4
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "Agreement"), dated March 14, 1997,
between each of the individuals listed on Schedule 1 hereto (each such
individual is referred to herein individually as a "Pledgor" and collectively
such individuals are referred to as the "Pledgors"), Grove Real Estate Asset
Trust , a Maryland real estate investment trust (the "REIT"), and for Grove
Operating, L.P., a Delaware limited partnership (the "Operating Partnership";
the REIT and the Operating Partnership, collectively, the "Pledgee").
WHEREAS, the Pledgors are limited partners of the Operating
Partnership, pursuant to the Agreement of Limited Partnership of Grove
Operating, L.P. dated the date hereof, among the REIT, as sole general partner,
the Pledgors, as limited partners, and the other limited partners named therein
(as such agreement may be amended, modified or supplemented from time to time in
accordance with its terms, the "Operating Partnership Agreement") (the units of
limited partnership interests in the Operating Partnership owned by each Pledgor
are hereinafter referred to as "Units");
WHEREAS, the Pledgors, the REIT and the Operating Partnership are
parties to that certain Contribution Agreement, dated the date hereof, among the
REIT, the Operating Partnership, the Pledgors, and the other contributors named
therein (as such agreement may be amended, modified or supplemented from time to
time in accordance with its terms, the "Contribution Agreement"); capitalized
terms used herein but not otherwise defined herein shall have the meanings
assigned to such terms in the Contribution Agreement;
WHEREAS, the Pledgors have agreed to indemnify the REIT and the
Operating Partnership for certain Damages as set forth in Section 8.1.A of the
Contribution Agreement (the "Secured Obligations"); and
WHEREAS, in order to secure the full and timely performance of the
Secured Obligations, pursuant to the Contribution Agreement, each of the
Pledgors has agreed to pledge and grant to the Pledgee, for the benefit of the
Pledgee, a lien and security interest in, to and under its Units, as more fully
described on Schedule I attached hereto (the "Pledged Units").
NOW, THEREFORE, the parties agree as follows:
1. Grant of Security Interest. As collateral security for the payment,
performance and observance of the Secured Obligations, now existing or hereafter
arising, absolute or contingent, whether or not due and payable, each of the
Pledgors pledges to the Pledgee,, and grants to the Pledgee, a security interest
in the following property (collectively, the "Collateral"):
(a) the Pledged Units, as more particularly described in Schedule I
attached hereto;
(b) all rights of each Pledgor under the Operating Partnership
Agreement attributable to its ownership of the Pledged Units, including, without
limitation, all rights of such Pledgor in, to and under that portion of its
capital account and distributions represented by, or to which such Pledgor is
entitled as a result of its ownership of, the Pledged Units;
(c) all shares, securities, cash or property representing a
dividend or distribution on any of the Pledged Units resulting from a split,
recapitalization, reclassification or other blanket change of the Pledged Units
or otherwise received in exchange therefor;
(d) all distributions and moneys paid or distributed in respect of or in
exchange for any or all of the foregoing;
(e) all rights of Pledgor in and to all distributions declared in respect
of any or all of the foregoing;
(f) all books and records relating to the foregoing; and
(g) all proceeds and profits of any or all of the foregoing.
2. Delivery of Certificates and Instruments. The Pledgors shall
deliver to the Pledgee: (a) the original certificates or other instruments or
documents evidencing the Pledged Units concurrently with the execution and
delivery of this Agreement, and (b) the original certificates or other
instruments or documents evidencing all other Collateral (except for Collateral
which this Agreement specifically permits the Pledgors to retain) within ten
days after a Pledgor's receipt thereof. All Collateral (whether delivered to
Pledgee concurrently with the execution and delivery of this Agreement or
subsequent thereto) which consists of certificated securities shall be in bearer
form or, if in registered form, shall be issued in the name of the Pledgee or
endorsed to the Pledgee or in blank or accompanied by stock power or other
appropriate instruments of transfer in favor of Pledgee executed in blank.
3. Pledgors Remain Liable. Notwithstanding anything herein to the
contrary, (a) the applicable Pledgors shall remain liable under the agreements
(including, without limitation, the Operating Partnership Agreement) included in
the Collateral to the extent set forth therein to perform all of their duties
and obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by the Pledgee of any of its rights hereunder shall
not release any Pledgor from any of its duties or obligations under the
agreements (including, without limitation, the Operating Partnership Agreement)
included in the Collateral, except to the extent that such duties and
obligations may have been terminated by reason of a sale, transfer or other
disposition of the Collateral pursuant hereto, and (c) the Pledgee shall have no
obligation or liability under the agreements (including, without limitation, the
Operating Partnership Agreement) included in the Collateral by reason of this
Agreement, nor shall the Pledgee be obligated to perform any of the obligations
or duties of any Pledgor thereunder or to take any action to collect or enforce
any claim for payment assigned hereunder.
4. Representations, Warranties and Covenants. Each Pledgor represents,
warrants and covenants as follows:
(a) Set forth on Schedule I attached hereto is a complete and
accurate list and description of all Pledged Units delivered by such Pledgor and
such Pledgor is the sole holder of record and sole beneficial owner of the
Pledged Units set forth opposite its name, free and clear of all claims,
mortgages, pledges, liens, encumbrances and security interests of every nature
whatsoever, except in favor of the Pledgee. All other Collateral hereafter
delivered by such Pledgor to the Pledgee will be held of record and beneficially
owned by such Pledgor free and clear of all claims, mortgages, pledges, liens,
encumbrances and security interests of every nature whatsoever, except in favor
of the Pledgee.
(b) With respect to each Pledgor, the addresses of its principal places
of residence/business are set forth below its signature hereto. No Pledgor will
change said address or location, or change its name, without at least 15 days'
prior written notice to the Pledgee, and with respect to any such change in
address or name, each Pledgor shall execute and deliver to the Pledgee such
documents and take such actions as the Pledgee reasonably deems necessary to
perfect and protect the Pledgee's security interests in and to the Collateral.
(c) Such Pledgor will not create, incur, assume or permit to
exist any security interest in the Collateral other than the security interest
created hereby, or sell, transfer, assign, pledge or grant a security interest
in the Collateral to any person other than the Pledgee.
(d) Such Pledgor has the requisite power and authority and
full legal right and capacity, to execute and deliver, and to perform its
obligations under, this Agreement, and has taken all necessary action to
authorize the execution, delivery and performance of this Agreement. Such
Pledgor, if an individual living in a community property state, has obtained all
consents, approvals or authorizations required under applicable laws relating to
the transfer of community property to execute, deliver and perform its
obligations under this Agreement; a true, correct and complete copy of all such
consents, approvals or authorizations has been provided to Pledgee.
(e) This Agreement constitutes the legal, valid and binding
obligation of such Pledgor, enforceable in accordance with its terms.
(f) The execution, delivery and performance of this Agreement
will not violate any law or regulation, or any order or decree of any court or
governmental instrumentality, and will not conflict with, or result in the
breach of, or constitute a default under, any indenture, mortgage, deed of
trust, agreement or other instrument to which such Pledgor is a party or by
which it is bound, and will not result in the creation or imposition of any
lien, charge or encumbrance upon any of the property of such Pledgor (including
the Collateral) pursuant to the provisions of any of the foregoing.
(g) No consent of any other person (including, without
limitation creditors of such Pledgor) and no consent, license, permit, approval
or authorization of, exemption by, notice or report to, or registration, filing
or declaration with, any governmental instrumentality is required in connection
with the execution, delivery, performance, validity or enforceability of this
Agreement, except for the filing of any financing statements required hereunder.
(h) The pledge of the Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in such
Collateral, subject to any filings or actions required pursuant to the New York
Uniform Commercial Code or otherwise.
(i) It will defend the Pledgee's security interest in the
Collateral against the claims and demands of all persons whomsoever.
(j) It will take any and all actions necessary to maintain
such Pledgor's status as a limited partner of the Operating Partnership and the
limited liability represented by the Pledged Units.
(k) Such Pledgor will not enter into or assume any other
agreement containing a negative pledge with respect to the Collateral.
5. Registration. At any time and from time to time the Pledgee may
cause all or any of theCollateral to be transferred to or registered in its
name or the name of its nominee or nominees.
6. Claims; Value of Collateral.
(a) On or prior to the date on which the survival period applicable to
the representation, warranty or covenant upon which a claim for indemnification
is based terminates as set forth in Sections 4.5 and 8.5.B of the Contribution
Agreement, the Pledgee may give notice (a "Claim Notice") to one or more of the
Pledgors of any such claim for indemnification it may have against the Pledgors,
or any claim against the Pledgee which it reasonably believes may result in such
a claim for indemnification against the Pledgors under Section 8.1.A of the
Contribution Agreement, specifying in reasonable detail the nature and dollar
amount of any such claim. Pledgor shall be deemed to have accepted a claim for
indemnification if it does not give a Response Notice (as hereinafter defined)
with respect thereto within 30 days following receipt of the Claim Notice. In
the event that the Pledgors object to any claim for indemnification and provide
a written response (a "Response Notice") to the Pledgee within 30 days following
receipt of the Claim Notice, which Response Notice describes in reasonable
detail the Pledgors' objection to the claim for indemnification (whether as to
the facts giving rise thereto, the amount thereof, or otherwise) and, if
applicable, providing a recalculation of the amount thereof, representatives of
the Pledgee and the Pledgors shall meet within ten days of the Pledgee's receipt
of the Response Notice to discuss and negotiate in good faith the claim for
indemnification and the Pledgors' objection thereto. In the event that such
meeting is not held or, if held, no resolution or compromise is reached within
30 days of such meeting, then at the election of either the Pledgee or the
Pledgors the dispute regarding the claim for indemnification shall be submitted
to and determined by a court of competent jurisdiction, as set forth in Section
21 hereof. A claim for indemnification is successful and is deemed to be a
Secured Obligation on the earliest to occur of: (i) the date on which the
Pledgors accept such claim pursuant to the second sentence of this paragraph (a)
or otherwise; (ii) on the date the Pledgors and the Pledgee agree on the amount
of such claim; or (iii) 30 days after a final adjudication of the Pledgors'
liability with respect to such claim (which shall mean that all applicable
appeals of any decision have been made or the time periods for filing such
appeals have lapsed) in accordance with the procedures set forth above in this
paragraph (a).
(b) The value of Collateral (the "Value") shall be determined as
follows: (i) with respect to Collateral consisting of the Pledged Units, an
amount equal to the fair market value of the number of common shares of
beneficial interest, par value $0.01 per share of the REIT ("Common Shares") for
which such Collateral is exchangeable pursuant to the Operating Partnership
Agreement; and (ii) for all other Collateral, the fair market value of such
Collateral as determined in good faith by the Independent Trust Managers of the
REIT. For purposes of clause (i) of this Section 6(b), "fair market value" of a
Common Share shall have the meaning assigned to such term in the Operating
Partnership Agreement. For the purposes of this Agreement, the term "Independent
Trust Managers" shall mean any member of the REIT's Board of Trust Managers who
is not an officer of the REIT or an affiliate of Grove Investment Group, Inc.
7. Voting Rights and Certain Payments Prior to Occurrence of
Secured Obligations and Other Events.
(a) Until Collateral may be applied to satisfy a Secured Obligation
hereunder, each Pledgor shall be entitled to exercise, as it shall think fit,
but in a manner in the judgment of the Pledgee not inconsistent with the terms
hereof, the voting power with respect to any such Collateral, and for that
purpose the Pledgee shall (if such Collateral shall be registered in the name of
the Pledgee or its nominee) execute or cause to be executed from time to time,
at the expense of such Pledgor, such proxies or other instruments in favor of
such Pledgor or its nominee, in such form and for such purposes as shall be
reasonably required by such Pledgor and, if such Pledgor is an entity, shall be
specified in a written request therefor of its President or a Vice-President, to
enable it to exercise such voting power with respect to such Collateral.
(b) Until the Independent Trust Managers of the REIT reasonably
determine that the outstanding claims for indemnification asserted by the
Pledgee in one or more Claim Notices may equal or exceed the value of the
Collateral then available to satisfy such claims for indemnification, each
Pledgor shall be entitled to receive and retain for its own account any and all
regular cash distributions (but not distributions in the form of partnership
interests in the Operating Partnership ("Partnership Interests") or other
securities or liquidating distributions) and interest at any time and from time
to time paid upon any of such Collateral.
(c) Notwithstanding anything contained in this Agreement to the
contrary, except with the prior consent of the Pledgee, until such time as this
Agreement is terminated, no Pledgor shall have the right to exercise any of its
redemption rights under Section 8.6 of the Operating Partnership Agreement.
8. Extraordinary Payments and Distributions. In case, upon the
dissolution or liquidation (in whole or in part) of the Operating Partnership,
any sum shall be paid as a liquidating distribution or otherwise upon or with
respect to any of the Collateral, such sum shall be paid over to the Pledgee
promptly, and in any event within ten days after receipt thereof, to be held by
the Pledgee as additional Collateral hereunder. In case any distribution of
Partnership Interests shall be made with respect to the Collateral, or
Partnership Interests or fractions thereof shall be issued pursuant to any split
involving any of the Collateral, or any distribution of capital shall be made on
any of the Collateral, or any partnership interests, shares, obligations or
other property shall be distributed upon or with respect to the Collateral
pursuant to a recapitalization or reclassification of the capital of the
Operating Partnership, or pursuant to the dissolution, liquidation (in whole or
in part), bankruptcy or reorganization of the Operating Partnership, or pursuant
to the merger or consolidation of the Operating Partnership with or into another
entity, the partnership interests, shares, obligations or other property so
distributed shall be delivered to the Pledgee promptly, and in any event within
ten days after receipt thereof, to be held by the Pledgee as additional
Collateral hereunder, and all of the same (other than cash) shall constitute
Collateral for all purposes hereof.
9. Voting Rights and Certain Payments After Occurrence of Secured
Obligation and Certain Other Events.
(a) At such time that Collateral may be applied to satisfy a Secured
Obligation hereunder, all rights of any Pledgor to exercise or refrain from
exercising all voting power with respect to such Collateral and to otherwise
exercise all ownership rights arising from such Collateral shall cease, and
thereupon the Pledgee shall be entitled to exercise all voting power with
respect to such Collateral and otherwise exercise such ownership rights as
though the Pledgee were the outright owner of such Collateral. In the event that
the Independent Trust Managers of the REIT acting on behalf of the Pledgee
hereunder, reasonably determine that the outstanding claims for indemnification
under the Contribution Agreement asserted by the Pledgee in one or more Claim
Notices may equal or exceed the value of the Collateral then available to
satisfy such claims for indemnification, all rights of any Pledgor to receive
and retain the distributions and interests which it would otherwise be
authorized to receive and retain pursuant to Section 7 hereof shall cease, and
thereupon the Pledgee shall be entitled to receive and retain, as additional
Collateral hereunder, any and all distributions and interest at any time and
from time to time paid upon any of such Collateral, provided that, concurrent
with making such determination, the Pledgee gives notice thereof to the
Pledgors. Upon receipt of any such notice, the Pledgors may submit the matter to
arbitration in accordance with the rules of the American Arbitration Association
before a tribunal in New York, New York, and the decision of the arbitrators as
to the retention of any such distributions and interest shall be final and
binding between the parties and shall be enforceable in any court of competent
jurisdiction.
(b) All payments, distributions or other property or assets which are
received by any Pledgor contrary to the provisions of paragraph (a) of this
Section 9 shall be received and held in trust for the benefit of the Pledgee,
shall be segregated from other funds of such Pledgor and shall be forthwith paid
over to the Pledgee.
10. Application of Cash Collateral. Any cash received and retained by
the Pledgee as additional Collateral hereunder pursuant to the foregoing
provisions may at any time and from time to time be applied (in whole or in
part) by the Pledgee, at its option, to the payment of the Secured Obligations
to which such Collateral is subject (in such order as the Pledgee shall in its
sole discretion determine).
11. Remedies With Respect to the Collateral.
(a) At such time that a claim for indemnification under the
Contribution Agreement becomes a Secured Obligation, the Pledgee, without
obligation to resort to other security, shall have the right at any time and
from time to time to redeem, sell, resell, assign and deliver, in its
discretion, all or any part of Collateral with a Value equal to the amount of
the Secured Obligation (the "Indemnification Amount"), in one or more parcels,
at the same or different times, and all right, title and interest, claim and
demand therein and right of redemption thereof, at any public or private sale,
for cash, upon credit or for future delivery, and in connection therewith the
Pledgee may grant options. Each such purchaser at any such sale shall hold the
property sold absolutely free from any claim or right on the part of any
Pledgor, and each Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and appraisal which such Pledgor now has or may at
any time in the future have under any rule of law or statute now existing or
hereafter enacted. If any part of the Collateral is sold by the Pledgee upon
credit or for future delivery, the Pledgee shall not be liable for the failure
of the purchaser to purchase or pay for the same and, in the event of any such
failure, the Pledgee may resell the Collateral. In no event shall a Pledgor be
credited with any part of the proceeds of sale of any Collateral until cash
payment thereof has actually been received by the Pledgee.
(b) No demand, advertisement or notice, all of which are hereby
expressly waived, shall be required in connection with (i) any redemption by the
Operating Partnership of any Collateral in accordance with the Operating
Partnership Agreement or (ii) any sale or other disposition of any part of the
Collateral which threatens to decline speedily in value or which is of a type
customarily sold on a recognized market. Except as set forth in the preceding
sentence, the Pledgee shall give the Pledgors at least ten days' prior notice of
the time and place of any public sale and of the time after which any private
sale or other disposition is to be made, which notice the Pledgors agree is
reasonable, all other demands, advertisements and notices being hereby waived.
The Pledgee shall not be obligated to make any sale of Collateral if it shall
determine not to do so, regardless of the fact that notice of sale may have been
given. The Pledgee may, without notice or 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. Upon each
private sale of Collateral of a type customarily sold in a recognized market and
upon each public sale, the Pledgee may purchase all or any of the Collateral
being sold, free from any equity or right of redemption, which is hereby waived
and released, and may make payment therefor by release or discharge of the
Secured Obligations in lieu of cash payment, and may, upon compliance with the
terms of sale, hold, retain and dispose of such Collateral without further
accountability therefor. In the case of all sales of Collateral, public or
private, the Pledgee may deduct from the proceeds of sale all costs and expenses
of every kind for sale or delivery, including brokers' and attorneys' fees, and
the Pledgee shall apply any balance of the proceeds of sale to the payment of
the Secured Obligations. Recourse against the Pledgors is joint and several,
however, is limited to the rights of the Pledgors in the Collateral and the
Pledgors, collectively, shall not be liable for any deficiency in the proceeds
of sale of the Collateral to the payment of the Secured Obligations. If any
proceeds of sale remain after payment in full of such costs and expenses and all
of the Secured Obligations, they shall be held by the Pledgee as additional
Collateral hereunder, subject to any duty of the Pledgee imposed by law to the
holder of any subordinate security interest in the Collateral known to the
Pledgee.
(c) For purposes of this Section 11, an agreement to sell all or any
part of the Collateral shall be treated as a sale thereof and the Pledgee shall
be free to carry out such sale pursuant to such agreement, and no Pledgor shall
be entitled to the return of any of the same subject thereto, notwithstanding
that after the Pledgee shall have entered into such an agreement, all Secured
Obligations may have been paid and performed in full.
(d) Each Pledgor recognizes that the Pledgee may be unable to effect a
public sale of all or a part of the Collateral by reason of certain prohibitions
contained in the Securities Act of 1933, as amended, as now or hereafter in
effect, or in applicable Blue Sky or other state securities laws, as now or
hereafter in effect, but may be compelled to resort to one or more private sales
to a restricted group of purchasers who will 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. Each Pledgor agrees that
private sales so made may be at prices and other terms less favorable to the
seller than if such Collateral were sold at public sales, and that the Pledgee
has no obligation to delay 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 such applicable
securities laws. Each Pledgor agrees that private sales made under the foregoing
circumstances shall be deemed to have been made in a commercially reasonable
manner.
(e) The remedies provided herein in favor of the Pledgee shall not be
deemed exclusive, but shall be cumulative, and shall be in addition to all other
remedies in favor of the Pledgee existing at law or in equity.
(f) The Pledgee shall not have any duty to exercise any of the rights,
privileges, options or powers or to sell or otherwise realize upon any of the
Collateral, as herein authorized, and the Pledgee shall not be responsible for
any failure to do so or delay in so doing.
12. Care of Collateral. The Pledgee shall have no duty as to the
collection or protection of the Collateral or any income thereon or as to the
preservation of any rights pertaining thereto, beyond the safe custody of any
thereof actually in its possession. With respect to any maturities, calls,
conversions, exchanges, redemptions, offers, tenders or similar matters relating
to any of the Collateral (herein called "events"), the Pledgee's duty shall be
fully satisfied if (i) the Pledgee exercises reasonable care to ascertain the
occurrence and to give reasonable notice to the Pledgors of any events
applicable to any Collateral which are registered and held in the name of the
Pledgee or its nominee, (ii) the Pledgee gives the Pledgors reasonable notice of
the occurrence of any events, of which the Pledgee has received actual
knowledge, as to any securities which are in bearer form or are not registered
and held in the name of the Pledgee or its nominee (the Pledgors hereby agreeing
to give the Pledgee reasonable notice of the occurrence of any events applicable
to any securities in the possession of the Pledgee of which the Pledgors have
received knowledge), and (iii) (a) the Pledgee endeavors to take such action
with respect to any of the events as the Pledgors may reasonably and
specifically request in writing in sufficient time for such action to be
evaluated and taken or (b) if the Pledgee determines that the action requested
might adversely affect the value of the Collateral, the collection of the
Secured Obligations, or otherwise prejudice the interests of the Pledgee, the
Pledgee gives reasonable notice to the Pledgors that any such requested action
will not be taken and if the Pledgee makes such determination or if any Pledgor
fails to make such timely request, the Pledgee takes such other action as it
deems advisable in the circumstances. Except as hereinabove specifically set
forth, the Pledgee shall have no further obligation to ascertain the occurrence
of, or to notify the Pledgors with respect to, any events and shall not be
deemed to assume any such further obligation as a result of the establishment by
the Pledgee of any internal procedures with respect to any securities in its
possession. Except for any claims, causes of action or demands arising out of
the Pledgee's failure to perform its agreements set forth in this Section, the
Pledgors release the Pledgee from any claims, causes of action and demands at
any time arising out of or with respect to this Agreement, the Collateral and/or
any actions taken or omitted to be taken by the Pledgee with respect thereto,
and the Pledgors hereby agree to hold the Pledgee harmless from and with respect
to any and all such claims, causes of action and demands.
13. Power of Attorney. Each Pledgor hereby appoints the Pledgee as
such Pledgor's attorney-in-fact for the purpose of carrying out the provisions
of this Agreement and taking any action and executing any instrument which the
Pledgee may deem necessary or advisable to accomplish the purposes hereof.
Without limiting the generality of the foregoing, the Pledgee shall have the
right and power to (a) receive, endorse and collect all checks and other orders
for the payment of money made payable to a Pledgor representing any interest or
other distribution payable in respect of the Collateral or any part thereof and
to give full discharge for the same, and (b) to execute endorsements,
assignments or other instruments of conveyance or transfer with respect to all
or any of the Collateral.
14. Further Assurances. The Pledgors shall, at their sole cost and
expense, upon request of the Pledgee, duly execute and deliver, or cause to be
duly executed and delivered, to the Pledgee such further instruments and
documents and take and cause to be taken such further actions as may be
necessary or proper in the reasonable opinion of the Pledgee to carry out more
effectually the provisions and purposes of this Agreement.
15. No Waiver. No failure on the part of the Pledgee to exercise, and
no delay on the part of the Pledgee in exercising, any of its options, powers,
rights or remedies hereunder, or partial or single exercise thereof, shall
constitute a waiver thereof or preclude any other or further exercise thereof or
the exercise of any other option, power, right or remedy.
16. Security Interest Absolute. All rights of the Pledgee hereunder,
grant of a security interest in the Collateral and all obligations of the
Pledgors hereunder, shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Contribution Agreement, any of the
Secured Obligations or any other agreement or instrument relating thereto, (b)
any change in any term of all or any of the Secured Obligations or any other
amendment or waiver of, or any consent to any departure from, the Contribution
Agreement, or any other agreement or instrument or (c) any other circumstance
which might otherwise constitute a defense available to, or a discharge of, any
Pledgor in respect of the Secured Obligations or in respect of this Agreement.
17. Return of Collateral. Upon the date that is two years from the
date hereof (i.e., the date of termination of the survival period for all
representations and warranties under the Contribution Agreement), the Pledgors
shall be entitled to the return of all of the Collateral and all other cash held
as additional Collateral hereunder which have not been used or applied toward
the payment of the Secured Obligations, unless claims for indemnification under
the Contribution Agreement asserted in one or more Claim Notices pursuant to
Section 6(a) hereof remain outstanding, in which case Collateral with a Value
equal to the aggregate dollar amount of such claims for indemnification (the
"Unresolved Claim Amount") shall be retained by the Pledgee pursuant to the
terms hereof pending final resolution of such claims for indemnification
pursuant to Section 6 hereof. Pledgee shall use its best efforts to cause the
Value of Collateral owned and pledged hereunder by each Pledgor that may be
retained towards the Unresolved Claim Amount by Pledgee under this Section 17 to
be equal to the Unresolved Claim Amount multiplied by such Pledgor's Collateral
Percentage, as set forth on Schedule I hereto. Notwithstanding the preceding
sentence, in the event that, the application of the calculation set forth in the
preceding sentence would result in (i) Pledgee returning any Collateral to any
Pledgor(s) and (ii) Pledgee retaining Collateral with a Value that is less than
the Unresolved Claim Amount, then Pledgee may retain additional Collateral from
the Pledgor(s) to whom Pledgee would otherwise be returning Collateral, pro rata
among such Pledgor(s) in accordance with their Collateral Percentage, until (x)
Pledgee has retained Collateral equal to the Unresolved Claim Amount or (y) no
Pledgor will have any Collateral returned hereunder, whichever should occur
first. Pledgee shall not be liable for any deficiency in the Value of Collateral
returned to any Pledgor under this Section 17. The assignment by the Pledgee to
the Pledgors of such Collateral shall be without representation or warranty of
any nature whatsoever and wholly without recourse. Notwithstanding the
foregoing, the Pledgors' release of the Pledgee and agreement to hold the
Pledgee harmless set forth in the last sentence of Section 12 hereof shall
survive any return of Collateral or termination of this Agreement.
18. Notices. All notices and other communications to any party
hereunder shall be in writing and shall be personally delivered or sent by
certified mail, postage prepaid, return receipt requested, or by a reputable
courier delivery service or by prepaid telex or telecopy and shall be given to
the address or telex or telecopier number for such party set forth below such
party's signature to this Agreement, or to such other address or telex or
telecopier number as such party may hereafter specify by notice to the other
party. Each such notice or other communication shall be effective (a) if given
by telex or telecopier, when such telex or telecopy is transmitted to the telex
or telecopier number specified by this Section and the appropriate answerback or
confirmation is received or (b) if given by any other means (including, without
limitation, by courier), when delivered at the address specified by this
Section.
19. Amendments and Waivers. No amendment or waiver of any provision
of this Agreement shall in any event be effective unless the same shall be in
writing and signed by the Pledgee and each Pledgor.
20. Governing Law. This Agreement and the rights and obligations of
the Pledgee and the Pledgors hereunder shall be construed in accordance with
and governed by the law of the State of New York (without giving effect to the
conflict of law principles thereof).
21. Submission to Jurisdiction.
(a) Any legal action or proceeding with respect to this Agreement may
be brought in the courts of the State of New York or of the United States of
America located in New York, and, by execution and delivery of this Agreement,
each Pledgor hereby accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts. Each Pledgor
hereby irrevocably waives, in connection with any such action or proceeding, (i)
trial by jury, (ii) any objection, including, without limitation, any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any such action or proceeding in
such respective jurisdictions and (iii) the right to interpose any setoff,
counterclaim or cross-claim.
(b) Each Pledgor irrevocably consents to the service of process of any
of the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by certified mail, postage prepaid, to such Pledgor at its
address determined pursuant to Section 18 hereof.
(c) Nothing herein shall affect the right of the Pledgee to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against the Pledgor in any other jurisdiction.
22. Assignment. None of the Pledgors or Pledgee may assign any of
their respective rights under and interests in this Agreement without the prior
written consent of the Pledgors (if the assignor is the Pledgee) or of the
Pledgee (if the assignor is any Pledgor), which consent shall not be
unreasonably withheld or delayed; provided, however, that no consent of any of
the Pledgors is required hereunder for the assignment by the Operating
Partnership or the REIT of any of its rights under and interests in the
Contribution Agreement to any permitted assignee under the Contribution
Agreement. Upon receipt of such consent (if required under this Section 22), the
Pledgee may deliver the Collateral or any portion thereof to its assignee who
shall thereupon, to the extent provided in the instrument of assignment, have
all of the rights of the Pledgee hereunder with respect to the Collateral, and
the Pledgee shall thereafter be fully discharged from any responsibility with
respect to the Collateral so delivered to such assignee. However, no such
assignment shall relieve such assignee of those duties and obligations of the
Pledgee specified hereunder.
23. Benefit of Agreement. This Agreement shall be binding upon and
inure to the benefit of the Pledgors and the Pledgee and their respective
heirs, successors and permitted assigns, and all subsequent holders of the
Secured Obligations.
24. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original and all of which
shall together constitute one and the same agreement.
25. Captions. The captions of the sections of this Agreement have been
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
26. Complete Agreement. This Agreement and the Contribution Agreement
constitute the entire agreement of the parties with respect to the subject
matter hereof and supersede all other understandings, oral or written, with
respect to the subject matter hereof.
27. Severability. In case any one or more of the provisions contained in
this Agreement should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein shall not in any way be affected or impaired.
IN WITNESS WHEREOF, the Pledgors have duly executed this Agreement,
and the Pledgee has caused this Agreement to be duly executed by its officers
duly authorized, as of the day and year first above written.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK)
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
/s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Business Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Residence Address
00 Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
/s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Business Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Residence Address
00X Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
/s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Business Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Residence Address
000 Xxxxx Xxxx
Xxxxxxxxxxx, XX 00000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
/s/ Xxxxxx X. XxXxxxxx
Xxxxxx XxXxxxxx
Business Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Xxxxxxxxx Xxxxxxx
0 Xxxxxxx Xxxx
Xxxxxxxxxxx, XX 00000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
/s/ Xxxxxx XxXxxxxx
Xxxxxx XxXxxxxx
Business Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
Residence Address
00 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
NATIONAL REALTY SERVICES,
LIMITED PARTNERSHIP
By: Grove Services Inc.
its General Partner
By: /s/ Xxxxxx Xxxxxxx
Name: Xxxxxx Xxxxxxx
Title: President
Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
GROVE INVESTMENT GROUP, INC.
By: /s/ Xxxxx Xxxxxxx
Name: Xxxxx Xxxxxxx
Title: Secretary
Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
BURGUNDY ASSOCIATES LIMITED
PARTNERSHIP
By: BALP, Inc.,
its General Partner
By: /s/ Xxxxxx X. XxXxxxxx
Name: Xxxxxx X. XxXxxxxx
Title: Treasurer
Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
GROVE EQUITY PARTNERSHIP
By: /s/ Xxxxxx X. XxXxxxxx
Xxxxxx X. XxXxxxxx
Partner
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Partner
By: /s/ Xxxxxx Xxxxxxx
Xxxxxx Xxxxxxx
Partner
By: /s/ Xxxxx Xxxxxxx
Xxxxx Xxxxxxx
Partner
Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGOR:
GROVE HOLDING CO. INC.
By: /s/ Xxxxxx X. XxXxxxxx
Name: Xxxxxx X. XxXxxxxx
Title: Treasurer
Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
SIGNATURE PAGE
TO
PLEDGE AGREEMENT
PLEDGEES:
GROVE REAL ESTATE ASSET TRUST
By: /s/ Xxxxxx X. XxXxxxxx
Name: Xxxxxx X. XxXxxxxx
Title: Chief Financial Officer
Address:
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
GROVE OPERATING, L.P.
By: GROVE REAL ESTATE ASSET TRUST,
its General Partner
By: /s/ Xxxxxx X. XxXxxxxx
Name: Xxxxxx X. XxXxxxxx
Title: Chief Financial Officer
Address:
c/o Grove Real Estate Asset Trust
000 Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
SCHEDULE I
Pledged Units
Name of Pledgor Number of Units Collateral
Percentage
Xxxxx Xxxxxxx ___ [ ]%
Xxxxx Xxxxxxx ___ [ ]%
Xxxxxx Xxxxxxx ___ [ ]%
Xxxxxx XxXxxxxx ___ [ ]%
National Realty, L.P. ___ [ ]%
Grove Investment Group, Inc. ___ [ ]%
Burgundy Associates Limited
Partnership ___ [ ]%
Xxxxxx XxXxxxxx [ ]%
Total ___ 100%
