Exhibit XI
PLEDGE AND SECURITY AGREEMENT [150 N. RIVERSIDE]
THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge and Security
Agreement"), dated as of March 22, 1994, is made by KILICO Realty Corporation,
an Illinois corporation ("Kilico Realty") and Xxxxxx Investors Life Insurance
Company, an Illinois insurance corporation ("Kilico"; Kilico Realty and Kilico
are hereinafter referred to together as the "Pledgor" or the "Company"), to
Lumbermens Mutual Casualty Company, an Illinois insurance corporation (the
"Pledgee").
W I T N E S S E T H:
WHEREAS, Pledgee made a loan (the "Loan") to 000 X. Xxxxxxxxx
Venture, an Illinois general partnership (together with its successors and
assigns, the "Borrower") in the amount of $12,400,000 pursuant to that certain
Loan Agreement between Lender and Borrower dated as of October 17, 1988;
WHEREAS, Kilico Realty holds an option to acquire a Fifty Percent
(50%) partnership interest in Borrower;
WHEREAS, Lender, Xxxxxx Corporation, a Delaware corporation
("Xxxxxx"), and The Prime Group, Inc., an Illinois corporation ("Prime"),
entered into that certain letter agreement dated February 17, 1994 (as amended,
the "Letter Agreement"), which Letter Agreement includes, among other things,
certain agreements of the parties regarding the Loan as set forth specifically
therein;
WHEREAS, Pledgor is an affiliate and subsidiary of Xxxxxx;
WHEREAS, in accordance with the terms of the Letter Agreement, in
order to induce Lender to modify certain of the terms and conditions of the
Loan, and in order to further secure the Loan, Pledgor has agreed, among other
hings, to execute and deliver to Pledgee that certain Limited Recourse Guaranty
dated as of even date herewith (the "Guaranty") with respect to the Loan;
WHEREAS, in accordance with the terms of the Letter Agreement, in
order to further induce Pledgee to modify certain of the terms and conditions of
the Loan, and in order to further secure the Loan, 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.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor hereby agrees as follows:
ARTICLE 1
DEFINITIONS; LETTER AGREEMENT
SECTION 1.1 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 case 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.
"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 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 4.2 (to which subparagraph (c) below shall apply) and 4.12 (to
which subparagraph (d) below shall apply), or to comply with the
provisions of Section 2.7(b) hereof, or to comply with the provisions of
paragraph 2 of the Letter Agreement, 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, so long as such default can reasonably be expected to
be cured within thirty (30) days, Pledgor promptly commences to cure such
default promptly following receipt of notice thereof and thereafter
diligently prosecutes such cure; provided, however, that if such default
cannot reasonably be cured within such thirty (30) day time period but can
reasonably be expected to be cured within an additional ninety (90) days,
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;
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(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,
unvacated or unbonded for a period of ninety (90) days after such entry,
appointment or issuance; or
(g) the occurrence of a default or event of default under any of the
Loan Documents not cured within any applicable cure or grace periods
provided therein with respect to such default or event of default.
"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 $7,000,000.
"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.
"Xxxxxx" shall have the meaning provided therefor in the recitals.
"Kilico" shall have the meaning provided therefor in the recitals.
"Kilico Realty" shall have the meaning provided therefor in the recitals.
"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,
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and, if applicable, any and all other documents and instruments in connection
with credit support/enhancement with respect to the Loan.
"Lock-Up Agreement" means, collectively, (i) that certain agreement dated
as of March 22, 1994 by and among Prime, Prime Group Limited Partnership, and
Friedman, Billings, Xxxxxx & Co., Inc., (ii) that certain agreement dated as of
March 22, 1994 by and among Pledgor, KR Gainesville, Inc., KR Gulf Coast Factory
Shops, Inc., and Friedman, Billings, Xxxxxx & Co., Inc., (iii) that certain
agreement dated as of March 22, 1994 by and among Xxxxxxx Xxxxxxxxx, Xxxxxxxxx
Family LLC, and Friedman, Billings, Xxxxxx & Co., Inc., (iv) that certain
agreement 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.
"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.
"Partnership Interests" means ownership interests held by Partners in the
Partnership, including, but not limited to, Partners' Partnership Units, capital
accounts, and profits and distributions relating thereto, all other payments (if
any) due or to become due in respect of such interests pursuant to the
Partnership Agreement, all rights, powers, and remedies of a Partner under the
Partnership Agreement, all proceeds of all or any of the foregoing, and all
certificates and instruments representing such interests.
"Partnership Units" means fractional, undivided shares of the Partnership
Interests issued pursuant to the Partnership Agreement.
"Person" means any individual or Entity.
"Pledge Amount" means at any time the Initial Pledge Amount minus the
cumulative amount of all Dilution Amounts in excess of the aggregate amount of
$3,351,000, as set forth more specifically in Section 2.7(b) hereof.
"Pledged Interest Issuer" means (i) the Partnership, with respect to any
Pledged Interests comprised of Common Units, and (ii) the General Partner, with
respect to any Pledged Interests comprised of Common Stock.
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"Pledged Interests" means all Common Units and/or Common Stock of any
Pledged Interest Issuer, which are now or hereafter pledged to Pledgee as
Collateral to secure the Secured Obligations.
"Pledgee" shall have the meaning provided therefor in the preamble.
"Pledgor" shall have the meaning provided therefor in the preamble.
"Preferential Distribution" shall have the meaning given such term in the
Partnership Agreement.
"Preferential Distribution Lapse Date" shall have the meaning given such
term in the Partnership Agreement.
"Preferential Distribution Shortfall" shall have the meaning given such
term in the Partnership Agreement.
"Preferred Distribution Shortfall" shall have the meaning given such ten-n
in the Partnership Agreement.
"Preferred Units" shall mean the Partnership Units designated as Preferred
Units under, and as otherwise defined and described in, the Partnership
Agreement.
"Prime" shall have the meaning provided therefor in the recitals.
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated March 22, 1994, among Prime Retail, Inc., Prime, Prime Group
Limited Partnership, Prime Group II, L.P., Xxxxxx Investors Life Insurance
Company, Pledgor, KR Gainesville, Inc., KR Gulf Coast Factory Shops, Inc.,
Xxxxxxx Xxxxxxxxx, Xxxxxxxxx Family LLC, Xxxxxxx X. Xxxxxxxxx, Xx., and
Xxxxxxxxx Family Associates LLC.
"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, The Prime Group, Inc., Prime
Group Limited Partnership, Prime Group II, L.P., Xxxxxxx Xxxxxxxxx, Xxxxxxxxx
Family LLC, Xxxxxxx X. Xxxxxxxxx, Xx., and Xxxxxxxxx Family Associates LLC.
"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.
SECTION 1.2 Letter Agreement. Pledgor agrees and acknowledges that this
Pledge is made by Pledgor pursuant to, and shall be construed to be consistent
with, the terms of the Letter Agreement; provided, however, that,
notwithstanding the terms of the Letter Agreement, the collateral value
maintenance provisions set forth in Section 4.16 of this Pledge and Security
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Agreement provide for the initial collateral value maintenance determination to
be made as of April 1, 1995.
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, 553,797 Common
Units, of which 405,347 Common Units are pledged by Kilico Realty and
148,450 Common Units are pledged by Kilico;
(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 a Conversion
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 noncash 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) 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, and all obligations of Borrower under the Loan Documents
(collectively the "Secured Obligations").
SECTION 2.3 [Intentionally omitted]
SECTION 2.4 Distributions. All Distributions shall be applied to pay
accrued and unpaid interest on the Initial Pledge Amount regardless of when any
such interest accrues. If
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such Distributions are insufficient to pay such accrued interest at any
Distribution date, future Distributions shall be applied to pay the deficiency
before current accrued interest is paid.
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:
(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
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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 duly 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;
(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,
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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 Dilution rights but only as provided in the
Letter Agreement.
(b) In the event that a portion of any Dilution Amount with respect
to any Dilution is allocated to Pledgor pursuant to the terms of the
Sharing Agreement, up to an aggregate amount of $3,351,000, Pledgor shall
promptly pledge and deliver to Pledgee, or cause to be pledged and
delivered to Pledgee, additional unencumbered Common Units and/or
unencumbered Common Stock (including certificates and transfer instruments
related 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 and subject to subparagraph
4.16(d) below) 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.
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At such time as the aggregate amount of all Dilution Amounts with respect
to all Dilutions that is allocated to Pledgor pursuant to the Sharing
Agreement shall exceed $3,351,000, the Pledge Amount shall be reduced by
an amount equal to the aggregate amount of all Dilution Amounts so
allocated to Pledgor in excess of $3,351,000.
(c) Under and pursuant to the Partnership Agreement and the Lock-Up
Agreement, 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 transfer restrictions on Pledged Interests but only as provided in
the Letter Agreement.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 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 and Pledgor has directed 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 3.1(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.
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ARTICLE 4
COVENANTS
SECTION 4.1 [Intentionally omitted]
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 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 2.5, 2.7 and 4.16,
Pledgor will, at all times, keep pledged to Pledgee pursuant hereto all Pledged
Interests and all 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. 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
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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 any 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.
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 Agreement
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].
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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
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) 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 based on publicly reported financial results of operations for
General Partner 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 (determined on a reasonable basis
acceptable to Pledgee) of any other collateral pledged by Pledgor under
this Section 4.16 and then constituting part of the
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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;
(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
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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.
SECTION 5.3 Right of Sale. At its sole option, Pledgee shall have the
right, exercisable by the giving of notice to Pledgor on or after each of the
dates set forth below (an "Annual Sale Date") to sell (or to compel Pledgor to
sell or to cause to be sold) with respect to each Annual Sale Date the
percentage of the Pledged Interests then pledged equal to the sum of (a) 25% of
the Pledged Interests then pledged plus (b) with respect to each Annual Sale
Date other than March 23, 1997, that percentage of the Pledged Interests that
Pledgee had the right to sell (or to compel Pledgor to sell or to cause to be
sold) on the immediately preceding Annual Sale Date but as to which Pledgee did
not exercise such right.
Annual Sale Date
----------------
March 23, 1997
March 23, 1998
March 23, 1999
March 23, 2000
The proceeds of any such sale shall be applied in accordance with Section 6.4.
Pledgee's rights under this Section 5.3 may be exercised in writing at any time
and the closing of any sale pursuant to this Section 5.3 shall occur as soon as
reasonably practicable following notice by Pledgee of its exercise of its rights
under this Section 5.3, subject to the dates set forth in the schedule above;
provided, however, that with respect to any sale by or caused by Pledgor, the
sale or sales of the applicable percentage of Pledged Interests to be sold shall
occur no later than 12 months after the date of giving of notice by Pledgor to
Pledgee as aforesaid. Notwithstanding anything herein to the contrary, after
March 23, 2000 Pledgee has the right to sell (or to compel Pledgor to sell or to
cause to be sold) any remaining balance of the Pledged Interests.
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 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
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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;
(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(c), 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(c), 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 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 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 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 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 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 under the Securities
-00-
Xxx, Xxxxxxx 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 be legally 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 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
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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.
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: Xxxxxx National Insurance Companies
Xxxxxx Center
Xxx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
With copy to: Xxxxxx National Insurance Companies
Xxxxxx Center
Xxx Xxxxxx Xxxxx
Xxxx Xxxxx, Xxxxxxxx 00000
Attention: General Counsel
To Pledgor: c/x Xxxxxx Financial Services, Inc.
000 Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Real Estate Investment Group
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With copy 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
or to any such other address as any party hereto shall designate in a written
notice to the other parties hereto.
SECTION 7.4 Captions. 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 hereby waives any plea of jurisdiction or venue as not being a resident
of Xxxx County, Illinois and hereby specifically authorizes 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
Pledgee. Pledgor hereby irrevocably authorizes 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.
-21-
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 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 any 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 or any of the Loan Documents, (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 of any other Loan Document, 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).
SECTION 7.9 Acknowledgement and Consent. Pledgor hereby consents 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 A attached hereto.
[Signature Page Follows]
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IN WITNESS WHEREOF, Pledgor has duly executed and delivered this Pledge
and Security Agreement as of the day and year first above written.
KILICO REALTY CORPORATION, an Illinois
corporation
By: /s/ Xxxx X. Xxxx
----------------------------------
Name: Xxxx X. Xxxx
Title: Vice President
XXXXXX INVESTORS LIFE INSURANCE
COMPANY, an Illinois insurance corporation
By: /s/ Xxxx X. Xxxx
----------------------------------
Name: Xxxx X. Xxxx
Title: Authorized Signatory
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EXHIBIT A
ACKNOWLEDGEMENT AND CONSENT
Reference is hereby made to the Pledge and Security Agreement [150 N.
Riverside] dated as of March 22, 1994 (the "Pledge and Security Agreement") by
Kilico Realty Corporation to Lumbermens Mutual Casualty 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
acknowledges receipt of a copy of the Pledge and Security Agreement and consents
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 or
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 relieve them of their obligations under
clauses (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 undersigned 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 undersigned's
records, if Pledgee is entitled to be substituted for Pledgor following any
foreclosure upon the Pledged
[Signature page follows.]
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.
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 under the above-referenced Pledge and
Security Agreement, hereby consents to the execution and delivery by the
Partnership and the General Partner of the foregoing Acknowledgement and Consent
and agrees with the provisions thereof.
Dated: March 22, 1994
KILICO REALTY CORPORATION, an Illinois
corporation
By:________________________________________
Name:______________________________________
Title:_____________________________________
XXXXXX INVESTORS LIFE INSURANCE
COMPANY, an Illinois insurance corporation
By:________________________________________
Name:______________________________________
Title:_____________________________________
May 6, 1994
Xx. Xxxxx X. Xxxxx
Assistant State's Attorney
500 Xxxxxxx X. Xxxxx Center
Xxxxxxx, Xxxxxxxx 00000
Re: 1987 Objection No. 1316, M&M Mars
Dear Xxxxx:
Enclosed please find photocopies of the three appraisal reports referenced
in my May 4, 1995 letter to you. I am also enclosing a photocopy of the Order
entered by Judge Xxxxxx on April 25, 1994 setting this matter for prove-up on
May 26, 1994. We are still searching for our objection file and when we find it,
I will forward you photocopies of the objection and other necessary
documentation.
Thank you for your attention to this matter.
Very truly yours,
Xxxxx X. Xxxxxx
DSM/pj
Enclosure
cc: Xxxxxx X. XxXxxxx, Esq.
