EXHIBIT 10.26
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge Agreement") is dated as
of March 9, 2011 and made by and between ROAD BAY INVESTMENTS, LLC (the
"Pledgor") and ALLSTATE LIFE INSURANCE COMPANY OF NEW YORK (the "Secured
Party").
W I T N E S S E T H
WHEREAS, the Secured Party and the Pledgor have entered into an Asset
Purchase Agreement dated March 9, 2011 (the "Asset Purchase Agreement"), under
which the Secured Party has agreed to sell, and the Pledgor has agreed to
purchase from the Secured Party, certain Assets (as defined in the Asset
Purchase Agreement) ; and
WHEREAS, as security for the payment and performance by the Pledgor of
its obligations under the Asset Purchase Agreement, the Pledgor has agreed to
grant a pledge of and security interest in the Pledgor's right, title, and
interest in and to the Assets;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the Pledgor and the Secured Party hereby agree as
follows:
ARTICLE I
GRANT OF PLEDGE AND SECURITY INTEREST
Section 1.1 Grant of Security Interest. To secure the payment in full
when due by the Pledgor to the Secured Party under the Asset Purchase Agreement
of all amounts (including fees, charges, and expenses) which accrue and become
due thereunder and the timely performance by the Pledgor of each of its other
obligations thereunder (collectively, the "Secured Obligations"), the Pledgor
hereby pledges and grants to the Secured Party a security interest in all of
the Pledgor's right, title, and interest in, to, and under the following
(collectively, the "Collateral"): (a) the Assets and all certificates or
instruments evidencing the same and all proceeds thereof, all accessions
thereto, and substitutions therefor; (b) all interest, distributions, and other
proceeds from time to time received, receivable, or otherwise distributed to
Pledgor in respect of or in exchange for any or all of the Assets; and (c) all
"Proceeds" (as such term is defined in the Uniform Commercial Code as in effect
in the State of New York or any other relevant jurisdiction (the "UCC")) of any
of the foregoing.
Section 1.2 Perfection of Security Interest.
(a) The Pledgor agrees to take all other actions which may be necessary
under the laws of the State of New York or may be requested by the Secured
Party to protect and perfect the interest of the Secured Party in the
Collateral created hereby and to ensure that such interest is senior in rank to
the claims of any other creditor of the Pledgor claiming an interest in and to
the Collateral, including the filing of UCC-1 financing statements (including
any continuation statements with respect to such financing statements when
applicable) identifying the Assets and naming the Pledgor as debtor and the
Secured Party as secured party. The Pledgor shall deliver to the Secured Party
file-stamped copies or other evidence of such filings.
Notwithstanding the agreements set forth in this Section 1.2, the Pledgor
hereby authorizes the Secured Party to take, and appoints the Secured Party as
its attorney-in-fact for the purpose of taking, any action necessary under the
UCC to perfect, and to maintain the perfection and priority of, the Secured
Party's interest in the Collateral, including, without limitation, the filing
of any such financing and continuation statements.
(b) Notwithstanding the agreements set forth in this Section 1.2,
Pledgor shall not be required to file or record any mortgage or other security
instrument in the event any recordation, transfer, stamp, documentary, or other
fees or taxes are or would be levied on Pledgor by reason of the making or
recording of any Note (as defined in the Asset Purchase Agreement) or mortgage.
All such recordation, transfer, stamp, documentary, or other fees or taxes
shall be the sole responsibility of Secured Party.
ARTICLE II
REPRESENTATIONS, WARRANTIES, AND COVENANTS
Section 2.1 Representations, Warranties, and Covenants as to the
Pledgor. The Pledgor hereby represents, warrants, and covenants to the Secured
Party:
(a) Title to Collateral. The Assets and all of the other Collateral in
existence on the date hereof are, and all Assets and all of the other
Collateral issued subsequent to the date hereof will be, owned by the Pledgor
free and clear of any lien or encumbrance. The Pledgor has not (i) filed or
consented to the filing with any governmental authority of any financing
statement or analogous document under the UCC or any other applicable laws
covering any Collateral, (ii) made any assignment to any other person of any
interest in the Collateral, or (iii) entered into any security agreement or
similar instrument or arrangement covering all or any part of the Collateral
with any other person, which financing statement or analogous document,
assignment, security agreement, or similar instrument is still in effect.
(b) Organization. The Pledgor is a limited liability company organized
under the laws of the State of Delaware.
(c) Principal Office. The Pledgor maintains its chief executive office
at 3075 Sanders Road, Northbrook, Illinois 60062.
(d) No Liens. Pledgor is as of the date hereof, and at the time of any
delivery of any Collateral to the Secured Party pursuant to Article I of this
Pledge Agreement, Pledgor will be, the sole legal and beneficial owner of the
Collateral. All Collateral is on the date hereof, and will be, so owned by
Pledgor free and clear of any lien except for the lien created by this Pledge
Agreement.
(e) Due Authorization. The execution and delivery to the Secured Party
of this Pledge Agreement by the Pledgor, the delivery to the Secured Party of
the Assets together with any necessary endorsements, and the consummation of
the transactions provided for in this Pledge Agreement have been duly
authorized by the Pledgor by all necessary corporate action on its part and
this Pledge Agreement constitutes a legal, valid, and binding obligation of the
Pledgor, enforceable against the Pledgor in accordance with its terms, and
except in each case as
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enforcement may be limited by bankruptcy, insolvency, examination, suspension
of payments, fraudulent transfer, reorganization, moratorium, and other similar
laws of general applicability affecting the enforcement of creditors' rights
generally, public policy, and general principles of equity (regardless of
whether such proceeding is considered in a proceeding in equity or law).
(f) No Conflict. The execution and delivery of this Pledge Agreement,
the delivery of the Collateral, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof will not conflict
with or result in the breach of any of the material terms and provisions of,
constitute (with or without notice or lapse of time or both) a default under,
or result in the creation of any lien upon any property or assets of the
Pledgor pursuant to, any indenture, contract, agreement, mortgage, deed of
trust, or other instrument to which the Pledgor is a party or by which it or
any of its properties is bound.
(g) No Violation. The execution and delivery of this Pledge Agreement,
the delivery of the Collateral, the consummation of the transactions
contemplated hereby, and the fulfillment of the terms hereof will not conflict
with or violate any organizational or governing documents of the Pledgor or any
law, treaty, rule, or regulation, or any judgment, order, or decree, or
determination of an arbitrator or governmental authority applicable to or
binding upon the Pledgor.
(h) No Proceedings. There are no actions at law, suits in equity, or
proceedings by or before any governmental commission, bureau, or administrative
agency pending or, to the best knowledge of the Pledgor, threatened against the
Pledgor or any of its assets, that would adversely affect the ability of the
Pledgor to perform its obligations under this Pledge Agreement.
(i) No Authorization Required. Except for such authorizations or
approvals as shall have been obtained prior to the date hereof, no
authorization or approval of any governmental agency or commission or public or
quasi-public body or authority with jurisdiction over the Pledgor or any of its
assets is necessary for the due execution and delivery of this Pledge Agreement
or for the validity or enforceability hereof.
Section 2.2 Delivery of Pledged Collateral; Filings.
Pledgor has delivered, or will deliver, to the Secured Party an
appropriate UCC-1 financing statement to be filed with the Secretaries of State
of the States of Delaware and New York, the States in which the Pledgor is
organized and located, respectively, evidencing the lien created by this Pledge
Agreement. Pledgor has delivered, or will deliver, to the Secured Party an
appropriate mortgage or other security instrument evidencing the lien of this
Pledge Agreement on any Assets constituting real property.
Section 2.3 Distributions; etc. So long as no Event of Default shall
have occurred, Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the lien of this Pledge Agreement, any and all distributions
of interest or other funds in respect of the Assets to the extent made in
accordance with the provisions of the Asset Purchase Agreement.
Section 2.4 Transfers and Other Liens. Pledgor shall not (i) sell,
convey, assign, or otherwise dispose of, or grant any option or right with
respect to, any of the Collateral
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except in connection with the full and complete payment or prepayment of the
Note issued in connection with the acquisition of the Asset or Collateral to be
sold, conveyed, assigned or otherwise disposed of or (ii) create or permit to
exist any lien or encumbrance upon or with respect to any Collateral, other
than the lien and security interest granted to the Secured Party pursuant to
this Pledge Agreement.
ARTICLE III
EVENTS OF DEFAULT; REMEDIES
Section 3.1 Events of Default. Each of the following events shall
constitute an event of default (each, an "Event of Default") under this Pledge
Agreement: (i) any material breach by the Pledgor of any term, provision, or
covenant of the Asset Purchase Agreement; (ii) any material breach by the
Pledgor of any term, provision, or covenant of this Pledge Agreement; (iii) the
Secured Party ceases to have a security interest in the Collateral; or (iv) the
Pledgor becomes subject to bankruptcy, insolvency, reorganization, liquidation,
conservation, rehabilitation, or other similar proceedings.
Section 3.2 Remedies Upon Default.
(a) Upon the occurrence of an Event of Default, all rights of Pledgor to
receive distributions which it would otherwise be authorized to receive and
retain pursuant to Section 2.3 hereof shall cease and all such rights shall
thereupon become vested in the Secured Party, which shall thereupon have the
sole right to receive and hold as Collateral such distributions.
(b) All distributions which are received by Pledgor contrary to the
provisions of paragraph (a) of this Section 3.2 shall be received in trust for
the benefit of the Secured Party, shall be segregated from other funds of
Pledgor and shall immediately be paid over to the Secured Party as Collateral
in the same form as so received (with any necessary endorsement).
(c) If an Event of Default shall have occurred, Secured Party shall have
the right, in addition to the other rights and remedies provided for herein or
otherwise available to it to be exercised from time to time, (i) to retain and
apply the distributions to the Secured Obligations and (ii) to exercise all the
rights and remedies of a secured party on default under the UCC in effect in
the State of New York at that time, and the Secured Party may also in its sole
discretion, without notice except as specified below, sell the Collateral or
any part thereof (including, without limitation, any partial interest in the
Assets) in one or more parcels at public or private sale, at any exchange,
broker's board, or at any of the Secured Party's offices or elsewhere, at such
price or prices and upon such other terms as the Secured Party may deem
commercially reasonable. Secured Party may be the purchaser of any or all of
the Collateral at any such sale and shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price for all or any
portion of the Collateral sold at such sale, to use and apply any of the
Secured Obligations owed to it as a credit on account of the purchase price of
any Collateral payable by it at such sale. Each purchaser at any such sale
shall acquire the property sold absolutely free from any claim or right on the
part of Pledgor, and Pledgor hereby waives, to the fullest extent permitted by
law, all rights of redemption, stay, and/or appraisal which it now
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has, or may at any time in the future have, under any rule of law or statute
now existing or hereafter enacted. Pledgor acknowledges and agrees that five
days' notice to Pledgor of the time and place of any public sale or the time
after which any private sale or other intended disposition is to take place
shall constitute reasonable notification of such matters. No notification need
be given to Pledgor if it has signed, after the occurrence of an Event of
Default, a statement renouncing or modifying any right to notification of sale
or other intended disposition. The Secured Party shall not be obligated to make
any sale of Collateral regardless of notice of sale having been given. The
Secured Party may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefore, and such sale may, without
further notice, be made at the time and place to which it was so adjourned.
Pledgor hereby waives, to the fullest extent permitted by law, any claims
against the Secured Party arising by reason of the fact that the price at which
any Collateral may have been sold at such a private sale was less than the
price which might have been obtained at a public sale, even if the Secured
Party accepts the first offer received and does not offer such Collateral to
more than one offeree. The Secured Party shall not be liable for any incorrect
or improper payment made pursuant to this Section in the absence of gross
negligence or willful misconduct.
(d) Pledgor recognizes that, by reason of certain prohibitions contained
in the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities law, the Secured Party may be compelled, with
respect to any sale of all or any part of the Collateral, to limit purchasers
to persons who will agree, among other things, to acquire the Collateral for
their own account, for investment and not with a view to the distribution or
resale thereof. Pledgor acknowledges that any such private sales may be at
prices and on terms less favorable to the Secured Party than those obtainable
through a public sale without such restrictions (including, without limitation,
a public offering made pursuant to a registration statement under the
Securities Act), and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Secured Party shall have no obligation to engage in public
sales and no obligation to delay the sale of any Collateral for the period of
time necessary to permit the issuer thereof to register it for a form of public
sale requiring registration under the Securities Act or under applicable state
securities laws, even if such issuer would agree to do so.
Section 3.3 Application of Proceeds. All distributions held from time to
time by the Secured Party and all proceeds received by the Secured Party in
respect of any sale of, collection from, or other realization upon all or any
part of the Collateral pursuant to the exercise by the Secured Party of its
remedies as a secured creditor as provided herein shall be applied, together
with any other sums then held by the Secured Party pursuant to this Pledge
Agreement, promptly by the Secured Party as follows:
First, to the payment of all costs and expenses, fees, commissions, and
taxes of such sale, collection, or other realization, including, without
limitation, compensation to the Secured Party and its agents and counsel, and
all expenses, liabilities, and advances made or incurred by the Secured Party
in connection therewith, together with interest on each such amount at the
highest rate then in effect under the Asset Purchase Agreement from and after
the date such amount is due, owing, or unpaid until paid in full;
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Second, without duplication of amounts applied pursuant to clause First
above, to the indefeasible payment in full in cash of the Secured Obligations
in accordance with the terms of the Asset Purchase Agreement; and
Third, the balance, if any, to the persons lawfully entitled thereto
(including Pledgor or its successors or assigns).
Section 3.4 Expenses. Pledgor will upon demand pay to the Secured Party
the amount of any and all expenses, including the fees and expenses of its
counsel and the fees and expenses of any experts and agents, which the Secured
Party may incur in connection with (i) the collection of the Secured
Obligations, (ii) the enforcement and administration of this Pledge Agreement,
(iii) the custody or preservation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iv) the exercise or enforcement of
any of the rights of the Secured Party hereunder, or (v) the failure by Pledgor
to perform or observe any of the provisions hereof. All amounts payable by
Pledgor under this Section 3.4 shall be due upon demand and shall be part of
the Secured Obligations. Pledgor's obligations under this Section 3.4 shall
survive the termination of this Pledge Agreement and the discharge of Pledgor's
other obligations hereunder.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Notices. All demands, notices, instructions, and
communications hereunder shall be in writing and shall be deemed to have been
duly given when received. All notices or communications under this Pledge
Agreement shall be addressed as follows:
NOTICES TO SECURED PARTY:
Allstate Life Insurance Company of New York
100 Motor Parkway, Suite 132
Hauppauge, Suffolk, NY, 11788-5107
WITH A COPY TO:
Allstate Life Inisurance Company of New York
3100 Sanders Road
Northbrook, Illinois 60062
Attention: Allstate Financial - Chief Financial Officer
NOTICES TO PLEDGOR:
Road Bay Investments, LLC
3075 Sanders Road, Suite G5C
Northbrook, IL 60062
Attention: President
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Section 4.2 Termination; Release. When a Note issued in connection with
the acquisition of an Asset or Collateral has been paid in full, the security
interest in such Asset or Collateral created by this Pledge Agreement shall be
released. When all the Secured Obligations have been paid in full, this Pledge
Agreement shall terminate. Upon partial release or termination of this Pledge
Agreement, the Secured Party shall, upon the request and at the sole cost and
expense of Pledgor, forthwith assign, transfer, and deliver to Pledgor, against
receipt and without recourse to or warranty by the Secured Party, such of the
Collateral to be released (in the case of a release) as may be in the
possession of the Secured Party and as shall not have been sold or otherwise
applied pursuant to the terms hereof, and, with respect to any other
Collateral, proper instruments (including UCC termination statements on Form
UCC-3) acknowledging the termination of this Pledge Agreement or the release of
such pledged Collateral, as the case may be.
Section 4.3 Continuing Security Interest; Assignment. This Pledge
Agreement shall create a continuing security interest in the Collateral and
shall (i) be binding upon Pledgor, its successors, and assigns and (ii) inure,
together with the rights and remedies of the Secured Party hereunder, to the
benefit of the Secured Party and each of its successors, transferees, and
assigns; no other persons (including, without limitation, any other creditor of
Pledgor) shall have any interest herein or any right or benefit with respect
hereto.
Section 4.4 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Pledge Agreement shall for
any reason whatsoever be held invalid, then such covenants, agreements,
provisions, or terms shall be deemed severable from the remaining covenants,
agreements, provisions, or terms of this Pledge Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Pledge
Agreement.
Section 4.5 Further Assurances. The Pledgor agrees to do and perform,
from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Secured Party to maintain
the perfection and the priority of the Secured Party's interest and to effect
more fully the purposes of this Pledge Agreement.
Section 4.6 No Waiver; Cumulative Remedies. No failure to exercise and
no delay in exercising, on the part of the Secured Party, any right, remedy,
power, or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power, or privilege. The rights, remedies, powers, and
privileges herein provided are cumulative and not exhaustive of any rights,
remedies, powers, and privileges provided by law.
Section 4.7 Amendment. This Pledge Agreement may not be modified,
amended, waived, or supplemented except by a writing signed by each of the
parties hereto.
Section 4.8 Headings. The headings herein are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.
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Section 4.9 GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LOCAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO ITS PRINCIPLES OF CHOICE OF LAW.
Section 4.10 Submission to Jurisdiction. Pledgor hereby irrevocably
submits to the jurisdiction of the federal and state courts of competent
jurisdiction in the State of New York in any suit or proceeding arising out of
this Pledge Agreement or the transactions contemplated hereby, agrees to be
bound by any judgment rendered by such courts in connection with this Pledge
Agreement, and waives any and all objections to jurisdiction that it may have
under the laws of New York or any other jurisdiction.
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IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement to
be duly executed and delivered by their respective duly authorized officers as
of the day and year first above written.
ROAD BAY INVESTMENTS, LLC
By: -----------------------------
Name:
Title: Authorized Signatory
By: -----------------------------
Name:
Title: Authorized Signatory
ALLSTATE LIFE INSURANCE COMPANY OF
NEW YORK
By: -----------------------------
Name:
Title: Authorized Signatory
By: -----------------------------
Name:
Title: Authorized Signatory
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