EXHIBIT 10.5
PLEDGE AGREEMENT
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PLEDGE AGREEMENT, dated ___________, 1997, between Kilroy Industries,
a California corporation, Xxxx X. Xxxxxx, Xx. and Xxxx X. Xxxxxx, Xx. (each of
the foregoing individuals and entity is referred to herein individually as a
"Pledgor" and collectively as the "Pledgors"), and Xxxxxx Realty Corporation, a
Maryland corporation (the "REIT"), for itself and as agent for Xxxxxx Realty,
L.P., a Delaware limited partnership (the "Operating Partnership") and each
other person who becomes a Covered Party (as defined in the Representations
Agreement defined below) and agrees to such agency (in both such capacities, the
"Pledgee").
WHEREAS, the Pledgors are limited partners of the Operating
Partnership, pursuant to the Amended and Restated Agreement of Limited
Partnership of Xxxxxx Realty, 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"), and such limited partnership interests are evidenced by
certificates representing units of limited partnership interest in the Operating
Partnership (the "Units");
WHEREAS, the Pledgors, the REIT and the Operating Partnership are
parties to that certain Supplemental Representations, Warranties and Indemnity
Agreement dated the date hereof (as such agreement may be amended, modified or
supplemented from time to time in accordance with its terms, the
"Representations Agreement"); capitalized terms used herein but not otherwise
defined herein shall have the meanings assigned to such terms in the
Representations Agreement;
WHEREAS, the Pledgors agreed to indemnify the REIT and the Operating
Partnership for certain losses as set forth in Section 4 of the Representations
Agreement (the "Secured Obligations"); and
WHEREAS, in order to secure the full and timely performance of the
Secured Obligations, pursuant to the Representations Agreement each of the
Pledgors agreed to pledge and grant to the Pledgee, for the Pledgee's own
benefit and the benefit of the Operating Partnership and the other Covered
Parties, a lien and security interest in, to and under 50% of its Units, as more
fully described on Schedule I attached hereto (the "Pledged Units").
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NOW, THEREFORE, the parties agree as follows:
1. Grant of Security Interest. As collateral security for the
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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, for its own benefit and for the benefit of the Operating Partnership
and the other Covered Parties, and grants to the Pledgee, for its own benefit
and for the benefit of the Operating Partnership and the other Covered Parties,
a security interest in the following property (collectively, the "Collateral"):
(a) the Pledged Units, as more particularly described in Schedule I
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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) any additional partnership interests in the Operating Partnership
("Partnership Interests") and/or obligations of the Operating Partnership which
may at any time hereafter be acquired by any Pledgor in connection with the
Pledged Units and the certificates or other instruments or documents evidencing
same;
(d) any additional partnership interests, shares of stock,
obligations and/or other property and the certificates or other instruments or
documents evidencing the same which may at any time hereafter be delivered by
the Pledgors to the Pledgee to be held pursuant to this Agreement;
(e) all distributions and moneys paid or distributed in respect of or
in exchange for any or all of the foregoing;
(f) all rights of Pledgor in and to all distributions declared in
respect of any or all of the foregoing;
(g) all books and records relating to the foregoing; and
(h) all proceeds and profits of any or all of the foregoing.
2. Delivery of Certificates and Instruments. The Pledgors shall
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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 which is 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.
3. Pledgors Remain Liable. Notwithstanding anything herein to the
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contrary, (a) the applicable Pledgors shall remain liable under the agreements
(including, without limitation, the Operating Partnership Agreement) included in
the Collateral to the
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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
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represents, warrants and covenants as follows (provided, however, that Xxxx X.
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Xxxxxx, Sr. makes no representation, warranty or covenant with respect to Xxxx
X. Xxxxxx, Xx. or Collateral delivered by Xxxx X. Xxxxxx, Xx. and Xxxx X.
Xxxxxx, Xx. makes no representation, warranty or covenant with respect to Xxxx
X. Xxxxxx, Xx. or Collateral delivered by Xxxx X. Xxxxxx, Xx.):
(a) Set forth on Schedule I attached hereto is a complete and
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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 and except, with respect to the
Pledged Units owned by Xxxx X. Xxxxxx, Xx., Xxxxx Xxxxxx'x interests in
distributions in respect of such Pledged Units which are in all respects subject
and subordinate to the interests of the Pledgee hereunder as provided in that
certain Consent (the "Consent") executed by Xxxxx Xxxxxx on October 23, 1996.
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 and except, with respect to
other Collateral hereafter delivered by Xxxx X. Xxxxxx, Xx., Xxxxx Xxxxxx'x
interests in distributions, if any, in respect of such Collateral which are in
all respects subject and subordinate to the interests of the Pledgee hereunder
as provided in the Consent.
With respect to each Pledgor which is an entity, the address of its
chief executive office and principal place of business, and the location of its
books and records relating to the Collateral, is set forth below its signature
hereto. With respect to each Pledgor which is an individual, the addresses of
its principal and only places of residence/business are set forth below its
signature hereto. No Pledgor will change said address or location, or merge or
consolidate with any person 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 or merger or consolidation, 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.
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(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 and other than, with respect to the Collateral delivered by Xxxx X.
Xxxxxx, Xx., Xxxxx Xxxxxx'x interests in distributions in respect of such
Collateral which are in all respects subject and subordinate to the interests of
the Pledgee hereunder as provided in the Consent, or sell, transfer, assign,
pledge or grant a security interest in the Collateral to any person other than
the Pledgee.
(d) The Pledged Units delivered by such Pledgor constitute the
percentage of the outstanding equity of the Operating Partnership as indicated
on Schedule I attached hereto.
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(e) The Pledged Units constitute 50% of the Partnership Interests of
the Operating Partnership owned by such Pledgor.
(f) The Collateral consisting of Partnership Interests are fully paid
and are not subject to any options to purchase or similar rights of any kind of
any person.
(g) Such Pledgor, if an entity, is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to own its properties
and to transact the business in which it is engaged.
(h) Such Pledgor has the requisite power and authority and, if an
individual, 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 is attached as a Schedule to
the Representations Agreement.
(i) This Agreement constitutes the legal, valid and binding
obligation of such Pledgor, enforceable in accordance with its terms.
(j) The execution, delivery and performance of this Agreement will
not violate (as applicable) any law or regulation, or any order or decree of any
court or governmental instrumentality, or any provision of the charter or by-
laws of, or any securities issued by, such Pledgor, 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 pursuant to the provisions of any of the foregoing.
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(k) No consent of any other person (including, without limitation, as
applicable, stockholders and 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.
(l) 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 California Uniform Commercial
Code or otherwise.
(m) It will defend the Pledgee's security interest in the Collateral
against the claims and demands of all persons whomsoever.
(n) 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.
(o) 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
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cause all or any of the Collateral to be transferred to or registered in its
name or the name of its nominee or nominees.
6. Claims; Value of Collateral.
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(a) Subject to Section 6 of the Representations Agreement, on or
prior to the date on which the Survival Period terminates, a Covered Party may
give notice (a "Claim Notice") to one or more of the Pledgors of any Claim it
may have against the Pledgor(s), or any claim against the Covered Party which it
reasonably believes may result in a Claim against the Pledgor(s) under Section 4
of the Representations Agreement, specifying in reasonable detail the nature and
dollar amount of any such Claim. A Pledgor shall be deemed to have accepted a
Claim 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 any Pledgor objects to any Claim and provides a written response (a
"Response Notice") to such Covered Party within 30 days following receipt of the
Claim Notice, which Response Notice describes in reasonable detail such
Pledgor's objection to the Claim (whether as to the facts giving rise thereto,
the amount thereof, or otherwise) and, if applicable, providing a recalculation
of the amount thereof, such Covered Party and such Pledgor shall meet within ten
days of the Covered Party's receipt of the Response Notice to discuss and
negotiate in good faith the Claim and such Pledgor's 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 such
Covered Party or such Pledgor the dispute regarding the Claim shall be submitted
to and determined by the U.S. District Court for the Southern District of
California or, if such court does not have
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jurisdiction over such dispute, such dispute shall be submitted to and
determined by the Circuit Court of Los Angeles County, California. A Claim is
successful and is deemed to be a Secured Obligation on the earliest to occur of:
(i) the date on which the relevant Pledgor(s) accepts such Claim pursuant to the
second sentence of this paragraph (a) or otherwise; (ii) on the date the
relevant Pledgor(s) and Covered Party agree on the amount of such Claim; or
(iii) 30 days after a final adjudication of the relevant Pledgor's or 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 or other
Partnership Interests, an amount equal to the fair market value of the number of
shares of the REIT's common stock for which such Collateral is exchangeable; and
(ii) for all other Collateral, the fair market value of such Collateral as
determined by the Independent Directors of the Pledgee. For purposes of clause
(i) of this Section 6(b), "fair market value" of a share of common stock of the
REIT shall have the meaning assigned to such term in the Operating Partnership
Agreement.
7. Voting Rights and Certain Payments Prior to Occurrence of Secured
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Obligations and Other Events.
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(a) Until Collateral may be applied to satisfy a Secured Obligation
hereunder (such Collateral to consist only of Collateral delivered by a Pledgee
liable for such Secured Obligation), 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 Directors of the Pledgee reasonably
determine that the outstanding Claims asserted by the Covered Parties in one or
more Claim Notices may equal or exceed the value of the Collateral then
available to satisfy such Claims, 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 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.
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8. Extraordinary Payments and Distributions. In case, upon the
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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
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Obligation and Certain Other Events. (a) At such time that Collateral may be
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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 Directors of the Pledgee
reasonably determine that the outstanding Claims asserted by the Covered Parties
in one or more Claim Notices may equal or exceed the value of the Collateral
then available to satisfy such Claims, all rights of any Pledgor to receive and
retain the distributions and interest 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
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such determination, the Pledgee gives notice thereof to the affected Pledgor(s).
Upon receipt of any such notice, a Pledgor may submit the matter to arbitration
in accordance with the rules of the American Arbitration Association before a
tribunal in Los Angeles, California, 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
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by the Pledgee as additional Collateral hereunder pursuant to the foregoing
provisions may at any
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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.
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(a) At such time that a Claim 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 cause the Operating Partnership 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 (such
Collateral to consist of Collateral delivered by a Pledgor which is liable for
such Secured Obligation), 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 REIT, the Operating Partnership or any other Covered
Party 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
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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 limited to the rights of
the Pledgors in the Collateral and the Pledgors 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
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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
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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 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
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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
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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,
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and no delay on the part of the Pledgee or of any Covered Party in exercising,
any of its options, powers, rights or remedies hereunder, or partial or single
exercise thereof, shall constitute a
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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
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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 Representations Agreement, any of
the Secured Obligations or any Grantor Agreement or any other agreement or
instrument relating thereto or relating to the Transactions, (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 Representations Agreement,
any Grantor 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 termination of the Survival
--------------------
Period, 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
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 shall be retained by the Pledgee pursuant to the terms
hereof pending resolution of such Claims pursuant to Section 6 hereof (such
retained Collateral to consist of Collateral delivered by any Pledgor which may
be liable for such Claims (or, if more than one Pledgor may be liable as to any
Claim, then in proportion to such Pledgors' potential liability so long as the
Pledgee holds sufficient Collateral of each such Pledgor, and otherwise in any
proportion). 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 communica-tion shall be effective (a) if given
by telex or telecopier, when such telex or telecopy is trans-mitted 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.
11
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 California (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 California or of the United States of
America located in California, 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. Except with respect to any assignment by the
----------
Pledgee to the Operating Partnership or to any permitted assignee of the REIT or
the Operating Partnership under the Representations Agreement or other Covered
Party (which shall not require any Pledgor's consent but as to which the Pledgee
will give notice to the Pledgors), 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 (a) the assignment by the Operating
Partnership or the REIT of any of its rights under and interests in the
Representations Agreement to any permitted assignee under the Representations
Agreement or (b) the Pledgee to act hereunder as agent on behalf of any person
who becomes a Covered Party. 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.
12
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 Representations
------------------
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.
13
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.
PLEDGORS: KILROY INDUSTRIES
By:________________________________
Name:
Title:
Address:
0000 Xxxx Xxxxxxxx Xxxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attn:______________________________
Tel: ( ) ____-_______
Fax: ( ) ____-_______
Telex: ( ) ____-_______
___________________________________
Xxxx X. Xxxxxx, Xx.
Address (residence):
___________________________________
___________________________________
Address (business):
[Xxxxxx Realty Corporation]
0000 Xxxx Xxxxxxxx Xxxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Tel: ( ) ____-_______
Fax: ( ) ____-_______
Telex: ( ) ____-_______
14
___________________________________
Xxxx X. Xxxxxx, Xx.
Address (residence):
___________________________________
___________________________________
Address (business):
Xxxxxx Realty Corporation
0000 Xxxx Xxxxxxxx Xxxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Tel: ( ) ____-_______
Fax: ( ) ____-_______
Telex: ( ) ____-_______
PLEDGEE: XXXXXX REALTY CORPORATION
By:________________________________
Name:
Title:
Address:
0000 Xxxx Xxxxxxxx Xxxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Attn:______________________________
Tel: ( ) ____-_______
Fax: ( ) ____-_______
Telex: ( ) ____-_______
15
SCHEDULE I
Description of Units
--------------------
Percentage
Name of Certificate Number Percentage of Pledgors
Pledgor Number of Units of Equity Total Units
------- ----------- -------- --------- -----------
Kilroy Industries 50%
Xxxx X. Xxxxxx, 50%
Sr.
Xxxx X. Xxxxxx, 50%
Jr.
