Document:

Exhibit 10.1

	
 
    

 

 

ASSET PURCHASE AGREEMENT

 

 

Between

 

 

ALLSTATE INSURANCE COMPANY,
  as Seller

 

and

 

ROAD BAY INVESTMENTS, LLC,
  as Purchaser

 

 

Dated as of March 24, 2011

 

	
 
    

 

 

TABLE OF CONTENTS

 

	
 
    	
Page
    
	
 
    	
 
    
	
ARTICLE I
    	
DEFINITIONS
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.01
    	
Definitions
    	
1
    
	
 
    	
 
    	
 
    
	
Section 1.02
    	
Other Definitional Provisions
    	
 
    
	
 
    	
 
    	
 
    
	
ARTICLE II
    	
PURCHASE AND SALE OF ASSETS
    	
3
    
	
 
    	
 
    	
 
    
	
Section 2.01
    	
Purchase and Sale of Assets
    	
3
    
	
 
    	
 
    	
 
    
	
Section 2.02
    	
Delivery and Payment
    	
3
    
	
 
    	
 
    	
 
    
	
Section 2.03
    	
Forms of Notes
    	
3
    
	
 
    	
 
    	
 
    
	
ARTICLE III
    	
TERMS AND CONDITIONS OF REPAYMENT   OF NOTES; MATURITY
    	
3
    
	
 
    	
 
    	
 
    
	
Section 3.01
    	
Interest
    	
3
    
	
 
    	
 
    	
 
    
	
Section 3.02
    	
Principal
    	
3
    
	
 
    	
 
    	
 
    
	
Section 3.03
    	
Payments by the Purchaser
    	
3
    
	
 
    	
 
    	
 
    
	
Section 3.04
    	
Prepayment
    	
4
    
	
 
    	
 
    	
 
    
	
ARTICLE IV
    	
REGISTRATION OF NOTES; TRANSFER   AND EXCHANGE
    	
4
    
	
 
    	
 
    	
 
    
	
Section 4.01
    	
Note Register
    	
4
    
	
 
    	
 
    	
 
    
	
Section 4.02
    	
Exchanges and Transfers
    	
4
    
	
 
    	
 
    
	
ARTICLE V
    	
RATIO OF DEBT TO TOTAL ASSETS COVENANT
    	
5
    
	
 
    	
 
    	
 
    
	
ARTICLE VI
    	
EVENTS OF DEFAULT
    	
5
    
	
 
    	
 
    
	
Section 6.01
    	
Events of Default
    	
5
    
	
 
    	
 
    	
 
    
	
Section 6.02
    	
Remedies Upon an Event of Default
    	
5
    
	
 
    	
 
    
	
ARTICLE VII
    	
MISCELLANEOUS
    	
5
    
	
 
    	
 
    
	
Section 7.01
    	
Notices
    	
5
    
	
 
    	
 
    	
 
    
	
Section 7.02
    	
Amendments, Waivers
    	
6
    
	
 
    	
 
    	
 
    
	
Section 7.03
    	
Successors and Assigns; Third Party Beneficiaries
    	
6
    
	
 
    	
 
    	
 
    
	
Section 7.04
    	
Severability
    	
6
    
						

 

i

 

	
Section 7.05
    	
Binding Effect
    	
6
    
	
 
    	
 
    	
 
    
	
Section 7.06
    	
GOVERNING LAW; CONSENT TO JURISDICTION
    	
6
    
	
 
    	
 
    	
 
    
	
Section 7.07
    	
Execution in Counterparts
    	
6
    
	
 
    	
 
    	
 
    
	
Section 7.08
    	
Entire Agreement
    	
6
    
	
 
    	
 
    	
 
    
	
Section 7.09
    	
Headings
    	
6
    
	
 
    	
 
    
	
SCHEDULES AND EXHIBITS
    	
 
    
	
 
    	
 
    
	
Schedule   I
    	
Initial   Assets
    	
 
    
	
Schedule   II
    	
Notice   Information
    	
 
    
	
Exhibit A
    	
Form of   Note
    	
 
    
				

 

ii

 

This ASSET PURCHASE AGREEMENT, dated as of March 24, 2011, is made by and between Allstate Insurance Company, an insurance company domiciled in Illinois (together with its successors and assigns, the “Seller”), and Road Bay Investments, LLC, a limited liability company organized under the laws of the State of Delaware (together with its successors and assigns, the “Purchaser”).

 

RECITALS

 

WHEREAS, the Seller desires to sell to the Purchaser on the date hereof and from time to time hereafter on or before December 31, 2011, and the Purchaser desires to purchase from the Seller, commercial mortgage loans, participations in commercial mortgage loans, bonds, or real estate acquired by Seller in connection with such loans with an aggregate fair value not in excess of $25,000,000 (the “Assets”); and

 

WHEREAS, as consideration for the sale of the Assets, the Seller shall receive one or more notes (the “ Notes”) from the Purchaser with an aggregate principal amount equal to the fair value of the Assets;

 

NOW, THEREFORE, for full and fair consideration, the parties hereto agree as follows:

 

ARTICLE I
 DEFINITIONS

 

Section 1.01       Definitions.  The following capitalized terms shall have the following meanings:

 

“Agreement” means this Asset Purchase Agreement, as the same may from time to time be amended, supplemented, or otherwise modified in accordance with the terms hereof.

 

“Assets” has the meaning specified in the first WHEREAS clause in the recitals hereof.

 

“Business Day” means any day other than a Saturday or a Sunday or any day on which banking institutions in Chicago, Illinois, are authorized or obligated by law, regulation, or executive order to be closed.

 

“Debt” means, without duplication, the Purchaser’s liabilities for borrowed money; liabilities for the deferred purchase price of property (excluding accounts payable arising in the ordinary course of business but including, without limitation, all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property); capital lease obligations; all liabilities for borrowed money secured by any lien with respect to any property owned by the Purchaser (whether or not it has assumed or otherwise become liable for such liabilities); and any guaranty by the Purchaser with respect to such liabilities or obligations of another person or entity.

 

“Event of Default” has the meaning specified in Section 6.01 hereof.

 

“Fair Value” with respect to any Asset means the fair value of such Asset on the date of purchase and sale under this Agreement determined in accordance with statutory accounting principles as set forth in the National Association of Insurance Commissioners’ Accounting Practices and Procedures Manual as then in effect.

 

“Holder” means, with respect to any Note, the Person in whose name such Note is registered in the Note Register.

 

 

“Initial Assets” has the meaning specified in Section 2.01 hereof.

 

“Interest Payment Date” means each April 1 and October 1, commencing April 1, 2011, provided that if such day is not a Business Day, the next succeeding Business Day.

 

“Interest Period” means, with respect to any Note, (a) in the case of the initial interest period with respect to such Note, the period from, and including, the date such Note was issued to the Seller to, but excluding, the immediately following Payment Date, (b) thereafter, the period from, and including, the preceding Payment Date to, but excluding, the next succeeding Payment Date, and (c) in the case of the final interest period with respect to such Note, the period from, and including, the preceding Payment Date to, but excluding, the Maturity Date.

 

“Interest Rate” means, with respect to each Note, the rate set forth in such note.

 

“Maturity Date” means, with respect to a Note, the date on which all outstanding unpaid principal on such Note becomes due and payable, whether at the Stated Maturity Date or by acceleration pursuant to Section 6.02.

 

“Note Register” has the meaning specified in Section 4.01 hereof.

 

“Notes” has the meaning specified in the second WHEREAS clause in the recitals hereof.

 

“Payment Date” means any Interest Payment Date or Maturity Date.

 

“Person” means an individual, corporation (including a business trust), partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated association or government or any agency or political subdivision thereof.

 

“Purchaser” has the meaning specified in the introduction to this Agreement.

 

“Record Date” means the date on which the Holders of any Note entitled to receive a payment with respect to principal or interest on the next succeeding Payment Date are determined, such date as to any Payment Date being five (5) Business Days prior to such Payment Date.

 

“Seller” has the meaning specified in the introduction to this Agreement.

 

“Stated Maturity Date” means, with respect to each Note, the seventh (7th) anniversary of the issuance date of such Note, provided such date is a Business Day.

 

“Total Assets” means, at any time, the total assets of the Purchaser which would be shown as assets on a balance sheet as of such time prepared in accordance with generally accepted accounting principles as in effect from time to time in the United States of America.

 

Section 1.02       Other Definitional Provisions.

 

(a) All terms defined in this Agreement shall have the defined meanings when used in any certificate or other document made or delivered pursuant hereto.

 

(b) The words “hereof,” “herein,” and “hereunder” and words of similar import when used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement; and Section and subsection references

 

2

 

contained in this Agreement are references to Sections or subsections in or to this Agreement unless otherwise specified.

 

ARTICLE II
 PURCHASE AND SALE OF ASSETS

 

Section 2.01       Purchase and Sale of Assets.  Upon the terms and subject to the conditions set forth in this Agreement, and in reliance on the covenants and agreements herein set forth, on the date hereof, the Seller shall sell and the Purchaser shall purchase the Assets listed on Schedule I (the “Initial Assets”).  From time to time on or after the date hereof and on or before December 31, 2011, the Seller may, on ten (10) Business Days’ notice to the Purchaser, offer to sell to the Purchaser, and the Purchaser may purchase, additional Assets.  Notwithstanding the foregoing provisions of this Section 2.01, the aggregate fair value of Assets that may be purchased and sold under this agreement shall not exceed $25,000,000.  As security for the performance of the Purchaser’s obligations under this Agreement, the parties hereto shall, concurrent with this Agreement, enter into a Pledge and Security Agreement wherein Purchaser grants a pledge of and security interest in the Purchaser’s right, title, and interest in the Assets and the other collateral identified therein.

 

Section 2.02       Delivery and Payment.  The Seller shall deliver the Initial Assets to the Purchaser on the date hereof.  Against delivery of the Initial Assets or any additional Assets, the Purchaser shall issue to Seller Notes with an aggregate principal amount equal to the aggregate Fair Value of such Assets.  Purchaser shall issue a separate Note for the purchase of each Asset.

 

Section 2.03       Forms of Notes.  The Notes shall be issued substantially in the form of the Note attached as Exhibit A hereto and shall be duly executed and delivered by the Purchaser as hereinafter provided.

 

ARTICLE III
 TERMS AND CONDITIONS OF REPAYMENT OF NOTES; MATURITY

 

Section 3.01       Interest.  Each Note shall bear interest during each Interest Period at the Interest Rate set forth in such Note.  Interest shall be due and payable on each Interest Payment Date.  Interest shall be computed on the basis of a 360-day year comprised of twelve 30-day months.

 

Section 3.02       Principal.  The principal of each Note shall be due and payable on the Stated Maturity Date.

 

Section 3.03       Payments by the Purchaser.

 

(a)      On any Payment Date, the Purchaser shall pay in accordance with the terms of this Agreement: (i) all accrued but unpaid interest on the Notes and (ii) any principal payments due with respect to the Notes, if any.

 

(b)     Any interest or principal that has not been paid when due shall accrue interest at a rate per annum equal to the Interest Rate from and including, for each such amount, the Payment Date therefor, up to but excluding the date on which each such amount is actually paid.

 

(c)      All payments required to be made by the Purchaser with respect to this Article III shall be made:  (i) by wire transfer of immediately available funds and/or the transfer of marketable securities (valued at their fair market value) not later than

 

3

 

1:00 p.m., Chicago time, and (ii) to the account of the Seller, or to such other account as the Seller may have most recently designated in writing for such purpose by notice to the Purchaser.

 

(d)     The Purchaser and any agent of the Purchaser may treat the Person in whose name any Note is registered on the Note Register as the owner of such Note on the applicable Record Date for the purpose of receiving payments of principal and interest on such Note and on any other date for all other purposes whatsoever (regardless of whether such payment is overdue), and neither the Purchaser nor any agent of the Purchaser shall be affected by notice to the contrary.

 

Section 3.04       Prepayment.  The Purchaser may prepay the Notes, in part or in full, at any time.  Upon Purchaser’s disposition of any Asset, or any real estate related to such Asset, Purchaser shall prepay, in full, the Note issued in connection with the purchase of such Asset.

 

ARTICLE IV
 REGISTRATION OF NOTES; TRANSFER AND EXCHANGE

 

Section 4.01       Note Register.  The Purchaser shall keep a register (the “Note Register”) at its office in Northbrook, Illinois, in which it shall provide for the registration of the Notes and the registration of transfers of the Notes.   Such Note Register shall be in written form or in any other form capable of being converted into written form within a reasonable time.  Upon surrender for registration of transfer of any Note at the office of the Purchaser and in compliance with the restrictions set forth in any legend appearing on any Note, the Purchaser shall execute and deliver, in the name of the designated transferee or transferees, one or more new Notes of any authorized denomination and of like terms.

 

Section 4.02       Exchanges and Transfers.  At the option of any Holder, any Note may be exchanged for one or more Notes, of any authorized denomination and of like terms, upon surrender of the Note to be exchanged at the office of the Purchaser or such other office as the Purchaser may designate for such purposes.  Whenever any Note is surrendered for exchange, the Purchaser shall execute and deliver the Note that the Holder making the exchange is entitled to receive.  Any Notes issued upon any registration of transfer or exchange of a Note shall be the valid obligations of the Purchaser, evidencing the same debt, and entitled to the same benefits under this Agreement, as the Note surrendered upon such registration of transfer or exchange.  Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed, or be accompanied by a written instrument of transfer in form satisfactory to the Purchaser duly executed by the Holder thereof or its attorney duly authorized in writing.  No service charge shall be made to a purchaser for any registration of transfer or exchange of a Note, but the Purchaser may require payment of a sum sufficient to cover the expenses of delivery (if any) not made by regular mail or any tax or other governmental charge payable in connection therewith.

 

ARTICLE V

RATIO OF DEBT TO TOTAL ASSETS COVENANT

 

Until this Agreement is terminated and all obligations of the Purchaser under this Agreement and the Notes have been paid or performed in full, the Purchaser covenants and agrees that it will not directly or indirectly, create, incur, assume, guarantee, or otherwise become directly or indirectly liable with respect to any Debt, unless on the date the Purchaser becomes liable with respect to any such Debt and immediately after giving effect thereto and the concurrent retirement of any other Debt, no Event of

 

4

 

Default exists and the aggregate amount of its Debt does not exceed 50% of its Total Assets for its then most recently ended fiscal year.

 

ARTICLE VI
 EVENTS OF DEFAULT

 

Section 6.01       Events of Default.  The occurrence of any of the following events shall constitute an “Event of Default” hereunder:

 

(a)      default is made in the payment of any installment of interest on the Notes when such interest becomes due and payable and such default continues for a period of 30 days,

 

(b)    default is made in the payment of the principal of the Notes when such principal becomes due and payable, or

 

(c)       default is made in the performance of the covenant set forth in Article V of this Agreement or any other part of this Agreement as it may be amended from time to time.

 

Section 6.02       Remedies Upon an Event of Default.  Upon the occurrence of an Event of Default, the Seller may give notice of such Event of Default to the Purchaser and demand payment of the entire outstanding principal amount of such Notes, plus all accrued but unpaid interest, plus interest on such overdue principal and overdue interest at the Interest Rate, plus such further amounts as shall be necessary to cover the Seller’s costs and expenses of collection, including reasonable attorneys’ fees.

 

ARTICLE VII
 MISCELLANEOUS

 

Section 7.01       Notices.  Except in the case of notices and other communications expressly permitted to be given by telephone, all notices and other communications provided for herein shall be delivered by the following means:  (i) hand delivery, (ii) overnight courier service (e.g., FedEx, or Airborne Express); (iii) registered or certified U.S. mail, postage prepaid, and return receipt requested; or (iv) facsimile transmission.  If any notice or other communication provided for herein is sent by any party by electronic e-mail it shall not be deemed to have been delivered to the addressee if the party sending such notice or communication receives a response from the intended addressee that he or she will not be able to retrieve e-mail due to vacation, other absence from the office, system failure, or other reason.  All such notices shall be delivered to the parties as set forth on Schedule II hereof.  All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given on the date of receipt.

 

Section 7.02       Amendments, Waivers.

 

(a) Except as otherwise expressly provided herein, no amendment or waiver of any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by the parties hereto.

 

(b)     The Seller and the Purchaser may amend any provision of this Agreement to effectuate the division of any Notes held by the Seller into paid and unpaid portions and the surrender of the paid portion.

 

5

 

 

(c) Each such amendment, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which given.  A failure or delay in exercising any right, power, or privilege with respect to this Agreement will not be presumed to operate as a waiver, and a single or partial exercise of any right, power, or privilege will not be presumed to preclude any subsequent or further exercise of that right, power, or privilege or the exercise of any other right, power, or privilege.

 

Section 7.03       Successors and Assigns; Third Party Beneficiaries.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors.  This Agreement shall not be transferred or assigned under any circumstances.  Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto and their respective successors and permitted transferees) any legal or equitable right, remedy, or claim under or by reason of this Agreement.

 

Section 7.04       Severability.  Any provision of this Agreement held to be invalid, illegal, or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality, or unenforceability without affecting the validity, legality, and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

 

Section 7.05       Binding Effect.  This Agreement shall remain in full force and effect until such time as all of the Notes issued by the Purchaser shall have been repaid in full and cancelled.

 

Section 7.06       GOVERNING LAW; CONSENT TO JURISDICTION.  THIS AGREEMENT SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

 

Section 7.07       Execution in Counterparts.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same agreement.  Delivery of an executed counterpart of a signature page of this Agreement by telecopy shall be effective as delivery of a manually executed counterpart of this Agreement.

 

Section 7.08       Entire Agreement.  This Agreement constitutes the entire agreement between the parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof.

 

Section 7.09       Headings.  Article and Section headings used herein are for convenience of reference only, are not part of this Agreement, and shall not affect the construction of, or be taken into consideration in interpreting, this Agreement.

 

[SIGNATURE PAGE FOLLOWS]

 

6

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the first date written above.

 

 

	
 
    	
ALLSTATE   INSURANCE COMPANY
    
	
 
    	
as   Seller
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
ROAD   BAY INVESTMENTS, LLC
    
	
 
    	
as   Purchaser
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:   Authorized Signatory
    

 

7

 

SCHEDULE I

to
 Asset Purchase Agreement between Allstate Insurance Company

and Road Bay Investments, LLC

 

1.             New Castle County, Delaware Multi-Family Mortgage Revenue Bonds (Fieldcrest Apartment Project), Series 1999 secured by Greentree Village Apartments, a 286 unit apartment complex located in Claymont, DE.

 

 

SCHEDULE II
 to
 Asset Purchase Agreement between Allstate Insurance Company

and Road Bay Investments, LLC

 

NOTICE INFORMATION

 

Address for Notices to Seller:

 

Allstate Insurance Company

3075 Sanders Road

Northbrook, Illinois  60062

Attention:  Commercial Mortgage Division

 

Address for Notices to Purchaser:

 

Road Bay Investments, LLC

3075 Sanders Road, Suite G5C

Northbrook, IL 60062

Attention:  President

 

 

EXHIBIT A

 

FORM OF NOTE

 

[ISSUE DATE]

 

 

Road Bay Investments, LLC, a limited liability company duly organized and existing under the laws of the State of Delaware (the “Company”), for value received hereby promises to pay to [                                              ], or its assigns, the outstanding balance of the principal sum of [                                                         ] in cash on [STATED MATURITY DATE] and to pay interest thereon semi-annually on the first day of April and October in each year, commencing [FIRST INTEREST DATE], at [RATE], until the principal hereof is paid in full, except that the final payment of any accrued and unpaid interest shall be concurrent with the final  payment of principal.  Interest will be computed on the basis of a 360-day year of twelve 30-day months.  All principal and interest shall be paid at the principal corporate office of the Company or such other place, which shall be acceptable to the Company, as the holder hereof shall designate in writing to the Company, in collected and immediately available funds in lawful money of the United States of America.  Principal and interest shall be payable on the terms and conditions set forth below

 

1.             The Company covenants that if:

 

(a)           default is made in the payment of any installment of interest on this Note when such interest becomes due and payable and such default continues for a period of 30 days,

 

(b)           default is made in the payment of the principal of this Note when such principal becomes due and payable, or

 

(c)           default is made in the performance of the covenant set forth in Article V, or any other part, of that certain Asset Purchase Agreement dated as of             , 20     between the Company and                         , as it may be amended from time to time,

 

the Company will, upon demand by the holder of this Note, pay to it the entire outstanding principal amount of this Note, plus all accrued but unpaid interest, plus interest on such overdue principal and overdue interest at the interest rate borne by this Note; and, in addition thereof, such further amount as shall be sufficient to cover the costs and expenses of collection, including reasonable attorneys’ fees.

 

2.             Each payment made hereunder will be credited first to accrued but unpaid interest, if any, and the balance of such payment will be credited to the principal amount hereof.

 

3.             In the event that any payment of principal or interest on this Note is scheduled to be made on a day that is not a Business Day, then such payment shall be made on the next following Business Day and no additional interest shall accrue as a result of payment on such following Business Day.  For the purpose of this paragraph, “Business Day” shall mean any day that is not a Saturday, Sunday, or any other day on which banking institutions in the State of Illinois are permitted or required by any applicable law to close.

 

4.             The Company’s obligations under this Note are secured pursuant to that certain Pledge and Security Agreement dated as of               , 20     between the Company and                                                   , as it may be amended from time to time.

 

 

5.             The Company may prepay this Note, in part or in full, at any time.  The Company shall prepay this Note upon disposition of the asset, or any real estate related to such asset, purchased by the Company with this Note.

 

6.             In the event the Company consolidates or merges into another entity or transfers substantially all of its assets to another entity, the entity into which the Company consolidates or merges or to which the assets of the Company are transferred must assume the liability of the Company hereunder.

 

7.             This Note shall be construed in accordance with, and governed by, the laws of the State of Illinois.

 

IN WITNESS WHEREOF, the Company has caused this Note to be executed in its name and attested to by its authorized officer, all as of the date first written above.

 

 

	
 
    	
ROAD   BAY INVESTMENTS, LLC
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
Attest:Exhibit 10.2

 

PLEDGE AND SECURITY AGREEMENT

 

THIS PLEDGE AND SECURITY AGREEMENT (this “Pledge Agreement”) is dated as of March 24, 2011 and made by and between ROAD BAY INVESTMENTS, LLC (the “Pledgor”) and ALLSTATE INSURANCE COMPANY(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 as of 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 Illinois 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 Illinois 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 enforcement may be limited by bankruptcy, insolvency, examination, suspension of payments,

 

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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 Illinois, 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 except in connection with the full and complete payment or prepayment of the Note issued in

 

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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 Illinois 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 has, or may at any time in the future have, under any rule of law or statute now existing or

 

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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   Insurance Company 
    
	
 
    	
 
    
	
 
    	
3075   Sanders Road 
   Northbrook, Illinois 60062 
   Attention: Commercial Mortgage Division 
   Facsimile: 847-402-4346
    
	
 
    	
 
    
	
 
    	
Notices   to Pledgor:
    
	
 
    	
 
    
	
 
    	
Road   Bay Investments, LLC
    
	
 
    	
3075   Sanders Road, Suite G5C
    
	
 
    	
Northbrook, IL   60062
    
	
 
    	
Attention:   President
    

 

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

 

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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.

 

Section 4.9             GOVERNING LAW.  THIS PLEDGE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LOCAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO ITS PRINCIPLES OF CHOICE OF LAW.

 

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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 Illinois 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 Illinois 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   INSURANCE COMPANY
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:   Authorized Signatory
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Name:
    
	
 
    	
 
    	
Title:   Authorized Signatory
    

 

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