<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
____________________
AMENDMENT NO. 1
TO
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
____________________
PRIME RETAIL, INC.
(Name of Issuer)
COMMON STOCK, PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
741570105
(CUSIP Number)
MICHAEL W. RESCHKE
77 WEST WACKER DRIVE
SUITE 4200
CHICAGO, IL 60601
(312) 917-1500
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
With a copy to:
WAYNE D. BOBERG, ESQ.
WINSTON & STRAWN
35 WEST WACKER DRIVE
CHICAGO, IL 60601
(312) 558-5600
DECEMBER 18, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is
filing this schedule because of Sections 240.13d-1(e), or 240.13d-1(f) or
240.13d-1(g), check the following box: / /
<PAGE>
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Michael W. Reschke
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP, (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER -539,140
BENEFICIALLY OWNED BY ----------------------------------------------
EACH REPORTING PERSON 8. SHARED VOTING POWER - 7,594,629
WITH ----------------------------------------------
9. SOLE DISPOSITIVE POWER - 539,140
----------------------------------------------
10. SHARED DISPOSITIVE POWER - 7,594,629
- -------------------------------------------------------------------------------
2
<PAGE>
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
Individually beneficially owns 152,717 shares of Common Stock, $0.01 par
value per share, of the Issuer ("Common Stock"), 9,552 shares of Series
B Preferred Stock, $0.01 par value per share, of the Issuer ("Preferred
Stock"), which is immediately convertible into 11,424 shares of Common
Stock, and certain options to purchase 374,999 shares of Common Stock,
which options have already vested or will vest within 60 days. May be
deemed to share beneficial ownership of: (i) 250,000 shares of Common
Stock directly owned by Prime Group Limited Partnership, an Illinois
limited partnership ("PGLP"); (ii) 5,557,000 Common Units of Prime
Retail, L.P., a Delaware limited partnership ("Common Units"), which
Common Units are exchangeable on a one for one basis for Common Stock at
any time (or, at Issuer's election, cash of equivalent value), directly
owned by Prime Financing Limited Partnership, an Illinois limited
partnership ("PFLP"); (iii) 884,541 Common Units directly owned by Prime
Group II, L.P., an Illinois limited partnership ("PG-II"); (iv) 97,456
Common Units directly owned by Prime Group IV, L.P., an Illinois limited
partnership ("PG-IV"); (v) 701,000 Common Units directly owned by Prime
Group V, L.P., an Illinois limited partnership ("PG-V"); and (vi) 104,632
Common Units directly owned by Prime Group VI, L.P., an Illinois limited
partnership ("PG-VI") by virtue of his position as managing general
partner of PGLP and his ability to control PGLP, Inc. ("PGLPI"), Prime
Finance, Inc. ("Prime Finance"), PFLP, PG-II, PG-IV, PG-V and PG-VI.
PGLPI is the managing general partner of PG-II, PG-IV, PG-V and PG-VI.
Prime Finance is the general managing partner of PFLP.
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES / /
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Individually beneficially owns 152,717 shares of Common Stock, 9,552
shares of Preferred Stock and certain options to purchase 374,999 shares
of Common Stock which, assuming conversion of the Preferred Stock and
exercise of all vested options, constitute approximately 1.3% of the
outstanding shares of Common Stock. May be deemed to share beneficial
ownership of the approximately: (i) 250,000 shares of Common Stock
directly owned by PGLP which constitute approximately 0.6% of the
outstanding shares of Common Stock; (ii) 5,557,000 Common Units directly
owned by PFLP which, assuming exchange of the Common Units, constitute
approximately 11.5% of the outstanding shares of Common Stock; (iii)
884,541 Common Units directly owned by PG-II which, assuming exchange of
the Common Units, constitute approximately 2.0% of the outstanding shares
of Common Stock; (iv) 97,456 Common Units directly owned by PG-IV which,
assuming exchange of the Common Units, constitute approximately 0.2% of
the outstanding shares of Common Stock; (v) 701,000 Common Units
directly owned by PG-V which, assuming exchange of the Common Units,
constitute approximately 1.6% of the outstanding shares of Common Stock;
and (vi) 104,632 Common Units directly owned by PG-VI which, assuming
exchange of the Common Units, constitute approximately 0.2% of the
outstanding shares of Common Stock by virtue of his position as managing
general partner of PGLP and his ability to control PGLPI, Prime Finance,
PFLP, PG-II, PG-IV, PG-V and PG-VI.
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - IN
- -------------------------------------------------------------------------------
3
<PAGE>
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
PGLP, Inc.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
Not Applicable
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois, United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER - 0
BENEFICIALLY OWNED BY EACH --------------------------------------------------
REPORTING PERSON WITH
8. SHARED VOTING POWER - 1,787,629
--------------------------------------------------
9. SOLE DISPOSITIVE POWER - 0
--------------------------------------------------
10. SHARED DISPOSITIVE POWER - 1,787,629
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
May be deemed to share beneficial ownership of: (i) 884,541 Common
Units of Prime Retail, L.P., a Delaware limited partnership ("Common
Units"), which Common Units are exchangeable on a one for one basis
for Common Stock, $0.01 par value per share, of the Issuer ("Common
Stock") at any time (or, at the Issuer's election, cash of
equivalent value), owned by Prime Group II, L.P., an Illinois
limited partnership ("PG-II"); (ii) 97,456 Common Units owned by
Prime Group IV, L.P., an Illinois limited partnership ("PG-IV");
(iii) 701,000 Common Units owned by Prime Group V, L.P., an Illinois
limited partnership ("PG-V"); and (iv) 104,632 Common Units owned by
Prime Group VI, L.P., an Illinois limited partnership ("PG-VI") by
virtue of its position as managing general partner of each of PG-II,
PG-IV, PG-V and PG-VI.
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------
4
<PAGE>
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
May be deemed to share beneficial ownership of: (i) 884,541 Common
Units owned by PG-II which, assuming exchange of the Common Units,
constitute approximately 2.0% of the outstanding shares of Common
Stock; (ii) 97,456 Common Units owned by PG-IV which, assuming
exchange of the Common Units, constitute approximately 0.2% of the
outstanding shares of Common Stock; (iii) 701,000 Common Units owned
by PG-V which, assuming exchange of the Common Units, constitute
approximately 1.6% of the outstanding shares of Common Stock; and
(iv) 104,632 Common Units owned by PG-VI which, assuming exchange of
the Common Units, constitute approximately 0.2% of the outstanding
shares of Common Stock by virtue of its position as managing general
partner of each of PG-II, PG-IV, PG-V and PG-VI.
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - CO
- -------------------------------------------------------------------------------
5
<PAGE>
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Finance, Inc.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
Not Applicable
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois, United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER - 0
BENEFICIALLY OWNED BY EACH --------------------------------------------------
REPORTING PERSON WITH
8. SHARED VOTING POWER - 5,557,000
--------------------------------------------------
9. SOLE DISPOSITIVE POWER - 0
--------------------------------------------------
10. SHARED DISPOSITIVE POWER - 5,557,000
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
May be deemed to share beneficial ownership of 5,557,000 Common
Units of Prime Retail, L.P., a Delaware limited partnership ("Common
Units"), which Common Units are exchangeable on a one for one basis
for Common Stock, $0.01 par value per share, of the Issuer, at any
time (or, at the Issuer's election, cash of equivalent value),
directly owned by Prime Financing Limited Partnership, an Illinois
limited partnership, by virtue of its position as managing general
partner of Prime Financing Limited Partnership.
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
May be deemed to share beneficial ownership of 5,557,000 Common
Units owned by Prime Financing Limited Partnership, which constitute
approximately 11.5% equity interest in the Issuer, assuming exchange
of the Common Units, by virtue of its position as general partner of
Prime Financing Limited Partnership.
6
<PAGE>
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - CO
- -------------------------------------------------------------------------------
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Group Limited Partnership
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois, United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER - 250,000
BENEFICIALLY OWNED BY EACH --------------------------------------------------
REPORTING PERSON WITH 8. SHARED VOTING POWER - 0
--------------------------------------------------
9. SOLE DISPOSITIVE POWER - 250,000
--------------------------------------------------
10. SHARED DISPOSITIVE POWER - 0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
250,000 shares of Common Stock, par value $0.01 per share, of the
Issuer ("Common Stock")
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 0.6% equity interest in the Issuer
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - PN
- -------------------------------------------------------------------------------
7
<PAGE>
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Financing Limited Partnership
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois, United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER - 5,557,000
BENEFICIALLY OWNED BY EACH --------------------------------------------------
REPORTING PERSON WITH 8. SHARED VOTING POWER - 0
--------------------------------------------------
9. SOLE DISPOSITIVE POWER -5,557,000
--------------------------------------------------
10. SHARED DISPOSITIVE POWER - 0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,557,000 Common Units of Prime Retail, L.P., a Delaware limited
partnership ("Common Units"), which Common Units are exchangeable
on a one for one basis for Common Stock of the Issuer, $0.01 par
value per share ("Common Stock"), at any time or, at the Issuer's
election, cash of equivalent value.
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 11.5% equity interest in the Issuer, assuming exchange
of the Common Units.
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - PN
- -------------------------------------------------------------------------------
8
<PAGE>
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Group II, L.P.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois, United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER -884,541
BENEFICIALLY OWNED BY EACH --------------------------------------------------
REPORTING PERSON WITH 8. SHARED VOTING POWER - 0
--------------------------------------------------
9. SOLE DISPOSITIVE POWER - 884,541
--------------------------------------------------
10. SHARED DISPOSITIVE POWER - 0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
884,541 Common Units of Prime Retail, L.P., a Delaware limited
partnership ("Common Units"), which Common Units are exchangeable on
a one for one basis for Common Stock of the Issuer, $0.01 par value
per share, at any time or, at the Issuer's election, cash of
equivalent value.
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 2.0% equity interest in the Issuer, assuming exchange
of the Common Units.
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - PN
- -------------------------------------------------------------------------------
9
<PAGE>
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Group IV, L.P.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois, United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER -97,456
BENEFICIALLY OWNED BY EACH --------------------------------------------------
REPORTING PERSON WITH 8. SHARED VOTING POWER - 0
--------------------------------------------------
9. SOLE DISPOSITIVE POWER - 97,456
--------------------------------------------------
10. SHARED DISPOSITIVE POWER - 0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
97,456 Common Units of Prime Retail, L.P., a Delaware limited
partnership ("Common Units"), which Common Units are exchangeable on
a one for one basis for Common Stock of the Issuer, $0.01 par value
per share, at any time or, at the Issuer's election, cash of
equivalent value.
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 0.2% equity interest in the Issuer, assuming exchange
of the Common Units.
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - PN
- -------------------------------------------------------------------------------
10
<PAGE>
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Group V, L.P.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois, United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER - 701,000
BENEFICIALLY OWNED BY EACH --------------------------------------------------
REPORTING PERSON WITH 8. SHARED VOTING POWER - 0
--------------------------------------------------
9. SOLE DISPOSITIVE POWER - 701,000
--------------------------------------------------
10. SHARED DISPOSITIVE POWER - 0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
701,000 Common Units of Prime Retail, L.P., a Delaware limited
partnership ("Common Units"), which Common Units are exchangeable on
a one for one basis for Common Stock of the Issuer, $0.01 par value
per share, at any time or, at the Issuer's election, cash of
equivalent value.
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 1.6% equity interest in the Issuer, assuming exchange
of the Common Units.
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - PN
- -------------------------------------------------------------------------------
11
<PAGE>
SCHEDULE 13D
CUSIP No. 741570105
- -------------------------------------------------------------------------------
1. NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Prime Group VI, L.P.
- -------------------------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) / /
(b) /X/
- -------------------------------------------------------------------------------
3. SEC USE ONLY
- -------------------------------------------------------------------------------
4. SOURCE OF FUNDS
00
- -------------------------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / /
- -------------------------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Illinois, United States of America
- -------------------------------------------------------------------------------
NUMBER OF SHARES 7. SOLE VOTING POWER - 104,632
BENEFICIALLY OWNED BY EACH --------------------------------------------------
REPORTING PERSON WITH 8. SHARED VOTING POWER - 0
--------------------------------------------------
9. SOLE DISPOSITIVE POWER - 104,632
--------------------------------------------------
10. SHARED DISPOSITIVE POWER - 0
- -------------------------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
104,632 Common Units of Prime Retail, L.P., a Delaware limited
partnership ("Common Units"), which Common Units are exchangeable on
a one for one basis for Common Stock of the Issuer, $0.01 par value
per share, at any time or, at the Issuer's election, cash of
equivalent value.
- -------------------------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / /
- -------------------------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 0.2% equity interest in the Issuer, assuming exchange
of the Common Units.
- -------------------------------------------------------------------------------
14. TYPE OF REPORTING PERSON - PN
- -------------------------------------------------------------------------------
12
<PAGE>
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to shares of Common Stock, par value
$0.01 per share ("Common Stock"), of Prime Retail, Inc., a Maryland
corporation (the "Company"). The principal executive offices of the Company
are located at 100 East Pratt Street, Nineteenth Floor, Baltimore, Maryland
21202.
ITEM 2. IDENTITY AND BACKGROUND.
(a) and (f). This Schedule 13D is filed by each of Michael W.
Reschke, an individual and a citizen of the United States of America
("Reschke"); PGLP, Inc., an Illinois corporation ("PGLPI"); Prime Finance,
Inc., an Illinois corporation ("Prime Finance"); Prime Group Limited
Partnership, an Illinois limited partnership ("PGLP"); Prime Financing
Limited Partnership, an Illinois limited partnership ("PFLP"); Prime Group
II, L.P., an Illinois limited partnership ("PG-II"); Prime Group IV, L.P., an
Illinois limited partnership ("PG-IV"); Prime Group V, L.P., an Illinois
limited partnership ("PG-V"); and Prime Group VI, L.P., an Illinois limited
partnership ("PG-VI").
Reschke (i) is the managing general partner of PGLP; (ii) owns an
approximate 50.75% equity interest in PGLPI, which is the managing general
partner of PG-II, PG-IV, PG-V; and PG-VI and (iii) owns an approximate 50.75%
equity interest in Prime International, Inc., which owns all of the issued
and outstanding stock of Prime Finance, which is the managing general partner
of PFLP.
(b)(i) The business address of each of Reschke, PGLPI, Prime
Finance, PGLP, PFLP, PG-II, PG-IV, PG-V and PG-VI is:
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
(ii) Unless otherwise indicated in paragraph (c)(iii) of this Item
2, the business address of each person listed in paragraph (c)(iii) of this
Item 2 is:
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
(c)(i) Reschke is the Chairman, President and Chief Executive
Officer of The Prime Group, Inc., an Illinois corporation ("PGI"), the
President and a member of the Board of Directors of PGLPI and Prime Finance
and the Chairman of the Board of Trustees and a member of the Board of
Trustees of Prime Group Realty Trust, a publicly traded real estate
investment trust ("PGRT"). Reschke is also the Chairman of the Board of
Directors of each of the Company, a publicly traded corporation which
qualifies for treatment as a real estate investment trust engaged in the
ownership, development and management of factory outlet centers, and
Brookdale Living Communities, Inc., a publicly traded Delaware corporation
involved in the ownership, development and operation of senior independent
assisted living facilities and a member of the Board of Directors of Horizon
Group Properties, Inc., a publicly traded corporation which qualifies for
treatment as a real estate investment trust involved in the ownership,
development and management of factory outlet centers. The principal business
of PGI and PGLPI is the ownership, development and management of, and
investment in, directly or indirectly, real estate. The principal business of
PGRT is the acquisition, development, finance, construction, leasing,
marketing, renovation and property management of office and industrial
properties.
(ii) The principal business of each of PGLPI, Prime Finance,
PGLP, PFLP, PG-II, PG-IV, PG-V and PG-VI is the ownership, development and
management of, and investment in, directly or indirectly, real estate.
(iii) The following table sets forth the name and the principal
occupation or employment of each director and executive officer (except
Reschke (see paragraph (c)(i) of this Item 2)) of PGLPI and Prime Finance:
<TABLE>
<CAPTION>
Name Present Principal Occupation or Employment
---- ------------------------------------------
<S> <C>
Robert J. Rudnik (A)(B). . . Executive Vice President/General Counsel and
Secretary of PGI; Vice President and Secretary
of PGLPI and Prime Finance; Executive Vice
President, General Counsel and Secretary of
Brookdale Living Communities, Inc.
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Name Present Principal Occupation or Employment
---- ------------------------------------------
<S> <C>
Gary J. Skoien. . . . . . . . Executive Vice President of PGI; Vice President
of PGLPI and Prime Finance; President, Chief
Executive Officer and Chairman of Horizon Group
Properties, Inc.
Ray R. Grinvalds. . . . . . . Senior Vice President/Asset and Development
Management of PGI; Vice President and Treasurer
of PGLPI
Warren H. John (B). . . . . . Vice President of PGI; Vice President and
Assistant Secretary of PGLPI
Mark K. Cynkar. . . . . . . . Senior Vice President and Chief Financial
Officer of PGI; Vice President of PGLPI and
-------------- Prime Finance
</TABLE>
(A) Director of Prime Finance
(B) Director of PGLPI
All of the executive officers and directors of PGLPI and Prime
Finance are citizens of the United States of America.
(d) and (e) During the last five years, none of Reschke nor any of
the executive officers of PGLPI or Prime Finance (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 an Agreement and Plan of Merger, dated as of
February 1, 1998, by and among Prime Retail, Inc. ("Old Prime"), Prime
Retail, L.P., Horizon Group, Inc., Sky Merger Corp., Horizon Group
Properties, Inc., Horizon Group Properties, L.P. and Horizon/Glen Outlet
Centers Limited Partnership (the "Merger Agreement"), the shares of Common
Stock of Old Prime owned by Reschke and PGLP were automatically converted
into the same number of shares of Common Stock of the Company upon
consummation of the transactions contemplated by the Merger Agreement.
PGLP, PFLP, PG-II, Prime Group III, L.P., an Illinois limited
partnership ("PG-III"), PG-IV and PG-V held, prior to the transactions
contemplated by the Merger Agreement, Common Units of Prime Retail, L.P., a
Delaware limited partnership ("Common Units"), which Common Units are
exchangeable on a one for one basis for Common Stock of the Company, $0.01
par value per share, at any time (or, at the Company's election, cash of
equivalent value). PFLP, PG-II, PG-IV, PG-V and PG-VI continue to hold such
Common Units.
On September 9, 1998, 38,916 Common Units were transferred from
PG-IV to PG-II.
On December 18, 1998, The Northern Trust Company released the
pledge on the 43,000 Common Units pledged by PGLP pursuant to a Pledge and
Security Agreement, dated as of October 1, 1996, by and between The Northern
Trust Company and PGLP.
On December 18, 1998, The Northern Trust Company released the
pledge on the 61,632 Common Units pledged by PG-III pursuant to a Pledge and
Security Agreement, dated as of October 1, 1996, by and between The Northern
Trust Company and PG-III.
On December 18, 1998, 43,000 Common Units were transferred from
PGLP to PG-VI.
On December 18, 1998, 61,632 Common Units were transferred from
PG-III to PG-II and then to PG-VI.
ITEM 4. PURPOSE OF TRANSACTION.
Reschke and PGLP own shares of Common Stock and PFLP, PG-II,
PG-IV, PG-V and PG-VI own Common Units and intend to hold such securities for
investment purposes.
14
<PAGE>
None of Reschke, PGLPI, Prime Finance, PGLP, PFLP, PG-II, PG-IV,
PG-V or PG-VI has any current plans or proposals which 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 beneficially owns 152,717 shares of Common Stock,
9,552 shares of Preferred Stock and certain options to purchase 374,999
shares of Common Stock which, assuming conversion of the Preferred Stock and
exercise of all vested options, constitute approximately 1.3% of the total
outstanding shares of Common Stock. PGLP beneficially owns 250,000 shares of
Common Stock which constitute approximately 0.6% of the outstanding shares of
Common Stock. PFLP beneficially owns 5,557,000 Common Units which, assuming
exchange of the Common Units, constitute approximately 11.5% of the
outstanding shares of Common Stock. PG-II beneficially owns 884,541 Common
Units which, assuming exchange of the Common Units, constitute approximately
2.0% of the outstanding shares of Common Stock. PG-IV beneficially owns
97,456 Common Units which, assuming exchange of the Common Units, constitute
approximately 0.2% of the outstanding shares of Common Stock. PG-V
beneficially owns 701,000 Common Units which, assuming exchange of the Common
Units, constitute approximately 1.6% of the outstanding shares of Common
Stock. PG-VI beneficially owns 104,632 Common Units which, assuming exchange
of the Common Units, constitute approximately 0.2% of the outstanding shares
of Common Stock.
By virtue of his position as managing general partner of PGLP and
his ability to control PGLPI, Prime Finance, PFLP, PG-II, PG-IV, PG-V, and
PG-VI, Reschke may be deemed to share beneficial ownership of the 250,000
shares of Common Stock directly owned by PGLP and the 5,557,000, 884,541,
97,456, 701,000 and 104,632 Common Units owned by PFLP, PG-II, PG-IV, PG-V
and PG-VI, respectively. Prime Finance may be deemed to share beneficial
ownership of the 5,557,000 Common Units directly owned by PFLP because Prime
Finance is the managing general partner of PFLP. PGLPI may be deemed to
share beneficial ownership of the 884,541, 97,456, 701,000 and 104,632 Common
Units directly owned by PG-II, PG-IV, PG-V and PG-VI, respectively, because
PGLPI is the managing general partner of each of PG-II, PG-IV, PG-V and
PG-VI.
(b) Reschke has the sole power to direct the vote and disposition
of 152,717 shares of Common Stock and 9,552 shares of Preferred Stock
directly owned by Reschke. PGLP has the sole power to direct the vote and
disposition of the 250,000 shares of Common Stock directly owned by PGLP.
PFLP has the sole power to direct the vote and disposition of the 5,557,000
Common Units owned by PFLP. Each of PG-II, PG-IV, PG-V and PG-VI has the
sole power to direct the vote and disposition of the 884,541, 97,456, 701,000
and 104,632 Common Units directly owned by PG-II, PG-IV, PG-V and PG-VI,
respectively.
By virtue of his position as managing general partner of PGLP and
his ability to control PGLPI, Prime Finance, PFLP, PG-II, PG-IV, PG-V and
PG-VI, Reschke may be deemed to share the power to direct the vote and
disposition of the 250,000 shares of Common Stock directly owned by PGLP and
the 5,557,000, 884,541, 97,456, 701,000 and 104,632 Common Units owned by
PFLP, PG-II, PG-IV, PG-V and PG-VI, respectively. Prime Finance may be
deemed to share the power to direct the vote and disposition of the 5,557,000
Common Units directly owned by PFLP because Prime Finance is the managing
general partner of PFLP. PGLPI may be deemed to share the power to direct
the vote and disposition of the 884,541, 97,456, 701,000 and 104,632 Common
Units directly owned by PG-II, PG-IV, PG-V and PG-VI, respectively, because
PGLPI is the managing general partner of each of PG-II, PG-IV, PG-V and
PG-VI.
(c) On December 18, 1998, (i) PGLP transferred 43,000 Common Units
to PG-VI as a contribution to the capital of PG-VI and (ii) PG-III
distributed to PG-II 61,632 Common Units, and PG-II transferred 61,632 Common
Units to PG-VI as a contribution to the capital of PG-VI. Other than as
described above, none of Reschke, PGLP, PFLP, PG-II, PG-IV, PG-V or PG-VI,
nor, to the best of their knowledge, any of the executive officers or
directors of PGLPI or Prime Finance, has effected any transaction in
securities of the Company during the past 60 days.
(d) Other than the following, 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, PGLP, PFLP, PG-II,
PG-IV, PG-V or PG-VI, except for Reschke, PGLP, PFLP, PG-II, PG-IV, PG-V,
PG-VI, PGLPI or Prime Finance:
(1) First Boston Mortgage Capital Corporation, pursuant to a
Pledge and Security Agreement dated as of June 14, 1996, as amended, by and
between PFLP and Bankers Trust Company;
(2) Kemper Investors Life Insurance Company ("Kemper"), pursuant
to a Pledge and Security Agreement dated as of March 22, 1994, as amended, by
and between PG-II and Kemper;
15
<PAGE>
(3) Lumbermens Mutual Casualty Company ("LMCC"), pursuant to a
Pledge and Security Agreement dated as of March 22, 1994, as amended, by and
between PG-V and LMCC; and
(4) LaSalle National Bank, a national banking association
("LaSalle"), pursuant to the terms and conditions of a Pledge Agreement,
dated as of December 18, 1998, by and between PG-VI and LaSalle (the "Pledge
Agreement");
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to a Pledge and Security Agreement dated as of June 14,
1996, as amended, by and between PFLP and Bankers Trust Company, PFLP
pledged 5,557,000 Common Units as security for borrowings pursuant to a
Credit Agreement by and between PFLP and First Boston Mortgage Capital
Corporation dated as of even date therewith.
Pursuant to a Pledge and Security Agreement dated as of March 22,
1994, as amended, by and between PG-II and Kemper, PG-II pledged 739,333
Common Units to secure certain obligations relating to the obligations of
PG-II under a guaranty issued by PG-II with respect to credit support issued
by Kemper to an affiliate of PG-II. On September 9, 1998, PG-II pledged an
additional 145,208 Common Units to secure such obligations.
Pursuant to a Pledge and Security Agreement dated as of March 22,
1994, as amended, by and between PG-V and LMCC, PG-V pledged 598,346 Common
Units as security for the obligations of PG-V to LMCC under a guaranty issued
by PG-V with respect to credit support issued by LMCC to an affiliate of PG-V.
Pursuant to the terms and conditions of the Pledge Agreement, PG-VI
pledged 104,632 Common Units (along with other collateral) to LaSalle, in
order to secure its obligations under that certain Loan Agreement, dated as
of December 18, 1998, by and between PG-VI and LaSalle (the "Loan
Agreement"), as amended by the First Amendment to Loan Documents, Consent and
Limited Release, dated January 29, 1999 (the "First Amendment"). 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"). The Loan Agreement, the First Amendment, the Pledge Agreement
and the Continuing Unconditional Guaranty are attached hereto as Exhibits I,
II, III and IV, respectively.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<CAPTION>
<S> <C>
Exhibit I Loan Agreement, dated as of December 18, 1998, by and
between PG-VI and LaSalle
Exhibit II First Amendment to Loan Documents, Consent and Limited
Release, dated as of January 29, 1999, by and between
PG-VI and LaSalle
Exhibit III Pledge Agreement, dated as of December 18, 1998, by and
between PG-VI and LaSalle
Exhibit IV Continuing Unconditional Guaranty, dated as of
December 18, 1998, by PGI in favor of LaSalle
</TABLE>
16
<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. 1 to Schedule 13D is true, complete and correct.
/s/ Michael W. Reschke
-----------------------------
Michael W. Reschke
Dated: February 25, 1999
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 1 to Schedule 13D is true, complete and correct.
PGLP, INC.
By: /s/ Michael W. Reschke
-------------------------
Name: Michael W. Reschke
Title: President
Dated: February 25, 1999
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 1 to Schedule 13D is true, complete and correct.
PRIME FINANCE, INC.
By: /s/ Michael W. Reschke
-----------------------
Name: Michael W. Reschke
Title: President
Dated: February 25, 1999
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 1 to Schedule 13D is true, complete and correct.
PRIME GROUP LIMITED PARTNERSHIP
By: /s/ Michael W. Reschke
-------------------------
Name: Michael W. Reschke
Title: Managing General Partner
Dated: February 25, 1999
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 1 to Schedule 13D is true, complete and correct.
PRIME FINANCING LIMITED PARTNERSHIP
By: Prime Finance, Inc., its managing general
partner
By: /s/ Michael W. Reschke
---------------------------
Name: Michael W. Reschke
Title: President
Dated: February 25, 1999
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 1 to Schedule 13D is true, complete and correct.
PRIME GROUP II, L.P.
By: PGLP, Inc., its managing general partner
By: /s/ Michael W. Reschke
-------------------------
Name: Michael W. Reschke
Title: President
Dated: February 25, 1999
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 1 to Schedule 13D is true, complete and correct.
PRIME GROUP IV, L.P.
By: PGLP, Inc., its managing general partner
By: /s/ Michael W. Reschke
-------------------------
Name: Michael W. Reschke
Title: President
Dated: February 25, 1999
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 1 to Schedule 13D is true, complete and correct.
PRIME GROUP V, L.P.
By: PGLP, Inc., its managing general partner
By: /s/ Michael W. Reschke
--------------------------
Name: Michael W. Reschke
Title: President
Dated: February 25, 1999
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of his or its knowledge
and belief, the undersigned certifies that the information set forth in this
Amendment No. 1 to Schedule 13D is true, complete and correct.
PRIME GROUP VI, L.P.
By: PGLP, Inc., its managing general partner
By: /s/ Michael W. Reschke
------------------------------
Name: Michael W. Reschke
Title: President
Dated: February 25, 1999
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
Exhibit I Loan Agreement, dated as of December 18, 1998, by and
between PG-VI and LaSalle
Exhibit II First Amendment to Loan Documents, Consent and Limited
Release, dated as of January 29, 1999, by and between
PG-VI and LaSalle
Exhibit III Pledge Agreement, dated as of December 18, 1998, by and
between PG-VI and LaSalle
Exhibit IV Continuing Unconditional Guaranty, dated as of
December 18, 1998, by PGI in favor of LaSalle
</TABLE>
<PAGE>
LOAN AGREEMENT
BETWEEN
PRIME GROUP VI, L.P.,
an Illinois limited partnership
AND
LASALLE NATIONAL BANK,
a national banking association
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE 1 DEFINITIONS AND DETERMINATIONS. . . . . . . . . . . . . . . . . . . 1
1.1 DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 TIME PERIODS . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.3 ACCOUNTING TERMS . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.4 REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.5 LENDER'S DISCRETION. . . . . . . . . . . . . . . . . . . . . . . . 7
1.6 BORROWER'S KNOWLEDGE . . . . . . . . . . . . . . . . . . . . . . . 7
1.7 MARKET PRICE ADJUSTMENTS.. . . . . . . . . . . . . . . . . . . . . 8
ARTICLE 2 LOAN AND TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . 8
2.1 REVOLVING LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.1 AMOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.1.2 PROCEDURE FOR BORROWING. . . . . . . . . . . . . . . . . . . . . . 8
2.2 DISBURSEMENT OF LOAN ON CLOSING DATE . . . . . . . . . . . . . . . 8
2.3 INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.1 INTEREST RATE. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.2 INTEREST PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.3 INTEREST COMPUTATION . . . . . . . . . . . . . . . . . . . . . . . 9
2.3.4 MAXIMUM INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.4 PRINCIPAL PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5 PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.5.1 VOLUNTARY PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . 9
2.5.2 MANDATORY PREPAYMENT . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 LIBOR OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6.1 OPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6.2 NOTICE PROCEDURE . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6.3 NOTICE IRREVOCABLE . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6.4 FAILURE TO PROVIDE NOTICE OF CONTINUATION. . . . . . . . . . . . . 11
2.7 INTEREST PERIODS . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.8 SPECIAL PROVISIONS GOVERNING LIBOR LOANS . . . . . . . . . . . . . 11
2.8.1 DETERMINATION OF INTEREST RATE . . . . . . . . . . . . . . . . . . 11
2.8.2 INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. . . . . . . . 12
2.9 ILLEGALITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.10 COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.11 LIBOR RATE TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.11.1 ADDITIONAL PAYMENTS. . . . . . . . . . . . . . . . . . . . . . . . 13
2.11.2 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.12 DEFAULT RATE . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.13 METHOD OF PAYMENT; GOOD FUNDS. . . . . . . . . . . . . . . . . . . 13
2.14 DEPOSIT TO BORROWER'S ACCOUNT. . . . . . . . . . . . . . . . . . . 13
ARTICLE 3 NOTE AND SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 NOTE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 4 CONDITIONS OF FUNDING . . . . . . . . . . . . . . . . . . . . . . . 14
4.1 INITIAL ADVANCE. . . . . . . . . . . . . . . . . . . . . . . . . . 14
</TABLE>
-i-
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
4.2 ALL REVOLVER ADVANCES. . . . . . . . . . . . . . . . . . . . . . . 16
4.2.1 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 16
4.2.2 PERFORMANCE; NO DEFAULT. . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE 5 REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . 16
5.1 BORROWER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
5.2 PARTNERS OF BORROWER . . . . . . . . . . . . . . . . . . . . . . . 16
5.3 AUTHORITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.4 NECESSARY ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.5 BINDING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 17
5.6 BORROWER'S SECURITIES. . . . . . . . . . . . . . . . . . . . . . . 17
5.7 TITLE TO PROPERTY; LIENS . . . . . . . . . . . . . . . . . . . . . 17
5.8 FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . 17
5.9 LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
5.10 CONFLICTING AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . 17
5.11 COMPLIANCE WITH APPLICABLE LAWS. . . . . . . . . . . . . . . . . . 18
5.12 APPLICATION OF CERTAIN LAWS AND REGULATIONS. . . . . . . . . . . . 18
5.12.1 INVESTMENT COMPANY ACT . . . . . . . . . . . . . . . . . . . . . . 18
5.12.2 HOLDING COMPANY ACT. . . . . . . . . . . . . . . . . . . . . . . . 18
5.13 MARGIN REGULATIONS . . . . . . . . . . . . . . . . . . . . . . . . 18
5.14 NO MISREPRESENTATION . . . . . . . . . . . . . . . . . . . . . . . 18
5.15 NO AFFILIATION . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.16 REGISTRATION EFFECTIVE . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 6 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . 19
6.1 LEGAL EXISTENCE; GOOD STANDING . . . . . . . . . . . . . . . . . . 19
6.2 INSPECTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION OF BORROWER . . . . . . 19
6.3.1 ANNUAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . . . . . 19
6.3.2 NOTICE OF DEFAULTS; LOSS . . . . . . . . . . . . . . . . . . . . . 20
6.3.3 NOTICE OF SUITS, ADVERSE EVENTS. . . . . . . . . . . . . . . . . . 20
6.3.4 COVENANT COMPLIANCE CERTIFICATE; BORROWING BASE CERTIFICATE. . . . 20
6.3.5 OTHER INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . 21
6.4 FINANCIAL INFORMATION OF PRIME RETAIL, INC. AND PGRT . . . . . . . 21
6.5 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS . . . . . . . . . 21
6.6 GENERAL PARTNER. . . . . . . . . . . . . . . . . . . . . . . . . . 21
6.7 FINANCIAL STATEMENTS OF GUARANTOR. . . . . . . . . . . . . . . . . 22
ARTICLE 7 NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 8 DEFAULT AND REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . 22
8.1 EVENTS OF DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1.1 DEFAULT IN PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . 22
8.1.2 BREACH OF COVENANTS AND CERTAIN OTHER PROVISIONS . . . . . . . . . 23
8.1.3 BREACH OF WARRANTY . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1.4 ACCELERATION OF ANY INDEBTEDNESS . . . . . . . . . . . . . . . . . 23
8.1.5 BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
8.1.6 JUDGMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
8.1.7 NON-PERFORMANCE OF GUARANTY, ETC . . . . . . . . . . . . . . . . . 24
8.1.8 INVALIDITY OF PLEDGE AGREEMENT, ETC. . . . . . . . . . . . . . . . 24
</TABLE>
-ii-
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<TABLE>
<CAPTION>
<S> <C>
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS . . . . . . . . . . . . . . 25
8.3 REMEDIES ON DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . 25
8.3.1 ENFORCEMENT OF SECURITY INTERESTS. . . . . . . . . . . . . . . . . 25
8.3.2 OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.4 APPLICATION OF FUNDS . . . . . . . . . . . . . . . . . . . . . . . 25
8.4.1 EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
8.4.2 BORROWER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . 26
8.4.3 SURPLUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 9 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE 10 EXPENSES AND INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . 26
10.1 CLOSING FEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.2 ATTORNEY'S FEES AND OTHER FEES AND EXPENSES. . . . . . . . . . . . 26
10.2.1 FEES AND EXPENSES FOR PREPARATION OF LOAN DOCUMENTS. . . . . . . . 26
10.2.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF LOAN
DOCUMENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
10.3 INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.3.1 BROKERAGE FEES . . . . . . . . . . . . . . . . . . . . . . . . . . 27
10.3.2 OPERATION OF COLLATERAL; JOINT VENTURERS . . . . . . . . . . . . . 27
ARTICLE 11 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.1 NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
11.2 SURVIVAL OF LOAN AGREEMENT . . . . . . . . . . . . . . . . . . . . 28
11.3 FURTHER ASSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 28
11.4 TAXES AND FEES . . . . . . . . . . . . . . . . . . . . . . . . . . 28
11.5 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.6 WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.7 MODIFICATION OF LOAN DOCUMENTS . . . . . . . . . . . . . . . . . . 29
11.8 CAPTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.9 SALE OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . 29
11.10 SUCCESSORS AND ASSIGNS . . . . . . . . . . . . . . . . . . . . . . 29
11.11 REMEDIES CUMULATIVE. . . . . . . . . . . . . . . . . . . . . . . . 29
11.12 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.13 APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 30
11.14 JURISDICTION AND VENUE . . . . . . . . . . . . . . . . . . . . . . 30
11.15 WAIVER OF RIGHT TO JURY TRIAL. . . . . . . . . . . . . . . . . . . 30
</TABLE>
-iii-
<PAGE>
LOAN AGREEMENT
THIS LOAN AGREEMENT is dated as of December 18, 1998, by and between
PRIME GROUP VI, L.P., an Illinois limited partnership ("Borrower"), and
LASALLE NATIONAL BANK, a national banking association ("Lender").
R E C I T A L S:
A. Borrower desires to obtain a revolving line of credit from Lender
in the maximum principal amount of $25,000,000 (the "Loan") to refinance
certain indebtedness and for working capital purposes for Borrower and its
affiliates. The Loan is to be secured by a lien on certain securities owned
by Borrower and is to be guaranteed by a limited partner of Borrower.
B. Lender is willing to furnish such revolving line of credit subject
to the terms and conditions set forth herein.
NOW, THEREFORE, it is agreed as follows:
ARTICLE 1
DEFINITIONS AND DETERMINATIONS
1.1 DEFINITIONS. As used in this Loan Agreement and in the other Loan
Documents, unless otherwise expressly indicated herein or therein, the
following terms shall have the following meanings (such meanings to be
applicable equally both to the singular and plural terms defined):
ACCOUNTANTS: Ernst & Young LLP or such other independent certified
public accounting firm selected by Borrower and reasonably satisfactory to
Lender.
AIMCO: Apartment Investment and Management Company, a Maryland
corporation that qualifies as a real estate investment trust.
AIMCO SHARES: The common stock, $0.01 par value per share, of AIMCO.
AVAILABLE BORROWING BASE: the lesser of (i) $25,000,000 and (ii) 50%
of the Fair Market Value of the Collateral.
BORROWER'S OBLIGATIONS: (i) any and all Indebtedness due or to become
due, now existing or howsoever arising of Borrower to Lender pursuant to
the terms of this Loan Agreement or pursuant to any other Loan Document,
and (ii) the performance of the covenants of Borrower contained in the Loan
Documents.
<PAGE>
BORROWER'S SECURITIES: See Section 5.6.
BREAK COSTS: See Section 2.10.
BROOKDALE: Brookdale Living Communities, Inc., a Delaware corporation.
BROOKDALE SHARES: the shares of common stock, $0.01 par value per
share, of Brookdale.
BUSINESS: the business of directly or indirectly acquiring,
developing, operating, managing and financing real estate or interests
therein, or investing in, or holding securities of, entities engaged in
such business.
BUSINESS DAY: any day other than a Saturday, Sunday or other day on
which banks in Chicago, Illinois, or London, England, are closed.
CLOSING: as defined in Article 9.
CLOSING DATE: as defined in Article 9.
CODE: the Internal Revenue Code of 1986, as amended, and any
successor statute thereto, and the rules and regulations issued thereunder,
as in effect from time to time.
COLLATERAL: the securities, cash and other property in which Lender
is granted the Security Interests pursuant to the Pledge Agreement.
COMMITMENT: $25,000,000.
DEFAULT: any event or condition which, with the giving of notice or
the lapse of time, or both, would become an Event of Default.
DEFAULT RATE: 3% plus the Floating Rate applicable from time to time
to the outstanding principal balance of the Loan.
DEFAULT PERIOD: a period of time commencing on the date that an Event
of Default has occurred and ending on the date that such Event of Default
is cured or waived.
EVENT OF DEFAULT: any of the Events of Default set forth in Section
8.1.
EXCHANGE ACT: the Securities Exchange Act of 1934, as amended.
FAIR MARKET VALUE OF THE COLLATERAL: as of any date the same is to be
calculated, (i) as to the Prime Retail Partnership Units, the product of
the Market Price of Prime Retail, Inc. Shares for such date multiplied by
the number of Prime Retail Inc. Shares into which the Prime Retail
Partnership Units may be converted, (ii) as to the Prime Group Realty
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Partnership Units, the product of the Market Price of PGRT Shares for such
date multiplied by the number of PGRT Shares into which the Prime Group
Realty Partnership Units may be converted, (iii) as to the Brookdale
Shares, the Market Price of the Brookdale Shares multiplied by the number
of Brookdale Shares, and (iv) as to the AIMCO Shares, the Market Price of
the AIMCO Shares multiplied by the number of AIMCO Shares.
FIXED RATE: for any Interest Period, a fixed interest rate per annum,
which rate shall be equal to the LIBOR Rate applicable to such Interest
Period plus 2.50%.
FLOATING RATE: 1/2% + the Prime Rate in effect from time to time. The
Floating Rate shall change automatically and immediately as and when the
Prime Rate shall change, without notice to Borrower.
GAAP: generally accepted accounting principles as in effect from time
to time, which shall include the official interpretations thereof by the
Financial Accounting Standards Board, consistently applied.
GOOD FUNDS: United States Dollars available to Lender in federal
funds at or before 1:00 p.m. Chicago time on a Business Day.
GOVERNMENTAL BODY: any foreign, federal, state, municipal or other
government, or any department, commission, board, bureau, agency, public
authority or instrumentality thereof or any court or arbitrator.
GUARANTOR: The Prime Group.
GUARANTY: the Continuing Unconditional Guaranty, substantially in the
form of Exhibit A, issued by Guarantor.
INDEBTEDNESS: all liabilities, obligations and reserves, contingent or
otherwise, which, in accordance with GAAP, would be reflected as a
liability on a balance sheet, including, without duplication: (i) all
Indebtedness for Borrowed Money, (ii) all obligations under conditional
sales or other title retention agreements, (iii) all obligations secured by
any Lien upon Property, (iv) all guaranties and other contingent
obligations, including, without limitation, letters of credit, and (v) all
obligations under operating leases.
INDEBTEDNESS FOR BORROWED MONEY: without duplication, all
Indebtedness (i) in respect of money borrowed, (ii) evidenced by a note,
debenture or other like written obligation to pay money, including, without
limitation, all of Borrower's Obligations, (iii) in respect of rent or hire
of Property under capitalized leases or for the deferred purchase price of
Property or (iv) in respect of obligations under conditional sales or other
title retention agreements, and all guaranties of any and all of the
foregoing.
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<PAGE>
INTEREST PERIOD: as defined in Section 2.7.
INTEREST RATE DETERMINATION DATE: the date on which Lender determines
the Fixed Rate applicable to a requested LIBOR Loan or the continuation
thereof, which shall be the second Business Day prior to the first day of
the Interest Period applicable to such LIBOR Loan.
LIBOR LOAN: each portion of the Loan that is bearing interest at an
applicable Fixed Rate.
LIBOR RATE: with respect to any LIBOR Loan for the applicable Interest
Period, the per annum rate of interest equal to the quotient obtained by
dividing (i) the average per annum interest rate at which deposits in
United States dollars are generally offered in the London Interbank Market
at 11:00 a.m. London, England time, on the Interest Rate Determination
Date, for a period equal to such Interest Period and in the amount of such
LIBOR Loan, by (ii) the difference between 100% and any applicable reserve
requirements (rounded upward to the nearest whole multiple of 1/100th of
one percent per annum) including, without limitation, any applicable
maximum reserve requirements for "Eurocurrency Liabilities" under
Regulation D of the Board of Governors of the Federal Reserve System (or
any similar reserves under any successor regulations).
LIBOR RATE TAXES: as defined in Section 2.11.1.
LIEN: any mortgage, pledge, assignment, lien, charge, encumbrance or
security interest of any kind, or the interest of a vendor or lessor under
any conditional sale agreement, capitalized lease, or other title retention
agreement.
LOAN: the revolving loan in the maximum principal amount of
$25,000,000 to be made by Lender from time to time to Borrower in
accordance with the terms set forth in Section 2.2.
LOAN AGREEMENT: this Loan Agreement and any amendments or supplements
hereto.
LOAN DOCUMENTS: (i) Loan Agreement, (ii) Note, (iii) Pledge Agreement,
(iv) Guaranty, (v) appropriate Uniform Commercial Code financing
statements, and (vi) such other instruments and documents as Lender may
require to evidence and perfect the Security Interests granted pursuant to
the Pledge Agreement.
MARKET PRICE: for any date shall be deemed to be (i) so long as the
Prime Shares, the AIMCO Shares and the Brookdale Shares are quoted on a
national securities exchange or the National Association of Securities
Dealers Automated Quotations ("NASDAQ") National Market System, the
reported closing sales price per share for such security on such date as
reported on such national securities exchange or NASDAQ, or, if there were
no reported sales transactions on that date, the reported closing sales
price per
4
<PAGE>
share for such security for the most recent Business Day (within
the previous ten Business Days) on which sales transactions are reported,
or (ii) if there were no reported transactions on a national securities
exchange or on NASDAQ on that date or within the previous ten Business Days
or if the Prime Shares and/or AIMCO Shares and/or Brookdale Shares are no
longer being quoted on a national securities exchange or on NASDAQ, then as
to those securities, zero.
MATERIAL ADVERSE EFFECT: any changes or effects, as the case may be,
that individually or in the aggregate are or can reasonably be expected to
be materially adverse to (i) the ability of Borrower or Guarantor, or
either of them, as the case may be, to fulfill any covenants or to perform
any of their respective obligations under this Loan Agreement or the other
Loan Documents, or (ii) the Lender's rights to foreclose on the Collateral
or convert any of the Partnership Units into any Prime Shares.
MATURITY DATE: December 31, 2000 or such earlier date on which the
Commitment is reduced to zero or otherwise terminated pursuant to the terms
of this Loan Agreement.
NOTE: the Revolving Note, substantially in the form of Exhibit B,
executed by Borrower to evidence the maximum amount of the Loan.
PARTNERSHIP UNITS: collectively, Prime Retail Partnership Units and
the Prime Group Realty Partnership Units.
PERSON: any individual, firm, corporation, limited liability company,
business enterprise, trust, association, joint venture, partnership,
governmental body or other entity, whether acting in an individual,
fiduciary or other capacity.
PGLP, INC.: PGLP, Inc., a Illinois corporation.
PGRT: Prime Group Realty Trust, a Maryland real estate investment
trust.
PGRT SHARES: shares of common stock, $0.01 par value per share, of
PGRT.
PLEDGE AGREEMENT: the Pledge Agreement, in the form of Exhibit C, by
and between Borrower and Lender.
PRIME GROUP REALTY OPERATING PARTNERSHIP: Prime Group Realty, L.P., a
Delaware limited partnership.
PRIME GROUP REALTY PARTNERSHIP UNITS: units of partnership interest
in the Prime Group Realty Operating Partnership.
PRIME GROUP REALTY REGISTRATION RIGHTS AGREEMENT: that certain
Registration Rights Agreement, dated November 17, 1997, by and among PGRT,
Prime Group Realty
5
<PAGE>
Operating Partnership, Prime Group Limited Partnership, Primestone
Investment Partners, L.P., a Delaware limited partnership, and the other
investors named therein.
PRIME LOAN: each portion of the Loan that is bearing interest at the
Floating Rate.
PRIME RATE: the per annum rate of interest announced or published
publicly from time to time by Lender at its principal place of business in
Chicago, Illinois, as its prime or equivalent rate of interest, which rate
is not necessarily the lowest rate of interest charged by Lender with
respect to commercial loans.
PRIME RETAIL, INC.: Prime Retail, Inc., a Maryland corporation that
has qualified for treatment as a real estate investment trust.
PRIME RETAIL, INC. REGISTRATION STATEMENT: that certain registration
statement number 333-65617, relating to 8,505,472 Prime Retail Inc. Shares.
PRIME RETAIL, INC. SHARES: shares of common stock, $0.01 par value
per share, of Prime Retail, Inc.
PRIME RETAIL OPERATING PARTNERSHIP.: Prime Retail, L.P., a Delaware
limited partnership.
PRIME RETAIL PARTNERSHIP UNITS: units of partnership interest in the
Prime Retail Operating Partnership.
PRIME RETAIL REGISTRATION RIGHTS AGREEMENT: that certain Registration
Rights Agreement, dated June 15, 1998, by and among Prime Retail, Inc.,
Prime Retail, L.P. and the other investors named therein.
PRIME SHARES: collectively, Prime Retail, Inc. Shares and PGRT Shares.
PRINCIPAL BALANCE: the unpaid principal balance of the Loan
outstanding from time to time.
PROPERTY: as to any Person, all types of real, personal or mixed
property and all types of tangible or intangible property owned by such
Person.
REVOLVER ADVANCE: any advance of the Loan made in accordance with the
terms set forth in Section 2.1.
SEC: the U.S. Securities and Exchange Commission.
SECURITY INTERESTS: the Liens in the Collateral granted to Lender
pursuant to the Pledge Agreement.
6
<PAGE>
THE PRIME GROUP: The Prime Group, Inc., an Illinois corporation.
1.2 TIME PERIODS. In this Loan Agreement and the other Loan Documents, in
the computation of periods of time from a specified date to a later specified
date (i) the word "from" means "from and including", (ii) the words "to" and
"until" each mean "to, but excluding" and (iii) the words "through", "end of"
and "expiration" each mean "through and including". All references in this Loan
Agreement and the other Loan Documents to "month", "quarter" or "year" shall be
deemed to refer to a calendar month, quarter or year.
1.3 ACCOUNTING TERMS. All accounting terms not specifically defined
herein shall be construed, all accounting determinations hereunder shall be made
and all financial statements required to be delivered pursuant hereto shall be
prepared in accordance with GAAP.
1.4 REFERENCES. All references in this Loan Agreement to "Article",
"Section", "subsection", "subparagraph", "clause" or "Exhibit", unless otherwise
indicated, shall be deemed to refer to an Article, Section, subsection,
subparagraph, clause or Exhibit, as applicable, of this Loan Agreement.
1.5 LENDER'S DISCRETION. Whenever the terms "satisfactory to Lender",
"determined by Lender", "acceptable to Lender", "Lender shall elect", "Lender
shall request" or similar terms are used in this Loan Agreement, except as
otherwise specifically provided in this Loan Agreement, such terms shall mean
satisfactory to, at the election of, determined by, acceptable to or requested
by, as applicable, Lender in its sole and absolute discretion.
1.6 BORROWER'S KNOWLEDGE. Any statements, representations or warranties
which are based upon the knowledge of Borrower shall be deemed to have been
limited to the knowledge, made after due inquiry by Michael W. Reschke,
President of PGLP, Inc., the managing general partner of Borrower, and
President, Chairman and Chief Executive Officer of The Prime Group, Inc., and
Mark K. Cynkar, Vice President and Treasurer of PGLP, Inc., the managing general
partner of Borrower and the Senior Vice President and Chief Financial Officer of
The Prime Group, or, if such persons are not then serving Borrower in their
present capacities, their successors., with respect to the matter in question.
1.7 MARKET PRICE ADJUSTMENTS. In the event of a stock dividend, stock
split or combination or other reduction in the number of issued and outstanding
Brookdale shares, AIMCO shares and/or Prime Shares, as to such affected
securities, any applicable Market Price per share specified in this Loan
Agreement shall be proportionately and appropriately adjusted to reflect such
dividend, split or combination or other reduction.
7
<PAGE>
ARTICLE 2
LOAN AND TERMS OF PAYMENT
2.1 REVOLVING LOAN.
2.1.1 AMOUNT. The Loan is a revolving loan which shall be made
available to Borrower by Lender from time to time on and after the Closing
Date in the maximum amount outstanding at any one time in the amount of the
Commitment; provided, however, that the aggregate principal amount of the
Loan which shall be outstanding hereunder at any time shall not exceed the
Available Borrowing Base. Subject to the limitations set forth in this
Article 2, from the Closing Date through the Maturity Date, Borrower may
reborrow all or any Revolver Advance which is repaid or prepaid.
2.1.2 PROCEDURE FOR BORROWING. Each Revolver Advance shall be made on
any Business Day by Lender after Borrower has made an irrevocable written
or telephonic request to Lender for a Revolver Advance, provided, however,
if such request is received by Lender after 12:00 p.m., Chicago time, on a
Business Day, such request shall be deemed to have been made on the next
Business Day. If such Revolver Advance is to bear interest at the Floating
Rate, then such Revolver Advance shall be made on the same Business Day as
the date such request is made or deemed to have been made; if such Revolver
Advance is to bear interest at the Fixed Rate in accordance with the terms
of Sections 2.6 and 2.7 below, then such Revolver Advance shall be made on
the third Business Day following the date such request is made or deemed to
have been made. The amount of such Revolver Advance shall not be less than
$100,000, subject to the additional restrictions set forth in Section 2.1.1
and Section 2.6.1. Each request for a Revolver Advance shall be deemed a
certification by Borrower that no Default or Event of Default exists or
will be created if the requested Revolver Advance is made. Lender shall
not be obligated to make any Revolver Advance if (i) a Default or Event of
Default exists or will be created if the requested Revolver Advance is
made, or (ii) after making such Revolver Advance, the outstanding aggregate
principal amount of the Loan will exceed the Available Borrowing Base at
such time.
2.2 DISBURSEMENT OF LOAN ON CLOSING DATE. Provided (i) no Default or
Event of Default shall be in existence on the Closing Date and (ii) all of the
terms and conditions set forth in Article IV below shall have been satisfied, on
the Closing Date and subject to the provisions of Section 2.1.1 above, Lender
shall advance to Borrower such amount of the Loan as Borrower shall request.
2.3 INTEREST. Borrower's Obligations shall bear interest computed and
payable as follows:
2.3.1 INTEREST RATE. The principal balance of the Loan outstanding
from time to time shall bear interest at a per annum rate equal to the
Floating Rate in effect from time to time, subject to the LIBOR option in
Section 2.6.
8
<PAGE>
2.3.2 INTEREST PAYMENTS. Accrued and unpaid interest on the Principal
Balance of the Loan shall be due and payable monthly in arrears on the
first Business Day of each month, commencing February 1, 1999; provided,
however, that accrued and unpaid interest on each LIBOR Loan shall also be
due and payable in arrears on the last day of the Interest Period
applicable to such LIBOR Loan.
2.3.3 INTEREST COMPUTATION. Interest shall be: (a) computed on the
basis of a year consisting of 360 days and (b) payable for the actual
number of days during the period for which interest is being charged.
2.3.4 MAXIMUM INTEREST. Notwithstanding any provision to the contrary
herein contained, Lender shall not collect a rate of interest on any
obligation or liability due and owing by Borrower to Lender in excess of
the maximum contract rate of interest permitted by applicable law. Lender
and Borrower have agreed that the interest laws of the State of Illinois
shall govern the relationship between them, but in the event of a final
adjudication to the contrary, Borrower shall be obligated to pay to Lender
only such interest as then shall be permitted by the laws of the state
found to govern the contract relationship between Lender and Borrower. All
interest found in excess of that rate of interest allowed and collected by
Lender shall be applied to the Principal Balance in such manner as to
prevent the payment and collection of interest in excess of the rate
permitted by applicable law.
2.4 PRINCIPAL PAYMENTS. The outstanding Principal Balance of the Loan
shall be paid in full not later than the Maturity Date.
2.5 PREPAYMENT.
2.5.1 VOLUNTARY PREPAYMENT. All or a portion of the Principal Balance
of the Loan may be prepaid at any time without premium or penalty, PROVIDED
that Borrower shall also pay, with such prepayment, all Break Costs
incurred by Lender, if any. All prepayments of the Loan pursuant to this
subsection 2.5.1 shall be accompanied by the payment of any accrued and
unpaid interest on the portion of the Principal Balance being prepaid to
the date on which Lender is in receipt of Good Funds, and any other sums
which are due and payable pursuant to the terms of the Loan Documents.
2.5.2 MANDATORY PREPAYMENT. If, as of 3:30 p.m., Chicago time, on any
Business Day, the outstanding Principal Balance of the Loan exceeds the
amount of the Available Borrowing Base on such Business Day then, not later
than 3:00 p.m., Chicago time, on the next Business Day, Borrower shall
either (i) repay the amount of such excess without notice or demand or
(ii) pledge to the Lender collateral, cash or cash equivalents (acceptable
to the Lender) in such amount sufficient to eliminate such excess. Any
payment made pursuant to this subsection 2.5.2 shall be accompanied by
accrued interest on the amount paid through the date on which Lender is in
receipt of Good Funds and in the case of LIBOR Loans, all Break Costs.
Such payment shall first be applied to the Floating Loan and then to the
LIBOR Loans.
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<PAGE>
2.6 LIBOR OPTION.
2.6.1 OPTION. Subject to the provisions of Sections 2.7 and 2.8,
Borrower shall have the option (i) to request that a Revolver Advance be
made at the Fixed Rate rather than the Floating Rate, (ii) to convert at
any time the interest rate charged on all or any part of the Principal
Balance of the Loan from the Floating Rate to a Fixed Rate; or (iii) upon
the expiration of any Interest Period applicable to a LIBOR Loan, to
continue all or any portion of the same as a LIBOR Loan, and the succeeding
Interest Period of such continued LIBOR Loan shall commence on the
expiration date of the Interest Period applicable thereto; PROVIDED, that
no portion of the outstanding Loan may be continued as, or be converted
into, a LIBOR Loan when any Event of Default or Default has occurred and is
continuing. Any Revolver Advance to be made at a Fixed Rate and any
partial conversion of the Loan to a Fixed Rate or continuation of the Loan
at a Fixed Rate under this Section shall be in a minimum amount of
$100,000, and in integral multiples of $100,000 in excess of that amount.
2.6.2 NOTICE PROCEDURE. If Borrower requests that a Revolver Advance
bear interest at the Fixed Rate or if Borrower desires to convert all or a
portion of the Loan to a LIBOR Loan or to continue all or any portion of a
LIBOR Loan as a LIBOR Loan, Borrower shall notify Lender no later than
12:00 p.m. (Chicago time) on the third Business Day prior to the
aforementioned request or the proposed conversion or continuation date.
Each notice shall specify (i) the proposed Revolver Advance disbursement
date or the conversion or continuation date (which shall be a Business
Day), as applicable, (ii) the principal amount of the applicable Revolver
Advance or the principal amount of the Loan to be converted to or continued
as a LIBOR Loan, as applicable, and (iii) the requested Interest Period.
In lieu of delivering the above-described notice, Borrower may give Lender
telephonic notice of any proposed LIBOR Loan or the conversion or
continuation of a LIBOR Loan by the time required under this Section;
PROVIDED, that such notice is confirmed in writing by delivery or fax to
Lender of such notice in no event later than 4:00 p.m. (Chicago time) on
the date of such telephonic notice.
2.6.3 NOTICE IRREVOCABLE. Notice of any proposed LIBOR Loan or of
conversion to a LIBOR Loan or continuation of a LIBOR Loan (or telephonic
notice in lieu thereof) shall be irrevocable and Borrower shall be bound in
accordance with the terms of such notice.
2.6.4 FAILURE TO PROVIDE NOTICE OF CONTINUATION. If notice of the
continuation of a LIBOR Loan is not delivered by Borrower in a timely
manner, the amount of such LIBOR Loan shall bear interest at the Floating
Rate as of the termination date of the applicable Interest Period and shall
no longer bear interest at the Fixed Rate unless it is thereafter converted
to a new LIBOR Loan in the manner described above.
2.7 INTEREST PERIODS. By giving notice as required hereunder, Borrower
shall have the option, subject to the other provisions of this Section, to
specify a one-, two-, three-, four-,
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<PAGE>
five- or six-month interest period (each an "Interest Period") during which
all or a portion of the Loan shall bear (or, if already a LIBOR Loan,
continue to bear) interest at the LIBOR Rate. The determination of Interest
Periods shall be subject to the following provisions:
(a) In the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the
immediately preceding Interest Period expires;
(b) If any Interest Period would otherwise expire on a day which is
not a Business Day, the Interest Period shall be extended to expire on the
next succeeding Business Day (unless the next succeeding Business Day is in
the next calendar month, in which event the Interest Period shall expire on
the immediately preceding Business Day);
(c) Borrower may not select an Interest Period which terminates later
than the Maturity Date;
(d) There shall be no more than four (4) Interest Periods with
respect to the Loan in effect at any one time.
2.8 SPECIAL PROVISIONS GOVERNING LIBOR LOANS.
2.8.1 DETERMINATION OF INTEREST RATE. On the Interest Rate
Determination Date, Lender shall determine (which determination shall,
absent manifest error, be presumptively correct) the Fixed Rate that shall
apply to the subject LIBOR Loan and shall promptly give notice thereof to
Borrower. If on any Interest Rate Determination Date Lender is unable to
obtain the applicable LIBOR Rate quotations, Lender shall give Borrower
prompt notice thereof and such requested LIBOR Loan shall automatically
become a Prime Loan and shall bear interest at the Floating Rate.
2.8.2 INTEREST RATE UNASCERTAINABLE, INADEQUATE OR UNFAIR. If, with
respect to any Interest Period, (i) any change occurs in any applicable law
or governmental rule, regulation or order (or any interpretation thereof
and including the introduction of any new law or governmental rule,
legislation or order) affecting the interbank Eurodollar market for such
Interest Period, or (ii) other circumstances affecting the interbank
Eurodollar market for such Interest Period results in the then applicable
Fixed Rates not adequately reflecting the cost to Lender of making or
funding the LIBOR Loans, Lender shall give notice thereof to Borrower,
whereupon until Lender has determined that the circumstances giving rise to
such inadequacy no longer exist, (A) the right of Borrower to elect to have
any portion of the Loan bear interest based upon the Fixed Rate shall be
suspended for such Interest Period, and (B) each outstanding LIBOR Loan
shall bear interest at the Floating Rate commencing on the last day of the
then current Interest Period therefor, notwithstanding any prior election
by Borrower to the contrary.
2.9 ILLEGALITY. In the event that on any date Lender shall have
reasonably determined that the making or continuation of any LIBOR Loan has
become unlawful by compliance by
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<PAGE>
Lender in good faith with any law, governmental rule, regulation or order of
any Governmental Body, then Lender shall promptly give notice to Borrower of
that determination. Upon the giving of such notice, Borrower's right to
request of Lender and Lender's obligation to make LIBOR Loans shall be
immediately suspended to the extent specified in such notice, and if any
LIBOR Loans are then outstanding, each such LIBOR Loan shall immediately
become a Prime Loan and shall commence bearing interest at the Floating Rate.
If Lender determines at any time following its giving of the aforementioned
notice that Lender may lawfully make LIBOR Loans of the type(s) referred to
in such notice, Lender shall promptly give notice to Borrower of such
determination, whereupon Borrower's right to request of Lender and Lender's
obligation to make LIBOR Loans of such type shall be restored.
2.10 COMPENSATION. Borrower shall indemnify Lender, within five (5)
Business Days following Borrower's receipt of the written statement described
below, for all losses, expenses and liabilities (including, without limitation,
any loss or expense incurred by reason of liquidation or reemployment of
deposits or other funds acquired by Lender to fund or maintain Lender's LIBOR
Loans to Borrower) which Lender may sustain (i) if such LIBOR Loans are not made
when requested due to Borrower's actions or inactions, (ii) if any prepayment of
any LIBOR Loan occurs for any reason on a date which is not the last day of the
applicable Interest Period, or (iii) as a consequence of any required conversion
of the interest rate applicable to a LIBOR Loan to a Floating Rate, (such
losses, expenses and liabilities being collectively referred to as "Break
Costs"). Lender shall promptly deliver to Borrower a written statement as to
such Break Costs, which statement shall be rebuttably presumed correct. The
maximum amount of any indemnification under this Section 2.10 shall not exceed
the interest which would have been payable for the balance of the applicable
Interest Period for the aforesaid LIBOR Loans.
2.11 LIBOR RATE TAXES. Borrower agrees that:
2.11.1 ADDITIONAL PAYMENTS. Borrower shall pay, prior to the date on
which penalties attach thereto, all present and future stamp and other
taxes, levies, or costs and charges whatsoever imposed, assessed, levied or
collected on or in respect of the Loan solely as a result of the interest
rate being determined by reference to the LIBOR Rate or any payments of
principal, interest or other amounts made on or in respect of a Loan made
to Borrower when the interest rate is determined by reference to the LIBOR
Rate (all such taxes, levies, costs and charges being herein collectively
called "LIBOR Rate Taxes"); PROVIDED HOWEVER, that LIBOR Rate Taxes shall
not include income or franchise taxes imposed by any jurisdiction (except
that Borrower shall be liable for the payment of the amount of any
additional net income or franchise taxes attributable to payments made by
Borrower pursuant to this Section).
2.11.2 INDEMNITY. Borrower shall indemnify Lender against, and
reimburse Lender within five (5) days after Lender's written demand for,
any LIBOR Rate Taxes paid by Lender. Lender shall provide Borrower with
appropriate receipts for any payments or reimbursements made by Borrower
pursuant to this Section as a result of the Loan.
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2.12 DEFAULT RATE. During a Default Period, the Principal Balance shall
bear interest at the Default Rate.
2.13 METHOD OF PAYMENT; GOOD FUNDS. All payments to be made by Borrower
pursuant to the Loan Documents shall be delivered to Lender at 135 South LaSalle
Street, Chicago, Illinois 60603, or to such other address as Lender shall notify
Borrower. Payment shall not be deemed to have been received by Lender until
Lender is in receipt of Good Funds.
2.14 DEPOSIT TO BORROWER'S ACCOUNT. Lender may, at its option, deposit the
proceeds of the Loan into a working capital account maintained by Borrower with
Lender and shall have the right to debit such account (or any other account or
deposit maintained or made by Borrower with Lender) from time to time for any of
Borrower's Obligations that are due and payable.
ARTICLE 3
NOTE AND SECURITY
3.1 NOTE. The Loan shall be evidenced by the Note.
3.2 SECURITY. All Borrower's Obligations shall be secured by the Pledge
Agreement.
ARTICLE 4
CONDITIONS OF FUNDING
Lender's obligation to make any Revolver Advance shall be subject to the
satisfaction of all of the following conditions in a manner, form and substance
reasonably satisfactory to Lender:
4.1 INITIAL ADVANCE. The obligation of the Lender to make the initial
Revolver Advance is, in addition to the conditions precedent specified in
Section 4.2, subject to the following being delivered to Lender, each duly
authorized and executed:
(a) the Loan Documents;
(b) a certificate of the general partner of Borrower, certifying on
the Closing Date:
(i) the certificate of limited partnership of Borrower, certified
by the Secretary of State of the state of organization of Borrower, as
of a date within the month in which the Closing Date occurs; and
(ii) the agreement of limited partnership of Borrower;
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(c) a certificate of the general partner of each of Prime Group
Operating Partnership and Prime Group Realty Operating Partnership,
certifying on the Closing Date:
(i) the certificate of limited partnership of such partnership,
certified by the Secretary of State of the state of organization of
such partnership, as of a date within the month in which the Closing
Date occurs; and
(ii) the agreement of limited partnership of such partnership;
(d) a certificate of the Secretary or Assistant Secretary of PGLP,
Inc. and The Prime Group, certifying on the Closing Date:
(i) the certificate or articles of incorporation, and all
amendments thereto, of such Person, certified by the Secretary of
State of the state of organization of such Person, as of a date within
the month in which the Closing Date occurs;
(ii) the by-laws, and all amendments thereto, of such Person;
(iii) Copies of the resolutions of such Person approving and
authorizing the execution, delivery and performance by such Person (as
to PGLP, Inc., in its own capacity or in its capacity as managing
general partner of Borrower) of the Loan Documents to be executed or
delivered by it (or, as to PGLP, Inc., by Borrower) hereunder; and
(iv) the names and true signatures of the officers of such
Person authorized to execute, deliver and perform, as applicable, the
Loan Documents to be executed or delivered by it hereunder;
(e) a certificate of existence, as of a date within the month in
which the Closing Date occurs, from the Secretary of State of the state of
organization for each of (i) Borrower, (ii) Prime Retail Operating
Partnership, and (iii) Prime Group Realty Operating Partnership;
(f) a good standing certificate, as of a date within the month in
which the Closing Date occurs, from the Secretary of State of the state of
incorporation for each of (i) PGLP, Inc. and (ii) The Prime Group;
(g) opinions of counsel for Borrower and Guarantor, in form and
substance satisfactory to Lender;
(h) a borrowing base certificate (as described in Section 6.3.4);
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(i) all filings of Uniform Commercial Code Financing Statements and
all other recordings and actions necessary to perfect and maintain the
Security Interests as first, valid and perfected liens and security
interests in the Collateral shall have been filed or taken and confirmation
thereof received;
(j) all necessary consents under each of (i) the agreement of limited
partnership for the Prime Retail Operating Partnership and the Prime Group
Realty Operating Partnership (the "Partnership Agreements"), and (ii) the
Prime Group Realty Registration Rights Agreement and the Prime Retail
Registration Rights Agreement approving (1) the transactions contemplated
by the Loan Documents, including, but not limited to, the pledge of the
Partnership Units under the Pledge Agreement; (2) the exercise of Lender's
rights hereunder and under the Pledge Agreement upon the occurrence of any
Event of Default; (3) the admission of Lender as a limited partner of the
Prime Retail Operating Partnership and the Prime Group Realty Operating
Partnership upon foreclosure of the Collateral; (4) the exchange of the
Prime Retail Partnership Units for Prime Retail, Inc. Shares, (5) the
exchange of the Prime Group Realty Partnership Units for PGRT Shares,
(6) the registration of such PGRT Shares with the SEC as provided under the
Prime Group Realty Registration Rights Agreement, (7) the registration of
the Prime Retail, Inc. Shares with the SEC as provided under the Prime
Retail Registration Rights Agreement, and (8) the ability of Lender to
become a party to the Prime Retail, Inc. Registration Rights Agreement;
(k) payment of all amounts for fees and expenses owning to Lender
under this Loan Agreement; and
(l) such other instruments, documents, certificates, consents,
waivers and opinions necessary to consummate the transactions contemplated
in this Loan Agreement and in the other Loan Documents, or as Lender may
reasonably request.
4.2 ALL REVOLVER ADVANCES. The obligation of Lender to make any Revolver
Advance is subject to the following further conditions precedent that:
4.2.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Borrower and Guarantor, as the case may be, set forth in this
Loan Agreement and the other Loan Documents shall be true and correct in
all material respects as of the date such Revolver Advance is made, except
for any representation or warranty limited by its terms to a specific date
and taking into account any disclosures made in writing pursuant to the
terms of this Loan Agreement.
4.2.2 PERFORMANCE; NO DEFAULT. Borrower shall have performed and
complied with all agreements and conditions contained in the Loan Documents
to be performed by or complied with prior to such Revolver Advance and no
Event of Default of Default then exists.
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ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Lender as follows:
5.1 BORROWER. Borrower is a limited partnership duly formed and validly
existing under the laws of the State of Illinois. The Borrower is duly
qualified in each jurisdiction in which the failure to so qualify could have
a Material Adverse Effect on Borrower. The Borrower has full power and
authority to execute and deliver the Loan Documents and to perform its
obligations hereunder and thereunder. The agreement of limited partnership
of Borrower, as amended, a copy of which has been furnished to Lender, is
true, correct and complete.
5.2 PARTNERS OF BORROWER. The managing general partner of Borrower is
PGLP, Inc. and the limited partners of Borrower are Prime Group II, L.P., an
Illinois limited partnership, Prime Group Limited Partnership, an Illinois
limited partnership, The Prime Group, and Prime International, Inc., an
Illinois corporation. PGLP, Inc. is a duly formed corporation, validly
existing and in good standing in the State of Illinois and qualified to do
business in each jurisdiction in which failure to do so would have a Material
Adverse Effect on PGLP, Inc.
5.3 AUTHORITY. No consent or approval of, or other action by, any
partner, Governmental Body or any other Person, which has not already been
obtained, is required to be obtained by Borrower to authorize, or is required
to be obtained by Borrower in connection with the execution, delivery and
performance of, the Loan Documents, or is required as a condition to the
validity or, subject to the terms of the Partnership Agreements,
enforceability of the Security Interests or any of the Loan Documents.
5.4 NECESSARY ASSETS. Borrower owns all of the assets necessary to
operate and maintain the operations of the Business.
5.5 BINDING AGREEMENTS. This Loan Agreement and the other Loan
Documents, when executed and delivered, will constitute the valid and legally
binding obligations of Borrower, and will be enforceable against Borrower in
accordance with their respective terms, except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
equitable principles.
5.6 BORROWER'S SECURITIES. As of the Closing Date, Borrower owns
3,576,933 Brookdale Shares, 104,632 Prime Retail Partnership Units, 115,000
AIMCO Shares, and 47,525 Prime Group Realty Partnership Units (collectively,
the "Borrower's Securities").
5.7 TITLE TO PROPERTY; LIENS. Borrower shall have good and marketable
title to all of the Collateral free and clear of all Liens. The applicable
Loan Documents create a valid and perfected Lien in the Collateral described
therein.
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5.8 FINANCIAL STATEMENTS. The financial statements previously delivered to
Lender present fairly the financial condition and the results of the operations
of Borrower and Guarantor as of the dates and for the periods indicated therein.
5.9 LITIGATION. To the knowledge of Borrower, there are no actions, suits,
arbitration proceedings or claims pending or threatened at law or in equity or
before any Governmental Body which, if adversely determined, could have a
Material Adverse Effect on Borrower or Guarantor. As of the Closing Date, to
the knowledge of Borrower, there are no proceedings pending or threatened which
call into question the validity or enforceability of any of this Loan Agreement
or the other Loan Documents or any of the transactions contemplated hereby or
thereby.
5.10 CONFLICTING AGREEMENTS. Borrower is not in default under any
agreement to which it is a party or by which Borrower or any of its Property is
bound, the effect of which default has resulted in the termination of such
agreement and such termination will have a Material Adverse Effect on Borrower.
No authorization or approval or other action by, and no notice to or filing
with, any Governmental Body which has not been obtained, given or made by
Borrower is required for the due execution, delivery and performance by Borrower
of any of the Loan Documents. No provision of any mortgage, indenture, contract
or agreement to which Borrower is a party conflicts with, or requires any
consent which has not already been obtained or is anticipated to be obtained as
described above, or in any way would prevent the execution, delivery or
performance of the terms of, any of the Loan Documents. Neither the execution,
delivery, or carrying out of the terms of the Loan Documents will constitute a
default under, or result in the creation or imposition of, or obligation to
create, any Lien upon the Property of Borrower pursuant to the terms of any such
mortgage, indenture, contract or agreement. Neither the execution and deliver
by Borrower of the Loan Documents, nor the consummation of the transactions
therein contemplated, nor compliance with the provisions thereof will violate
any law, rule, regulation, order, writ, judgment, injunction, decree or award
binding on Borrower, except where such violation could not reasonably be
expected to have a Material Adverse Effect.
5.11 COMPLIANCE WITH APPLICABLE LAWS. Borrower is not in default in
respect of any judgment, order, writ, injunction, decree or decision of any
Governmental Body, which default would have a Material Adverse Effect on
Borrower. Borrower is in compliance in all material respects with all
applicable statutes and regulations of all Governmental Bodies, a violation of
which would have a Material Adverse Effect on Borrower.
5.12 APPLICATION OF CERTAIN LAWS AND REGULATIONS.
5.12.1 INVESTMENT COMPANY ACT. Borrower is not an "investment
company," or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
5.12.2 HOLDING COMPANY ACT. Borrower is not a "holding company," or a
"subsidiary company" of a "holding company," or an "affiliate" of a
"holding company"
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or of a "subsidiary company" of a "holding company," as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended.
5.13 MARGIN REGULATIONS. None of the transactions contemplated by this
Loan Agreement or any of the other Loan Documents, including the use of proceeds
of the Loan, will violate or result in a violation of Section 7 of the Exchange
Act, or any regulations issued pursuant thereto, including, without limitation,
Regulations T, U and X.
5.14 NO MISREPRESENTATION. To Borrower's knowledge, no representation or
warranty contained herein and no certificate, information or report furnished or
to be furnished by Borrower in connection with any of the Loan Documents or any
of the transactions contemplated hereby or thereby contains or will contain a
misstatement of material fact, or omits or will omit to state a material fact
required to be stated in order to make the statements contained herein or
therein not misleading in the light of the circumstances under which such
statements were made. To Borrower's knowledge, there is no fact which has not
expressly been disclosed to Lender in writing, or so far as Borrower reasonably
can foresee, that will have a Material Adverse Effect on Borrower or Guarantor.
5.15 NO AFFILIATION. Borrower and AIMCO are not "affiliates" as that term
is defined in the Securities Act of 1933, as amended.
5.16 REGISTRATION EFFECTIVE. The Prime Retail, Inc. Registration
Statement, with respect to the Prime Retail, Inc. Shares issuable upon
conversion of the Prime Retail Partnership Units, has been declared effective
under the Securities Act of 1933, as amended, and to Borrower's knowledge, no
"stop order" suspending the effectiveness of the Prime Retail, Inc.
Registration Statement has been issued, nor has any proceeding for the
issuance of such an order been initiated or threatened.
ARTICLE 6
AFFIRMATIVE COVENANTS
Until all of Borrower's Obligations are paid and performed in full,
Borrower agrees:
6.1 LEGAL EXISTENCE; GOOD STANDING. Borrower shall maintain its existence
in its jurisdiction of organization and maintain its qualification in any
jurisdiction in which failure to be so qualified would have a Material Adverse
Effect. The Guarantor shall maintain its existence and remain in good standing
in its jurisdiction of incorporation and in any jurisdiction in which failure to
be so qualified would have a Material Adverse Effect.
6.2 INSPECTION. Borrower will permit representatives of Lender to visit
its offices to examine its books and records and Accountants' reports relating
thereto, and to make copies or extracts therefrom, and to discuss its business
and affairs with its employees, all at reasonable times, upon reasonable prior
notice, and, at all reasonable times and upon reasonable prior notice,
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to examine and inspect its Property and to meet and discuss the business and
its affairs with the Accountants.
6.3 FINANCIAL STATEMENTS AND OTHER INFORMATION OF BORROWER. Borrower will
maintain a system of accounting in accordance with GAAP and furnish to Lender:
6.3.1 ANNUAL STATEMENTS. As soon as available and in any event within
120 days after the close of each fiscal year, a copy of (a) the balance
sheet of Borrower as of the end of such year, and (b) the statements of
income and cash flow of Borrower for such year, setting forth in each case
(beginning with the 1998 financial statements) in comparative form the
corresponding figures for the preceding year, all in reasonable detail, and
in each case audited by the Accountants. Such annual statements shall be
accompanied by a report of the Accountants which states that in making the
audit of the financial statements of Borrower, nothing of a financial or
accounting nature came to the attention of the Accountants that caused them
to believe that Borrower was not in compliance with the terms, covenants,
provisions, or conditions of any of the Loan Documents or that there shall
have occurred a condition or event that constitutes an Event of Default
(or, if applicable, specifying in such certificate the nature and status of
any instances of non-compliance or Events of Default), and which is
otherwise in a form reasonably satisfactory to Lender.
6.3.2 NOTICE OF DEFAULTS; LOSS. Immediate written notice if: (i) any
Indebtedness aggregating in excess of $3,000,000 of Borrower or Guarantor
is declared or shall become due and payable prior to its declared or stated
maturity (other than regularly scheduled payments), or called and not paid
when due, (ii) the holder of any note, or other evidence of Indebtedness,
certificate or security evidencing any such Indebtedness aggregating in
excess of $3,000,000 of Borrower or Guarantor has the right to declare such
Indebtedness due and payable prior to its stated maturity, (iii) there
shall occur and be continuing a Default or Event of Default, accompanied by
a certified statement of an authorized officer of PGLP, Inc., as managing
general partner of Borrower, or an authorized officer of Guarantor setting
forth what action Borrower or Guarantor, as the case may be, proposes to
take in respect thereof, or (iv) any event shall occur causing loss or
depreciation in the value of assets having a Material Adverse Effect upon
the business or operations of Borrower or Guarantor, including the amount
or the estimated amount of any such loss or depreciation or adverse effect.
6.3.3 NOTICE OF SUITS, ADVERSE EVENTS. Prompt written notice of: (i)
any citation, summons, subpoena, order to show cause or other order naming
Borrower or Guarantor a party to any proceeding involving in excess of
$3,000,000 and include with such notice a copy of such citation, summons,
subpoena, order to show cause or other order, (ii) any lapse or other
termination of any material license, permit, franchise, agreement or other
authorization issued to Borrower or Guarantor by any Governmental Body or
any other Person, (iii) any refusal by any Governmental Body or any other
Person to renew or extend any such material license, permit, franchise,
agreement or other authorization and (iv) any dispute between Borrower or
Guarantor and any
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Governmental Body or any other Person, which lapse, termination, refusal
or dispute referred to in clauses (ii) or (iii) above or in this
clause (iv) may have a material adverse effect on the financial
condition, operations, business, prospects or Property of Borrower or
Guarantor.
6.3.4 COVENANT COMPLIANCE CERTIFICATE; BORROWING BASE CERTIFICATE. On
or before the 20th day after the end of each calendar quarter, a compliance
certificate in a form reasonably satisfactory to Lender stating whether
Borrower is in compliance with the terms, covenants, provisions and
conditions of the Loan Documents and specifying any condition or event that
constitutes an Event of Default set forth in Article 8 hereof, together
with any supporting documentation reasonably requested by Lender. On the
date of each requested Revolver Advance, and on or before the 5th day after
the end of each month, a borrowing base certificate in a form reasonably
satisfactory to Lender setting forth the calculation of the Available
Borrowing Base as of the close of business of the business day immediately
preceding the date of such Revolver Advance or as of the end of the
preceding month, as applicable.
6.3.5 OTHER INFORMATION. Such other information and reports relating
to the past, present or future financial condition, operations, plans and
projections of Borrower as Lender reasonably may request from time to time.
6.4 FINANCIAL INFORMATION OF PRIME RETAIL, INC. AND PGRT. Borrower shall
furnish to the Bank:
6.4.1 as soon as available, but in no event more than five (5)
Business Days after request by Lender, a copy of each quarterly report on
Form 10-Q filed by Prime Retail, Inc., PGRT, Brookdale and AIMCO with the
SEC;
6.4.2 as soon as available, but in no event more than five (5)
Business Days after request by Lender, a copy of any annual report on
Form 10-K filed by Prime Retail, Inc., PGRT, Brookdale or AIMCO with the
SEC.
6.4.3 as soon as available, but in any event no more than five (5)
Business Days after request by Lender, any other report filed by Prime
Retail, Inc., PGRT, Brookdale or AIMCO with the SEC under Section 13 of the
Exchange Act, and any definitive proxy material filed by such Person with
the SEC under Section 14 of the Exchange Act.
6.5 REPORTS TO GOVERNMENTAL BODIES AND OTHER PERSONS. Borrower will file,
all on a timely basis, all reports, applications, documents, instruments and
information required to be filed pursuant to all rules, regulations or requests
of any Governmental Body or other Person having jurisdiction over the operation
of Borrower, including, but not limited to, such of the Loan Documents as may be
required to be filed with any such Governmental Body or other Person pursuant to
applicable rules and regulations promulgated by such Governmental Body or other
Person, unless the failure to file would not reasonably be expected to have a
Material Adverse Effect.
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6.6 GENERAL PARTNER. PGLP, Inc. or a "Prime Group Entity" at all times
shall remain the general partner of Borrower. As used herein, a "Prime Group
Entity" shall mean (i) PGLP, Inc., (ii) The Prime Group, (iii) any person in
which The Prime Group or PGLP, Inc. has a beneficial ownership of 51% or more of
the voting interests in such person, (iv) any entity controlling, controlled by
or under common control with, The Prime Group or PGLP, Inc., or (v) any entity
in which The Prime Group or PGLP, Inc., or officers, directors and employees of
The Prime Group or PGLP, Inc. own, directly or indirectly, a controlling
interest.
6.7 FINANCIAL STATEMENTS OF GUARANTOR. Borrower will cause Guarantor to
furnish to Lender as soon as available and in any event within 180 days after
the close of each fiscal year, a copy of Guarantor's (a) balance sheet as of the
end of such year, and (b) statements of income and cash flow for such year,
setting forth in each case (beginning with the 1998 financial statements) in
comparative form the corresponding figures for the preceding year, all in
reasonable detail, and in each case audited by the Accountants.
ARTICLE 7
NEGATIVE COVENANTS
Borrower shall not:
7.1 Engage in any business other than the Business or otherwise materially
change the nature of the Business of Borrower as it exists on the Closing Date.
7.2 Amend, modify or waive any term or provision of Borrower's certificate
of limited partnership or agreement of limited partnership in a manner that
would have a Material Adverse Effect.
7.3 Sell, lease, assign, transfer, pledge, hypothecate or otherwise
dispose of or grant any security interest in any of Borrower's Securities
pledged as Collateral, except as permitted by Section 5.7.
7.4 Consent to any alteration or modification of any provision affecting
the Partnership Units, which alteration or modification would have a Material
Adverse Effect.
ARTICLE 8
DEFAULT AND REMEDIES
8.1 EVENTS OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under the Loan Documents:
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8.1.1 DEFAULT IN PAYMENT. If Borrower shall fail to pay all or any
portion of Borrower's Obligations on or before the fifth Business Day
following the date on which the same become due and payable.
8.1.2 BREACH OF COVENANTS AND CERTAIN OTHER PROVISIONS.
(a) If Borrower shall fail to observe or perform any covenant or
agreement made by Borrower contained in Article VI (except for Sections 6.1
and 6.5) or in Article VII.
(b) If Borrower shall fail to observe or perform any covenant or
agreement (other than those referred to in subparagraph (a) above) made by
Borrower in any of the Loan Documents, and such failure shall continue for
a period of 30 days after the earlier of (i) the written notice of such
failure is given to Borrower by Lender or (ii) the date Borrower shall have
actual knowledge of such failure; PROVIDED, HOWEVER, that if such default
is of a nature that it cannot be cured within thirty (30) days and Borrower
commences and diligently proceeds to cure such default, such cure period
shall be extended for such period of time as required to cure such default
but in no event more than thirty (30) additional days.
(c) Any alterations, modifications or amendments are made to the
certificate or articles of incorporation of either Prime Retail, Inc. or
PGRT or to any other agreement that would adversely alter in any material
manner the rights afforded to holders of Collateral consisting of (i) Prime
Retail Partnership Units in the Second Amended and Restated Agreement of
Limited Partnership of Prime Retail, L.P., as further amended, or (ii)
Prime Group Realty Partnership Units in the Amended and Restated Agreement
of Limited Partnership of Prime Group Realty, L.P., as further amended, to
convert such Partnership Units into Prime Shares.
8.1.3 BREACH OF WARRANTY. Any representation or warranty made by
Borrower or Guarantor in or pursuant to any of the Loan Documents to which
Borrower or Guarantor is a party or in any instrument or document
furnished in compliance with the Loan Documents shall prove to be false or
misleading in any material respect as of the date on which made.
8.1.4 ACCELERATION OF ANY INDEBTEDNESS. If Borrower or Guarantor at
any time shall be in default (as principal or guarantor or other surety) in
the payment of any principal of or premium or interest on any Indebtedness
for Borrowed Money in excess of $3,000,000 (other than Borrower's
Obligations) and in each case such default has resulted in an acceleration
of the maturity of such Indebtedness for Borrowed Money which is not paid
promptly upon acceleration.
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8.1.5 BANKRUPTCY.
(a) If Borrower or Guarantor or, to the extent, and for so long as,
the shares or limited partnership units of such Person (or, in the case of
Prime Retail, Inc. and PGRT, shares of limited partnership units that are
exchangeable into shares of such Person) have been pledged to Lender as
security for the Loan, the Prime Retail Operating Partnership, the Prime
Group Realty Operating Partnership, Prime Retail, Inc., PGRT, Brookdale or
AIMCO shall (i) generally not be paying, or admit in writing its inability
to pay, its debts as they become due, (ii) file, or consent, by answer or
otherwise, to the filing against any of such entities, of a petition for
relief or reorganization or arrangement or any other petition in bankruptcy
or insolvency under the laws of any jurisdiction, (iii) make an assignment
for the benefit of creditors, (iv) consent to the appointment of a
custodian, receiver, trustee or other officer with similar powers for, or
for any substantial part of the Property owned by any of such entities, (v)
be adjudicated insolvent, or (vi) take a corporate action to authorize any
of the foregoing.
(b) If any Governmental Body of competent jurisdiction shall enter an
order appointing, without consent of Borrower or Guarantor or, to the
extent, and for so long as, the shares or limited partnership units of such
Person (or, in the case of Prime Retail, Inc. and PGRT, shares of limited
partnership units that are exchangeable into shares of such Person) have
been pledged to Lender as security for the Loan, the Prime Retail Operating
Partnership, the Prime Group Realty Operating Partnership, Prime Retail,
Inc., PGRT, Brookdale or AIMCO, a custodian, receiver, trustee or other
officer with similar powers with respect to any of such Persons, or with
respect to any substantial part of the Property belonging to Borrower or
such Person, or if an order for relief shall be entered in any case or
proceeding for liquidation or reorganization or otherwise to take advantage
of any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of any of such entities, or if any
petition for any such relief shall be filed against any of such entities
and such order or petition shall not be dismissed within 90 days.
8.1.6 JUDGMENTS. If there shall exist final judgments against
Borrower or Guarantor which shall have been outstanding for any period of
30 days or more from the date of the entry thereof and shall not have been
discharged in full or stayed pending appeal and if the aggregate amount
thereof exceeds $3,000,000.
8.1.7 NON-PERFORMANCE OF GUARANTY, ETC. Guarantor shall fail (subject
to any applicable notice, cure or grace period) to comply with or to
perform in any material respect any covenant set forth in the Guaranty,
Guarantor (or any Person by, through or on behalf of Guarantor) shall
contest in any manner the validity, binding nature or enforceability of the
Guaranty, or the Guaranty shall cease to be in full force and effect.
8.1.8 INVALIDITY OF PLEDGE AGREEMENT, ETC. The Pledge Agreement shall
cease to be in full force and effect, any party thereto (other than Lender)
shall fail (subject to any applicable notice, cure or grace period) to
comply with or to perform in any material
23
<PAGE>
respect any applicable provision of the Pledge Agreement promptly
upon request of the Lender (or, if such noncompliance or nonperformance
would result in the non-perfection of a material portion of the
Collateral granted to the Lender under the Pledge Agreement, at any
time regardless of whether the Lender has made any such request), or
any Person (other than the Lender) party to the Pledge Agreement (or
any Person by, through or on behalf of such Person party thereto)
shall contest in any manner the validity, binding nature of
enforceability of the Pledge Agreement, as applicable.
8.2 ACCELERATION OF BORROWER'S OBLIGATIONS. Upon the occurrence of:
(a) any Event of Default described in clauses (ii), (iii), (iv) and
(v) of subsection 8.1.5(a) or described in Section 8.1.5(b), all of
Borrower's Obligations at that time outstanding automatically shall mature
and become due and payable and Borrower's right to request additional
Revolver Advances shall immediately terminate, or
(b) any other Event of Default, Lender, at any time, (unless such
Event of Default shall have been cured by Borrower or waived by Lender) at
its option, may declare all of Borrower's Obligations due and payable,
whereupon Borrower's Obligations immediately shall mature and become due
and payable and Borrower's right to request additional Revolver Advances
shall immediately terminate,
all without presentment, demand, protest, or notice, all of which hereby are
waived.
8.3 REMEDIES ON DEFAULT. If any of Borrower's Obligations have been
accelerated pursuant to Section 8.2, Lender, at its option, may:
8.3.1 ENFORCEMENT OF SECURITY INTERESTS. Enforce its rights and
remedies under the Loan Documents in accordance with their respective
terms.
8.3.2 OTHER REMEDIES. Enforce any of the rights or remedies granted
to Lender under any other Loan Document and any other rights or remedies
accorded to Lender at equity or law, by virtue of statute or otherwise.
8.4 APPLICATION OF FUNDS. Any funds received by Lender pursuant to the
exercise of any rights accorded to Lender pursuant to, or by the operation of
any of the terms of, any of the Loan Documents, including, without limitation,
insurance proceeds, condemnation proceeds or proceeds from the sale of
Collateral, shall be applied by Lender in the following order of priority:
8.4.1 EXPENSES. First, to the payment of (i) all fees and expenses,
including, without limitation, reasonable attorney's fees, court costs,
fees of appraisers, title charges, costs of maintaining and preserving the
Collateral, costs of sale, and all other costs incurred by the Lender in
exercising any rights accorded to the Lender pursuant to the Loan Documents
or by applicable law and (ii) all Liens superior to the Liens of Lender,
except such superior Liens subject to which any sale of the Collateral may
have been made;
24
<PAGE>
8.4.2 BORROWER'S OBLIGATIONS. Next to the payment of Borrower's
Obligations in such order as Lender may determine; and
8.4.3 SURPLUS. Any surplus, to the Person or Persons entitled
thereto.
ARTICLE 9
CLOSING
The closing of the Loan (the "Closing") shall be on the date hereof (the
"Closing Date"), and the Closing shall take place on such date provided all
conditions for the Closing as set forth in this Loan Agreement have been
satisfied. The Closing shall occur at such place as the parties hereto shall
agree.
ARTICLE 10
EXPENSES AND INDEMNITY
10.1 CLOSING FEE. The Borrower shall pay to Lender on the Closing Date
hereof the sum of $250,000, which may be paid out of Borrower's initial
borrowing under the Loan.
10.2 ATTORNEY'S FEES AND OTHER FEES AND EXPENSES. Whether or not any of
the transactions contemplated by this Loan Agreement shall be consummated,
Borrower agrees to pay to Lender on demand all fees paid or expenses incurred
by Lender in connection with the transactions contemplated hereby and in
connection with any amendments, modifications or waivers (whether or not the
same become effective) under or in respect of any of the Loan Documents,
including, without limitation:
10.2.1 FEES AND EXPENSES FOR PREPARATION OF LOAN DOCUMENTS. All
reasonable fees, expenses and disbursements (including without limitation,
charges for required lien searches, reproduction of documents, long
distance telephone calls and overnight express carriers) of counsel
retained by Lender in connection with the preparation and negotiation of
any of the Loan Documents or any amendments, modifications or waivers
hereto or thereto (whether or not the same become effective).
10.2.2 FEES AND EXPENSES IN ENFORCEMENT OF RIGHTS OR DEFENSE OF LOAN
DOCUMENTS. Any reasonable attorneys' fees and expenses or other costs or
expenses incurred by Lender in connection with the enforcement or
collection against Borrower or Guarantor of any provision of any of the
Loan Documents, and in connection with or arising out of any litigation,
investigation or proceeding instituted by any Governmental Body or any
other Person with respect to any of the Loan Documents, whether or not suit
is instituted, including, but not limited to, such costs or expenses
arising from the enforcement or collection against Borrower, of any
provision of any of the Loan Documents in any state or federal bankruptcy
or reorganization proceeding.
25
<PAGE>
10.3 INDEMNITY. Borrower hereby agrees to indemnify and save Lender
harmless from the following:
10.3.1 BROKERAGE FEES. The fees, if any, of brokers and finders
incurred by Borrower.
10.3.2 OPERATION OF COLLATERAL; JOINT VENTURERS. Any loss, cost,
liability, damage or expense (including reasonable attorneys' fees and
expenses) incurred in connection with the ownership, operation or
maintenance of the Collateral, the construction of Lender and Borrower as
having the relationship of joint venturers or partners or the determination
that Lender or Borrower has acted as agent for the other.
ARTICLE 11
MISCELLANEOUS
11.1 NOTICES. Any notices, communications and waivers under this Loan
Agreement shall be in writing and shall be (i) delivered in person, (ii) mailed,
postage prepaid, either by registered or certified mail, return receipt
requested, (iii) by overnight express carrier, or (iv) by facsimile
transmission, addressed in each case as follows:
To Lender: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attn: John C. Hein
Facsimile No.: (312)904-6691
With copy to: Schwartz, Cooper, Greenberger & Krauss
180 North LaSalle Street, Suite 2700
Chicago, Illinois 60601
Attn: Robert A. Smoller, Esq.
Facsimile No.: (312) 782-8416
To Borrower: Prime Group VI, L.P.
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900 (Suite 4200 after February 1, 1999)
Chicago, Illinois 60601
Attn: Michael W. Reschke
Facsimile No.: (312)917-1511
26
<PAGE>
With copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Facsimile No.: (312)558-5700
And to: The Prime Group, Inc.
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
Attn: Robert J. Rudnik, Esq.
Facsimile No.: (312)917-8442
or to any other address as to any of the parties hereto, as such party shall
designate in a written notice to the other party hereto. All notices sent
pursuant to the terms of this Section shall be deemed received (i) if personally
delivered, then on the date of delivery, (ii) if sent by overnight, express
carrier, then on the next federal banking day immediately following the day
sent, (iii) if sent by registered or certified mail, then on the earlier of the
third federal banking day following the day sent or when actually received, or
(iv) if sent by facsimile transmission, when transmitted to the facsimile number
specified in this Section and confirmation of receipt is received.
11.2 SURVIVAL OF LOAN AGREEMENT. All covenants, agreements,
representations and warranties made in this Loan Agreement and in the
certificates delivered pursuant hereto shall survive the making by Lender of the
Loan and the execution and delivery to Lender of the Note and of all other Loan
Documents and shall continue in full force and effect so long as any of
Borrower's Obligations remain outstanding, unperformed or unpaid.
11.3 FURTHER ASSURANCE. From time to time, Borrower shall execute and
deliver to Lender such additional documents as Lender may require to carry out
the purposes of the Loan Documents and to protect Lender's rights thereunder.
11.4 TAXES AND FEES. Should any tax (other than taxes based upon the net
income of Lender), recording or filing fees become payable in respect of any of
the Loan Documents, or any amendment, modification or supplement thereto,
Borrower agrees to pay the same to Lender promptly after demand, but in no event
after 15 Business Days from the date of demand, together with any interest or
penalties thereon and agrees to hold Lender harmless with respect thereto.
11.5 SEVERABILITY. In the event that any provision of this Loan Agreement
is deemed to be invalid by reason of the operation of law, or by reason of the
interpretation placed thereon by any administrative agency or any court, this
Loan Agreement shall be construed as not containing such provision, and the
invalidity of such provision shall not affect the validity of any other
provisions hereof, and any and all other provisions hereof which otherwise are
lawful and valid shall remain in full force and effect.
27
<PAGE>
11.6 WAIVER. No delay on the part of Lender in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, and no single or
partial exercise of any right, power or privilege hereunder shall preclude other
or further exercise thereof, or be deemed to establish a custom or course of
dealing or performance between the parties hereto, or preclude the exercise of
any other right, power or privilege.
11.7 MODIFICATION OF LOAN DOCUMENTS. No modification or waiver of any
provision of any of the Loan Documents shall be effective unless the same shall
be in writing, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or demand
on Borrower in any case shall entitle Borrower to any other or further notice or
demand in the same, similar or other circumstances.
11.8 CAPTIONS. The headings in this Loan Agreement are for purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
11.9 SALE OF INTEREST. Borrower may not sell, assign or transfer this Loan
Agreement or any portion thereof, including, without limitation, Borrower's
right, title, interest, remedies, powers, and/or duties hereunder or thereunder.
Borrower hereby consents to Lender's sale, assignment, transfer or other
disposition of this Loan Agreement or of any portion hereof or thereof, at any
time or times after an Event of Default has occurred, including, without
limitation, Lender's right, title, interest, remedies, powers, and/or duties
hereunder or thereunder. Borrower hereby consents to Lender's participation of
this Loan Agreement at any time prior to an Event of Default so long as Lender
retains at least a 50% participating interest in this Loan Agreement. Borrower
acknowledges and agrees that any and all such assignees or participants may be
provided with information concerning Borrower, its operations, business and
financial condition and this Loan Agreement which have been or would be provided
to Lender.
11.10 SUCCESSORS AND ASSIGNS. This Loan Agreement shall be binding upon
and inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.
11.11 REMEDIES CUMULATIVE. All rights and remedies of Lender pursuant to
this Loan Agreement, any other Loan Documents or otherwise, shall be cumulative
and non-exclusive, and may be exercised singularly or concurrently. One or more
successive actions may be brought against Borrower as often as Lender deems
advisable, until all of Borrower's Obligations are paid and performed in full.
11.12 ENTIRE AGREEMENT. This Loan Agreement and the other Loan Documents
executed prior or pursuant hereto constitute the entire agreement between the
parties hereto with respect to the transactions contemplated hereby or thereby
and supersede any prior agreements, whether written or oral, relating to the
subject matter hereof.
11.13 APPLICABLE LAW. THE LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS AND
28
<PAGE>
DECISIONS OF THE STATE OF ILLINOIS (OTHER THAN CHOICE OF LAW PROVISIONS),
UNLESS OTHERWISE PROVIDED THEREIN.
11.14 JURISDICTION AND VENUE. BORROWER HEREBY AGREES THAT ALL ACTIONS OR
PROCEEDINGS INITIATED BY BORROWER AND ARISING DIRECTLY OR INDIRECTLY OUT OF THE
LOAN DOCUMENTS SHALL BE LITIGATED IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS,
OR THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF ILLINOIS OR, IF
LENDER INITIATES SUCH ACTION, ANY COURT IN WHICH LENDER SHALL INITIATE SUCH
ACTION, TO THE EXTENT SUCH COURT HAS JURISDICTION. BORROWER HEREBY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING
COMMENCED BY LENDER IN ANY OF SUCH COURTS. BORROWER WAIVES ANY CLAIM THAT
CHICAGO, ILLINOIS OR THE NORTHERN DISTRICT OF ILLINOIS IS AN INCONVENIENT FORUM
OR AN IMPROPER FORUM BASED ON LACK OF VENUE. THE EXCLUSIVE CHOICE OF FORUM FOR
BORROWER SET FORTH IN THIS SECTION SHALL NOT BE DEEMED TO PRECLUDE THE
ENFORCEMENT, BY LENDER, OF ANY JUDGMENT OBTAINED IN ANY OTHER FORUM OR THE
TAKING, BY LENDER, OF ANY ACTION TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION.
11.15 WAIVER OF RIGHT TO JURY TRIAL. LENDER AND BORROWER ACKNOWLEDGE AND
AGREE THAT ANY CONTROVERSY WHICH MAY ARISE UNDER ANY OF THE LOAN DOCUMENTS OR
WITH RESPECT TO THE TRANSACTIONS CONTEMPLATED THEREBY WOULD BE BASED UPON
DIFFICULT AND COMPLEX ISSUES AND THEREFORE, THE PARTIES AGREE THAT ANY COURT
PROCEEDING ARISING OUT OF ANY SUCH CONTROVERSY WILL BE TRIED IN A COURT OF
COMPETENT JURISDICTION BY A JUDGE SITTING WITHOUT A JURY.
11.16 NON-RECOURSE. Notwithstanding anything to the contrary contained
herein, Lender agrees that no limited partner, agent, director, officer or
employee of Borrower shall be personally liable to Lender for the payment of the
Loan or performance of any of Borrower's Obligations or any other obligations
hereunder, under the Note or under any of the other Loan Documents, or with
respect to the Loan, and recourse hereunder, under the Note and under any other
Loan Documents (including, without limitation, with respect to the
representations and warranties contained herein or therein) shall be limited to
the Collateral. It is understood that the preceding sentence shall not (i) in
the event of any malfeasance, such as fraud, misappropriation of funds or
intentional misrepresentation, estop Lender from instituting or prosecuting a
legal action or proceeding or otherwise making a claim against the Person or
Persons committing such malfeasance, or (ii) constitute a waiver, release or
discharge of any of Borrower's Obligations, and the same shall continue until
paid or discharged in full.
[BALANCE OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS.]
29
<PAGE>
This Loan Agreement has been executed and delivered by each of the parties
hereto by a duly authorized officer of each such party on the date first set
forth above.
PRIME GROUP VI, L.P., an Illinois limited partnership
By: PGLP, Inc., an Illinois corporation, as managing
general partner
By: /s/ ROBERT J. RUDNIK
---------------------------------------------
Name: ROBERT J. RUDNIK
-------------------------------------------
Title: VICE PRESIDENT
------------------------------------------
LASALLE NATIONAL BANK, a national banking association
By: /s/ JOHN C. HEIN
--------------------------------------------------
Name: JOHN C. HEIN
------------------------------------------------
Title: FIRST VICE PRESIDENT
-----------------------------------------------
<PAGE>
EXHIBIT A
FORM OF GUARANTY
<PAGE>
EXHIBIT B
FORM OF NOTE
<PAGE>
EXHIBIT C
FORM OF PLEDGE AGREEMENT
<PAGE>
FIRST AMENDMENT TO LOAN DOCUMENTS, CONSENT AND LIMITED RELEASE
THIS FIRST AMENDMENT TO LOAN DOCUMENTS, CONSENT AND LIMITED RELEASE
(this "Amendment") is dated as of January 29, 1999 and is by and between
Prime Group VI, L.P., an Illinois limited partnership (the "Borrower"), and
LaSalle National Bank (the "Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and the Lender entered into that certain Loan
Agreement, dated as of December 18, 1998 (as amended, restated, modified or
supplemented and in effect from time to time, the "Loan Agreement"), pursuant
to which the Lender extended certain credit facilities to Borrower (all such
extensions of credit collectively referred to herein as the "Loans"), upon
the terms and subject to the conditions set forth therein (capitalized terms
used herein without definition shall have the meanings ascribed to such terms
in the Loan Agreement); and
WHEREAS, as security for the Loans, Borrower executed and delivered that
certain Pledge Agreement to the Lender, dated as of December 18, 1998 (as
amended, restated, modified or supplemented and in effect from time to time,
the "Pledge Agreement"); and
WHEREAS, Borrower has requested that the Lender release the AIMCO Shares
pledged as Collateral under the Pledge Agreement and consent to Borrower (i)
selling the pledged AIMCO Shares and (ii) using the proceeds of the AIMCO
Sale to purchase 256,572 Prime Group Realty Partnership Units (the
"Additional Partnership Units") to be pledged to Lender in substitution for
the pledged AIMCO Shares; and
WHEREAS, the Lender is willing to release the pledged AIMCO Shares and
consent to their sale, subject to Borrower (i) consummating the sale of the
AIMCO Shares, (ii) purchasing the Additional Partnership Units, (iii)
pledging the Additional Partnership Units, (iv) delivering unit certificates
evidencing the Additional Partnership Units to Lender as Collateral for the
Loans, and (v) amending Lender's existing Uniform Commercial Code financing
statements covering the Collateral, on the terms and conditions contained
herein;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower and Lender hereby
agree as follows:
1. The Lender hereby agrees to release its lien on the AIMCO Shares
pledged to the Lender pursuant to the Pledge Agreement as Collateral for the
Loans, and hereby consents to the sale of the AIMCO Shares, subject to the
following conditions:
a) the Borrower shall sell the released AIMCO Shares (the "Released
Shares") through an investment account with ABN AMRO Incorporated (the
"ABN AMRO Account") for which the Borrower, the Lender and ABN AMRO
Incorporated have entered into a restricted account agreement to
evidence and perfect the
1
<PAGE>
Lender's security interest in the Released Shares and all proceeds of,
and substitutions for, the Released Shares;
a) all proceeds from the sale of the Released Shares shall be held
in the ABN AMRO Account until the Borrower consummates the purchase of
the Additional Partnership Units;
a) the Borrower shall direct the seller of the Additional
Partnership Units to deliver the certificates evidencing the
Additional Partnership Units to the ABN AMRO Account immediately upon
consummation of the purchase of the Additional Partnership Units;
a) the Borrower shall direct ABN AMRO Incorporated to deliver the
certificates evidencing the Additional Partnership Units to the Lender
upon ABN AMRO Incorporated's receipt of the Additional Partnership
Units; and
a) concurrently with the execution of this Amendment, the Borrower
shall deliver to Lender an assignment separate from certificate
executed in blank with respect to each certificate evidencing the
Additional Partnership Units.
2. The Loan Agreement is hereby amended by deleting Paragraph 5.15 and
by deleting all reference elsewhere in the Loan Agreement to "Apartment
Investment and Management Company," "AIMCO," and "AIMCO Shares."
3. The Pledge Agreement is hereby amended as follows:
a) by deleting all reference to "Apartment Investment and Management
Company," "AIMCO," and "AIMCO Stock"; and
a) by deleting Schedule 1 thereto in its entirety and, upon purchase
of the Additional Partnership Units, replacing it with a new
"Schedule 1" substantially in the form attached hereto.
4. The Prime Group, Inc., an Illinois corporation, hereby ratifies its
obligations under that certain Continuing Unconditional Guaranty, dated December
18, 1998, given by The Prime Group, Inc. in favor of the Lender.
5. The Borrower hereby represents and warrants that its execution, delivery
and performance of this Amendment, the Pledge Agreement and the Loan Agreement
(both as amended hereby) are within its partnership powers and have been duly
authorized by all requisite partnership action on its part and that this
Amendment has been duly executed by Borrower and this Amendment, the Pledge
Agreement and the Loan Agreement (both as amended hereby) constitute valid and
binding obligations of the Borrower, enforceable in accordance with their
respective terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization and other similar laws
affecting creditors' rights
2
<PAGE>
generally and by general principles of equity.
6. The parties hereto hereby agree and acknowledge that nothing
contained in this Amendment in any manner or respect limits or terminates any
of the provisions of the Pledge Agreement or the Loan Agreement other than as
expressly set forth herein and further agree and acknowledge that the Pledge
Agreement and the Loan Agreement both remain and continue in full force and
effect.
7. This Amendment may be executed in one or more counterparts, each of
which, when executed and delivered, shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
document with the same force and effect as if the signatures of all of the
parties were on a single counterpart.
8. This Amendment, taken with the Pledge Agreement and the Loan
Agreement, embodies the entire agreement and understanding with respect to
the subject matter hereof and supersedes all prior agreements and
understandings relating to the subject matter hereof. Any reference to the
Pledge Agreement or the Loan Agreement (howsoever each may be called)
contained in any notice, request, certificate or other document shall be
deemed to refer to the Pledge Agreement and the Loan Agreement, respectively,
as amended by this Amendment unless the context shall otherwise expressly
specify.
9. This Amendment shall be governed by and construed in accordance with
the laws of the State of Illinois.
[Balance of page intentionally left blank; signature page follows.]
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this First
Amendment to Loan Documents, Consent and Limited Release as of the date first
written above.
PRIME GROUP VI, L.P.
By: PGLP, Inc., an Illinois corporation, as
managing general partner
By: /s/ ROBERT J. RUDNIK
----------------------------
Name: ROBERT J. RUDNIK
--------------------------
Title: VICE PRESIDENT
-------------------------
LASALLE NATIONAL BANK
By: /s/ JOHN C. HEIN
---------------------------------
Name: JOHN C. HEIN
-------------------------------
Title: FIRST VICE PRESIDENT
------------------------------
Agreed to and Accepted as of the
29th day of January, 1999:
- ----
THE PRIME GROUP, INC.
By: /s/ ROBERT J. RUDNIK
------------------------------
Name: ROBERT J. RUDNIK
----------------------------
Title: EXECUTIVE VICE PRESIDENT
---------------------------
<PAGE>
SCHEDULE I
DESCRIPTION OF PLEDGED COLLATERAL
A. PLEDGED SHARES
<TABLE>
<CAPTION>
Issuer Certificate No. Shares
- ------ -------------- ------
<S> <C> <C>
Brookdale Living Communities, Inc. C0008 137,000
C0009 137,000
C0010 137,000
C0011 137,000
C0012 137,000
C0013 137,000
C0014 137,000
C0015 137,000
C0016 137,000
C0017 137,000
C0035 300,000
C0043 673,327
C0046 1,233,606
---------
3,576,933
</TABLE>
B. PLEDGED UNITS
104,632 aggregate units of limited partnership interests in Prime Retail,
L.P., a Delaware limited partnership, as evidenced by certificates #0027
for 43,000 units and #0028 for 61,632 units.
304,097 units of limited partnership interests in Prime Group Realty, L.P.,
a Delaware limited partnership, as evidenced by certificates ___________
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (this "AGREEMENT"), dated as of December 18,
1998, is by and between PRIME GROUP VI, L.P., an Illinois limited partnership
(the "PLEDGOR"), and LaSalle National Bank (the "PLEDGEE").
W I T N E S S E T H
WHEREAS, the Pledgor and the Pledgee are parties to that certain
Loan Agreement, dated as of December 18, 1998, as it may be amended from time
to time (the "LOAN AGREEMENT"), pursuant to which the Pledgee has agreed to
extend loans and certain other financial accommodations to the Pledgor;
WHEREAS, the Pledgor presently owns 115,000 shares of class A
common stock, $0.01 par value per share ("AIMCO STOCK"), of Apartment
Investment and Management Company, a Maryland corporation that qualifies as a
real estate investment trust ("AIMCO"), 3,576,933 shares of common stock,
$0.01 par value per share ("BROOKDALE STOCK"), of Brookdale Living
Communities, Inc., a Delaware corporation ("BROOKDALE"), 104,632 Common Units
of partnership interest ("PRIME RETAIL PARTNERSHIP UNITS") in Prime Retail,
L.P., a Delaware limited partnership ("PRIME RETAIL OPERATING PARTNERSHIP")
and 47,525 Common Units of partnership interest ("PRIME GROUP REALTY
PARTNERSHIP UNITS") in Prime Group Realty, L.P., a Delaware limited
partnership ("PRIME GROUP REALTY OPERATING PARTNERSHIP"). Collectively, the
AIMCO Stock, the Brookdale Stock, the Prime Retail Partnership Units and the
Prime Group Realty Partnership Units are referred to herein as the "PRIME
SECURITIES";
WHEREAS, pursuant to the Third Amended and Restated Agreement of
Limited Partnership of the Prime Retail Operating Partnership dated as of
October 15, 1998 (as amended, modified or restated from time to time, the
"PRIME RETAIL PARTNERSHIP AGREEMENT"), the Prime Retail Partnership Units may
be exchanged one share of Prime Retail Partnership Units for one share of
common stock, par value $0.01 per share ("PRIME RETAIL STOCK"), of Prime
Retail, Inc., a Maryland corporation that has qualified for treatment as a
real estate investment trust ("PRIME RETAIL, INC.");
WHEREAS, pursuant to the Amended and Restated Agreement of Limited
Partnership of the Prime Group Realty Operating Partnership dated as of
November 17, 1998 (as amended, modified or restated from time to time, the
"PRIME GROUP REALTY PARTNERSHIP AGREEMENT"), the Prime Group Realty
Partnership Units may be exchanged one unit of Prime Group Realty Partnership
Units for one share of common stock, par value $0.01 per share ("PRIME GROUP
REALTY STOCK"), of Prime Group Realty Trust, a Maryland corporation that has
qualified for treatment as a real estate investment trust ("PGRT");
WHEREAS, the Pledgor has agreed to grant the Pledgee a security
interest in the AIMCO Stock and the Brookdale Stock (collectively, the
"PLEDGED SHARES"), and the Prime Retail
<PAGE>
Partnership Units and the Prime Group Realty Partnership Units (collectively,
the "PLEDGED UNITS"), more fully described on Schedule I.
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which are hereby acknowledged, the Pledgor hereby
agrees as follows:
1. PLEDGE. The Pledgor hereby pledges to the Pledgee, and grants to
the Pledgee a security interest in, the following (the "PLEDGED COLLATERAL"):
(a) the Pledged Shares now owned by the Pledgor and the certificates,
if any, representing such Pledged Shares, and all dividends, cash,
securities, instruments, rights and other property from time to time
received, receivable or otherwise distributed in respect of or in exchange
for any or all of such Pledged Shares;
(b) the Pledged Units now owned by the Pledgor and the certificates,
if any, representing such Pledged Units, the Pledgor's interest in the
capital, income, profits and distributions of the Prime Retail Operating
Partnership and the Prime Group Realty Operating Partnership attributable
to such Pledged Units, and all other cash, securities, instruments and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Units;
(c) all additional shares of Prime Securities and other securities
acquired by the Pledgor in any manner with respect to the Pledged Shares
and the Pledged Units (including, but not limited to, Prime Retail Stock
for which Prime Retail Partnership Units are exchanged, and Prime Group
Realty Shares for which Prime Group Realty Partnership Units are
exchanged), and the certificates, if any, representing such additional
securities (any such additional securities shall constitute part of the
Pledged Shares or the Pledged Units, as the case may be, under and as
defined in this Agreement), and all dividends, cash, instruments,
subscription warrants, securities and any other rights and options and
other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such securities;
and
(d) all other property hereafter delivered to the Pledgee in
substitution for, as proceeds of, or in addition to any of the foregoing
and all certificates, instruments and documents representing or evidencing
such property, and all cash, securities, interest, dividends, rights and
other property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for or upon conversion
of any or all thereof.
2. SECURITY FOR OBLIGATIONS. The Pledged Collateral secures the
payment of all of the Pledgor's "Borrower's Obligations", as such term is
defined in the Loan Agreement, to the Pledgee, whether for principal,
interest, fees, expenses or otherwise, and all obligations of the Pledgor now
or hereafter existing under this Agreement (such Borrower's Obligations under
the Loan Agreement
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and all such obligations of the Pledgor now or hereafter existing under this
Agreement being referred to herein as the "OBLIGATIONS").
3. DELIVERY OF PLEDGED COLLATERAL.
(a) All certificates, instruments or documents, if any, representing
or evidencing the Pledged Collateral shall be delivered to and held by or
on behalf of the Pledgee pursuant hereto and shall be in suitable form for
transfer by delivery, shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to
the Pledgee. In the event any or all of the Pledged Collateral are
evidenced by a book entry, Pledgor shall execute and deliver to Pledgee
such documents as are required by Pledgee to create and perfect a security
interest in such uncertificated Pledged Collateral. In addition, the
Pledgee shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates
or instruments of smaller or larger denominations.
(b) Pledgor shall, and shall cause other appropriate parties under
Section 8-313 and 8-321 of the Uniform Commercial Code as in effect on the
date hereof in the State of Illinois (the "CODE") to, mark it or their
books and records with the numbers and face amounts of all uncertificated
securities evidencing the Pledged Shares and/or the Pledged Units, as
applicable, and all rollovers and replacements therefor to reflect the
security interests granted pursuant to Section 2 hereof. Pledgor shall
provide Pledgee and shall cause other persons to provide Pledgee with
written confirmation of the security interest in such uncertificated
securities. Pledgor shall take, and shall cause all other necessary
persons to take, all action necessary or appropriate to create, perfect and
maintain a first perfected priority lien in such uncertificated securities
in favor of Pledgee. In the event that subsequent to the date hereof, the
Pledged Shares and/or Pledged Units, as applicable, are evidenced by
certificates, Pledgor will promptly deliver such certificates to Pledgee,
together with an assignment duly endorsed in blank for transfer.
4. REPRESENTATIONS AND WARRANTIES. The Pledgor represents and warrants
as follows:
(a) The Brookdale Stock and the Pledged Units have been duly
authorized and validly issued and are fully paid and nonassessable. The
Prime Retail Stock to be issued upon the conversion of the Prime Retail
Partnership Units, and the Prime Group Realty Stock to be issued upon the
conversion of the Prime Group Realty Partnership Units, has been duly
authorized and will be, upon conversion, fully paid and nonassessable.
(b) The Pledgor is, or at the time of any future delivery, pledge,
assignment or transfer will be, the legal and beneficial owner of the
Pledged Collateral, free and clear of any lien, security interest, pledge,
warrant, option, purchase agreement, shareholders' agreement, restriction,
redemption agreement or other charge, encumbrance or restriction of any
nature on the Pledged Collateral (except for the lien created by this
Agreement, the restrictions imposed by the agreements listed on Schedule II
hereto, completed copies of which have been delivered to Pledgor, and the
liens permitted by the Loan Agreement), with
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full right to deliver, pledge, assign and transfer the Pledged Collateral
to the Pledgee as Pledged Collateral hereunder.
(c) The Brookdale Stock was acquired and fully paid for by an
affiliate of the Pledgor on ________________, ____ in a transaction exempt
from the registration provisions of the Securities Act of 1933, as amended
(the "SECURITIES ACT").
(d) The AIMCO Stock was acquired and fully paid for by an affiliate
of the Pledgor on ________________, ____ in a transaction exempt from the
registration provisions of the Securities Act.
(e) Subject to compliance with the agreements listed on Schedule II
hereto, the Pledged Units can be exchanged at any time at the rate of one
unit of Prime Retail Partnership Unit for one share of Prime Retail Stock,
and one unit of Prime Group Realty Partnership Unit for one share of Prime
Group Realty Stock.
(f) Upon (i) filing of the UCC financing statements, forms of which
are attached hereto as Exhibit A, with the Secretary of State of Illinois
and the Secretary of State of Maryland, (ii) execution and delivery of the
Acknowledgment and Consent, dated as of even date herewith, among Pledgor,
Prime Retail Operating Partnership, Prime Retail, Inc. and Pledgee, (iii)
execution and delivery of the Acknowledgment and Consent, dated as of even
date herewith, among Pledgor, Prime Group Realty Operating Partnership,
PGRT, Prudential Securities Incorporated and Pledgee, and (iv) possession
by Pledgee of the certificates representing the Pledged Collateral, the
pledge of the Pledged Collateral pursuant to this Agreement will create a
valid, perfected and first security interest in the Pledged Collateral,
securing the payment of the Obligations. All other filings, registrations,
recordings and other actions necessary or desirable to create, perfect and
protect such security interest have been duly taken, and such security
interests are entitled to all of the rights, priorities and benefits
afforded by the Code or other relevant law as enacted in any relevant
jurisdiction which relates to perfected security interests.
(g) Except as otherwise set forth in paragraph (g) above, no
authorization, approval, or other action by, and no notice to or filing
with, any governmental authority or regulatory body is required either
(i) for the pledge by the Pledgor of the Pledged Collateral pursuant to
this Agreement or for the execution, delivery or performance of this
Agreement by the Pledgor, or (ii) for the exercise by the Pledgee of the
voting or other rights provided for in this Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Agreement (except as may
be required in connection with a disposition of such Pledged Collateral by
laws affecting the offering and sale of securities generally).
(h) The Pledgor has full power and authority to enter into this
Agreement and has the right to pledge and grant a security interest in the
Pledged Collateral as provided by this Agreement.
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5. FURTHER ASSISTANCE. The Pledgor agrees that at any time and from
time to time, at the expense of the Pledgor, the Pledgor will promptly
execute and deliver, or cause to be executed and delivered, all certificates,
stock powers, proxies, assignments, instruments and documents; and will take
all further action that may be reasonably necessary or desirable, or that the
Pledgee may reasonably request, in order to perfect and protect any security
interest granted or purported to be granted hereby or to enable the Pledgee
to exercise and enforce its rights and remedies hereunder with respect to any
Pledged Collateral and to carry out the provisions and purposes hereof.
6. VOTING RIGHTS; DIVIDENDS; ETC.
(a) Except as set forth below, so long as no Event of Default (as
hereinafter defined):
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent with
the terms of this Agreement or the Loan Agreement; PROVIDED, HOWEVER,
that the Pledgor shall not exercise nor shall it refrain from
exercising any such right if such action or inaction could have a
material adverse effect on the value of the Pledged Collateral or upon
the rights of the Pledgee to effectively realize upon the security
afforded by such Pledged Collateral.
(ii) The Pledgor shall be entitled to receive and retain any and
all dividends and interest paid in respect of the Pledged Shares and
all distributions paid in respect of the Pledged Units, PROVIDED
HOWEVER, that any and all
(1) dividends, interest and distributions paid or payable other
than in cash in respect of, and instruments and other
property received, receivable or otherwise distributed in
respect of, or in exchange for, any Pledged Collateral,
(2) dividends and other distributions paid or payable in cash
in respect of any Pledged Collateral in connection with a
partial or total liquidation or dissolution or in
connection with a reduction of capital, capital surplus or
paid-in-surplus resulting from a sale or refinancing of any
property, and
(3) cash paid, payable or otherwise distributed in redemption
of, or in exchange for, any Pledged Collateral,
shall be Pledged Collateral, shall be forthwith delivered to the
Pledgee to hold as Pledged Collateral and shall, if received by the
Pledgor, be received in trust for the benefit of the Pledgee, be
segregated from the other property or funds of the Pledgor, and be
forthwith delivered to the Pledgee as Pledged Collateral in the same
form as so received (with any necessary endorsement).
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(b) Except as set forth below, upon the occurrence (and during the
continuance) of an Event of Default (as hereinafter defined):
(i) All rights of the Pledgor to exercise the voting and other
consensual rights which it would otherwise be entitled to exercise
pursuant to Section 6(a)(i) (but only after an Event of Default) and
to receive the dividends and interest payments and distributions which
it would otherwise be authorized to receive and retain pursuant to
Section 6(a)(ii) shall cease, and all such rights shall thereupon
become vested in the Pledgee which shall thereupon have the sole right
to exercise such voting and other consensual rights and to receive and
hold as Pledged Collateral such dividends and interest payments and
distributions;
(ii) All dividends and interest payments and distributions which
are received by the Pledgor contrary to the provisions of paragraph
(i) of this Section 6(b) shall be received in trust for the benefit of
the Pledgee, shall be segregated from other funds of the Pledgor and
shall be forthwith paid over to the Pledgee as Pledged Collateral in
the same form as so received (with any necessary endorsements); and
(iii) The Pledgor shall execute and deliver (or cause to be
executed and delivered) to the Pledgee all such proxies and other
instruments as the Pledgee may (reasonably) request for the purpose of
enabling the Pledgee to exercise the voting and other rights which it
is entitled to exercise pursuant to paragraph (i) above and to receive
the dividends or interest payments or distribution which it is
authorized to receive pursuant to paragraph (ii) above.
7. TRANSFERS AND OTHER LIENS; ADDITIONAL SHARES. The Pledgor agrees
that it will not (i) sell, assign, transfer, convey, exchange, pledge,
hypothecate or otherwise dispose of, or grant any option, warrant, right,
contract or commitment with respect to, any of the Pledged Collateral without
the prior written consent of the Pledgee, or (ii) create or permit to exist
any lien, security interest, pledge, proxy, purchase arrangement,
restriction, redemption agreements, shareholders' agreement or other charge
or encumbrance upon or with respect to any of the Pledged Collateral, except
for the lien created by this Agreement, restrictions imposed by the
agreements listed on Schedule II hereto and liens permitted by the Loan
Agreement.
8. APPLICATION OF PROCEEDS OF SALE OR CASH HELD AS COLLATERAL. All
proceeds from the sale of Pledged Collateral sold pursuant to this Agreement
and/or the cash held as Pledged Collateral hereunder shall be (a) retained by
the Pledgee as cash collateral for the Obligations, or (b) at the election of
the Pledgee, applied by the Pledgee as follows:
FIRST: to payment of the costs and expenses of such sale,
including the out-of-pocket expenses of the Pledgee, including the reasonable
fees and out-of-pocket expenses of counsel employed in connection therewith,
and to the payment of all advances made by the Pledgee for the account of the
Pledgor hereunder, and the payment of all costs and expenses incurred by the
Pledgee in connection with the administration and enforcement of this
Agreement, to the extent that such advances, costs and expenses shall not
have been reimbursed to the Pledgee;
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SECOND: to the payment of interest accrued and unpaid, if
any, on any of the Obligations to and including the date of such application
and then to the payment or prepayment of principal of any of the Obligations
and then to the payment of the balance of the Obligations in such order as
Pledgee may determine in its sole discretion; and
THIRD: the balance, if any, of such proceeds shall be paid to
the Pledgor, or its successors or assigns, or as a court of competent
jurisdiction may direct.
9. THE PLEDGEE APPOINTED ATTORNEY-IN-FACT. The Pledgor hereby
appoints the Pledgee as the Pledgor's attorney-in-fact, with full authority
in the place and stead of the Pledgor and in the name of the Pledgor or
otherwise, from time to time after giving notice to Pledgee in the Pledgee's
discretion to take any action and to execute any instrument which the Pledgee
may deem necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, (i) to receive, endorse and collect all
instruments made payable to the Pledgor representing any dividend, interest
payment or other distribution in respect of the Pledged Collateral or any
part thereof and to give full discharge for the same and (ii) to exercise all
rights, including conversion rights, with respect to such Pledged Collateral.
10. THE PLEDGEE MAY PERFORM. If the Pledgor fails to perform any
agreement contained herein, the Pledgee may itself perform, or cause
performance of, such agreement, and the reasonable expenses of the Pledgee
incurred in connection therewith shall be payable by the Pledgor under
Section 17.
11. REASONABLE CARE. The Pledgee shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in
its possession if the Pledged Collateral is accorded treatment substantially
equal to that which the Pledgee accords its own property, it being understood
that the Pledgee shall not have any responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Collateral, whether or not
the Pledgee has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with
respect to any Pledged Collateral; PROVIDED, HOWEVER, that upon the Pledgor's
instruction, the Pledgee shall use reasonable efforts to take such action as
the Pledgor directs the Pledgee to take with respect to calls, conversions,
exchanges, maturities, tenders, rights against other parties or other similar
matters relative to the Pledged Collateral, but failure of the Pledgee to
comply with any such request shall not of itself be deemed a failure to
exercise reasonable care, and no failure of the Pledgee to preserve or
protect any rights with respect to the Pledged Collateral against prior
parties, or to do any act with respect to preservation of the Pledged
Collateral not so requested by the Pledgor, shall be deemed a failure to
exercise reasonable care in the custody or preservation of the Pledged
Collateral.
12. SUBSEQUENT CHANGES AFFECTING COLLATERAL. The Pledgor represents to
the Pledgee that the Pledgor has made its own arrangements for keeping informed
of changes or potential changes affecting the Pledged Collateral (including, but
not limited to, rights to convert, rights to subscribe, payment of dividends or
distributions, reorganization or other exchanges, tender offers and voting
rights), and the Pledgor agrees that the Pledgee shall have no responsibility or
liability
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for informing the Pledgor of any such changes or potential changes or for
taking any action or omitting to take any action with respect thereto.
13. EVENTS OF DEFAULT; REMEDIES UPON AN EVENT OF DEFAULT.
(a) The occurrence of any one or more of the following events shall
constitute an "EVENT OF DEFAULT" by Pledgor under this Agreement:
(i) there occurs (and is continuing) an Event of Default under
and as defined in the Loan Agreement;
(ii) the Pledged Shares and the Pledged Units shall not be
exchangeable for shares of Prime Retail Stock or Prime Group Realty
Stock as set forth in (and subject to the conditions in Section 4(e)
hereof.
(iii) the Pledgor fails to perform or observe any material term,
covenant (after 5 day written notice) or agreement contained in this
Agreement on its part to be performed or observed, or any
representation or warranty made by the Pledgor in this Agreement shall
be untrue or misleading in any material respect as of the date with
respect to which such representation or warranty was made;
(iv) a notice of lien, levy or assessment is filed or recorded
with respect to all or a substantial part of the Pledged Collateral,
and such lien, levy or assessment is not released, discharged or
removed within thirty (30) days from the date it is filed or recorded,
except for a lien, levy or assessment which relates to current taxes
not yet due and payable or a lien permitted by the Loan Agreement; and
(v) all or a substantial part of the Pledged Collateral is
attached, seized, subjected to a writ or distress warrant, or is
levied upon, or comes within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors.
(b) If any Event of Default shall have occurred (and be continuing),
the Pledgee shall have, in addition to all other rights given by law or by
this Agreement, the Loan Agreement or otherwise, all of the rights and
remedies with respect to the Pledged Collateral of a secured party under
the Code in effect in the State of Illinois at that time, and the Pledgee
may, without notice and at its option, transfer or register the Pledged
Collateral or any part thereof on the books of the issuer thereof into the
name of the Pledgee or the Pledgee's nominee(s), with or without any
indication that such Pledged Collateral is subject to the security interest
hereunder. In addition, with respect to any Pledged Collateral which shall
then be in or shall thereafter come into the possession or custody of the
Pledgee, the Pledgee may sell or cause the same to be sold at any broker's
board or at public or private sale, in one or more sales or lots, at such
price or prices as the Pledgee may deem best, for cash or on credit or for
future delivery, without assumption of any credit risk. The purchaser of
any or all Pledged Collateral so sold shall thereafter hold the same
absolutely, free from any claim, encumbrance or right of any kind
whatsoever, except for claims, encumbrances
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or rights that may arise without the knowledge or consent of the
Pledgor. Unless any of the Pledged Collateral threatens to decline
speedily in value or is or becomes of a type sold on a recognized
market, the Pledgee will give the Pledgor reasonable notice of the time
and place of any public sale thereof, or of the time after which any
private sale or other intended disposition is to be made. Any sale
of the Pledged Collateral conducted in conformity with reasonable
commercial practices of banks, insurance companies, commercial
finance companies, or other financial institutions disposing of property
similar to the Pledged Collateral shall be deemed to be commercially
reasonable. Any requirements of reasonable notice shall be met if such
notice is mailed to the Pledgor as provided in Section 20 below, at least
five (5) days before the time of the sale or disposition. Any other
requirement of notice, demand or advertisement for sale is, to the extent
permitted by law, waived. The Pledgee may, in its own name or in the name
of a designee or nominee, buy any of the Pledged Collateral at any public
sale and, if permitted by applicable law, at any private sale. All
expenses (including court costs and reasonable attorneys' fees and
expenses) of, or incident to, the enforcement of any of the provisions
hereof shall be recoverable from the proceeds of the sale or other
disposition of Pledged Collateral. In view of the fact that federal and
state securities laws may impose certain restrictions on the method by
which a sale of the Pledged Collateral may be effected after an Event of
Default, the Pledgor agrees that upon the occurrence or existence of any
Event of Default, the Pledgee may, from time to time, attempt to sell all
or any part of the Pledged Collateral by means of a private placement,
restricting the prospective purchasers to those who can make the
representations and agreements required of purchasers of securities in
private placements. In so doing, the Pledgee may solicit offers to buy the
Pledged Collateral, or any part of it, for cash, from a limited number of
investors deemed by the Pledgee in its judgment, to be responsible parties
who might be interested in purchasing the Pledged Collateral, and if the
Pledgee solicits such offers from not less than three (3) such investors,
then the acceptance by the Pledgee of the highest offer obtained therefrom
shall be deemed to be a commercially reasonable method of disposition of
the Pledged Collateral.
In addition, upon the occurrence (and during the continuance) of an
Event of Default, all rights of the Pledgor to exercise the voting and
other rights which it would otherwise be entitled to exercise and to
receive cash dividends and interest payments, shall cease, and all such
rights shall thereupon become vested in the Pledgee as provided in Section
6.
14. SECURITIES LAWS. Pledgor hereby acknowledges and confirms that
Pledgee may be unable to effect a public sale of any or all of the Pledged
Shares and the Pledged Units by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws and may be compelled to
resort to one or more private sales thereof to a restricted group of purchasers
who will be obligated to agree, among other things, to acquire any of the
Pledged Shares and Pledged Units for their own respective accounts for
investment and not with the view to the distribution or resale thereof. Pledgor
further acknowledges and confirms that any such private sale may result in
prices or other terms less favorable to the seller than if such sale were a
public sale and, notwithstanding such circumstances, agrees that any such
private sale shall be deemed to have been made in a commercially reasonable
manner, and the Pledgee shall be under no obligation to take any steps in order
to permit the Pledged Shares and Pledged Units to be sold at a public sale. The
Pledgee shall
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be under no obligation to delay a sale of any of the Pledged Shares and
Pledged Units for any period of time necessary to permit any issuer thereof
to register such Pledged Shares and Pledged Units for public sale under the
Securities Act or under applicable state securities laws.
15. AUTHORITY OF THE PLEDGEE. The Pledgee shall have and be entitled to
exercise all such powers hereunder as are specifically delegated to the Pledgee
by the terms hereof, together with such powers as are incidental thereto. The
Pledgee may execute any of its duties hereunder by or through agents or
employees. Neither the Pledgee, nor any director, officer, agent or employee of
the Pledgee, shall be liable for any action taken or omitted to be taken by it
or them hereunder or in connection herewith, except for its or their own gross
negligence or willful misconduct. The Pledgor hereby agrees to indemnify and
hold harmless the Pledgee and/or any such director, officer, agent or employee
from and against any and all liability incurred by any of them, hereunder or in
connection herewith, unless such liability shall be due to its or their own
gross negligence or willful misconduct.
16. TERMINATION. This Agreement shall terminate after the time when all
the Obligations have been fully paid and performed, at which time the Pledgee
shall reassign and redeliver (or cause to be reassigned and redelivered) to the
Pledgor, or to such person or persons as the Pledgor shall designate, against
receipt, such of the Pledged Collateral (if any) as shall not have been sold or
otherwise applied by the Pledgee pursuant to the terms hereof and shall still be
held by it hereunder, together with appropriate instruments of reassignment and
release. Any such reassignment shall be without recourse upon or warranty by
the Pledgee and at the expense of the Pledgor.
17. EXPENSES. The Pledgor agrees to reimburse the Pledgee promptly after
demand for any and all reasonable expenses, including the reasonable fees and
expenses of its counsel and of any experts and agents, which the Pledgee may
incur in connection with (i) the administration of this Agreement, (ii) the
custody or preservation of, or the registration of the Pledged Collateral, (iii)
the exercise or enforcement of any of the rights of the Pledgee hereunder, or
(iv) the failure by the Pledgor to perform or observe any of the provisions
hereof.
18. SECURITY INTEREST ABSOLUTE. All rights of the Pledgee and security
interests hereunder, and all obligations of the Pledgor hereunder, shall be
absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Loan
Agreement or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment of, or
in any other term of, all or any of the Obligations, or any other
amendment or waiver of or any consent to any departure from the Loan
Agreement;
(iii) any exchange, surrender, release or non-perfection of any
other collateral, or any release or amendment or waiver of or consent
to departure from any guaranty, for all or any of the Obligations; or
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(iv) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Pledgor in respect of the
Obligations or of this Agreement.
19. AMENDMENTS, WAIVERS AND CONSENTS. No amendment or waiver of any
provision of this Agreement nor consent to any departure by the Pledgor
herefrom, shall in any event be effective unless the same shall be in writing
and signed by the Pledgee, and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
20. NOTICES. Any notice required or desired to be served, given or
delivered hereunder shall be in writing (including facsimile transmission), and
shall be deemed to have been validly served, given or delivered upon the earlier
of (a) personal delivery to the address set forth below (b) in the case of
mailed notice, two (2) days after deposit in the United States mails, with
proper postage for certified mail, return receipt requested, prepaid, or in the
case of notice by Federal Express or other reputable overnight courier service,
one (1) day after delivery to such courier service, and (c) in the case of
facsimile transmission, upon transmission with confirmation of receipt,
addressed to the party to be notified as follows:
If to the Pledgor: Prime Group VI, L.P.
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900 (Suite 4200 after February 1, 1999)
Attn: Michael W. Reschke
Facsimile Number: (312)917-1511
With a copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Facsimile Number: (312)558-5700
And to: The Prime Group, Inc.
77 West Wacker Drive
Suite 4200
Attn: Robert J. Rudnik, Esq.
Facsimile Number: (312)917-8442
If to the Pledgee: LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois 60603
Attention: John C. Hein
Facsimile Number: (312) 904-6691
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With a copy to: Schwartz, Cooper, Greenberger & Krauss, Chartered
180 North LaSalle Street, Suite 2700
Chicago, Illinois 60601
Attention: Robert A. Smoller, Esq.
Facsimile Number: (312) 782-8416
or to such other address as any of the parties may hereafter designate for
itself by written notice to the other parties in the manner herein prescribed.
21. CONTINUING SECURITY INTEREST. This Agreement shall create a
continuing security interest in the Pledged Collateral and shall (i) be binding
upon the Pledgor, its successors and assigns, and (ii) inure to the benefit of
the Pledgee and its successors, transferees and assigns.
22. WAIVERS. To the extent permitted by applicable law, the Pledgor
waives presentment and demand for payment of any of the Obligations, protest and
notice of dishonor or default with respect to any of the Obligations, and all
other notices to which the Pledgor might otherwise be entitled, except as
otherwise expressly provided herein or in the Loan Agreement.
23. WAIVER OF JURY TRIAL. The Pledgor and the Pledgee each hereby waive
any right to a trial by jury in any action or proceeding to enforce or defend
any rights under this Agreement or any amendment, instrument, document or
agreement delivered or which may in the future be delivered in connection
herewith or arising from any banking relationship existing in connection with
this Agreement, and agrees that any such action or proceeding shall be tried
before a court and not before a jury.
24. GOVERNING LAW; TERMS. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to conflict of laws
provisions) and decisions of the State of Illinois. Unless otherwise defined
herein, terms defined in Articles 3, 8 and 9 of the Code are used herein as
therein defined. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but, if any provision of this Agreement shall be interpreted in such manner as
to be ineffective or invalid under applicable law, such provisions shall be
ineffective or invalid only to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Agreement.
25. DEFINITIONS. The singular shall include the plural and vice versa and
any gender shall include any other gender as the text shall indicate.
26. SECTION HEADINGS. The section headings herein are for convenience of
reference only, and shall not affect in any way the interpretation of any of the
provisions hereof.
27. NON-RECOURSE. The non-recourse provisions set forth in Section 11.5
of the Loan Agreement are incorporated in this Agreement by reference as if
fully set forth herein.
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IN WITNESS WHEREOF, the Pledgor and the Pledgee have each caused this
Pledge Agreement to be duly executed and delivered by its officer, if any,
thereunto duly authorized as of the date first above written.
PRIME GROUP VI, L.P., an Illinois limited
partnership
By: PGLP, Inc., an Illinois corporation, as
managing general partner
By: /s/ ROBERT J. RUDNIK
----------------------------------------
Its: VICE PRESIDENT
----------------------------------
LASALLE NATIONAL BANK, a national banking
association
By: /s/ JOHN C. HEIN
---------------------------------------------
Its: FIRST VICE PRESIDENT
---------------------------------------
<PAGE>
SCHEDULE I
DESCRIPTION OF PLEDGED COLLATERAL
A. PLEDGED SHARES
<TABLE>
<CAPTION>
Issuer Certificate No. Shares
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<S> <C> <C>
Brookdale Living Communities, Inc. 3,576,933
Apartment Investment
and Management Company 115,000
</TABLE>
B. PLEDGED UNITS
104,632 units of limited partnership interests in Prime Retail, L.P., a
Delaware limited partnership, as evidenced by certificate number
____________
47,525 units of limited partnership interests in Prime Group Realty, L.P.,
a Delaware limited partnership, as evidenced by certificate number
___________
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SCHEDULE II
OTHER AGREEMENTS
1. Registration Rights Agreement dated as of November 17, 1997 by
and among Prime Group Realty Trust, Prime Group Realty, L.P.,
Prime Group Limited Partnership, Primestone Investment Partners
L.P. and the other investors named therein.
2. Registration Rights Agreement dated as of June 15, 1998 by and
among Prime Retail, Inc., Prime Retail, L.P. and the other
investors named therein.
3. Prime Retail Partnership Agreement.
4. Prime Group Realty Partnership Agreement.
5. Lock-Up Agreement, dated November 11, 1997, from Prime Group Limited
Partnership to Prudential Securities Incorporated, Friedman, Billings,
Ramsey & Co., Inc., Smith Barney Inc. and Morgan Keegan & Company,
Inc.
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CONTINUING UNCONDITIONAL GUARANTY
WHEREAS, PRIME GROUP VI, L.P., an Illinois limited partnership
("BORROWER") has entered into a Loan Agreement dated as of December 18, 1998,
(the "LOAN AGREEMENT") with LASALLE NATIONAL BANK, a national banking
association ("LENDER"), pursuant to which Lender has made or may, in its sole
discretion, from time to time hereafter, make loans and advances to or extend
other financial accommodations to Borrower;
WHEREAS, The Prime Group, Inc., an Illinois corporation
("GUARANTOR") is a limited partner of Borrower and is desirous of having
Lender extend and/or continue the extension of credit to Borrower, and Lender
has required that Guarantor execute and deliver this Guaranty to Lender as a
condition to the extension and continuation of credit by Lender; and
WHEREAS, the extension and/or continued extension of credit, as
aforesaid, by Lender is necessary and desirable to the conduct and operation
of the business of Borrower and will inure to the personal and financial
benefit of Guarantor;
1. NOW, THEREFORE, for value received and in consideration of the
Loans made or to be made by Lender to Borrower pursuant to the Loan
Agreement, the Guarantor hereby unconditionally guaranties (i) the full and
prompt payment when due, whether at maturity or earlier, by reason of
acceleration or otherwise, and at all times thereafter, of all of the
indebtedness, liabilities and obligations of every kind and nature of
Borrower to Lender or any parent, affiliate or subsidiary of Lender (the term
"LENDER" as used hereinafter shall include such parents, affiliates and
subsidiaries under the Loan Agreement), howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, joint or
several, now or hereafter existing, or due or to become due, and howsoever
owned, held or acquired by Lender, whether through discount, overdraft,
purchase, direct loan or as collateral or otherwise, under the Loan Agreement
and (ii) the prompt, full and faithful discharge by Borrower of each and
every term, condition, agreement, representation and warranty now or
hereafter made by Borrower to Lender under the Loan Agreement (all such
indebtedness, liabilities and obligations being hereinafter referred to as
the "BORROWER'S OBLIGATIONS"). Guarantor further agrees to pay all costs and
expenses, including, without limitation, all court costs and reasonable
attorneys' and paralegals' fees paid or incurred by Lender in endeavoring to
collect all or any part of Borrower's Obligations from, or in prosecuting any
action against, Guarantor or any other guarantor of all or any part of
Borrower's Obligations. All amounts payable by Guarantor under this Guaranty
shall be payable upon demand by Lender.
2. Notwithstanding any provision of this Guaranty to the contrary, it
is intended that this Guaranty, and any liens and security interests granted
by Guarantor to secure this Guaranty, not constitute a "Fraudulent
Conveyance" (as defined below). Consequently, Guarantor agrees that if the
Guaranty, or any liens or security interests securing this Guaranty, would,
but for the application of this sentence, constitute a Fraudulent Conveyance,
this Guaranty and each such lien and security interest shall be valid and
enforceable only to the maximum extent that would not cause this Guaranty or
such lien or security interest to constitute a Fraudulent Conveyance, and
this Guaranty
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shall automatically be deemed to have been amended accordingly at all
relevant times. For purposes hereof, "FRAUDULENT CONVEYANCE" means a
fraudulent conveyance under Section 548 of the "Bankruptcy Code" (as
hereinafter defined) or a fraudulent conveyance or fraudulent transfer under
the provisions of any applicable fraudulent conveyance or fraudulent transfer
law or similar law of any state, nation or other governmental unit, as in
effect from time to time.
3. Guarantor hereby agrees that, except as hereinafter provided, its
obligations under this Guaranty shall be unconditional, irrespective of (i)
the validity or enforceability of Borrower's Obligations or any part thereof,
or of any promissory note or other document evidencing all or any part of
Borrower's Obligations, (ii) the absence of any attempt to collect Borrower's
Obligations from Borrower or any other guarantor or other action to enforce
the same, (iii) the waiver or consent by Lender with respect to any provision
of any instrument evidencing Borrower's Obligations, or any part thereof, or
any other agreement heretofore, now or hereafter executed by Borrower and
delivered to Lender, (iv) failure by Lender to take any steps to perfect and
maintain its security interest in, or to preserve its rights to, any security
or collateral for Borrower's Obligations, (v) the institution of any
proceeding under Chapter 11 of Title 11 of the United States Code (11 U.S.C.
Section 101 et seq.), as amended (the "BANKRUPTCY CODE"), or any similar
proceeding, by or against Borrower, or Lender's election in any such
proceeding of the application of Section 1111(b)(2) of the Bankruptcy Code,
(vi) any borrowing or grant of a security interest by Borrower as
debtor-in-possession, under Section 364 of the Bankruptcy Code, (vii) the
disallowance, under Section 502 of the Bankruptcy Code, of all or any portion
of Lender's claim(s) for repayment of Borrower's Obligations, or (viii) any
other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor other than if the Borrower's Obligations
have been paid in full and discharged and the Loan Agreement is terminated.
4. If bankruptcy or reorganization proceedings at any time are
instituted by or against the Borrower under the Bankruptcy Code, and if in
the one year period ending on the date such proceedings are instituted, the
Borrower has granted a security interest or made a non-cash transfer in favor
of the Lender at a time when the aggregate value of the collateral securing
the Loan (as defined in the Loan Agreement) was less than the aggregate
amount of all the guaranteed indebtedness, and Guarantor: (a) is an "insider"
as defined in Section 101(28) of said Code, now existing or hereafter
amended; and (b) is an "insider-guarantor" under Section 547(b) of the Code,
now existing or hereafter amended, then in any such event, the Guarantor as
such "insider-guarantor" agrees not to seek recourse (by subrogation or
otherwise) against or in any manner become a creditor of the Borrower if
called upon to make payment to the Lender hereunder.
5. Guarantor hereby waives, to the extent permitted by applicable law
and except as otherwise provided herein or in the Loan Agreement, diligence,
presentment, demand of payment, filing of claims with a court in the event of
receivership or bankruptcy of Borrower, protest or notice with respect to
Borrower's Obligations and all demands whatsoever, and covenants that this
Guaranty will not be discharged, except by complete performance of the
obligations and liabilities contained herein. Upon any Event of Default by
Borrower as provided in any instrument or document evidencing all or any part
of Borrower's Obligations, including without limitation the Loan Agreement,
Lender may, at its sole election, proceed directly and at once, without
notice, against Guarantor to collect and recover the full amount or any
portion of Borrower's Obligations,
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without first proceeding against Borrower, or any other person, firm, or
corporation, or against any security or collateral for Borrower's Obligations.
6. Lender is hereby authorized, without notice or demand and without
affecting the liability of Guarantor hereunder, to at any time and from time
to time (i) renew, extend, accelerate or otherwise change the time for
payment of, or other terms relating to, Borrower's Obligations or otherwise
modify, amend or change the terms of any promissory note or other agreement,
document or instrument now or hereafter executed by Borrower and delivered to
Lender; (ii) accept partial payments on Borrower's Obligations; (iii) take
and hold security or collateral for the payment of Borrower's Obligations
guaranteed hereby, or for the payment of this Guaranty, or for the payment of
any other guaranties of Borrower's Obligations or other liabilities of
Borrower, and exchange, enforce, waive and release any such security or
collateral; (iv) apply such security or collateral and direct the order or
manner of sale thereof as in its sole discretion it may determine; and (v)
settle, release, compromise, collect or otherwise liquidate Borrower's
Obligations and any security or collateral therefor in any manner, without
affecting or impairing the obligations of Guarantor hereunder. Lender shall
have the exclusive right to determine the time and manner of application of
any payments or credits, whether received from Borrower or any other source,
and such determination shall be binding on Guarantor. All such payments and
credits may be applied, reversed and reapplied, in whole or in part, to any
of Borrower's Obligations as Lender shall determine in its sole discretion
without affecting the validity or enforceability of this Guaranty.
7. The Guarantor will at all times maintain on a consolidated and
combined basis the ratio of Operating Income to Debt Service at the end of
each month of not less than 2.0 to 1.0. For purposes of this paragraph:
"NET INCOME" means, with reference to any quarter, the net income (or
net deficit) of Guarantor on a consolidated and combined basis for such
quarter on a modified cash basis (i.e., cash receipts less cash disbursements
and accrued expenses), and without limiting the foregoing, after deduction
from gross income of all expenses and reserves, including reserves for all
taxes on or measured by income, but excluding any extraordinary profits and
also excluding any taxes on such profits.
"OPERATING INCOME" means, with reference to any quarter, Net Income for
such period plus all amounts deducted in arriving at such Net Income amount
in respect of (i) Debt Service for such quarter, (ii) federal, state and
local income taxes for such quarter, and (iii) non-cash items such as
depreciation and amortization of intangibles.
"DEBT SERVICE" means, with reference to any quarter, the sum of all
interest paid, accrued or capitalized and any required principal amortization
of the Guarantor on a combined and consolidated basis for such quarter
determined in accordance with GAAP.
On or before the 20th day after the end of each calendar quarter, Guarantor
shall provide Lender with a compliance certificate in a form reasonably
satisfactory to Lender stating whether Guarantor is in compliance with the
covenant set forth in this paragraph.
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8. To secure the payment and performance of Guarantor's obligations
and liabilities contained herein, Guarantor grants to Lender a security
interest in all property of Guarantor delivered concurrently herewith, if
any, or which is now, or at any time hereafter in transit to, or in the
possession, custody or control of Lender, and all proceeds of all such
property. Guarantor agrees that Lender shall have the rights and remedies of
a secured party under the Uniform Commercial Code of Illinois, as now
existing or hereafter amended, with respect to all of the aforesaid property,
including without limitation thereof, the right to sell or otherwise dispose
of any or all of such property and apply the proceeds of such sale to the
payment of Borrower's Obligations. In addition, at any time after maturity
of Borrower's Obligations by reason of acceleration or otherwise, Lender may,
in its sole discretion, without notice to Guarantor and regardless of the
acceptance of any security or collateral for the payment hereof, appropriate
and apply toward the payment of Borrower's Obligations (i) any indebtedness
due or to become due from Lender to Guarantor, and (ii) any moneys, credits
or other property belonging to Guarantor, at any time held by or coming into
the possession of Lender whether for deposit or otherwise.
9. Guarantor hereby assumes responsibility for keeping itself informed
of the financial condition of Borrower, and any and all endorsers and/or
other guarantors of any instrument or document evidencing all or any part of
Borrower's Obligations and of all other circumstances bearing upon the risk
of nonpayment of Borrower's Obligations or any part thereof that diligent
inquiry would reveal and Guarantor hereby agrees that Lender shall have no
duty to advise Guarantor of information known to Lender regarding such
condition or any such circumstances or to undertake any investigation not a
part of its regular business routine. If Lender, in its sole discretion,
undertakes at any time or from time to time to provide any such information
to any Guarantor, Lender shall be under no obligation to update any such
information or to provide any such information to Guarantor on any subsequent
occasion.
10. The Guarantor hereby represents and warrants unto the Lender that:
(i) the Guarantor is a corporation validly organized and existing and in good
standing under the laws of the State of Illinois, is duly qualified to do
business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification
(unless the failure to so qualify would not be reasonably likely to
materially and adversely affect the Guarantor), and has full power and
authority to own its property and to conduct its business presently conducted
by it; (ii) the execution, delivery and performance by the Guarantor of this
Guaranty, are within the Guarantor's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene the
Guarantor's articles of incorporation or by-laws or any contractual
restriction, law or governmental regulation or court decree or order binding
on or affecting the Guarantor (the effect of which contravention would be
reasonably likely to have a material adverse effect upon the Guarantor) or
result in, or require the creation or imposition of, any Lien on any of the
Guarantor's properties; (iii) this Guaranty constitutes a legal, valid and
binding obligation of the Guarantor enforceable in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally; (iv) the
consolidated balance sheets of the Guarantor and its subsidiaries as at
December 31, 1997 and the related statements of earnings of the Guarantor and
its subsidiaries, copies of which have been furnished to the Lender, have
been prepared in accordance with generally accepted accounting principles
consistently applied, and present fairly the consolidated financial condition
of the
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Guarantor covered thereby as at the dates thereof and the results of their
operations for the periods then ended, and since December 31, 1997, there has
been no material adverse change in the financial condition, operations,
assets, business or properties of the Guarantor.
11. Guarantor consents and agrees that Lender shall be under no
obligation to marshall any assets in favor of Guarantor or against or in
payment of any or all of Borrower's Obligations. Guarantor further agrees
that, to the extent that Borrower makes a payment or payments to Lender, or
Lender receives any proceeds of collateral, which payment or payments or any
part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to Borrower, its estate,
trustee, receiver or any other party, including, without limitation,
Guarantor, under any bankruptcy law, state or federal law, common law or
equitable theory, then to the extent of such payment or repayment, Borrower's
Obligations or the part thereof which has been paid, reduced or satisfied by
such amount, and Guarantor's obligations hereunder with respect to such
portion of Borrower's Obligations, shall be reinstated and continued in full
force and effect as of the date such initial payment, reduction or
satisfaction occurred.
12. Guarantor agrees that any and all claims of Guarantor against
Borrower, any endorser or any other guarantor of all or any part of
Borrower's Obligations, or against any of Borrower's properties, whether
arising by reason of any payment by Guarantor to Lender pursuant to the
provisions hereof, or otherwise, shall be subordinate and subject in right of
payment to the prior payment, in full, of all of Borrower's Obligations;
provided, however, that this provision shall not apply to distributions made
or to be made by Borrower under Borrower's partnership agreement to Guarantor
prior to any Event of Default (as defined in the Loan Agreement) by Borrower
as provided in any instrument or document evidencing all or any part of
Borrower's Obligations, including, without limitation, the Loan Agreement.
13. Subject to the terms of the Loan Agreement, Lender may, without
notice to anyone, sell or assign Borrower's Obligations or any part thereof,
or grant participations therein, and in any such event each and every
immediate or remote assignee or holder of, or participant in, all or any of
Borrower's Obligations shall have the right to enforce this Guaranty, by suit
or otherwise for the benefit of such assignee, holder, or participant, as
fully as if herein by name specifically given such right, but Lender shall
have an unimpaired right, prior and superior to that of any such assignee,
holder or participant, to enforce this Guaranty for the benefit of Lender, as
to any part of Borrower's Obligations retained by Lender.
14. This Guaranty shall be binding upon Guarantor and upon the
successors (including without limitation, any receiver, trustee or debtor in
possession of or for Guarantor) of Guarantor and shall inure to the benefit
of Lender and its successors and assigns. If there is more than one
signatory hereto, all references to Guarantor herein shall include each and
every Guarantor and each and every obligation of Guarantor hereunder shall be
the joint and several obligation of each Guarantor. Each Guarantor that is a
corporation or a partnership hereby represents and warrants that it has all
necessary corporate or partnership authority, as the case may be, to execute
and deliver this Guaranty and to perform its obligations hereunder.
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15. This Guaranty shall continue in full force and effect, and Lender
shall be entitled to make loans and advances and extend financial
accommodations to Borrower under the Loan Agreement on the faith hereof until
such time as Lender has, in writing, notified Guarantor that all of
Borrower's Obligations have been paid in full and discharged and the Loan
Agreement has been terminated or until Lender has actually received written
notice from any Guarantor of the discontinuance of this Guaranty as to that
Guarantor, or written notice of the death, incompetency or dissolution of any
Guarantor. In case of any discontinuance by, or death, incompetency or
dissolution of, any Guarantor (collectively, a "TERMINATION EVENT"), this
Guaranty and the obligations of such Guarantor and his or its heirs, legal
representatives, successors or assigns, as the case may be, shall remain in
full force and effect with respect to all of Borrower's Obligations incurred
prior to the receipt by Lender of written notice of the Termination Event.
The occurrence of a Termination Event with respect to one Guarantor shall not
affect or impair the obligations of any other Guarantor hereunder.
16. Anything in this Guaranty to the contrary notwithstanding, it is
expressly agreed that neither the Lender, nor its successors or assigns,
shall have any recourse of any kind whatsoever for or with regard to any
indebtedness, liability or obligation under this Guaranty whether or not so
provided herein, against any of the following persons personally or against
any of the separate property or estate of any of the following persons (as
distinguished from the property of the Guarantor) and the Lender, and each of
its successors and assigns waives and does hereby waive any such personal
liability: any present or future director or shareholder or employee of the
Guarantor, any present or future partner in any partnership which is or
becomes a shareholder of the Guarantor, any person or entity that, directly
or indirectly, through one or more partnerships, is a partner in any
partnership which is or becomes a shareholder of the Guarantor, or any
shareholder, officer, director, employee, trustee, beneficiary, member or
agent of any corporation or other entity which is or becomes a shareholder of
the Guarantor. The foregoing shall not impair the ability of the Lender to
enforce the terms of this Guaranty against the Guarantor.
17. Wherever possible each provision of this Guaranty shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Guaranty shall be prohibited by or invalid under
such law, such provision shall be ineffective to the extent of such
prohibition or i-nvalidity without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.
18. All notices to be sent under this Guaranty shall be sent by any
method of delivery described in the Loan Agreement, and to the Lender at the
addresses described in the Loan Agreement, and to Guarantor at the following
addresses:
To Guarantor: The Prime Group, Inc.
77 West Wacker Drive
Suite 3900 (Suite 4200 from and after February 1, 1999)
Chicago, Illinois 60601
Attn: Michael W. Reschke
Facsimile: (312)917-1511
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With a copies to: Winston & Strawn
35 West Wacker Drive
Chicago, Illinois 60601
Attn: Wayne D. Boberg, Esq.
Facsimile: (312)558-5700
The Prime Group, Inc.
77 West Wacker Drive
Suite 4200
Chicago, Illinois 60601
Attn: Robert J. Rudnik, Esq.
Facsimile: (312)917-8442
or to such other addresses as Guarantor or Lender shall designate in a written
notice to the other.
19. THIS GUARANTY SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS
OF THE STATE OF ILLINOIS.
20. Guarantor irrevocably agrees that, subject to Lender's sole and
absolute election, ALL ACTIONS OR PROCEEDINGS IN ANY WAY, MANNER OR RESPECT,
ARISING OUT OF OR FROM OR RELATED TO THIS GUARANTY SHALL BE LITIGATED IN
COURTS HAVING SITUS WITHIN THE CITY OF CHICAGO, STATE OF ILLINOIS. GUARANTOR
HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURTS LOCATED WITHIN SAID CITY AND STATE. GUARANTOR HEREBY WAIVES
ANY RIGHT IT MAY HAVE TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION
BROUGHT AGAINST GUARANTOR BY LENDER IN ACCORDANCE WITH THIS PARAGRAPH.
SERVICE OF LEGAL PROCESS MAY BE MADE ON THE GUARANTOR BY ANY METHOD OF
DELIVERY, AND TO THE ADDRESSES, FOR SENDING NOTICES HEREUNDER, AS DESCRIBED
IN PARAGRAPH 17 ABOVE.
21. GUARANTOR AND LENDER HEREBY WAIVE ALL RIGHTS TO TRIAL BY JURY IN
ANY ACTION OR PROCEEDING WHICH PERTAINS DIRECTLY OR INDIRECTLY TO THIS
GUARANTY.
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IN WITNESS WHEREOF, this Guaranty has been duly executed by the
undersigned as of the above-mentioned date.
THE PRIME GROUP, INC., an Illinois
corporation
By: /s/ ROBERT J. RUDNIK
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Its: EXECUTIVE VICE PRESIDENT
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