Exhibit 10.5
CONSENT AND AGREEMENT OF
PRIME GROUP REALTY TRUST AND PRIME GROUP REALTY, L.P.
-----------------------------------------------------
This CONSENT AND AGREEMENT (this "Consent and Agreement") is executed
and given this 26th day of September, 2000, by Prime Group Realty Trust, a
Maryland real estate investment trust ("REIT"), and Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), in favor of Vornado PS,
L.L.C., a Delaware limited liability company, in its capacity as Lender pursuant
to the Loan Agreement referred to below (the "Lender") and, as set forth below,
agreed to by the Lender and Primestone Investment Partners L.P., a Delaware
limited partnership (the "Borrower"). Unless otherwise defined herein,
capitalized terms used herein have the definitions set forth for such terms in
the Loan Agreement (as hereinafter defined).
W I T N E S S E T H:
-----------------------------
WHEREAS, the Borrower, Lender, the Members of the Guarantor Group
party thereto, and Xxxxxxx X. Xxxxxxx are parties to that certain Loan Agreement
of even date herewith (as amended, supplemented or otherwise modified from time
to time, the "Loan Agreement") pursuant to which the Lender has agreed to
provide the Loan referred to therein;
WHEREAS, the Borrower, the REIT, the Partnership , The Prime Group,
Inc., an Illinois corporation, and certain other investors named therein have
entered into the Registration Rights Agreement, dated as of November 17, 1997
(as the same may from time to time be amended, supplemented, restated or
modified, the "Registration Rights Agreement");
WHEREAS, the Borrower is party to the Amended and Restated Agreement
of Limited Partnership of the Partnership, dated as of November 17, 1997, as
amended (as so amended, the "Partnership Agreement"), among the REIT, The Xxxxx
Group, L.L.C., and the Limited Partners (as defined therein); and
WHEREAS, as security for the Borrower's obligations under the Loan
Agreement, the Borrower has, pursuant to that certain Pledge and Security
Agreement of even date herewith (as amended, supplemented or otherwise modified
from time to time, the "Security Agreement"), granted the Lender a perfected
security interest in, among other things, the Borrower's rights, title and
interest in the Pledged Units (as defined below), together with all common
shares issued by the REIT in exchange for the Pledged Units (the "Pledged
Shares"), the Registration Rights Agreement and the Partnership
Agreement (each as amended, supplemented or otherwise modified from time to
time, the "Assigned Agreements");
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each of the REIT and the Partnership hereby consents and agrees as
follows:
1. (a) Each of the REIT and the Partnership hereby consents to (a)
the assignment by the Borrower of its rights, title and interest in and to the
Pledged Shares and the Assigned Agreements to the Lender pursuant to the
Security Agreement and (b) subject to the terms of the Assigned Agreements to
(i) the foreclosure upon, or exercise of any other rights or remedies the Lender
may have in respect of, the Pledged Collateral (as defined in the Security
Agreement), whether pursuant to the Security Agreement, at law, in equity, or
otherwise and (ii) subject to compliance with the terms of the REIT's Articles
of Amendment and Restatement, as amended (as so amended, the "Declaration of
Trust") and applicable law, the sale or other disposition by Lender of any or
all of the Pledged Shares. In furtherance of the foregoing, each of the REIT and
the Partnership hereby consents to the transfer to the Lender or any transferee
of the Lender of 7,944,893 partnership units of the Partnership (the "Prime OP
Units") that have been pledged to Lender pursuant to the Security Agreement
(together with all Prime OP Units or other securities distributed in respect of
such Prime OP Units and any Prime OP Units or other securities into which such
Prime OP Units may be converted or for which such Prime OP Units may be
exchanged, the "Pledged Units") resulting from (x) the exercise by Lender or any
transferee lender of its remedies under the Credit Documents, including by
foreclosure or transfer in lieu thereof or (y) the purchase of Pledged Units in
a foreclosure sale of the Prudential Loan or the purchase of Pledged Units from
Prudential (or a transferee or substitute lender of Prudential), and irrevocably
agrees in advance that (i) notwithstanding anything contained in the Partnership
Agreement to the contrary, any such transfer may occur on any business day
hereafter and (ii) notwithstanding anything contained in the Partnership
Agreement to the contrary, including, without limitation, Sections 11.3 and 11.4
of the Partnership Agreement but subject to the receipt by the REIT of the
documents specified in Sections 11.3(A), 11.4(B)(i) and 11.4(B)(ii) of the
Partnership Agreement, following any such transfer the REIT will cause the
Partnership (1) to admit the Lender as a Substituted Limited Partner (as such
term is defined in the Partnership Agreement) and (2) to admit a transferee of
the Lender or subsequent holder of the Pledged Shares as a Substitute Limited
Partner; provided that any such subsequent holder of the Pledged Shares is a
Qualified Transferee (as such term is defined in the Partnership Agreement) and
such transfer is not prohibited by Sections 11.3(C), 11.6(D), 11.6(E) or 11.6(F)
of the Partnership Agreement (it being understood and agreed that each of the
Lender, any transferee of the Lender and any subsequent holder of Pledged Units
shall have the unqualified right to assign its Pledged Units to an Assignee (as
such term is defined in the Partnership Agreement)).
-2-
2. Each of the REIT and the Partnership agrees that, until such time
as the Partnership receives written instruction from the Lender releasing the
obligation in this Section 2, if the consent of the Borrower is required as a
condition to any proposed modification to the Pledged Units or the Partnership
Agreement or any actions submitted to the vote of the Limited Partners (as
defined in the Partnership Agreement), each of the REIT and the Partnership will
deem the Borrower to have voted "against" the proposed modification or such
action unless it has received the prior written consent of Lender to such
modification or such action. In the event that the Lender does not respond to a
written request for such consent within five (5) business days after receipt by
the Lender of such request, the Lender shall be deemed not to have granted such
request.
3. Neither the REIT nor the Partnership shall, without the prior
written consent of the Lender, enter into any amendment, supplement, assignment,
transfer or other modification of the Registration Rights Agreement that affects
the Lender or any transferee of the Lender or any of the rights of a holder of
the Pledged Shares, enter into any consensual cancellation or termination of the
Registration Rights Agreement, or consent to the assignment or other transfer by
Borrower of any of its right, title and interest thereunder or under the
Partnership Agreement or the Registration Rights Agreement, or consent to any
such assignment by the Borrower.
4. Each of the REIT and the Partnership agrees, subject to
compliance by the Lender, any transferee lender or subsequent holder of the
Pledged Shares with the terms, provisions and restrictions of the Loan
Documents, that the Lender or such transferee lender or subsequent holder of the
Pledged Shares shall be entitled to require and enforce the performance of all
actions and things required to be paid or performed by the Borrower, the REIT or
the Partnership under the Assigned Agreements and the Lender, any transferee
lender or any subsequent holder of the Pledged Shares may proceed either in its
own name or otherwise and may protect and enforce its rights by suit in equity,
action at law or other appropriate proceeding, or proceed to take any other
action authorized or permitted under applicable law. Each and every remedy of
the Lender, any such transferee lender or any such subsequent holder of the
Pledged Shares shall, to the extent permitted by law, be cumulative and shall be
in addition to any other remedy now or hereafter existing pursuant to any
agreement, at law or in equity or by statute. Without limitation of the
foregoing, the REIT agrees that as promptly as possible after the date hereof,
the REIT will amend the prospectus constituting part of the shelf registration
statement filed pursuant to Article IV of the Registration Rights Agreement to
include the Lender, any transferee lender and/or any subsequent holder of the
Pledged Shares as a selling stockholder under such Registration Rights Agreement
and that the REIT will continue to include the Lender, any transferee lender
and/or any subsequent holder of the Pledged Shares as such a selling stockholder
under the Registration Rights Agreement for so long as the Registration Rights
Agreement shall be pledged to the Lender, transferee lender or subsequent holder
of the Pledged Shares or the
-3-
Lender, transferee lender or subsequent holder of the Pledged Shares may be
entitled to exercise rights under the Registration Rights Agreement.
5. (a) The REIT and the Partnership also confirm that if the Lender
or a transferee lender or subsequent holder of the Pledged Units becomes a
limited partner in the Partnership by virtue of being the holder of any of the
Pledged Units, the Lender, any such transferee lender or any such subsequent
holder of the Pledged Units will be entitled to exercise, and the Partnership
will be required to honor, the limited partner redemption rights set forth in
Section 8.6 of the Partnership Agreement and Exhibit C to the Partnership
Agreement with respect to any such Pledged Units commencing on the first date
the Lender or such subsequent holder becomes the holder of those Pledged Units.
(b) In the event that the Lender commences actions to foreclose on
the Borrower's interest in any or all of the Pledged Units, purchases the
Pledged Units in a foreclosure sale of the Prudential Loan or purchases the
Pledged Units from Prudential and the Lender gives written notice of such
commencement or purchase to the REIT within two (2) Business Days after such
commencement or purchase, then if the Lender gives a notice of election (the
"Notice of Election") under the Partnership Agreement to exchange all or any
portion of such Pledged Units (but in no event fewer than 25,000 Pledged Units,
as such number may be equitably adjusted to give effect to recapitalizations,
reverse stock splits, stock dividends, share combinations and similar events)
held by the Lender for common shares of the REIT or, at the option of the REIT,
cash, the REIT shall notify the Lender within five (5) business days after the
receipt by the REIT of such Notice of Election (including the receipt by the
REIT of the Pledged Units being exchanged as required by the Partnership
Agreement), of its determination whether the REIT desires to exchange such
Pledged Units for cash or common shares. In the event that the REIT does not
elect to exchange such Pledged Units for cash, then the REIT shall deliver the
relevant common shares to the Lender within three (3) business days after the
earlier of such notification or the expiration of such five (5) business day
period. In the event that the REIT elects to exchange such Pledged Units for
cash, then the REIT and the Partnership shall, within three (3) business days
after the date of such notification , cancel the Pledged Units which were
tendered and issue a promissory note of the REIT and the Partnership, as co-
makers, (the "Note") for the amount of the cash due to the Lender in exchange
for the redemption of such Pledged Units. The Note shall provide that interest
payments are due in an amount equal to any distributions which would have been
due had the Pledged Units not been cancelled until the cash was paid to the
Lender. Such interest shall only accrue and be payable to the extent, and on the
same dates, that distribution payments are actually made by the Partnership to
holders of limited partner common units of the Partnership (a "Dividend Payment
Date"). In addition, but without duplication of any such interest payments, the
REIT and the Partnership shall pay to the Lender, as additional interest, an
amount equal to the amount that would have been due to the Lender pursuant to
Section 5.5 of the Partnership
-4-
Agreement had the Pledged Units not been cancelled, such payments to be made to
the Lender on the Partnership Payment Date (as defined in the Partnership
Agreement) on which such payments would have been made to the Lender had the
Pledged Units not been cancelled. The Note shall have a maturity date which is
the date the cash payment would be due to the Lender were the exchange
undertaken in accordance with the terms of the Partnership Agreement, assuming
that the REIT took the entire thirty (30) days allowed under the Partnership
Agreement to determine whether to exchange such Pledged Units for cash or common
shares.
(c) The Lender agrees to provide the REIT with copies of any notice
to Borrower of the occurrence of an Event of Default under the Loan Agreement no
later than three (3) Business Days after the date on which the Lender delivers
such notice of an Event of Default to the Borrower; provided however that the
failure of the Lender to deliver a copy of such notice to the REIT shall not in
any way adversely affect or limit any of the Lender's rights under this Consent
and Agreement.
6. Notwithstanding anything contained in the Declaration of Trust to
the contrary, the REIT hereby represents, warrants and agrees that the
conditions set forth in Section 4.6 of the Declaration of Trust have been
satisfied and that the Ownership Limit (as defined in the Declaration of Trust)
has been waived with respect to the Lender (but not to any transferees of the
Lender) by the Board of Trustees of the REIT (the "Board") to the extent set
forth in this Section 6. Accordingly, the REIT agrees that the Ownership Limit
shall not apply to the extent, and only to the extent, necessary to allow the
exchange of the Pledged Units held by the Lender (but not by any transferee of
the Lender) for common shares of the REIT as provided in the Partnership
Agreement in the event the REIT does not elect to exchange such Pledged Units
for cash as provided in the Partnership Agreement; provided that the extent to
which the Ownership Limit shall not apply shall be reduced by each Equity Share
(as defined in the Declaration of Trust) owned by the Lender, whether
constructively or actually or directly or indirectly, other than Equity Shares
acquired by the Lender pursuant to (x) a foreclosure on, or a conveyance in lieu
of foreclosure on, the Pledged Shares, or (y) the purchase of Pledged Shares in
a foreclosure sale of the Prudential Loan or the purchase of Pledged Shares from
Prudential (or a transferee or substitute lender of Prudential) , and the
exchange of any Pledged Units for common shares of beneficial interest of the
REIT. Nothing contained herein shall be construed as a limitation on the ability
of the Lender to transfer the Loan.
7. The REIT hereby represents, warrants and agrees that, (i) subject
to clauses (ii) and (iii) of this Section 7, notwithstanding Section 3-601(j) of
the Maryland General Corporation Law, the Lender will be an interested
stockholder of the REIT, (ii) pursuant to Section 3-603(c) of the MGCL, any
business combination between the REIT and the Lender (or any affiliate thereof)
resulting from the Lender's acquisition of the Pledged Units and the Lender's
acquisition of
-5-
common shares of the REIT or cash upon exchange of the Pledged Units as provided
in the Partnership Agreement has been irrevocably exempted from the provisions
of Section 3-602 of the MGCL, and (iii) pursuant to Section 3-603(c) of the
MGCL, any business combination between the REIT and the Lender (or any affiliate
thereof) has been irrevocably exempted from the provisions of Section 3-602 of
the MGCL, provided that any such business combination (other than any business
combination described in clause (ii)) is first approved by the Board of Trustees
of the REIT, including the approval of a majority of the members of the Board of
Trustees of the REIT who are not affiliates or associates (as each such term is
defined in Section 3-601 of the MGCL) of the Lender (or any affiliate thereof),
and the REIT hereby agrees that, to such extent, Section 3-602 of the MGCL shall
not apply to any business combination between the Lender and the REIT. The REIT
hereby irrevocably agrees that it will not adopt a shareholder rights plan or
other agreement or instrument similar to a shareholder rights plan or a "poison
pill" unless such takeover defenses shall not apply to the acquisition or
ownership by the Lender of any or all of the Pledged Units or any common shares
of the REIT received by the Lender upon the exchange of any or all of the
Pledged Units (together with any units of the Partnership or shares of the REIT
issued in respect of such Pledged Units or shares of the REIT and any other
securities into which such Pledged Units or shares of the REIT may be exchanged
or converted (collectively, the "Exempt Securities")); provided, however, that
the foregoing shall not bind the REIT with respect to (i) any other common or
preferred shares of the REIT, (ii) any other common or preferred units of the
Partnership, or (iii) other securities of the REIT or the Partnership
(collectively, the "Company's Securities"), previously acquired or subsequently
acquired by the Lender. Without limitation of the foregoing, the REIT agrees
that this provision shall be broadly interpreted to exempt the ownership by the
Lender from the operation of any such shareholder rights plan or similar
agreement or instrument with respect to the Exempt Securities.
8. Election of Vornado Nominee. The REIT hereby agrees that:
(i) on or before the date that is six (6) months after the date
hereof (the "First Determination Date"), the Board shall make a
determination in the Board's business judgement whether or not the Board
anticipates that the REIT will be the subject of (i) a sale of the REIT or
substantially all of its assets, (ii) a merger or other business
combination involving the REIT or (iii) any other similar strategic
transaction (any such transaction described in the foregoing clauses (i)
through (iii), a "Strategic Transaction") within six (6) months after the
First Determination Date. In the event that the Board anticipates in the
Board's business judgement that the REIT will not be the subject of a
Strategic Transaction within six (6) months after the First Determination
Date, then the Board shall, if requested by the Lender, elect Xxxxxxx
Xxxxxxxxxx, the President of Vornado Realty Trust (or such other person
named by Vornado Realty Trust and reasonably approved by the Board) to the
Board (the "Vornado Nominee");
-6-
(ii) in the event that the Vornado Nominee is not named to the
Board by the First Determination Date, then on or before the date that
is nine (9) months after the date hereof(the "Second Determination
Date"), the Board shall make a determination in the Board's business
judgement whether or not the Board anticipates that the REIT will be
the subject of Strategic Transaction within three (3) months after the
Second Determination Date. In the event that the Board anticipates in
the Board's business judgement that the REIT will not be the subject
of a Strategic Transaction within three (3) months after the Second
Determination Date, then the Board shall, if so requested by the
Lender, elect the Vornado Nominee to the Board;
(iii) In the event that the Vornado Nominee is not elected to the
Board by the Second Determination Date, and a Strategic Transaction is
not completed on or before the date that is the first anniversary of
the date hereof, then the Board shall, if so requested by the Lender,
elect the Vornado Nominee to the Board.
Notwithstanding the foregoing, as a condition to the Vornado Nominee
being elected to the Board, the Vornado Nominee shall deliver a letter
to the REIT providing that the Vornado Nominee resigns from the Board
in the event that (a) the loan is repaid without the Lender or its
affiliates obtaining ownership of at least 500,000 (as such number
shall be equitably adjusted to give effect to recapitalizations,
reverse share splits, stock dividends, share combinations and similar
events) Pledged Shares or (b) the Lender and its affiliates hold, as a
result of sales to unaffiliated third parties, fewer than 500,000 (as
such number shall be equitably adjusted to give effect to
recapitalizations, reverse share splits, stock dividends, share
combinations and similar events) Pledged Shares.
9. (a) Each of the REIT and the Partnership further acknowledges and
agrees that the Lender may assign its rights under the Loan Agreement and the
Security Agreement to a transferee Lender and may transfer the Pledged Shares
and that, in the event of any such assignment or transfer, this Consent and
Agreement (other than the provisions of Section 5(b), Section 6 and Section 7
(except as provided in Section 9(b) below)) hereof shall be for the benefit of
any such lenders and any transferee to whom Lender may sell the Pledged Shares,
and such rights of Lender hereunder or referred to herein may be exercised by
any such other lenders and any such transferees.
-7-
(b) In the event that the Lender or a transferee of the Lender that
has elected to be, or that is directly or indirectly owned by an entity that has
elected to be, taxed as a real estate investment trust reasonably determines in
good faith that the foreclosure by the Lender or such transferee upon, or
ownership by the Lender or such transferee of, all or any portion of the Pledged
Shares, could adversely affect the status of the Lender, such transferee or such
other entity that directly or indirectly owns the Lender or such transferee that
has elected to be taxed as a real estate investment as such a real estate
investment trust (the "REIT Compliance Issues"), then the Lender or such
transferee shall have the right to transfer the Loan, the Prudential Loan (to
the extent that it has acquired the Prudential Loan) and/or the Pledged Shares
to an Institutional Investor (as defined below) identified by the Lender or such
transferee and approved by the REIT in the REIT's reasonable discretion, which
approval will not be unreasonably withheld. In the event the REIT fails to
approve or disapprove of such Institutional Investor within five (5) business
days after its receipt of a written request for such transfer that specifies
that the failure to respond within five (5) business days shall be deemed to be
an approval, such transfer and such Institutional Investor shall be deemed to be
approved. The Lender or such transferee shall promptly provide the REIT with
such information as the REIT may reasonably request with respect to the REIT
Compliance Issues and the Institutional Investor to whom the Lender or such
transferee desires to transfer the Loan, the Prudential Loan and/or the Pledged
Shares in order to enable the REIT to respond to the Lender's or such
transferee's request within the foregoing five (5) business day period. In the
event that the REIT consents or is deemed to have consented to such transfer,
such Institutional Investor (i) shall not be obligated to sell any common units
of the Partnership and shares of the REIT that it acquired prior to the date of
such transfer (provided such units and shares were not purchased with the
knowledge that such Institutional Investor may be purchasing the Pledged Shares;
the "Previously Owned Securities"), and (ii) shall succeed to the Lender's or
such transferee's benefits and obligations under the Assigned Agreements, this
Consent and Agreement (including, without limitation, Section 5(b) and Section 7
(and shall have the right to receive the waiver of Ownership Limit no less
favorable to such transferee than the waiver of the Ownership Limit in Section 6
hereof)) for the Pledged Shares and the Previously Owned Securities, subject to
such restrictions to the foregoing clauses (i) and (ii) as the REIT may
reasonably impose to protect its status as a real estate investment trust. In
addition, the REIT hereby agrees that the Lender may, subject to the provisions
of the penultimate paragraph of the Section 9(b) but otherwise without the
consent of the REIT, transfer the Loan, the Prudential Loan and/or the Pledged
Shares to an affiliate (as such term is defined in Rule 405 under the Securities
Act of 1933, as amended) (an "Affiliate") of the Lender. The REIT agrees that in
the event of a transfer of the Loan, the Prudential Loan and/or the Pledged
Shares to an Institutional Investor or to an Affiliate of the Lender pursuant to
this Section 9(b), a waiver of the Ownership Limit no less favorable to such
Institutional Investor or to such Affiliate of the Lender than the waiver of the
Ownership Limit contained in Section 6 hereof will apply to such Institutional
Investor or to such Affiliate of the Lender.
-8-
The term "Institutional Investor" shall mean an institutional investor
with assets in excess of $250,000,000.00, including but not necessarily limited
to a bank, investment bank, mutual fund, mortgage REIT, pension fund, private
investment fund, multi-investor fund or other similar institution or fund, but
shall specifically exclude all office or industrial real estate investment
trusts and other direct competitors of the REIT or Partnership. It shall be
understood that without limiting the meaning of the word "reasonable", it shall
be reasonable for the REIT to refuse to consent to any such transfer to a
particular Institutional Investor if (i) such transfer could adversely affect
the REIT's status as a real estate investment trust, (ii) such Institutional
Investor fails to deliver to the REIT an executed Excepted Holder Certificate in
form and substance substantially identical to the Excepted Holder Certificate of
the Lender attached hereto as EXHIBIT A (with such changes as the REIT may
reasonably request to deal with changes in real estate investment trust tax law
qualification or compliance requirements), or such other form of Excepted Holder
Certificate as may be agreed to by the REIT in its sole discretion, (iii) the
REIT's legal counsel does not issue an opinion to the REIT that the transfer to
such Institutional Investor will not adversely affect the REIT's status as a
real estate investment trust (and the REIT will use its best efforts to obtain
such an opinion from its legal counsel as promptly as practicable), or (iv) such
Institutional Investor has previously commenced or threatened to make a hostile
tender offer for the REIT's shares or a proxy fight to replace all or some of
the then current trustees of the REIT or filed a report on Schedule 13D under
the Securities Exchange Act of 1934, as amended, stating an intention to
consummate a transaction specified in Item 4 of such Schedule in a manner that
is hostile to the Board of the REIT.
Notwithstanding the foregoing, it shall be a condition to the transfer
of the Loan, the Prudential Loan and/or the Pledged Shares to an Institutional
Investor approved or deemed to have been approved pursuant to this Section 9 or
to an Affiliate of the Lender that such transferee deliver an Excepted Holder
Certificate described in clause (ii) of the foregoing paragraph and that the
REIT's legal counsel issues an opinion to the REIT that the transfer to such
Institutional Investor or such Affiliate of the Lender, as applicable, will not
adversely affect the REIT's status as a real estate investment trust (and the
REIT will use its best efforts to obtain such an opinion from its counsel as
promptly as practicable).
The rights under this Section 9(b) may not be exercised by a
transferee of the Lender unless such transferee is either (a) is an Affiliate of
the Lender or (b) has elected to be, or is directly or indirectly owned by an
entity that has elected to be, taxed as a real estate investment trust.
10. Securities Account. The REIT acknowledges, on its own behalf and
in its capacity as the Managing General Partner of the Partnership, and the
Partnership acknowledges that, pursuant to the terms of the Loan Agreement and
the other Credit Documents, the Borrower has established a "Securities Account"
(as defined in the Loan Agreement) opened by Prudential Securities
-9-
Incorporated in the name of Borrower bearing account number 084 953016, and
that, until further notice from Prudential and the Lender, all distributions and
dividends in respect of the Pledged Shares are to be paid by the REIT and the
Partnership directly into such Securities Account.
11. The Resolutions. Attached hereto as EXHIBIT B is a copy of
resolutions of the Board which were adopted by the Board on September 7, 2000
and September 23, 2000 (the "Resolutions"). The Resolutions have not been
amended, modified or rescinded and remain in full force and effect as of the
date hereof. In the event such Resolutions are amended, modified or rescinded in
any manner which adversely affects the Lender without the prior written consent
of the Lender, a default shall be deemed to have occurred under this Consent and
Agreement.
12. Amendment of Section 2.12 of Bylaws. The REIT hereby agrees that
the provisions of the last grammatical paragraph of Section 2.12 of the REITs's
Amended and Restated Bylaws shall not be rescinded, modified or amended in any
manner which would adversely affect Lender or any transferee lender or
subsequent holder of the Pledged Shares.
13. REIT Opinion. The REIT agrees that from time to time, upon the
reasonable request of the Lender, it will use its best efforts to cause Winston
& Xxxxxx, counsel to the REIT (or other counsel reasonably acceptable to the
Lender), to render to the Lender an opinion, in form and substance satisfactory
to the Lender, with respect to the status of the REIT as a real estate
investment trust for purposes of the Code. The Lender agrees to reimburse the
REIT for its reasonable legal fees incurred in connection with the rendering of
more than four such legal opinions in any calendar year (it being understood and
agreed that the REIT will bear the expenses incurred in connection with
rendering of the first four of such legal opinions in each calendar year). The
foregoing does not constitute a covenant by the REIT to remain a real estate
investment trust.
14. Agreement of Lender Regarding Ownership of the REIT Securities.
Lender hereby represents, warrants and covenants for the benefit of the REIT
that neither it nor any of its Affiliates currently owns or will directly or
indirectly acquire any of the REIT's or the Partnership's equity securities,
without the prior approval of the REIT, other than the Pledged Units (and common
shares of the REIT upon the exchange of the Pledged Units in accordance with
their terms), and the benefits to Lender contained in this Agreement shall be
null and void at the option of the REIT and the resolutions adopted by the Board
with respect to the matters covered hereby shall be revocable and subject to
modification by the Board in the event the foregoing representation, warranty
and covenant is breached; provided, however, that the foregoing representation,
warranty and covenant shall not be breached as the result of the indirect
acquisition by Lender or its Affiliates of an immaterial amount of the REIT's
-10-
or the Partnership's securities if the Lender or such Affiliate of the Lender,
as applicable, causes the disposition of such securities within a reasonable
time after the consummation of such indirect acquisition or by the ownership or
acquisition by trustees or officers of the Lender or any of its Affiliates of an
immaterial amount of equity securities of the REIT or the Partnership for their
own personal account.
15. Certain Rights and Remedies. Notwithstanding anything contained
in this Agreement to the contrary, in the event that the Lender or a transferee
of the Lender acquires any Pledged Shares pursuant to Section 17(j) of the Loan
Agreement, any rights, privileges obligations, representations, warranties and
covenants that had been offered and imposed by the REIT and constituted part of
the Offered Terms (as defined in the Loan Agreement) shall inure to the benefit
of the Lender or such transferee of the Lender and such Lender or such
transferee of the Lender shall be entitled to exercise such rights and
privileges and shall be bound by such obligations as if the REIT had directly
offered such rights, privileges and obligations to the Lender or such transferee
of the Lender.
16. (a) No Waiver; Amendments. No failure on the part of the Lender
to exercise, no delay in exercising, and no course of dealing with respect to,
any right or remedy hereunder will operate as a waiver thereof, nor will any
single or partial exercise of any right or remedy hereunder preclude any other
further exercise of any other right or remedy. This Consent and Agreement may
not be amended, supplemented or modified except by written agreement of the
REIT, the Partnership and the Lender.
(b) Survival of Certain Covenants. Notwithstanding any provision of
this Consent and Agreement to the contrary, the obligations of the REIT and the
Partnership under this Consent and Agreement shall survive until payment in full
of all amounts owing under the Loan Agreement and the promissory note delivered
pursuant to the Loan Agreement unless the Lender, a transferee lender or a
subsequent holder of the Pledged Shares has acquired any or all of the Pledged
Shares pursuant to (x) a foreclosure on, or a transfer in lieu of a foreclosure
on, the Pledged Shares or (y) the purchase in a foreclosure sale on the
Prudential Loan or the purchase from Prudential or a transferee or substitute
lender of Prudential, in which case this Consent and Agreement shall survive for
so long as the Lender, any transferee of the Lender or any subsequent holder of
Pledged Shares shall hold the Loan or any Pledged Shares.
(c) Publicity. Except as otherwise required by applicable law or the
rules or regulations of any securities exchange on which the securities of such
party or any Affiliate of such party are listed or traded, each of the parties
hereto agrees that it and its Affiliates shall not issue or cause the
-11-
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the other
party hereto, and each of the parties hereto agrees that in any event, it will
give the other party reasonable opportunity to review and comment upon any such
release or announcement prior to publication of the same.
(d) Notices. All notices and other communications required under the
terms and provisions hereof shall be in writing and shall be addressed (1) if to
the REIT or the Partnership, addressed to it at Prime Group Realty Trust, 00
Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attn: Xxxxxxx X.
Xxxxxxx, Telecopy No.: (000) 000-0000, with copies to Prime Group Realty Trust,
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000; Attention: Xxxxx X.
Xxxxxxx, Telecopy No.: (000) 000-0000, and to Winston & Xxxxxx, 00 Xxxx Xxxxxx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attn: Xxxxx X. Xxxxxx, Esq., Telecopy No.: (312)
558-5700 or (2) if to the Lender, c/o Vornado Realty Trust, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: President, Xxxxxx Xxxxxx and Xxxx Xxxxxxx,
Telecopy No.: (000) 000-0000; and to Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx Israel, Esq., Telecopy No.: (000) 000-0000
or at such other place as any party may hereafter designate to the other party
hereto in writing. Any notice under this Consent and Agreement to the REIT, the
Partnership or the Lender shall be in writing and sent (A) by telecopy, or (B)
by registered or certified mail with return receipt requested (postage paid), or
(C) by a recognized overnight delivery service with charges prepaid. Any notice
under this Consent and Agreement to the REIT, the Partnership or the Lender
shall be deemed given only when actually received or when delivery is refused,
and any such notice to any person other than the REIT, the Partnership or the
Lender shall be deemed to have been given when deposited in the mails, postage
prepaid, certified or registered United States mail.
(e) Successors and Assigns. This Consent and Agreement shall be
binding upon and inure to the benefit of the REIT, the Partnership and the
Lender and their respective permitted successors and assigns.
(f) Governing Law. This Consent and Agreement will be governed by and
construed and enforced in accordance with the laws of the State of New York
without regard to conflicts of laws provisions thereof.
-12-
(g) Business Day. "Business day" means, for purposes of this Consent
Agreement, any day other than a Saturday, Sunday, or other day on which
commercial banks in The City of New York or Chicago, Illinois are obligated or
permitted to be closed.
-13-
IN WITNESS WHEREOF, the undersigned, REIT has executed this Consent
and Agreement as of the date set forth in the first paragraph of this Consent
and Agreement.
PRIME GROUP REALTY L.P.
By: PRIME GROUP REALTY TRUST,
Its General Partner
By: [s] Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Co-President
-14-
IN WITNESS WHEREOF, the undersigned, the Lender has executed this
Consent and Agreement as of the date set forth in the first paragraph of this
Consent and Agreement.
PRIME GROUP REALTY, L.P
By: Prime Group Realty Trust,
its general partner
By: [s] Xxxxxxx X. Xxxxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Co-President
VORNADO PS, L.L.C.
By: VORNADO REALTY, L.P.,
its sole member
By: VORNADO REALTY TRUST,
its General Partner
By: [s] Xxxxx Xxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President and Chief
Financial Officer
Acknowledged and Agreed:
PRIMESTONE INVESTMENT PARTNERS L.P.,
By: PG/Primestone, L.L.C.,
Its General Partner
By: The Prime Group, Inc.,
Its Administrative Member
By: [s] Xxxx X. Xxxxxx
---------------------------
Name: Xxxx X. Xxxxxx
Title: Chief Financial Officer
-15-
