MEMBERSHIP PLEDGE AGREEMENT
Exhibit 10.7
Execution Version
THIS MEMBERSHIP PLEDGE AGREEMENT (the “Agreement”) is made as of April 8, 2008, by and between
Origen Financial, Inc., a Delaware corporation (“Pledgor”), and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust u/a/d
12/13/04 (“Pledgee”).
RECITALS:
A. Pursuant to that certain Senior Secured Loan Agreement, of even date herewith between
Origen Financial L.L.C. (the “Company”) and Pledgee, Pledgee has loaned $46,000,000 to the Company,
and pursuant to that certain Amended and Restated Senior Secured Loan Agreement of even date
herewith between the Company and Pledgee, Pledgee has loaned the aggregate amount of $15,000,000 to
the Company (collectively, the “Loan Agreements”).
B. Pledgor has executed a Guaranty of even date herewith (the “Guaranty”) in favor of Pledgee
guaranteeing the obligations of the Company as described therein relating to the Obligations (as
defined in the Loan Agreements).
B. Pledgor owns a 100% membership interest (the “Membership Interest”) in the Company.
C. To induce Pledgee to provide financial accommodations to the Company and to secure the
repayment of the Obligations, Pledgor hereby grants to Pledgee a security interest in the
Membership Interest and any sums due Pledgor from the Company, upon the terms and subject to the
conditions set forth in this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. Pledge. As security for the full payment and performance of the Obligations,
Pledgor delivers, pledges and grants to Pledgee a continuing first priority security interest in
the following (the “Membership Interest Collateral”):
(a) the Membership Interest;
(b) any notes payable or other indebtedness owing from the Company to Pledgor, whether
evidenced by a promissory note, a book entry or otherwise; and
(c) the proceeds of each of the foregoing, including without limitation, any and all
dividends, cash, instruments and other property or income from time to time received,
receivable or otherwise distributed in respect of, or in exchange for, any of the above
(the “Proceeds”).
2. Membership Interest Powers. Concurrently with execution of this Agreement, Pledgee
shall deliver to Pledgor certificate(s) representing the Membership Interest Collateral,
along with an undated membership interest power covering such certificate(s), in form and substance
reasonable acceptable to Pledgee, duly executed in blank by Pledgor.
3. Pledgee’s Duties. To the extent permitted under the Uniform Commercial Code as in
effect in the State of Michigan from time to time (the “Code”) and the provisions of this
Agreement, Pledgee shall have no duty with respect to the Membership Interest Collateral. Without
limiting the generality of the foregoing, Pledgee shall be under no obligation to take any steps
necessary to preserve rights in the Membership Interest Collateral against any other parties or to
exercise any rights represented thereby; provided, however, that Pledgee may, at
his option, do so, and any and all expenses incurred in connection therewith shall be for Pledgor’s
sole account.
4. Distributions. So long as no Event of Default (as defined in the Loan Agreements)
has occurred and is continuing, Pledgor shall be entitled to receive for its own use all dividends
and distributions with respect to the Membership Interest Collateral. If an Event of Default has
occurred and is continuing, Pledgor shall not be entitled to receive or retain any dividends or
distributions paid in respect of the Membership Interest Collateral, and any and all such dividends
or distributions shall be forthwith delivered to the Pledgee to hold as collateral and shall, if
received by Pledgor, be received in trust for delivery to the Pledgee, and be segregated from the
other property or accounts of Pledgor until delivered to the Pledgee.
5. Representations, Warranties and Covenants. Pledgor represents, warrants and
covenants that:
(a) The Membership Interest has been duly and validly issued. Pledgor is the record
and beneficial owner of, and has good and marketable title to, the Membership Interest;
(b) There are no restrictions upon the transfer of any of the Membership Interest
Collateral. Pledgor has the right to pledge and grant a security interest in or otherwise
transfer such Membership Interest Collateral free of any encumbrances or rights of third
parties;
(c) The Membership Interest Collateral is and shall remain free from all liens, claims,
encumbrances and purchase money or other security interests. Pledgor shall not sell,
transfer or otherwise dispose of any or all of the Membership Interest Collateral without
Pledgee’s prior written consent. Pledgor will defend the right, title and interest of
Pledgee in and to the Membership Interest Collateral against the claims and demands of all
persons whomsoever;
(d) There are no options for the purchase of the Membership Interest and all rights
represented thereby and Pledgor shall not grant any such options so long as this Agreement
remains outstanding;
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(e) There are no existing agreements with respect to the Membership Interest Collateral
between Pledgor and any other person or entity;
(f) Upon either (i) the delivery to Pledgee of the membership interest certificate(s)
evidencing the Membership Interest and the membership interest power or (ii) the filing of a
financing statement listing Pledgor as debtor and Pledgee as secured party and describing
the Membership Interest Collateral, the security interest created by this Agreement will
constitute a valid, perfected first priority security interest in the Membership Interest
Collateral granted by Pledgor, enforceable in accordance with its terms against all
creditors of Pledgor and any persons purporting to purchase any Membership Interest
Collateral from Pledgor, except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating to or affecting
creditors’ rights generally, general equitable principles (whether considered in a
proceeding in equity or at law);
(g) If Pledgor shall, as a result of its ownership of any Membership Interest, become
entitled to receive or shall receive any membership interest certificate (including, without
limitation, any certificate representing a membership interest dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any certificate
issued in connection with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any Membership Interest, or
otherwise in respect thereof, Pledgor shall accept the same as the agent of Pledgee, hold
the same in trust for Pledgee and deliver the same forthwith to Pledgee in the exact form
received, duly endorsed by Pledgor to Pledgee, if required, together with an undated
membership interest power covering such certificate duly executed in blank by Pledgor, to be
held by Pledgee, subject to the terms hereof, as additional collateral security for the
Obligations. Any property distributed to Pledgor upon or in respect of the Membership
Interest upon the liquidation, dissolution, recapitalization or reorganization of the
Company, shall be delivered to Pledgor as additional collateral security for the
Obligations. If any property distributed in respect of the Membership Interest shall be
received by Pledgor while an Event of Default has occurred and is continuing, Pledgor shall,
until such property is delivered to Pledgee, hold the property in trust for Pledgee,
segregated from other property of Pledgor, as additional collateral security for the
Obligations;
(h) Without the prior written consent of Pledgee, Pledgor shall not vote to enable, or
take any other action to permit the Company to issue any membership interest or other equity
securities of any nature or to issue any other securities convertible into or granting the
right to purchase or exchange for any membership interest or other equity securities of any
nature of the Company;
(i) Upon the written request of Pledgee, and at its sole expense, Pledgor will promptly
and duly execute and deliver such further instruments and documents and take such further
actions as Pledgee may reasonably request for the purposes of obtaining or preserving the
full benefits of this Agreement and of the rights and powers herein
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granted. If any amount payable under or in connection with any of the Membership Interest Collateral shall be or
become evidenced by any promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to
Pledgee, duly endorsed in a manner satisfactory to Pledgee, to be held as Membership
Interest Collateral pursuant to this Agreement; and
(j) Pledgor shall pay, and save Pledgee harmless from, any and all liabilities with
respect to, or resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of the Membership
Interest Collateral granted by Pledgor or in connection with any of the transactions
contemplated by this Agreement.
6. Voting Rights. Unless an Event of Default shall have occurred and be continuing,
Pledgor shall be permitted to exercise all voting and related rights with respect to the Membership
Interest; provided, however, that no vote shall be cast or related right exercised
or other action taken which would impair the Membership Interest Collateral or which would be
inconsistent with or result in any violation of any provision of this Agreement.
7. Remedies.
(a) If an Event of Default has occurred and is continuing, Pledgee shall have, in addition to
any other rights given by law and the rights against Pledgor hereunder, and in any other documents
executed by Pledgor and Pledgee, all of the rights and remedies with respect to the Membership
Interest Collateral of a secured party under the Code, including, but not limited to, the right to
collect, receive, appropriate and realize upon the Membership Interest Collateral.
(b) With respect to the Membership Interest Collateral, Pledgee may sell or cause the same to
be sold at any public or private sale, in one or more sales or lots, at such price as Pledgee may
deem best, and for cash or on credit or for future delivery, without assumption of any credit risk,
and the purchaser of any or all of the Membership Interest Collateral so sold shall thereafter hold
the same absolutely, free from any claim, encumbrance or right of any kind whatsoever and free of
any right or equity of redemption in Pledgor, which right or equity is hereby waived or released.
The proceeds of sale will be applied to the expenses of retaking, holding, preparing for
disposition, processing and disposing of the Membership Interest Collateral and, to the extent not
prohibited by law, reasonable attorney’s fees and legal expenses incurred by Pledgee. All
remaining proceeds will be applied to the Obligations. Any surplus remaining, subject to any
rights of the holder of a subordinate security interest or lien, will be paid to Pledgor. To the
extent permitted by applicable law, Pledgor waives all claims, damages and demands it may acquire
against Pledgor arising out of the exercise by it of any rights hereunder, except such claims and
damages arising out of the gross negligence or willful misconduct of Pledgee. Pledgor shall remain
liable for any deficiency if the proceeds of any sale or other disposition of Membership Interest
Collateral are insufficient to pay the Obligations and the reasonable fees and disbursements of any
attorneys employed by Pledgor to collect such deficiency. Pledgor agrees that any transfer or sale
of the Membership Interest Collateral conducted in conformity with reasonable commercial practices
of banks, insurance companies or other financial institutions disposing of property similar to the
Membership Interest Collateral shall be deemed to be
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commercially reasonable. Any requirement of
reasonable notice shall be met if such notice is mailed to Pledgor at the address set forth in this
Agreement at least five business days before the time of the sale or disposition. Pledgor, to the
extent permitted by law, waives any other requirement of notice, demand or advertisement for sale.
Pledgee may, in its own name, or in the
name of a designee or nominee, buy the Membership Interest Collateral at any public sale of the
Membership Interest Collateral. Pledgee shall have the right to execute any document or form, in
its name or in Pledgor’s name, which may be necessary or desirable in connection with such sale of
Membership Interest Collateral.
In view of the fact that federal and state securities laws may impose certain restrictions on
the method by which a sale of the Membership Interest Collateral may be effected after an Event of
Default, Pledgor agrees that upon the occurrence and continuation of an Event of Default, Pledgee
may from time to time attempt to sell all or any part of the Membership Interest Collateral by a
private placement, restricting the bidders and prospective purchasers to those who will represent
and agree that they are “accredited investors” within the meaning of Regulation D promulgated
pursuant to the Securities Act of 1933, as amended (the “Securities Act”), and are purchasing for
investment only and not for distribution. In so doing, Pledgee may solicit offers to buy the
Membership Interest Collateral, or any part of it, for cash from a limited number of investors
deemed by Pledgee, in its sole discretion, to be responsible parties who might be interested in
purchasing the Membership Interest Collateral.
Notwithstanding the above, should Pledgee determine that, prior to any public offering of any
securities contained in the Membership Interest Collateral, such securities should be registered
under the Securities Act and/or registered or qualified under any other federal or state law, and
that such registration and/or qualification is not practical, then Pledgor agrees that Pledgee’s
compliance with any applicable state or federal laws in connection with the private sale of the
Membership Interest Collateral will not be considered to adversely affect the commercial
reasonableness of any sale of the Membership Interest Collateral.
(c) If an Event of Default shall occur and be continuing, Pledgee shall have the right to have
any or all of the Membership Interest registered in its name or the name of its nominee, and
Pledgee or its nominee may thereafter exercise all voting, related and other rights pertaining to
such Membership Interest at any meeting of members of the Company or otherwise and any and all
rights of conversion, exchange, subscription and any other rights, privileges or options pertaining
to the Membership Interest as if it were the absolute owner thereof (including, without limitation,
the right to exchange at Pledgee’s discretion any and all of the Membership Interest upon the
merger, consolidation, reorganization, recapitalization or other fundamental change in the limited
liability company structure of the Company, or upon the exercise by Pledgor or Pledgee of any
right, privilege or option pertaining to the Membership Interest, and in connection therewith, the
right to deposit and deliver any and all of the Membership Interest with any committee, depositary,
transfer agent, registrar or other designated agency upon such terms and conditions as Pledgee may
determine).
(d) Pledgee shall not be liable for any failure to demand, collect or realize upon all or any
part of the Membership Interest Collateral or for any delay in doing so, nor shall
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Pledgee be under
any obligation to sell or otherwise dispose of any Membership Interest Collateral upon the request
of Pledgor or any other person or to take any other action whatsoever with regard to the Membership
Interest Collateral or any part thereof.
8. Pledgee as Pledgor’s Attorney-in-Fact. Pledgor irrevocably appoints Pledgee as
Pledgor’s attorney-in-fact, with full power of substitution, to (a) take any and all appropriate
action and execute any and all documents and instruments which may be necessary to accomplish the
purposes of this Agreement, including, without limitation, any financing statements, endorsements,
assignment or other instruments of transfer and (b) to arrange for the transfer of the Membership
Interest Collateral and other collateral on the Company’s books to the name of Pledgee or to the
name of its nominee, all such acts of such attorney being ratified and confirmed and such power
being coupled with an interest and irrevocable until the Obligations are irrevocably paid or
performed in full.
9. Duty of the Pledgee. Pledgee’s sole duty with respect to the custody, safekeeping
and physical preservation of the Membership Interest Collateral in its possession shall be to deal
with it in the same manner as the Pledgee deals with similar securities and property for its own
account. Neither Pledgee nor its agents shall be liable for failure to demand, collect or realize
upon any of the Membership Interest Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Membership Interest Collateral upon the request of
Pledgor or any other person or to take any other action whatsoever with regard to the Membership
Interest Collateral or any part thereof.
10. Further Assurances. Pledgor agrees that Pledgor will cooperate with Pledgee and
will execute and deliver, or cause to be executed and delivered, all such other Membership Interest
powers, proxies, instruments and documents and will take all such other action as Pledgee may
reasonably request from time to time to carry out the provisions and purposes hereof.
11. Notices. All notices, demands, instructions and other communications required or
permitted to be given to or made upon any party shall be in writing and shall be personally
delivered or sent by registered or certified mail, postage prepaid and, if mailed, shall be deemed
to be received for purposes of this Agreement five (5) business days after mailing by the sender.
Unless otherwise specified in a notice sent or delivered in accordance with the foregoing
provisions of this Section 8, notices, demands, instructions and other communications in writing
shall be given to or made upon the parties at the following addresses:
| If to Pledgor: | Origen Financial, Inc. | |||
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ | ||||
| ▇▇▇▇▇ ▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||
| Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
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| With a copy to: | Jaffe, Raitt, Heuer & ▇▇▇▇▇, PC | |||
| ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ | ||||
| ▇▇▇▇▇ ▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇ Sugar | ||||
| Fax. No.: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| If to Lender: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust u/a/d 12/13/04 | |||
| ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ | ||||
| ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ | ||||
| Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| Phone No.: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| With a copy to: | ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇ LLP | |||
| 2290 First National Building | ||||
| ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||||
| ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ | ||||
| Fax No: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
| Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇ | ||||
12. Choice of Law. The law of the State of Michigan shall govern the perfection, the
effect of perfection or non-perfection, and the priority of a security interest in the Membership
Interest Collateral. The validity of this Agreement, its construction, interpretation and
enforcement and the rights of the parties shall be determined under, governed by and construed in
accordance with the internal laws of the State of Michigan, without regard to principles of
conflicts of law.
13. Miscellaneous Provisions.
(a) The terms and provisions of this Agreement shall be binding upon, inure to the
benefit or and be enforceable by the parties and their heirs and assigns.
(b) This Agreement, together with any other writing referred to in this Agreement or
delivered pursuant to this Agreement, contains the entire understanding of the parties.
There are no other representations, promises, warranties, covenants or undertakings except
as expressly set forth herein or therein. This Agreement supersedes all prior agreements
and understandings among the parties with respect to the subject matter of this Agreement.
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(c) This Agreement may be amended only by a written instrument duly executed by the
parties or their assigns.
(d) The waiver by any party of any breach of any provision of this Agreement shall not
operate or be construed as a waiver of any subsequent or similar breach.
(e) This Agreement may be executed in two counterparts, each of which shall constitute
an original and both of which taken together shall constitute one and the same instrument.
(f) Pledgor irrevocably authorizes Pledgor at any time and from time to time to file
any financing statements and amendments thereto describing the Membership Interest
Collateral in order for Pledgee to perfect its security interest therein.
(g) No provision of this Agreement may be waived, amended or modified except pursuant
to an agreement in writing entered into by Pledgor and Pledgee.
(h) This Agreement shall be binding upon and inure to the benefit of Pledgor and
Pledgee, and their respective successors and assigns, provided, however, that Pledgor may
not, without the prior written consent of Pledgee, assign any rights, powers, duties or
obligations under this Agreement.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the date first written above.
| PLEDGOR: | ||||||
| ORIGEN FINANCIAL, INC., a Delware corporation | ||||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
|
|||||
| Name: | ▇▇▇▇▇▇ ▇▇▇▇▇ | |||||
| Title: | Chief Executive Officer | |||||
| PLEDGEE: | ||||||
| ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ TRUST U/A/D 12/13/04 | ||||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
|
|||||
| Name: | ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||
| Title: | Title | |||||
[Signature page to Pledge Agreement]
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