Exhibit I
PLEDGE AND SECURITY AGREEMENT [LAKE XXXXXX]
THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge and Security Agreement"),
dated as of March 22, 1994, is entered into by and between Prime Group II, L.P.,
an Illinois limited partnership (the "Pledgor" or the "Company"), and Xxxxxx
Investors Life Insurance Company, an Illinois insurance corporation (the
"Pledgee").
W I T N E S S E T H:
WHEREAS, The Prime Group, Inc. ("Prime") and Xxxxxx Corporation, a
Delaware corporation ("Xxxxxx"), acting on behalf of themselves and their
respective affiliates, are parties to that certain letter agreement dated August
25, 1993 and amended and restated as of February 17, 1994 (the "Letter
Agreement"), wherein Xxxxxx and Prime agreed to modify certain of their existing
lending and other business relationships;
WHEREAS, Pledgor is an Affiliate of Prime; and Pledgee is a direct or
indirect subsidiary of Xxxxxx;
WHEREAS, Pledgee and certain of its Affiliates have made or provided
credit support/enhancement for loans to certain Affiliates of Pledgor, which
loans are guaranteed by certain of Guarantor's Affiliates pursuant to written
guaranties (the "Existing Guaranties");
WHEREAS, in order to induce Pledgee to release the Existing Guaranties,
concurrently herewith, Pledgor is among other things executing and delivering to
Pledgee that certain guaranty dated of even date herewith (the "Guaranty"), with
respect to the loan (such loan, as extended, modified or restated from time to
time, being referred to herein as the "Loan"), described on Exhibit A to the
borrower (such borrower, and its successors and assigns, being referred to
herein as "Borrower"), which Pledgee has made or with respect to which Pledgee
has provided credit support/enhancement;
WHEREAS, in order to further induce Pledgee to release the Existing
Guaranties concurrently herewith, Pledgor has agreed to execute and deliver this
Pledge and Security Agreement, pursuant to which (i) the Pledged Interests (as
defined herein) will be pledged to secure Pledgor's obligations under the
Guaranty and this Pledge and Security Agreement, and (ii) certain Distributions
(as defined herein) paid on or with respect to the Pledged Interests will be
paid and applied as provided herein; and
WHEREAS, the transactions contemplated by the Letter Agreement include the
execution and delivery of this Pledge and Security Agreement executed by Pledgor
for the benefit of Pledgee.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Pledgee hereby agree
as follows:
ARTICLE 1
DEFINITIONS
The following terms when used in this Pledge and Security Agreement,
including its preamble and recitals, shall have the following meanings (such
definitions to be equally applicable to the singular and plural forms thereof):
"Adjusted Funds from Operations" shall mean Funds from Operations for the
most recent calendar quarter after deducting (i) the total amount of the
quarterly distribution on the Preferred Units paid in that calendar quarter plus
the amount of any Preferred Distribution Shortfall as of the end of that
calendar quarter, (ii) a 10% payment reserve based on the amount remaining after
deducting item (i), and (iii) the total amount of the quarterly distribution on
the Convertible Preferred Units paid in that calendar quarter plus the amount of
any Convertible Preferred Distribution Shortfall on the Convertible Preferred
Units as of the end of that calendar quarter.
"Borrower" shall have the meaning provided therefor in the recitals.
"Borrower Obligations" shall mean any and all obligations or liabilities
of Borrower whether direct or indirect, joint or several, absolute or
contingent, now existing or hereafter arising, due or to become due, which arise
out of or in connection with any Loan Document.
"Business Day" means any day of the week other than Saturday, Sunday or
any other day on which the New York Stock Exchange is closed.
"Closing Price" means, on any date, the last sale price, regular way, or,
in case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either caw as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Stock is
not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, for the Common Stock, as reported by the
National Association of Security Dealers, Inc. Automated Quotation System or, if
such system is no longer in use, the principal other automated quotation system
that may then be in use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock as such Person is
selected from time to time by the board of directors of General Partner.
"Code" means the Uniform Commercial Code from time to time in effect in
the State of Illinois.
"Collateral" is defined in Section 2.1.
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"Common Stock" means shares of common stock, par value $.01 per share, of
the General Partner, including certificates representing such shares and any
interests in the entries on the books of any financial intermediary pertaining
to such shares.
"Common Units" means the Partnership Units designated as Common Units
under, and as otherwise defined and described in, the Partnership Agreement.
"Convertible Preferred Distribution Shortfall" shall have the meaning
given such term in the Partnership Agreement.
"Convertible Preferred Units" shall mean the Partnership Units designated
as Convertible Preferred Units under, and as otherwise defined and described in,
the Partnership Agreement.
"Dilution" shall mean the exercise of the rights granted to the
Partnership pursuant to Section 12.5 of the Partnership Agreement to acquire
Common Units of a Limited Partner and dilute such Limited Partner's Partnership
Interest in satisfaction of such Limited Partner's liability to the Partnership
pursuant to Sections 12.3 or 12.4 of the Partnership Agreement. Whenever in this
Pledge and Security Agreement reference is made to Dilution of Common Units, or
to Common Units subject to Dilution, any such reference shall be deemed to
include any and all rights under Section 12.7(b) and Section 12.5(d) of the
Partnership Agreement regarding Common Units with respect to which the Dilution
rights of the Partnership have terminated.
"Dilution Amount" means, with respect to any Dilution, the aggregate
dollar amount recovered from the Limited Partners under the Partnership
Agreement by reason of such Dilution.
"Discount" means an amount equal to 0.335 multiplied by a fraction, (i)
the numerator of which shall be (A) the Target Distribution Amount as of the end
of the most recent calendar quarter, minus (B) four (4) times the Adjusted Funds
from Operations for the most recent calendar quarter (but in no event shall the
numerator be less than zero), and (ii) the denominator of which shall be
$6,625,892.00.
"Distributions" means all distributions, proceeds, dividends, liquidating
proceeds or dividends, and other distributions or payments, ordinary or
extraordinary (whether similar or dissimilar to the foregoing), paid in cash, on
or with respect to any Pledged Interests.
"Entity" means any general partnership, limited partnership, corporation,
joint venture, trust, business trust, limited liability company, corporation or
association.
"Exchange" means the exchange of some or all or a portion of the Common
Units of a Limited Partner for Common Stock pursuant to the Partnership
Agreement.
"Exchange Rights" means the rights of a Limited Partner to exchange Common
Units for Common Stock pursuant to Article XI of the Partnership Agreement and
subject to Section 12.7(a) of the Partnership Agreement.
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"Event of Default" means:
(a) any failure by Pledgor to pay any amount due under the Guaranty,
or to apply any Distributions as provided in Section 2.4 hereof, or to
comply with the provisions of any section of Article 4 hereof other than
Sections 4.1 (to which subparagraph (d) below shall apply), 4.2 (to which
subparagraph (c) below shall apply) and 4.12 (to which subparagraph (d)
below shall apply), and, in each such case, the continuance of such
failure for five (5) Business Days after written notice from Pledgee;
(b) if any representation or warranty made or deemed made by Pledgor
in or under the Guaranty or this Pledge and Security Agreement shall prove
to be false or misleading in any material respect on the date made or
deemed to be made, and Pledgee gives notice to Pledgor of such default (no
grace or cure period being applicable to any such default);
(c) any sale, assignment, transfer, pledge or further encumbrance by
Pledgor of any of the Pledged Interests, or any interest therein, other
than pursuant to a Dilution under the Partnership Agreement;
(d) any default (not otherwise specified in this definition of
"Event of Default") in the performance or observance of any covenant or
agreement to be performed or observed by Pledgor under this Pledge and
Security Agreement or the Guaranty and the continuation thereof for a
period of thirty (30) days after notice of such default is given by
Pledgee to Pledgor; provided, however, that if such default cannot
reasonably be cured within such thirty (30) day time period and so long as
Pledgor promptly commences to cure such default promptly following receipt
of notice thereof and thereafter diligently prosecutes such cure, such
period will be extended for up to an additional ninety (90) days;
(e) Pledgor shall (i) in a proceeding commenced by Pledgor, be
adjudicated a bankrupt, or an order for relief shall have been entered
against Pledgor, under federal bankruptcy law, (ii) make a general
assignment for the benefit of creditors, (iii) apply for, seek, consent
to, or acquiesce in, the appointment of a receiver, custodian, trustee,
liquidator or similar official for it or all or substantially all of its
property, (iv) institute any proceeding seeking an order for relief or to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or fail to have any such proceeding
instituted against it dismissed within ninety (90) days after filing or
(v) fail to contest in good faith any appointment or proceeding described
in subsection (f) below for a period of ninety (90) days after such
appointment or the institution of such proceeding; or
(f) a receiver, custodian, trustee, liquidator or similar official
shall be appointed for Pledgor or all or substantially all of its
properties, or a proceeding described in subsection (e) above, shall be
instituted against Pledgor or a warrant of attachment, execution or
similar process against all or substantially all of its property shall be
issued, and any such event continues undischarged, undismissed, unstayed,
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unvacated or unbonded for a period of ninety (90) days after such entry,
appointment or issuance.
"Funds from Operations" shall mean the net income (loss), computed in
accordance with generally accepted accounting principles consistently applied,
excluding gains or losses from debt restructuring and sales of real property,
plus depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures.
"General Partner" means Prime Retail, Inc., a Maryland corporation, and
its successors and assigns.
"Guaranty" shall have the meaning provided therefor in the recitals.
"Initial Pledge Amount" means the amount set forth in Exhibit A hereto as
the Initial Pledge Amount under this Pledge and Security Agreement.
"Initial Pledged Interests" means the Pledged Interests which are being
pledged as of the date hereof by Pledgor to Pledgee pursuant to this Pledge and
Security Agreement to secure the Secured Obligations.
"Interest Amount" shall have the meaning provided therefor in Section 2.4
hereof.
"Letter Agreement" shall have the meaning provided therefor in the
recitals.
"Limited Partner" shall mean any Person named as a Limited Partner on
Exhibit A to the Partnership Agreement, or any Person admitted as a Substituted
Limited Partner or additional Limited Partner (as such terms are defined and
described in the Partnership Agreement), in such Person's capacity as a limited
partner of the Partnership.
"Loan" shall have the meaning provided therefor in the recitals.
"Loan Documents" means, with respect to the Loan, this Pledge and Security
Agreement, the Guaranty, and any and all other documents and instruments
evidencing or securing the Loan, and, if applicable, any and all other documents
and instruments executed and delivered in connection with credit
support/enhancement with respect to the Loan.
"Lock-Up Letter" means, collectively, (i) that certain letter dated as of
March 22, 1994 by and among Prime, Prime Group Limited Partnership, and
Friedman, Billings, Xxxxxx & Co., Inc., (ii) that certain letter dated as of
March 22, 1994 by and among Xxxxxx Investors Life Insurance Company, KILICO
Realty Corporation, KR Gainesville, Inc., KR Gulf Coast Factory Shops, Inc., and
Friedman, Billings, Xxxxxx & Co., Inc., (iii) that certain letter dated as of
March 22, 1994 by and among Xxxxxxx Xxxxxxxxx, Xxxxxxxxx Family LLC and
Friedman, Billings, Xxxxxx & Co., Inc., and (iv) that certain letter dated as of
March 22, 1994 by and among Xxxxxxx X. Xxxxxxxxx, Xx., Xxxxxxxxx Family
Associates LLC and Friedman, Billings, Xxxxxx & Co., Inc., relating to certain
restrictions on the sale or other disposition of Common Units or Common Stock.
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"Market Value" means (i) with respect to Common Stock on any date, the
average of the Closing Price for the five consecutive Business Days ending on
such date, and (ii) with respect to Common Units on any date, the Market Value
of the Common Stock that would be issued if an Exchange were to occur as to such
Common Units on such date. Notwithstanding the foregoing, (i) for purposes of
this Pledge and Security Agreement, the Market Value of the Initial Pledged
Interests as of the date hereof shall be deemed to be the Initial Pledge Amount,
and (ii) for purposes of Section 4.16 only, the Market Value is subject to
adjustment as provided in said Section 4.16(d).
"Partners" means the partners in the Partnership.
"Partnership" means Prime Retail, L.P., a Delaware limited partnership.
"Partnership Agreement" means that certain Agreement of Limited
Partnership of the Partnership dated March 22, 1994.
"Preferred Units" shall mean the Partnership Units designated as Preferred
Units under, and as otherwise defined and described in, the Partnership
Agreement.
"Prime Partner(s)" shall mean the affiliate(s) of Prime which are
partner(s) of Borrower, as set forth on Exhibit A.
"Prime Pledges" shall have the meaning provided therefor in Section 2.7
hereof.
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated March 22, 1994, among Prime Retail, Inc., the Partnership,
Prime, Prime Group Limited Partnership, Xxxxxxx Xxxxxxxxx, Xxxxxxxxx Family LLC,
Xxxxxxx X. Xxxxxxxxx, Xx., Xxxxxxxxx Family Associates LLC, Xxxxxx Investors
Life Insurance Company, KILICO Realty Corporation, KR Gainesville, Inc., and KR
Gulf Coast Factory Shops, Inc.
"Secured Obligations" shall have the meaning provided therefor in Section
2.2.
"Sharing Agreement" means that certain Retail Assets Sharing Agreement
dated of even date herewith by and among Pledgor, Prime, Prime Group Limited
Partnership, Xxxxxxx Xxxxxxxxx, Xxxxxxxxx Family LLC, Xxxxxxx X. Xxxxxxxxx, Xx.,
Xxxxxxxxx Family Associates LLC, Xxxxxx Investors Life Insurance Company, KILICO
Realty Corporation, KR Gainesville, Inc., and KR Gulf Coast Factory Shops, Inc.
"Target Distribution Amount" shall mean an amount, determined from time to
time, that would be required to pay an annual distribution at the rate of the
Preferential Distribution per Common Unit on all Common Units then issued and
outstanding, plus the amount of any accrued and unpaid Preferential Distribution
Shortfall outstanding at such time with respect to all Common Units owned by the
General Partner.
In addition to the foregoing, the definitions set forth in Section A of
Schedule 1 to Exhibit B attached hereto are hereby incorporated by this
reference.
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ARTICLE 2
PLEDGE
SECTION 2.1 Grant of Security Interest. Pledgor hereby pledges,
hypothecates, assigns, and transfers to Pledgee, and hereby grants to Pledgee, a
continuing lien and security interest in all of the following property (the
"Collateral"):
(a) subject to Sections 2.7 and 4.16(b) hereof, 690,276 Common
Units;
(b) any Pledged Interests or other collateral pledged by Pledgor to
Pledgee after the date hereof to secure the Secured Obligations pursuant
to this Pledge and Security Agreement;
(c) any and all Common Stock owned by Pledgor following an Exchange
of any Pledged Interests which are Common Units (which Common Stock shall
constitute "Pledged Interests" hereunder immediately upon issuance thereof
and without any further act required on the part of Pledgor);
(d) any and all Common Units or Common Stock or any other securities
or property received by Pledgor as a result of any exchanges, splits,
reverse splits, combinations, mergers, consolidations, reclassifications,
warrants, options, and non-cash dividends or distributions in respect of
any Pledged Interests (and any such Common Units or Common Stock or other
securities or property so received shall be deemed "Pledged Interests" for
purposes hereof);
(e) subject to Sections 2.4 and 4.7 hereof, all Distributions with
respect to any Pledged Interests; and
(f) all other proceeds of any of the foregoing. For purposes of this
Pledge and Security Agreement, "proceeds" includes, without limitation,
whatever is receivable or received when Collateral or proceeds are sold,
collected, exchanged, converted or otherwise disposed of, whether such
disposition is voluntary or involuntary.
SECTION 2.2 Security for Secured Obligations. This Pledge and Security
Agreement secures the full and prompt payment when due of all sums now or
hereafter payable by Pledgor, and timely performance of all obligations of
Pledgor, now or hereafter existing, under the Guaranty and this Pledge and
Security Agreement (the "Secured Obligations").
SECTION 2.3 [Intentionally omitted]
SECTION 2.4 Distributions. In the event that any Distribution is to be
paid on or with respect to the Pledged Interests at a time when no Event of
Default has occurred and is continuing, such Distribution shall be paid directly
to Pledgor; provided that Pledgor shall hold such Distribution in trust and
promptly, and in no event more than three (3) Business Days after receipt
thereof by Pledgor, pay such Distribution to Pledgee in an amount equal to: (a)
the amount of interest (the "Interest Amount") that has accrued since the date
of the immediately preceding Distribution (or, in the case of the first such
Distribution, since the date of this Pledge
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and Security Agreement) to the date of such Distribution at the interest rate
provided in the note evidencing the Loan, as such interest rate may change from
time to time, on a principal amount equal to the Pledge Amount, as such Pledge
Amount may change from time to time pursuant to this Pledge and Security
Agreement; and (b) if any such Distribution is in an amount less than such
Interest Amount, any such deficiency shall accumulate (with interest thereon at
the interest rate, if any, provided in the note evidencing the Loan) for
purposes of this Section 2.4 and the amount of the next Distribution (and, if
necessary, subsequent Distributions) to be paid to Pledgee shall include and be
applied first to such deficiency (and any accrued interest thereon), until such
deficiency (and all accrued interest thereon) has been paid in full, before
payment of any new Interest Amount. Unless and until an Event of Default shall
have occurred and be continuing, Pledgor shall be entitled to receive, retain
and apply Distributions in excess of the amount of the Interest Amount plus any
such accumulated deficiency (and accrued interest thereon) free and clear of the
lien and security interest of this Pledge and Security Agreement and shall not
be obligated to pay or invest such amounts to or in any Person. Any such
Distributions paid to Pledgee shall be applied by Pledgee to pay accrued and
unpaid interest on the Loan and shall be deemed to be a contribution by the
Prime Partner(s) to the capital of Borrower.
SECTION 2.5 Continuing Security Interest; Transfer of Note. This Pledge
and Security Agreement shall create a continuing security interest in the
Collateral and shall:
(a) remain in full force and effect until payment in full or other
satisfaction in full of all Secured Obligations;
(b) inure to the benefit of and be binding upon the Pledgor and its
successors and assigns; and
(c) inure to the benefit of and be binding upon Pledgee and its
successors and assigns.
Without limiting the foregoing clause (c), Pledgee may assign or otherwise
transfer (in whole or in part) any of the Loan Documents held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits and subject to all of the obligations thereafter accruing in respect
thereof under any Loan Document or otherwise; provided that no such assignment
shall relieve Pledgee of any obligation thereunder accruing prior to such
assignment. Upon the payment or other satisfaction in full of all Secured
Obligations, the security interest granted herein shall terminate and all rights
to the Collateral shall revert to Pledgor. Upon any such termination (whether in
whole or in part), Pledgee will, at Pledgor's sole expense, deliver to Pledgor,
all documents, chattel paper, agreements, certificates, notes and instruments
representing, constituting, or evidencing all Pledged Interests, together with
all other Collateral then held by Pledgee hereunder, and execute and deliver to
Pledgor, at Pledgor's sole expense, such documents as Pledgor shall reasonably
request to evidence such termination.
SECTION 2.6 Security Interest Absolute. All rights of Pledgee and the
security interests granted to Pledgee hereunder, and all obligations of Pledgor
hereunder, shall be absolute and unconditional, irrespective of:
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(a) any lack of validity or enforceability of any of the Loan
Documents or instruments relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term, including the applicable rate of interest, of, all or any of
the Borrower Obligations, or any other renewal, extension, amendment,
modification or waiver of or any consent to departure from any of the Loan
Documents;
(c) any act or omission of Pledgee (or other holder of the Loan
Documents) of any nature whatsoever;
(d) with respect to Pledgor, Borrower, or any other Person, (i) any
failure to obtain required authorization by all necessary corporate,
partnership or other action relating to the incurrence of the Borrower
Obligations or the Secured Obligations or to the execution, delivery or
performance of any of the Loan Documents, or (ii) any violation of any
provision of any of the articles of incorporation, by-laws, partnership
agreement or any other document, instrument or agreement occasioned by the
incurrence of the Borrower Obligations or the Secured Obligations, by the
execution, delivery, or performance of any of the Loan Documents, or by
any failure of same to have been duty authorized by all necessary
corporate or other action;
(e) any release, amendment, waiver, modification, extension or
renewal of or consent to departure from, any guaranty given to secure all
or any of the Borrower Obligations or the Secured Obligations (other than
a release of the Guaranty); or forbearance of any other action or inaction
under or in respect of any of the Loan Documents;
(f) any exchange, release, forbearance or surrender of or any other
action or inaction with respect to any collateral (including, without
limitation, the Collateral, other than a release of all of the Collateral
which would result in a termination of the Guaranty under Section 8(a)
thereof at any time and from time to time now or hereafter securing any or
all of the Borrower Obligations or the Secured Obligations or the Loan
Documents or the liability of Pledgor, Borrower, or any other Person in
respect of all or any of the Loan Documents, or any failure to perfect or
continue as perfected any security interest or other lien with respect to
any such collateral, or any loss or destruction of any such collateral, or
any matter impairing the value of such collateral as security for all or
any of the Borrower Obligations, or the liability of Pledgor, Borrower, or
any other Person, in respect of all or any of the Borrower Obligations or
Loan Documents;
(g) any guaranty now or hereafter executed by Pledgor or anyone else
or any recovery under any such other guaranty;
(h) any waiver of or assertion or enforcement or failure or refusal
to assert or enforce, in whole or in part, any of the terms and provisions
of the Loan Documents, or any claim, cause of action, right or remedy
which Pledgee may, at any time, have under any of the Loan Documents or
with respect to any guaranty or any security which may be held by Pledgee
(or other holder of the Loan Documents) with respect to the Loan;
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(i) the failure to give Pledgor any notice whatsoever, other than
any notice which Pledgee is expressly required to give pursuant to any
provision of this Pledge and Security Agreement;
(j) exculpatory provisions in any of the Loan Documents (other than
in the Guaranty or in this Pledge and Security Agreement) limiting
recourse to property encumbered by the Loan Documents or to any other
security or limiting rights to enforce a deficiency judgment against the
Borrower;
(k) any sale, assignment, conveyance, merger or other transfer,
voluntary or involuntary (whether by operation of law or otherwise), of
all or any part of any of the Borrower's interest in any property securing
the Loan or the occurrence of any such sale, assignment, conveyance,
merger or other voluntary or involuntary transfer which results in Pledgor
becoming the Borrower under any of the Loan Documents; provided, however,
that any such sale, assignment, conveyance, merger or other transfer shall
be subject to the limitations set forth in the Loan Documents;
(l) any sale, assignment, conveyance, merger or other transfer,
voluntary or involuntary (whether by operation of law or otherwise), of
all or any part of the interests of Pledgee (or other holder of the Loan
Documents) in this Pledge and Security Agreement or any of the other Loan
Documents;
(m) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation, or the like, of Pledgor, Borrower
or any other Person, whether or not Pledgor shall have notice or knowledge
of any of the foregoing;
(n) any recovery (other than payment in full of all of the Secured
Obligations which would result in a termination of the Guaranty under
Section 8(a) thereof) as a result of the exercise by Pledgee (or other
holder of the Loan Documents) of any of its rights or remedies under the
Loan Documents, including any foreclosure thereof; or
(o) any other fact, circumstance or matter of any nature whatsoever
(other than payment in full of all of the Secured Obligations which would
result in a termination of the Guaranty under Section 8(a) thereof) that
might otherwise constitute a defense available to, or a discharge of, or
might otherwise operate to release or affect the obligations of, Pledgor,
Borrower, or any other Person liable to Pledgee (or other holder of the
Loan Documents) in respect of any of the Borrower Obligations, the Secured
Obligations or the Loan Documents.
SECTION 2.7 Dilution of Pledged Interests; Reallocation; Lock-Up
Provisions
(a) The Common Units now or hereafter constituting a part of the
Pledged Interests and certain other Common Units are subject to Dilution
as set forth in the Partnership Agreement and in accordance with the
Sharing Agreement which provides for the allocation of Dilution among the
parties thereto, and the pledge and security interest granted hereby is
expressly subject to any such Dilution rights. In the event of any
Dilution under the Partnership Agreement, a portion of the Dilution Amount
shall be deemed allocated to and thereupon subtracted from the Pledge
Amount, and the number
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of Common Units then constituting a part of the Pledged Interests shall be
reduced, in accordance with the formula set forth on Exhibit C attached
hereto.
(b) Simultaneously with the execution and delivery of this Pledge
and Security Agreement, Pledgee or its Affiliates have executed and
delivered certain Pledge and Security Agreements (the "Pledgee-Affiliated
Security Agreements"), in form substantially similar to this Pledge and
Security Agreement, for the purpose of securing limited recourse
guaranties (the "Pledge-Affiliated Guaranties") by Pledgee or such
Affiliates of loans made to Huntley Development Limited Partnership, an
Illinois limited partnership, and 000 X. Xxxxxxxxx Venture, an Illinois
general partnership (the "Pledgee-Affiliated Secured Loans"). Pursuant to
the Pledgee-Affiliated Security Agreements, Pledgee or its Affiliates have
pledged Common Units to secure the Pledgee-Affiliated Guaranties. If, as a
result of any Dilution, any such Common Units pledged by Pledgee or its
Affiliates are assigned to the Partnership, then, in order to replace the
Common Units so assigned to the Partnership by Pledgee or its Affiliates,
Pledgor agrees that Pledgee and its Affiliates shall have the right to
reallocate the same number (as are so assigned to the Partnership by
Pledgee and its Affiliates) of Common Units pledged under the Prime
Pledges to the Prime Pledges, if any, securing the Pledgee-Affiliated
Secured Loans from the Prime Pledges securing loans other than the
Pledgee-Affiliated Secured Loans, pro rata (subject to certain limitations
set forth on Exhibit A-1). In such event, Pledgee shall deliver to Pledgor
a new Exhibit A-1 (as described in subparagraph 2.7(c) below) reflecting
such reallocation. Immediately upon the delivery by Pledgee to Pledgor of
such new Exhibit A-1, the Common Units constituting a part of the Pledged
Interests and the Collateral under this Pledge and Security Agreement
shall be the number of Common Units as indicated on such new Exhibit A-1
as being pledged by Pledgor pursuant to this Pledge and Security
Agreement, and Exhibit A hereto shall be adjusted accordingly. In the
event of any such reallocation, Pledgor shall promptly deliver to Pledgee
such financing statements and such other documents and instruments as may
reasonably be required by Pledgee in connection with such reallocation,
and, to the extent not previously delivered, a limited recourse guaranty
and pledge and security agreement.
(c) Simultaneously with the execution and delivery of this Pledge
and Security Agreement, Pledgor and Affiliates of Pledgor have executed
and delivered, or may hereafter execute and deliver, other Pledge and
Security Agreements, in form substantially similar to this Pledge and
Security Agreement, for the purpose of securing guaranties by Pledgor and
such Affiliates of loans which Pledgee and Affiliates of Pledgee have made
to other Affiliates of Pledgor or with respect to which Pledgee and
Affiliates of Pledgee have provided credit support/enhancement. Such other
Pledge and Security Agreements, together with this Pledge and Security
Agreement, are referred to herein collectively as the "Prime Pledges". A
schedule of all such Prime Pledges is attached hereto as Exhibit A-1.
Exhibit A-1 specifies, inter alia, the Initial Pledge Amounts, the number
of Common Units, and the percentage of the total Common Units constituting
Pledged Interests under all of the Prime Pledges (as defined respectively
therein), which are pledged under each respective Prime Pledge as of the
date hereof. Pledgee and its Affiliates shall have the right on a single
occasion at any time during the period of eighteen (18) months after the
date hereof to substitute a new Exhibit A-1 to all
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the Prime Pledges, which reallocates the total of the Pledge Amounts among
the Prime Pledges (subject to certain limitations as set forth on Exhibit
A-1), with a reallocation of the total Common Units constituting Pledged
Interests among such Prime Pledges in the same proportion as the
reallocation of the Pledge Amounts. Such reallocation may result in an
increase or a decrease, or in no change, to the Common Units constituting
Pledged Interests hereunder. Immediately upon the delivery by Pledgee to
Pledgor of such new Exhibit A-1, the Common Units constituting a part of
the Pledged Interests and the Collateral under this Pledge and Security
Agreement shall be the number of Common Units in the Partnership as
indicated on such new Exhibit A-1 and Exhibit A hereto shall be adjusted
accordingly. In the event of any such reallocation, Pledgor shall promptly
deliver to Pledgee amended financing statements and such other documents
and instruments as may reasonably be required by Pledgee in connection
with such reallocation.
(d) Under and pursuant to the Partnership Agreement and the Lock-Up
Letter, Pledgor's Common Units and Common Stock constituting Pledged
Interests hereunder will be subject to restrictions upon transfer thereof,
and the pledge and security interest granted hereby is expressly subject
to any such transfer restrictions on Pledged Interests.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Incorporation of Representations and Warranties. The
representations and warranties set forth in Section B of Schedule I to Exhibit B
attached hereto are incorporated herein by this reference, and shall be deemed
to be made as of the date hereof and (except for paragraphs 5, 6 and 7 of
Section B of Schedule 1 to Exhibit B as of the date of each pledge and delivery
hereunder.
SECTION 3.2 Additional Representations and Warranties. Pledgor represents
and warrants to Pledgee, as of the date hereof and as of the date of each pledge
and delivery hereunder, in each case only with respect to the Collateral then
being pledged:
(a) Pledgor is the sole record, legal and beneficial owner of, and
has good and marketable title to (and has full right and authority to
pledge and assign), the Collateral, free and clear of all liens, security
interests, options, or other charges or encumbrances, except as described
in Section 2.7.
(b) The delivery of the Collateral to Pledgee, together with the
filing of the Uniform Commercial Code financing statements described in
the following sentence, is effective to create a valid, perfected,
continuing and enforceable first priority security interest in such
Collateral and all proceeds thereof, securing the Secured Obligations. All
Uniform Commercial Code financing statements necessary to perfect the
security interest of Pledgee in and to all or part of the Collateral have
been filed in the appropriate governmental office or executed and
delivered to Pledgee for filing (or, in the case of a reallocation as
provided in Section 2.7, will be so executed and delivered within five
Business Days after Pledgor's receipt of the new Exhibit A-1 under Section
2.7 above),
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and Pledgor has directed (or, in the case of a reallocation as provided in
Section 2.7, will so direct within five Business Days after Pledgor's
receipt of the new Exhibit A-1 under Section 2.7 above) the Partnership to
register the pledge to Pledgee of the Common Units then being pledged
hereunder.
(c) In the case of any Pledged Interests consisting of Common Stock,
all of such Pledged Interests are duly authorized and validly issued,
fully paid, and non-assessable and are not subject to any shareholder
agreements, voting agreements, voting trusts, trust deeds, irrevocable
proxies, or any other similar agreements or instruments, except as
contemplated by this Pledge and Security Agreement, and there are no
outstanding options, warrants or other agreements with respect thereto, in
each case, except as described in Section 2.7.
(d) No authorization, approval, or other action by, and no notice to
or filing with, any governmental authority, regulatory body or any other
Person (other than the filing contemplated by Section 3.2(b) hereof) is
required by Pledgor for the pledge by Pledgor of any Collateral pursuant
to this Pledge and Security Agreement or for the execution, delivery, and
performance of this Pledge and Security Agreement by Pledgor.
ARTICLE 4
COVENANTS
SECTION 4.1 Incorporation of Covenants. The covenants set forth in Section
C of Schedule 1 to Exhibit B attached hereto are incorporated herein by this
reference.
SECTION 4.2 Restrictions on Encumbrances; Warranty of Title. Pledgor will
not hereafter sell, assign, dispose of, transfer, pledge, encumber, or grant any
option or warrant with respect to, the Collateral (subject to the provisions of
Section 2.7). Subject to Section 2.7, Pledgor will warrant and defend the right,
title and interest in and to the Collateral, and Pledgee's interest in and to
the Collateral, against the claims and demands of all Persons whomsoever.
SECTION 4.3 Stock Powers and Instruments of Transfer. Pledgor shall (a)
upon the execution and delivery of this Pledge and Security Agreement, and
simultaneously with the delivery by Pledgor of any other or additional
Collateral as may be required hereunder (or, in the case of a reallocation
pursuant to Section 2.7, within five Business Days after Pledgor's receipt of
the new Exhibit A-1 under Section 2.7 above), and after any Exchange, promptly
deliver to Pledgee, such stock powers, stock certificates, instruments,
certificates, opinions of counsel, and similar documents, reasonably
satisfactory in form and substance to Pledgee, with respect to the Pledged
Interests as Pledgee may reasonably require in order to accomplish the purposes
of this Pledge and Security Agreement, and (b) from time to time upon the
request of Pledgee after the occurrence of any Event of Default relating to any
such Pledged Interests, promptly take whatever action is reasonably requested by
Pledgee in order to accomplish the purposes of this Pledge and Security
Agreement.
SECTION 4.4 Continuous Pledge. Subject to Sections 2.4, 2.5, 2.7, 4.7 and
4.16, Pledgor will, at all times, keep pledged to Pledgee pursuant hereto all
Pledged Interests and all
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other Collateral and other securities, instruments, proceeds, and rights from
time to time received by or distributable to Pledgor in respect of any
Collateral.
SECTION 4.5 Exchange Rights. Without the prior written consent of Pledgee,
Pledgor shall not exercise any of its Exchange Rights in respect of the
Collateral.
SECTION 4.6 Further Assurances. Pledgor agrees that at any time, and from
time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments, including, without limitation, financing
statements, and take all further action, that may be reasonably necessary or
desirable, or that Pledgee may reasonably request, in order to perfect,
maintain, preserve, and protect the first perfected priority lien and security
interest (subject to the provisions of Section 2.7) granted or purported to be
granted hereby in compliance with applicable law and/or to enable Pledgee to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 4.7 Distributions. Unless and until an Event of Default shall have
occurred and be continuing, Pledgor shall be entitled to receive, retain and
apply all Distributions, in accordance with Section 2.4 above. Upon the
occurrence and during the continuance of an Event of Default (i) the rights of
Pledgor to all Distributions shall cease and all such rights shall thereupon
become vested in Pledgee which shall exclusively be entitled to receive all
Distributions, subject to application in accordance with Section 6.4 below, (ii)
Pledgor agrees to deliver to Pledgee any and all Distributions received by
Pledgor, (iii) any and all Distributions received and held by Pledgor which
Pledgor is obligated to deliver to Pledgee shall, until delivery thereof, be
held by Pledgor separate and apart from its other property in trust for Pledgee,
and (iv) Pledgee shall have the right to notify the Pledged Interest Issuer of
the vesting in Pledgee of such rights to receive Distributions as aforesaid and
Pledgor hereby irrevocably consents to any such notification.
SECTION 4.8 [Intentionally omitted]
SECTION 4.9 Other Parties. Pledgor will not, without the prior written
consent of Pledgee, waive or release any obligation of any party with respect to
the Collateral or enter into any agreement amending or supplementing the
Collateral.
SECTION 4.10 [Intentionally omitted]
SECTION 4.11 Additional Undertakings. Pledgor will not, without the prior
written consent of Pledgee, take or omit to take an action the taking or the
omission of which would result in any impairment or alteration of any obligation
of the maker of any instrument constituting Collateral.
SECTION 4.12 Place of Business. If Pledgor shall change its principal
place of business or its chief executive office or its name or remove the
records concerning the Collateral from its principal place of business, Pledgor
shall give to Pledgee thirty (30) days advance notice thereof and, in connection
therewith, take such action, reasonably satisfactory to Pledgee, as may be
necessary to maintain the security interest of Pledgee in the Collateral
hereunder at all times fully perfected and in full force and effect.
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SECTION 4.13 Shareholder Agreements. Pledgor shall not, with respect to
any Pledged Interests that are now or hereafter pledged to Pledgee, enter into
any shareholder agreements, voting agreements, voting trusts, trust deeds,
irrevocable proxies, or any other similar agreements or instruments, except this
Pledge and Security Agreement, the Partnership Agreement, the Lock-Up Letter and
the Registration Rights Agreement.
SECTION 4.14 Payment of Taxes, Etc. Pledgor shall pay promptly when due
all taxes, assessments, charges, encumbrances and liens now or hereafter imposed
upon any Collateral, and shall discharge or cause to be discharged as a lien of
record by payment or filing of any bond required by law, or otherwise, any (i)
judgment liens or (ii) tax or other similar involuntary liens (except liens
created by Pledgee) filed or otherwise asserted against the Collateral or any
part thereof, and any proceedings for the enforcement thereof, within fifteen
(15) days after Pledgor has notice thereof; provided, however, that Pledgor
shall have the right to contest in good faith any such taxes, assessments,
charges, encumbrances and liens, including any such judgment liens or tax liens
or other such involuntary liens (and during the continuation of such contest
need not pay or discharge any such matters) upon deposit with Pledgee, within
such fifteen (15) day period, of a cash deposit, an irrevocable letter of credit
or a surety bond or other security reasonably satisfactory to Pledgee, in an
amount sufficient to pay such lien, any accrued interest thereon, and any costs
and expenses in connection therewith.
SECTION 4.15 [Intentionally omitted].
SECTION 4.16 Collateral Value.
(a) So long as this Pledge and Security Agreement remains in full
force and effect, and subject to subparagraph (d) below, if as of the
first Business Day of any calendar quarter beginning April 1, 1995,
Pledgee shall determine, after receipt of the calculation of Market Value
provided for in subparagraph (c) below, that the aggregate Market Value of
the Pledged Interests and the fair market value of any other Collateral
theretofore pledged by Pledgor under, this Section 4.16 and then
constituting a part of the Collateral hereunder, is less than 90% of the
Pledge Amount, then Pledgor shall promptly pledge and deliver to Pledgee
additional unencumbered Common Units and/or unencumbered Common Stock
(including certificates and transfer instruments relating thereto), and/or
other collateral acceptable to Pledgee, such that, after giving effect to
the pledge of such additional Common Units and/or Common Stock and/or
other collateral, all Pledged Interests and other Collateral pledged under
this Pledge and Security Agreement and then constituting a part of the
Collateral shall have a fair market value (valuing Pledged Interests at
Market Value) equal to or greater than the Pledge Amount. Such additional
Common Units and/or Common Stock shall constitute Pledged Interests and,
together with any other collateral pledged hereunder, shall be deemed to
be part of the Collateral hereunder.
(b) So long as this Pledge and Security Agreement remains in full
force and effect, and subject to subparagraph (d) below, if as of the
first Business Day of any calendar quarter beginning April 1, 1995,
Pledgee shall determine, after receipt of the calculation of Market Value
provided for in subparagraph (c) below, that the aggregate of the Market
Value of the Pledged Interests and the fair market value of any other
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Collateral theretofore pledged by Pledgor under this Section 4.16 and then
constituting a part of the Collateral hereunder, is more than 110% of the
Pledge Amount, then Pledgee shall promptly release and deliver to Pledgor
Common Units and/or Common Stock and/or other Collateral (as Pledgee shall
determine in its sole discretion), such that, after giving effect to such
release and delivery, the aggregate of the Market Value of the remaining
Pledged Interests and the fair market value of any other Collateral
theretofore pledged by Pledgor under this Pledge and Security Agreement
and then constituting a part of the Collateral hereunder, shall be as
close as possible to, but in no event less than, 110% of the Pledge
Amount.
(c) Within (i) forty-five (45) days, so long as the adjustment
contemplated by subparagraph (d) below is applicable, and (ii) within five
(5) Business Days, if such adjustment contemplated by subparagraph (d)
below is no longer applicable, after the first Business Day of each
calendar quarter beginning April 1, 1995, and at such other times as the
Pledgee may request, Pledgor shall deliver to Pledgee a calculation, made
in good faith and certified as such by the Chief Financial Officer of
General Partner, or another officer of General Partner reasonably
acceptable to Pledgee, of the Market Value of the Pledged Interests
(including the adjustment contemplated by subparagraph (d) below, if
applicable) and the fair market value of any other collateral pledged by
Pledgor under this Section 4.16 and then constituting part of the
Collateral hereunder, calculated as of the first Business Day of the
applicable calendar quarter in accordance with the provisions of this
Pledge and Security Agreement.
(d) Notwithstanding anything in this Pledge and Security Agreement
to the contrary, until the earlier of (i) the Preferential Distribution
Lapse Date, or (ii) as to any Common Unit then constituting Pledged
Interests, the Exchange of such Common Unit to Common Stock, at which time
the definition of "Market Value" in Article I of this Pledge and Security
Agreement shall control, the Market Value of the Pledged Interests shall
be deemed to be (A) the amount determined in accordance with the
definition of "Market Value" in Article I of this Pledge and Security
Agreement, minus (B) an amount equal to such "Market Value" (determined in
accordance with Article (I) multiplied by the Discount, but in no event
shall the result be less than zero.
ARTICLE 5
CERTAIN RIGHTS OF PLEDGEE
SECTION 5.1 Pledgee Appointed Attorney-in-Fact. Pledgor hereby irrevocably
appoints Pledgee as Pledgor's attorney-in-fact, coupled with an interest, with
full power of substitution, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, after the occurrence and during
the continuance of an Event of Default, in Pledgee's discretion, to take any
action and to execute any instrument which Pledgee may reasonably deem necessary
or advisable to accomplish the purposes of this Pledge and Security Agreement,
including, without limitation:
(a) to ask, demand, collect, xxx for, recover, receive and give
receipts for moneys due and to become due under or in respect of any of
the Collateral;
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(b) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with clause (a)
above;
(c) to file any claims or commence, maintain or discontinue any
action or institute any proceedings which Pledgee may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of Pledgee with respect to any of the Collateral;
(d) to execute and deliver any instrument required to be executed
and delivered by Pledgor under Sections 4.3 and 4.6; and
(e) to do all other things necessary and proper by Pledgor to
protect, preserve, and permit Pledgee to realize upon, the Collateral, and
the other rights contemplated by the Pledge and Security Agreement.
SECTION 5.2 Pledgee Has No Duty. The powers conferred on Pledgee hereunder
are solely to protect its interest in the Collateral and shall not impose any
duty on it to exercise any such powers. Pledgee shall have no duty as to any
Collateral or responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Interests, whether or not Pledgee has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
execution and delivery of this Pledge and Security Agreement and the Guaranty is
not intended to be, nor shall they be construed to be, the formation of a
partnership or joint venture between Pledgor and Pledgee.
ARTICLE 6
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default shall have occurred
and be continuing Pledgee may exercise in respect of the Collateral, all rights
and remedies provided for herein or otherwise available to Pledgee, including
without limitation, all of the rights and remedies of a secured party on default
under the Code and also may, without notice except as specified below:
(a) sell such Collateral or any part thereof in one or more parcels
at public or private sale or broker's board, at any of Pledgee's offices
or elsewhere, for cash or other property, on credit or for future
delivery, and upon such other terms as may be commercially reasonable;
Pledgor agrees that Pledgee shall be entitled to bid for or purchase any
or all of the Collateral at any such sale; Pledgor agrees that, to the
extent notice of sale shall be required by law, at least ten (10) 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; Pledgee shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given; Pledgee 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;
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(b) notify the parties obligated on any of such Collateral to make
payment to Pledgee of any amount due or to become due thereunder
(including, without limitation, any Distributions);
(c) enforce collection of any of such Collateral by suit or
otherwise;
(d) endorse any checks, drafts, or other writings in Pledgor's name
to allow collection of such Collateral;
(e) take control of any proceeds of such Collateral; and
(f) subject to Section 2.7(d), upon disposition of the Collateral as
provided in Section 6.1(a), execute (in the name, place and stead of
Pledgor) endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of such Collateral.
SECTION 6.2 Securities Laws. If Pledgee shall determine, subject to
Section 2.7(d), to exercise the right to sell all or any of the Collateral at
any time pursuant to Section 6.1, Pledgor agrees that, upon request of Pledgee,
Pledgor will, at its own expense:
(a) exercise its rights under the Registration Rights Agreement;
(b) use its best efforts to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by Pledgee; and
(c) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid
and binding and in compliance with applicable law.
Pledgor acknowledges the impossibility of ascertaining the amount of damages
that would be suffered by Pledgee by reason of the failure by Pledgor to perform
any of the covenants contained in this Section and, consequently, agrees that,
if Pledgor shall fail to perform any of such covenants, at Pledgee's election,
Pledgee shall have the right to have each covenant of Pledgor in this Section
6.2 specifically enforced against Pledgor, and Pledgor waives and agrees not to
assert any defenses against an action for specific performance of such
covenants.
Pledgor further acknowledges that Pledgee may be compelled to resort to
one or more private sales to a restricted group of purchasers who shall be
obliged to agree, among other things, to acquire such Collateral for their own
account, for investment and not with a view to the distribution or resale
thereof. If, at any time of any sale of Collateral, which sale is then subject
to the applicable securities law, as from time to time amended (the "Securities
Act"), the same or any part thereof to be sold shall not, for any reason
whatsoever, be effectively registered under the Securities Act, Pledgee is
hereby authorized to sell such Collateral or such part thereof by private sale
in any commercially reasonable manner and under any commercially reasonable
circumstances as Pledgee may deem necessary or advisable in order that such sale
may legally be effected without registration. Pledgor acknowledges that private
sales so made may be at prices and on other terms less favorable to the seller
than if such Collateral were sold at public sales, and agrees that Pledgee shall
not have an obligation to delay the sale of any such Collateral for
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the period of time necessary to permit the issuer of such Collateral, even if
such issuer would agree, to register such Collateral for public sale under the
Securities Act. Pledgor agrees that private sales made under the foregoing
circumstances shall not, because so made, be deemed to have been made in a
commercially unreasonable manner.
SECTION 6.3 Indemnity and Expenses. Pledgor hereby indemnifies and holds
harmless Pledgee and Pledgee's officers, directors, employees, agents,
representatives, successors and assigns, from and against any and all claims,
losses, and liabilities growing out of or resulting from this Pledge and
Security Agreement (including, without limitation, enforcement of this Pledge
and Security Agreement, and any underwriting fees or expenses in connection with
registration or sale of Collateral), except for claims, losses, or liabilities
resulting from Pledgee's willful misconduct or gross negligence. Upon demand,
Pledgor will pay to Pledgee the amount of any and all expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which Pledgee may incur in connection with:
(a) the enforcement of this Pledge and Security Agreement;
(b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of Pledgee
hereunder; or
(d) the failure by Pledgor to perform or observe any of the
provisions hereof.
SECTION 6.4 Application of Proceeds. Any and all amounts actually received
by Pledgee hereunder in respect of Collateral shall be applied in the order set
forth below (to the extent permitted by applicable law):
(a) first, to the payment of all costs, expenses, liabilities and
advances made or incurred by Pledgee in performing or enforcing any of the
provisions hereof or in protecting the liens of this Pledge and Security
Agreement or the security afforded hereby and to the payment of the fees
and other expenses, including, without limitation, reasonable attorney's
fees and disbursements, of Pledgee to the extent that they have not been
paid or reimbursed;
(b) second, to the extent proceeds remain after the application
pursuant to the preceding clause (a), an amount equal to the outstanding
Secured Obligations shall be paid to Pledgee; and
(c) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (a) and (b), and the payment in full of
all Secured Obligations, to Pledgor, its successors or assigns, or such
other Person as may be entitled thereto by law or as a court of competent
jurisdiction may otherwise direct.
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ARTICLE 7
MISCELLANEOUS PROVISIONS
SECTION 7.1 Amendments. No amendment to or waiver of any provision of this
Pledge and Security Agreement, nor consent to any departure by Pledgor herefrom,
shall in any event be effective unless the same shall be in writing and signed
by Pledgee, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given.
SECTION 7.2 Protection of Collateral. Pledgee may from time to time, at
its option, perform any act which Pledgor agrees hereunder to perform and which
Pledgor shall fail to perform within ten (10) Business Days after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default).
SECTION 7.3 Notices. Any notice or other communication required or
permitted hereunder shall be (a) in writing and shall be deemed to have been
duly given (A) when received, if delivered in person, (B) five (5) days after
deposit in a regularly maintained receptacle of the United States mail as first
class mail, postage prepaid, (C) the Business Day after notice is sent for
overnight delivery by nationally recognized overnight courier service, or (D) on
the day on which the party to whom such notice is addressed refuses delivery by
mail or by nationally recognized courier service , and (b) addressed as follows:
To Pledgee: c/x Xxxxxx Financial Services, Inc.
000 Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Real Estate Investment Group
With copies to: Xxxxxx Corporation
Legal Department, C-3
Xxx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attn: General Counsel
and
KFC Portfolio Corp.
c/x Xxxxxx Financial Services, Inc.
000 Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Legal Department
Real Estate Counsel
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To Pledgor: c/o The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
With a copy to: The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
or to any such other address as any party hereto shall designate in a written
notice to the other parties hereto.
SECTION 7.4 Caption. Article and section captions used in this Pledge and
Security Agreement are for convenience of reference only, and shall not affect
the construction of this Pledge and Security Agreement.
SECTION 7.5 Governing Law; Submission to Jurisdiction. This Pledge and
Security Agreement shall be governed by, and construed in accordance with, the
laws of the State of Illinois without regard to principles of conflict of laws.
Pledgor and Pledgee hereby waive any plea of jurisdiction or venue as not being
a resident of Xxxx County, Illinois and hereby specifically authorize any action
brought upon this Pledge and Security Agreement to be instituted and prosecuted
in either the Circuit Court of Xxxx County, Illinois or in the United States
District Court for the Northern District of Illinois, at the election of the
party bringing the action. Pledgor and Pledgee hereby irrevocably authorize
service of process to be made upon it in the manner provided in Section 7.3
above, in any action which may be instituted against it arising out of or
relating to this Pledge and Security Agreement.
SECTION 7.6 WAIVER OF JURY TRIAL. PLEDGOR WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM FILED BY ANY PARTY, RELATING DIRECTLY OR INDIRECTLY TO THIS PLEDGE
AND SECURITY AGREEMENT, THE GUARANTY OR THE SECURED OBLIGATIONS.
SECTION 7.7 Severability. Wherever possible each provision of this Pledge
and Security Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Pledge and Security
Agreement shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Pledge and Security Agreement.
SECTION 7.8 Limited Recourse. Notwithstanding anything to the contrary
contained herein or in the Guaranty, except as otherwise provided in this
Section 7.8, neither Pledgor nor any of its shareholders, officers, directors,
partners, employees, agents or other representatives ("Other Persons") shall
have any personal liability for the Secured Obligations under this Pledge
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and Security Agreement, or for the obligation to observe, perform or discharge
any of the terms, covenants or conditions contained herein or in the Guaranty,
and, except as otherwise provided in this Section 7.8, (a) no attachment,
execution, writ or other process shall be sought and no judicial proceeding
shall be initiated by or on behalf of Pledgee against Pledgor or any Other
Person as a result of a breach or default under this Pledge and Security
Agreement or the Guaranty, except to the extent that such attachment, execution,
writ or judicial proceeding shall be necessary to enforce any of the rights,
remedies or recourses of Pledgee against or with reference to the Collateral,
and (b) in the event that an suit is brought hereunder or under the Guaranty,
any judgment obtained in or as a result of such suit shall be enforceable and/or
enforced solely against the Collateral; provided, however, that nothing herein
contained shall be construed to: (i) be a release or impairment of Pledgor's
obligations hereunder or under the Guaranty, (ii) prevent Pledgee from
exercising and enforcing, consistent with the provisions of this Section 7.8,
any other remedy allowed at law or in equity or by statute or by the terms
hereof or of the Guaranty or (iii) prevent Pledgee from recovering from Pledgor
(or any such Other Person), or limit Pledgee's recourse against Pledgor (or any
such Other Person) for, any funds, damages or costs (including, without
limitation, reasonable legal expenses) incurred by Pledgee as a result of any
willful act or omission in bad faith, any fraudulent act or omission, or any
breach of any of the following sections of this Pledge and Security Agreement:
Section 2.4, the first sentence of Section 4.2, Section 4.3(a), Section 4.4,
Section 4.5 and Section 4.7(ii). Nothing in this Section 7.8 shall be deemed to
increase the liability of any such Other Person beyond that which any such Other
Person may have under the partnership agreement of Pledgor or under law.
SECTION 7.9 Acknowledgement and Consent. Pledgor and Pledgee hereby
consent to the execution and delivery by the Partnership and the General Partner
of an acknowledgement and consent of and to this Pledge and Security Agreement
substantially in the form of Exhibit D attached hereto.
SECTION 7.10 Credit Support/Enhancement. If Pledgee has provided credit
support/enhancement with respect to all or a part of the Loan, Pledgor agrees
that it is guaranteeing such Loan and pledging the Collateral (as herein
defined) for the benefit of Pledgee. Pledgor and Pledgee agree that
Distributions paid on or with respect to the Pledged interests and paid to
Pledgee under Section 2.4, and any proceeds of the Collateral received by
Pledgee, shall be paid and applied by Pledgee to the payment or reimbursement of
interest, and/or the payment of principal, as applicable, on such Loan in the
manner and to the extent provided in Section 2.4 and Section 6.4, and as
provided in Exhibit A, if applicable, notwithstanding that Pledgee may not be
the holder of the Loan Documents.
[Signature Page Follows]
-22-
IN WITNESS WHEREOF, Pledgor and Pledgee have duly executed and delivered this
Pledge and Security Agreement as of the day and year first above written.
PRIME GROUP II, L.P., an Illinois limited
partnership
By: PGLP, Inc., an Illinois corporation
By: /s/ Xxxxxxx X. Xxxxxxx
Name: Xxxxxxx X. Xxxxxxx
Title: President
XXXXXX INVESTORS LIFE INSURANCE COMPANY,
an Illinois insurance corporation
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: Authorized Signatory
-23-
EXHIBIT A
LAKE XXXXXX(1)
Project: The Island on Lake Xxxxxx
Lender: Xxxxxx Investors Life Insurance Company ("KILICO"). KILICO
has provided credit support/enhancement with respect to the
Loan.
Borrower: The Island on Lake Xxxxxx, Ltd., a Texas limited
partnership
Prime (1) The Lake Xxxxxx Island, Ltd., a Texas limited
Partner(s): partnership, general partner (50%) [comprised of The Prime
Group, Inc., general partner (94%) and Prime International,
Inc. (6%), limited partner] and (2) Prime International,
Inc., limited partner (50%)
Loan: The Loan made pursuant to the Loan Agreement between
Capital Health Facilities Development Corporation and
Borrower dated 12/1/86 in connection with the $25,000,000
Capital Health Facilities Development Corporation Health
Facilities Development Revenue Bonds (The Island on Lake
Xxxxxx, Ltd. Project) Series 1986
Guaranty/ Limited Recourse Guaranty [Lake Xxxxxx] by Prime Group II,
Guarantor: L.P., an Illinois limited partnership, in favor of KELICO
Initial
Pledge
Amount: $8,723,000
Number of
Common Units
Pledged: 690,276
--------
(1) No reallocation pursuant to Section 2.7(c) permitted.
EXHIBIT A-1
[See Attached]
EXHIBIT A-1
1. DEVONSHIRE
Project: The Devonshire Senior Housing Facility, Lisle, Illinois
Lender: Xxxxxx Investors Life Insurance Company ("KILICO"). KILICO
has provided credit support/enhancement with respect to the
Loan.
Borrower: The Ponds of Pembroke Limited Partnership, an Illinois
limited partnership
Prime
Partner(s): The Prime Group, Inc. (25%), general partner
Loan: Collectively: (1) the Loan made pursuant to the Amended and
Restated Loan Agreement between the Village of Lisle and
Borrower dated 12/1/87 in connection with the $27,000,000
Village of Lisle Illinois, Multi-Family Housing Revenue
Bonds (Ashley of Lisle Project) and (2) the Loan made
pursuant to the Loan Agreement between the Village of Lisle,
Illinois and Borrower dated 8/15/91 as amended and restated
on 1/15/93 in connection with the $6,000,000 Village of
Lisle, Illinois Multi-Family Housing Revenue Bonds series
0000 (Xxxxxxxxxx Xxxxx Project)
Guaranty/ Limited Recourse Guaranty [Devonshire] by Prime Group II,
Guarantor: L.P., an Illinois limited partnership, in favor of KILICO
Initial
Pledge
Amount: $1,442,000
Number of
Common Units
Pledged: 114,110
2. HUNTLEY(1)(2)(3)
Project: Vacant land in Huntley, Illinois.
Lender: Xxxxxx Investors Life Insurance Company ("KILICO")
Borrower: Huntley Development Limited Partnership, an Illinois limited
partnership ("HDLP") and American National Bank and Trust
Company of Chicago, not personally but as Trustee under
Trust No. 109743-01, of which HDLP is the sole beneficiary
("Trust").
Prime Partner(s): (1) Huntley Development Company (1%), general partner (owned
100% by Prime International, Inc. ("PI")) and (2) PI (99%),
limited partner
Loan: Collectively: (1) the Loan evidenced by the Amended and
Restated Promissory Note dated 11/30/92 of PI to KILICO in
the stated principal amount of $25,100,000, as amended from
time to time; (2) the Loan evidenced by the Promissory Note
dated 6/13/91 of Elite Financial, Inc. ("Elite") to KILICO,
as amended from time to time, the proceeds of which were
used by Elite to make a loan to Borrower pursuant to the
Promissory Note dated as of 6/13/91 in the original
principal amount of $7,800,000; (3) the Loan evidenced by
the Promissory Note of Elite to KILICO dated 5/31/91 in the
original principal amount of $2,279,750, which Promissory
Note was modified by an Allonge to Promissory Note dated
8/1/91 increasing the stated principal amount to $2,500,000,
as further amended or modified from time to time, the
proceeds of which were used by Elite to make a loan to
Borrower pursuant to a Promissory Note dated 5/31/91 in the
original principal amount of $2,279,750, which Promissory
Note was amended by an Allonge to Promissory Note dated
8/l/91 increasing the stated principal amount to $2,500,000;
and (4) the obligation of PI to purchase from KILICO a 50%
participation interest in those certain Tax Increment
Allocation Revenue Bonds (Huntley Redevelopment Project),
Series 1 through 32, pursuant to a Bond Participation
Agreement between KILICO and PI, dated as of March 22, 1994.
Guaranty/Guarantor: Limited Recourse Guaranty [Huntley] by Prime Group II, L.P.,
an Illinois limited partnership, in favor of KILICO
Initial Pledge
Amount: $8,858,000
Number of
Common Units
Pledged: 700,960
-2-
3. LAKE XXXXXX(3)
Project: The Island on Lake Xxxxxx
Lender: Xxxxxx Investors Life Insurance Company ("KILICO"). KILICO
has provided credit support/enhancement with resect to the
Loan.
Borrower: The Island on Lake Xxxxxx, Ltd., a Texas limited partnership
Prime Partner(s): (1) The Lake Xxxxxx Island, Ltd., a Texas limited
partnership, general partner (50%) [comprised of The Prime
Group, Inc., general partner (94%) and Prime International,
Inc. (6%), limited partner] and (2) Prime International,
Inc., limited partner (50%)
Loan: The Loan made pursuant to the Loan Agreement between Capital
Health Facilities Development Corporation and Borrower dated
12/1/86 in connection with the $25,000,000 Capital Health
Facilities Development Corporation Health Facilities
Development Revenue Bonds (The Island on Lake Xxxxxx, Ltd.
Project) Series 1986
Guaranty/ Limited Recourse Guaranty [Lake Xxxxxx] by Prime Group II,
Guarantor: L.P., an Illinois limited partnership, in favor of KILICO
Initial
Pledge
Amount: $8,723,000
Number of
Common Units
Pledged: 690,276
-3-
4. NAPERVILLE
Project: Vacant property in Naperville, Illinois
Lender: Xxxxxx Investors Life Insurance Company ("KILICO") and
Federal Xxxxxx Life Assurance Company ("FKLA"), jointly and
severally. KILICO has provided credit support/enhancement
with respect to the Shawmut Loan (defined below) and
KILICO/FKLA has made the Subordinate Loan (defined below).
Borrower: Route 59 Partners L.P., an Illinois limited partnership
Prime (1) The Prime Group, Inc. ("Prime") (5%), general partner,
Partner(s): and (2) Prime (35%), limited partner
Loan: Collectively: (1) the Loan evidenced by the Amended and
Restated Promissory Note of Borrower to Shawmut Bank
Connecticut, N.A. dated 12/30/93 in the original principal
amount of $15,500,000 (the "Shawmut Loan") and (2) the Loan
evidenced by the Promissory Note of Borrower to KILICO and
FKLA dated 12/30/92 in the original principal amount of
$1,500,000 (the "Subordinate Loan")
Guaranty/ Limited Recourse Guaranty [Naperville] by Prime Group II,
Guarantor: L.P., an Illinois limited partnership, in favor of KILICO
and FKLA
Initial
Pledge
Amount: $2,608,000
Number of
Common Units
Pledged: 206,379
-4-
5. 000 X. XXXXXXX
Project: 000 X. XxXxxxx, Xxxxxxx, Xxxxxxxx Parking Garage
Lender: Xxxxxx Investors Life Insurance Company ("KILICO")
Borrower: 000 X. XxXxxxx Limited Partnership, an Illinois limited
partnership and American National Bank and Trust Company of
Chicago, not personally but as trustee under Trust Number
110024-09, of which 000 X. XxXxxxx Limited Partnership is
the sole beneficiary
Prime (1) Prime International, Inc. (99%), general partner and
Partner(s): (2) 300 North LaSalle, Inc. (1%), limited partner (owned
100% by Xxxxxxx X. Xxxxxxx)
Loan: Loan made pursuant to the Loan Agreement between Lender (as
assignee of Lumbermens Mutual Casualty Company) and Borrower
dated 2/8/90 in the original principal amount of $31,000,000
Guaranty/ Limited Recourse Guaranty [300 X. XxXxxxx] by Prime Group
Guarantor: II, L.P., an Illinois limited partnership, in favor of
KILICO
Initial
Pledge
Amount: $13,288,000
Number of
Common Units
Pledged: 1,051,519
-5-
6. 000 X. XXXXXXXXX(0)(0)(0)(0)
Project: Vacant land in Chicago, Illinois
Lender: Lumbermens Mutual Casualty Company ("Lumbermens")
Borrower: 000 X. Xxxxxxxxx Venture, an Illinois general partnership
Prime Partner(s): Prime International, Inc. (90%), general partner
Loan: Loan made pursuant to the Loan Agreement between Lumbermens
and Borrower dated 10/17/88 in the original principal amount
of $12,400,000
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-6-
7. EAST CHICAGO ENTERPRISE CENTER(5)
Project: Industrial warehouse facility in East Chicago, Illinois
Lender: Xxxxxx Investors Life Insurance Company ("KILICO")
Borrower: (1) Enterprise Center I, L.P., an Illinois limited
partnership; (2) Enterprise Center II, L.P., an Illinois
limited partnership; (3) Enterprise Center III, L.P., an
Illinois limited partnership; (4) Enterprise Center IV,
L.P., an Illinois limited partnership
Prime Partner(s): For each Borrower, K-P Enterprise Centers Limited
Partnership (50%), general partner, which is comprised in
part by (1) K-P Enterprise Centers, Inc. (1%) (of which The
Prime Group, Inc. owns 50%), general partner and (2) Prime
Group Limited Partnership (49%), limited partner
Loan: Collectively, the Loans made pursuant: (1) those certain
industrial revenue bonds (Enterprise Center I, L.P.
Project), in the aggregate principal amount of $5,100,000,
issued by the Indiana Development Finance Authority (the
"Issuer"); (2) those certain industrial revenue bonds
(Enterprise Center II, L.P. Project), in the aggregate
principal amount of $5,300,000, issued by the Issuer; (3)
those certain industrial revenue bonds (Enterprise Center
III, L.P. Project), in the aggregate principal amount of
$4,500,000, issued by the Issuer; (4) those certain
industrial revenue bonds (Enterprise Center IV, L.P.
Project), in the aggregate principal amount of $3,000,000,
issued by the Issuer
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-7-
8. HAMMOND ENTERPRISE CENTER(5)
Project: Industrial warehouse facility in Hammond, Indiana
Lender: Xxxxxx Investors Life Insurance Company ("KILICO")
Borrower: (1) Enterprise Center V, L.P., an Illinois limited
partnership; and (2) Enterprise Center VI, L.P., an Illinois
limited partnership
Prime Partner(s): For each Borrower, K-P Enterprise Centers Limited
Partnership (50%), general partner, which is comprised in
part by (1) K-P Enterprise Centers, Inc. (1%) (of which The
Prime Group, Inc. owns 50%), general partner and (2) Prime
Group Limited Partnership (49%), limited partner
Loan: Collectively, the Loans made pursuant: (1) those certain
industrial revenue bonds (Enterprise Center V, L.P.
Project), in the aggregate principal amount of $5,700,000,
issued by the Issuer; and (2) those certain industrial
revenue bonds (Enterprise Center VI, L.P. Project), in the
aggregate principal amount of $5,000,000, issued by the
Issuer
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-8-
9. ARLINGTON HEIGHTS ENTERPRISE CENTER(5)
Project: Industrial warehouse facility in Arlington Heights, Illinois
Lender: Xxxxxx Investors Life Insurance Company ("KILICO")
Borrower: (1) Arlington Heights I, L.P., an Illinois limited
partnership; (2) Arlington Heights II, L.P., an Illinois
limited partnership; and (3) Arlington Heights III, L.P., an
Illinois limited partnership
Prime Partner(s): For each Borrower, K-P Enterprise Centers Limited
Partnership (50%), general partner, which is comprised in
part by (1) K-P Enterprise Centers, Inc. (1%) (of which The
Prime Group, Inc. owns 50%), general partner and (2) Prime
Group Limited Partnership (49%), limited partner
Loan: Collectively, the Loans made pursuant: (1) those certain
industrial revenue bonds (Arlington Heights I, L.P.
Project), in the aggregate principal amount of $4,500,000,
issued by the Village of Arlington Heights, Illinois (the
"Issuer"); (2) those certain industrial revenue bonds
(Arlington Heights II, L.P. Project), in the aggregate
principal amount of $4,800,000, issued by the Issuer; and
(3) those certain industrial revenue bonds (Arlington
Heights III, L.P. Project) , in the aggregate principal
amount of $4,900,000, issued by the Issuer
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-9-
10. NORTHGATE(5)
Project: Northgate Plaza, a retail shopping center in Addison,
Illinois
Lender: Xxxxxx Investors Life Insurance Company ("KILICO")
Borrower: Prime 53 North Partners, an Illinois [limited] partnership
("Prime 53") and American National Bank and Trust Company of
Chicago, not personally but as Trustee under Trust Nos.
110340-06, 11206-09 and 11205-00, of which Prime 53 is the
sole beneficiary ("Trust")
Prime Partner(s): The Prime Group, Inc. (50%), general partner
Loan: Loan evidenced by the Amended and Restated Promissory Note
dated 3/22/94 of Borrower to KILICO in the original
principal amount of $5,559,173
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-10-
11. TRIAD SUPERIOR EQUITY ADVANCE(5)
Project: Eight industrial revenue bond projects located in the state
of Tennessee
Lender: Xxxxxx Investors Life Insurance Company ("KILICO")
Borrower: Triad Development Company, an Illinois limited partnership
Prime Partner(s): (1) Prime of Tennessee, Inc. (1%), general partner; (2) The
Prime Group, Inc. (1%), limited partner; and (3) PGC
Development, Ltd. (48%), limited partner
Loan: "Triad Superior Equity" as defined in Section 3.3 of the
Second Amended and Restated Agreement of Limited Partnership
of Borrower
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-11-
12. TRIAD NON-ASSET BONDS(5)
Project: (1) Xxxxx Partners, Ltd.; (2) Xxxxxxxxxxx Properties, Ltd.;
and (3) Xxxxxxx Partners, Ltd.
Lender: Xxxxxx Investors Life Insurance Company ("KILICO")
Borrower: (1) Xxxxx Partners, Ltd.; (2) Xxxxxxxxxxx Properties, Ltd.;
and (3) Xxxxxxx Partners, Ltd.
Prime Partner(s): For each Borrower: Triad Development Company (50%), a
general partner, comprised in part by (1) Prime of
Tennessee, Inc. (1%), general partner; (2) The Prime Group,
Inc. (1%), limited partner; and (3) PGC Development, Ltd.
(48%), limited partner
Loan: Collectively: (1) those certain $6,000,000 Floating Rate
Monthly Demand Industrial Development Revenue Bonds (Xxxxx
Partners, Ltd., Project) issued by The Industrial
Development Board of the County of Xxxx, Tennessee (the
"Issuer"); (2) those certain $4,500,000 Floating Rate
Monthly Demand Industrial Development Revenue Bonds
(Xxxxxxxxxxx Properties, Ltd., Project) issued by the
Issuer; (3) those certain $5,100,000 Floating Rate Monthly
Demand Industrial Development Revenue Bonds (Xxxxxxx
Partners, Ltd., Project) issued by the Issuer
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
(1) Any Dilution of Common Units shall be allocated, on a pro rata basis in
accordance with the respective number of Common Units, among the projects listed
on this Exhibit A-1 other than those under the headings "Huntley" and "150 N.
Riverside" as provided in Exhibit C hereto, until such time as the Pledge Amount
for all such projects shall be $0, at which time the Dilution shall be allocated
to the project listed under the heading "Huntley", until such time as the Pledge
Amount for the project listed under the heading "Huntley" shall be $0, at which
time the Dilution shall be allocated to the project listed under the heading
"150 N. Riverside".
(2) No reallocation pursuant to Section 2.7(b) permitted.
(3) No reallocation pursuant to Section 2.7(c) permitted.
(4) Limited Recourse Guaranty and Pledge and Security Agreement will be executed
and delivered by Prime Group II, L.P. to Xxxxxx Investors Life Insurance
Company, in the event of reallocation under Section 2.7(b) to "150 N.
Riverside." The maximum reallocation to "150 N. Riverside" pursuant to Section
2.7(b) shall be $3,351,000.
-12-
(5) Limited Recourse Guaranty and Pledge and Security Agreement will be executed
and delivered by Prime Group II, L.P. to Xxxxxx Investors Life Insurance
Company, in the event of reallocation under Section 2.7(c) to "East Chicago
Enterprise Center", "Hammond Enterprise Center", "Arlington Heights Enterprise
Center", "Northgate", "Triad Superior Equity Advance", or "Triad Non-Asset
Bonds", as the case may be.
-13-
EXHIBIT B
[See Schedule 1 Attached]
SCHEDULE 1
A. Definitions Applicable to Representations, Warranties Covenants:
Definitions. The following definitions shall apply to words and
phrases used in this Schedule I and the document to which this Schedule is
attached.
Affiliate means, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or
its controlled by, such Person. As used in this definition,
"control" (including, with its correlative meanings, "controlled by"
and "under common control with") means possession, directly or
indirectly, of power to direct or cause the direction of management
or policies (whether through ownership of securities, or partnership
or other ownership interests, by contract or otherwise).
Beneficiary means, individually and collectively, the
benefited party(ies) under the document to which this Schedule 1 is
attached.
Company means Prime Group II, L.P., an Illinois limited
partnership.
Company General Partner means PGLP, Inc., an Illinois
corporation.
Material Adverse Effect means (a) any adverse effect on the
ability of the Company to grant to Pledgee or to keep pledged to
Pledgee a perfected first lien security interest in and to the
Collateral or (b) any material adverse effect on the ability of the
Company to perform its obligations (other than those described in
clause (a) above) under the Transaction Documents.
Person means an individual, partnership, corporation, trust,
unincorporated organization, or other entity, or a government or
agency or political subdivision thereof.
Transactions means the transactions contemplated by the
document to which this Schedule 1 is attached.
Transaction Documents means (a) the document to which this
Schedule 1 is attached, (b) any document or instrument which secures
or is secured by the document to which this Schedule 1 is attached
and (c) any other document or instrument evidencing or securing the
obligations under a document described in clause (a) or (b) above,
in each case, as such document or instrument may be modified or
amended from time to time.
B. Representations and Warranties:
The Company hereby represents and warrants to Beneficiary that the
following statements are true, correct and complete:
1. Organization: Power.
(a) The Company (i) is a limited partnership duly organized,
validly existing and in good standing under the laws of the state of its
formation, (ii) is duly qualified to do business as a foreign limited
partnership under the laws of each jurisdiction in which the laws of such
jurisdiction so permit or require it to be qualified and in which the
nature of its business requires it to be so qualified (except where
failure to do so would not reasonably be expected to have a Material
Adverse Effect), and (iii) has all requisite power and authority to own,
operate and encumber its property and assets and conducts its business
substantially as presently conducted and proposed to be conducted in
connection with and following the consummation of the Transactions.
(b) The Company General Partner (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, (ii) is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction in which the nature of its business requires it to be so
qualified (except where the failure to be so qualified would not
reasonably be expected to have a Material Adverse Effect), and (iii) has
all requisite corporate power and authority to own, operate and encumber
its property and assets and conduct its business substantially as
presently conducted and as proposed to be conducted in connection with and
following the consummation of the Transactions.
2. Authority: Enforceability. (i) Each of the Company and the
Company General Partner (on behalf of the Company) has the requisite power
and authority (A) to execute, deliver and perform each of the Transaction
Documents to which the Company is a party, and (B) to file the Transaction
Documents filed by the Company, or to be filed by the Company, with the
appropriate governmental authorities; (ii) the execution, delivery and
performance (or filing, as the case may be) of each of the Transaction
Documents to which the Company is a party, and the consummation of the
Transactions, have been duly approved by the Company and the Board of
Directors of the Company General Partner, and no other partnership or
corporate proceedings on the part of the Company or the Company General
Partner which have not been completed are necessary to consummate such
Transactions; (iii) each of the Transaction Documents to which the Company
is a party has been duly executed and delivered (or filed, as the case may
be) by the Company and by the Company General Partner on behalf of the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, is
in full force and effect, and no term or condition thereof has been
amended, modified or waived, without the prior written consent of the
Beneficiary, and (iv) the Company has performed and complied in all
material respects with all the terms, provisions, agreements and
conditions set forth in the Transaction Documents and required to be
performed or complied with by it on or before the date as of which this
representation is made, and no default by the Company, to the best
knowledge of the Company, exists thereunder.
3. No Conflict. The execution, delivery and performance by each of
the Company and by the Company General Partner (on behalf of the Company)
of each Transaction Document to which the Company is a party do not and
will not (i) conflict
-2-
with or violate the Company's partnership agreement or the Company General
Partner's Articles or Certificate of Incorporation or other charter
documents or By-laws, or other organizational documents, as the case may
be, (ii) contravene or conflict with any statute, rule, or regulation, in
each case in effect on the date as of which this representation is made,
(iii) contravene or conflict with, result in any breach of, or constitute
a default under, any agreement or instrument binding on the Company or the
Company General Partner, (iv) result in or require the creation or
imposition of any lien whatsoever upon any of the properties or assets of
the Company (other than the liens arising pursuant to the Transaction
Documents), or (v) require any approval of stockholders or any approval or
consent of any person or entity under any agreement or instrument binding
on the Company or the Company General Partner, that has not been obtained,
which, in any case described in clauses (ii) through (v) of this paragraph
3 would reasonably be expected to result in a Material Adverse Effect.
4. Governmental Consents. The Transactions, and the execution,
delivery and, to the best of the Company's knowledge, performance by the
Company and the execution and delivery by the Company General Partner (on
behalf of the Company) of each of the Transaction Documents to which it is
a party, do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by any governmental
authority which has not been obtained or made and which, if not obtained
or made, would reasonably be expected to result in a Material Adverse
Effect, except for filings of the Transaction Documents (or notice
thereof) with appropriate governmental offices necessary (i) to perfect
any liens or security interests granted under the Transaction Documents or
(ii) in connection with any transfer of Collateral following enforcement
of any such liens or security interests.
5. Litigation; Adverse Effects.
(i) There is no action, suit, proceeding or arbitration, at
law or in equity or before any governmental authority, nor to the best
knowledge of the Company is there any governmental investigation, in each
case pending, or, to the best knowledge of the Company, threatened,
against the Company or the Company General Partner, or any property of the
Company or the Company General Partner, which relates to the Transactions
or the Transaction Documents and which would reasonably be expected to
result in a Material Adverse Effect.
(ii) Neither the Company nor the Company General Partner is
(A) in violation of any applicable law, rule or regulation, which
violation would reasonably be expected to result in a Material Adverse
Effect, or (B) subject to or in default with respect to any final
judgment, writ, order, injunction or decree of any court or governmental
authority.
(iii) Each of the Company and the Company General Partner has
obtained all licenses, permits, franchises and other governmental
authorizations necessary for the ownership of its property or for the
conduct of its business, the failure to obtain or violation of which would
reasonably be expected to result in a Material Adverse Effect.
-3-
6. No Defaults. The Company is not in default in the performance,
observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument binding on the Company
relating to any borrowing, loan or credit arrangement, and no condition
exists which, with the giving of notice or the lapse of time or both,
would constitute a default thereunder, other than defaults that, in the
aggregate, would not reasonably be expected to result in a Material
Adverse Effect.
7. Solvency. After due inquiry, and taking into account the
Transactions, each of the Company's and the Company General Partner's
assets exceed its liabilities. Each of the Company and the Company General
Partner is, and, to the best of the Company's knowledge, from and after
the date hereof each of the Company and the Company General Partner will
be, able to pay its debts when the same become due. Neither the Company
nor the Company General Partner has (i) made a general assignment for the
benefit of its creditors, (ii) admitted in writing its inability to pay
its debts as they mature, or (iii) been subjected to an attachment,
execution or other judicial seizure of a substantial portion of its
property which remains in effect. There is not pending any case,
proceeding or other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or recomposition of the Company or
the Company General Partner or any of its debts under any law relating to
bankruptcy, insolvency, reorganization or relief of debtors or seeking
appointment of a receiver, trustee, custodian or any similar official for
its or for all or substantially all of its property.
C. Reporting Covenants:
The Company covenants and agrees that, so long as the Company shall
have any liability or obligation outstanding under any of the Transaction
Documents, unless Beneficiary shall otherwise give prior written consent
thereto:
1. Financial Statements. The Company shall maintain or cause to be
maintained, a system of accounting established and administered in
accordance with sound business practices and consistent with past
practices to permit preparation of financial statements in conformity with
GAAP, and each of the financial statements described below shall be
prepared from such system and records. The Company shall deliver or cause
to be delivered to the Lender:
(a) As soon as practicable, and in any event within sixty (60)
days after the end of each calendar quarter, the balance sheet of
the Company as at the end of such quarter and related statements of
operations and retained earnings and changes in financial position
for such quarter, setting forth in each case in comparative form the
figures for the corresponding period of the previous fiscal year,
all in reasonable detail and certified by the chief financial
officer, treasurer or assistant treasurer of the Company General
Partner that they fairly present the financial condition of the
Company as at the dates indicated and the results of operations for
the periods indicated, subject to changes resulting from audit and
normal year-end adjustment;
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(b) As soon as practicable, and in any event within one
hundred twenty (120) days after the end of each fiscal year (i.e.
the twelve months ending December 31), the audited balance sheet of
the Company as at the end of such - fiscal year and the related
audited statements of operations and retained earnings and changes
in financial position for such fiscal year, setting forth in each
case in comparative form the figures for the Company for the
previous fiscal year, all in reasonable detail and reported by firm
of reputable independent public accountants.
2. Notification of Defaults. The Company, upon acquiring knowledge
thereof, shall promptly notify Lender of any event of default, or any
event which with the giving of notice or lapse of time, or both, would
constitute an event of default, under the Transaction Documents, and
describing the action the Company proposes to take with respect thereto.
3. Other Information. Upon the request of Beneficiary made from time
to time, the Company shall furnish to Beneficiary such information as may
be prepared by the Company or the Company General Partner in writing in
the ordinary course of its business respecting the Company's or the
Company General Partner's business or condition (financial or otherwise),
operations, performance, properties or prospects. Beneficiary shall treat
any non-public information so obtained as confidential.
D. Affirmative Covenants:
The Company covenants and agrees that, so long as the Company shall have
any liability or obligation outstanding under any of the Transaction Documents,
unless Beneficiary shall otherwise give prior written consent thereto:
1. Existence. The Company shall maintain its existence as a
limited partnership in good standing under the laws of the state of its
formation and maintain its qualification to do business in each
jurisdiction in which the laws of such jurisdiction so permit or require
it to be qualified and in which the character of the properties owned or
leased by it therein or in which the transaction of its business is such
that the failure to qualify would reasonably be expected to result in a
Material Adverse Effect. The Company shall cause the Company General
Partner to maintain its existence as a corporation in good standing under
the laws of the state of its incorporation and maintain its qualification
to do business in each jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of
its business is such that the failure to qualify would reasonably be
expected to result in a Material Adverse Effect. The foregoing shall not
prohibit the Company or the Company General Partner from merging with or
into a corporation or other entity organized under the laws of any state
within the United States (in which event, from and after the effective
date of such merger, all references herein to the Company or the Company
General Partner, as the case may be, shall be deemed to refer to such
successor entity); provided, however, that (a) any such successor entity
to the Company assumes in writing all of the obligations and liabilities
of the Company under the Transaction Documents and (b) before and after
giving effect to such merger, there shall not exist any event of default,
or any event
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which, with the giving of notice or lapse of time or both, would
constitute an event of default, under any of the Transaction Documents.
2. Taxes. The Company shall pay and discharge, or cause to be
paid and discharged, all taxes, assessments and governmental charges upon
it, its income and its properties, or upon the Company General Partner or
the Company General Partner's income and properties, prior to the date on
which penalties are attached thereto, unless and to the extent only that
(a) failure to pay any such taxes, assessments or governmental charges
would not reasonably be expected to result in a Material Adverse Effect,
or (b) (i) such taxes, assessments and governmental charges shall be
contested in good faith and by appropriate proceedings by the Company or
the Company General Partner, as the case may be, after the Company or the
Company General Partner, as the case may be, has established a reasonable
reserve on its books for such item, and (ii) the pendency of such contest
will not result in any impairment of any lien and security interest
granted by the Company or the Company General Partner in favor of
Beneficiary.
3. Compliance with Laws, Etc. The Company shall comply with,
and cause the Company General Partner to comply with, all applicable
statutes, rules, regulations, orders and restrictions of any and all
governmental instrumentalities or agencies thereof having jurisdiction
over the conduct of the business or the ownership of the properties of the
Company or the Company General Partner, as the case may be (except for any
non-compliance therewith which would not reasonably be expected to result
in a Material Adverse Effect), unless and only to the extent that the
application of such statutes, rules, regulations, orders and restrictions
shall be contested in good faith and by appropriate proceedings by the
Company or the Company General Partner, as the case may be, in such a
manner that any enforcement action or any liability resulting from such
non-compliance shall. be stayed or held in abeyance pending the outcome of
such contest.
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EXHIBIT C
Allocation of Dilution Amount
In the event of a Dilution under the Partnership Agreement that is
allocated, in whole or in part, to Pledgor pursuant to the Sharing Agreement,
the Common Units then constituting a part of the Pledged Interests shall be
adjusted as follows:
a.* Multiply the Dilution Amount allocated to Pledgor pursuant to
the Partnership Agreement and the Sharing Agreement by the following
fraction:
Number of Common Units Pledged for this Pledge
----------------------------------------------
Total number of Common Units Owned by Pledgor
(excluding Common Units pledged to secure Kepro S.A.,
Xxxxxxx and 000 X. Xxxxxxxxx loans)
b. Divide the number resulting from (a) by the Market Value of one
Common Unit as of the date of the Dilution.
c. Subtract the number obtained in (b) from the number of Common
Units then constituting Pledged Interests under the Pledge. The result is
the adjusted number of Common Units constituting Pledged Interests under
the Pledge.
*The number resulting from (a) is subtracted from the Pledge Amount in effect
prior to the Dilution to determine the new Pledge Amount.
EXHIBIT D
ACKNOWLEDGEMENT AND CONSENT
Reference is hereby made to the Pledge and Security Agreement [Lake
Xxxxxx] dated as of March 22, 1994 (the "Pledge and Security Agreement") by
Prime Group II, L.P. in favor of Xxxxxx Investors Life Insurance Company. Each
capitalized term used herein shall have the meaning assigned thereto in the
Pledge and Security Agreement.
Notwithstanding anything in the By-laws of the General Partner to the
contrary, Prime Retail, L.P., a Delaware limited partnership (the
"Partnership"), and Prime Retail, Inc., a Maryland corporation (the "General
Partner"), hereby acknowledge receipt of a copy of the Pledge and Security
Agreement and consent to Pledgor's pledge of the Pledged Interests pursuant to
the terms thereof Notwithstanding anything in the By-laws of the General Partner
to the contrary, the Partnership and the General Partner further acknowledge and
agree (i) to recognize and consent to the pledge of all future rights and
interests in the Pledged Interests, Distributions or other Collateral to which
Pledgee may be entitled under the Pledge and Security Agreement, (ii) that, as
of the date hereof, there are, to their knowledge, no existing defaults by
Pledgor under the Partnership Agreement with respect to any of the Pledged
Interests, (iii) that, without Pledgee's consent in its sole discretion, no
further transfer or encumbrance by Pledgor of the Pledged Interests, rights to
Distributions related thereto or other Collateral will be consented to or
recognized by the Partnership and the General Partner (except in the event of a
Dilution), and (iv) in the event that either of the Partnership and the General
Partner receives written notice from Pledgee of the occurrence and continuation
of an Event of Default under the Pledge and Security Agreement and of Pledgee's
election to exercise its remedies thereunder with respect to such Event of
Default, the recipient of any such notice from Pledgee shall promptly notify
Pledgor of its receipt thereof (provided that the failure by the Partnership and
the General Partner to give Pledgor such notice shall not (x) impair, alter or
otherwise affect Pledgee's rights or remedies, or the exercise thereof, with
respect to such Event of Default or (y) create any liability on the part of the
Partnership or General Partner solely by reason of such failure (it being
understood that such clause (y) does not relive them of their obligations under
clause (A) and (B) below)), and so long as the Partnership and the General
Partner shall not have received a written objection from the Pledgor within five
(5) Business Days of receipt of such written notice from the Pledgee, the
Partnership and the General Partner will (A) consent to, and take such action as
may be reasonably necessary or appropriate to effect, the substitution of record
ownership of Pledgee for Pledgor on the Partnership's and the General Partner's
records, if Pledgee is entitled to be substituted for Pledgor following any
foreclosure upon the Pledged Interests pursuant to Section 6.1 of the Pledge and
Security Agreement, and (B) pay Distributions, and issue Common Stock, directly
to Pledgee, in accordance with the terms of the Pledge and Security Agreement.
[Signature Page Follows]
PRIME RETAIL, L.P., a Delaware limited partnership
By: Prime Retail, Inc. a Maryland
corporation, its general partner
By: ___________________________________
Name:__________________________________
Title:_________________________________
PRIME RETAIL, INC., a Maryland corporation
By: _________________________________________
Name:________________________________________
Title:_______________________________________
The undersigned, being the Pledgor and Pledgee under the above-referenced
Pledge and Security Agreement, hereby consent to the execution and delivery by
the Partnership and the General Partner of the foregoing Acknowledgement and
Consent and agree with the provisions thereof.
Dated: March 22, 1994
PRIME GROUP II, L.P., an Illinois limited
partnership
By: PGLP, Inc., an Illinois corporation
By: ___________________________________
Name:__________________________________
Title:_________________________________
XXXXXX INVESTORS LIFE INSURANCE COMPANY,
an Illinois insurance corporation
By: _________________________________________
Name:________________________________________
Title:_______________________________________
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