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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. 4)
____________________
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
Suite 4200
Chicago, IL 60601
(312) 558-5600
December 7, 1999
(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 - 68,000
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER - 3,919,350
BENEFICIALLY 8
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER - 68,000
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER - 3,919,350
WITH 10
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
Individually beneficially owns vested options to purchase 68,000
shares of common stock, par value $0.01 per share ("Common Stock").
May be deemed to share beneficial ownership of (i) 21,784 shares of
Common Stock directly owned by The Prime Group, Inc., (ii) 3,576,933
shares of Common Stock directly owned by Prime Group VI, L.P. and
(iii) 320,633 shares of Common Stock directly owned by Prime Group II,
L.P. by virtue of his ability to control The Prime Group, Inc. and
PGLP, Inc., which is the managing general partner of Prime Group VI,
L.P. and Prime Group II, 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
Individually beneficially owns an approximate .7% equity interest in
the Issuer, assuming full exercise of options to purchase 68,000
shares of Common Stock. May be deemed to share beneficial ownership of
(i) the approximate .2% equity interest in the Issuer directly owned
by The Prime Group, Inc., (ii) the approximate 35.3% equity interest
in the Issuer directly owned by Prime Group VI, L.P. and (iii) the
approximate 3.2% equity interest in the Issuer directly owned by Prime
Group II, L.P. by virtue of his ability to control The Prime Group,
Inc. and PGLP, Inc., which is the managing general partner of Prime
Group VI, L.P. and Prime Group II, L.P.
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON - IN
14
- ------------------------------------------------------------------------------
2
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SCHEDULE 13D
- -----------------------
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, Unites States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER - 3,576,933
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER - 0
BENEFICIALLY 8
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER - 3,576,933
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER - 0
WITH 10
- ------------------------------------------------------------------------------
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 35.3% equity interest in the Issuer
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON - PN
14
- ------------------------------------------------------------------------------
3
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SCHEDULE 13D
- -----------------------
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, Unites States of America
- ------------------------------------------------------------------------------
SOLE VOTING POWER - 0
7
NUMBER OF
SHARES -----------------------------------------------------------
SHARED VOTING POWER - 3,897,566
BENEFICIALLY 8
OWNED BY
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER - 0
9
REPORTING
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER - 3,897,566
WITH 10
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
May be deemed to share beneficial ownership of (i) 3,576,933 shares of
Common Stock directly owned by Prime Group VI, L.P. and (ii) 320,633
shares of Common Stock directly owned by Prime Group II, L.P. by
virtue of its position as managing general partner of Prime Group VI,
L.P. and Prime Group II, 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
35.3% equity interest in the Issuer directly owned by Prime Group VI,
L.P. and (ii) the approximate 3.2% equity interest in the Issuer
directly owned by Prime Group II, L.P. by virtue of its position as
managing general partner of Prime Group VI, L.P. and Prime Group II,
L.P.
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON - CO
14
- ------------------------------------------------------------------------------
4
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Item 1. Security and Issuer.
This Amendment No. 4 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. 4 to Schedule 13D is filed by each of
Michael W. Reschke, an individual and a citizen of the United States of America
("Reschke"), 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 PGLPI, which is
the managing general partner of PG-VI.
(b)(i) The business address of each of Reschke, PG-VI and PGLPI is:
c/o The Prime Group, Inc.
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:
c/o The Prime Group, Inc.
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 The Prime Group,
Inc. ("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 PGI is the ownership, development and management of, and
investment in, directly or indirectly, real estate. The business address of PGI
is 77 West Wacker Drive, Suite 4200, Chicago, Illinois 60601. 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 PG-VI and PGLPI is the
ownership, development and management of, and investment in, directly or
indirectly, real estate.
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(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 PGLPI:
Name Present Principal Occupation or Employment
- ---- ------------------------------------------
Robert J. Rudnik................. Executive Vice President/General Counsel and
Secretary of PGI; Vice President and
Secretary and a member of the Board of
Directors of PGLPI; Executive Vice
President/General Counsel and Secretary and a
member of the Board of Directors of the
Company
Gary J. Skoien................... Executive Vice President of PGI; Vice
President of PGLPI; Chairman, President and
Chief Executive Officer of Horizon
Ray R. Grinvalds................. 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
Warren H. John................... Vice President of PGI; Vice President and
Assistant Secretary and a member of the Board
of Directors of PGLPI
All of the executive officers and directors of PGLPI are citizens of
the United States of America.
(d) and (e) During the last five years, none of Reschke, PG-VI or
PGLPI or any of the directors or executive officers of 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 $65,000,000. Reschke owns an approximate
50.75% equity interest in PGI and is the managing general partner of PGLP. The
Formation Agreement is identified as Exhibit 99.1 hereto and incorporated herein
by reference.
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 $18,000,000 (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
$8,740,000, 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.
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On January 26, 1999, PGLP transferred 90,035 shares of Common Stock to
PG-II. PGLPI is the managing general partner of PG-II.
On April 7, 1999, PGLP transferred 54,441 shares of Common Stock to
PG-II.
On September 8, 1999, PGLP transferred 132,612 shares of Common Stock
to PG-II.
On January 6, 2000, PGLP transferred 43,545 shares of Common Stock to
PG-II.
Item 4. Purpose of Transaction.
PG-VI acquired the shares of Common Stock owned by it to facilitate
the formation of the Company and for investment purposes. PGI and PG-II
acquired the shares of Common Stock owned by such entities for investment
purposes.
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 have a term of 10 years. As of May 7, 1999, Reschke's options
to purchase 50,000 shares of Common Stock had vested. The exercise price of the
options is $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. 4 to Schedule 13D, none of
Reschke, PG-VI or PGLPI, nor, to the best of their knowledge, any of the
executive officers or directors of 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 68,000 shares of Common
Stock, which number of shares, assuming full exercise of such vested options,
constitutes approximately .7% of the outstanding shares of the Company's Common
Stock. PGI beneficially owns 21,784 shares of Common Stock, which number of
shares constitutes approximately .2% of the outstanding shares of the Company's
Common Stock. PG-VI beneficially owns 3,576,933 shares of Common Stock, which
number of shares constitutes approximately 35.3% of the outstanding shares of
the Company's Common Stock. PG-II beneficially owns 320,633 shares of Common
Stock, which number of shares constitutes approximately 3.2% of the outstanding
shares of the Company's Common Stock.
By virtue of his ability to control PGI and PGLPI, which is the
managing general partner of PG-VI and PG-II, Reschke may be deemed to share
beneficial ownership of the 21,784, 3,576,933 and 320,633 shares of Common Stock
directly owned by PGI, PG-VI and PG-II, respectively. By virtue of its position
as managing general partner of PG-VI and PG-II, PGLPI may be deemed to share
beneficial ownership of the 3,576,933 and 320,633 shares of Common Stock
directly owned by PG-VI and PG-II, respectively.
(b) Assuming full exercise of Reschke's vested options, Reschke has
the sole power to direct the vote and disposition of 68,000 shares of Common
Stock directly owned by Reschke. Each of PGI, PG-VI and PG-II has the sole
power to direct the vote and disposition of the 21,784, 3,576,933 and 320,633
shares of Common Stock owned by PGI, PG-VI and PG-II, respectively.
By virtue of his ability to control PGI and PGLPI, which is the
managing general partner of PG-VI and PG-II, Reschke may be deemed to share the
power to direct the vote and disposition of the 21,784, 3,576,933 and 320,633
shares of Common Stock directly owned by PGI, PG-VI and PG-II, respectively. By
virtue of its
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position as managing general partner of PG-VI and PG-II, PGLPI may be deemed to
share the power to direct the vote and disposition of the 3,576,933 and 320,633
shares of Common Stock directly owned by PG-VI and PG-II, respectively.
(c) 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., Mr. Copeland received an option (the "PGI Option") to purchase
100,000 shares of Common Stock from PGI (the "PGI Shares") for an aggregate
purchase price of $1,000. The PGI Option first became exercisable on May 7, 1998
and has a term of five years.
Pursuant to the terms and conditions of 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"), Mr. Copeland
received an option (the "PG-VI Option") to purchase 25,000 shares of Common
Stock from PG-VI (the "PG-VI Shares") for an aggregate purchase price of
$272,722.50. The PG-VI Option first became exercisable on May 7, 1997 and has a
term of three years. 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 an Assumption Agreement, dated as of December 18, 1998, by and
between PG-VI and PG-III.
On December 7, 1999, pursuant to the terms and conditions of an Option
Purchase Agreement, dated as of December 7, 1999, by and among, the Company,
Darryl W. Copeland, Jr., PGI and PG-III (the "Option Purchase Agreement"), (i)
the Company purchased the PGI Option from Mr. Copeland for $1,250,000 and
exercised the PGI Option to purchase the PGI Shares from PGI for an aggregate
purchase price of $1,000, and (ii) the Company purchased the PG-VI Option from
Mr. Copeland for $75,000 and exercised the PG-VI Option to purchase the PG-VI
Shares from PG-III for an aggregate purchase price of $272,722.50.
On January 6, 2000, PGLP transferred 43,545 shares of Common Stock to
PG-II.
Other than as described above, none of Reschke, PGI, PGLPI, PG-VI or
PG-II, nor, to the best of their knowledge, any of the executive officers or
directors of PGLPI, has effected any transaction in securities of the Company
during the past 60 days.
(d) Other than (i) LaSalle National Bank ("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 "LaSalle Pledge Agreement") and (ii) Kemper
Investors Life Insurance Company ("Kemper"), pursuant to the terms and
conditions of a Pledge and Security Agreement [Lake Travis], dated as of March
22, 1994, by and between PG-II and Kemper, as amended by the First Amendment to
Pledge and Security Agreement [Lake Travis], dated as of August 31, 1994, by and
between PG-II and Kemper, the Second Amendment to Pledge and Security Agreement
[Lake Travis], dated as of February 19, 1997, by and between PG-II and Kemper,
the Third Amendment to Pledge and Security Agreement [Lake Travis], dated as of
February 19, 1997, by and between PG-II and Kemper, the Fourth Amendment to
Pledge and Security Agreement [Lake Travis], dated as of April 9, 1997, by and
between PG-II and Kemper, the Fifth Amendment to Pledge and Security Agreement
[Lake Travis], dated as of April 7, 1998, by and between PG-II and Kemper, the
Sixth Amendment to Pledge and Security Agreement [Lake Travis], dated as of June
15, 1998, by and between PG-II and Kemper, the Seventh Amendment to Pledge and
Security Agreement [Lake Travis], dated as of September 30, 1998, by and between
PG-II and Kemper, the Eighth Amendment to Pledge and Security Agreement [Lake
Travis], dated as of December 31, 1998, by and between PG-II and Kemper (the
"Eighth Amendment"), the Ninth Amendment to Pledge and Security Agreement [Lake
Travis], dated as of March 31, 1999, by and between PG-II and Kemper (the "Ninth
Amendment"), the Tenth Amendment to Pledge and Security Agreement [Lake Travis],
dated as of September 1, 1999, by and between PG-II and Kemper (the "Tenth
Amendment") and the Eleventh Amendment to Pledge and Security Agreement [Lake
Travis], dated as of December 20, 1999, by and between PG-II and Kemper (the
"Eleventh Amendment") (as amended, the "Kemper 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, PG-VI or PG-II, except for Reschke, PGI, PG-VI, PGLPI or PG-II.
(e) Not applicable.
8
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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 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 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
LaSalle 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").
Pursuant to the Eighth Amendment, PG-II pledged 90,035 shares of
Common Stock to Kemper in order to secure its obligations under the Limited
Recourse Guaranty [Lake Travis] made as of March 22, 1994 in favor of Kemper, as
amended by the First Amendment to Limited Recourse Guaranty [Lake Travis], dated
as of August 31, 1994, by and between PG-II and Kemper (the "First Amendment to
Limited Recourse Guaranty") (as amended, the "Kemper Guaranty").
Pursuant to the Ninth Amendment, PG-II pledged 54,441 shares of Common
Stock to Kemper in order to secure its obligations under the Kemper Guaranty.
Pursuant to the Tenth Amendment, PG-II pledged 132,612 shares of
Common Stock to Kemper in order to secure its obligations under the Kemper
Guaranty.
Pursuant to the Eleventh Amendment, PG-II pledged 43,545 shares of
Common Stock, together with other collateral, to Kemper in order to secure its
obligations under the Kemper Guaranty.
On December 7, 1999, pursuant to the terms and conditions of the
Option Purchase Agreement, (i) the Company purchased the PGI Option from Mr.
Copeland for $1,250,000 and exercised the PGI Option to purchase the PGI Shares
from PGI for an aggregate purchase price of $1,000, and (ii) the Company
purchased the PG-VI Option from Mr. Copeland for $75,000 and exercised the PG-VI
Option to purchase the PG-VI Shares from PG-III for an aggregate purchase price
of $272,722.50.
9
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Each of the Registration Rights Agreement, Amendment No. 1 to
Registration Rights Agreement, the Blackacre Stock Option Agreement, the Loan
Agreement, the LaSalle Pledge Agreement, the Continuing Unconditional Guaranty
and the First Amendment are identified as Exhibits 99.2, 99.3, 99.4, 99.6,
99.7, 99.8 and 99.9, respectively, and incorporated herein by reference. The
Kemper Pledge Agreement, the Kemper Guaranty, the First Amendment to Limited
Recourse Guaranty, the Eighth Amendment, the Ninth Amendment, the Tenth
Amendment, the Eleventh Amendment and the Option Purchase Agreement are attached
hereto as Exhibits 99.10, 99.11, 99.12, 99.13, 99.14, 99.15, 99.16 and 99.17,
respectively, and incorporated herein by reference.
Item 7. Material to be Filed as Exhibits.
Exhibit No. Description
----------- -----------
Exhibit 99.1 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 99.2 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 99.3 Amendment No. 1 to Registration Rights Agreement, dated
as of December 5, 1997, by and among the Company, PGI,
PGLP and PG-VI*
Exhibit 99.4 Stock Option Agreement, dated as of May 7, 1997, by and
between PGI and Blackacre*
Exhibit 99.5 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 99.6 Loan Agreement, dated as of December 18, 1998, by and
between PG-VI and LaSalle*
Exhibit 99.7 Pledge Agreement, dated as of December 18, 1998, by and
between PG-VI and LaSalle*
Exhibit 99.8 Continuing Unconditional Guaranty, dated as of December
18, 1998, by PGI in favor of LaSalle*
Exhibit 99.9 First Amendment to Loan Documents, Consent and Limited
Release, dated as of January 29, 1999, by and between
PG-VI and LaSalle*
Exhibit 99.10 Pledge and Security Agreement [Lake Travis], dated as
of March 22, 1994, by and between PG-II and Kemper
Exhibit 99.11 Limited Recourse Guaranty [Lake Travis] made by PG-II
as of March 22, 1994 in favor of Kemper
Exhibit 99.12 First Amendment to Limited Recourse Guaranty [Lake
Travis], dated as of August 31, 1994, by and between
PG-II and Kemper
Exhibit 99.13 Eighth Amendment to Pledge and Security Agreement [Lake
Travis], dated as of December 31, 1998, by and between
PG-II and Kemper
10
<PAGE>
Exhibit 99.14 Ninth Amendment to Pledge and Security Agreement [Lake
Travis], dated as of March 31, 1999, by and between PG-
II and Kemper
Exhibit 99.15 Tenth Amendment to Pledge and Security Agreement [Lake
Travis], dated as of September 1, 1999, by and between
PG-II and Kemper
Exhibit 99.16 Eleventh Amendment to Pledge and Security Agreement
[Lake Travis], dated as of December 20, 1999, by and
between PG-II and Kemper
Exhibit 99.17 Option Purchase Agreement, dated as of December 7,
1999, by and among the Company, Darryl W. Copeland,
Jr., PGI and PG-III
_____________________
*Previously filed.
11
<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. 4 to Schedule 13D is true, complete and correct.
/s/ Michael W. Reschke
----------------------
Michael W. Reschke
Dated: January 19, 2000
<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. 4 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: January 19, 2000
<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. 4 to Schedule 13D is true, complete and correct.
PGLP, INC.
By: /s/ Michael W. Reschke
-----------------------
Name: Michael W. Reschke
Title: President
Dated: January 19, 2000
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
----------- -----------
Exhibit 99.1 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 99.2 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 99.3 Amendment No. 1 to Registration Rights Agreement, dated
as of December 5, 1997, by and among the Company, PGI,
PGLP and PG-VI*
Exhibit 99.4 Stock Option Agreement, dated as of May 7, 1997, by and
between PGI and Blackacre*
Exhibit 99.5 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 99.6 Loan Agreement, dated as of December 18, 1998, by and
between PG-VI and LaSalle*
Exhibit 99.7 Pledge Agreement, dated as of December 18, 1998, by and
between PG-VI and LaSalle*
Exhibit 99.8 Continuing Unconditional Guaranty, dated as of December
18, 1998, by PGI in favor of LaSalle*
Exhibit 99.9 First Amendment to Loan Documents, Consent and Limited
Release, dated as of January 29, 1999, by and between
PG-VI and LaSalle*
Exhibit 99.10 Pledge and Security Agreement [Lake Travis], dated as
of March 22, 1994, by and between PG-II and Kemper
Exhibit 99.11 Limited Recourse Guaranty [Lake Travis] made by PG-II
as of March 22, 1994 in favor of Kemper
Exhibit 99.12 First Amendment to Limited Recourse Guaranty [Lake
Travis], dated as of August 31, 1994, by and between
PG-II and Kemper
Exhibit 99.13 Eighth Amendment to Pledge and Security Agreement [Lake
Travis], dated as of December 31, 1998, by and between
PG-II and Kemper
Exhibit 99.14 Ninth Amendment to Pledge and Security Agreement [Lake
Travis], dated as of March 31, 1999, by and between PG-
II and Kemper
Exhibit 99.15 Tenth Amendment to Pledge and Security Agreement [Lake
Travis], dated as of September 1, 1999, by and between
PG-II and Kemper
Exhibit 99.16 Eleventh Amendment to Pledge and Security Agreement
[Lake Travis], dated as of December 20, 1999, by and
between PG-II and Kemper
<PAGE>
Exhibit 99.17 Option Purchase Agreement, dated as of December 7,
1999, by and among the Company, Darryl W. Copeland,
Jr., PGI and PG-III
_______________________
*Previously filed.
2
<PAGE>
EXHIBIT 99.10
PLEDGE AND SECURITY AGREEMENT [LAKE TRAVIS]
-------------------------------------------
THIS PLEDGE AND SECURITY AGREEMENT (this "Pledge and Security
Agreement"), dated as of March 22, 1994, is entered into by and between Prime
Group II, L.P., an Illinois limited partnership (the "Pledgor" or the
"Company"), and Kemper Investors Life Insurance Company, an Illinois insurance
corporation (the "Pledgee").
W I T N E S S E T H:
-------------------
WHEREAS, The Prime Group, Inc. ("Prime") and Kemper Corporation, a
Delaware corporation ("Kemper"), acting on behalf of themselves and their
respective affiliates, are parties to that certain letter agreement dated August
25, 1993 and amended and restated as of February 17, 1994 (the "Letter
Agreement"), wherein Kemper and Prime agreed to modify certain of their existing
lending and other business relationships;
WHEREAS, Pledgor is an Affiliate of Prime; and Pledgee is a direct or
indirect subsidiary of Kemper;
WHEREAS, Pledgee and certain of its Affiliates have made or provided
credit support/enhancement for loans to certain Affiliates of Pledgor, which
loans are guaranteed by certain of Guarantor's Affiliates pursuant to written
guaranties (the "Existing Guaranties");
WHEREAS, in order to induce Pledgee to release the Existing
Guaranties, concurrently herewith, Pledgor is among other things executing and
delivering to Pledgee that certain guaranty dated of even date herewith (the
"Guaranty"), with respect to the loan (such loan, as extended, modified or
restated from time to time, being referred to herein as the "Loan"), described
on Exhibit A to the borrower (such borrower, and its successors and assigns,
---------
being referred to herein as "Borrower"), which Pledgee has made or with respect
to which Pledgee has provided credit support/enhancement;
WHEREAS, in order to further induce Pledgee to release the Existing
Guaranties concurrently herewith, Pledgor has agreed to execute and deliver this
Pledge and Security Agreement, pursuant to which (i) the Pledged Interests (as
defined herein) will be pledged to secure Pledgor's obligations under the
Guaranty and this Pledge and Security Agreement, and (ii) certain Distributions
(as defined herein) paid on or with respect to the Pledged Interests will be
paid and applied as provided herein; and
WHEREAS, the transactions contemplated by the Letter Agreement include
the execution and delivery of this Pledge and Security Agreement executed by
Pledgor for the benefit of Pledgee.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Pledgee hereby agree
as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
The following terms when used in this Pledge and Security Agreement,
including its preamble and recitals, shall have the following meanings (such
definitions to be equally applicable to the singular and plural forms thereof):
"Adjusted Funds from Operations" shall mean Funds from Operations for
the most recent calendar quarter after deducting (i) the total amount of the
quarterly distribution on the Preferred Units paid in that calendar quarter plus
the amount of any Preferred Distribution Shortfall as of the end of that
calendar quarter, (ii) a 10% payment reserve based on the amount remaining after
deducting item (i), and (iii) the total amount of the quarterly distribution on
the Convertible Preferred Units paid in that calendar quarter plus the amount of
any Convertible Preferred Distribution Shortfall on the Convertible Preferred
Units as of the end of that calendar quarter.
"Borrower" shall have the meaning provided therefor in the recitals.
"Borrower Obligations" shall mean any and all obligations or
liabilities of Borrower whether direct or indirect, joint or several, absolute
or contingent, now existing or hereafter arising, due or to become due, which
arise out of or in connection with any Loan Document.
"Business Day" means any day of the week other than Saturday, Sunday
or any other day on which the New York Stock Exchange is closed.
"Closing Price" means, on any date, the last sale price, regular way,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, regular way, in either caw as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Common Stock is
not listed or admitted to trading on the New York Stock Exchange, as reported in
the principal consolidated transaction reporting system with respect to
securities listed on the principal national securities exchange on which the
Common Stock is listed or admitted to trading or, if the Common Stock is not
listed or admitted to trading on any national securities exchange, the last
quoted price, or if not so quoted, the average of the high bid and low asked
prices in the over-the-counter market, for the Common Stock, as reported by the
National Association of Security Dealers, Inc. Automated Quotation System or, if
such system is no longer in use, the principal other automated quotation system
that may then be in use or, if the Common Stock is not quoted by any such
organization, the average of the closing bid and asked prices as furnished by a
professional market maker making a market in the Common Stock as such Person is
selected from time to time by the board of directors of General Partner.
"Code" means the Uniform Commercial Code from time to time in effect
in the State of Illinois.
"Collateral" is defined in Section 2.1.
-2-
<PAGE>
"Common Stock" means shares of common stock, par value $.01 per share,
of the General Partner, including certificates representing such shares and any
interests in the entries on the books of any financial intermediary pertaining
to such shares.
"Common Units" means the Partnership Units designated as Common Units
under, and as otherwise defined and described in, the Partnership Agreement.
"Convertible Preferred Distribution Shortfall" shall have the meaning
given such term in the Partnership Agreement.
"Convertible Preferred Units" shall mean the Partnership Units
designated as Convertible Preferred Units under, and as otherwise defined and
described in, the Partnership Agreement.
"Dilution" shall mean the exercise of the rights granted to the
Partnership pursuant to Section 12.5 of the Partnership Agreement to acquire
Common Units of a Limited Partner and dilute such Limited Partner's Partnership
Interest in satisfaction of such Limited Partner's liability to the Partnership
pursuant to Sections 12.3 or 12.4 of the Partnership Agreement. Whenever in
this Pledge and Security Agreement reference is made to Dilution of Common
Units, or to Common Units subject to Dilution, any such reference shall be
deemed to include any and all rights under Section 12.7(b) and Section 12.5(d)
of the Partnership Agreement regarding Common Units with respect to which the
Dilution rights of the Partnership have terminated.
"Dilution Amount" means, with respect to any Dilution, the aggregate
dollar amount recovered from the Limited Partners under the Partnership
Agreement by reason of such Dilution.
"Discount" means an amount equal to 0.335 multiplied by a fraction,
(i) the numerator of which shall be (A) the Target Distribution Amount as of the
end of the most recent calendar quarter, minus (B) four (4) times the Adjusted
Funds from Operations for the most recent calendar quarter (but in no event
shall the numerator be less than zero), and (ii) the denominator of which shall
be $6,625,892.00.
"Distributions" means all distributions, proceeds, dividends,
liquidating proceeds or dividends, and other distributions or payments, ordinary
or extraordinary (whether similar or dissimilar to the foregoing), paid in cash,
on or with respect to any Pledged Interests.
"Entity" means any general partnership, limited partnership,
corporation, joint venture, trust, business trust, limited liability company,
corporation or association.
"Exchange" means the exchange of some or all or a portion of the
Common Units of a Limited Partner for Common Stock pursuant to the Partnership
Agreement.
"Exchange Rights" means the rights of a Limited Partner to exchange
Common Units for Common Stock pursuant to Article XI of the Partnership
Agreement and subject to Section 12.7(a) of the Partnership Agreement.
-3-
<PAGE>
"Event of Default" means:
(a) any failure by Pledgor to pay any amount due under the Guaranty,
or to apply any Distributions as provided in Section 2.4 hereof, or to
comply with the provisions of any section of Article 4 hereof other than
Sections 4.1 (to which subparagraph (d) below shall apply), 4.2 (to which
subparagraph (c) below shall apply) and 4.12 (to which subparagraph (d)
below shall apply), and, in each such case, the continuance of such failure
for five (5) Business Days after written notice from Pledgee;
(b) if any representation or warranty made or deemed made by Pledgor
in or under the Guaranty or this Pledge and Security Agreement shall prove
to be false or misleading in any material respect on the date made or
deemed to be made, and Pledgee gives notice to Pledgor of such default (no
grace or cure period being applicable to any such default);
(c) any sale, assignment, transfer, pledge or further encumbrance by
Pledgor of any of the Pledged Interests, or any interest therein, other
than pursuant to a Dilution under the Partnership Agreement;
(d) any default (not otherwise specified in this definition of "Event
of Default") in the performance or observance of any covenant or agreement
to be performed or observed by Pledgor under this Pledge and Security
Agreement or the Guaranty and the continuation thereof for a period of
thirty (30) days after notice of such default is given by Pledgee to
Pledgor; provided, however, that if such default cannot reasonably be cured
within such thirty (30) day time period and so long as Pledgor promptly
commences to cure such default promptly following receipt of notice thereof
and thereafter diligently prosecutes such cure, such period will be
extended for up to an additional ninety (90) days;
(e) Pledgor shall (i) in a proceeding commenced by Pledgor, be
adjudicated a bankrupt, or an order for relief shall have been entered
against Pledgor, under federal bankruptcy law, (ii) make a general
assignment for the benefit of creditors, (iii) apply for, seek, consent to,
or acquiesce in, the appointment of a receiver, custodian, trustee,
liquidator or similar official for it or all or substantially all of its
property, (iv) institute any proceeding seeking an order for relief or to
adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up,
liquidation, reorganization, arrangement, adjustment or composition of it
or its debts under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or fail to have any such proceeding
instituted against it dismissed within ninety (90) days after filing or (v)
fail to contest in good faith any appointment or proceeding described in
subsection (f) below for a period of ninety (90) days after such
appointment or the institution of such proceeding; or
(f) a receiver, custodian, trustee, liquidator or similar official
shall be appointed for Pledgor or all or substantially all of its
properties, or a proceeding described in subsection (e) above, shall be
instituted against Pledgor or a warrant of attachment, execution or similar
process against all or substantially all of its property shall be issued,
and any such event continues undischarged, undismissed, unstayed,
-4-
<PAGE>
unvacated or unbonded for a period of ninety (90) days after such entry,
appointment or issuance.
"Funds from Operations" shall mean the net income (loss), computed in
accordance with generally accepted accounting principles consistently applied,
excluding gains or losses from debt restructuring and sales of real property,
plus depreciation and amortization and after adjustments for unconsolidated
partnerships and joint ventures.
"General Partner" means Prime Retail, Inc., a Maryland corporation, and its
successors and assigns.
"Guaranty" shall have the meaning provided therefor in the recitals.
"Initial Pledge Amount" means the amount set forth in Exhibit A hereto as
---------
the Initial Pledge Amount under this Pledge and Security Agreement.
"Initial Pledged Interests" means the Pledged Interests which are being
pledged as of the date hereof by Pledgor to Pledgee pursuant to this Pledge and
Security Agreement to secure the Secured Obligations.
"Interest Amount" shall have the meaning provided therefor in Section 2.4
hereof.
"Letter Agreement" shall have the meaning provided therefor in the
recitals.
"Limited Partner" shall mean any Person named as a Limited Partner on
Exhibit A to the Partnership Agreement, or any Person admitted as a Substituted
- ---------
Limited Partner or additional Limited Partner (as such terms are defined and
described in the Partnership Agreement), in such Person's capacity as a limited
partner of the Partnership.
"Loan" shall have the meaning provided therefor in the recitals.
"Loan Documents" means, with respect to the Loan, this Pledge and Security
Agreement, the Guaranty, and any and all other documents and instruments
evidencing or securing the Loan, and, if applicable, any and all other documents
and instruments executed and delivered in connection with credit
support/enhancement with respect to the Loan.
"Lock-Up Letter" means, collectively, (i) that certain letter dated as of
March 22, 1994 by and among Prime, Prime Group Limited Partnership, and
Friedman, Billings, Ramsey & Co., Inc., (ii) that certain letter dated as of
March 22, 1994 by and among Kemper Investors Life Insurance Company, KILICO
Realty Corporation, KR Gainesville, Inc., KR Gulf Coast Factory Shops, Inc., and
Friedman, Billings, Ramsey & Co., Inc., (iii) that certain letter dated as of
March 22, 1994 by and among Abraham Rosenthal, Rosenthal Family LLC and
Friedman, Billings, Ramsey & Co., Inc., and (iv) that certain letter dated as of
March 22, 1994 by and among William H. Carpenter, Jr., Carpenter Family
Associates LLC and Friedman, Billings, Ramsey & Co., Inc., relating to certain
restrictions on the sale or other disposition of Common Units or Common Stock.
-5-
<PAGE>
"Market Value" means (i) with respect to Common Stock on any date, the
average of the Closing Price for the five consecutive Business Days ending on
such date, and (ii) with respect to Common Units on any date, the Market Value
of the Common Stock that would be issued if an Exchange were to occur as to such
Common Units on such date. Notwithstanding the foregoing, (i) for purposes of
this Pledge and Security Agreement, the Market Value of the Initial Pledged
Interests as of the date hereof shall be deemed to be the Initial Pledge Amount,
and (ii) for purposes of Section 4.16 only, the Market Value is subject to
adjustment as provided in said Section 4.16(d).
"Partners" means the partners in the Partnership.
"Partnership" means Prime Retail, L.P., a Delaware limited partnership.
"Partnership Agreement" means that certain Agreement of Limited Partnership
of the Partnership dated March 22, 1994.
"Preferred Units" shall mean the Partnership Units designated as Preferred
Units under, and as otherwise defined and described in, the Partnership
Agreement.
"Prime Partner(s)" shall mean the affiliate(s) of Prime which are
partner(s) of Borrower, as set forth on Exhibit A.
---------
"Prime Pledges" shall have the meaning provided therefor in Section 2.7
hereof.
"Registration Rights Agreement" means that certain Registration Rights
Agreement dated March 22, 1994, among Prime Retail, Inc., the Partnership,
Prime, Prime Group Limited Partnership, Abraham Rosenthal, Rosenthal Family LLC,
William H. Carpenter, Jr., Carpenter Family Associates LLC, Kemper Investors
Life Insurance Company, KILICO Realty Corporation, KR Gainesville, Inc., and KR
Gulf Coast Factory Shops, Inc.
"Secured Obligations" shall have the meaning provided therefor in Section
2.2.
"Sharing Agreement" means that certain Retail Assets Sharing Agreement
dated of even date herewith by and among Pledgor, Prime, Prime Group Limited
Partnership, Abraham Rosenthal, Rosenthal Family LLC, William H. Carpenter, Jr.,
Carpenter Family Associates LLC, Kemper Investors Life Insurance Company, KILICO
Realty Corporation, KR Gainesville, Inc., and KR Gulf Coast Factory Shops, Inc.
"Target Distribution Amount" shall mean an amount, determined from time to
time, that would be required to pay an annual distribution at the rate of the
Preferential Distribution per Common Unit on all Common Units then issued and
outstanding, plus the amount of any accrued and unpaid Preferential Distribution
Shortfall outstanding at such time with respect to all Common Units owned by the
General Partner.
In addition to the foregoing, the definitions set forth in Section A of
Schedule 1 to Exhibit B attached hereto are hereby incorporated by this
---------
reference.
-6-
<PAGE>
ARTICLE 2
PLEDGE
SECTION 2.1 Grant of Security Interest. Pledgor hereby pledges,
--------------------------
hypothecates, assigns, and transfers to Pledgee, and hereby grants to Pledgee, a
continuing lien and security interest in all of the following property (the
"Collateral"):
(a) subject to Sections 2.7 and 4.16(b) hereof, 690,276 Common Units;
(b) any Pledged Interests or other collateral pledged by Pledgor to
Pledgee after the date hereof to secure the Secured Obligations pursuant to
this Pledge and Security Agreement;
(c) any and all Common Stock owned by Pledgor following an Exchange of
any Pledged Interests which are Common Units (which Common Stock shall
constitute "Pledged Interests" hereunder immediately upon issuance thereof
and without any further act required on the part of Pledgor);
(d) any and all Common Units or Common Stock or any other securities
or property received by Pledgor as a result of any exchanges, splits,
reverse splits, combinations, mergers, consolidations, reclassifications,
warrants, options, and non-cash dividends or distributions in respect of
any Pledged Interests (and any such Common Units or Common Stock or other
securities or property so received shall be deemed "Pledged Interests" for
purposes hereof);
(e) subject to Sections 2.4 and 4.7 hereof, all Distributions with
respect to any Pledged Interests; and
(f) all other proceeds of any of the foregoing. For purposes of this
Pledge and Security Agreement, "proceeds" includes, without limitation,
whatever is receivable or received when Collateral or proceeds are sold,
collected, exchanged, converted or otherwise disposed of, whether such
disposition is voluntary or involuntary.
SECTION 2.2 Security for Secured Obligations. This Pledge and Security
--------------------------------
Agreement secures the full and prompt payment when due of all sums now or
hereafter payable by Pledgor, and timely performance of all obligations of
Pledgor, now or hereafter existing, under the Guaranty and this Pledge and
Security Agreement (the "Secured Obligations").
SECTION 2.3 [Intentionally omitted]
SECTION 2.4 Distributions. In the event that any Distribution is to be
-------------
paid on or with respect to the Pledged Interests at a time when no Event of
Default has occurred and is continuing, such Distribution shall be paid directly
to Pledgor; provided that Pledgor shall hold such Distribution in trust and
promptly, and in no event more than three (3) Business Days after receipt
thereof by Pledgor, pay such Distribution to Pledgee in an amount equal to: (a)
the amount of interest (the "Interest Amount") that has accrued since the date
of the immediately preceding Distribution (or, in the case of the first such
Distribution, since the date of this Pledge
-7-
<PAGE>
and Security Agreement) to the date of such Distribution at the interest rate
provided in the note evidencing the Loan, as such interest rate may change from
time to time, on a principal amount equal to the Pledge Amount, as such Pledge
Amount may change from time to time pursuant to this Pledge and Security
Agreement; and (b) if any such Distribution is in an amount less than such
Interest Amount, any such deficiency shall accumulate (with interest thereon at
the interest rate, if any, provided in the note evidencing the Loan) for
purposes of this Section 2.4 and the amount of the next Distribution (and, if
necessary, subsequent Distributions) to be paid to Pledgee shall include and be
applied first to such deficiency (and any accrued interest thereon), until such
deficiency (and all accrued interest thereon) has been paid in full, before
payment of any new Interest Amount. Unless and until an Event of Default shall
have occurred and be continuing, Pledgor shall be entitled to receive, retain
and apply Distributions in excess of the amount of the Interest Amount plus any
such accumulated deficiency (and accrued interest thereon) free and clear of the
lien and security interest of this Pledge and Security Agreement and shall not
be obligated to pay or invest such amounts to or in any Person. Any such
Distributions paid to Pledgee shall be applied by Pledgee to pay accrued and
unpaid interest on the Loan and shall be deemed to be a contribution by the
Prime Partner(s) to the capital of Borrower.
SECTION 2.5 Continuing Security Interest; Transfer of Note. This Pledge
----------------------------------------------
and Security Agreement shall create a continuing security interest in the
Collateral and shall:
(a) remain in full force and effect until payment in full or other
satisfaction in full of all Secured Obligations;
(b) inure to the benefit of and be binding upon the Pledgor and its
successors and assigns; and
(c) inure to the benefit of and be binding upon Pledgee and its
successors and assigns.
Without limiting the foregoing clause (c), Pledgee may assign or otherwise
transfer (in whole or in part) any of the Loan Documents held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits and subject to all of the obligations thereafter accruing in respect
thereof under any Loan Document or otherwise; provided that no such assignment
shall relieve Pledgee of any obligation thereunder accruing prior to such
assignment. Upon the payment or other satisfaction in full of all Secured
Obligations, the security interest granted herein shall terminate and all rights
to the Collateral shall revert to Pledgor. Upon any such termination (whether
in whole or in part), Pledgee will, at Pledgor's sole expense, deliver to
Pledgor, all documents, chattel paper, agreements, certificates, notes and
instruments representing, constituting, or evidencing all Pledged Interests,
together with all other Collateral then held by Pledgee hereunder, and execute
and deliver to Pledgor, at Pledgor's sole expense, such documents as Pledgor
shall reasonably request to evidence such termination.
SECTION 2.6 Security Interest Absolute. All rights of Pledgee and the
--------------------------
security interests granted to Pledgee hereunder, and all obligations of Pledgor
hereunder, shall be absolute and unconditional, irrespective of:
-8-
<PAGE>
(a) any lack of validity or enforceability of any of the Loan
Documents or instruments relating thereto;
(b) any change in the time, manner or place of payment of, or in any
other term, including the applicable rate of interest, of, all or any of
the Borrower Obligations, or any other renewal, extension, amendment,
modification or waiver of or any consent to departure from any of the Loan
Documents;
(c) any act or omission of Pledgee (or other holder of the Loan
Documents) of any nature whatsoever;
(d) with respect to Pledgor, Borrower, or any other Person, (i) any
failure to obtain required authorization by all necessary corporate,
partnership or other action relating to the incurrence of the Borrower
Obligations or the Secured Obligations or to the execution, delivery or
performance of any of the Loan Documents, or (ii) any violation of any
provision of any of the articles of incorporation, by-laws, partnership
agreement or any other document, instrument or agreement occasioned by the
incurrence of the Borrower Obligations or the Secured Obligations, by the
execution, delivery, or performance of any of the Loan Documents, or by any
failure of same to have been duty authorized by all necessary corporate or
other action;
(e) any release, amendment, waiver, modification, extension or renewal
of or consent to departure from, any guaranty given to secure all or any of
the Borrower Obligations or the Secured Obligations (other than a release
of the Guaranty); or forbearance of any other action or inaction under or
in respect of any of the Loan Documents;
(f) any exchange, release, forbearance or surrender of or any other
action or inaction with respect to any collateral (including, without
limitation, the Collateral, other than a release of all of the Collateral
which would result in a termination of the Guaranty under Section 8(a)
thereof at any time and from time to time now or hereafter securing any or
all of the Borrower Obligations or the Secured Obligations or the Loan
Documents or the liability of Pledgor, Borrower, or any other Person in
respect of all or any of the Loan Documents, or any failure to perfect or
continue as perfected any security interest or other lien with respect to
any such collateral, or any loss or destruction of any such collateral, or
any matter impairing the value of such collateral as security for all or
any of the Borrower Obligations, or the liability of Pledgor, Borrower, or
any other Person, in respect of all or any of the Borrower Obligations or
Loan Documents;
(g) any guaranty now or hereafter executed by Pledgor or anyone else
or any recovery under any such other guaranty;
(h) any waiver of or assertion or enforcement or failure or refusal to
assert or enforce, in whole or in part, any of the terms and provisions of
the Loan Documents, or any claim, cause of action, right or remedy which
Pledgee may, at any time, have under any of the Loan Documents or with
respect to any guaranty or any security which may be held by Pledgee (or
other holder of the Loan Documents) with respect to the Loan;
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<PAGE>
(i) the failure to give Pledgor any notice whatsoever, other than any
notice which Pledgee is expressly required to give pursuant to any
provision of this Pledge and Security Agreement;
(j) exculpatory provisions in any of the Loan Documents (other than in
the Guaranty or in this Pledge and Security Agreement) limiting recourse to
property encumbered by the Loan Documents or to any other security or
limiting rights to enforce a deficiency judgment against the Borrower;
(k) any sale, assignment, conveyance, merger or other transfer,
voluntary or involuntary (whether by operation of law or otherwise), of all
or any part of any of the Borrower's interest in any property securing the
Loan or the occurrence of any such sale, assignment, conveyance, merger or
other voluntary or involuntary transfer which results in Pledgor becoming
the Borrower under any of the Loan Documents; provided, however, that any
such sale, assignment, conveyance, merger or other transfer shall be
subject to the limitations set forth in the Loan Documents;
(l) any sale, assignment, conveyance, merger or other transfer,
voluntary or involuntary (whether by operation of law or otherwise), of all
or any part of the interests of Pledgee (or other holder of the Loan
Documents) in this Pledge and Security Agreement or any of the other Loan
Documents;
(m) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation, or the like, of Pledgor, Borrower
or any other Person, whether or not Pledgor shall have notice or knowledge
of any of the foregoing;
(n) any recovery (other than payment in full of all of the Secured
Obligations which would result in a termination of the Guaranty under
Section 8(a) thereof) as a result of the exercise by Pledgee (or other
holder of the Loan Documents) of any of its rights or remedies under the
Loan Documents, including any foreclosure thereof; or
(o) any other fact, circumstance or matter of any nature whatsoever
(other than payment in full of all of the Secured Obligations which would
result in a termination of the Guaranty under Section 8(a) thereof) that
might otherwise constitute a defense available to, or a discharge of, or
might otherwise operate to release or affect the obligations of, Pledgor,
Borrower, or any other Person liable to Pledgee (or other holder of the
Loan Documents) in respect of any of the Borrower Obligations, the Secured
Obligations or the Loan Documents.
SECTION 2.7 Dilution of Pledged Interests; Reallocation; Lock-Up
----------------------------------------------------
Provisions
- ----------
(a) The Common Units now or hereafter constituting a part of the
Pledged Interests and certain other Common Units are subject to Dilution as
set forth in the Partnership Agreement and in accordance with the Sharing
Agreement which provides for the allocation of Dilution among the parties
thereto, and the pledge and security interest granted hereby is expressly
subject to any such Dilution rights. In the event of any Dilution under
the Partnership Agreement, a portion of the Dilution Amount shall be deemed
allocated to and thereupon subtracted from the Pledge Amount, and the
number
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<PAGE>
of Common Units then constituting a part of the Pledged Interests shall be
reduced, in accordance with the formula set forth on Exhibit C attached
---------
hereto.
(b) Simultaneously with the execution and delivery of this Pledge and
Security Agreement, Pledgee or its Affiliates have executed and delivered
certain Pledge and Security Agreements (the "Pledgee-Affiliated Security
Agreements"), in form substantially similar to this Pledge and Security
Agreement, for the purpose of securing limited recourse guaranties (the
"Pledge-Affiliated Guaranties") by Pledgee or such Affiliates of loans made
to Huntley Development Limited Partnership, an Illinois limited
partnership, and 150 N. Riverside Venture, an Illinois general partnership
(the "Pledgee-Affiliated Secured Loans"). Pursuant to the Pledgee-
Affiliated Security Agreements, Pledgee or its Affiliates have pledged
Common Units to secure the Pledgee-Affiliated Guaranties. If, as a result
of any Dilution, any such Common Units pledged by Pledgee or its Affiliates
are assigned to the Partnership, then, in order to replace the Common Units
so assigned to the Partnership by Pledgee or its Affiliates, Pledgor agrees
that Pledgee and its Affiliates shall have the right to reallocate the same
number (as are so assigned to the Partnership by Pledgee and its
Affiliates) of Common Units pledged under the Prime Pledges to the Prime
Pledges, if any, securing the Pledgee-Affiliated Secured Loans from the
Prime Pledges securing loans other than the Pledgee-Affiliated Secured
Loans, pro rata (subject to certain limitations set forth on Exhibit A-1).
-----------
In such event, Pledgee shall deliver to Pledgor a new Exhibit A-1 (as
-----------
described in subparagraph 2.7(c) below) reflecting such reallocation.
Immediately upon the delivery by Pledgee to Pledgor of such new Exhibit A-
---------
1, the Common Units constituting a part of the Pledged Interests and the
-
Collateral under this Pledge and Security Agreement shall be the number of
Common Units as indicated on such new Exhibit A-1 as being pledged by
-----------
Pledgor pursuant to this Pledge and Security Agreement, and Exhibit A
---------
hereto shall be adjusted accordingly. In the event of any such
reallocation, Pledgor shall promptly deliver to Pledgee such financing
statements and such other documents and instruments as may reasonably be
required by Pledgee in connection with such reallocation, and, to the
extent not previously delivered, a limited recourse guaranty and pledge and
security agreement.
(c) Simultaneously with the execution and delivery of this Pledge and
Security Agreement, Pledgor and Affiliates of Pledgor have executed and
delivered, or may hereafter execute and deliver, other Pledge and Security
Agreements, in form substantially similar to this Pledge and Security
Agreement, for the purpose of securing guaranties by Pledgor and such
Affiliates of loans which Pledgee and Affiliates of Pledgee have made to
other Affiliates of Pledgor or with respect to which Pledgee and Affiliates
of Pledgee have provided credit support/enhancement. Such other Pledge and
Security Agreements, together with this Pledge and Security Agreement, are
referred to herein collectively as the "Prime Pledges". A schedule of all
such Prime Pledges is attached hereto as Exhibit A-1. Exhibit A-1
----------- -----------
specifies, inter alia, the Initial Pledge Amounts, the number of Common
Units, and the percentage of the total Common Units constituting Pledged
Interests under all of the Prime Pledges (as defined respectively therein),
which are pledged under each respective Prime Pledge as of the date hereof.
Pledgee and its Affiliates shall have the right on a single occasion at any
time during the period of eighteen (18) months after the date hereof to
substitute a new Exhibit A-1 to all
-----------
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<PAGE>
the Prime Pledges, which reallocates the total of the Pledge Amounts among
the Prime Pledges (subject to certain limitations as set forth on Exhibit
-------
A-1), with a reallocation of the total Common Units constituting Pledged
---
Interests among such Prime Pledges in the same proportion as the
reallocation of the Pledge Amounts. Such reallocation may result in an
increase or a decrease, or in no change, to the Common Units constituting
Pledged Interests hereunder. Immediately upon the delivery by Pledgee to
Pledgor of such new Exhibit A-1, the Common Units constituting a part of
-----------
the Pledged Interests and the Collateral under this Pledge and Security
Agreement shall be the number of Common Units in the Partnership as
indicated on such new Exhibit A-1 and Exhibit A hereto shall be adjusted
----------- ---------
accordingly. In the event of any such reallocation, Pledgor shall promptly
deliver to Pledgee amended financing statements and such other documents
and instruments as may reasonably be required by Pledgee in connection with
such reallocation.
(d) Under and pursuant to the Partnership Agreement and the Lock-Up
Letter, Pledgor's Common Units and Common Stock constituting Pledged
Interests hereunder will be subject to restrictions upon transfer thereof,
and the pledge and security interest granted hereby is expressly subject to
any such transfer restrictions on Pledged Interests.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Incorporation of Representations and Warranties. The
-----------------------------------------------
representations and warranties set forth in Section B of Schedule 1 to Exhibit B
---------
attached hereto are incorporated herein by this reference, and shall be deemed
to be made as of the date hereof and (except for paragraphs 5, 6 and 7 of
Section B of Schedule 1 to Exhibit B as of the date of each pledge and delivery
---------
hereunder.
SECTION 3.2 Additional Representations and Warranties. Pledgor represents
-----------------------------------------
and warrants to Pledgee, as of the date hereof and as of the date of each pledge
and delivery hereunder, in each case only with respect to the Collateral then
being pledged:
(a) Pledgor is the sole record, legal and beneficial owner of, and
has good and marketable title to (and has full right and authority to
pledge and assign), the Collateral, free and clear of all liens, security
interests, options, or other charges or encumbrances, except as described
in Section 2.7.
(b) The delivery of the Collateral to Pledgee, together with the
filing of the Uniform Commercial Code financing statements described in the
following sentence, is effective to create a valid, perfected, continuing
and enforceable first priority security interest in such Collateral and all
proceeds thereof, securing the Secured Obligations. All Uniform Commercial
Code financing statements necessary to perfect the security interest of
Pledgee in and to all or part of the Collateral have been filed in the
appropriate governmental office or executed and delivered to Pledgee for
filing (or, in the case of a reallocation as provided in Section 2.7, will
be so executed and delivered within five Business Days after Pledgor's
receipt of the new Exhibit A-1 under Section 2.7 above),
-----------
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<PAGE>
and Pledgor has directed (or, in the case of a reallocation as provided in
Section 2.7, will so direct within five Business Days after Pledgor's
receipt of the new Exhibit A-1 under Section 2.7 above) the Partnership to
-----------
register the pledge to Pledgee of the Common Units then being pledged
hereunder.
(c) In the case of any Pledged Interests consisting of Common Stock,
all of such Pledged Interests are duly authorized and validly issued, fully
paid, and non-assessable and are not subject to any shareholder agreements,
voting agreements, voting trusts, trust deeds, irrevocable proxies, or any
other similar agreements or instruments, except as contemplated by this
Pledge and Security Agreement, and there are no outstanding options,
warrants or other agreements with respect thereto, in each case, except as
described in Section 2.7.
(d) No authorization, approval, or other action by, and no notice to
or filing with, any governmental authority, regulatory body or any other
Person (other than the filing contemplated by Section 3.2(b) hereof) is
required by Pledgor for the pledge by Pledgor of any Collateral pursuant to
this Pledge and Security Agreement or for the execution, delivery, and
performance of this Pledge and Security Agreement by Pledgor.
ARTICLE 4
COVENANTS
SECTION 4.1 Incorporation of Covenants. The covenants set forth in Section
--------------------------
C of Schedule 1 to Exhibit B attached hereto are incorporated herein by this
---------
reference.
SECTION 4.2 Restrictions on Encumbrances; Warranty of Title. Pledgor will
-----------------------------------------------
not hereafter sell, assign, dispose of, transfer, pledge, encumber, or grant any
option or warrant with respect to, the Collateral (subject to the provisions of
Section 2.7). Subject to Section 2.7, Pledgor will warrant and defend the
right, title and interest in and to the Collateral, and Pledgee's interest in
and to the Collateral, against the claims and demands of all Persons whomsoever.
SECTION 4.3 Stock Powers and Instruments of Transfer. Pledgor shall (a)
----------------------------------------
upon the execution and delivery of this Pledge and Security Agreement, and
simultaneously with the delivery by Pledgor of any other or additional
Collateral as may be required hereunder (or, in the case of a reallocation
pursuant to Section 2.7, within five Business Days after Pledgor's receipt of
the new Exhibit A-1 under Section 2.7 above), and after any Exchange, promptly
-----------
deliver to Pledgee, such stock powers, stock certificates, instruments,
certificates, opinions of counsel, and similar documents, reasonably
satisfactory in form and substance to Pledgee, with respect to the Pledged
Interests as Pledgee may reasonably require in order to accomplish the purposes
of this Pledge and Security Agreement, and (b) from time to time upon the
request of Pledgee after the occurrence of any Event of Default relating to any
such Pledged Interests, promptly take whatever action is reasonably requested by
Pledgee in order to accomplish the purposes of this Pledge and Security
Agreement.
SECTION 4.4 Continuous Pledge. Subject to Sections 2.4, 2.5, 2.7, 4.7 and
-----------------
4.16, Pledgor will, at all times, keep pledged to Pledgee pursuant hereto all
Pledged Interests and all
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<PAGE>
other Collateral and other securities, instruments, proceeds, and rights from
time to time received by or distributable to Pledgor in respect of any
Collateral.
SECTION 4.5 Exchange Rights. Without the prior written consent of Pledgee,
---------------
Pledgor shall not exercise any of its Exchange Rights in respect of the
Collateral.
SECTION 4.6 Further Assurances. Pledgor agrees that at any time, and from
------------------
time to time, at the expense of Pledgor, Pledgor will promptly execute and
deliver all further instruments, including, without limitation, financing
statements, and take all further action, that may be reasonably necessary or
desirable, or that Pledgee may reasonably request, in order to perfect,
maintain, preserve, and protect the first perfected priority lien and security
interest (subject to the provisions of Section 2.7) granted or purported to be
granted hereby in compliance with applicable law and/or to enable Pledgee to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.
SECTION 4.7 Distributions. Unless and until an Event of Default shall have
-------------
occurred and be continuing, Pledgor shall be entitled to receive, retain and
apply all Distributions, in accordance with Section 2.4 above. Upon the
occurrence and during the continuance of an Event of Default (i) the rights of
Pledgor to all Distributions shall cease and all such rights shall thereupon
become vested in Pledgee which shall exclusively be entitled to receive all
Distributions, subject to application in accordance with Section 6.4 below, (ii)
Pledgor agrees to deliver to Pledgee any and all Distributions received by
Pledgor, (iii) any and all Distributions received and held by Pledgor which
Pledgor is obligated to deliver to Pledgee shall, until delivery thereof, be
held by Pledgor separate and apart from its other property in trust for Pledgee,
and (iv) Pledgee shall have the right to notify the Pledged Interest Issuer of
the vesting in Pledgee of such rights to receive Distributions as aforesaid and
Pledgor hereby irrevocably consents to any such notification.
SECTION 4.8 [Intentionally omitted]
SECTION 4.9 Other Parties. Pledgor will not, without the prior written
-------------
consent of Pledgee, waive or release any obligation of any party with respect to
the Collateral or enter into any agreement amending or supplementing the
Collateral.
SECTION 4.10 [Intentionally omitted]
SECTION 4.11 Additional Undertakings. Pledgor will not, without the prior
-----------------------
written consent of Pledgee, take or omit to take an action the taking or the
omission of which would result in any impairment or alteration of any obligation
of the maker of any instrument constituting Collateral.
SECTION 4.12 Place of Business. If Pledgor shall change its principal place
-----------------
of business or its chief executive office or its name or remove the records
concerning the Collateral from its principal place of business, Pledgor shall
give to Pledgee thirty (30) days advance notice thereof and, in connection
therewith, take such action, reasonably satisfactory to Pledgee, as may be
necessary to maintain the security interest of Pledgee in the Collateral
hereunder at all times fully perfected and in full force and effect.
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<PAGE>
SECTION 4.13 Shareholder Agreements. Pledgor shall not, with respect to any
----------------------
Pledged Interests that are now or hereafter pledged to Pledgee, enter into any
shareholder agreements, voting agreements, voting trusts, trust deeds,
irrevocable proxies, or any other similar agreements or instruments, except this
Pledge and Security Agreement, the Partnership Agreement, the Lock-Up Letter and
the Registration Rights Agreement.
SECTION 4.14 Payment of Taxes, Etc. Pledgor shall pay promptly when due all
---------------------
taxes, assessments, charges, encumbrances and liens now or hereafter imposed
upon any Collateral, and shall discharge or cause to be discharged as a lien of
record by payment or filing of any bond required by law, or otherwise, any (i)
judgment liens or (ii) tax or other similar involuntary liens (except liens
created by Pledgee) filed or otherwise asserted against the Collateral or any
part thereof, and any proceedings for the enforcement thereof, within fifteen
(15) days after Pledgor has notice thereof; provided, however, that Pledgor
shall have the right to contest in good faith any such taxes, assessments,
charges, encumbrances and liens, including any such judgment liens or tax liens
or other such involuntary liens (and during the continuation of such contest
need not pay or discharge any such matters) upon deposit with Pledgee, within
such fifteen (15) day period, of a cash deposit, an irrevocable letter of credit
or a surety bond or other security reasonably satisfactory to Pledgee, in an
amount sufficient to pay such lien, any accrued interest thereon, and any costs
and expenses in connection therewith.
SECTION 4.15 [Intentionally omitted].
SECTION 4.16 Collateral Value.
----------------
(a) So long as this Pledge and Security Agreement remains in full
force and effect, and subject to subparagraph (d) below, if as of the first
Business Day of any calendar quarter beginning April 1, 1995, Pledgee shall
determine, after receipt of the calculation of Market Value provided for in
subparagraph (c) below, that the aggregate Market Value of the Pledged
Interests and the fair market value of any other Collateral theretofore
pledged by Pledgor under, this Section 4.16 and then constituting a part of
the Collateral hereunder, is less than 90% of the Pledge Amount, then
Pledgor shall promptly pledge and deliver to Pledgee additional
unencumbered Common Units and/or unencumbered Common Stock (including
certificates and transfer instruments relating thereto), and/or other
collateral acceptable to Pledgee, such that, after giving effect to the
pledge of such additional Common Units and/or Common Stock and/or other
collateral, all Pledged Interests and other Collateral pledged under this
Pledge and Security Agreement and then constituting a part of the
Collateral shall have a fair market value (valuing Pledged Interests at
Market Value) equal to or greater than the Pledge Amount. Such additional
Common Units and/or Common Stock shall constitute Pledged Interests and,
together with any other collateral pledged hereunder, shall be deemed to be
part of the Collateral hereunder.
(b) So long as this Pledge and Security Agreement remains in full
force and effect, and subject to subparagraph (d) below, if as of the first
Business Day of any calendar quarter beginning April 1, 1995, Pledgee shall
determine, after receipt of the calculation of Market Value provided for in
subparagraph (c) below, that the aggregate of the Market Value of the
Pledged Interests and the fair market value of any other
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<PAGE>
Collateral theretofore pledged by Pledgor under this Section 4.16 and then
constituting a part of the Collateral hereunder, is more than 110% of the
Pledge Amount, then Pledgee shall promptly release and deliver to Pledgor
Common Units and/or Common Stock and/or other Collateral (as Pledgee shall
determine in its sole discretion), such that, after giving effect to such
release and delivery, the aggregate of the Market Value of the remaining
Pledged Interests and the fair market value of any other Collateral
theretofore pledged by Pledgor under this Pledge and Security Agreement and
then constituting a part of the Collateral hereunder, shall be as close as
possible to, but in no event less than, 110% of the Pledge Amount.
(c) Within (i) forty-five (45) days, so long as the adjustment
contemplated by subparagraph (d) below is applicable, and (ii) within five
(5) Business Days, if such adjustment contemplated by subparagraph (d)
below is no longer applicable, after the first Business Day of each
calendar quarter beginning April 1, 1995, and at such other times as the
Pledgee may request, Pledgor shall deliver to Pledgee a calculation, made
in good faith and certified as such by the Chief Financial Officer of
General Partner, or another officer of General Partner reasonably
acceptable to Pledgee, of the Market Value of the Pledged Interests
(including the adjustment contemplated by subparagraph (d) below, if
applicable) and the fair market value of any other collateral pledged by
Pledgor under this Section 4.16 and then constituting part of the
Collateral hereunder, calculated as of the first Business Day of the
applicable calendar quarter in accordance with the provisions of this
Pledge and Security Agreement.
(d) Notwithstanding anything in this Pledge and Security Agreement to
the contrary, until the earlier of (i) the Preferential Distribution Lapse
Date, or (ii) as to any Common Unit then constituting Pledged Interests,
the Exchange of such Common Unit to Common Stock, at which time the
definition of "Market Value" in Article I of this Pledge and Security
Agreement shall control, the Market Value of the Pledged Interests shall be
deemed to be (A) the amount determined in accordance with the definition of
"Market Value" in Article I of this Pledge and Security Agreement, minus
(B) an amount equal to such "Market Value" (determined in accordance with
Article (I) multiplied by the Discount, but in no event shall the result be
less than zero.
ARTICLE 5
CERTAIN RIGHTS OF PLEDGEE
SECTION 5.1 Pledgee Appointed Attorney-in-Fact. Pledgor hereby irrevocably
----------------------------------
appoints Pledgee as Pledgor's attorney-in-fact, coupled with an interest, with
full power of substitution, with full authority in the place and stead of
Pledgor and in the name of Pledgor or otherwise, after the occurrence and during
the continuance of an Event of Default, in Pledgee's discretion, to take any
action and to execute any instrument which Pledgee may reasonably deem necessary
or advisable to accomplish the purposes of this Pledge and Security Agreement,
including, without limitation:
(a) to ask, demand, collect, sue for, recover, receive and give
receipts for moneys due and to become due under or in respect of any of the
Collateral;
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<PAGE>
(b) to receive, endorse, and collect any drafts or other instruments,
documents and chattel paper, in connection with clause (a) above;
(c) to file any claims or commence, maintain or discontinue any
action or institute any proceedings which Pledgee may deem necessary or
desirable for the collection of any of the Collateral or otherwise to
enforce the rights of Pledgee with respect to any of the Collateral;
(d) to execute and deliver any instrument required to be executed and
delivered by Pledgor under Sections 4.3 and 4.6; and
(e) to do all other things necessary and proper by Pledgor to
protect, preserve, and permit Pledgee to realize upon, the Collateral, and
the other rights contemplated by the Pledge and Security Agreement.
SECTION 5.2 Pledgee Has No Duty. The powers conferred on Pledgee hereunder
-------------------
are solely to protect its interest in the Collateral and shall not impose any
duty on it to exercise any such powers. Pledgee shall have no duty as to any
Collateral or responsibility for (i) ascertaining or taking action with respect
to calls, conversions, exchanges, maturities, tenders or other matters relative
to any Pledged Interests, whether or not Pledgee has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps to preserve rights
against prior parties or any other rights pertaining to any Collateral. The
execution and delivery of this Pledge and Security Agreement and the Guaranty is
not intended to be, nor shall they be construed to be, the formation of a
partnership or joint venture between Pledgor and Pledgee.
ARTICLE 6
REMEDIES
SECTION 6.1 Certain Remedies. If any Event of Default shall have occurred
----------------
and be continuing Pledgee may exercise in respect of the Collateral, all rights
and remedies provided for herein or otherwise available to Pledgee, including
without limitation, all of the rights and remedies of a secured party on default
under the Code and also may, without notice except as specified below:
(a) sell such Collateral or any part thereof in one or more parcels
at public or private sale or broker's board, at any of Pledgee's offices or
elsewhere, for cash or other property, on credit or for future delivery,
and upon such other terms as may be commercially reasonable; Pledgor agrees
that Pledgee shall be entitled to bid for or purchase any or all of the
Collateral at any such sale; Pledgor agrees that, to the extent notice of
sale shall be required by law, at least ten (10) days' notice to Pledgor of
the time and place of any public sale or the time after which any private
sale is to be made shall constitute reasonable notification; Pledgee shall
not be obligated to make any sale of Collateral regardless of notice of
sale having been given; Pledgee may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such
sale may, without further notice, be made at the time and place to which it
was so adjourned;
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<PAGE>
(b) notify the parties obligated on any of such Collateral to make
payment to Pledgee of any amount due or to become due thereunder
(including, without limitation, any Distributions);
(c) enforce collection of any of such Collateral by suit or
otherwise;
(d) endorse any checks, drafts, or other writings in Pledgor's name
to allow collection of such Collateral;
(e) take control of any proceeds of such Collateral; and
(f) subject to Section 2.7(d), upon disposition of the Collateral as
provided in Section 6.1(a), execute (in the name, place and stead of
Pledgor) endorsements, assignments, stock powers and other instruments of
conveyance or transfer with respect to all or any of such Collateral.
SECTION 6.2 Securities Laws. If Pledgee shall determine, subject to Section
---------------
2.7(d), to exercise the right to sell all or any of the Collateral at any time
pursuant to Section 6.1, Pledgor agrees that, upon request of Pledgee, Pledgor
will, at its own expense:
(a) exercise its rights under the Registration Rights Agreement;
(b) use its best efforts to obtain all necessary governmental
approvals for the sale of the Collateral, as requested by Pledgee; and
(c) do or cause to be done all such other acts and things as may be
necessary to make such sale of the Collateral or any part thereof valid and
binding and in compliance with applicable law.
Pledgor acknowledges the impossibility of ascertaining the amount of damages
that would be suffered by Pledgee by reason of the failure by Pledgor to perform
any of the covenants contained in this Section and, consequently, agrees that,
if Pledgor shall fail to perform any of such covenants, at Pledgee's election,
Pledgee shall have the right to have each covenant of Pledgor in this Section
6.2 specifically enforced against Pledgor, and Pledgor waives and agrees not to
assert any defenses against an action for specific performance of such
covenants.
Pledgor further acknowledges that Pledgee may be compelled to resort to one
or more private sales to a restricted group of purchasers who shall be obliged
to agree, among other things, to acquire such Collateral for their own account,
for investment and not with a view to the distribution or resale thereof. If,
at any time of any sale of Collateral, which sale is then subject to the
applicable securities law, as from time to time amended (the "Securities Act"),
the same or any part thereof to be sold shall not, for any reason whatsoever, be
effectively registered under the Securities Act, Pledgee is hereby authorized to
sell such Collateral or such part thereof by private sale in any commercially
reasonable manner and under any commercially reasonable circumstances as Pledgee
may deem necessary or advisable in order that such sale may legally be effected
without registration. Pledgor acknowledges that private sales so made may be at
prices and on other terms less favorable to the seller than if such Collateral
were sold at public sales, and agrees that Pledgee shall not have an obligation
to delay the sale of any such Collateral for
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<PAGE>
the period of time necessary to permit the issuer of such Collateral, even if
such issuer would agree, to register such Collateral for public sale under the
Securities Act. Pledgor agrees that private sales made under the foregoing
circumstances shall not, because so made, be deemed to have been made in a
commercially unreasonable manner.
SECTION 6.3 Indemnity and Expenses. Pledgor hereby indemnifies and holds
----------------------
harmless Pledgee and Pledgee's officers, directors, employees, agents,
representatives, successors and assigns, from and against any and all claims,
losses, and liabilities growing out of or resulting from this Pledge and
Security Agreement (including, without limitation, enforcement of this Pledge
and Security Agreement, and any underwriting fees or expenses in connection with
registration or sale of Collateral), except for claims, losses, or liabilities
resulting from Pledgee's willful misconduct or gross negligence. Upon demand,
Pledgor will pay to Pledgee the amount of any and all expenses, including the
reasonable fees and disbursements of its counsel and of any experts and agents,
which Pledgee may incur in connection with:
(a) the enforcement of this Pledge and Security Agreement;
(b) the custody or preservation of, or the sale of, collection from,
or other realization upon, any of the Collateral;
(c) the exercise or enforcement of any of the rights of Pledgee
hereunder; or
(d) the failure by Pledgor to perform or observe any of the
provisions hereof.
SECTION 6.4 Application of Proceeds. Any and all amounts actually
-----------------------
received by Pledgee hereunder in respect of Collateral shall be applied in the
order set forth below (to the extent permitted by applicable law):
(a) first, to the payment of all costs, expenses, liabilities and
advances made or incurred by Pledgee in performing or enforcing any of the
provisions hereof or in protecting the liens of this Pledge and Security
Agreement or the security afforded hereby and to the payment of the fees
and other expenses, including, without limitation, reasonable attorney's
fees and disbursements, of Pledgee to the extent that they have not been
paid or reimbursed;
(b) second, to the extent proceeds remain after the application
pursuant to the preceding clause (a), an amount equal to the outstanding
Secured Obligations shall be paid to Pledgee; and
(c) third, to the extent proceeds remain after the application
pursuant to the preceding clauses (a) and (b), and the payment in full of
all Secured Obligations, to Pledgor, its successors or assigns, or such
other Person as may be entitled thereto by law or as a court of competent
jurisdiction may otherwise direct.
-19-
<PAGE>
ARTICLE 7
MISCELLANEOUS PROVISIONS
SECTION 7.1 Amendments. No amendment to or waiver of any provision of
----------
this Pledge and Security Agreement, nor consent to any departure by Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by Pledgee, and then such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which it is given.
SECTION 7.2 Protection of Collateral. Pledgee may from time to time, at
------------------------
its option, perform any act which Pledgor agrees hereunder to perform and which
Pledgor shall fail to perform within ten (10) Business Days after being
requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of an Event of
Default).
SECTION 7.3 Notices. Any notice or other communication required or
-------
permitted hereunder shall be (a) in writing and shall be deemed to have been
duly given (A) when received, if delivered in person, (B) five (5) days after
deposit in a regularly maintained receptacle of the United States mail as first
class mail, postage prepaid, (C) the Business Day after notice is sent for
overnight delivery by nationally recognized overnight courier service, or (D) on
the day on which the party to whom such notice is addressed refuses delivery by
mail or by nationally recognized courier service , and (b) addressed as follows:
To Pledgee: c/o Kemper Financial Services, Inc.
120 South LaSalle Street
13th Floor
Chicago, Illinois 60603
Attn: Real Estate Investment Group
With copies to: Kemper Corporation
Legal Department, C-3
One Kemper Drive
Long Grove, Illinois 60049
Attn: General Counsel
and
KFC Portfolio Corp.
c/o Kemper Financial Services, Inc.
120 South LaSalle Street
22nd Floor
Chicago, Illinois 60603
Attn: Legal Department
Real Estate Counsel
-20-
<PAGE>
To Pledgor: c/o The Prime Group, Inc.
77 West Wacker Drive
39th Floor
Chicago, Illinois 60601
Attention: Michael W. Reschke
With a copy to: The Prime Group, Inc.
77 West Wacker Drive
39th Floor
Chicago, Illinois 60601
Attention: Robert J. Rudnik
or to any such other address as any party hereto shall designate in a written
notice to the other parties hereto.
SECTION 7.4 Caption. Article and section captions used in this Pledge and
-------
Security Agreement are for convenience of reference only, and shall not affect
the construction of this Pledge and Security Agreement.
SECTION 7.5 Governing Law; Submission to Jurisdiction. This Pledge and
-----------------------------------------
Security Agreement shall be governed by, and construed in accordance with, the
laws of the State of Illinois without regard to principles of conflict of laws.
Pledgor and Pledgee hereby waive any plea of jurisdiction or venue as not being
a resident of Cook County, Illinois and hereby specifically authorize any action
brought upon this Pledge and Security Agreement to be instituted and prosecuted
in either the Circuit Court of Cook County, Illinois or in the United States
District Court for the Northern District of Illinois, at the election of the
party bringing the action. Pledgor and Pledgee hereby irrevocably authorize
service of process to be made upon it in the manner provided in Section 7.3
above, in any action which may be instituted against it arising out of or
relating to this Pledge and Security Agreement.
SECTION 7.6 WAIVER OF JURY TRIAL. PLEDGOR WAIVES, TO THE FULLEST EXTENT
--------------------
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM FILED BY ANY PARTY, RELATING DIRECTLY OR INDIRECTLY TO THIS PLEDGE
AND SECURITY AGREEMENT, THE GUARANTY OR THE SECURED OBLIGATIONS.
SECTION 7.7 Severability. Wherever possible each provision of this Pledge
------------
and Security Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Pledge and Security
Agreement shall be prohibited by or invalid under such law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Pledge and Security Agreement.
SECTION 7.8 Limited Recourse. Notwithstanding anything to the contrary
----------------
contained herein or in the Guaranty, except as otherwise provided in this
Section 7.8, neither Pledgor nor any of its shareholders, officers, directors,
partners, employees, agents or other representatives ("Other Persons") shall
have any personal liability for the Secured Obligations under this Pledge
-21-
<PAGE>
and Security Agreement, or for the obligation to observe, perform or discharge
any of the terms, covenants or conditions contained herein or in the Guaranty,
and, except as otherwise provided in this Section 7.8, (a) no attachment,
execution, writ or other process shall be sought and no judicial proceeding
shall be initiated by or on behalf of Pledgee against Pledgor or any Other
Person as a result of a breach or default under this Pledge and Security
Agreement or the Guaranty, except to the extent that such attachment, execution,
writ or judicial proceeding shall be necessary to enforce any of the rights,
remedies or recourses of Pledgee against or with reference to the Collateral,
and (b) in the event that an suit is brought hereunder or under the Guaranty,
any judgment obtained in or as a result of such suit shall be enforceable and/or
enforced solely against the Collateral; provided, however, that nothing herein
-------- -------
contained shall be construed to: (i) be a release or impairment of Pledgor's
obligations hereunder or under the Guaranty, (ii) prevent Pledgee from
exercising and enforcing, consistent with the provisions of this Section 7.8,
any other remedy allowed at law or in equity or by statute or by the terms
hereof or of the Guaranty or (iii) prevent Pledgee from recovering from Pledgor
(or any such Other Person), or limit Pledgee's recourse against Pledgor (or any
such Other Person) for, any funds, damages or costs (including, without
limitation, reasonable legal expenses) incurred by Pledgee as a result of any
willful act or omission in bad faith, any fraudulent act or omission, or any
breach of any of the following sections of this Pledge and Security Agreement:
Section 2.4, the first sentence of Section 4.2, Section 4.3(a), Section 4.4,
Section 4.5 and Section 4.7(ii). Nothing in this Section 7.8 shall be deemed to
increase the liability of any such Other Person beyond that which any such Other
Person may have under the partnership agreement of Pledgor or under law.
SECTION 7.9 Acknowledgement and Consent. Pledgor and Pledgee hereby
---------------------------
consent to the execution and delivery by the Partnership and the General Partner
of an acknowledgement and consent of and to this Pledge and Security Agreement
substantially in the form of Exhibit D attached hereto.
---------
SECTION 7.10 Credit Support/Enhancement. If Pledgee has provided credit
--------------------------
support/enhancement with respect to all or a part of the Loan, Pledgor agrees
that it is guaranteeing such Loan and pledging the Collateral (as herein
defined) for the benefit of Pledgee. Pledgor and Pledgee agree that
Distributions paid on or with respect to the Pledged interests and paid to
Pledgee under Section 2.4, and any proceeds of the Collateral received by
Pledgee, shall be paid and applied by Pledgee to the payment or reimbursement of
interest, and/or the payment of principal, as applicable, on such Loan in the
manner and to the extent provided in Section 2.4 and Section 6.4, and as
provided in Exhibit A, if applicable, notwithstanding that Pledgee may not be
---------
the holder of the Loan Documents.
[Signature Page Follows]
-22-
<PAGE>
IN WITNESS WHEREOF, Pledgor and Pledgee have duly executed and delivered this
Pledge and Security Agreement as of the day and year first above written.
PRIME GROUP II, L.P., an Illinois limited partnership
By: PGLP, Inc., an Illinois corporation
By: /s/ Michael W. Reschke
----------------------------------------
Name: Michael W. Reschke
--------------------------------------
Title: President
-------------------------------------
KEMPER INVESTORS LIFE INSURANCE COMPANY,
an Illinois insurance corporation
By: /s/ John E. Neal
------------------------------------------------
Name: John E. Neal
------------------------------------------------
Title: Authorized Signatory
-----------------------------------------------
-23-
<PAGE>
EXHIBIT A
---------
LAKE TRAVIS/1/
-----------
Project: The Island on Lake Travis
Lender: Kemper Investors Life Insurance Company ("KILICO").
KILICO has provided credit support/enhancement with
respect to the Loan.
Borrower: The Island on Lake Travis, Ltd., a Texas limited partnership
Prime (1) The Lake Travis Island, Ltd., a Texas limited partnership,
Partner(s): general partner (50%) [comprised of The Prime Group, Inc.,
general partner (94%) and Prime International, Inc. (6%),
limited partner] and (2) Prime International, Inc., limited
partner (50%)
Loan: The Loan made pursuant to the Loan Agreement between Capital
Health Facilities Development Corporation and Borrower dated
12/1/86 in connection with the $25,000,000 Capital Health
Facilities Development Corporation Health Facilities Develop-
ment Revenue Bonds (The Island on Lake Travis, Ltd. Project)
Series 1986
Guaranty/ Limited Recourse Guaranty [Lake Travis] by Prime Group II ,
Guarantor: L.P., an Illinois limited partnership, in favor of KELICO
Initial
Pledge
Amount: $8,723,000
Number of
Common Units
Pledged: 690,276
______________________
/1/ No reallocation pursuant to Section 2.7(c) permitted.
<PAGE>
EXHIBIT A-1
-----------
[See Attached]
<PAGE>
EXHIBIT A-1
1. DEVONSHIRE
----------
Project: The Devonshire Senior Housing Facility, Lisle, Illinois
Lender: Kemper Investors Life Insurance Company ("KILICO"). KILICO has
provided credit support/enhancement with respect to the Loan.
Borrower: The Ponds of Pembroke Limited Partnership, an Illinois limited
partnership
Prime
Partner(s): The Prime Group, Inc. (25%), general partner
Loan: Collectively: (1) the Loan made pursuant to the Amended and
Restated Loan Agreement between the Village of Lisle and Borrower
dated 12/1/87 in connection with the $27,000,000 Village of Lisle
Illinois, Multi-Family Housing Revenue Bonds (Ashley of Lisle
Project) and (2) the Loan made pursuant to the Loan Agreement
between the Village of Lisle, Illinois and Borrower dated 8/15/91
as amended and restated on 1/15/93 in connection with the
$6,000,000 Village of Lisle, Illinois Multi-Family Housing
Revenue Bonds series 1991 (Devonshire Lisle Project)
Guaranty/ Limited Recourse Guaranty [Devonshire] by Prime Group II, L.P.,
Guarantor: an Illinois limited partnership, in favor of KILICO
Initial
Pledge
Amount: $1,442,000
Number of
Common Units
Pledged: 114,110
<PAGE>
2. HUNTLEY /1/2/3/
-------
Project: Vacant land in Huntley, Illinois.
Lender: Kemper Investors Life Insurance Company ("KILICO")
Borrower: Huntley Development Limited Partnership, an Illinois limited
partnership ("HDLP") and American National Bank and Trust
Company of Chicago, not personally but as Trustee under
Trust No. 109743-01, of which HDLP is the sole beneficiary
("Trust").
Prime Partner(s): (1) Huntley Development Company (1%), general partner (owned
100% by Prime International, Inc. ("PI")) and (2) PI (99%),
limited partner
Loan: Collectively: (1) the Loan evidenced by the Amended and
Restated Promissory Note dated 11/30/92 of PI to KILICO in
the stated principal amount of $25,100,000, as amended from
time to time; (2) the Loan evidenced by the Promissory Note
dated 6/13/91 of Elite Financial, Inc. ("Elite") to KILICO,
as amended from time to time, the proceeds of which were
used by Elite to make a loan to Borrower pursuant to the
Promissory Note dated as of 6/13/91 in the original
principal amount of $7,800,000; (3) the Loan evidenced by
the Promissory Note of Elite to KILICO dated 5/31/91 in the
original principal amount of $2,279,750, which Promissory
Note was modified by an Allonge to Promissory Note dated
8/1/91 increasing the stated principal amount to $2,500,000,
as further amended or modified from time to time, the
proceeds of which were used by Elite to make a loan to
Borrower pursuant to a Promissory Note dated 5/31/91 in the
original principal amount of $2,279,750, which Promissory
Note was amended by an Allonge to Promissory Note dated
8/l/91 increasing the stated principal amount to $2,500,000;
and (4) the obligation of PI to purchase from KILICO a 50%
participation interest in those certain Tax Increment
Allocation Revenue Bonds (Huntley Redevelopment Project),
Series 1 through 32, pursuant to a Bond Participation
Agreement between KILICO and PI, dated as of March 22, 1994.
Guaranty/Guarantor: Limited Recourse Guaranty [Huntley] by Prime Group II, L.P.,
an Illinois limited partnership, in favor of KILICO
Initial Pledge
Amount: $8,858,000
Number of
Common Units
Pledged: 700,960
-2-
<PAGE>
3. LAKE TRAVIS /3/
-----------
Project: The Island on Lake Travis
Lender: Kemper Investors Life Insurance Company ("KILICO"). KILICO
has provided credit support/enhancement with resect to the
Loan.
Borrower: The Island on Lake Travis, Ltd., a Texas limited partnership
Prime Partner(s): (1) The Lake Travis Island, Ltd., a Texas limited
partnership, general partner (50%) [comprised of The Prime
Group, Inc., general partner (94%) and Prime International,
Inc. (6%), limited partner] and (2) Prime International,
Inc., limited partner (50%)
Loan: The Loan made pursuant to the Loan Agreement between Capital
Health Facilities Development Corporation and Borrower dated
12/1/86 in connection with the $25,000,000 Capital Health
Facilities Development Corporation Health Facilities
Development Revenue Bonds (The Island on Lake Travis, Ltd.
Project) Series 1986
Guaranty/ Limited Recourse Guaranty [Lake Travis] by Prime Group II,
Guarantor: L.P., an Illinois limited partnership, in favor of KILICO
Initial
Pledge
Amount: $8,723,000
Number of
Common Units
Pledged: 690,276
-3-
<PAGE>
4. NAPERVILLE
----------
Project: Vacant property in Naperville, Illinois
Lender: Kemper Investors Life Insurance Company ("KILICO") and
Federal Kemper Life Assurance Company ("FKLA"), jointly and
severally. KILICO has provided credit support/enhancement
with respect to the Shawmut Loan (defined below) and
KILICO/FKLA has made the Subordinate Loan (defined below).
Borrower: Route 59 Partners L.P., an Illinois limited partnership
Prime (1) The Prime Group, Inc. ("Prime") (5%), general partner,
Partner(s): and (2) Prime (35%), limited partner
Loan: Collectively: (1) the Loan evidenced by the Amended and
Restated Promissory Note of Borrower to Shawmut Bank
Connecticut, N.A. dated 12/30/93 in the original principal
amount of $15,500,000 (the "Shawmut Loan") and (2) the Loan
evidenced by the Promissory Note of Borrower to KILICO and
FKLA dated 12/30/92 in the original principal amount of
$1,500,000 (the "Subordinate Loan")
Guaranty/ Limited Recourse Guaranty [Naperville] by Prime Group II,
Guarantor: L.P., an Illinois limited partnership, in favor of KILICO
and FKLA
Initial
Pledge
Amount: $2,608,000
Number of
Common Units
Pledged: 206,379
-4-
<PAGE>
5. 300 N. LASALLE
--------------
Project: 320 N. LaSalle, Chicago, Illinois Parking Garage
Lender: Kemper Investors Life Insurance Company ("KILICO")
Borrower: 300 N. LaSalle Limited Partnership, an Illinois limited
partnership and American National Bank and Trust Company of
Chicago, not personally but as trustee under Trust Number
110024-09, of which 300 N. LaSalle Limited Partnership is
the sole beneficiary
Prime (1) Prime International, Inc. (99%), general partner and (2)
Partner(s): 300 North LaSalle, Inc. (1%), limited partner (owned 100% by
Michael W. Reschke)
Loan: Loan made pursuant to the Loan Agreement between Lender (as
assignee of Lumbermens Mutual Casualty Company) and Borrower
dated 2/8/90 in the original principal amount of $31,000,000
Guaranty/ Limited Recourse Guaranty [300 N. LaSalle] by Prime Group
Guarantor: II, L.P., an Illinois limited partnership, in favor of
KILICO
Initial
Pledge
Amount: $13,288,000
Number of
Common Units
Pledged: 1,051,519
-5-
<PAGE>
6. 150 N. RIVERSIDE /1/2/3/4/
----------------
Project: Vacant land in Chicago, Illinois
Lender: Lumbermens Mutual Casualty Company ("Lumbermens")
Borrower: 150 N. Riverside Venture, an Illinois general partnership
Prime Partner(s): Prime International, Inc. (90%), general partner
Loan: Loan made pursuant to the Loan Agreement between Lumbermens
and Borrower dated 10/17/88 in the original principal amount
of $12,400,000
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-6-
<PAGE>
7. EAST CHICAGO ENTERPRISE CENTER /5/
------------------------------
Project: Industrial warehouse facility in East Chicago, Illinois
Lender: Kemper Investors Life Insurance Company ("KILICO")
Borrower: (1) Enterprise Center I, L.P., an Illinois limited
partnership; (2) Enterprise Center II, L.P., an Illinois
limited partnership; (3) Enterprise Center III, L.P., an
Illinois limited partnership; (4) Enterprise Center IV,
L.P., an Illinois limited partnership
Prime Partner(s): For each Borrower, K-P Enterprise Centers Limited
Partnership (50%), general partner, which is comprised in
part by (1) K-P Enterprise Centers, Inc. (1%) (of which The
Prime Group, Inc. owns 50%), general partner and (2) Prime
Group Limited Partnership (49%), limited partner
Loan: Collectively, the Loans made pursuant: (1) those certain
industrial revenue bonds (Enterprise Center I, L.P.
Project), in the aggregate principal amount of $5,100,000,
issued by the Indiana Development Finance Authority (the
"Issuer"); (2) those certain industrial revenue bonds
(Enterprise Center II, L.P. Project), in the aggregate
principal amount of $5,300,000, issued by the Issuer; (3)
those certain industrial revenue bonds (Enterprise Center
III, L.P. Project), in the aggregate principal amount of
$4,500,000, issued by the Issuer; (4) those certain
industrial revenue bonds (Enterprise Center IV, L.P.
Project), in the aggregate principal amount of $3,000,000,
issued by the Issuer
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-7-
<PAGE>
8. HAMMOND ENTERPRISE CENTER/5/
-------------------------
Project: Industrial warehouse facility in Hammond, Indiana
Lender: Kemper Investors Life Insurance Company ("KILICO")
Borrower: (1) Enterprise Center V, L.P., an Illinois limited
partnership; and (2) Enterprise Center VI, L.P., an Illinois
limited partnership
Prime Partner(s): For each Borrower, K-P Enterprise Centers Limited
Partnership (50%), general partner, which is comprised in
part by (1) K-P Enterprise Centers, Inc. (1%) (of which The
Prime Group, Inc. owns 50%), general partner and (2) Prime
Group Limited Partnership (49%), limited partner
Loan: Collectively, the Loans made pursuant: (1) those certain
industrial revenue bonds (Enterprise Center V, L.P.
Project), in the aggregate principal amount of $5,700,000,
issued by the Issuer; and (2) those certain industrial
revenue bonds (Enterprise Center VI, L.P. Project), in the
aggregate principal amount of $5,000,000, issued by the
Issuer
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-8-
<PAGE>
9. ARLINGTON HEIGHTS ENTERPRISE CENTER/5/
-----------------------------------
Project: Industrial warehouse facility in Arlington Heights, Illinois
Lender: Kemper Investors Life Insurance Company ("KILICO")
Borrower: (1) Arlington Heights I, L.P., an Illinois limited
partnership; (2) Arlington Heights II, L.P., an Illinois
limited partnership; and (3) Arlington Heights III, L.P., an
Illinois limited partnership
Prime Partner(s): For each Borrower, K-P Enterprise Centers Limited
Partnership (50%), general partner, which is comprised in
part by (1) K-P Enterprise Centers, Inc. (1%) (of which The
Prime Group, Inc. owns 50%), general partner and (2) Prime
Group Limited Partnership (49%), limited partner
Loan: Collectively, the Loans made pursuant: (1) those certain
industrial revenue bonds (Arlington Heights I, L.P.
Project), in the aggregate principal amount of $4,500,000,
issued by the Village of Arlington Heights, Illinois (the
"Issuer"); (2) those certain industrial revenue bonds
(Arlington Heights II, L.P. Project), in the aggregate
principal amount of $4,800,000, issued by the Issuer; and
(3) those certain industrial revenue bonds (Arlington
Heights III, L.P. Project) , in the aggregate principal
amount of $4,900,000, issued by the Issuer
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-9-
<PAGE>
10. NORTHGATE /5/
---------
Project: Northgate Plaza, a retail shopping center in Addison,
Illinois
Lender: Kemper Investors Life Insurance Company ("KILICO")
Borrower: Prime 53 North Partners, an Illinois [limited] partnership
("Prime 53") and American National Bank and Trust Company of
Chicago, not personally but as Trustee under Trust Nos.
110340-06, 11206-09 and 11205-00, of which Prime 53 is the
sole beneficiary ("Trust")
Prime Partner(s): The Prime Group, Inc. (50%), general partner
Loan: Loan evidenced by the Amended and Restated Promissory Note
dated 3/22/94 of Borrower to KILICO in the original
principal amount of $5,559,173
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-10-
<PAGE>
11. TRIAD SUPERIOR EQUITY ADVANCE /5/
-----------------------------
Project: Eight industrial revenue bond projects located in the state
of Tennessee
Lender: Kemper Investors Life Insurance Company ("KILICO")
Borrower: Triad Development Company, an Illinois limited partnership
Prime Partner(s): (1) Prime of Tennessee, Inc. (1%), general partner; (2) The
Prime Group, Inc. (1%), limited partner; and (3) PGC
Development, Ltd. (48%), limited partner
Loan: "Triad Superior Equity" as defined in Section 3.3 of the
Second Amended and Restated Agreement of Limited Partnership
of Borrower
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
-11-
<PAGE>
12. TRIAD NON-ASSET BONDS/5/
---------------------
Project: (1) Mabry Partners, Ltd.; (2) Middlebrook Properties, Ltd.;
and (3) Watkins Partners, Ltd.
Lender: Kemper Investors Life Insurance Company ("KILICO")
Borrower: (1) Mabry Partners, Ltd.; (2) Middlebrook Properties, Ltd.;
and (3) Watkins Partners, Ltd.
Prime Partner(s): For each Borrower: Triad Development Company (50%), a
general partner, comprised in part by (1) Prime of
Tennessee, Inc. (1%), general partner; (2) The Prime Group,
Inc. (1%), limited partner; and (3) PGC Development, Ltd.
(48%), limited partner
Loan: Collectively: (1) those certain $6,000,000 Floating Rate
Monthly Demand Industrial Development Revenue Bonds (Mabry
Partners, Ltd., Project) issued by The Industrial
Development Board of the County of Knox, Tennessee (the
"Issuer"); (2) those certain $4,500,000 Floating Rate
Monthly Demand Industrial Development Revenue Bonds
(Middlebrook Properties, Ltd., Project) issued by the
Issuer; (3) those certain $5,100,000 Floating Rate Monthly
Demand Industrial Development Revenue Bonds (Watkins
Partners, Ltd., Project) issued by the Issuer
Initial
Pledge
Amount: $0
Number of
Common Units
Pledged: 0
/1/ Any Dilution of Common Units shall be allocated, on a pro rata basis in
accordance with the respective number of Common Units, among the projects listed
on this Exhibit A-1 other than those under the headings "Huntley" and "150 N.
Riverside" as provided in Exhibit C hereto, until such time as the Pledge Amount
for all such projects shall be $0, at which time the Dilution shall be allocated
to the project listed under the heading "Huntley", until such time as the Pledge
Amount for the project listed under the heading "Huntley" shall be $0, at which
time the Dilution shall be allocated to the project listed under the heading
"150 N. Riverside".
/2/ No reallocation pursuant to Section 2.7(b) permitted.
/3/ No reallocation pursuant to Section 2.7(c) permitted.
/4/ Limited Recourse Guaranty and Pledge and Security Agreement will be
executed and delivered by Prime Group II, L.P. to Kemper Investors Life
Insurance Company, in the event of reallocation under Section 2.7(b) to
"150 N. Riverside." The maximum reallocation to "150 N. Riverside" pursuant
to Section 2.7(b) shall be $3,351,000.
-12-
<PAGE>
/5/ Limited Recourse Guaranty and Pledge and Security Agreement will be
executed and delivered by Prime Group II, L.P. to Kemper Investors Life
Insurance Company, in the event of reallocation under Section 2.7(c) to
"East Chicago Enterprise Center", "Hammond Enterprise Center", "Arlington
Heights Enterprise Center", "Northgate", "Triad Superior Equity Advance",
or "Triad Non-Asset Bonds", as the case may be.
-13-
<PAGE>
EXHIBIT B
[See Schedule 1 Attached]
<PAGE>
SCHEDULE 1
----------
A. Definitions Applicable to Representations, Warranties Covenants:
---------------------------------------------------------------
Definitions. The following definitions shall apply to words and
-----------
phrases used in this Schedule I and the document to which this Schedule is
attached.
Affiliate means, as to any Person, any other Person which
---------
directly or indirectly controls, or is under common control with, or
its controlled by, such Person. As used in this definition, "control"
(including, with its correlative meanings, "controlled by" and "under
common control with") means possession, directly or indirectly, of
power to direct or cause the direction of management or policies
(whether through ownership of securities, or partnership or other
ownership interests, by contract or otherwise).
Beneficiary means, individually and collectively, the benefited
-----------
party(ies) under the document to which this Schedule 1 is attached.
Company means Prime Group II, L.P., an Illinois limited
-------
partnership.
Company General Partner means PGLP, Inc., an Illinois
-----------------------
corporation.
Material Adverse Effect means (a) any adverse effect on the
-----------------------
ability of the Company to grant to Pledgee or to keep pledged to
Pledgee a perfected first lien security interest in and to the
Collateral or (b) any material adverse effect on the ability of the
Company to perform its obligations (other than those described in
clause (a) above) under the Transaction Documents.
Person means an individual, partnership, corporation, trust,
------
unincorporated organization, or other entity, or a government or
agency or political subdivision thereof.
Transactions means the transactions contemplated by the document
------------
to which this Schedule 1 is attached.
Transaction Documents means (a) the document to which this
---------------------
Schedule 1 is attached, (b) any document or instrument which secures
or is secured by the document to which this Schedule 1 is attached and
(c) any other document or instrument evidencing or securing the
obligations under a document described in clause (a) or (b) above, in
each case, as such document or instrument may be modified or amended
from time to time.
B. Representations and Warranties:
------------------------------
The Company hereby represents and warrants to Beneficiary that the
following statements are true, correct and complete:
<PAGE>
1. Organization: Power.
-------------------
(a) The Company (i) is a limited partnership duly organized,
validly existing and in good standing under the laws of the state of its
formation, (ii) is duly qualified to do business as a foreign limited
partnership under the laws of each jurisdiction in which the laws of such
jurisdiction so permit or require it to be qualified and in which the
nature of its business requires it to be so qualified (except where failure
to do so would not reasonably be expected to have a Material Adverse
Effect), and (iii) has all requisite power and authority to own, operate
and encumber its property and assets and conducts its business
substantially as presently conducted and proposed to be conducted in
connection with and following the consummation of the Transactions.
(b) The Company General Partner (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
state of its incorporation, (ii) is duly qualified to do business as a
foreign corporation and is in good standing under the laws of each
jurisdiction in which the nature of its business requires it to be so
qualified (except where the failure to be so qualified would not reasonably
be expected to have a Material Adverse Effect), and (iii) has all requisite
corporate power and authority to own, operate and encumber its property and
assets and conduct its business substantially as presently conducted and as
proposed to be conducted in connection with and following the consummation
of the Transactions.
2. Authority: Enforceability. (i) Each of the Company and the
-------------------------
Company General Partner (on behalf of the Company) has the requisite power
and authority (A) to execute, deliver and perform each of the Transaction
Documents to which the Company is a party, and (B) to file the Transaction
Documents filed by the Company, or to be filed by the Company, with the
appropriate governmental authorities; (ii) the execution, delivery and
performance (or filing, as the case may be) of each of the Transaction
Documents to which the Company is a party, and the consummation of the
Transactions, have been duly approved by the Company and the Board of
Directors of the Company General Partner, and no other partnership or
corporate proceedings on the part of the Company or the Company General
Partner which have not been completed are necessary to consummate such
Transactions; (iii) each of the Transaction Documents to which the Company
is a party has been duly executed and delivered (or filed, as the case may
be) by the Company and by the Company General Partner on behalf of the
Company and constitutes the legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms, is
in full force and effect, and no term or condition thereof has been
amended, modified or waived, without the prior written consent of the
Beneficiary, and (iv) the Company has performed and complied in all
material respects with all the terms, provisions, agreements and conditions
set forth in the Transaction Documents and required to be performed or
complied with by it on or before the date as of which this representation
is made, and no default by the Company, to the best knowledge of the
Company, exists thereunder.
3. No Conflict. The execution, delivery and performance by each of
-----------
the Company and by the Company General Partner (on behalf of the Company)
of each Transaction Document to which the Company is a party do not and
will not (i) conflict
-2-
<PAGE>
with or violate the Company's partnership agreement or the Company General
Partner's Articles or Certificate of Incorporation or other charter
documents or By-laws, or other organizational documents, as the case may
be, (ii) contravene or conflict with any statute, rule, or regulation, in
each case in effect on the date as of which this representation is made,
(iii) contravene or conflict with, result in any breach of, or constitute a
default under, any agreement or instrument binding on the Company or the
Company General Partner, (iv) result in or require the creation or
imposition of any lien whatsoever upon any of the properties or assets of
the Company (other than the liens arising pursuant to the Transaction
Documents), or (v) require any approval of stockholders or any approval or
consent of any person or entity under any agreement or instrument binding
on the Company or the Company General Partner, that has not been obtained,
which, in any case described in clauses (ii) through (v) of this paragraph
3 would reasonably be expected to result in a Material Adverse Effect.
4. Governmental Consents. The Transactions, and the execution,
---------------------
delivery and, to the best of the Company's knowledge, performance by the
Company and the execution and delivery by the Company General Partner (on
behalf of the Company) of each of the Transaction Documents to which it is
a party, do not and will not require any registration with, consent or
approval of, or notice to, or other action to, with or by any governmental
authority which has not been obtained or made and which, if not obtained or
made, would reasonably be expected to result in a Material Adverse Effect,
except for filings of the Transaction Documents (or notice thereof) with
appropriate governmental offices necessary (i) to perfect any liens or
security interests granted under the Transaction Documents or (ii) in
connection with any transfer of Collateral following enforcement of any
such liens or security interests.
5. Litigation; Adverse Effects.
---------------------------
(i) There is no action, suit, proceeding or arbitration, at law
or in equity or before any governmental authority, nor to the best
knowledge of the Company is there any governmental investigation, in each
case pending, or, to the best knowledge of the Company, threatened, against
the Company or the Company General Partner, or any property of the Company
or the Company General Partner, which relates to the Transactions or the
Transaction Documents and which would reasonably be expected to result in a
Material Adverse Effect.
(ii) Neither the Company nor the Company General Partner is (A)
in violation of any applicable law, rule or regulation, which violation
would reasonably be expected to result in a Material Adverse Effect, or (B)
subject to or in default with respect to any final judgment, writ, order,
injunction or decree of any court or governmental authority.
(iii) Each of the Company and the Company General Partner has
obtained all licenses, permits, franchises and other governmental
authorizations necessary for the ownership of its property or for the
conduct of its business, the failure to obtain or violation of which would
reasonably be expected to result in a Material Adverse Effect.
-3-
<PAGE>
6. No Defaults. The Company is not in default in the performance,
-----------
observance or fulfillment of any of the obligations, covenants or
conditions contained in any agreement or instrument binding on the Company
relating to any borrowing, loan or credit arrangement, and no condition
exists which, with the giving of notice or the lapse of time or both, would
constitute a default thereunder, other than defaults that, in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect.
7. Solvency. After due inquiry, and taking into account the
--------
Transactions, each of the Company's and the Company General Partner's
assets exceed its liabilities. Each of the Company and the Company General
Partner is, and, to the best of the Company's knowledge, from and after the
date hereof each of the Company and the Company General Partner will be,
able to pay its debts when the same become due. Neither the Company nor
the Company General Partner has (i) made a general assignment for the
benefit of its creditors, (ii) admitted in writing its inability to pay its
debts as they mature, or (iii) been subjected to an attachment, execution
or other judicial seizure of a substantial portion of its property which
remains in effect. There is not pending any case, proceeding or other
action seeking reorganization, arrangement, adjustment, liquidation,
dissolution or recomposition of the Company or the Company General Partner
or any of its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors or seeking appointment of a receiver,
trustee, custodian or any similar official for its or for all or
substantially all of its property.
C. Reporting Covenants:
-------------------
The Company covenants and agrees that, so long as the Company shall
have any liability or obligation outstanding under any of the Transaction
Documents, unless Beneficiary shall otherwise give prior written consent
thereto:
1. Financial Statements. The Company shall maintain or cause to be
--------------------
maintained, a system of accounting established and administered in
accordance with sound business practices and consistent with past practices
to permit preparation of financial statements in conformity with GAAP, and
each of the financial statements described below shall be prepared from
such system and records. The Company shall deliver or cause to be
delivered to the Lender:
(a) As soon as practicable, and in any event within sixty (60)
days after the end of each calendar quarter, the balance sheet of the
Company as at the end of such quarter and related statements of
operations and retained earnings and changes in financial position for
such quarter, setting forth in each case in comparative form the
figures for the corresponding period of the previous fiscal year, all
in reasonable detail and certified by the chief financial officer,
treasurer or assistant treasurer of the Company General Partner that
they fairly present the financial condition of the Company as at the
dates indicated and the results of operations for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustment;
-4-
<PAGE>
(b) As soon as practicable, and in any event within one hundred
twenty (120) days after the end of each fiscal year (i.e. the twelve
months ending December 31), the audited balance sheet of the Company
as at the end of such - fiscal year and the related audited statements
of operations and retained earnings and changes in financial position
for such fiscal year, setting forth in each case in comparative form
the figures for the Company for the previous fiscal year, all in
reasonable detail and reported by firm of reputable independent public
accountants.
2. Notification of Defaults. The Company, upon acquiring knowledge
------------------------
thereof, shall promptly notify Lender of any event of default, or any event
which with the giving of notice or lapse of time, or both, would constitute
an event of default, under the Transaction Documents, and describing the
action the Company proposes to take with respect thereto.
3. Other Information. Upon the request of Beneficiary made from time
-----------------
to time, the Company shall furnish to Beneficiary such information as may
be prepared by the Company or the Company General Partner in writing in the
ordinary course of its business respecting the Company's or the Company
General Partner's business or condition (financial or otherwise),
operations, performance, properties or prospects. Beneficiary shall treat
any non-public information so obtained as confidential.
D. Affirmative Covenants:
---------------------
The Company covenants and agrees that, so long as the Company shall have
any liability or obligation outstanding under any of the Transaction Documents,
unless Beneficiary shall otherwise give prior written consent thereto:
1. Existence. The Company shall maintain its existence as a
---------
limited partnership in good standing under the laws of the state of its
formation and maintain its qualification to do business in each
jurisdiction in which the laws of such jurisdiction so permit or require it
to be qualified and in which the character of the properties owned or
leased by it therein or in which the transaction of its business is such
that the failure to qualify would reasonably be expected to result in a
Material Adverse Effect. The Company shall cause the Company General
Partner to maintain its existence as a corporation in good standing under
the laws of the state of its incorporation and maintain its qualification
to do business in each jurisdiction in which the character of the
properties owned or leased by it therein or in which the transaction of its
business is such that the failure to qualify would reasonably be expected
to result in a Material Adverse Effect. The foregoing shall not prohibit
the Company or the Company General Partner from merging with or into a
corporation or other entity organized under the laws of any state within
the United States (in which event, from and after the effective date of
such merger, all references herein to the Company or the Company General
Partner, as the case may be, shall be deemed to refer to such successor
entity); provided, however, that (a) any such successor entity to the
-------
Company assumes in writing all of the obligations and liabilities of the
Company under the Transaction Documents and (b) before and after giving
effect to such merger, there shall not exist any event of default, or any
event
-5-
<PAGE>
which, with the giving of notice or lapse of time or both, would constitute
an event of default, under any of the Transaction Documents.
2. Taxes. The Company shall pay and discharge, or cause to be
-----
paid and discharged, all taxes, assessments and governmental charges upon
it, its income and its properties, or upon the Company General Partner or
the Company General Partner's income and properties, prior to the date on
which penalties are attached thereto, unless and to the extent only that
(a) failure to pay any such taxes, assessments or governmental charges
would not reasonably be expected to result in a Material Adverse Effect, or
(b) (i) such taxes, assessments and governmental charges shall be contested
in good faith and by appropriate proceedings by the Company or the Company
General Partner, as the case may be, after the Company or the Company
General Partner, as the case may be, has established a reasonable reserve
on its books for such item, and (ii) the pendency of such contest will not
result in any impairment of any lien and security interest granted by the
Company or the Company General Partner in favor of Beneficiary.
3. Compliance with Laws, Etc. The Company shall comply with,
-------------------------
and cause the Company General Partner to comply with, all applicable
statutes, rules, regulations, orders and restrictions of any and all
governmental instrumentalities or agencies thereof having jurisdiction over
the conduct of the business or the ownership of the properties of the
Company or the Company General Partner, as the case may be (except for any
non-compliance therewith which would not reasonably be expected to result
in a Material Adverse Effect), unless and only to the extent that the
application of such statutes, rules, regulations, orders and restrictions
shall be contested in good faith and by appropriate proceedings by the
Company or the Company General Partner, as the case may be, in such a
manner that any enforcement action or any liability resulting from such
non-compliance shall be stayed or held in abeyance pending the outcome of
such contest.
-6-
<PAGE>
EXHIBIT C
---------
Allocation of Dilution Amount
-----------------------------
In the event of a Dilution under the Partnership Agreement that is
allocated, in whole or in part, to Pledgor pursuant to the Sharing Agreement,
the Common Units then constituting a part of the Pledged Interests shall be
adjusted as follows:
a.* Multiply the Dilution Amount allocated to Pledgor pursuant to the
Partnership Agreement and the Sharing Agreement by the following fraction:
Number of Common Units Pledged for this Pledge
----------------------------------------------
Total number of Common Units Owned by Pledgor
(excluding Common Units pledged to secure Kepro S.A.,
Huntley and 150 N. Riverside loans)
b. Divide the number resulting from (a) by the Market Value of one
Common Unit as of the date of the Dilution.
c. Subtract the number obtained in (b) from the number of Common
Units then constituting Pledged Interests under the Pledge. The result is
the adjusted number of Common Units constituting Pledged Interests under
the Pledge.
*The number resulting from (a) is subtracted from the Pledge Amount in effect
prior to the Dilution to determine the new Pledge Amount.
<PAGE>
EXHIBIT D
---------
ACKNOWLEDGEMENT AND CONSENT
---------------------------
Reference is hereby made to the Pledge and Security Agreement [Lake Travis]
dated as of March 22, 1994 (the "Pledge and Security Agreement") by Prime Group
II, L.P. in favor of Kemper Investors Life Insurance Company. Each capitalized
term used herein shall have the meaning assigned thereto in the Pledge and
Security Agreement.
Notwithstanding anything in the By-laws of the General Partner to the
contrary, Prime Retail, L.P., a Delaware limited partnership (the
"Partnership"), and Prime Retail, Inc., a Maryland corporation (the "General
Partner"), hereby acknowledge receipt of a copy of the Pledge and Security
Agreement and consent to Pledgor's pledge of the Pledged Interests pursuant to
the terms thereof Notwithstanding anything in the By-laws of the General Partner
to the contrary, the Partnership and the General Partner further acknowledge and
agree (i) to recognize and consent to the pledge of all future rights and
interests in the Pledged Interests, Distributions or other Collateral to which
Pledgee may be entitled under the Pledge and Security Agreement, (ii) that, as
of the date hereof, there are, to their knowledge, no existing defaults by
Pledgor under the Partnership Agreement with respect to any of the Pledged
Interests, (iii) that, without Pledgee's consent in its sole discretion, no
further transfer or encumbrance by Pledgor of the Pledged Interests, rights to
Distributions related thereto or other Collateral will be consented to or
recognized by the Partnership and the General Partner (except in the event of a
Dilution), and (iv) in the event that either of the Partnership and the General
Partner receives written notice from Pledgee of the occurrence and continuation
of an Event of Default under the Pledge and Security Agreement and of Pledgee's
election to exercise its remedies thereunder with respect to such Event of
Default, the recipient of any such notice from Pledgee shall promptly notify
Pledgor of its receipt thereof (provided that the failure by the Partnership and
the General Partner to give Pledgor such notice shall not (x) impair, alter or
otherwise affect Pledgee's rights or remedies, or the exercise thereof, with
respect to such Event of Default or (y) create any liability on the part of the
Partnership or General Partner solely by reason of such failure (it being
understood that such clause (y) does not relive them of their obligations under
clause (A) and (B) below)), and so long as the Partnership and the General
Partner shall not have received a written objection from the Pledgor within five
(5) Business Days of receipt of such written notice from the Pledgee, the
Partnership and the General Partner will (A) consent to, and take such action as
may be reasonably necessary or appropriate to effect, the substitution of record
ownership of Pledgee for Pledgor on the Partnership's and the General Partner's
records, if Pledgee is entitled to be substituted for Pledgor following any
foreclosure upon the Pledged Interests pursuant to Section 6.1 of the Pledge and
Security Agreement, and (B) pay Distributions, and issue Common Stock, directly
to Pledgee, in accordance with the terms of the Pledge and Security Agreement.
[Signature Page Follows]
<PAGE>
PRIME RETAIL, L.P., a Delaware limited partnership
By: Prime Retail, Inc. a Maryland
corporation, its general partner
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
PRIME RETAIL, INC., a Maryland corporation
By:____________________________________________________
Name:__________________________________________________
Title:_________________________________________________
The undersigned, being the Pledgor and Pledgee under the above-referenced
Pledge and Security Agreement, hereby consent to the execution and delivery by
the Partnership and the General Partner of the foregoing Acknowledgement and
Consent and agree with the provisions thereof.
Dated: March 22, 1994
PRIME GROUP II, L.P., an Illinois limited partnership
By: PGLP, Inc., an Illinois corporation
By:_______________________________________________
Name:_____________________________________________
Title:____________________________________________
KEMPER INVESTORS LIFE INSURANCE
COMPANY, an Illinois insurance corporation
By:____________________________________________________
Name:__________________________________________________
Title:_________________________________________________
-2-
<PAGE>
EXHIBIT 99.11
LIMITED RECOURSE GUARANTY [LAKE TRAVIS]
---------------------------------------
THIS LIMITED RECOURSE GUARANTY (this "Guaranty") is made as of the
22nd, day of March, 1994 by Prime Group II, L.P., an Illinois limited
partnership ("Guarantor" or "Company"), in favor of Kemper Investors Life
Insurance Company, an Illinois insurance corporation ("Lender").
RECITALS
--------
WHEREAS, The Prime Group, Inc. ("Prime") and Kemper Corporation, a
Delaware corporation ("Kemper"), acting on behalf of themselves and their
respective affiliates, are parties to that certain letter agreement dated August
25, 1993 and amended and restated as of February 17, 1994 (the "Letter
Agreement"), wherein Kemper and Prime agreed to modify certain of their existing
lending relationships;
WHEREAS, Guarantor is an Affiliate of Prime; and Lender is a direct or
indirect subsidiary of Kemper;
WHEREAS, Lender has made or provided credit support/enhancement for
loans to certain Affiliates of Guarantor, which loans are guaranteed by certain
of Guarantor's Affiliates pursuant to written guaranties (the "Existing
Guaranties");
WHEREAS, in order to induce Lender to release the Existing Guaranties,
concurrently herewith, Guarantor has agreed, among other things, to execute and
deliver this Guaranty with respect to the loan (such loan, as extended, modified
or restated from time to time, being referred to herein as the "Loan") described
on Exhibit A, to the borrower (such borrower, and its successors and assigns
---------
being referred to herein as "Borrower") described on Exhibit A, which Lender has
---------
made or with respect to which Lender has provided credit support/enhancement;
WHEREAS, the transactions contemplated by the Letter Agreement include
the execution and delivery of this Guaranty executed by Guarantor in favor of
Lender; and
WHEREAS, this Guaranty is secured by that certain Pledge and Security
Agreement dated as of even date herewith by Guarantor in favor of Lender, (as
amended from time to time, the "Pledge Agreement").
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Guarantor hereby agrees as follows:
1. Guaranty.
--------
(a) Guarantor hereby absolutely and unconditionally guarantees the
punctual payment when due, whether at stated maturity, by acceleration or
otherwise, without set-off, counterclaim or other reduction whatsoever, of (i)
the aggregate outstanding unpaid principal amount of the Loan, (ii) all accrued
and unpaid interest on the principal amount of the Loan, and (iii) all other
amounts due under the Loan from time to time or under any documents and
<PAGE>
instruments executed and delivered or assigned to Lender in order to evidence
the Loan or evidence or perfect a lien or security interest in collateral for
the Loan (the "Collateral Documents"), and any and all extensions, renewals or
modifications of any of the foregoing (such principal, interest and other
amounts are hereinafter referred to collectively as the "Obligations"). In
addition, if Guarantor shall fail to pay any amount due hereunder upon demand in
accordance with the terms hereof Guarantor shall pay any and all fees, costs and
expenses (including reasonable attorneys' fees) incurred by Lender to third
parties, whether litigation is involved or not, and if involved, whether at the
trial or appellate levels or in pre-or post-judgment or bankruptcy proceedings,
in enforcing the obligations of Guarantor hereunder or realizing upon any
collateral securing this Guaranty (all of the foregoing fees, costs and expenses
are referred to herein collectively as the "Guaranteed Expenses"). The
Obligations and any instrument, document or agreement, express or implied, which
has been or may hereafter be made or entered into by Guarantor, Borrower or any
other person or entity in reference to the Obligations (including, without
limitation, the Collateral Documents and the Pledge Agreement, as hereinafter
defined) shall all be hereinafter collectively referred to as the "Terms".
(b) For purposes hereof, the following terms shall have the following
respective meanings:
"Business Day" shall mean any day of the week other than Saturday,
Sunday or any other day on which banks are generally closed within the City
of Chicago, Illinois.
"Pledge Amount" has the meaning set forth in the Pledge Agreement.
(c) Notwithstanding anything to the contrary in Section 1(a),
Guarantor's maximum liability under this Guaranty shall not exceed an amount
equal to the sum of (i) the Pledge Amount, from time to time, plus (ii) the
amount of any Guaranteed Expenses incurred by Lender.
2. Limited Recourse. Notwithstanding anything to the contrary
----------------
contained herein or in the Pledge Agreement, except as otherwise provided in
this Section 2, neither Guarantor nor any of its shareholders, officers,
directors, partners, employees, agents or other representatives ("Other
Persons") shall have any personal liability for the Obligations or the
Guaranteed Expenses under this Guaranty, or for the obligation to observe,
perform or discharge any of the terms, covenants or conditions contained herein
or in the Pledge Agreement, and, except as otherwise provided in this Section 2,
(a) no attachment, execution, writ or other process shall be sought and no
judicial proceeding shall be initiated by or on behalf of Lender against
Guarantor or any Other Person as a result of a breach or default under this
Guaranty or the Pledge Agreement, except to the extent that such attachment,
execution, writ or judicial proceeding shall be necessary to enforce any of the
rights, remedies or recourses of Lender against or with reference to the
Collateral (as defined in the Pledge Agreement), and (b) in the event that any
suit is brought hereunder or under the Pledge Agreement, any judgment obtained
in or as a result of such suit shall be enforceable and/or enforced solely
against the Collateral; provided, however, that nothing herein contained shall
-------- -------
be construed to: (i) be a release or impairment of Guarantor's obligations
hereunder or under the Pledge Agreement, (ii) prevent Lender from exercising and
enforcing, consistent with the provisions of this Section 2, any other remedy
allowed at law or in equity or by statute or by the terms hereof or the Pledge
Agreement
2
<PAGE>
or (iii) prevent Lender from recovering from Guarantor (or any such Other
Person), or limit Lender's recourse against Guarantor (or any such Other Person)
for, any funds, damages or costs (including, without limitation, reasonable
legal expenses) incurred by Lender as a result of any willful act or omission in
bad faith, any fraudulent act or omission or any breach of any of the following
sections of the Pledge Agreement: Section 2.4, the first sentence of Section
4.2, Section 4.3(a), Section 4.4, Section 4.5 and Section 4.7(ii). Nothing in
this Paragraph 2 shall be deemed to increase the liability of any such Other
Person beyond that which any such Other Person may have under the partnership
agreement of Guarantor or under law.
3. Guaranty Absolute. Guarantor guarantees that the Obligations and
-----------------
the Guaranteed Expenses will be paid in accordance with the terms and provisions
of this Guaranty and, to the maximum extent permitted by law, Guarantor waives
any law, regulation, order or judgment now or hereafter in effect in any
jurisdiction affecting the obligations of Guarantor or the rights of Lender with
respect thereto. This Guaranty, and the liability of Guarantor under this
Guaranty (which liability is subject to Sections 1(c) and 2 hereof), shall
continue and be absolute and unconditional and remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of any of the Terms;
(b) any change in the time, manner or place of payment of, or in
any other term, including the applicable rate of interest, of, all or
any of the Terms, or any other renewal, extension, amendment,
modification or waiver of or any consent to departure from any of the
Terms;
(c) any act or omission of Lender (or other holder of the
Collateral Documents) of any nature whatsoever;
(d) with respect to Guarantor, Borrower or any other person or
entity, (i) any failure to obtain required authorization by all
necessary corporate, partnership or other action relating to the
incurrence of the Obligations or to the execution, delivery or
performance of any of the Terms, or (ii) any violation of any
provision of any of the articles of incorporation, by-laws,
partnership agreement or any other document, instrument or agreement
occasioned by the incurrence of the Terms, by the execution, delivery,
or performance of any of the Terms, or by any failure of same to have
been duly authorized by all necessary corporate or other action;
(e) any amendment, waiver, modification, extension or renewal of
or consent to departure from or forbearance of any other action or
inaction under or in respect of this Guaranty or any other of the
Terms;
(f) any exchange, release, forbearance or surrender of or any
other action or inaction with respect to any collateral (including,
without limitation, the Collateral other than a release of all of the
Collateral which results in a termination of this Guaranty under
Section 8(a) below) at any time and from time to time now or hereafter
securing any or all of the Obligations or Terms (including, without
limitation, any reallocation of collateral effected by or on
3
<PAGE>
behalf of Lender (or its affiliate) pursuant to the Pledge Agreement)
or the liability of Guarantor, Borrower or any other person or entity
in respect of all or any of the Terms or any failure to perfect or
continue as perfected any security interest or other lien with respect
to any such collateral, or any loss or destruction of any such
collateral, or any matter impairing the value of such collateral as
security for all or any of the Terms, the liability of Guarantor,
Borrower or any other person or entity, in respect of all or any of
the Obligations or Terms;
(g) any other guaranty now or hereafter executed by Guarantor or
anyone else or any recovery under any such other guaranty;
(h) any waiver of or assertion or enforcement or failure or
refusal to assert or enforce, in whole or in part, any of the terms
and provisions of the Terms, or any claim, cause of action, right or
remedy which Lender may, at any time, have under this Guaranty, the
Pledge Agreement or any of the other Collateral Documents or with
respect to any guaranty or any security which may be held by Lender
(or other holder of the Collateral Documents) with respect to the
Loan;
(i) the failure to give Guarantor any notice whatsoever, other
than any notice which Lender is expressly required to give pursuant to
any provisions of this Guaranty;
(j) exculpatory provisions in any of the Collateral Documents
limiting Lender's recourse to property encumbered by the Loan
Documents or to any other security or limiting Lender's rights to
enforce a deficiency judgment against Borrower;
(k) any sale, assignment, conveyance, merger or other transfer,
voluntary or involuntary (whether by operation of law or otherwise),
of all or any part of Borrower's interest in any property securing the
Loan or the occurrence of any such sale, assignment, conveyance,
merger or other voluntary or involuntary transfer which results in
Guarantor becoming the Borrower under the Collateral Documents,
provided, however, that any such sale, assignment, conveyance, merger
or other transfer shall be subject to the limitations set forth in the
Collateral Documents;
(l) any sale, assignment, conveyance, merger or other transfer,
voluntary or involuntary (whether by operation of law or otherwise),
of all or any part of the interest of Lender (or other holder of the
Collateral Documents) in the Collateral Documents or this Guaranty;
(m) any failure to properly record or file any of the Collateral
Documents, or to otherwise perfect, protect, secure or insure any
security interest or lien given as security for the Loan;
4
<PAGE>
(n) any recovery as a result of the exercise by Lender (or other
holder of the Collateral Documents) of any of its rights or remedies
under the Collateral Documents, including any foreclosure thereof; or
(o) any other fact, circumstance or matter of any nature
whatsoever that might otherwise constitute a defense available to, or
a discharge of, or might otherwise operate to release or affect the
obligations of, Guarantor, Borrower or any other person or entity
liable to Lender (or other holder of the Collateral Documents) in
respect of any of the Terms.
This Guaranty shall continue to be effective or shall be reinstated, as the case
may be, regardless of whether any payment of any of the Obligations or the
Guaranteed Expenses is rescinded or must otherwise be returned by Lender upon
the insolvency, bankruptcy, or reorganization of Guarantor, Borrower, or any
other person or entity or for any reason whatsoever, all as though such payment
had not been made. Lender shall not be required to contest, dispute or litigate
its obligation to make such payment or repayment. The obligations of Guarantor
hereunder shall be absolute and primary, shall be complete and binding as to
Guarantor upon its execution of this Guaranty, shall be subject to no conditions
precedent, and shall be independent of and cumulative to any other of the Terms,
and Lender may exercise any of its rights and remedies under this Guaranty, any
other of the Terms or otherwise singly or concurrently. The obligations of
Guarantor under this Guaranty shall not be reduced, limited, impaired,
discharged, deferred, suspended or terminated by any voluntary or involuntary
bankruptcy, insolvency, receivership, reorganization, liquidation, arrangement,
or debtor-relief proceeding of or against Borrower, or by any defense that
Borrower may have by reason of the existence of any such proceeding or any
order, decree or decision of any court or administrative body resulting from or
relating to any such proceeding.
4. Waiver; No Duties. Guarantor waives to the fullest extent
-----------------
permitted by applicable law: (a) all statutes of limitations as a defense to any
action brought against Guarantor by Lender; (b) any defense based upon any legal
disability or any discharge or limitation of liability (except as provided in
Sections 1(c) and 2 above), whether consensual or arising by operation of law or
any bankruptcy, insolvency or debtor-relief proceeding, or from any other cause;
(c) promptness, diligence, presentment, demand, protest and notice of any kind
(other than as expressly required herein); (d) any defense based upon or arising
out of any defense of Borrower to the payment or performance of any part of the
obligations (other than payment); (e) any and all rights of indemnity,
contribution, reimbursement or any similar right that Guarantor may have against
Borrower as a result of any actions taken or amounts paid in connection with or
relating to this Guaranty or the Loan; (f) all rights of subrogation, including,
without limitation, all rights to enforce any remedy of Lender, and all right to
participate in any security held by Lender; (g) notice of any change in
Borrower's financial condition; (h) the right to interpose any substantive or
procedural defense of the law of guaranty, indemnification or suretyship (except
the defense of prior payment of all of the Obligations and Guaranteed Expenses
which Guarantor is called upon to pay under this Guaranty); (i) all rights and
remedies accorded by applicable law to guarantors or sureties, including without
limitation, any extension of time conferred by any law now or hereafter in
effect; (j) the right to interpose any defense (except as allowed under clause
(h) above), set-off or counterclaim of any nature or description in any action
or proceeding; and (k) any right or claim of right to cause a marshalling of
5
<PAGE>
Borrower's assets or to cause Lender to proceed against Borrower and/or any
collateral held by Lender at any time or in any particular order. Lender shall
not be obligated to exhaust any right or take any action against the Borrower or
any other person or entity or any collateral for the Obligations prior to the
enforcement of its rights hereunder. Nothing in this Paragraph 4 shall be
construed as a waiver by a Prime Partner (as defined in the Pledge Agreement) of
any right to receive any distributions to which it might be entitled under the
partnership agreement of Borrower, including any such right that may arise as a
result of a payment by Guarantor hereunder.
5. Representations, Warranties and Covenants. The representations,
-----------------------------------------
warranties and covenants set forth in Exhibit B attached hereto (including,
without limitation, the definitions set forth therein) are hereby incorporated
in this Guaranty by this reference and shall be deemed to be made as of the date
hereof.
6. Notices. Any notice or other communication required or permitted
-------
hereunder shall be (a) in writing and shall be deemed to have been duly given
(A) when received, if delivered in person, (B) five (5) days after deposit in a
regularly maintained receptacle of the United States mail as registered or
certified mail, first class postage prepaid, (C) the business day after notice
is sent for overnight delivery by nationally recognized overnight courier
service, or (D) on the day on which the party to whom such notice is addressed
refuses delivery by mail or by nationally recognized courier service, and (b)
addressed as follows:
To Lender: c/o Kemper Financial Services, Inc.
120 South LaSalle Street
13th Floor
Chicago, Illinois 60603
Attn: Real Estate Investment Group
With copies to: Kemper Corporation
Legal Department, C-3
One Kemper Drive
Long Grove, Illinois 60049
Attn: General Counsel
KFC Portfolio Corp.
c/o Kemper Financial Services, Inc.
120 South LaSalle Street
22nd Floor
Chicago, Illinois 60603
Attn: Legal Department
Real Estate Counsel
To Guarantor: c/o The Prime Group, Inc.
77 West Wacker Drive
39th Floor
Chicago, Illinois 60601
6
<PAGE>
Attention: Michael W. Reschke
With a copy to: The Prime Group, Inc.
77 West Wacker Drive
39th Floor
Chicago, Illinois 60601
Attention: Robert J. Rudnik
or to any such other address as any party hereto shall designate in a written
notice to the other parties hereto.
7. No Waiver; Cumulative Remedies. Lender may, at any time and from
------------------------------
time to time, waive or not insist on strict compliance with any one or more of
the provisions contained in any document relating to this Guaranty, but any such
waiver or non-insistence shall be deemed to be made pursuant to the terms of
said document and not in modification thereof. Any waiver or non-insistence in
any instance or under any particular circumstance shall not be considered a
waiver or non-insistence of such provision in any other instance or any other
circumstance. The remedies provided herein and in the other documents executed
contemporaneously herewith and referred to herein shall be cumulative, may be
exercised from time to time, singularly or concurrently or in any combination,
without Lender being obligated to exercise any such right in any other
circumstance, and, subject to Section 2 above, are not exclusive of any remedies
provided by law.
8. Continuing Guaranty; Transfer. This Guaranty is a continuing
-----------------------------
guaranty and shall:
(a) remain in full force and effect until (i) all of the
Obligations and Guaranteed Expenses have been paid in full, or all of
the Collateral (as such term is defined in the Pledge Agreement)
securing this Guaranty has been applied toward the Obligations and
Guaranteed Expenses and (ii) any and all amounts due or claims made
under clause (iii) of Section 2 of this Guaranty have been paid,
satisfied or otherwise disposed of, as applicable, at which time this
Guaranty shall terminate (and Lender shall at such time, upon the
request and at the expense of any Guarantor, acknowledge the release
and termination of this Guaranty);
(b) be binding upon Guarantor, and its heirs, administrators,
executors, successors and assigns, who shall be jointly and severally
liable hereunder in accordance with the terms hereof; provided,
however, Guarantor may not assign any of its rights and obligations
hereunder without the prior written consent of Lender; and
(c) inure to the benefit of and be binding on and enforceable by
Lender and its successors, transferees, participants, and assigns.
Without limiting the generality of this clause, Lender may assign or
otherwise transfer any of the Obligations and/or any of the Terms to
any other person or entity, and such other
7
<PAGE>
person or entity shall thereupon become vested with all the rights in
respect thereof granted to Lender herein or otherwise.
9. Governing Law; Submission to Jurisdiction. This Guaranty shall be
-----------------------------------------
governed by, and construed in accordance with, the laws of the State of Illinois
without regard to principles of conflict of laws. Each of Lender and Guarantor
hereby waives any plea of jurisdiction or venue as not being a resident of Cook
County, Illinois and hereby specifically authorizes any action brought by the
other upon or with regard to this Guaranty to be instituted and prosecuted in
either the Circuit Court of Cook County, Illinois or in the United States
District Court for the Northern District of Illinois, at the election of the
party bringing the action. Each of Lender and Guarantor hereby irrevocably
authorizes service of process to be made upon it in the manner specified in
Section 6 above, in any action which may be instituted against it arising out of
or relating to this Guaranty.
10. Headings. Section headings in this Guaranty are included herein
--------
for convenience of reference only and shall not constitute a part of this
Guaranty for any other purpose.
11. WAIVER OF JURY TRIAL. GUARANTOR WAIVES, TO THE FULLEST EXTENT
--------------------
PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM FILED BY ANY PARTY, RELATING DIRECTLY OR INDIRECTLY TO THIS
GUARANTY, THE PLEDGE AGREEMENT OR THE OBLIGATIONS GUARANTEED HEREBY.
12. Estoppel. Guarantor shall, at any time and from time to time,
--------
within ten (10) Business Days following request by Lender, execute, acknowledge
and deliver to Lender a statement certifying that this Guaranty is unmodified
and in full force and effect (or if there have been modifications, that the same
is in full force and effect as modified and stating such modifications) and
that, to the best of Guarantor's knowledge, Guarantor is not in default
hereunder (or if there is such a default, describing such default in reasonable
detail).
13. Severability. The unenforceability or invalidity of any provision
------------
or provisions of this Guaranty shall not render any other provision or
provisions herein contained unenforceable or invalid.
14. Non-Assertion. Lender covenants that it shall not assert in any
-------------
judicial or other case or proceeding that certain Release of Guaranties and
Other Obligations and Covenant Not to Sue, of even date herewith, made by Lender
and certain affiliates of Lender in favor of Guarantor and others, is not valid,
enforceable and effective.
[Signature Page Follows]
8
<PAGE>
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
and delivered on the date and year first above written.
PRIME GROUP II, L.P., an Illinois limited
partnership
By: PGLP, Inc., an Illinois corporation,
its general partner
By: /s/ Michael W. Reschke
------------------------------------
Its: President
-----------------------------------
ACKNOWLEDGED:
KEMPER INVESTORS LIFE INSURANCE COMPANY,
an Illinois insurance corporation
By: /s/ John E. Neal
------------------------------------
Its: Authorized Signatory
-----------------------------------
9
<PAGE>
EXHIBIT A
---------
LAKE TRAVIS
-----------
Project: The Island on Lake Travis
Lender: Kemper Investors Life Insurance Company ("KILICO"). KILICO has
provided credit support/enhancement with resect to the Loan.
Borrower: The Island on Lake Travis, Ltd., a Texas limited partnership
Loan: The Loan made pursuant to the Loan Agreement between Capital Health
Facilities Development Corporation and Borrower dated 12/1/86 in
connection with the $25,000,000 Capital Health Facilities
Development Corporation Health Facilities Development Revenue Bonds
(The Island on Lake Travis, Ltd. Project) Series 1986
<PAGE>
EXHIBIT B
---------
[See Attached]
2
<PAGE>
SCHEDULE 1
----------
A. Definitions Applicable to Representations, Warranties and Covenants:
-------------------------------------------------------------------
Definitions. The following definitions shall apply to words and
-----------
phrases used in this Schedule 1 and the document to which this Schedule is
attached.
Affiliate means, as to any Person, any other Person which directly or
---------
indirectly controls, or is under common control with, or its controlled by,
such Person. As used in this definition, "control" (including, with its
correlative meanings, "controlled by" and "under common control with")
means possession, directly or indirectly, of power to direct or cause the
direction of management or policies (whether through ownership of
securities, or partnership or other ownership interests, by contract or
otherwise).
Beneficiary means, individually and collectively, the benefited
-----------
party(ies) under the document to which this Schedule I is attached.
Company means Prime Group II, L.P., an Illinois limited partnership.
-------
Company General Partner means PGLP, Inc., an Illinois corporation.
-----------------------
Material Adverse Effect means (a) any adverse effect on the ability of
-----------------------
the Company to grant to Pledgee or to keep pledged to Pledgee a perfected
first lien security interest in and to the Collateral or (b) any material
adverse effect on the ability of the Company to perform its obligations
(other than those described in clause (a) above) under the Transaction
Documents.
Person means an individual, partnership, corporation, trust,
------
unincorporated organization, or other entity, or a government or agency or
political subdivision thereof.
Transactions means the transactions contemplated by the document to
------------
which this Schedule 1 is attached.
Transaction Documents means (a) the document to which this Schedule 1
---------------------
is attached, (b) any document or instrument which secures or is secured by
the document to which this Schedule 1 is attached and (c) any other
document or instrument evidencing or securing the obligations under a
document described in clause (a) or (b) above, in each case, as such
document or instrument may be modified or amended from time to time.
B. Representations and Warranties:
------------------------------
The Company hereby represents and warrants to Beneficiary that the
following statements are true, correct and complete:
1. Organization; Power.
-------------------
(a) The Company (i) is a limited partnership duly organized, validly
existing and in good standing under the laws of the state of its formation, (ii)
is duly qualified to do
3
<PAGE>
business as a foreign limited partnership under the laws of each jurisdiction in
which the laws of such jurisdiction so permit or require it to be qualified and
in which the nature of its business requires it to be so qualified (except where
failure to do so would not reasonably be expected to have a Material Adverse
Effect), and (iii) has all requisite power and authority to own, operate and
encumber its property and assets and conducts its business substantially as
presently conducted and proposed to be conducted in connection with and
following the consummation of the Transactions.
(b) The Company General Partner (i) is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, (ii) is duly qualified to do business as a foreign corporation
and is in good standing under the laws of each jurisdiction in which the nature
of its business requires it to be so qualified (except where the failure to be
so qualified would not reasonably be expected to have a Material Adverse
Effect), and (iii) has all requisite corporate power and authority to own,
operate and encumber its property and assets and conduct its business
substantially as presently conducted and as proposed to be conducted in
connection with and following the consummation of the Transactions.
2. Authority; Enforceability. (i) Each of the Company and the Company
-------------------------
General Partner (on behalf of the Company) has the requisite power and authority
(A) to execute, deliver and perform each of the Transaction Documents to which
the Company is a party, and (B) to file the Transaction Documents filed by the
Company, or to be filed by the Company, with the appropriate governmental
authorities; (ii) the execution, delivery and performance (or filing, as the
case may be) of each of the Transaction Documents to which the Company is a
party, and the consummation of the Transactions, have been duly approved by the
Company and the Board of Directors of the Company General Partner, and no other
partnership or corporate proceedings on the part of the Company or the Company
General Partner which have not been completed are necessary to consummate such
Transactions; (iii) each of the Transaction Documents to which the Company is a
party has been duly executed and delivered (or filed, as the case may be) by the
Company and by the Company General Partner on behalf of the Company and
constitutes the legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, is in full force and effect,
and no term or condition thereof has been amended, modified or waived, without
the prior written consent of the Beneficiary, and (iv) the Company has performed
and complied in all material respects with all the terms, provisions, agreements
and conditions set forth in the Transaction Documents and required to be
performed or complied with by it on or before the date as of which this
representation is made, and no default by the Company, to the best knowledge of
the Company, exists thereunder.
3. No Conflict. The execution, delivery and performance by each of the
-----------
Company and by the Company General Partner (on behalf of the Company) of each
Transaction Document to which the Company is a party do not and will not (i)
conflict with or violate the Company's partnership agreement or the Company
General Partner's Articles or Certificate of Incorporation or other charter
documents or By-laws, or other organizational documents, as the case may be,
(ii) contravene or conflict with any law, statute, rule, or regulation, in each
case in effect on the date as of which this representation is made, (iii)
contravene or conflict with, result in any breach of, or constitute a default
under, any agreement or instrument binding on the Company or the Company General
Partner, (iv) result in or require the creation or imposition of any lien
whatsoever upon any of the properties or assets of the Company (other than the
liens arising
4
<PAGE>
pursuant to the Transaction Documents), or (v) require any approval of
stockholders or any approval or consent of any person or entity under any
agreement or instrument binding on the Company or the Company General Partner,
that has not been obtained, which, in any case described in clauses (ii) through
(v) of this paragraph 3 would reasonably be expected to result in a Material
Adverse Effect.
4. Governmental Consents. The Transactions, and the execution, delivery
---------------------
and, to the best of the Company's knowledge, performance by the Company and the
execution and delivery by the Company General Partner (on behalf of the Company)
of each of the Transaction Documents to which it is a party, do not and will not
require any registration with, consent or approval of, or notice to, or other
action to, with or by any governmental authority which has not been obtained or
made and which, if not obtained or made, would reasonably be expected to result
in a Material Adverse Effect, except for filings of the Transaction Documents
(or notice thereof) with appropriate governmental offices necessary (i) to
perfect any liens or security interests granted under the Transaction Documents
or (ii) in connection with any transfer of Collateral following enforcement of
any such liens or security interests.
5. Litigation; Adverse Effects.
---------------------------
(i) There is no action, suit, proceeding or arbitration, at law or
in equity or before any governmental authority, nor to the best knowledge of the
Company is there any governmental investigation, in each case pending, or, to
the best knowledge of the Company, threatened, against the Company or the
Company General Partner, or any property of the Company or the Company General
Partner, which relates to the Transactions or the Transaction Documents and
which would reasonably be expected to result in a Material Adverse Effect.
(ii) Neither the Company nor the Company General Partner is (A) in
violation of any applicable law, rule or regulation, which violation would
reasonably be expected to result in a Material Adverse Effect, or (B) subject to
or in default with respect to any final judgment, writ, order, injunction or
decree of any court or governmental authority.
(iii) Each of the Company and the Company General Partner has obtained
all licenses, permits, franchises and other governmental authorizations
necessary for the ownership of its property or for the conduct of its business,
the failure to obtain or violation of which would reasonably be expected to
result in a Material Adverse Effect.
6. No Defaults. The Company is not in default in the performance,
-----------
observance or fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument binding on the Company relating to any
borrowing, loan or credit arrangement, and no condition exists which, with the
giving of notice or the lapse of time or both, would constitute a default
thereunder, other than defaults that, in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
7. Solvency. After due inquiry, and taking into account the
--------
Transactions, each of the Company's and the Company General Partner's assets
exceed its liabilities. Each of the Company and the Company General Partner is,
and, to the best of the Company's knowledge, from and after the date hereof each
of the Company and the Company General Partner will be, able to pay
5
<PAGE>
its debts when the same become due. Neither the Company nor the Company General
Partner has (i) made a general assignment for the benefit of its creditors, (ii)
admitted in writing its inability to pay its debts as they mature, or (iii) been
subjected to an attachment, execution or other judicial seizure of a substantial
portion of its property which remains in effect. There is not pending any case,
proceeding or other action seeking reorganization, arrangement, adjustment,
liquidation, dissolution or recomposition of the Company or the Company General
Partner or any of its debts under any law relating to bankruptcy, insolvency,
reorganization or relief of debtors or seeking appointment of a receiver,
trustee, custodian or any similar official for its or for all or substantially
all of its property.
C. Reporting Covenants:
-------------------
The Company covenants and agrees that, so long as the Company shall
have any liability or obligation outstanding under any of the Transaction
Documents, unless Beneficiary shall otherwise give prior written consent
thereto:
1. Financial Statements. The Company shall maintain or cause to be
--------------------
maintained, a system of accounting established and administered in
accordance with sound business practices and consistent with past practices
to permit preparation of financial statements in conformity with GAAP, and
each of the financial statements described below shall be prepared from
such system and records. The Company shall deliver or cause to be delivered
to the Lender:
(a) As soon as practicable, and in any event within sixty (60)
days after the end of each calendar quarter, the balance sheet of the
Company as at the end of such quarter and related statements of
operations and retained earnings and changes in financial position for
such quarter, setting forth in each case in comparative form the
figures for the corresponding period of the previous fiscal year, all
in reasonable detail and certified by the chief financial officer,
treasurer or assistant treasurer of the Company General Partner that
they fairly present the financial condition of the Company as at the
dates indicated and the results of operations for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustment;
(b) As soon as practicable, and in any event within one hundred
twenty (120) days after the end of each fiscal year (i.e. the twelve
months ending December 31), the audited balance sheet of the Company
as at the end of such fiscal year and the related audited statements
of operations and retained earnings and changes in financial position
for such fiscal year, setting forth in each case in comparative form
the figures for the Company for the previous fiscal year, all in
reasonable detail and reported by a firm of reputable independent
public accountants.
2. Notification of Defaults. The Company, upon acquiring knowledge
------------------------
thereof, shall promptly notify Lender of any event of default, or any event
which with the giving of notice or lapse of time, or both, would constitute an
event of default, under the Transaction Documents, and describing the action the
Company proposes to take with respect thereto.
6
<PAGE>
3. Other Information. Upon the request of Beneficiary made from
-----------------
time to time, the Company shall furnish to Beneficiary such information as may
be prepared by the Company or the Company General Partner in writing in the
ordinary course of its business respecting the Company's or the Company General
Partner's business or condition (financial or otherwise), operations,
performance, properties or prospects. Beneficiary shall treat any non-public
information so obtained as confidential.
D. Affirmative Covenants:
---------------------
The Company covenants and agrees that, so long as the Company shall have
any liability or obligation outstanding under any of the Transaction Documents,
unless Beneficiary shall otherwise give prior written consent thereto:
1. Existence. The Company shall maintain its existence as a
---------
limited partnership in good standing under the laws of the state of its
formation and maintain its qualification to do business in each
jurisdiction in which the laws of such jurisdiction so permit or require it
to be qualified and in which the character of the properties owned or
leased by it therein or in which the transaction of its business is such
that the failure to qualify would reasonably be expected to result in a
Material Adverse Effect. The Company shall cause the Company General
Partner to maintain its existence as a corporation in good standing under
the laws of the state of its incorporation and maintain its to do business
in each jurisdiction in which the character of the properties owned or
leased by it therein or in which the transaction of its business is such
that the failure to qualify would reasonably be expected to result in a
Material Adverse Effect. The foregoing shall not prohibit the Company or
the Company General Partner from merging with or into a corporation or
other entity organized under the laws of any state within the United States
(in which event, from and after the effective date of such merger, all
references herein to the Company or the Company General Partner, as the
case may be, shall be deemed to refer to such successor entity); provided,
--------
however, that (a) any such successor entity to the Company assumes in
-------
writing all of the obligations and liabilities of the Company under the
Transaction Documents and (b) before and after giving effect to such
merger, there shall not exist any event of default, or any event which,
with the giving of notice or lapse of time or both, would constitute an
event of default, under any of the Transaction Documents.
2. Taxes. The Company shall pay and discharge, or cause to be
-----
paid and discharged, all taxes, assessments and governmental charges upon
it, its income and its properties, or upon the Company General Partner or
the Company General Partner's income and properties, prior to the date on
which penalties are attached thereto, unless and to the extent only that
(a) failure to pay any such taxes, assessments or governmental charges
would not reasonably be expected to result in a Material Adverse Effect, or
(b) (i) such taxes, assessments and governmental charges shall be contested
in good faith and by appropriate proceedings by the Company or the Company
General Partner, as the case may be, after the Company or the Company
General Partner, as the case may be, has established a reasonable reserve
on its books for such item, and (ii) the pendency of such contest will not
result in any impairment of any lien and security interest granted by the
Company or the Company General Partner in favor of Beneficiary.
7
<PAGE>
3. Compliance with Laws, Etc. The Company shall comply with,
--------------------------
and cause the Company General Partner to comply with, all applicable
statutes, rules, regulations, orders and restrictions of any and all
governmental instrumentalities or agencies thereof having jurisdiction over
the conduct of the business or the ownership of the properties of the
Company or the Company General Partner, as the case may be (except for any
non-compliance therewith which would not reasonably be expected to result
in a Material Adverse Effect), unless and only to the extent that the
application of such statutes, rules, regulations, orders and restrictions
shall be contested in good faith and by appropriate proceedings by the
Company or the Company General Partner, as the case may be, in such a
manner that any enforcement action or any liability resulting from such
non-compliance shall be stayed or held in abeyance pending the outcome of
such contest.
8
<PAGE>
EXHIBIT 99.12
FIRST AMENDMENT TO LIMITED RECOURSE GUARANTY [LAKE TRAVIS]
----------------------------------------------------------
THIS FIRST AMENDMENT TO LIMITED RECOURSE GUARANTY [LAKE TRAVIS] (this
"Amendment") is made as of August 31, 1994, by PRIME GROUP II, L.P., an Illinois
limited partnership ("Guarantor"), and KEMPER INVESTORS LIFE INSURANCE COMPANY,
an Illinois insurance corporation ("Lender").
RECITALS:
--------
WHEREAS, Guarantor has executed and delivered to Lender a certain
Limited Recourse Guaranty [Lake Travis], made as of March 22, 1994 (the
"Guaranty"); and
WHEREAS, Guarantor and Lender desire to amend and modify the Guaranty
as provided herein.
NOW, THEREFORE, in consideration of the foregoing premises, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Guarantor and Lender hereby agree as follows:
1. The Guaranty is hereby amended and modified to substitute as
Exhibit A thereto the "Exhibit A" attached hereto and made a part hereof.
- ---------
2. Except to the extent expressly amended and modified hereby, the
Guaranty shall remain in full force and effect, unmodified, in accordance with
its terms.
[Signature Page Follows]
1
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered as of the date and year first above written.
PRIME GROUP II, L.P., an Illinois limited partnership
By: PGLP, Inc., an Illinois corporation, its General
Partner
By: /s/ Michael W. Reschke
----------------------------------------
Its: President
---------------------------------------
KEMPER INVESTORS LIFE INSURANCE COMPANY, an Illinois
insurance corporation
By: /s/ John E. Neal
---------------------------------------------
Its: Authorized Signatory
--------------------------------------------
2
<PAGE>
EXHIBIT A
---------
LAKE TRAVIS
-----------
Project: The Island on Lake Travis
Lender: Kemper Investors Life Insurance Company ("KILICO"). KILICO has
provided credit support/enhancement with resect to the Loan.
Borrower: The Island on Lake Travis, Ltd., a Texas limited partnership
Loan: The Loan made pursuant to the Loan Agreement between Capital
Health Facilities Development Corporation and Borrower dated
12/1/86 in connection with the $25,000,000 Capital Health
Facilities Development Corporation Health Facilities Development
Revenue Bonds (The Island on Lake Travis, Ltd. Project) Series
1986; the "Loan" shall include principal and interest payable
under any note or other reimbursement obligation of Borrower to
Lender relating to Lender's credit support/enhancement of the
Loan
<PAGE>
Exhibit 99.13
EIGHTH AMENDMENT TO PLEDGE AND SECURITY AGREEMENT
[LAKE TRAVIS]
This EIGHTH AMENDMENT TO PLEDGE AND SECURITY AGREEMENT [LAKE TRAVIS] (this
"Amendment") is made and entered into as of the 31st day of December, 1998, by
and between PRIME GROUP II, L.P., an Illinois limited partnership ("Pledgor"),
and KEMPER INVESTORS LIFE INSURANCE COMPANY, an Illinois insurance corporation
("Pledgee").
W I T N E S S E T H :
WHEREAS, Pledgor and Pledgee entered into that certain Pledge and Security
Agreement [Lake Travis], dated as of March 22, 1994 (the "Original Pledge
Agreement"), pursuant to which Pledgor pledged to Pledgee 690,276 Common Units
in Prime Retail, L.P., a Delaware limited partnership, to secure Pledgor's
obligations under the Guaranty; and
WHEREAS, the Original Pledge Agreement was amended (i) by that certain
First Amendment to Pledge and Security Agreement [Lake Travis], dated as of
August 31, 1994 (the "First Amendment"), between Pledgor and Pledgee; (ii) by
that certain Second Amendment to Pledge and Security Agreement [Lake Travis],
dated as of June 12, 1995 (the "Second Amendment"), between Pledgor and Pledgee;
(iii) by that certain Third Amendment to Pledge and Security Agreement [Lake
Travis], dated as of February 19, 1997 (the "Third Amendment"), between Pledgor
and Pledgee; (iv) by that certain Fourth Amendment to Pledge and Security
Agreement [Lake Travis], dated as of April 9, 1997 (the "Fourth Amendment"),
between Pledgor and Pledgee; (v) by that certain Fifth Amendment to Pledge and
Security Agreement [Lake Travis] dated as of April 7, 1998 (the "Fifth
Amendment"), between Pledgor and Pledgee; (vi) by the certain Sixth Amendment to
Pledge and Security Agreement [Lake Travis] dated as of June 15, 1998 (the
"Sixth Amendment"), between Pledgor and Pledgee; and (viii) by that certain
Seventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of
September 30, 1998 (the "Seventh Amendment"), between Pledgor and Pledgee (the
Original Pledge Agreement, as amended by the First Amendment, the Second
Amendment, the Third Amendment, the Fourth Amendment, the Fifth Amendment, the
Sixth Amendment and Seventh Amendment, is herein referred to as the "Pledge
Agreement"); and
WHEREAS, pursuant to the Second Amendment, the number of Common Units
pledged by Pledgor to Pledgee was increased from 690,276 to 785,852; and
WHEREAS, pursuant to the Third Amendment, and in accordance with
Section 4.16 (b) of the Pledge Agreement, Pledgee released 40,227 Common Units
pledged by Pledgor to Pledgee; and
WHEREAS, pursuant to the Fourth Amendment Pledgor pledged to Pledgee
an additional 100,000 Common Units to secure Pledgor's obligations under the
Guaranty; and
WHEREAS, pursuant to the Fifth Amendment Pledgee released from the
Pledge Agreement 106,292 Common Units and, following such release, 739,333
Common Units were pledged by Pledgor to Pledgee; and
<PAGE>
WHEREAS, pursuant to the Sixth Amendment Pledgor and Pledgee agreed to
certain amendments to the Pledge Agreement, and Pledgor confirmed its pledge and
grant of a security interest in 739,333 Common Units, giving effect to certain
"Merger Transactions" described therein; and
WHEREAS, pursuant to the Seventh Amendment Pledgor pledged to Pledgee
an additional 145,208 Common Units to secure Pledgor's obligations under the
Guaranty; and
WHEREAS, pursuant to Section 4.16(a) of the Pledge Agreement Pledgor
is required to pledge to Pledgee additional Common Units and/or other collateral
acceptable to Pledgee as hereinafter provided.
WHEREAS, Pledgor has requested that Pledgee accept as other collateral
shares of common stock, par value $.01 per share, of Brookdale Living
Communities, Inc., a Delaware corporation and Pledgee has agreed to accept such
collateral to satisfy Pledgor's current obligations, subject to the terms and
conditions as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Pledgee hereby agree
as follows:
1. All capitalized terms used in this Amendment which are not
specifically defined in this Amendment but which are defined in the Pledge
Agreement shall have the meanings given such terms in the Pledge Agreement.
2. Article 1 of the Pledge Agreement is hereby amended by adding thereto
the following definitions:
"Brookdale" means Brookdale Living Communities, Inc., a Delaware
corporation.
"Brookdale Common Stock" means shares of common stock, par value $.01 per
share, of Brookdale.
3. The definition of "Market Value" in Article 1 of the Pledge Agreement
is hereby amended by adding to the end of said definition the following:
"With respect to Brookdale Common Stock, "Market Value" means, on any date,
an amount equal to 90% the Closing Price for the ten consecutive Business
Days ending on such date. Determination of the Closing Price for Brookdale
Common Stock shall be made in accordance with the definition of Closing
Price set forth in Article 1 hereof but, for such purposes, all references
to Common Stock shall be deemed to refer to Brookdale Common Stock and the
reference to General Partner shall be deemed to refer to Brookdale."
4. For purposes of subparagraphs (a), (b) and (c) of Section 4.16 of the
Pledge Agreement, the Market Value of Brookdale Common Stock pledged hereunder
shall be included
2
<PAGE>
in the calculation of the Market Value of the Pledged Interests determined in
accordance with the provisions hereof.
5. Pledgor hereby pledges, hypothecates, assigns and transfer to Pledgee,
and hereby grants to Pledgee a continuing lien and security interest in 90,035
shares of Brookdale Common Stock (the "Pledged Brookdale Common Stock"), subject
to Section 4.16 of the Pledge Agreement. Pledgor and Pledgee agree that said
Pledged Brookdale Common Stock shall constitute "Pledged Interests" included in
the "Collateral" for purposes of the Pledge Agreement. Nothing contained in this
Amendment shall be construed to require Pledgee to accept future pledges of
Brookdale Common Stock to satisfy Pledgor's obligations under Section 4.16(a) of
the Pledge Agreement.
6. Pledgor represents and warrants to Pledgee that, as of the date
hereof, Pledgor is the sole record, legal and beneficial owner of, and has good
and marketable title to (and has full right and authority to pledge and assign),
the Pledged Brookdale Common Stock pledged hereunder, free and clear of all
liens, security interests, options or other charges or encumbrances. Pledgor
hereby reiterates and incorporates herein by this reference the representations
and warranties set forth in Paragraphs 1, 2, 3 and 4 of Section B of Schedule 1
to Exhibit B to the Pledge Agreement. Contemporaneously with the execution and
delivery of this Amendment, Pledgor has delivered to Pledgee the certificates
evidencing the Pledged Brookdale Common Stock, accompanied by assignments
separate from certificate, duly endorsed in blank for transfer, with signature
guaranty, which is effective to create a valid, perfected, continuing and
enforceable security interest in the "Pledged Brookdale Common Stock" and all
proceeds thereof, securing the Secured Obligations.
7. Subparagraph (a) of Section 4.16 of the Pledge Agreement is hereby
amended by adding a new sentence at the end of said subparagraph (a) to read as
follows:
"Pledgor shall cause each additional pledge and delivery required of
it under this subparagraph (a) to be completed no later than twenty (20)
Business Days after the tenth (10th) Business Day following the later of (i)
the release by the General Partner or (ii) the release by Brookdale of its
earnings for the applicable calendar quarter."
8. Subparagraph (c) of Section 4.16 of the Pledge Agreement is amended by
deleting the words "and certified as such by the Chief Financial Officer of
General Partner, or another officer of General Partner reasonably acceptable to
Pledgee, of the Market Value of the Pledged Interests (including the adjustment
contemplated by subparagraph (d) below, if applicable)" in the fifth, sixth,
seventh and eighth lines of said subparagraph and replacing such words with the
words "and certified as such by the President or Chief Financial Officer of the
Pledgor, or by another officer of Pledgor reasonably acceptable to Pledgee, of
the Market Value of the Pledged Interests".
9. Exhibit A to the Pledge Agreement is hereby amended by adding to the
description of Pledged Interests 90,035 shares of Brookdale Common Stock.
10. All references in the Pledge Agreement to "this Pledge and Security
Agreement"
3
<PAGE>
and any and all references in the Loan Documents to the "Pledge Agreement" shall
mean the Pledge Agreement, as amended by this Amendment.
11. Pledgor hereby ratifies and confirms the Guaranty and the Pledge
Agreement and agrees that the same shall remain in full force and effect except
as heretofore amended and except as amended by this Amendment.
12. The provisions of this Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the day and year first above written.
PRIME GROUP II, L.P., an Illinois
limited partnership
By: PGLP, Inc., an Illinois corporation,
general partner
By: /s/ Michael W. Reschke
-------------------------------------
Its: President
-------------------------------------
KEMPER INVESTORS LIFE INSURANCE
COMPANY, an Illinois insurance corporation
By: /s/ Kemper Investors Life Insurance Company
-------------------------------------------
Its: Authorized Signatory
By: /s/ Kemper Investors Life Insurance Company
-------------------------------------------
Its: Authorized Signatory
4
<PAGE>
ACKNOWLEDGMENT
Prime Retail, L.P., a Delaware limited partnership (the "Partnership"), and
Prime Retail, Inc., a Maryland corporation (the "General Partner"), hereby
acknowledge receipt of a copy of the foregoing Eighth Amendment to Pledge and
Security Agreement [Lake Travis] (the "Eighth Amendment"). Notwithstanding
anything in the By-laws of the General Partner to the contrary, the Partnership
and the General Partner further acknowledge and agree that the Acknowledgment
and Consent, dated March 22, 1994, entered into by the undersigned with respect
to the Pledge and Security Agreement [Lake Travis], dated March 22, 1994, as
amended, between Prime Group II, L.P., as Pledgor, and Kemper Investors Life
Insurance Company, as Pledgee, is hereby ratified and confirmed and shall remain
in full force and effect except as heretofore amended and except as amended by
the terms and provisions of the Eighth Amendment.
Date: December 31, 1998 PRIME RETAIL, L.P., a Delaware limited partnership
By: Prime Retail, Inc., a Maryland
corporation
By: /s/ Michael W. Reschke
--------------------------
Title: Chairman of the Board
------------------------
PRIME RETAIL, INC., a Maryland corporation
By: /s/ Michael W. Reschke
--------------------------
Title: Chairman of the Board
------------------------
5
<PAGE>
EXHIBIT 99.14
NINTH AMENDMENT TO PLEDGE AND SECURITY AGREEMENT
[LAKE TRAVIS]
This NINTH AMENDMENT TO PLEDGE AND SECURITY AGREEMENT [LAKE TRAVIS] (this
"Amendment") is made and entered into as of the 31st day of March, 1999, by and
between PRIME GROUP II, L.P., an Illinois limited partnership ("Pledgor"), and
KEMPER INVESTORS LIFE INSURANCE COMPANY, an Illinois insurance corporation
("Pledgee").
W I T N E S S E T H :
WHEREAS, Pledgor and Pledgee entered into that certain Pledge and Security
Agreement [Lake Travis], dated as of March 22, 1994 (the "Original Pledge
Agreement"), pursuant to which Pledgor pledged to Pledgee 690,276 Common Units
in Prime Retail, L.P., a Delaware limited partnership, to secure Pledgor's
obligations under the Guaranty; and
WHEREAS, the Original Pledge Agreement was amended (i) by that certain
First Amendment to Pledge and Security Agreement [Lake Travis], dated as of
August 31, 1994 (the "First Amendment"), between Pledgor and Pledgee; (ii) by
that certain Second Amendment to Pledge and Security Agreement [Lake Travis],
dated as of June 12, 1995 (the "Second Amendment"), between Pledgor and Pledgee;
(iii) by that certain Third Amendment to Pledge and Security Agreement [Lake
Travis], dated as of February 19, 1997 (the "Third Amendment"), between Pledgor
and Pledgee; (iv) by that certain Fourth Amendment to Pledge and Security
Agreement [Lake Travis], dated as of April 9, 1997 (the "Fourth Amendment"),
between Pledgor and Pledgee; (v) by that certain Fifth Amendment to Pledge and
Security Agreement [Lake Travis] dated as of April 7, 1998 (the "Fifth
Amendment"), between Pledgor and Pledgee; (vi) by the certain Sixth Amendment to
Pledge and Security Agreement [Lake Travis] dated as of June 15, 1998 (the
"Sixth Amendment"), between Pledgor and Pledgee; (vii) by that certain Seventh
Amendment to Pledge and Security Agreement [Lake Travis] dated as of September
30, 1998 (the "Seventh Amendment"), between Pledgor and Pledgee; and (viii) by
that certain Eighth Amendment to Pledge and Security Agreement [Lake Travis]
dated as of December 31, 1998 (the "Eighth Amendment"), between Pledgor and
Pledgee (the Original Pledge Agreement, as amended by the First Amendment, the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment and the Eighth Amendment,
is herein referred to as the "Pledge Agreement"); and
WHEREAS, pursuant to the Second Amendment, the number of Common Units
pledged by Pledgor to Pledgee was increased from 690,276 to 785,852; and
WHEREAS, pursuant to the Third Amendment, and in accordance with Section
4.16 (b) of the Pledge Agreement, Pledgee released 40,227 Common Units pledged
by Pledgor to Pledgee; and
WHEREAS, pursuant to the Fourth Amendment Pledgor pledged to Pledgee an
additional 100,000 Common Units to secure Pledgor's obligations under the
Guaranty; and
<PAGE>
WHEREAS, pursuant to the Fifth Amendment Pledgee released from the Pledge
Agreement 106,292 Common Units and, following such release, 739,333 Common Units
were pledged by Pledgor to Pledgee; and
WHEREAS, pursuant to the Sixth Amendment Pledgor and Pledgee agreed to
certain amendments to the Pledge Agreement, and Pledgor confirmed its pledge and
grant of a security interest in 739,333 Common Units, giving effect to certain
"Merger Transactions described therein; and
WHEREAS, pursuant to the Seventh Amendment Pledgor pledged to Pledgee an
additional 145,208 Common Units to secure Pledgor's obligations under the
Guaranty; and
WHEREAS, pursuant to the Eighth Amendment, Pledgor pledged to Pledgee, and
Pledgee accepted as collateral, 90,035 shares of Brookdale Common Stock to
secure Pledgor's obligations under the Guaranty; and
WHEREAS, pursuant to Section 4.16(a) of the Pledge Agreement Pledgor is
required to pledge to Pledgee additional Common Units and/or other collateral
acceptable to Pledgee as hereinafter provided.
WHEREAS, Pledgor has requested that Pledgee accept as other collateral
additional shares of Brookdale Common Stock and Pledgee has agreed to accept
such collateral to satisfy Pledgor's current obligations, subject to the terms
and conditions as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Pledgee hereby agree
as follows:
1. All capitalized terms used in this Amendment which are not specifically
defined in this Amendment but which are defined in the Pledge Agreement shall
have the meanings given such terms in the Pledge Agreement.
2. For purposes of subparagraphs (a), (b) and (c) of Section 4.16 of the
Pledge Agreement, the Market Value of Brookdale Common Stock pledged hereunder
shall be included in the calculation of the Market Value of the Pledged
Interests determined in accordance with the provisions hereof.
3. Pledgor hereby pledges, hypothecates, assigns and transfer to Pledgee,
and hereby grants to Pledgee a continuing lien and security interest in 54,441
shares of Brookdale Common Stock (the "Pledged Brookdale Common Stock"), subject
to Section 4.16 of the Pledge Agreement. Pledgor and Pledgee agree that said
Pledged Brookdale Common Stock shall constitute "Pledged Interests" included in
the "Collateral" for purposes of the Pledge Agreement. Nothing contained in this
Amendment shall be construed to require Pledgee to accept future pledges of
Brookdale Common Stock to satisfy Pledgor's obligations under Section 4.16(a) of
the Pledge Agreement.
2
<PAGE>
4. Pledgor represents and warrants to Pledgee that, as of the date hereof,
Pledgor is the sole record, legal and beneficial owner of, and has good and
marketable title to (and has full right and authority to pledge and assign), the
Pledged Brookdale Common Stock pledged hereunder, free and clear of all liens,
security interests, options or other charges or encumbrances. Pledgor hereby
reiterates and incorporates herein by this reference the representations and
warranties set forth in Paragraphs 1, 2, 3 and 4 of Section B of Schedule 1 to
Exhibit B to the Pledge Agreement. Contemporaneously with the execution and
delivery of this Amendment, Pledgor has delivered to Pledgee the certificates
evidencing the Pledged Brookdale Common Stock, accompanied by assignments
separate from certificate, duly endorsed in blank for transfer, with signature
guaranty, which is effective to create a valid, perfected, continuing and
enforceable security interest in the "Pledged Brookdale Common Stock" and all
proceeds thereof, securing the Secured Obligations.
5. Exhibit A to the Pledge Agreement is hereby amended by substituting
144,476 shares of Brookdale Common Stock for 90,035 shares of Brookdale Common
Stock in the description of Pledged Interests.
6. All references in the Pledge Agreement to "this Pledge and Security
Agreement" and any and all references in the Loan Documents to the "Pledge
Agreement" shall mean the Pledge Agreement, as amended by this Amendment.
7. Pledgor hereby ratifies and confirms the Guaranty and the Pledge
Agreement and agrees that the same shall remain in full force and effect except
as heretofore amended and except as amended by this Amendment.
8. The provisions of this Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the day and year first above written.
PRIME GROUP II, L.P., an Illinois
limited partnership
By: PGLP, Inc., an Illinois corporation,
general partner
By: /s/ Robert J. Rudnik
-----------------------------
Its: Vice President
-----------------------------
KEMPER INVESTORS LIFE INSURANCE COMPANY, an
Illinois insurance corporation
By: /s/ Kemper Investors Life Insurance Company
-------------------------------------------
Its: Authorized Signatory
By: /s/ Kemper Investors Life Insurance Company
-------------------------------------------
Its: Authorized Signatory
4
<PAGE>
ACKNOWLEDGMENT
Prime Retail, L.P., a Delaware limited partnership (the "Partnership"), and
Prime Retail, Inc., a Maryland corporation (the "General Partner"), hereby
acknowledge receipt of a copy of the foregoing Ninth Amendment to Pledge and
Security Agreement [Lake Travis] (the "Ninth Amendment"). Notwithstanding
anything in the By-laws of the General Partner to the contrary, the Partnership
and the General Partner further acknowledge and agree that the Acknowledgment
and Consent, dated March 22, 1994, entered into by the undersigned with respect
to the Pledge and Security Agreement [Lake Travis], dated March 22, 1994, as
amended, between Prime Group II, L.P., as Pledgor, and Kemper Investors Life
Insurance Company, as Pledgee, is hereby ratified and confirmed and shall remain
in full force and effect except as heretofore amended and except as amended by
the terms and provisions of the Ninth Amendment.
Date: March 31, 1999 PRIME RETAIL, L.P., a Delaware limited partnership
By: Prime Retail, Inc., a Maryland
corporation
By: /s/ Michael W. Reschke
-----------------------------
Title: Chairman of the Board
--------------------------
PRIME RETAIL, INC., a Maryland corporation
By: /s/ Michael W. Reschke
----------------------------------
Title: Chairman of the Board
-------------------------------
5
<PAGE>
EXHIBIT 99.15
TENTH AMENDMENT TO PLEDGE AND SECURITY AGREEMENT
[LAKE TRAVIS]
This TENTH AMENDMENT TO PLEDGE AND SECURITY AGREEMENT [LAKE TRAVIS] (this
"Amendment") is made and entered into as of the 1st day of September, 1999, by
and between PRIME GROUP II, L.P., an Illinois limited partnership ("Pledgor"),
and KEMPER INVESTORS LIFE INSURANCE COMPANY, an Illinois insurance corporation
("Pledgee").
W I T N E S S E T H :
WHEREAS, Pledgor and Pledgee entered into that certain Pledge and Security
Agreement [Lake Travis], dated as of March 22, 1994 (the "Original Pledge
Agreement"), pursuant to which Pledgor pledged to Pledgee 690,276 Common Units
in Prime Retail, L.P., a Delaware limited partnership, to secure Pledgor's
obligations under the Guaranty; and
WHEREAS, the Original Pledge Agreement was amended (i) by that certain
First Amendment to Pledge and Security Agreement [Lake Travis], dated as of
August 31, 1994 (the "First Amendment"), between Pledgor and Pledgee; (ii) by
that certain Second Amendment to Pledge and Security Agreement [Lake Travis],
dated as of June 12, 1995 (the "Second Amendment"), between Pledgor and Pledgee;
(iii) by that certain Third Amendment to Pledge and Security Agreement [Lake
Travis], dated as of February 19, 1997 (the "Third Amendment"), between Pledgor
and Pledgee; (iv) by that certain Fourth Amendment to Pledge and Security
Agreement [Lake Travis], dated as of April 9, 1997 (the "Fourth Amendment"),
between Pledgor and Pledgee; (v) by that certain Fifth Amendment to Pledge and
Security Agreement [Lake Travis] dated as of April 7, 1998 (the "Fifth
Amendment"), between Pledgor and Pledgee; (vi) by the certain Sixth Amendment to
Pledge and Security Agreement [Lake Travis] dated as of June 15, 1998 (the
"Sixth Amendment"), between Pledgor and Pledgee; (vii) by that certain Seventh
Amendment to Pledge and Security Agreement [Lake Travis] dated as of September
30, 1998 (the "Seventh Amendment"), between Pledgor and Pledgee; (viii) by that
certain Eighth Amendment to Pledge and Security Agreement [Lake Travis] dated as
of December 31, 1998 (the "Eighth Amendment"), between Pledgor and Pledgee; and
(ix) by that certain Ninth Amendment to Pledge and Security Agreement [Lake
Travis] dated as of March 31, 1999 (the "Ninth Amendment"), between Pledgor and
Pledgee (the Original Pledge Agreement, as amended by the First Amendment, the
Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, and
the Ninth Amendment, is herein referred to as the "Pledge Agreement"); and
WHEREAS, pursuant to the Second Amendment, the number of Common Units
pledged by Pledgor to Pledgee was increased from 690,276 to 785,852; and
WHEREAS, pursuant to the Third Amendment, and in accordance with Section
4.16 (b) of the Pledge Agreement, Pledgee released 40,227 Common Units pledged
by Pledgor to Pledgee; and
<PAGE>
WHEREAS, pursuant to the Fourth Amendment Pledgor pledged to Pledgee an
additional 100,000 Common Units to secure Pledgor's obligations under the
Guaranty; and
WHEREAS, pursuant to the Fifth Amendment Pledgee released from the Pledge
Agreement 106,292 Common Units and, following such release, 739,333 Common Units
were pledged by Pledgor to Pledgee; and
WHEREAS, pursuant to the Sixth Amendment Pledgor and Pledgee agreed to
certain amendments to the Pledge Agreement, and Pledgor confirmed its pledge and
grant of a security interest in 739,333 Common Units, giving effect to certain
"Merger Transactions" described therein; and
WHEREAS, pursuant to the Seventh Amendment Pledgor pledged to Pledgee an
additional 145,208 Common Units to secure Pledgor's obligations under the
Guaranty; and
WHEREAS, pursuant to the Eighth Amendment, Pledgor pledged to Pledgee, and
Pledgee accepted as collateral, 90,035 shares of Brookdale Common Stock to
secure Pledgor's obligations under the Guaranty; and
WHEREAS, pursuant to the Ninth Amendment, Pledgor pledged to Pledgee, and
Pledgee accepted as collateral, an additional 54,441 shares of Brookdale Common
Stock to secure Pledgor's obligations under the Guaranty; and
WHEREAS, pursuant to Section 4.16(a) of the Pledge Agreement Pledgor is
required to pledge to Pledgee additional Common Units and/or other collateral
acceptable to Pledgee as hereinafter provided.
WHEREAS, Pledgor has requested that Pledgee accept as other collateral
additional shares of Brookdale Common Stock and Pledgee has agreed to accept
such collateral to satisfy Pledgor's current obligations, subject to the terms
and conditions as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Pledgee hereby agree
as follows:
1. All capitalized terms used in this Amendment which are not
specifically defined in this Amendment but which are defined in the Pledge
Agreement shall have the meanings given such terms in the Pledge Agreement.
2. For purposes of subparagraphs (a), (b) and (c) of Section 4.16 of the
Pledge Agreement, the Market Value of Brookdale Common Stock pledged hereunder
shall be included in the calculation of the Market Value of the Pledged
Interests determined in accordance with the provisions hereof.
3. Pledgor hereby pledges, hypothecates, assigns and transfer to Pledgee,
and hereby grants to Pledgee a continuing lien and security interest in 132,612
shares of Brookdale Common Stock (the "Pledged Brookdale Common Stock"), subject
to Section 4.16 of the Pledge
2
<PAGE>
Agreement. Pledgor and Pledgee agree that said Pledged Brookdale Common Stock
shall constitute "Pledged Interests" included in the "Collateral" for purposes
of the Pledge Agreement. Nothing contained in this Amendment shall be construed
to require Pledgee to accept future pledges of Brookdale Common Stock to satisfy
Pledgor's obligations under Section 4.16(a) of the Pledge Agreement.
4. Pledgor represents and warrants to Pledgee that, as of the date
hereof, Pledgor is the sole record, legal and beneficial owner of, and has good
and marketable title to (and has full right and authority to pledge and assign),
the Pledged Brookdale Common Stock pledged hereunder, free and clear of all
liens, security interests, options or other charges or encumbrances. Pledgor
hereby reiterates and incorporates herein by this reference the representations
and warranties set forth in Paragraphs 1, 2, 3 and 4 of Section B of Schedule 1
to Exhibit B to the Pledge Agreement. Contemporaneously with the execution and
delivery of this Amendment, Pledgor has delivered to Pledgee the certificates
evidencing the Pledged Brookdale Common Stock, accompanied by assignments
separate from certificate, duly endorsed in blank for transfer, with signature
guaranty, which is effective to create a valid, perfected, continuing and
enforceable security interest in the "Pledged Brookdale Common Stock" and all
proceeds thereof, securing the Secured Obligations.
5. Exhibit A to the Pledge Agreement is hereby amended by substituting
277,088 shares of Brookdale Common Stock for 144,476 shares of Brookdale Common
Stock in the description of Pledged Interests.
6. All references in the Pledge Agreement to "this Pledge and Security
Agreement" and any and all references in the Loan Documents to the "Pledge
Agreement" shall mean the Pledge Agreement, as amended by this Amendment.
7. Pledgor hereby ratifies and confirms the Guaranty and the Pledge
Agreement and agrees that the same shall remain in full force and effect except
as heretofore amended and except as amended by this Amendment.
8. The provisions of this Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
3
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
and delivered as of the day and year first above written.
PRIME GROUP II, L.P., an Illinois
limited partnership
By: PGLP, Inc., an Illinois corporation,
general partner
By: /s/ Robert J. Rudnik
--------------------------------------
Its: Vice President
--------------------------------------
KEMPER INVESTORS LIFE INSURANCE
COMPANY, an Illinois insurance corporation
By: /s/ Kemper Investors Life Insurance Company
-------------------------------------------
Its: Authorized Signatory
By: /s/ Kemper Investors Life Insurance Company
-------------------------------------------
Its: Authorized Signatory
4
<PAGE>
ACKNOWLEDGMENT
Prime Retail, L.P., a Delaware limited partnership (the "Partnership"), and
Prime Retail, Inc., a Maryland corporation (the "General Partner"), hereby
acknowledge receipt of a copy of the foregoing Tenth Amendment to Pledge and
Security Agreement [Lake Travis] (the "Tenth Amendment"). Notwithstanding
anything in the By-laws of the General Partner to the contrary, the Partnership
and the General Partner further acknowledge and agree that the Acknowledgment
and Consent, dated March 22, 1994, entered into by the undersigned with respect
to the Pledge and Security Agreement [Lake Travis], dated March 22, 1994, as
amended, between Prime Group II, L.P., as Pledgor, and Kemper Investors Life
Insurance Company, as Pledgee, is hereby ratified and confirmed and shall remain
in full force and effect except as heretofore amended and except as amended by
the terms and provisions of the Tenth Amendment.
Date: September 1, 1999 PRIME RETAIL, L.P., a Delaware limited partnership
By: Prime Retail, Inc., a Maryland
corporation
By: /s/ Michael W. Reschke
------------------------
Title: Chairman of the Board
---------------------
PRIME RETAIL, INC., a Maryland corporation
By: /s/ Michael W. Reschke
------------------------
Title: Chairman of the Board
---------------------
5
<PAGE>
Exhibit 99.16
ELEVENTH AMENDMENT TO PLEDGE AND SECURITY AGREEMENT
[LAKE TRAVIS]
This ELEVENTH AMENDMENT TO PLEDGE AND SECURITY AGREEMENT [LAKE TRAVIS]
(this "Amendment") is made and entered into as of the 20th day of December,
1999, by and between PRIME GROUP II, L.P., an Illinois limited partnership
("Pledgor"), and KEMPER INVESTORS LIFE INSURANCE COMPANY, an Illinois insurance
corporation ("Pledge").
W I T N E S S E T H :
WHEREAS, Pledgor and Pledgee entered into that certain Pledge and
Security Agreement [Lake Travis], dated as of March 22, 1994 (the "Original
Pledge Agreement"), pursuant to which Pledgor pledged to Pledgee 690,276 Common
Units in Prime Retail, L.P., a Delaware limited partnership, to secure Pledgor's
obligations under the Guaranty; and
WHEREAS, the Original Pledge Agreement was amended (i) by that certain
First Amendment to Pledge and Security Agreement [Lake Travis], dated as of
August 31, 1994 (the "First Amendment"), between Pledgor and Pledgee; (ii) by
that certain Second Amendment to Pledge and Security Agreement [Lake Travis],
dated as of June 12, 1995 (the "Second Amendment"), between Pledgor and Pledgee;
(iii) by that certain Third Amendment to Pledge and Security Agreement [Lake
Travis], dated as of February 19, 1997 (the "Third Amendment"), between Pledgor
and Pledgee; (iv) by that certain Fourth Amendment to Pledge and Security
Agreement [Lake Travis], dated as of April 9, 1997 (the "Fourth Amendment"),
between Pledgor and Pledgee; (v) by that certain Fifth Amendment to Pledge and
Security Agreement [Lake Travis] dated as of April 7, 1998 (the "Fifth
Amendment"), between Pledgor and Pledgee; (vi) by the certain Sixth Amendment to
Pledge and Security Agreement [Lake Travis] dated as of June 15, 1998 (the
"Sixth Amendment"), between Pledgor and Pledgee; (vii) by that certain Seventh
Amendment to Pledge and Security Agreement [Lake Travis] dated as of September
30, 1998 (the "Seventh Amendment"), between Pledgor and Pledgee; (viii) by that
certain Eighth Amendment to Pledge and Security Agreement [Lake Travis] dated as
of December 31, 1998 (the "Eighth Amendment"), between Pledgor and Pledgee; (ix)
by that certain Ninth Amendment to Pledge and Security Agreement [Lake Travis]
dated as of March 31, 1999 (the "Ninth Amendment"), between Pledgor and Pledgee;
and (x) by that certain Tenth Amendment to Pledge and Security Agreement [Lake
Travis] dated as of September 1, 1999 (the "Tenth Amendment"), between Pledgor
and Pledgee (the Original Pledge Agreement, as amended by the First Amendment,
the Second Amendment, the Third Amendment, the Fourth Amendment, the Fifth
Amendment, the Sixth Amendment, the Seventh Amendment, the Eighth Amendment, the
Ninth Amendment and the Tenth Amendment, is herein referred to as the "Pledge
Agreement"); and
WHEREAS, pursuant to the Second Amendment, the number of Common Units
pledged by Pledgor to Pledgee was increased from 690,276 to 785,852; and
WHEREAS, pursuant to the Third Amendment, and in accordance with
Section 4.16 (b) of the Pledge Agreement, Pledgee released 40,227 Common Units
pledged by Pledgor to Pledgee; and
<PAGE>
WHEREAS, pursuant to the Fourth Amendment Pledgor pledged to Pledgee
an additional 100,000 Common Units to secure Pledgor's obligations under the
Guaranty; and
WHEREAS, pursuant to the Fifth Amendment Pledgee released from the
Pledge Agreement 106,292 Common Units and, following such release, 739,333
Common Units were pledged by Pledgor to Pledgee; and
WHEREAS, pursuant to the Sixth Amendment Pledgor and Pledgee agreed to
certain amendments to the Pledge Agreement, and Pledgor confirmed its pledge and
grant of a security interest in 739,333 Common Units, giving effect to certain
"Merger Transactions" described therein; and
WHEREAS, pursuant to the Seventh Amendment Pledgor pledged to Pledgee
an additional 145,208 Common Units to secure Pledgor's obligations under the
Guaranty; and
WHEREAS, pursuant to the Eighth Amendment, Pledgor pledged to Pledgee,
and Pledgee accepted as collateral, 90,035 shares of Brookdale Common Stock to
secure Pledgor's obligations under the Guaranty; and
WHEREAS, pursuant to the Ninth Amendment, Pledgor pledged to Pledgee,
and Pledgee accepted as collateral, an additional 54,441 shares of Brookdale
Common Stock to secure Pledgor's obligations under the Guaranty; and
WHEREAS, pursuant to the Tenth Amendment, Pledgor pledged to Pledgee,
and Pledgee accepted as collateral, an additional 132,612 shares of Brookdale
Common Stock to secure Pledgor's obligations under the Guaranty; and
WHEREAS, pursuant to Section 4.16(a) of the Pledge Agreement Pledgor
is required to pledge to Pledgee additional Common Units and/or other collateral
acceptable to Pledgee as hereinafter provided.
WHEREAS, Pledgor has requested that Pledgee accept as other collateral
additional shares of Brookdale Common Stock and Pledgee has agreed to accept
such collateral to satisfy a portion of Pledgor's current obligations, subject
to the terms and conditions as set forth herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and Pledgee hereby agree
as follows:
1. All capitalized terms used in this Amendment which are not
specifically defined in this Amendment but which are defined in the Pledge
Agreement shall have the meanings given such terms in the Pledge Agreement.
2. For purposes of subparagraphs (a), (b) and (c) of Section 4.16 of
the Pledge Agreement, the Market Value of Brookdale Common Stock pledged
hereunder shall be included in the calculation of the Market Value of the
Pledged Interests determined in accordance with the provisions hereof.
2
<PAGE>
3. Pledgor hereby pledges, hypothecates, assigns and transfer to
Pledgee, and hereby grants to Pledgee a continuing lien and security interest in
43,545 shares of Brookdale Common Stock (the "Pledged Brookdale Common Stock"),
subject to Section 4.16 of the Pledge Agreement. Pledgor and Pledgee agree that
said Pledged Brookdale Common Stock shall constitute "Pledged Interests"
included in the "Collateral" for purposes of the Pledge Agreement. Nothing
contained in this Amendment shall be construed to require Pledgee to accept
future pledges of Brookdale Common Stock to satisfy Pledgor's obligations under
Section 4.16(a) of the Pledge Agreement.
4. Pledgor represents and warrants to Pledgee that, as of the date
hereof, Pledgor is the sole record, legal and beneficial owner of, and has good
and marketable title to (and has full right and authority to pledge and assign),
the Pledged Brookdale Common Stock pledged hereunder, free and clear of all
liens, security interests, options or other charges or encumbrances. Pledgor
hereby reiterates and incorporates herein by this reference the representations
and warranties set forth in Paragraphs 1, 2, 3 and 4 of Section B of Schedule 1
to Exhibit B to the Pledge Agreement. Contemporaneously with the execution and
delivery of this Amendment, Pledgor has delivered to Pledgee the certificates
evidencing the Pledged Brookdale Common Stock, accompanied by assignments
separate from certificate, duly endorsed in blank for transfer, with signature
guaranty, which is effective to create a valid, perfected, continuing and
enforceable security interest in the "Pledged Brookdale Common Stock" and all
proceeds thereof, securing the Secured Obligations.
5. Pledgor hereby pledges, hypothecates, assigns and transfers to
Pledgee, and hereby grants to Pledgee a continuing lien and security interest in
76,544 Common Units (the "Additional Common Units"), subject to Section 4.16 of
the Pledge Agreement. Pledgor and Pledgee agree that said Common Units shall
constitute "Pledged Interests" included within the "Collateral" for purposes of
the Pledge Agreement.
6. Pledgor represents and warrants to Pledgee that, as of the date
hereof, Pledgor is the sole record, legal and beneficial owner of, and has good
and marketable title to (and has full right and authority to pledge and assign),
the Additional Common Units pledged hereunder, free and clear of all liens,
security interests, options or other charges or encumbrances. Pledgor hereby
reiterates and incorporates herein by this reference the representations and
warranties set forth in Paragraphs 1, 2, 3 and 4 of Section 4 of Schedule 1 to
Exhibit B to the Pledge Agreement. Pledgor will promptly deliver to Pledgee the
certificates evidencing the Additional Common Units, together with duly executed
assignments separate from certificate.
7. Exhibit A to the Pledge Agreement is hereby amended by
substituting (a) 320,633 shares of Brookdale Common Stock for 277,088 shares of
Brookdale Common Stock in the description of Pledged Interests, and (b) 961,085
for 884,541 as the "Number of Common Units Pledged" in the description of
Pledged Interests.
8. All references in the Pledge Agreement to "this Pledge and
Security Agreement" and any and all references in the Loan Documents to the
"Pledge Agreement" shall mean the Pledge Agreement, as amended by this
Amendment.
9. Pledgor hereby ratifies and confirms the Guaranty and the Pledge
Agreement and agrees that the same shall remain in full force and effect except
as heretofore amended and except as amended by this Amendment.
3
<PAGE>
10. The provisions of this Amendment shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered as of the day and year first above written.
PRIME GROUP II, L.P., an Illinois
limited partnership
By: PGLP, Inc., an Illinois corporation,
general partner
By: /s/ Robert J. Rudnik
----------------------------------
Its: Vice President
---------------------------------
KEMPER INVESTORS LIFE INSURANCE
COMPANY, an Illinois insurance corporation
By: Kemper Investors Life Insurance Company
----------------------------------------
Its: Authorized Signatory
By: Kemper Investors Life Insurance Company
---------------------------------------
Its: Authorized Signatory
4
<PAGE>
ACKNOWLEDGMENT
Prime Retail, L.P., a Delaware limited partnership (the
"Partnership"), and Prime Retail, Inc., a Maryland corporation (the "General
Partner"), hereby acknowledge receipt of a copy of the foregoing Eleventh
Amendment to Pledge and Security Agreement [Lake Travis] (the "Eleventh
Amendment"). Notwithstanding anything in the By-laws of the General Partner to
the contrary, the Partnership and the General Partner further acknowledge and
agree that the Acknowledgment and Consent, dated March 22, 1994, entered into by
the undersigned with respect to the Pledge and Security Agreement [Lake Travis],
dated March 22, 1994, as amended, between Prime Group II, L.P., as Pledgor, and
Kemper Investors Life Insurance Company, as Pledgee, is hereby ratified and
confirmed and shall remain in full force and effect except as heretofore amended
and except as amended by the terms and provisions of the Eleventh Amendment.
Date: December 20, 1999 PRIME RETAIL, L.P., a Delaware limited partnership
By: Prime Retail, Inc., a Maryland
corporation
By: /s/ Michael W. Reschke
-----------------------------------
Title: Chairman of the Board
--------------------------------
PRIME RETAIL, INC., a Maryland corporation
By: /s/ Michael W. Reschke
----------------------------------------
Title: Chairman of the Board
------------------------------------
<PAGE>
Exhibit 99.17
OPTION PURCHASE AGREEMENT
-------------------------
This OPTION PURCHASE AGREEMENT (this "Agreement") is made and entered into
as of the 7th day of December, 1999, by and among Brookdale Living Communities,
Inc., a Delaware corporation ("Brookdale"), Darryl W. Copeland, Jr., an
individual currently residing at 54 Petty Road, Cranbury, New Jersey 08512
("DWC"), The Prime Group, Inc., an Illinois corporation ("PGI"), and Prime Group
III, L.P., an Illinois limited partnership ("PG3LP").
WITNESSETH
----------
WHEREAS, PGI and DWC are parties to that certain Stock Option and Deposit
Agreement (the "First Option Agreement"), dated as of May 7, 1997, pursuant to
which PGI granted DWC an option to purchase from PGI 100,000 shares of
Brookdale's common stock (the "First Option Shares") for an aggregate purchase
price of $1,000.00 (the "First Option"); and
WHEREAS, PGI, Prime Group VI, L.P., an Illinois limited partnership
("PG6LP"), and DWC are parties to that certain Stock Purchase Agreement and
Agreement Concerning Option Shares (the "Second Option Agreement", and together
with the First Option Agreement, the "Option Agreements"), dated as of May 7,
1997, pursuant to which PG6LP granted DWC an option to purchase from PG6LP
25,000 shares of Brookdale's common stock (the "Second Option Shares", and
together with the First Option Shares, the "Option Shares") for an aggregate
purchase price of $272,722.50 (the "Second Option", and together with the First
Option, the "Options"); and
WHEREAS, PG3LP assumed all of PG6LP's obligations under the Second Option
Agreement pursuant to an Assumption Agreement, dated as of December 18, 1998, by
and between PG6LP and PG3LP; and
WHEREAS, Brookdale desires to purchase from DWC, and DWC desires to sell to
Brookdale, the Options upon the terms and subject to the conditions set forth in
this Agreement; and
WHEREAS, immediately following the purchase and sale of the Options,
Brookdale desires to purchase the Option Shares from PGI and PG3LP, and PGI and
PG3LP desire to sell the Option Shares to Brookdale, upon the terms and subject
to the conditions set forth in this Agreement;
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Purchase and Sale of the Options. Brookdale shall purchase and
acquire from DWC, and DWC shall sell, transfer, convey, assign and deliver to
Brookdale, all of the rights, title and interests of DWC in and to the Options,
upon the following terms and conditions:
(a) the purchase price for the First Option shall be One Million Two
Hundred Fifty Thousand Dollars ($1,250,000.00), payable by Brookdale to DWC
on the date hereof by wire transfer of immediately available funds in such
amount; and
<PAGE>
(b) the purchase price for the Second Option shall be Seventy-Five
Thousand Dollars ($75,000.00), payable by Brookdale (i) to DWC on the date
hereof by wire transfer of immediately available funds in the amount of
$38,743.55 and (ii) to PG3LP on the date hereof by wire transfer of
immediately available funds in the amount of $36,256.45 in payment of all
unpaid Periodic Payments (as defined in the Second Option Agreement) due
PG3LP as of the date hereof.
2. Purchase and Sale of the Option Shares. Immediately following the
purchase and sale of the Options pursuant to Section 1 above, Brookdale shall
purchase and acquire from PGI and PG3LP, and PGI and PG3LP shall sell, transfer,
convey, assign and deliver to Brookdale, all of the rights, title and interests
of PGI and PG3LP in and to the Option Shares, upon the following terms and
conditions:
(a) the purchase price for the First Option Shares shall be One
Thousand Dollars ($1,000.00), payable by Brookdale to PGI on the date
hereof by wire transfer of immediately available funds in such amount; and
(b) the purchase price for the Second Option Shares shall be Two
Hundred Seventy-Two Thousand Seven Hundred Twenty-Two and 50/100 Dollars
($272,722.50), payable by Brookdale to PG3LP on the date hereof by wire
transfer of immediately available funds in such amount.
3. Delivery. Upon payment of the respective purchase prices for the
Option Shares, (a) PGI and PG3LP shall instruct Winston & Strawn, as Escrow
Agent under the Option Agreements, to deliver the stock certificates
representing the Option Shares, together with the accompanying stock power for
the stock certificate representing the First Option Shares, currently held in
escrow by the Escrow Agent, to Brookdale and (b) PG3LP shall execute and deliver
to Brookdale a stock power for the stock certificate representing the Second
Option Shares.
4. Closing. Subject to the satisfaction of the conditions to
effectiveness set forth in Section 6 below, the closing of the purchase and sale
of the Options and the subsequent purchase and sale of the Option Shares (the
"Closing") pursuant to this Agreement shall occur on the date hereof. In the
event the Closing does not occur on the date hereof, Brookdale's right to
purchase the Options, and DWC's obligation to sell the Options, shall
automatically terminate, and Brookdale's right to purchase the Option Shares,
and PGI's and PG3LP's obligations to sell the Option Shares, shall automatically
terminate.
5. Representations and Warranties.
(a) DWC represents and warrants to and agrees with Brookdale that:
(i) DWC has valid title to the Options, free and clear of any
pledge, lien, security interest, encumbrance, claim or equitable
interest whatsoever other than pursuant to this Agreement; and upon
payment of the respective purchase prices for the Options as herein
contemplated, Brookdale will obtain valid title to the Options, free
and clear of any pledge, lien, security interest, encumbrance, claim
or equitable interest;
-2-
<PAGE>
(ii) no third-party consents, approvals, authorizations or
orders are required for the execution and delivery by DWC of this
Agreement and the sale of the Options to Brookdale hereunder;
(iii) DWC has full legal capacity to execute and deliver this
Agreement and perform his obligations hereunder; and
(iv) this Agreement constitutes the valid and legally binding
obligation of DWC, enforceable against DWC in accordance with its
terms;
(b) PGI and PG3LP represent and warrant to and agree with Brookdale
that:
(i) PGI and PG3LP have valid title to the Option Shares, free
and clear of any pledge, lien, security interest, encumbrance, claim
or equitable interest whatsoever other than pursuant to this
Agreement; and upon payment of the respective purchase prices for the
Option Shares as herein contemplated, Brookdale will obtain valid
title to the Option Shares, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest;
(ii) no third-party consents, approvals, authorizations or
orders are required for the execution and delivery by PGI and PG3LP of
this Agreement and the sale of the Option Shares to Brookdale
hereunder;
(iii) PGI and PG3LP have full legal capacity to execute and
deliver this Agreement and perform their obligations hereunder; and
(iv) this Agreement constitutes the valid and legally binding
obligation of PGI and PG3LP, enforceable against PGI and PG3LP in
accordance with its terms; and
(c) Brookdale represents and warrants to and agrees with DWC, PGI and
PG3LP that:
(i) Brookdale is validly existing and in good standing under
the laws of the State of Delaware; and
(ii) Brookdale has the corporate power and authority to execute
and deliver this Agreement and perform its obligations hereunder.
6. Conditions to Effectiveness. This Agreement shall become effective
contemporaneously with, and subject to:
(a) the execution and delivery of this Agreement by all of the
parties hereto;
(b) the payment by Brookdale of the respective purchase prices for
the Options to DWC and PG3LP as provided in Section 1 above;
(c) the payment by Brookdale of the respective purchase prices for
the Option Shares to PGI and PG3LP as provided in Section 2 above; and
-3-
<PAGE>
(d) the delivery by the Escrow Agent of the stock certificates
representing the Option Shares, together with the accompanying stock power
for the stock certificate representing the First Option Shares, to
Brookdale as provided in Section 3 above.
7. Release. Upon satisfaction of the conditions to effectiveness set
forth in Section 6 above, each of Brookdale, DWC, PGI and PG3LP does hereby
forever release, discharge and acquit the other parties hereto and the Escrow
Agent from any and all claims, demands, obligations and liabilities, whensoever
arising out of, connected with or relating to the Option Agreements, the
Options, the purchase and sale of the Options, the Option Shares and the
purchase and sale of the Option Shares (except for claims, demands, obligations
and liabilities arising from any breach of a representation or warranty
contained herein).
8. Severability. Any invalidity, illegality or unenforceability of any
provision of this Agreement shall not render invalid, illegal or unenforceable
the remaining provisions hereof.
9. Headings. The headings contained herein are for convenience of
reference only and shall not be deemed to be part of this Agreement.
10. Counterparts. This Agreement may be executed in counterparts, all of
which together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.
11. Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Illinois without regard to the principles of
conflicts of laws.
[signature page follows]
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BROOKDALE LIVING COMMUNITIES, INC.
By: /s/ Brookdale Living Communities, Inc.
--------------------------------------
Name: Brookdale Living Communities, Inc.
------------------------------------
Title: Authorized Signatory
-----------------------------------
/s/ Darryl W. Copeland, Jr.
------------------------------------------
Darryl W. Copeland, Jr.
THE PRIME GROUP, INC.
By: /s/ The Prime Group, Inc.
--------------------------------------
Name: The Prime Group, Inc.
------------------------------------
Title: Authorized Signatory
-----------------------------------
PRIME GROUP III, L.P.
By: PGLP, Inc.,
Managing General Partner
By: /s/ PGLP, Inc.
--------------------------------------
Name: PGLP, Inc.
------------------------------------
Title: Authorized Signatory
-----------------------------------
ACKNOWLEDGED BY:
WINSTON & STRAWN
By: /s/ Winston & Strawn
-----------------------------------
Name: Winston & Strawn
---------------------------------
Title: Authorized Signatory
--------------------------------
-5-
