-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Q2xlk01T7bZfGzq6qFGTnWYTW5zs4cF1SLcypVnhevGW1IuszghlA215O2S6juv9 M+++InUftD68hXhkVMi1QA== 0000912057-02-037270.txt : 20020930 0000912057-02-037270.hdr.sgml : 20020930 20020930172739 ACCESSION NUMBER: 0000912057-02-037270 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20020930 GROUP MEMBERS: PGLP, INC. GROUP MEMBERS: PRIME FINANCE, INC. GROUP MEMBERS: PRIME FINANCING LIMITED PARTNERSHIP GROUP MEMBERS: PRIME GROUP II, L.P. GROUP MEMBERS: PRIME GROUP LIMITED PARTNERSHIP GROUP MEMBERS: PRIME GROUP V, L.P. GROUP MEMBERS: PRIME GROUP VI, L.P. GROUP MEMBERS: THE PRIME GROUP, INC. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: PRIME RETAIL INC/BD/ CENTRAL INDEX KEY: 0000911708 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 382559212 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-46088 FILM NUMBER: 02777287 BUSINESS ADDRESS: STREET 1: 100 E PRATT ST STREET 2: 1900 FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 BUSINESS PHONE: 4102340782 MAIL ADDRESS: STREET 1: 100 EAST PRATT STREET STREET 2: 1900 FLOOR CITY: BALTIMORE STATE: MD ZIP: 21202 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: RESCHKE MICHAEL W CENTRAL INDEX KEY: 0001046205 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 77 W WACKER DR STREET 2: SUITE 3900 CITY: CHICAGO STATE: IL ZIP: 60601 BUSINESS PHONE: 3029171500 MAIL ADDRESS: STREET 1: 77 W WACKER DR STREET 2: SUITE 3900 CITY: CHICAGO STATE: IL ZIP: 60601 SC 13D/A 1 a2090218zsc13da.txt SC 13D/A UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 7) -------------------- PRIME RETAIL, INC. (Name of Issuer) Common Stock, par value $0.01 per share (Title of Class of Securities) 741570105 (CUSIP Number) Michael W. Reschke 77 West Wacker Drive Suite 4200 Chicago, IL 60601 (312) 917-1500 (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) With a copy to: Michael E. Kernan, Esq. McGuireWoods, LLP 77 West Wacker Drive, Suite 4400 Chicago, IL 60601 (312) 849-8100 May 17, 2002 (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box: / / The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 2 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Michael W. Reschke - ------------------------------------------------------------------------------- (2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP, (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES 7. SOLE VOTING POWER - 3,104,847 BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 2,582,972 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 3,104,847 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 2,582,972 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Individually beneficially owns (i) 199,548 shares of Common Stock, $0.01 par value per share, of the Issuer ("Common Stock"); (ii) 9,552 shares of Series B Preferred Stock, $0.01 par value per share, of the Issuer ("Preferred Stock"), which are immediately convertible into 11,424 shares of Common Stock; (iii) 2,568,876 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock, at any time or, at the Issuer's election, cash of equivalent value; and (iv) certain options to purchase 324,999 shares of Common Stock, which options have already vested or will vest within 60 days. May be deemed to share beneficial ownership of: (i) 22,241 Common Units directly owned by PGLP, Inc., an Illinois corporation ("PGLPI");(ii) 251,300 shares of Common Stock directly owned by Prime Group Limited Partnership, an Illinois limited partnership ("PGLP"); (iii) 750,000 Common Units directly owned by The Prime Group, Inc., an Illinois corporation ("PGI"); (iv) 961,085 Common Units directly owned by Prime Group II, L.P., an Illinois limited partnership ("PG-II"); and (v) 598,346 Common Units directly owned by Prime Group V, L.P., an Illinois limited partnership ("PG-V"), by virtue of his position as managing general partner of PGLP and his ability to control PGLPI, PGI, PG-II and PG-V. PGLPI is the managing general partner of PG-II and PG-V. - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Individually beneficially owns 199,548 shares of Common Stock, 9,552 shares of Preferred Stock, 2,568,876 Common Units and certain options to purchase 324,999 shares of Common Stock which, assuming conversion of the Preferred Stock, exchange of the Common Units and exercise of all vested options, constitute approximately 6.7% of the outstanding shares of Common Stock. May be deemed to share beneficial ownership of approximately: (i) 22,241 Common Units owned directly by PGLPI which, assuming exchange of the Common Units, constitute approximately 0.05% of the outstanding shares of Common Stock; (ii) 251,300 shares of Common Stock directly owned by PGLP which constitute approximately 0.6% of the outstanding shares of Common Stock; (iii) 750,000 Common Units owned directly by PGI which, assuming exchange of the Common Units, constitute approximately 1.7% of the outstanding shares of Common Stock; (iv) 961,085 Common Units directly owned by PG-II which, assuming exchange of the Common Units, constitute approximately 2.2% of the outstanding shares of Common Stock; and (v) 598,346 Common Units directly owned by PG-V which, assuming exchange of the Common Units, constitute approximately 1.4% of the outstanding shares of Common Stock, by virtue of his position as managing general partner of PGLP and his ability to control PGLPI, PGI, PG-II and PG-V. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - IN - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 3 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON PGLP, Inc. - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 22,241 - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 1,559,431 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 22,241 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 1,559,431 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficially owns 22,241 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock, $.01 par value per share, of the Issuer ("Common Stock") at any time, or at the Issuer's election, cash of equivalent value. May be deemed to share beneficial ownership of: (i) 961,085 Common Units, owned by Prime Group II, L.P., an Illinois limited partnership ("PG-II"); and (ii) 598,346 Common Units owned by Prime Group V, L.P., an Illinois limited partnership ("PG-V"), by virtue of its position as managing general partner of each of PG-II and PG-V. - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Beneficially owns 22,241 Common Units which, assuming exchange of the Common Units, constitute approximately 0.05% of the outstanding shares of Common Stock. May be deemed to share beneficial ownership of: (i) 961,085 Common Units owned by PG-II which, assuming exchange of the Common Units, constitute approximately 2.2% of the outstanding shares of Common Stock; and (ii) 598,346 Common Units owned by PG-V which, assuming exchange of the Common Units, constitute approximately 1.4% of the outstanding shares of Common Stock, by virtue of its position as managing general partner of each of PG-II and PG-V. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - CO - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 4 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Finance, Inc. - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS Not Applicable - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 0 - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) None. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - CO - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 5 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Group Limited Partnership - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 251,300 - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 251,300 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficially owns 251,300 shares of Common Stock, par value $0.01 per share, of the Issuer ("Common Stock"). - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Beneficially owns 251,300 shares of Common Stock which constitute approximately 0.6% of the outstanding shares of Common Stock. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 6 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Financing Limited Partnership - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS Not applicable - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 0 - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) None. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 7 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON The Prime Group, Inc. - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 750,000 - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 750,000 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficially owns 750,000 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock of the Issuer, $0.01 par value per share ("Common Stock"), at any time or, at the Issuer's election, cash of equivalent value. - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Beneficially owns 750,000 Common Units which assuming exchange of the Common Units, constitute approximately 1.7% of the outstanding shares of Common Stock. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - CO - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 8 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Group II, L.P. - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 961,085 - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 961,085 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficially owns 961,085 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock of the Issuer, $0.01 par value per share ("Common Stock"), at any time or, at the Issuer's election, cash of equivalent value. - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Beneficially owns 961,085 Common Units which, assuming exchange of the Common Units, constitute approximately 2.2% of the outstanding shares of Common Stock. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 9 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Group V, L.P. - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS 00 - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 598,346 - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 598,346 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON Beneficially owns 598,346 Common Units of Prime Retail, L.P., a Delaware limited partnership ("Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock of the Issuer, $0.01 par value per share ("Common Stock"), at any time or, at the Issuer's election, cash of equivalent value. - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) Beneficially owns 598,346 Common Units which, assuming exchange of the Common Units, constitute approximately 1.4% of the outstanding shares of Common Stock. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- CUSIP No. 741570105 SCHEDULE 13D Page 10 of 10 Pages - ------------------------------------------------------------------------------- - ------------------------------------------------------------------------------- 1. NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Prime Group VI, L.P. - ------------------------------------------------------------------------------- 2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) |X| - ------------------------------------------------------------------------------- 3. SEC USE ONLY - ------------------------------------------------------------------------------- 4. SOURCE OF FUNDS Not applicable - ------------------------------------------------------------------------------- 5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6. CITIZENSHIP OR PLACE OF ORGANIZATION Illinois, United States of America - ------------------------------------------------------------------------------- NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH 7. SOLE VOTING POWER - 0 - ------------------------------------------------------------------------------- 8. SHARED VOTING POWER - 0 - ------------------------------------------------------------------------------- 9. SOLE DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 10. SHARED DISPOSITIVE POWER - 0 - ------------------------------------------------------------------------------- 11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None. - ------------------------------------------------------------------------------- 12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES / / - ------------------------------------------------------------------------------- 13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) None. - ------------------------------------------------------------------------------- 14. TYPE OF REPORTING PERSON - PN - ------------------------------------------------------------------------------- Item 1. Security and Issuer. This Amendment No. 7 to Schedule 13D relates to shares of Common Stock, par value $0.01 per share ("Common Stock"), of Prime Retail, Inc., a Maryland corporation (the "Company"). The principal executive offices of the Company are located at 100 East Pratt Street, Nineteenth Floor, Baltimore, Maryland 21202. This Amendment No. 7 to Schedule 13D is filed by each of Michael W. Reschke, an individual and a citizen of the United States of America ("Reschke"); PGLP, Inc., an Illinois corporation ("PGLPI"); Prime Finance, Inc., an Illinois corporation ("Prime Finance"); Prime Group Limited Partnership, an Illinois limited partnership ("PGLP"); Prime Financing Limited Partnership, an Illinois limited partnership ("PFLP"); The Prime Group, Inc., an Illinois corporation ("PGI"); Prime Group II, L.P., an Illinois limited partnership ("PG-II"); Prime Group V, L.P., an Illinois limited partnership ("PG-V"); and Prime Group VI, L.P., an Illinois limited partnership ("PG-VI"). This Amendment No. 7 to Schedule 13D should be read in conjunction with the Report on Schedule 13D of Reschke, PGLPI, Prime Finance, PGLP, PFLP, PG-II, Prime Group III, L.P., an Illinois limited partnership, Prime Group IV, L.P., an Illinois limited partnership and PG-V originally filed on June 25, 1998, as amended by Amendment No. 1 to Schedule 13D filed on March 4, 1999, as amended by Amendment No. 2 to Schedule 13D filed on January 28, 2000, as amended by Amendment No. 3 to Schedule 13D filed on November 8, 2000, as amended by Amendment No. 4 to Schedule 13D filed on May 29, 2001, as amended by Amendment No. 5 to Schedule 13D filed on August 20, 2001 and as amended by Amendment No. 6 to Schedule 13D filed on August 29, 2001 (collectively, the "Schedule 13D"). Item 2. Identity and Background. (a) and (f). This Amendment No. 7 to Schedule 13D is filed by each of Reschke; PGLPI; Prime Finance; PGLP; PFLP; PGI; PG-II; PG-V; and PG-VI. Reschke (i) is the managing general partner of PGLP; (ii) owns an approximate 51.24% equity interest in PGLPI, which is the managing general partner of PG-II, PG-V and PG-VI;(iii) owns an approximate 51.24% equity interest in Prime International, Inc., an Illinois corporation ("Prime International"), which owns all of the issued and outstanding stock of Prime Finance, which is the managing general partner of PFLP; and (iv) owns an approximate 51.24% equity interest in PGI. (b)(i) The business address of each of Reschke, PGLPI, Prime Finance, PGLP, PGI, PFLP, PG-II, PG-V and PG-VI is: c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, Illinois 60601 (ii) The business address of each person listed in paragraph (c)(iii) of this Item 2, unless otherwise stated, is: c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, Illinois 60601 11 (c)(i) Reschke is Chairman, President and Chief Executive Officer of PGI, the President and a member of the Board of Directors of PGLPI and Prime Finance and a member of the Board of Trustees of Prime Group Realty Trust, a publicly traded real estate investment trust ("PGRT"). Reschke is also a member of the Board of Directors of the Company, a publicly traded corporation that qualifies for treatment as a real estate investment trust engaged in the ownership, development and management of factory outlet centers. The principal business of PGRT is the acquisition, development, finance, construction, leasing, marketing, renovation and property management of office and industrial properties. (ii) The principal business of each of PGLPI, Prime Finance, PGLP, PFLP, PGI, PG-II, PG-V and PG-VI is the ownership, development and management of, and investment in, directly or indirectly, real estate. (iii) The following table sets forth the name and the principal occupation or employment of each director and executive officer (except Reschke) (see paragraph (c)(i) of this Item 2) of PGLPI, PGI and Prime Finance:
Name Present Principal Occupation or Employment - ---- ------------------------------------------ Gary J. Skoien .............. Vice President of PGLPI and Prime Finance; Executive Vice President and Chief Operating Officer of PGI; President, Chief Executive Officer and Chairman of the Board of Horizon Group Properties, Inc. Warren H. John (A)(B)........ Vice President and Assistant Secretary of PGLPI; Vice President of PGI Mark K. Cynkar............... Senior Vice President and Chief Financial Officer of PGI; Vice President of PGLPI and Prime Finance Bohdan P. Hirniak............ Vice President/Land Development Division of PGI Edward J. John (B)........... Vice Chairman of PGI; Orthodontist 1420 N. Arlington Heights Rd. Arlington Heights, IL 60004 Joseph R. Thompson........... Vice President of PGI Phillip E. Waters............ Vice President of PGI Paul A. Roehri............... Vice President of PGLPI; Vice President/Director of Accounting of PGI
- -------------- (A) Director of PGLPI (B) Director of PGI All of the executive officers and directors of PGLPI, PGI and Prime Finance are citizens of the United States of America. (d) and (e) During the last five years, none of Reschke nor any of the executive officers of PGLPI, PGI or Prime Finance (i) has been convicted in 12 a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. Item 3 is supplemented in the following manner: Effective as of May 17, 2002, PFLP, PG-II, PGLP, PGI, Prime Finance, PGLPI, Reschke, Edward J. John ("EJJ"), Glenn D. Reschke ("GDR"), Warren H. John ("WHJ") and Robert J. Rudnik ("RJR") entered into an Assignment Agreement in Liquidation of PFLP (the "PFLP Liquidation Agreement"), a copy of which is attached hereto as Exhibit XXI. Under the PFLP Liquidation Agreement, in connection with the liquidation and dissolution of PFLP, PFLP transferred and assigned the Common Units of Prime Retail, L.P., a Delaware limited partnership (the "Common Units"), which Common Units are exchangeable on a one for one basis for Common Stock (or at the Company's election, cash of equivalent value). Specifically, 1,730,843 Common Units were transferred and assigned to PG-II, 3,076,157 Common Units were distributed to PGLP and 750,000 Common Units were transferred and assigned to PGI. PG-II subsequently transferred and assigned the 1,730,843 Common Units received from PFLP in the manner described in the PFLP Liquidation Agreement to the following persons in such amounts as are listed below.
NUMBER OF COMMON UNITS ASSIGNEE ---------------------- -------- 876,218 Reschke 454,719 EJJ 155,726 RJR 134,962 WHJ 88,245 GDR 20,973 PGLPI
PGLP subsequently transferred and assigned the 3,076,157 Common Units received from PFLP in the manner described in the PFLP Liquidation Agreement to the following persons in such amounts as are listed below.
NUMBER OF COMMON UNITS ASSIGNEE ---------------------- -------- 1,576,368 Reschke 818,067 EJJ 280,161 RJR 242,804 WHJ 158,757 GDR
Effective as of May 17, 2002, PG-VI, PG-II, PGI, Prime International, PGLPI, Reschke, EJJ, GDR, WHJ and RJR entered into an Assignment Agreement of PRLP Common Units by PG-VI (the "PG-VI Assignment Agreement"), a copy of which is attached hereto as Exhibit XXII. Under the PG-VI Assignment Agreement, PG-VI transferred and assigned 104,632 Common Units to PG-II. PG-II subsequently transferred and assigned the 104,632 Common Units received from PG-VI in the manner described in the PG-VI Assignment Agreement to the following persons in such amounts as are listed below. 13
NUMBER OF COMMON UNITS ASSIGNEE ---------------------- -------- 52,969 Reschke 27,488 EJJ 9,414 RJR 8,159 WHJ 5,334 GDR 1,268 PGLPI
Effective as of May 17, 2002, PG-V, PGLP, PGLPI, Reschke, EJJ, GDR, WHJ and RJR entered into an Assignment Agreement of PRLP Common Units by PG-V (the "PG-V Assignment Agreement"), a copy of which is attached hereto as Exhibit XXIII. Under the PG-V Assignment Agreement, PG-V transferred and assigned 123,566 Common Units to PGLP. PGLP subsequently transferred and assigned the 123,566 Common Units received from PG-V in the manner described in the PG-V Assignment Agreement to the following persons in such amounts as are listed below.
NUMBER OF COMMON UNITS ASSIGNEE ---------------------- -------- 63,321 Reschke 32,861 EJJ 11,254 RJR 9,753 WHJ 6,377 GDR
The stock certificates issued to the respective assignees for each of the transactions described in this Item 3 were distributed by the Company's transfer agent on or about September 20, 2002. Item 4. Purpose of Transaction. Item 4 is supplemented in the following manner: PG-II, PGLP and PGI received the above-referenced 1,730,843, 3,076,157 and 750,000 Common Units, respectively, in connection with the PFLP Liquidation Agreement. PG-II and PGLP transferred and assigned their respective Common Units to the assignees referenced above. Reschke and PGLPI are included among such assignees and hold such Common Units for investment purposes. PGI holds its Common Units for investment purposes. PG-II received the above-referenced 104,632 Common Units in connection with the PG-VI Assignment Agreement. PG-II transferred and assigned its Common Units to the assignees referenced above. Reschke and PGLPI are included among such assignees and hold such Common Units for investment purposes. PGLP received the above-referenced 123,566 Common Units in connection with the PG-V Assignment Agreement. PGLP transferred its Common Units to the assignees referenced above. Reschke is included among such assignees and holds such Common Units for investment purposes. Other than as discussed above, none of Reschke, PGLPI, Prime Finance, PGLP, PFLP, PGI, PG-II, PG-V or PG-VI has any current plans or proposals which relate to or would result in the types of transactions set forth in paragraphs (a) through (j) of the instructions for this Item 4. 14 Item 5. Interest in Securities of the Issuer. (a) Reschke beneficially owns 199,548 shares of Common Stock, 9,552 shares of Preferred Stock, which are immediately convertible into 11,424 shares of Common Stock, 2,568,876 Common Units and certain options to purchase 324,999 shares of Common Stock which, assuming conversion of the Preferred Stock, exchange of the Common Units and exercise of all vested options, constitute approximately 6.7% of the total outstanding shares of Common Stock. PGLP beneficially owns 251,300 shares of Common Stock which constitute approximately 0.6% of the outstanding shares of Common Stock. PGLPI beneficially owns 22,241 Common Units which, assuming the exchange of the Common Units, constitute approximately 0.05% of the outstanding shares of Common Stock. PGI beneficially owns 750,000 Common Units which, assuming exchange of the Common Units, constitute approximately 1.7% of the outstanding shares of Common Stock. PG-II beneficially owns 961,085 Common Units which, assuming exchange of the Common Units, constitute approximately 2.2% of the outstanding shares of Common Stock. PG-V beneficially owns 598,346 Common Units which, assuming exchange of the Common Units, constitute approximately 1.4% of the outstanding shares of Common Stock. By virtue of his position as managing general partner of PGLP and his ability to control PGLPI, PGI, PG-II and PG-V, Reschke may be deemed to share beneficial ownership of the 251,300 shares of Common Stock directly owned by PGLP and the 22,241, 750,000, 961,085 and 598,346 Common Units owned by PGLPI, PGI, PG-II and PG-V, respectively. PGLPI may be deemed to share beneficial ownership of the 961,085 and 598,346 Common Units directly owned by PG-II and PG-V, respectively, because PGLPI is the managing general partner of PG-II and PG-V. (b) Reschke has the sole power to direct the vote and disposition of 199,548 shares of Common Stock and 9,552 shares of Preferred Stock, which are immediately convertible into 11,424 shares of Common Stock, directly owned by Reschke. Reschke has the sole power to direct the vote of the 2,568,876 Common Units directly owned by Reschke. PGLP has the sole power to direct the vote and disposition of the 251,300 shares of Common Stock directly owned by PGLP. PGLPI has the sole power to direct the vote of the 22,241 Common Units directly owned by PGLPI. PGI has the sole power to direct the vote of the 750,000 Common Units directly owned by PGI. Each of PG-II and PG-V has the sole power to direct the vote and disposition of the 961,085 and 598,346 Common Units directly owned by PG-II and PG-V, respectively. By virtue of his position as managing general partner of PGLP and his ability to control PGLPI, PGI, PG-II and PG-V, Reschke may be deemed to share the power to direct the vote and disposition of the 251,300 shares of Common Stock directly owned by PGLP and the 22,241, 750,000, 961,085 and 598,346 Common Units directly owned by PGLPI, PGI, PG-II and PG-V, respectively. PGLPI may be deemed to share the power to direct the vote and disposition of the 961,085 and 598,346 Common Units directly owned by PG-II and PG-V respectively, because PGLPI is the managing general partner of PG-II and PG-V. (c) Except for the transfers discussed above in Item 4, none of Reschke, PGLP, PGLPI, PGI, PG-II or PG-V nor, to the best of their knowledge, any of the executive officers or directors of PGI or PGLPI, has effected any transaction in securities of the Company during the past 60 days. (d) Other than the following, no person is known to have the right to receive or the power to direct the receipt of dividends from, or the proceeds 15 from the sale of, securities held by Reschke, PGLP, PGLPI, PGI, PG-II or PG-V, except for Reschke, PGLP, PGLPI, PGI, PG-II or PG-V: (1) Kemper Investors Life Insurance Company ("Kemper"), pursuant to a Pledge and Security Agreement [Lake Travis], dated as of March 22, 1994, by and between PG-II and Kemper (the "Original Kemper Pledge Agreement"), as amended from time to time and as amended and restated pursuant to the Amended and Restated Pledge and Security Agreement [Lake Travis] dated as of April 30, 2001, by and among PG-II, PGI and Kemper (as amended, the "Kemper Pledge Agreement"); (2) Lumbermens Mutual Casualty Company ("LMCC"), pursuant to a Pledge and Security Agreement [150 N. Riverside] dated as of March 22, 1994 made by KILICO Realty Corporation and Kemper to LMCC, as amended by the First Amendment to Pledge and Security Agreement [150 N. Riverside] effective as of September 1, 1995 by and between PG-V and LMCC (the "First Amendment to LMCC Pledge Agreement") (as amended, the "LMCC Pledge Agreement"); (e) As a result of the transactions discussed in Items 3 and 4, neither Prime Finance, PFLP nor PG-VI is deemed to be beneficial owner of more than 5% of the Common Stock of the Company. Exhibit XXVI, Amendment No. 1 to Joint Filing Statement, has been amended to reflect that Prime Finance, PFLP and PG-VI are no longer members of the filing group. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Item 6 is supplemented in the following manner: Pursuant to the Kemper Pledge Agreement, PG-II and PGI pledged, among other collateral, 961,085 Common Units to secure certain obligations of PG-II and PGI under the Limited Recourse Guaranty [Lake Travis] made as of March 22, 1994 in favor of Kemper (the "Original Kemper Guaranty"), as amended from time to time and as amended and restated pursuant to the Amended and Restated Limited Recourse Guaranty [Lake Travis] dated as of April 30, 2001, by and among PG-II, PGI and Kemper (as amended, the "Kemper Guaranty"), issued by PG-II and PGI with respect to credit support issued by Kemper for the benefit of an affiliate of PG-II and PGI. Pursuant to the LMCC Pledge Agreement, PG-V has currently pledged to LMCC 598,346 Common Units as security for the obligations of PG-V to LMCC under the Limited Recourse Guaranty [150 N. Riverside] made March 22, 1994 by KILICO Realty Corporation and Kemper in favor of LMCC (the "Original LMCC Guaranty"), as amended by the First Amendment to Limited Recourse Guaranty [150 N. Riverside] effective as of September 1, 1995 by and between PG-V and LMCC (the "First Amendment to LMCC Guaranty") (as amended, the "LMCC Guaranty"), to secure the repayment of a loan note by LMCC to an affiliate of PG-V. The Original Kemper Pledge Agreement, the amendments thereto, the Amended and Restated Pledge and Security Agreement, the Original Kemper Guaranty, the First Amendment to Kemper Guaranty, the Amended and Restated Limited Recourse Guaranty, the LMCC Pledge Agreement, the First Amendment to LMCC Pledge Agreement, the Original LMCC Guaranty, and the First Amendment to LMCC Guaranty, are attached hereto as exhibits and incorporated herein by reference. Item 7. Material to be Filed as Exhibits. 16
Exhibit I Pledge and Security Agreement [Lake Travis] dated as of March 22, 1994 by and between PG-II and Kemper* Exhibit II First Amendment to Pledge and Security Agreement [Lake Travis] dated as of August 31, 1994 by and between PG-II and Kemper* Exhibit III Second Amendment to Pledge and Security Agreement [Lake Travis] dated as of June 12, 1995 by and between PG-II and Kemper* Exhibit IV Third Amendment to Pledge and Security Agreement [Lake Travis] dated as of February 19, 1997 by and between PG-II and Kemper* Exhibit V Fourth Amendment to Pledge and Security Agreement [Lake Travis] dated as of April 9, 1997 by and between PG-II and Kemper* Exhibit VI Fifth Amendment to Pledge and Security Agreement [Lake Travis] dated as of April 7, 1998 by and between PG-II and Kemper* Exhibit VII Seventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of September 30, 1998 by and between PG-II and Kemper* Exhibit VIII Eleventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of December 20, 1999 by and between PG-II and Kemper* Exhibit IX Limited Recourse Guaranty [Lake Travis] made by PG-II as of March 22, 1994 in favor of Kemper* Exhibit X First Amendment to Limited Recourse Guaranty dated as of August 31, 1994 by and between PG-II and Kemper* Exhibit XI Pledge and Security Agreement [150 N. Riverside] dated as of March 22, 1994 made by KILICO Realty Corporation and Kemper to LMCC* Exhibit XII First Amendment to Pledge and Security Agreement [150 N. Riverside] effective as of September 1, 1995 by and between PG-V and LMCC* Exhibit XIII Limited Recourse Guaranty [150 N. Riverside] made as of March 22, 1994 by KILICO Realty Corporation and Kemper in favor of LMCC* Exhibit XIV First Amendment to Limited Recourse Guaranty [150 N. Riverside] effective September 1, 1995 by and between PG-V and LMCC* Exhibit XV Letter Proposal of The Prime Group, Inc., to Company, dated as of September 20, 2000*
17
Exhibit XVI Letter Proposal of The Prime Group, Inc., to Company, dated as of October 27, 2000* Exhibit XVII Agreement to Form Joint Venture to Acquire Preferred & Common Equity Securities, dated as of November 2, 2000* Exhibit XVIII Joint Filing Statement, dated as of November 7, 2000 by and among Reschke, PGLPI, The Prime Group, Inc., Prime Finance, PGLP, PFLP, PG-II, PG-V and PG-VI* Exhibit XIX Letter, dated as of May 16, 2001, terminating Agreement to Form Joint Venture* Exhibit XX Letter Proposal of Reschke to Company, dated as of August 7, 2001* Exhibit XXI Agreement Regarding Assignments of PRLP Common Units in Liquidation of PFLP dated as of May 17, 2002, by and among PFLP, PG-II, PGLP, PGI, Prime Finance, PGLPI, Reschke, EJJ, GDR, WHJ and RJR Exhibit XXII Agreement Regarding Assignments of PRLP Common Units and by PG-VI dated as of May 17, 2002, by and among PG-VI, PG-II, PGI, Prime International, PGLPI, Reschke, EJJ, GDR, WHJ and RJR Exhibit XXIII Agreement Regarding Assignments of PRLP Common Units by PG-V dated as of May 17, 2002, by and among PG-V, PGLP, PGLPI, Reschke, EJJ, GDR, WHJ and RJR Exhibit XXIV Amended and Restated Pledge and Security Agreement [Lake Travis] dated as of April 30, 2001 by and among PG-II, PGI and Kemper Exhibit XXV Amended and Restated Limited Recourse Guaranty [Lake Travis] made by PG-II and PGI as of April 30, 2001 in favor of Kemper Exhibit XXVI Amendment 1 to Joint Filing Statement, dated as of September 30, 2002 by and among Reschke, PGLPI, PGI, Prime Finance, PGLP, PFLP, PG-II, PG-V and PG-VI
----------- *Previously filed 18 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. /s/ Michael W. Reschke ------------------------------------ Michael W. Reschke Dated: September 30, 2002 19 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. PGLP, INC. /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: President Dated: September 30, 2002 20 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. PRIME FINANCE, INC. /s/ Michael W. Reschke ---------------------------------- Name: Michael W. Reschke Title: President Dated: September 30, 2002 21 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. PRIME GROUP LIMITED PARTNERSHIP /s/ Michael W. Reschke ------------------------------------ Name: Michael W. Reschke Title: Managing General Partner Dated: September 30, 2002 22 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. PRIME FINANCING LIMITED PARTNERSHIP By: Prime Finance, Inc., its General partner By: /s/ Michael W. Reschke ----------------------------- Name: Michael W. Reschke Title: President Dated: September 30, 2002 23 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. The Prime Group, Inc. /s/ Michael W. Reschke -------------------------------- Name: Michael W. Reschke Title: President Dated: September 30, 2002 24 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. PRIME GROUP II, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke ------------------------------- Name: Michael W. Reschke Title: President Dated: September 30, 2002 25 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. PRIME GROUP V, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke ----------------------------- Name: Michael W. Reschke Title: President Dated: September 30, 2002 26 SIGNATURE After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this Amendment No. 7 to Schedule 13D is true, complete and correct. PRIME GROUP VI, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke ------------------------------ Name: Michael W. Reschke Title: President Dated: September 30, 2002 27 EXHIBIT INDEX
Exhibit No. Document - ----------- -------- Exhibit I Pledge and Security Agreement [Lake Travis] dated as of March 22, 1994 by and between PG-II and Kemper* Exhibit II First Amendment to Pledge and Security Agreement [Lake Travis] dated as of August 31, 1994 by and between PG-II and Kemper* Exhibit III Second Amendment to Pledge and Security Agreement [Lake Travis] dated as of June 12, 1995 by and between PG-II and Kemper* Exhibit IV Third Amendment to Pledge and Security Agreement [Lake Travis] dated as of February 19, 1997 by and between PG-II and Kemper* Exhibit V Fourth Amendment to Pledge and Security Agreement [Lake Travis] dated as of April 9, 1997 by and between PG-II and Kemper* Exhibit VI Fifth Amendment to Pledge and Security Agreement [Lake Travis] dated as of April 7, 1998 by and between PG-II and Kemper* Exhibit VII Seventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of September 30, 1998 by and between PG-II and Kemper* Exhibit VIII Eleventh Amendment to Pledge and Security Agreement [Lake Travis] dated as of December 20, 1999 by and between PG-II and Kemper* Exhibit IX Limited Recourse Guaranty [Lake Travis] made by PG-II as of March 22, 1994 in favor of Kemper* Exhibit X First Amendment to Limited Recourse Guaranty dated as of August 31, 1994 by and between PG-II and Kemper* Exhibit XI Pledge and Security Agreement [150 N. Riverside] dated as of March 22, 1994 made by KILICO Realty Corporation and Kemper to LMCC* Exhibit XII First Amendment to Pledge and Security Agreement [150 N. Riverside] effective as of September 1, 1995 by and between PG-V and LMCC* Exhibit XIII Limited Recourse Guaranty [150 N. Riverside] made as of March 22, 1994 by KILICO Realty Corporation and Kemper in favor of LMCC* Exhibit XIV First Amendment to Limited Recourse Guaranty [150 N. Riverside] effective September 1, 1995 by and between PG-V and LMCC*
28
Exhibit No. Document - ----------- -------- Exhibit XV Letter Proposal of The Prime Group, Inc., to Company, dated as of September 20, 2000* Exhibit XVI Letter Proposal of The Prime Group, Inc., to Company, dated as of October 27, 2000* Exhibit XVII Agreement to Form Joint Venture to Acquire Preferred & Common Equity Securities, dated as of November 2, 2000* Exhibit XVIII Joint Filing Statement, dated as of November 7, 2000 by and among Reschke, PGLPI, The Prime Group, Inc., Prime Finance, PGLP, PFLP, PG-II, PG-V and PG-VI* Exhibit XIX Letter, dated as of May 16, 2001, terminating Agreement to Form Joint Venture* Exhibit XX Letter Proposal of Reschke to Company, dated as of August 7, 2001* Exhibit XXI Agreement Regarding Assignments of PRLP Common Units in Liquidation of PFLP dated as of May 17, 2002, by and among PFLP, PG-II, PGLP, PGI, Prime Finance, PGLPI, Reschke, EJJ, GDR, WHJ and RJR Exhibit XXII Agreement Regarding Assignments of PRLP Common Units and by PG-VI dated as of May 17, 2002, by and among PG-VI, PG-II, PGI, Prime International, PGLPI, Reschke, EJJ, GDR, WHJ and RJR Exhibit XXIII Agreement Regarding Assignments of PRLP Common Units by PG-V dated as of May 17, 2002, by and among PG-V, PGLP, PGLPI, Reschke, EJJ, GDR, WHJ and RJR Exhibit XXIV Amended and Restated Pledge and Security Agreement [Lake Travis] dated as of April 30, 2001 by and among PG-II, PGI and Kemper Exhibit XXV Amended and Restated Limited Recourse Guaranty by PG-II and PGI as of April 30, 2001 in favor of Kemper Exhibit XXVI Amendment 1 to Joint Filing Statement, dated as of September 30, 2002 by and among Reschke, PGLPI, PGI, Prime Finance, PGLP, PFLP, PG-II, PG-V and PG-VI
*Previously filed 29 EX-21 3 a2090218zex-21.txt EXHIBIT 21 EXHIBIT XXI AGREEMENT REGARDING ASSIGNMENTS OF PRLP COMMON UNITS AND HGPLP COMMON UNITS IN LIQUIDATION OF PFLP THIS AGREEMENT REGARDING ASSIGNMENTS OF PRLP COMMON UNITS AND HGPLP COMMON UNITS IN LIQUIDATION OF PFLP (this "AGREEMENT") is made and entered into as of the 17th day of May, 2002, by and among Prime Financing Limited Partnership, an Illinois limited partnership ("PFLP"), Prime Group II, L.P., an Illinois limited partnership ("PG2LP"), Prime Group Limited Partnership, an Illinois limited partnership ("PRIME LP"), The Prime Group, Inc., an Illinois corporation ("PGI"), Prime Finance, Inc., an Illinois corporation, ("PFI"), PGLP, Inc., an Illinois corporation ("PGLP INC."), Michael W. Reschke ("MWR"), Edward J. John ("EJJ"), Glenn D. Reschke ("GDR"), Warren H. John ("WHJ"), and Robert J. Rudnik ("RJR"). W I T N E S S E T H: WHEREAS, PG2LP is the sole limited partner of, with a ninety-nine percent (99%) interest in, Prime Group III, L.P., an Illinois limited partnership ("PG3LP"), and PGLP, Inc. is the sole general partner of, with a one percent (1%) interest in, PG3LP; and WHEREAS, on the date hereof, immediately prior to the transactions contemplated by this Agreement, PG3LP distributed to PG2LP all of its assets, consisting of (i) a 19.4021% limited partnership interest in PFLP, and (ii) 3,081 common units in Horizon Group Properties, L.P. ("HGPLP COMMON UNITS"), in connection with the liquidation and dissolution of PG3LP and accordance with the applicable terms of the Agreement of Limited Partnership of PG3LP, dated as of April 13, 1994, and as approved by PG2LP and PGLP Inc., the sole partners of PG3LP (the "PG3LP LIQUIDATING DISTRIBUTIONS"); and WHEREAS, as of the date hereof, following the PG3LP Liquidating Distributions, (i) PFI is the sole general partner of PFLP with a one percent (1%) interest in PFLP, (ii) PG2LP is a limited partner of PFLP with a 52.9410% interest in PFLP, (iii) Prime LP is a limited partner in PFLP with a 17.9073% interest in PFLP, and (iv) PGI is a limited partner in PFLP with a 28.1517% interest in PFLP; and WHEREAS, as of the date hereof, as set forth on EXHIBIT A attached hereto (i) MWR, EJJ, GDR, WHJ, and RJR are (a) the holders of all of the partnership interests in Prime LP, (b) the holders of all of the limited partnership interests in PG2LP, (c) the holders of all of the issued and outstanding shares of stock of PGI, and (d) the holders of all of the issued and outstanding shares of stock of PGLP Inc., and (ii) PGLP Inc. is the sole general partner of PG2LP with a 1.2117% interest in PG2LP; and 1 WHEREAS, PFLP currently holds 277,850 HGPLP Common Units and 5,557,000 common units in Prime Retail, L.P., a Delaware limited partnership ("PRLP COMMON UNITS"); and WHEREAS, the parties hereto have determined that it is in their best interests (i) that PFLP be liquidated and, in connection therewith, the HGPLP Common Units and the PRLP Common Units held by PFLP be distributed by PFLP to its partners in the manner and in the proportions set forth or described herein and (ii) that the PRLP Common Units received by PG2LP and Prime LP in the liquidation of PFLP be distributed by PG2LP and Prime LP to the partners of PG2LP and Prime LP; and WHEREAS, the parties hereto have agreed to take all actions and steps to cause, effect, accomplish and evidence the transactions described above, and, in connection therewith, have agreed that not all of the transfers and assignments of the PRLP Common Units described in this Agreement will be effected and accomplished by the issuance of a separate certificate or separate certificates representing the PRLP Common Units and that PFLP is authorized and directed to cause certificates representing the PRLP Common Units to be directly issued in the name of the persons who are the ultimate assignees of the PRLP Common Units currently held by PFLP as described below; and WHEREAS, the parties hereto have agreed to enter into this Agreement to cause, effect and accomplish the transfer and assignments of the PRLP Common Units and the HGLP Common Units described herein and the other transactions described herein. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency which are hereby acknowledged, the parties hereto hereby agree as follows: 1. The parties hereto hereby agree that the HGPLP Common Units and the PRLP Common Units are hereby transferred and assigned as follows in the following order: (a) PFLP hereby transfers and assigns 1,730,843 PRLP Common Units to PG2LP. (b) PFLP hereby transfers and assigns 3,076,157 PRLP Common Units to Prime L.P. (c) PFLP hereby transfers and assigns 117,357 HGPLP Common Units to Prime L.P. (d) PFLP hereby transfers and assigns 750,000 PRLP Common Units to PGI. (e) PFLP hereby transfers and assigns 160,493 HGPLP Common Units to PGI. (f) PG2LP hereby transfers and assigns 876,218 PRLP Common Units to MWR. (g) PG2LP hereby transfers and assigns 454,719 PRLP Common Units to EJJ. 2 (h) PG2LP hereby transfers and assigns 155,726 PRLP Common Units to RJR. (i) PG2LP hereby transfers and assigns 134,962 PRLP Common Units to WHJ. (j) PG2LP hereby transfers and assigns 88,245 PRLP Common Units to GDR. (k) PG2LP hereby transfers and assigns 20,973 PRLP Common Units to PGLP Inc. (l) Prime LP hereby assigns 1,576,368 PRLP Common Units to MWR. (m) Prime LP hereby assigns 818,067 PRLP Common Units to EJJ. (n) Prime LP hereby assigns 280,161 PRLP Common Units to RJR. (o) Prime LP hereby assigns 242,804 PRLP Common Units to WHJ. (p) Prime LP hereby assigns 158,757 PRLP Common Units to GDR. 2. The parties hereto hereby agree that, although each of the above-described assignments have occurred on the date hereof, the assignees of each assignment may not receive a certificate or certificates representing the PRLP Common Units so assigned. To evidence and effect the result of the assignments described herein, the parties hereto hereby direct and authorize PFLP to cause the delivery of the Certificates described below directly to the ultimate assignees of the HGPLP Common Units and the PRLP Common Units as described below: (a) to Prime LP, a Certificate issued in the name of Prime LP representing 117,357 HGPLP Common Units; (b) to PGI, a Certificate issued in the name of PGI representing 160,493 HGPLP Common Units; (c) to PGI, a Certificate issued in the name of PGI representing 750,000 PRLP Common Units; (d) to PGLP Inc., a Certificate issued in the name of PGLP Inc. representing 20,973 PRLP Common Units; (e) to MWR, a Certificate issued in the name of MWR representing 2,452,586 PRLP Common Units; (f) to EJJ, a Certificate issued in the name of EJJ representing 1,272,786 PRLP Common Units; (g) to RJR, a Certificate issued in the name of RJR representing 435,887 PRLP Common Units; 3 (h) to WHJ, a Certificate issued in the name of WHJ representing 377,766 PRLP Common Units; and (i) to GDR, a Certificate issued in the name of GDR representing 247,002 PRLP Common Units. 3. This Agreement may be executed by the parties hereto in one or more counterparts, and each counterpart shall constitute an original, and all such counterparts, taken together, shall constitute one and the same instrument. [signature page follows] 4 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written. PRIME FINANCING LIMITED PARTNERSHIP By: Prime Finance, Inc. Its: Managing General Partner By: /S/ MICHAEL W. RESCHKE ---------------------------------- Its: PRESIDENT ---------------------------------- PRIME GROUP II, L.P. By: PGLP, Inc. Its: Managing General Partner By: /S/ MICHAEL W. RESCHKE ---------------------------------- Its: PRESIDENT ---------------------------------- PRIME GROUP LIMITED PARTNERSHIP By: /S/ MICHAEL W. RESCHKE ---------------------------------- Michael W. Reschke Managing General Partner THE PRIME GROUP, INC. By: /S/ MICHAEL W. RESCHKE ---------------------------------- Its: PRESIDENT ---------------------------------- PRIME FINANCE, INC. By: /S/ MICHAEL W. RESCHKE ---------------------------------- Its: PRESIDENT ---------------------------------- PGLP, INC. By: /S/ MICHAEL W. RESCHKE ---------------------------------- Its: PRESIDENT ---------------------------------- /S/ MICHAEL W. RESCHKE ---------------------------------- MICHAEL W. RESCHKE /S/ EDWARD J. JOHN ---------------------------------- EDWARD J. JOHN /S/ GLENN D. RESCHKE ---------------------------------- GLENN D. RESCHKE /S/ WARREN H. JOHN ---------------------------------- WARREN H. JOHN /S/ ROBERT J. RUDNIK ---------------------------------- ROBERT J. RUDNIK EX-22 4 a2090218zex-22.txt EXHIBIT 22 EXHIBIT XXII AGREEMENT REGARDING ASSIGNMENTS OF PRLP COMMON UNITS AND BY PRIME GROUP VI, L.P. THIS AGREEMENT REGARDING ASSIGNMENTS OF PRLP COMMON UNITS BY PRIME GROUP VI, L.P. this "AGREEMENT") is made and entered into as of the 17th day of May, 2002, by and among Prime Group VI, L.P., an Illinois limited partnership ("PG6LP"), Prime Group II, L.P., an Illinois limited partnership ("PG2LP"), The Prime Group, Inc., an Illinois corporation ("PGI"), Prime International, Inc., an Illinois corporation, ("PII"), PGLP, Inc., an Illinois corporation ("PGLP INC."), Michael W. Reschke ("MWR"), Edward J. John ("EJJ"), Glenn D. Reschke ("GDR"), Warren H. John ("WHJ"), and Robert J. Rudnik ("RJR"). W I T N E S S E T H: WHEREAS, MWR, EJJ, RJR, GDR and WHJ are all of the partners in Prime Group Limited Partnership, an Illinois limited partnership ("PRIME LP"), holding interests in Prime LP as set forth in EXHIBIT A attached hereto; and WHEREAS, Prime LP was a limited partner in PG6LP, with a 27.266529% interest in PG6LP; and WHEREAS, on the date hereof, immediately prior to the transactions contemplated by this Agreement, Prime LP distributed to MWR, EJJ, RJR, GDR and WHJ, on a pro-rata basis in accordance with their respective interests in Prime LP, all of Prime LP's interest in PG6LP, and, immediately thereafter, MWR, EJJ, RJR, GDR and WHJ contributed such interests to PG2LP (the "PRIME LP INTEREST TRANSFER"); and WHEREAS, as of the date hereof, following the Prime LP Interest Transfer, (i) PGLP Inc. is the sole general partner of PG6LP with a 0.160197% interest in PG6LP, (ii) PG2LP is a limited partner of PG6LP with a 28.205219% interest in PG6LP, (iii) PGI is a limited partner in PG6LP with a 71.474387% interest in PG6LP, and (iv) PII is a limited partner in PG6LP with a 0.160197% interest in PG6LP; and WHEREAS, as of the date hereof, as set forth on EXHIBIT A attached hereto (i) MWR, EJJ, GDR, WHJ, and RJR are (a) the holders of all of the partnership interests in Prime LP, (b) the holders of all of the limited partnership interests in PG2LP, and (c) the holders of all of the issued and outstanding shares of stock of PGLP Inc., and (ii) PGLP Inc. is the sole general partner of PG2LP with a 1.0% interest in PG2LP; and WHEREAS, PG6LP currently holds 104,632 unencumbered common units in Prime Retail, L.P., a Delaware limited partnership ("PRLP COMMON UNITS"); and WHEREAS, the parties hereto have determined that it is in their best interests (i) that the unencumbered PRLP Common Units held by PG6LP be distributed by PG6LP to PG2LP as set forth or described herein and (ii) that the PRLP Common Units received by PG2LP be distributed by PG2LP to the partners of PG2LP; and WHEREAS, the parties hereto have agreed to take all actions and steps to cause, effect, accomplish and evidence the transactions described above, and, in connection therewith, have agreed that not all of the transfers and assignments of the PRLP Common Units described in this Agreement will be effected and accomplished by the issuance of a separate certificate or separate certificates representing the PRLP Common Units and that PG6LP is authorized and directed to cause certificates representing the PRLP Common Units to be directly issued in the name of the persons who are the ultimate assignees of the PRLP Common Units currently held by PG6LP as described below; and WHEREAS, the parties hereto have agreed to enter into this Agreement to cause, effect and accomplish the transfer and assignments of the PRLP Common Units described herein and the other transactions described herein. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency which are hereby acknowledged, the parties hereto hereby agree as follows: 1. The parties hereto hereby agree that the [sic] and the PRLP Common Units are hereby transferred and assigned as follows in the following order: (a) PG6LP hereby transfers and assigns 104,632 PRLP Common Units to PG2LP. (b) PG2LP hereby transfers and assigns 52,969 PRLP Common Units to MWR. (c) PG2LP hereby transfers and assigns 27,488 PRLP Common Units to EJJ. (d) PG2LP hereby transfers and assigns 9,414 PRLP Common Units to RJR. (e) PG2LP hereby transfers and assigns 8,159 PRLP Common Units to WHJ. (f) PG2LP hereby transfers and assigns 5,334 PRLP Common Units to GDR. (g) PG2LP hereby transfers and assigns 1,268 PRLP Common Units to PGLP Inc. 2. The parties hereto hereby agree that, although each of the above-described assignments have occurred on the date hereof, the assignees of each assignment may not receive a certificate or certificates representing the PRLP Common Units so assigned. To evidence and effect the result of the assignments described herein, the parties hereto hereby direct and authorize PG6LP to cause the delivery of the Certificates described below directly to the ultimate assignees of the 2 HGPLP Common Units and the PRLP Common Units as described below: (a) to MWR, a Certificate issued in the name of MWR representing 52,969 PRLP Common Units; (b) to EJJ, a Certificate issued in the name of EJJ representing 27,488 PRLP Common Units; (c) to RJR, a Certificate issued in the name of RJR representing 9,414 PRLP Common Units; (d) to WHJ, a Certificate issued in the name of WHJ representing 8,159 PRLP Common Units; (e) to GDR, a Certificate issued in the name of GDR representing 5,334 PRLP Common Units; and (f) to PGLP Inc., a Certificate issued in the name of PGLP Inc. representing 1,268 PRLP Common Units. 3. This Agreement may be executed by the parties hereto in one or more counterparts, and each counterpart shall constitute an original, and all such counterparts, taken together, shall constitute one and the same instrument. [signature page follows] 3 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written. PRIME GROUP VI, L.P. By: PGLP, Inc. Its: Managing General Partner By: /S/ MICHAEL W. RESCHKE --------------------------------- Its: PRESIDENT --------------------------------- PRIME GROUP II, L.P. By: PGLP, Inc. Its: Managing General Partner By: /S/ MICHAEL W. RESCHKE --------------------------------- Its: PRESIDENT --------------------------------- PRIME GROUP LIMITED PARTNERSHIP By: /S/ MICHAEL W. RESCHKE --------------------------------- Michael W. Reschke Managing General Partner THE PRIME GROUP, INC. By: /S/ MICHAEL W. RESCHKE --------------------------------- Its: PRESIDENT --------------------------------- PRIME INTERNATIONAL, INC. By: /S/ MICHAEL W. RESCHKE --------------------------------- Its: PRESIDENT --------------------------------- PGLP, INC. By: /S/ MICHAEL W. RESCHKE --------------------------------- Its: PRESIDENT --------------------------------- /S/ MICHAEL W. RESCHKE --------------------------------------- MICHAEL W. RESCHKE /S/ EDWARD J. JOHN --------------------------------------- EDWARD J. JOHN /S/ GLENN D. RESCHKE --------------------------------------- GLENN D. RESCHKE /S/ WARREN H. JOHN --------------------------------------- WARREN H. JOHN /S/ ROBERT J. RUDNIK --------------------------------------- ROBERT J. RUDNIK EXHIBIT A OWNERSHIP INTERESTS 1. PRIME GROUP VI, L.P. (a) PGLP, Inc.: 0.160197% general partner (b) The Prime Group, Inc.: 71.474387 limited partner (c) Prime Group II, L.P.: 28.205219% limited partner (following the Prime LP Interest Transfer) (d) Prime International, Inc.: 0.160197% limited partner 2. PRIME GROUP LIMITED PARTNERSHIP (a) Michael W. Reschke ("MWR"): 51.2447% general partner (b) Edward J. John ("EJJ"): 26.5938% general partner (c) Robert J. Rudnik ("RJR"): 9.1075% limited partner (d) Warren H. John ("WHJ"): 7.8931% limited partner (e) Glenn D. Reschke ("GDR"): 5.1609% limited partner 3. PRIME GROUP II, L.P. (a) PGLP, Inc.: 1.2117% general partner (b) MWR: 50.6238% limited partner (c) EJJ: 26.2715% limited partner (d) RJR: 8.9971% limited partner (e) WHJ: 7.7975% limited partner (f) GDR: 5.0984% limited partner 4. PGLP, INC. (a) MWR: 51.2447% shareholder (b) EJJ: 26.5938% shareholder (c) RJR: 9.1075% shareholder (d) WHJ: 7.8931% shareholder (e) GDR: 5.1609% shareholder EX-23 5 a2090218zex-23.txt EXHIBIT 23 EXHIBIT XXIII AGREEMENT REGARDING ASSIGNMENTS OF PRLP COMMON UNITS BY PRIME GROUP V, L.P. THIS AGREEMENT REGARDING ASSIGNMENTS OF PRLP COMMON UNITS BY PRIME GROUP V, L.P. (this "AGREEMENT") is made and entered into as of the 17th day of May, 2002, by and among Prime Group V, L.P., an Illinois limited partnership ("PG5LP"), Prime Group Limited Partnership, an Illinois limited partnership ("PRIME LP"), PGLP, Inc., an Illinois corporation ("PGLP INC."), Michael W. Reschke ("MWR"), Edward J. John ("EJJ"), Glenn D. Reschke ("GDR"), Warren H. John ("WHJ"), and Robert J. Rudnik ("RJR"). W I T N E S S E T H: WHEREAS, Prime LP is the sole limited partner of, with a ninety-nine percent (99%) interest in, PG5LP, and PGLP, Inc. is the sole general partner of, with a one percent (1%) interest in, PG5LP; and WHEREAS, MWR, EJJ, RJR, GDR and WHJ are all of the partners in Prime LP and the owners of all of the issued and outstanding shares of stock of PGLP Inc., as set forth on EXHIBIT A attached hereto, and WHEREAS, PG5LP currently holds 123,566 unencumbered common units in Prime Retail, L.P., a Delaware limited partnership ("PRLP COMMON UNITS"); and WHEREAS, the parties hereto have determined that it is in their best interests (i) that the unencumbered PRLP Common Units held by PG5LP be distributed by PG5LP to PG2LP as set forth or described herein and (ii) that the PRLP Common Units received by Prime LP from PG5LP be distributed to the partners of Prime LP; and WHEREAS, the parties hereto have agreed to take all actions and steps to cause, effect, accomplish and evidence the transactions described above, and, in connection therewith, have agreed that not all of the transfers and assignments of the PRLP Common Units described in this Agreement will be effected and accomplished by the issuance of a separate certificate or separate certificates representing the PRLP Common Units and that PG5LP is authorized and directed to cause certificates representing the PRLP Common Units to be directly issued in the name of the persons who are the ultimate assignees of the unencumbered PRLP Common Units currently held by PG5LP as described below; and WHEREAS, the parties hereto have agreed to enter into this Agreement to cause, effect and accomplish the transfer and assignments of the PRLP Common Units described herein and the other transactions described herein. NOW THEREFORE, in consideration of the foregoing and for other good and valuable consideration, the receipt and sufficiency which are hereby acknowledged, the parties hereto hereby agree as follows: 1. The parties hereto hereby agree that the PRLP Common Units are hereby transferred and assigned as follows in the following order: (a) PG5LP hereby transfers and assigns 123,566 PRLP Common Units to Prime L.P. (b) Prime LP hereby assigns 63,321 PRLP Common Units to MWR. (c) Prime LP hereby assigns 32,861 PRLP Common Units to EJJ. (d) Prime LP hereby assigns 11,254 PRLP Common Units to RJR. (e) Prime LP hereby assigns 9,753 PRLP Common Units to WHJ. (f) Prime LP hereby assigns 6,377 PRLP Common Units to GDR. 2. The parties hereto hereby agree that, although each of the above-described assignments have occurred on the date hereof, the assignees of each assignment may not receive a certificate or certificates representing the PRLP Common Units so assigned. To evidence and effect the result of the assignments described herein, the parties hereto hereby direct and authorize PG5LP to cause the delivery of the Certificates described below directly to the ultimate assignees of the PRLP Common Units as described below: (a) to MWR, a Certificate issued in the name of MWR representing 63,321 PRLP Common Units; (b) to EJJ, a Certificate issued in the name of EJJ representing 32,861 PRLP Common Units; (c) to RJR, a Certificate issued in the name of RJR representing 11,753 PRLP Common Units; (d) to WHJ, a Certificate issued in the name of WHJ representing 9,753 PRLP Common Units; and (e) to GDR, a Certificate issued in the name of GDR representing 6,377 PRLP Common Units. 2 3. This Agreement may be executed by the parties hereto in one or more counterparts, and each counterpart shall constitute an original, and all such counterparts, taken together, shall constitute one and the same instrument. [signature page follows] 3 IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the day and year first above written. PRIME GROUP V, L.P. By: PGLP, Inc. Its: Managing General Partner By: /S/ MICHAEL W. RESCHKE --------------------------------- Its: PRESIDENT --------------------------------- PRIME GROUP LIMITED PARTNERSHIP By: /S/ MICHAEL W. RESCHKE --------------------------------- Michael W. Reschke Managing General Partner PGLP, INC. By: /S/ MICHAEL W. RESCHKE --------------------------------- Its: PRESIDENT --------------------------------- /S/ MICHAEL W. RESCHKE --------------------------------------- MICHAEL W. RESCHKE /S/ EDWARD J. JOHN --------------------------------------- EDWARD J. JOHN /S/ GLENN D. RESCHKE --------------------------------------- GLENN D. RESCHKE /S/ WARREN H. JOHN --------------------------------------- WARREN H. JOHN /S/ ROBERT J. RUDNIK --------------------------------------- ROBERT J. RUDNIK EXHIBIT A OWNERSHIP INTERESTS 1. PRIME GROUP V, L.P. (a) PGLP, Inc.: 1% general partner (b) Prime Group Limited Partnership: 99% limited partner 2. PRIME GROUP LIMITED PARTNERSHIP (a) Michael W. Reschke ("MWR"): 51.2447% general partner (b) Edward J. John ("EJJ"): 26.5938% general partner (c) Robert J. Rudnik ("RJR"): 9.1075% limited partner (d) Warren H. John ("WHJ"): 7.8931% limited partner (e) Glenn D. Reschke ("GDR"): 5.1609% limited partner 3. PGLP, INC. (a) MWR: 51.2447% shareholder (b) EJJ: 26.5938% shareholder (c) RJR: 9.1075% shareholder (d) WHJ: 7.8931% shareholder (e) GDR: 5.1609% shareholder EX-24 6 a2090218zex-24.txt EXHIBIT 24 EXHIBIT XXIV AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT [LAKE TRAVIS] THIS AMENDED AND RESTATED PLEDGE AND SECURITY AGREEMENT (this "Pledge and Security Agreement"), dated as of April 30, 2001, is entered into by and between Prime Group II, L.P., an Illinois limited partnership ("PG II"), The Prime Group, Inc., an Illinois corporation ("Prime"; PG II and Prime are sometimes hereinafter referred to individually as "Pledgor" or together as "Pledgors"), and Kemper Investors Life Insurance Company, an Illinois insurance corporation ("Pledgee"). RECITALS: WHEREAS, PG II and Pledgee entered into a certain Pledge and Security Agreement Lake Travis dated March 22, 1994, as amended from time to time (the "Original PG II Pledge Agreement") securing liabilities and obligations arising under a certain Limited Recourse Guaranty Lake Travis of even date therewith executed and delivered by PG II to Pledgee with respect to a loan described therein arising out of credit enhancement extended by Pledgee and its Affiliates; WHEREAS, Prime and Pledgee entered into a certain Pledge and Security Agreement Lake Travis dated August 31, 1994, as amended from time to time (the "Original Prime Pledge Agreement") securing liabilities and obligations arising under a certain Limited Recourse Guaranty Lake Travis of even date therewith executed and delivered by Prime to Pledgee, with respect to a loan described therein arising out of credit enhancement extended by Pledgee and its Affiliates; WHEREAS, certain defaults currently exist under the Original PG II Pledge Agreement; WHEREAS, as a material inducement to Pledgee to waive the existing defaults under the Original PG II Pledge Agreement and in order to reflect changes in the collateral and other transactions which have occurred since the Original PG II Pledge Agreement and the Original Prime Pledge Agreement and restate the rights and obligations of the parties thereunder, Pledgors and Pledgee have agreed to enter into this Pledge and Security Agreement on the terms hereinafter set forth. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Pledgors and Pledgee hereby agree that the Original PG II Pledge Agreement and the Original Prime Pledge Agreement are hereby amended and restated in their entirety to read as follows: 1 ARTICLE 1 DEFINITIONS The following terms when used in this Pledge and Security Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof): "ADA Agreement" shall have the meaning given in the Standby Agreement. "Affiliate" means, as to any Person, any other Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Alternate Security" shall have the meaning given in the Standby Agreement. "Base Annual Fee" shall have the meaning given in the Standby Agreement. "Bond Debt Service" shall have the meaning given in the definition of Operating Deficits in this Article 1. "Bonds" shall mean the Health Facilities Development Revenue Bonds (The Island on Lake Travis, Ltd. Project) Series 1986, in the aggregate principal amount of $25,000,000 issued by the Capital Health Facilities Development Corporation, a Texas public non-profit corporation, to finance the construction and equipping of the Project. "Borrower" shall mean The Island on Lake Travis, Ltd., a Texas limited partnership. "Borrower Obligations" shall mean any and all obligations or liabilities of Borrower whether direct or indirect, joint or several, absolute or contingent, now existing or hereafter arising, due or to become due, which arise out of or in connection with any Loan Document. "Business Day" shall mean any day of the week other than Saturday, Sunday or any other day on which banks are generally closed within the City of Chicago, Illinois. "Code" means the Uniform Commercial Code from time to time in effect in the State of Illinois. "Collateral" is defined in Section 2.1. "Collateral Value" means the aggregate fair market value of all the Collateral as of the date of determination; the fair market value of each item of Collateral consisting of publicly traded stock or securities convertible or exchangeable into stock shall be calculated by Pledgee based upon the mean average of the closing prices or other comparable information reported for the ten Business Days immediately preceding the date of determination in the Wall Street Journal 2 (or, if not available, in such other nationally recognized financial publication designated by Pledgee); the fair market value of money market mutual funds, cash and other depository accounts and all items of Collateral not otherwise described in this paragraph shall be calculated by Pledgee based upon the publicly reported or other determinable values therefor as of the first Business Day preceding the date of determination; and such calculation of fair market values by Pledgee shall be binding and conclusive upon the parties. "Common Stock" means shares of common stock, par value $.01 per share, of the General Partner, including certificates representing such shares and any interests in the entries on the books of any financial intermediary pertaining to such shares. "Common Units" means the Partnership Units designated as Common Units under, and as otherwise defined and described in, the Partnership Agreement. "Credit Enhancement Fees" shall have the meaning given in the Standby Agreement. "Custody Account" means the account or accounts described in Section 2.1(c); all fees, charges and expenses relating to the Custody Account shall be paid from Disbursements in accordance with Section 2.4. "Disbursements" is defined in Section 2.4. "Distributions" means all income, interest, distributions, proceeds, dividends, liquidating proceeds or dividends, and other distributions or payments, ordinary or extraordinary (whether similar or dissimilar to the foregoing), and other earnings paid in cash, on or with respect to any Pledged Interests or other Collateral; all Distributions shall be paid or distributed directly to the Custody Account and invested in Permitted Investments. "Entity" means any general partnership, limited partnership, corporation, joint venture, trust, business trust, limited liability company, corporation or association. "Environmental Agreement" shall have the meaning given in the Standby Agreement. "Exchange" means the exchange of some or all or a portion of the Common Units of a Limited Partner for Common Stock pursuant to the Partnership Agreement. "Exchange Rights" means the rights of a Limited Partner to exchange Common Units for Common Stock pursuant to Article XI of the Partnership Agreement. "Event of Default" means: (a) any failure by any Pledgor to pay any amount due under the Guaranty, to pay when due any Required Monthly Payment as provided in Section 2.2 hereof, or to comply with the provisions of any section of Article 4 hereof other than Sections 4.1 (to which subparagraph (d) below shall apply), 4.2 (to which subparagraph (c) below shall apply) and 4.10 (to which subparagraph (d) below shall apply), and, in each such case, the continuance of such failure for five (5) Business Days after written notice from Pledgee; 3 (b) if any representation or warranty made or deemed made by any Pledgor in or under the Guaranty or this Pledge and Security Agreement shall prove to be false or misleading in any material respect on the date made or deemed to be made, and Pledgee gives notice to Pledgors of such default (no grace or cure period being applicable to any such default); (c) any sale, assignment, transfer, pledge or further encumbrance by any Pledgor of any of the Collateral, or any interest therein; (d) any default (not otherwise specified in this definition of "Event of Default") in the performance or observance of any covenant or agreement to be performed or observed by Pledgors under this Pledge and Security Agreement or the Guaranty and the continuation thereof for a period of thirty (30) days after notice of such default is given by Pledgee to Pledgors; provided, however, that if such default cannot reasonably be cured within such thirty (30) day time period and so long as Pledgors promptly commence to cure such default promptly following receipt of notice thereof and thereafter diligently prosecute such cure, such period will be extended for up to an additional ninety (90) days; (e) any Pledgor shall (i) in a proceeding commenced by such Pledgor, be adjudicated a bankrupt, or an order for relief shall have been entered against such Pledgor, under federal bankruptcy law, (ii) make a general assignment for the benefit of creditors, (iii) apply for, seek, consent to, or acquiesce in, the appointment of a receiver, custodian, trustee, liquidator or similar official for it or all or substantially all of its property, (iv) institute any proceeding seeking an order for relief or to adjudicate it a bankrupt or insolvent, or seeking dissolution, winding up, liquidation, reorganization, arrangement, adjustment or composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization or relief of debtors, or fail to have any such proceeding instituted against it dismissed within ninety (90) days after filing or (v) fail to contest in good faith any appointment or proceeding described in subsection (f) below for a period of ninety (90) days after such appointment or the institution of such proceeding; or (f) a receiver, custodian, trustee, liquidator or similar official shall be appointed for any Pledgor or all or substantially all of its properties, or a proceeding described in subsection (e) above, shall be instituted against any Pledgor or a warrant of attachment, execution or similar process against all or substantially all of its property shall be issued, and any such event continues undischarged, undismissed, unstayed, unvacated or unbonded for a period of ninety (90) days after such entry, appointment or issuance; or (g) the occurrence of an "Event of Default" under the Standby Agreement, the Reimbursement Agreement or the Mortgage (in each case, as defined in the applicable document); or (h) the Collateral Value at any time is less than $10,500,000 and Pledgors shall fail to restore the Collateral Value to at least $10,500,000 within ten (10) days after notice from Pledgee to Pledgors; or (i) Operating Deficits for any calendar year exceed $1,250,000 and Pledgors shall fail to pay to Pledgee, or to the Custody Account, an amount equal to such excess over 4 $1,250,000 in immediately available funds within ten (10) Business Days after notice from Pledgee to Pledgors. "General Partner" means Prime Retail, Inc., a Maryland corporation, and its successors and assigns. "Guaranty" shall mean that certain Amended and Restated Limited Recourse Guaranty Lake Travis dated April 30, 2001 made by Pledgors for the benefit of Pledgee. "Limited Partner" shall mean any Person named as a Limited Partner on EXHIBIT A to the Partnership Agreement, or any Person admitted as a Substituted Limited Partner or additional Limited Partner (as such terms are defined and described in the Partnership Agreement), in such Person's capacity as a limited partner of the Partnership. "Loan" means (i) any and all liabilities and obligations of Borrower to Pledgee or an Affiliate of Pledgee arising under the Reimbursement Agreement, and any and all documents and instruments evidencing or securing the liabilities and obligations under the Reimbursement Agreement, or any renewal, extension or refinancing thereof, (ii) any and all liabilities and obligations of Borrower to Pledgee or an Affiliate of Pledgee arising under the Standby Agreement, the ADA Agreement or the Environmental Agreement or (iii) any other liabilities or obligations of Borrower or any Pledgor to Pledgee or an Affiliate of Pledgee arising under the Guaranty or this Pledge and Security Agreement or arising in connection with any credit support or enhancement extended by Pledgee or any Affiliate of Pledgee with respect to the Bonds. "Loan Documents" means, this Pledge and Security Agreement, the Guaranty, and any and all other documents and instruments evidencing or securing the Loan. "Management Agreement is defined in Section 4.1 B.4. "Material Adverse Effect" means (a) any adverse effect on the ability of any Pledgor to grant to Pledgee or to keep pledged to Pledgee a perfected first lien security interest in and to the Collateral or (b) any material adverse effect on the ability of any Pledgor to perform its obligations under the Loan Documents. "Operating Deficit" means, with respect to the Project for any calendar month, quarter or year, as applicable, commencing from and after January 1, 2001, the excess (if any) of (a) the sum of (i) debt service payable by Borrower during such period pursuant to the provisions of that certain Loan Agreement dated as of December 1, 1986, as amended, between Capital Health Facilities Development Corporation and Borrower, and the Note issued by Borrower with respect to its liabilities and obligations thereunder ("Bond Debt Service"), (ii) capital expenditures paid or required to be paid during such period to the extent included in a budget approved by Pledgee or otherwise expressly approved by Pledgee in its sole discretion and (iii) all ordinary and necessary expenses paid or required to be paid during such period arising out of the ownership, operation, leasing, management or maintenance of the Project including, without limitation, real 5 estate taxes and insurance premiums but excluding from such expenses (w) non-cash expenses, such as depreciation and amortization, (x) state and federal income taxes, (y) capital expenditures determined in accordance with generally accepted accounting principles other than those referred to in the preceding clause (ii) and (z) debt service on any indebtedness other than that referred to in the preceding clause (i), over (b) the sum of all rental and other income or revenues actually received in such period arising from the ownership and operation of the Project plus revenues received in such period from casualty or condemnation proceeds. "Owner's Share of Up-Front Credit Enhancement Fees" shall have the meaning given in the Standby Agreement. "Partners" means the partners in the Partnership. "Partnership" means Prime Retail, L.P., a Delaware limited partnership. "Partnership Agreement" means that certain Third Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of October 15, 1998, effective as of June 15, 1998, as amended by Amendment No. 1 to the Third Amendment of and Restated Agreement of Limited Partnership of Prime Retail, L.P., dated as of September 28, 1999, as the same may be further amended from time to time. "Partnership Interests" means ownership interests held by Partners in the Partnership, including, but not limited to, Partners' Partnership Units, capital accounts, and profits and distributions relating thereto, all other payments (if any) due or to become due in respect of such interests pursuant to the Partnership Agreement, all rights, powers, and remedies of a Partner under the Partnership Agreement, all proceeds of all or any of the foregoing, and all certificates and instruments representing such interests. "Partnership Units" means fractional, undivided shares of the Partnership Interests issued pursuant to the Partnership Agreement. "Permitted Investments" means, any or all of the following to the extent approved by Pledgee: (i) direct obligations of the United States Government or its agencies; (ii) corporate debt rated A or better by S&P or Moody's; (iii) commercial paper rated Al or P1 or better; (iv) certificates of deposit and bankers acceptances from institutions rated A or better by S&P or Moody's; or (v) repurchase agreements or money market accounts with dealer banks or securities firms which are either (A) primary dealers on the Federal Reserve reporting dealer list, or (B) banks rated A or better by S&P or Moody's, and the terms of the repurchase agreements must specify that investments be made in securities which are direct obligations of the United States Government or its agencies. "Person" means any individual or Entity. "Pledged Interest Issuer" means the issuer of any Pledged Interest. "Pledged Interests" means all the Collateral described in subparagraphs (a), (b), (c), (d), (e), (f), and (g) of Section 2.1, which are now or hereafter pledged to Pledgee as Collateral to 6 secure the Secured Obligations, less all Disbursements made in the accordance with the provisions of this Pledge and Security Agreement. "Pledgee" shall have the meaning provided therefor in the Recitals to this Pledge and Security Agreement. "Pledgor" shall have the meaning provided therefor in the Recitals to this Pledge and Security Agreement. "Project" shall mean that certain multi-family residential rental development for retired or aging persons that was constructed and equipped with the proceeds of the Bonds. "Registration Rights Agreement" means that certain Registration Rights Agreement dated as of June 15, 1998 by the General Partner and the Partnership for the benefit of holders of Common Units of the Partnership and certain stockholders of the General Partner. "Reimbursement Agreement" means (i) that certain Reimbursement Agreement dated November 1, 1994 among Credit Suisse First Boston (formerly Credit Suisse), Pledgee, Federal Kemper Life Assurance Company and Borrower, as heretofore or hereafter amended, or (ii) any other reimbursement or similar agreement entered into by Borrower in connection with the securing of Alternate Security for the Bonds or the purchase of the Bonds by Pledgee or an Affiliate of Pledgee. "Required Monthly Payments" is defined in Section 2.2 "Secured Obligations" is defined in Section 2.3. "Standby Agreement" means that certain Standby Bond Purchase and Indemnity Agreement The Island on Lake Travis between Pledgee and Borrower dated December 1, 1994 and effective as of March 22, 1994. "Up-Front Credit Enhancement Fees" shall have the meaning given in the Standby Agreement. ARTICLE 2 PLEDGE SECTION 2.1 GRANT OF SECURITY INTEREST. Pledgors hereby pledge, hypothecate, assign, and transfer to Pledgee, and hereby grant to Pledgee, a continuing lien and security interest in all of the following property (the "Collateral"): (a) 961,085 Common Units; 7 (b) 155,980 shares of Class A Common Stock, par value $.01 per share, of Apartment Investment and Management Company, a Maryland corporation ("AIMCO Common Stock"); (c) Account No. 399892 with Bank of New York, New York, New York, known as KILICO - PRIME GROUP II, LP Collateral Account, together with all deposits into said account, monies held thereunder and securities and investments acquired with funds held in said account and all rights, additions to, interest on or other distributions issued as an addition to, or substitutions for, or renewals of, said account. (d) all Permitted Investments owned or held hereunder. (e) any and all Common Stock owned by any Pledgor following an Exchange of any Pledged Interests which are Common Units (which Common Stock shall constitute "Pledged Interests" hereunder immediately upon issuance thereof and without any further act required on the part of any Pledgor); (f) any and all units, common stock or any other securities or property received as a result of any exchanges, splits, reverse splits, combinations, mergers, consolidations, reclassifications, warrants, options, and noncash dividends or distributions in respect of any Pledged Interests (and any such units, common stock or other securities or property so received shall be deemed "Pledged Interests" for purposes hereof); (g) all Required Monthly Payments made by Pledgors; (h) all Distributions with respect to any Pledged Interests; and (i) all other proceeds of any of the foregoing. For purposes of this Pledge and Security Agreement, "proceeds" includes, without limitation, whatever is receivable or received when Collateral or proceeds are sold, collected, exchanged, converted or otherwise disposed of, whether such disposition is voluntary or involuntary. SECTION 2.2.PAYMENTS. Pledgors jointly and severally agree to pay to or deposit in the Custody Account the sum of $20,000 per month in immediately available federal funds on the first day of each calendar month commencing August 1, 2001 and continuing on the first day of each successive month thereafter to and including March 1, 2004. Such payments (the "Required Monthly Payments") shall be held and invested by Pledgee as additional Collateral hereunder. The Required Monthly Payments shall be made at the place designated by Pledgee for payment. In the event any Required Monthly Payment is not received by Pledgee within five Business Days after the due date, Pledgors shall also pay to Pledgee a late charge in an amount equal to five percent (5%) of the amount of such overdue payment. Any Required Monthly Payment that is not made when due shall bear interest from such due date at the rate of twelve percent (12%) per annum, compounded monthly, payable on demand with any late charges. SECTION 2.3 SECURITY FOR SECURED OBLIGATIONS. This Pledge and Security Agreement secures the full and prompt payment and performance when due of (the "Secured Obligations"): (i) all sums now or hereafter payable by Pledgors to Pledgee or an Affiliate of Pledgee and all obligations of Pledgors to Pledgee or an Affiliate of Pledgee, now or hereafter 8 existing, under the Guaranty, this Pledge and Security Agreement or any other Loan Document; (ii) all sums now or hereafter payable by Borrower to Pledgee or an Affiliate of Pledgee and all obligations of Borrower to Pledgee or an Affiliate of Pledgee, now or hereafter existing, under the Reimbursement Agreement or any renewal, extension or refinancing thereof; (iii) all liabilities and obligations of Borrower to Pledgee or an Affiliate of Pledgee, now or hereafter existing under the Standby Agreement, the ADA Agreement or the Environmental Agreement; and (iv) all liabilities and obligations of Borrower or any Pledgor to Pledgee or an Affiliate of Pledgee, now or hereafter existing, under any other Loan Document. SECTION 2.4 DISBURSEMENTS. Pledgors hereby irrevocably authorize and direct Pledgee to convert to cash and disburse from the Collateral, in such manner as Pledgee may determine in its sole discretion, funds for payment of the following ("Disbursements"): (a) To the payment of all fees, charges and expenses relating to the Custody Account; (b) To the payment or reimbursement of all Credit Enhancement Fees including without limitation (i) Credit Enhancement Fees in excess of the Base Annual Fee and (ii) Up-Front Credit Enhancement Fees in excess of Owner's Share of Up-Front Credit Enhancement Fees; (c) To the payment or reimbursement of Bond Debt Service; (d) To the payment or reimbursement of all advances, costs, disbursements, expenses, fees, liabilities and obligations payable by Borrower or Pledgors to Pledgee or an Affiliate of Pledgee pursuant to the Standby Agreement, Reimbursement Agreement, Guaranty, this Pledge and Security Agreement or any other Loan Document; and (e) To the payment or reimbursement of any remaining Operating Deficits actually incurred from and after January 1, 2001. All Disbursements by Pledgee for the purpose of funding Operating Deficits will be subject to and made in accordance with the following terms and conditions: (i) Disbursements will be made no more frequently than monthly, based on the calculation of Operating Deficits for the immediately preceding calendar month; (ii) Pledgors shall cause written request for Disbursements of Operating Deficits to be submitted to Pledgee within fifteen (15) days after the end of each month with such detail and supporting documentation as Pledgee may reasonably require; (iii) Pledgee may cause Disbursements of Operating Deficits to be made directly to, or for the benefit of, third party creditors under procedures satisfactory to Pledgee and in such order of priority as Pledgee may determine in its sole discretion; and (iv) Disbursements of Operating Deficits will not be required at any time during which an Event of Default exists under this Pledge and Security Agreement. Notwithstanding anything to the contrary contained in this Section 2.4, at any time an Event of Default has occurred and is continuing, Pledgee shall have the exclusive right to retain and apply to the Secured Obligations all Collateral received or held pursuant to this Pledge and Security Agreement. Pledgors hereby irrevocably ratify, confirm and approve the Disbursements heretofore made in the amount of $493,962.98 for Credit Enhancement Fees, Bond Debt Service and real estate taxes payable through April 3, 2001, and 9 further ratify, confirm and approve all Disbursements to be made in accordance with the provisions hereof. Pledgors shall cause Borrower to deposit all rental income and other revenues received from the operation of the Project in a cash collateral account of the Borrower established for the benefit of Pledgee; and the funds held in such collateral account shall be first applied to payment of the items described in subparagraphs (a),(b),(c), (d), and (e) of this Section 2.4 to the extent thereof before the Collateral is applied to the payment of such items. SECTION 2.5 CONTINUING SECURITY INTEREST. This Pledge and Security Agreement shall create a continuing security interest in the Collateral and shall: (a) remain in full force and effect until payment in full or other satisfaction in full of all Secured Obligations; (b) inure to the benefit of and be binding upon the Pledgors and their respective successors and assigns; and (c) inure to the benefit of and be binding upon Pledgee and their respective successors and assigns. Without limiting the foregoing clause (c), Pledgee may assign or otherwise transfer (in whole or in part) the Guaranty, this Pledge and Security Agreement or all or any of the Loan Documents held by it to any other Person, and such other Person shall thereupon become vested with all the benefits and subject to all of the obligations thereafter accruing in respect thereof under the Guaranty, this Pledge and Security Agreement or any Loan Document or otherwise; provided that no such assignment shall relieve Pledgee of any obligation thereunder accruing prior to such assignment. Upon the payment or other satisfaction in full of all Secured Obligations, the security interests granted herein shall terminate and all rights to the Collateral shall revert to Pledgors. Upon any such termination (whether in whole or in part), Pledgee will, at Pledgors' sole expense, deliver to Pledgors, all documents, chattel paper, agreements, certificates, notes and instruments representing, constituting, or evidencing all Pledged Interests, together with all other Collateral then held by Pledgee hereunder, and execute and deliver to Pledgors, at Pledgors' sole expense, such documents as Pledgors shall reasonably request to evidence such termination. SECTION 2.6 SECURITY INTEREST ABSOLUTE. All rights of Pledgee and the security interests granted to Pledgee hereunder, and all obligations of Pledgors hereunder, shall be absolute and unconditional, irrespective of: (a) any lack of validity or enforceability of any of the Loan Documents or instruments relating thereto; (b) any change in the time, manner or place of payment of, or in any other term, including the applicable rate of interest, of, all or any of the Borrower Obligations, or any other renewal, extension, amendment, modification or waiver of or any consent to departure from any of the Loan Documents; 10 (c) any act or omission of Pledgee (or other holder of the Loan Documents) of any nature whatsoever; (d) with respect to any Pledgor, Borrower, or any other Person, (i) any failure to obtain required authorization by all necessary corporate, partnership or other action relating to the incurrence of the Borrower Obligations or the Secured Obligations or to the execution, delivery or performance of any of the Loan Documents, or (ii) any violation of any provision of any of the articles of incorporation, by-laws, partnership agreement or any other document, instrument or agreement occasioned by the incurrence of the Borrower Obligations or the Secured Obligations, by the execution, delivery, or performance of any of the Loan Documents, or by any failure of same to have been duly authorized by all necessary corporate, partnership or other action; (e) any release, amendment, waiver, modification, extension or renewal of or consent to departure from, any guaranty given to secure all or any of the Borrower Obligations or the Secured Obligations (other than a release of the Guaranty); or forbearance of any other action or inaction under or in respect of any of the Loan Documents; (f) any exchange, release, forbearance or surrender of or any other action or inaction with respect to any collateral (including, without limitation, the Collateral, other than a release of all of the Collateral which would result in a termination of the Guaranty under Section 7(a) thereof) at any time and from time to time now or hereafter securing any or all of the Borrower Obligations or the Secured Obligations or the Loan Documents or the liability of Pledgor, Borrower, or any other Person in respect of all or any of the Loan Documents, or any failure to perfect or continue as perfected any security interest or other lien with respect to any such collateral, or any loss or destruction of any such collateral, or any matter impairing the value of such collateral as security for all or any of the Borrower Obligations, or the liability of any Pledgor, Borrower, or any other Person, in respect of all or any of the Borrower Obligations or Loan Documents; (g) any guaranty now or hereafter executed by any Pledgor or anyone else or any recovery under any such other guaranty; (h) any waiver of or assertion or enforcement or failure or refusal to assert or enforce, in whole or in part, any of the terms and provisions of the Loan Documents, or any claim, cause of action, right or remedy which Pledgee may, at any time, have under any of the Loan Documents or with respect to any guaranty or any security which may be held by Pledgee (or other holder of the Loan Documents) with respect to the Loan; (i) the failure to give Pledgor any notice whatsoever, other than any notice which Pledgee is expressly required to give pursuant to any provision of this Pledge and Security Agreement; (j) exculpatory provisions in any of the Loan Documents (other than in the Guaranty or in this Pledge and Security Agreement) limiting recourse to property encumbered by the Loan Documents or to any other security or limiting rights to enforce a deficiency judgment against the Borrower; 11 (k) any sale, assignment, conveyance, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise), of all or any part of any of the Borrower's interest in any property securing the Loan or the occurrence of any such sale, assignment, conveyance, merger or other voluntary or involuntary transfer which results in any Pledgor becoming the Borrower under any of the Loan Documents; provided, however, that any such sale, assignment, conveyance, merger or other transfer shall be subject to the limitations set forth in the Loan Documents; (l) any sale, assignment, conveyance, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise), of all or any part of the interests of Pledgee (or other holder of the Loan Documents) in the Guaranty or this Pledge and Security Agreement or any of the other Loan Documents; (m) any bankruptcy, insolvency, reorganization, arrangement, readjustment, composition, liquidation, or the like, of any Pledgor, Borrower or any other Person, whether or not any Pledgor shall have notice or knowledge of any of the foregoing; (n) any recovery (other than payment in full of all of the Secured Obligations which would result in a termination of the Guaranty under Section 7(a) thereof) as a result of the exercise by Pledgee (or other holder of the Loan Documents) of any of its rights or remedies under the Loan Documents, including any foreclosure thereof, or (o) any other fact, circumstance or matter of any nature whatsoever (other than payment in full of all of the Secured Obligations which would result in a termination of the Guaranty under Section 7(a) thereof) that might otherwise constitute a defense available to, or a discharge of, or might otherwise operate to release or affect the obligations of, any Pledgor, Borrower, or any other Person liable to Pledgee (or other holder of the Loan Documents) in respect of any of the Borrower Obligations, the Secured Obligations or the Loan Documents. SECTION 2.7 RIGHT OF WITHDRAWAL. If at the end of any calendar quarter Collateral Value exceeds $15,773,000, Pledgors shall have the right, exercisable by giving written notice thereof to Pledgee within sixty days after the end of such calendar quarter to withdraw from the Collateral an amount equal to such excess over $15,773,000; and Pledgee shall cause such withdrawl [sic] to be made to Pledgors within fifteen days after the giving of such notice. Thereafter, provided that the Collateral Value is at all times at least equal to $15,773,000, Pledgee shall distribute to Pledgors within thirty days after the end of each calendar quarter the excess, if any, of Distributions received during such calendar quarter over Operating Deficits incurred during such calendar quarter. ARTICLE 3 REPRESENTATIONS AND WARRANTIES SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF PLEDGORS. Each Pledgor hereby severally represents and warrants to Pledgee, as to itself, that the following statements are true, correct and complete: 12 (a) ORGANIZATION; POWER. PGII (i) is a limited partnership duly organized, validly existing and in good standing under the laws of the state of its formation, (ii) is duly qualified to do business as a foreign limited partnership under the laws of each jurisdiction in which the laws of such jurisdiction so permit or require it to be qualified and in which the nature of its business requires it to be so qualified (except where failure to do so would not reasonably be expected to have a Material Adverse Effect), and (iii) has all requisite partnership power and authority to own, operate and encumber its property and assets and conduct its business substantially as presently conducted and as proposed to be conducted in connection with and following the consummation of the Loan Documents. Prime (i) is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, (ii) is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction in which the nature of its business requires it to be so qualified (except where the failure to be so qualified would not reasonably be expected to have a Material Adverse Effect), and (iii) has all requisite corporate power and authority to own, operate and encumber its property and assets and conduct its business substantially as presently conducted and as proposed to be conducted in connection with and following the consummation of the Loan Documents. (b) AUTHORITY; ENFORCEABILITY. (i) Such Pledgor has the requisite power and authority (A) to execute, deliver and perform each of the Loan Documents to which such Pledgor is a party, and (B) to file the Loan Documents filed by such Pledgor, or to be filed by such Pledgor, with the appropriate governmental authorities; (ii) the execution, delivery and performance (or filing, as the case may be) of each of the Loan Documents to which such Pledgor is a party, and the consummation of the transactions thereunder have been duly approved by such Pledgor and its board of directors or general partner, as the case may be, and no other partnership or corporate proceedings which have not been completed are necessary to consummate such transactions; (iii) each of the Loan Documents to which such Pledgor is a party has been duly executed and delivered (or filed, as the case may be) by such Pledgor and constitutes the legal, valid and binding obligation of such Pledgor, enforceable against such Pledgor in accordance with its terms, is in full force and effect, and no term or condition thereof has been amended, modified or waived, without the prior written consent of such Pledgee, and (iv) such Pledgor has performed and complied in all material respects with all of the terms, provisions, agreements and conditions set forth in the Loan Documents and required to be performed or complied with by it on or before the date as of which this representation is made, and no default by such Pledgor, to the best knowledge of such Pledgor, exists thereunder. (c) NO CONFLICT. The execution, delivery and performance by such Pledgor of each Loan Document to which such Pledgor is a party do not and will not (i) conflict with or violate such Pledgor's partnership agreement or such Pledgor's or its general partner's articles or certificate of incorporation or other charter documents or by-laws, or other organizational documents, as the case may be, (ii) contravene or conflict within any law, statute, rule, or regulation, in each case in effect on the date as of which this representation is made, (iii) contravene or conflict with, result in any breach of, or constitute a default under, any agreement or instrument binding on such Pledgor, (iv) result in or require the creation or imposition of any lien whatsoever upon any of the properties or assets of such Pledgor (other than the liens arising pursuant to the Loan Documents), or (v) require any approval of stockholders or any approval or consent of any person or entity under any agreement or instrument binding on such Pledgor, that 13 has not been obtained, which, in any case described in clauses (ii) through (v) of this subparagraph (c) would reasonably be expected to result in a Material Adverse Effect. (d) GOVERNMENTAL CONSENTS. The transactions contemplated by the Loan Documents, and the execution, delivery and, to the best of such Pledgor's knowledge, performance by such Pledgor of each of the Loan Documents to which it is a party, do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by any governmental authority which has not been obtained or made and which, if not obtained or made, would reasonably be expected to result in a Material Adverse Effect, except for filings of the Loan Documents (or notice thereof) with appropriate governmental offices necessary (i) to perfect any liens or security interests granted under the Loan Documents or (ii) in connection with any transfer of Collateral following enforcement of any such liens or security interests. (e) LITIGATION; ADVERSE EFFECTS. (i) There is no action, suit, proceeding or arbitration, at law or in equity or before any governmental authority, nor to the best knowledge of such Pledgor is there any governmental investigation, in each case pending, or, to the best knowledge of such Pledgor, threatened, against such Pledgor, or any property of such Pledgor, which relates to the Loan Documents and which would reasonably be expected to result in a Material Adverse Effect. (ii) Such Pledgor is not (A) in violation of any applicable law, rule or regulation, which violation would reasonably be to result in a Material Adverse Effect, or (B) subject to or in default with respect to any final judgment, writ, order, injunction or decree of any court or governmental authority. (iii) Such Pledgor has obtained all licenses, permits, franchises and other governmental authorizations necessary for the ownership of its property or for the conduct of its business, the failure to obtain or violation of which would reasonably be expected to result in a Material Adverse Effect. (f) NO DEFAULTS. Such Pledgor is not in default in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any agreement or instrument binding on such Pledgor relating to any borrowing, loan or credit arrangement, and no condition exists which, with the giving of notice or the lapse of time or both, would constitute a default thereunder, other than defaults that, in the aggregate, would not reasonably be expected to result in a Material Adverse Effect. (g) SOLVENCY. After due inquiry, and taking into account the transactions contemplated by the Loan Documents, the assets of such Pledgor exceed its liabilities. Such Pledgor is, and, to the best of such Pledgor's knowledge, from and after the date hereof such Pledgor will be, able to pay its debts when the same become due. Such Pledgor has not (i) made a general assignment for the benefit of its creditors, (ii) admitted in writing its inability to pay its debts as they mature, or (iii) been subjected to an attachment, execution or other judicial seizure of a substantial portion of its property which remains in effect. There is not pending any case, 14 proceeding or other action seeking reorganization, arrangement, adjustment, liquidation, dissolution or recomposition of such Pledgor or any of its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors or seeking appointment of a receiver, trustee, custodian or any similar official for its or for all or substantially all of its property. SECTION 3.2 ADDITIONAL REPRESENTATIONS AND WARRANTIES. Each Pledgor hereby severally represents and warrants to Pledgee, as of the date hereof and as of the date of each pledge and delivery hereunder, in each case only with respect to the Collateral then being pledged by it: (a) Either PG II or Prime is the sole record, legal and beneficial owner of, and has good and marketable title to (and has full right and authority to pledge and assign), the Collateral, free and clear of all liens, security interests, options, or other charges or encumbrances. (b) The delivery of the Collateral to Pledgee, together with the filing of the Uniform Commercial Code financing statements described in the following sentence, is effective to create a valid, perfected, continuing and enforceable first priority security interest in such Collateral and all proceeds thereof, securing the Secured Obligations. All Uniform Commercial Code financing statements necessary to perfect the security interest of Pledgee in and to all or part of the Collateral have been filed in the appropriate governmental office or executed and delivered to Pledgee for filing, and the Partnership has been directed to register the pledge to Pledgee of the Common Units pledged hereunder. (c) In the case of Pledged Interests consisting of Common Stock, such Pledged Interests are duly authorized and validly issued, fully paid, and non-assessable and are not subject to any shareholder agreements, voting agreements, voting trusts, trust deeds, irrevocable proxies, or any other similar agreements or instruments, except as contemplated by this Pledge and Security Agreement, and there are no outstanding options, warrants or other agreements with respect thereto. (d) No authorization, approval, or other action by, and no notice to or filing with, any governmental authority, regulatory body or any other Person (other than the filing contemplated by Section 3.2(b) hereof) is required by any Pledgor for the pledge by such Pledgor of any Collateral pursuant to this Pledge and Security Agreement or for the execution, delivery, and performance of this Pledge and Security Agreement by any Pledgor. ARTICLE 4 COVENANTS SECTION 4.1 REPORTING AND AFFIRMATIVE COVENANTS. A. REPORTING COVENANTS: 15 Pledgors covenant and agree that, so long as such Pledgors shall have any liability or obligation outstanding under any of the Loan Documents, unless Pledgee shall otherwise give prior written consent thereto: 1. FINANCIAL STATEMENTS. Pledgors shall cause Borrower to maintain a system of accounting established and administered in accordance with sound business practices and consistent with past practices to permit preparation of financial statements in conformity with GAAP, and each of the financial statements described below shall be prepared from such system and records. Pledgors shall deliver or cause to be delivered to Pledgee: (a) Within thirty (30) days after the end of each calendar month: (i) an operating statement of the Borrower detailing revenues and expenses of the Project for the preceding calendar month and accrual to cash adjustments; (ii) a budget comparison report of the Borrower for the preceding calendar month as prepared by the Borrower or the Manager under the Management Agreement, showing variances from budget to actual for the month and year-to-date; (iii) an operating cash flow statement for the preceding calendar month and year-to-date with variances from actual to forecasted; and, (iv) upon request of Pledgee, check runs, accounts payable ledgers, bank statements and other reasonable information relating to the income or expenses of the Project. (b) As soon as practicable, and in any event within sixty (60) days after the end of each calendar quarter, the balance sheet of the Borrower as at the end of such quarter and related statements of operations and retained earnings and changes in financial position for such quarter, setting forth in each case in comparative form the figures for the corresponding period of the previous fiscal year, all in reasonable detail and certified by the chief financial officer, treasurer or assistant treasurer of the Borrower's General Partner that they fairly present the financial condition of the Borrower as at the dates indicated and the results of operations for the periods indicated, subject to changes resulting from audit and normal year-end adjustment; (c) As soon as practicable, and in any event within one hundred twenty (120) days after the end of each fiscal year (i.e. the twelve months ending December 31), the audited balance sheet of the Borrower as at the end of such fiscal year and the related audited statements of operations and retained earnings and changes in financial position for such fiscal year, setting forth in each case in comparative form the figures for the Borrower for the previous fiscal year, all in reasonable detail and reported by a firm of reputable independent public accountants. 2. NOTIFICATION OF DEFAULTS. Pledgors, upon acquiring knowledge thereof, shall promptly notify Lender of any event of default, or any event which with the giving of notice or lapse of time, or both, would constitute an event of default, under the Loan Documents, and describing the action Pledgors propose to take with respect thereto. 3. OTHER INFORMATION. Upon the request of Pledgee made from time to time, Pledgors shall furnish to Pledgee such information as may be prepared by the Borrower or the Borrower's General Partner in writing in the ordinary course of its business respecting the Borrower's business or condition (financial or otherwise), operations, performance, 16 properties or prospects. Pledgee shall treat any non-public information so obtained as confidential. B. AFFIRMATIVE AND NEGATIVE COVENANTS: 1. EXISTENCE. Pledgors shall cause the Borrower to maintain its existence as a limited partnership in good standing under the laws of the state of its formation and maintain its qualification to do business in each jurisdiction in which the laws of such jurisdiction so permit or require it to be qualified and in which the character of the properties owned or leased by it therein or in which the transaction of its business is such that the failure to qualify would reasonably be expected to result in a Material Adverse Effect. Pledgors shall cause the Borrower's general partner to maintain its existence as a limited partnership in good standing under the laws of the state of its incorporation and maintain its qualification to do business in each jurisdiction in which the character of the properties owned or leased by it therein or in which the transaction of its business is such that the failure to qualify would reasonably be expected to result in a Material Adverse Effect. The foregoing shall not prohibit the Borrower or the Borrower's general partner from merging with or into a corporation or other entity organized under the laws of any state within the United States (in which event, from and after the effective date of such merger, all references herein to the Borrower or the Borrower's general partner, as the case may be, shall be deemed to refer to such successor entity); provided, however, that (a) any such successor entity to the Borrower assumes in writing all of the obligations and liabilities of the Borrower under the Loan Documents and (b) before and after giving effect to such merger, there shall not exist any event of default, or any event which, with the giving of notice or lapse of time or both, would constitute an event of default, under any of the Loan Documents. 2. TAXES. Pledgors shall cause the Borrower to pay and discharge, or cause to be paid and discharged, all taxes, assessments and governmental charges upon it, its income and its properties, or upon the Borrower's general partner or the Borrower's general partner's income and properties, prior to the date on which penalties are attached thereto, unless and to the extent only that (a) failure to pay any such taxes, assessments or governmental charges would not reasonably be expected to result in a Material Adverse Effect, or (b) (i) such taxes, assessments and governmental charges shall be contested in good faith and by appropriate proceedings by the Borrower or the Borrower's general partner, as the case may be, after the Borrower or the Borrower's general partner, as the case may be, has established a reasonable reserve on its books for such item, and (ii) the pendency of such contest will not result in any impairment of any lien or security interest granted by the Borrower or the Borrower's general partner in favor of Pledgee. 3. COMPLIANCE WITH LAWS, ETC. Pledgors shall cause the Borrower to comply with, and cause the Borrower's general partner to comply with, all applicable statutes, rules, regulations, orders and restrictions of any and all governmental instrumentalities or agencies thereof having jurisdiction over the conduct of the business or the ownership of the properties of the Borrower or the Borrower's general partner, as the case may be (except for any non-compliance therewith which would not reasonably be expected to 17 result in a Material Adverse Effect), unless and only to the extent that the application of such statutes, rules, regulations, orders and restrictions shall be contested in good faith and by appropriate proceedings by the Borrower or the Borrower's general partner, as the case may be, in such a manner that any enforcement action or any liability resulting from such non-compliance shall be stayed or held in abeyance pending the outcome of such contest. 4. MANAGEMENT. Without the prior written consent of Pledgee, Pledgors will not cause or permit Borrower to: (a) modify or amend in any material respect or terminate that certain Management Agreement dated as of May 7, 1997, between Borrower, as Owner, and Brookdale Living Communities of Texas, Inc., as Manager (the "Management Agreement"), relating to the management of the Project; (b) enter into any new or successor agreement (written or oral) relating to the management of the Project; or (c) pay or agree to pay any manager of the Project compensation aggregating more than five per cent of the gross revenues of the Project on an annual basis. SECTION 4.2 RESTRICTIONS ON ENCUMBRANCES: WARRANTY OF TITLE. No Pledgor will hereafter sell, assign, dispose of, transfer, pledge, encumber, or grant any option or warrant with respect to, the Collateral. Each Pledgor will warrant and defend the right, title and interest in and to the Collateral, and Pledgee's interest in and to the Collateral, against the claims and demands of all Persons whomsoever. SECTION 4.3 STOCK POWERS AND INSTRUMENTS OF-TRANSFER. Each Pledgor shall (a) upon the execution and delivery of this Pledge and Security Agreement, and simultaneously with the delivery by such Pledgor of any other or additional Collateral as may be required hereunder after any Exchange, promptly deliver to Pledgee, such stock powers, stock certificates, instruments, certificates, opinions of counsel, and similar documents, reasonably satisfactory in form and substance to Pledgee, with respect to the Pledged Interests as Pledgee may reasonably require in order to accomplish the purposes of this Pledge and Security Agreement, and (b) from time to time upon the request of Pledgee after the occurrence of any Event of Default relating to any Collateral, promptly take whatever action is reasonably requested by Pledgee in order to accomplish the purposes of this Pledge and Security Agreement. SECTION 4.4 CONTINUOUS PLEDGE. Subject to Sections 2.4, 2.5, 2.7 and 4.7, each Pledgor will, at all times, keep pledged to Pledgee pursuant hereto all Pledged Interests and all other Collateral and other securities, instruments, proceeds, and rights from time to time received by or distributable to such Pledgor in respect of any Collateral. SECTION 4.5 EXCHANGE RIGHTS. Without the prior written consent of Pledgee, no Pledgor shall exercise any of its Exchange Rights in respect of the Collateral. 18 SECTION 4.6 FURTHER ASSURANCES. Pledgors agree that at any time, and from time to time, at the expense of Pledgors, to promptly execute and deliver all further instruments, including, without limitation, financing statements, and take all further action, that may be reasonably necessary or desirable, or that Pledgee may reasonably request, in order to perfect, maintain, preserve, and protect the first perfected priority lien and security interest granted or purported to be granted hereby in compliance with applicable law and/or to enable Pledgee to exercise and enforce its rights and remedies hereunder with respect to any Collateral. SECTION 4.7 DISBURSEMENTS; DISTRIBUTIONS. Unless and until an Event of Default shall have occurred and be continuing, Pledgee shall make Disbursements in accordance with Section 2.4 above. Upon the occurrence and during the continuance of an Event of Default (i) the rights of Pledgors under Section 2.4 shall cease, and all rights to the Collateral shall thereupon become vested in Pledgee which shall exclusively be entitled to receive and retain all Collateral and the proceeds thereof, subject to application in accordance with Section 6.4 below. At all times from and after August 1, 2001, if any Pledgor receives any Distributions,(i) it shall prompty [sic] deliver to Pledgee for deposit in the Custody Account any and all Distributions received by such Pledgor (including, without limitation of the foregoing, all dividends and distributions with respect to the Common Units and AIMCO Common Stock) from and after August 1, 2001, and (ii) any and all Distributions received and held by each Pledgor which each Pledgor is obligated to deliver to Pledgee shall, until delivery thereof, be held by such Pledgor separate and apart from its other property in trust for Pledgee; and whether or not an Event of Default shall have occurred, Pledgee shall have the right to notify each Pledged Interest Issuer, of the vesting in Pledgee of such rights to receive Distributions at all times hereunder and each Pledgor hereby irrevocably consents to any such notification. If any Pledgor does not cause any Distribution received by it to be delivered to Pledgee or deposited in the Custody Account within five Business Days after it has received the same, it shall pay to Pledgee on demand a late charge of five percent (5 %) of the amount of such Distribution plus interest on the unpaid amount thereof at the rate of twelve percent (12 %), in addition to all other remedies available to Pledgee. SECTION 4.8 OTHER PARTIES. No Pledgor will, without the prior written consent of Pledgee, waive or release any obligation of any party with respect to the Collateral or enter into any agreement amending or supplementing the Collateral. SECTION 4.9 ADDITIONAL UNDERTAKINGS. No Pledgor will, without the prior written consent of Pledgee, take or omit to take any action the taking or the omission of which would result in any impairment or alteration of any obligation of the maker of any instrument constituting Collateral. SECTION 4.10 PLACE OF BUSINESS. If any Pledgor shall change its principal place of business or its chief executive office or its name or remove the records concerning the Collateral from its principal place of business, such Pledgor shall give to Pledgee thirty (30) days advance notice thereof and, in connection therewith, take such action, reasonably satisfactory to Pledgee, as may be necessary to maintain the security interest of Pledgee in the Collateral hereunder at all times fully perfected and in full force and effect. 19 SECTION 4.11 SHAREHOLDER AGREEMENTS. No Pledgor shall, with respect to any Pledged Interests that are now or hereafter pledged to Pledgee, enter into any shareholder agreements, voting agreements, voting trusts, trust deeds, irrevocable proxies, or any other similar agreements or instruments, except this Pledge and Security Agreement, the Partnership Agreement and the Registration Rights Agreement. SECTION 4.12 PAYMENT OF TAXES, ETC. Pledgors shall pay promptly when due all taxes, assessments, charges, encumbrances and liens now or hereafter imposed upon any Collateral, and shall discharge or cause to be discharged as a lien of record by payment or filing of any bond required by law, or otherwise, any (i) judgment liens or (ii) tax or other similar involuntary liens (except liens created by Pledgee) filed or otherwise asserted against the Collateral or any part thereof, and any proceedings for the enforcement thereof, within fifteen (15) days after any Pledgor has notice thereof; provided, however, that any Pledgor shall have the right to contest in good faith any such taxes, assessments, charges, encumbrances and liens, including any such judgment liens or tax liens or other such involuntary liens (and during the continuation of such contest need not pay or discharge any such matters) upon deposit with Pledgee, within such fifteen (15) day period, of a cash deposit, an irrevocable letter of credit or a surety bond or other security reasonably satisfactory to Pledgee, in an amount sufficient to pay such lien, any accrued interest thereon, and any costs and expenses in connection therewith. ARTICLE 5 CERTAIN RIGHTS OF PLEDGEE SECTION 5.1 PLEDGEE APPOINTED ATTORNEY-IN-FACT. Each Pledgor hereby irrevocably appoints Pledgee as such Pledgor's attorney-in-fact, coupled with an interest, with full power of substitution, with full authority in the place and stead of such Pledgor and in the name of such Pledgor or otherwise, after the occurrence and during the continuance of an Event of Default, in Pledgee's discretion, to take any action and to execute any instrument which Pledgee may reasonably deem necessary or advisable to accomplish the purposes of this Pledge and Security Agreement, including, without limitation: (a) to ask, demand, collect, sue for, recover, receive and give receipts for moneys due and to become due under or in respect of any of the Collateral; (b) to receive, endorse, and collect any drafts or other instruments, documents and chattel paper, in connection with clause (a) above; (c) to file any claims or commence, maintain or discontinue any action or institute any proceedings which Pledgee may deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Pledgee with respect to any of the Collateral; (d) to execute and deliver any instrument required to be executed and delivered by Pledgors under Sections 4.3 and 4.6; and 20 (c) to do all other things necessary and proper by Pledgors to protect, preserve, and permit Pledgee to realize upon, the Collateral, and the other rights contemplated by the Pledge and Security Agreement. SECTION 5.2 PLEDGEE HAS NO DUTY. The powers conferred on Pledgee hereunder are solely to protect its interest in the Collateral and shall not impose any duty on it to exercise any such powers. Pledgee shall have no duty as to any Collateral or responsibility for (i) ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relative to any Pledged Interests, whether or not Pledgee has or is deemed to have knowledge of such matters, or (ii) taking any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The execution and delivery of this Pledge and Security Agreement and the Guaranty is not intended to be, nor shall they be construed to be, the formation of a partnership or joint venture between Pledgors and Pledgee. ARTICLE 6 REMEDIES SECTION 6.1 CERTAIN REMEDIES. If any Event of Default shall have occurred and be continuing Pledgee may exercise in respect of the Collateral, all rights and remedies provided for herein or otherwise available to Pledgee, including without limitation, all of the rights and remedies of a secured party on default under the Code and also may, without notice except as specified below: (a) sell such Collateral or any part thereof in one or more parcels at public or private sale or broker's board, at any of Pledgee's offices or elsewhere, for cash or other property, on credit or for future delivery, and upon such other terms as may be commercially reasonable; Pledgors agree that Pledgee shall be entitled to bid for or purchase any or all of the Collateral at any such sale; Pledgors agree that, to the extent notice of sale shall be required by law, at least ten (10) days' notice to Pledgors of the time and place of any public sale or the time after which any private sale is to be made shall constitute reasonable notification; Pledgee shall not be obligated to make any sale of Collateral regardless of notice of sale having been given; Pledgee may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned; (b) notify the parties obligated on any of such Collateral to make payment to Pledgee of any amount due or to become due thereunder (including, without limitation, any Distributions); (c) enforce collection of any of such Collateral by suit or otherwise; (d) endorse any checks, drafts, or other writings in Pledgor's name to allow collection of such Collateral; (e) take control of any proceeds of such Collateral; and 21 (f) upon disposition of the Collateral as provided in Section 6.1(a), execute (in the name, place and stead of any Pledgor) endorsements, assignments, stock powers and other instruments of conveyance or transfer with respect to all or any of such Collateral. SECTION 6.2 SECURITIES LAWS. If Pledgee shall determine to exercise the right to sell all or any of the Collateral at any time pursuant to Section 6.1(a), Pledgors agree that, upon request of Pledgee, Pledgors will, at their own expense: (a) exercise its rights under the Registration Rights Agreement; (b) use best efforts to obtain all necessary governmental approvals for the sale of the Collateral, as requested by Pledgee; and (c) do or cause to be done all such other acts and things as may be necessary to make such sale of the Collateral or any part thereof valid and binding and in compliance with applicable law. Pledgors acknowledge the impossibility of ascertaining the amount of damages that would be suffered by Pledgee by reason of the failure by Pledgors to perform any of the covenants contained in this Section and, consequently, agrees that, if any Pledgor shall fail to perform any of such covenants, at Pledgee's election, Pledgee shall have the right to have each covenant of Pledgors in this Section 6.2 specifically enforced against each Pledgor, and each Pledgor waives and agrees not to assert any defenses against an action for specific performance of such covenants. Pledgors further acknowledge that Pledgee may be compelled to resort to one or more private sales to a restricted group of purchasers who shall be obliged to agree, among other things, to acquire such Collateral for their own account, for investment and not with a view to the distribution or resale thereof. If, at any time of any sale of Collateral, which sale is then subject to the applicable securities law, as from time to time amended (the "Securities Act"), the same or any part thereof to be sold shall not, for any reason whatsoever, be effectively registered under the Securities Act, Pledgee is hereby authorized to sell such Collateral or such part thereof by private sale in any commercially reasonable manner and under any commercially reasonable circumstances as Pledgee may deem necessary or advisable in order that such sale may legally be effected without registration. Pledgors acknowledge that private sales so made may be at prices and on other terms less favorable to the seller than if such Collateral were sold at public sales, and agrees that Pledgee shall not have an obligation to delay the sale of any such Collateral for the period of time necessary to permit the issuer of such Collateral, even if such issuer would agree, to register such Collateral for public sale under the Securities Act. Pledgors agree that private sales made under the foregoing circumstances shall not, because so made, be deemed to have been made in a commercially unreasonable manner. SECTION 6.3 INDEMNITY AND EXPENSES. Each Pledgor hereby indemnifies and holds harmless Pledgee and Pledgee's officers, directors, employees, agents, representatives, successors and assigns, from and against any and all claims, losses, and liabilities growing out of or resulting from this Pledge and Security Agreement (including, without limitation, enforcement of this Pledge and Security Agreement, and any underwriting fees or expenses in connection 22 with registration or sale of Collateral), except for claims, losses, or liabilities resulting from Pledgee's willful misconduct or gross negligence. Upon demand, Pledgors will pay to Pledgee the amount of any and all expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which Pledgee may incur in connection with: (a) the enforcement of this Pledge and Security Agreement; (b) the custody or preservation of, or the sale of, collection from, or other realization upon, any of the Collateral; (c) the exercise or enforcement of any of the rights of Pledgee hereunder; or (d) the failure by any Pledgor to perform or observe any of the provisions hereof. SECTION 6.4 APPLICATION OF PROCEEDS. Any and all amounts actually received by Pledgee hereunder in respect of Collateral shall be applied in the order set forth below (to the extent permitted by applicable law): (a) first, to the payment of all costs, expenses, liabilities and advances made or incurred by Pledgee in performing or enforcing any of the provisions hereof or in protecting the liens of this Pledge and Security Agreement or the security afforded hereby and to the payment of the fees and other expenses, including, without limitation, reasonable attorney's fees and disbursements, of Pledgee to the extent that they have not been paid or reimbursed; (b) second, to the extent proceeds remain after the application pursuant to the preceding clause (a), an amount equal to the outstanding Secured Obligations shall be paid to Pledgee; and (c) third, to the extent proceeds remain after the application pursuant to the preceding clauses (a) and (b), and the payment in full of all Secured Obligations, to Pledgors, their successors or assigns, or such other Person as may be entitled thereto by law or as a court of competent jurisdiction may otherwise direct. ARTICLE 7 MISCELLANEOUS PROVISIONS SECTION 7.1 AMENDMENTS. No amendment to or waiver of any provision of this Pledge and Security Agreement, nor consent to any departure by any Pledgor herefrom, shall in any event be effective unless the same shall be in writing and signed by Pledgee, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given. SECTION 7.2 PROTECTION OF COLLATERAL. Pledgee may from time to time, at its option, perform any act which Pledgors agree hereunder to perform and which Pledgors shall fail 23 to perform within ten (10) Business Days after being requested in writing so to perform (it being understood that no such request need be given after the occurrence and during the continuance of an Event of Default). SECTION 7.3 NOTICES. Any notice or other communication required or permitted hereunder shall be (a) in writing and shall be deemed to have been duly given (A) when received, if delivered in person, (B) five (5) days after deposit in a regularly maintained receptacle of the United States mail as first class mail, postage prepaid, (C) the Business Day after notice is sent for overnight delivery by nationally recognized overnight courier service, or (D) on the day on which the party to whom such notice is addressed refuses delivery by mail or by nationally recognized courier service, and (b) addressed as follows: To Pledgee: c/o ZKS Real Estate Partners, LLC 200 West Adams Suite 2222 Chicago, Illinois 60606 Attn: Beth A. Schlief With copies to: Zurich Kemper Life Companies 1400 American Lane Tower 1, 17th Floor Schaumburg, IL 60196 Attn: Gary Fridley To Pledgor: c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, Illinois 60601 Attention: Michael W. Reschke With a copy to: The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, Illinois 60601 Attention: Robert J. Rudnik or to any such other address as any party hereto shall designate in a written notice to the other parties hereto. SECTION 7.4 CAPTIONS. Article and section captions used in this Pledge and Security Agreement are for convenience of reference only, and shall not affect the construction of this Pledge and Security Agreement. SECTION 7.5 GOVERNING LAW; SUBMISSION TO JURISDICTION. This Pledge and Security Agreement shall be governed by, and construed in accordance with, the laws of the State of Illinois without regard to principles of conflict of laws. Pledgors and Pledgee hereby waive any plea of jurisdiction or venue as not being a resident of Cook County, Illinois and 24 hereby specifically authorize any action brought upon this Pledge and Security Agreement to be instituted and prosecuted in either the Circuit Court of Cook County, Illinois or in the United States District Court for the Northern District of Illinois, at the election of the party bringing the action. Pledgor and Pledgee hereby irrevocably authorize service of process to be made upon it in the manner provided in Section 7.3 above, in any action which may be instituted arising out of or relating to this Pledge and Security Agreement. SECTION 7.6 WAIVER OF JURY TRIAL. EACH OF PLEDGEE AND EACH PLEDGOR WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY ANY PARTY, RELATING DIRECTLY OR INDIRECTLY TO THIS PLEDGE AND SECURITY AGREEMENT; THE GUARANTY OR THE SECURED OBLIGATIONS. SECTION 7.7 SEVERABILITY. Wherever possible each provision of this Pledge and Security Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Pledge and Security Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Pledge and Security Agreement. SECTION 7.8 LIMITED RECOURSE. Notwithstanding anything to the contrary contained herein or in the Guaranty, except as otherwise provided in this Section 7.8, neither any Pledgor nor any of its shareholders, officers, directors, partners, employees, agents or other representatives ("Other Persons") shall have any personal liability for the Secured Obligations under this Pledge and Security Agreement, or for the obligation to observe, perform or discharge any of the terms, covenants or conditions contained herein or in the Guaranty, and, except as otherwise provided in this Section 7.8, (a) no attachment, execution, writ or other process shall be sought and no judicial proceeding shall be initiated by or on behalf of Pledgee against any Pledgor or any Other Person as a result of a breach or default under this Pledge and Security Agreement or the Guaranty, except to the extent that such attachment, execution, writ or judicial proceeding shall be necessary to enforce any of the rights, remedies or recourses of Pledgee against or with reference to the Collateral, and (b) in the event that any suit is brought hereunder or under the Guaranty, any judgment obtained in or as a result of such suit shall be enforceable and/or enforced solely against the Collateral; PROVIDED, HOWEVER, that nothing herein contained shall be construed to: (i) be a release or impairment of any Pledgor's obligations hereunder or under the Guaranty, (ii) prevent Pledgee from exercising and enforcing, consistent with the provisions of this Section 7.8, any other remedy allowed at law or in equity or by statute or by the terms hereof or of the Guaranty or (iii) prevent Pledgee from recovering from any Pledgor (or any such Other Person), or limit Pledgee's recourse against any Pledgor (or any such Other Person) for, any funds, damages or costs (including, without limitation, reasonable legal expenses) incurred by Pledgee as a result of any willful act or omission of any Pledgor in bad faith, any fraudulent act or omission of any Pledgor, or any breach of any of the following sections of this Pledge and Security Agreement: the first sentence of Section 4.2, Section 4.3(a), Section 4.4, Section 4.5 and Section 4.7(ii). Nothing in this Section 7.8 shall be deemed to increase the liability of any such Other Person beyond that which any such Other Person may have under the partnership agreement of Pledgor or under law. 25 SECTION 7.9 ACKNOWLEDGEMENT AND CONSENT. Pledgors and Pledgee hereby consent to the execution and delivery by the Partnership and the General Partner of an acknowledgement and consent of and to this Pledge and Security Agreement substantially in the form of EXHIBIT A attached hereto. SECTION 7.10 JOINT AND SEVERAL. The covenants and agreements of each or both of such Pledgors under this Pledge and Security Agreement shall constitute joint and several obligations of such Pledgors. SECTION 7.11 SUPERCEDE. This Pledge and Security Agreement restates and supercedes the Original PG II Pledge Agreement and the Original Prime Pledge Agreement. [Signature Page Follows] 26 IN WITNESS WHEREOF, Pledgors and Pledgee have duly executed and delivered this Pledge and Security Agreement as of the day and year first above written. THE PRIME GROUP, INC., PRIME GROUP II, L.P., an Illinois limited an Illinois corporation partnership By: /S/ MARK K. CYNKAR By: PGLP, Inc., an Illinois corporation ------------------------------------- Name: MARK K. CYNKAR ------------------------------------- Title: SENIOR VICE PRESIDENT ------------------------------------- By: /S/ MARK K. CYNKAR -------------------------------------- Name: MARK K. CYNKAR -------------------------------------- Title: VICE PRESIDENT -------------------------------------- KEMPER INVESTORS LIFE INSURANCE COMPANY, an Illinois insurance corporation-- By: /S/ BETH A. SCHLIEF -------------------------------------- Name: BETH A. SCHLIEF -------------------------------------- Title: AUTHORIZED SIGNATORY -------------------------------------- By: /S/ FREDERICK L. STEPHENS -------------------------------------- Name: FREDERICK L. STEPHENS -------------------------------------- Title: AUTHORIZED SIGNATORY --------------------------------------
27 EXHIBIT A ACKNOWLEDGMENT Reference is hereby made to the Amended and Restated Pledge and Security Agreement Lake Travis dated as of April 30, 2001 (the "Pledge and Security Agreement") by Prime Group II, L.P. and The Prime Group, Inc., in favor of Kemper Investors Life Insurance Company. Each capitalized term used herein shall have the meaning assigned thereto in the Pledge and Security Agreement. Notwithstanding anything in the By-laws of the General Partner to the contrary, Prime Retail, L.P., a Delaware limited partnership (the "Partnership"), and Prime Retail, Inc., a Maryland corporation (the "General Partner"), hereby acknowledge receipt of a copy of the Pledge and Security Agreement, the pledge of the Pledged Interests pursuant to the terms thereof and that such pledge does not require the consent of the Partnership or the General Partner. Notwithstanding anything in the By-laws of the General Partner to the contrary, the Partnership and the General Partner further acknowledge and agree (i) to recognize the pledge of all future rights and interests in the Pledged Interests, Distributions or other Collateral to which Pledgee may be entitled under the Pledge and Security Agreement, (ii) that, as of the date hereof, there are, to their knowledge, no existing defaults by Pledgors under the Partnership Agreement with respect to any of the Pledged Interests, (iii) that, without Pledgee's consent in its sole discretion, no further transfer or encumbrance by Pledgors of the Pledged Interests, rights to Distributions related thereto or other Collateral will be recognized by the Partnership and the General Partner, (iv) in the event that either of the Partnership and the General Partner receives written notice from Pledgee of the occurrence and continuation of an Event of Default under the Pledge and Security Agreement and of Pledgee's election to exercise its remedies thereunder with respect to such Event of Default, the Partnership and the General Partner will consent to, and take such action as may be reasonably necessary or appropriate to effect, the substitution of record ownership of Pledgee for any Pledgor on the Partnership's and the General Partner's records, if Pledgee is entitled to be substituted for any Pledgor following any foreclosure upon the Pledged Interests pursuant to Section 6.1 of the Pledge and Security Agreement, and (v) until either the Partnership or the General Partner receives written notice from Pledgee that the Pledge and Security Agreement has been terminated, pay Distributions and issue Common Stock issuable upon exchange of the Pledged Interests directly to Pledgee. [Signature Page Follows] 28 PRIME RETAIL, L.P., a Delaware limited partnership By: Prime Retail, Inc., a Maryland corporation, its general partner By: /S/ STEVEN S. GOTHELF -------------------------------------- Name: -------------------------------------- Title: -------------------------------------- PRIME RETAIL, INC., a Maryland corporation By: /S/ STEVEN S. GOTHELF -------------------------------------- Name: -------------------------------------- Title: --------------------------------------
The undersigned, being the Pledgors and Pledgee under the above-referenced Pledge and Security Agreement, hereby consent to the execution and delivery by the Partnership and the General Partner of the foregoing Acknowledgement and agree with the provisions thereof. Dated: April 30, 2001 THE PRIME GROUP, INC., PRIME GROUP II, L.P. an Illinois limited an Illinois corporation partnership By: /S/ ROBERT J. RUDNIK By: PGLP, Inc., an Illinois corporation, ------------------------------------- Name: ROBERT J. RUDNIK ------------------------------------- Title: EXECUTIVE VICE PRESIDENT By: /S/ ROBERT J. RUDNIK -------------------------------------- -------------------------------------- Name: ROBERT J. RUDNIK -------------------------------------- Title: VICE PRESIDENT -------------------------------------- KEMPER INVESTORS LIFE INSURANCE COMPANY, an Illinois insurance corporation By: /S/ BETH A. SCHLIEF -------------------------------------- Name: BETH A. SCHLIEF -------------------------------------- Title: AUTHORIZED SIGNATORY -------------------------------------- By: /S/ FREDERICK L. STEPHENS -------------------------------------- Name: FREDERICK L. STEPHENS -------------------------------------- Title: AUTHORIZED SIGNATORY --------------------------------------
29 EX-25 7 a2090218zex-25.txt EXHIBIT 25 EXHIBIT XXV AMENDED AND RESTATED LIMITED RECOURSE GUARANTY [LAKE TRAVIS] THIS AMENDED AND RESTATED LIMITED RECOURSE GUARANTY (this "Guaranty") is made as of the 30th day of April, 2001, by Prime Group II, L.P., an Illinois limited partnership ("PG II"), The Prime Group, Inc., an Illinois corporation ("Prime" PG II and Prime are sometimes hereinafter referred to individually as "Guarantor" or together as "Guarantors") in favor of Kemper Investors Life Insurance Company, an Illinois insurance corporation ("Lender"). RECITALS: WHEREAS, PG II executed and delivered to Lender a certain Limited Recourse Guaranty [Lake Travis] dated March 22, 1994, as amended from time to time (the "Original PG II Guaranty") in favor of Lender guaranteeing a loan described therein arising out of credit enhancement extended by Lender and its Affiliates; WHEREAS, Prime executed and delivered to Lender a certain Limited Recourse Guaranty [Lake Travis] dated August 31, 1994, as amended from time to time (the "Original Prime Guaranty") in favor of Lender guaranteeing a loan described therein arising out of credit enhancement extended by Lender and its Affiliates; WHEREAS, each of the Original PG II Guaranty and Original Prime Guaranty were secured by a Pledge and Security Agreement [Lake Travis] between PG II and Prime, respectively, and Lender, as amended from time to time (the "Original Pledge Agreements"); WHEREAS, certain defaults currently exist under one of the Original Pledge Agreements; WHEREAS, as a material inducement to Lender to waive such defaults and in order to reflect other transactions which have occurred since the Original PG II Guaranty and the Original Prime Guaranty and restate the rights and obligations of the parties thereunder, Guarantors have agreed to execute and deliver this Guaranty on the terms hereinafter set forth; and WHEREAS, Guarantors and Lender are entering into a certain Amended and Restated Pledge and Security Agreement [Lake Travis] of even date herewith (as amended from time to time, the "Pledge and Security Agreement") as security for their liabilities and obligations under this Guaranty and in order to fully amend and restate the rights and obligations of the parties under the Original Pledge Agreements. NOW, THEREFORE, in consideration of the foregoing premises, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, 1 Guarantors hereby agree that the Original PG II Guaranty and Original Prime Guaranty are hereby amended and restated in their entirety to read as follows: 1. GUARANTY. (a) Guarantors hereby absolutely and unconditionally guarantee the punctual payment when due, whether at stated maturity, by acceleration or otherwise, without set-off, counterclaim or other reduction whatsoever, of (i) the aggregate outstanding unpaid principal amount of the Loan (hereinafter defined), (ii) all accrued and unpaid interest on the principal amount of the Loan, and (iii) all other amounts due under the Loan from time to time or under any documents and instruments executed and delivered or assigned to Lender in order to evidence or secure the Loan or evidence or perfect a lien or security interest in collateral for the Loan (the "Collateral Documents"), and any and all extensions, renewals or modifications of any of the foregoing (such principal, interest and other amounts are hereinafter referred to collectively as the "Obligations"). In addition, if Guarantors shall fail to pay any amount due hereunder upon demand in accordance with the terms hereof Guarantors shall pay any and all fees, costs and expenses (including reasonable attorneys' fees) incurred by Lender to third parties, whether litigation is involved or not, and if involved, whether at the trial or appellate levels or in pre- or post-judgment or bankruptcy proceedings, in enforcing the obligations of Guarantors hereunder or realizing upon any collateral securing this Guaranty (all of the foregoing fees, costs and expenses are referred to herein collectively as the "Guaranteed Expenses"). The Obligations and any instrument, document or agreement, express or implied, which has been or may hereafter be made or entered into by Guarantors, Borrower (hereinafter defined) or any other person or entity in reference to the Obligations (including, without limitation, the Collateral Documents and the Pledge Agreement, as hereinafter defined) shall all be hereinafter collectively referred to as the "Terms". (b) For purposes hereof, the following terms shall have the following respective meanings: "ADA Agreement" shall have the meaning given in the Standby Agreement. "Affiliate" means, as to any Person, any other Person that directly or indirectly controls, or is under common control with, or is controlled by, such Person. As used in this definition, "control" (including, with its correlative meanings, "controlled by" and "under common control with") means possession, directly or indirectly, of power to direct or cause the direction of management or policies (whether through ownership of securities or partnership or other ownership interests, by contract or otherwise). "Alternate Security" shall have the meaning given in the Standby Agreement. "Bonds" shall mean the Health Facilities Development Revenue Bonds (The Island on Lake Travis, Ltd. Project) Series 1986, in the aggregate principal amount of $25,000,000 issued by the Capital Health Facilities Development Corporation, a Texas public non-profit corporation. "Borrower" shall mean The Island on Lake Travis, Ltd., a Texas limited partnership. 2 "Business Day" shall mean any day of the week other than Saturday, Sunday or any other day on which banks are generally closed within the City of Chicago, Illinois. "Entity' means any general partnership, limited partnership, corporation, joint venture, trust, business trust, limited liability company, corporation or association. "Environmental Agreement" shall have the meaning given in the Standby Agreement. "Loan" means (i) any and all liabilities and obligations of Borrower arising under the Reimbursement Agreement, and any and all documents and instruments evidencing or securing the liabilities and obligations under the Reimbursement Agreement, or any renewal, extension or refinancing thereof, (ii) any and all liabilities and obligations of Borrower arising under the Standby Agreement, the ADA Agreement or the Environmental Agreement, or (iii) any other liabilities or obligations of Borrower or any Guarantor to Lender or an Affiliate of Lender arising in connection with any credit support or enhancement extended by Lender or any Affiliate of Lender with respect to the Bonds. "Person" means any individual or Entity. "Reimbursement Agreement" means (i) that certain Reimbursement Agreement dated November 1, 1994 among Credit Suisse First Boston (formerly Credit Suisse), Lender, Federal Kemper Life Assurance Company and Borrower, as heretofore or hereafter amended, or any other reimbursement or similar agreement entered into by Borrower in connection with the securing of Alternate Security for the Bonds or the purchase of the Bonds by Lender or an Affiliate of Lender. "Standby Agreement" means that certain Standby Bond Purchase and Indemnity Agreement between Lender and Borrower dated December 1, 1994 and effective as of March 22, 1994. 2. LIMITED RECOURSE. Notwithstanding anything to the contrary contained herein or in the Pledge Agreement, except as otherwise provided in this Section 2, neither any Guarantor nor any of its shareholders, officers, directors, partners, employees, agents or other representatives ("Other Persons") shall have any personal liability for the Obligations or the Guaranteed Expenses under this Guaranty, or for the obligation to observe, perform or discharge any of the terms, covenants or conditions contained herein or in the Pledge Agreement, and, except as otherwise provided in this Section 2, (a) no attachment, execution, writ or other process shall be sought and no judicial proceeding shall be initiated by or on behalf of Lender against any Guarantor or any Other Person as a result of a breach or default under this Guaranty or the Pledge Agreement, except to the extent that such attachment, execution, writ or judicial proceeding shall be necessary to enforce any of the rights, remedies or recourses of Lender against or with reference to the Collateral (as defined in the Pledge Agreement), and (b) in the event that any suit is brought hereunder or under the Pledge Agreement, any judgment obtained in or as a result of such suit shall be enforceable and/or enforced solely against the Collateral; PROVIDED, HOWEVER, that nothing herein contained shall be construed to: (i) be a release or impairment of any Guarantor's obligations hereunder or under the Pledge Agreement, (ii) prevent Lender from exercising and enforcing, consistent with the provisions of this Section 2, 3 any other remedy allowed at law or in equity or by statute or by the terms hereof or the Pledge Agreement or (iii) prevent Lender from recovering from any Guarantor (or any such Other Person), or limit Lender's recourse against any Guarantor (or any such Other Person) for, any funds, damages or costs (including, without limitation, reasonable legal expenses) incurred by Lender as a result of any willful act or omission in bad faith, any fraudulent act or omission or any breach of any of the following sections of the Pledge Agreement: the first sentence of Section 4.2, Section 4.3(a), Section 4.4, Section 4.5 and Section 4.7(ii). Nothing in this Paragraph 2 shall be deemed to increase the liability of any such Other Person beyond that which any such Other Person may have under the partnership agreement of Guarantor or under law. 3. GUARANTY ABSOLUTE. Guarantors guarantee that the Obligations and the Guaranteed Expenses will be paid in accordance with the terms and provisions of this Guaranty and, to the maximum extent permitted by law, Guarantors waive any law, regulation, order or judgment now or hereafter in effect in any jurisdiction affecting the obligations of Guarantors or the rights of Lender with respect thereto. This Guaranty, and the liability of Guarantors under this Guaranty (which liability is subject to Section 2 hereof), shall continue and be absolute and unconditional and remain in full force and effect irrespective of: (a) any lack of validity or enforceability of any of the Terms; (b) any change in the time, manner or place of payment of, or in any other term, including the applicable rate of interest, of, all or any of the Terms, or any other renewal, extension, amendment, modification or waiver of or any consent to departure from any of the Terms; (c) any act or omission of Lender (or other holder of the Collateral Documents) of any nature whatsoever; (d) with respect to any Guarantor, Borrower or any other person or entity, (i) any failure to obtain required authorization by all necessary corporate, partnership or other action relating to the incurrence of the Obligations or to the execution, delivery or performance of any of the Terms, or (ii) any violation of any provision of any of the articles of incorporation, by-laws, partnership agreement or any other document, instrument or agreement occasioned by the incurrence of the Terms, by the execution, delivery, or performance of any of the Terms, or by any failure of same to have been duly authorized by all necessary corporate or other action; (e) any amendment, waiver, modification, extension or renewal of or consent to departure from or forbearance of any other action or inaction under or in respect of this Guaranty or any other of the Terms; (f) any exchange, release, forbearance or surrender of or any other action or inaction with respect to any collateral (including, without limitation, the Collateral other than a release of all of the Collateral, which results in a termination of this Guaranty under Section 7(a) below) at any time and from time to time now or hereafter securing any or all of the Obligations or Terms or the liability of any Guarantor, Borrower or any other person or entity in respect of all or any of the Terms or any failure to perfect or continue as perfected any security interest or other lien with respect to any such collateral, or any loss or destruction of any such collateral, or 4 any matter impairing the value of such collateral as security for all or any of the Terms, the liability of any Guarantor, Borrower or any other person or entity, in respect of all or any of the Obligations or Terms; (g) any other guaranty now or hereafter executed by any Guarantor or anyone else or any recovery under any such other guaranty; (h) any waiver of or assertion or enforcement or failure or refusal to assert or enforce, in whole or in part, any of the terms and provisions of the Terms, or any claim, cause of action, right or remedy which Lender may, at any time, have under this Guaranty, the Pledge Agreement or any of the other Collateral Documents or with respect to any guaranty or any security which may be held by Lender (or other holder of the Collateral Documents) with respect to the Loan; (i) the failure to give any Guarantor any notice whatsoever, other than any notice which Lender is expressly required to give pursuant to any provisions of this Guaranty; (j) exculpatory provisions in any of the Collateral Documents limiting Lender's recourse to property encumbered by the Loan Documents or to any other security or limiting Lender's rights to enforce a deficiency judgment against Borrower; (k) any sale, assignment, conveyance, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise), of all or any part of Borrower's interest in any property securing the Loan or the occurrence of any such sale, assignment, conveyance, merger or other voluntary or involuntary transfer which results in any Guarantor becoming the Borrower under the Collateral Documents, provided, however, that any such sale, assignment, conveyance, merger or other transfer shall be subject to the limitations set forth in the Collateral Documents, (l) any sale, assignment,, [sic] conveyance, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise), of all or any part of the interest of Lender (or other holder of the Collateral Documents) in the Collateral Documents or this Guaranty; (m) any failure to properly record or file any of the Collateral Documents, or to otherwise perfect, protect, secure or insure any security interest or lien given as security for the Loan; (n) any recovery as a result of the exercise by Lender (or other holder of the Collateral Documents) of any of its rights or remedies under the Collateral Documents, including any foreclosure thereof; or (o) any other fact, circumstance or matter of any nature whatsoever that might otherwise constitute a defense available to, or a discharge of, or might otherwise operate to release or affect the obligations of any Guarantor, Borrower or any other person or entity liable to Lender (or other holder of the Collateral Documents) in respect of any of the Terms. 5 This Guaranty shall continue to be effective or shall be reinstated, as the case may be, regardless of whether any payment of any of the Obligations or the Guaranteed Expenses is rescinded or must otherwise be returned by Lender upon the insolvency, bankruptcy, or reorganization of any Guarantor, Borrower, or any other person or entity or for any reason whatsoever, all as though such payment had not been made. Lender shall not be required to contest, dispute or litigate its obligation to make such payment or repayment. The obligations of each Guarantor hereunder shall be absolute and primary, shall be complete and binding as to such Guarantor upon its execution of this Guaranty, shall be subject to no conditions precedent, and shall be independent of and cumulative to any other of the Terms, and Lender may exercise any of its rights and remedies under this Guaranty, any other of the Terms or otherwise singly or concurrently. The obligations of any Guarantor under this Guaranty shall not be reduced, limited, impaired, discharged, deferred, suspended or terminated by any voluntary or involuntary bankruptcy, insolvency, receivership, reorganization, liquidation, arrangement, or debtor-relief proceeding of or against Borrower, or by any defense that Borrower may have by reason of the existence of any such proceeding or any order, decree or decision of any court or administrative body resulting from or relating to any such proceeding. 4. WAIVER; NO DUTIES. Guarantors waive to the fullest extent permitted by applicable law; (a) all statutes of limitations as a defense to any action brought against any Guarantor by Lender; (b), any defense based upon any legal disability or any discharge or limitation of liability (except as provided in Section 2 above), whether consensual or arising by operation of law or any bankruptcy, insolvency or debtor-relief proceeding, or from any other cause; (c) promptness, diligence, presentment, demand, protest and notice of any kind (other than as expressly required herein), (d) any defense based upon or arising out of any defense of Borrower to the payment or performance of any part of the Obligations (other than payment); (e) any and all rights of indemnity, contribution, reimbursement or any similar right that any Guarantor may have against Borrower as a result of any actions taken or amounts paid in connection with or relating to this Guaranty or the Loan; (f) all rights of subrogation, including, without limitation, all rights to enforce any remedy of Lender, and all right to participate in any security held by Lender; (g) notice of any change in Borrower's financial condition; (h) the right to interpose any substantive or procedural defense of the law of guaranty, indemnification or suretyship (except the defense of prior payment of all of the Obligations and Guaranteed Expenses which any Guarantor is called upon to pay under this Guaranty); (i) all rights and remedies accorded by applicable law to guarantors or sureties, including without limitation, any extension of time conferred by any law now or hereafter in effect; (j) the right to interpose any defense (except as allowed under clause (h) above), set-off or counterclaim of any nature or description in any action or proceeding; and (k) any right or claim of right to cause a marshalling of Borrower's assets or to cause Lender to proceed against Borrower and/or any collateral held by Lender at any time or in any particular order. Lender shall not be obligated to exhaust any right or take any action against the Borrower or any other person or entity or any collateral for the Obligations prior to the enforcement of its rights hereunder. Nothing in this Paragraph 4 shall be construed as a waiver by any Guarantor or an Affiliate of any Guarantor of any right to receive any distributions to which it might be entitled under the partnership agreement of Borrower. 5. NOTICES. Any notice or other communication required or permitted hereunder shall be (a) in writing and shall be deemed to have been duly given (A) when received, if delivered in 6 person, (B) five (5) days after deposit in a regularly maintained receptacle of the United States mail as registered or certified mail, first class postage prepaid, (C) the business day after notice is sent for overnight delivery by nationally recognized overnight courier service, or (D) on the day on which the party to whom such notice is addressed refuses delivery by mail or by nationally recognized courier service, and (b) addressed as follows: To Lender: c/o ZKS Real Estate Partners, LLC 200 West Adams Suite 2222 Chicago, Illinois 60606 Attn: Beth A. Schlief With copies to: Zurich Kemper Life Companies 1400 American Lane Tower 1, 17th Floor Schaumburg, IL 60196 Attn: Gary Fridley To Guarantor: c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, Illinois 60601 Attention: Michael W. Reschke With a copy to: The Prime Group, Inc, [sic] 77 West Wacker Drive Suite 4200 Chicago, Illinois 60601 Attention: Robert J. Rudnik or to any such other address as any party hereto shall designate in a written notice to the other parties hereto. 6. NO WAIVER: CUMULATIVE REMEDIES. Lender may, at any time and from time to time, waive or not insist on strict compliance with any one or more of the provisions contained in any document relating to this Guaranty, but any such waiver or non-insistence shall be deemed to be made pursuant to the terms of said document and not in modification thereof. Any waiver or non-insistence in any instance or under any particular circumstance shall not be considered a waiver or non-insistence of such provision in any other instance or any other circumstance. The remedies provided herein and in the other documents executed contemporaneously herewith and referred to herein shall be cumulative, may be exercised from time to time, singularly or concurrently or in any combination, without Lender being obligated to exercise any such right in any other circumstance, and, subject to Section 2 above, are not exclusive of any remedies provided by law. 7 7. CONTINUING GUARANTY; TRANSFER. This Guaranty is a continuing guaranty and shall: (a) remain in full force and effect until (i) all of the Obligations and Guaranteed Expenses have been paid in full, or all of the Collateral (as such term is defined in the Pledge Agreement) securing this Guaranty has been applied toward the Obligations and Guaranteed Expenses and (ii) any and all amounts due or claims made under clause (iii) of Section 2 of this Guaranty have been paid, satisfied or otherwise disposed of, as applicable, at which time this Guaranty shall terminate (and Lender shall at such time, upon the request and at the expense of any Guarantor, acknowledge the release and termination of this Guaranty); (b) be binding upon each Guarantor, and its heirs, administrators, executors, successors and assigns, who shall be jointly and severally liable hereunder in accordance with the terms hereof; provided, however, no Guarantor may assign any of its rights and obligations hereunder without the prior written consent of Lender; and (c) inure to the benefit of and be binding on and enforceable by Lender and its successors, transferees, participants, and assigns. Without limiting the generality of this clause, Lender may assign or otherwise transfer any of the Obligations and/or any of the Terms to any other person or entity, and such other person or entity shall thereupon become vested with all the rights in respect thereof granted to Lender herein or otherwise. 8. GOVERNING LAW; SUBMISSION TO JURISDICTION. This Guaranty shall be governed by, and construed in accordance with, the laws of the State of Illinois without regard to principles of conflict of laws. Each of Lender and each Guarantor hereby waives any plea of jurisdiction or venue as not being a resident of Cook County, Illinois and hereby specifically authorizes any action brought by the other upon or with regard to this Guaranty to be instituted and prosecuted in either the Circuit Court of Cook County, Illinois or in the United States District Court for the Northern District of Illinois, at the election of the party bringing the action. Each of Lender and each Guarantor hereby irrevocably authorizes service of process to be made upon it in the manner specified in Section 5 above, in any action which may be instituted against it arising out of or relating to this Guaranty. 9. HEADINGS. Section headings in this Guaranty are included herein for convenience of reference only and shall not constitute a part of this Guaranty for any other purpose. 10. WAIVER OF JURY TRIAL. EACH OF LENDER AND EACH GUARANTOR WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM FILED BY ANY PARTY, RELATING DIRECTLY OR INDIRECTLY TO THIS GUARANTY, THE PLEDGE AGREEMENT OR THE OBLIGATIONS GUARANTEED HEREBY. 11. ESTOPPEL. Each Guarantor shall, at any time and from time to time, within ten (10) Business Days following request by Lender, execute, acknowledge and deliver to Lender a statement certifying that this Guaranty is unmodified and in full force and effect (or if there have been modifications, that the same is in full force and effect as modified and stating such 8 modifications) and that, to the best of Guarantor's knowledge, Guarantor is not in default hereunder (or if there is such a default, describing such default in reasonable detail). 12. SEVERABILITY. The unenforceability or invalidity of any provision or provisions of this Guaranty shall not render any other provision or provisions herein contained unenforceable or invalid. 13. NON-ASSERTION. Lender covenants that it shall not assert in any judicial or other case or proceeding that that certain Release of Guaranties and Other Obligations and Covenant Not to Sue, dated March 22, 1994, made by Lender and certain affiliates of Lender in favor of Guarantor and others, is not valid, enforceable and effective. 14. JOINT AND SEVERAL. The covenants, agreements and guaranties of each or both of the Guarantors under this Guaranty shall constitute joint and several obligations of the Guarantors. 15. SUPERCEDE. This Guaranty restates and supercedes the Original PG II Guaranty and the Original Prime Guaranty. [Signature Page Follows] 9 IN WITNESS WHEREOF, Guarantors have caused this Guaranty to be executed and delivered on the date and year first above written. THE PRIME GROUP, INC., PRIME GROUP II, L.P. an Illinois limited an Illinois corporation partnership By: /S/ MARK K. CYNKAR By: PGLP, Inc., an Illinois corporation, its ------------------------------ general partner Name: MARK K. CYNKAR ----------------------------- Title: SENIOR VICE PRESIDENT ----------------------------- By: /S/ MARK K. CYNKAR --------------------------------- Name: MARK K. CYNKAR --------------------------------- Title: VICE PRESIDENT --------------------------------- ACKNOWLEDGED: KEMPER INVESTORS LIFE INSURANCE COMPANY, an Illinois insurance corporation By: /S/ BETH A. SCHLIEF ------------------------------ Name: BETH A. SCHLIEF ------------------------------ Title: AUTHORIZED SIGNATORY ------------------------------ By: /S/ FREDERICK L. STEPHENS ------------------------------ Name: FREDERICK L. STEPHENS ------------------------------ Title: AUTHORIZED SIGNATORY ------------------------------
10 EX-26 8 a2090218zex-26.txt EXHIBIT 26 EXHIBIT XXVI AMENDMENT NO. 1 TO JOINT FILING STATEMENT The undersigned hereby agree to amend that certain Joint Filing Statement dated as of November 7, 2000, to remove Prime Financing Limited Partnership, an Illinois limited partnership, Prime Finance, Inc., an Illinois corporation and Prime Group VI, L.P., an Illinois limited partnership, in their status as a group (as defined by Rule 13d-1(k)(1) of the Securities Exchange Act of 1934, as amended), effective as of September 30, 2002. Dated: September 30, 2002 /s/ Michael W. Reschke - --------------------------------------- Michael W. Reschke PGLP, INC. By: /s/ Michael W. Reschke - --------------------------------------- Name: Michael W. Reschke Title: President PRIME FINANCE, INC. By: /s/ Michael W. Reschke - --------------------------------------- Name: Michael W. Reschke Title: President PRIME GROUP LIMITED PARTNERSHIP By: /s/ Michael W. Reschke - --------------------------------------- Name: Michael W. Reschke Title: Managing General Partner PRIME FINANCING LIMITED PARTNERSHIP By: Prime Finance, Inc., its managing general partner By: /s/ Michael W. Reschke - --------------------------------------- Name: Michael W. Reschke Title: President PRIME GROUP II, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke - --------------------------------------- Name: Michael W. Reschke Title: President PRIME GROUP V, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke - --------------------------------------- Name: Michael W. Reschke Title: President PRIME GROUP VI, L.P. By: PGLP, Inc., its managing general partner By: /s/ Michael W. Reschke - --------------------------------------- Name: Michael W. Reschke Title: President THE PRIME GROUP, INC. By: /s/ Michael W. Reschke - --------------------------------------- Name: Michael W. Reschke Title: President -----END PRIVACY-ENHANCED MESSAGE-----