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STOCK PLEDGE AGREEMENT
dated as of March 12, 1998
between
RESOURCE PROPERTIES, INC., as Pledgor
and
MERRILL LYNCH MORTGAGE CAPITAL INC., as Lender
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TABLE OF CONTENTS
Page
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ARTICLE I
CERTAIN DEFINITIONS......................................................................................1
ARTICLE II
COLLATERAL: GENERAL TERMS................................................................................3
Section 2.01. Security Interest......................................................................3
Section 2.02. Delivery of Certificates, Instruments, Etc.............................................4
Section 2.03. Release of Security Interest...........................................................4
Section 2.04. Pledgor Remains Liable.................................................................5
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS OF PLEDGORS....................................................5
Section 3.01. Representations and Warranties.........................................................5
Section 3.02. Covenants..............................................................................6
Section 3.03. Protection of Collateral...............................................................7
Section 3.04. Sale or Pledge of Related Collateral...................................................7
Section 3.05. Further Assurances, Preservation and Perfection of Security Interest...................7
Section 3.06. Rights of Pledgor......................................................................8
Section 3.07. Preservation of Related Collateral.....................................................8
[Section 3.09. Agreements of Pledgor.......... .......................................................8]
ARTICLE IV
NEGATIVE PLEDGE AGREEMENT................................................................................9
ARTICLE V
LENDER' RIGHTS AND REMEDIES..............................................................................9
Section 5.01. Remedies...............................................................................9
Section 5.02. [Intentionally Omitted................................................................10
Section 5.03. Application of Proceeds...............................................................10
Section 5.04. Deficiency............................................................................11
Section 5.05. Appointment of Lender as Pledgors' Lawful Attorney....................................11
Section 5.06. Reimbursement.........................................................................12
Section 5.07. Exoneration of Lender; Certain Reimbursements.........................................12
Section 5.08. Waiver of Redemption and Deficiency Rights............................................12
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ARTICLE VI
MISCELLANEOUS...........................................................................................13
Section 6.01. Remedies Cumulative...................................................................13
Section 6.02. Prejudgment Remedy Provision..........................................................13
Section 6.03. Security Interest Absolute............................................................13
Section 6.04. [Intentionally Omitted]...............................................................13
Section 6.05. No Delay; Waivers.....................................................................13
Section 6.06. Further Assurances....................................................................13
Section 6.07. Waivers and Amendments................................................................14
Section 6.08. Notices...............................................................................14
Section 6.09. Governing Law.........................................................................15
Section 6.10. Submission to Jurisdiction; Waiver of Objection to
Inconvenient Forum....................................................................15
Section 6.11. Waiver of Jury Trial..................................................................15
Section 6.12. Binding Agreement; Assignments........................................................16
Section 6.13. [Reserved]. ..........................................................................16
Section 6.14. Restoration or Set Aside..............................................................16
Section 6.15. Severability..........................................................................16
Section 6.16. Section Headings......................................................................16
Section 6.17. Counterparts..........................................................................16
Section 6.18. No Rights of Others...................................................................16
Section 6.19. Entire Agreement......................................................................17
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STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT, dated as of March 12, 1998 (as
amended, modified or supplemented from time to time, this "Agreement") between
RESOURCE PROPERTIES, INC., a Delaware corporation ("Pledgor"), and MERRILL LYNCH
MORTGAGE CAPITAL, INC., a Delaware corporation (with its successors and
permitted assigns, "Lender").
PRELIMINARY STATEMENT
Pledgor is the sole shareholder and holds one hundred percent
(100%) interest in Resource Properties XLIX, Inc., a Delaware corporation
("Borrower").
Borrower 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 Borrower to finance Borrower'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 Borrower 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, as to Pledgor, all "accounts" (as defined in
the UCC as in effect in the State of New York) now owned or hereafter acquired
by Pledgor, including all accounts receivable, contract rights, book debts,
notes, drafts and other obligations or indebtedness owing to Pledgor, whether or
not 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 as in effect in the State of New York), and all of
Pledgor's rights to any goods, services or other property represented by any of
the foregoing.
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"Agreement" means this Stock Pledge Agreement, as amended from
time to time.
"Bylaws" means the bylaws of Borrower, dated as of March __,
1998, as may be amended from time to time.
"Certificate of Incorporation" means the certificate of
incorporation of Borrower, dated as of March __, 1998, as may be amended from
time to time.
"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.
"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 and (ii) all rights or claims in respect of refunds for
taxes paid.
"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 Loan Agreement.
"Monies" means all cash, checks, notes, drafts or similar
items of payment.
"Obligations" means (i) all indebtedness, obligations and
liabilities of Borrower 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 Borrower 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 Borrower 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.
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"Person" means any natural person, partnership, joint venture,
firm, corporation, limited liability company, association, trust or other
enterprise (whether or not incorporated), or any government or political
subdivision or any agency, department or instrumentality thereof.
"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 other 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 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 related
"Collateral"):
(a) (i) all of Pledgor's right, title and interest in and to its
equity interests in Borrower (the "Pledged Interests"), and the
certificates, if any, representing the Pledged Interests, in each case
whether now owned or hereafter acquired; and (ii) all cash, securities,
dividends, proceeds and other property whether constituting Accounts,
Documents, General Intangibles and/or Instruments or otherwise at any
time and from time to time received, receivable or otherwise
distributed in respect of or in exchange for any and all of the Pledged
Interests;
(b) to the extent not included in clause (a) above, any and all
rights and remedies of Pledgor under the Certificate of Incorporation
and the Bylaws, including the right to enforce any and all
representations, warranties, covenants, obligations, agreements and
indemnities of any party thereto made to or for the benefit of, or that
otherwise inure to the benefit of, Pledgor;
(c) all securities hereafter delivered to Lender in substitution
for or in addition to any of the foregoing, and all certificates and
instruments representing or evidencing such securities and all cash,
securities, dividends, 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 foregoing;
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(d) All books and records (including credit files, computer
programs, printouts and other computer materials and records) of
Pledgor pertaining to any of the foregoing;
(e) All of Pledgor's right, title and interest in and to the
profits and losses of Borrower and Pledgor's right as a shareholder of
Borrower to receive distributions of Borrower's assets, upon complete
or partial liquidation or otherwise; and
(f)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 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;
provided, however, that any amounts distributed to Pledgor in its
capacity as shareholder of Borrower shall not constitute Collateral,
and shall be free and clear of any security interest granted by Pledgor
to Lender hereunder, upon and after such distribution.
Section 2.02. Delivery of Certificates, Instruments, Etc.
Pledgor shall deliver to Lender concurrently with the execution and delivery of
this Agreement all original certificates, instruments and other documents, if
any, evidencing or representing the related Collateral, together with copies of
the Certificate of Incorporation and the Bylaws, in each case accompanied by, if
applicable, a duly executed instrument of transfer in blank and shall execute
and deliver to Lender such UCC financing statements as Lender shall specify to
ensure Lender the benefits of the first priority Lien (as defined below) on and
to the Collateral.
Section 2.03. 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 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.
Section 2.04. Pledgor Remains Liable. Anything herein to the
contrary notwithstanding, (a) Pledgor shall remain liable under the Certificate
of Incorporation, the Bylaws and any other shareholder agreements affecting the
rights, limitations, preferences or obligations of Pledgor (collectively, the
"Shareholder 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
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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 Shareholder
Documents; and (c) Lender shall not have any obligation or liability under the
Shareholder 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 Shareholder Documents.
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. This Agreement and the granting
of a continuing first-priority security interest in the related 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 principals 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;
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(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.
(b) Title to Related Collateral. Pledgor is the sole owner of
all of the related Collateral, beneficially and of record, free and clear of any
Liens other than the Liens created hereunder. 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 (ii) 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 Commonwealth of [Pennsylvania], the office of the prothonotary of the County
of Philadelphia, Pennsylvania, and the office of the Secretary of State of the
State of Delaware, Lender will have a valid, perfected, continuing,
first-priority security interest in or lien on, respectively, that portion of
the related 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 6.08. Pledgor's federal taxpayer identification number is 23-2720234.
Section 3.02. Covenants. Pledgor covenants and agrees with
Lender as set forth
below:
(a) Defense of Title. Pledgor shall defend its title to the
related Collateral against all claims of all Persons whomsoever, except with
respect to Liens created hereby or Permitted Liens.
(b) Additional Liens. Pledgor shall not (i) permit any Lien
except Permitted Liens to be created or exist with respect to the related
Collateral, or (ii) agree to amend, modify or supplement the Certificate of
Incorporation and the Bylaws or any other agreements, documents or certificates
related to the related Collateral in any material respect without the prior
written consent of Lender.
(c) 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, such Pledger shall execute and file any documents necessary to
perfect (and to continue the perfection of) Lender's security interests.
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Section 3.03. Protection of Collateral. Pledgor will not
create, permit or suffer to exist, and will defend the related Collateral
against and take such other action as is necessary to remove, any Lien on such
related 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 related 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 payable, upon demand, by Pledgor to Lender, and shall be
deemed additional Obligations secured by the Collateral.
Section 3.04. Sale or Pledge of Related Collateral. Pledgor
shall not sell, assign, transfer or otherwise dispose of, or pledge or otherwise
encumber (except to the extent permitted by this Agreement or the other Loan
Documents), any of the related Collateral or any interest therein.
Section 3.05. Further Assurances, Preservation and Perfection
of Security Interest. (a) At its own 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 matters 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, 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 5.06 hereof.
Section 3.06. Rights of Pledgor. Unless an Event of Default
shall have occurred and be continuing, notwithstanding any other provision of
this Agreement to the contrary, Pledgor shall be entitled to (i) exercise any
and all voting and other consensual rights pertaining to the related Pledged
Interests or any part thereof for any purpose not inconsistent with the terms of
this Agreement and (ii) receive and use, free and clear of any Lien created
hereby or any security interest granted by Pledgor to Lender hereunder, for any
purpose any distributions actually made, and any allocations actually made, with
respect to the Pledged Interests (whether as a distribution of net cash flow or
otherwise).
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Section 3.07. Preservation of Related Collateral. Pledgor will
not allow any material default for which it is responsible to occur under any
related Collateral, and shall fully perform or cause to be performed when due
all of its obligations under the related Collateral.
Section 3.08. Papers, Records and Files.
(a) Maintenance . Pledgor shall acquire and shall assemble,
maintain and have available a complete file relating to the Pledged Interests,
including all statements and other information delivered to Pledgor pursuant to
the Certificate of Incorporation, the Bylaws and any other Shareholder
Documents. Pledgor shall maintain all such papers, records and files not in the
possession of Lender in good and complete condition 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 related Collateral, Pledgor will hold
or cause to be held any paper, record or file related to the such Collateral in
trust for Lender.
(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 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.
Section 3.09. Agreements of Pledgor. Until the Obligations are
performed in full, Pledgor covenants and agrees with the Lender not to permit
Borrower, while equity interests in Borrower have been pledged pursuant to this
Agreement, to elect to have such equity interests treated as securities governed
by Article 8 of the Uniform Commercial Code.
The representations and warranties set forth in this Section 3
shall survive the execution and delivery of this Agreement.
ARTICLE IV
NEGATIVE PLEDGE AGREEMENT
Pledgor covenants and agrees that until such time as (i) all
Obligations shall have been paid and (ii) the Loan Agreement shall have been
terminated, Pledgor will not, without the written consent of Lender:
(a) Sell, assign, pledge, grant any Lien other than a
Permitted Lien on, transfer, dispose of or otherwise encumbers the related
Collateral or any part thereof, including, without limitation, entering into any
lock-up or any other arrangement with respect to the related Collateral that
adversely affects the interests of the Lender (as determined by the Lender); or
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(b) Amend, waive, modify or otherwise change any of the terms
or provisions of the Certificate of Incorporation, the Bylaws, any document
setting forth the designation, amount, relative rights, limitations and
preferences of any class of equity of the Borrower or any equivalent documents
(in each case as in effect on the Closing Date), or consent to any such
amendment, modification or change, provided that if any of the terms or
provisions of the Certificate of Incorporation or the Bylaws or other
Shareholder Documents is, or is proposed to be, amended, waived, or modified
without the consent of Pledgor, Pledgor shall provide Lender with prompt written
notice of every such proposed and actual amendment or modification to the extent
that Pledgor has notice or knowledge thereof.
ARTICLE V
LENDER' RIGHTS AND REMEDIES
Section 5.01. Remedies. (a) Should any Event of Default occur,
Lender is hereby authorized and empowered, at its election, (i) to transfer and
register in its or its nominee's name the whole or any part of the Collateral,
including by means of the completion of the instrument of transfer referred to
in Section 2.02, (ii) to exercise all voting rights with respect to the
Collateral, (iii) to demand, sue for, collect, receive and give acquittance for
any and all cash distributions or monies due or to become due upon or by virtue
thereof, and to settle, prosecute or defend any action or proceeding with
respect thereto, (iv) to sell in one or more sales (public or private) the whole
or any part of the Collateral or otherwise to transfer or assign the same, (v)
to receive and retain all distributions on the Collateral, and (vi) to otherwise
enforce and act with respect to the Collateral or the proceeds thereof as though
Lender were the outright owner thereof. Pledgor hereby irrevocably constitutes
Lender as its proxy and attorney-in-fact, with full power of substitution, to
accomplish any of the foregoing, which appointment is coupled with an interest.
(b) In the event of any disposition of the Collateral as
provided in Section 5.01(a)(iv), Lender shall give to Pledgor at least ten (10)
days prior written notice of the time and place of any public sale of the
related Collateral or of the time after which any private sale or any other
intended disposition is to be made. Pledgor hereby acknowledges that ten (10)
days prior written notice of such sale or sales shall be reasonable notice.
Lender may enforce its rights hereunder without any other notice and without
compliance with any other condition precedent now or hereunder imposed by
statute, rule of law or otherwise (all of which are hereby expressly waived by
Pledgor, to the fullest extent permitted by law). Lender may buy any part or all
of the related Collateral at any public sale and, if any part or all of the
related Collateral is of a type customarily sold in a recognized market or is of
the type which is the subject of widely distributed standard price quotations or
as otherwise permitted by law, Lender may buy any part or all of the related
Collateral at a private sale and may make payments thereof by any means.
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(c) Pledgor recognizes that Lender may be unable to effect a
public sale of the related Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
other applicable laws, but may be compelled to resort to one or more private
sales thereof to a restricted group of purchasers and may otherwise be required
to impose additional limitations on sales as a result thereof. Pledgor agrees
that any such private sales may be at prices and other terms less favorable to
the seller than if sold at public sales and that such private sales shall not by
reason thereof be deemed not to have been made in a commercially reasonable
manner. Pledgor agrees to use its best efforts to cause Borrower to execute and
deliver all such instruments and documents and to do or cause to be done all
such other acts and things as may be necessary or, in the opinion of the Lender,
advisable (i) to cause the related Collateral to be exempt from registration
under the provisions of the Securities Act, (ii) to amend such instruments and
documents which, in the opinion of the Lender, are necessary or advisable to
meet the requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto, and (iii) to make any
sales of any portion or all of the Collateral pursuant to this Section 5.01
valid and binding and in compliance with any and all applicable laws. Pledgor
further agrees to cause Borrower to comply with the provisions of the state
securities or "Blue Sky" laws of any jurisdiction which the Lender shall
designate, to the extent that any such laws apply under circumstances under
which the related Collateral is exempt from registration under the provisions of
the Securities Act.
Section 5.02. [Intentionally Omitted].
Section 5.03. 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 5.06, 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 Pledgor, or its successors or assigns, 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:
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 or its successors or
assigns.
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As used in Sections 5.03 and 5.04, "proceeds" of Collateral shall mean cash and
other property realized in respect of, and distributions in kind of, such
Collateral, including any thereof received under any reorganization, liquidation
or adjustment of debt of the Pledgor or any other issuer of or obligor on any of
such Collateral.
Section 5.04. Deficiency. If the proceeds of the sale,
collection or other realization of or upon the Collateral pursuant to Section
5.01 are insufficient to cover the costs and expenses of such realization and
the payment in full of the Obligations, neither Pledgor nor the shareholders in
Pledgor shall be liable to Lender for the deficiency (except as otherwise
provided in the Loan Agreement).
Section 5.05. Appointment of Lender as Pledgors' 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 related Collateral and/or proceeds of the related 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 related 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 to fully exercise its rights
under Section 5.01.
Section 5.06. 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 of Pledgor. At the option of Lender, all such
sums may be paid from the related 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 upon demand therefor.
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Section 5.07. 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 related 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 5.07(a), Pledgor
shall pay or reimburse Lender for all fees and taxes in connection with
preserving the related 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 related Collateral,
except to the extent such fees and taxes result from the gross negligence or
willful misconduct of Lender.
Section 5.08. Waiver of Redemption and Deficiency Rights.
Pledgor hereby waives, to the fullest extent permitted by law, every statute of
limitation, any right of redemption, any moratorium or redemption period, and
any right which Pledgor may have to direct the order in which any of the related
Collateral shall be disposed of in the event of any disposition thereof pursuant
hereto.
ARTICLE VI
MISCELLANEOUS
Section 6.01. 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 party under Article 9 of the UCC in each
applicable jurisdiction.
Section 6.02. Prejudgment Remedy Provision. In the event of
any legal action between Pledgor and Lender hereunder, Pledgor expressly waives,
to the extent permitted by law, 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 related Collateral to enforce the provisions of this Agreement.
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Section 6.03. 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 Underlying
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, or 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 6.04. [Intentionally Omitted]
Section 6.05. 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 6.06. 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 6.07. 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 6.08. 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:
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
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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, Inc.
c/o Resource America, Inc.
1521 Locust Street, 4th Floor
Philadelphia, Pennsylvania 19102
Attention: Scott Schaeffer
Facsimile No.: (215) 546-5005
Confirmation: (215) 546-5388
with a copy to:
Ledgewood Law Firm
1521 Locust Street
Philadelphia, Pennsylvania 19102
Attention: Jeffrey Brotman, Esq.
Facsimile No.: (215) 735-2513
Confirmation: (215) 731-9450
or to such other address as the party to receive the notice shall designate by
notice to the other party.
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Section 6.09. 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 6.10. 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 6.11. Waiver of Jury Trial. 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 related Collateral or the
transactions contemplated hereby.
Section 6.12. 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
with the prior written consent of Lender. Any purported assignment in violation
of this Section shall be null and void. At any time that two or more Persons are
participants in the interests of Lender hereunder, Lender or its designee shall
serve as representative ("Lender Representative") for all of them under all the
Loan Documents. The Lender Representative will serve as the sole source of
communication from such Persons and delivery of notices or information to Lender
Representative by Pledgor shall be deemed to constitute delivery to all such
participants. Except as otherwise provided in the preceding sentence, the
designation of a Lender Representative shall not relieve Pledgor of its
obligations to any Person participating in the interests of Lender hereunder.
Section 6.13. [Reserved].
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Section 6.14. Restoration or Set Aside. If, for any reason,
any portion of Borrower'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 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, shall constitute additional
Obligations.
Section 6.15. 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 6.16. 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 6.17. 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 6.18. 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 6.19. 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.
[Signature begin on the next page]
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IN WITNESS WHEREOF, the parties hereto have caused this Stock
Pledge Agreement to be duly executed as of the date first above written.
RESOURCE PROPERTIES, INC.
as Pledgor
By:_________________________________
Name: Scott Schaeffer
Title: President
MERRILL LYNCH MORTGAGE CAPITAL INC.,
as Lender
By:________________________________
Name: David W. Mahoney
Title: Vice President
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