EXHIBIT 10.30
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of November , 1997 (this
"Agreement"), by and between Prime Group Realty Trust, a Maryland real estate
investment trust (the "Company"), and Security Capital Preferred Growth
Incorporated, a Maryland corporation (the "Investor").
WHEREAS, pursuant to that certain Series A Preferred Securities Purchase
Agreement, dated as of November 11, 1997 (the "Purchase Agreement"), by and
among the Company, Prime Group Realty, L.P., a Delaware limited partnership,
and the Investor, the Investor has agreed to acquire 2 million shares of
Series A Cumulative Convertible Preferred Shares of Beneficial Interest, par
value $.01 per share, of the Company (the "Preferred Shares"), all of which
may be converted into the Company's common shares of beneficial interest, par
value S.01 per share (the "Common Shares"), pursuant to the terms of the
Preferred Shares; and
WHEREAS, in connection with the Purchase Agreement, the Company has
agreed to register for sale by the Investor and certain transferees, the
Preferred Shares and Common Shares received by the Investor upon conversion
of Preferred Shares (collectively, the "Registrable Shares"); and
WHEREAS, the parties hereto desire to enter into this Agreement to
evidence the foregoing agreement of the Company and the mutual covenants of
the parties relating thereto.
NOW, THEREFORE, in consideration of the foregoing and the covenants of
the parties set forth herein and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, subject to the
terms and conditions set forth herein, the parties hereby agree as follows:
Section (i) Certain Definitions. In this Agreement the following
terms shall have the following respective meanings:
"Accredited Investor" shall have the meaning set forth in Rule 501 of
the General Rules and Regulations promulgated under the Securities Act.
"Affiliate" shall mean, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the Person specified.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the
relevant time.
"Holders" shall mean (i) the Investor and (ii) each Person holding
Registrable Shares (which term, for purposes of this definition shall include
Common Shares that may be issued upon conversion of outstanding Preferred
Shares) as a result of a transfer or assignment to that Person of Registrable
Shares other than pursuant to an effective registration statement or Rule 144
under the Securities Act.
"Indemnified Party" shall have the meaning ascribed to it in Section
6(c) of this Agreement.
"Indemnifying Party" shall have the meaning ascribed to it in Section
6(c) of this Agreement.
"Person" shall mean an individual, corporation, partnership, estate,
trust, association, private foundation, joint stock company or other entity.
"Piggyback Notice" shall have the meaning ascribed to it in Section 3(a)
of this Agreement.
"Piggyback Registration" shall have the meaning ascribed to it in
Section 3(a) of this Agreement.
"Preferred Shares" shall have the meaning ascribed to it in the recitals
to this Agreement.
The terms "Register," "Registered" and "Registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act providing for the sale by the Holders of
Registrable Shares in accordance with the method or methods of distribution
designated by the Holders, and the declaration or ordering of the
effectiveness of such registration statement by the Commission.
"Registrable Shares" shall have the meaning ascribed to it in the
recitals to this Agreement, except that as to any particular Registrable
Shares, once issued such securities shall cease to be Registrable Shares when
(a) a registration statement with respect to the sale of such securities
(other than the Company's registration statement on Form S-11 (File No.
333-33547)) shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement, or (b) such securities shall have been sold in accordance with
Rule 144 (or any successor provision) under the Securities Act.
"Registration Expenses" shall mean all out-of-pocket expenses (excluding
Selling Expenses) incurred by the Company in complying with Sections 2, 3 and
4 hereof, including, without limitation, the following: (a) all registration,
filing and listing fees; (b) fees and expenses
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of compliance with federal and state securities or real estate syndication
laws (including, without limitation, reasonable fees and disbursements of
counsel in connection with state securities and real estate syndication
qualifications of the Registrable Shares under the laws of such jurisdictions
as the Holders may reasonably designate); (c) printing (including, without
limitation, expenses of printing or engraving certificates for the
Registrable Shares in a form eligible for deposit with The Depository Trust
Company and otherwise meeting the requirements of any securities exchange on
which they are listed and of printing registration statements and
prospectuses), messenger, telephone, shipping and delivery expenses; (d) fees
and disbursements of counsel for the Company; (e) fees and disbursements of
all independent public accountants of the Company (including without
limitation the expenses of any annual or special audit and "cold comfort"
letters required by the managing underwriter); (f) Securities Act liability
insurance if the Company so desires; (g) fees and expenses of other Persons
reasonably necessary in connection with the registration, including any
experts, retained by the Company; (h) fees and expenses incurred in
connection with the listing of the Registrable Shares on each securities
exchange on which securities of the same class or series are then listed; and
(i) fees and expenses associated with any filing with the National
Association of Securities Dealers, Inc. required to be made in connection
with the registration statement.
"Registration Request" shall have the meaning ascribed to it in Section
2(a) of this Agreement.
"Rule 144" shall mean Rule 144 promulgated by the Commission under the
Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission thereunder, all as the same shall
be in effect at the relevant time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to any sale of Registrable
Shares.
Section (ii) Demand Registration.
(a) Upon receipt of a written request (a "Registration Request")
delivered not earlier than 120 days prior to the first anniversary of this
Agreement from Holders holding at least 50% of the aggregate of the number of
Preferred Shares then outstanding, the Company shall (i) promptly give notice
of the Registration Request to all non-requesting Holders and (ii) prepare
and file with the Commission, within 45 days after its receipt of such
Registration Request a registration statement for the purpose of effecting a
Registration of the sale of all Registrable Shares by the requesting Holders
and any other Holder who requests to have his Registrable Shares included in
such registration statement within IO days after receipt of notice by such
Holder of the Registration Request. The Company shall use its reasonable
best efforts to effect such Registration as soon as practicable but not later
than 120 days after its receipt of such Registration Request (including,
without limitation, the execution of an undertaking to file post-effective
amendments and appropriate qualification under applicable state securities
and real estate
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syndication laws); and shall keep such Registration continuously effective
until the earlier of (i) the third anniversary of the date hereof, (h) the
date on which all Registrable Shares have been sold pursuant to such
registration statement or Rule 144, and (iii) the date on which, in the
reasonable opinion of counsel to the Holders, all of the Registrable Shares
may be sold in accordance with Rule 144(k); provided, however, that the
Company shall not be obligated to take any action to effect any such
Registration, qualification or compliance pursuant to this Section 2 in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such Registration,
qualification or compliance unless the Company is already subject to service
in such jurisdiction.
Notwithstanding the foregoing, the Company shall have the right (the
"Suspension Right") to defer such filing (or suspend sales under any filed
registration statement or defer the updating of any filed registration
statement and suspend sales thereunder) for a period of not more than 90 days
during any one-year period ending on December 31, if the Company shall
furnish to the Holders a certificate signed by an executive officer or any
trustee of the Company stating that, in the good faith judgment of the
Company, it would be detrimental to the Company and its shareholders to file
such registration statement or amendment thereto at such time (or continue
sales under a filed registration statement) and therefore the Company has
elected to defer the filing of such registration statement (or suspend sales
under a filed registration statement).
(b) The Company shall not be required to effect more than one (1)
Registration pursuant to this Section 2.
Section (i) Piggyback Registrations.
(c) On and after the Conversion Date (as defined in the Company's
Amended and Restated Declaration of Trust), so long as the Investor and its
Affiliates hold at least 25% of the Registrable Shares, if the Company
proposes to register any of its common equity securities or any securities
convertible into its common equity securities under the Securities Act (other
than pursuant to (i) a registration statement filed pursuant to Rule 415
under the Securities Act, (ii) a registration on Form S-4 or any successor
form, or (iii) an offering of securities in connection with an employee
benefit, share dividend, share ownership or dividend reinvestment plan) and
the registration form to be used may be used for the registration of
Registrable Shares, the Company will give prompt written notice to all
holders of Registrable Shares of its intention to effect such a registration
(each a "Piggyback Notice") and, subject to subparagraph 3(c) below, the
Company will include in such registration all Registrable Shares with respect
to which the Company has received written requests for inclusion therein
within ten days after the date of sending the Piggyback Notice (a "Piggyback
Registration"), unless, if the Piggyback Registration is not an underwritten
offering, the Company in its reasonable judgement determines that, or in the
case of an underwritten Piggyback Registration, the managing underwriters
advise the Company in writing that in their opinion, the inclusion of
Registrable Shares would adversely interfere with such offering, affect the
Company's securities in the public markets, or otherwise adversely affect the
Company. Nothing herein shall affect the right of the Company to withdraw
any such
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registration in its sole discretion.
(d) If a Piggyback Registration is a primary registration on behalf of
the Company and, if the Piggyback Registration is not an underwritten
offering, the Company in its reasonable judgement determines that, or in the
case of an underwritten Piggyback Registration, the managing underwriters
advise the Company in writing that in their opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in an orderly manner within a price range acceptable to the Company, the
Company will include in such registration (i) first, the securities the
Company proposes to sell and (ii) second, the Registrable Shares requested to
be included in such Registration and any other securities requested to be
included in such registration, pro rata among the holders of Registrable
Shares requesting such registration and the holders of such other securities
on the basis of the number of Shares requested for inclusion in such
registration by each such holder.
(e) If a Piggyback Registration is a secondary registration on behalf
of holders of the Company's securities other than the holders of Registrable
Shares, and, if the Piggyback Registration is not an underwritten offering,
the Company determines that, or in the case of an underwritten Piggyback
Registration, the managing underwriters advise the Company in writing that in
their opinion, the number of securities requested to be included in such
registration exceeds the number which can be sold in an orderly manner in
such offering within a price range acceptable to the holders initially
requesting such registration, the Company will include in such registration
the securities requested to be included therein by the holders requesting
such registration and the Registrable Shares requested to be included in such
registration, pro rata among the holders of securities requesting such
registration on the basis of the number of Shares requested for inclusion in
such registration by each such holder.
(f) In the case of an underwritten Piggyback Registration, the Company
will have the right to select the investment banker(s) and manager(s) to
administer the offering. If requested by the underwriters for any
underwritten offerings by Holders, under a registration requested pursuant to
Section 2(a), the Company will enter into a customary underwriting agreement
with such underwriters for such offering, to contain such representations and
warranties by the Company and such other terms which are customarily
contained in agreements of this type. The Holders shall be a party to such
underwriting agreement and may, at their option, require that any or all of
the conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of Holders.
The Holders shall not be required to make any representations or warranties
to or agreement with the Company or the underwriters other than
representations, warranties or agreements regarding the Holders and the
Holders' intended method of distribution and any other representation or
warranties required by law.
Section (i) Registration Procedures.
(g) The Company shall promptly notify the Holders of the occurrence
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of the following events:
(i) when any registration statement relating to the Registrable
Shares or post-effective amendment thereto filed with the Commission has
become effective;
(ii) the issuance by the Commission of any stop order suspending
the effectiveness of any registration statement relating to the Registrable
Shares;
(iii) the suspension of an effective registration statement by
the Company in accordance with the last paragraph of Section 2(a) hereof;
(iv) the Company's receipt of any notification of the suspension of
the qualification of any Registrable Shares covered by a registration
statement for sale in any jurisdiction; and
(v) the existence of any event, fact or circumstance that results
in a registration statement or prospectus relating to Registrable Shares or
any document incorporated therein by reference containing an untrue statement
of material fact or omitting to state a material fact required to be stated
therein or necessary to make the statements therein not misleading during the
distribution of securities.
The Company agrees to use its reasonable best efforts to obtain the
withdrawal of any order suspending the effectiveness of any such registration
statement or any state qualification as promptly as possible. The Investor
agrees by acquisition of the Registrable Shares that upon receipt of any
notice from the Company of the occurrence of any event of the type described
in Section 4(a)(ii), (iii), (iv) or (v) to immediately discontinue its
disposition of Registrable Shares pursuant to any registration statement
relating to such securities until the Investor's receipt of written notice
from the Company that such disposition may be made.
(h) The Company shall provide to the Holders, at no cost to the
Holders, a copy of the registration statement and any amendment thereto used
to effect the Registration of the Registrable Shares, each prospectus
contained in such registration statement or post-effective amendment and any
amendment or supplement thereto and such other documents as the requesting
Holders may reasonably request in order to facilitate the disposition of the
Registrable Shares covered by such registration statement. The Company
consents to the use of each such prospectus and any supplement thereto by the
Holders in connection with the offering and sale of the Registrable Shares
covered by such registration statement or any amendment thereto. The Company
shall also file a sufficient number of copies of the prospectus and any
post-effective amendment or supplement thereto with the New York Stock
Exchange, Inc. (or, if the Common Shares are no longer listed thereon, with
such other securities exchange or market on which the Common Shares are then
listed) so as to enable the Holders to have the benefits of the prospectus
delivery provisions of Rule 153 under the Securities Act.
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(i) The Company agrees to use its reasonable best efforts to cause the
Registrable Shares covered by a registration statement to be registered with
or approved by such state securities authorities as may be necessary to
enable the Holders to consummate the disposition of such shares pursuant to
the plan of distribution set forth in the registration statement; provided,
however, that the Company shall not be obligated to take any action to effect
any such Registration, qualification or compliance pursuant to this Section 4
in any particular jurisdiction in which the Company would be required to
execute a general consent to service of process in effecting such
Registration, qualification or compliance unless the Company is already
subject to service in such jurisdiction.
(j) Subject to the Company's Suspension Right, if any event, fact or
circumstance requiring an amendment to a registration statement relating to
the Registrable Shares or supplement to a prospectus relating to the
Registrable Shares shall exist, immediately upon becoming aware thereof the
Company agrees to notify the Holders and prepare and furnish to the Holders a
post-effective amendment to the registration statement or supplement to the
prospectus or any document incorporated therein by reference or file any
other required document so that, as thereafter delivered to the purchasers of
the Registrable Shares, the prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(k) The Company agrees to use its reasonable best efforts (including
the payment of any listing fees) to obtain the listing of all Registrable
Shares covered by the registration statement on each securities exchange on
which securities of the same class or series are then listed.
(l) The Company agrees to use its reasonable best efforts to comply
with the Securities Act and the Exchange Act in connection with the offer and
sale of Registrable Shares pursuant to a registration statement, and, as soon
as reasonably practicable following the end of any fiscal year during which a
registration statement effecting a Registration of the Registrable Shares
shall have been effective, to make available to its security holders an
earnings statement satisfying the provisions of Section 11 (a) of the
Securities Act.
(m) The Company agrees to cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Shares to be sold pursuant to a Registration and not bearing any
Securities Act legend; and enable certificates for such Registrable Shares to
be issued for such numbers of shares and registered in such names as the
Holders may reasonably request at least two business days prior to any sale
of Registrable Shares.
Section (i) Expenses of Registration. The Company shall pay all
Registration Expenses incurred in connection with the registration,
qualification or compliance pursuant to Sections 2, 3 and 4 hereof. All
Selling Expenses incurred in connection with the sale of Registrable Shares
by any of the Holders shall be borne by the Holder selling such Registrable
Shares. Each Holder shall pay the expenses of its own counsel.
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Section (ii) Indemnification.
(n) The Company will indemnify each Holder, each Holder's officers and
directors, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses,
damages and liabilities (including reasonable legal expenses), arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement or prospectus relating to the
Registrable Shares, or any amendment or supplement thereto, or based on any
omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
provided, however, that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises out
of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with
information furnished in writing to the Company by such Holder or underwriter
for inclusion therein.
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(o) Each Holder will indemnify the Company, each of its trustees and
each of its officers who sips the registration statement, each underwriter,
if any, of the Company's securities covered by such registration statement,
and each person who controls the Company or such underwriter within the
meaning of Section 15 of the Securities Act, against all claims, losses,
damages and liabilities (including reasonable legal fees and expenses)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any such registration statement or
prospectus, or any amendment or supplement thereto, or based on any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement or prospectus, in reliance upon and in conformity with
information furnished in writing to the Company by such Holder for inclusion
therein.
(p) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
but the omission to so notify the Indemnifying Party shall not relieve it
from any liability which it may have to the Indemnified Party pursuant to the
provisions of this Section 6 except to the extent of the actual damages
suffered by such delay in notification. The Indemnifying Party shall assume
the defense of such action, including the employment of counsel to be chosen
by the Indemnifying Party to be reasonably satisfactory to the Indemnified
Party, and payment of expenses. The Indemnified Party shall have the right
to employ its own counsel in any such case, but the legal fees and expenses
of such counsel shall be at the expense of the Indemnified Party, unless the
employment of such counsel shall have been authorized in writing by the
Indemnifying Party in connection with the defense of such action, or the
Indemnifying Party shall not have employed counsel to take charge of the
defense of such action or the Indemnified Party shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to those available to the Indemnifying Party (in
which case the Indemnifying Party shall not have the right to direct the
defense of such action on behalf of the Indemnified Party), in any of which
events such fees and expenses shall be borne by the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
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(q) If the indemnification provided for in this Section 6 is
unavailable to a party that would have been an Indemnified Party under this
Section 6 in respect of any expenses, claims, losses, damages and liabilities
referred to herein, then each party that would have been an Indemnifying
Party hereunder shall, in lieu of indemnifying such Indemnified Party,
contribute to the amount paid or payable by such Indemnified Party as a
result of such expenses, claims, losses, damages and liabilities in such
proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and such Indemnified Party on the other in
connection with the statement or omission which resulted in such expenses,
claims, losses, damages and liabilities, as well as any other relevant
equitable considerations. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Indemnifying Party or
such Indemnified Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and each Holder agree that it would not be just and equitable if
contribution pursuant to this Section were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 6(d).
(r) No person guilty of fraudulent misrepresentation (within the
meaning of Section I I (f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(s) In no event shall any Holder be liable for any expenses, claims,
losses, damages or liabilities pursuant to this Section 6 in excess of the
net proceeds to such Holder of any Registrable Shares sold by such Holder.
Section (i) Information to be Furnished by Holders. Each Holder
shall furnish to the Company such information as the Company may reasonably
request and as shall be required in connection with the Registration and
related proceedings referred to in Section 2 or Section 3 hereof. If any
Holder fails to provide the Company with such information within IO days of
receipt of the Company's request, the Company's obligations under Section 2
or Section 3 hereof, as applicable, with respect to such Holder or the
Registrable Shares owned by such Holder shall be suspended until such Holder
provides such information.
Section (ii) Undertaking to Participate in Underwriting. If the
Holders of at least $20 million of the Registrable Shares shall propose to
sell Registrable Shares in an underwritten public offering, the Company shall
make available members of the management of the Company and its affiliates
for reasonable assistance in selling efforts relating to such offering, to
the extent customary for a public offering (including, without limitation, to
the extent customary, senior management attendance at due diligence meetings
with the underwriters and their counsel and road shows) and shall enter into
underwriting agreements containing usual and customary terms and conditions
reasonably acceptable to the Company for such types of offerings.
Section (iii) Rule 144 Sales.
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(t) The Company covenants that it will file the reports required to be
filed by the Company under the Exchange Act, so as to enable any Holder to
sell Registrable Shares pursuant to Rule 144 under the Securities Act.
(u) In connection with any sale, transfer or other disposition by any
Holder of any Registrable Shares pursuant to Rule 144 under the Securities
Act, the Company shall cooperate with such Holder to facilitate the timely
preparation and delivery of certificates representing Registrable Shares to
be sold and not bearing any Securities Act legend, and enable certificates
for such Registrable Shares to be for such number of shares and registered in
such names as the selling Holder may reasonably request at least two business
days prior to any sale of Registrable Shares.
Section (i) Miscellaneous.
(v) Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Maryland.
(w) Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
(x) Amendment. No supplement, modification, waiver or termination of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby.
(y) Notices, etc. Each notice, demand, request, request for approval,
consent, approval, disapproval, designation or other communication (each of
the foregoing being referred to herein as a notice) required or desired to be
given or made under this Agreement shall be in writing (except as otherwise
provided in this Agreement), and shall be effective and deemed to have been
received (i) when delivered in person, (ii) when sent by fax with receipt
acknowledged, (iii) five (5) days after having been mailed by certified or
registered United States mail, postage prepaid, return receipt requested, or
(iv) the next business day after having been sent by a nationally recognized
overnight mail or courier service, receipt requested. Notices shall be
addressed as follows: (a) if to the Investor, at the Investor's address or
fax number set forth below its signature hereon, or at such other address or
fax number as the Investor shall have furnished to the Company in writing, or
(b) if to any assignee or transferee of an Investor, at such address or fax
number as such assignee or transferee shall have furnished the Company in
writing, or (c) if to the Company, at the address of its principal executive
offices and addressed to the attention of the President, or at such other
address or fax number as the Company shall have furnished to the Investors or
any assignee or transferee. Any notice or other communication required to be
given hereunder to a Holder in connection with a registration may instead be
given to the designated representative of such Holder.
(z) Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by fewer than all of the parties
hereto (provided that each party
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executes one or more counterparts), each of which shall be enforceable
against the parties actually executing such counterparts, and all of which
together shall constitute one instrument.
(aa) Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision.
(bb) Section Titles. Section titles are for descriptive purposes only
and shall not control or alter the meaning of this Agreement as set forth in
the text.
(cc) Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective successors and assigns.
(dd) Remedies. The Company and the Investor acknowledge that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that the Company and each
Holder, in addition to any other remedy to which it may be entitled at law or
in equity, shall be entitled to compel specific performance of the
obligations of another party under this Agreement in accordance with the
terms and conditions of this Agreement in any court of the United States or
any State thereof having jurisdiction.
(ee) Attorneys' Fees. If the Company or any Holder brings an action to
enforce its rights under this Agreement, the prevailing party in the action
shall be entitled to recover its costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred in connection with such
action, including any appeal of such action.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
PRIME GROUP REALTY TRUST
By:
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Name:
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Title:
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SECURITY CAPITAL PREFERRED GROWTH
INCORPORATED
By:
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Name:
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Title:
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EXHIBIT C
TAG-ALONG AGREEMENT
THIS TAG-ALONG AGREEMENT (the "Agreement") dated as of November ,
1997 is among Prime Financing, L.P., Prime Group Limited Partnership, Prime
Group II, L.P., Prime Group III, L.P., Prime Group IV, L.P., Prime Group V,
L.P., The Prime Group, Inc., PG/Primestone, L.L.C., a Delaware limited
liability company (together with their respective controlled Affiliates and
their successors in interest pursuant to Section 4 hereof, the "Other
Holders"), and Security Capital Preferred Growth Incorporated, a Maryland
corporation (together with its successors in interest pursuant to Section 4
hereof, "SCPG").
PRELIMINARY STATEMENT
WHEREAS the Other Holders own Common Units, which interests, subject to
certain conditions, are exchangeable for Common Shares.
WHEREAS SCPG owns the Preferred Shares, which shares, subject to certain
conditions, are convertible into Common Shares.
WHEREAS the Other Holders and SCPG desire to enter into this Agreement
to set forth certain agreements with respect to certain transfers by the
Other Holders of their Common Shares; and
WHEREAS the execution and delivery of this Agreement by the parties
hereto is a condition to the closing of the Series A Preferred Securities
Purchase Agreement, dated as of November 11, 1997, by and among Prime Group
Realty Trust, Prime Group Realty, L.P. and SCPG.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. Definitions. As used in this Agreement, the following terms shall have
the following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with the first Person and shall include any Person who is an
officer, director or beneficial holder of at least 10% of the then
outstanding capital stock (or other shares of beneficial interest or
partnership interest) of the first Person entitled ordinarily to vote for the
first Person's directors (or, for persons that are not corporations, for
those Persons exercising functions similar to directors of a corporation) and
immediate family members of any such officer, director or holder.
"Common Shares" means the common shares of beneficial interest,
$.01 par value per share, of Prime Group Realty Trust and Common Share
Equivalents.
"Common Share Equivalents" means any security that is convertible
into or exchangeable for Common Shares or upon the exercise of which Prime
Group Realty Trust is required to issue Common Shares, whether or not such
securities are then convertible, exchangeable or exercisable.
"Common Units" means the common units of limited partner interest
of Prime Group Realty, L.P.
"Extraordinary Transaction" means (a) any merger, consolidation,
recapitalization, other business combination or other similar action for
which approval of the holders of Common Shares is required and has been
obtained, or (b) any other Transfer (whether, pursuant to an exchange or
tender offer or otherwise) involving the sale or disposition of 80% or more
of the then outstanding Common Shares.
"Person" means any corporation, limited liability company,
partnership, association, organization, trust, individual, government or any
agency or political subdivision thereof, or other entity.
"Preferred Shares" means the shares of Series A cumulative
convertible preferred shares of beneficial interest, $.01 par value per share
of Prime Group Realty Trust.
"Sale" means any Transfer by the Other Holders or by Primestone
Investment Partners, L.P. of Common Shares, directly or indirectly, to one or
more Persons who are not Affiliates controlled by the Other Holders if, after
giving effect to such Transfer and all prior Transfers of Common Shares
during the preceding 12 months, the Other Holders and Primestone Investment
Partners, L.P. will have Transferred more than 15% of the number of Common
Shares beneficially owned by the Other Holders and Primestone Investment
Partners, L.P., in the aggregate, at the beginning of such 12-month period
(as adjusted for stock splits or stock dividends, or in connection with a
combination of shares, recapitalization, merger, consolidation or other
reorganization); provided, however, that the term "Sale" shall not apply to
Transfers by Primestone Investment Partners, L.P., the proceeds of which are
used either (a) to repay margin loan indebtedness of Primestone Investment
Partners, L.P. or (b) to fund distributions to affiliates of The Blackstone
Group.
"Sale Notice" shall have the meaning ascribed to such term in
Section 2(a) of this Agreement.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Terms Notice" shall have the meaning ascribed to such term in
Section 2(b) of
2
this Agreement.
"Tag-Along Rights" shall have the meaning ascribed to such term in
Section 2 of this Agreement.
"Transfer" means any direct or indirect sale, transfer, distribution,
assignment, bequest, pledge, hypothecation, encumbrance, grant of a security
interest in, or grant, issuance, sale or conveyance of an option, warrant or
right to acquire, or other disposition of, one or more Common Shares;
provided, however, that a Transfer shall not include (i) sales or
dispositions made pursuant to a broadly distributed, underwritten public
offering pursuant to an effective registration statement under the Securities
Act, (ii) any pledge (including any foreclosure or seizure resulting from
such pledge) to a bona fide financial institution or other business
organization with a net worth in excess of $25 million for the purpose of
securing bona fide indebtedness (including any guarantee or other obligation
related thereto) of the Other Holders or (iii) sales or dispositions pursuant
to an Extraordinary Transaction.
"Transferee" means the recipient, directly or indirectly, of one or more
Common Shares or any interest therein pursuant to a Transfer.
2. Sale of Common Shares. The Other Holders agree, that in the event that
the Other Holders wish to engage in a Sale, to offer to SCPG the right to
participate in such sale in the manner and on the terms set forth in this
Section 2 (the rights of SCPG to participate in a Sale of Common Shares
hereunder are referred to herein as the "Tag-Along Rights").
(a) Offer. At least three business days prior to any Sale, the Other
Holders shall deliver a written notice (the "Sale Notice") to SCPG which
shall include:
(i) A description of the proposed Sale, specifying in reasonable
detail the proposed terms and conditions of the proposed Sale, including the
number of Common Shares proposed to be transferred as a result of such Sale,
the purchase price (or liquidation value) of such Shares, the name and
address of the proposed transferee(s), and the closing date of the proposed
Sale.
(ii) An offer by the Other Holders to include in the proposed Sale
to the proposed transferee, at the option of SCPG, on the same terms and
conditions as the proposed Sale, up to one Common Share for each two Common
Shares to be sold by the Other Holders in the proposed Sale.
(b) Notice of Proposed Sale. The Other Holders shall notify SCPG in
writing (the "Terms Notice") of the terms of the Sale as soon as practicable
after such terms are determined, but in any event at least one business day
prior to the Sale.
(c) Time and Manner of Exercise. If SCPG desires to accept the offer
contained in
3
the Sale Notice, it shall notify the Other Holders in writing before 5:00
p.m. Chicago time on the business day following the date of receipt of the
Terms Notice, which notice shall specify the number of Common Shares for
which such offer has been accepted. If SCPG has not so accepted such offer
in writing it shall be deemed to have waived all of its Tag-Along Rights with
respect to the proposed Sale, and the Other Holders shall be free, for a
period of 90 days from and after the date of receipt by SCPG of the Terms
Notice, to transfer the Common Shares specified in the Sale Notice but only
on terms no more favorable to the Other Holders than the terms described in
the Sale Notice and the Terms Notice, and any sale in violation of this
provision shall be invalid.
(d) Other Agreements.
(i) The Other Holders shall use their best efforts to obtain the
agreement of the prospective transferees) to the participation of SCPG in any
contemplated Sale, and the Other Holders shall not transfer any of their
Common Shares to the prospective transferee(s) if the prospective
transferees) declines to allow the participation of SCPG as contemplated by
this Section 2, and any sale in violation of this provision shall be invalid.
If SCPG elects to exercise its Tag-Along Rights hereunder, SCPG shall take
such actions and execute such documents and instruments as may be requested
by the Other Holders and as shall be reasonably necessary in order to
consummate the proposed Sale on the same terms as the Other Holders. Each of
the Other Holders and SCPG shall bear their or its own costs and expenses
incurred in connection with any proposed Sale.
(ii) Prime Group Realty Trust agrees that, if requested by SCPG in
writing, it will accelerate, pursuant to Section 3 of the Declaration
creating the Preferred Shares, the date on which the Preferred Shares are
convertible so as to permit SCPG to sell such number of Common Shares that it
has elected to sell pursuant to Section 2 of this Agreement.
(iii) PG/Primestone, L.L.C., as managing general partner of
Primestone Investment Partners, L.P., shall not vote for or consent to (and
none of the Other Holders shall vote or cause any of their Affiliates to vote
for or consent to) any sale of Common Shares by Primestone Investment
Partners, L.P. (except with respect to Transfers described in the proviso to
the definition of "Sale" in Section I hereof) unless in connection with such
Transfer, SCPG is granted Tag-Along Rights in accordance with Section 2
hereof.
(e) Abandonment of Sale. The Other Holders shall have the right, in
their sole discretion, at all times prior to consummation of the proposed
Sale to abandon, rescind annul, withdraw or otherwise terminate such Sale,
and the Other Holders shall not have any liability or obligation to SCPG with
respect thereto by virtue of such abandonment, rescission, annulment,
withdrawal or termination.
3. Form of Agreement Satisfactory to SCPG. Any agreement which SCPG may be
requested or required to execute in connection with Section 2 hereof must be
in form and substance reasonably satisfactory to SCPG. No provision in this
Agreement, including, without
4
limitation, Section 2 hereof, shall require SCPG to make any representation
(other than as to title, due authorization and enforceability relating solely
to SCPG) or provide any indemnification in any such agreement (other than
indemnification for breaches of the representations set forth in the
preceding clause) and no right or obligation of SCPG shall be conditioned
upon the making of such representation or the provision of such
indemnification.
4. Miscellaneous.
(a) Notices. Notices and other communications provided for in this
Agreement shall be in writing and shall be either delivered by reputable
courier service (charges prepaid), sent by confirmed facsimile transmission
or sent by certified mail (postage prepaid and return receipt requested)
addressed to the party or parties sought to be charged with notice of the
same at the respective addresses set forth below, subject to written notice
of change of address given by any party to the other parties:
IF TO THE OTHER
HOLDERS: The Prime Group, Inc.
00 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxx X. Xxxxxx
Xxxxxxx & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Fax: (000) 000-0000
IF TO SCPG: Security Capital Preferred Growth Incorporated
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxx
Fax: (000) 000-0000
with a copy to: Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
5
Notice shall be effective and deemed to have been received (i) when
delivered in person, (ii) when sent by fax with receipt acknowledged, (iii)
five (5) days after having been mailed by certified or registered United
States mail, postage prepaid, return receipt requested, or (iv) the next
business day after having been sent by a nationally recognized overnight mail
or courier service, receipt requested.
(b) Changes and Modifications; Termination, Actions under this
Agreement. This Agreement may be terminated, changed, modified or extended,
and consents hereunder may be granted, only by an agreement in writing signed
by SCPG and the owners of a majority of the Common Shares owned by the Other
Holders.
(c) Complete Agreement. This Agreement embodies the complete agreement
and understanding among the parties and supersedes and preempts any prior
understandings, agreements, or representations by or among the parties,
written or oral, which may have related to the subject matter hereof in any
way. This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns (including,
without limitation, successor holders of Shares); provided, however, that
SCPG may not assign or transfer its rights or obligations hereunder without
the prior written consent of the owners of a majority of the Common Shares
held by the Other Holders, except to one or more Persons of the types
specified in Section 8.2 of the Purchase Agreement.
(d) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which taken together shall
constitute one instrument.
(e) Severability. If in any judicial proceeding a court shall refuse
to enforce any provision of this Agreement, then such unenforceable provision
shall be deemed eliminated from this Agreement for the purpose of such
proceeding to the extent necessary to permit the remaining provisions to be
enforced.
(f) Governing Law. This Agreement shall be governed by the laws of the
State of Maryland without giving effect to the conflict of laws rules of any
jurisdiction.
(g) Remedies. The parties hereto shall have all remedies for breach of
this Agreement available to them provided by law or equity. Without limiting
the generality of the foregoing, the parties agree that in addition to all
other rights and remedies available at law or in equity, the parties shall be
entitled to obtain specific performance of the obligations of each party to
this Agreement and immediate injunctive relief, and that in the event any
action or proceeding is brought in defense, that there is an inadequate
remedy at law.
(h) Transfers. It shall be a condition to any Transfer of Common
Shares to Affiliates of Xxxxxxx X. Xxxxxxx that the Transferee agree in
writing to be bound by the obligations of the Other Holders pursuant to, and
as provided in, this Agreement, whereupon such Transferee shall be deemed to
be a successor in interest of the Other Holders for all purposes of this
Agreement
6
(but which subsequent agreement shall not relieve the Other Holders of their
obligations hereunder). Any Transfer in violation of this provision shall be
void.
(i) Termination. This Agreement shall terminate on the date on which
SCPG shall cease to own Common Shares issued or issuable upon conversion or
exchange of the Preferred Shares representing at least five percent of the
then outstanding Common Shares (on a fully diluted basis).
[Signature Page Follows]
7
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date set forth above.
------------------------------------------
Xxxxxxx X. Xxxxxxx
PRIME GROUP REALTY TRUST
By: --------------------------------------
Its: -------------------------------------
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, its
managing general partner
By: --------------------------------------
Its: -------------------------------------
PRIME GROUP II, L.P., PRIME GROUP III,
L.P., PRIME GROUP IV, L.P., PRIME GROUP
V, L.P.
By: PGLP, Inc., its sole General
Partner
By: --------------------------------------
Its: -------------------------------------
PRIME GROUP LIMITED PARTNERSHIP
------------------------------------------
By: Xxxxxxx X. Xxxxxxx, its Managing
General Partner
PRIME FINANCING, L.P.
By: Prime Financing, Inc., its sole
General Partner
By: --------------------------------------
Its: -------------------------------------
THE PRIME GROUP, INC.
By: --------------------------------------
Its: -------------------------------------
PG/PRIMESTONE, L.L.C.
By: --------------------------------------
Its: -------------------------------------
SECURITY CAPITAL PREFERRED GROWTH
INCORPORATED
By: --------------------------------------
Its: -------------------------------------
ACCEPTED AND AGREED TO
WITH RESPECT TO SECTION 2(d)(ii):
Prime Group Realty, L.P.
By: Prime Group Realty Trust, its
managing general partner
By: -----------------------------------
Name: ---------------------------------
Its: ----------------------------------
PRIME GROUP REALTY TRUST
By: -----------------------------------
Name: ---------------------------------
Its: ----------------------------------
EXHIBIT D
November , 1997
Security Capital Markets Group Incorporated
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxxx X. House, Vice President
Re: Prime Group Realty Trust
Gentlemen:
This letter confirms the appointment of Security Capital Markets Group
Incorporated ("SCMG") by Prime Group Realty Trust (the "Company") and Prime
Group Realty, L.P. (the "Operating Partnership") as a Placement Agent in
connection with that certain Series A Preferred Securities Purchase Agreement
(the "Purchase Agreement") by and among the Company, the Operating
Partnership and Security Capital Preferred Growth Incorporated ("SCPG"),
pursuant to which SCPG is purchasing 2 million shares of the Company's Series
A Cumulative Convertible Preferred Shares of Beneficial Interest (the
"Securities"). Nothing herein shall constitute an undertaking by SCMG to
underwrite or otherwise purchase the Securities.
For these services, the Company and the Operating Partnership jointly
agree that SCMG's compensation hereunder will consist of a fee (the "Fee")
equal to 1% of the Aggregate Purchase Price (as defined in the Purchase
Agreement) of all Securities purchased by SCPG pursuant to the Purchase
Agreement. Such fee shall be payable at or prior to the Closing Date (as
defined in the Purchase Agreement). The Company and the Operating
Partnership agree and acknowledge that no fee payable to any other finder,
broker, broker-dealer or other party shall reduce the Fee payable hereunder.
Each of SCMG, the Company and the Operating Partnership agrees that (i)
in connection with the sale of the Securities, neither it nor any person
acting on its behalf has offered or sold or will offer or sell the Securities
by any form of general solicitation or general advertising, including but not
limited to the following: (A) any advertisement, article, notice or other
communication published in any newspaper or broadcast over television or
radio or (B) any seminar or meeting whose attendees were invited by any
general solicitation or general advertising; and (ii) it has solicited and
will solicit offers for Securities only from and will offer Securities only
to, investors that it has a reasonable basis to believe are "accredited
investors" within the meaning of Rule 501 (a) under the Securities Act of
1933, as amended.
In consideration for SCMG agreeing to provide the services referred to
herein, the Company and the Operating Partnership jointly agree to indemnify
and hold harmless SCMG, its affiliates and each other entity or person, if
any, controlling SCMG or any of its affiliates within the meaning of the
federal securities laws, and their respective directors, officers and
employees (SCMG and each such entity or person being referred to as an
"Indemnified Person"), from and against any claim by any third party for any
losses, claims, damages or liabilities (or actions in respect thereof)
relating to or arising out of the services performed pursuant to this
agreement, the purchase contemplated hereby or SCMG's role in connection
therewith, and to reimburse any Indemnified Person for all expenses
(including, without limitation, reasonable fees and disbursements of counsel)
incurred in connection with any action, suit or proceeding in relation
thereto or in connection therewith, other than any such losses, claims,
damages, liabilities or expenses of any Indemnified Person that are
determined by final judgment of a court of competent jurisdiction to have
resulted primarily from actions taken or omitted to be taken by such
Indemnified Person in bad faith or from such Indemnified Person's gross
negligence or SCMG's intentional and material breach of this agreement. The
Company shall not be liable for any settlement of any proceeding effected
without its prior written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the Company agrees to indemnify
the Indemnified Person from and against any loss or liability by reason of
such settlement or judgment subject to the rights of the Company in this
paragraph to claim exemption from its indemnity obligations. The Company
shall not, without the prior written consent of any Indemnified Person,
effect any settlement of any proceeding in respect of which such Indemnified
Person is a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release
of such Indemnified Person from all liability on claims that are the subject
matter of such proceeding.
This agreement shall be governed by the internal laws of the state of
Illinois. This agreement may be terminated at any time by the Company or
SCMG upon written notice to the other party; provided that the
representations and indemnity obligations of the Company hereunder and the
obligation of the Company to pay SCMG the Fee shall survive any termination
of SCMG's engagement hereunder and any sale of such Securities.
Please indicate your agreement with this understanding by signing the
letter below and returning it to the undersigned.
Sincerely,
PRIME GROUP REALTY TRUST
By: ------------------------------------------
Name: ----------------------------------------
Its: -----------------------------------------
Prime Group Realty, L.P.
By: Prime Group Realty Trust, its general
partner
By: ------------------------------------------
Name: ----------------------------------------
Its: -----------------------------------------
Accepted and Agreed to as of the date set forth above:
SECURITY CAPITAL MARKETS GROUP INCORPORATED
By: --------------------------------------
Name: ------------------------------------
Its: -------------------------------------
