Exhibit 4
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4(e) (Atria, Kapson, ARV, Fortress Lines)
PLEDGE AND SECURITY AGREEMENT
(MEMBERSHIP INTERESTS AND STOCK)
THIS PLEDGE AND SECURITY AGREEMENT (this "AGREEMENT") dated as
of February 8, 2001 is by and between CAPITAL TRUST, INC., a Maryland
corporation ("SECURED PARTY"), having an address at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, and LF STRATEGIC REALTY INVESTORS II L.P., a Delaware
limited partnership ("LFSRI"), having an address at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇.▇. ▇▇▇▇▇, LFSRI II ALTERNATIVE PARTNERSHIP L.P., a Delaware limited
partnership ("LFAP"), having an address at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇.
▇▇▇▇▇, LFSRI II-CADIM ALTERNATIVE PARTNERSHIP L.P., a Delaware limited
partnership ("CADIM" and, together with LFSRI and LFAP, "PLEDGOR"), having an
address at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, PROMETHEUS ASSISTED
LIVING LLC, a Delaware limited liability company ("PROMETHEUS ASSISTED"),
PROMETHEUS HOMEBUILDERS LLC, a Delaware limited liability company ("PROMETHEUS
HOMEBUILDERS"), LFSRI II ASSISTED LIVING LLC, a Delaware limited liability
company ("LFSRI ASSISTED") and PROMETHEUS SENIOR QUARTERS LLC, a Delaware
limited liability company ("PROMETHEUS SQ," together with Prometheus Assisted,
Prometheus Homebuilders and LFSRI Assisted, collectively, "COMPANY"), each
having an address at ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇.
PRELIMINARY STATEMENT
A. Secured Party has agreed to make a loan to LFSRI II SPV
REIT CORP., a Delaware corporation ("ORIGINAL BORROWER") and SENIOR QUARTERS
FUNDING CORP., a Delaware corporation ("NEW BORROWER," and collectively with
Original Borrower, the "BORROWER"), in the aggregate principal sum of
$110,000,000 a portion of which has been advanced prior to the date hereof (the
"LOAN") in accordance with the provisions of a certain Amended and Restated Loan
Agreement (the "LOAN AGREEMENT") dated of even date herewith, which Loan shall
be evidenced by, and payable, together with interest thereon, in accordance with
the provisions of three promissory notes collectively referred to therein as the
"NOTES." The Notes, the Loan Agreement, this Agreement and all other documents
of any nature whatsoever evidencing, securing or guaranteeing the Loan in whole
or in part, or otherwise executed and delivered in connection with the Loan or
relating thereto, as the same may be modified or amended from time to time, are
hereinafter referred to collectively as the "LOAN DOCUMENTS".
B. Capitalized terms used and not otherwise defined herein
shall have the respective meanings given to such terms in the Loan Agreement.
C. As of the date hereof Pledgor is the owner of 100% of the
Equity Interests in Company which together with the right to receive dividends
and other distributions on account thereof from time to time is hereinafter
collectively referred to as, the "INTERESTS".
D. Secured Party was willing to make the Loan only if Pledgor
and the Company agreed to execute and deliver this Agreement as additional
security for the payment of all principal, interest, additional interest and
other sums of any nature whatsoever which may or shall become due under the
Notes, the Loan Agreement and the other Loan Documents (collectively, the
"DEBT") and the observance and performance by Borrower, Pledgor, the Company and
the other members of the Borrower Control Group of all the terms, covenants and
provisions of the Loan Documents on the part of Pledgor and the Company to be
observed and performed.
E. Pledgor and the Company will derive substantial economic
benefit from the Loan and, therefore, Pledgor and the Company desire to execute
this Agreement in order to satisfy the condition described in the foregoing
paragraph D.
NOW, THEREFORE, in consideration of Secured Party's agreement
to make the Loan and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Pledgor and the Company hereby
represent and warrant to and covenant and agree with Secured Party as follows:
SECTION 1. SECURITY INTEREST. As security for the due and
punctual payment in full of the Debt and for the due and punctual performance by
Borrower, Pledgor, the Company and the other members of the Borrower Control
Group of all of the terms, covenants and provisions of the Loan Documents (the
Debt, the payment thereof and the performance of the terms, covenants and
provisions of the Loan Documents being hereinafter collectively called the
"OBLIGATIONS"), Pledgor hereby pledges, hypothecates, assigns, and delivers to
Secured Party and grants to Secured Party a security interest in and lien on all
of Pledgor's right, title and interest now owned or hereafter acquired in and to
the following described property (the "COLLATERAL"):
(a) the Interests and any certificates representing the
Interests;
(b) all cash, securities, dividends, distributions, Proceeds,
and other property at any time and from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of the Interests and any fees, commissions or other
compensation payable to Pledgor as a member of the Company (all of the
foregoing, collectively, "DISTRIBUTIONS");
(c) all contract rights, general intangibles, rights, claims,
powers, privileges, benefits and remedies arising from or in any way
related to ownership of the Interests, any certificates and other
instruments representing the Interests and the other Collateral
described above in paragraphs 1(a) and (b), including, without
limitation, all rights to vote or consent, or to receive any notice, or
to inspect or review any books, records or other information;
(d) all additions to the Collateral described in the foregoing
clauses (a) through (c) including without limitation any tangible or
intangible property in the Company obtained in the future by Pledgor,
all substitutions therefor and all replacements thereof; and
(e) all Proceeds of any of the foregoing.
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Notwithstanding any contrary provision contained herein as
used in this Agreement, the terms "Collateral" and "Distributions" shall not
include any Money properly released from the Deposit Account or other Collateral
released by Secured Party pursuant to the terms of this Agreement or the Amended
and Restated Deposit Account Agreement.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF PLEDGOR. Pledgor
hereby represents and warrants to Secured Party as of the date hereof as
follows:
(a) No consent of any other person or entity (including,
without limitation, any owner or creditor of Pledgor) which has not
been obtained, is required in connection with the execution, delivery,
performance, validity or enforceability of this Agreement.
(b) Pledgor is duly organized, validly existing and in good
standing under the laws of the state of its formation and has all
requisite power and authority under the laws of such state and under
its organizational and charter documents to enter into and perform its
obligations under this Agreement.
(c) Pledgor has taken all necessary legal and other action to
authorize the execution, delivery and performance of this Agreement,
and this Agreement constitutes the valid and binding obligation and
agreement of Pledgor, enforceable in accordance with its terms, subject
to limitations as to enforceability imposed by bankruptcy,
reorganization, moratorium, insolvency and other laws of general
application relating to or affecting the enforceability of creditors'
rights and to equitable principles.
(d) Pledgor has not received any notice of default under any
agreement or instrument to which Pledgor is a party or by which Pledgor
or Pledgor's assets may be bound which default would have a material
adverse effect on Pledgor's business, assets, property or financial or
other condition, and Pledgor is not in default under any order,
judgment, award or decree of any court, arbitrator or other
governmental authority binding upon or affecting Pledgor or by which
any of Pledgor's assets may be bound or affected.
(e) Neither the execution and delivery of this Agreement nor
the compliance by Pledgor with the terms and provisions hereof are
events which of themselves, or with the giving of notice or the passage
of time, or both, would constitute, on the part of Pledgor, a violation
of or conflict with, or result in any breach of, or default under, the
terms, conditions or provisions of, or require any consent, permit,
approval, authorization, declaration or filing (other than filings now
or hereafter made by Pledgor as required under the Securities Exchange
Act of 1934, as amended, as a result hereof) which has not been made or
obtained under or pursuant to, any statute, law, judgment, decree,
order, rule or regulation applicable to Pledgor, the organizational and
charter documents of Pledgor, if any, or any other agreement or
instrument to which Pledgor is a party or by which Pledgor, or
Pledgor's assets, are bound, or result in the creation or imposition of
any Lien on any of the assets of Pledgor, and no such condition or
event of itself, or with the giving of notice or the passage of time,
or both, will result in the acceleration of the due date of any
obligation of Pledgor or by which any of Pledgor's assets are bound;
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provided, however, that the compliance by Pledgor with the terms and
provisions hereof is subject to all applicable Federal and state
securities laws.
(f) Except as have been disclosed in the September 30, 2000
financial statements of Pledgor provided to Secured Party, there are no
judgments presently outstanding and unsatisfied against Pledgor or any
of Pledgor's assets, and neither Pledgor nor any of Pledgor's assets is
a party to or the subject of any actions or suits or proceedings in
equity or by any governmental authorities, and no such litigation or
proceeding has been threatened against Pledgor or against any of
Pledgor's assets, and no investigation in contemplation of such
litigation or proceeding has begun or is pending or has been
threatened.
(g) Pledgor's principal place of business and chief executive
office is at the location identified in the first paragraph of this
Agreement.
(h) The financial statements of Pledgor and the Company
furnished to Secured Party are true, correct and complete in all
material respects and fairly present the financial condition of Pledgor
and the Company as at the end of and for the reporting periods covered
thereby. Except as shown on such financial statements, no borrowings
have been made or indebtedness incurred by Pledgor or the Company which
is outstanding and which might give rise to a lien or claim against any
assets of Pledgor or Company. Except for the Permitted Indebtedness of
Pledgor or Company, there are no liabilities, contingent or otherwise,
or any unrealized or anticipated losses from unfavorable commitments,
whether arising before or after the date of such financial statements,
which are not disclosed in such financial statements.
(i) As of the date hereof, each of Pledgor and Company, has
filed or caused to be filed all United States, state, local and foreign
income tax returns (if any) which are required to be filed and all
United States, state, local and foreign tax returns other than income
tax returns which are required to be filed and has paid or caused to be
paid all taxes shown on such returns or on any assessment made against
it and all other taxes, fees or other charges imposed on it by any
governmental authority, agency or instrumentality which have become due
and payable. No tax liens have been filed against Pledgor or Company or
against any of their respective assets, and no material claims are
being asserted against Pledgor or Company or any of their respective
assets in respect of any taxes.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. Each
Company hereby represents and warrants to Secured Party, as to itself only, as
of the date hereof as follows:
(a) Company is duly organized, validly existing and in good
standing under the laws of the state of its formation and has all
requisite power and authority under the laws of such state and under
its organizational and charter documents to enter into and perform its
obligations under this Agreement.
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(b) Company has taken all necessary legal and other action to
authorize the execution, delivery and performance of this Agreement,
and this Agreement constitutes the valid and binding obligation and
agreement of Company, enforceable in accordance with its terms, subject
to limitations as to enforceability imposed by bankruptcy,
reorganization, moratorium, insolvency and other laws of general
application relating to or affecting the enforceability of creditors'
rights and to equitable principles.
(c) Company has not received any notice of default under any
agreement or instrument to which it is a party or by which it or its
assets may be bound which default would have a material adverse effect
on its business, assets, property or financial or other condition, and
Company is not in default under any order, judgment, award or decree of
any court, arbitrator or other governmental authority binding upon or
affecting it or by which any of its assets may be bound or affected.
(d) Neither the execution and delivery of this Agreement nor
the compliance by Company with the terms and provisions hereof are
events which of themselves, or with the giving of notice or the passage
of time, or both, would constitute, on the part of Company, a violation
of or conflict with, or result in any breach of, or default under, the
terms, conditions or provisions of, or require any consent, permit,
approval, authorization, declaration or filing (other than filings now
or hereafter made by Pledgor as required under the Securities Exchange
Act of 1934, as amended, as a result hereof) which has not been made or
obtained under or pursuant to, any statute, law, judgment, decree,
order, rule or regulation applicable to Company, or (i) the
organizational and charter documents of Company or (ii) any other
agreement or instrument to which Company is a party or by which
Company, or its assets, are bound, or result in the creation or
imposition of any Lien on any of the assets of Company, and no such
condition or event of itself, or with the giving of notice or the
passage of time, or both, will result in the acceleration of the due
date of any obligation of Company or by which any of its assets are
bound; provided, however, that the compliance by Company with the terms
and provisions hereof is subject to all applicable Federal and state
securities laws.
(e) There are no judgments presently outstanding and
unsatisfied against Company or any of its assets, and neither Company
nor any of its assets is a party to or the subject of any actions or
suits or proceedings in equity or by any governmental authorities, and
no such litigation or proceeding has been threatened against Company or
against any of its assets, and no investigation in contemplation of
such litigation or proceeding has begun or is pending or has been
threatened.
(f) Company's chief executive office is at the location
identified in the first paragraph of this Agreement.
(g) The Interests constitute 100% of the Equity Interests in
the Company.
(h) Prometheus SQ is the sole record and beneficial owner of
100% of the Equity Interests in each of Prometheus SQ Holdings Corp.
("PROMETHEUS HOLDINGS"), a Delaware corporation and Atria Holdings LLC
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("ATRIA"), a Delaware limited liability company except to the extent
any direct or indirect equity owners in Prometheus Holdings and Atria
are deemed to be a beneficial owner of the aforementioned Equity
Interests.
SECTION 4. ADDITIONAL REPRESENTATIONS AND WARRANTIES OF
PLEDGOR. Pledgor hereby represents and warrants to Secured Party as of the date
hereof as follows with respect to the Interests:
(a) (i) Pledgor is the sole record and beneficial owner of the
Interests (except to the extent any direct or indirect equity owners in Pledgor
is deemed to be a beneficial owner of the Interests), free and clear of all
Liens (other than as created hereunder); Pledgor has legal title to the
Interests and good right and lawful authority to grant a security interest and
lien in the same in the manner hereby done or contemplated. (ii) The execution
and delivery of this Agreement by Pledgor and Company is not restricted in any
way by (x) any agreement or instrument to which Pledgor is a party relative to
Pledgor's Equity Interests in Prometheus Homebuilders, Prometheus Assisted and
LFSRI Assisted, except for such restrictions as have been waived by proper steps
taken in compliance with such restrictions, (y) any agreement or instrument
relative to Pledgor's Equity Interests in Prometheus SQ, except for the
agreements and instruments set forth on Exhibit A hereto and such restrictions
as have been waived, by proper steps taken in compliance with such restrictions
or (z) any applicable law governing Company. (iii) The transferability of the
Interests, with respect to either the grant of a security interest and lien in
the Collateral to Secured Party, or any foreclosure sale of the Collateral by
Secured Party is not restricted in any way by (x) any agreement or instrument to
which Pledgor is a party relative to Pledgor's Equity Interests in Prometheus
Homebuilders, Prometheus Assisted and LFSRI Assisted and, except for such
restrictions as have been waived, by proper steps taken in compliance with such
restrictions, (y) any agreement or instrument relative to Pledgor's Equity
Interest in Prometheus SQ, except for the agreements and instruments set forth
on Exhibit A and except for such restrictions as have been waived, by proper
steps taken in compliance with such restrictions, or (z) any law governing the
Company (other than applicable Federal and state securities laws). (iv) The
Interests are not subject to any option or similar arrangement; and no consent
or approval of any governmental body or regulatory authority, or of any
securities exchange, is necessary to the validity of the rights created
hereunder; and all action has been taken by Pledgor to create and perfect, in
favor of Secured Party, a security interest and lien in the Interests, and
Secured Party has acquired a first priority perfected security interest and lien
therein.
(b) There are no outstanding or authorized options, warrants,
rights, contracts, rights to subscribe, conversion rights or other agreements or
commitments (collectively, "ADVERSE RIGHTS") to which Company or Pledgor is a
party providing for the issuance or acquisition of any Equity Interests in
Company.
(c) As to all Collateral acquired by Pledgor on and after the
date hereof, Pledgor shall be the legal and equitable owner of such Collateral
free and clear of all Liens (other than those created hereunder); each
membership interest or other security comprising such Collateral will have been
duly authorized, validly issued and be fully paid and non-assessable; Pledgor
will have legal title to such Collateral and good and lawful authority to
pledge, assign and deliver such Collateral in the manner hereby contemplated;
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and no consent or approval of any governmental body or regulatory authority, or
of any securities exchange, is or will be necessary to the validity of the
rights created hereunder.
(d) Pledgor shall not, nor shall it cause, authorize or suffer
Company to, take any action, or fail to take any action, in contravention of the
terms, conditions and provisions of the Notes, the Loan Agreement, this
Agreement or any of the other Loan Documents.
(e) None of the ownership interests comprising the Collateral
are dealt in or traded on securities exchanges or in securities markets, and
none by its terms expressly provides that it is a security governed by Article 8
of the UCC or that it is an investment company security, and none is held in a
securities account (as defined in Section 8-501 of the UCC.)
SECTION 5. COVENANTS.
(a) Entity Status. Pledgor will and will cause the Company to
continue to comply with the provisions of all of their respective
organizational and governing documents, and the laws of the state or
other jurisdiction in which each such Entity was formed relating to
each such Entity. All customary formalities regarding the Entity
existence of Pledgor and the Company will continue to be observed.
(b) Existence. Pledgor shall not and shall not suffer the
Company to (i) take any actions in violation of its organizational or
governing documents or (ii) amend, modify, waive or terminate its
organizational or governing documents.
(c) Other Actions. Pledgor shall not and shall not suffer
Company to:
(1) Liens on the Collateral. Incur, create, assume,
become or be liable in any manner with respect to, or permit
to exist, any Lien with respect to any Collateral except Liens
in favor of Secured Party.
(2) Certain Restrictions. Enter into any agreement
which expressly restricts the ability of Pledgor or the
Company to enter into amendments, modifications or waivers of
any of the Loan Documents.
(3) Issuance of Equity Interests. Issue or allow to
be created any shareholder, partnership, trust or membership
interests, as applicable, or other Equity Interests in the
Company.
(d) Additional Covenant. Pledgor shall not cause or suffer the
Company to, and the Company shall not, issue any Equity Interests or
debt instruments having rights which may be senior or prior to the
rights of Pledgor to receive Distributions from Company or which could
otherwise adversely affect the rights of the Interests.
(e) Reduction of Distributions. Subject to fiduciary
obligations, Pledgor shall not, directly or indirectly, without the
prior written consent of Secured Party, vote to amend the
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organizational documents of Company to reduce the stated return to
Pledgor thereunder or change the formula for calculating cash from
operations available therefor.
(f) Payment of Distributions. Pledgor shall cause Company to,
and Company shall, pay any and all of its available cash less Cost
Exclusions as a distribution directly to Pledgor.
SECTION 6. DELIVERY OF COLLATERAL; VOTING RIGHTS;
DISTRIBUTIONS; SUBSTITUTION OF COLLATERAL.
(a) Any and all certificates representing the Collateral
(including without limitation additional or substitute certificates or
instruments representing Distributions or other Collateral that
hereafter may be issued) shall be delivered to the Secured Party in
suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, with
signatures appropriately guaranteed, and accompanied by any required
transfer tax stamps, all in form satisfactory to Secured Party.
(b) So long as there shall not have occurred and be continuing
an Event of Default (hereinafter defined), Pledgor shall be entitled to
exercise any and all voting rights and powers relating or pertaining to
the Collateral or any part thereof for any purpose not inconsistent
with the terms and provisions of the Notes the Loan Agreement, this
Agreement and the other Loan Documents or otherwise in contravention of
any of the terms, covenants and provisions of the Notes the Loan
Agreement, this Agreement or any of the other Loan Documents.
(c) Except as and to the extent provided herein and in the
Loan Documents until the Indebtedness is paid in full, Pledgor shall
not receive or be entitled to retain Distributions, if any, paid on the
Collateral. To the extent Pledgor receives any Distributions prohibited
hereunder, Pledgor shall receive same in trust for the benefit of
Secured Party and shall immediately deliver same to Secured Party or
its designated agent (accompanied by proper instruments of assignment
or stock powers executed by Pledgor in accordance with Secured Party's
instructions) to be held subject to the terms, provisions and
conditions of this Agreement, the Loan Agreement and the Amended and
Restated Deposit Account Agreement.
(d) Upon the occurrence of an Event of Default and so long as
said Event of Default shall continue, at the option of Secured Party,
(i) all rights of Pledgor to exercise the voting and consensual rights
and powers which Pledgor is entitled to exercise pursuant to the
foregoing subparagraph (b) shall cease, and all such rights shall
thereupon and without any further action or notice become vested in
Secured Party who shall have the sole and exclusive right and authority
to exercise (or refrain from exercising) such voting and consensual
rights and powers in its sole discretion, and (ii) Secured Party shall
receive and be entitled to retain any and all Distributions until the
Indebtedness is satisfied. THIS ASSIGNMENT OF VOTING RIGHTS IS COUPLED
WITH AN INTEREST AND IS IRREVOCABLE BY DISSOLUTION OR OTHERWISE. The
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exercise of any of the rights and remedies of Secured Party under this
paragraph shall not be or be deemed to be a disposition of Collateral
under Article 9 of the Uniform Commercial Code as in effect in any
applicable jurisdiction (the "UCC") or an acceptance or a retention or
a proposal to accept or retain --- all or any part of the Collateral in
satisfaction of all or any of the Obligations. Any and all
Distributions received by Secured Party pursuant to the provisions of
this paragraph shall be retained by Secured Party as part of the
Collateral and applied in accordance with the provisions of Section 11
of this Agreement.
(e) No substitution of Collateral shall be permitted without
the prior written consent of Secured Party.
SECTION 7. COSTS AND EXPENSES. The Company and Pledgor shall
pay all costs, fees, expenses and charges incurred by Secured Party in
connection with the administration and enforcement of this Agreement and the
security interest granted hereunder (including, without limitation, all
attorneys' fees and costs). In addition, the Company and Pledgor agree to pay,
and to save Secured Party harmless from all liability for, any stamp or other
taxes which may be payable in connection with the execution or delivery of this
Agreement or the transactions contemplated hereby. The obligations of the
Company and Pledgor pursuant to this paragraph shall survive any termination of
this Agreement.
SECTION 8. EVENT OF DEFAULT. The occurrence of any of the
following events shall constitute an event of default (an "EVENT OF DEFAULT")
hereunder:
(a) If any representation or warranty of Pledgor or the
Company made in this Agreement, or in any certificate, report,
financial statement or other instrument furnished in connection with
this Agreement shall prove false or misleading in any material respect
the effect of which shall cause or result in a Material Adverse
condition with respect to the Pledgor or the Company;
(b) If Pledgor or Company shall make a general assignment for
the benefit of creditors;
(c) If a court of competent jurisdiction enters a decree or
order for relief with respect to Pledgor or Company under Title 11 of
the United States Code as now constituted or hereafter amended or under
any other applicable Federal or state bankruptcy, insolvency or other
similar law, rule or regulation, or if such court enters a decree or
order appointing a receiver, liquidator, assignee, trustee, custodian,
examiner, magistrate, arbitrator, sequestrator (or similar official) of
Pledgor or Company or of any substantial part of their respective
properties, or if such court decrees or orders the winding up or
liquidation of the affairs of Pledgor or Company;
(d) If Pledgor or Company files a petition for relief or
answer or consent seeking relief under Title 11 of the United States
Code as now constituted or hereafter amended, or under any other
applicable Federal or state bankruptcy, insolvency or other similar
law, rule or regulation, or if Pledgor or Company fails to vigorously
and diligently oppose or otherwise consents to or acquiesces in the
commencement or prosecution of an involuntary case under Title 11 of
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the United States Code as now constituted or hereafter amended, or
under any other applicable Federal or state bankruptcy, insolvency or
similar law, rule or regulation, or to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
examiner magistrate, arbitrator, sequestrator (or other similar
official) of Pledgor or Company or of any substantial part of their
respective properties, or if Pledgor or Company fails generally to pay
its debts as such debts become due, or if Pledgor or Company takes any
action in furtherance of any action described in this subparagraph;
(e) If any Affiliate of Pledgor or Company shall commence any
legal action seeking to cause Pledgor or Company or any Affiliate of
Pledgor or Company to take any of the actions described in
subparagraphs (b), (c) or (d) above with respect to Pledgor or Company;
(f) If Pledgor or Company shall be in default of any other
provision provided herein and such default shall continue for a period
of thirty (30) days after notice from Secured Party; or
(g) If an "Event of Default" (as such term is defined in the
Loan Agreement) occurs.
SECTION 9. REMEDIES UPON DEFAULT. Upon the occurrence and
during the continuation of an Event of Default, Secured Party may, in addition
to any other rights or remedies which Secured Party may have, immediately and
without demand exercise with respect to the Collateral any and all rights and
remedies granted to a secured party under the UCC.
SECTION 10. SALE OF COLLATERAL.
(a) Sale of the Collateral may be made at any public or
private sale or at any broker's board or on any securities exchange,
for cash, upon credit or for future delivery, as Secured Party shall
deem appropriate. Secured Party shall be authorized at any such sale,
in its sole discretion, to restrict the prospective bidders or
purchasers to persons who will represent and agree that they are
purchasing the Collateral then being sold for their own account for
investment and not with a view to the distribution or resale thereof,
and upon consummation of any such sale Secured Party shall have the
right to assign, transfer and deliver to the purchaser or purchasers
thereof the Collateral so sold. Each such purchaser at any such sale
shall hold the property sold absolutely free from any claim or right on
the part of Pledgor, and Pledgor hereby waives, to the extent permitted
by law, all right of redemption, stay or appraisal which Pledgor now
has or may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. To the extent that notice of
sale shall be required to be given by law, Secured Party shall give
Pledgor ten (10) days' notice in the manner herein specified of Secured
Party's intention to make any such public or private sale or sale at
any broker's board or on any such securities exchange. Such notice, in
case of public sale, shall state the time and place fixed for such
sale, and, in the case of sale at a broker's board or on a securities
exchange, shall state the board or exchange at which such sale is to be
made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. In case of private
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sale, such notice shall state the time after which the Collateral will
be sold. Any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as Secured
Party may fix in the notice of such sale. At any such sale, the
Collateral, or any portion thereof, may be sold as Secured Party may in
its sole discretion determine. To the extent permitted by law, Secured
Party may bid, which bid may be in whole or in part, in the form of
cancellation of indebtedness, for and purchase for the account of
Secured Party or its nominee the whole or any part of the Collateral.
Secured Party shall not be obligated to make any sale of the Collateral
if Secured Party shall determine not to do so, regardless of the fact
that notice of sale of the Collateral may have been given. Secured
Party may, without notice of publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may,
without further notice, be made at the time and place to which the same
was so adjourned. In case sale of all or any part of the Collateral is
made on credit or for future delivery, the Collateral so sold may be
retained by Secured Party until the sales price is paid by the
purchaser or purchasers thereof, but Secured Party shall not incur any
liability in case any such purchaser or purchasers shall fail to take
up and pay for the Collateral so sold and, in the case of any such
failure, such Collateral may be sold again upon like notice. As an
alternative to exercising the power of sale herein conferred upon it,
Secured Party may proceed by a suit or suits at law or in equity to
foreclose this Agreement and to sell the Collateral, or any portion
thereof, pursuant to a judgment or decree of a court or courts of
competent jurisdiction. Pledgor agrees, to the extent permitted by law,
that any sale or other disposition of any of the Collateral in
accordance with the foregoing procedures shall be deemed to be
commercially reasonable under the UCC and otherwise proper.
(b) In connection with any disposition of the Collateral, if
Secured Party elects to obtain the advice of any one or more
independent nationally known investment banking firms which are member
firms of the New York Stock Exchange (or other nationally recognized
exchange), with respect to the method or manner of sale or disposition
of any of the Collateral, the best price reasonably obtainable therefor
and any other details concerning such sale or disposition, Pledgor
agrees, to the extent permitted by law, that any sale or other
disposition of any of the Collateral in reliance on such advice shall
be deemed to be commercially reasonable under the UCC and otherwise
proper.
(c) Pledgor understands that compliance with federal or state
securities laws may very strictly limit the course of conduct of
Secured Party if Secured Party were to attempt to dispose of all or any
part of the Collateral and may also limit the extent to which or the
manner in which any subsequent transferee of the Collateral may dispose
of the same. Pledgor agrees that in any sale of any of the Collateral,
Secured Party is hereby authorized to comply with any such limitation
or restriction in connection with such sale as it may be advised by
counsel is necessary in order to avoid any violation of applicable law
(including, without limitation, compliance with such procedures as may
restrict the number of prospective bidders and purchasers or further
restrict such prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
11
Collateral), or in order to obtain any required approval of the sale or
of the purchaser by any governmental regulatory authority or official,
and Pledgor further agrees that such compliance shall not result in
such sale being considered or deemed not to have been made in a
commercially reasonable manner, nor shall Secured Party be liable or
accountable to Pledgor for any discount allowed by reason of the fact
that such Collateral is sold in compliance with any such limitation or
restriction.
SECTION 11. APPLICATION OF MONIES. All monies (including,
without limitation, Distributions) received or collected by Secured Party
pursuant to this Agreement shall be held as Collateral by Secured Party and
after the occurrence of an Event of Default shall be applied by Secured Party
first, to the payment of all costs incurred in the collection of such monies
(including attorneys' fees and expenses) and second, to the payment of the
Indebtedness in such order and priority as Secured Party may in its sole
discretion determine. The balance, if any, of such monies remaining after
payment in full of such costs and the Obligations shall be remitted to Pledgor
or as otherwise directed by a court of competent jurisdiction.
SECTION 12. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor
hereby appoints Secured Party, effective upon an Event of Default and during the
continuation thereof, as the attorney-in-fact of Pledgor for the purpose of
carrying out the provisions of this Agreement and taking any action and
executing any instrument which Secured Party may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest. Without limiting the generality of the foregoing, upon an
Event of Default and during the continuation thereof, Secured Party shall have
the right and power to receive, endorse and collect all checks and other orders
for the payment of money made payable to Pledgor or Company representing any
Distribution or any part of any thereof and to give full discharge for the same.
SECTION 13. NO WAIVER. No failure or delay on the part of
Secured Party in exercising any power or right hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power preclude any other or further exercise thereof or the exercise of any
other right or power hereunder nor shall Secured Party's waiver of any right or
remedy against Pledgor release or relieve Pledgor from its obligations
hereunder. No modification or waiver of any provision of this Agreement nor
consent to any departure by Pledgor therefrom shall be effective unless the same
shall be in writing and signed by Secured Party, 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 Pledgor in any case shall, of itself, entitle
Pledgor to any other or further notice or demand in similar or other
circumstances. If any notice is required by law to be given to Pledgor or
Company by Secured Party, five (5) days' notice given by registered mail, return
receipt requested, and addressed to such party at the address set forth herein
shall be deemed for all purposes to be reasonable notice.
SECTION 14. DURATION OF SECURED PARTY'S RIGHTS AND
TERMINATION. Until the Indebtedness shall have been paid in full, all rights,
powers and remedies granted to Secured Party under this Agreement shall continue
to exist and may be exercised by Secured Party at any time and from time to
time. Upon payment in full of the Indebtedness, Secured Party shall reassign and
redeliver, without recourse or warranty and at the expense of Pledgor, or cause
to be so reassigned and redelivered, to Pledgor or to such person or persons as
Pledgor shall designate, against receipt, such of the Collateral, if any, as
12
shall not have been sold or otherwise applied by Secured Party pursuant to the
terms hereof and still be held by Secured Party hereunder, together with
appropriate instruments of reassignment and release.
SECTION 15. AGREEMENTS OF PLEDGOR. Until the Indebtedness is
paid and performed in full, Pledgor covenants and agrees with Secured Party as
follows:
(a) Pledgor shall furnish or cause to be furnished to Secured
Party from time to time, at the request of Secured Party, such
information concerning Pledgor or the Company as Secured Party may
reasonably request;
(b) Except for the Permitted Indebtedness, Pledgor shall not,
as to itself, and shall not authorize or permit the Company to, make
any loans to members of Pledgor or to set aside any funds for any such
purpose;
(c) Except for the Permitted Indebtedness, Pledgor shall not
authorize or permit the Company to create any mortgage, pledge, title
retention lien, or other Lien or incur any indebtedness (directly or as
a guarantor) or any Lien with respect to any assets now owned or
hereafter acquired by Company, or to take or fail to take any other
action whatsoever, in contravention of Section 5 of this Agreement or
otherwise inconsistent with the terms and provisions of the Notes, the
Loan Agreement, this Agreement or any of the other Loan Documents;
(d) Pledgor shall not, and shall not authorize or permit the
Company to, in any manner further encumber, sell, transfer or convey,
or permit to be further encumbered, sold, transferred or conveyed in
any manner, the Collateral other than in compliance with Section 2.6(b)
of the Loan Agreement;
(e) Pledgor shall not consent to or authorize any action by
Company with respect to entering into any merger or consolidation with
any corporation or other person or party, or changing the character of
its business, or adding any additional members to Company;
(f) Pledgor shall take any steps necessary to prevent Company
from doing any act or thing prohibited pursuant to this Section or
which would otherwise be in contravention of any representation,
warranty, term, covenant or provision set forth in the Loan Agreement
or any of the other Loan Documents.
SECTION 16. LIMITATION ON DUTIES AND LIABILITIES OF SECURED
PARTY; INDEMNIFICATION.
(a) Beyond the exercise of reasonable care in the custody of
any Collateral in its possession, Secured Party shall have no duty as
to any Collateral or as to the preservation of rights against prior
parties or any other rights pertaining thereto. Secured Party shall
have no duty as to any Collateral, to ascertain or take action with
respect to calls, conversions, exchanges, maturities, tenders or other
matters relative to any Collateral, whether or not Secured Party has or
is deemed to have knowledge of such matters, or as to the taking of any
necessary steps to preserve rights against any parties or any other
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rights pertaining to any Collateral. Secured Party shall be deemed to
have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords other collateral of the
same type in its possession. Except for gross negligence and willful
misconduct, Secured Party shall not be liable or responsible for any
loss or damage to any of the Collateral, or for any diminution in the
value thereof, by reason of the act or omission of Secured Party or any
agent, bailee or custodian selected by Secured Party in good faith or
for taking any necessary steps to preserve rights against any parties
with respect to any Collateral or for the collection of any proceeds of
any Collateral or for any invalidity, lack of value or uncollectability
of any of the Collateral.
(b) The pledge and assignment of the Collateral and grant of a
security interest is for collateral purposes only, and, prior to its
foreclosure thereon, Secured Party shall neither by virtue of this
Security Agreement, by the receipt of Distributions or Payor Proceeds,
by exercise of voting rights or by the exercise of any of its rights or
remedies hereunder be deemed to be a member, interest holder, partner
or stockholder, as applicable, of Company or to have any liability for
the debts, obligations or liabilities of Pledgor or Company or any
other member, interest holder, partner or stockholder, as applicable,
of Company. Without limiting the generality of the foregoing, by
accepting the pledge, assignment and security interests described
herein, Secured Party does not thereby assume any debts, obligations,
responsibilities, covenants, agreements or liabilities of Pledgor in
connection with the Collateral or of Pledgor to Company, or to any
third parties dealing with Company.
(c) Pledgor shall indemnify and hold harmless Secured Party
from and against any and all liability, loss, or damage that Secured
Party may suffer or incur and which arises out of or results from
claims of third parties, including another stockholder, member,
interest holder or partner, as applicable, based on the rights or
obligations of Company or a stockholder, member, interest holder or
partner, as applicable, of Company under the Company's organizational
and charter documents, this Agreement, or acceptance of Distributions
or the exercise of any of the rights or remedies of Secured Party
hereunder; any claim of any alleged obligation, liability or duty on
the part of Company to perform or discharge any of the terms,
covenants, or provisions of the Company's organizational and charter
documents or any liability or obligation of Company or Pledgor;
together with all costs and expenses (including, without limitation,
court costs and attorneys' fees and costs) paid or incurred in
connection therewith; or any receipt of Distributions from Company or
anyone else. Pledgor shall reimburse Secured Party upon demand for the
full amount of any indemnity to which Secured Party may be entitled
hereunder and the full amount of the indemnity obligation shall be
considered to be an Obligation and shall be secured hereby.
(d) Pledgor upon demand shall pay to Secured Party the amount
of any and all reasonable expense, including the reasonable fees and
disbursements of counsel and of any experts and agents, which Secured
Party may incur in connection with (i) the administration of this
Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the
Collateral, (iii) the exercise or enforcement of any of the rights of
14
Secured Party hereunder, or (iv) the failure by Pledgor or Company to
perform or observe any of the provisions hereof.
(e) All costs and expenses, including reasonable attorneys'
fees and costs, incurred or paid by Secured Party in exercising any
right, power or remedy conferred in this Agreement, or in the
enforcement thereof, shall become a part of the Debt and shall bear
interest from the date incurred or paid by Secured Party at the Default
Rate (as such term is defined in the Loan Agreement).
SECTION 17. SECURITY INTEREST ABSOLUTE. All rights of Secured
Party and the security interests hereunder, and all obligations secured hereby,
shall be absolute and unconditional, irrespective of any lack of validity or
enforceability of the other Loan Documents; 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
Documents; any exchange, release or non-perfection of any other collateral for
the Indebtedness, or any release or amendment or waiver of or consent to
departure from any of the Loan Documents; or any other circumstance (other than
payment and performance of the Obligations in full) that might otherwise
constitute a defense available to, or a discharge of Pledgor or any other
obligor under any of the Loan Documents, or any third party grantor of
collateral for the Obligations or any part thereof.
SECTION 18. NOTICE. Any notice, request, demand, statement,
authorization, approval or consent made hereunder shall be in writing and shall
be hand delivered or sent by Federal Express, or other reputable national
courier service, or by postage pre-paid registered or certified mail, return
receipt requested, and shall be deemed given (i) when received at the following
addresses if hand delivered or sent by Federal Express, or other reputable
national courier service, and (ii) three (3) business days after being
postmarked and addressed as follows if sent by registered or certified mail,
return receipt requested:
If to Secured Party:
Capital Trust, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
With copies to:
Capital Trust, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Loan Administrator
and
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Paul, Hastings, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
If to Pledgor or Company:
c/o Lazard Freres Real Estate Investors L.L.C.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇
With a copy in the case of any notice to Pledgor or Company
to:
c/o Lazard Freres Real Estate Investors L.L.C.
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, Esq.
and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Each party may designate a change of address by notice to the other parties,
given at least fifteen (15) days before such change of address is to become
effective.
SECTION 19. FURTHER ASSURANCES.
(a) Pledgor will, at Pledgor's expense and in such manner and
form as Secured Party may require, execute, deliver, file and record
any financing statement, specific assignment or other paper and take
any other action necessary or desirable, or that Secured Party may
request, in order to create, preserve, perfect or validate any security
interest, or to enable Secured Party to exercise and enforce its rights
hereunder with respect to any of the Collateral, or better to assure
and confirm unto Secured Party its rights, powers and remedies
hereunder. To the extent permitted by applicable law, Pledgor hereby
authorizes Secured Party to execute and file, in the name of Pledgor or
otherwise, UCC financing statements (which may be carbon, photographic,
photostatic or other reproductions of this Agreement or of a financing
statement relating to this Agreement) which Secured Party in its sole
discretion may deem necessary or appropriate to further perfect its
rights under this Agreement. Pledgor hereby consents and agrees that
the issuer of the Collateral or any registrar or transfer agent for any
of the Collateral shall be entitled to accept the provisions hereof as
conclusive evidence of the right of Secured Party to effect any
transfer pursuant to the provisions hereof, notwithstanding any other
notice or direction to the contrary heretofore or hereafter given by
Pledgor or any other party to such issuer, registrar or transfer agent.
16
(b) Pledgor agrees that Pledgor will not change (i) Pledgor's
name, identity or organizational structure in any manner, or (ii) the
location of Pledgor's principal place of business or chief executive
office unless Pledgor shall have given Secured Party not less than
thirty (30) days' prior written notice thereof which notice must state
in bold print that the notice is being sent for the purpose of allowing
the Secured Party to determine whether, or not to amend any UCC
Financing Statements filed in connection with this Agreement.
(c) Pledgor agrees to do and to cause the Company to do such
further reasonable acts and things, and to execute and deliver such
additional conveyances, assignments, agreements and instruments, as
Secured Party may at any time request in connection with the
administration or enforcement of this Agreement (including, without
limitation, to aid Secured Party in the sale of all or any part of the
Collateral) or related to the Collateral or any part thereof or in
order better to assure and confirm unto Secured Party its rights,
powers and remedies hereunder.
SECTION 20. CUMULATIVE RIGHTS AND REMEDIES. All remedies
afforded to Secured Party by reason of this Agreement are separate and
cumulative remedies and it is agreed that no one of such remedies shall be
deemed to be in exclusion of any other remedies available to Secured Party and
shall not in any manner limit or prejudice any other legal or equitable remedies
which Secured Party may have. The rights, powers and remedies given to Secured
Party by this Agreement shall be in addition to all rights, powers and remedies
given to Secured Party by virtue of any statue or rule of law and all such
rights, powers and remedies are cumulative and not alternative, and may be
exercised and enforced successively or concurrently.
SECTION 21. PARTIES BOUND. This Agreement shall be binding
upon and inure to the benefit of Pledgor, Company and Secured Party and their
respective successors and assigns.
SECTION 22. SEVERABILITY. If any term, covenant or provision
of this Agreement shall be held to be invalid, illegal or unenforceable in any
respect, this Agreement shall be construed without such term, covenant or
provision.
SECTION 23. NO ORAL CHANGE. This Agreement may only be
modified, amended, changed, discharged or terminated by an agreement in writing
signed by the parties hereto against whom enforcement is sought.
SECTION 24. GOVERNING LAW. This agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflicts of laws.
SECTION 25. HEADINGS. Section headings used herein are for
convenience only and shall not affect the construction of this Agreement.
SECTION 26. "PLEDGOR". The term "Pledgor" as used herein
shall, if this Agreement is signed by more than one pledgor, mean "the pledgors
and each of them" and each obligation of Pledgor herein contained shall be the
joint and several undertaking of all such pledgors, except where expressly
stated to the contrary in this Agreement.
17
SECTION 27. COUNTERPARTS. This Agreement may be executed in
any number of counterparts, and each such counterpart shall for all purposes be
deemed to be an original, and all such counterparts together shall constitute
but one and the same agreement.
SECTION 28. CONSENT BY COMPANY. Company is executing this
Agreement for the purposes of making the representations and warranties
contained in Section 3, evidencing its agreement to the provisions of this
Agreement applicable to it, and consenting to the other provisions hereof and to
the exercise by Secured Party of its remedies provided herein.
- SIGNATURES ON NEXT PAGE -
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IN WITNESS WHEREOF, Secured Party, Pledgor and Company have
duly executed this Agreement the date first above written.
SECURED PARTY: CAPITAL TRUST, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: Managing Director
PLEDGOR: LF STRATEGIC REALTY INVESTORS II L.P.,
LFSRI II ALTERNATIVE PARTNERSHIP L.P.,
and LFSRI II-CADIM ALTERNATIVE
PARTNERSHIP L.P., all Delaware limited
partnerships
By: Lazard Freres Real Estate Investors L.L.C.,
a New York limited liability company,
Their general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Principal and Chief Financial Officer
PROMETHEUS ASSISTED: PROMETHEUS ASSISTED LIVING LLC
By: LF Strategic Realty
Investors II L.P., its managing member
By: Lazard Freres Real Estate
Investors L.L.C., their General
Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Principal and Chief Financial Officer
19
LFSRI ASSISTED: LFSRI II ASSISTED LIVING LLC,
By: LF Strategic Realty
Investors II L.P., Its Managing Member
By: Lazard Freres Real Estate Investors
L.L.C.,
Its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Controller
PROMETHEUS HOMEBUILDERS: PROMETHEUS HOMEBUILDERS LLC
By: LF Strategic Realty
Investors II L.P., Its Managing
Member
By: Lazard Freres Real Estate Investors
L.L.C.
Its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Controller
PROMETHEUS SQ: PROMETHEUS SENIOR QUARTERS LLC
By: LF Strategic Realty Investors II L.P.,
Its Managing Member
By: Lazard Freres Real Estate Investors L.L.C.,
Its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Controller
20