PLEDGE, SECURITY AGREEMENT AND
ACCOUNT CONTROL AGREEMENT
THIS PLEDGE, SECURITY AGREEMENT AND ACCOUNT
CONTROL AGREEMENT (this “ Agreement ”) is
entered into as of April 30, 2009, by NEWCASTLE INVESTMENT
CORP., a Maryland corporation (the “ Company ”),
NIC TP LLC, a Delaware limited liability company (the “
Pledgor ”), THE BANK OF NEW YORK MELLON TRUST COMPANY,
NATIONAL ASSOCIATION, a national banking association (the “
Bank ”) and THE BANK OF NEW YORK MELLON TRUST COMPANY,
NATIONAL ASSOCIATION, a national banking association, in its
capacity as trustee for the benefit of the Holders (as defined
below) from time to time under the Indenture referred to below
(together with its successors and assigns, the “
Trustee ”).
WHEREAS, the Company and the Trustee are parties
to that certain Junior Subordinated Indenture dated as of
April 30, 2009 with respect to the Company’s Junior
Subordinated Notes due 2035 (the “ Securities ”)
(as the same may be amended, restated, supplemented or replaced
from time to time, the “ Indenture ”).
Capitalized terms used herein and not defined shall have the
meanings ascribed to them in the Indenture.
WHEREAS, pursuant to Section 10.5 of the
Indenture, the Company has agreed to enter into this Agreement in
order to pledge to the Trustee the Collateral (as defined below)
and to grant in favor of the Trustee a security interest in the
Collateral, and to perfect the Trustee’s security interest in
the Collateral Account (as defined below).
WHEREAS, the
Pledgor is a special purpose, wholly owned subsidiary of the
Company.
WHEREAS, the Pledgor maintains that certain
account no. 76148, entitled “NEWCASTLE NIC TP CUSTODY”
with the Bank (the “ Collateral Account ”)
pursuant to a custodial agreement between the Bank and the Pledgor
dated as of April 30, 2009 (the “ Account
Agreement ”), a copy of which is attached hereto as
Exhibit A , into which certain funds shall be deposited
as provided herein and the Indenture.
WHEREAS, the Trustee, the Pledgor, the Company
and the Bank have agreed to enter into this Agreement so as to
pledge to and grant unto the Trustee, for the benefit of the
Holders (defined below), the Collateral and perfect the
Trustee’s security interest in the Collateral Account, and
the Company has, additionally, entered into this Agreement for the
purpose of confirming certain obligations of the Company to the
Bank and the Trustee in connection with the Pledgor’s pledge
and other agreements contained herein.
NOW, THEREFORE, in consideration of their mutual
covenants and promises, the parties hereto agree as
follows:
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1.
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Definitions
. As used in this
Agreement, the following terms have the meaning specified
below:
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“
Business Day ” shall mean any day other than
(i) a Saturday or Sunday, (ii) a day on which banking
institutions in the City of New York are authorized or required by
law or executive order to remain closed or (iii) a day on
which the Corporate Trust Office of the Trustee is closed for
business.
“
Collateral ” shall mean, collectively, (i) the
Collateral Account; together with all funds credited and on deposit
in the Collateral Account; and (ii) any and all proceeds of
any of the foregoing whether now owned and existing or hereafter
acquired or arising including, without limitation, proceeds
received upon the sale, exchange or other disposition of any of the
foregoing.
“
Event of Default ” shall mean an event of default
under the Indenture.
“
Holders ” shall mean the holders of the outstanding
Securities.
“
Interest ” shall have the meaning given to such term
in Section 2(d).
“
Majority Holders ” shall mean Holders of a majority in
aggregate principal amount of the outstanding
Securities.
“
Participation Interest ” shall mean that certain A-4
Participation Interest in the amount of $23,125,000 in that certain
Mezzanine Loan (the “ Mezzanine Loan ”) in the
maximum principal amount of $130,000,000 made by Fortress Credit
Corp. as of February 7, 2005 to 401 Mezz Venture LLC, a
Delaware limited liability company, the owner of one hundred
percent (100%) of the ownership interest in 401 North Wabash
Venture LLC, a Delaware limited liability company, the owner of
certain property known as the Trump International Hotel and Tower
Chicago (the “ Trump Property ”).
“
Person ” shall mean a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company, trust,
unincorporated association, government or any agency or political
subdivision thereof, or any other entity of whatever
nature.
“
Participation Proceeds ” shall mean all of the
Pledgor’s right, title and interest in, to and under all
payments, repayments, prepayments (including, but not limited to,
exit fees, termination fees, equity kickers, defeasance collateral
and the like), proceeds, distributions, cash, instruments and other
property (other than the Participation Interest itself), collateral
and other amounts from time-to-time received, or receivable in
respect of the Mezzanine Loan, the Participation Interest, the
Trump Property, or under the Participation Agreement.
“
Securities ” shall mean the “Securities,”
as defined in the Indenture.
“
Trump Property ” shall have the meaning set forth in
the definition of Participation Interest.
In addition,
the term “ proceeds ” shall have the meaning set
forth in the Uniform Commercial Code as in effect in the State of
New York (the “ UCC ”). In the event that the
UCC is revised subsequent to the date hereof, all references herein
to the UCC shall be deemed to be references to such revision and
the corresponding successor provisions and requirements.
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2.
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Characterization of Collateral
Account; Deposits to Collateral Account; Creation of Securities
Account .
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(a)
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The Collateral Account is and shall
be treated as a “deposit account” as such term is
defined in Section 9-102(a)(29) of the UCC. Cash shall be
deposited and maintained in the Collateral Account.
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2
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(b)
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Pledgor shall deposit all
Participation Proceeds and all cash and instruments received or
distributed in respect of the Participation Interest and any other
cash Collateral into the Collateral Account within two
(2) Business Days after receipt of such amounts.
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(c)
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Pledgor agrees that upon its
receipt of any item of property other than cash (whether investment
property, financial assets, securities, instruments, or other
property) in respect of the Participation Interest, it shall
promptly create a securities account, transfer such property to
such securities account, and grant a first priority security
interest in such securities account to the Trustee on behalf of the
Holders, on substantially the same terms as agreed to herein with
respect to the Collateral and the Collateral Account.
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(d)
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Notwithstanding anything to the
contrary in this Agreement or the Pledge and Security Agreement,
dated the date hereof by and between Newcastle Investment Corp., a
Maryland corporation, and the Trustee, so long as no Event of
Default has occurred, Pledgor shall be entitled to receive any and
all interest accruing and on deposit in the Collateral Account with
respect amounts in the Collateral Account, if any, including any
interest paid or accrued upon such Interest
(“Interest”), and such interest shall not be deemed to
be Collateral or subject to any lien or other restriction granted
pursuant to this Agreement. So long as no Event of Default has
occurred, Bank shall distribute such Interest amount to the Pledgor
quarterly on each of January 30, April 30, July 30
and October 30 of each year. Trustee agrees that all funds
distributed from the Collateral Account are automatically released
from any security interest of the Trustee in such funds.
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(e)
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Pledgor represents and warrants as
of the date hereof and covenants that Pledgor owns the
Participation Interest and has right and title to the Participation
Proceeds, free and clear of all pledges, liens, hypothecations,
security interests, charges, options or other encumbrances
whatsoever, except the lien and security interest created by this
Agreement and any related financing statements.
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3.
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Pledge; Grant of Security Interest
and Agreement for Control .
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(a)
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The Pledgor hereby pledges and
grants to the Trustee, as collateral security for the amounts now
or hereafter to become due with respect to the Securities, a first
priority security interest in all of the Pledgor’s right,
title and interest in and to the Collateral, whether now owned by
the Pledgor or hereafter acquired and whether now existing or
hereafter coming into existence, and the Bank hereby acknowledges
the security interest granted to the Trustee herein.
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(b)
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The Pledgor, the Company and the
Bank acknowledge and agree that all Collateral on deposit in the
account is subject to the sole dominion, control and discretion of
the Trustee, its authorized agents or designees, subject to the
terms of this Agreement.
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(c)
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The Bank acknowledges that the
Trustee shall have, in addition to the rights and remedies set
forth herein and in the Indenture, all of the rights and remedies
available to a secured party under the UCC, as if such rights and
remedies were fully set forth herein.
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3
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(d)
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At all times, the Bank is
authorized by the Pledgor, and the Bank agrees, to comply with
(i) all instructions originated by the Trustee directing
disposition of funds in the Account without the consent of the
Pledgor or any other Person and (ii) all other directions, requests
or instructions from the Trustee regarding disposition and/or
delivery of any of the Collateral, without the consent or direction
from the Pledgor or any other Person (including, without
limitation, the Company). The Trustee hereby agrees with the
Pledgor and the Company that it shall not deliver instructions
directing disposition of the funds in the Collateral Account except
during such time that an Event of Default shall have occurred and
be continuing under the Indenture. The foregoing sentence is solely
an agreement among the Trustee, the Pledgor and the Company;
therefore, such provision (i) in no way limits or modifies the
Bank’s obligations under this Section 3 and
(ii) imposes no duty or obligation on the Bank to investigate
or inquire of any party whether and Event of Default or other
condition exists under the Indenture or any other agreement between
the Pledgor and/or the Company and the Trustee.
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(e)
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The Bank hereby acknowledges that,
except, as otherwise provided herein with respect to Interest to be
disbursed to the Company, until such time as the Bank receives
written instructions from the Trustee to the contrary, the Bank
shall: (i) make any payments and distributions from the
Collateral Account to such account as shall be directed by the
Trustee, (ii) comply with the instructions of the Trustee
without any further consent from the Pledgor or any other Person
(including, without limitation, the Company) in respect of the
Collateral and (iii) except as set forth in this
Section 3(e), not take any other action with respect to the
Collateral, effectuating any settlements with respect to any
Collateral (provided that the foregoing shall not prohibit deposits
of Collateral into the Collateral Account where settlement has been
effectuated from funds other than the Collateral), advancing funds
to any Person, transferring or releasing any Collateral, releasing
interest, dividends or distributions, or retaining or setting off
amounts due to the Bank against the Collateral (except as
explicitly provided in Section 5(d) hereof).
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(f)
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The Pledgor shall have the right to
give instructions directing the disposition of funds in the
Collateral Account so long as no Event of Default has occurred and
it continuing and such instructions are only with respect to an
amount not in excess of the total amount of Interest credited to
the Collateral Account and not previously withdrawn.
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4.
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Rights With Respect to the
Collateral . Other than the Trustee, neither
the Pledgor nor any other Person (including, without limitation,
the Company) shall have any authority whatsoever to sell, transfer,
pledge, trade, deposit, withdraw, direct the disposition of or
otherwise handle the Collateral Account (subject to
Section 3(f)) or, except as otherwise expressly permitted
under the Indenture, any other Collateral. Neither the Pledgor nor
any Person (including, without limitation, the Company), other than
the Trustee, may withdraw any amounts from the Collateral Account
(subject to Section 3(f)). The Bank will not comply with any
entitlement order or request to withdraw any amounts from the
Collateral Account given by any Person other than the Trustee
(subject to Section 3(f)).
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5.
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Bank’s Representations and
Warranties . The Bank represents and warrants
to the Trustee that:
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(a)
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The Collateral Account is
maintained with the Bank solely in the Pledgor’s
name.
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(b)
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The Bank has no knowledge of any
claim to, security interest in or lien upon any of the Collateral,
except for th
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