EXHIBIT 7
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Pledge #4 (Konover Line-2)
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") dated as of July
11, 2002 is by and among CTMPII FC LF (MS) a Cayman Islands exempted entity
("SECURED PARTY"), having an address at c/o Capital Trust, 410 Park Avenue, 14th
Floor, New York, N.Y. 10022, PROMETHEUS SOUTHEAST RETAIL LLC, a Delaware limited
liability company ("PLEDGOR"), having an address at 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, X.X. 00000, and PROMETHEUS SOUTHEAST RETAIL TRUST, a Maryland real estate
investment trust ("COMPANY"), having an address at 00 Xxxxxxxxxxx Xxxxx, Xxx
Xxxx, X.X. 00000.
PRELIMINARY STATEMENT
A. Secured Party has agreed to make a loan to LFSRI II SPV REIT
CORP., a Delaware corporation ("LFSRI II BORROWER") and SENIOR QUARTERS FUNDING
CORP., a Delaware corporation ("SENIOR QUARTERS BORROWER"; Senior Quarters
Borrower, collectively with LFSRI II Borrower, the "BORROWER"), in the aggregate
principal sum of up to $65,000,000 (the "LOAN"), in accordance with the
provisions of a certain Loan Agreement (the "LOAN AGREEMENT") dated of even date
herewith, which Loan shall be evidenced by, and payable, together with interest
thereon, in accordance with the provisions of a certain promissory note, the
"NOTE". The Note, the Loan Agreement, this Agreement and all other documents of
any nature whatsoever evidencing, securing or guaranteeing the Loan in whole or
in part, or otherwise executed and delivered in connection with the Loan or
relating thereto, as the same may be modified or amended from time to time, are
hereinafter referred to collectively as the "LOAN DOCUMENTS".
B. Capitalized terms used and not otherwise defined herein shall
have the respective meanings given to such terms in the Loan Agreement.
C. As of the date hereof: Pledgor is the owner of 100,000 Common
Shares of Company (the "Interest"); and Company owns 21,052,631 shares of Common
Stock, $.01 par value, of KONOVER PROPERTY TRUST, INC., a Maryland corporation
("OPERATING COMPANY"), and is entitled to receive dividends and other
distributions on account thereof from time to time declared and paid by
Operating Company, and owns a certain Contingent Value Right granted by
Operating Company. The Company also owns 500 shares of PSCO Acquisition Corp.,
which shares are not required to be pledged under this Agreement.
D. Pledgor has previously entered into that certain Pledge and
Security Agreement dated as of June 30, 1999 (as amended or modified from time
to time, the "ORIGINAL KONOVER 2 PLEDGE AGREEMENT"), whereby Pledgor has pledged
to Capital Trust, Inc. ("CAPITAL TRUST"), the Collateral as set forth in the
Original Konover 2 Pledge Agreement.
E. Secured Party was willing to make the Loan only if Pledgor and
Company agreed to execute and deliver this Agreement as additional security for
the payment of all
principal, interest, additional interest and other sums of any nature whatsoever
which may or shall become due under the Note, the Loan Agreement and the other
Loan Documents (collectively, the "DEBT") and the observance and performance by
Borrower, Pledgor, Company and the other members of the Borrower Control Group
of all the terms, covenants and provisions of the Loan Documents on the part of
Pledgor and Company to be observed and performed.
F. Company and Pledgor will derive substantial economic benefit
from the Loan and, therefore, Pledgor and Company desire to execute this
Agreement in order to satisfy the condition described in the foregoing paragraph
E.
G. Borrower has agreed to make available a portion of the
proceeds from the Loan to the Pledgor.
NOW, THEREFORE, in consideration of the foregoing and Secured Party's
agreement to make the Loan and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Pledgor and Company
hereby represent and warrant to and covenant and agree with Secured Party as
follows:
SECTION 1. SECURITY INTEREST. As security for the due and punctual
payment in full of the Debt and for the due and punctual performance by
Borrower, Pledgor, Company and the other members of the Borrower Control Group
of all of the terms, covenants and provisions of the Loan Documents (the Debt,
the payment thereof and the performance of the terms, covenants and provisions
of the Loan Documents being hereinafter collectively called the "OBLIGATIONS"),
Pledgor hereby pledges, hypothecates, assigns, and delivers to Secured Party and
grants to Secured Party a security interest in all of Pledgor's right, title and
interest now owned or hereafter acquired in and to the following described
property (the "COLLATERAL"):
(a) the Interest and any certificates representing the
Interest;
(b) all cash, securities, dividends, distributions,
Proceeds, and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Interest, and any fees, commissions or
other compensation payable to Pledgor as a member of Company (all of
the foregoing, collectively, "DISTRIBUTIONS");
(c) all contract rights, general intangibles, rights,
claims, powers, privileges, benefits and remedies arising from or in
any way related to ownership of the Interest, any certificates and
other instruments representing the Interest and the other Collateral
described above in paragraphs 1(a) and (b), including, without
limitation, all rights to vote or consent, or to receive any notice, or
to inspect or review any books, records or other information;
(d) all additions to the Collateral described in the
foregoing clauses (a) through (c) including without limitation any
membership interests in the Company obtained in the future by Pledgor,
all substitutions therefor and all replacements thereof;
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(e) all amounts due and payable or hereafter becoming due
and payable by Company to Pledgor, whether in the form of dividends,
distributions, securities, cash, Proceeds and other property, and
including without limitation the Proceeds of any Transfer of Equity
Interests in Company (collectively, "PAYOR PROCEEDS"); and
(f) all Proceeds of any of the foregoing.
Notwithstanding any contrary provision contained herein, (i) except for
purposes of Section 3(g) hereof, as used in this Agreement, the term "Equity
Interests" shall not include the preferred shares of Company (the "ACCOMMODATION
SHARES") held by not more than 150 Persons, and (ii) as used in this Agreement,
the terms "Collateral", "Distributions" and "Payor Proceeds" shall not include
any money properly released from the Deposit Account or other Collateral
released by Secured Party pursuant to the terms of this Agreement or the Deposit
Account Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor hereby
represents and warrants to Secured Party as follows:
(a) No consent of any other person or entity (including,
without limitation, any owner or creditor of Pledgor), is required in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement other than the consent of the Senior
Lender with respect to the Senior Loan, which consent of Senior Lender
has been obtained contemporaneously herewith.
(b) Pledgor is duly organized, validly existing and in
good standing under the laws of the state of its formation and has all
requisite power and authority under the laws of such state and under
its organizational and charter documents to enter into and perform its
obligations under this Agreement.
(c) Pledgor has taken all necessary legal and other
action to authorize the execution, delivery and performance of this
Agreement, and this Agreement constitutes the valid and binding
obligation and agreement of Pledgor, enforceable in accordance with its
terms, subject to limitations as to enforceability imposed by
bankruptcy, reorganization, moratorium, insolvency and other laws of
general application relating to or affecting the enforceability of
creditors' rights and to equitable principles.
(d) Pledgor has not received any notice of default under
any agreement or instrument to which Pledgor is a party or by which
Pledgor or Pledgor's assets may be bound which default would have a
material adverse effect on Pledgor's business, assets, property or
financial or other condition, and Pledgor is not in default under any
order, judgment, award or decree of any court, arbitrator or other
governmental authority binding upon or affecting Pledgor or by which
any of Pledgor's assets may be bound or affected.
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(e) Neither the execution and delivery of this Agreement
nor the compliance by Pledgor with the terms and provisions hereof are
events which of themselves, or with the giving of notice or the passage
of time, or both, would constitute, on the part of Pledgor, a violation
of or conflict with, or result in any breach of, or default under, the
terms, conditions or provisions of, or require any consent, permit,
approval, authorization, declaration or filing which has not been made
or obtained under or pursuant to, (i) any statute, law, judgment,
decree, order, rule or regulation applicable to Pledgor, (ii) the
organizational and charter documents of Pledgor, if any, or, (iii)
except as set forth in the documents listed on Exhibit A annexed hereto
and on the Disclosure Schedule (as such term is defined in the Original
Konover 2 Pledge Agreement) that was delivered by Pledgor to Capital
Trust simultaneously with the delivery of the Original Konover 2 Pledge
Agreement (EXHIBIT A together with the Disclosure Schedule is
hereinafter collectively referred to as the "DISCLOSURE SCHEDULES"),
any other agreement or instrument to which Pledgor is a party (other
than the Senior Loan had the consent of the Senior Lender not been
obtained with respect hereto, such consent of Senior Lender having been
so obtained contemporaneously herewith) or by which Pledgor, or
Pledgor's assets, are bound, or result in the creation or imposition of
any lien, charge or encumbrance of any nature whatsoever on any of the
assets of Pledgor, and, except as set forth in the documents listed on
the Disclosure Schedules, no such condition or event of itself, or with
the giving of notice or the passage of time, or both, will result in
the acceleration of the due date of any obligation of Pledgor or by
which any of Pledgor's assets are bound.
(f) After giving effect to the documents set forth on
Exhibit A annexed hereto and delivered in connection herewith, the
Disclosure Schedule originally delivered by Pledgor to Capital Trust
simultaneously with the Original Konover 2 Pledge Agreement is true,
correct and complete as of the date hereof and no modifications,
amendments or other changes have been made to the documents listed
therein since such delivery date, except for those modifications,
amendments and other changes contemplated by the documents set forth on
Exhibit A hereto and delivered in connection herewith.
(g) There are no judgments presently outstanding and
unsatisfied against Pledgor or any of Pledgor's assets, and neither
Pledgor nor any of Pledgor's assets is a party to or the subject of any
actions or suits or proceedings in equity or by any governmental
authorities, and no such litigation or proceeding has been threatened
against Pledgor or against any of Pledgor's assets, and no
investigation in contemplation of such litigation or proceeding has
begun or is pending or has been threatened.
(h) Intentionally Deleted.
(i) The financial statements of Pledgor and Company
furnished to Secured Party are true, correct and complete in all
material respects and fairly present the financial condition of Pledgor
and Company as at the end of and for the reporting periods covered
thereby. Except for the Permitted Indebtedness of Pledgor or the
Company or as shown on such financial statements, no borrowings (other
than the Senior Loan) have
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been made or indebtedness incurred by Pledgor or Company which is
outstanding and which might give rise to a lien or claim against any
assets of Company. There are no liabilities, contingent or otherwise,
or any unrealized or anticipated losses from unfavorable commitments,
whether arising before or after the date of such financial statements,
which are not disclosed in such financial statements.
(j) As of the date hereof, each of Pledgor and Company
has filed or caused to be filed all United States, state, local and
foreign income tax returns (if any) which are required to be filed and
all United States, state, local and foreign tax returns other than
income tax returns which are required to be filed and has paid or
caused to be paid all taxes shown on such returns or on any assessment
made against it and all other taxes, fees or other charges imposed on
it by any governmental authority, agency or instrumentality which have
become due and payable. No tax liens have been filed against Pledgor or
Company or against any of their respective assets, and no material
claims are being asserted against Pledgor or Company or any of their
respective assets in respect of any taxes.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF COMPANY. Company hereby
represents and warrants to Secured Party as follows:
(a) Company is duly organized, validly existing and in
good standing under the laws of the state of its formation and has all
requisite power and authority under the laws of such state and under
its organizational and charter documents to enter into and perform its
obligations under this Agreement.
(b) Company has taken all necessary legal and other
action to authorize the execution, delivery and performance of this
Agreement, and this Agreement constitutes the valid and binding
obligation and agreement of Company, enforceable in accordance with its
terms, subject to limitations as to enforceability imposed by
bankruptcy, reorganization, moratorium, insolvency and other laws of
general application relating to or affecting the enforceability of
creditors' rights and to equitable principles.
(c) Company has not received any notice of default under
any agreement or instrument to which it is a party or by which it or
its assets may be bound which default would have a material adverse
effect on its business, assets, property or financial or other
condition, and Company is not in default under any order, judgment,
award or decree of any court, arbitrator or other governmental
authority binding upon or affecting it or by which any of its assets
may be bound or affected.
(d) Neither the execution and delivery of this Agreement
nor the compliance by Company with the terms and provisions hereof are
events which of themselves, or with the giving of notice or the passage
of time, or both, would constitute, on the part of the Company, a
violation of or conflict with, or result in any breach of, or default
under, the terms, conditions or provisions of, or require any consent,
permit, approval, authorization, declaration or filing which has not
been made or obtained under or pursuant to, (i) any statute, law,
judgment, decree, order, rule or regulation applicable
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to Company, or (ii) the organizational and charter documents of Company
or (iii) except as set forth in the documents listed on the Disclosure
Schedules, any other agreement or instrument to which Company is a
party (other than the Senior Loan had the consent of the Senior Lender
not been obtained with respect hereto, such consent of Senior Lender
having been so obtained contemporaneously herewith) or by which
Company, or its assets, are bound, or result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever
on any of the assets of Company, and, except as set forth in the
documents listed on the Disclosure Schedules, no such condition or
event of itself, or with the giving of notice or the passage of time,
or both, will result in the acceleration of the due date of any
obligation of Company or by which any of its assets are bound.
(e) Except as set forth on SCHEDULE 4.1(D) to the Loan
Agreement, there are no judgments presently outstanding and unsatisfied
against Company or any of its assets, and neither Company nor any of
its assets is a party to or the subject of any actions or suits or
proceedings in equity or by any governmental authorities, and no such
litigation or proceeding has been threatened against Company or against
any of its assets, and no investigation in contemplation of such
litigation or proceeding has begun or is pending or has been
threatened.
(f) Company's chief executive office is at the location
identified in the first paragraph of this Agreement.
(g) The total authorized Equity Interests in Company
consists of 450,000 Common Shares of beneficial interest, $.01 par
value, of which 100,000 Common Shares are issued and outstanding, and
50,000 Preferred Shares of beneficial interest, of which 125 Preferred
Shares have been designated as Series A Redeemable Preferred Shares, of
which 103 Series A Redeemable Preferred Shares are issued and
outstanding. Pledgor is the sole record owner of the foregoing 100,000
Common Shares. All of such 100,000 Common Shares of beneficial interest
in Company are validly issued, fully paid and non-assessable. Company
is the sole owner of 21,052,631 shares of Common Stock, $.01 par value,
of Operating Company. All of such 21,052,631 shares of Common Stock of
Operating Company are validly issued, fully paid and non-assessable.
Except as set forth in the documents listed on the Disclosure
Schedules, there are no outstanding or authorized options, warrants,
rights, contracts, rights to subscribe, conversion rights or other
agreements or commitments to which Company is a party or which are
binding upon Company providing for the issuance or acquisition of any
Equity Interest in Company.
SECTION 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF PLEDGOR.
Pledgor hereby represents and warrants to Secured Party as follows with respect
to the Interest:
(a) (i) Pledgor is the sole record owner of the Interest,
free and clear of all Liens, security interests, charges and
encumbrances of every kind and nature (other than as created hereunder,
under the Original Konover 2 Pledge Agreement and under the Senior Loan
Agreement); if the Interest is capital stock, the Interest is duly
authorized,
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validly issued, fully paid and non-assessable, after giving effect to
the consent of the Senior Lender, such consent having been given
contemporaneously herewith; Pledgor has legal title to the Interest and
good right and lawful authority to grant a security interest in the
same in the manner hereby done or contemplated, after giving effect to
the consent of the Senior Lender, such consent having been given
contemporaneously herewith. (ii) The transferability of the Interest is
not restricted in any way by any agreement or instrument, except for
such restrictions ("RESTRICTIONS") as are set forth in the documents
listed on the Disclosure Schedules, and any such restrictions and
limitations on the transfer, assignment, pledge or other disposition of
the Collateral that are contained in the Restrictions have been waived,
by proper steps taken in compliance with the Restrictions and all
applicable law governing Company, with respect to the grant of a
security interest in the Collateral to Secured Party, and with respect
to any foreclosure sale of the Collateral by Secured Party (where
Secured Party or its affiliates purchases the Collateral); except as
set forth in the documents listed on the Disclosure Schedules, the
Interest is not subject to any option or similar arrangement; and no
consent or approval of any governmental body or regulatory authority,
or of any securities exchange, is necessary to the validity of the
rights created hereunder; and all action has been taken by Pledgor to
create and perfect, in favor of Secured Party, a security interest in
the Interest, and Secured Party has acquired a second priority
perfected security interest therein subject and subordinate only to the
security interest and lien in the Interest in favor of the Senior
Lender under the Senior Loan Documents.
(b) As to all Collateral acquired by Pledgor on and after
the date hereof, Pledgor shall be the legal and equitable owner of such
Collateral free and clear of all liens, security interests, charges,
and encumbrances of every kind and nature (other than those created
hereunder or under the Original Xxxxxxx 0 Xxxxxx Xxxxxxxxx); each
membership interest or other security comprising such Collateral will
have been duly authorized, validly issued and be fully paid and
non-assessable; after giving effect to the consent of the Senior Lender
(such consent having been given contemporaneously herewith), Pledgor
will have legal title to such Collateral and good and lawful authority
to pledge, assign and deliver such Collateral in the manner hereby
contemplated; and no consent or approval of any governmental body or
regulatory authority, or of any securities exchange, is or will be
necessary to the validity of the rights created hereunder.
(c) Pledgor shall not, nor shall it cause, authorize or
suffer Company to, take any action, or fail to take any action, in
contravention of the terms, conditions and provisions of the Note, the
Loan Agreement, this Agreement or any of the other Loan Documents.
(d) None of the ownership interests comprising the
Collateral are dealt in or traded on securities exchanges or in
securities markets, and none by its terms expressly provides that it is
a security governed by Article 8 of the UCC or that it is an investment
company security, and none is held in a securities account (as defined
in Section 8-501 of the UCC.)
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SECTION 5. COVENANTS.
(a) ENTITY STATUS. Pledgor will and will cause the
Company to continue to comply with the provisions of all of their
respective organizational and governing documents, and the laws of the
state in which each such Entity was formed relating to each such
Entity. All customary formalities regarding the Entity existence of
Pledgor and the Company will continue to be observed.
(b) EXISTENCE. Except as specifically set forth in that
certain letter dated as of the date hereof from Secured Party to the
Borrower relating to the Operating Company (the "CONSENT LETTER"),
Pledgor shall not and shall not suffer the Company to (i) take any
actions in violation of its organizational or governing documents or
the Restrictions or (ii) amend, modify, waive or terminate its
organizational or governing documents or the Restrictions.
(c) OTHER ACTIONS. Pledgor shall not and shall not suffer
the Company to:
(1) LIENS ON THE COLLATERAL. Incur, create,
assume, become or be liable in any manner with respect to, or
permit to exist, any Lien with respect to any Collateral
except Liens in favor of Secured Party or Senior Lender under
the Senior Loan Documents.
(2) CERTAIN RESTRICTIONS. Unless required under
any of the documents listed on the Disclosure Schedules, enter
into any agreement which expressly restricts the ability of
Pledgor or the Company to enter into amendments, modifications
or waivers of any of the Loan Documents.
(3) ISSUANCE OF EQUITY INTERESTS. Issue or allow
to be created any shareholder, partnership, trust or
membership interests, as applicable, or other Equity Interests
in Pledgor or the Company, except for any issuance of
Accommodation Shares.
(d) ADDITIONAL COVENANTS.
(1) Except as permitted under the Loan Agreement
or the Consent Letter and as required under the documents
listed on the Disclosure Schedules, Company shall not Transfer
its interest in Operating Company.
(2) Except pursuant to the Senior Loan
Documents, Pledgor shall not cause or suffer the Company to,
and Company shall not, issue any Equity Interests or debt
instruments having rights which may be senior or prior to the
rights of Pledgor to receive Distributions from Company or the
rights of Company to receive Distributions from Operating
Company or which could otherwise adversely affect the rights
of the Interests or the right to receive Payor Proceeds.
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(e) INTENTIONALLY DELETED.
(f) PAYOR PROCEEDS. Pledgor shall not, and shall not
cause or suffer Company to waive its rights, in whole or in part, to
receive the Payor Proceeds.
(g) PAYMENT OF DISTRIBUTIONS. Pledgor shall cause Company
to, and Company shall, pay any and all cash available of Company
(except for cash necessary to pay the preferred dividend on the
Accommodation Shares) as a dividend directly to Pledgor subject to the
terms of the Senior Deposit Account Agreement.
SECTION 6. DELIVERY OF COLLATERAL; VOTING RIGHTS; DISTRIBUTIONS;
SUBSTITUTION OF COLLATERAL.
(a) Any and all certificates representing the Collateral
(including without limitation additional or substitute certificates or
instruments representing Distributions, Payor Proceeds or other
Collateral that hereafter may be issued) shall be delivered to the
Secured Party in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, with signatures appropriately guaranteed, and accompanied by any
required transfer tax stamps, all in form satisfactory to Secured
Party; it being agreed and understood that the delivery of the
Collateral (or any certificates or instruments representing the
Collateral or Distributions) pursuant to the Original Konover 2 Pledge
Agreement shall satisfy Pledgor's delivery obligations under this
Section 6(a).
(b) So long as there shall not have occurred and be
continuing an Event of Default (hereinafter defined), Pledgor shall be
entitled to exercise any and all voting rights and powers relating or
pertaining to the Collateral or any part thereof for any purpose not
inconsistent with the terms and provisions of the Note, the Loan
Agreement, this Agreement and the other Loan Documents or otherwise in
contravention of any of the terms, covenants and provisions of the
Note, the Loan Agreement, this Agreement or any of the other Loan
Documents.
(c) Except as and to the extent provided in the Loan
Agreement and the Deposit Account Agreement, until the Indebtedness is
paid in full, Pledgor and the Company shall not receive or be entitled
to retain Distributions, if any, or Payor Proceeds paid on the
Collateral. To the extent Pledgor or the Company receives any
Distributions or Payor Proceeds prohibited hereunder, Pledgor or the
Company shall receive same in trust for the benefit of Secured Party
and shall immediately deliver same to Secured Party or its designated
agent (accompanied by proper instruments of assignment or stock powers
executed by Pledgor in accordance with Secured Party's instructions) to
be held subject to the terms, provisions and conditions of this
Agreement, the Loan Agreement and the Deposit Account Agreement.
(d) Upon the occurrence of an Event of Default and so
long as said Event of Default shall continue, at the option of Secured
Party, (i) all rights of Pledgor to exercise the voting and consensual
rights and powers which Pledgor is entitled to
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exercise pursuant to the foregoing subparagraph (b) shall cease, and
all such rights shall thereupon and without any further action or
notice become vested in Secured Party who shall have the sole and
exclusive right and authority to exercise (or refrain from exercising)
such voting and consensual rights and powers in its sole discretion,
and (ii) Secured Party shall receive and be entitled to retain any and
all Distributions and Payor Proceeds until the Indebtedness is
satisfied. THIS ASSIGNMENT OF VOTING RIGHTS IS COUPLED WITH AN INTEREST
AND IS IRREVOCABLE BY DISSOLUTION OR OTHERWISE. The exercise of any of
the rights and remedies of Secured Party under this paragraph shall not
be or be deemed to be a disposition of Collateral under Article 9 of
the Uniform Commercial Code as in effect in any applicable jurisdiction
(the "UCC") or an acceptance or a retention or a --- proposal to accept
or retain all or any part of the Collateral in satisfaction of all or
any of the Obligations. Any and all Distributions and Payor Proceeds
received by Secured Party pursuant to the provisions of this paragraph
shall be retained by Secured Party as part of the Collateral and
applied in accordance with the provisions of Section 11 of this
Agreement.
(e) No substitution of Collateral shall be permitted
without the prior written consent of Secured Party.
SECTION 7. COSTS AND EXPENSES. Company and Pledgor shall pay all costs,
fees, expenses and charges incurred by Secured Party in connection with the
administration and enforcement of this Agreement and the security interest
granted hereunder (including, without limitation, all attorneys' fees and
costs). In addition, Company and Pledgor agree to pay, and to save Secured Party
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement or the
transactions contemplated hereby. The obligations of Company and Pledgor
pursuant to this paragraph shall survive any termination of this Agreement.
SECTION 8. EVENT OF DEFAULT. The occurrence of any of the following
events shall constitute an event of default (an "EVENT OF DEFAULT") hereunder:
(a) If any representation or warranty of Pledgor or the
Company made in this Agreement, or in any certificate, report,
financial statement or other instrument furnished in connection with
this Agreement shall prove false or misleading in any material respect;
(b) If Pledgor, the Company or Operating Company shall
make a general assignment for the benefit of creditors;
(c) If a court of competent jurisdiction enters a decree
or order for relief with respect to Pledgor under Title 11 of the
United States Code as now constituted or hereafter amended or under any
other applicable Federal or state bankruptcy, insolvency or other
similar law, rule or regulation, or if such court enters a decree or
order appointing a receiver, liquidator, assignee, trustee, custodian,
examiner, magistrate, arbitrator, sequestrator (or similar official) of
Pledgor, the Company or Operating Company or of any substantial part of
their respective properties, or if such court decrees
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or orders the winding up or liquidation of the affairs of Pledgor, the
Company or Operating Company;
(d) If Pledgor, the Company or Operating Company files a
petition for relief or answer or consent seeking relief under Title 11
of the United States Code as now constituted or hereafter amended, or
under any other applicable Federal or state bankruptcy, insolvency or
other similar law, rule or regulation, or if Pledgor, the Company or
Operating Company fails to vigorously and diligently oppose or
otherwise consents to or acquiesces in the commencement or prosecution
of an involuntary case under Title 11 of the United States Code as now
constituted or hereafter amended, or under any other applicable Federal
or state bankruptcy, insolvency or similar law, rule or regulation, or
to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, examiner magistrate, arbitrator,
sequestrator (or other similar official) of Pledgor, the Company or
Operating Company, or of any substantial part of their respective
properties, or if Pledgor, the Company or Operating Company, fails
generally to pay its debts as such debts become due, or if Pledgor, the
Company or Operating Company, takes any action in furtherance of any
action described in this subparagraph;
(e) If any Affiliate of Pledgor, the Company or Operating
Company shall commence any legal action seeking to cause Pledgor, the
Company or Operating Company or any Affiliate of Pledgor , the Company
or Operating Company to take any of the actions described in
subparagraphs (b), (c) or (d) above with respect to Pledgor, the
Company or Operating Company.
(f) If Pledgor or the Company shall be in default of any
other provision provided herein and such default shall continue for a
period of thirty (30) days after notice from Secured Party; or
(g) If an "EVENT OF DEFAULT" (as such term is defined in
the Loan Agreement) occurs.
SECTION 9. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of
Default, Secured Party may, in addition to any other rights or remedies which
Secured Party may have, immediately and without demand exercise with respect to
the Collateral any and all rights and remedies granted to a secured party under
the UCC. Notwithstanding anything to the contrary contained herein, Secured
Party's rights related to the enforcement of remedies under this Agreement shall
be subject and subordinate to the rights of Senior Lender under the Senior Loan
Documents.
SECTION 10. SALE OF COLLATERAL.
(a) Sale of the Collateral may be made at any public or
private sale or at any broker's board or on any securities exchange,
for cash, upon credit or for future delivery, as Secured Party shall
deem appropriate. Secured Party shall be authorized at any such sale,
in its sole discretion, to restrict the prospective bidders or
purchasers to
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persons who will represent and agree that they are purchasing the
Collateral then being sold for their own account for investment and not
with a view to the distribution or resale thereof, and upon
consummation of any such sale Secured Party shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of
Pledgor, and Pledgor hereby waives, to the extent permitted by law, all
right of redemption, stay or appraisal which Pledgor now has or may at
any time in the future have under any rule of law or statute now
existing or hereafter enacted. To the extent that notice of sale shall
be required to be given by law, Secured Party shall give Pledgor ten
(10) days' notice in the manner herein specified of Secured Party's
intention to make any such public or private sale or sale at any
broker's board or on any such securities exchange. Such notice, in case
of public sale, shall state the time and place fixed for such sale,
and, in the case of sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such sale is to be
made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. In case of private
sale, such notice shall state the time after which the Collateral will
be sold. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as Secured
Party may fix in the notice of such sale. At any such sale, the
Collateral, or any portion thereof, may be sold as Secured Party may in
its sole discretion determine. To the extent permitted by law, Secured
Party may bid, which bid may be in whole or in part, in the form of
cancellation of indebtedness, for and purchase for the account of
Secured Party or its nominee the whole or any part of the Collateral.
Secured Party shall not be obligated to make any sale of the Collateral
if Secured Party shall determine not to do so, regardless of the fact
that notice of sale of the Collateral may have been given. Secured
Party may, without notice of publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same
was so adjourned. In case sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be
retained by Secured Party until the sales price is paid by the
purchaser or purchasers thereof, but Secured Party shall not incur any
liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in the case of any such
failure, such Collateral may be sold again upon like notice. As an
alternative to exercising the power of sale herein conferred upon it,
Secured Party may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral, or any portion
thereof, pursuant to a judgment or decree of a court or courts of
competent jurisdiction. Pledgor agrees, to the extent permitted by law,
that any sale or other disposition of any of the Collateral in
accordance with the foregoing procedures shall be deemed to be
commercially reasonable under the UCC and otherwise proper.
(b) In connection with any disposition of the Collateral,
if Secured Party elects to obtain the advice of any one or more
independent nationally known investment banking firms which are member
firms of the New York Stock Exchange (or other nationally recognized
exchange), with respect to the method or manner of sale or
-12-
disposition of any of the Collateral, the best price reasonably
obtainable therefor and any other details concerning such sale or
disposition, Pledgor agrees, to the extent permitted by law, that any
sale or other disposition of any of the Collateral in reliance on such
advice shall be deemed to be commercially reasonable under the UCC and
otherwise proper.
(c) Pledgor understands that compliance with federal or
state securities laws may very strictly limit the course of conduct of
Secured Party if Secured Party were to attempt to dispose of all or any
part of the Collateral and may also limit the extent to which or the
manner in which any subsequent transferee of the Collateral may dispose
of the same. Pledgor agrees that in any sale of any of the Collateral,
Secured Party is hereby authorized to comply with any such limitation
or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers or further
restrict such prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or
of the purchaser by any governmental regulatory authority or official,
and Pledgor further agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall Secured Party be liable or
accountable to Pledgor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction.
SECTION 11. APPLICATION OF MONIES. All monies (including, without
limitation, Distributions) received or collected by Secured Party pursuant to
this Agreement shall be held as Collateral by Secured Party and after the
occurrence of an Event of Default shall be applied by Secured Party first, to
the payment of all costs incurred in the collection of such monies (including
attorneys' fees and legal expenses) and second, to the payment of the
Indebtedness in such order and priority as Secured Party may in its sole
discretion determine. The balance, if any, of such monies remaining after
payment in full of such costs and the Obligations shall be remitted to Pledgor
or as otherwise directed by a court of competent jurisdiction.
SECTION 12. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
appoints Secured Party, effective upon an Event of Default, as the
attorney-in-fact of Pledgor for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument which Secured
Party may deem necessary or advisable to accomplish the purposes hereof, which
appointment is irrevocable and coupled with an interest. Without limiting the
generality of the foregoing, upon an Event of Default, Secured Party shall have
the right and power to receive, endorse and collect all checks and other orders
for the payment of money made payable to Pledgor or Company representing any
Distribution or Payor Proceeds or any part of any thereof and to give full
discharge for the same.
SECTION 13. NO WAIVER. No failure or delay on the part of Secured Party
in exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or
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partial exercise of any such right or power preclude any other or further
exercise thereof or the exercise of any other right or power hereunder nor shall
Secured Party's waiver of any right or remedy against Pledgor release or relieve
Pledgor from its obligations hereunder. No modification or waiver of any
provision of this Agreement nor consent to any departure by Pledgor therefrom
shall be effective unless the same shall be in writing and signed by Secured
Party, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on Pledgor
in any case shall, of itself, entitle Pledgor to any other or further notice or
demand in similar or other circumstances. If any notice is required by law to be
given to Pledgor or the Company by Secured Party, five (5) days' notice given by
registered mail, return receipt requested, and addressed to such party at the
address set forth herein shall be deemed for all purposes to be reasonable
notice.
SECTION 14. DURATION OF SECURED PARTY'S RIGHTS AND TERMINATION. Until
the Indebtedness shall have been paid in full, all rights, powers and remedies
granted to Secured Party under this Agreement shall continue to exist and may be
exercised by Secured Party at any time and from time to time. Upon payment in
full of the Indebtedness, Secured Party shall reassign and redeliver, without
recourse or warranty and at the expense of Pledgor, or cause to be so reassigned
and redelivered, to Pledgor or to such person or persons as Pledgor shall
designate, against receipt, such of the Collateral, if any, as shall not have
been sold or otherwise applied by Secured Party pursuant to the terms hereof and
still be held by Secured Party hereunder, together with appropriate instruments
of reassignment and release.
SECTION 15. AGREEMENTS OF PLEDGOR. Until the Indebtedness is paid and
performed in full, Pledgor covenants and agrees with Secured Party as follows:
(a) Pledgor shall furnish or cause to be furnished to
Secured Party from time to time, at the request of Secured Party, such
information concerning Pledgor, the Company or Operating Company as
Secured Party may reasonably request;
(b) Pledgor shall not authorize or permit Company to make
any loans to members of the Company or to set aside any funds for any
such purpose;
(c) Except as created hereby or by the Original Konover 2
Pledge Agreement, Pledgor shall not authorize or permit Company to
create or permit to exist any mortgage, pledge, title retention lien,
or other lien, encumbrance or security interest, or incur or permit to
exist any indebtedness (directly or as a guarantor) or any lien,
encumbrance or security interest, with respect to any assets now owned
or hereafter acquired by Company, or to take or fail to take any other
action whatsoever, in contravention of Section 5 of this Agreement or
otherwise inconsistent with the terms and provisions of the Note, the
Loan Agreement, this Agreement or any of the other Loan Documents;
(d) Pledgor shall not, and shall not authorize or permit
Company to, in any manner further encumber, sell, transfer or convey,
or permit to be further encumbered, sold, transferred or conveyed in
any manner, the Collateral other than in
-14-
compliance with Section 2.6(b) of the Loan Agreement or as otherwise
may be required by Senior Lender in accordance with the terms of the
Senior Loan Agreement;
(e) Pledgor shall not consent to or authorize any action
by Company with respect to amending, modifying or terminating the
Restrictions (in whole or in part) without obtaining the prior written
consent of Secured Party, it being agreed by Pledgor and Company that
any such amendments, modification or termination without the prior
consent of Secured Party shall be void and of no force or effect, nor
shall Pledgor consent to or authorize any action by Company with
respect to entering into any merger or consolidation with, or sale of
any portion of its assets to, any corporation or other person or party,
or changing the character of its business, or adding any additional
members to Company except to the extent permitted by the Consent
Letter;
(f) Pledgor shall take any steps necessary to prevent
Company or Operating Company from doing any act or thing prohibited
pursuant to this Section or which would otherwise be in contravention
of any representation, warranty, term, covenant or provision set forth
in the Loan Agreement or any of the other Loan Documents.
SECTION 16. LIMITATION ON DUTIES AND LIABILITIES OF SECURED PARTY;
INDEMNIFICATION.
(a) Beyond the exercise of reasonable care in the custody
of any Collateral in its possession, Secured Party shall have no duty
as to any Collateral or as to the preservation of rights against prior
parties or any other rights pertaining thereto. Secured Party shall
have no duty as to any Collateral, to ascertain or take action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other
rights pertaining to any Collateral. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords other collateral of the
same type in its possession. Except for gross negligence and willful
misconduct, Secured Party shall not be liable or responsible for any
loss or damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of Secured Party or any
agent, bailee or custodian selected by Secured Party in good faith or
for taking any necessary steps to preserve rights against any parties
with respect to any Collateral or for the collection of any proceeds of
any Collateral or for any invalidity, lack of value or uncollectability
of any of the Collateral.
(b) The pledge and assignment of the Collateral and grant
of a security interest is for collateral purposes only, and, prior to
its foreclosure thereon, Secured Party shall neither by virtue of this
Security Agreement, by the receipt of Distributions or Payor Proceeds,
by exercise of voting rights or by the exercise of any of its rights or
remedies hereunder be deemed to be a member, interest holder, partner
or stockholder, as applicable, of Company or Operating Company or to
have any liability for the debts, obligations or liabilities of
Company, Pledgor, or any other member, interest holder, partner or
stockholder, as applicable, of Company or Operating Company. Without
limiting the generality of the foregoing, by accepting the pledge,
assignment and security interests described herein, Secured Party does
not thereby assume any debts,
-15-
obligations, responsibilities, covenants, agreements or liabilities of
Pledgor in connection with the Collateral or of Pledgor to Company, to
Operating Company or to any third parties dealing with Company.
(c) Pledgor shall indemnify and hold harmless Secured
Party from and against any and all liability, loss, or damage that
Secured Party may suffer or incur and which arises out of or results
from claims of third parties, including another stockholder, member,
interest holder or partner, as applicable, based on the rights or
obligations of Company or a stockholder, member, interest holder or
partner, as applicable, of Company under the Company's organizational
and charter documents, this Agreement, or acceptance of Distributions
or the exercise of any of the rights or remedies of Secured Party
hereunder; any claim of any alleged obligation, liability or duty on
the part of Company to perform or discharge any of the terms,
covenants, or provisions of the Company's organizational and charter
documents or any liability or obligation of Company or Pledgor;
together with all costs and expenses (including, without limitation,
court costs and attorneys' fees and costs) paid or incurred in
connection therewith; or any receipt of Distributions from Company or
anyone else. Pledgor shall reimburse Secured Party upon demand for the
full amount of any indemnity to which Secured Party may be entitled
hereunder and the full amount of the indemnity obligation shall be
considered to be an Obligation and shall be secured hereby.
(d) Pledgor upon demand shall pay to Secured Party the
amount of any and all reasonable expense, including the reasonable fees
and disbursements of counsel and of any experts and agents, which
Secured Party may incur in connection with (i) the administration of
this Agreement, (ii) the custody, preservation, use or operation of, or
the sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure by Pledgor or Company to
perform or observe any of the provisions hereof.
(e) All costs and expenses, including reasonable
attorneys' fees and costs, incurred or paid by Secured Party in
exercising any right, power or remedy conferred in this Agreement, or
in the enforcement thereof, shall become a part of the Debt and shall
bear interest from the date incurred or paid by Secured Party at the
Default Rate (as such term is defined in the Loan Agreement).
SECTION 17. SECURITY INTEREST ABSOLUTE. All rights of Secured Party and
the security interests hereunder, and all obligations secured hereby, shall be
absolute and unconditional, irrespective of any lack of validity or
enforceability of the other Loan Documents; any change in the time, manner or
place of payment of, or in any other term of, all or any of the Obligations or
any other amendment or waiver of or any consent to any departure from the Loan
Documents; any exchange, release or non-perfection of any other collateral for
the Indebtedness, or any release or amendment or waiver of or consent to
departure from any of
-16-
the Loan Documents; or any other circumstance (other than payment and
performance of the Obligations in full) that might otherwise constitute a
defense available to, or a discharge of Pledgor or any other obligor under any
of the Loan Documents, or any third party grantor of collateral for the
Obligations or any part thereof.
SECTION 18. NOTICE. Any notice, request, demand, statement,
authorization, approval or consent made hereunder shall be in writing and shall
be hand delivered or sent by Federal Express, or other reputable national
courier service, or by postage pre-paid registered or certified mail, return
receipt requested, and shall be deemed given (i) when received at the following
addresses if hand delivered or sent by Federal Express, or other reputable
national courier service, and (ii) three (3) business days after being
postmarked and addressed as follows if sent by registered or certified mail,
return receipt requested:
If to Secured Party:
c/o Capital Trust, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx XxxxXxxxxx
With copies to:
c/o Capital Trust, Inc.
000 Xxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxx X. Xxxxxx and Loan Administrator
and
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxx
If to Pledgor:
x/x Xxxxxx Xxxxxx Xxxx Xxxxxx Xxxxxxxxx, X.X.X.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxx X. Xxxxx
With copies to:
c/o Lazard Freres Real Estate Investors L.L.C.
00 Xxxxxxxxxxx Xxxxx
-00-
Xxx Xxxx, X.X. 00000
Attention: Xxxxxxxx X. Xxxxxxxxxx, Esq.
and
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx Xxxxxxxxxxx, Esq.
Each party may designate a change of address by notice to the other parties,
given at least fifteen (15) days before such change of address is to become
effective.
SECTION 19. FURTHER ASSURANCES.
(a) Pledgor will, at Pledgor's expense and in such manner
and form as Secured Party may require, execute, deliver, file and
record any financing statement, specific assignment or other paper and
take any other action necessary or desirable, or that Secured Party may
request, in order to create, preserve, perfect or validate any security
interest, or to enable Secured Party to exercise and enforce its rights
hereunder with respect to any of the Collateral, or better to assure
and confirm unto Secured Party its rights, powers and remedies
hereunder. To the extent permitted by applicable law, Pledgor hereby
authorizes Secured Party to execute and file, in the name of Pledgor or
otherwise, UCC financing statements (which may be carbon, photographic,
photostatic or other reproductions of this Agreement or of a financing
statement relating to this Agreement) which Secured Party in its sole
discretion may deem necessary or appropriate to further perfect its
rights under this Agreement. Pledgor hereby consents and agrees that
the issuer of the Collateral or any registrar or transfer agent for any
of the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of Secured Party to effect any
transfer pursuant to the provisions hereof, notwithstanding any other
notice or direction to the contrary heretofore or hereafter given by
Pledgor or any other party to such issuer, registrar or transfer agent.
(b) Pledgor agrees that Pledgor will not change (i)
Pledgor's name, identity or organizational structure in any manner, or
(ii) the location of Pledgor's principal place of business or chief
executive office unless Pledgor shall have given Secured Party not less
than thirty (30) days' prior written notice thereof.
(c) Pledgor agrees to do and to cause the Company and
Operating Company to do such further reasonable acts and things, and to
execute and deliver such additional conveyances, assignments,
agreements and instruments, as Secured Party may at any time request in
connection with the administration or enforcement of this Agreement
(including, without limitation, to aid Secured Party in the sale of all
or any part of the Collateral) or related to the Collateral or any part
thereof or in order better to assure and confirm unto Secured Party its
rights, powers and remedies hereunder.
-18-
SECTION 20. CUMULATIVE RIGHTS AND REMEDIES. All remedies afforded to
Secured Party by reason of this Agreement are separate and cumulative remedies
and it is agreed that no one of such remedies shall be deemed to be in exclusion
of any other remedies available to Secured Party and shall not in any manner
limit or prejudice any other legal or equitable remedies which Secured Party may
have. The rights, powers and remedies given to Secured Party by this Agreement
shall be in addition to all rights, powers and remedies given to Secured Party
by virtue of any statue or rule of law and all such rights, powers and remedies
are cumulative and not alternative, and may be exercised and enforced
successively or concurrently.
SECTION 21. PARTIES BOUND. This Agreement shall be binding upon and
inure to the benefit of Pledgor, Company and Secured Party and their respective
successors and assigns.
SECTION 22. SEVERABILITY. If any term, covenant or provision of this
Agreement shall be held to be invalid, illegal or unenforceable in any respect,
this Agreement shall be construed without such term, covenant or provision.
SECTION 23. NO ORAL CHANGE. This Agreement may only be modified,
amended, changed, discharged or terminated by an agreement in writing signed by
the parties hereto against whom enforcement is sought.
SECTION 24. GOVERNING LAW. This agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to principles of conflicts of laws.
SECTION 25. HEADINGS. Section headings used herein are for convenience
only and shall not affect the construction of this Agreement.
SECTION 26. "PLEDGOR". The term "Pledgor" as used herein shall, if this
Agreement is signed by more than one pledgor, mean "the pledgors and each of
them" and each obligation of Pledgor herein contained shall be the joint and
several undertaking of all such pledgors, except where expressly stated to the
contrary in this Agreement.
SECTION 27. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, and each such counterpart shall for all purposes be deemed to
be an original, and all such counterparts together shall constitute but one and
the same agreement.
SECTION 28. CONSENT BY COMPANY. Company is executing this Agreement for
the purposes of making the representations and warranties contained in Section
3, evidencing its agreement to the provisions of this Agreement applicable to
it, and consenting to the other provisions hereof and to the exercise by Secured
Party of its remedies provided herein.
-19-
IN WITNESS WHEREOF, Secured Party, Pledgor and Company have
duly executed this Agreement the date first above written.
SECURED PARTY: CTMPII FC LF (MS)
By: /s/ Xxxxxx X. Xxxxxxx III
-------------------------------------------
Name: Xxxxxx X. Xxxxxxx III
Title: Authorized Signatory
PLEDGOR: PROMETHEUS SOUTHEAST RETAIL LLC
By: LFSRI II SPV REIT CORP.
By: /s/ Xxxx X. Xxxxx
---------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President and Chief
Financial Officer
COMPANY: PROMETHEUS SOUTHEAST RETAIL TRUST
By: /s/ Xxxx X. Xxxxx
-------------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President and Chief Financial
Officer
