BOND PLEDGE AND SECURITY AGREEMENT
Between
PALOMINO PARK PUBLIC IMPROVEMENTS CORPORATION
WELLSFORD REAL PROPERTIES INC.
COMMERZBANK AG,
New York Branch,
and
UNITED STATES TRUST COMPANY OF NEW YORK
Dated as of June 16, 2000
(Letter of Credit No. 150SBY00300064)
BOND PLEDGE AND SECURITY AGREEMENT
THIS BOND PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement"), dated as
of June 16, 2000, is made by and among Palomino Park Public Improvements
Corporation, a Colorado nonprofit corporation (the "Bond Issuer"), Wellsford
Real Properties, Inc., a Maryland corporation ("WRP" and, collectively with the
Bond Issuer, the "Pledgor"), Commerzbank AG, a banking corporation organized and
existing under the laws of The Federal Republic of Germany, acting by and
through its ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇ "▇▇▇▇"), ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Trust Company of New
York, as custodian for the Bank (the "Bond Trustee"), pursuant to the Letter of
Credit Reimbursement Agreement dated as of June 16, 2000, between the Pledgor
and the Bank (hereinafter, as the same may from time to time be amended or
supplemented, called the "Reimbursement Agreement").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Bond Issuer is issuing at the request of and for the benefit
of WRP and its Subsidiary, The Park at Highlands, L.L.C., a Colorado limited
liability company ("Highlands"), its "Palomino Park Public Improvements Corp.
Assessment Lien Revenue Bonds Series 1995," in the aggregate principal amount of
$14,755,000 (the "Bonds") pursuant to a Trust Indenture dated as of September 1,
1995, (the "Bond Indenture") between the Bond Issuer and United States Trust
Company of New York, as trustee (said trustee, together with any successor
trustee, hereinafter referred to as the "Bond Trustee");
WHEREAS, the Bond Indenture requires the purchase of Bonds under certain
circumstances as set forth in Section 4.04 of the Bond Indenture from the
holders thereof;
WHEREAS, the Pledgor has entered into the Reimbursement Agreement in order
to cause the Bank to issue its Letter of Credit No. 150SBY00300064 dated June
16, 2000, which may be used, inter alia, to pay the purchase price of certain
Bonds (to the extent moneys drawn under the Letter of Credit are used to
purchase such Bonds, such Bonds are hereinafter referred to as "Pledged Bonds");
and
WHEREAS, it is a condition precedent to the obligation of the Bank to issue
the Letter of Credit that the Pledgor shall have executed and delivered this
Pledge Agreement to the Bank;
NOW, THEREFORE, in consideration of the premises and in order to induce the
Bank to enter into the Reimbursement Agreement and issue the Letter of Credit
thereunder and for other good and valuable consideration, receipt of which is
hereby acknowledged, the Pledgor hereby agrees with the Bank as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Reimbursement Agreement shall have such defined meanings when used herein.
2. Pledge. The Pledgor hereby pledges, assigns, hypothecates, transfers,
and delivers to the Bank all of its right, title and interest in and to the
Pledged Bonds as the same may be from time to time delivered to the Bond Trustee
by the holders thereof and the Pledgor hereby grants to the Bank a first lien
on, and security interest in, its right, title and interest in and to the
Pledged Bonds, all interest or other income thereon and all proceeds thereof
(the "Collateral"), as collateral security for the prompt and complete payment
when due of all amounts due in respect of the obligations of the Pledgor under
the Reimbursement Agreement and interest on such amounts (all the foregoing
being hereinafter called the "Obligations"). The Pledgor hereby consents to the
Bond Trustee acting as the agent and bailee of the Bank for purposes of
perfecting the Lien of this Pledge Agreement and of holding the Collateral for
the benefit of the Bank.
3. Payments on the Pledged Bonds. If, while this Pledge Agreement is in
effect, the Pledgor shall become entitled to receive or shall receive any
principal or interest payment in respect of the Pledged Bonds, the Pledgor
agrees to accept the same as the Bank's agent and to hold the same in trust on
behalf of the Bank and to deliver the same forthwith to the Bank. Pledgor
instructs and authorizes the Bond Trustee to deliver forthwith to the Bank any
payment to be made on Pledged Bonds and instructs and authorizes the Bond
Trustee to hold and receive on behalf of the Bank and deliver forthwith to the
Bank any payments to be made or received in respect of Pledged Bonds (including
all proceeds of any remarketing of the Pledged Bonds). All sums of money so paid
in respect of the Pledged Bonds which are received by the Pledgor and paid to
the Bank shall be credited against the obligations of the Pledgor to the Bank
first to any fees, costs, charges or expenses payable to the Bank under the
Reimbursement Agreement or the Letter of Credit, next to any accrued but unpaid
interest under Sections 2.1 or 2.2 of the Reimbursement Agreement, next to any
current interest due, and then to outstanding principal.
4. Release of Pledged Bonds. Subject to and in accordance with the terms
and conditions of Section 2.4 of the Reimbursement Agreement, the Pledgor shall
have the right to effect releases of Pledged Bonds from the security interest
created by this Agreement.
5. Rights of the Bank. The Bank shall not be liable for failure to collect
or realize upon the Obligations or any collateral security or guarantee
therefor, or any part thereof, or for any delay in so doing nor shall it be
under any obligation to take any action whatsoever with regard thereto. If an
Event of Default has occurred and is continuing, the Bank may thereafter,
without notice, exercise all rights, privileges or options pertaining to any
Pledged Bonds as if it were the absolute owner thereof, upon such terms and
conditions as it may determine, all without liability except to account for
property actually received by it, but the Bank shall have no duty to exercise
any of the aforesaid rights, privileges or options and shall not be responsible
for any failure to do so or delay in so doing.
6. Remedies. In the event of any Event of Default under the Reimbursement
Agreement, the Bank, without demand of performance or other demand,
advertisement or notice of any kind (except the notice specified below of time
and place of public or private sale) to or upon the Pledgor or any other person
(all and each of which demands, advertisements and/or
notices are hereby expressly waived) in its sole discretion (a) may exercise any
or all of its rights and remedies under any or all of the Related Documents or
any other instrument or agreeing, securing, evidencing or relating to the
Obligations or under applicable law (including all of the rights and remedies of
a secured creditor under the New York Uniform Commercial Code or any other
applicable law), (b) may forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or (c) may forthwith sell, assign,
give option or options to purchase, contract to sell or otherwise dispose of and
deliver said Collateral, or any part thereof, in one or more parcels at public
or private sale or sales, at any exchange, broker's board or at any of the
Bank's offices or elsewhere upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for cash or on credit or for
future delivery without assumption of any credit risk, with the right to the
Bank upon any such sale or sales, public or private, to purchase the whole or
any part of said Collateral so sold, free of any right or equity of redemption
in the Pledgor, which right or equity is hereby expressly waived or released.
The Bank shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care, safekeeping
or otherwise of any and all of the Collateral or in any way relating to the
rights of the Bank hereunder, including reasonable attorney's fees and legal
expenses, to the payment, in whole or in part, of the Obligations in such order
as the Bank may elect, the Pledgor remaining liable for any deficiency remaining
unpaid after such application, and only after so applying such net proceeds and
after the payment by the Bank of any other amount required to be paid by any
provision of law, including, without limitation, Section 9-504(l)(c) of the New
York Uniform Commercial Code, need the Bank account for the surplus, if any, to
the Pledgor. The Pledgor agrees that the Bank need not give more than ten days'
notice of the time and place of any public sale or of the time after which a
private sale or other intended disposition is to take place and that such notice
is reasonable notification of such matters. No notification need be given to the
Pledgor if it has signed after default a statement renouncing or modifying any
right to notification of sale or other intended disposition. In addition to the
rights and remedies granted to it in this Pledge Agreement and in any other
instrument or agreement securing, evidencing or relating to any of the
Obligations, the Bank shall have all the rights and remedies of a secured party
under the Uniform Commercial Code of the State of New York. The Pledgor further
agrees to waive and agrees not to assert any rights or privileges which it may
acquire under Section 9-112 of the New York Uniform Commercial Code and the
Pledgor shall be liable for the deficiency if the proceeds of any sale or other
disposition of the Collateral are insufficient to pay all amounts to which the
Bank is entitled, and the fees and costs of any attorneys employed by the Bank
to collect such deficiency. The Bond Trustee, in its capacity as custodian for
the Bank, agrees to take such steps as Bank reasonably requests in order to
effect or implement any of the foregoing remedies.
7. Representations, Warranties and Covenants of the Pledgor. The Pledgor
represents and warrants that: (a) on the date that any Bonds become Pledged
Bonds, none of the Bond Issuer, WRP nor the Bond Trustee (except in its capacity
as the Bank's designated custodian to hold the Pledged Bonds) will have any
right, title or interest in and to the Pledged Bonds; (b) the Pledgor has, and
on the date that such Bonds become Pledged Bonds will have, full power,
authority and legal right to pledge all of its right, title and interest in and
to the Pledged Bonds pursuant to this Pledge Agreement; (c) this Pledge
Agreement has been duly
authorized, executed and delivered by the Pledgor and constitutes a legal, valid
and binding obligation of the Pledgor enforceable in accordance with its terms;
(d) no consent of any other party (including, without limitation, creditors of
the Pledgor) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration with,
any governmental authority, domestic or foreign, is required to be obtained by
the Pledgor in connection with the execution, delivery or performance of this
Pledge Agreement; (e) the execution, delivery and performance of this Pledge
Agreement will not violate, in any material respect, any provision of any
applicable law or regulation or of any order, judgment, writ, award or decree of
any court, arbitrator or governmental authority, domestic or foreign, or of any
mortgage, indenture, lease, contract, or other agreement, instrument undertaking
to which the Pledgor is a party or which purports to be binding upon the Pledgor
or upon its assets and will not result in the creation or imposition of any
lien, charge or encumbrance on or security interest in any of the assets of the
Pledgor except as contemplated by this Pledge Agreement; and (f) the pledge,
assignment and delivery of such Pledged Bonds pursuant to this Pledge Agreement
will create a valid first lien on and a first perfected security interest in,
all right, title or interest of the Pledgor in or to such Pledged Bonds, and the
proceeds thereof, subject to no prior pledge, lien, mortgage, hypothecation,
security interest, charge, option or encumbrance or to any agreement purporting
to grant to any third party a security interest in the property or assets of the
Pledgor which would include the Pledged Bonds. The Pledgor covenants and agrees
that it will defend the Bank's right, title and security interest in and to the
Pledged Bonds and the proceeds thereof against the claims and demands of all
persons whomsoever; and covenants and agrees that it will have like title to and
right to pledge any other property at any time hereafter pledged to the Bank as
Collateral hereunder and will likewise defend the Bank's right thereto and
security interest therein.
8. No Disposition, etc. Without the prior written consent of the Bank, the
Pledgor and the Bond Trustee each agree that they will not sell, assign,
transfer, exchange, or otherwise dispose of, or grant any option with respect
to, the Collateral, nor will they create, incur or permit to exist any pledge,
lien, mortgage, hypothecation, security interest, charge, option or any other
encumbrance with respect to any of the Collateral, or any interest therein, or
any proceeds thereof, except for the lien and security interest provided for by
this Pledge Agreement and sale of the Pledged Bonds pursuant to Section 4.05 of
the Bond Indenture, subject to Section 4 of this Pledge Agreement.
9. Sale of Collateral.
(a) The Pledgor recognizes that the Bank may be unable to effect a public
sale of any or all of the Pledged Bonds by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws, but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such securities for its own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall be deemed to have been made in a commercially reasonable manner.
The Bank shall be under no obligation to delay a sale of any of the Pledged
Bonds for the period of time necessary to permit the issuer of such securities
to register such securities for public sale under the Securities Act, or under
applicable state securities laws, even if the issuer would agree to do so.
(b) The Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion or
all of the Pledged Bonds valid and binding and in compliance with any and all
applicable laws, regulations, orders, writs, injunctions, decrees or awards of
any and all courts, arbitrators or governmental instrumentalities, domestic or
foreign, having jurisdiction over any such sale or sales, all at the Pledgor's
expense. The Pledgor further agrees that a breach of any of the covenants
contained in this Pledge Agreement will cause irreparable injury to the Bank,
that the Bank has no adequate remedy at law in respect of such breach and, as a
consequence, agrees that each and every covenant contained in this Pledge
Agreement shall be specifically enforceable against the Pledgor and the Pledgor
hereby waives and agrees not to assert any defenses against an action for
specific performance of such covenants except for a defense that no Event of
Default has occurred under the Reimbursement Agreement. The Pledgor further
acknowledges the impossibility of ascertaining the amount of damages which would
be suffered by the Bank by reason of a breach of any of such covenants and,
consequently, agrees that, if the Bank shall ▇▇▇ for damages for breach, the
Pledgor shall pay, as liquidated damages and not as a penalty, an amount equal
to the outstanding principal amount of, accrued premium, if any, and accrued
interest on the Pledged Bonds and all other amounts payable pursuant to Article
2 of the Reimbursement Agreement on the date the Bank shall demand compliance
with this Paragraph.
(c) The Bond Trustee, as custodian for the Bank, agrees to cooperate with
the Bank and the Pledgor and to do or cause to be done all such acts and things
as may be necessary to permit the Pledgor to make such sale or sales of any
portion or all of the Pledged Bonds valid and binding and in compliance with any
and all applicable laws, regulations, orders, writs, injunctions, decrees or
awards of any and all courts, arbitrators or governmental instrumentalities,
domestic or foreign, having jurisdiction over any such sale or sales.
10. Bond Trustee.
(i) If a book-entry depository administered by the Depository Trust Company
or any successor or nominee thereto (the "Depository") is in use pursuant to the
Bond Indenture, the Bond Trustee shall notify the Depository (in a form
acceptable to the Depository for such notice) of the principal amount(s) of the
Bonds which are to become Pledged Bonds prior to or concurrently with its
receipt from the Bank of a federal funds tracking number for a wire transfer in
payment of a drawing under the Letter of Credit to purchase such Bonds. Said
notice shall further instruct the Depository to record in its system a
corresponding increase in the principal amount of the Bonds credited to the
account of the Bond Trustee as the agent and bailee of the Bank or such other
Person identified by the Bank (through notice to the Bond Trustee and the
Pledgor) as the entity which should hold Pledged Bonds in a book-entry system
(the Bond Trustee or such other Person, the "Bank's DTC Participant").
Concurrently with the delivery of such notice to the Depository, the Bond
Trustee shall provide a copy of such notice to the Bank
and the Pledgor. The Bond Trustee and the Pledgor shall provide the Bank with
any confirmation or like notice received by any of them from the Depository
evidencing the Depository's compliance with the instructions.
(ii) Whenever a book-entry depository is in use pursuant to the Bond
Indenture and Pledged Bonds are held on behalf of the Bank by the Bank's DTC
Participant, the Bank shall have the right to obtain a separate bond certificate
to evidence the Pledged Bonds, and upon request by the Bank, the Pledgor will
cause the Bond Trustee to authenticate and deliver such certificate, and such
certificate shall be deposited with the Depository or delivered to the Bank or a
Person designated by the Bank, as the Bank shall direct.
(iii) If a book-entry depository ever ceases to be in use with respect to
the Bonds, the Bond Trustee and the Pledgor each hereby agree to hold any
Pledged Bonds received by any of them as the Bank's agent and bailee and to make
a notation in its respective records with respect to the Pledged Bonds. Upon
request of the Bank, each of the Bond Trustee and the Pledgor will deliver all
or a portion of such Pledged Bonds to the Bank or to such Person as the Bank may
direct without termination of this Pledge Agreement.
(iv) Except at the written direction of the Bank, the Bond Trustee shall
not enter into any other agreement regarding possession of the Pledged Bonds or
any other Collateral other than this Pledge Agreement without prior written
consent of the Bank. The Bond Trustee will not release any Pledged Bonds for
remarketing unless the Bank has delivered to the Bond Trustee written notice
(which may be by telecopy) pursuant to Section 2.4 of the Reimbursement
Agreement and Section 4.05(a) of the Bond Indenture.
(v) Upon appointment of a successor Bond Trustee under and in accordance
with the terms of the Bond Indenture, release and delivery to the Bank or its
designee of any Collateral then held by the Bond Trustee pursuant to this Pledge
Agreement, and the assumption in writing by its successor of its obligations
hereunder, the Bond Trustee shall have the right to terminate its position as
Bond Trustee for the Bonds and its obligations under this Pledge Agreement.
(vi) In acting under this Pledge Agreement, the Bond Trustee shall not be
liable to the Bank except for negligence or willful misconduct in the
performance of its obligations hereunder.
11. Further Assurances. The Pledgor agrees that at any time and from time
to time upon the written request of the Bank, the Pledgor will execute and
deliver such further documents and do such further acts and things as the Bank
may reasonably request in order to effect the purposes of this Pledge Agreement.
12. Severability. Any provision of this Pledge Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
13. No Waiver; Remedies Cumulative. The Bank shall not by any act, delay,
omission or otherwise be deemed to have waived any of its rights or remedies
hereunder and no waiver shall be valid unless in writing, signed by the Bank,
and then only to the extent therein set forth. A waiver by the Bank of any right
or remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Bank would otherwise have on any future occasion. No
failure to exercise nor any delay in exercising on the part of the Bank, any
right, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided are
cumulative and may be exercised singly or concurrently, and are not exclusive of
any rights or remedies provided by law.
14. Waivers; Amendments; Applicable Law. None of the terms or provisions of
this Pledge Agreement may be waived, altered, modified or amended except by an
instrument in writing, duly executed by the Bank. This Pledge Agreement and all
obligations of the Pledgor and the Bond Trustee hereunder shall be binding upon
the successors and assigns of their respective successor and assigns, and shall,
together with the rights and remedies of the Bank hereunder, inure to the
benefit of the Bank and its successors and assigns. This Pledge Agreement shall
be governed by, and be construed and interpreted in accordance with, the laws of
the State of New York.
15. Designation of Custodian. The Bank hereby designates the Bond Trustee
as the Bank's custodian and agent for the purpose of holding the Pledged Bonds
on behalf of the Bank and with such authority for taking actions with respect to
the Pledged Bonds as set forth herein and as may be directed by, and on behalf
of, the Bank. The parties hereto acknowledge that the Bank may designate any
successor Bond Trustee under the Bond Indenture, or any substitute Person that
the Bank may elect to designate, as the Bank's custodian and agent for the
purpose of holding the Pledged Bonds on behalf of the Bank and with such
authority for taking actions with respect to the Pledged Bonds as set forth
herein and as may be directed by, and on behalf of, the Bank.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK: SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Pledgor, the Bank and the Bond Trustee have caused
this Bond Pledge and Security Agreement to be duly executed and delivered on the
day and year first above written.
PLEDGOR:
PALOMINO PARK PUBLIC IMPROVEMENTS CORPORATION, a Colorado
nonprofit corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
WELLSFORD REAL PROPERTIES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
BANK:
COMMERZBANK AG, New York Branch
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Assistant Treasurer
UNITED STATES TRUST COMPANY OF NEW YORK:
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Assistant Vice President