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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 3)
____________________
BROOKDALE LIVING COMMUNITIES, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
112462 10 6
(CUSIP Number)
MICHAEL W. RESCHKE
77 WEST WACKER DRIVE
SUITE 4200
CHICAGO, IL 60601
(312) 917-1500
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
With a copy to:
WAYNE D. BOBERG, ESQ.
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, IL 60601
(312) 558-5600
DECEMBER 18, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of (S)(S) 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box: [_]
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SCHEDULE 13D
- -----------------------
CUSIP NO. 112462 10 6
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael W. Reschke
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
United States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
43,000
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 4,044,350
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
43,000
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
4,044,350
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
Individually beneficially owns vested options to purchase 43,000
shares of Common Stock, par value $0.01 per share ("Common Stock").
May be deemed to share beneficial ownership of the 121,784 shares of
Common Stock directly owned by The Prime Group, Inc., the 320,633
shares of Common Stock directly owned by Prime Group Limited
Partnership, the 3,576,933 shares of Common Stock directly owned by
Prime Group VI, L.P. and the 25,000 shares of Common Stock directly
owned by Prime Group III, L.P.
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
2
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- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Individually beneficially owns an approximate .4% equity interest in
the Issuer, assuming full exercise of options to purchase 43,000 shares
of Common Stock. May be deemed to share beneficial ownership of (i) the
approximate 1.1% equity interest in the Issuer directly owned by The
Prime Group, Inc., (ii) the approximate 2.8% equity interest in the
Issuer directly owned by Prime Group Limited Partnership, (iii) the
approximate 30.9% equity interest in the Issuer directly owned by Prime
Group VI, L.P. and (iv) the approximate .2% equity interest in the
Issuer directly owned by Prime Group III, L.P.
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON - IN
14
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3
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SCHEDULE 13D
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CUSIP NO. 112462 10 6
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Prime Group, Inc.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois, United States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
121,784
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 0
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
121,784
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
121,784 shares of Common Stock
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Approximate 1.1% equity interest in the Issuer
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON - CO
14
- ------------------------------------------------------------------------------
4
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CUSIP NO. 112462 10 6
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Group VI, L.P.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
00
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois, United States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
3,576,933
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 0
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
3,576,933
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
0
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
3,576,933 shares of Common Stock
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Approximate 30.9% equity in the Issuer
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON - PN
14
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5
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- -----------------------
CUSIP NO. 112462 10 6
- -----------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PGLP, Inc.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS
4
Not Applicable
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Illinois, United States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
0
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
OWNED BY 3,601,933
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
0
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10
3,601,933
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
May be deemed to share beneficial ownership of (i) the 3,576,933 shares
of Common Stock directly owned by Prime Group VI, L.P. and (ii) the
25,000 shares of Common Stock directly owned by Prime Group III, L.P.
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
May be deemed to share beneficial ownership of (i) the approximate
30.9% equity interest in the Issuer directly owned by Prime Group VI,
L.P. and (ii) the approximate .2% equity interest in the Issuer
directly owned by Prime Group III, L.P.
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON - CO
14
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6
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ITEM 1. SECURITY AND ISSUER.
This Amendment No. 3 to Schedule 13D relates to shares of Common
Stock, par value $0.01 per share ("Common Stock"), of Brookdale Living
Communities, Inc., a Delaware corporation (the "Company"). The principal
executive offices of the Company are located at 77 West Wacker Drive, Suite
4400, Chicago, Illinois 60601.
ITEM 2. IDENTITY AND BACKGROUND.
(a) and (f) This Amendment No. 3 to Schedule 13D is filed by each of
Michael W. Reschke, an individual and a citizen of the United States of America
("Reschke"), The Prime Group, Inc., an Illinois corporation ("PGI"), Prime Group
VI, L.P., an Illinois limited partnership ("PG-VI"), and PGLP, Inc., an Illinois
corporation ("PGLPI").
Reschke owns an approximate 50.75% equity interest in PGI and an
approximate 50.75% equity interest in PGLPI, which is the managing general
partner of, with a 1.0% partnership interest in, PG-VI.
(b)(i) The business address of each of Reschke, PGI, PG-VI and PGLPI
is:
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
(ii) Unless otherwise indicated in paragraph (c)(iii) of this Item
2, the business address of each person listed in paragraph (c)(iii) of this Item
2 is:
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
(c)(i) Reschke is the Chairman of the Board, President and Chief
Executive Officer and a member of the Board of Directors of PGI, the President
and a member of the Board of Directors of PGLPI and the Chairman of the Board
and a member of the Board of Trustees of Prime Group Realty Trust, a publicly
traded real estate investment trust ("PGRT"). The principal business of PGRT is
the acquisition, development, finance, construction, leasing, marketing,
renovation and property management of office and industrial properties. The
business address of PGRT is 77 West Wacker Drive, Suite 3900, Chicago, Illinois
60601. Reschke is also the Chairman of the Board and a member of the Board of
Directors of each of Prime Retail, Inc., a publicly traded real estate
investment trust involved in the ownership, development and management of
factory outlet centers ("Prime Retail"), and the Company and a member of the
Board of Directors of Horizon Group Properties, Inc., a publicly traded
corporation involved in the ownership, development and management of factory
outlet centers ("Horizon"). The business address of Prime Retail is 100 East
Pratt Street, Nineteenth Floor, Baltimore, Maryland 21202. The business address
of Horizon is 77 West Wacker Drive, Suite 4200, Chicago, Illinois 60601.
(ii) The principal business of each of PGI, PG-VI and PGLPI is the
ownership, development and management of, and investment in, directly or
indirectly, real estate.
(iii) The following table sets forth the name and the principal
occupation or employment of each director and executive officer (except Reschke
(see paragraph (c)(i) of this Item 2)) of PGI and PGLPI:
Name Present Principal Occupation or Employment
- ---- ------------------------------------------
Robert J. Rudnik (A)(B)........ Executive Vice President/General Counsel and
Secretary of PGI; Vice President and Secretary
of PGLPI; Executive Vice President/General
Counsel and Secretary of the Company
7
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Name Present Principal Occupation or Employment
- ---- ------------------------------------------
Gary J. Skoien................ Executive Vice President of PGI; Vice President
of PGLPI; Chairman, President and Chief
Executive Officer of Horizon
Ray R. Grinvalds (A).......... Senior Vice President/Asset and Development
Management of PGI; Vice President and Treasurer
of PGLPI
Mark K. Cynkar................ Senior Vice President and Chief Financial
Officer of PGI; Vice President of PGLPI
Bohdan P. Hirniak............. Vice President/Land Development Division of PGI
Warren H. John (A)(B)......... Vice President of PGI; Vice President and
Assistant Secretary of PGLPI
Robert E. Lemke............... Vice President/Single Family Housing of PGI
Richard F. Cavenaugh.......... Executive Vice President of PGI
Martin A. Eppel............... Vice President/Asset Management and Development
of PGI
Paul A. Roehri................ Vice President of PGI
Glenn D. Reschke (A).......... Executive Vice President/Development of Prime
c/o The Prime Group, Inc. Retail
100 East Pratt Street
Baltimore, MD 21202
Edward J. John (A)............ Orthodontist
1420 N. Arlington Heights Rd.
Arlington Heights, IL 60004
_______________
(A) Director of PGI
(B) Director of PGLPI
All of the executive officers and directors of PGI and PGLPI are
citizens of the United States of America.
(d) and (e) During the last five years, none of Reschke, PGI, PG-VI
or PGLPI or any of the directors or executive officers of PGI or PGLPI (i) has
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) or (ii) was a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to a Formation Agreement, dated as of May 7, 1997, by and
among the Company, PGI, Prime Group Limited Partnership, an Illinois limited
partnership ("PGLP"), Brookdale Holdings, Inc. and Mark J. Schulte (the
"Formation Agreement"), and in connection with the consummation of the Company's
initial public offering of Common Stock on May 7, 1997, PGI and PGLP contributed
the assets and operations of PGI's senior independent and assisted living
division to the Company in exchange for the receipt by PGI and PGLP of 1,382,410
and 320,633 shares of Common Stock, respectively, and the assumption by the
Company of certain indebtedness of PGI's senior independent and assisted living
division in the aggregate amount of $65.0 million. Reschke is the managing
general partner of PGLP. The Formation Agreement is identified as Exhibit I
hereto and incorporated herein by reference.
8
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Pursuant to a Credit Agreement, dated as of May 7, 1997, by and
between PG-VI and Healthcare Realty Trust Incorporated and in connection with
the consummation of the Company's initial public offering of Common Stock on May
7, 1997, PG-VI obtained a loan in the aggregate amount of $18.0 million (the
"HRTI Loan") the proceeds of which were used to finance a portion of PG-VI's May
7, 1997 purchase of 2,500,000 shares of Common Stock at a purchase price of
$10.695 per share. The balance of the purchase price for such shares,
approximately $8.74 million, was contributed or advanced to PG-VI by its
partners. PG-VI repaid the HRTI Loan in full on November 17, 1997.
On December 18, 1998, (i) PGI transferred 1,233,606 shares of Common
Stock to PG-VI and (ii) PG-VI transferred 25,000 shares of Common Stock to Prime
Group II, L.P., an Illinois limited partnership ("PG-II"), which in turn
transferred such 25,000 shares of Common Stock to Prime Group III, L.P., an
Illinois limited partnership ("PG-III"). PGLPI is the managing general partner
of PG-III.
ITEM 4. PURPOSE OF TRANSACTION.
PGI and PGLP acquired the shares of Common Stock owned by such
entities in order to maintain a significant investment in the Company following
the consummation of the Company's initial public offering. PG-VI purchased the
shares of Common Stock owned by it for investment purposes and to facilitate the
formation of the Company.
PG-III acquired the shares of Common Stock owned by it in connection
with PG-III's assumption of all of PG-VI's obligations under a Stock Purchase
Agreement and Agreement Concerning Option Shares, dated as of May 7, 1997, by
and among PGI, PG-VI and Darryl W. Copeland, Jr. (the "Stock Purchase
Agreement"), pursuant to the terms and conditions of an Assumption Agreement,
dated as of December 18, 1998, by and between PG-VI and PG-III (the "Assumption
Agreement").
On May 7, 1997, the Company granted to Reschke, as Chairman of the
Board of the Company, options to acquire 100,000 shares of Common Stock. The
options vest, subject to the satisfaction of certain conditions, at the rate of
25% per year over the four years commencing on the first anniversary of their
date of grant and will have a term of 10 years. On May 7, 1998, Reschke's
options to purchase 25,000 shares of Common Stock vested. The exercise price of
the options is the initial public offering price of $11.50 per share.
On May 21, 1998, the Company granted to Reschke, as Chairman of the
Board of the Company, options to acquire 18,000 shares of Common Stock. The
options vested immediately on the date of grant and have a term of 10 years.
The exercise price of the options is $23.475 per share.
Except as set forth in this Amendment No. 3 to Schedule 13D, none of
Reschke, PGI, PG-VI or PGLPI has any current plans or proposals that relate to
or would result in the types of transactions set forth in paragraphs (a) through
(j) of the instructions for this Item 4.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Reschke owns vested options to purchase 43,000 shares of the
4,087,450 shares of Common Stock to which this Amendment No. 3 to Schedule 13D
relates, which number of shares, assuming full exercise of such vested options,
constitutes approximately .4% of the total outstanding shares of the Company's
Common Stock. PGI directly beneficially owns 121,784 of the 4,087,350 shares of
Common Stock to which this Amendment No. 3 to Schedule 13D relates, which number
of shares constitutes approximately 1.1% of the total outstanding shares of the
Company's Common Stock. PGLP beneficially owns 320,633 of the 4,087,350 shares
of Common Stock to which this Amendment No. 3 to Schedule 13D relates, which
number of shares constitutes approximately 2.8% of the total outstanding shares
of the Company's Common Stock. PG-VI beneficially owns 3,576,933 of the
4,087,350 shares of Common Stock to which this Amendment No. 3 to Schedule 13D
relates, which number of shares constitutes approximately 30.9% of the total
outstanding shares of the Company's Common Stock. PG-III beneficially owns
25,000 of the 4,087,350 shares of Common Stock to which this Amendment No. 3 to
Schedule 13D relates, which number of shares constitutes .2% of the total
outstanding shares of the Company's Common Stock. By virtue of his ability to
control each of PGI, PGLP, PG-VI and PG-III, Reschke may be deemed
9
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to share beneficial ownership of the 121,784, 320,633, 3,576,933 and 25,000
shares of Common Stock directly owned by PGI, PGLP, PG-VI and PG-III,
respectively. By virtue of its ability to control PG-VI and PG-III, PGLPI may be
deemed to share beneficial ownership of the 3,576,933 and 25,000 shares of
Common Stock directly owned by PG-VI and PG-III, respectively.
(b) Assuming full exercise of Reschke's vested options, Reschke has
the sole power to direct the vote and disposition of 43,000 shares of Common
Stock directly owned by Reschke. Each of PGI, PGLP, PG-VI and PG-III has the
sole power to direct the vote and disposition of the 121,784, 320,633, 3,576,933
and 25,000 shares of Common Stock directly owned by PGI, PGLP, PG-VI and PG-III,
respectively. Reschke may be deemed to share the power to direct the vote and
disposition of the 121,784, 320,633, 3,576,933 and 25,000 shares of Common Stock
directly owned by PGI, PGLP, PG-VI and PG-III, respectively, because Reschke has
the ability to control each of PGI, PGLP, PG-VI and PG-III. PGLPI may be deemed
to share the power to direct the vote and disposition of the 3,576,933 and
25,000 shares of Common Stock directly owned by PG-VI and PG-III, respectively,
because PGLPI is the managing general partner of PG-VI and PG-III and,
therefore, has the ability to control PG-VI and PG-III.
(c) On December 18, 1998, (i) PGI transferred 1,233,606 shares of
Common Stock to PG-VI and (ii) PG-VI transferred 25,000 shares of Common Stock
to PG-II, which in turn transferred such 25,000 shares of Common Stock to PG-
III. Other than as described above, none of Reschke, PGI, PGLP, PG-VI or PG-
III, nor, to the best of their knowledge, any of the executive officers or
directors of PGI or PGLPI, has effected any transaction in securities of the
Company during the past 60 days.
(d) Other than LaSalle National Bank, a national banking association
("LaSalle"), pursuant to the terms and conditions of a Pledge Agreement, dated
as of December 18, 1998, by and between PG-VI and LaSalle (the "Pledge
Agreement"), no person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of,
securities held by Reschke, PGI, PGLP, PG-VI or PG-III, except for Reschke, PGI,
PGLP, PG-VI, PGLPI or PG-III.
(e) As more fully described in paragraph (c) of this Item 5, on
December 18, 1998, PGI ceased to be the beneficial owner of more than five
percent (5.0%) of the total outstanding shares of the Company's Common Stock.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
Pursuant to the terms and conditions of a Registration Rights
Agreement, dated as of May 7, 1997, by and among the Company, PGI, PGLP and PG-
VI, as amended by Amendment No. 1 to Registration Rights Agreement, dated as of
December 5, 1997, by and among the Company, PGI, PGLP and PG-VI ("Amendment No.
1 to Registration Rights Agreement") (as amended, the "Registration Rights
Agreement"), the Company granted demand and incidental registration rights to
PGI, PGLP and PG-VI for the registration of shares of Common Stock owned by PGI,
PGLP and PG-VI under the Securities Act of 1933, as amended. Under the
Registration Rights Agreement, three demand registrations are permitted during
the first five years following the Company's initial public offering of Common
Stock and one demand registration per year is permitted each year thereafter
until PGI, PGLP and PG-VI collectively own less than 10% of the outstanding
Common Stock. The Company will pay the fees and expenses of the demand
registrations and the incidental registrations, while PGI, PGLP and PG-VI will
pay all underwriting discounts and commissions. These registration rights are
subject to certain conditions and limitations, including the right of
underwriters to limit the number of shares owned by PGI, PGLP and PG-VI included
in such registration.
Pursuant to the terms and conditions of a Stock Option and Deposit
Agreement, dated as of May 7, 1997, by and between PGI and Darryl W. Copeland,
Jr. (the "Copeland Stock Option Agreement"), Mr. Copeland received an option to
purchase 100,000 shares of Common Stock from PGI at a purchase price of $0.01
per share. The option first became exercisable on May 7, 1998, and the term of
the option shall continue in effect until May 7, 2002.
10
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Pursuant to the terms and conditions of the Stock Purchase
Agreement, PG-VI agreed to sell to Mr. Copeland 25,000 shares of Common Stock
(the "Purchased Shares") for an aggregate purchase price of $272,722.50. The
purchase and sale of the Purchased Shares shall occur no later than May 8, 2000.
In the event the purchase and sale of the Purchased Shares do not occur on or
before May 8, 2000, Mr. Copeland's right to purchase the Purchased Shares and
PG-VI's obligation to sell the Purchased Shares automatically terminate. Mr.
Copeland has no voting rights as a stockholder with respect to the Purchased
Shares until the closing of the purchase and sale of the Purchased Shares. As of
December 18, 1998, PG-III assumed all of PG-VI's obligations under the Stock
Purchase Agreement pursuant to the terms and conditions of the Assumption
Agreement.
Pursuant to the terms and conditions of a Stock Option
Agreement, dated as of May 7, 1997, by and between PGI and Blackacre Bridge
Capital L.L.C., a Delaware limited liability company ("Blackacre") (the
"Blackacre Stock Option Agreement"), PGI granted to Blackacre an option to
purchase 12,500 shares of Common Stock at a price per share equal to the lesser
of $12.00 or the average of all closing prices of the Common Stock from the date
of the consummation of the Company's initial public offering to that date which
is six months after the date of the consummation of the Company's initial public
offering. The option first became exerciseable on November 7, 1997, and the term
of the option shall continue in effect until May 7, 2000. Blackacre has no
rights as a stockholder with respect to such shares until the date of the sale
of such shares upon the exercise of such option.
Pursuant to the terms and conditions of a Note Purchase
Agreement, dated as of December 5, 1997, by and between PG-VI and Och-Ziff
Capital Management, L.P., a Delaware limited partnership ("Och-Ziff") (the "Note
Purchase Agreement"), PG-VI issued an exchangeable note, dated December 5, 1997,
having a principal amount of $20.0 million and a five year term (the
"Exchangeable Note") to Och-Ziff. On December 18, 1998, PG-VI repaid all
principal and interest outstanding under the Exchangeable Note.
Pursuant to the terms and conditions of the Note Purchase
Agreement, PG-VI pledged certain shares of Common Stock to Och-Ziff, pursuant to
the terms and conditions of a Pledge and Security Agreement, dated as of
December 5, 1997, by and between PG-VI and Och-Ziff (the "Pledge and Security
Agreement"), in order to secure the obligations of PG-VI under the Exchangeable
Note. In addition, each of PGI, PGLP, PGLPI, Prime International, Inc. and Prime
Group II, L.P. guaranteed the payment in full of the obligations of PG-VI under
the Exchangeable Note pursuant to separate Guaranties, each dated as of December
5, 1997, made in favor of Och-Ziff. On December 18, 1998, PG-VI repaid all
principal and interest outstanding under the Exchangeable Note. Consequently,
the Pledge and Security Agreement was terminated, and the Guaranties were
terminated and released as of December 18, 1998.
On January 16, 1998, PGI transferred to Robert J. Rudnik
("Rudnik") 27,020 shares of Common Stock at a value of $17.82503 per share in
partial redemption of Rudnik's interests in PGI. Pursuant to the terms and
conditions of an Agreement Regarding Assignments of BLCI Common Stock, dated as
of January 16, 1998, by and among PG-VI, PGLP, Prime Group II, L.P., Reschke,
Edward J. John, Glenn D. Reschke, Reschke 1, L.L.C., Warren H. John, Rudnik and
Ray R. Grinvalds (the "Agreement Regarding Assignments"), PG-VI through certain
of its affiliates transferred to Rudnik and Warren H. John ("John") 98,264 and
33,409 shares of Common Stock, respectively, at a value of $17.82503 per share
in partial redemption of Rudnik's and John's respective interests in PGLP and
Prime Group II, L.P.
Pursuant to the terms and conditions of a Loan Agreement, dated
as of December 18, 1998, by and between PG-VI and LaSalle, as amended by the
First Amendment to Loan Documents, Consent and Limited Release, dated as of
January 29, 1999, by and between PG-VI and LaSalle (the "First Amendment") (as
amended, the "Loan Agreement"), PG-VI pledged 3,576,933 shares of Common Stock,
together with other collateral, to LaSalle, pursuant to the terms and conditions
of the Pledge Agreement, in order to secure its obligations under the Loan
Agreement. In addition, PGI guaranteed the payment in full of PG-VI's
obligations under the Loan Agreement pursuant to a Continuing Unconditional
Guaranty made in favor of LaSalle, dated as of December 18, 1998 (the
"Continuing Unconditional Guaranty").
Each of the Registration Rights Agreement, Amendment No. 1 to
Registration Rights Agreement, the Copeland Stock Option Agreement, the Stock
Purchase Agreement, the Blackacre Stock Option Agreement and
11
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the Agreement Regarding Assignments are identified as Exhibits II, III, IV, V,
VI and VII, respectively, and incorporated herein by reference. The Loan
Agreement, the Pledge Agreement, the Continuing Unconditional Guaranty, the
First Amendment and the Assumption Agreement are attached hereto as Exhibits IX,
X, XI, XII and XIII, respectively, and incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit No. Description
---------- -----------
Exhibit I Formation Agreement, dated as of May 7,
1997, by and among the Company, PGI, PGLP,
Brookdale Holdings, Inc. and Mark J.
Schulte, as filed with the Securities and
Exchange Commission on August 14, 1997 as
Exhibit 10.1 to the Company's Form 10-Q
(Commission File No. 0-22253) and
incorporated herein by reference
Exhibit II Registration Rights Agreement, dated as of
May 7, 1997, by and among the Company, PGI,
PGLP and PG-VI, as filed with the Securities
and Exchange Commission on August 14, 1997
as Exhibit 10.3 to the Company's Form 10-Q
(Commission File No. 0-22253) and
incorporated herein by reference
Exhibit III Amendment No. 1 to Registration Rights
Agreement, dated as of December 5, 1997, by
and among the Company, PGI, PGLP and PG-VI*
Exhibit IV Stock Option and Deposit Agreement, dated as
of May 7, 1997, by and between Darryl W.
Copeland, Jr. and PGI, as filed with the
Securities and Exchange Commission on August
14, 1997 as Exhibit 10.42 to the Company's
Form 10-Q (Commission File No. 0-22253) and
incorporated herein by reference
Exhibit V Stock Purchase Agreement and Agreement
Concerning Option Shares, dated as of May 7,
1997, by and among Darryl W. Copeland, Jr.,
PGI and PG-VI, as filed with the Securities
and Exchange Commission on August 14, 1997
as Exhibit 10.43 to the Company's Form 10-Q
(Commission File No. 0-22253) and
incorporated herein by reference
Exhibit VI Stock Option Agreement, dated as of May 7,
1997, by and between PGI and Blackacre*
Exhibit VII Agreement Regarding Assignments of BLCI
Common Stock, dated as of January 16, 1998,
by and among PG-VI, PGLP, Prime Group II,
L.P., Reschke, Edward J. John, Glenn D.
Reschke, Reschke 1, L.L.C., John, Rudnik and
Ray R. Grinvalds*
Exhibit VIII Joint Acquisition Statement pursuant to Rule
13d-1(f)(1) of the Securities Exchange Act
of 1934, as amended, by Reschke, PGI, PG-VI
and PGLPI*
Exhibit IX Loan Agreement, dated as of December 18,
1998, by and between PG-VI and LaSalle
Exhibit X Pledge Agreement, dated as of December 18,
1998, by and between PG-VI and LaSalle
Exhibit XI Continuing Unconditional Guaranty, dated as
of December 18, 1998, by PGI in favor of
LaSalle
Exhibit XII First Amendment to Loan Documents, Consent
and Limited Release, dated as of January 29,
1999, by and between PG-VI and LaSalle
12
<PAGE>
Exhibit XIII Assumption Agreement, dated as of December
18, 1998, by and between PG-VI and PG-III
__________________________
*Previously filed.
13
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of his or its
knowledge and belief, the undersigned certifies that the information set forth
in this Amendment No. 3 to Schedule 13D is true, complete and correct.
/s/ Michael W. Reschke
-------------------------
Michael W. Reschke
Dated: March 2, 1999
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 3 to Schedule 13D is true, complete and correct.
THE PRIME GROUP, INC.
By: /s/ Michael W. Reschke
------------------------------
Name: Michael W. Reschke
Title: President
Dated: March 2, 1999
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 3 to Schedule 13D is true, complete and correct.
PRIME GROUP VI, L.P.
By: PGLP, Inc.
Managing General Partner
By: /s/ Michael W. Reschke
----------------------------
Name: Michael W. Reschke
Title: President
Dated: March 2, 1999
<PAGE>
SIGNATURE
---------
After reasonable inquiry and to the best of his or its
knowledge and belief, the undersigned certifies that the information set forth
in this Amendment No. 3 to Schedule 13D is true, complete and correct.
PGLP, INC.
By: /s/ Michael W. Reschke
------------------------------
Name: Michael W. Reschke
Title: President
Dated: March 2, 1999
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
Exhibit I Formation Agreement, dated as of May 7, 1997, by and among the
Company, PGI, PGLP, Brookdale Holdings, Inc. and Mark J. Schulte,
as filed with the Securities and Exchange Commission on August
14, 1997 as Exhibit 10.1 to the Company's Form 10-Q (Commission
File No. 0-22253) and incorporated herein by reference
Exhibit II Registration Rights Agreement, dated as of May 7, 1997, by and
among the Company, PGI, PGLP and PG-VI, as filed with the
Securities and Exchange Commission on August 14, 1997 as Exhibit
10.3 to the Company's Form 10-Q (Commission File No. 0-22253) and
incorporated herein by reference
Exhibit III Amendment No. 1 to Registration Rights Agreement, dated as of
December 5, 1997, by and among the Company, PGI, PGLP and PG-VI*
Exhibit IV Stock Option and Deposit Agreement, dated as of May 7, 1997, by
and between Darryl W. Copeland, Jr. and PGI, as filed with the
Securities and Exchange Commission on August 14, 1997 as Exhibit
10.42 to the Company's Form 10-Q (Commission File No. 0-22253)
and incorporated herein by reference
Exhibit V Stock Purchase Agreement and Agreement Concerning Option Shares,
dated as of May 7, 1997, by and among Darryl W. Copeland, Jr.,
PGI and PG-VI, as filed with the Securities and Exchange
Commission on August 14, 1997 as Exhibit 10.43 to the Company's
Form 10-Q (Commission File No. 0-22253) and incorporated herein
by reference
Exhibit VI Stock Option Agreement, dated as of May 7, 1997, by and between
PGI and Blackacre*
Exhibit VII Agreement Regarding Assignments of BLCI Common Stock, dated as of
January 16, 1998, by and among PG-VI, PGLP, Prime Group II, L.P.,
Reschke, Edward J. John, Glenn D. Reschke, Reschke 1, L.L.C.,
John, Rudnik and Ray R. Grinvalds*
Exhibit VIII Joint Acquisition Statement pursuant to Rule 13d-1(f)(1) of the
Securities Exchange Act of 1934, as amended, by Reschke, PGI, PG-
VI and PGLPI*
Exhibit IX Loan Agreement, dated as of December 18, 1998, by and between PG-
VI and LaSalle
Exhibit X Pledge Agreement, dated as of December 18, 1998, by and between
PG-VI and LaSalle
Exhibit XI Continuing Unconditional Guaranty, dated as of December 18, 1998,
by PGI in favor of LaSalle
Exhibit XII First Amendment to Loan Documents, Consent and Limited
Release, dated as of January 29, 1999, by and between PG-VI and
LaSalle
Exhibit XIII Assumption Agreement, dated as of December 18, 1998, by and
between PG-VI and PG-III
__________________
*Previously filed.
<PAGE>
EXHIBIT IX
LOAN AGREEMENT
BETWEEN
PRIME GROUP VI, L.P.,
an Illinois limited partnership
AND
LASALLE NATIONAL BANK,
a national banking association
<PAGE>
TABLE OF CONTENTS
-----------------
<TABLE>
<S> <C>
ARTICLE 1
- ---------
DEFINITIONS AND DETERMINATIONS.......................................................................... 1
1.1 Definitions.................................................................................... 1
1.2 Time Periods................................................................................... 7
1.3 Accounting Terms............................................................................... 7
1.4 References..................................................................................... 7
1.5 Lender's Discretion............................................................................ 7
1.6 Borrower's Knowledge........................................................................... 7
1.7 Market Price Adjustments....................................................................... 8
ARTICLE 2
- ---------
LOAN AND TERMS OF PAYMENT............................................................................... 8
2.1 Revolving Loan................................................................................. 8
2.1.1 Amount......................................................................................... 8
2.1.2 Procedure for Borrowing........................................................................ 8
2.2 Disbursement of Loan on Closing Date........................................................... 8
2.3 Interest....................................................................................... 9
2.3.1 Interest Rate.................................................................................. 9
2.3.2 Interest Payments.............................................................................. 9
2.3.3 Interest Computation........................................................................... 9
2.3.4 Maximum Interest............................................................................... 9
2.4 Principal Payments............................................................................. 9
2.5 Prepayment..................................................................................... 9
2.5.1 Voluntary Prepayment........................................................................... 9
2.5.2 Mandatory Prepayment........................................................................... 10
2.6 LIBOR Option................................................................................... 10
2.6.1 Option......................................................................................... 10
2.6.2 Notice Procedure............................................................................... 10
2.6.3 Notice Irrevocable............................................................................. 11
2.6.4 Failure to Provide Notice of Continuation...................................................... 11
2.7 Interest Periods............................................................................... 11
2.8 Special Provisions Governing LIBOR Loans....................................................... 11
2.8.1 Determination of Interest Rate................................................................. 11
2.8.2 Interest Rate Unascertainable, Inadequate or Unfair............................................ 12
2.9 Illegality..................................................................................... 12
2.10 Compensation................................................................................... 12
2.11 LIBOR Rate Taxes............................................................................... 13
2.11.1 Additional Payments............................................................................ 13
2.11.2 Indemnity...................................................................................... 13
2.12 Default Rate................................................................................... 13
2.13 Method of Payment; Good Funds.................................................................. 13
2.14 Deposit to Borrower's Account.................................................................. 13
</TABLE>
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<TABLE>
<S> <C>
ARTICLE 3
- ---------
NOTE AND SECURITY....................................................................................... 13
3.1 Note........................................................................................... 13
3.2 Security....................................................................................... 13
ARTICLE 4
- ---------
CONDITIONS OF FUNDING................................................................................... 14
4.1 Initial Advance................................................................................ 14
4.2 All Revolver Advances.......................................................................... 16
4.2.1 Representations and Warranties................................................................. 16
4.2.2 Performance; No Default........................................................................ 16
ARTICLE 5
- ---------
REPRESENTATIONS AND WARRANTIES.......................................................................... 16
5.1 Borrower....................................................................................... 16
5.2 Partners of Borrower........................................................................... 16
5.3 Authority...................................................................................... 17
5.4 Necessary Assets............................................................................... 17
5.5 Binding Agreements............................................................................. 17
5.6 Borrower's Securities.......................................................................... 17
5.7 Title to Property; Liens....................................................................... 17
5.8 Financial Statements........................................................................... 17
5.9 Litigation..................................................................................... 17
5.10 Conflicting Agreements......................................................................... 17
5.11 Compliance with Applicable Laws................................................................ 18
5.12 Application of Certain Laws and Regulations.................................................... 18
5.12.1 Investment Company Act......................................................................... 18
5.12.2 Holding Company Act............................................................................ 18
5.13 Margin Regulations............................................................................. 18
5.14 No Misrepresentation........................................................................... 18
5.15 No Affiliation................................................................................. 19
5.16 Registration Effective......................................................................... 19
ARTICLE 6
- ---------
AFFIRMATIVE COVENANTS................................................................................... 19
6.1 Legal Existence; Good Standing................................................................. 19
6.2 Inspection..................................................................................... 19
6.3 Financial Statements and Other Information of Borrower......................................... 19
6.3.1 Annual Statements.............................................................................. 19
6.3.2 Notice of Defaults; Loss....................................................................... 20
6.3.3 Notice of Suits, Adverse Events................................................................ 20
6.3.4 Covenant Compliance Certificate; Borrowing Base Certificate.................................... 20
6.3.5 Other Information.............................................................................. 21
6.4 Financial Information of Prime Retail, Inc. and PGRT........................................... 21
</TABLE>
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<TABLE>
<S> <C>
6.5 Reports to Governmental Bodies and Other Persons................................................... 21
6.6 General Partner.................................................................................... 21
6.7 Financial Statements of Guarantor.................................................................. 22
ARTICLE 7
- ---------
NEGATIVE COVENANTS........................................................................................ 22
ARTICLE 8
- ---------
DEFAULT AND REMEDIES...................................................................................... 22
8.1 Events of Default.................................................................................. 22
8.1.1 Default in Payment................................................................................. 22
8.1.2 Breach of Covenants and Certain Other Provisions................................................... 23
8.1.3 Breach of Warranty................................................................................. 23
8.1.4 Acceleration of any Indebtedness................................................................... 23
8.1.5 Bankruptcy......................................................................................... 23
8.1.6 Judgments.......................................................................................... 24
8.1.7 Non-Performance of Guaranty, Etc................................................................... 24
8.1.8 Invalidity of Pledge Agreement, Etc................................................................ 24
8.2 Acceleration of Borrower's Obligations............................................................. 25
8.3 Remedies on Default................................................................................ 25
8.3.1 Enforcement of Security Interests.................................................................. 25
8.3.2 Other Remedies..................................................................................... 25
8.4 Application of Funds............................................................................... 25
8.4.1 Expenses........................................................................................... 25
8.4.2 Borrower's Obligations............................................................................. 26
8.4.3 Surplus............................................................................................ 26
ARTICLE 9
- ---------
CLOSING................................................................................................. 26
ARTICLE 10
- ----------
EXPENSES AND INDEMNITY.................................................................................. 26
10.1 Closing Fee...................................................................................... 26
10.2 Attorney's Fees and Other Fees and Expenses...................................................... 26
10.2.1 Fees and Expenses for Preparation of Loan Documents.............................................. 26
10.2.2 Fees and Expenses in Enforcement of Rights or Defense of Loan Documents.......................... 26
10.3 Indemnity........................................................................................ 27
10.3.1 Brokerage Fees................................................................................... 27
10.3.2 Operation of Collateral; Joint Venturers......................................................... 27
ARTICLE 11
- ----------
MISCELLANEOUS........................................................................................... 27
11.1 Notices.......................................................................................... 27
</TABLE>
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<TABLE>
<S> <C>
11.2 Survival of Loan Agreement........................................................................ 28
11.3 Further Assurance................................................................................. 28
11.4 Taxes and Fees.................................................................................... 28
11.5 Severability...................................................................................... 29
11.6 Waiver............................................................................................ 29
11.7 Modification of Loan Documents.................................................................... 29
11.8 Captions.......................................................................................... 29
11.9 Sale of Interest.................................................................................. 29
11.10 Successors and Assigns........................................................................... 29
11.11 Remedies Cumulative.............................................................................. 29
11.12 Entire Agreement................................................................................. 30
11.13 APPLICABLE LAW................................................................................... 30
11.14 JURISDICTION AND VENUE........................................................................... 30
11.15 WAIVER OF RIGHT TO JURY TRIAL.................................................................... 30
</TABLE>
-iv-
<PAGE>
LOAN AGREEMENT
--------------
THIS LOAN AGREEMENT is dated as of December 18, 1998, by and between PRIME
GROUP VI, L.P., an Illinois limited partnership ("Borrower"), and LASALLE
NATIONAL BANK, a national banking association ("Lender").
R E C I T A L S:
---------------
A. Borrower desires to obtain a revolving line of credit from Lender in
the maximum principal amount of $25,000,000 (the "Loan") to refinance certain
indebtedness and for working capital purposes for Borrower and its affiliates.
The Loan is to be secured by a lien on certain securities owned by Borrower and
is to be guaranteed by a limited partner of Borrower.
B. Lender is willing to furnish such revolving line of credit subject to
the terms and conditions set forth herein.
NOW, THEREFORE, it is agreed as follows:
ARTICLE 1
---------
DEFINITIONS AND DETERMINATIONS
------------------------------
1.1 DEFINITIONS. As used in this Loan Agreement and in the other Loan
-----------
Documents, unless otherwise expressly indicated herein or therein, the following
terms shall have the following meanings (such meanings to be applicable equally
both to the singular and plural terms defined):
Accountants: Ernst & Young LLP or such other independent certified
-----------
public accounting firm selected by Borrower and reasonably satisfactory to
Lender.
AIMCO: Apartment Investment and Management Company, a Maryland
-----
corporation that qualifies as a real estate investment trust.
AIMCO Shares: The common stock, $0.01 par value per share, of AIMCO.
------------
Available Borrowing Base: the lesser of (i) $25,000,000 and (ii) 50%
------------------------
of the Fair Market Value of the Collateral.
Borrower's Obligations: (i) any and all Indebtedness due or to become
----------------------
due, now existing or howsoever arising of Borrower to Lender pursuant to
the terms of this Loan Agreement or pursuant to any other Loan Document,
and (ii) the performance of the covenants of Borrower contained in the Loan
Documents.
<PAGE>
Borrower's Securities: See Section 5.6.
---------------------
Break Costs: See Section 2.10.
-----------
Brookdale: Brookdale Living Communities, Inc., a Delaware corporation.
---------
Brookdale Shares: the shares of common stock, $0.01 par value per
----------------
share, of Brookdale.
Business: the business of directly or indirectly acquiring,
--------
developing, operating, managing and financing real estate or interests
therein, or investing in, or holding securities of, entities engaged in
such business.
Business Day: any day other than a Saturday, Sunday or other day on
------------
which banks in Chicago, Illinois, or London, England, are closed.
Closing: as defined in Article 9.
-------
Closing Date: as defined in Article 9.
------------
Code: the Internal Revenue Code of 1986, as amended, and any successor
----
statute thereto, and the rules and regulations issued thereunder, as in
effect from time to time.
Collateral: the securities, cash and other property in which Lender is
----------
granted the Security Interests pursuant to the Pledge Agreement.
Commitment: $25,000,000.
----------
Default: any event or condition which, with the giving of notice or
-------
the lapse of time, or both, would become an Event of Default.
Default Rate: 3% plus the Floating Rate applicable from time to time
------------
to the outstanding principal balance of the Loan.
Default Period: a period of time commencing on the date that an Event
--------------
of Default has occurred and ending on the date that such Event of Default
is cured or waived.
Event of Default: any of the Events of Default set forth in Section
----------------
8.1.
Exchange Act: the Securities Exchange Act of 1934, as amended.
------------
Fair Market Value of the Collateral: as of any date the same is to be
-----------------------------------
calculated, (i) as to the Prime Retail Partnership Units, the product of
the Market Price of Prime Retail,
2
<PAGE>
Inc. Shares for such date multiplied by the number of Prime Retail Inc.
Shares into which the Prime Retail Partnership Units may be converted, (ii)
as to the Prime Group Realty Partnership Units, the product of the Market
Price of PGRT Shares for such date multiplied by the number of PGRT Shares
into which the Prime Group Realty Partnership Units may be converted, (iii)
as to the Brookdale Shares, the Market Price of the Brookdale Shares
multiplied by the number of Brookdale Shares, and (iv) as to the AIMCO
Shares, the Market Price of the AIMCO Shares multiplied by the number of
AIMCO Shares.
Fixed Rate: for any Interest Period, a fixed interest rate per annum,
----------
which rate shall be equal to the LIBOR Rate applicable to such Interest
Period plus 2.50%.
Floating Rate: 1/2% + the Prime Rate in effect from time to time. The
-------------
Floating Rate shall change automatically and immediately as and when the
Prime Rate shall change, without notice to Borrower.
GAAP: generally accepted accounting principles as in effect from time
----
to time, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied.
Good Funds: United States Dollars available to Lender in federal funds
----------
at or before 1:00 p.m. Chicago time on a Business Day.
Governmental Body: any foreign, federal, state, municipal or other
-----------------
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
Guarantor: The Prime Group.
---------
Guaranty: the Continuing Unconditional Guaranty, substantially in the
--------
form of Exhibit A, issued by Guarantor.
Indebtedness: all liabilities, obligations and reserves, contingent or
------------
otherwise, which, in accordance with GAAP, would be reflected as a
liability on a balance sheet, including, without duplication: (i) all
Indebtedness for Borrowed Money, (ii) all obligations under conditional
sales or other title retention agreements, (iii) all obligations secured by
any Lien upon Property, (iv) all guaranties and other contingent
obligations, including, without limitation, letters of credit, and (v) all
obligations under operating leases.
Indebtedness for Borrowed Money: without duplication, all Indebtedness
-------------------------------
(i) in respect of money borrowed, (ii) evidenced by a note, debenture or
other like written obligation to pay money, including, without limitation,
all of Borrower's Obligations,
3
<PAGE>
(iii) in respect of rent or hire of Property under capitalized leases or
for the deferred purchase price of Property or (iv) in respect of
obligations under conditional sales or other title retention agreements,
and all guaranties of any and all of the foregoing.
Interest Period: as defined in Section 2.7.
---------------
Interest Rate Determination Date: the date on which Lender determines
--------------------------------
the Fixed Rate applicable to a requested LIBOR Loan or the continuation
thereof, which shall be the second Business Day prior to the first day of
the Interest Period applicable to such LIBOR Loan.
LIBOR Loan: each portion of the Loan that is bearing interest at an
----------
applicable Fixed Rate.
LIBOR Rate: with respect to any LIBOR Loan for the applicable Interest
----------
Period, the per annum rate of interest equal to the quotient obtained by
dividing (i) the average per annum interest rate at which deposits in
United States dollars are generally offered in the London Interbank Market
at 11:00 a.m. London, England time, on the Interest Rate Determination
Date, for a period equal to such Interest Period and in the amount of such
LIBOR Loan, by (ii) the difference between 100% and any applicable reserve
requirements (rounded upward to the nearest whole multiple of 1/100th of
one percent per annum) including, without limitation, any applicable
maximum reserve requirements for "Eurocurrency Liabilities" under
Regulation D of the Board of Governors of the Federal Reserve System (or
any similar reserves under any successor regulations).
LIBOR Rate Taxes: as defined in Section 2.11.1.
----------------
Lien: any mortgage, pledge, assignment, lien, charge, encumbrance or
----
security interest of any kind, or the interest of a vendor or lessor under
any conditional sale agreement, capitalized lease, or other title retention
agreement.
Loan: the revolving loan in the maximum principal amount of
----
$25,000,000 to be made by Lender from time to time to Borrower in
accordance with the terms set forth in Section 2.2.
Loan Agreement: this Loan Agreement and any amendments or supplements
--------------
hereto.
Loan Documents: (i) Loan Agreement, (ii) Note, (iii) Pledge Agreement,
--------------
(iv) Guaranty, (v) appropriate Uniform Commercial Code financing
statements, and (vi) such other instruments and documents as Lender may
require to evidence and perfect the Security Interests granted pursuant to
the Pledge Agreement.
4
<PAGE>
Market Price: for any date shall be deemed to be (i) so long as the
------------
Prime Shares, the AIMCO Shares and the Brookdale Shares are quoted on a
national securities exchange or the National Association of Securities
Dealers Automated Quotations ("NASDAQ") National Market System, the
reported closing sales price per share for such security on such date as
reported on such national securities exchange or NASDAQ, or, if there were
no reported sales transactions on that date, the reported closing sales
price per share for such security for the most recent Business Day (within
the previous ten Business Days) on which sales transactions are reported,
or (ii) if there were no reported transactions on a national securities
exchange or on NASDAQ on that date or within the previous ten Business Days
or if the Prime Shares and/or AIMCO Shares and/or Brookdale Shares are no
longer being quoted on a national securities exchange or on NASDAQ, then as
to those securities, zero.
Material Adverse Effect: any changes or effects, as the case may be,
-----------------------
that individually or in the aggregate are or can reasonably be expected to
be materially adverse to (i) the ability of Borrower or Guarantor, or
either of them, as the case may be, to fulfill any covenants or to perform
any of their respective obligations under this Loan Agreement or the other
Loan Documents, or (ii) the Lender's rights to foreclose on the Collateral
or convert any of the Partnership Units into any Prime Shares.
Maturity Date: December 31, 2000 or such earlier date on which the
-------------
Commitment is reduced to zero or otherwise terminated pursuant to the terms
of this Loan Agreement.
Note: the Revolving Note, substantially in the form of Exhibit B,
----
executed by Borrower to evidence the maximum amount of the Loan.
Partnership Units: collectively, Prime Retail Partnership Units and
-----------------
the Prime Group Realty Partnership Units.
Person: any individual, firm, corporation, limited liability company,
------
business enterprise, trust, association, joint venture, partnership,
governmental body or other entity, whether acting in an individual,
fiduciary or other capacity.
PGLP, Inc.: PGLP, Inc., a Illinois corporation.
----------
PGRT: Prime Group Realty Trust, a Maryland real estate investment
----
trust.
PGRT Shares: shares of common stock, $0.01 par value per share, of
-----------
PGRT.
Pledge Agreement: the Pledge Agreement, in the form of Exhibit C, by
----------------
and between Borrower and Lender.
5
<PAGE>
Prime Group Realty Operating Partnership: Prime Group Realty, L.P., a
----------------------------------------
Delaware limited partnership.
Prime Group Realty Partnership Units: units of partnership interest in
------------------------------------
the Prime Group Realty Operating Partnership.
Prime Group Realty Registration Rights Agreement: that certain
------------------------------------------------
Registration Rights Agreement, dated November 17, 1997, by and among PGRT,
Prime Group Realty Operating Partnership, Prime Group Limited Partnership,
Primestone Investment Partners, L.P., a Delaware limited partnership, and
the other investors named therein.
Prime Loan: each portion of the Loan that is bearing interest at the
----------
Floating Rate.
Prime Rate: the per annum rate of interest announced or published
----------
publicly from time to time by Lender at its principal place of business in
Chicago, Illinois, as its prime or equivalent rate of interest, which rate
is not necessarily the lowest rate of interest charged by Lender with
respect to commercial loans.
Prime Retail, Inc.: Prime Retail, Inc., a Maryland corporation that
------------------
has qualified for treatment as a real estate investment trust.
Prime Retail, Inc. Registration Statement: that certain registration
-----------------------------------------
statement number 333-65617, relating to 8,505,472 Prime Retail Inc. Shares.
Prime Retail, Inc. Shares: shares of common stock, $0.01 par value
-------------------------
per share, of Prime Retail, Inc.
Prime Retail Operating Partnership: Prime Retail, L.P., a Delaware
-----------------------------------
limited partnership.
Prime Retail Partnership Units: units of partnership interest in the
------------------------------
Prime Retail Operating Partnership.
Prime Retail Registration Rights Agreement: that certain Registration
------------------------------------------
Rights Agreement, dated June 15, 1998, by and among Prime Retail, Inc.,
Prime Retail, L.P. and the other investors named therein.
Prime Shares: collectively, Prime Retail, Inc. Shares and PGRT Shares.
------------
Principal Balance: the unpaid principal balance of the Loan
-----------------
outstanding from time to time.
6
<PAGE>
Property: as to any Person, all types of real, personal or mixed
--------
property and all types of tangible or intangible property owned by such
Person.
Revolver Advance: any advance of the Loan made in accordance with the
----------------
terms set forth in Section 2.1.
SEC: the U.S. Securities and Exchange Commission.
---
Security Interests: the Liens in the Collateral granted to Lender
------------------
pursuant to the Pledge Agreement.
The Prime Group: The Prime Group, Inc., an Illinois corporation.
---------------
1.2 TIME PERIODS. In this Loan Agreement and the other Loan Documents, in
------------
the computation of periods of time from a specified date to a later specified
date (i) the word "from" means "from and including", (ii) the words "to" and
"until" each mean "to, but excluding" and (iii) the words "through", "end of"
and "expiration" each mean "through and including". All references in this Loan
Agreement and the other Loan Documents to "month", "quarter" or "year" shall be
deemed to refer to a calendar month, quarter or year.
1.3 ACCOUNTING TERMS. All accounting terms not specifically defined herein
----------------
shall be construed, all accounting determinations hereunder shall be made and
all financial statements required to be delivered pursuant hereto shall be
prepared in accordance with GAAP.
1.4 REFERENCES. All references in this Loan Agreement to "Article",
----------
"Section", "subsection", "subparagraph", "clause" or "Exhibit", unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
1.5 LENDER'S DISCRETION. Whenever the terms "satisfactory to Lender",
-------------------
"determined by Lender", "acceptable to Lender", "Lender shall elect", "Lender
shall request" or similar terms are used in this Loan Agreement, except as
otherwise specifically provided in this Loan Agreement, such terms shall mean
satisfactory to, at the election of, determined by, acceptable to or requested
by, as applicable, Lender in its sole and absolute discretion.
1.6 BORROWER'S KNOWLEDGE. Any statements, representations or warranties
--------------------
which are based upon the knowledge of Borrower shall be deemed to have been
limited to the knowledge, made after due inquiry by Michael W. Reschke,
President of PGLP, Inc., the managing general partner of Borrower, and
President, Chairman and Chief Executive Officer of The Prime Group, Inc., and
Mark K. Cynkar, Vice President and Treasurer of PGLP, Inc., the managing general
partner of Borrower and the Senior Vice President and Chief Financial Officer of
The Prime Group, or, if such persons are not then serving Borrower in their
present capacities, their successors, with respect to the matter in question.
7
<PAGE>
1.7 MARKET PRICE ADJUSTMENTS. In the event of a stock dividend, stock
------------------------
split or combination or other reduction in the number of issued and outstanding
Brookdale shares, AIMCO shares and/or Prime Shares, as to such affected
securities, any applicable Market Price per share specified in this Loan
Agreement shall be proportionately and appropriately adjusted to reflect such
dividend, split or combination or other reduction.
ARTICLE 2
---------
LOAN AND TERMS OF PAYMENT
-------------------------
2.1 REVOLVING LOAN.
--------------
2.1.1 AMOUNT. The Loan is a revolving loan which shall be made
------
available to Borrower by Lender from time to time on and after the Closing
Date in the maximum amount outstanding at any one time in the amount of the
Commitment; provided, however, that the aggregate principal amount of the
Loan which shall be outstanding hereunder at any time shall not exceed the
Available Borrowing Base. Subject to the limitations set forth in this
Article 2, from the Closing Date through the Maturity Date, Borrower may
reborrow all or any Revolver Advance which is repaid or prepaid.
2.1.2 PROCEDURE FOR BORROWING. Each Revolver Advance shall be made on
-----------------------
any Business Day by Lender after Borrower has made an irrevocable written
or telephonic request to Lender for a Revolver Advance, provided, however,
if such request is received by Lender after 12:00 p.m., Chicago time, on a
Business Day, such request shall be deemed to have been made on the next
Business Day. If such Revolver Advance is to bear interest at the Floating
Rate, then such Revolver Advance shall be made on the same Business Day as
the date such request is made or deemed to have been made; if such Revolver
Advance is to bear interest at the Fixed Rate in accordance with the terms
of Sections 2.6 and 2.7 below, then such Revolver Advance shall be made on
the third Business Day following the date such request is made or deemed to
have been made. The amount of such Revolver Advance shall not be less than
$100,000, subject to the additional restrictions set forth in Section 2.1.1
and Section 2.6.1. Each request for a Revolver Advance shall be deemed a
certification by Borrower that no Default or Event of Default exists or
will be created if the requested Revolver Advance is made. Lender shall not
be obligated to make any Revolver Advance if (i) a Default or Event of
Default exists or will be created if the requested Revolver Advance is
made, or (ii) after making such Revolver Advance, the outstanding aggregate
principal amount of the Loan will exceed the Available Borrowing Base at
such time.
2.2 DISBURSEMENT OF LOAN ON CLOSING DATE. Provided (i) no Default or Event
------------------------------------
of Default shall be in existence on the Closing Date and (ii) all of the terms
and conditions set forth in Article IV below shall have been satisfied, on the
Closing Date and subject to the provisions
8
<PAGE>
of Section 2.1.1 above, Lender shall advance to Borrower such amount of the Loan
as Borrower shall request.
2.3 INTEREST. Borrower's Obligations shall bear interest computed and
--------
payable as follows:
2.3.1 INTEREST RATE. The principal balance of the Loan outstanding
-------------
from time to time shall bear interest at a per annum rate equal to the
Floating Rate in effect from time to time, subject to the LIBOR option in
Section 2.6.
2.3.2 INTEREST PAYMENTS. Accrued and unpaid interest on the Principal
-----------------
Balance of the Loan shall be due and payable monthly in arrears on the
first Business Day of each month, commencing February 1, 1999; provided,
however, that accrued and unpaid interest on each LIBOR Loan shall also be
due and payable in arrears on the last day of the Interest Period
applicable to such LIBOR Loan.
2.3.3 INTEREST COMPUTATION. Interest shall be: (a) computed on the
--------------------
basis of a year consisting of 360 days and (b) payable for the actual
number of days during the period for which interest is being charged.
2.3.4 MAXIMUM INTEREST. Notwithstanding any provision to the contrary
----------------
herein contained, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Borrower to Lender in excess of
the maximum contract rate of interest permitted by applicable law. Lender
and Borrower have agreed that the interest laws of the State of Illinois
shall govern the relationship between them, but in the event of a final
adjudication to the contrary, Borrower shall be obligated to pay to Lender
only such interest as then shall be permitted by the laws of the state
found to govern the contract relationship between Lender and Borrower. All
interest found in excess of that rate of interest allowed and collected by
Lender shall be applied to the Principal Balance in such manner as to
prevent the payment and collection of interest in excess of the rate
permitted by applicable law.
2.4 PRINCIPAL PAYMENTS. The outstanding Principal Balance of the Loan
------------------
shall be paid in full not later than the Maturity Date.
2.5 PREPAYMENT.
----------
2.5.1 VOLUNTARY PREPAYMENT. All or a portion of the Principal Balance
--------------------
of the Loan may be prepaid at any time without premium or penalty, provided
that Borrower shall also pay, with such prepayment, all Break Costs
incurred by Lender, if any. All prepayments of the Loan pursuant to this
subsection 2.5.1 shall be accompanied by the payment of any accrued and
unpaid interest on the portion of the Principal Balance being
9
<PAGE>
prepaid to the date on which Lender is in receipt of Good Funds, and any
other sums which are due and payable pursuant to the terms of the Loan
Documents.
2.5.2 MANDATORY PREPAYMENT. If, as of 3:30 p.m., Chicago time, on any
--------------------
Business Day, the outstanding Principal Balance of the Loan exceeds the
amount of the Available Borrowing Base on such Business Day then, not later
than 3:00 p.m., Chicago time, on the next Business Day, Borrower shall
either (i) repay the amount of such excess without notice or demand or (ii)
pledge to the Lender collateral, cash or cash equivalents (acceptable to
the Lender) in such amount sufficient to eliminate such excess. Any payment
made pursuant to this subsection 2.5.2 shall be accompanied by accrued
interest on the amount paid through the date on which Lender is in receipt
of Good Funds and in the case of LIBOR Loans, all Break Costs. Such payment
shall first be applied to the Floating Loan and then to the LIBOR Loans.
2.6 LIBOR OPTION.
------------
2.6.1 OPTION. Subject to the provisions of Sections 2.7 and 2.8,
------
Borrower shall have the option (i) to request that a Revolver Advance be
made at the Fixed Rate rather than the Floating Rate, (ii) to convert at
any time the interest rate charged on all or any part of the Principal
Balance of the Loan from the Floating Rate to a Fixed Rate; or (iii) upon
the expiration of any Interest Period applicable to a LIBOR Loan, to
continue all or any portion of the same as a LIBOR Loan, and the succeeding
Interest Period of such continued LIBOR Loan shall commence on the
expiration date of the Interest Period applicable thereto; provided, that
--------
no portion of the outstanding Loan may be continued as, or be converted
into, a LIBOR Loan when any Event of Default or Default has occurred and is
continuing. Any Revolver Advance to be made at a Fixed Rate and any partial
conversion of the Loan to a Fixed Rate or continuation of the Loan at a
Fixed Rate under this Section shall be in a minimum amount of $100,000, and
in integral multiples of $100,000 in excess of that amount.
2.6.2 NOTICE PROCEDURE. If Borrower requests that a Revolver Advance
----------------
bear interest at the Fixed Rate or if Borrower desires to convert all or a
portion of the Loan to a LIBOR Loan or to continue all or any portion of a
LIBOR Loan as a LIBOR Loan, Borrower shall notify Lender no later than
12:00 p.m. (Chicago time) on the third Business Day prior to the
aforementioned request or the proposed conversion or continuation date.
Each notice shall specify (i) the proposed Revolver Advance disbursement
date or the conversion or continuation date (which shall be a Business
Day), as applicable, (ii) the principal amount of the applicable Revolver
Advance or the principal amount of the Loan to be converted to or continued
as a LIBOR Loan, as applicable, and (iii) the requested Interest Period. In
lieu of delivering the above-described notice, Borrower may give Lender
telephonic notice of any proposed LIBOR Loan or the conversion or
continuation of a LIBOR Loan by the time required under this Section;
provided, that such notice is confirmed in writing by delivery or fax to
--------
Lender of
10
<PAGE>
such notice in no event later than 4:00 p.m. (Chicago time) on the date of
such telephonic notice.
2.6.3 NOTICE IRREVOCABLE. Notice of any proposed LIBOR Loan or of
------------------
conversion to a LIBOR Loan or continuation of a LIBOR Loan (or telephonic
notice in lieu thereof) shall be irrevocable and Borrower shall be bound in
accordance with the terms of such notice.
2.6.4 FAILURE TO PROVIDE NOTICE OF CONTINUATION. If notice of the
-----------------------------------------
continuation of a LIBOR Loan is not delivered by Borrower in a timely
manner, the amount of such LIBOR Loan shall bear interest at the Floating
Rate as of the termination date of the applicable Interest Period and shall
no longer bear interest at the Fixed Rate unless it is thereafter converted
to a new LIBOR Loan in the manner described above.
2.7 INTEREST PERIODS. By giving notice as required hereunder, Borrower
----------------
shall have the option, subject to the other provisions of this Section, to
specify a one-, two-, three-, four-, five- or six-month interest period (each an
"Interest Period") during which all or a portion of the Loan shall bear (or, if
already a LIBOR Loan, continue to bear) interest at the LIBOR Rate. The
determination of Interest Periods shall be subject to the following provisions:
(a) In the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the
immediately preceding Interest Period expires;
(b) If any Interest Period would otherwise expire on a day which is
not a Business Day, the Interest Period shall be extended to expire on the
next succeeding Business Day (unless the next succeeding Business Day is in
the next calendar month, in which event the Interest Period shall expire on
the immediately preceding Business Day);
(c) Borrower may not select an Interest Period which terminates later
than the Maturity Date;
(d) There shall be no more than four (4) Interest Periods with
respect to the Loan in effect at any one time.
2.8 SPECIAL PROVISIONS GOVERNING LIBOR LOANS.
----------------------------------------
2.8.1 DETERMINATION OF INTEREST RATE. On the Interest Rate
------------------------------
Determination Date, Lender shall determine (which determination shall,
absent manifest error, be presumptively correct) the Fixed Rate that shall
apply to the subject LIBOR Loan and shall promptly give notice thereof to
Borrower. If on any Interest Rate Determination Date Lender is unable to
obtain the applicable LIBOR Rate quotations, Lender shall give
11
<PAGE>
Borrower prompt notice thereof and such requested LIBOR Loan shall
automatically become a Prime Loan and shall bear interest at the Floating
Rate.
2.8.2 INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. If, with
---------------------------------------------------
respect to any Interest Period, (i) any change occurs in any applicable law
or governmental rule, regulation or order (or any interpretation thereof
and including the introduction of any new law or governmental rule,
legislation or order) affecting the interbank Eurodollar market for such
Interest Period, or (ii) other circumstances affecting the interbank
Eurodollar market for such Interest Period results in the then applicable
Fixed Rates not adequately reflecting the cost to Lender of making or
funding the LIBOR Loans, Lender shall give notice thereof to Borrower,
whereupon until Lender has determined that the circumstances giving rise to
such inadequacy no longer exist, (A) the right of Borrower to elect to have
any portion of the Loan bear interest based upon the Fixed Rate shall be
suspended for such Interest Period, and (B) each outstanding LIBOR Loan
shall bear interest at the Floating Rate commencing on the last day of the
then current Interest Period therefor, notwithstanding any prior election
by Borrower to the contrary.
2.9 ILLEGALITY. In the event that on any date Lender shall have reasonably
----------
determined that the making or continuation of any LIBOR Loan has become unlawful
by compliance by Lender in good faith with any law, governmental rule,
regulation or order of any Governmental Body, then Lender shall promptly give
notice to Borrower of that determination. Upon the giving of such notice,
Borrower's right to request of Lender and Lender's obligation to make LIBOR
Loans shall be immediately suspended to the extent specified in such notice, and
if any LIBOR Loans are then outstanding, each such LIBOR Loan shall immediately
become a Prime Loan and shall commence bearing interest at the Floating Rate. If
Lender determines at any time following its giving of the aforementioned notice
that Lender may lawfully make LIBOR Loans of the type(s) referred to in such
notice, Lender shall promptly give notice to Borrower of such determination,
whereupon Borrower's right to request of Lender and Lender's obligation to make
LIBOR Loans of such type shall be restored.
2.10 COMPENSATION. Borrower shall indemnify Lender, within five (5)
------------
Business Days following Borrower's receipt of the written statement described
below, for all losses, expenses and liabilities (including, without limitation,
any loss or expense incurred by reason of liquidation or reemployment of
deposits or other funds acquired by Lender to fund or maintain Lender's LIBOR
Loans to Borrower) which Lender may sustain (i) if such LIBOR Loans are not made
when requested due to Borrower's actions or inactions, (ii) if any prepayment of
any LIBOR Loan occurs for any reason on a date which is not the last day of the
applicable Interest Period, or (iii) as a consequence of any required conversion
of the interest rate applicable to a LIBOR Loan to a Floating Rate, (such
losses, expenses and liabilities being collectively referred to as "Break
Costs"). Lender shall promptly deliver to Borrower a written statement as to
such Break Costs, which statement shall be rebuttably presumed correct. The
maximum amount of any indemnification under this Section 2.10 shall not exceed
the interest which would have been payable for the balance of the applicable
Interest Period for the aforesaid LIBOR Loans.
12
<PAGE>
2.11 LIBOR RATE TAXES. Borrower agrees that:
----------------
2.11.1 ADDITIONAL PAYMENTS. Borrower shall pay, prior to the date on
-------------------
which penalties attach thereto, all present and future stamp and other
taxes, levies, or costs and charges whatsoever imposed, assessed, levied or
collected on or in respect of the Loan solely as a result of the interest
rate being determined by reference to the LIBOR Rate or any payments of
principal, interest or other amounts made on or in respect of a Loan made
to Borrower when the interest rate is determined by reference to the LIBOR
Rate (all such taxes, levies, costs and charges being herein collectively
called "LIBOR Rate Taxes"); provided however, that LIBOR Rate Taxes shall
-------- -------
not include income or franchise taxes imposed by any jurisdiction (except
that Borrower shall be liable for the payment of the amount of any
additional net income or franchise taxes attributable to payments made by
Borrower pursuant to this Section).
2.11.2 INDEMNITY. Borrower shall indemnify Lender against, and
---------
reimburse Lender within five (5) days after Lender's written demand for,
any LIBOR Rate Taxes paid by Lender. Lender shall provide Borrower with
appropriate receipts for any payments or reimbursements made by Borrower
pursuant to this Section as a result of the Loan.
2.12 DEFAULT RATE. During a Default Period, the Principal Balance shall
------------
bear interest at the Default Rate.
2.13 METHOD OF PAYMENT; GOOD FUNDS. All payments to be made by Borrower
-----------------------------
pursuant to the Loan Documents shall be delivered to Lender at 135 South LaSalle
Street, Chicago, Illinois 60603, or to such other address as Lender shall notify
Borrower. Payment shall not be deemed to have been received by Lender until
Lender is in receipt of Good Funds.
2.14 DEPOSIT TO BORROWER'S ACCOUNT. Lender may, at its option, deposit
-----------------------------
the proceeds of the Loan into a working capital account maintained by Borrower
with Lender and shall have the right to debit such account (or any other account
or deposit maintained or made by Borrower with Lender) from time to time for any
of Borrower's Obligations that are due and payable.
ARTICLE 3
---------
NOTE AND SECURITY
-----------------
3.1 NOTE. The Loan shall be evidenced by the Note.
----
3.2 SECURITY. All Borrower's Obligations shall be secured by the Pledge
--------
Agreement.
13
<PAGE>
ARTICLE 4
---------
CONDITIONS OF FUNDING
---------------------
Lender's obligation to make any Revolver Advance shall be subject to the
satisfaction of all of the following conditions in a manner, form and substance
reasonably satisfactory to Lender:
4.1 INITIAL ADVANCE. The obligation of the Lender to make the initial
---------------
Revolver Advance is, in addition to the conditions precedent specified in
Section 4.2, subject to the following being delivered to Lender, each duly
authorized and executed:
(a) the Loan Documents;
(b) a certificate of the general partner of Borrower, certifying on
the Closing Date:
(i) the certificate of limited partnership of Borrower,
certified by the Secretary of State of the state of organization of
Borrower, as of a date within the month in which the Closing Date
occurs; and
(ii) the agreement of limited partnership of Borrower;
(c) a certificate of the general partner of each of Prime Group
Operating Partnership and Prime Group Realty Operating Partnership,
certifying on the Closing Date:
(i) the certificate of limited partnership of such
partnership, certified by the Secretary of State of the state of
organization of such partnership, as of a date within the month in
which the Closing Date occurs; and
(ii) the agreement of limited partnership of such partnership;
(d) a certificate of the Secretary or Assistant Secretary of PGLP,
Inc. and The Prime Group, certifying on the Closing Date:
(i) the certificate or articles of incorporation, and all
amendments thereto, of such Person, certified by the Secretary of
State of the state of organization of such Person, as of a date
within the month in which the Closing Date occurs;
(ii) the by-laws, and all amendments thereto, of such Person;
14
<PAGE>
(iii) Copies of the resolutions of such Person approving and
authorizing the execution, delivery and performance by such Person
(as to PGLP, Inc., in its own capacity or in its capacity as
managing general partner of Borrower) of the Loan Documents to be
executed or delivered by it (or, as to PGLP, Inc., by Borrower)
hereunder; and
(iv) the names and true signatures of the officers of such
Person authorized to execute, deliver and perform, as applicable,
the Loan Documents to be executed or delivered by it hereunder;
(e) a certificate of existence, as of a date within the month in
which the Closing Date occurs, from the Secretary of State of the state of
organization for each of (i) Borrower, (ii) Prime Retail Operating
Partnership, and (iii) Prime Group Realty Operating Partnership;
(f) a good standing certificate, as of a date within the month in
which the Closing Date occurs, from the Secretary of State of the state of
incorporation for each of (i) PGLP, Inc. and (ii) The Prime Group;
(g) opinions of counsel for Borrower and Guarantor, in form and
substance satisfactory to Lender;
(h) a borrowing base certificate (as described in Section 6.3.4);
(i) all filings of Uniform Commercial Code Financing Statements and
all other recordings and actions necessary to perfect and maintain the
Security Interests as first, valid and perfected liens and security
interests in the Collateral shall have been filed or taken and confirmation
thereof received;
(j) all necessary consents under each of (i) the agreement of
limited partnership for the Prime Retail Operating Partnership and the
Prime Group Realty Operating Partnership (the "Partnership Agreements"),
and (ii) the Prime Group Realty Registration Rights Agreement and the Prime
Retail Registration Rights Agreement approving (1) the transactions
contemplated by the Loan Documents, including, but not limited to, the
pledge of the Partnership Units under the Pledge Agreement; (2) the
exercise of Lender's rights hereunder and under the Pledge Agreement upon
the occurrence of any Event of Default; (3) the admission of Lender as a
limited partner of the Prime Retail Operating Partnership and the Prime
Group Realty Operating Partnership upon foreclosure of the Collateral; (4)
the exchange of the Prime Retail Partnership Units for Prime Retail, Inc.
Shares, (5) the exchange of the Prime Group Realty Partnership Units for
PGRT Shares, (6) the registration of such PGRT Shares with the SEC as
provided under the Prime Group Realty Registration Rights Agreement, (7)
the registration of the Prime Retail, Inc. Shares with the SEC as provided
under the Prime
15
<PAGE>
Retail Registration Rights Agreement, and (8) the ability of Lender to
become a party to the Prime Retail, Inc. Registration Rights Agreement;
(k) payment of all amounts for fees and expenses owning to
Lender under this Loan Agreement; and
(l) such other instruments, documents, certificates, consents,
waivers and opinions necessary to consummate the transactions contemplated
in this Loan Agreement and in the other Loan Documents, or as Lender may
reasonably request.
4.2 ALL REVOLVER ADVANCES. The obligation of Lender to make any
---------------------
Revolver Advance is subject to the following further conditions precedent that:
4.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
------------------------------
warranties of Borrower and Guarantor, as the case may be, set forth in this
Loan Agreement and the other Loan Documents shall be true and correct in
all material respects as of the date such Revolver Advance is made, except
for any representation or warranty limited by its terms to a specific date
and taking into account any disclosures made in writing pursuant to the
terms of this Loan Agreement.
4.2.2 PERFORMANCE; NO DEFAULT. Borrower shall have performed and
-----------------------
complied with all agreements and conditions contained in the Loan Documents
to be performed by or complied with prior to such Revolver Advance and no
Event of Default of Default then exists.
ARTICLE 5
---------
REPRESENTATIONS AND WARRANTIES
------------------------------
Borrower represents and warrants to Lender as follows:
5.1 BORROWER. Borrower is a limited partnership duly formed and validly
--------
existing under the laws of the State of Illinois. The Borrower is duly qualified
in each jurisdiction in which the failure to so qualify could have a Material
Adverse Effect on Borrower. The Borrower has full power and authority to execute
and deliver the Loan Documents and to perform its obligations hereunder and
thereunder. The agreement of limited partnership of Borrower, as amended, a copy
of which has been furnished to Lender, is true, correct and complete.
5.2 PARTNERS OF BORROWER. The managing general partner of Borrower is
--------------------
PGLP, Inc. and the limited partners of Borrower are Prime Group II, L.P., an
Illinois limited partnership, Prime Group Limited Partnership, an Illinois
limited partnership, The Prime Group, and Prime International, Inc., an Illinois
corporation. PGLP, Inc. is a duly formed corporation, validly
16
<PAGE>
existing and in good standing in the State of Illinois and qualified to do
business in each jurisdiction in which failure to do so would have a Material
Adverse Effect on PGLP, Inc.
5.3 AUTHORITY. No consent or approval of, or other action by, any
---------
partner, Governmental Body or any other Person, which has not already been
obtained, is required to be obtained by Borrower to authorize, or is required to
be obtained by Borrower in connection with the execution, delivery and
performance of, the Loan Documents, or is required as a condition to the
validity or, subject to the terms of the Partnership Agreements, enforceability
of the Security Interests or any of the Loan Documents.
5.4 NECESSARY ASSETS. Borrower owns all of the assets necessary to
----------------
operate and maintain the operations of the Business.
5.5 BINDING AGREEMENTS. This Loan Agreement and the other Loan
------------------
Documents, when executed and delivered, will constitute the valid and legally
binding obligations of Borrower, and will be enforceable against Borrower in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
equitable principles.
5.6 BORROWER'S SECURITIES. As of the Closing Date, Borrower owns
---------------------
3,576,933 Brookdale Shares, 104,632 Prime Retail Partnership Units, 115,000
AIMCO Shares, and 47,525 Prime Group Realty Partnership Units (collectively, the
"Borrower's Securities").
5.7 TITLE TO PROPERTY; LIENS. Borrower shall have good and marketable
------------------------
title to all of the Collateral free and clear of all Liens. The applicable Loan
Documents create a valid and perfected Lien in the Collateral described therein.
5.8 FINANCIAL STATEMENTS. The financial statements previously delivered
--------------------
to Lender present fairly the financial condition and the results of the
operations of Borrower and Guarantor as of the dates and for the periods
indicated therein.
5.9 LITIGATION. To the knowledge of Borrower, there are no actions,
----------
suits, arbitration proceedings or claims pending or threatened at law or in
equity or before any Governmental Body which, if adversely determined, could
have a Material Adverse Effect on Borrower or Guarantor. As of the Closing Date,
to the knowledge of Borrower, there are no proceedings pending or threatened
which call into question the validity or enforceability of any of this Loan
Agreement or the other Loan Documents or any of the transactions contemplated
hereby or thereby.
5.10 CONFLICTING AGREEMENTS. Borrower is not in default under any
----------------------
agreement to which it is a party or by which Borrower or any of its Property is
bound, the effect of which default has resulted in the termination of such
agreement and such termination will have a Material Adverse
17
<PAGE>
Effect on Borrower. No authorization or approval or other action by, and no
notice to or filing with, any Governmental Body which has not been obtained,
given or made by Borrower is required for the due execution, delivery and
performance by Borrower of any of the Loan Documents. No provision of any
mortgage, indenture, contract or agreement to which Borrower is a party
conflicts with, or requires any consent which has not already been obtained or
is anticipated to be obtained as described above, or in any way would prevent
the execution, delivery or performance of the terms of, any of the Loan
Documents. Neither the execution, delivery, or carrying out of the terms of the
Loan Documents will constitute a default under, or result in the creation or
imposition of, or obligation to create, any Lien upon the Property of Borrower
pursuant to the terms of any such mortgage, indenture, contract or agreement.
Neither the execution and delivery by Borrower of the Loan Documents, nor the
consummation of the transactions therein contemplated, nor compliance with the
provisions thereof will violate any law, rule, regulation, order, writ,
judgment, injunction, decree or award binding on Borrower, except where such
violation could not reasonably be expected to have a Material Adverse Effect.
5.11 COMPLIANCE WITH APPLICABLE LAWS. Borrower is not in default in
-------------------------------
respect of any judgment, order, writ, injunction, decree or decision of any
Governmental Body, which default would have a Material Adverse Effect on
Borrower. Borrower is in compliance in all material respects with all applicable
statutes and regulations of all Governmental Bodies, a violation of which would
have a Material Adverse Effect on Borrower.
5.12 APPLICATION OF CERTAIN LAWS AND REGULATIONS.
-------------------------------------------
5.12.1 INVESTMENT COMPANY ACT. Borrower is not an "investment
----------------------
company," or a company "controlled" by an "investment company," within
the meaning of the Investment Company Act of 1940, as amended.
5.12.2 HOLDING COMPANY ACT. Borrower is not a "holding company,"
-------------------
or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company" of a "holding
company," as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended.
5.13 MARGIN REGULATIONS. None of the transactions contemplated by this
------------------
Loan Agreement or any of the other Loan Documents, including the use of proceeds
of the Loan, will violate or result in a violation of Section 7 of the Exchange
Act, or any regulations issued pursuant thereto, including, without limitation,
Regulations T, U and X.
5.14 NO MISREPRESENTATION. To Borrower's knowledge, no representation
--------------------
or warranty contained herein and no certificate, information or report furnished
or to be furnished by Borrower in connection with any of the Loan Documents or
any of the transactions contemplated hereby or thereby contains or will contain
a misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements contained herein or
therein not misleading in the light of the circumstances under which such
statements were made.
18
<PAGE>
To Borrower's knowledge, there is no fact which has not expressly been disclosed
to Lender in writing, or so far as Borrower reasonably can foresee, that will
have a Material Adverse Effect on Borrower or Guarantor.
5.15 NO AFFILIATION. Borrower and AIMCO are not "affiliates" as that
--------------
term is defined in the Securities Act of 1933, as amended.
5.16 REGISTRATION EFFECTIVE. The Prime Retail, Inc. Registration Statement,
----------------------
with respect to the Prime Retail, Inc. Shares issuable upon conversion of the
Prime Retail Partnership Units, has been declared effective under the Securities
Act of 1933, as amended, and to Borrower's knowledge, no "stop order" suspending
the effectiveness of the Prime Retail, Inc. Registration Statement has been
issued, nor has any proceeding for the issuance of such an order been initiated
or threatened.
ARTICLE 6
---------
AFFIRMATIVE COVENANTS
---------------------
Until all of Borrower's Obligations are paid and performed in full,
Borrower agrees:
6.1 LEGAL EXISTENCE; GOOD STANDING. Borrower shall maintain its existence
------------------------------
in its jurisdiction of organization and maintain its qualification in any
jurisdiction in which failure to be so qualified would have a Material Adverse
Effect. The Guarantor shall maintain its existence and remain in good standing
in its jurisdiction of incorporation and in any jurisdiction in which failure to
be so qualified would have a Material Adverse Effect.
6.2 INSPECTION. Borrower will permit representatives of Lender to visit
----------
its offices to examine its books and records and Accountants' reports relating
thereto, and to make copies or extracts therefrom, and to discuss its business
and affairs with its employees, all at reasonable times, upon reasonable prior
notice, and, at all reasonable times and upon reasonable prior notice, to
examine and inspect its Property and to meet and discuss the business and its
affairs with the Accountants.
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION OF BORROWER. Borrower will
------------------------------------------------------
maintain a system of accounting in accordance with GAAP and furnish to Lender:
6.3.1 ANNUAL STATEMENTS. As soon as available and in any event within
-----------------
120 days after the close of each fiscal year, a copy of (a) the balance
sheet of Borrower as of the end of such year, and (b) the statements of
income and cash flow of Borrower for such year, setting forth in each case
(beginning with the 1998 financial statements) in comparative form the
corresponding figures for the preceding year, all in reasonable detail, and
in each case audited by the Accountants. Such annual statements shall be
19
<PAGE>
accompanied by a report of the Accountants which states that in making the
audit of the financial statements of Borrower, nothing of a financial or
accounting nature came to the attention of the Accountants that caused them
to believe that Borrower was not in compliance with the terms, covenants,
provisions, or conditions of any of the Loan Documents or that there shall
have occurred a condition or event that constitutes an Event of Default
(or, if applicable, specifying in such certificate the nature and status of
any instances of non-compliance or Events of Default), and which is
otherwise in a form reasonably satisfactory to Lender.
6.3.2 NOTICE OF DEFAULTS; LOSS. Immediate written notice if: (i) any
------------------------
Indebtedness aggregating in excess of $3,000,000 of Borrower or Guarantor
is declared or shall become due and payable prior to its declared or stated
maturity (other than regularly scheduled payments), or called and not paid
when due, (ii) the holder of any note, or other evidence of Indebtedness,
certificate or security evidencing any such Indebtedness aggregating in
excess of $3,000,000 of Borrower or Guarantor has the right to declare such
Indebtedness due and payable prior to its stated maturity, (iii) there
shall occur and be continuing a Default or Event of Default, accompanied by
a certified statement of an authorized officer of PGLP, Inc., as managing
general partner of Borrower, or an authorized officer of Guarantor setting
forth what action Borrower or Guarantor, as the case may be, proposes to
take in respect thereof, or (iv) any event shall occur causing loss or
depreciation in the value of assets having a Material Adverse Effect upon
the business or operations of Borrower or Guarantor, including the amount
or the estimated amount of any such loss or depreciation or adverse effect.
6.3.3 NOTICE OF SUITS, ADVERSE EVENTS. Prompt written notice of: (i)
-------------------------------
any citation, summons, subpoena, order to show cause or other order naming
Borrower or Guarantor a party to any proceeding involving in excess of
$3,000,000 and include with such notice a copy of such citation, summons,
subpoena, order to show cause or other order, (ii) any lapse or other
termination of any material license, permit, franchise, agreement or other
authorization issued to Borrower or Guarantor by any Governmental Body or
any other Person, (iii) any refusal by any Governmental Body or any other
Person to renew or extend any such material license, permit, franchise,
agreement or other authorization and (iv) any dispute between Borrower or
Guarantor and any Governmental Body or any other Person, which lapse,
termination, refusal or dispute referred to in clauses (ii) or (iii) above
or in this clause (iv) may have a material adverse effect on the financial
condition, operations, business, prospects or Property of Borrower or
Guarantor.
6.3.4 COVENANT COMPLIANCE CERTIFICATE; BORROWING BASE CERTIFICATE. On
-----------------------------------------------------------
or before the 20th day after the end of each calendar quarter, a compliance
certificate in a form reasonably satisfactory to Lender stating whether
Borrower is in compliance with the terms, covenants, provisions and
conditions of the Loan Documents and specifying any condition or event that
constitutes an Event of Default set forth in Article 8 hereof,
20
<PAGE>
together with any supporting documentation reasonably requested by Lender.
On the date of each requested Revolver Advance, and on or before the 5th
day after the end of each month, a borrowing base certificate in a form
reasonably satisfactory to Lender setting forth the calculation of the
Available Borrowing Base as of the close of business of the business day
immediately preceding the date of such Revolver Advance or as of the end of
the preceding month, as applicable.
6.3.5 OTHER INFORMATION. Such other information and reports relating
-----------------
to the past, present or future financial condition, operations, plans and
projections of Borrower as Lender reasonably may request from time to time.
6.4 FINANCIAL INFORMATION OF PRIME RETAIL, INC. AND PGRT. Borrower shall
----------------------------------------------------
furnish to the Bank:
6.4.1 as soon as available, but in no event more than five (5)
Business Days after request by Lender, a copy of each quarterly report on
Form 10-Q filed by Prime Retail, Inc., PGRT, Brookdale and AIMCO with the
SEC;
6.4.2 as soon as available, but in no event more than five (5)
Business Days after request by Lender, a copy of any annual report on Form
10-K filed by Prime Retail, Inc., PGRT, Brookdale or AIMCO with the SEC.
6.4.3 as soon as available, but in any event no more than five (5)
Business Days after request by Lender, any other report filed by Prime
Retail, Inc., PGRT, Brookdale or AIMCO with the SEC under Section 13 of the
Exchange Act, and any definitive proxy material filed by such Person with
the SEC under Section 14 of the Exchange Act.
6.5 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Borrower will file,
------------------------------------------------
all on a timely basis, all reports, applications, documents, instruments and
information required to be filed pursuant to all rules, regulations or requests
of any Governmental Body or other Person having jurisdiction over the operation
of Borrower, including, but not limited to, such of the Loan Documents as may be
required to be filed with any such Governmental Body or other Person pursuant to
applicable rules and regulations promulgated by such Governmental Body or other
Person, unless the failure to file would not reasonably be expected to have a
Material Adverse Effect.
6.6 GENERAL PARTNER. PGLP, Inc. or a "Prime Group Entity" at all times
---------------
shall remain the general partner of Borrower. As used herein, a "Prime Group
Entity" shall mean (i) PGLP, Inc., (ii) The Prime Group, (iii) any person in
which The Prime Group or PGLP, Inc. has a beneficial ownership of 51% or more of
the voting interests in such person, (iv) any entity controlling, controlled by
or under common control with, The Prime Group or PGLP, Inc., or (v) any entity
in which The Prime Group or PGLP, Inc., or officers, directors and employees of
The Prime Group or PGLP, Inc. own, directly or indirectly, a controlling
interest.
21
<PAGE>
6.7 FINANCIAL STATEMENTS OF GUARANTOR. Borrower will cause Guarantor to
---------------------------------
furnish to Lender as soon as available and in any event within 180 days after
the close of each fiscal year, a copy of Guarantor's (a) balance sheet as of the
end of such year, and (b) statements of income and cash flow for such year,
setting forth in each case (beginning with the 1998 financial statements) in
comparative form the corresponding figures for the preceding year, all in
reasonable detail, and in each case audited by the Accountants.
ARTICLE 7
---------
NEGATIVE COVENANTS
------------------
Borrower shall not:
7.1 Engage in any business other than the Business or otherwise materially
change the nature of the Business of Borrower as it exists on the Closing Date.
7.2 Amend, modify or waive any term or provision of Borrower's certificate
of limited partnership or agreement of limited partnership in a manner that
would have a Material Adverse Effect.
7.3 Sell, lease, assign, transfer, pledge, hypothecate or otherwise
dispose of or grant any security interest in any of Borrower's Securities
pledged as Collateral, except as permitted by Section 5.7.
7.4 Consent to any alteration or modification of any provision affecting
the Partnership Units, which alteration or modification would have a Material
Adverse Effect.
ARTICLE 8
---------
DEFAULT AND REMEDIES
--------------------
8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
-----------------
constitute an Event of Default under the Loan Documents:
8.1.1 DEFAULT IN PAYMENT. If Borrower shall fail to pay all or any
------------------
portion of Borrower's Obligations on or before the fifth Business Day
following the date on which the same become due and payable.
22
<PAGE>
8.1.2 BREACH OF COVENANTS AND CERTAIN OTHER PROVISIONS.
------------------------------------------------
(a) If Borrower shall fail to observe or perform any covenant or
agreement made by Borrower contained in Article VI (except for Sections 6.1
and 6.5) or in Article VII.
(b) If Borrower shall fail to observe or perform any covenant or
agreement (other than those referred to in subparagraph (a) above) made by
Borrower in any of the Loan Documents, and such failure shall continue for
a period of 30 days after the earlier of (i) the written notice of such
failure is given to Borrower by Lender or (ii) the date Borrower shall have
actual knowledge of such failure; provided, however, that if such default
-------- -------
is of a nature that it cannot be cured within thirty (30) days and Borrower
commences and diligently proceeds to cure such default, such cure period
shall be extended for such period of time as required to cure such default
but in no event more than thirty (30) additional days.
(c) Any alterations, modifications or amendments are made to the
certificate or articles of incorporation of either Prime Retail, Inc. or
PGRT or to any other agreement that would adversely alter in any material
manner the rights afforded to holders of Collateral consisting of (i) Prime
Retail Partnership Units in the Second Amended and Restated Agreement of
Limited Partnership of Prime Retail, L.P., as further amended, or (ii)
Prime Group Realty Partnership Units in the Amended and Restated Agreement
of Limited Partnership of Prime Group Realty, L.P., as further amended, to
convert such Partnership Units into Prime Shares.
8.1.3 BREACH OF WARRANTY. Any representation or warranty made by
------------------
Borrower or Guarantor in or pursuant to any of the Loan Documents to which
Borrower or Guarantor is a party or in any instrument or document furnished
in compliance with the Loan Documents shall prove to be false or misleading
in any material respect as of the date on which made.
8.1.4 ACCELERATION OF ANY INDEBTEDNESS. If Borrower or Guarantor at
--------------------------------
any time shall be in default (as principal or guarantor or other surety) in
the payment of any principal of or premium or interest on any Indebtedness
for Borrowed Money in excess of $3,000,000 (other than Borrower's
Obligations) and in each case such default has resulted in an acceleration
of the maturity of such Indebtedness for Borrowed Money which is not paid
promptly upon acceleration.
8.1.5 BANKRUPTCY.
----------
(a) If Borrower or Guarantor or, to the extent, and for so long as,
the shares or limited partnership units of such Person (or, in the case of
Prime Retail, Inc. and PGRT, shares of limited partnership units that are
exchangeable into shares of such Person) have
23
<PAGE>
been pledged to Lender as security for the Loan, the Prime Retail Operating
Partnership, the Prime Group Realty Operating Partnership, Prime Retail,
Inc., PGRT, Brookdale or AIMCO shall (i) generally not be paying, or admit
in writing its inability to pay, its debts as they become due, (ii) file,
or consent, by answer or otherwise, to the filing against any of such
entities, of a petition for relief or reorganization or arrangement or any
other petition in bankruptcy or insolvency under the laws of any
jurisdiction, (iii) make an assignment for the benefit of creditors, (iv)
consent to the appointment of a custodian, receiver, trustee or other
officer with similar powers for, or for any substantial part of the
Property owned by any of such entities, (v) be adjudicated insolvent, or
(vi) take a corporate action to authorize any of the foregoing.
(b) If any Governmental Body of competent jurisdiction shall enter an
order appointing, without consent of Borrower or Guarantor or, to the
extent, and for so long as, the shares or limited partnership units of such
Person (or, in the case of Prime Retail, Inc. and PGRT, shares of limited
partnership units that are exchangeable into shares of such Person) have
been pledged to Lender as security for the Loan, the Prime Retail Operating
Partnership, the Prime Group Realty Operating Partnership, Prime Retail,
Inc., PGRT, Brookdale or AIMCO, a custodian, receiver, trustee or other
officer with similar powers with respect to any of such Persons, or with
respect to any substantial part of the Property belonging to Borrower or
such Person, or if an order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of any of such entities, or if any
petition for any such relief shall be filed against any of such entities
and such order or petition shall not be dismissed within 90 days.
8.1.6 JUDGMENTS. If there shall exist final judgments against
---------
Borrower or Guarantor which shall have been outstanding for any period of
30 days or more from the date of the entry thereof and shall not have been
discharged in full or stayed pending appeal and if the aggregate amount
thereof exceeds $3,000,000.
8.1.7 NON-PERFORMANCE OF GUARANTY, ETC. Guarantor shall fail (subject
--------------------------------
to any applicable notice, cure or grace period) to comply with or to
perform in any material respect any covenant set forth in the Guaranty,
Guarantor (or any Person by, through or on behalf of Guarantor) shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty, or the Guaranty shall cease to be in full force and effect.
8.1.8 INVALIDITY OF PLEDGE AGREEMENT, ETC. The Pledge Agreement shall
-----------------------------------
cease to be in full force and effect, any party thereto (other than Lender)
shall fail (subject to any applicable notice, cure or grace period) to
comply with or to perform in any material respect any applicable provision
of the Pledge Agreement promptly upon request of the Lender (or, if such
noncompliance or nonperformance would result in the non-perfection of a
material portion of the Collateral granted to the Lender under the Pledge
Agreement,
24
<PAGE>
at any time regardless of whether the Lender has made any such request), or
any Person (other than the Lender) party to the Pledge Agreement (or any
Person by, through or on behalf of such Person party thereto) shall contest
in any manner the validity, binding nature of enforceability of the Pledge
Agreement, as applicable.
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the occurrence of:
--------------------------------------
(a) any Event of Default described in clauses (ii), (iii), (iv) and
(v) of subsection 8.1.5(a) or described in Section 8.1.5(b), all of
Borrower's Obligations at that time outstanding automatically shall mature
and become due and payable and Borrower's right to request additional
Revolver Advances shall immediately terminate, or
(b) any other Event of Default, Lender, at any time, (unless such
Event of Default shall have been cured by Borrower or waived by Lender) at
its option, may declare all of Borrower's Obligations due and payable,
whereupon Borrower's Obligations immediately shall mature and become due
and payable and Borrower's right to request additional Revolver Advances
shall immediately terminate,
all without presentment, demand, protest, or notice, all of which hereby are
waived.
8.3 REMEDIES ON DEFAULT. If any of Borrower's Obligations have been
-------------------
accelerated pursuant to Section 8.2, Lender, at its option, may:
8.3.1 ENFORCEMENT OF SECURITY INTERESTS. Enforce its rights and
---------------------------------
remedies under the Loan Documents in accordance with their respective
terms.
8.3.2 OTHER REMEDIES. Enforce any of the rights or remedies granted
--------------
to Lender under any other Loan Document and any other rights or remedies
accorded to Lender at equity or law, by virtue of statute or otherwise.
8.4 APPLICATION OF FUNDS. Any funds received by Lender pursuant to the
--------------------
exercise of any rights accorded to Lender pursuant to, or by the operation of
any of the terms of, any of the Loan Documents, including, without limitation,
insurance proceeds, condemnation proceeds or proceeds from the sale of
Collateral, shall be applied by Lender in the following order of priority:
8.4.1 EXPENSES. First, to the payment of (i) all fees and expenses,
--------
including, without limitation, reasonable attorney's fees, court costs,
fees of appraisers, title charges, costs of maintaining and preserving the
Collateral, costs of sale, and all other costs incurred by the Lender in
exercising any rights accorded to the Lender pursuant to the Loan Documents
or by applicable law and (ii) all Liens superior to the Liens of Lender,
except such superior Liens subject to which any sale of the Collateral may
have been made;
25
<PAGE>
8.4.2 BORROWER'S OBLIGATIONS. Next to the payment of Borrower's
----------------------
Obligations in such order as Lender may determine; and
8.4.3 SURPLUS. Any surplus, to the Person or Persons entitled
-------
thereto.
ARTICLE 9
---------
CLOSING
-------
The closing of the Loan (the "Closing") shall be on the date hereof
(the "Closing Date"), and the Closing shall take place on such date provided all
conditions for the Closing as set forth in this Loan Agreement have been
satisfied. The Closing shall occur at such place as the parties hereto shall
agree.
ARTICLE 10
----------
EXPENSES AND INDEMNITY
----------------------
10.1 CLOSING FEE. The Borrower shall pay to Lender on the Closing Date
-----------
hereof the sum of $250,000, which may be paid out of Borrower's initial
borrowing under the Loan.
10.2 ATTORNEYS' FEES AND OTHER FEES AND EXPENSES. Whether or not any of the
-------------------------------------------
transactions contemplated by this Loan Agreement shall be consummated, Borrower
agrees to pay to Lender on demand all fees paid or expenses incurred by Lender
in connection with the transactions contemplated hereby and in connection with
any amendments, modifications or waivers (whether or not the same become
effective) under or in respect of any of the Loan Documents, including, without
limitation:
10.2.1 FEES AND EXPENSES FOR PREPARATION OF LOAN DOCUMENTS. All
---------------------------------------------------
reasonable fees, expenses and disbursements (including without limitation,
charges for required lien searches, reproduction of documents, long
distance telephone calls and overnight express carriers) of counsel
retained by Lender in connection with the preparation and negotiation of
any of the Loan Documents or any amendments, modifications or waivers
hereto or thereto (whether or not the same become effective).
10.2.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF LOAN
-------------------------------------------------------------
DOCUMENTS. Any reasonable attorneys' fees and expenses or other costs or
---------
expenses incurred by Lender in connection with the enforcement or
collection against Borrower or Guarantor of any provision of any of the
Loan Documents, and in connection with or arising out of any litigation,
investigation or proceeding instituted by any Governmental Body or any
other Person with respect to any of the Loan Documents, whether or not suit
is instituted, including, but not limited to, such costs or expenses
arising from the
26
<PAGE>
enforcement or collection against Borrower, of any provision of any of the
Loan Documents in any state or federal bankruptcy or reorganization
proceeding.
10.3 INDEMNITY. Borrower hereby agrees to indemnify and save Lender
---------
harmless from the following:
10.3.1 BROKERAGE FEES. The fees, if any, of brokers and finders
--------------
incurred by Borrower.
10.3.2 OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss, cost,
----------------------------------------
liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or
maintenance of the Collateral, the construction of Lender and Borrower as
having the relationship of joint venturers or partners or the determination
that Lender or Borrower has acted as agent for the other.
ARTICLE 11
----------
MISCELLANEOUS
-------------
11.1 NOTICES. Any notices, communications and waivers under this Loan
-------
Agreement shall be in writing and shall be (i) delivered in person, (ii) mailed,
postage prepaid, either by registered or certified mail, return receipt
requested, (iii) by overnight express carrier, or (iv) by facsimile
transmission, addressed in each case as follows:
To Lender: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attn: John C. Hein
Facsimile No.: (312) 904-6691
With copy to: Schwartz, Cooper, Greenberger & Krauss
180 North LaSalle Street, Suite 2700
Chicago, Illinois 60601
Attn: Robert A. Smoller, Esq.
Facsimile No.: (312) 782-8416
27
<PAGE>
To Borrower: Prime Group VI, L.P.
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900 (Suite 4200 after February 1, 1999)
Chicago, Illinois 60601
Attn: Michael W. Reschke
Facsimile No.: (312) 917-1511
With copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Facsimile No.: (312) 558-5700
And to: The Prime Group, Inc.
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
Attn: Robert J. Rudnik, Esq.
Facsimile No.: (312) 917-8442
or to any other address as to any of the parties hereto, as such party shall
designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section shall be deemed received (i) if personally
delivered, then on the date of delivery, (ii) if sent by overnight, express
carrier, then on the next federal banking day immediately following the day
sent, (iii) if sent by registered or certified mail, then on the earlier of the
third federal banking day following the day sent or when actually received, or
(iv) if sent by facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received.
11.2 SURVIVAL OF LOAN AGREEMENT. All covenants, agreements, representations
--------------------------
and warranties made in this Loan Agreement and in the certificates delivered
pursuant hereto shall survive the making by Lender of the Loan and the execution
and delivery to Lender of the Note and of all other Loan Documents and shall
continue in full force and effect so long as any of Borrower's Obligations
remain outstanding, unperformed or unpaid.
11.3 FURTHER ASSURANCE. From time to time, Borrower shall execute and
-----------------
deliver to Lender such additional documents as Lender may require to carry out
the purposes of the Loan Documents and to protect Lender's rights thereunder.
11.4 TAXES AND FEES. Should any tax (other than taxes based upon the net
--------------
income of Lender), recording or filing fees become payable in respect of any of
the Loan Documents, or any amendment, modification or supplement thereto,
Borrower agrees to pay the same to Lender
28
<PAGE>
promptly after demand, but in no event after 15 Business Days from the date of
demand, together with any interest or penalties thereon and agrees to hold
Lender harmless with respect thereto.
11.5 SEVERABILITY. In the event that any provision of this Loan Agreement
------------
is deemed to be invalid by reason of the operation of law, or by reason of the
interpretation placed thereon by any administrative agency or any court, this
Loan Agreement shall be construed as not containing such provision, and the
invalidity of such provision shall not affect the validity of any other
provisions hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
11.6 WAIVER. No delay on the part of Lender in exercising any right, power
------
or privilege hereunder shall operate as a waiver thereof, and no single or
partial exercise of any right, power or privilege hereunder shall preclude other
or further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
11.7 MODIFICATION OF LOAN DOCUMENTS. No modification or waiver of any
------------------------------
provision of any of the Loan Documents shall be effective unless the same shall
be in writing, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand on
Borrower in any case shall entitle Borrower to any other or further notice or
demand in the same, similar or other circumstances.
11.8 CAPTIONS. The headings in this Loan Agreement are for purposes of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
11.9 SALE OF INTEREST. Borrower may not sell, assign or transfer this Loan
----------------
Agreement or any portion thereof, including, without limitation, Borrower's
right, title, interest, remedies, powers, and/or duties hereunder or thereunder.
Borrower hereby consents to Lender's sale, assignment, transfer or other
disposition of this Loan Agreement or of any portion hereof or thereof, at any
time or times after an Event of Default has occurred, including, without
limitation, Lender's right, title, interest, remedies, powers, and/or duties
hereunder or thereunder. Borrower hereby consents to Lender's participation of
this Loan Agreement at any time prior to an Event of Default so long as Lender
retains at least a 50% participating interest in this Loan Agreement. Borrower
acknowledges and agrees that any and all such assignees or participants may be
provided with information concerning Borrower, its operations, business and
financial condition and this Loan Agreement which have been or would be provided
to Lender.
11.10 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon and
----------------------
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.
11.11 REMEDIES CUMULATIVE. All rights and remedies of Lender pursuant to
-------------------
this Loan Agreement, any other Loan Documents or otherwise, shall be cumulative
and non-exclusive, and
29
<PAGE>
may be exercised singularly or concurrently. One or more successive actions may
be brought against Borrower as often as Lender deems advisable, until all of
Borrower's Obligations are paid and performed in full.
11.12 ENTIRE AGREEMENT. This Loan Agreement and the other Loan Documents
----------------
executed prior or pursuant hereto constitute the entire agreement between the
parties hereto with respect to the transactions contemplated hereby or thereby
and supersede any prior agreements, whether written or oral, relating to the
subject matter hereof.
11.13 APPLICABLE LAW. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
--------------
WITH AND GOVERNED BY THE LAWS AND DECISIONS OF THE STATE OF ILLINOIS (OTHER THAN
CHOICE OF LAW PROVISIONS), UNLESS OTHERWISE PROVIDED THEREIN.
11.14 JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS OR
----------------------
PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THE
LOAN DOCUMENTS SHALL BE LITIGATED IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS,
OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS OR, IF
LENDER INITIATES SUCH ACTION, ANY COURT IN WHICH LENDER SHALL INITIATE SUCH
ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION. BORROWER HEREBY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED BY LENDER IN ANY OF SUCH COURTS. BORROWER WAIVES ANY CLAIM THAT
CHICAGO, ILLINOIS OR THE NORTHERN DISTRICT OF ILLINOIS IS AN INCONVENIENT FORUM
OR AN IMPROPER FORUM BASED ON LACK OF VENUE. THE EXCLUSIVE CHOICE OF FORUM FOR
BORROWER SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT, BY LENDER, OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE
TAKING, BY LENDER, OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION.
11.15 WAIVER OF RIGHT TO JURY TRIAL. LENDER AND BORROWER ACKNOWLEDGE AND
-----------------------------
AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN DOCUMENTS OR
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES AND THEREFORE, THE PARTIES AGREE THAT ANY COURT
PROCEEDING ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
11.16 NON-RECOURSE. Notwithstanding anything to the contrary contained
------------
herein, Lender agrees that no limited partner, agent, director, officer or
employee of Borrower shall be
30
<PAGE>
personally liable to Lender for the payment of the Loan or performance of any of
Borrower's Obligations or any other obligations hereunder, under the Note or
under any of the other Loan Documents, or with respect to the Loan, and recourse
hereunder, under the Note and under any other Loan Documents (including, without
limitation, with respect to the representations and warranties contained herein
or therein) shall be limited to the Collateral. It is understood that the
preceding sentence shall not (i) in the event of any malfeasance, such as fraud,
misappropriation of funds or intentional misrepresentation, estop Lender from
instituting or prosecuting a legal action or proceeding or otherwise making a
claim against the Person or Persons committing such malfeasance, or (ii)
constitute a waiver, release or discharge of any of Borrower's Obligations, and
the same shall continue until paid or discharged in full.
[Balance of page intentionally left blank; signature page follows.]
31
<PAGE>
This Loan Agreement has been executed and delivered by each of the parties
hereto by a duly authorized officer of each such party on the date first set
forth above.
PRIME GROUP VI, L.P., an Illinois limited partnership
By: PGLP, Inc., an Illinois corporation, as managing
general partner
By: /s/ Robert J. Rudnik
---------------------------------------------
Name: Robert J. Rudnik
-------------------------------------------
Title: Vice President
------------------------------------------
LASALLE NATIONAL BANK, a national banking association
By: /s/ John C. Hein
-------------------------------------------------
Name: John C. Hein
-----------------------------------------------
Title: First Vice President
----------------------------------------------
<PAGE>
EXHIBIT X
PLEDGE AGREEMENT
----------------
THIS PLEDGE AGREEMENT (this "AGREEMENT"), dated as of December 18,
1998, is by and between PRIME GROUP VI, L.P., an Illinois limited partnership
(the "PLEDGOR"), and LaSalle National Bank (the "PLEDGEE").
W I T N E S S E T H
-------------------
WHEREAS, the Pledgor and the Pledgee are parties to that certain Loan
Agreement, dated as of December 18, 1998, as it may be amended from time to time
(the "LOAN AGREEMENT"), pursuant to which the Pledgee has agreed to extend loans
and certain other financial accommodations to the Pledgor;
WHEREAS, the Pledgor presently owns 115,000 shares of class A common
stock, $0.01 par value per share ("AIMCO STOCK"), of Apartment Investment and
Management Company, a Maryland corporation that qualifies as a real estate
investment trust ("AIMCO"), 3,576,933 shares of common stock, $0.01 par value
per share ("BROOKDALE STOCK"), of Brookdale Living Communities, Inc., a Delaware
corporation ("BROOKDALE"), 104,632 Common Units of partnership interest ("PRIME
RETAIL PARTNERSHIP UNITS") in Prime Retail, L.P., a Delaware limited partnership
("PRIME RETAIL OPERATING PARTNERSHIP") and 47,525 Common Units of partnership
interest ("PRIME GROUP REALTY PARTNERSHIP UNITS") in Prime Group Realty, L.P., a
Delaware limited partnership ("PRIME GROUP REALTY OPERATING PARTNERSHIP").
Collectively, the AIMCO Stock, the Brookdale Stock, the Prime Retail Partnership
Units and the Prime Group Realty Partnership Units are referred to herein as the
"PRIME SECURITIES";
WHEREAS, pursuant to the Third Amended and Restated Agreement of
Limited Partnership of the Prime Retail Operating Partnership dated as of
October 15, 1998 (as amended, modified or restated from time to time, the "PRIME
RETAIL PARTNERSHIP AGREEMENT"), the Prime Retail Partnership Units may be
exchanged one share of Prime Retail Partnership Units for one share of common
stock, par value $0.01 per share ("PRIME RETAIL STOCK"), of Prime Retail, Inc.,
a Maryland corporation that has qualified for treatment as a real estate
investment trust ("PRIME RETAIL, INC.");
WHEREAS, pursuant to the Amended and Restated Agreement of Limited
Partnership of the Prime Group Realty Operating Partnership dated as of November
17, 1998 (as amended, modified or restated from time to time, the "PRIME GROUP
REALTY PARTNERSHIP AGREEMENT"), the Prime Group Realty Partnership Units may be
exchanged one unit of Prime Group Realty Partnership Units for one share of
common stock, par value $0.01 per share ("PRIME GROUP REALTY STOCK"), of Prime
Group Realty Trust, a Maryland corporation that has qualified for treatment as a
real estate investment trust ("PGRT");
<PAGE>
WHEREAS, the Pledgor has agreed to grant the Pledgee a security
interest in the AIMCO Stock and the Brookdale Stock (collectively, the "PLEDGED
SHARES"), and the Prime Retail Partnership Units and the Prime Group Realty
Partnership Units (collectively, the "PLEDGED UNITS"), more fully described on
Schedule I.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the Pledgor hereby
agrees as follows:
1. PLEDGE. The Pledgor hereby pledges to the Pledgee, and grants to the
------
Pledgee a security interest in, the following (the "PLEDGED COLLATERAL"):
(a) the Pledged Shares now owned by the Pledgor and the certificates,
if any, representing such Pledged Shares, and all dividends, cash,
securities, instruments, rights and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Pledged Shares;
(b) the Pledged Units now owned by the Pledgor and the certificates,
if any, representing such Pledged Units, the Pledgor's interest in the
capital, income, profits and distributions of the Prime Retail Operating
Partnership and the Prime Group Realty Operating Partnership attributable
to such Pledged Units, and all other cash, securities, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Units;
(c) all additional shares of Prime Securities and other securities
acquired by the Pledgor in any manner with respect to the Pledged Shares
and the Pledged Units (including, but not limited to, Prime Retail Stock
for which Prime Retail Partnership Units are exchanged, and Prime Group
Realty Shares for which Prime Group Realty Partnership Units are
exchanged), and the certificates, if any, representing such additional
securities (any such additional securities shall constitute part of the
Pledged Shares or the Pledged Units, as the case may be, under and as
defined in this Agreement), and all dividends, cash, instruments,
subscription warrants, securities and any other rights and options and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such securities;
and
(d) all other property hereafter delivered to the Pledgee in
substitution for, as proceeds of, or in addition to any of the foregoing
and all certificates, instruments and documents representing or evidencing
such property, and all cash, securities, interest, dividends, rights and
other property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for or upon conversion
of any or all thereof.
2. SECURITY FOR OBLIGATIONS. The Pledged Collateral secures the payment
------------------------
of all of the Pledgor's "Borrower's Obligations", as such term is defined in the
Loan Agreement, to the Pledgee,
2
<PAGE>
whether for principal, interest, fees, expenses or otherwise, and all
obligations of the Pledgor now or hereafter existing under this Agreement (such
Borrower's Obligations under the Loan Agreement and all such obligations of the
Pledgor now or hereafter existing under this Agreement being referred to herein
as the "OBLIGATIONS").
3. DELIVERY OF PLEDGED COLLATERAL.
------------------------------
(a) All certificates, instruments or documents, if any, representing
or evidencing the Pledged Collateral shall be delivered to and held by or
on behalf of the Pledgee pursuant hereto and shall be in suitable form for
transfer by delivery, shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
the Pledgee. In the event any or all of the Pledged Collateral are
evidenced by a book entry, Pledgor shall execute and deliver to Pledgee
such documents as are required by Pledgee to create and perfect a security
interest in such uncertificated Pledged Collateral. In addition, the
Pledgee shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates
or instruments of smaller or larger denominations.
(b) Pledgor shall, and shall cause other appropriate parties under
Section 8-313 and 8-321 of the Uniform Commercial Code as in effect on the
date hereof in the State of Illinois (the "CODE") to, mark it or their
books and records with the numbers and face amounts of all uncertificated
securities evidencing the Pledged Shares and/or the Pledged Units, as
applicable, and all rollovers and replacements therefor to reflect the
security interests granted pursuant to Section 2 hereof. Pledgor shall
provide Pledgee and shall cause other persons to provide Pledgee with
written confirmation of the security interest in such uncertificated
securities. Pledgor shall take, and shall cause all other necessary
persons to take, all action necessary or appropriate to create, perfect and
maintain a first perfected priority lien in such uncertificated securities
in favor of Pledgee. In the event that subsequent to the date hereof, the
Pledged Shares and/or Pledged Units, as applicable, are evidenced by
certificates, Pledgor will promptly deliver such certificates to Pledgee,
together with an assignment duly endorsed in blank for transfer.
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
------------------------------
as follows:
(a) The Brookdale Stock and the Pledged Units have been duly
authorized and validly issued and are fully paid and nonassessable. The
Prime Retail Stock to be issued upon the conversion of the Prime Retail
Partnership Units, and the Prime Group Realty Stock to be issued upon the
conversion of the Prime Group Realty Partnership Units, has been duly
authorized and will be, upon conversion, fully paid and nonassessable.
(b) The Pledgor is, or at the time of any future delivery, pledge,
assignment or transfer will be, the legal and beneficial owner of the
Pledged Collateral, free and clear of any lien, security interest, pledge,
warrant, option, purchase agreement, shareholders' agreement,
3
<PAGE>
restriction, redemption agreement or other charge, encumbrance or
restriction of any nature on the Pledged Collateral (except for the lien
created by this Agreement, the restrictions imposed by the agreements
listed on Schedule II hereto, completed copies of which have been delivered
to Pledgor, and the liens permitted by the Loan Agreement), with full right
to deliver, pledge, assign and transfer the Pledged Collateral to the
Pledgee as Pledged Collateral hereunder.
(c) The Brookdale Stock was acquired and fully paid for by an
affiliate of the Pledgor on December 18, 1998 in a transaction exempt from
the registration provisions of the Securities Act of 1933, as amended (the
"SECURITIES ACT").
(d) The AIMCO Stock was acquired and fully paid for by an affiliate of
the Pledgor on December 18, 1998 in a transaction exempt from the
registration provisions of the Securities Act.
(e) Subject to compliance with the agreements listed on Schedule II
hereto, the Pledged Units can be exchanged at any time at the rate of one
unit of Prime Retail Partnership Unit for one share of Prime Retail Stock,
and one unit of Prime Group Realty Partnership Unit for one share of Prime
Group Realty Stock.
(f) Upon (i) filing of the UCC financing statements, forms of which
are attached hereto as Exhibit A, with the Secretary of State of Illinois
and the Secretary of State of Maryland, (ii) execution and delivery of the
Acknowledgment and Consent, dated as of even date herewith, among Pledgor,
Prime Retail Operating Partnership, Prime Retail, Inc. and Pledgee, (iii)
execution and delivery of the Acknowledgment and Consent, dated as of even
date herewith, among Pledgor, Prime Group Realty Operating Partnership,
PGRT, Prudential Securities Incorporated and Pledgee, and (iv) possession
by Pledgee of the certificates representing the Pledged Collateral, the
pledge of the Pledged Collateral pursuant to this Agreement will create a
valid, perfected and first security interest in the Pledged Collateral,
securing the payment of the Obligations. All other filings, registrations,
recordings and other actions necessary or desirable to create, perfect and
protect such security interest have been duly taken, and such security
interests are entitled to all of the rights, priorities and benefits
afforded by the Code or other relevant law as enacted in any relevant
jurisdiction which relates to perfected security interests.
(g) Except as otherwise set forth in paragraph (g) above, no
authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either (i)
for the pledge by the Pledgor of the Pledged Collateral pursuant to this
Agreement or for the execution, delivery or performance of this Agreement
by the Pledgor, or (ii) for the exercise by the Pledgee of the voting or
other rights provided for in this Agreement or the remedies in respect of
the Pledged Collateral pursuant to this Agreement (except as may be
required in connection with a disposition of such Pledged Collateral by
laws affecting the offering and sale of securities generally).
4
<PAGE>
(h) The Pledgor has full power and authority to enter into this
Agreement and has the right to pledge and grant a security interest in the
Pledged Collateral as provided by this Agreement.
5. FURTHER ASSISTANCE. The Pledgor agrees that at any time and from time
------------------
to time, at the expense of the Pledgor, the Pledgor will promptly execute and
deliver, or cause to be executed and delivered, all certificates, stock powers,
proxies, assignments, instruments and documents; and will take all further
action that may be reasonably necessary or desirable, or that the Pledgee may
reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable the Pledgee to exercise
and enforce its rights and remedies hereunder with respect to any Pledged
Collateral and to carry out the provisions and purposes hereof.
6. VOTING RIGHTS; DIVIDENDS; ETC.
------------------------------
(a) Except as set forth below, so long as no Event of Default (as
hereinafter defined):
(i) The Pledgor shall be entitled to exercise any and all voting
and other consensual rights pertaining to the Pledged Collateral or
any part thereof for any purpose not inconsistent with the terms of
this Agreement or the Loan Agreement; provided, however, that the
-------- -------
Pledgor shall not exercise nor shall it refrain from exercising any
such right if such action or inaction could have a material adverse
effect on the value of the Pledged Collateral or upon the rights of
the Pledgee to effectively realize upon the security afforded by such
Pledged Collateral.
(ii) The Pledgor shall be entitled to receive and retain any and
all dividends and interest paid in respect of the Pledged Shares and
all distributions paid in respect of the Pledged Units, provided
--------
however, that any and all
-------
(1) dividends, interest and distributions paid or payable other
than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral,
(2) dividends and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in-
surplus resulting from a sale or refinancing of any
property, and
(3) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Pledged Collateral,
5
<PAGE>
shall be Pledged Collateral, shall be forthwith delivered
to the Pledgee to hold as Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the
benefit of the Pledgee, be segregated from the other
property or funds of the Pledgor, and be forthwith
delivered to the Pledgee as Pledged Collateral in the same
form as so received (with any necessary endorsement).
(b) Except as set forth below, upon the occurrence (and during the
continuance) of an Event of Default (as hereinafter defined):
(i) All rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to Section 6(a)(i) (but only after an Event of Default) and
to receive the dividends and interest payments and distributions which
it would otherwise be authorized to receive and retain pursuant to
Section 6(a)(ii) shall cease, and all such rights shall thereupon
become vested in the Pledgee which shall thereupon have the sole right
to exercise such voting and other consensual rights and to receive and
hold as Pledged Collateral such dividends and interest payments and
distributions;
(ii) All dividends and interest payments and distributions which
are received by the Pledgor contrary to the provisions of paragraph (i)
of this Section 6(b) shall be received in trust for the benefit of the
Pledgee, shall be segregated from other funds of the Pledgor and shall
be forthwith paid over to the Pledgee as Pledged Collateral in the same
form as so received (with any necessary endorsements); and
(iii) The Pledgor shall execute and deliver (or cause to be
executed and delivered) to the Pledgee all such proxies and other
instruments as the Pledgee may (reasonably) request for the purpose of
enabling the Pledgee to exercise the voting and other rights which it
is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends or interest payments or distribution which it is
authorized to receive pursuant to paragraph (ii) above.
7. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES. The Pledgor agrees that
--------------------------------------------
it will not (i) sell, assign, transfer, convey, exchange, pledge, hypothecate or
otherwise dispose of, or grant any option, warrant, right, contract or
commitment with respect to, any of the Pledged Collateral without the prior
written consent of the Pledgee, or (ii) create or permit to exist any lien,
security interest, pledge, proxy, purchase arrangement, restriction, redemption
agreements, shareholders' agreement or other charge or encumbrance upon or with
respect to any of the Pledged Collateral, except for the lien created by this
Agreement, restrictions imposed by the agreements listed on Schedule II hereto
and liens permitted by the Loan Agreement.
8. APPLICATION OF PROCEEDS OF SALE OR CASH HELD AS COLLATERAL. All
----------------------------------------------------------
proceeds from the sale of Pledged Collateral sold pursuant to this Agreement
and/or the cash held as Pledged
6
<PAGE>
Collateral hereunder shall be (a) retained by the Pledgee as cash collateral for
the Obligations, or (b) at the election of the Pledgee, applied by the Pledgee
as follows:
FIRST: to payment of the costs and expenses of such sale,
-----
including the out-of-pocket expenses of the Pledgee, including the reasonable
fees and out-of-pocket expenses of counsel employed in connection therewith, and
to the payment of all advances made by the Pledgee for the account of the
Pledgor hereunder, and the payment of all costs and expenses incurred by the
Pledgee in connection with the administration and enforcement of this Agreement,
to the extent that such advances, costs and expenses shall not have been
reimbursed to the Pledgee;
SECOND: to the payment of interest accrued and unpaid, if any,
------
on any of the Obligations to and including the date of such application and then
to the payment or prepayment of principal of any of the Obligations and then to
the payment of the balance of the Obligations in such order as Pledgee may
determine in its sole discretion; and
THIRD: the balance, if any, of such proceeds shall be paid to
-----
the Pledgor, or its successors or assigns, or as a court of competent
jurisdiction may direct.
9. THE PLEDGEE APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby appoints
--------------------------------------
the Pledgee as the Pledgor's attorney-in-fact, with full authority in the place
and stead of the Pledgor and in the name of the Pledgor or otherwise, from time
to time after giving notice to Pledgee in the Pledgee's discretion to take any
action and to execute any instrument which the Pledgee may deem necessary or
advisable to accomplish the purposes of this Agreement, including, without
limitation, (i) to receive, endorse and collect all instruments made payable to
the Pledgor representing any dividend, interest payment or other distribution in
respect of the Pledged Collateral or any part thereof and to give full discharge
for the same and (ii) to exercise all rights, including conversion rights, with
respect to such Pledged Collateral.
10. THE PLEDGEE MAY PERFORM. If the Pledgor fails to perform any
-----------------------
agreement contained herein, the Pledgee may itself perform, or cause performance
of, such agreement, and the reasonable expenses of the Pledgee incurred in
connection therewith shall be payable by the Pledgor under Section 17.
11. REASONABLE CARE. The Pledgee shall be deemed to have exercised
---------------
reasonable care in the custody and preservation of the Pledged Collateral in its
possession if the Pledged Collateral is accorded treatment substantially equal
to that which the Pledgee accords its own property, it being understood that the
Pledgee shall not have any responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Pledged Collateral, whether or not the Pledgee has or is
deemed to have knowledge of such matters, or (ii) taking any necessary steps to
preserve rights against any parties with respect to any Pledged Collateral;
provided, however, that upon the Pledgor's instruction, the Pledgee shall use
- -------- -------
reasonable efforts to take such action as the Pledgor directs the Pledgee to
take with respect to calls, conversions, exchanges, maturities, tenders, rights
against other parties or other similar matters
7
<PAGE>
relative to the Pledged Collateral, but failure of the Pledgee to comply with
any such request shall not of itself be deemed a failure to exercise reasonable
care, and no failure of the Pledgee to preserve or protect any rights with
respect to the Pledged Collateral against prior parties, or to do any act with
respect to preservation of the Pledged Collateral not so requested by the
Pledgor, shall be deemed a failure to exercise reasonable care in the custody or
preservation of the Pledged Collateral.
12. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Pledgor represents to
---------------------------------------
the Pledgee that the Pledgor has made its own arrangements for keeping informed
of changes or potential changes affecting the Pledged Collateral (including, but
not limited to, rights to convert, rights to subscribe, payment of dividends or
distributions, reorganization or other exchanges, tender offers and voting
rights), and the Pledgor agrees that the Pledgee shall have no responsibility or
liability for informing the Pledgor of any such changes or potential changes or
for taking any action or omitting to take any action with respect thereto.
13. EVENTS OF DEFAULT; REMEDIES UPON AN EVENT OF DEFAULT.
----------------------------------------------------
(a) The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" by Pledgor under this Agreement:
(i) there occurs (and is continuing) an Event of Default under
and as defined in the Loan Agreement;
(ii) the Pledged Shares and the Pledged Units shall not be
exchangeable for shares of Prime Retail Stock or Prime Group Realty
Stock as set forth in (and subject to the conditions in Section 4(e)
hereof.
(iii) the Pledgor fails to perform or observe any material term,
covenant (after 5 day written notice) or agreement contained in this
Agreement on its part to be performed or observed, or any
representation or warranty made by the Pledgor in this Agreement shall
be untrue or misleading in any material respect as of the date with
respect to which such representation or warranty was made;
(iv) a notice of lien, levy or assessment is filed or recorded
with respect to all or a substantial part of the Pledged Collateral,
and such lien, levy or assessment is not released, discharged or
removed within thirty (30) days from the date it is filed or recorded,
except for a lien, levy or assessment which relates to current taxes
not yet due and payable or a lien permitted by the Loan Agreement; and
(v) all or a substantial part of the Pledged Collateral is
attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors.
8
<PAGE>
(b) If any Event of Default shall have occurred (and be continuing),
the Pledgee shall have, in addition to all other rights given by law or by
this Agreement, the Loan Agreement or otherwise, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under
the Code in effect in the State of Illinois at that time, and the Pledgee
may, without notice and at its option, transfer or register the Pledged
Collateral or any part thereof on the books of the issuer thereof into the
name of the Pledgee or the Pledgee's nominee(s), with or without any
indication that such Pledged Collateral is subject to the security interest
hereunder. In addition, with respect to any Pledged Collateral which shall
then be in or shall thereafter come into the possession or custody of the
Pledgee, the Pledgee may sell or cause the same to be sold at any broker's
board or at public or private sale, in one or more sales or lots, at such
price or prices as the Pledgee may deem best, for cash or on credit or for
future delivery, without assumption of any credit risk. The purchaser of
any or all Pledged Collateral so sold shall thereafter hold the same
absolutely, free from any claim, encumbrance or right of any kind
whatsoever, except for claims, encumbrances or rights that may arise
without the knowledge or consent of the Pledgor. Unless any of the Pledged
Collateral threatens to decline speedily in value or is or becomes of a
type sold on a recognized market, the Pledgee will give the Pledgor
reasonable notice of the time and place of any public sale thereof, or of
the time after which any private sale or other intended disposition is to
be made. Any sale of the Pledged Collateral conducted in conformity with
reasonable commercial practices of banks, insurance companies, commercial
finance companies, or other financial institutions disposing of property
similar to the Pledged Collateral shall be deemed to be commercially
reasonable. Any requirements of reasonable notice shall be met if such
notice is mailed to the Pledgor as provided in Section 20 below, at least
five (5) days before the time of the sale or disposition. Any other
requirement of notice, demand or advertisement for sale is, to the extent
permitted by law, waived. The Pledgee may, in its own name or in the name
of a designee or nominee, buy any of the Pledged Collateral at any public
sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees and
expenses) of, or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or other
disposition of Pledged Collateral. In view of the fact that federal and
state securities laws may impose certain restrictions on the method by
which a sale of the Pledged Collateral may be effected after an Event of
Default, the Pledgor agrees that upon the occurrence or existence of any
Event of Default, the Pledgee may, from time to time, attempt to sell all
or any part of the Pledged Collateral by means of a private placement,
restricting the prospective purchasers to those who can make the
representations and agreements required of purchasers of securities in
private placements. In so doing, the Pledgee may solicit offers to buy the
Pledged Collateral, or any part of it, for cash, from a limited number of
investors deemed by the Pledgee in its judgment, to be responsible parties
who might be interested in purchasing the Pledged Collateral, and if the
Pledgee solicits such offers from not less than three (3) such investors,
then the acceptance by the Pledgee of the highest offer obtained therefrom
shall be deemed to be a commercially reasonable method of disposition of
the Pledged Collateral.
9
<PAGE>
In addition, upon the occurrence (and during the continuance) of an
Event of Default, all rights of the Pledgor to exercise the voting and
other rights which it would otherwise be entitled to exercise and to
receive cash dividends and interest payments, shall cease, and all such
rights shall thereupon become vested in the Pledgee as provided in Section
6.
14. SECURITIES LAWS. Pledgor hereby acknowledges and confirms that
---------------
Pledgee may be unable to effect a public sale of any or all of the Pledged
Shares and the Pledged Units by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire any of the
Pledged Shares and Pledged Units for their own respective accounts for
investment and not with the view to the distribution or resale thereof. Pledgor
further acknowledges and confirms that any such private sale may result in
prices or other terms less favorable to the seller than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner, and the Pledgee shall be under no obligation to take any steps in order
to permit the Pledged Shares and Pledged Units to be sold at a public sale. The
Pledgee shall be under no obligation to delay a sale of any of the Pledged
Shares and Pledged Units for any period of time necessary to permit any issuer
thereof to register such Pledged Shares and Pledged Units for public sale under
the Securities Act or under applicable state securities laws.
15. AUTHORITY OF THE PLEDGEE. The Pledgee shall have and be entitled to
------------------------
exercise all such powers hereunder as are specifically delegated to the Pledgee
by the terms hereof, together with such powers as are incidental thereto. The
Pledgee may execute any of its duties hereunder by or through agents or
employees. Neither the Pledgee, nor any director, officer, agent or employee of
the Pledgee, shall be liable for any action taken or omitted to be taken by it
or them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct. The Pledgor hereby agrees to indemnify and
hold harmless the Pledgee and/or any such director, officer, agent or employee
from and against any and all liability incurred by any of them, hereunder or in
connection herewith, unless such liability shall be due to its or their own
gross negligence or willful misconduct.
16. TERMINATION. This Agreement shall terminate after the time when all
-----------
the Obligations have been fully paid and performed, at which time the Pledgee
shall reassign and redeliver (or cause to be reassigned and redelivered) to the
Pledgor, or to such person or persons as the Pledgor shall designate, against
receipt, such of the Pledged Collateral (if any) as shall not have been sold or
otherwise applied by the Pledgee pursuant to the terms hereof and shall still be
held by it hereunder, together with appropriate instruments of reassignment and
release. Any such reassignment shall be without recourse upon or warranty by
the Pledgee and at the expense of the Pledgor.
17. EXPENSES. The Pledgor agrees to reimburse the Pledgee promptly after
--------
demand for any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Pledgee may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the registration of the Pledged Collateral, (iii)
the
10
<PAGE>
exercise or enforcement of any of the rights of the Pledgee hereunder, or (iv)
the failure by the Pledgor to perform or observe any of the provisions hereof.
18. SECURITY INTEREST ABSOLUTE. All rights of the Pledgee and security
--------------------------
interests hereunder, and all obligations of the Pledgor hereunder, shall be
absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Loan
Agreement or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan
Agreement;
(iii) any exchange, surrender, release or non-perfection of any
other collateral, or any release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the Obligations; or
(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Obligations or of this Agreement.
19. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any
--------------------------------
provision of this Agreement nor consent to any departure by the Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Pledgee, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
20. NOTICES. Any notice required or desired to be served, given or
-------
delivered hereunder shall be in writing (including facsimile transmission), and
shall be deemed to have been validly served, given or delivered upon the earlier
of (a) personal delivery to the address set forth below (b) in the case of
mailed notice, two (2) days after deposit in the United States mails, with
proper postage for certified mail, return receipt requested, prepaid, or in the
case of notice by Federal Express or other reputable overnight courier service,
one (1) day after delivery to such courier service, and (c) in the case of
facsimile transmission, upon transmission with confirmation of receipt,
addressed to the party to be notified as follows:
If to the Pledgor: Prime Group VI, L.P.
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900 (Suite 4200 after February 1, 1999)
Attn: Michael W. Reschke
Facsimile Number: (312)917-1511
11
<PAGE>
With a copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Facsimile Number: (312)558-5700
And to: The Prime Group, Inc.
77 West Wacker Drive
Suite 4200
Attn: Robert J. Rudnik, Esq.
Facsimile Number: (312)917-8442
If to the Pledgee: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: John C. Hein
Facsimile Number: (312) 904-6691
With a copy to: Schwartz, Cooper, Greenberger & Krauss, Chartered
180 North LaSalle Street, Suite 2700
Chicago, Illinois 60601
Attention: Robert A. Smoller, Esq.
Facsimile Number: (312) 782-8416
or to such other address as any of the parties may hereafter designate for
itself by written notice to the other parties in the manner herein prescribed.
21. CONTINUING SECURITY INTEREST. This Agreement shall create a
----------------------------
continuing security interest in the Pledged Collateral and shall (i) be binding
upon the Pledgor, its successors and assigns, and (ii) inure to the benefit of
the Pledgee and its successors, transferees and assigns.
22. WAIVERS. To the extent permitted by applicable law, the Pledgor
-------
waives presentment and demand for payment of any of the Obligations, protest and
notice of dishonor or default with respect to any of the Obligations, and all
other notices to which the Pledgor might otherwise be entitled, except as
otherwise expressly provided herein or in the Loan Agreement.
23. WAIVER OF JURY TRIAL. The Pledgor and the Pledgee each hereby waive
--------------------
any right to a trial by jury in any action or proceeding to enforce or defend
any rights under this Agreement or any amendment, instrument, document or
agreement delivered or which may in the future be delivered in connection
herewith or arising from any banking relationship existing in connection with
this Agreement, and agrees that any such action or proceeding shall be tried
before a court and not before a jury.
12
<PAGE>
24. GOVERNING LAW; TERMS. This Agreement shall be governed by and
--------------------
construed in accordance with the internal laws (as opposed to conflict of laws
provisions) and decisions of the State of Illinois. Unless otherwise defined
herein, terms defined in Articles 3, 8 and 9 of the Code are used herein as
therein defined. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but, if any provision of this Agreement shall be interpreted in such manner as
to be ineffective or invalid under applicable law, such provisions shall be
ineffective or invalid only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
25. DEFINITIONS. The singular shall include the plural and vice versa and
-----------
any gender shall include any other gender as the text shall indicate.
26. SECTION HEADINGS. The section headings herein are for convenience of
----------------
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
27. NON-RECOURSE. The non-recourse provisions set forth in Section 11.5
------------
of the Loan Agreement are incorporated in this Agreement by reference as if
fully set forth herein.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
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<PAGE>
IN WITNESS WHEREOF, the Pledgor and the Pledgee have each caused this
Pledge Agreement to be duly executed and delivered by its officer, if any,
thereunto duly authorized as of the date first above written.
PRIME GROUP VI, L.P., an Illinois limited
partnership
By: PGLP, Inc., an Illinois corporation, as
managing general partner
By: /s/ Robert J. Rudnik
--------------------------------------
Its: Vice President
---------------------------------
LASALLE NATIONAL BANK, a national banking
association
By: /s/ John C. Hein
-------------------------------------------
Its: First Vice President
--------------------------------------
<PAGE>
SCHEDULE I
----------
Description of Pledged Collateral
---------------------------------
A. PLEDGED SHARES
--------------
Issuer Shares
------ ------
Brookdale Living Communities, Inc. 3,576,933
Apartment Investment
and Management Company 115,000
B. PLEDGED UNITS
-------------
104,632 units of limited partnership interests in Prime Retail, L.P., a
Delaware limited partnership.
47,525 units of limited partnership interests in Prime Group Realty, L.P.,
a Delaware limited partnership.
<PAGE>
SCHEDULE II
Other Agreements
----------------
1. Registration Rights Agreement dated as of November 17, 1997 by and
among Prime Group Realty Trust, Prime Group Realty, L.P., Prime Group
Limited Partnership, Primestone Investment Partners L.P. and the other
investors named therein.
2. Registration Rights Agreement dated as of June 15, 1998 by and among
Prime Retail, Inc., Prime Retail, L.P. and the other investors named
therein.
3. Prime Retail Partnership Agreement.
4. Prime Group Realty Partnership Agreement.
5. Lock-Up Agreement, dated November 11, 1997, from Prime Group Limited
Partnership to Prudential Securities Incorporated, Friedman, Billings,
Ramsey & Co., Inc., Smith Barney Inc. and Morgan Keegan & Company,
Inc.
<PAGE>
EXHIBIT XI
CONTINUING UNCONDITIONAL GUARANTY
---------------------------------
WHEREAS, PRIME GROUP VI, L.P., an Illinois limited partnership
("BORROWER") has entered into a Loan Agreement dated as of December 18, 1998,
(the "LOAN AGREEMENT") with LASALLE NATIONAL BANK, a national banking
association ("LENDER"), pursuant to which Lender has made or may, in its sole
discretion, from time to time hereafter, make loans and advances to or extend
other financial accommodations to Borrower;
WHEREAS, The Prime Group, Inc., an Illinois corporation ("GUARANTOR")
is a limited partner of Borrower and is desirous of having Lender extend and/or
continue the extension of credit to Borrower, and Lender has required that
Guarantor execute and deliver this Guaranty to Lender as a condition to the
extension and continuation of credit by Lender; and
WHEREAS, the extension and/or continued extension of credit, as
aforesaid, by Lender is necessary and desirable to the conduct and operation of
the business of Borrower and will inure to the personal and financial benefit of
Guarantor;
1. NOW, THEREFORE, for value received and in consideration of the Loans
made or to be made by Lender to Borrower pursuant to the Loan Agreement, the
Guarantor hereby unconditionally guaranties (i) the full and prompt payment when
due, whether at maturity or earlier, by reason of acceleration or otherwise, and
at all times thereafter, of all of the indebtedness, liabilities and obligations
of every kind and nature of Borrower to Lender or any parent, affiliate or
subsidiary of Lender (the term "Lender" as used hereinafter shall include such
parents, affiliates and subsidiaries under the Loan Agreement), howsoever
created, arising or evidenced, whether direct or indirect, absolute or
contingent, joint or several, now or hereafter existing, or due or to become
due, and howsoever owned, held or acquired by Lender, whether through discount,
overdraft, purchase, direct loan or as collateral or otherwise, under the Loan
Agreement and (ii) the prompt, full and faithful discharge by Borrower of each
and every term, condition, agreement, representation and warranty now or
hereafter made by Borrower to Lender under the Loan Agreement (all such
indebtedness, liabilities and obligations being hereinafter referred to as the
"BORROWER'S OBLIGATIONS"). Guarantor further agrees to pay all costs and
expenses, including, without limitation, all court costs and reasonable
attorneys' and paralegals' fees paid or incurred by Lender in endeavoring to
collect all or any part of Borrower's Obligations from, or in prosecuting any
action against, Guarantor or any other guarantor of all or any part of
Borrower's Obligations. All amounts payable by Guarantor under this Guaranty
shall be payable upon demand by Lender.
2. Notwithstanding any provision of this Guaranty to the contrary, it is
intended that this Guaranty, and any liens and security interests granted by
Guarantor to secure this Guaranty, not constitute a "Fraudulent Conveyance" (as
defined below). Consequently, Guarantor agrees that if the Guaranty, or any
liens or security interests securing this Guaranty, would, but for the
application of this sentence, constitute a Fraudulent Conveyance, this Guaranty
and each such lien and security interest shall be valid and enforceable only to
the maximum extent that would not cause this Guaranty or such lien or security
interest to constitute a Fraudulent Conveyance, and this Guaranty
<PAGE>
shall automatically be deemed to have been amended accordingly at all relevant
times. For purposes hereof, "Fraudulent Conveyance" means a fraudulent
conveyance under Section 548 of the "Bankruptcy Code" (as hereinafter defined)
or a fraudulent conveyance or fraudulent transfer under the provisions of any
applicable fraudulent conveyance or fraudulent transfer law or similar law of
any state, nation or other governmental unit, as in effect from time to time.
3. Guarantor hereby agrees that, except as hereinafter provided, its
obligations under this Guaranty shall be unconditional, irrespective of (i) the
validity or enforceability of Borrower's Obligations or any part thereof, or of
any promissory note or other document evidencing all or any part of Borrower's
Obligations, (ii) the absence of any attempt to collect Borrower's Obligations
from Borrower or any other guarantor or other action to enforce the same, (iii)
the waiver or consent by Lender with respect to any provision of any instrument
evidencing Borrower's Obligations, or any part thereof, or any other agreement
heretofore, now or hereafter executed by Borrower and delivered to Lender, (iv)
failure by Lender to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or collateral for
Borrower's Obligations, (v) the institution of any proceeding under Chapter 11
of Title 11 of the United States Code (11 U.S.C. (S)(S)101 et seq.), as amended
(the "Bankruptcy Code"), or any similar proceeding, by or against Borrower, or
Lender's election in any such proceeding of the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by Borrower as debtor-in-possession, under Section 364 of the
Bankruptcy Code, (vii) the disallowance, under Section 502 of the Bankruptcy
Code, of all or any portion of Lender's claim(s) for repayment of Borrower's
Obligations, or (viii) any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor other than if the
Borrower's Obligations have been paid in full and discharged and the Loan
Agreement is terminated.
4. If bankruptcy or reorganization proceedings at any time are instituted
by or against the Borrower under the Bankruptcy Code, and if in the one year
period ending on the date such proceedings are instituted, the Borrower has
granted a security interest or made a non-cash transfer in favor of the Lender
at a time when the aggregate value of the collateral securing the Loan (as
defined in the Loan Agreement) was less than the aggregate amount of all the
guaranteed indebtedness, and Guarantor: (a) is an "insider" as defined in
(S)(S)101(28) of said Code, now existing or hereafter amended; and (b) is an
"insider-guarantor" under (S)(S)547(b) of the Code, now existing or hereafter
amended, then in any such event, the Guarantor as such "insider-guarantor"
agrees not to seek recourse (by subrogation or otherwise) against or in any
manner become a creditor of the Borrower if called upon to make payment to the
Lender hereunder.
5. Guarantor hereby waives, to the extent permitted by applicable law and
except as otherwise provided herein or in the Loan Agreement, diligence,
presentment, demand of payment, filing of claims with a court in the event of
receivership or bankruptcy of Borrower, protest or notice with respect to
Borrower's Obligations and all demands whatsoever, and covenants that this
Guaranty will not be discharged, except by complete performance of the
obligations and liabilities contained herein. Upon any Event of Default by
Borrower as provided in any instrument or document evidencing all or any part of
Borrower's Obligations, including without limitation the
2
<PAGE>
Loan Agreement, Lender may, at its sole election, proceed directly and at once,
without notice, against Guarantor to collect and recover the full amount or any
portion of Borrower's Obligations, without first proceeding against Borrower, or
any other person, firm, or corporation, or against any security or collateral
for Borrower's Obligations.
6. Lender is hereby authorized, without notice or demand and without
affecting the liability of Guarantor hereunder, to at any time and from time to
time (i) renew, extend, accelerate or otherwise change the time for payment of,
or other terms relating to, Borrower's Obligations or otherwise modify, amend or
change the terms of any promissory note or other agreement, document or
instrument now or hereafter executed by Borrower and delivered to Lender; (ii)
accept partial payments on Borrower's Obligations; (iii) take and hold security
or collateral for the payment of Borrower's Obligations guaranteed hereby, or
for the payment of this Guaranty, or for the payment of any other guaranties of
Borrower's Obligations or other liabilities of Borrower, and exchange, enforce,
waive and release any such security or collateral; (iv) apply such security or
collateral and direct the order or manner of sale thereof as in its sole
discretion it may determine; and (v) settle, release, compromise, collect or
otherwise liquidate Borrower's Obligations and any security or collateral
therefor in any manner, without affecting or impairing the obligations of
Guarantor hereunder. Lender shall have the exclusive right to determine the time
and manner of application of any payments or credits, whether received from
Borrower or any other source, and such determination shall be binding on
Guarantor. All such payments and credits may be applied, reversed and reapplied,
in whole or in part, to any of Borrower's Obligations as Lender shall determine
in its sole discretion without affecting the validity or enforceability of this
Guaranty.
7. The Guarantor will at all times maintain on a consolidated and
combined basis the ratio of Operating Income to Debt Service at the end of each
month of not less than 2.0 to 1.0. For purposes of this paragraph:
"Net Income" means, with reference to any quarter, the net income (or net
deficit) of Guarantor on a consolidated and combined basis for such quarter on a
modified cash basis (i.e., cash receipts less cash disbursements and accrued
expenses), and without limiting the foregoing, after deduction from gross income
of all expenses and reserves, including reserves for all taxes on or measured by
income, but excluding any extraordinary profits and also excluding any taxes on
such profits.
"Operating Income" means, with reference to any quarter, Net Income for
such period plus all amounts deducted in arriving at such Net Income amount in
respect of (i) Debt Service for such quarter, (ii) federal, state and local
income taxes for such quarter, and (iii) non-cash items such as depreciation and
amortization of intangibles.
"Debt Service" means, with reference to any quarter, the sum of all
interest paid, accrued or capitalized and any required principal amortization of
the Guarantor on a combined and consolidated basis for such quarter determined
in accordance with GAAP.
3
<PAGE>
On or before the 20th day after the end of each calendar quarter, Guarantor
shall provide Lender with a compliance certificate in a form reasonably
satisfactory to Lender stating whether Guarantor is in compliance with the
covenant set forth in this paragraph.
8. To secure the payment and performance of Guarantor's obligations and
liabilities contained herein, Guarantor grants to Lender a security interest in
all property of Guarantor delivered concurrently herewith, if any, or which is
now, or at any time hereafter in transit to, or in the possession, custody or
control of Lender, and all proceeds of all such property. Guarantor agrees that
Lender shall have the rights and remedies of a secured party under the Uniform
Commercial Code of Illinois, as now existing or hereafter amended, with respect
to all of the aforesaid property, including without limitation thereof, the
right to sell or otherwise dispose of any or all of such property and apply the
proceeds of such sale to the payment of Borrower's Obligations. In addition, at
any time after maturity of Borrower's Obligations by reason of acceleration or
otherwise, Lender may, in its sole discretion, without notice to Guarantor and
regardless of the acceptance of any security or collateral for the payment
hereof, appropriate and apply toward the payment of Borrower's Obligations (i)
any indebtedness due or to become due from Lender to Guarantor, and (ii) any
moneys, credits or other property belonging to Guarantor, at any time held by or
coming into the possession of Lender whether for deposit or otherwise.
9. Guarantor hereby assumes responsibility for keeping itself informed of
the financial condition of Borrower, and any and all endorsers and/or other
guarantors of any instrument or document evidencing all or any part of
Borrower's Obligations and of all other circumstances bearing upon the risk of
nonpayment of Borrower's Obligations or any part thereof that diligent inquiry
would reveal and Guarantor hereby agrees that Lender shall have no duty to
advise Guarantor of information known to Lender regarding such condition or any
such circumstances or to undertake any investigation not a part of its regular
business routine. If Lender, in its sole discretion, undertakes at any time or
from time to time to provide any such information to any Guarantor, Lender shall
be under no obligation to update any such information or to provide any such
information to Guarantor on any subsequent occasion.
10. The Guarantor hereby represents and warrants unto the Lender that: (i)
the Guarantor is a corporation validly organized and existing and in good
standing under the laws of the State of Illinois, is duly qualified to do
business and is in good standing as a foreign corporation in each jurisdiction
where the nature of its business requires such qualification (unless the failure
to so qualify would not be reasonably likely to materially and adversely affect
the Guarantor), and has full power and authority to own its property and to
conduct its business presently conducted by it; (ii) the execution, delivery and
performance by the Guarantor of this Guaranty, are within the Guarantor's
corporate powers, have been duly authorized by all necessary corporate action,
and do not contravene the Guarantor's articles of incorporation or by-laws or
any contractual restriction, law or governmental regulation or court decree or
order binding on or affecting the Guarantor (the effect of which contravention
would be reasonably likely to have a material adverse effect upon the Guarantor)
or result in, or require the creation or imposition of, any Lien on any of the
Guarantor's properties; (iii) this Guaranty constitutes a legal, valid and
binding obligation of the Guarantor
4
<PAGE>
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally; (iv) the consolidated balance sheets of the
Guarantor and its subsidiaries as at December 31, 1997 and the related
statements of earnings of the Guarantor and its subsidiaries, copies of which
have been furnished to the Lender, have been prepared in accordance with
generally accepted accounting principles consistently applied, and present
fairly the consolidated financial condition of the Guarantor covered thereby as
at the dates thereof and the results of their operations for the periods then
ended, and since December 31, 1997, there has been no material adverse change in
the financial condition, operations, assets, business or properties of the
Guarantor.
11. Guarantor consents and agrees that Lender shall be under no obligation
to marshall any assets in favor of Guarantor or against or in payment of any or
all of Borrower's Obligations. Guarantor further agrees that, to the extent that
Borrower makes a payment or payments to Lender, or Lender receives any proceeds
of collateral, which payment or payments or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside and/or
required to be repaid to Borrower, its estate, trustee, receiver or any other
party, including, without limitation, Guarantor, under any bankruptcy law, state
or federal law, common law or equitable theory, then to the extent of such
payment or repayment, Borrower's Obligations or the part thereof which has been
paid, reduced or satisfied by such amount, and Guarantor's obligations hereunder
with respect to such portion of Borrower's Obligations, shall be reinstated and
continued in full force and effect as of the date such initial payment,
reduction or satisfaction occurred.
12. Guarantor agrees that any and all claims of Guarantor against
Borrower, any endorser or any other guarantor of all or any part of Borrower's
Obligations, or against any of Borrower's properties, whether arising by reason
of any payment by Guarantor to Lender pursuant to the provisions hereof, or
otherwise, shall be subordinate and subject in right of payment to the prior
payment, in full, of all of Borrower's Obligations; provided, however, that this
provision shall not apply to distributions made or to be made by Borrower under
Borrower's partnership agreement to Guarantor prior to any Event of Default (as
defined in the Loan Agreement) by Borrower as provided in any instrument or
document evidencing all or any part of Borrower's Obligations, including,
without limitation, the Loan Agreement.
13. Subject to the terms of the Loan Agreement, Lender may, without notice
to anyone, sell or assign Borrower's Obligations or any part thereof, or grant
participations therein, and in any such event each and every immediate or remote
assignee or holder of, or participant in, all or any of Borrower's Obligations
shall have the right to enforce this Guaranty, by suit or otherwise for the
benefit of such assignee, holder, or participant, as fully as if herein by name
specifically given such right, but Lender shall have an unimpaired right, prior
and superior to that of any such assignee, holder or participant, to enforce
this Guaranty for the benefit of Lender, as to any part of Borrower's
Obligations retained by Lender.
14. This Guaranty shall be binding upon Guarantor and upon the successors
(including without limitation, any receiver, trustee or debtor in possession of
or for Guarantor) of Guarantor and
5
<PAGE>
shall inure to the benefit of Lender and its successors and assigns. If there is
more than one signatory hereto, all references to Guarantor herein shall include
each and every Guarantor and each and every obligation of Guarantor hereunder
shall be the joint and several obligation of each Guarantor. Each Guarantor that
is a corporation or a partnership hereby represents and warrants that it has all
necessary corporate or partnership authority, as the case may be, to execute and
deliver this Guaranty and to perform its obligations hereunder.
15. This Guaranty shall continue in full force and effect, and Lender
shall be entitled to make loans and advances and extend financial accommodations
to Borrower under the Loan Agreement on the faith hereof until such time as
Lender has, in writing, notified Guarantor that all of Borrower's Obligations
have been paid in full and discharged and the Loan Agreement has been terminated
or until Lender has actually received written notice from any Guarantor of the
discontinuance of this Guaranty as to that Guarantor, or written notice of the
death, incompetency or dissolution of any Guarantor. In case of any
discontinuance by, or death, incompetency or dissolution of, any Guarantor
(collectively, a "Termination Event"), this Guaranty and the obligations of such
Guarantor and his or its heirs, legal representatives, successors or assigns, as
the case may be, shall remain in full force and effect with respect to all of
Borrower's Obligations incurred prior to the receipt by Lender of written notice
of the Termination Event. The occurrence of a Termination Event with respect to
one Guarantor shall not affect or impair the obligations of any other Guarantor
hereunder.
16. Anything in this Guaranty to the contrary notwithstanding, it is
expressly agreed that neither the Lender, nor its successors or assigns, shall
have any recourse of any kind whatsoever for or with regard to any indebtedness,
liability or obligation under this Guaranty whether or not so provided herein,
against any of the following persons personally or against any of the separate
property or estate of any of the following persons (as distinguished from the
property of the Guarantor) and the Lender, and each of its successors and
assigns waives and does hereby waive any such personal liability: any present or
future director or shareholder or employee of the Guarantor, any present or
future partner in any partnership which is or becomes a shareholder of the
Guarantor, any person or entity that, directly or indirectly, through one or
more partnerships, is a partner in any partnership which is or becomes a
shareholder of the Guarantor, or any shareholder, officer, director, employee,
trustee, beneficiary, member or agent of any corporation or other entity which
is or becomes a shareholder of the Guarantor. The foregoing shall not impair the
ability of the Lender to enforce the terms of this Guaranty against the
Guarantor.
17. Wherever possible each provision of this Guaranty shall be interpreted
in such manner as to be effective and valid under applicable law, but if any
provision of this Guaranty 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 Guaranty.
6
<PAGE>
18. All notices to be sent under this Guaranty shall be sent by any method
of delivery described in the Loan Agreement, and to the Lender at the addresses
described in the Loan Agreement, and to Guarantor at the following addresses:
To Guarantor: The Prime Group, Inc.
77 West Wacker Drive
Suite 3900 (Suite 4200 from and after February 1, 1999)
Chicago, Illinois 60601
Attn: Michael W. Reschke
Facsimile: (312)917-1511
With a copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Facsimile: (312)558-5700
The Prime Group, Inc.
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
Attn: Robert J. Rudnik, Esq.
Facsimile: (312)917-8442
or to such other addresses as Guarantor or Lender shall designate in a written
notice to the other.
19. THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF
THE STATE OF ILLINOIS.
20. Guarantor irrevocably agrees that, subject to Lender's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS GUARANTY SHALL BE LITIGATED IN COURTS
HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. GUARANTOR HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURTS
LOCATED WITHIN SAID CITY AND STATE. GUARANTOR HEREBY WAIVES ANY RIGHT IT MAY
HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST GUARANTOR
BY LENDER IN ACCORDANCE WITH THIS PARAGRAPH. SERVICE OF LEGAL PROCESS MAY BE
MADE ON THE GUARANTOR BY ANY METHOD OF DELIVERY, AND TO THE ADDRESSES, FOR
SENDING NOTICES HEREUNDER, AS DESCRIBED IN PARAGRAPH 17 ABOVE.
7
<PAGE>
21. GUARANTOR AND LENDER HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS GUARANTY.
[Balance of page intentionally left blank; signature page follows.]
8
<PAGE>
IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned as of the above-mentioned date.
THE PRIME GROUP, INC., an Illinois corporation
By:/s/ Robert J. Rudnik
-------------------------------------------
Its: Executive Vice President
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<PAGE>
EXHIBIT XII
FIRST AMENDMENT TO LOAN DOCUMENTS, CONSENT AND LIMITED RELEASE
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THIS FIRST AMENDMENT TO LOAN DOCUMENTS, CONSENT AND LIMITED RELEASE
(this "Amendment") is dated as of January 29, 1999 and is by and between Prime
Group VI, L.P., an Illinois limited partnership (the "Borrower"), and LaSalle
National Bank (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender entered into that certain Loan
Agreement, dated as of December 18, 1998 (as amended, restated, modified or
supplemented and in effect from time to time, the "Loan Agreement"), pursuant to
which the Lender extended certain credit facilities to Borrower (all such
extensions of credit collectively referred to herein as the "Loans"), upon the
terms and subject to the conditions set forth therein (capitalized terms used
herein without definition shall have the meanings ascribed to such terms in the
Loan Agreement); and
WHEREAS, as security for the Loans, Borrower executed and delivered
that certain Pledge Agreement to the Lender, dated as of December 18, 1998 (as
amended, restated, modified or supplemented and in effect from time to time, the
"Pledge Agreement"); and
WHEREAS, Borrower has requested that the Lender release the AIMCO
Shares pledged as Collateral under the Pledge Agreement and consent to Borrower
(i) selling the pledged AIMCO Shares and (ii) using the proceeds of the AIMCO
Sale to purchase 256,572 Prime Group Realty Partnership Units (the "Additional
Partnership Units") to be pledged to Lender in substitution for the pledged
AIMCO Shares; and
WHEREAS, the Lender is willing to release the pledged AIMCO Shares and
consent to their sale, subject to Borrower (i) consummating the sale of the
AIMCO Shares, (ii) purchasing the Additional Partnership Units, (iii) pledging
the Additional Partnership Units, (iv) delivering unit certificates evidencing
the Additional Partnership Units to Lender as Collateral for the Loans, and (v)
amending Lender's existing Uniform Commercial Code financing statements covering
the Collateral, on the terms and conditions contained herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and Lender hereby
agree as follows:
1. The Lender hereby agrees to release its lien on the AIMCO Shares
pledged to the Lender pursuant to the Pledge Agreement as Collateral for the
Loans, and hereby consents to the sale of the AIMCO Shares, subject to the
following conditions:
a) the Borrower shall sell the released AIMCO Shares (the
"Released Shares") through an investment account with ABN AMRO
Incorporated (the "ABN AMRO Account") for which the Borrower, the
Lender and ABN AMRO Incorporated have entered into a restricted
account agreement to evidence and
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perfect the Lender's security interest in the Released Shares and
all proceeds of, and substitutions for, the Released Shares;
b) all proceeds from the sale of the Released Shares shall be
held in the ABN AMRO Account until the Borrower consummates the
purchase of the Additional Partnership Units;
c) the Borrower shall direct the seller of the Additional
Partnership Units to deliver the certificates evidencing the
Additional Partnership Units to the ABN AMRO Account immediately
upon consummation of the purchase of the Additional Partnership
Units;
d) the Borrower shall direct ABN AMRO Incorporated to deliver
the certificates evidencing the Additional Partnership Units to
the Lender upon ABN AMRO Incorporated's receipt of the Additional
Partnership Units; and
e) concurrently with the execution of this Amendment, the
Borrower shall deliver to Lender an assignment separate from
certificate executed in blank with respect to each certificate
evidencing the Additional Partnership Units.
2. The Loan Agreement is hereby amended by deleting Paragraph 5.15 and by
deleting all reference elsewhere in the Loan Agreement to "Apartment Investment
and Management Company," "AIMCO," and "AIMCO Shares."
3. The Pledge Agreement is hereby amended as follows:
a) by deleting all reference to "Apartment Investment and
Management Company," "AIMCO," and "AIMCO Stock"; and
b) by deleting Schedule 1 thereto in its entirety and, upon
purchase of the Additional Partnership Units, replacing it with a
new "Schedule 1" substantially in the form attached hereto.
4. The Prime Group, Inc., an Illinois corporation, hereby ratifies its
obligations under that certain Continuing Unconditional Guaranty, dated December
18, 1998, given by The Prime Group, Inc. in favor of the Lender.
5. The Borrower hereby represents and warrants that its execution,
delivery and performance of this Amendment, the Pledge Agreement and the Loan
Agreement (both as amended hereby) are within its partnership powers and have
been duly authorized by all requisite partnership action on its part and that
this Amendment has been duly executed by Borrower and this Amendment, the Pledge
Agreement and the Loan Agreement (both as amended hereby) constitute valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy,
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insolvency, moratorium, reorganization and other similar laws affecting
creditors' rights generally and by general principles of equity.
6. The parties hereto hereby agree and acknowledge that nothing
contained in this Amendment in any manner or respect limits or terminates any of
the provisions of the Pledge Agreement or the Loan Agreement other than as
expressly set forth herein and further agree and acknowledge that the Pledge
Agreement and the Loan Agreement both remain and continue in full force and
effect.
7. This Amendment may be executed in one or more counterparts, each of
which, when executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
document with the same force and effect as if the signatures of all of the
parties were on a single counterpart.
8. This Amendment, taken with the Pledge Agreement and the Loan
Agreement, embodies the entire agreement and understanding with respect to the
subject matter hereof and supersedes all prior agreements and understandings
relating to the subject matter hereof. Any reference to the Pledge Agreement or
the Loan Agreement (howsoever each may be called) contained in any notice,
request, certificate or other document shall be deemed to refer to the Pledge
Agreement and the Loan Agreement, respectively, as amended by this Amendment
unless the context shall otherwise expressly specify.
9. This Amendment shall be governed by and construed in accordance with
the laws of the State of Illinois.
[Balance of page intentionally left blank; signature page follows.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Loan Documents, Consent and Limited Release as of the date first
written above.
PRIME GROUP VI, L.P.
By: PGLP, Inc., an Illinois
corporation, as managing general
partner
By:/s/ Robert J. Rudnik
---------------------
Name: Robert J. Rudnik
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Title: Vice President
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LASALLE NATIONAL BANK
By:/s/ John C. Hein
------------------------
Name: John C. Hein
----------------------
Title: First Vice President
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Agreed to and Accepted as of the
29th day of January, 1999:
THE PRIME GROUP, INC.
By: /s/ Robert J. Rudnik
Name: Robert J. Rudnik
Title: Executive Vice President
<PAGE>
SCHEDULE I
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Description of Pledged Collateral
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A. PLEDGED SHARES
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Issuer Certificate No. Shares
- ------ --------------- ------
Brookdale Living Communities, Inc. C0008 137,000
C0009 137,000
C0010 137,000
C0011 137,000
C0012 137,000
C0013 137,000
C0014 137,000
C0015 137,000
C0016 137,000
C0017 137,000
C0035 300,000
C0043 673,327
C0046 1,233,606
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3,576,933
B. PLEDGED UNITS
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104,632 aggregate units of limited partnership interests in Prime Retail,
L.P., a Delaware limited partnership, as evidenced by certificates #0027 for
43,000 units and #0028 for 61,632 units.
304,097 units of limited partnership interests in Prime Group Realty, L.P.,
a Delaware limited partnership.
<PAGE>
EXHIBIT XIII
ASSUMPTION AGREEMENT
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This Assumption Agreement (this "Agreement") is made and entered into
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as of the 18th day of December, 1998, by and between Prime Group VI, L.P., an
Illinois limited partnership ("PG6LP"), and Prime Group III, L.P., an Illinois
-----
limited partnership ("PG3LP").
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W I T N E S S E T H
-------------------
WHEREAS, PG6LP is a party to that certain Stock Purchase Agreement and
Agreement Concerning Option Shares (the "Stock Purchase Agreement"), dated as of
------------------------
May 7, 1997, among The Prime Group, Inc., an Illinois corporation ("PGI"), PG6LP
---
and Darryl W. Copeland, Jr., an individual ("DWC"), a copy of which is attached
---
hereto as Exhibit A; and
---------
WHEREAS, the Stock Purchase Agreement, in part, provides that PG6LP
agrees to sell to DWC, and DWC agrees to purchase from PG6LP, 25,000 shares (the
"Purchase Shares") of common stock of Brookdale Living Communities, Inc.
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("BLCI") for the purchase price and upon the terms and conditions set forth in
----
the Stock Purchase Agreement; and
WHEREAS, PG6LP recently obtained a loan (the "LaSalle Loan") from
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LaSalle National Bank ("LaSalle") and secured repayment of the LaSalle Loan with
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a pledge to LaSalle of various securities held by PG6LP, including a certain
number of shares of stock of BLCI, but not including the Purchase Shares; and
WHEREAS, in connection with the closing of the LaSalle Loan, PG6LP
distributed to Prime Group II, L.P., an Illinois limited partnership ("PG2LP"),
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the Purchase Shares and all rights to receive the Unpaid Portion of the Periodic
Payments (as such terms are defined in the Stock Purchase Agreement) from DWC
(the "Unpaid Periodic Payments"), and PG2LP, in turn, contributed the Purchase
------------------------
Shares and the Unpaid Periodic Payments to PG3LP, and, in connection therewith,
PG3LP agreed to assume all of the obligations of PG6LP under the Stock Purchase
Agreement.
<PAGE>
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. PG3LP hereby assumes all of the obligations of PG6LP under the
Stock Purchase Agreement and, in connection therewith, hereby agrees to
deliver a certificate representing the Purchase Shares to Winston &
Strawn as "Escrow Agent" pursuant to Section 3 of the Stock Purchase
Agreement.
2. All notices and other communications which otherwise would be
delivered to PG6LP under the Stock Purchase Agreement shall be
delivered to PG3LP at the following address (and Section 4 of the Stock
Purchase Agreement is hereby amended accordingly):
If to PG3LP, to:
Prime Group III, L.P.
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900, until February 1, 1999
(Suite 4200 from and after February 1, 1999)
Chicago, Illinois 60601
Attn: Michael W. Reschke
Telecopy Number: 312/917-1511
With a copy to:
The Prime Group, Inc.
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
Attn: Robert J. Rudnik
Telecopy Number: 312/917-8442
[signature page follows]
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<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
PRIME GROUP VI, L.P.
By: PGLP, INC., Managing General
Partner
By: /s/ Robert J. Rudnik
--------------------------------
Its: Vice President
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PRIME GROUP III, L.P.
By: PGLP, INC., Managing General
Partner
By: /s/ Robert J. Rudnik
--------------------------------
Its: Vice President
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ACKNOWLEDGED BY:
/s/ Darryl W. Copeland
- ------------------------------------
Darryl W. Copeland, Jr.
Date: December 18, 1998
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