and subordinate only to the
security interest and lien in the Interest in favor of the Senior
Lender under the Senior Loan documents.
(b) Except for the Interest and as set forth in the Senior Loan
Documents, there are no outstanding or authorized options, warrants,
rights, contracts, rights to subscribe, conversion rights or other
agreements or commitments (collectively, "ADVERSE RIGHTS") to which
Pledgor is a party, providing for the issuance or acquisition of any
Equity Interests in Company.
(c) As to all Collateral acquired by Pledgor on and after the
date hereof, Pledgor shall be the legal and equitable owner of such
Collateral free and clear of all Liens (other than those created
hereunder and under the Original ARV Pledge Agreement); each ownership
interest or other security comprising such Collateral will have been
duly authorized, validly issued and be fully paid and non-assessable;
after giving effect to the consent of the Senior Lender (such consent
having been given contemporaneously herewith), Pledgor will have legal
title to such Collateral and good and lawful authority to pledge,
assign and deliver such Collateral in the manner hereby contemplated;
and no consent or approval of any governmental body or regulatory
authority, or of any securities exchange, is or will be necessary to
the validity of the rights created hereunder.
(d) Pledgor shall not take any action, or fail to take any
action, in contravention of the terms, conditions and provisions of
the Note, the Loan Agreement, this Agreement or any of the other Loan
Documents.
SECTION 5. COVENANTS.
(a) Entity Status. Pledgor will continue to comply with the
provisions of all of its organizational and governing documents, and
the laws of the state in which such Entity was formed relating to each
such Entity. All customary formalities regarding the Entity existence
of Pledgor will continue to be observed.
(b) Existence. Pledgor shall not (i) take any actions in
violation of its organizational or governing documents or (ii) amend,
modify, waive or terminate its organizational or governing documents.
(c) Other Actions. Pledgor shall not:
(1) Liens on the Collateral. Incur, create, assume, become
or be liable in any manner with respect to, or permit to exist,
any Lien with respect to any Collateral except Liens in favor of
Secured Party or Senior Lender under the Senior Loan Documents.
(2) Certain Restrictions. Enter into any agreement which
expressly restricts the ability of Pledgor to enter into
amendments, modifications or waivers of any of the Loan
Documents.
(3) Issuance of Equity Interests. Issue or allow to be
created any shareholder, partnership, trust or membership
interests, as applicable, or other Equity Interests in Pledgor.
(d) Reduction of Distributions. Subject to fiduciary obligations,
Pledgor shall not, directly or indirectly, without prior written
consent of the Secured Party, vote to reduce the annual dividend
payable by the Company.
(e) Transfer. Pledgor shall not Transfer the Interest other than
in compliance with Section 2.6(b) the Loan Agreement or as otherwise
may be required by Senior Lender in accordance with the terms of the
Senior Loan Agreement.
SECTION 6. DELIVERY OF COLLATERAL; VOTING RIGHTS; DISTRIBUTIONS;
SUBSTITUTION OF COLLATERAL.
(a) Any and all certificates representing the Collateral
(including without limitation additional or substitute certificates or
instruments representing Distributions or other Collateral that
hereafter may be issued) shall be delivered to the Secured Party in
suitable form for transfer by delivery, or shall be accompanied by
duly executed instruments of transfer or assignment in blank, with
signatures appropriately guaranteed, and accompanied by any required
transfer tax stamps, all in form satisfactory to Secured Party; it
being agreed and understood that the delivery of the Collateral (or
any certificates or instruments representing the Collateral or
Distributions) pursuant to the Original ARV Pledge Agreement shall
satisfy Pledgor's delivery obligations under this Section 6(a).
(b) So long as there shall not have occurred and be continuing an
Event of Default (hereinafter defined), Pledgor shall be entitled to
exercise any and all voting rights and powers relating or pertaining
to the Collateral or any part thereof for any purpose not inconsistent
with the terms and provisions of the Note, the Loan Agreement, this
Agreement and the other Loan Documents or otherwise in contravention
of any of the terms, covenants and provisions of the Note, the Loan
Agreement, this Agreement or any of the other Loan Documents.
(c) Except as and to the extent provided herein and in the Loan
Documents until the Indebtedness is paid in full, Pledgor shall not
receive or be entitled to retain Distributions, if any, paid on the
Collateral. To the extent Pledgor receives any Distributions
prohibited hereunder, Pledgor shall receive same in trust for the
benefit of Secured Party and shall immediately deliver same to Secured
Party or its designated agent (accompanied by proper instruments of
assignment or stock powers executed by Pledgor in accordance with
Secured Party's instructions) to be held subject to the terms,
provisions and conditions of this Agreement, the Loan Agreement and
the Amended and Restated Deposit Account Agreement.
(d) Upon the occurrence of an Event of Default and so long as
said Event of Default shall continue, at the option of Secured Party,
(i) all rights of Pledgor to exercise the voting and consensual rights
and powers which Pledgor is entitled to exercise pursuant to the
foregoing subparagraph (b) shall cease, and all such rights shall
thereupon and without any further action or notice become vested in
Secured Party who shall have the sole and exclusive right and
authority to exercise (or refrain from exercising) such voting and
consensual rights and powers in its sole discretion, and (ii) Secured
Party shall receive and be entitled to retain any and all
Distributions until the Indebtedness is satisfied. THIS ASSIGNMENT OF
VOTING RIGHTS IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE BY
DISSOLUTION OR OTHERWISE. The exercise of any of the rights and
remedies of Secured Party under this paragraph shall not be or be
deemed to be a disposition of Collateral under Article 9 of the
Uniform Commercial Code as in effect in any applicable jurisdiction
(the "UCC") or an acceptance or a retention or a proposal to accept or
retain all or any part of the Collateral in satisfaction of all or any
of the Obligations. Any and all Distributions received by Secured
Party pursuant to the provisions of this paragraph shall be retained
by Secured Party as part of the Collateral and applied in accordance
with the provisions of Section 11 of this Agreement.
(e) No substitution of Collateral shall be permitted without the
prior written consent of Secured Party.
SECTION 7. COSTS AND EXPENSES. Pledgor shall pay all costs, fees,
expenses and charges incurred by Secured Party in connection with the
administration and enforcement of this Agreement and the security interest
granted hereunder (including, without limitation, all attorneys' fees and
costs). In addition, Pledgor agrees to pay, and to save Secured Party
harmless from all liability for, any stamp or other taxes which may be
payable in connection with the execution or delivery of this Agreement or
the transactions contemplated hereby. The obligations of Pledgor pursuant
to this paragraph shall survive any termination of this Agreement.
SECTION 8. EVENT OF DEFAULT. The occurrence of any of the following
events shall constitute an event of default (an "EVENT OF DEFAULT")
hereunder:
(a) If any representation or warranty of Pledgor made in this
Agreement, or in any certificate, report, financial statement or other
instrument furnished in connection with this Agreement shall prove
false or misleading in any material respect the effect of which shall
cause or result in a Material Adverse Condition to the Pledgor or the
Company;
(b) If Pledgor shall make a general assignment for the benefit of
creditors;
(c) If a court of competent jurisdiction enters a decree or order
for relief with respect to Pledgor under Title 11 of the United States
Code as now constituted or hereafter amended or under any other
applicable Federal or state bankruptcy, insolvency or other similar
law, rule or regulation, or if such court enters a decree or order
appointing a receiver, liquidator, assignee, trustee, custodian,
examiner, magistrate, arbitrator, sequestrator (or similar official)
of Pledgor or of any substantial part of its properties, or if such
court decrees or orders the winding up or liquidation of the affairs
of Pledgor;
(d) If Pledgor files a petition for relief or answer or consent
seeking relief under Title 11 of the United States Code as now
constituted or hereafter amended, or under any other applicable
Federal or state bankruptcy, insolvency or other similar law, rule or
regulation, or if Pledgor fails to vigorously and diligently oppose or
otherwise consents to or acquiesces in the commencement or prosecution
of an involuntary case under Title 11 of the United States Code as now
constituted or hereafter amended, or under any other applicable
Federal or state bankruptcy, insolvency or similar law, rule or
regulation, or to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, examiner
magistrate, arbitrator, sequestrator (or other similar official) of
Pledgor, or of any substantial part of its properties, or if Pledgor
fails generally to pay its debts as such debts become due, or if
Pledgor takes any action in furtherance of any action described in
this subparagraph;
(e) If any Affiliate of Pledgor shall commence any legal action
seeking to cause Pledgor or any Affiliate of Pledgor to take any of
the actions described in subparagraphs (b), (c) or (d) above with
respect to Pledgor;
(f) If Pledgor shall be in default of any other provision
provided herein and such default shall continue for a period of thirty
(30) days after notice from Secured Party; or
(g) If an "Event of Default" (as such term is defined in the Loan
Agreement) occurs.
SECTION 9. REMEDIES UPON DEFAULT. Upon the occurrence and during the
continuation of an Event of Default, Secured Party may, in addition to any
other rights or remedies which Secured Party may have, immediately and
without demand exercise with respect to the Collateral any and all rights
and remedies granted to a secured party under the UCC. Notwithstanding
anything to the contrary contained herein, Secured Party's rights related
to the enforcement of remedies under this Agreement shall be subject and
subordinate to the rights of Senior Lender under the Senior Loan Documents.
SECTION 10. SALE OF COLLATERAL.
(a) Sale of the Collateral may be made at any public or private
sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery, as Secured Party shall deem
appropriate. Secured Party shall be authorized at any such sale, in
its sole discretion, to restrict the prospective bidders or purchasers
to persons who will represent and agree that they are purchasing the
Collateral then being sold for their own account for investment and
not with a view to the distribution or resale thereof, and upon
consummation of any such sale Secured Party shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof
the Collateral so sold. Each such 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
law, all right of redemption, stay or appraisal which Pledgor now has
or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. To the extent that notice of sale
shall be required to be given by law, Secured Party shall give Pledgor
ten (10) days' notice in the manner herein specified of Secured
Party's intention to make any such public or private sale or sale at
any broker's board or on any such securities exchange. Such notice, in
case of public sale, shall state the time and place fixed for such
sale, and, in the case of sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. In case of
private sale, such notice shall state the time after which the
Collateral will be sold. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or
places as Secured Party may fix in the notice of such sale. At any
such sale, the Collateral, or any portion thereof, may be sold as
Secured Party may in its sole discretion determine. To the extent
permitted by law, Secured Party may bid, which bid may be in whole or
in part, in the form of cancellation of indebtedness, for and purchase
for the account of Secured Party or its nominee the whole or any part
of the Collateral. Secured Party shall not be obligated to make any
sale of the Collateral if Secured Party shall determine not to do so,
regardless of the fact that notice of sale of the Collateral may have
been given. Secured Party may, without notice of publication, adjourn
any public or private sale or cause the same to be adjourned from time
to time by announcement at the time and place fixed for sale, and such
sale may, without further notice, be made at the time and place to
which the same was so adjourned. In case sale of all or any part of
the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by Secured Party until the sales
price is paid by the purchaser or purchasers thereof, but Secured
Party shall not incur any liability in case any such purchaser or
purchasers shall fail to take up and pay for the Collateral so sold
and, in the case of any such failure, such Collateral may be sold
again upon like notice. As an alternative to exercising the power of
sale herein conferred upon it, Secured Party may proceed by a suit or
suits at law or in equity to foreclose this Agreement and to sell the
Collateral, or any portion thereof, pursuant to a judgment or decree
of a court or courts of competent jurisdiction. Pledgor agrees, to the
extent permitted by law, that any sale or other disposition of any of
the Collateral in accordance with the foregoing procedures shall be
deemed to be commercially reasonable under the UCC and otherwise
proper.
(b) In connection with any disposition of the Collateral, if
Secured Party elects to obtain the advice of any one or more
independent nationally known investment banking firms which are member
firms of the New York Stock Exchange (or other nationally recognized
exchange), with respect to the method or manner of sale or disposition
of any of the Collateral, the best price reasonably obtainable
therefor and any other details concerning such sale or disposition,
Pledgor agrees, to the extent permitted by law, that any sale or other
disposition of any of the Collateral in reliance on such advice shall
be deemed to be commercially reasonable under the UCC and otherwise
proper.
(c) Pledgor understands that compliance with federal or state
securities laws may very strictly limit the course of conduct of
Secured Party if Secured Party were to attempt to dispose of all or
any part of the Collateral and may also limit the extent to which or
the manner in which any subsequent transferee of the Collateral may
dispose of the same. Pledgor agrees that in any sale of any of the
Collateral, Secured Party is hereby authorized to comply with any such
limitation or restriction in connection with such sale as it may be
advised by counsel is necessary in order to avoid any violation of
applicable law (including, without limitation, compliance with such
procedures as may restrict the number of prospective bidders and
purchasers or further restrict such prospective bidders or purchasers
to persons who will represent and agree that they are purchasing for
their own account for investment and not with a view to the
distribution or resale of such Collateral), or in order to obtain any
required approval of the sale or of the purchaser by any governmental
regulatory authority or official, and Pledgor further agrees that such
compliance shall not result in such sale being considered or deemed
not to have been made in a commercially reasonable manner, nor shall
Secured Party be liable or accountable to Pledgor for any discount
allowed by reason of the fact that such Collateral is sold in
compliance with any such limitation or restriction.
SECTION 11. APPLICATION OF MONIES. All monies (including, without
limitation, Distributions) received or collected by Secured Party pursuant
to this Agreement shall be held as Collateral by Secured Party and after
the occurrence of an Event of Default shall be applied by Secured Party
first, to the payment of all costs incurred in the collection of such
monies (including attorneys' fees and expenses) and second, to the payment
of the Indebtedness in such order and priority as Secured Party may in its
sole discretion determine. The balance, if any, of such monies remaining
after payment in full of such costs and the Obligations shall be remitted
to Pledgor or as otherwise directed by a court of competent jurisdiction.
SECTION 12. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
appoints Secured Party, effective upon an Event of Default and during the
continuation thereof, as the attorney-in-fact of Pledgor for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instrument which Secured Party may deem necessary or
advisable to accomplish the purposes hereof, which appointment is
irrevocable and coupled with an interest. Without limiting the generality
of the foregoing, upon an Event of Default and during the continuation
thereof, Secured Party shall have the right and power to receive, endorse
and collect all checks and other orders for the payment of money made
payable to Pledgor representing any Distribution or any part of any thereof
and to give full discharge for the same.
SECTION 13. NO WAIVER. No failure or delay on the part of Secured
Party in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or
power preclude any other or further exercise thereof or the exercise of any
other right or power hereunder nor shall Secured Party's waiver of any
right or remedy against Pledgor release or relieve Pledgor from its
obligations hereunder. No modification or waiver of any provision of this
Agreement nor consent to any departure by Pledgor therefrom shall be
effective unless the same shall be in writing and signed by Secured Party,
and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on
Pledgor in any case shall, of itself, entitle Pledgor to any other or
further notice or demand in similar or other circumstances. If any notice
is required by law to be given to Pledgor or the Company by Secured Party,
five (5) days' notice given by registered mail, return receipt requested,
and addressed to such party at the address set forth herein shall be deemed
for all purposes to be reasonable notice.
SECTION 14. DURATION OF SECURED PARTY'S RIGHTS AND TERMINATION. Until
the Indebtedness shall have been paid in full, all rights, powers and
remedies granted to Secured Party under this Agreement shall continue to
exist and may be exercised by Secured Party at any time and from time to
time. Upon payment in full of the Indebtedness, Secured Party shall
reassign and redeliver, without recourse or warranty and at the expense of
Pledgor, or cause to be so reassigned and redelivered, to Pledgor or to
such person or persons as Pledgor shall designate, against receipt, such of
the Collateral, if any, as shall not have been sold or otherwise applied by
Secured Party pursuant to the terms hereof and still be held by Secured
Party hereunder, together with appropriate instruments of reassignment and
release.
SECTION 15. AGREEMENTS OF PLEDGOR. Until the Indebtedness is paid and
performed in full, Pledgor covenants and agrees with Secured Party as
follows:
(a) Pledgor shall furnish or cause to be furnished to Secured
Party from time to time, at the request of Secured Party, such
information concerning Pledgor or Company (to the extent available to
Pledgor) as Secured Party may reasonably request;
(b) Except for the Permitted Indebtedness, Pledgor shall not make
any loans to shareholders of Pledgor or to set aside any funds for any
such purpose;
(c) Except as created hereby or by the Original ARV Pledge
Agreement, and except for the Permitted Indebtedness and the Original
ARV Pledge Agreement, Pledgor shall not create any mortgage, pledge,
title retention lien, or other Lien, or incur any indebtedness
(directly or as a guarantor) or any Lien, with respect to any assets
now owned or hereafter acquired by Pledgor, or to take or fail to take
any other action whatsoever, in contravention of Section 5 of this
Agreement or otherwise inconsistent with the terms and provisions of
the Note, the Loan Agreement, this Agreement or any of the other Loan
Documents;
(d) Pledgor shall not in any manner further encumber, sell,
transfer or convey, or permit to be further encumbered, sold,
transferred or conveyed in any manner, the Collateral other than in
compliance with Section 2.6(b) of the Loan Agreement or as otherwise
may be required by Senior Lender in accordance with the terms of the
Senior Loan Agreement.
SECTION 16. LIMITATION ON DUTIES AND LIABILITIES OF SECURED PARTY;
INDEMNIFICATION.
(a) Beyond the exercise of reasonable care in the custody of any
Collateral in its possession, Secured Party shall have no duty as to
any Collateral or as to the preservation of rights against prior
parties or any other rights pertaining thereto. Secured Party shall
have no duty as to any Collateral, to ascertain or take action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not Secured Party has
or is deemed to have knowledge of such matters, or as to the taking of
any necessary steps to preserve rights against any parties or any
other rights pertaining to any Collateral. Secured Party shall be
deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is
accorded treatment substantially equal to that which it accords other
collateral of the same type in its possession. Except for gross
negligence and willful misconduct, Secured Party shall not be liable
or responsible for any loss or damage to any of the Collateral, or for
any diminution in the value thereof, by reason of the act or omission
of Secured Party or any agent, bailee or custodian selected by Secured
Party in good faith or for taking any necessary steps to preserve
rights against any parties with respect to any Collateral or for the
collection of any proceeds of any Collateral or for any invalidity,
lack of value or uncollectability of any of the Collateral.
(b) The pledge and assignment of the Collateral and grant of a
security interest is for collateral purposes only, and, prior to its
foreclosure thereon, Secured Party shall neither by virtue of this
Security Agreement, by the receipt of Distributions, by exercise of
voting rights or by the exercise of any of its rights or remedies
hereunder be deemed to be a member, interest holder, partner or
stockholder, as applicable, of Company or to have any liability for
the debts, obligations or liabilities of Company, Pledgor, or any
other member, interest holder, partner or stockholder, as applicable,
of Company. Without limiting the generality of the foregoing, by
accepting the pledge, assignment and security interests described
herein, Secured Party does not thereby assume any debts, obligations,
responsibilities, covenants, agreements or liabilities of Pledgor in
connection with the Collateral or of Pledgor to Company or to any
third parties dealing with Company.
(c) Pledgor shall indemnify and hold harmless Secured Party from
and against any and all liability, loss, or damage that Secured Party
may suffer or incur and which arises out of or results from claims of
third parties, including another stockholder, member, interest holder
or partner, as applicable, based on the rights or obligations of
Company or a stockholder, member, interest holder or partner, as
applicable, of Company under the Company's organizational and charter
documents, this Agreement, or acceptance of Distributions or the
exercise of any of the rights or remedies of Secured Party hereunder;
any claim of any alleged obligation, liability or duty on the part of
Company to perform or discharge any of the terms, covenants, or
provisions of the Company's organizational and charter documents or
any liability or obligation of Company or Pledgor; together with all
costs and expenses (including, without limitation, court costs and
attorneys' fees and costs) paid or incurred in connection therewith;
or any receipt of Distributions from Company or anyone else. Pledgor
shall reimburse Secured Party upon demand for the full amount of any
indemnity to which Secured Party may be entitled hereunder and the
full amount of the indemnity obligation shall be considered to be an
Obligation and shall be secured hereby.
(d) Pledgor upon demand shall pay to Secured Party the amount of
any and all reasonable expense, including the reasonable fees and
disbursements of counsel and of any experts and agents, which Secured
Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure by Pledgor to perform or
observe any of the provisions hereof.
(e) All costs and expenses, including reasonable attorneys' fees
and costs, incurred or paid by Secured Party in exercising any right,
power or remedy conferred in this Agreement, or in the enforcement
thereof, shall become a part of the Debt and shall bear interest from
the date incurred or paid by Secured Party at the Default Rate (as
such term is defined in the Loan Agreement).
SECTION 17. SECURITY INTEREST ABSOLUTE. All rights of Secured Party
and the security interests hereunder, and all obligations secured hereby,
shall be absolute and unconditional, irrespective of any lack of validity
or enforceability of the other Loan Documents; any change in the time,
manner or place of payment of, or in any other term of, all or any of the
Obligations or any other amendment or waiver of or any consent to any
departure from the Loan Documents; any exchange, release or non-perfection
of any other collateral for the Indebtedness, or any release or amendment
or waiver of or consent to departure from any of the Loan Documents; or any
other circumstance (other than payment and performance of the Obligations
in full) that might otherwise constitute a defense available to, or a
discharge of Pledgor or any other obligor under any of the Loan Documents,
or any third party grantor of collateral for the Obligations or any part
thereof.
SECTION 18. NOTICE. Any notice, request, demand, statement,
authorization, approval or consent made hereunder shall be in writing and
shall be hand delivered or sent by Federal Express, or other reputable
national courier service, or by postage pre-paid registered or certified
mail, return receipt requested, and shall be deemed given (i) when received
at the following addresses if hand delivered or sent by Federal Express, or
other reputable national courier service, and (ii) three (3) business days
after being postmarked and addressed as follows if sent by registered or
certified mail, return receipt requested:
If to Secured Party:
c/o Capital Trust, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx XxxxXxxxxx
With copies to:
c/o Capital Trust, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx and Loan Administrator
and
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxx, Esq.
If to Pledgor:
c/o Lazard Freres Real Estate Investors L.L.C.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxx X. Xxxxx
With copies to:
c/o Lazard Freres Real Estate Investors L.L.C.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxxx X. Xxxxxxxxxx, Esq.
and
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx Xxxxxxxxxxx, Esq.
Each party may designate a change of address by notice to the other
parties, given at least fifteen (15) days before such change of address is
to become effective.
SECTION 19. FURTHER ASSURANCES.
(a) Pledgor will, at Pledgor's expense and in such manner and
form as Secured Party may require, execute, deliver, file and record
any financing statement, specific assignment or other paper and take
any other action necessary or desirable, or that Secured Party may
request, in order to create, preserve, perfect or validate any
security interest, or to enable Secured Party to exercise and enforce
its rights hereunder with respect to any of the Collateral, or better
to assure and confirm unto Secured Party its rights, powers and
remedies hereunder. To the extent permitted by applicable law, Pledgor
hereby authorizes Secured Party to execute and file, in the name of
Pledgor or otherwise, UCC financing statements (which may be carbon,
photographic, photostatic or other reproductions of this Agreement or
of a financing statement relating to this Agreement) which Secured
Party in its sole discretion may deem necessary or appropriate to
further perfect its rights under this Agreement. Pledgor hereby
consents and agrees that the issuer of the Collateral or any registrar
or transfer agent for any of the Collateral shall be entitled to
accept the provisions hereof as conclusive evidence of the right of
Secured Party to effect any transfer pursuant to the provisions
hereof, notwithstanding any other notice or direction to the contrary
heretofore or hereafter given by Pledgor or any other party to such
issuer, registrar or transfer agent.
(b) Pledgor agrees that Pledgor will not change (i) Pledgor's
name, identity or organizational structure in any manner, or (ii) the
location of Pledgor's principal place of business or chief executive
office unless Pledgor shall have given Secured Party not less than
thirty (30) days' prior written notice thereof which notice must state
in bold print that the notice is being sent for the purpose of
allowing Secured Party to determine whether or not to amend the UCC
financing statements filed in connection with this Agreement.
(c) Pledgor agrees to do such further reasonable acts and things,
and to execute and deliver such additional conveyances, assignments,
agreements and instruments, as Secured Party may at any time request
in connection with the administration or enforcement of this Agreement
(including, without limitation, to aid Secured Party in the sale of
all or any part of the Collateral) or related to the Collateral or any
part thereof or in order better to assure and confirm unto Secured
Party its rights, powers and remedies hereunder.
SECTION 20. CUMULATIVE RIGHTS AND REMEDIES. All remedies afforded to
Secured Party by reason of this Agreement are separate and cumulative
remedies and it is agreed that no one of such remedies shall be deemed to
be in exclusion of any other remedies available to Secured Party and shall
not in any manner limit or prejudice any other legal or equitable remedies
which Secured Party may have. The rights, powers and remedies given to
Secured Party by this Agreement shall be in addition to all rights, powers
and remedies given to Secured Party by virtue of any statue or rule of law
and all such rights, powers and remedies are cumulative and not
alternative, and may be exercised and enforced successively or
concurrently.
SECTION 21. PARTIES BOUND. This Agreement shall be binding upon and
inure to the benefit of Pledgor and Secured Party and their respective
successors and assigns.
SECTION 22. SEVERABILITY. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such term, covenant or
provision.
SECTION 23. NO ORAL CHANGE. This Agreement may only be modified,
amended, changed, discharged or terminated by an agreement in writing
signed by the parties hereto against whom enforcement is sought.
SECTION 24. GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws.
SECTION 25. HEADINGS. Section headings used herein are for convenience
only and shall not affect the construction of this Agreement.
SECTION 26. "PLEDGOR". The term "Pledgor" as used herein shall, if
this Agreement is signed by more than one pledgor, mean "the pledgors and
each of them" and each obligation of Pledgor herein contained shall be the
joint and several undertaking of all such pledgors, except where expressly
stated to the contrary in this Agreement.
SECTION 27. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each such counterpart shall for all purposes be deemed
to be an original, and all such counterparts together shall constitute but
one and the same agreement.
- SIGNATURES ON NEXT PAGE -
IN WITNESS WHEREOF, Secured Party, Pledgor and Company have duly
executed this Agreement the date first above written.
SECURED PARTY: CTMPII FC LF (MS)
By:
---------------------------------------
Name:
Title:
PLEDGOR: LFSRI II ASSISTED LIVING LLC
By: LF Strategic Realty Investors II L.P., its managing
member
By: Lazard Freres Real Estate Investors L.L.C.
Its General Partner
By:
--------------------------------------
Name: Xxxx X. Xxxxx
Title: Managing Principal and Chief Financial
Officer
