Exhibit 99.3
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") dated as of
June 30, 1999 is by and among CAPITAL TRUST, INC., a Maryland corporation
("Secured Party"), PROMETHEUS SOUTHEAST RETAIL LLC, a Delaware limited
liability company ("Pledgor"), having an address at 00 Xxxxxxxxxxx Xxxxx,
Xxx Xxxx, X.X. 00000, and PROMETHEUS SOUTHEAST RETAIL TRUST, a Maryland real
estate investment trust ("Company"), having an address at 00 Xxxxxxxxxxx
Xxxxx, Xxx Xxxx, X.X. 00000.
Preliminary Statement
A. Secured Party has agreed to make a loan to LFSRI II SPV REIT
CORP., a Delaware corporation ("Borrower"), in the principal sum of
$52,500,000 (the "Loan") in accordance with the provisions of a certain Loan
Agreement (the "Loan Agreement") dated of even date herewith, which Loan
shall be evidenced by, and payable, together with interest thereon, in
accordance with the provisions of a certain Note (the "Note") dated of even
date herewith. The Note, the Loan Agreement, this Agreement and all other
documents of any nature whatsoever evidencing, securing or guaranteeing the
Loan in whole or in part, or otherwise executed and delivered in connection
with the Loan or relating thereto, as the same may be modified or amended
from time to time, are hereinafter referred to collectively as the "Loan
Documents".
B. Capitalized terms used and not otherwise defined herein shall
have the respective meanings given to such terms in the Loan Agreement.
C. As of the date hereof: Pledgor is the owner of 100,000 Common
Shares of Company (the "Interest"), and Company owns 21,052,631 shares of
Common Stock, $.01 par value, of KONOVER PROPERTY TRUST INC., a Maryland
corporation ("Operating Company"), and is entitled to receive dividends and
other distributions on account thereof from time to time declared and paid by
Operating Company, and owns a certain Contingent Value Right granted by
Operating Company.
D. Secured Party was willing to make the Loan only if Pledgor and
Company agreed to execute and deliver this Agreement as additional security
for the payment of all principal, interest, additional interest and other
sums of any nature whatsoever which may or shall become due under the Note,
the Loan Agreement and the other Loan Documents (collectively, the "Debt")
and the observance and performance by Borrower, Pledgor, Company and the
other members of the Borrower Control Group of all the terms, covenants and
provisions of the Loan Documents on the part of Pledgor and Company to be
observed and performed.
E. Company and Pledgor will derive substantial economic benefit
from the Loan and, therefore, Pledgor and Company desire to execute this
Agreement in order to satisfy the condition described in the foregoing
paragraph D.
NOW, THEREFORE, in consideration of Secured Party's agreement to
make the Loan and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Company hereby
represent and warrant to and covenant and agree with Secured Party as
follows:
SECTION 1. Security Interest. As security for the due and
punctual payment in full of the Debt and for the due and punctual performance
by Borrower, Pledgor, Company and the other members of the Borrower Control
Group of all of the terms, covenants and provisions of the Loan Documents
(the Debt, the payment thereof and the performance of the terms, covenants
and provisions of the Loan Documents being hereinafter collectively called
the "Obligations"), Pledgor hereby pledges, hypothecates, assigns, and
delivers to Secured Party and grants to Secured Party a security interest in
all of Pledgor's right, title and interest now owned or hereafter acquired in
and to the following described property (the "Collateral"):
(a) the Interest and any certificates representing the Interest;
(b) all cash, securities, dividends, distributions, Proceeds, and
other property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of the
Interest, and any fees, commissions or other compensation payable to
Pledgor as a member of Company (all of the foregoing, collectively,
"Distributions");
(c) all contract rights, general intangibles, rights, claims,
powers, privileges, benefits and remedies arising from or in any way
related to ownership of the Interest, any certificates and other
instruments representing the Interest and the other Collateral described
above in paragraphs 1(a) and (b), including, without limitation, all
rights to vote or consent, or to receive any notice, or to inspect or
review any books, records or other information;
(d) all additions to the Collateral described in the foregoing
clauses (a) through (c) including without limitation any membership
interests in the Company obtained in the future by Pledgor, all
substitutions therefor and all replacements thereof;
(e) all amounts due and payable or hereafter becoming due and
payable by Company to Pledgor, whether in the form of dividends,
distributions, securities, cash, Proceeds and other property, and
including without limitation the Proceeds of any Transfer of Equity
Interests in Company (collectively, "Payor Proceeds"); and
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(f) all Proceeds of any of the foregoing.
Notwithstanding any contrary provision contained herein, (i) except
for purposes of Section 3(g) hereof, as used in this Agreement, the term
"Equity Interests" shall not include the preferred shares of Company (the
"Accommodation Shares") held by not more than 150 Persons, and (ii) as used
in this Agreement, the terms "Collateral", "Distributions" and "Payor
Proceeds" shall not include any Money properly released from the Deposit
Account or other Collateral released by Secured Party pursuant to the terms
of this Agreement or the Deposit Account Agreement.
SECTION 2. Representations and Warranties of Pledgor. Pledgor
hereby represents and warrants to Secured Party as follows:
(a) No consent of any other person or entity (including, without
limitation, any owner or creditor of Pledgor), is required in connection
with the execution, delivery, performance, validity or enforceability of
this Agreement.
(b) Pledgor is duly organized, validly existing and in good
standing under the laws of the state of its formation and has all
requisite power and authority under the laws of such state and under its
organizational and charter documents to enter into and perform its
obligations under this Agreement.
(c) Pledgor has taken all necessary legal and other action to
authorize the execution, delivery and performance of this Agreement, and
this Agreement constitutes the valid and binding obligation and
agreement of Pledgor, enforceable in accordance with its terms, subject
to limitations as to enforceability imposed by bankruptcy,
reorganization, moratorium, insolvency and other laws of general
application relating to or affecting the enforceability of creditors'
rights and to equitable principles.
(d) Pledgor has not received any notice of default under any
agreement or instrument to which Pledgor is a party or by which Pledgor
or Pledgor's assets may be bound which default would have a material
adverse effect on Pledgor's business, assets, property or financial or
other condition, and Pledgor is not in default under any order,
judgment, award or decree of any court, arbitrator or other governmental
authority binding upon or affecting Pledgor or by which any of Pledgor's
assets may be bound or affected.
(e) Neither the execution and delivery of this Agreement nor the
compliance by Pledgor with the terms and provisions hereof are events
which of themselves, or with the giving of notice or the passage of
time, or both, would constitute, on the part of Pledgor, a violation of
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or conflict with, or result in any breach of, or default under, the
terms, conditions or provisions of, or require any consent, permit,
approval, authorization, declaration or filing which has not been made
or obtained under or pursuant to, any statute, law, judgment, decree,
order, rule or regulation applicable to Pledgor, the organizational and
charter documents of Pledgor, if any, or, except as set forth in the
documents listed on the Disclosure Schedule delivered by Pledgor to
Secured Party simultaneously with the delivery of, and in connection
with, this Agreement and the other Pledge Agreements (the "Disclosure
Schedule"), any other agreement or instrument to which Pledgor is a
party or by which Pledgor, or Pledgor's assets, are bound, or result in
the creation or imposition of any lien, charge or encumbrance of any
nature whatsoever on any of the assets of Pledgor, and, except as set
forth in the documents listed on the Disclosure Schedule, no such
condition or event of itself, or with the giving of notice or the
passage of time, or both, will result in the acceleration of the due
date of any obligation of Pledgor or by which any of Pledgor's assets
are bound.
(f) There are no judgments presently outstanding and unsatisfied
against Pledgor or any of Pledgor's assets, and neither Pledgor nor any
of Pledgor's assets is a party to or the subject of any actions or suits
or proceedings in equity or by any governmental authorities, and no such
litigation or proceeding has been threatened against Pledgor or against
any of Pledgor's assets, and no investigation in contemplation of such
litigation or proceeding has begun or is pending or has been threatened.
(g) Pledgor's principal place of business and chief executive
office is at the location identified in the first paragraph of this
Agreement.
(h) The financial statements of Pledgor and Company furnished to
Secured Party are true, correct and complete in all material respects
and fairly present the financial condition of Pledgor and Company as at
the end of and for the reporting periods covered thereby. Except as
shown on such financial statements, no borrowings have been made or
indebtedness incurred by Pledgor or Company which is outstanding and
which might give rise to a lien or claim against any assets of Company.
There are no liabilities, contingent or otherwise, or any unrealized or
anticipated losses from unfavorable commitments, whether arising before
or after the date of such financial statements, which are not disclosed
in such financial statements.
(i) As of the date hereof, each of Pledgor and Company has filed
or caused to be filed all United States, state, local and foreign income
tax returns (if any) which are required to be filed and all United
States, state, local and foreign tax returns other than income tax
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returns which are required to be filed and has paid or caused to be paid
all taxes shown on such returns or on any assessment made against it and
all other taxes, fees or other charges imposed on it by any governmental
authority, agency or instrumentality which have become due and payable.
No tax liens have been filed against Pledgor or Company or against any
of their respective assets, and no material claims are being asserted
against Pledgor or Company or any of their respective assets in respect
of any taxes.
SECTION 3. Representations and Warranties of Company. Company
hereby represents and warrants to Secured Party as follows:
(a) Company is duly organized, validly existing and in good
standing under the laws of the state of its formation and has all
requisite power and authority under the laws of such state and under its
organizational and charter documents to enter into and perform its
obligations under this Agreement.
(b) Company has taken all necessary legal and other action to
authorize the execution, delivery and performance of this Agreement, and
this Agreement constitutes the valid and binding obligation and
agreement of Company, enforceable in accordance with its terms, subject
to limitations as to enforceability imposed by bankruptcy,
reorganization, moratorium, insolvency and other laws of general
application relating to or affecting the enforceability of creditors'
rights and to equitable principles.
(c) Company has not received any notice of default under any
agreement or instrument to which it is a party or by which it or its
assets may be bound which default would have a material adverse effect
on its business, assets, property or financial or other condition, and
Company is not in default under any order, judgment, award or decree of
any court, arbitrator or other governmental authority binding upon or
affecting it or by which any of its assets may be bound or affected.
(d) Neither the execution and delivery of this Agreement nor the
compliance by Company with the terms and provisions hereof are events
which of themselves, or with the giving of notice or the passage of
time, or both, would constitute, on the part of the Company, a violation
of or conflict with, or result in any breach of, or default under, the
terms, conditions or provisions of, or require any consent, permit,
approval, authorization, declaration or filing which has not been made
or obtained under or pursuant to, any statute, law, judgment, decree,
order, rule or regulation applicable to Company, or, except as set forth
in the documents listed on the Disclosure Schedule, (i) the
organizational and charter documents of Company or (ii) any other
agreement or instrument to which Company is a party or by which Company,
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or its assets, are bound, or result in the creation or imposition of any
lien, charge or encumbrance of any nature whatsoever on any of the
assets of Company, and, except as set forth in the documents listed on
the Disclosure Schedule, no such condition or event of itself, or with
the giving of notice or the passage of time, or both, will result in the
acceleration of the due date of any obligation of Company or by which
any of its assets are bound.
(e) There are no judgments presently outstanding and unsatisfied
against Company or any of its assets, and neither Company nor any of its
assets is a party to or the subject of any actions or suits or
proceedings in equity or by any governmental authorities, and no such
litigation or proceeding has been threatened against Company or against
any of its assets, and no investigation in contemplation of such
litigation or proceeding has begun or is pending or has been threatened.
(f) Company's chief executive office is at the location identified
in the first paragraph of this Agreement.
(g) The total authorized Equity Interests in Company consists of
450,000 Common Shares of beneficial interest, $.01 par value, of which
100,000 Common Shares are issued and outstanding, and 50,000 Preferred
Shares of beneficial interest, of which 125 Preferred Shares have been
designated as Series A Redeemable Preferred Shares, of which 103 Series
A Redeemable Preferred Shares are issued and outstanding. Pledgor is the
sole record owner of the foregoing 100,000 Common Shares. All of such
100,000 Common Shares of beneficial interest in Company are validly
issued, fully paid and non-assessable. Company is the sole owner of
21,052,631 shares of Common Stock, $.01 par value, of Operating Company.
All of such 21,052,631 shares of Common Stock of Operating Company are
validly issued, fully paid and non-assessable. Except as set forth in
the documents listed on the Disclosure Schedule, there are no
outstanding or authorized options, warrants, rights, contracts, rights
to subscribe, conversion rights or other agreements or commitments to
which Company is a party or which are binding upon Company providing for
the issuance or acquisition of any Equity Interest in Company.
(h) The aggregate indebtedness of Operating Company does not
exceed 65% of the fair market value of the assets of Operating Company.
SECTION 4. Additional Representations and Warranties of Pledgor.
Pledgor hereby represents and warrants to Secured Party as follows with
respect to the Interest:
(a) (i) Pledgor is the sole record owner of the Interest, free
and clear of all Liens, security interests, charges and encumbrances of
every kind and nature (other than as created hereunder); if the Interest
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is capital stock, the Interest is duly authorized, validly issued, fully
paid and non-assessable; Pledgor has legal title to the Interest and
good right and lawful authority to grant a security interest in the same
in the manner hereby done or contemplated. (ii) The transferability of
the Interest is not restricted in any way by any agreement or
instrument, except for such restrictions ("Restrictions") as are set
forth in the documents listed on the Disclosure Schedule, and any such
restrictions and limitations on the transfer, assignment, pledge or
other disposition of the Collateral that are contained in the
Restrictions have been waived, by proper steps taken in compliance with
the Restrictions and all applicable law governing Company, with respect
to the grant of a security interest in the Collateral to Secured Party,
and with respect to any foreclosure sale of the Collateral by Secured
Party; except as set forth in the documents listed on the Disclosure
Schedule, the Interest is not subject to any option or similar
arrangement; and no consent or approval of any governmental body or
regulatory authority, or of any securities exchange, is necessary to the
validity of the rights created hereunder; and all action has been taken
by Pledgor to create and perfect, in favor of Secured Party, a security
interest in the Interest, and Secured Party has acquired a first
priority perfected security interest therein.
(b) As to all Collateral acquired by Pledgor on and after the date
hereof, Pledgor shall be the legal and equitable owner of such
Collateral free and clear of all liens, security interests, charges, and
encumbrances of every kind and nature (other than those created
hereunder); each membership interest or other security comprising such
Collateral will have been duly authorized, validly issued and be fully
paid and non-assessable; Pledgor will have legal title to such
Collateral and good and lawful authority to pledge, assign and deliver
such Collateral in the manner hereby contemplated, and no consent or
approval of any governmental body or regulatory authority, or of any
securities exchange, is or will be necessary to the validity of the
rights created hereunder.
(c) Pledgor shall not, nor shall it cause, authorize or suffer
Company to, take any action, or fail to take any action, in
contravention of the terms, conditions and provisions of the Note, the
Loan Agreement, this Agreement or any of the other Loan Documents.
(d) None of the ownership interests comprising the Collateral are
dealt in or traded on securities exchanges or in securities markets, and
none by its terms expressly provides that it is a security governed by
Article 8 of the UCC or that it is an investment company security, and
none is held in a securities account (as defined in Section 8-501 of the
UCC.)
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SECTION 5. Covenants.
(a) Entity Status. Pledgor will and will cause the Company to
continue to comply with the provisions of all of their respective
organizational and governing documents, and the laws of the state in
which each such Entity was formed relating to each such Entity. All
customary formalities regarding the Entity existence of Pledgor and the
Company will continue to be observed.
(b) Existence. Pledgor shall not and shall not suffer the Company
to (i) take any actions in violation of its organizational or governing
documents or the Restrictions or (ii) amend, modify, waive or terminate
its organizational or governing documents or the Restrictions.
(c) Other Actions. Pledgor shall not and shall not suffer the
Company to:
(1) Liens on the Collateral. Incur, create, assume, become
or be liable in any manner with respect to, or permit to exist, any Lien
with respect to any Collateral except Liens in favor of Secured Party.
(2) Certain Restrictions. Unless required under any of the
documents listed on the Disclosure Schedule, enter into any agreement
which expressly restricts the ability of Pledgor or the Company to enter
into amendments, modifications or waivers of any of the Loan Documents.
(3) Issuance of Equity Interests. Issue or allow to be
created any shareholder, partnership, trust or membership interests, as
applicable, or other Equity Interests in Pledgor or the Company, except
for any issuance of Accommodation Shares.
(4) Identity. Change its name, identity or organizational
structure in any manner which might make any financing or continuation
statement filed in connection herewith seriously misleading within the
meaning of Section 9-402(7) of the UCC (or any other applicable
provision of the UCC).
(d) Additional Covenants.
(1) Except as permitted under the Loan Agreement and as
required under the documents listed on the Disclosure Schedule,
Company shall not Transfer its interest in Operating Company.
(2) Pledgor shall not cause or suffer the Company to, and
Company shall not, issue any Equity Interests or debt instruments
having rights which may be senior or prior to the rights of Pledgor
to receive Distributions from Company or the rights of Company to
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receive Distributions from Operating Company or which could
otherwise adversely affect the rights of the Interests or the right
to receive Payor Proceeds.
(e) Reduction of Distributions. Subject to fiduciary obligations,
neither Pledgor nor Company shall, directly or indirectly, without the
prior written consent of Secured Party, vote to declare the annual
dividend payable by the Operating Company in an amount less than $0.50
per share.
(f) Payor Proceeds. Pledgor shall not, and shall not cause or
suffer Company to waive its rights, in whole or in part, to receive the
Payor Proceeds.
(g) Payment of Distributions. Pledgor shall cause Company to, and
Company shall, pay any and all cash available of Company (except for
cash necessary to pay the preferred dividend on the Accommodation
Shares) as a dividend directly to Pledgor.
SECTION 6. Delivery of Collateral; Voting Rights; Distributions;
Substitution of Collateral.
(a) Any and all certificates representing the Collateral
(Including without limitation additional or substitute certificates or
instruments representing Distributions, Payor Proceeds or other
Collateral that hereafter may be issued) shall be delivered to the
Secured Party in suitable form for transfer by delivery, or shall be
accompanied by duly executed instruments of transfer or assignment in
blank, with signatures appropriately guaranteed, and accompanied by any
required transfer tax stamps, all in form satisfactory to Secured Party.
(b) So long as there shall not have occurred and be continuing an
Event of Default (hereinafter defined), Pledgor shall be entitled to
exercise any and all voting rights and powers relating or pertaining to
the Collateral or any part thereof for any purpose not inconsistent with
the terms and provisions of the Note, the Loan Agreement, this Agreement
and the other Loan Documents or otherwise in contravention of any of the
terms, covenants and provisions of the Note, the Loan Agreement, this
Agreement or any of the other Loan Documents.
(c) Except as and to the extent provided in the Loan Agreement and
the Deposit Account Agreement, until the Indebtedness is paid in full,
Pledgor and the Company shall not receive or be entitled to retain
Distributions, if any, or Payor Proceeds paid on the Collateral. To the
extent Pledgor or the Company receives any Distributions or Payor
Proceeds prohibited hereunder, Pledgor or the Company shall receive same
in trust for the benefit of Secured Party and shall immediately deliver
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same to Secured Party or its designated agent (accompanied by proper
instruments of assignment or stock powers executed by Pledgor in
accordance with Secured Party's instructions) to be held subject to the
terms, provisions and conditions of this Agreement, the Loan Agreement
and the Deposit Account Agreement.
(d) Upon the occurrence of an Event of Default and so long as said
Event of Default shall continue, at the option of Secured Party, (i) all
rights of Pledgor to exercise the voting and consensual rights and
powers which Pledgor is entitled to exercise pursuant to the foregoing
subparagraph (b) shall cease, and all such rights shall thereupon and
without any further action or notice become vested in Secured Party who
shall have the sole and exclusive right and authority to exercise (or
refrain from exercising) such voting and consensual rights and powers in
its sole discretion, and (ii) Secured Party shall receive and be
entitled to retain any and all Distributions and Payor Proceeds until
the Indebtedness is satisfied. THIS ASSIGNMENT OF VOTING RIGHTS IS
COUPLED WITH AN INTEREST AND IS IRREVOCABLE BY DISSOLUTION OR OTHERWISE.
The exercise of any of the rights and remedies of Secured Party under
this paragraph shall not be or be deemed to be a disposition of
Collateral under Article 9 of the Uniform Commercial Code as in effect
in any applicable jurisdiction (the "UCC") or an acceptance or a
retention or a proposal to accept or retain all or any part of the
Collateral in satisfaction of all or any of the Obligations. Any and all
Distributions and Payor Proceeds received by Secured Party pursuant to
the provisions of this paragraph shall he retained be Secured Party as
part of the Collateral and applied in accordance with the provisions of
Section 11 of this Agreement.
(e) No substitution of Collateral shall be permitted without the
prior written consent of Secured Party.
SECTION 7. Costs and Expenses. Company and Pledgor shall pay all
costs, fees, expenses and charges incurred by Secured Party in connection
with the administration and enforcement of this Agreement and the security
interest granted hereunder (including, without limitation, all attorneys'
fees and costs). In addition, Company and Pledgor agree to pay, and to save
Secured Party harmless from all liability for, any stamp or other taxes which
may be payable in connection with the execution or delivery of this Agreement
or the transactions contemplated hereby. The obligations of Company and
Pledgor pursuant to this paragraph shall survive any termination of this
Agreement.
SECTION 8. Event of Default. The occurrence of any of the
following events shall constitute an event of default (an "Event of Default")
hereunder:
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(a) If any representation or warranty of Pledgor or the Company
made in this Agreement, or in any certificate, report, financial
statement or other instrument furnished in connection with this
Agreement shall prove false or misleading in any material respect;
(b) If Pledgor, the Company or Operating Company shall make a
general assignment for the benefit of creditors;
(c) If a court of competent jurisdiction enters a decree or order
for relief with respect to Pledgor under Title 11 of the United States
Code as now constituted or hereafter amended or under any other
applicable Federal or state bankruptcy, insolvency or other similar law,
rule or regulation, or if such court enters a decree or order appointing
a receiver, liquidator, assignee, trustee, custodian, examiner,
magistrate, arbitrator, sequestrator (or similar official) of Pledgor,
the Company or Operating Company or of any substantial part of their
respective properties, or if such court decrees or orders the winding up
or liquidation of the affairs of Pledgor, the Company or Operating
Company;
(d) If Pledgor, the Company or Operating Company files a petition
for relief or answer or consent seeking relief under Title 11 of the
United States Code as now constituted or hereafter amended, or under any
other applicable Federal or state bankruptcy, insolvency or other
similar law, rule or regulation. or if Pledgor, the Company or Operating
Company falls to vigorously and diligently oppose or otherwise consents
to or acquiesces in the commencement or prosecution of an Involuntary
case under Title 11 of the United States Code as now constituted or
hereafter amended, or under any other applicable Federal or state
bankruptcy, insolvency or similar law, rule or regulation, or to the
appointment of or taking possession by a receiver, liquidator, assignee,
trustee, custodian, examiner magistrate, arbitrator, sequestrator (or
other similar official) of Pledgor, the Company or Operating Company, or
of any substantial part of their respective properties, or if Pledgor,
the Company or Operating Company, falls generally to pay its debts as
such debts become due, or if Pledgor, the Company or Operating Company,
takes any action in furtherance of any action described in this
subparagraph;
(e) If any Affiliate of Pledgor, the Company or Operating Company
shall commence any legal action seeking to cause Pledgor, the Company or
Operating Company or any Affiliate of Pledgor, the Company or Operating
Company to take any of the actions described in subparagraphs (b), (c)
or (d) above with respect to Pledgor, the Company or Operating Company;
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(f) If Pledgor or the Company shall be in default of any other
provision provided herein and such default shall continue for a period
of thirty (30) days after notice from Secured Party; or
(g) If an "Event of Default" (as such term is defined in the Loan
Agreement) occurs.
SECTION 9. Remedies Upon Default. Upon the occurrence of an Event
of Default, Secured Party may, in addition to any other rights or remedies
which Secured Party may have, immediately and without demand exercise with
respect to the Collateral any and all rights and remedies granted to a
secured party under the UCC.
SECTION 10. Sale of Collateral.
(a) Sale of the Collateral may be made at any public or private
sale or at any broker's board or on any securities exchange, for cash,
upon credit or for future delivery, as Secured Party shall deem
appropriate. Secured Party shall be authorized at any such sale, in its
sole discretion, to restrict the prospective bidders or purchasers to
persons who will represent and agree that they are purchasing the
Collateral then being sold for their own account for investment and not
with a view to the distribution or resale thereof, and upon consummation
of any such sale Secured Party shall have the right to assign, transfer
and deliver to the purchaser or purchasers thereof the Collateral so
sold. Each such purchaser at any such sale shall hold the property sold
absolutely free from any claim or right on the part of Pledgor, and
Pledgor hereby waives, to the extent permitted by law, all right of
redemption, stay or appraisal which Pledgor now has or may at any time
in the future have under any rule of law or statute now existing or
hereafter enacted. To the extent that notice of sale shall be required
to be given by law, Secured Party shall give Pledgor ten (10) days'
notice in the manner herein specified of Secured Party's intention to
make any such public or private sale or sale at any broker's board or on
any such securities exchange. Such notice, in case of public sale, shall
state the time and place fixed for such sale, and, in the case of sale
at a broker's board or on a securities exchange, shall state the board
or exchange at which such sale is to be made and the day on which the
Collateral, or portion thereof, will first be offered for sale at such
board or exchange. In case of private sale, such notice shall state the
time after which the Collateral will he sold. Any such public sale shall
be held at such time or times within ordinary business hours and at such
place or places as Secured Party may fix in the notice of such sale. At
any such sale, the Collateral, or any portion thereof, may be sold as
Secured Party may in its sole discretion determine. To the extent
permitted by law, Secured Party may bid, which bid may be in whole or in
part, in the form of cancellation of indebtedness, for and purchase for
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the account of Secured Party or its nominee the whole or any part of the
Collateral. Secured Party shall not be obligated to make any sale of the
Collateral if Secured Party shall determine not to do so, regardless of
the fact that notice of sale of the Collateral may have been given.
Secured Party may, without notice of publication, adjourn any public or
private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same
was so adjourned. In case sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be
retained by Secured Party until the sales price is paid by the purchaser
or purchasers thereof, but Secured Party shall not incur any liability
in case any such purchaser or purchasers shall fail to take up and pay
for the Collateral so sold and, in the case of any such failure, such
Collateral may be sold again upon like notice. As an alternative to
exercising the power of sale herein conferred upon it, Secured Party may
proceed by a suit or suits at law or in equity to foreclose this
Agreement and to sell the Collateral, or any portion thereof, pursuant
to a judgment or decree of a court or courts of competent jurisdiction.
Pledgor agrees, to the extent permitted by law, that any sale or other
disposition of any of the Collateral in accordance with the foregoing
procedures shall be deemed to be commercially reasonable under the UCC
and otherwise proper.
(b) In connection with any disposition of the Collateral, if
Secured Party elects to obtain the advice of any one or more independent
nationally known investment banking firms which are member firms of the
New York Stock Exchange (or other nationally recognized exchange), with
respect to the method or manner of sale or disposition of any of the
Collateral, the best price reasonably obtainable therefor and any other
details concerning such sale or disposition, Pledgor agrees, to the
extent permitted by law, that any sale or other disposition of any of
the Collateral in reliance on such advice shall be deemed to be
commercially reasonable under the UCC and otherwise proper.
(c) Pledgor understands that compliance with federal or state
securities laws may very strictly limit the course of conduct of Secured
Party if Secured Party were to attempt to dispose of all or any part of
the Collateral and may also limit the extent to which or the manner in
which any subsequent transferee of the Collateral may dispose of the
same. Pledgor agrees that in any sale of any of the Collateral, Secured
Party is hereby authorized to comply with any such limitation or
restriction in connection with such sale as it may be advised by counsel
is necessary in order to avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers or further
restrict such prospective bidders or purchasers to persons who will
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represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or
of the purchaser by any governmental regulatory authority or official,
and Pledgor further agrees that such compliance shall not result in such
sale being considered or deemed not to have been made in a commercially
reasonable manner, nor shall Secured Party be liable or accountable to
Pledgor for any discount allowed by reason of the fact that such
Collateral is sold in compliance with any such limitation or
restriction.
SECTION 11. Application of Monies. All monies (including, without
limitation, Distributions) received or collected by Secured Party pursuant to
this Agreement shall be held as Collateral by Secured Party and after the
occurrence of an Event of Default shall be applied by Secured Party first, to
the payment of all costs incurred in the collection of such monies (including
attorneys' fees and legal expenses) and second, to the payment of the
Indebtedness in such order and priority as Secured Party may in its sole
discretion determine. The balance, if any, of such monies remaining after
payment in full of such costs and the Obligations shall be remitted to
Pledgor or as otherwise directed by a court of competent jurisdiction.
SECTION 12. Secured Party Appointed Attorney-in-Fact. Pledgor
hereby appoints Secured Party, effective upon an Event of Default, as the
attorney-in-fact of Pledgor for the purpose of carrying out the provisions of
this Agreement and taking any action and executing any instrument which
Secured Party may deem necessary or advisable to accomplish the purposes
hereof, which appointment is irrevocable and coupled with an interest.
Without limiting the generality of the foregoing, upon an Event of Default,
Secured Party shall have the right and power to receive, endorse and collect
all checks and other orders for the payment of money made payable to Pledgor
or Company representing any Distribution or Payor Proceeds or any part of any
thereof and to give full discharge for the same.
SECTION 13. No Waiver. No failure or delay on the part of Secured
Party in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power
preclude any other or further exercise thereof or the exercise of any other
right or power hereunder nor shall Secured Party's waiver of any right or
remedy against Pledgor release or relieve Pledgor from its obligations
hereunder. No modification or waiver of any provision of this Agreement nor
consent to any departure by Pledgor therefrom shall be effective unless the
same shall be in writing and signed by Secured Party, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand on Pledgor in any case shall, of
itself, entitle Pledgor to any other or further notice or demand in similar
or other circumstances. If any notice is required by law to be given to
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Pledgor or the Company by Secured Party, five (5) days' notice given by
registered mail, return receipt requested, and addressed to such party at the
address set forth herein shall he deemed for all purposes to be reasonable
notice.
SECTION 14. Duration of Secured Party's Rights and Termination.
Until the Indebtedness shall have been paid in full, all rights, powers and
remedies granted to Secured Party under this Agreement shall continue to
exist and may be exercised by Secured Party at any time and from time to
time. Upon payment in full of the Indebtedness, Secured Party shall reassign
and redeliver, without recourse or warranty and at the expense of Pledgor, or
cause to be so reassigned and redelivered, to Pledgor or to such person or
persons as Pledgor shall designate, against receipt, such of the Collateral,
if any, as shall not have been sold or otherwise applied by Secured Party
pursuant to the terms hereof and still be held by Secured Party hereunder,
together with appropriate instruments of reassignment and release.
SECTION 15. Agreements of Pledgor. Until the Indebtedness is paid
and performed in full, Pledgor covenants and agrees with Secured Party as
follows:
(a) Pledgor shall furnish or cause to be furnished to Secured
Party from time to time, at the request of Secured Party, such
information concerning Pledgor, the Company or Operating Company as
Secured Party may reasonably request;
(b) Pledgor shall not authorize or permit Company to make any
loans to members of the Company or to set aside any funds for any such
purpose;
(c) Pledgor shall not authorize or permit Company to create or
permit to exist any mortgage, pledge, title retention lien, or other
lien, encumbrance or security interest, or incur or permit to exist any
indebtedness (directly or as a guarantor) or any lien, encumbrance or
security interest, with respect to any assets now owned or hereafter
acquired by Company, or to take or fail to take any other action
whatsoever, in contravention of Section 5 of this Agreement or otherwise
inconsistent with the terms and provisions of the Note, the Loan
Agreement, this Agreement or any of the other Loan Documents;
(d) Pledgor shall not, and shall not authorize or permit Company
to, in any manner further encumber, sell, transfer or convey, or permit
to be further encumbered, sold, transferred or conveyed in any manner,
the Collateral;
(e) Pledgor shall not consent to or authorize any action by
Company with respect to amending, modifying or terminating the
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Restrictions (in whole or in part) without obtaining the prior written
consent of Secured Party, it being agreed by Pledgor and Company that
any such amendments, modification or termination without the prior
consent of Secured Party shall be void and of no force or effect, nor
shall Pledgor consent to or authorize any action by Company with respect
to entering into any merger or consolidation with, or sale of any
portion of its assets to, any corporation or other person or party, or
changing the character of its business, or adding any additional members
to Company;
(f) Pledgor shall take any steps necessary to prevent Company or
Operating Company from doing any act or thing prohibited pursuant to
this Section or which would otherwise be in contravention of any
representation, warranty, term, covenant or provision set forth in the
Loan Agreement or any of the other Loan Documents.
SECTION 16. Limitation on Duties and Liabilities of Secured Party;
Indemnification.
(a) Beyond the exercise of reasonable care in the custody of any
Collateral in its possession, Secured Party shall have no duty as to any
Collateral or as to the preservation of rights against prior parties or
any other rights pertaining thereto. Secured Party shall have no duty as
to any Collateral, to ascertain or take action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to
any Collateral, whether or not Secured Party has or is deemed to have
knowledge of such matters, or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to
any Collateral. Secured Party shall be deemed to have exercised
reasonable care in the custody and preservation of the Collateral in its
possession if the Collateral is accorded treatment substantially equal
to that which it accords other collateral of the same type in its
possession. Except for gross negligence and willful misconduct, Secured
Party shall not be liable or responsible for any loss or damage to any
of the Collateral, or for any diminution in the value thereof, by reason
of the act or omission of Secured Party or any agent, bailee or
custodian selected by Secured Party in good faith or for taking any
necessary steps to preserve rights against any parties with respect to
any Collateral or for the collection of any proceeds of any Collateral
or for any invalidity, lack of value or uncollectability of any of the
Collateral.
(b) The pledge and assignment of the Collateral and grant of a
security interest is for collateral purposes only, and, prior to its
foreclosure thereon, Secured Party shall neither by virtue of this
Security Agreement, by the receipt of Distributions or Payor Proceeds,
by exercise of voting rights or by the exercise of any of its rights or
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remedies hereunder be deemed to be a member, interest holder, partner or
stockholder, as applicable, of Company or Operating Company or to have
any liability for the debts, obligations or liabilities of Company,
Pledgor, or any other member, interest holder, partner or stockholder,
as applicable, of Company or Operating Company. Without limiting the
generality of the foregoing, by accepting the pledge, assignment and
security interests described herein, Secured Party does not thereby
assume any debts, obligations, responsibilities, covenants, agreements
or liabilities of Pledgor in connection with the Collateral or of
Pledgor to Company, to Operating Company or to any third parties dealing
with Company.
(c) Pledgor shall indemnify and hold harmless Secured Party from
and against any and all liability, loss, or damage that Secured Party
may suffer or incur and which arises out of or results from claims of
third parties, including another stockholder, member, interest holder or
partner, as applicable, based on the rights or obligations of Company or
a stockholder, member, interest holder or partner, as applicable, of
Company under the Company's organizational and charter documents, this
Agreement, or acceptance of Distributions or the exercise of any of the
rights or remedies of Secured Party hereunder; any claim of any alleged
obligation, liability or duty on the part of Company to perform or
discharge any of the terms, covenants, or provisions of the Company's
organizational and charter documents or any liability or obligation of
Company or Pledgor; together with all costs and expenses (including,
without limitation, court costs and attorneys' fees and costs) paid or
incurred in connection therewith; or any receipt of Distributions from
Company or anyone else. Pledgor shall reimburse Secured Party upon
demand for the full amount of any indemnity to which Secured Party may
be entitled hereunder and the full amount of the indemnity obligation
shall be considered to be an Obligation and shall be secured hereby.
(d) Pledgor upon demand shall pay to Secured Party the amount of
any and all reasonable expense, including the reasonable fees and
disbursements of counsel and of any experts and agents, which Secured
Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
Secured Party hereunder, or (iv) the failure by Pledgor or Company to
perform or observe any of the provisions hereof.
(e) All costs and expenses, including reasonable attorneys' fees
and costs, incurred or paid by Secured Party in exercising any right,
power or remedy conferred in this Agreement, or in the enforcement
thereof, shall become a part of the Debt and shall bear interest from
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the date incurred or paid by Secured Party at the Default Rate (as such
term is defined in the Loan Agreement).
SECTION 17. Security Interest Absolute. All rights of Secured
Party and the security interests hereunder, and all obligations secured
hereby, shall be absolute and unconditional, irrespective of any lack of
validity or enforceability of the other Loan Documents; any change in the
time, manner or place of payment of, or in any other term of, all or any of
the Obligations or any other amendment or waiver of or any consent to any
departure from the Loan Documents; any exchange, release or non-perfection of
any other collateral for the Indebtedness, or any release or amendment or
waiver of or consent to departure from any of the Loan Documents; or any
other circumstance (other than payment and performance of the Obligations in
full) that might otherwise constitute a defense available to, or a discharge
of Pledgor or any other obligor under any of the Loan Documents, or any third
party grantor of collateral for the Obligations or any part thereof.
SECTION 18. Notice. Any notice, request, demand, statement,
authorization, approval or consent made hereunder shall be in writing and
shall be hand delivered or sent by Federal Express, or other reputable
national courier service, or by postage pre-paid registered or certified
mail, return receipt requested, and shall be deemed given (i) when received
at the following addresses if hand delivered or sent by Federal Express, or
other reputable national courier service, and (ii) three (3) business days
after being postmarked and addressed as follows if sent by registered or
certified mail, return receipt requested:
If to Secured Party:
Capital Trust, Inc.
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxxxx X. Xxxxxx & Xxxxx Xxxxxxxx
With copies to:
Battle Xxxxxx LLP
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxx
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If to Pledgor:
Prometheus Southeast Retail LLC
c/o Lazard Freres Real Estate Investors, L.L.C.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxx X. Xxxxx
If to Company:
Prometheus Southeast Retail Trust
c/o Lazard Freres Real Estate Investors, L.L.C.
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxx X. Xxxxx
With a copy in the case of any notice to Pledgor or Company to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, X.X. 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Each party may designate a change of address by notice to the other parties,
given at least fifteen (15) days before such change of address is to become
effective.
SECTION 19. Further Assurances.
(a) Pledgor will, at Pledgor's expense and in such manner and form
as Secured Party may require, execute, deliver, file and record any
financing statement, specific assignment or other paper and take any
other action necessary or desirable, or that Secured Party may request,
in order to create, preserve, perfect or validate any security interest,
or to enable Secured Party to exercise and enforce its rights hereunder
with respect to any of the Collateral, or better to assure and confirm
unto Secured Party its rights, powers and remedies hereunder. To the
extent permitted by applicable law, Pledgor hereby authorizes Secured
Party to execute and file, in the name of Pledgor or otherwise, UCC
financing statements (which may be carbon, photographic, photostatic or
other reproductions of this Agreement or of a financing statement
relating to this Agreement) which Secured Party in its sole discretion
may deem necessary or appropriate to further perfect its rights under
this Agreement. Pledgor hereby consents and agrees that the issuer of
the Collateral or any registrar or transfer agent for any of the
Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of Secured Party to effect any transfer
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pursuant to the provisions hereof, notwithstanding any other notice or
direction to the contrary heretofore or hereafter given by Pledgor or
any other party to such issuer, registrar or transfer agent.
(b) Pledgor agrees that Pledgor will not change (i) Pledgor's
name, identity or organizational structure in any manner, or (ii) the
location of Pledgor's principal place of business or chief executive
office unless Pledgor shall have given Secured Party not less than
thirty (30) days' prior written notice thereof.
(c) Pledgor agrees to do and to cause the Company and Operating
Company to do such further reasonable acts and things, and to execute
and deliver such additional conveyances, assignments, agreements and
instruments,, as Secured Party may at any time request in connection
with the administration or enforcement of this Agreement (including,
without limitation, to aid Secured Party in the sale of all or any part
of the Collateral) or related to the Collateral or any part thereof or
in order better to assure and confirm unto Secured Party its rights,
powers and remedies hereunder.
SECTION 20. Cumulative Rights and Remedies. All remedies afforded
to Secured Party by reason of this Agreement are separate and cumulative
remedies and it is agreed that no one of such remedies shall be deemed to be
in exclusion of any other remedies available to Secured Party and shall not
in any manner limit or prejudice any other legal or equitable remedies which
Secured Party may have. The rights, powers and remedies given to Secured
Party by this Agreement shall be in addition to all rights, powers and
remedies given to Secured Party by virtue of any statue or rule of law and
all such rights, powers and remedies are cumulative and not alternative, and
may be exercised and enforced successively or concurrently.
SECTION 21. Parties Bound. This Agreement shall be binding upon
and inure to the benefit of Pledgor, Company and Secured Party and their
respective successors and assigns.
SECTION 22. Severability. If any term, covenant or provision of
this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such term, covenant or
provision.
SECTION 23. No Oral Change. This Agreement may only be modified,
amended, changed, discharged or terminated by an agreement in writing signed
by the parties hereto against whom enforcement is sought.
SECTION 24. Governing Law. This agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws.
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SECTION 25. Headings. Section headings used herein are for
convenience only and shall not affect the construction of this Agreement.
SECTION 26. "Pledgor". The term "Pledgor" as used herein shall,
if this Agreement is signed by more than one pledgor, mean "the pledgors and
each of them" and each obligation of Pledgor herein contained shall be the
joint and several undertaking of all such pledgors, except where expressly
stated to the contrary in this Agreement.
SECTION 27. Counterparts. This Agreement may be executed in any
number of counterparts, and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts together shall constitute
but one and the same agreement.
SECTION 28. Consent by Company. Company is executing this
Agreement for the purposes of making the representations and warranties
contained in Section 3, evidencing its agreement to the provisions of this
Agreement applicable to it, and consenting to the other provisions hereof and
to the exercise by Secured Party of its remedies provided herein.
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IN WITNESS WHEREOF, Secured Party, Pledgor and Company have duly
executed this Agreement the date first above written.
SECURED PARTY: CAPITAL TRUST, INC.
By: /s/ Xxxxx X. Xxxxxxxx
Name/Title: Xxxxx X. Xxxxxxxx, Vice President
PLEDGOR: PROMETHEUS SOUTHEAST RETAIL LLC
By: LFSRI II SPV REIT CORP.
By: /s/ Xxxx X. Xxxxx
Name/Title: Xxxx X. Xxxxx, Vice President
COMPANY: PROMETHEUS SOUTHEAST RETAIL TRUST
By: /s/ Xxxx X. Xxxxx
Name/Title: Xxxx X. Xxxxx, Vice President
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