PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT (as amended, supplemented or
otherwise modified from time to time, this "AGREEMENT") dated as of September
26, 2000 made by Primestone Investment Partners L.P., a Delaware limited
partnership (the "PLEDGOR"), and Vornado PS, L.L.C., a Delaware limited
liability company (the "LENDER").
W I T N E S S E T H:
WHEREAS, the Pledgor has entered into an Amended and Restated Agreement
of Limited Partnership (including, without limitation, all exhibits thereto, as
amended, supplemented or otherwise modified from time to time, the "PARTNERSHIP
AGREEMENT") of Prime Group Realty, L.P., a Delaware limited partnership
("PRIME") dated as of November 17, 1997 among Prime Group Realty Trust, a
Maryland real estate investment trust (the "REIT"), and The Xxxxx Group, L.L.C.,
a Delaware limited liability company, as the General Partners and the Persons
whose names are set forth on Exhibit A thereto, as the Limited Partners;
WHEREAS, pursuant to the Partnership Agreement the Pledgor is the
beneficial and record owner of the number of certificated limited partnership
interests issued by Prime pursuant to the Partnership Agreement identified on
Schedule I hereto (the "PRIME OP UNITS");
WHEREAS, pursuant to the Partnership Agreement the Pledgor has the
right, subject to certain conditions, to exchange each OP Unit for one common
share of the REIT or, at the option of the REIT, cash equal to the fair market
value of such common share of the REIT at the time of exchange;
WHEREAS, the Pledgor has entered into a Credit Agreement dated as of
November 17, 1997 (as the same may from time to time be amended, extended,
supplemented, restated or otherwise modified or replaced, the "PRUDENTIAL CREDIT
AGREEMENT") between the Pledgor and Prudential Securities Credit Corporation, a
Delaware corporation ("PRUDENTIAL"), pursuant to which Prudential agreed to make
a loan (the "PRUDENTIAL LOAN") to the Pledgor secured by a first priority
security interest in the Pledged Collateral (as hereinafter defined);
WHEREAS, the Pledgor has entered into the Loan Agreement dated as of
the date hereof (as the same may from time to time be amended, extended,
supplemented, restated or otherwise modified or replaced, the "LOAN AGREEMENT";
terms used herein, and not otherwise defined herein, are used with the meanings
ascribed to them in the Loan Agreement) between the Pledgor, The Prime Group,
Inc., Xxxxxxx X. Xxxxxxx and the Lender pursuant to which the Lender has agreed
to make a loan (the "LOAN") to the Pledgor in an amount no greater than
$62,000,000;
WHEREAS, the Lender and Prudential have entered into that certain
Intercreditor Agreement dated as of the date hereof (as the same may from time
to time be amended, extended, supplemented, restated or otherwise modified or
replaced, or as the terms thereof may be waived by Prudential, the
"INTERCREDITOR AGREEMENT") pursuant to which certain rights of the Lender and
Prudential to the Pledged Collateral are governed; and
WHEREAS, as a condition precedent to the Lender's entering into the
Loan Agreement, the Lender has required the Pledgor to grant, assign and pledge,
and the Pledgor has agreed to grant, assign and pledge, to the Lender a
continuing perfected security interest in and to all its rights, title and
interests in the Pledged Collateral (as hereinafter defined), subject only to
the Permitted Liens (as defined in the Loan Agreement), to secure all of the
obligations of the Pledgor to the Lender under the Loan Agreement, the Note and
the other Credit Documents.
NOW, THEREFORE, Pledgor, intending to be bound hereby, in consideration
of the premises hereof, in order to induce the Lender to provide the Loan under
and in accordance with the terms of the Loan Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, hereby agrees with, and for the benefit of, the Lender as follows:
SECTION 1. PLEDGE. Pledgor hereby pledges and assigns to the Lender and
grants to the Lender a continuing security interest, subject only to the
Permitted Liens, in all of its rights, title and interests in and to, whether
now owned or existing or hereafter acquired or arising:
(a) Prime L.P., including, without limitation, the 7,944,893 Prime
OP Units currently owned by Pledgor, together with all Prime OP Units and other
securities distributed in respect of such Prime OP Units and any Prime OP Units
or other securities into which such Prime OP Units may be converted or for which
such Prime OP Units may be exchanged (collectively, the "PLEDGED PRIME OP
UNITS");
(b) all common shares issued by the REIT in exchange for the
Pledged Prime OP Units ("REIT SHARES", and together with the Pledged Prime OP
Units, the "PLEDGED SHARES");
(c) all payments due or to become due to the Pledgor arising out
of, as a result of or in connection with the Prime OP Units, whether as
distributions of cash or property or otherwise and all of Pledgor's rights
arising out of, as a result of or in connection with the Pledged Shares, whether
now existing or hereafter arising or acquired, to exercise all voting,
consensual and other powers of ownership pertaining to the Pledged Shares
(including, without limitation, to make determinations, to exercise any election
(including, without limitation, election of remedies) or option, to give or
receive any notice, consent, amendment, waiver or approval), together with full
power and authority to demand, receive, enforce, collect or give receipt for any
of the foregoing, to enforce or execute any checks or other instruments or
orders, to file any claims and to take any
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action which, in the opinion of the Lender, may be necessary or advisable in
connection with any of the foregoing;
(d) (i) that certain Registration Rights Agreement dated as of
November 17, 1997 (as the same may from time to time be amended, supplemented,
restated or modified, the "REGISTRATION RIGHTS AGREEMENT") among the REIT,
Prime, The Prime Group, Inc., the Pledgor and the other investors named therein
and (ii) the Partnership Agreement, (the Partnership Agreement together with the
Registration Rights Agreement collectively, the "ASSIGNED AGREEMENTS"),
including, without limitation, (A) all rights of the Pledgor to receive moneys
due and to become due under or pursuant to the Assigned Agreements, (B) all
rights of the Pledgor to receive proceeds of any insurance, indemnity, warranty
or guaranty with respect to the Assigned Agreements, (C) claims of the Pledgor
for damages arising out of or for breach of or default under the Assigned
Agreements, (D) the right of the Pledgor to terminate the Assigned Agreements,
to perform thereunder and to compel performance and otherwise exercise all
remedies thereunder and (E) the right of the Pledgor to exchange Prime OP Units
into REIT Shares, including, without limitation, all income, cash, dividends or
other distributions received therefrom;
(e) the Securities Account (as defined in the Loan Agreement), all
balances from time to time in the Securities Account and all earnings,
investments, security entitlements, securities and other Financial Assets (as
defined in the Uniform Commercial Code) from time to time credited to or
deposited in the Securities Account by the Pledgor or on behalf of the Pledgor,
and all proceeds, products, dividends, interest, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of such security entitlements,
securities and other Financial Assets, and any other similar accounts that may
from time to time be designated by the parties hereto as additional collateral
hereunder;
(f) the Deposit Account (as defined in the Loan Agreement), all
balances from time to time in the Deposit Account and all earnings, investments,
security entitlements and securities from time to time credited to or deposited
in the Deposit Account by the Pledgor or on behalf of the Pledgor, and all
proceeds, products, dividends, interest, cash, instruments and other property
from time to time received, receivable or otherwise distributed in respect of or
in exchange for any or all of such security entitlements and securities, and any
other similar accounts that may from time to time be designated by the parties
hereto as additional collateral hereunder; and
(g) all proceeds, products and any replacements of any of the
foregoing; all of the foregoing being herein referred to as the "PLEDGED
COLLATERAL."
SECTION 2. SECURITY FOR OBLIGATIONS. This Agreement secures the
indefeasible payment of all liabilities, obligations and indebtedness of any and
every kind and nature heretofore, now or hereafter owing, arising, due or
payable from the Pledgor to the Lender pursuant to the Loan Agreement, the Note
and all other Credit Documents to which the Pledgor is a party, however
evidenced, created, incurred, acquired or owing, whether for principal,
interest, fees, indemnification, expenses or otherwise, whether primary or
secondary, direct or indirect, joint or several, contingent or fixed, or
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otherwise, including the expenses of preparing for and selling any and all of
the Pledged Collateral and the reasonable attorneys' fees and legal expenses
incurred in connection therewith by the Lender and including, without
limitation, obligations of performance, now or hereafter given by the Pledgor to
the Lender and whether or not evidenced by promissory notes or other evidence of
indebtedness (all such obligations and liabilities being hereinafter
collectively referred to as the "OBLIGATIONS"). The Pledgor and the Lender
hereby agree that they intend the security interest hereby granted to attach
upon the execution of this Agreement.
SECTION 3. DELIVERY OF PLEDGED COLLATERAL. Except as provided for in
the Intercreditor Agreement as it may be amended, modified or waived, should any
of the Pledged Collateral at any time be represented or evidenced by a
certificate or instrument, such certificates or instruments shall be endorsed,
delivered to and held by or on behalf of the Lender pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Lender. Upon the day after the maturity of the
Loan (if the Obligations have not been paid in full) or upon the occurrence of
an Event of Default under the Loan Agreement and/or the other Credit Documents
(any such event being an "ACCELERATION DEFAULT"), the Lender shall have the
right, at any time in its discretion and without notice to the Pledgor, to
transfer to or to register in the name of the Lender or any of its nominees any
or all of the Pledged Collateral. In addition, the Lender shall have the right,
subject to the terms of the Intercreditor Agreement, at any time to exchange
certificates or instruments representing or evidencing the Pledged Collateral
for certificates or instruments of smaller or larger denominations.
(b) The books and records of Prime shall be marked to reflect the
transfer of the Pledged Collateral and/or the pledge and security interests
granted to the Lender under this Agreement, as applicable.
SECTION 4. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents
and warrants to the Lender as follows:
(a) The Prime OP Units have been, and the REIT Shares upon the
exchange of the Prime OP Units for the appropriate number of REIT Shares, will
be duly authorized and validly issued, are fully paid and non-assessable and
represent, on the Closing Date, the percentage of the issued limited partnership
interests of Prime as is set forth on SCHEDULE I hereto; and, except as set
forth in the REIT's most current registration statement filed with the SEC and
in Section 11(d) of the Loan Agreement, no warrants, subscription rights or
options are outstanding with respect to the Pledged Shares.
(b) It is the legal and beneficial owner of the Prime OP Units as
indicated on SCHEDULE I hereto, free and clear of any Liens, adverse claims,
security interests, options or other charges or encumbrances, except for the
Liens securing the Prudential Loan and the security interests created by this
Agreement.
(c) The pledge of the Pledged Collateral pursuant to this
Agreement, together with the delivery to (or as directed by) the Lender of the
certificates evidencing the Prime
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OP Units and the filing of the appropriate financing statements, create a valid
and perfected continuing Lien on and security interest in the Pledged
Collateral, securing the indefeasible payment and performance of the Obligations
subject only to the Lien securing the Prudential Loan.
(d) Other than Prudential's consent, no authorization, consent,
approval or other action by, and no notice to or filing with, any Governmental
Authority, regulatory body or other Persons is required to be obtained or made
by Pledgor either (i) for the pledge by Pledgor of the Pledged Collateral
pursuant to this Agreement or for the execution, delivery or performance of this
Agreement by Pledgor, or (ii) for the exercise by the Lender of the voting or
other rights provided for in this Agreement or the remedies in respect of the
Pledged Collateral pursuant to this Agreement, subject to applicable state and
federal securities laws.
(e) Except as provided for in the Prudential Credit Agreement,
there are no restrictions on the transfer of the Pledged Collateral, except
such, if any, as are imposed by operation of law. Pledgor has the right to
transfer the Pledged Collateral free of any Liens or encumbrances and without
the consent of the creditors of the Pledgor (other than the Lender), any persons
or any Governmental Authority whatsoever.
(f) Neither the execution or delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, nor the compliance with or
performance of the terms and conditions of this Agreement by Pledgor is
prevented by, limited by, conflicts with or will result in the breach or
violation of or a default under the terms, conditions or provisions of (i) the
by-laws or the certificate of incorporation (or an equivalent organizational
document) of such Pledgor, Prime or the REIT or any agreement among the partners
of Prime, (ii) any mortgage, security agreement, indenture, evidence of
indebtedness, loan or financing agreement, trust agreement or other agreement or
instrument to which such Pledgor is a party or by which it is bound or to which
any of Pledgor's property or assets is subject, or (iii) any provision of law,
any order of any court or administrative agency or any rule or regulation
applicable to such Pledgor or any of its properties, subject to applicable state
and federal securities laws.
(g) Pledgor has full power, right and legal authority to execute,
deliver and perform its obligations under this Agreement and has taken all
partnership and other actions necessary to authorize the execution and delivery
of; and the performance of its obligations hereunder.
(h) This Agreement constitutes the legal, valid and binding
obligation of Pledgor, enforceable in accordance with its terms, subject to the
effect of any applicable bankruptcy, insolvency, reorganization or moratorium or
similar laws affecting the rights of creditors generally.
(i) Any assignee of all or any portion of the Pledged Collateral
is entitled to receive payments with respect thereto without any defense,
counterclaim, setoff, abatement, reduction, recoupment or other claim arising
out of the actions of Pledgor.
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(j) There are no actions, suits or proceedings (whether or not
purportedly on behalf of Pledgor) pending or, to the knowledge of Pledgor,
threatened affecting Pledgor that involve the Pledged Collateral, this
Agreement, the Loan Agreement, the Note or any of the other Credit Documents.
(k) Each Assigned Agreement, a true and complete copy of which has
been furnished to the Lender, has been duly authorized, executed and delivered
by Prime and the REIT and, to Pledgor's best knowledge, the other parties
thereto, has not been amended or otherwise modified, is in full force and effect
and is binding upon and enforceable against all parties thereto in accordance
with its terms, subject to the effect of any applicable bankruptcy, insolvency,
reorganization or moratorium or similar laws affecting the rights of creditors
generally. There exists no default under each Assigned Agreement by any party
thereto. Each of the REIT, and Prime has executed and delivered to the Lender a
consent to the assignment of the Assigned Agreement pursuant to the Loan
Agreement.
SECTION 5. FURTHER ASSURANCES. Pledgor hereby agrees that at any time
and from time to time, at its expense, Pledgor will promptly execute and deliver
all further instruments and documents, and take all further action, that may be
reasonably necessary or desirable and whether or not requested by Lender, or
that the Lender may reasonably request, in order to perfect and protect any Lien
or security interest granted or purported to be granted hereby or to enable the
Lender to exercise and enforce its rights and remedies hereunder, subject to
applicable state and federal securities laws, with respect to any Pledged
Collateral. Pledgor agrees that at any time and from time to time, upon the
written request of the Lender and at the cost and expense of the Pledgor, the
Pledgor will promptly and duly execute and deliver any and all instruments and
documents and take such action as the Lender deems necessary.
SECTION 6. VOTING RIGHTS; DISTRIBUTIONS, ETC. (a) So long as no
Acceleration Default shall have occurred and be continuing:
(i) Pledgor shall be entitled to exercise any and all voting and
other rights pertaining to the Pledged Collateral or any part thereof
for any purpose not inconsistent with the terms of this Agreement, the
Loan Agreement or any other Credit Document to which Pledgor is a
party; PROVIDED, HOWEVER, that (a) Pledgor shall not vote for or
consent to, any amendment, supplement, restatement or modification to
the Partnership Agreement without the prior written consent of the
Lender and (b) Pledgor shall not exercise any other voting right
without giving the Lender prior written notice whenever Pledgor shall
exercise or refrain from exercising any such voting or other consensual
right if such action would have a Material Adverse Effect on the value
of the Pledged Collateral or any part thereof.
(ii) Subject to the terms of the Loan Agreement, the Securities
Account Agreement (as defined in the Loan Agreement) and the Deposit
Account Agreement (as defined in the Loan Agreement), Pledgor shall be
entitled to
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receive and retain any and all distributions, income, dividends and
interest paid in respect of the Pledged Collateral; PROVIDED, HOWEVER,
that any and all:
(A) income, dividends and distributions paid or payable
other than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in respect
of, or in exchange for, any Pledged Collateral;
(B) income, dividends and other distributions paid or
payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution or
in connection with a reduction of contributed capital or capital
surplus; and
(C) all amounts paid, payable or otherwise distributed in
respect of redemption of, or in exchange for, any Pledged
Collateral,
shall be forthwith delivered to (or as directed by) the Lender to hold
as Pledged Collateral and shall, if received by Pledgor, be received in
trust for the benefit of the Lender, be segregated from the other
property or funds of Pledgor, and be forthwith delivered to the Lender
as Pledged Collateral in the same form as so received (with all
necessary endorsements).
(iii) The Lender shall execute and deliver (or cause to be
executed and delivered) to Pledgor all such proxies and other
instruments as Pledgor may reasonably request for the purpose of
enabling Pledgor to exercise the voting and other rights which it is
entitled to exercise pursuant to clause (i) above and to receive the
distributions, income, dividends, or interest payments which it is
authorized to receive and retain pursuant to clause (ii) above.
(b) Upon the occurrence and during the continuance of an
Acceleration Default and in accordance with the terms of the Intercreditor
Agreement:
(i) All rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to Section 6(a)(i) hereof and to receive the income, dividends
and interest payments which it would otherwise be authorized to receive
and retain pursuant to Section 6(a)(ii) hereof shall cease, and all
such rights shall thereupon become vested in the Lender who shall
thereupon have the sole right to exercise such voting and other
consensual rights and to receive and hold as Pledged Collateral such
income, dividends and interest payments.
(ii) All income, dividends and interest payments which are
received by Pledgor contrary to the provisions of clause (i) of this
Section 6(b) shall be received in trust for the benefit of the Lender,
shall be segregated from other funds of the Pledgor and shall be
forthwith paid over to the Lender as Pledged Collateral in the same
form as so received (with all necessary endorsements).
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SECTION 7. TRANSFERS AND OTHER LIENS; ADDITIONAL INTERESTS. (a) Pledgor
hereby agrees that it will not (i) sell or otherwise transfer or dispose of, or
grant any interest in or option with respect to, any of the Pledged Collateral,
or (ii) create or permit to exist any Lien, security interest, or other charge
or encumbrance upon or with respect to any of the Pledged Collateral, except for
(x) sales permitted pursuant to Section 14(a)(10) of the Loan Agreement, (y) the
security interests granted under this Agreement or (z) Permitted Liens.
(b) The Pledgor shall at its expense:
(i) perform and observe all the terms and provisions of the
Assigned Agreements to be performed or observed by it, maintain the
Assigned Agreements in full force and effect, enforce the Assigned
Agreements in accordance with their respective terms; and
(ii) furnish to the Lender promptly upon receipt thereof copies
of all notices, requests and other documents received by the Pledgor
under or pursuant to the Assigned Agreements, and from time to time (A)
furnish to the Lender such information and reports regarding the
Assigned Agreements as the Lender may reasonably request and (B) upon
request of the Lender make to any other party to the Assigned
Agreements such demands and requests for information and reports or as
the Pledgor is entitled to make thereunder.
(c) The Pledgor shall not without the Lender's prior consent:
(i) cancel or terminate the Assigned Agreements or consent to or
accept any cancellation or termination thereof;
(ii) amend or otherwise modify the Assigned Agreements or give
any consent, waiver or approval thereunder;
(iii) waive any default under or breach of the Assigned
Agreements; or
(iv) take any other action in connection with the Assigned
Agreements which would impair the value of the interest or rights of
the Pledgor thereunder or which would impair the interest or rights of
the Lender.
SECTION 8. LITIGATION RESPECTING THE PLEDGED COLLATERAL. In the event
any action, suit or other proceeding at law, in equity, in arbitration or before
any court, administrative agency or other authority involving or affecting the
Pledged Collateral becomes known to or is contemplated by the Pledgor, Pledgor
shall give the Lender immediate notice thereof.
SECTION 9. LENDER APPOINTED ATTORNEY-IN-FACT. (a) Subject to
Prudential's rights and interests under the Prudential Credit Agreement, Pledgor
hereby appoints the Lender (and any officer or agent of the Lender with all
power of substitution and revocation) Pledgor's true and lawful
attorney-in-fact, coupled with an interest, with full authority in the place and
stead of Pledgor and in the name of Pledgor or otherwise, from
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time to time in the Lender's discretion to (i) if an Acceleration Default occurs
and is continuing, take any action and to execute any instrument which the
Lender may deem necessary or advisable to accomplish the purposes of this
Agreement, including, without limitation, (A) to receive, endorse and collect
all instruments made payable to Pledgor representing any income, dividend or
other distribution in respect of the Pledged Collateral or any part or proceeds
thereof and to give full discharge for the same; (B) to transfer the Pledged
Collateral, in whole or in part, to the name of the Lender or such other Person
or Persons as the Lender may designate, or to cause the Pledged Shares to be
transferred on the books of Prime to the name of the Lender; (C) take possession
of and endorse any one or more checks, drafts, bills of exchange, money orders
or any other documents received on account of the Pledged Collateral; (D)
collect, xxx for and give acquittances for moneys due on account of the
foregoing; withdraw any claims, suits, or proceedings pertaining to or arising
out of the foregoing; (E) take any other action contemplated by this Agreement;
and (F) sign, execute, acknowledge, swear to, verify, deliver, file, record and
publish any one or more of the foregoing, and (ii) at any time execute and
record or file on behalf of Pledgor any evidence of a security interest
contemplated by this Agreement and any refilings, continuations or extensions
thereof.
(b) The powers of attorney which shall be granted pursuant to
Section 9(a) hereof and all authority thereby conferred shall be granted and
conferred solely to protect the Lender's interests in the Pledged Collateral and
shall not impose any duty upon the attorney-in-fact to exercise such powers.
Such powers of attorney shall be irrevocable prior to the indefeasible payment
and performance in full of the Obligations and shall not be terminated prior
thereto or affected by any act of the Pledgor or by operation of law, including,
but not limited to, dissolution, liquidation, wind-up, death, disability or
incompetency of any Person, the termination of any trust, or the occurrence of
any other event, and if the Pledgor should become bankrupt, insolvent, or come
under the direct regulation of similar laws which affect the rights of creditors
generally or any other event should occur before the indefeasible payment and
performance in full of the Obligations and termination of the Loan Agreement,
the Note and the other Credit Documents, such attorney-in-fact shall
nevertheless be fully authorized to act under such powers of attorney as if such
event had not occurred and regardless of notice thereof.
SECTION 10. LENDER MAY PERFORM. If Pledgor fails to perform any
agreement contained herein, the Lender may itself perform, or cause performance
of, such agreement, and the expenses of the Lender incurred in connection
therewith shall be payable by the Pledgor under Section 13 hereof.
SECTION 11. REASONABLE CARE. The Lender shall be deemed to have
exercised reasonable care in the custody and preservation of the Pledged
Collateral in its possession if the Pledged Collateral is accorded treatment
substantially equal to that which the Lender accords its own property, it being
understood that the Lender shall not have any responsibility for (i)
ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders or other matters relative to any Pledged Collateral, whether
or not the Lender has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Pledged Collateral.
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SECTION 12. REMEDIES UPON ACCELERATION DEFAULT.
(a) Subject to the terms of the Intercreditor Agreement, if any
Acceleration Default shall have occurred and be continuing:
(i) The Lender may notify the obligors or other parties, if any,
interested in any items of Pledged Collateral of the interests of the
Lender therein and of any action proposed to be taken with respect
thereto, and inform any of those parties that all payments otherwise
payable to the Pledgor with respect thereto shall be made to the Lender
until the Loan has been indefeasibly paid in full;
(ii) The Lender may exercise in respect of the Pledged
Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it, all the rights and remedies of a
secured party under the Uniform Commercial Code in effect in the State
of New York at that time (the "CODE"), and the Lender may also, without
notice except as specified below, sell the Pledged Collateral or any
part thereof in one or more parcels at public or private sale, at any
exchange, broker's board or at any of the Lender's offices or
elsewhere, for cash, on credit or for future delivery, and upon such
other terms as the Lender may deem commercially reasonable. Pledgor
hereby agrees that, to the extent notice of sale shall be required by
law, at least five (5) days' notice to Pledgor of the time and place of
any public sale or the time after which any private sale is to be made
shall constitute reasonable notification. The Lender shall not be
obligated to make any sale of Pledged Collateral regardless of notice
of sale having been given. The Lender may adjourn any public or private
sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the
time and place to which it was so adjourned. At any such sale, unless
prohibited by applicable law, the Lender may bid for and purchase all
or any part of the Pledged Collateral so sold free from any right or
equity of redemption. The Lender shall not be liable for failure to
collect or realize upon any or all of the Pledged Collateral or for any
delay in so doing nor shall any of them be under any obligation to take
any action whatsoever with regard thereto. The Lender is hereby
authorized to comply with any limitation or restriction in connection
with any sale of Pledged Collateral as it may be advised by counsel is
necessary in order to (a) avoid any violation of applicable law or (b)
obtain any required approval of the sale or of the purchase by any
Governmental Authority, and the Pledgor agrees that such compliance
shall not result in such sale being considered or deemed not to have
been made in a commercially reasonable manner and that the Lender shall
not be liable or accountable to the Pledgor for any discount allowed by
reason of the fact that such Pledged Collateral is sold in compliance
with any such limitation or restriction;
(iii) Any cash held by the Lender as Pledged Collateral and all
cash proceeds received by the Lender in respect of any sale of,
collection from, or other realization upon all or any part of the
Pledged Collateral may, in the discretion of the Lender, be held by the
Lender as collateral for, and thereafter
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applied (after payment of any amounts payable to the Lender pursuant to
Section 13 hereof) in whole or in part by the Lender against, all or
any part of the Obligations in such order as the Lender shall elect.
Any surplus of such cash or cash proceeds held by the Lender and
remaining after the indefeasible payment in full of all the Obligations
shall be paid over to the Pledgor or to whomsoever may be lawfully
entitled to receive such surplus; and
(iv) The Lender may otherwise use or deal from time to time with
the Pledged Collateral, in whole or in part, in all respects as if the
Lender were the outright owner thereof.
The Pledgor recognizes that, by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, and applicable state
securities laws, the Lender may be compelled, with respect to any sale of all or
any part of the Pledged Collateral, to limit purchasers to those who will agree,
among other things, to acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges that any such private sales may be at prices and on terms
less favorable to the Lender than those obtainable through a public sale without
such restrictions, and, notwithstanding such circumstances, agree that any such
private sale shall be deemed to have been made in a commercially reasonable
manner and that the Lender shall have no obligation to engage in public sales
and no obligation to delay the sale of any Pledged Collateral for the period of
time necessary to permit the respective issuer thereof to register it for public
sale.
(b) Except as set forth in Section 12(a)(iii) hereof; the Lender
shall have the sole right to determine the order in which Obligations shall be
deemed discharged by the application of the Pledged Collateral or any other
property or money held hereunder or any amount realized thereon. Any requirement
of reasonable notice imposed by law shall be deemed met if such notice is in
writing and is mailed, teletransmitted or hand delivered to the Pledgor at least
five (5) days prior to the sale, disposition or other event giving rise to such
notice requirement.
(c) The Lender shall collect the cash proceeds received from any sale
or other disposition or from any other source contemplated by and in accordance
with subsection (a) above and shall apply the full proceeds in accordance with
the provisions of this Agreement.
(d) Notwithstanding the foregoing, none of the provisions of this
Section 12 shall confer on the Lender any rights or privileges that are not
permissible under applicable law.
(e) In connection with the provisions of this Agreement, Pledgor
from time to time shall promptly execute and deliver, or cause to be executed
and delivered, to the Lender such documents and instruments, and shall join in
such notices and shall take, or cause to be taken, such other lawful actions as
the Lender shall deem necessary or desirable to enable it to exercise any of the
rights with respect to the Pledged Collateral granted to it pursuant to this
Agreement.
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SECTION 13. EXPENSES. The Pledgor will, upon demand, pay to the Lender
the amount of all reasonable out-of-pocket expenses, including the reasonable
fees and expenses of its counsel and of any experts and agents which the Lender
may incur in connection with (i) the perfection, custody or preservation of, or
the sale of, collection from, or other realization upon, any of the Pledged
Collateral, (ii) the exercise or enforcement of any of the rights of the Lender
hereunder, (iii) the failure by the Pledgor to perform or observe any of the
provisions hereof, or (iv) any actual or attempted sale, assignment of rights or
interests, or exchange of, or any enforcement, collection, compromise or
settlement respecting the Pledged Collateral or any other property or money held
hereunder, or (v) any other action taken by the Lender hereunder whether
directly or as attorney-in-fact pursuant to the power of attorney herein
conferred, and all such expenses shall be deemed a part of the Obligations for
all purposes of this Agreement and the Lender may apply the Pledged Collateral
or any other property or money held hereunder to payment of or reimbursement of
itself for such expenses. The Pledgor shall pay all such expenses on demand,
together with interest thereon from the date the expense is paid or incurred by
the Lender at an interest rate equal to that under the Note (computed on the
basis of the actual number of days elapsed over a 360-day year).
SECTION 14. WAIVERS AND AMENDMENTS, ETC. The rights and remedies given
hereby are in addition to all others however arising, but it is not intended
that any right or remedy be exercised in any jurisdiction in which such exercise
would be prohibited by law. No action, failure to act or knowledge of the Lender
shall be deemed to constitute a waiver of any power, right or remedy hereunder,
nor shall any single or partial exercise thereof preclude any further exercise
thereof or the exercise of any other power, right or remedy. Any waiver or
consent respecting any covenant, representation, warranty or other term or
provision of this Agreement shall be effective only in the specified instance
and for the specific purpose for which given and shall not be deemed, regardless
of frequency given, to be a further or continuing waiver or consent. The failure
or delay of the Lender at any time or times to require performance of, or to
exercise its rights with respect to, any representation, warranty, covenant or
other term or provision of this Agreement in no manner shall affect its rights
at a later time to enforce any such provision. No notice to or demand on a party
in any case shall entitle such party to any other or further notice or demand in
the same, similar or other circumstances. Any right or power of the Lender
hereunder respecting the Pledged Collateral and any other property or money held
hereunder may at the option of the Lender be exercised as to all or any part of
the same and the term the "Pledged Collateral" wherever used herein, unless the
context clearly requires otherwise, shall be deemed to mean (and shall be read
as) the "Pledged Collateral and any other property or money held hereunder or
any part thereof." This Agreement shall not be amended nor shall any right
hereunder be deemed waived except by a written agreement expressly setting forth
the amendment or waiver and signed by the party against whom or which such
amendment or waiver is sought to be charged.
SECTION 15. NOTICES. Each notice to, and each demand upon, the Pledgor
by the Lender relating to this Agreement and each notice to, and each demand
upon, the Lender by the Pledgor relating to this Agreement, shall specifically
refer to this
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Agreement, and shall be in writing and shall be conclusively deemed to have been
received and shall be effective except as explicitly noted hereinabove (i) on
the day on which delivered if delivered personally, or transmitted by telecopier
(followed by a mailed written confirmation), (ii) on the next Business Day if
delivered by a nationally recognized overnight courier (such as Federal
Express), or (iii) five (5) Business Days after the date on which the same is
mailed by certified United States mail postage prepaid, return receipt requested
and shall be addressed:
(a) in the case of the Pledgor, to:
Primestone Investment Partners L. P.
c/o The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
With copies to:
The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
and:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(b) in the case of the Lender, to:
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Vornado PS, L.L.C.
c/o Vornado Realty Trust
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Israel, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
or at such other address as the party giving such notice shall have been advised
of in writing for such purpose by the party to which the same is directed.
SECTION 16. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing perfected Lien on (subject only to the Lien securing the Prudential
Loan) and security interest in the Pledged Collateral and shall (i) remain in
full force and effect until the indefeasible payment in full or performance of
the Loan, (ii) be binding upon Pledgor, its successors and assigns and (iii)
inure to the benefit of the Lender and its successors, transferees and assigns.
Upon the indefeasible payment in full or performance of the Loan, Pledgor shall
be entitled to the return at its out-of-pocket expense, if any, of such of the
Pledged Collateral as shall not have been sold or otherwise applied pursuant to
the terms of this Agreement and/or applicable law.
SECTION 17. SEVERABILITY. In the event that any provision of this
Agreement shall be determined to be superseded, invalid or otherwise
unenforceable pursuant to applicable law, such determination shall not affect
the validity of the remaining provisions of this Agreement, and the remaining
provisions of this Agreement shall be enforced as if the invalid provision were
deleted.
SECTION 18. SURVIVAL OF REPRESENTATIONS, ETC. All representations,
warranties, covenants and other agreements made herein shall survive the
execution and delivery of this Agreement and shall continue in full force and
effect until all amounts due under the Loan Agreement, the Note and the other
Credit Documents have been indefeasibly paid in full. This Agreement shall
remain and continue in full force and effect without regard to any modification,
execution, renewal, amendment or waiver of any provision of any of the Loan
Agreement, the Note or any other Credit Document.
SECTION 19. TERMINATION AND MISCELLANEOUS PROVISIONS. This Agreement
shall continue in full force and effect until all of the Obligations shall have
been indefeasibly paid and satisfied. This Agreement shall be binding upon and
shall inure to the benefit of
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the parties hereto and their respective successors, and assigns. Section
headings used herein are for convenience only and shall not affect the meaning
or construction of any of the provisions hereof. This Agreement may be executed
in any number of counterparts with the same effect as if the signatures thereto
and hereto were upon the same instrument.
SECTION 20. ENTIRE AGREEMENT. This Agreement, the Loan Agreement and
the other Credit Documents contain the entire agreement of the parties and
supersedes all other agreements, understandings and representations, oral or
otherwise, between the parties with respect to the matters contained herein.
SECTION 21. GOVERNING LAW; TERMS. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York,
without giving effect to its conflict of laws provisions. Unless otherwise
defined herein or in the Loan Agreement. terms defined in Article 9 of the
Uniform Commercial Code in the State of New York are used herein as therein
defined.
SECTION 22. DISCLOSURE LIMITATION OF LIABILITY. No claim may be made by
Pledgor or any other Person against the Lender or its affiliates, directors,
officers, employees, attorneys or agents for any special, indirect,
consequential, punitive or treble damages in respect of any claim for breach of
contract or any other theory of liability arising out of or related to the
transactions contemplated by this Agreement or any other Credit Documents, or
any act, omission or event occurring in connection herewith or therewith; and
Pledgor hereby waives, releases and agrees not to xxx upon any claim for any and
all special, indirect, consequential, punitive or treble damages, whether or not
accrued and whether or not known or suspected to exist in its favor.
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IN WITNESS WHEREOF, the Pledgor and the Lender have each caused this
Pledge and Security Agreement to be duly executed and delivered as of the date
first above written.
PRIMESTONE INVESTMENT PARTNERS L.P.
By: PG/Primestone, L.L.C.,
Its general partner
By: The Prime Group, Inc.,
Its Administrative Member
By: ______________________
Name:
Title:
VORNADO PS, L.L.C.
By: Vornado Realty, L.P.,
Its sole member
By: Vornado Realty Trust,
Its general partner
By: _______________________
Name:
Title:
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SCHEDULE I
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Pledgor Issuer Class of Interest Certificate No. of Pledged Percentage
------- ------ ----------------- No. Shares of of Total
--- Interest Outstanding
-------- -----------
--------------------------------------------------------------------------------------------------------------------
Primestone Investment Prime Group Limited Partnership 19 7,944,893 35.5%
Partners L.P. Realty, L.P. Interest Common Units
--------------------------------------------------------------------------------------------------------------------
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