EXHIBIT 10.3
PLEDGE, ASSIGNMENT
AND SECURITY AGREEMENT
(LIQUIDITY COVENANT WAIVER)
PLEDGE, ASSIGNMENT AND SECURITY AGREEMENT (LIQUIDITY COVENANT
WAIVER) (this "Agreement"), dated as of March 27, 2002, given by PRIME GROUP
REALTY, L.P., a Delaware limited partnership ("Pledgor"), having an address c/o
Prime Group Realty Trust, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
in favor of BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, a banking
corporation organized under the laws of the Federal Republic of Germany
("Agent"), having an address at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, as
Agent on behalf of each Lender (as hereinafter defined).
W I T N E S S E T H :
WHEREAS, Dearborn Center, L.L.C. ("Borrower") owns that certain
piece of land (the "Land") in Chicago, Illinois, situated north of ▇▇▇▇▇ Street
between State and Dearborn Streets and as more fully described on Exhibit A
attached hereto, on which it is currently constructing a class "A" mixed use
building, to be known as "Dearborn Center", which shall contain approximately
1,395,000 NRSF of office space, 107,000 NRSF of retail space and a parking
facility containing at least 209 parking stalls (the "Project"); and
WHEREAS, in connection with the development of the Project, Borrower
and Agent, as a lender and as the agent for the lenders from time to time party
to the Credit Agreement (as hereinafter defined) (each, a "Lender" and,
collectively, "Lenders"), executed and delivered that certain Credit Agreement,
dated as of January 5, 2001 (said Credit Agreement, as it may be amended,
modified or supplemented, from time to time, being the "Credit Agreement"); and
WHEREAS, pursuant to the terms of the Credit Agreement, Lenders have
agreed, subject to and in accordance with the terms of the Credit Agreement and
the other Loan Documents (as defined in the Credit Agreement), to make a loan to
Borrower in a principal amount up to TWO HUNDRED THIRTY MILLION AND NO/100
DOLLARS ($230,000,000.00) (the "Loan") for the construction of the Project; and
WHEREAS, to evidence such indebtedness Borrower has executed and
delivered one or more promissory notes (collectively, the "Note"), dated January
5, 2001, in favor of the Lenders in an aggregate amount equal to the Loan and
issued pursuant to, and in accordance with, the Credit Agreement; and
WHEREAS, in order to secure: (a) payment by the Borrower of the
outstanding principal amount set forth in, and evidenced by the Note, together
with all interest accrued and unpaid thereon and all other sums due to the
Lenders and Agent, in its capacity as agent, in respect of the Loan, including
any Breakage Costs (as defined in the Credit Agreement) and any sums due or any
obligation of any kind owing under the Notes, the Credit Agreement or in any
other Loan Document to which Borrower is a party (including, without being
limited to, any reimbursement or indemnity obligation), and (b) the performance
by the Borrower of all the covenants and agreements contained in the Note, the
Mortgage (as hereinafter defined) and the other Loan Documents to which Borrower
is a party, as the same may be amended, modified, supplemented or restated, to
be performed or observed by or on the part of the Borrower (items (a) and (b)
being referred to collectively herein as, the "Secured Obligations"), the
Borrower executed, delivered and recorded that certain Mortgage, Security
Agreement, Assignment of Leases, Rents and Revenues and Fixture Filing with
respect to the Land in favor of Lenders and dated as of January 5, 2001 and
recorded on January 24, 2001 as document number 0010060838 (the "Mortgage"); and
WHEREAS, as a condition precedent to the execution of the Loan
Documents (as defined in the Credit Agreement), Pledgor executed and delivered
the Guaranties (as defined in the Credit Agreement); and
WHEREAS, Borrower and Pledgor have requested that Lenders modify
certain financial covenants contained in the Guaranties; and
WHEREAS, Borrower and Pledgor have further requested that Lenders
grant a waiver of certain breaches of financial covenants contained in the
Guaranties; and
WHEREAS, as an inducement to Lenders to modify and waive certain
financial covenants, Pledgor has agreed to escrow the Reserved Funds (as
hereinafter defined) and otherwise take the actions described herein; and
WHEREAS, Lenders have agreed to modify and waive the financial
covenants on the terms and conditions set forth in the Omnibus Second
Modification to Senior Loan Documents, dated of even date herewith (the
"Amendment"); and
WHEREAS, Pledgor will establish an account with Agent or another
bank or financial institution approved by Agent (the "Depository"), in the name
of and for the benefit of Lenders (the "Senior Additional Reserve Account") into
which the Reserved Funds shall be deposited; and
WHEREAS, in order further to secure the payment and performance of
the Secured Obligations (as hereinafter defined) and as a condition of Lenders
agreeing to execute and deliver the Amendment, Pledgor has agreed to pledge its
interest in the Senior Additional Reserve Account and the Reserved Funds to
Agent and to create in favor of Agent a first priority security interest in the
Senior Additional Reserve Account and the Reserved Funds.
NOW, THEREFORE, in consideration of the premises herein contained,
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Pledge and Assignment. Pledgor hereby pledges and assigns to Agent
(for the benefit of Lenders), and grants to Agent (for the benefit of Lenders) a
continuing general lien and first priority security interest in, to and under
all of Pledgor's right, title and interest in, to and under the following
collateral, in each case, whether now owned or hereafter acquired by Pledgor,
wherever located and whether now or hereafter existing (collectively, the
"Account Collateral"):
(i) the Senior Additional Reserve Account and all financial assets credited
thereto and all funds held therein;
(ii) all interest, dividends, cash, investments, investment property,
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 Senior
Additional Reserve Account;
(iii) all contract rights, general intangibles, powers, options, privileges
and immunities, and other rights pertaining to the Senior Additional Reserve
Account, including the right to make withdrawals therefrom;
(iv) all instruments, certificates and documents now or hereafter
representing or evidencing the Senior Additional Reserve Account;
(v) any securities, notes, bonds, commercial paper or other instruments
(whether held in certificated, uncertificated or book-entry form) held by the
Depository from time to time in connection with the investment of the amounts
held in the Senior Additional Reserve Account;
(vi) any interest in any property or asset of any kind received, wholly or
partly, in trade or exchange for any of the foregoing; and
(vii) all replacements, substitutions, renewals and all proceeds of any and
all of the foregoing.
SECTION 2. Secured Obligations. This Agreement and the pledge and
assignment made hereunder secure all Secured Obligations.
SECTION 3. Dominion and Control. The Senior Additional Reserve Account and
all Account Collateral shall be under sole dominion and control of Agent and,
subject to the terms of this Agreement, Agent shall have the sole right to make
and/or authorize withdrawals, disbursements or transfers from the Senior
Additional Reserve Account and to exercise any rights hereunder with respect to
the Account Collateral.
SECTION 4. Maintaining the Senior Additional Reserve Account (a) Pledgor
shall, concurrently herewith, establish the Senior Additional Reserve Account
with the Depository. So long as any of the Secured Obligations remain
outstanding, Pledgor shall maintain the Senior Additional Reserve Account with
the Depository (or with the prior written consent of Agent, which consent it may
withhold in its sole discretion for any or no reason, with another bank or
financial institution). For so long as any of the Secured Obligations remain
outstanding, Pledgor shall not, without Agent's prior written consent, which
consent it may withhold in its sole discretion for any or no reason, be a
signatory of the Senior Additional Reserve Account and, the sole signatories
shall be representatives of Agent, as designated by Agent, from time to time.
The terms and conditions of any account agreement with the Depository with
respect to the Senior Additional Reserve Account shall not be amended or
modified without the prior written consent of Agent (which consent Agent may
withhold in its sole discretion for any or no reason) unless required by
applicable law.
(b) Prior to any Default (as defined in the Credit Agreement ) and any
Event of Default (as defined in the Credit Agreement), upon the written request
of Pledgor, Agent shall direct the Depository to invest the funds held in the
Senior Additional Reserve Account, in any of the Cash and Cash Equivalents (as
defined in the Credit Agreement). All interest or other earnings with respect to
the funds held in the Senior Additional Reserve Account as a result of such
investments shall be retained in the Senior Additional Reserve Account, shall be
deemed part of the Account Collateral and shall be disbursed, invested and/or
applied in accordance with the terms and provisions of this Agreement. Agent
shall endeavor to effect such direction on the same Business Day if such written
direction is received by Agent before 12:00 p.m. and, if received after 12:00
p.m., on the next Business Day; provided, however, that Agent shall bear no
responsibility for any loss occasioned by investment of any of the Account
Collateral as herein provided, by any delays in investing or reinvesting the
Account Collateral, or by any failure to achieve the maximum possible yield from
the Account Collateral. Pledgor shall be entitled to direct Agent to change the
type of investment not more than twice monthly.
(c) Pledgor shall treat and report as its income, to the extent Pledgor is
required to report interest income or earnings under applicable law, all such
interest or earnings earned on the Account Collateral. If Agent requires that
Pledgor complete any additional forms for delivery to, or as required by, the
Internal Revenue Service for reporting the payment of interest, Pledgor agrees
to deliver such forms to Agent at Pledgor's sole cost and expense. The tax
identification number of Pledgor is ▇▇-▇▇▇▇▇▇▇, and Pledgor represents and
warrants that its tax identification number is true and correct.
SECTION 5. Deposits. Pledgor shall deposit One Million Five Hundred
Thousand Dollars ($1,500,000) (the "Reserved Funds") into the Senior Additional
Reserve Account as follows:
(a) $375,000 on or prior to the date of this Agreement;
(b) $281,250 on or prior to April 30, 2002;
(c) $281,250 on or prior to May 31, 2002;
(d) $281,250 on or prior to June 28, 2002; and
(e) $281,250 on or prior to July 31, 2002.
Pledgor hereby acknowledges, agrees and confirms that all Reserved Funds
deposited into the Senior Additional Reserve Account shall at all times
constitute a part of the Account Collateral and be held and treated in
accordance with the terms hereof. A failure to fund any part of the Reserved
Funds shall be an Event of Default.
SECTION 6. Withdrawals and Use of Reserved Funds. (a) Subject to subsection
(b) of this Section 6, Agent shall be the only party permitted to effect any
disbursement or withdrawal from the Senior Additional Reserve Account and
neither Pledgor nor any other person or entity claiming on behalf of, and
through, Pledgor shall have any right, authority or power, whether express or
implied, to make use of, disburse or withdraw, all or any portion of the Account
Collateral and Pledgor shall not effect or attempt to effect any disbursement or
withdrawal from the Senior Additional Reserve Account.
(b) Agent may apply and use the Account Collateral in accordance with, and
subject to, that certain intercreditor letter agreement, dated of even date
herewith, by and between Agent and Bankers Trust Company (on behalf of the
Mezzanine Lenders (as defined in the Credit Agreement)), a copy of which is
attached hereto as Exhibit B (the "Intercreditor Letter Agreement").
SECTION 7. Representations and Warranties. Pledgor represents, warrants and
covenants, as of the date hereof, as follows:
(a) Pledgor hereby ratifies, confirms and reaffirms, as of the date hereof,
all of Pledgor's representations, warranties and covenants in the Guaranties.
(b) Pledgor is the legal and beneficial owner of the Account Collateral
free and clear of any lien, security interest, option or other charge or
encumbrance except for the security interest in favor of Agent created by this
Agreement and the right of Bankers Trust Company (on behalf of the Mezzanine
Lenders) and Borrower to consent to Agent's application of the Account
Collateral in certain circumstances, as set forth in the Intercreditor Letter
Agreement. Pledgor, at its sole cost and expense, shall defend Pledgor's and
Agent's title and interest in and to the Account Collateral against any and all
third party attachments, executions, liens, claims, security interests or other
encumbrances of any nature, however arising.
(c) Other than the filing of a UCC (as hereinafter defined) financing
statement or filing and the execution and delivery of a tripartite depository
agreement by and among Depository, Agent and Pledgor, all consents,
authorizations, approvals, and other actions by, and notices to or filings with,
any person, firm, entity, governmental authority or regulatory body required for
(i) the pledge and assignment by Pledgor of the Account Collateral pursuant to
this Agreement, (ii) the execution, delivery or performance of this Agreement by
Pledgor, (iii) the perfection or maintenance of the first priority security
interest created by this Agreement or (iv) the exercise of Agent's remedies
hereunder have been obtained by Pledgor as at the date hereof.
(d) The pledge and assignment of the Account Collateral pursuant to this
Agreement creates a valid first priority security interest in the Account
Collateral securing the payment and performance of the Secured Obligations.
(e) This Agreement is the legal, valid, and binding obligation of Pledgor
and is enforceable against Pledgor in accordance with its terms, subject to
bankruptcy, insolvency or other similar laws affecting the enforcement of
creditors' rights generally.
(f) No Account Collateral (or any right, title or interest therein) has
been or shall be pledged, mortgaged, assigned, encumbered, conveyed,
transferred, hypothecated, or otherwise disposed of other than in accordance
with the terms and conditions of this Agreement.
(g) Pledgor shall take all necessary and appropriate measures to obtain,
maintain, protect and preserve the Account Collateral, including, without being
limited to, the payment of all local, state and federal taxes.
(h) There are no actions, suits or proceedings pending or, to the Knowledge
(as defined in the Credit Agreement) of Pledgor, threatened against or affecting
Pledgor that could have an adverse effect on this Agreement, at law or in
equity, before or by any governmental agency or authority, and Pledgor is not
operating under or subject to, in default of or in violation with respect to any
order, writ, injunction, decree or demand of any court or tribunal that could
affect its obligations hereunder.
(i) Pledgor is not insolvent (as defined in Section 101 of the Bankruptcy
Code (as hereinafter defined)) and will not be rendered insolvent by the
execution and delivery of this Agreement or the consummation of the transactions
contemplated thereby.
(j) Pledgor shall promptly comply with all terms and provisions of this
Agreement. Pledgor shall promptly, upon transmittal or receipt, deliver to Agent
copies of all notices and correspondence with respect to the Account Collateral.
Pledgor shall promptly and fully respond to any inquiry of Agent made with
respect to the matters set forth in the preceding sentence and shall permit
Agent to participate in any inquiry, hearing or meeting in regard to the
foregoing.
(k) Pledgor has no counterclaims, offsets or defenses with respect to this
Agreement.
(l) The execution, delivery and performance by Pledgor of this Agreement
have been duly authorized by all necessary action and do not and will not
violate any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree or determination or award presently in effect having
applicability to Pledgor, or result in a breach of or constitute a default under
any other indenture, loan or credit agreement, operating agreement, or any other
agreement, lease or instrument to which Pledgor is a party or by which it or its
assets may be bound or affected; and as of the date hereof, Pledgor has not
received notice that Pledgor is in default under any such law, rule, regulation,
order, writ, judgment, injunction, decree, determination, award, indenture,
credit agreement, loan agreement, agreement, lease or instrument.
(m) The Senior Additional Reserve Account is and will be the only bank
account of Pledgor (or account maintained with any other financial institution)
into which the Reserved Funds shall be deposited and retained and Pledgor shall
not open any other such accounts for this purpose without the prior written
consent of Agent (which consent Agent may withhold in its sole discretion for
any or no reason).
SECTION 8. Further Assurances. Pledgor and Borrower agree that on the date
hereof and at any time from time to time hereafter to execute and deliver
promptly all instruments and documents (including, without being limited to, any
Uniform Commercial Code of New York ("UCC") financing statements or filings
necessary to perfect Agent's liens on, and security interests in the Account
Collateral and a tripartite depository agreement by and among Depository, Agent
and Pledgor) and to take all further reasonable action that may be necessary or
reasonably desirable or that Agent may reasonably request, in order to perfect
and protect any security interest granted or purported to be granted hereby or
to enable Agent to exercise and enforce its rights and remedies hereunder with
respect to any Account Collateral.
SECTION 9. Right to Inspect. Agent (or any person designated by it,
including, without being limited to, third party consultants, accountants,
auditors and attorneys) shall, in its sole discretion, have the right, at
reasonable times, to inspect, audit, check, copy and make extracts from
Pledgor's books, records, journals, orders, receipts and any correspondence and
other data or documentation relating to the Account Collateral.
SECTION 10. Agent's Duties. The powers conferred on Agent hereunder are
solely to protect its interests in the Account Collateral and shall not impose
any duty upon it to exercise any such powers except as expressly provided
herein. Except for the safe custody of any Account Collateral in its possession,
the accounting for moneys actually received by it hereunder and its obligations
to direct the Depository to make disbursements hereunder, Agent shall have no
duty as to any Account Collateral or as to the taking of any necessary steps to
preserve rights against any parties or any other rights pertaining to such
Account Collateral. Agent shall be deemed to have exercised reasonable care in
the custody and preservation of any Account Collateral in its possession if such
Account Collateral is accorded treatment substantially equal to that which it
accords its own property.
SECTION 11. Remedies. (a) Upon the occurrence of any Event of Default:
(i) Agent may, at its option, (A) direct the Depository to continue to
hold the Account Collateral and to disburse the same only at the written
direction of Agent, or (B) direct that the Depository disburse all or any
portion of the Account Collateral then or thereafter held by the Depository
to Agent or such other banking or financial institution and/or account as
Agent may, from time to time, designate in writing to the Depository, in
which event Agent may apply the Account Collateral immediately to the
Secured Obligations or to any other payments permitted by the Intercreditor
Letter Agreement, in such order as Agent shall elect. Expenses of retaking,
holding, insuring, preserving, protecting, preparing for sale or selling or
the like with respect to the Account Collateral shall include, in any
event, reasonable attorney's fees and disbursements, fees and disbursements
of in-house counsel for Agent (provided that such in-house counsel fees and
disbursements are not charged at rates higher than those of outside counsel
typically retained by Agent) and other legally recoverable collection costs
and expenses, all of which shall constitute Secured Obligations. Any
surplus of such cash or cash proceeds held by Agent and remaining after
payment in full of all of the Secured Obligations and all payments
permitted by the Intercreditor Letter Agreement shall be paid over to
Pledgor or to whomsoever may be lawfully entitled to receive such surplus.
(ii) Agent may exercise any and all rights and remedies of Pledgor
under or in connection with any of the Account Collateral.
(iii) Agent may exercise in respect of the Account Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party upon
default under Article 9 of the UCC as in effect at such time, whether or
not the UCC applies to the affected Account Collateral, and may also (A)
without notice except as specified below, sell the Account Collateral or
any part thereof at public or private sale, at any of Agent's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other
terms as Agent may deem commercially reasonable; and (B) exercise any and
all rights and remedies of Pledgor under or in connection with the Account
Collateral. Pledgor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to Pledgor of the time and
place of any public sale or the time after which any private sale is to be
made shall constitute reasonable notification. Agent shall not be obligated
to make any sale of Account Collateral regardless of notice of sale having
been given. Agent may adjourn any public or private sale from time to time
by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned.
(iv) Any cash held by Agent as Account Collateral and all cash
proceeds received by Agent in respect of any sale of, collection from, or
other realization upon all or any part of the Account Collateral may, in
the discretion of Agent, be held by Agent as collateral for, and/or then or
at any time thereafter applied in whole or in part by Agent against, all or
any part of the Secured Obligations or to the payments permitted by the
Intercreditor Letter Agreement, in such order as Agent shall elect. Any
cash held by Agent as Account Collateral and all cash proceeds received by
Agent in respect of any sale of, collection from, or other realization upon
all or any part of the Account Collateral shall be applied, firstly, for
the payment of Agent's costs and expenses of collection and, secondly, for
the payment of the Secured Obligations and the payments permitted by the
Intercreditor Letter Agreement. Any surplus of such cash or cash proceeds
held by Agent and remaining after payment in full of all the Secured
Obligations and the payments permitted by the Intercreditor Letter
Agreement shall be paid over to Pledgor or to whomsoever may be lawfully
entitled to receive such surplus.
(v) Agent may, without notice to Pledgor except as required by law and
at any time or from time to time, charge, set off and otherwise apply all
or any part of the Account Collateral against the Secured Obligations and
the payments permitted by the Intercreditor Letter Agreement.
(b) No failure on the part of Agent to exercise, and no delay in
exercising, any right under the Credit Agreement, the Loan Documents, or this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right under the Credit Agreement, the Loan Documents or
this Agreement. The remedies provided in the Credit Agreement, the Loan
Documents and this Agreement are cumulative and not exclusive of any remedies
provided by law or in equity.
(c) Notwithstanding anything contained in this Agreement to the contrary,
this Agreement shall not be deemed to be an election of remedies available to
Agent under the Credit Agreement and the Loan Documents, at law or in equity,
nor shall it be deemed to impair, waive or otherwise modify, in any manner, any
rights or remedies of Agent under the Credit Agreement and the Loan Documents or
any other document or instrument evidencing, securing or relating to the Loan,
nor preclude or limit Agent from pursuing at any time whatever remedies that are
available to Agent under the Credit Agreement or the Loan Documents, at law or
in equity.
SECTION 12. Amendments, Waiver. Neither this Agreement, nor any term or
provision thereof may be changed, waived, discharged or terminated except by an
instrument in writing executed by the party against which enforcement of the
change, waiver, discharge or termination shall be sought.
SECTION 13. Notices. All notices, consents, approvals and requests required
or permitted hereunder shall be given in writing and shall be effective for all
purposes if hand delivered or sent by (a) certified or registered United States
mail, postage prepaid, (b) expedited overnight prepaid delivery service, either
commercial or United States Postal Service, with proof of attempted delivery or
(c) personal delivery, addressed as follows (or at such other address and person
as shall be designated from time to time by any party hereto, as the case may
be, in a written notice to the other parties hereto in the manner provided for
in this Section 13):
If to Agent:
Bayerische Hypo- und Vereinsbank AG, New York Branch
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Real Estate Lending
with copies to:
Bayerische Hypo- und Vereinsbank AG
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
and:
Shearman & Sterling
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇, Esq. (766/44)
If to Pledgor:
Prime Group Realty, L.P.
c/o Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
with copies to:
Prime Group Realty, L.P.
c/o Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
and:
Dearborn Center, L.L.C.
c/o J. ▇▇▇▇ ▇▇▇▇▇▇▇ Development Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇ ▇▇▇▇▇▇▇
and:
Jenner & Block
▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
A notice shall be deemed to have been given: in the case of hand delivery, at
the time of delivery; in the case of registered or certified mail, two (2)
Business Days after deposit in the mail; in the case of expedited overnight
prepaid delivery, upon the first attempted delivery on a Business Day.
SECTION 14. Continuing Security Interest. This Agreement shall create a
continuing security interest in the Account Collateral and shall remain in full
force and effect until the payment and performance in full of the Secured
Obligations and Agent has terminated this Agreement in writing.
SECTION 15. Costs and Expenses. Pledgor shall pay on demand all costs and
expenses (including, without being limited to, reasonable attorneys' fees and
expenses and fees and expenses of in-house counsel of Agent (provided that such
in-house counsel fees and disbursements are not charged at rates higher than
those of outside counsel typically retained by Agent) and the payment of any
taxes and other impositions) of, or incidental to, or in any way relating to the
enforcement or the rights of Agent hereunder. Pledgor agrees to pay the fees of
the Depository with respect to the Senior Additional Reserve Account, as such
fees are established and imposed from time to time.
SECTION 16. Successors and Assigns. The provisions of this Agreement shall
be binding upon and shall inure to the benefit of Pledgor and Agent and their
respective successors, permitted assigns and legal representatives. No
assignment of this Agreement shall be made by Pledgor without the prior written
consent of Agent (which consent Agent may withhold in its sole discretion for
any or no reason).
SECTION 17. Severability. If any one or more provisions in this Agreement
shall be held to be invalid, illegal, void or unenforceable in any respect (a)
such provision or provisions shall be given force to the fullest possible extent
that they are valid, legal and enforceable, (b) such invalidity, illegality, or
unenforceability shall not affect any other provision of this Agreement and (c)
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
SECTION 18. Governing Law; Terms; Interpretation. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed solely within such state.
Unless otherwise defined herein, terms defined in the UCC are used herein as
therein defined. For the purposes of this Agreement, "Business Day" shall mean
any day (other than a Saturday and a Sunday) on which commercial banks are not
authorized or required to close in New York, New York. The singular shall
include the plural and vice versa; references to one gender include other
genders; headings are included for convenience only and do not affect the
interpretation or construction of this Agreement, and all Exhibits attached to
this Agreement are part of this Agreement. "Event of Default" has the meaning
ascribed to it in the Credit Agreement and includes a default by Pledgor under
the terms of any of the Guaranties or a default by Pledgor under this Agreement
and a reference herein to "Secured Obligations" includes and extends to the
performance and payment by Pledgor of all covenants and agreements contained in
the Guaranties and in this Agreement to be performed or observed by or on the
part of Pledgor. For the avoidance of doubt, this Agreement shall be deemed a
"Loan Document" for all purposes of the Credit Agreement.
SECTION 19. Cash Collateral. In the event that Pledgor becomes the subject
of a proceeding under Title 11 of the United States Bankruptcy Code, as amended
(the "Bankruptcy Code"), the parties hereto agree that the Account Collateral
(whether or not deposited in the Senior Additional Reserve Account and whether
or not then or thereafter due and payable) shall constitute "cash collateral" of
Agent under Section 363 of the Bankruptcy Code.
SECTION 20. Agent Appointed Attorney-in-Fact. Pledgor hereby irrevocably
appoints Agent its attorney-in-fact with full authority in the place and stead
of Pledgor and in the name of Pledgor or otherwise in Agent's discretion, to
take any action and to execute any instrument, from and after the occurrence of
an Event of Default, that Agent may deem necessary or advisable to accomplish
the purposes of this Agreement.
SECTION 21. Mortgagee in Possession. Pledgor hereby confirms and agrees
that notwithstanding the provisions of this Agreement, Borrower retains sole
control of the operation and maintenance of the Land, subject to the obligations
of Pledgor under this Agreement, the Credit Agreement and the Loan Documents,
and Agent is not and shall not be deemed to be a mortgagee in possession.
SECTION 22. WAIVER OF JURY TRIAL. THE PARTIES HEREBY AGREE NOT TO ELECT A
TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY JURY, AND WAIVE ANY RIGHT TO
TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH RIGHT SHALL NOW OR HEREAFTER
EXIST WITH REGARD TO THE LOAN DOCUMENTS (INCLUDING THIS AGREEMENT), OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY EACH PARTY AND
IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND EACH ISSUE AS TO WHICH
THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE. AGENT AND PLEDGOR ARE
HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING AS
CONCLUSIVE EVIDENCE OF THIS WAIVER.
SECTION 23. Entire Agreement. This Agreement embodies the entire
understanding of the parties hereto with respect to the subject matter hereof,
and all prior representations, promises, warranties, understandings or
agreements, expressed or implied, oral or written, relating hereto are merged
into this Agreement.
SECTION 24. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when fully executed shall be an original, and all of
said counterparts taken together shall be deemed to constitute one and the same
agreement.
* * *
[SIGNATURES ON NEXT PAGE]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered as of the date first above written.
PLEDGOR:
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust,
its managing general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
---------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Co-President
AGENT:
BAYERISCHE HYPO- UND VEREINSBANK AG,
NEW YORK BRANCH
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Managing Director
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Director
ACKNOWLEDGED AND AGREED:
DEARBORN CENTER, L.L.C.
By: Prime/▇▇▇▇▇▇▇ Development Company, L.L.C., its
sole member
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇ L.L.C., its managing member
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇▇
------------------
▇.▇. ▇▇▇▇▇▇▇▇▇
Member
EXHIBIT A
LAND
▇▇▇▇ ▇, ▇, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇ LYING EAST OF THE EAST LINE OF DEARBORN
STREET (EXCEPTING THEREFROM THE NORTH 9 FEET OF SAID LOTS TAKEN FOR ALLEY), IN
BLOCK 141 IN SCHOOL SECTION ADDITION TO CHICAGO IN SECTION 16, TOWNSHIP 39
NORTH, RANGE 14, EAST OF THE THIRD PRINCIPAL MERIDIAN, IN ▇▇▇▇ COUNTY, ILLINOIS.
EXHIBIT B
INTERCREDITOR LETTER AGREEMENT
[INTENTIONALLY NOT INCLUDED]
PLEDGE, ASSIGNMENT AND SECURITY AGREEMENT
(LIQUIDITY COVENANT WAIVER)
BY AND BETWEEN
PRIME GROUP REALTY, L.P.,
as Pledgor,
AND
BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH,
as Agent and Lender
Dated as of March 27, 2002
TABLE OF CONTENTS
Page
SECTION 1. Pledge and Assignment.............................................2
SECTION 2. Secured Obligations...............................................3
SECTION 3. Dominion and Control..............................................3
SECTION 4. Maintaining the Senior Additional Reserve Account.................3
SECTION 5. Deposits..........................................................4
SECTION 6. Withdrawals and Use of Reserved Funds.............................5
SECTION 7. Representations and Warranties....................................5
SECTION 8. Further Assurances................................................7
SECTION 9. Right to Inspect..................................................7
SECTION 10. Agent's Duties...................................................7
SECTION 11. Remedies.........................................................7
SECTION 12. Amendments, Waiver...............................................9
SECTION 13. Notices..........................................................9
SECTION 14. Continuing Security Interest....................................10
SECTION 15. Costs and Expenses..............................................11
SECTION 16. Successors and Assigns..........................................11
SECTION 17. Severability....................................................11
SECTION 18. Governing Law; Terms; Interpretation............................11
SECTION 19. Cash Collateral.................................................12
SECTION 20. Agent Appointed Attorney-in-Fact................................12
SECTION 21. Mortgagee in Possession.........................................12
SECTION 22. WAIVER OF JURY TRIAL............................................12
SECTION 23. Entire Agreement................................................12
SECTION 24. Counterparts....................................................12
Exhibit A - Land
Exhibit B - Intercreditor Letter Agreement