Exhibit 10.3
Execution Version
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, dated as of May 30, 2024 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”), is entered into by and among ExchangeRight Income Fund Operating Partnership, LP, a limited partnership formed under the laws of the state of Delaware (the “Borrower”), the direct and indirect Subsidiaries of the Borrower listed on the signature pages hereof (together with the Borrower, each, a “Pledgor” and collectively, the “Pledgors”, which terms shall include any Person that becomes a Pledgor pursuant to Section 32 hereof), and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent (in such capacity, the “Administrative Agent”) for the benefit of the Lenders (as defined below).
RECITALS:
WHEREAS, the Borrower, the financial institutions from time to time party thereto as lenders (collectively, the “Lenders”), and the Administrative Agent have entered into that certain Credit Agreement, dated as of the date hereof (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), pursuant to which the Lenders have agreed to make available to the Borrower certain financial accommodations on the terms and conditions contained in the Credit Agreement;
WHEREAS, the Borrower and each of the other Pledgors, though separate legal entities, are mutually dependent on each other in the conduct of their respective businesses as an integrated operation and have determined it to be in their mutual best interests to obtain financing from the Lenders through their collective efforts;
WHEREAS, each Pledgor acknowledges that it will receive direct and indirect benefits from the Lenders making such financial accommodations available to the Borrower under the Credit Agreement; and
WHEREAS, it is a condition precedent to the effectiveness of the Credit Agreement and to the extension of such financial accommodations thereunder that the Pledgors execute and deliver this Pledge Agreement, among other things, to grant to the Administrative Agent for benefit of the Lenders a security interest in the Pledged Collateral (as defined below) as security for the Obligations.
NOW, THEREFORE, for and in consideration of the foregoing and of any financial accommodations or extensions of credit (including, without limitation, any loan or advance by renewal, refinancing or extension of the agreements described hereinabove or otherwise) heretofore, now or hereafter made to or for the benefit of any Pledgor pursuant to any Loan Document, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Pledgors and the Administrative Agent hereby agree as follows:
“Pledged Interests” means, with respect to each Pledgor, such Pledgor’s right, title and interest in the Equity Interests of the Pledged Subsidiaries named on Schedule I attached hereto (and/or on any Schedule I attached to any applicable Pledge Supplement or Pledge Amendment.
“Pledged Subsidiary” means a Person that has issued any Equity Interest that constitutes any part of the Pledged Collateral.
“UCC” means the Uniform Commercial Code as the same may, from time to time, be in effect in the State of New York, as amended or supplemented from time to time; provided, however, in the event that, by reason of mandatory provisions of law, any or all of the attachment, perfection or priority of the Administrative Agent’s security interest in any Pledged Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes of definitions related to such provisions. Any and all terms used in this Pledge Agreement which are defined in the UCC shall be construed and defined in accordance with the meaning and definition ascribed to such terms under the UCC, unless otherwise defined herein.
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IN WITNESS WHEREOF, the Pledgors and the Administrative Agent have duly executed and delivered this Pledge Agreement as of the date set forth above.
EXCHANGERIGHT INCOME FUND OPERATING
PARTNERSHIP, LP, a Delaware limited partnership, as Pledgor
By: EXCHANGERIGHT INCOME FUND, a Maryland statutory trust;
its General Partner
By: ExchangeRight Income Fund Trustee, LLC,
a Delaware limited liability company; its trustee
By: ExchangeRight Real Estate, LLC,
a California limited liability company; its manager
By:__/s/ David Fisher________________________
Name: David Fisher
Title: Executive Managing Principal
(Principal Executive Officer)
[Signature Page to Pledge Agreement]
WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent
By: __/s/ Matthew Kuhn___________________________
Name: Matthew Kuhn
Title: Managing Director
[Signature Page to Pledge Agreement]
SCHEDULE I TO PLEDGE AGREEMENT
PLEDGED SUBSIDIARIES
Pledgor | Pledged Subsidiary | Certificate No. | No. of Shares / Units Owned | Percentage of Ownership
|
ExchangeRight Income Fund Operating Partnership, LP | ExchangeRight Essential Income Strategy Properties 6, LLC | 001 | N/A | 100% |
ExchangeRight Income Fund Operating Partnership, LP | ExchangeRight Net Leased Portfolio 3 DST | 001 | N/A | 100% |
ExchangeRight Income Fund Operating Partnership, LP | ExchangeRight Net Leased Portfolio 4 DST | 001 | N/A | 100% |
ExchangeRight Income Fund Operating Partnership, LP | ExchangeRight Net Leased Portfolio 5 DST | 001 | N/A | 100% |
ExchangeRight Income Fund Operating Partnership, LP | ExchangeRight Net Leased Portfolio 6 DST | 001 | N/A | 100% |
SCHEDULE II TO PLEDGE AGREEMENT
PLEDGOR INFORMATION
Pledgor | Type of Entity | Jurisdiction | Organizational ID No. | Mailing Address of Chief Executive Office |
ExchangeRight Income Fund Operating Partnership, LP | Limited partnership | delaware | 7230591 | 1055 E. Colorado Blvd., Suite 310, Pasadena, CA 91106 |
EXHIBIT A
to
PLEDGE AGREEMENT
FORM OF PLEDGE SUPPLEMENT
SUPPLEMENT NO.____ dated as of ____, 20___ to the PLEDGE AGREEMENT dated as of May 30, 2024 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”), among ExchangeRight Income Fund Operating Partnership, LP, a limited partnership formed under the laws of the state of Delaware (the “Borrower”), certain subsidiaries of the Borrower from time to time signatories thereto as Pledgors (together with the Borrower, collectively, the “Pledgors”) and WELLS FARGO BANK, NATIONAL ASSOCIATION, as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”).
Reference is made to the Credit Agreement dated as of May [__], 2024 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the financial institutions from time to time party thereto as lenders (the “Lenders”) and the Administrative Agent. Capitalized terms used but not defined herein shall have the respective meanings given to such terms in the Pledge Agreement or the Credit Agreement, as applicable.
The undersigned Subsidiary of the Borrower (the “New Pledgor”) is executing this Supplement in accordance with the requirements of the Credit Agreement and the Pledge Agreement to become a Pledgor under the Pledge Agreement in consideration for Loans and Letters of Credit previously made to, or issued for the account of, the Borrower.
Accordingly, Administrative Agent and the New Pledgor agree as follows:
SECTION 1. In accordance with Section 32 of the Pledge Agreement, the New Pledgor by its signature below becomes a Pledgor under the Pledge Agreement with the same force and effect as if originally named therein as a Pledgor, and the New Pledgor hereby (a) agrees to all the terms and provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and (b) represents and warrants that the representations and warranties made by it as a Pledgor thereunder are true and correct in all respects on and as of the date hereof. In furtherance of the foregoing, the New Pledgor, as security for the payment and performance in full of the Obligations, does hereby create and grant to Administrative Agent, its successors and assigns, a security interest in and Lien on all of the New Pledgor’s right, title and interest in and to the Pledged Collateral (as defined in the Pledge Agreement) of the New Pledgor. Each reference to a “Pledgor” or the “Pledgors” in the Pledge Agreement shall be deemed to include the New Pledgor. The Pledge Agreement is hereby incorporated herein by reference.
SECTION 2. The New Pledgor represents and warrants to Administrative Agent that this Supplement has been duly authorized, executed and delivered by it and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally.
SECTION 3. This Supplement may be executed in counterparts, each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Supplement shall become effective when Administrative Agent shall have received counterparts of this Supplement that, when taken together, bear the signatures of the New Pledgor and Administrative Agent. Delivery of an executed counterpart of a signature page of this Supplement by facsimile, e-mailed .pdf or any other electronic means that reproduces an image of the actual executed signature page shall be effective as delivery of a manually executed counterpart of this Supplement.
SECTION 4. The New Pledgor hereby represents and warrants that the information set forth in Schedules I and II attached hereto is true and correct and is hereby added to the information set forth in Schedules I and II to the Pledge Agreement, respectively. The New Pledgor hereby agrees that this Supplement may be attached to the Pledge Agreement and that the Pledged Collateral listed on Schedule I hereto shall be and become part of the Pledged Collateral referred to in the Pledge Agreement and shall secure all Obligations in accordance with the terms of the Pledge Agreement.
SECTION 5. If for any reason any provision or provisions hereof are determined to be invalid and contrary to any existing or future law, such invalidity shall not impair the operation of or effect those portions of this Supplement which are valid.
SECTION 6. All communications and notices hereunder shall be in writing and given as provided in the Pledge Agreement. All communications and notices hereunder to the New Pledgor shall be given to it at the address set forth under its signature below.
SECTION 7. The New Pledgor agrees to reimburse Administrative Agent for its reasonable out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other charges and disbursements of counsel for Administrative Agent.
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IN WITNESS WHEREOF, the New Pledgor and Administrative Agent have duly executed and delivered this Supplement to the Pledge Agreement as of the day and year first above written.
[NEW PLEDGOR]
By:
Name:
Title:
Address:
Attention:
Facsimile: (____) _____-______
ACKNOWLEDGED AND AGREED
as of the date first above written:
WELLS FARGO BANK, NATIONAL ASSOCIATION,
as Administrative Agent
By:
Name:
Title:
Schedule I to
Supplement No.__
to the Pledge Agreement
PLEDGED SUBSIDIARIES
Pledgor | Pledged Subsidiary | Certificate No. | No. of Shares / Units Owned | Percentage of Ownership
|
[______] | [______] | [______] | [______] | 100% |
Schedule II to
Supplement No.__
to the Pledge Agreement
NEW PLEDGOR INFORMATION
Pledgor | Type of Entity | Jurisdiction | Organizational ID No. | Mailing Address of Chief Executive Office |
[_______] | [_______] | [_______] | [_______] | [_______] |
EXHIBIT B
to
PLEDGE AGREEMENT
FORM OF PLEDGE AMENDMENT
[Date]
Reference is hereby made to the Pledge Agreement (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”) dated as of May 30, 2024, by and among ExchangeRight Income Fund Operating Partnership, LP, a limited partnership formed under the laws of the state of Delaware (the “Borrower”), the undersigned Pledgor and the other Subsidiaries of the Borrower from time to time party thereto as Pledgors, and Wells Fargo Bank, National Association, as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”), whereby the undersigned has pledged certain capital stock, membership interests and partnership interests, as applicable, of certain of its Subsidiaries as collateral to the Administrative Agent, for the ratable benefit of the Lenders, as more fully described in the Pledge Agreement. This Amendment is a “Pledge Amendment” as defined in the Pledge Agreement and is, together with the acknowledgments, certificates, and Transfer Powers delivered herewith, subject in all respects to the terms and provisions of the Pledge Agreement. Capitalized terms used herein and not defined herein shall have the meanings given to them in the Pledge Agreement.
By its execution below, the undersigned hereby agrees that (i) this Amendment may be attached to the Pledge Agreement and that the Pledged Collateral listed on Schedule I hereto shall be and become part of the Pledged Collateral referred to in the Pledge Agreement and shall secure all Obligations in accordance with the terms of the Pledge Agreement and (ii) each [corporation] [limited liability company] [partnership] listed on Schedule I hereto shall be deemed to be a Pledged Subsidiary for all purposes of the Pledge Agreement.
By its execution below, the undersigned represents and warrants that it has full power and authority to execute this Pledge Amendment and that the representations and warranties contained in Section 6 of the Pledge Agreement are true and correct in all respects as of the date hereof and after taking into account the pledge of the additional Pledged Collateral relating hereto. The Pledge Agreement, as amended and modified hereby, remains in full force and effect and is hereby ratified and confirmed.
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IN WITNESS WHEREOF, the Pledgor has duly executed and delivered this Pledge Amendment to the Pledge Agreement as of the day and year first above written.
[PLEDGOR]
By:
Name:
Title:
Schedule I
to
Pledge Amendment
PLEDGED SUBSIDIARIES
Pledgor | Pledged Subsidiary | Certificate No. | No. of Shares / Units Owned | Percentage of Ownership
|
[______] | [______] | [______] | [______] | 100% |
ACKNOWLEDGMENT
TO
PLEDGE AMENDMENT
[Date]
The undersigned hereby acknowledges receipt of a copy of the foregoing Pledge Amendment together with a copy of the Pledge Agreement, agrees promptly to note on its books the security interests granted under such Pledge Agreement, agrees that after the occurrence and during the continuance of an Event of Default it will comply with instructions originated by the Administrative Agent without further consent by the Pledgor and waives any rights or requirement at any time hereafter to receive a copy of such Pledge Agreement in connection with the registration of any Pledged Collateral in the name of the Administrative Agent or its nominee or the exercise of voting rights by the Administrative Agent or its nominee.
[NAME[S] OF ADDITIONAL PLEDGED SUBSIDIARY[IES]]
By:
Name:
Title:
EXHIBIT C
to
PLEDGE AGREEMENT
FORM OF TRANSFER POWER
FOR VALUE RECEIVED, the undersigned does hereby sell, assign and transfer to _________________________________ _____ [shares] [units] [percent] of the [capital stock] [membership interests] of _________________, a _____________ [corporation] [limited liability company] [limited partnership] (the “Company”), represented by Certificate No. _____ (the “[Stock]”), standing in the name of the undersigned on the books of the Company, and does hereby irrevocably constitute and appoint ______________________________ as the undersigned’s true and lawful attorney, for it and in its name and stead, to sell, assign and transfer all or any of the [Stock], and for that purpose to make and execute all necessary acts of assignment and transfer thereof; and to substitute one or more persons with like full power, hereby ratifying and confirming all that said attorney or substitute or substitutes shall lawfully do by virtue hereof.
Dated:
[PLEDGOR]
By:
Name:
Title:
EXHIBIT D
to
PLEDGE AGREEMENT
Form of CONTROL Acknowledgement
[Date]
PLEDGED SUBSIDIARY: | PLEDGOR: |
[Name of Pledged Subsidiary] | [Name of Pledgor] |
Reference is hereby made to that certain Pledge Agreement dated as of May 30, 2024 (as the same may be amended, restated, supplemented or otherwise modified from time to time, the “Pledge Agreement”), by and among ExchangeRight Income Fund Operating Partnership, LP, a limited partnership formed under the laws of the state of Delaware (the “Borrower”), the undersigned Pledgor and certain other Subsidiaries of the Borrower from time to time party thereto as pledgors, and Wells Fargo Bank, National Association, as Administrative Agent for the Lenders (in such capacity, the “Administrative Agent”). Capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in the Pledge Agreement.
Pledged Subsidiary is hereby instructed by the Pledgor that all of the Pledgor’s right, title and interest in and to all of the Pledgor’s rights in connection with any Equity Interests in Pledged Subsidiary now and hereafter owned by the Pledgor are subject to a pledge and security interest in favor of Administrative Agent. Pledgor hereby instructs the Pledged Subsidiary to act upon any instruction delivered to it by the Administrative Agent with respect to the Pledged Collateral without seeking further instruction from the Pledgor, and, by its execution hereof, the Pledged Subsidiary agrees to do so.
Pledged Subsidiary, by its written acknowledgement and acceptance hereof, hereby (i) acknowledges receipt of a copy of the aforementioned Pledge Agreement and agrees promptly to note on its books the security interest granted under such Pledge Agreement, (ii) waives any rights or requirements at any time hereafter to receive a copy of such Pledge Agreement in connection with the registration of any Pledged Collateral in the name of the Administrative Agent or its nominee or the exercise of voting rights by the Administrative Agent or its nominee, and (iii) acknowledges and agrees that, notwithstanding anything to the contrary in its bylaws, operating agreement, partnership agreement, declaration or other applicable governing or organizational documents, such Pledged Subsidiary will (A) be bound by, and comply with, all terms of the Pledge Agreement applicable to such Pledged Subsidiary, including, without limitation, Sections 7(e), (f) and (i) thereof, (B) notify the Administrative Agent in writing promptly of the occurrence of any of the events described in Section 7(f) of the Pledge Agreement, and (C) not permit any of the Equity Interests issued by it to be dealt in or traded on a securities exchange or in securities markets.
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IN WITNESS WHEREOF, the Pledgor has caused this Control Acknowledgment to be duly signed and delivered by its officer duly authorized as of the day and year first above written.
[PLEDGOR]
By:
Name:
Title:
Acknowledged and accepted as of the day and year first above written:
[PLEDGED SUBSIDIARY]
By:
Name:
Title: