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FILED: ROCKLAND COUNTY CLERK 12/04/2021 03:06 AM INDEX NO. 034885/2021
NYSCEF DOC. NO. 77 RECEIVED NYSCEF: 12/04/2021
EXHIBIT “D”
FILED: ROCKLAND COUNTY CLERK 12/04/2021 03:06 AM INDEX NO. 034885/2021
NYSCEF DOC. NO. 77 . .
RECEIVED NYSCEF: 12/04/2021
OWNERSHIP INTERESTS PLEDGE AND SECURITY AGREEMENT
THIS OWNERSHIP INTERESTS PLEDGE AND SECURITY AGREEMENT
(this "Agreement") is made as of the 28th day of August, 2020, by and between HELLO LIVING
DEVELOPER NOSTRAND LLC, a New York limited liability company, having an address at 33
35th Street, 6th Floor, Suite B-613, Brooklyn, NY 11232 (the "Pledeor"), and 1580 NOSTRAND
MEZZ LLC, a Delaware limited liability company, having offices at 520 Madison Avenue, Suite
3501, New York, NY 10022 ("Lender").
WHEREAS, pursuant to the terms of the Mezzanine Promissory Note (the "Note"), the
Mezzanine Loan Agreement (the "Mezzanine Loan Agreement"), and any and all other security
documents and guarantees securing the note (collectively herein, the "Loan Documents") dated of
even date herewith between Pledgor and Lender, Lender has agreed to make that certain mezzanine
loan to the Pledgor in the principal amount of up to $3,000,000.00 (the "Loan"), as evidenced and
secured by all of the obligations under and in connection with the Loan Documents (the
"Obligations"); and
WHEREAS, the Pledgor is the sole member of HELLO NOSTRAND LLC, a New York
limited liability company (the "Issuer"); and
WHEREAS, in order to induce Lender to make the Loan, itis a condition precedent under
the Loan Documents that Pledgor shall have (a) granted to Lender the security interests, and
undertaken the obligations, set forth in this Agreement, and (b) executed and delivered to Lender
this Agreement.
NOW, THEREFORE, in consideration of the promises contained herein and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Pledge of Collateral. Pledgor hereby irrevocably and unconditionally pledges and assigns
to Lender, and irrevocably and unconditionally grants to Lender a security interest in, all
of Pledgor's right, title,and interest in and to the following (the "Collateral"):
(a) the Pledged Interests (hereinafter defined) together with all rights to Distributions
(hereinafter defined) or other payments arising therefrom or relating thereto, and
all options, rights, instruments, and other property or proceeds from time to time
received, receivable, or otherwise distributable in respect of or in exchange for any
or all of the Pledged Interests;
(b) to the extent not covered by subparagraph (a), allrights to receive all income, gain,
profit, loss, or other items allocated, allocable, distributed, or distributable to
Pledgor under the Organizational Documents (hereinafter defined) of the Issuer,
and all general intangibles, accounts, investment property, payment intangibles,
supporting obligations, other contract rights or rights to the payment of money, and
all proceeds, as each of the foregoing terms is defined in the UCC (hereinafter
defined), arising out of, or in connection with, the membership interest in Issuer;
(c) all of Pledgor's ownership interest in any capital accounts in the Issuer;
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(d) all of Pledgor's voting, consent, management, management removal and
replacement, and approval rights, and/or rights to control or direct the affairs of the
Issuer, inclusive of the mañagcment rights of the Pledgor in the Issuer, as set forth
in the Operating Agreement of the Issuer dated November 28, 2017, and any
amendments thereto, as the same may be amended or amended and restated from
time to time (collectively, the "Oneratine Agreement");
(e) any additional ownership interests of, and any ownership interests exchangeable
for or convertible into and warrants, options, and other rights to purchase or
otherwise acquire shares of ownership interests of, the Issuer, or entity which is the
successor of the Issuer, from time to time acquired by Pledgor in any manner (all
of which interests shall be deemed to be part of the Pledged Interests), and any
certificates or other instruments representing such additional interests, warrants,
options, and other rights, and all Distributions and other property or proceeds from
time to time received, receivable, or otherwise distributed or distributable in respect
of or in exchange for any or allof such additional shares, warrants, options, or other
rights. Pledgor agrees that Lender may from time to time attach as Schedule A
hereto an updated list of the Collateral at the time pledged to Lender hereunder
(although the failure to so update Schedule A shall not limit the pledge of such
additional interests to Lender); and
(f) to the extent not covered by clauses (a) through (e) above, allproceeds of any or all
"proceeds"
of the foregoing Collateral. For purposes of this Agreement, the term
includes whatever is receivable or received when Collateral or proceeds are sold,
exchanged, collected, or otherwise disposed of, whether such disposition is
voluntary or involuntary, and includes, without limitation, proceeds of any
indemnity or guaranty payable to Pledgor from time to time with respect to any of
the Collateral.
2. C_ertain Definitions. Capitalized terms used herein without definition shall have the
respective meanings provided therefor in the Loan Documents. Terms (whether or not
capitalized)used herein and not defined in the Loan Documents or otherwise defined herein
that are defined in the Uniform Commercial Code as in effect in the State of New York or
other applicable jurisdiction (the "UCC") have such defined meanings herein, unless the
context otherwise indicates or requires. In addition, the following terms used herein shall
have the following meanings:
Matter"
(a) "Article 8 means any action, decision, determination or election by the
Issuer or its members that the membership interest in the Issuer be, or cease to be,
"security"
a as defined in and governed by Article 8 of the UCC, and all other
matters related to any such action, decision, determination or election.
Day"
(b) "Business means a weekday, Monday through Friday, except a legal holiday
or a day on which banking institutions in New York, New York are authorized by
law to be closed.
Obligation"
(c) "Contractual means, as to any Person, any contract, agreement, or
undertaking, regardless of how characterized, oral or written, to which such Person
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is a party, or by which such Person or such Person's property is bound, or to which
such Person or such Person's property is subject.
"Distributions"
(d) means any distribution of property (including cash) (regardless of
whether from cash flow, capital transactions, or otherwise) on account of a Pledged
Interest, or any other distribution or payment on or in respect of any membership
interest or the redemption or repurchase thereof.
Authority"
(e) "Governmental means any national, state, or local government, any
political subdivision thereof, or any other governmental, quasi-governmental,
judicial, public, or statutory instrumentality, authority, body, agency, bureau, or
entity or any arbitrator with authority to bind a Person at law, and any agency,
authority, department, commission, board, bureau, or instrumentality of any of
them.
Requirements"
(f) "Legal means all applicable federal, state, county and local laws,
by-laws, rules, regulations, codes and ordinanas, and the requirements of any
Governmental Authority having or claiming jurisdiction with respect thereto,
including, but not limited to, all orders and directives of any Governmental
Authority having or claiming jurisdiction with respect thereto.
"
(g) "Lig means any lien, encumbrance, security interest, mortgage, restriction,
charge or encumbrance of any kind.
Collateral" "Collateral"
(h) "Loan means the as defined in the Mezzanine Loan
Agreement and includes the Collateral hereunder.
Documents"
(i) "Organizational means for any corporation, partnership, trust,limited
liability company, limited liability partnership, unincorporated association,
business or other legal entity, the agreements pursuant to which such entity has
been established or organized, its affairs are to be governed, and its business is to
be conducted, as such documents may be amended from time to time.
"Person"
(j) means any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal, State,
county or municipal government or any bureau, department or agency thereof and
any fiduciary acting in such capacity on behalf of any of the foregoing.
Interests"
(k) "Pledged means the ownership interests or membership interest now or
hereafter listed on Schedule A hereto or which would be listed on an updated
Schedule A at any time of reference, together with all related rights of the holder
thereof pursuant to the Organizational Documents of the Issuer.
3. Security for the Secured Obligations. This Agreement secures, and the Collateral is
collateral security for, the payment and performance in full when due, whether at stated
maturity, by required prepayment, declaration, acceleration, demand, or otherwise
(including the payment of amounts that would become due but for the operation of the
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automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a)), of the
following (the "Secured Obligations"):
(a) the Obligations, including all obligations and liabilities of every nature of the Issuer
now or hereafter existing under or arising out of or in connection with the Loan
Documents and all renewals or extensions thereof, whether for principal, interest,
fees, expenses, indemnities, or otherwise, whether voluntary or involuntary, direct
or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly
owed with others, and whether or not from time to time decreased or extinguished
and later increased, created, or incurred, and all or any portion of such obligations
or liabilities that are paid, to the extent all or any part of such payment is avoided
or recovered directly or indirectly from Lender as a preference, fraudulent transfer,
or otherwise, and all obligations of every nature of the Pledgor now or hereafter
existing under this Agreement; and
(b) the obligations of Pledgor hereunder.
4. Delivery of Collateral.
(a) If at any time the Pledged Interests are evidenced by one or more certificates,
Pledgor shall deliver to Lender any original certificate evidencing the Pledged
Interests (the "Certificate"), in suitable form for transfer by delivery or, as
applicable, accompanied by any necessary endorsement or duly executed
instruments of transfer or assignment, in blank, all in form and substance
satisfactory to Lender.
(b) Lender shall have the right, at any time after the occurrence of an Event of Default,
in its discretion and without notice to Pledgor, to transfer to or to register (ifnot
already so registered) in the name of Lender or any of itsnominees any or allof the
Collateral. In addition, Lender shall have the right at any time to exchange
certificates or instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
5. Representations and Warranties. Pledgor hereby represents and warrants as follows:
(a) Organization: Address of Pledeor. Pledgor is the type of entity, organized in the
jurisdiction, and has the address set forth with respect to Pledgor in the introductory
paragraph to this Agreement.
(b) No Conflict. The execution, delivery, and performance by Pledgor of this
Agreement will not (i) violate any provision of any Legal Requirement applicable
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to Pledgor, or any order, judgment, or decree of any Governmental Authority
binding on Pledgor, (ii)result in a breach of, or constitute with due notice or lapse
of time or both, a default under any Contractual Obligation of Pledgor, (iii)result
in or require the creation or imposition of any Lien upon any of Pledgor's properties
or assets, except pursuant to this Agreement, (iv) require the approval or consent of
any Person under any Contractual Obligation of Pledgor, except for the approvals
or consents described on Schedule B hereto, which approvals or consents have been
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obtained, and true and complete copies of which have been furnished to Lender, or
(v) conflict with any provision of Pledgor's Organizational Documents.
(c) Binding Obligation. The execution, delivery and performance of this Agreement
and the transactions contemplated hereby is within the authority of Pledgor, has
been duly authorized by all necessary proceedings, and is the legally valid and
binding obligation of Pledgor, enforceable against Pledgor in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws or equitable principles generally.
(d) Description of Collateral. The Pledged Interests are being certificated pursuant to
this Agreement and are fully paid and non-assessable. The Pledged Interests
constitute all of the issued and outstanding ownership interests of the Issuer owned
beneficially or of record by Pledgor. Neither Pledgor nor any other Person holds,
or has any right to the issuance of, any options or other rights to purchase, and is
not party to any other agreement with respect to and does not hold or have the right
to any property that is now or hereafter convertible into, or that requires the issuance
or sale of, any ownership interests of the Issuer. No Person other than Pledgor owns
any ownership interests of any type in the Issuer. Other than the Certificate
delivered to Lender pursuant to this Agreement, there currently exist no certificates,
instruments or writings representing the Pledged Interests. However, to the extent
that in the future there exist any such certificates, instruments or writings, Pledgor
shall deliver all such certificates, instruments or writings to Lender.
(e) Ownership of Collateral. (i) Pledgor is the legal and beneficial owner of, and has
good and marketable title to,the Collateral, and is the record owner of the Pledged
Interests, free and clear of, and subject to no, pledges, Liens, security interests,
charges, options, restrictions or other encumbrances, except the pledge and security
interest created by this Agreement; (ii) Pledgor has the legal capacity to execute,
deliver and perform Pledgor's obligations under this Agreement and to pledge and
grant a security interest in all of the Collateral of which it isthe legal or beneficial
owner pursuant to this Agreement; (iii) except for authorizations and consents
which have already been obtained, no authorization, consent of or notice to any
party that has not been obtained is required in connection with the execution,
delivery, performance, validity or enforcement of this Agreement, including,
without limitation, the assignment and transfer by Pledgor of any of the Collateral
to Lender or the subsequent transfer by Lender pursuant to the terms hereof; and
(iv) Lender's filing of UCC-1 financing statements with the Secretary of State of
the State of New York results in the perfection of Lender's security interest in the
Pledged Interests, and such portion of the other Collateral in which a security
interest may be perfected by filing such UCC-1 form or financing statement.
(f) Governmental Authorizations. No authorization, approval, or other action by, and
no notice to or filing with, any Governmental Authority is required for either (i) the
pledge by Pledgor of the Collateral pursuant to this Agreement and the grant by
Pledgor of the security interest granted hereby, (ii) the execution, delivery, or
performance of this Agreement by Pledgor, or (iii)the exercise by Lender of the
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voting or other rights in respect of the Collateral provided for in this Agreement
(except as may be required in connection with a disposition of Collateral by laws
affecting the offering and sale of securities generally).
(g) Article 8. Pledgor acknowledges and agrees that the terms of the Pledged Interests
and the Organizational Documents of the Issuer do and will provide that the
"security"
Pledged Interests shall coalitute a within the meaning of Article 8 of
the UCC (including Section 8-102(a)(15) thereof), as in effect from time to time in
the State ofNew York, and Article 8 of the Uniform Commercial Code of any other
applicable jurisdiction that now or hereafter substantially includes the 1994
revisions to Article 8 thereof as adopted by the American Law Institute and the
National Conference of Commissioners on Uniform State Laws and approved by
the American Bar Association on February 14, 1995. Pledgor acknowledges and
agrees that the Pledged Interests, and any and all Certificates which have been
delivered to Lender on the date hereof, constitute and each will constitute a
security"
"certificated (as defined in the UCC). Pledgor therefor covenants and
agrees that Pledgor shall not, directly or indirectly, without the prior written consent
of Lender, alter, amend modify, supplement or change in any way, the Operating
Agreement as in effect on the date hereof. However, the Pledged Interests are not
and will not be investment company securities within the meaning of Section 8-103
assets"
. ofthe UCC. The Pledged Interests will not become "financial (within
(i)
the meaning of Section 8-102(a)(9) of the UCC) and (ii) will not be credited to a
account"
"securities (within the meaning of Section 8-501(a) of the UCC).
(h) Creation. Perfection and Priority of Security Interest. This Agreement constitutes
an authenticated record, and Lender is authorized at any time and from time to time
to file any and allUCC financing statements and take such other actions determined
by Lender to be necessary or desirable to perfect its security interest in the
Collateral.
(i) No Other Financing Statements. Other than the UCC financing statements filed by
Lender describing the Collateral, there is no financing statement (or similar
statement or registration under the laws of any jurisdiction) now on fileor registered
in any public office covering any interest of Pledgor or any other Person in the
Collateral.
(j) Other Information. All information heretofore, herein or hereafter supplied to
Lender by Pledgor with respect to the Collateral in writing is accurate and complete
in all material respects.
6. Assurances and Covenants of Pledgctr.
(a) Transfers and Other Liens. Pledgor shall not:
(i) sell, assign (by operation of law or otherwise), pledge, or hypothecate or
otherwise dispose of, or grant any option with respect to, any of the
Collateral, except to Lender pursuant to this Agreement; or
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(ii) create or suffer to exist any Lien upon or with respect to any of the
Collateral, except for the Lien created hereunder.
(b) Covenants of Pledgor. Pledgor covenants and agrees, with respect to itself and the
Pledged Interests, that so long as any Secured Obligation is outstanding:
(i) Pledgor shall not vote for, or agree or consent to, the sale, transfer, pledge
or encumbrance of the Pledged Interests while the Loan is outstanding.
(ii) Pledgor shall not vote for, or agree or consent to, the discontinuance of the
business or the dissolution or liquidation of the Issuer.
(iii) Pledgor shall not vote for,or agree or consent to, any material modifications
to the Organizational Documents of the Issuer.
(iv) Pledgor shall provide Lender with copies of any modifications made to the
Organizational Documents of the Issuer within thirty (30) days after the date
such modifications are made.
(v) Pledgor shall not enter into any agreements which restrict, limit or otherwise
impair the transferability of the Pledged Interests.
(vi) Pledgor shall be the sole member of the Issuer and the sole holder of
membership interest in the Issuer and shall not resign or withdraw as a
member or vote for,agree or consent to,or permit the admission of any new
members to the Issuer or any change in the management of the Issuer.
(c) Additional Collateral. Pledgor shall pledge hereunder, immediately upon Pledgor's
acquisition (directly or indirectly) thereof, any and all additional ownership
interests of Pledgor in the Issuer.
(d) Pledge Amendments. Pledgor shall, upon obtaining any additional ownership
interests or other securities required to be pledged hereunder promptly (and in any
event within five (5) Business Days) deliver to Lender such documents as Lender
may require to confirm the pledge hereunder of such additional collateral; provided
that the failure of Pledger to execute any such additional documents with respect to
any additional Pledged Interests pledged pursuant to this Agreement shall not
impair the security interest of Lender therein or otherwise adversely affect the rights
and remedies of Lender hereunder with respect thereto.
(e) Taxes and Assessments. Pledgor shall pay promptly when due all taxes,
assessments, and governmental charges or levies imposed upon, and all claims
against, the Collateral, except to the extent the validity thereof is being contested in
good faith and by appropriate preccedings and in which reserves or other
appropriate provisions have been made or provided therefor; provided that Pledgor
shall in any event pay such taxes, assessments, charges, levies, or claims not later
than five (5) days prior to the date of any proposed sale under any judgment, writ,
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or warrant of attachmeñt entered or filed against Pledgor or any of the Collateral as
a result of the failure to make such payment.
(f) Further Assurances. Pledgor shall from time to time, at the expense of Pledgor,
promptly execute and deliver all further instruments and documents, and take all
further action, that may be necessary and that Lender may request, in order to give
full effect to this Agreement and to perfect and protect any security interest granted
or purported to be granted hereby or to enable Lender to exercise and enforce its
rights and remedies hereunder with respect to any Collateral, provided that such
further instruments, documents and action are consistent with this Agreement.
(g) Warranty of Title to Collateral. Pledgor covenants that Pledgor will defend its
rights and title in the Collateral against the claims and demands of all Persons
whomsoever. Pledgor further covenants that Pledgor will have titleto and right to
pledge and grant a security interest in the Collateral hereafter pledged or in which
a security interest is granted to Lender hereunder and will likewise defend itsrights
therein.
(h) Good Standing. Pledgor will at all times be duly formed and is,and will at alltimes
be, validly existing, in good standing and qualified to do business in each
jurisdiction where required. Pledgor will at all times have all requisite power to
own its property and conduct its business as now conducted and as presently
contemplated.
7. Voting Rights. DividendsA.
(a) So long as no Event of Default shall have occurred:
(i) Pledgor shall be entitled to exercise any and allvoting and other consensual
rights pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms of this Agreement and the Loan Documents;
provided, however, that any and all such rights shall remain subject to the
provisions of Section 7(b) hereof;
(ii) Subject to the terms and conditions of this Agreement and the Loan
Documents, Pledgor shall be entitled to receive and retain, and to utilize
free and clear of the Lien of this Agreement, any and all Distributions, paid
in respect of the Collateral; provided, however, if any such property is
distributed in the form of shares of membership interest in the Issuer, such
membership interest shall be pledged, and any certificates representing such
membership interest delivered, to Lender (collectively, "Collateral
Payments and Distributions").
(b) After the occurrence of an Event of Default beyond all applicable notice, grace, or
cure periods:
(i) all rights of Pledgor to exercise the voting, management, and other
consensual rights which itwould otherwise be entitled to exercise pursuant
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to Section 7(a)(i) shall cease, and all such rights shall thereupon become
vested in Lender who shall thereupon have the sole right to exercise such
voting, management, and other consensual rights;
(ii) all rights of Pledgor to receive the Collateral Payments and Distributions
which Pledgor would otherwise be authorized to receive and retain pursuant
to Section 7(a)(ii) shall cease, and all such rights shall thereupon become
vested in Lender who shall thereupon have the sole right to receive and hold
as Collateral such Collateral Payments and Distributions; and
(iii) all Collateral Payments and Distributions which are received by Pledgor
contrary to the provisions of paragraph (ii) of this Section 7(b) shall be
received in trust for the benefit of Lender, shall be segregated from other
funds of Pledgor, and shall forthwith be paid over to Lender as Collateral in
the same form as so received (with any necessary endorsements).
(c) In order to permit Lender to exercise the voting and other consensual rights which
itmay be entitled to exercise pursuant to Section 7(b)(i) and to receive allCollateral
Payments and Distributions which itmay be entitled to receive under Section
7(a)(ii) or Section 7(b)(ii), (i)Pledgor shall promptly execute and deliver (or cause
to be executed and delivered) to Lender all such proxies, dividend payment orders,
and other instruments as Lender may from time to time request, and (ii) without
limiting the effect of the immMiately preceding clause (i), Pledgor hereby grants
to Lender an irrevocable proxy to vote the Pledged Interests and to exercise allother
rights, powers, privileges, and remedies to which a holder of the Pledged Interests
would be entitled (including, without limitation, giving or withholding written
consents of members, calling special meetings of members, and voting at such
meetings), which proxy shall be effective, automatically and without the necessity
of any action (including any transfer of any Pledged Interests on the record books
of the Issuer) by any other Person (including the Issuer or any officer or agent
thereof), provided, however, Lender shall not exercise any rights granted under
such proxy except upon the occurrence of an Event of Default.
(d) Notwithstanding any of the foregoing, Pledgor agrees that this Agreement shall not
in any way be deemed to obligate Lender to assume any of Pledgor's obligations,
duties, expenses, or liabilities unless Lender otherwise expressly agrees to assume
any or all of said obligations, duties, expenses, or liabilities in writing.
8. Lender Appointed Attorney-in-Fact. Pledgor hereby irrevocably appoints Lender as
Pledgor's attorney-in-fact, with full authority in the place and stead of Pledgor and in the
name of Pledgor, exercisable after the occurrence of an Event of Default, beyond all
applicable notice, grace, or cure periods, from time to time in Lender's reasonable
discretion to take any action and to execute any instrument that Lender may in good faith
deem necessary or advisable to accomplish the purposes of this Agreement, including,
without limitation:
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