EXHIBIT 2.5
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PLEDGE AND SECURITY AGREEMENT
dated as of March 12, 1998
between
RESOURCE PROPERTIES XLIX, INC., as Pledgor
and
MERRILL LYNCH MORTGAGE CAPITAL INC., as Lender
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PLEDGE AND SECURITY AGREEMENT
TABLE OF CONTENTS
Page
ARTICLE I
CERTAIN DEFINITIONS......................................................................................1
ARTICLE II
COLLATERAL; GENERAL TERMS................................................................................3
Section 2.01. Security Interest.........................................................................3
Section 2.02. Collections...............................................................................5
Section 2.03. Lender Account............................................................................5
Section 2.04. Delivery of Certificates, etc.............................................................5
Section 2.05. Release of Security Interest..............................................................6
Section 2.06. Pledgor Remains Liable....................................................................6
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR.....................................................7
Section 3.01. Representations and Warranties............................................................7
(a) General Representations and Warranties.................................................7
(b) Title to Collateral....................................................................8
(c) Perfection.............................................................................8
(d) Principal Place of Business; Taxpayer Identification Number............................8
Section 3.02. Covenants.................................................................................8
(a) Defense of Title.......................................................................8
(b) [Reserved].............................................................................8
(c) Additional Liens.......................................................................8
(d) Change in Location of Principal Place of Business......................................8
Section 3.03. Protection of Collateral..................................................................8
Section 3.04. Sale or Pledge of Collateral..............................................................9
Section 3.05. Further Assurances, Preservation and Perfection of
Security Interest......................................................................9
Section 3.06. Preservation of Collateral................................................................9
Section 3.07. Maintenance of Papers, Records and Files..................................................9
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Page
ARTICLE IV
LENDER'S RIGHTS AND REMEDIES............................................................................10
Section 4.01. Remedies.................................................................................10
Section 4.02. [Intentionally Omitted...................................................................12
Section 4.03. Application of Proceeds..................................................................12
Section 4.04. Deficiency...............................................................................13
Section 4.05. Appointment of Lender as Pledgor's Lawful Attorney.......................................13
(a) To Endorse Pledgor's Name.............................................................13
(b) To Sign Pledgor's Name to Perfection Documents........................................13
(c) To Sign Pledgor's Name on Other Documents.............................................13
Section 4.06. Reimbursement............................................................................13
Section 4.07. Exoneration of Lender; Certain Reimbursements............................................14
(a) Lender's Powers for Lender's Sole Benefit.............................................14
(b) Pledgor to Reimburse Lender for Collateral-Preservation
Fees and Taxes........................................................................14
Section 4.08. Waiver of Redemption and Deficiency Rights...............................................14
ARTICLE V
MISCELLANEOUS...........................................................................................14
Section 5.01. Remedies Cumulative......................................................................14
Section 5.02. Prejudgment Remedy Provision.............................................................14
Section 5.03. Security Interest Absolute...............................................................15
Section 5.04. [Intentionally Omitted]..................................................................15
Section 5.05. No Delay; Waivers........................................................................15
Section 5.06. Further Assurances.......................................................................15
Section 5.07. Waivers and Amendments...................................................................15
Section 5.08. Notices..................................................................................15
Section 5.09. Governing Law............................................................................17
Section 5.10. Submission to Jurisdiction; Waiver of Objection to
Inconvenient Forum....................................................................17
Section 5.11. Waiver of Jury Trial.....................................................................17
Section 5.12. Binding Agreement; Assignments...........................................................17
Section 5.13. Indemnification..........................................................................18
Section 5.14. Restoration or Set Aside.................................................................18
Section 5.15. Severability.............................................................................18
Section 5.16. Section Headings.........................................................................18
Section 5.17. Counterparts.............................................................................18
Section 5.18. No Rights of Others......................................................................18
Section 5.19. Entire Agreement.........................................................................18
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PLEDGE SECURITY AGREEMENT, dated as of March 12, 1998, between
RESOURCE PROPERTIES XLIX, INC., a Delaware corporation ("Pledgor"), and MERRILL
LYNCH MORTGAGE CAPITAL INC., a Delaware corporation ("Lender," and Pledgor and
Lender, together, the "Parties").
PRELIMINARY STATEMENT
Pledgor and Lender have entered into a secured loan agreement
dated as of the date hereof (as amended from time to time, the "Loan Agreement")
pursuant to which Lender has agreed, subject to the terms and conditions of the
Loan Agreement, to make a loan to Pledgor to finance Pledgor's acquisition of
the Mortgage Loan (as defined in the Loan Agreement).
To induce Lender to enter into the Loan Agreement, pledgor has
agreed to pledge and grant a security interest in and to the Collateral (as
defined herein) to secure the obligations of Pledgor under the Loan Agreement.
In consideration of the mutual promises of the Parties, and of
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, it is mutually agreed by and between the Parties as follows:
ARTICLE I
CERTAIN DEFINITIONS
Capitalized terms used herein shall have the meanings ascribed
to them in the Loan Agreement except as set forth below:
"Accounts" means all "accounts" (as defined in the UCC) now
owned or hereafter acquired by Pledgor, all accounts receivable, contract
rights, book debts, notes, drafts and other obligations or indebtedness owing to
Pledgor arising from the sale, lease or exchange of goods or other property by
Pledgor and/or the performance of services by Pledgor (including any such
obligation which might be characterized as an account, contract right or general
intangible under the UCC), and all of Pledgor's rights in, to and under all
purchase orders for goods, services or other property, and all of Pledgor's
rights to any goods, services or other property represented by any of the
foregoing (including returned or repossessed goods and unpaid sellers' rights of
rescission, replevin, reclamation and rights to stoppage in transit), and all
Monies due to or to become due to Pledgor under all contracts for the sale,
lease or exchange of goods or other property and/or the performance of services
by Pledgor (whether or not yet earned by performance on the part of Pledgor), in
each case whether now existing or hereafter arising or acquired, including the
right to receive the proceeds of such purchase orders and contracts and all
collateral security and guarantees of any kind given by any Person with respect
to any of the foregoing.
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"Agreement" means this Pledge and Security Agreement, as
amended from time to time.
"Borrower Account" has the meaning specified in the Loan
Agreement.
"Borrower Collection Account" has the meaning specified in the
Loan Agreement.
"Borrower Working Capital Account" has the meaning specified
in the Loan Agreement.
"Collateral" has the meaning specified in Section 2.01.
"Documents" means all "documents" (as defined in the UCC) or
other receipts covering, evidencing or representing goods now owned or hereafter
acquired by Pledgor.
"Equipment" means all "equipment" (as defined in the UCC) now
owned or hereafter acquired by Pledgor.
"Event of Default" has the meaning specified in the Loan
Agreement.
"General Intangibles" means all "general intangibles" (as
defined in the UCC) now owned or hereafter acquired by Pledgor, including (i)
all obligations or indebtedness owing to Pledgor (other than Accounts) from
whatever source arising, (ii) all patent licenses, patents, trademark licenses,
trademarks, rights in intellectual property, goodwill, trade names, service
marks, trade secrets, copyrights, permits and licenses, (iii) all rights or
claims in respect of refunds for taxes paid, and (iv) all rights in respect of
any pension plan or similar arrangement maintained for employees of Pledgor or
its subsidiaries, if any.
"Goods" means all personal property, excluding Instruments (as
defined below) and Monies (as defined below) now owned or hereafter acquired by
Pledgor.
"Instruments" means all "instruments," "chattel paper" or
"letters of credit" (each as defined in the UCC) evidencing, representing,
arising from or existing in respect of, relating to, securing or otherwise
supporting the payment of, any of the Accounts, including promissory notes,
drafts, bills of exchange and trade acceptances, now owned or hereafter acquired
by Pledgor.
"Lender" has the meaning specified in the Preliminary
Statement.
"Lender Account" has the meaning specified in the Loan
Agreement.
"Monies" means all cash, checks, notes, drafts or similar
items of payment.
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"Obligations" means (i) all indebtedness, obligations and
liabilities of Pledgor to Lender arising under, or in connection with, the Loan
Documents, whether now existing or hereafter arising; (ii) any and all sums paid
by Lender in order to preserve the Collateral or its security interest therein;
(iii) in the event of any proceeding for the collection or enforcement of any
indebtedness, obligations or liabilities of Pledgor referred to in clause (i),
the expenses of retaking, holding, collection, preparing for sale, selling or
otherwise disposing of or realizing on the Collateral, or of any exercise by
Lender of its rights with respect to the Collateral under the Loan Documents,
together with attorneys' fees and expenses and court costs; and (iv) all
indemnity obligations of Pledgor to Lender pursuant to the Loan Documents.
"Parties" has the meaning specified in the first paragraph
hereof.
"Permitted Lien" has the meaning specified in the Loan
Agreement.
"Pledgor" has the meaning specified in the first paragraph
hereof.
"UCC" means at any time the Uniform Commercial Code as in
effect in the State of New York; provided, that if, by reason of mandatory
provisions of law, the validity or perfection of Lender's security interest in
any item of collateral is governed by the UCC or any similar law as in effect in
a jurisdiction other than New York, "UCC" means the UCC or such similar law as
in effect in such other jurisdiction for purposes of the provisions hereof
relating to such validity or perfection.
ARTICLE II
COLLATERAL; GENERAL TERMS
Section 2.01. Security Interest. As security for the
Obligations, Pledgor hereby grants to Lender a continuing first-priority
security interest in, Lien on and right of set-off against, and hereby assigns
to Lender as security, all of Pledgor's right, title and interest, if any, in,
to and under the following property and interests in property, whether now owned
or hereafter acquired or existing and wherever located (collectively, the
"Collateral"):
(a) The Mortgage Loan and all proceeds, products and profits
derived therefrom, including all scheduled payments of principal of and
interest on the Mortgage Loan, and all prepayments and other amounts
due or payable or to become due or payable in respect thereof
(including any contingent interest); all monies, goods, insurance
proceeds, condemnation awards and other tangible or intangible property
received upon the liquidation or sale thereof;
(b) Each of the Underlying Loan Documents, including (i) all
rights in respect of each deed of trust, security agreement and
assignment of rents executed in connection with the Mortgage Loan; (ii)
all rights in respect of each collateral assignment of leases and
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rents executed in connection with the Mortgage Loan; (iii) each UCC-1
financing statement filed in connection with the Mortgage Loan; (iv)
[each title insurance policy, title binder or commitment to issue title
insurance with respect to the Mortgage Loan (together with all related
endorsements); and (v) each policy of hazard, flood, boiler, liability,
business interruption or other form of insurance now or hereafter
issued with respect to the premises and improvements encumbered by the
Underlying Loan Documents, including any commitment to insure];
(c) All of Pledgors' right, title and interest in the claims,
rights and benefits accruing to Pledgor under that certain Lender's
Plan of Reorganization for Debtor dated February 11, 1998, as confirmed
by the U.S. Bankruptcy Court for the District of Columbia on February
24, 1998 (the "Plan") as set forth in the Purchase Agreement;
(d) the Purchase Agreement;
(e) the Management Agreement;
(f) All tangible and intangible personal property of whatever
kind that relates to the Mortgage Loan;
(g) All right, title and interest of Pledgor now existing or
hereafter acquired in the Mortgaged Property and any personal property
pledged to secure the Mortgage Loan;
(h) All Monies and other rights on deposit from time to time
in the Borrower Collection Account, the Borrower Working Capital
Account or any other Borrower Account, any sums deposited therein, all
investments made with such Monies, any interest or other income earned
thereon, and all proceeds thereof;
(i) All right, title and interest of Pledgor now existing or
hereafter acquired in and to the Transaction Documents and all
instruments or other documents, if any, evidencing or representing the
same, including the right to enforce all rights of Pledgor under the
Transaction Documents;
(j) All right, title and interest of Pledgor now existing or
hereafter acquired in and to Accounts, Documents, General Intangibles,
Goods, Equipment and Instruments;
(k) All books and records (including credit files, computer
programs, printouts and other computer materials and records) of
Pledgor pertaining to any of the Collateral; and
(l) All cash and non-cash proceeds and products of the
foregoing, and all dividends, cash, instruments and other property from
time to time received, receivable or otherwise distributed when
Collateral or proceeds are sold, leased, collected, exchanged
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or otherwise disposed of, whether such disposition is voluntary or
involuntary, and includes, without limitation, all rights to payment,
including return premiums, with respect to any insurance relating
thereto;
*[All of Pledgor's interest in the Mortgaged Property and
other property at the time such property is conveyed by Underlying
Borrower to Borrower pursuant to the Plan]*
provided, however, that any amounts distributed by Borrower to the Manager or
any of the partners or shareholders of Borrower shall not constitute Collateral,
and shall be free and clear of any security interest granted by Pledgor
hereunder, upon and after such distribution or payment.
Section 2.02. Collections. Except as otherwise provided in
Section 2.03, Pledgor shall continue to service and administer or cause the
servicing and administration, at its own expense, of the Mortgage Loan (or any
property acquired in respect thereof), subject to and in accordance with the
Loan Agreement, and shall cause all Collections to be deposited into the
Borrower Collection Account, and all Net Cash Flow (net of Borrower Amounts) to
be remitted to Lender, at the times and in the manner set forth in the Loan
Agreement. All right, title and interest of Pledgor in and to the cash amounts
on deposit from time to time in the Borrower Collection Account, Borrower
Working Capital Account or any other Borrower Account shall constitute part of
the Collateral hereunder and cash amounts on deposit from time to time in the
Borrower Collection Account shall not constitute payment of the Obligations
until applied thereto pursuant to Section 2.06(c) of the Loan Agreement or
Section 4.03 hereof. Notwithstanding any provisions of this Agreement to the
contrary, in no event shall any amount (including interest on amounts or other
income on deposit in the Borrower Collection Account) be paid or released to or
for the account of, or withdrawn by or for the account of, Pledgor, Servicer,
Custodian, Manager or any other Person, except as provided in Section 2.06 of
the Loan Agreement or Section 4.03 hereof.
Section 2.03. Lender Account. (a) If an Event of Default shall
have occurred and be continuing, (i) Lender shall be entitled (in addition to
any other right it may have in respect of such Event of Default under any Loan
Document or applicable law), immediately and without notice to Pledgor, to cause
Underlying Borrower to make payments to a Lender Account, (ii) Pledgor shall,
promptly upon request by Lender, cause [Servicer] immediately to remit all
amounts then on deposit in the Borrower Collection Account to a Lender Account
and cause each other depository institution at which a Borrower Account is
established to remit all amounts then on deposit in such account to a Lender
Account and (iii) Lender shall immediately be entitled to transfer or cause to
be transferred to a Lender Account any and all amounts on deposit in each
Borrower Account. In addition, if an Event of Default shall have occurred and be
continuing, all Collections, amounts and proceeds (including instruments)
received by Pledgor in respect of the Mortgage Loan or the Mortgaged Property
shall be received in trust for the ratable benefit of Lender.
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Section 2.04. Delivery of Certificates, etc. Pledgor shall
deliver to Lender:
(a) concurrently with the execution and delivery of this
Agreement, among other things, the original secured promissory notes
issued in connection with the Mortgage Loan, (collectively, the
"Underlying Note"), an original executed counterpart of the loan
agreement entered into in connection with the Mortgage Loan (the
"Underlying Loan Agreement"), copies of all other Underlying Loan
Documents, a copy of the Plan, a copy of each of the Purchase Agreement
and the Management Agreement, such delivery to be effected, in the case
of the original Underlying Note, the original executed counterpart of
the Underlying Loan Agreement and copies of other Underlying Loan
Documents, by Pledgor delivering the same to Custodian pursuant to the
Custodial Agreement and Custodian delivering to Lender the Initial
Certification;
(b) within five days after Pledgor's receipt thereof, the
original certificates, instruments or other documents, if any,
evidencing or representing all other Collateral not delivered pursuant
to clause (a) above.
Section 2.05. Release of Security Interest. At such time as
(a) all Obligations shall have been paid and (b) the Loan Agreement shall have
been terminated, Lender shall take all steps necessary to release the security
interest in the Collateral granted hereunder. When so released, the Collateral
shall be free and clear of any Lien created hereunder in favor of Lender. Upon
such termination and at the written request of Pledgor, and at the cost and
expense of Pledgor, Lender shall execute a satisfaction of this Agreement and
such instruments, documents or agreements as are necessary or desirable to
terminate, radiate, discharge and remove of record any documents constituting
public notice of this Security Agreement and the security interests and
assignment granted hereunder and shall deliver or cause to be delivered to
Pledgor all property (if any), including Monies, of Pledgor then held by Lender
(including Collateral held by the Custodian).
Section 2.06. Pledgor Remains Liable. Anything herein to the
contrary notwithstanding, (a) Pledgor shall remain liable under the Underlying
Loan Documents and the Transaction Documents to the extent set forth therein to
perform all of its duties and obligations thereunder to the same extent as if
this Agreement had not been executed; (b) the exercise by Lender of any of the
rights hereunder shall not release Pledgor from any of its duties or obligations
under the Underlying Loan Documents and the Transaction Documents, except to the
extent that such duties and obligations may be terminated pursuant to the terms
of the Underlying Loan Documents and the Transaction Documents by reason of a
sale, transfer or other disposition of the Collateral as provided in Article IV
hereof; and (c) Lender shall not have any obligation or liability under the
Underlying Loan Documents or the Transaction Documents by reason of this
Agreement, nor shall Lender be obligated to perform any of the obligations or
duties of Pledgor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder; provided that Lender and any other
transferee of the Collateral shall take the same subject to the Underlying Loan
Documents and the Transaction Documents.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGOR
Section 3.01. Representations and Warranties. Pledgor makes
the representations and warranties set forth below to Lender:
(a) General Representations and Warranties.
(i) Due Organization; Power. Pledgor is duly organized
and validly existing as a corporation in good standing under the laws
of the State of Delaware and has all requisite power to own its
properties, conduct its business, enter into this Agreement and perform
its obligations hereunder.
(ii) Due Authorization; Enforceability. This Agreement
and the granting of a continuing first-priority security interest in
the Collateral have been duly authorized by Pledgor; this Agreement has
been validly entered into by Pledgor; and this Agreement constitutes a
valid and binding instrument of Pledgor, enforceable against Pledgor in
accordance with its terms (except to the extent enforceability may be
limited by applicable bankruptcy, insolvency or other similar laws of
general applicability relating to or affecting the enforcement of
creditors' rights and by the effect of general principles of equity
(regardless of whether enforceability is considered in a proceeding in
equity or at law)).
(iii) No Consents. Except as required for perfection of
the security interest in the Collateral as described in Section
3.01(c), no permits, licenses, franchises, approvals, authorizations,
qualifications or consents of, or registrations or filings with,
governmental authorities are required in connection with the execution
or delivery by Pledgor of, or the performance by Pledgor of its
obligations under, this Agreement, except such as have been obtained or
made and are in full force and effect.
(iv) No Conflict. The execution and delivery of, and the
performance by Pledgor of its obligations under, this Agreement do not
and will not result in a breach or constitute a violation of, conflict
with, or constitute a default under, the Certificate of Incorporation
or the Bylaws of Pledgor, or any law, regulation, order or judgment
applicable to Pledgor or any agreement or instrument to which Pledgor
is a party or by which Pledgor or any of its property is bound.
(v) No Material Litigation. There are no actions,
suits, proceedings or claims pending or, to the knowledge of Pledgor,
threatened against or affecting Pledgor or any of its property which
may have, individually or in the aggregate, a Material Adverse Effect.
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(b) Title to Collateral. Pledgor is the sole owner of all of
the Collateral, beneficially and of record, free and clear of any Liens other
than the Liens created hereunder and under the other Loan Documents. The
Collateral is not subject to any option to purchase or similar rights of any
kind.
(c) Perfection. Upon (i) the execution and delivery of this
Agreement and the Custodial Agreement, (ii) the delivery of the Underlying Note
to Custodian pursuant thereto and (iii) the filing of a UCC-1 financing
statement against Pledgor and naming Lender as the secured party in the office
of the Secretary of State of the State of Delaware and the Secretary of State of
The Commonwealth of [Pennsylvania], and in the office of the prothonotary of the
[County of Philadelphia], Pennsylvania, Lender will have a valid, perfected,
continuing, first-priority security interest in or lien on, respectively, (a)
the Underlying Note and the proceeds thereof, and (b) that portion of the
Collateral in which a security interest is perfected by filing a financing
statement under the UCC.
(d) Principal Place of Business; Taxpayer Identification
Number. The principal place of business of Pledgor is the address indicated in
Section 5.08. Pledgor's federal taxpayer identification number is 23-2953181.
Section 3.02. Covenants.
(a) Defense of Title. Pledgor shall defend its title to the
Collateral against all claims of all Persons whomsoever, except with respect to
Liens created hereby or Permitted Liens.
(b) [Reserved].
(c) Additional Liens. Pledgor shall not permit any Lien except
Permitted Liens to be created or exist with respect to the Collateral.
(d) Change in Location of Principal Place of Business. Pledgor
shall not, without ten (10) days prior written notification to Lender, relocate
its principal place of business to a new location. At the time of such written
notification, Pledgor shall execute and file any documents necessary to perfect
(and to continue the perfection of) Lender's security interests.
Section 3.03. Protection of Collateral. Pledgor will not
create, permit or suffer to exist, and will defend the Collateral against and
take such other action as is necessary to remove, any Lien on such Collateral
other than Permitted Liens, and if Pledgor fails to do so, Lender may, without
waiving or releasing any obligation or liability of Pledgor hereunder or any
Event of Default, at any time thereafter (but shall be under no obligation to),
make such payment or any part thereof, obtain such discharge or otherwise defend
Pledgor's title to the Collateral. All sums so paid by Lender and any expenses
incurred by Lender in connection therewith, including reasonable attorneys'
fees, court costs, expenses and other charges relating thereto, shall be
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payable, upon demand, by Pledgor to Lender, and shall be deemed additional
Obligations secured by the Collateral.
Section 3.04. Sale or Pledge of Collateral. Pledgor shall not
sell, assign, transfer or otherwise dispose of, or pledge or otherwise encumber
(except to the extent otherwise permitted by this Agreement or the other Loan
Documents) any of the Collateral or any interest therein.
Section 3.05. Further Assurances, Preservation and Perfection
of Security Interest. (a) At Pledgor's expense, Pledgor shall do all such acts,
and shall execute and deliver to Lender all such financing statements,
certificates, instruments and other documents and shall do and perform or cause
to be done all actions and such other things necessary or expedient to be done
as Lender may reasonably request from time to time in order to give full effect
to this Agreement, and for the purpose of effectively perfecting, maintaining
and preserving Lender's security interest and the benefits intended to be
granted to Lender hereunder. To the extent permitted by applicable law, Pledgor
hereby authorizes Lender to execute and file, in the name of Pledgor or
otherwise, UCC financing statements, including continuation statements, and
similar recording documents which Lender in its sole discretion may deem
necessary or appropriate.
(b) If Pledgor fails to perform any act required by this
Agreement, Lender may, but shall not be obligated to, perform or cause the
performance of such act, and the expenses of Lender incurred in connection
therewith shall be governed by Section 4.6.
Section 3.06. Preservation of Collateral. Pledgor will, in its
dealing with the Collateral, comply with all laws, regulations and rules of any
Governmental Authority, provided that this covenant shall not prohibit Pledgor
from, and Pledgor shall not be construed to be in default of this Agreement
solely by, contesting in good faith and by appropriate proceedings Permitted
Liens, if Pledgor maintains reserves therefor in an amount reasonably designated
by Lender. Pledgor will not allow any material or monetary default for which it
is responsible to occur under any Collateral, and shall fully perform or cause
to be performed when due all of its obligations under the Collateral.
Section 3.07. Maintenance of Papers, Records and Files. (a)
Pledgor shall acquire and shall assemble, maintain and have available a complete
file (or direct [Disbursing Agent] to do so), in accordance with industry custom
and practice, for the Mortgage Loan. Pledgor shall maintain (or direct
[Disbursing Agent] to maintain) all such papers, records and files not in the
possession of Lender or Custodian in good and complete condition in accordance
with industry practice and shall preserve them against loss.
(b) Pledgor to Hold Records in Trust for Lender. For so long
as Lender has a security interest in any Collateral, Pledgor will hold or cause
to be held any paper, record or file related to the Collateral in trust for
Lender, except for such papers, records or files that are delivered to the
Custodian.
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(c) Lender's Rights of Inspection. Upon reasonable advance
notice from Lender, and during regular business hours, Pledgor shall make any or
all such papers, records or files available (or direct Servicer to do so) to
Lender in order that Lender may examine any such papers, records and files,
either by its employees or by agents or contractors, or both, and make copies of
all or any portion thereof.
ARTICLE IV
LENDER'S RIGHTS AND REMEDIES
Section 4.01. Remedies. (a) Should any Event of Default occur,
Lender, at its option, in addition to its rights and remedies under the Loan
Agreement or any other Loan Documents, shall have any or all of the following
rights and remedies:
(i) Lender May Sell Collateral. Lender may cause the
disposition of all or any portion of the Collateral to be conducted,
immediately upon such occurrence or upon the expiration of any period
of delay or notice required by law. Should Lender decide to conduct
more than one such sale or disposition, Lender may at its option cause
the same to be conducted simultaneously or successively on the same day
or upon such different days or at such different times and in such
order as Lender may deem to be in its best interests. Pledgor waives,
to the fullest extent permitted by law, any prejudice resulting to it
from any such decision.
(ii) Lender to Determine Terms and Conditions of Sale. Lender
shall have the right to sell the Collateral in one or more lots, at one
or more times, at such place or places, at public or private sales and
with or without notice of any kind (except as otherwise provided
herein), as Lender may elect, at such prices and on such terms, as to
cash or credit, as Lender may deem proper. Lender shall have the right
to become a purchaser at any such sale which is open to the public, and
to apply all unpaid obligations toward the purchase price of all or any
portion of the Collateral sold to Lender. If notice is given of public
sale, it is agreed that notice shall be satisfactorily given if such
notice is published at least once in the Wall Street Journal (Eastern
edition) and at least once in the Philadelphia Inquirer not less than
five (5) Business Days prior to such sale. The foregoing notice
provisions shall not preclude Lender's rights to foreclose upon the
Collateral in any other manner permitted under the UCC; provided,
however, that a sale of the Collateral in accordance with such notice
requirements shall be deemed a disposition of the Collateral in a
commercially reasonable manner. Should any Event of Default occur and
be continuing, Lender shall have the right to sell the Collateral, or
to foreclose, sue upon, or otherwise seek to enforce the same in its
own name or in the name of Pledgor as provided herein. Subject to the
foregoing provisions of this paragraph, once Lender is entitled to
exercise its rights and remedies hereunder, Lender shall have the right
to renew, extend the time of payment of, or otherwise modify, amend,
supplement, settle or compromise, in any manner, any obligations for
the payment of money included in the
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Collateral, any security therefor and any other agreements,
instruments, claims or choices in action of any kind which may be
included in the Collateral.
(iii) Lender May Take Possession of Collateral. Lender may
take possession of all or any portion of the Collateral that is not
already in its possession, and Pledgor agrees to assemble and make
available the Collateral to Lender at a convenient location. Should any
Event of Default occur and be continuing, Lender may manage and protect
the Collateral, do any acts which it deems proper to protect the
Collateral as security hereunder, and sue upon any contract claim
relating to the Collateral and receive any payments due thereon or any
damages thereunder, and apply all sums received to the payment of the
Obligations in such order as Lender shall determine. Any such actions
of Lender shall not be deemed, as between Pledgor and Lender, to impose
upon Lender any of Pledgor's obligations under any contracts.
(iv) Lender May Set Off Lender Obligations to Pledgor. Lender
shall be entitled to set off any obligation of Lender to Pledgor
against all unpaid amounts of principal and interest on the Loans and
any other amounts owing by Pledgor hereunder or otherwise, whether or
not any such obligation is liquidated, unliquidated, matured, unmatured
or contingent.
[(v) Lender May Direct Disbursing Agent. Lender shall be
entitled to direct Disbursing Agent to remit all payments of principal
of and interest on, or any other proceeds derived from, the Mortgage
Loan, to Lender or to such person or entity as Lender may designate,
and Pledgor shall, upon request by Lender, execute and consent to all
such notices and directions given by Lender to Disbursing Agent or
Custodian.]
(vi) Lender May Take Possession of Files and Documents.
Lender shall be entitled to require Pledgor to deliver or cause to be
delivered to Lender or Custodian all files and documents in the
possession of Pledgor or Disbursing Agent relating to the Mortgage
Loan, and Pledgor shall promptly take such actions and furnish to
Lender such documents as Lender deems necessary or appropriate to
enforce its rights with respect to the Mortgage Loan.
(vii) Lender May Direct Underlying Borrower [and Disbursing
Agent and Liquidating Trustee] to make Payments to Lender. Lender shall
be entitled to notify the Underlying Borrower and any other Persons now
or hereafter liable in whole or in part for the payment of any amount
due on or in respect of the Mortgage Loan [and Disbursing Agent and
Liquidating Trustee] of the pledge thereof to Lender, and to direct the
Underlying Borrower and any such other Person [and Disbursing Agent and
Liquidating Trustee] to make all payments of principal, interest and
other sums with respect to such Mortgage Loans, in whole or in part,
directly to Lender or its designee, and Pledgor shall, upon request by
Lender, execute and consent to all notices and directions given by
Lender
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to the Underlying Borrower or any such other persons [and Disbursing
Agent and Liquidating Trustee] pursuant hereto.
(vii) Lender May Exercise Pledgor's Rights Under Collateral.
Lender shall be entitled to exercise Pledgor's rights under or in
respect of any item of Collateral.
(ix) Lender May Withdraw Funds from Accounts. Lender shall be
entitled to exercise complete dominion and control over each of the
Borrower Collection Account, the Borrower Working Capital Account and
each other Borrower Account, and all funds on deposit in such accounts,
including the right to make withdrawals therefrom or require the
liquidation of investments in which funds therein are invested for
application pursuant to this agreement.
(x) Other Remedies. Lender shall be entitled to exercise any
other rights or remedies provided herein, in any document or instrument
delivered pursuant hereto, under any other agreement or under
applicable law.
(b) Pledgor Waives Rights to Judicial Process, Defenses.
Lender may enforce its rights and remedies hereunder without prior judicial
process or hearing, and Pledgor hereby expressly waives, to the fullest extent
permitted by law, any right Pledgor might otherwise have to require Lender to
enforce its rights by judicial process. Pledgor also waives, to the fullest
extent permitted by law, any defense Pledgor might otherwise have to the
Obligations secured hereby arising from use of nonjudicial process, enforcement
and sale of all or any portion of the Collateral or from any other election of
remedies.
Section 4.02. [Intentionally Omitted.]
Section 4.03. Application of Proceeds. Except as otherwise
herein expressly provided, the proceeds of any collection, sale or other
realization of all or any part of the Collateral pursuant hereto following
Lender's exercise of remedies hereunder, and any other cash at the time held by
Lender hereunder, shall be applied by Lender in the following manner:
first, to the reimbursement of sums expended by Lender
pursuant to Section 4.06, and to the payment of the costs and expenses
of such collection, sale or realization, or any other enforcement
action pursuant hereto, including attorney's fees (including the
allocated expenses of internal counsel to Lender), and all other
expenses incurred in connection therewith, with a reasonable reserve
for any liabilities incurred in connection therewith; and
second, to the Pledgor, provided, however, that so long as the
Loan is outstanding, all such amounts shall be distributed concurrently
to Lender for application in the following order of priority:
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first, to any Loan Fees and Expenses, if any (without
duplication of amounts applied pursuant to clause first above);
second, to any interest accrued and unpaid on the Loan, if
any;
third, to the Principal Amount of the Loan (until paid in
full); and
fourth, to the payment to Pledgor.
As used in Sections 4.03 and 4.04, "proceeds" of the Collateral shall mean cash
and other property realized in respect of, and distributions in kind of,
Collateral, including any thereof received under any reorganization, liquidation
or adjustment of debt of Pledgor or any other issuer of or obligor on any of the
Collateral.
Section 4.04. Deficiency. If the proceeds of sale, collection
or other realization of or upon the Collateral pursuant to Section 4.01 are
insufficient to cover the costs and expenses of such realization and the payment
in full of the Obligations, Pledgor (but not its shareholders individually
except as otherwise provided in Section 7.03 of the Loan Agreement (including as
to any distributions made thereto by Pledgor)) shall be liable to Lender for the
deficiency.
Section 4.05. Appointment of Lender as Pledgor's Lawful
Attorney. Pledgor irrevocably designates, makes, constitutes and appoints Lender
(and all Persons designated by Lender) as its true and lawful attorney (and
agent-in-fact) to take the following actions and upon the occurrence and during
the continuance of an Event of Default:
(a) To Endorse Pledgor's Name. At such time or times hereafter
as Lender or its agent in its sole discretion may determine, in
Pledgor's or Lender's name, to endorse Pledgor's name on any checks,
notes, drafts, instruments, documents or any other payment relating to
the Collateral and/or proceeds of the Collateral which come into the
possession of Lender or come under Lender's control;
(b) To Sign Pledgor's Name to Perfection Documents. To the
extent permitted by law, to sign Pledgor's name on any documents
(including financing statements and continuations thereof) necessary or
desirable for the purpose of maintaining or achieving the perfection of
a security interest in the Collateral; and
(c) To Sign Pledgor's Name on Other Documents. To the extent
permitted by law, to sign Pledgor's name to any document necessary or
appropriate in order to permit Lender fully to exercise its rights
under Section 4.01, or in order to further effectuate the purposes of
Sections 3.05 and 5.06.
Section 4.06. Reimbursement. All sums expended by Lender in connection
with the exercise of any right or remedy provided for herein shall be and shall
remain the obligation
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of Pledgor. At the option of Lender, all such sums may be paid from the
Collateral or may be advanced by Lender, in which event they shall be deemed to
have been advanced to Pledgor and shall be reimbursed by Pledgor to Lender.
Section 4.07. Exoneration of Lender; Certain Reimbursements.
(a) Lender's Powers for Lender's Sole Benefit. The powers
conferred on Lender hereunder are solely for Lender's benefit, and do not impose
any duty on Lender to exercise any such powers. Following an Event of Default or
the occurrence of any other event entitling Lender to exercise remedies
hereunder, Lender shall have no duty of care to Pledgor as to any Collateral or
with respect to the taking of any steps necessary to preserve rights against
other parties or any other obligation pertaining to the Collateral. Pledgor
waives, to the fullest extent permitted by law, all rights whatsoever against
Lender for any loss, expense, liability or damage suffered by Pledgor as a
result of actions taken pursuant to this Agreement, including those arising
under any "mortgagee in possession" doctrine or the like, except to the extent
such losses, expenses, liabilities or damages result from the gross negligence
or willful misconduct of Lender.
(b) Pledgor to Reimburse Lender for Collateral-Preservation
Fees and Taxes. Without limiting the application of Section 4.07(a), Pledgor
shall pay or reimburse Lender for all fees and taxes in connection with
preserving the Collateral and Lender's interest therein, whether through
judicial proceedings or otherwise, or in defending or prosecuting any actions,
suits or proceedings arising out of or relating to the Collateral, except to the
extent such fees and taxes result from the gross negligence or willful
misconduct of Lender.
Section 4.08. Waiver of Redemption and Deficiency Rights.
Pledgor hereby expressly waives, to the fullest extent permitted by law, every
statute of limitation, any right of redemption, any moratorium or redemption
period, any limitation on a deficiency judgment, and any right which Pledgor may
have to direct the order in which any of the Collateral shall be disposed of in
the event of any disposition thereof pursuant hereto.
ARTICLE V
MISCELLANEOUS
Section 5.01. Remedies Cumulative. The rights, remedies and
benefits of Lender herein expressly specified are cumulative and not exclusive
of any other rights, remedies or benefits which Lender may have under this
Agreement or any other Loan Document at Law, in equity, by statute or otherwise.
Without limiting the generality of the foregoing, Lender shall have all rights
and remedies of a secured creditor under Article 9 of the UCC in each applicable
jurisdiction.
Section 5.02. Prejudgment Remedy Provision. In the event of
any legal action between Pledgor and Lender hereunder, Pledgor expressly waives,
to the extent permitted by law,
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any and all rights Pledgor may have under the law as now constituted or
hereafter amended that may constitute a limitation on prejudgment remedies, and
Lender may invoke any prejudgment remedy available to it, including garnishment,
attachment, foreign attachments and replevin, with respect to the Collateral to
enforce the provisions of this Agreement.
Section 5.03. Security Interest Absolute. All rights of Lender
hereunder, the grant of a security interest in the Collateral and all
obligations of Pledgor hereunder, shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Loan Documents
or the Transaction Documents, (b) any change in time, manner or place of payment
of, or in any other term of, all or any of the Obligations, or any release,
amendment or waiver of or any consent to any departure from the Loan Agreement
or any other agreement or instrument, (c) any exchange, release or nonperfection
of any other collateral, of any release, amendment or waiver of or consent to or
departure from any guarantee, for all or any of the Obligations, or (d) any
other circumstance which might otherwise constitute a defense available to, or a
discharge of, Pledgor in respect of the Obligations or in respect of this
Agreement.
Section 5.04. [Intentionally Omitted]
Section 5.05. No Delay; Waivers. No delay on the part of
Lender in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any power or right
hereunder preclude other or further exercise thereof or the exercise of any
other power or right. Lender shall not be deemed to have waived any rights
hereunder unless such waiver shall be in writing and signed by Lender.
Section 5.06. Further Assurances. Each Party shall execute
such deeds, assignments, endorsements and other instruments and documents and
shall give such further assurances as shall be necessary to perform its
obligations hereunder.
Section 5.07. Waivers and Amendments. This Agreement may be
amended, superseded or canceled, and the terms hereof may be waived, only by a
written instrument signed by authorized representatives of the Parties or, in
the case of a waiver, by an authorized representative of the party waiving
compliance. No such written instrument shall be effective unless it expressly
recites that it is intended to amend, supersede or cancel this Agreement or to
waive compliance with one or more of the terms hereof, as the case may be.
Section 5.08. Notices. All notices, requests, demands and
other communications required under the terms and provisions hereof shall be in
writing and shall become effective when delivered by hand or received by
telecopier, telegram, registered or certified mail, postage prepaid, or an
established overnight delivery service, addressed as follows:
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If to Lender:
Merrill Lynch Mortgage Capital Inc.
World Financial Center, North Tower
250 Vesey Street
New York, New York 10281
Attention: David Mahoney
Facsimile No.: (212) 449-0735
Confirmation: (212) 449-9293
and:
Attention: Michael Nash
Facsimile No.: (212) 449-0769
Confirmation: (212) 449-5080
with a copy to:
Sidley & Austin
875 Third Avenue
New York, New York 10022
Attention: George Petrow
Facsimile No.: (212) 906-2021
Confirmation: (212) 906-2258
If to Pledgor:
Resource Properties XLIX, Inc.
c/o Resource America, Inc.
Ledgewood Law Firm Building
1521 Locust Street, 4th Floor
Philadelphia, Pennsylvania 19102
Attention: Scott Schaeffer
Facsimile No.: (215) 546-5005
Confirmation: (215) 546-5388
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with a copy to:
Ledgewood Law Firm
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Jeffrey Brotman, Esq.
Facsimile No.: (215) 735-2513
Confirmation: (215) 731-9540
or to such other address as the party to receive the notice shall designate by
notice to the other party.
Section 5.09. Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, without
regard to principles of conflict of laws, except to the extent that the validity
or perfection of the security interest hereunder, or remedies hereunder, in
respect of any particular Collateral is required, pursuant to mandatory
choice-of-law rules, to be governed by the laws of a jurisdiction other than the
State of New York.
Section 5.10. Submission to Jurisdiction; Waiver of Objection
to Inconvenient Forum. Each Party hereby irrevocably submits to the
non-exclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York State court sitting in New York County
for purposes of all legal proceedings arising out of or relating to this
Agreement. Each Party hereto irrevocably waives, to the fullest extent permitted
by law, any objection which it may now or hereafter have to the laying of the
venue of any such proceeding brought in such a court and any claim that any such
proceeding brought in such a court has been brought in an inconvenient forum.
Section 5.11. Waiver of Jury Trial. Each of Pledgor and Lender
hereby irrevocably waives any and all rights to trial by jury in any legal
proceeding arising out of or relating to this Agreement, the Collateral or the
transactions contemplated hereby.
Section 5.12. Binding Agreement; Assignments. This Agreement
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns. Pledgor shall not assign this
Agreement or any interest herein or in the Collateral, or any part thereof, or
any cash or property held by Lender as Collateral under this Agreement, except
(i) with the prior written consent of Lender in its sole discretion. Any
purported assignment in violation of this Section shall be null and void. Lender
may assign its rights and/or delegate its duties to the extent permitted by
Section 7.06 of the Loan Agreement, and any such assignment shall in all respect
be subject to the terms of such Section.
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Section 5.13. Indemnification. Pledgor shall indemnify, defend
and hold Lender harmless from and against any and all claims, liabilities,
costs, expenses, losses, demands, damages, judgments and awards (including
attorneys' fees of every kind) arising from or in connection with this
Agreement, any other Loan Document, the Collateral, the Certificate of
Incorporation or the Bylaws or any Transaction Document (including expenses of
or incidental to the enforcement of any of the provisions of this Agreement or
any actual or attempted sale of the Collateral but excluding any such claims,
liabilities, costs, losses, demands, damages, judgments and awards to the extent
incurred by reason of gross negligence or willful misconduct on the part of
Lender as determined by a court of competent jurisdiction). All such amounts
owing to Lender hereunder shall be deemed additional Obligations.
Section 5.14. Restoration or Set Aside. If, for any reason,
any portion of Pledgor's payments to Lender pursuant to the Obligations is set
aside or restored, whether voluntarily or involuntarily, after the making
thereof, then the obligation intended to be satisfied thereby shall be revived
and shall continue in full force and effect as if said payment or payments had
not been made, and Pledgor shall be liable for the full amount Lender is
required to repay plus any and all costs and expenses (including (i) attorneys'
fees and expenses and (ii) attorneys' fees and expenses incurred pursuant to the
United States Bankruptcy Code) paid by Lender in connection therewith.
Section 5.15. Severability. If any provision of this Agreement
shall be invalid, illegal or unenforceable, then, to the extent permitted by
law, the validity, legality and enforceability of the remaining provisions shall
not in any way be affected or impaired thereby.
Section 5.16. Section Headings. Section headings used herein
are for convenience of reference only and are not to affect the construction of,
or to be taken into consideration in interpreting, this Agreement.
Section 5.17. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same instrument.
Section 5.18. No Rights of Others. No Person other than a
Party shall have any legal or equitable right, remedy or claim under or in
respect of this Agreement.
Section 5.19. Entire Agreement. This Agreement, taken together
with the other Loan Documents, supersedes all prior written agreements and
understandings between the Parties with respect to the subject matter hereof,
whether express or implied, written or oral.
[Signatures begin on the next page]
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IN WITNESS WHEREOF, the Parties have caused this Pledge and
Security Agreement to be executed by their duly authorized representatives, as
of the day and year first above written.
RESOURCE PROPERTIES XLIX, INC.
By:
-------------------------------------
Name: Scott Schaeffer
Title: President
MERRILL LYNCH MORTGAGE CAPITAL INC.
By:
-------------------------------------
Name: David W. Mahoney
Title: Vice President
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