November 19, 2001
Cadim Acquisition, LLC
c/o Mayer, Brown & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
or Xxxx X. Xxxxxx
Xxxxxxxxx: (000) 000-0000
Cadim inc.
000, Xxxxxx Xxxxxxxx, Xxxxxx 0000
Case Postale 000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Re: Purchase and Sale of Loan Participation among
Vornado PS, L.L.C., a Delaware limited liability
company (the "Lender"), Vornado Realty L.P. ("VRLP"),
Cadim Acquisition, LLC, a Delaware limited liability
company (the "Participant"), and Cadim inc., a company
incorporated under the laws of Quebec ("Cadim").
Gentlemen/Ladies:
Reference is made to that certain Loan Agreement, dated
as of September 26, 2000 (the "Vornado Loan Agreement"), among Primestone
Investment Partners L.P., as Borrower (the "Borrower"), The Prime Group,
Inc., Prime Group Limited Partnership, PGLP, Inc., Prime Group II, L.P. and
Prime International, Inc. (collectively, the "Guarantors"), Xxxxxxx X.
Xxxxxxx ("Xxxxxxx") and the Lender and to the note, dated as of September
26, 2000, in the original principal amount of $62,000,000 (the "Vornado
Note") made by the Borrower to the Lender. The Vornado Note is secured by a
security interest in 7,944,893 units representing common limited
partnership interests in Prime Group Realty, L.P., a Delaware limited
partnership (the "Operating Partnership"), granted by the Borrower pursuant
to that certain Pledge and Security Agreement, dated as of September 26,
2000 (the "Vornado Pledge and Security Agreement"), between the Borrower
and the Lender. Capitalized terms used herein which are not defined herein
have the meanings herein ascribed to them in the Vornado Loan Agreement.
The Vornado Loan Agreement, the Vornado Note, the Vornado Pledge and
Security
Agreement and all other documents delivered in connection therewith are
referred to herein as the "Vornado Loan Documents" and the indebtedness
evidenced thereby, together with all of the rights of the Lender
thereunder, and all the obligations of the Borrower, Guarantors and Xxxxxxx
to Lender in connection therewith, are referred to herein as the "Vornado
Loan".
Reference is also made to that certain Xxxxxxx and
Restated Credit Agreement, dated as of September 26, 2000, as amended (as
so amended, the "Prudential Loan Agreement"), between Borrower and P-B
Finance Ltd. ("Prudential Lender") and to the note, dated as of November
17, 1997, in the original principal amount of $40,000,000 (the "Prudential
Note") made by the Borrower to Prudential Securities Credit Corporation and
indorsed to the Lender. The Prudential Note is secured by a security
interest in 7,944,893 Prime OP Units, granted by the Borrower pursuant to
that certain Amended and Restated Pledge and Security Agreement, dated as
of September 26, 2000, as amended (as so amended, the "Prudential Pledge
and Security Agreement"), between the Borrower and the Prudential Lender.
The Prudential Loan Agreement, the Prudential Note, the Prudential Pledge
and Security Agreement and all other documents delivered in connection
therewith are referred to herein as the "Prudential Loan Documents" and the
indebtedness evidenced thereby, together with all of the rights of Lender
thereunder, and all the obligations of the Borrower, Guarantors and Xxxxxxx
to Lender in connection therewith, are referred to herein as the
"Prudential Loan". All right, title and interest of the Prudential Lender
under the Prudential Loan was sold and assigned to Lender pursuant to that
certain Assignment of Loan and Loan Documents, dated as of October 31, 2001
(the "Prudential Loan Assignment"). For purposes hereof, all references to
the "Prudential Loan" shall include all rights to indemnification and other
recoveries, if any, in favor of Lender under and pursuant to the Prudential
Loan Assignment.
The Prudential Loan Agreement and the Vornado Loan
Agreement are sometimes collectively referred to herein as the "Loan
Agreements"; the Prudential Loan Documents and the Vornado Loan Documents
are sometimes collectively referred to herein as the "Loan Documents"; the
Prudential Note and the Vornado Note are sometimes collectively referred to
herein as the "Notes"; and the Prudential Loan and the Vornado Loan are
sometimes collectively referred to herein as the "Loans".
Lender desires to sell, and the Participant desires to
purchase, an undivided participating interest in the Loans now outstanding
under the Loan Agreements as evidenced by the Notes and the related Loan
Documents on the terms and conditions set forth below and the Participant
desires to contribute to a possible joint effort with Lender with respect
to a possible strategic transaction relating to Prime Group Realty Trust
(the "REIT") (although as of the date hereof there is no agreement between
the parties as to any such joint effort and in the event the parties are
-2-
unable to reach an agreement with respect to any such joint effort neither
Lender nor Participant shall, except as set forth in Section 5(b), owe the
other party any obligation with respect to any such possible joint effort).
1. Purchase and Sale; Closing Date. Subject to the
terms and conditions hereof, the Lender hereby agrees to sell and the
Participant agrees to purchase, without recourse (except as set forth
herein), an undivided 50.0% participating interest (the "Participation") in
the Loans. As used herein "Participant's Share" means 50.0%. Such purchase
and sale shall be effected on November 19, 2001 (the "Closing Date").
Notwithstanding anything contained herein to the contrary, the Lender and
the Participant hereby acknowledge that the purchase by the Participant of
the Participation shall not result in the Participant acquiring any
contractual rights under the Loan Documents or becoming an obligee under
the Loans and that the Lender shall retain all contractual rights and
obligations under all of the Loan Documents.
2. Purchase Price. On the Closing Date, the Participant
shall pay to the Lender FORTY-NINE MILLION, NINE HUNDRED EIGHTY-NINE
THOUSAND, TWO HUNDRED FORTY AND NO/100 DOLLARS ($49,989,240.00) (the
"Purchase Price") in consideration for the Participant's Share of the
Loans, including all payments thereon and all amounts realized or recovered
in connection therewith from and after the date hereof (whether or not such
payments relate to the period on, before or after the date hereof (but
subject, in the case of cash payments or cash recoveries, to distribution
in accordance with Section 3 hereof)), and as a contribution to a possible
joint effort with Lender with respect to a possible strategic transaction
relating to the REIT (although as of the date hereof there is no agreement
between the parties as to any such joint effort and in the event the
parties are unable to reach an agreement with respect to any such joint
effort neither Lender nor Participant shall, except as set forth in Section
5(b), owe the other party any obligation with respect to any such possible
joint effort). In addition, the Lender and the Participant hereby agree
that within seven (7) days from the date hereof, the Purchase Price shall
be adjusted to reflect the equal sharing between the Lender and the
Participant of the costs and expenses incurred by the Lender and its
affiliates on the one hand (up to a maximum of Two Million Dollars
($2,000,000)) and the Participant and its affiliates on the other hand (up
to a maximum of Two Million Dollars ($2,000,000)) prior to the date hereof
relating to the Loans (in the case of Lender) and relating to the Loans and
the REIT and its assets (in the case of the Participant). All references to
"Dollars" herein shall mean the lawful currency of the United States of
America. Payment of the Purchase Price shall be made in accordance with
Section 9.
3. Distributions of Payments (other than Prime OP Units
or REIT Shares). When, if and to the extent that the Lender hereafter
receives (by payments in the ordinary course, by realization on collateral
security, or otherwise) a payment or prepayment in cash of principal of or
-3-
interest on the Loans or any other amounts payable by the Borrower pursuant
to the Loan Documents or payments in cash in bankruptcy or any insolvency
proceeding, 100% of any such amount received by the Lender shall be applied
in the following order of priority:
(a) first, to the payment of or reimbursement of all
out-of-pocket costs and expenses incurred from and after the date hereof,
including attorneys' fees and disbursements, incurred by or on behalf of
the Lender or Participant (provided that such expenses of the Participant
shall have been reasonably approved by the Lender) in connection with the
servicing and administration of the Loans, including the enforcement of any
remedies (and the cost of the Lender's and Participant's (provided that
such costs of the Participant shall have been reasonably approved by the
Lender) investigation of rights and remedies) as against the Borrower, any
of the Guarantors or any other obligor in respect of the Loans, or any
collateral or security given therefor; provided that neither Cadim nor VRLP
shall be entitled to reimbursements of amounts required to be paid by it
pursuant to the indemnification provisions of Section 7(b) or Section 8(b),
respectively; and
(b) second, to the Lender and Participant pro rata in
accordance with their respective "Interest Balance Accounts" until such
Interest Balance Accounts equal zero. On the Closing Date, the Interest
Balance Account of Lender will equal Four Million, Seven Hundred
Sixty-Seven Thousand, Seventy-Nine and No/100 Dollars ($4,767,079.00) and
the Interest Balance Account of Participant will equal Zero Dollars
($0.00). If, after the Closing Date, the calculation of the foregoing
amount of the Lender's Interest Balance Account is determined to be
incorrect, the parties agree that, within seven (7) days of the Closing
Date, the parties will adjust the initial Lender's Interest Balance Account
to reflect the correctly calculated amount of the Lender's Interest Balance
Account as of the Closing Date (and Xxxxxx agrees to provide reasonable
"back-up" information to Participant regarding the calculation of the
amount of the Lender's Interest Balance Account set forth above). After the
Closing Date on a daily basis, the Interest Balance Account of the Lender
shall be increased by the sum of (i) 50% of the interest accrued (as
provided under the Vornado Loan Documents or the Prudential Loan Documents,
as applicable) on the outstanding principal balance of the Loans for the
immediately preceding day and (ii) 100% of the interest accrued (as
provided under the Vornado Loan Documents or the Prudential Loan Documents,
as applicable) on the amounts comprising the Lender's Interest Balance
Account for the immediately preceding day. After the Closing Date, the
Interest Balance Account of the Participant shall be increased by the sum
of (i) 50% of the interest accrued (as provided under the Vornado Loan
Documents or the Prudential Loan Documents, as applicable) on the
outstanding principal balance of the Loans for the immediately preceding
day and (ii) 100% of the interest accrued (as provided under the Vornado
Loan Documents or the Prudential Loan Documents, as applicable) on the
amounts comprising the Participant's Interest Balance Account for the
immediately preceding day. The Interest Balance Account of each of Lender
-4-
and Participant shall be reduced by each disbursement to it under this
Section 3(b); and
(c) thereafter 50% to Lender and 50% to Participant.
Lender shall pay to the Participant any amounts payable
to the Participant pursuant to the above provisions of this Section 3 not
later than the first (1st) Business Day after receipt of such amounts from
the Borrower, any of the Guarantors or any other entity or person obligated
with respect to the Loans. The application of amounts pursuant to this
Section 3 shall be for the benefit of Lender and Participant and shall not,
insofar as the Borrower, Guarantors or other obligors under the Loan
Documents are concerned, affect the Lender's right to apply any amounts
received in respect of the Loans to the Loans in such priority and
proportion as Lender shall determine.
Notwithstanding anything herein to the contrary, if the
Lender acquires the Prime OP Units or REIT Shares pledged as collateral for
the Loans on behalf of the Lender and the Participant as the result of a
credit bid in the foreclosure proceedings, such Prime OP Units and/or REIT
Shares shall be distributed 50% to Lender, 50% to Participant as more fully
set forth in Section 5(a) hereof and such distribution shall not result in
any reduction in the Interest Balance Account of either Lender or
Participant.
4. Xxxxxx's Duties; Servicing; Participant's Rights.
(a) Without the prior consent of the Participant, the
Lender shall not (i) give its agreement to any material amendment, waiver
or modification of any Loan Document, including without limitation (A)
postponing any date fixed for payment of any portion of the principal of,
or interest on, the Loans, (B) reducing the principal of, or interest on,
the Loans, (C) releasing any lien or security interest on any collateral or
security given for the Loans or (D) releasing any Guarantor or Xxxxxxx from
its or his obligations regarding the Loans or under any of the Loan
Documents, (ii) agree to a plan of reorganization of the Borrower in any
bankruptcy or similar proceeding involving the Borrower, (iii) post any
bond, security or similar payment required to be posted by a court of
competent jurisdiction in connection with a bankruptcy or similar
proceeding involving the Borrower or (iv) enter into any agreement with
Borrower, any Guarantor or Xxxxxxx in which any such entity or person
receives a material benefit with respect to (1) the collateral securing the
Loans, (2) the relationship of any such entity or person with the REIT, the
Operating Partnership or any of their respective subsidiaries or (3) any of
the assets of the REIT, the Operating Partnership or any of their
respective subsidiaries.
(b) Lender shall administer and service the Loans with
the same degree of care which an institutional lender normally exercises in
connection with similar loans held by or for the benefit of such lender and
-5-
any participants, provided that, notwithstanding anything herein that may
be construed to the contrary, the Lender shall not be liable to the
Participant with respect to anything which the Lender or its agents, in the
exercise of the Lender's good faith discretion, does or refrains from doing
from and after the date hereof in connection with the administration or
servicing of the Loans, it being agreed, for all purposes hereunder, that
the Lender shall be liable in connection with the administration and
servicing of the Loans (which shall include for all purposes hereunder the
monitoring of the Loans) from and after the date hereof, or its failure to
administer or service the Loans from and after the date hereof, only if and
to the extent the Lender's action or failure to act constituted willful
misconduct, bad faith or gross negligence on the part of the Lender.
Without limiting the foregoing, the Lender may rely (in good faith) upon
the advice of counsel, accountants and other experts, including those
retained by Xxxxxxxx, and upon any written or oral communication which it
believes to be genuine or correct or to have been signed or made by the
proper person, shall not have any obligation to make any inquiry concerning
the performance of the Borrower, any of the Guarantors or any other entity
or person obligated with respect to the Loans, of their obligations and
liabilities under the Loan Documents or in respect of the Loans and shall
not be responsible for the performance of the payment obligations of the
Borrower, any of the Guarantors or any other entity or person obligated
with respect to the Loans or any other party to any of the Loan Documents.
Nothing herein shall be deemed to impose on the Lender any duties or
responsibilities to the Participant except as otherwise expressly provided
herein.
(c) Lender shall have the right to employ and retain
attorneys, accountants, contractors, brokers, investment bankers, property
managers, engineers, environmental consultants, appraisers and other
experts and advisors to the extent the Lender reasonably deems necessary or
appropriate in connection with the monitoring of the Loans, the enforcement
of the terms of the Loans, the exercise of remedies provided or available
in connection therewith and/or the sale or liquidation of, or other
realization on, the collateral therefor (the cost of which shall be
chargeable as provided for in Section 3(a) or Section 7), and, except as
expressly herein provided, (i) Lender shall have the sole right to exercise
or refrain from exercising any rights or remedies available to the Lender
under the Loans or take or refrain from taking any other action with
respect to the Loans or the collateral therefor or under the Loan Documents
or otherwise available to it, including, without limitation, the
commission, prosecution or settlement in the name of the Lender of any
judicial or nonjudicial or similar action or proceeding, at law or in
equity, with respect to any such rights or remedies and taking any action
the Lender deems necessary in connection with any other judicial or
nonjudicial or similar action or proceeding involving the Borrower, any of
the Guarantors or Xxxxxxx, including, without limitation, any bankruptcy or
similar proceeding and (ii) the sale of the Participation by the Lender
shall not limit or otherwise affect the Lender's discretion in exercising
or refraining from exercising any rights or remedies. Notwithstanding the
immediately preceding sentence, (i) Lender shall use reasonable efforts to
-6-
consult in good faith with Participant in advance with respect to all
material decisions made in connection with the Loans and (ii) the choice by
Lender of legal counsel and accountants referred to in this Section 4(c)
shall be subject to the prior reasonable approval of Participant; provided
that (1) any "big five" accounting firm shall be acceptable, (2) the law
firm of Xxxxxx Xxxxxx Xxxxx & Xxxx LLP shall be acceptable as bankruptcy
and litigation counsel and (3) the law firm of Xxxxxxxx & Xxxxxxxx shall be
acceptable as to litigation with respect to the Borrower, the Guarantors,
Xxxxxxx or any other obligor under any of the Loan Documents and with
respect to enforcing any rights under any of the Loan Documents. The
Participant shall use good faith efforts to make a representative of
Participant available to Lender for purposes of all consultations referred
to in the immediately preceding sentence.
(d) (i) At any time prior to the completion of the sale
of the collateral for the Loans pursuant to a foreclosure proceeding, the
Participant shall have the option to purchase all, but not less than all,
of the interest in the Loans held by the Lender at a price (the "Option
Price") equal to the sum of (A) 50% of the outstanding principal amount of
the Loans at the time of the purchase of the Loans, plus (B) an amount
equal to the Interest Balance Account of the Lender on the date of the
purchase, plus (C) all amounts Lender would be entitled to receive under
Section 3(a) if a distribution were made on the date of the purchase which
would pay the amount owing to Lender under Section 3(a) in full (provided,
however, that the option contained in this Section 4(d) may not be
exercised after the completion of the foreclosure sale relating to the
collateral securing the Loans or of a bankruptcy, insolvency or other
similar proceeding involving the Borrower that results in the disposition
of the collateral securing the Loans, it being understood and agreed that
this Section 4(d) shall cease to be of any force and effect from and after
the time of the completion of such foreclosure sale or of such bankruptcy,
insolvency or other similar proceeding). The Participant may exercise such
option by delivering written notice of such election (a "Notice of
Election") to the Lender, together with payment of the full amount of the
Option Price in the manner and within the time period specified in Section
4(d)(ii) below. Any Notice of Election delivered to the Lender shall
constitute an irrevocable and unconditional obligation of the Participant
to purchase all of the interest in the Loans held by the Lender at the
Option Price, and upon receipt by the Lender of a Notice of Election, the
Lender shall be obligated to sell all of such interest in the Loans held by
the Lender to the Participant at the Option Price.
(ii) The closing of the purchase of the Lender's
interest in the Loans pursuant to this Section 4(d) shall occur no later
than the Business Day following the Business Day on which delivery of the
Notice of Election occurred; provided that, if the Notice of Election is
delivered to Lender by Participant at the foreclosure proceeding, then the
closing shall occur immediately upon such delivery. At the closing, Xxxxxx
shall deliver to the Participant all of Xxxxxx's interest in the Loans free
and clear of all liens, charges and encumbrances on Xxxxxx's title thereto,
-7-
and the Participant shall deliver the Option Price to the Lender by payment
of wire transfer of immediately available funds to an account designated by
the Lender; provided that, if the Notice of Election is delivered to Lender
by Participant at the foreclosure proceeding, then Participant shall
deliver the Option Price to the Lender on the Business Day following the
closing.
(iii) Upon the closing of the purchase of the Lender's
interest in the Loans pursuant to this Section 4(d), the Lender shall not
have any further rights with respect to the servicing of the Loans, any
further obligations with respect to the Loans or any further economic
interest in the Loans.
(iv) In the event that the Participant acquires the
Loans pursuant to this Section 4(d), Lender will reasonably cooperate with
Participant to transfer to Participant all of the Lender's rights under the
Loan Documents that may be transferred to Participant under the terms of
such Loan Documents and, upon the reasonable request of Participant, Xxxxxx
will execute and deliver such other documents as may be reasonably required
(without imposing any other obligations or liabilities upon Lender) to
allow Participant to exercise such rights to the extent such rights may be
transferred to the Participant under the terms of the Loan Documents.
(e) Each of the Lender and the Participant agrees that
the Lender may submit one or more bids at the foreclosure proceeding
relating to the collateral for the Loans in such amounts as the Lender may
determine following consultation in good faith with the Participant. In the
event that the Participant desires the Lender to submit a bid at a price
that is higher than a bid that the Lender desires to submit, then the
Participant (and its affiliates) shall have the right to submit bids for
the collateral at such foreclosure proceeding for its own account and in
such amounts as it may determine in its sole and absolute discretion (or
may issue to Lender a Notice of Election in accordance with Section 4(d)
above). The proceeds from the sale of the collateral in such foreclosure
sale in which Participant (or one of its affiliates) is the successful
bidder shall in all circumstances be distributed in accordance with Section
3 hereof.
(f) If, at any time after March 19, 2002 (the "Buy-Sell
Lockout Date"), the Participant disagrees with a material action proposed
to be taken by Lender in connection with a bankruptcy, insolvency or other
judicial action involving the Borrower, and the Lender, notwithstanding
such disagreement, proceeds with such disputed material action, then both
the Participant and the Lender shall have the right to make an offer as
described below (the "Buy-Sell Offer") to the other party as set forth
below (provided, however, that the Buy-Sell Offer may not be made after the
completion of the foreclosure sale relating to the collateral securing the
Loans or of a bankruptcy, insolvency or other similar proceeding involving
the Borrower that results in the disposition of the collateral securing the
Loans, it being understood and agreed that this Section 4(f) shall cease to
-8-
be of any force and effect from and after the time of the completion of such
foreclosure sale or of such bankruptcy, insolvency or other similar
proceeding):
(i) The Buy-Sell Offer shall be in writing and be
signed by the party delivering the Buy-Sell Offer (the "Exercising Party"),
and shall specify a cash purchase price (the "Buy-Sell Offer Price") at
which the Exercising Party would purchase 100% of the Loans from the party
receiving the Buy-Sell Offer (the "Receiving Party").
(ii) The Receiving Party shall have the right,
exercisable by delivery of notice in writing (the "Buy-Sell Election") to
the Exercising Party within five (5) Business Days after the receipt of the
Buy-Sell Offer, to elect to either: (A) sell to the Exercising Party all of
the Receiving Party's right, title and interest in and to the Loans for a
cash purchase price equal to the Lender Value (if the Lender is the
Receiving Party) or the Participant Value (if the Participant is the
Receiving Party); or (B) purchase all of the Exercising Party's right,
title and interest in and to Loans for a cash purchase price equal to the
Participant Value (if the Participant is the Exercising Party) or the
Lender Value (if the Lender is the Exercising Party). As used herein, the
"Lender Value" shall mean the amount Lender would receive if an amount
equal to the Buy-Sell Offer Price were distributed in accordance with the
waterfall set forth in Section 3 hereof; and "Participant Value"shall mean
the amount Participant would receive if an amount equal to the Buy-Sell
Offer Price were distributed in accordance with the waterfall set forth in
Section 3 hereof. If the Receiving Party fails to give the Exercising Party
notice of the Buy-Sell Election prior to the expiration of the five (5)
Business Day period specified in the first sentence of this clause (ii),
the Receiving Party shall be deemed to have elected to sell to the
Exercising Party all of the Receiving Party's right, title and interest in
and to the Loans for a cash purchase price equal to the Lender Value (if
the Lender is the Receiving Party) or the Participant Value (if the
Participant is the Receiving Party).
(iii) The closing of the purchase and sale pursuant to
this Section 4(f) shall occur no later than the second (2nd) Business Day
following the Business Day on which the Buy-Sell Election shall have been
made or shall be deemed to have occurred. At the closing, the selling party
shall deliver to the purchasing party all of the selling party's interest
in the Loans free and clear of all liens, charges and encumbrances on its
title thereto, and the purchasing party shall deliver the Lender Value or
Participant Value (as applicable) to the selling party by payment of wire
transfer of immediately available funds to an account designated by the
selling party.
(iv) Upon the closing of the purchase of the selling
party's interest in the Loans pursuant to this Section 4(f), the selling
party shall not have any further rights with respect to the servicing of
the Loans, any further obligations with respect to the Loans or any further
economic interest in the Loans.
-9-
5. Foreclosure on Collateral.
(a) If the Lender acquires some or all of the Prime OP
Units or REIT Shares pledged as collateral for the Loans on behalf of the
Lender and the Participant as the result of a credit bid in the foreclosure
proceedings, then (i) the Lender shall, upon written request by the
Participant, either (A) deliver the Participant's Share of the Prime OP
Units or REIT Shares, as the case may be, acquired by the Lender as a
result of such credit bid to the Participant or (B) deliver a notice of
election to the REIT to exchange the Participant's Share of such Prime OP
Units acquired by the Lender as a result of such credit bid for REIT Xxxxxx
and, upon receipt of such REIT Shares, the Lender shall deliver such REIT
Shares to the Participant (it being understood and agreed that (I) any such
delivery will be subject to the terms and conditions of the organizational
documents governing the REIT and the Operating Partnership and to transfer
and other restrictions imposed by applicable law and that each party will
provide the other party with all agreements and other documents reasonably
necessary or requested by the other party to ensure compliance with such
requirements and restrictions and (II) Lender shall be entitled to retain
for its own account 50% of the Prime OP Units or REIT Shares acquired by
Lender as a result of such credit bid and any REIT Shares issued upon
exchange of any such Prime OP Units so retained for the Lender's account).
Subject to the provisions of Section 5(b), (i) the Lender shall have no
further rights in respect of the Prime OP Units or REIT Shares delivered to
Participant pursuant to this Section 5(a) and (ii) the Participant shall
have no rights to the Prime OP Units and/or REIT Shares that the Lender is
entitled to retain for its own account
(b) Each of the Lender and the Participant hereby
agrees that, in regard to any Prime OP Units or REIT Shares pledged as
collateral for the Loans and acquired by the Lender on behalf of the Lender
and the Participant as the result of a credit bid in the foreclosure
proceedings (including any Prime OP Units or REIT Shares delivered to
Lender or Participant for its own account pursuant to Section 5(a) above
but excluding any Prime OP Units or REIT Shares acquired by the Participant
as a result of a bid for its own account as described in Section 4(e)), it
shall not, without the prior written consent of the other, directly or
indirectly, sell or otherwise transfer or dispose of, or grant any interest
in or option with respect to, or create or permit to exist any lien,
security interest or other charge or encumbrance upon or with respect to
any such Prime OP Units or REIT Shares during the period beginning on the
date on which Lender so acquires such Prime OP Units or REIT Shares (the
"Acquisition Date") and ending on the Exclusivity Period Termination Date
(such period, the "Exclusivity Period"). The term "Exclusivity Period
Termination Date" shall mean the earlier to occur of (x) the date that is
eighteen (18) months after the Acquisition Date and (y) the date on which
Participant's and/or Participant's affiliates' standstill obligations to
the REIT are terminated; provided, however, that in no event shall the
Exclusivity Period Termination Date occur earlier than the date that is six
(6) months after the Acquisition Date. In addition, each of the Lender
-10-
and the Participant agrees that, during the Exclusivity Period, without the
prior written consent of the other, (i) it shall not, and shall use its
best efforts to ensure that its affiliates, directors, trustees, officers,
employees, controlling shareholders or owners, legal and financial
advisors, accountants and other agents and representatives (collectively,
its "Representatives") shall not, (A) take any action, either directly or
indirectly, to initiate, assist, solicit, or encourage, any inquiries or
the making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its shareholders) with respect to a
Transaction (as hereinafter defined) (B) engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to a Transaction, (C) otherwise
facilitate any effort or attempt to make or implement a Transaction or (D)
take any other action which may be reasonably expected to lead to any
Transaction, in each case, other than a Transaction in which the Lender
and/or its shareholders and/or affiliates and the Participant and/or its
shareholders and/or affiliates are participants (a "Lender/Participant
Transaction"); (ii) it will immediately cease any existing activities,
discussions or negotiations with any parties conducted heretofore with
respect to any of the foregoing and will advise such parties that it is not
in a position to negotiate further with them during the Exclusivity Period
or to provide any further due diligence materials and (iii) it shall not,
and shall use its best efforts to ensure that its affiliates or
Representatives shall not, acquire, directly or indirectly, any shares of
beneficial interest of the REIT or units in the Operating Partnership
(whether by way of purchase, exercise of option, transfer or otherwise,
including, without limitation, from an affiliate) except in connection with
a Lender/Participant Transaction. A "Transaction" means a merger,
acquisition, tender offer, exchange offer, consolidation or similar
business combination transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of the REIT, the
Operating Partnership or any subsidiary of either of them, or any other
sale, dividend, split, reorganization, recapitalization, restructuring,
spin-off or other disposition of equity securities of the REIT, the
Operating Partnership or any subsidiary of either of them or any similar
transaction involving, directly or indirectly, the REIT, the Operating
Partnership or any subsidiary of either of them. Notwithstanding anything
to the contrary contained herein, in the event that Participant or Lender
makes a request to the REIT to release Participant, Cadim and/or their
respective Representatives from any standstill or similar agreement to the
extent required to facilitate any of the foregoing and the REIT declines to
grant such release, then Lender, VRLP and their respective Representatives
shall be permitted, on their own behalf, to engage in a "solicitation" of
"proxies" (as such terms are defined in the rules promulgated under the
Securities Exchange Act of 1934, as amended) with respect to securities of
the REIT and/or the Operating Partnership. Neither Participant nor Cadim
nor any of their respective affiliates has or shall have any agreement,
arrangement or understanding with Lender, VRLP or any of their respective
Representatives regarding any such solicitation of proxies by Xxxxxx, VRLP
-11-
or any of their respective Representatives, and Participant, Xxxxx and
their respective affiliates may, in their discretion, agree to, abstain or
oppose any such solicitation of proxies.
Notwithstanding anything to the contrary in this Agreement, at any time
after the date that is six (6) months after the Acquisition Date, each of
the Lender and the Participant (in such capacity, the "Transferor") shall
have the right to sell all or a portion of the Prime OP Units or REIT
Shares then owned by the Transferor (free and clear of any restrictions
under this Section 5(b)); provided that (i) the Transferor complies with
the procedures set forth in the next immediately succeeding paragraph and
(ii) at some time prior to such sale, the Lender and the Participant have
made an offer to the REIT to enter into a Transaction and such offer has
been rejected by either the REIT or the REIT's shareholders.
In connection with a sale by the Transferor of all or a portion of its
Prime OP Units or REIT Shares, the Transferor shall comply with the
following procedures: (i) The Transferor shall first offer to sell such
Prime OP Units or REIT Shares to the other party (the "Other Party")
pursuant to a written offer (the "Offer") which shall set forth the price
at which the Transferor would be willing to sell such Prime OP Units or
REIT Shares to the Other Party. (ii) The Other Party shall have seven (7)
Business Days from the date of delivery of the Offer to elect by written
notice to the Transferor to either (A) purchase such Prime OP Units or REIT
Shares from the Transferor at the price set forth in the Offer, (B) sell
the Other Party's Prime OP Units or REIT Shares (or a pro rata portion
thereof, as applicable) to the same transferee that purchases the
Transferor's Prime OP Units or REIT Shares on the same terms and conditions
of the sale by the Transferor of its Prime OP Units or REIT Shares
(provided that such terms and conditions shall be no less favorable to the
Other Party than those set forth in the Offer, except that the purchase
price may be 98% or more of the purchase price set forth in the Offer) or
(C) permit the Transferor to sell its Prime OP Units or REIT Shares on
terms no less favorable to the Transferor than the terms set forth in the
Offer (except that the purchase price may be 98% or more of the purchase
price set forth in the offer). If the Other Party fails to make an election
within the time period set forth above, the Other Party shall be deemed to
have elected clause (ii)(C) above. (iii) If the Other Party elects or is
deemed to have elected clauses (ii) (B) or (ii)(C) above, Transferor shall
have one hundred (100) days from the date of delivery of the Offer to
complete the sale of such Prime OP Units or REIT Shares in accordance with
the terms of this paragraph. If such sale is not completed within such one
hundred (100) day period, the provisions of this paragraph shall again
apply. (iv) If the Other Party elects the option set forth in clause
(ii)(A) above, then the closing of the sale of such Prime OP Units or REIT
Shares from the Transferor to the Other Party shall occur on the date that
is twenty (20) days after the date of delivery of the Offer (or if such day
is not a Business Day, the next succeeding Business Day) and at the closing
of such sale, the Transferor shall deliver to the Other Party all of
Transferor's interest in such Prime OP Units or REIT Shares free and clear
-12-
of all liens, charges and encumbrances on Transferor's title thereto, and
the Other Party shall deliver the purchase price set forth in the Offer to
the Transferor by payment of wire transfer of immediately available funds
to an account designated by the Transferor. If a party shall default in the
sale or purchase, the non-defaulting party shall be free to sell all or a
portion of its Prime OP Units or REIT Shares without having to comply with
the terms of this paragraph.
(c) Xxxxxx and the Participant agree that if the Lender
acquires the Prime OP Units or REIT Shares that have been pledged as
collateral for the Loans on behalf of the Lender and the Participant as the
result of a credit bid in the foreclosure proceedings or if the Lender
otherwise acquires the right to do so in any other manner, Lender shall
deliver to the Board of Trustees of the REIT the resignation letters of
Xxxxxxx and Xxxxxxx X. Xxxxx delivered by Xxxxxxx and Xx. Xxxxx pursuant to
the letter agreements, each dated September 26, 2000, between VRLP and
Xxxxxxx and between VRLP and Xx. Xxxxx, comprising a portion of the Loan
Documents.
(d) Xxxxxx and the Participant agree that Vornado
Realty Trust, an affiliate of the Lender, has the right to request the
Board of Trustees of the REIT to elect Xxxxxxx Xxxxxxxxxx, the President of
Vornado Realty Trust, (or such other person named by Vornado Realty Trust
and reasonably approved by the Board of Trustee of the REIT) to the Board
of Trustees of the REIT. Lender and VRLP agree that they will cause Vornado
Realty Trust to exercise or not exercise such right at such time as the
Lender and Participant shall jointly agree. Lender and Participant agree
that Lender at its sole discretion may designate Xxxxxxx Xxxxxxxxxx, but
further agree that in the event Lender does not designate Xx. Xxxxxxxxxx or
Xx. Xxxxxxxxxx determines not to serve on the Board of Trustees of the
REIT, the Lender and Participant shall jointly agree upon a replacement
designee (and if the REIT does not approve such replacement designee, one
or more other replacement designees) to serve on the Board of Trustees of
the REIT in lieu of Xx. Xxxxxxxxxx.
6. Notice of Amendments and Copies of Loan Related
Information. Lender shall furnish to the Participant promptly upon receipt
by the Lender (i) copies of any amendments, waivers or modifications of the
Loan Documents, (ii) financial statements, reports and certificates
furnished pursuant to the Loan Documents, and (iii) such other information
furnished to the Lender by the Borrower relating to the Loans as the
Participant shall request.
7. Indemnification by Participant
(a) Xxxxx shall indemnify the Lender for 50% of any and
all losses, liabilities, obligations, damages, penalties, actions,
judgments, suits, costs and expenses (including attorneys' fees and
disbursements) of any kind or nature whatsoever (collectively, "Losses")
which may be imposed on, incurred by or asserted against the
-13-
Lender in any way relating to or arising out of the administration or
servicing of the Loans from and after the date hereof or the enforcement of
any of the terms thereof from and after the date hereof, except to the
extent such Losses arise from the Lender's gross negligence, bad faith or
wilful misconduct (provided that, in the case of a claim based on the bad
faith of Lender, Lender shall have been found in a final non-appealable
judgment to have acted in bad faith, such bad faith action shall have
resulted in Losses to Participant and Participant shall not have approved
the action that is so found to constitute bad faith) or they are recovered
from the Borrower, any of the Guarantors or any other entity or person
obligated with respect to the Loans (including from the realization on
collateral security). Cadim shall also indemnify the Lender against and
hold the Lender harmless from any liability, cost, loss, damage or expense
(including attorneys' fees and disbursements) incurred by the Lender
resulting from or arising out of (i) the inaccuracy or breach in any
material respect of any of the Participant's representations or warranties
contained herein and (ii) the breach in any material respect of any of the
Participant's covenants contained herein.
(b) Xxxxx hereby further agrees that it shall hold
harmless from and shall fully indemnify the Lender, VRLP and their
respective affiliates, officers, directors, partners, members,
shareholders, agents and representatives (collectively, the "Vornado
Indemnified Parties") against, all Losses incurred by the Vornado
Indemnified Parties as a direct result of any claim made by the Borrower,
the Guarantors, Xxxxxxx or a third party against the Lender or the
Participant or any of their respective affiliates to the extent arising out
of or by virtue of any action or failure to act by the Participant or any
of its affiliates taken or omitted prior to the date hereof, provided,
however, that Xxxxx's obligation to hold harmless and indemnify the Vornado
Indemnified Parties shall apply if and only to the extent that either (i)
such claim shall be decided adversely to the Participant or one or more of
its affiliates by final and non-appealable judgment and Losses are incurred
as a result of such claim or (ii) the Participant or one or more of its
affiliates shall settle such claim and Losses (other than the legal costs
incurred by the Participant or its affiliates or the Vornado Indemnified
Parties) are incurred as a result of such settlement. In addition, Xxxxx
agrees to indemnify the Vornado Indemnified Parties against and hold the
Vornado Indemnified Parties harmless from any Losses incurred by the
Vornado Indemnified Parties, resulting from or arising out of the
administration or servicing of the Loans from and after the date of this
Agreement or the enforcement of any of the terms thereof from and after the
date of this Agreement, in each case to the extent, but only to the extent,
that such Losses arise from the Participant's gross negligence, wilful
misconduct or bad faith (provided, that in the case of Participant's bad
faith, Participant shall have been found in a final non-appealable judgment
to have acted in bad faith, such bad faith action shall have resulted in
Losses to Lender and Lender shall not have approved the action that is so
found to constitute bad faith).
-14-
(c) The Participant's indemnification obligations under
this Section 7 shall be payable within ten (10) days after a request is
made therefor by the Lender if the Participant agrees that it is obligated
to pay the requested amount or, if the Participant does not so agree,
within ten (10) days after the date on which such indemnification
obligations are determined to be payable. To the extent such
indemnification obligations are not paid on or before such tenth (10th)
day, such obligations shall bear interest from such tenth (10th) day to
(but excluding) the date of payment, at a rate per annum equal to the
effective federal funds rate as obtained from the Federal Reserve Bank of
New York plus five percent (5%). These indemnities shall survive
termination of this Agreement.
(d) In no event shall the amount required to be paid by
Cadim pursuant to its indemnification obligations under this Section 7
exceed Fifty Million Dollars ($50,000,000).
8. Indemnification by VRLP:
(a) VRLP shall indemnify the Participant for 50% of any
and all Losses which may be imposed on, incurred by or asserted against the
Participant in any way relating to or arising out of the administration or
servicing of the Loans from and after the date hereof or the enforcement of
any of the terms thereof from and after the date hereof, except to the
extent such Losses arise from the Participant's gross negligence, bad faith
or wilful misconduct (provided that, in the case of a claim based on the
bad faith of Participant, Participant shall have been found in a final
non-appealable judgment to have acted in bad faith, such bad faith action
shall have resulted in Losses to Lender and Lender shall not have approved
the action that is so found to constitute bad faith) or they are recovered
from the Borrower, any of the Guarantors or any other entity or person
obligated with respect to the Loans (including from the realization on
collateral security). VRLP shall also indemnify the Participant against and
hold the Participant harmless from any Losses incurred by the Participant,
resulting from or arising out of (i) the inaccuracy or breach in any
material respect of any of the Lender's representations or warranties
contained herein, or (ii) the breach in any material respect of any of the
Lender's covenants contained herein.
(b) VRLP hereby agrees that it shall hold harmless from
and shall fully indemnify the Participant and its affiliates, officers,
directors, partners, members, shareholders, agents and representatives
(collectively, the "Participant Indemnified Parties") against, all Losses
incurred by the Participant Indemnified Parties as a direct result of any
claim made by the Borrower, the Guarantors, Xxxxxxx or a third party
against the Lender and/or Participant or either of their respective
Affiliates arising out of or by virtue of any action or failure to act by
the Lender or any of its affiliates taken or omitted prior to the date
hereof in connection with the Loans; provided, however, that VRLP's
obligation to hold harmless and indemnify the Participant Indemnified
-15-
Parties shall apply if and only to the extent that either (i) such claim
shall be decided adversely to the Lender or one or more of its affiliates
by final and non-appealable judgment and Losses are incurred as a result of
such claim or (ii) the Lender or one or more of its affiliates shall settle
such claim and Losses (other than the legal costs incurred by the Lender or
its affiliates or the Participant Indemnified Parties) are incurred as a
result of such settlement. In addition, VRLP agrees to indemnify the
Participant Indemnified Parties against and hold the Participant
Indemnified Parties harmless from any Losses incurred by the Participant
Indemnified Parties, resulting from or arising out of the administration or
servicing of the Loans from and after the date of this Agreement or the
enforcement of any of the terms thereof from and after the date of this
Agreement, in each case to the extent, but only to the extent, that such
Losses arise from the Lender's gross negligence, wilful misconduct or bad
faith (provided, that in the case of Xxxxxx's bad faith, Lender shall have
been found in a final non-appealable judgment to have acted in bad faith,
such bad faith action shall have resulted in Losses to Participant and
Participant shall not have approved the action that is so found to
constitute bad faith).
(c) VRLP's indemnification obligations under this Section
8 shall be payable within ten (10) days after a request is made therefor by
the Participant if VRLP agrees that it is obligated to pay the requested
amount or, if VRLP does not so agree, within ten (10) days after the date
on which such indemnification obligations are determined to be payable. To
the extent such indemnification obligations are not paid on or before such
tenth (10th) day, such obligations shall bear interest from such tenth
(10th) day to (but excluding) the date of payment, at a rate per annum
equal to the effective federal funds rate as obtained from the Federal
Reserve Bank of New York plus five percent (5%). These indemnities shall
survive termination of this Agreement.
(d) Notwithstanding anything contained in this Section 8
to the contrary, in no event shall VRLP have any indemnification obligation
in respect of any Losses incurred in connection with, or as a result of,
any assertions that the foreclosure proceeding relating to the collateral
securing the Loans is or was not "commercially reasonable" within the
meaning of applicable law, including the Uniform Commercial Code as in
effect in the State of New York (it being understood and agreed that all
such Losses shall be borne 50% by Lender and 50% by Participant).
(e) In no event shall the amount required to be paid by
VRLP pursuant to its indemnification or obligations under this Section 8
exceed Fifty Million Dollars ($50,000,000).
9. Payment Directions. All payments made hereunder by any
party shall be made in the lawful currency of the United States of America
by wire transfer of immediately available federal funds as follows:
-16-
If to the Lender or to a Vornado Indemnified Party:
Bank: Fleet Bank N.A.
New York, NY
ABA No.: 000000000
Account No.: 9403934562
Account Name: Vornado Realty L.P.
Attention: Xxxx Xxxxxxxx at (201) 587-1000 ext. 2202
If to the Participant or to a Participant Indemnified Party:
Bank: Chase Manhattan Bank
ABA No.: 021-00-0021
Account No.: 000-0-000000
Account Name: Cadim Holdings U.S. Inc.
Attention: Xxxx Xxxxxxxx at (000) 000-0000
Any party may change the account to which payments are to be made hereunder
by notice from time to time to the other parties.
10. Return of Excess Payments. If the Lender should for
any reason make any payment to the Participant in anticipation of the
receipt of funds from the Borrower, any of the Guarantors or any other
entity or person obligated with respect to the Loans and such funds are not
received by the Lender from the Borrower, any of the Guarantors or such
entity or person on the date payment is due, or are in excess of the amount
due to the Participant, then the Participant shall, upon request by the
Lender, forthwith return to the Lender any such amounts transferred to the
Participant by the Lender plus interest thereon from the day such amounts
were transferred by the Lender to the Participant to but excluding the day
such amounts are returned by the Participant, at a rate per annum equal to
the effective federal funds rate as obtained from the Federal Reserve Bank
of New York. Nothing in this Agreement shall be construed as obligating the
Lender to advance funds, and in connection with the enforcement or
monitoring of the Loans, the Lender shall have the right to refrain from
taking any action if it requests funds from the Participant (as an advance
payment of or reimbursement for costs incurred in accordance with the terms
of this Agreement) and the Participant does not advance its share.
11. Returns of Amounts Deemed Preferences.
(a) If the Lender is required at any time to return
pursuant to any bankruptcy, insolvency, liquidation or reorganization law
or otherwise, any portion of the payments made by the Borrower, any of the
Guarantors or any other entity or person obligated with respect to the
Loans or otherwise received by the Lender, the Participant shall, on demand
of the Lender, forthwith return to the Lender any such amounts received
-17-
by the Participant, but without interest thereon unless the Lender is
required to pay interest on such amounts to the person recovering such
payment, in which case with interest thereon, computed at the same rate
that the Lender is required to pay.
(b) If the Participant receives any payment on account of
either of the Loans, including by exercise of any right of set-off,
counterclaim or banker's lien that it may have, in excess of the amount
which the Participant is entitled to receive pursuant to this Agreement,
the Participant shall promptly deliver such excess to the Lender. If the
Participant is required at any time to return pursuant to any bankruptcy,
insolvency, liquidation or reorganization law or otherwise, any portion of
the payments referred to in the preceding sentence, the Lender shall, on
demand of the Participant, return to the Participant such excess (or
portion thereof) received by the Lender, but without interest thereon
unless the Participant is required to pay interest on such amounts to the
person recovering such payment, in which case with interest thereon,
computed at the same rate that the Participant is required to pay.
12. No Taxes. If the Participant is not organized under
the laws of the United States or a state thereof, the Participant
represents and warrants to the Lender that under applicable law and
treaties no taxes will be required to be withheld by the Lender with
respect to payments to be made to the Participant hereunder and, the
Participant agrees that it shall furnish to the Lender in a timely fashion
a properly completed and duly executed Internal Revenue Service Form W8-BEN
or Form W8-ECI, as applicable, and additional Forms W8-BEN or Form W8-ECI,
or appropriate successor forms, to the extent that the form previously
furnished has ceased to be effective, the information therein has become
inaccurate, or such form has been superseded. The Participant agrees that
it shall comply from time to time with all applicable laws and regulations
of the United States with regard to such withholding tax exemption and the
Lender shall be permitted, to the extent required by law, to withhold from
payments otherwise payable to the Participant hereunder any amounts
required to be so withheld under applicable law.
13. Survival of Obligations. The Participant's and the
Lender's obligations under this Agreement shall not be affected by any
invalidity, unenforceability or insufficiency of any Loan Document, or any
default by or insolvency of the Borrower, any of the Guarantors or any
other entity or person obligated with respect to the Loans.
14. Notices. All notices and requests required or
permitted hereunder shall be given in writing and shall be effective for
all purposes if hand delivered or sent by (a) certified or registered mail,
postage prepaid, (b) expedited prepaid delivery service, with proof of
attempted delivery or (c) telecopy or facsimile, addressed as set forth on
the signature page hereto (or at such other address and person as shall be
designated from time to time by any party hereto in a written notice to the
other parties hereto in the manner provided for in this Section). A notice
-18-
shall be deemed to have been given: in the case of hand delivery, at the
time of delivery as confirmed by a receipt signed by the recipient; in the
case of registered or certified mail, when delivered or the first attempted
delivery on a Business Day; in the case of expedited prepaid delivery, upon
the delivery (or refusal thereof) thereof; or in the case of telecopy or
facsimile, upon receipt.
15. Intentionally Omitted.
16. No Third Party Beneficiaries. This Agreement is solely
for the benefit of the Lender, the Vornado Indemnified Parties and their
respective successors and assignees and the Participant, the Participant
Indemnified Parties and their respective successors and assigns, and
nothing contained in this Agreement shall be deemed to confer upon anyone
other than such parties any right to insist upon or to enforce the
performance or observance of any of the obligations contained herein or
therein.
17. No Brokers and Financial Advisors. Lender and the
Participant each hereby represents to the other that it has dealt with no
financial advisors, brokers, underwriters, placement agents, agents or
finders in connection with the transactions contemplated by this Agreement
which could cause the other party to become subject to the payment of fees,
commissions, cost or expenses as a result thereof. Each of the Lender and
the Participant agrees to indemnify and hold harmless the other for all
costs, damages or other expenses arising out of any breach of its
representation made in this Section 17.
18. Representations and Warranties of the Lender.
(a) Lender hereby represents and warrants to the Participant:
(i) The Participation is not subject to any assignment,
conveyance, transfer or participation or agreement to assign,
convey, transfer or participate, in whole or in part, except as
created hereby.
(ii) Lender has good title to and is the sole legal and
beneficial owner of the Participation free and clear of all liens,
charges and encumbrances to such title, except as created hereby.
(iii) Lender has the requisite limited liability company power
and authority to execute and deliver, and to perform all of its
obligations under, this Agreement and all other instruments and
documents executed and delivered by the Lender in connection
herewith.
(iv) This Agreement constitutes the legal, valid and binding
obligation of the Lender and VRLP enforceable against each of them
-19-
in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, moratorium or other similar laws
affecting the enforcement of creditors' rights generally or general
principles of equity.
(v) The Vornado Loan Documents listed on Exhibit A
constitute all documents which evidence the Vornado Loan, and to
the knowledge of Lender, the Prudential Loan Documents listed on
Exhibit B constitute all documents which evidence the Prudential
Loan. To Xxxxxx's knowledge, Participant has been provided with
true and complete copies of such documents as received by the
Lender and executed by Xxxxxxxx. The Vornado Loan Documents have
not been amended or modified by the Lender in any respect, and to
Lender's knowledge, except as set forth on Exhibit B, the
Prudential Loan Documents have not been amended or modified in any
respect.
(vi) As of the Closing Date, the aggregate principal sum
outstanding under the Vornado Note will be $62,000,000.00, interest
and fees outstanding under the Vornado Note will be $4,563,599.00
and other charges outstanding under the Vornado Note will be
$305,000.00. As of the Closing Date, the aggregate principal sum
outstanding under the Prudential Note will be $37,978,480.00,
interest and fees outstanding under the Prudential Note will be
$203,480.00 and other charges outstanding under the Prudential Note
will be $951,768.00.
(vii) Lender does not know of any offsets or defenses on the
part of Borrower, any Guarantor or Xxxxxxx with respect to the
obligations of any of them under the Loan Documents, and, to its
knowledge, no such party or other third party has made any claim
against Lender in connection with the Vornado Loan or against the
Lender or the Prudential Lender in connection with the Prudential
Loan except as set forth on Schedule I; provided however, that no
representation contained herein shall be deemed to constitute a
representation regarding the "commercial reasonableness" of the
foreclosure proceeding relating to the collateral securing the
Loans for purposes of applicable law, including the Uniform
Commercial Code as in effect in the State of New York.
(viii) Lender is the 100% owner of the Loans and there are no
participants in the Loans other than Participant.
(ix) Lender has the right under the Loan Documents to sell
the Participation to Participant on the terms set forth herein and
no consent from any third party is required to sell such
Participation to Participant.
-20-
(x) This Agreement and the performance of its obligations
hereunder by Xxxxxx and VRLP do not violate any agreement to which
either of them is a party or to which either of them is bound.
(b) Except for the specific representations and warranties
made by the Lender in this Agreement, Lender makes no representation or
warranty with reference to, and it does not assume nor shall it have
responsibility or liability express or implied for, the due authorization,
execution or delivery by the Borrower, any of the Guarantors or any other
entity or person obligated with respect to the Loans or the Loan Documents,
any representation or warranty made by the Borrower, any of the Guarantors
or other entity or person obligated with respect to the Loans, the
performance or observance by the Borrower, any of the Guarantors or other
entity or person obligated with respect to the Loans of any provisions of
the Loan Documents, the enforceability, collectability, validity or
legality of any Loan Documents, or any security interest granted to or for
the benefit of the Lender or the financial condition or solvency of the
Borrower, any of the Guarantors or any other entity or person obligated
with respect to the Loans or any credit or other information provided by
the Borrower, any of the Guarantors or other entity or person obligated
with respect to the Loans or the sufficiency of any collateral securing the
Loans.
19. Representations and Warranties of the Participant.
(a) Participant hereby represents and warrants to the Lender:
(i) Participant has the requisite limited liability company
power and authority to execute and deliver, and to perform all of its
obligations under, this Agreement and all other instruments and
documents executed and delivered by the Participant in connection
herewith.
(ii) This Agreement constitutes the legal, valid and binding
obligation of the Participant and Cadim enforceable against each of
them in accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, moratorium or other similar
laws affecting the enforcement of creditors' rights generally or
general principles of equity.
(iii) Participant has obtained the waiver attached hereto as
Exhibit C and such attachment is a true and correct copy of such
waiver.
(iv) Participant has received a copy of each of the documents
listed on Exhibit A and Exhibit B hereto.
-21-
(v) Participant has independently and without reliance on the
Lender, and based on such documents and information that the
Participant deems appropriate, made its own analysis of the Borrower,
the Guarantors and any other entity or person obligated with respect
to the Loans, and the collateral and security therefor, for the
purpose of purchasing the Participa tion in the Loans and that it
will continue to make its own credit decisions without such reliance
and on such basis.
(vi) This Agreement and the performance of its obligations
hereunder by each of Participant and Xxxxx do not violate any
agreement to which either of them is a party or to which either of
them is bound.
20. No Assignments, Subparticipations. This Agreement may
not be assigned by any party without the prior written consent of the other
parties. The Participant may not sell, assign, subdivide, subparticipate or
otherwise transfer the Participation or any part thereof or interest
therein without the prior written consent of the Lender (except to an
affiliate of Participant controlled by or under common control with
Participant). Other than pursuant to this Agreement, the Lender may not
sell, assign, subdivide, subparticipate or otherwise transfer the Loans or
any part thereof or interest therein without the prior written consent of
the Participant (except to an affiliate of Lender controlled by or under
common control with Lender).
21. Intentionally Omitted.
22. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCEABLE IN ACCORDANCE WITH, AND GOVERNED BY, THE LAWS OF THE STATE OF
NEW YORK.
23. Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all other prior arrangements and
understandings relating to the subject matter hereof.
24. Confidentiality. The Participant agrees that it and its
agents will keep the information contained in any documents delivered to it
in connection with the Loans confidential (whether delivered prior to or
after its execution of this Agreement, unless such information was already
in the possession of Participant and not otherwise subject to an obligation
to keep such information confidential or was already in the public domain);
provided, however, any such information may be disclosed to the extent
required by law (it being understood and agreed that the disclosing party
-22-
will provide, in such circumstances, a copy of the information to be so
disclosed to the other party prior to such disclosure) and to the
Participant's affiliates, directors, officers, employees and
representatives who need to know such information for the purpose of
managing the Participation (it being understood that such affiliates,
directors, officers, employees and representatives shall be informed by the
Participant of the confidential nature of such information and shall be
directed by the Participant to treat such information confidentially).
25. Modifications in Writing. This Agreement may not be
amended, changed, waived or modified except by a writing executed by both the
Lender and the Participant.
26. Rules of Construction. The section headings in this
Agreement are included herein for convenience of reference only and shall
not constitute a part of this Agreement for any other purpose. All section
references shall mean references to the sections of this Agreement, unless
otherwise specified. As used herein, the terms "include" and "including"
shall be deemed to mean "without limitation", and the terms "herein",
"hereof" and "hereunder" and terms of like import shall be construed to
refer to this Agreement as a whole and not the specific section or
provision in which such term is used. The parties hereto acknowledge that
they were represented by counsel in connection with the negotiation and
drafting of this Agreement and this Agreement shall not be subject to the
principle of construing its meaning against the party which drafted same.
27. Severability. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.
28. Counterparts. This Agreement may be executed in any
number of counterparts, each of when where so executed and delivered shall
be an original, but all of which shall constitute one and the same
instrument. It shall not be necessary in making proof of this Agreement to
produce or account for more than one copy of such instrument.
29. Choice of Forum; Waiver of Immunity; Waiver of Jury
Trial. Each of the parties hereto irrevocably agrees that any legal action
or proceeding against it arising out of or in connection with this
Agreement or for recognition or enforcement of any judgment rendered in any
-23-
such action or proceeding may be brought in the United States Courts or the
State of New York Courts, in each case located in the Borough of Manhattan,
City and State of New York, and by execution and delivery of this
Agreement, each party hereby irrevocably accepts and submits to the
jurisdiction of each of the aforesaid courts in personam, generally and
unconditionally with respect to any such action or proceeding. Each of the
Parties hereto further irrevocably consents to the service of process out
of said courts by mailing a copy thereof, by registered or certified mail,
postage prepaid to it at the address set forth for such party herein below.
Each of the Parties hereto also irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of venue of any such action or proceeding brought in any such court
and any claim that any such action or proceeding brought in such court has
been brought in an inconvenient forum. Each of the Parties hereto
irrevocably agrees that, should either party institute any legal action or
proceeding in any jurisdiction (whether for an injunction, specific
performance, damages or otherwise) in relation to this Agreement, no
immunity (to the extent that it may at any time exist, whether on the
grounds of sovereignty or otherwise) from such action or proceeding shall
be claimed by it or on its behalf, any such immunity being hereby
irrevocably waived and that each of the Parties hereto each irrevocably
agrees that it and its assets are, and shall be, subject to such legal
action or proceeding in respect of its obligations under this Agreement.
Each of the Parties hereto hereby waives any right to trial by jury in
connection with any action, proceeding or counterclaim instituted with
respect to this Agreement.
-24-
Please indicate the Participant's and Xxxxx's agreement to the
foregoing by executing this Agreement on the line provided below and
returning to the undersigned two copies of the Agreement.
VORNADO PS, L.L.C., a Delaware limited
liability company
By: Vornado Realty L.P., a Delaware
limited partnership and its Sole
Member
By: Vornado Realty Trust, a Maryland
real estate investment trust and its
General Partner
By: /s/ Xxxxxxx Xxxxxxxxxx
-------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: President
Address: Vornado PS, L.L.C.
000 Xxxxxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx
Xxxxxxxxx: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx Xxxxxx
Xxxxxxxxx: (000) 000-0000
Telephone: (000) 000-0000
-25-
VORNADO REALTY L.P., a Delaware
limited partnership
By: Vornado Realty Trust, a Maryland
real estate investment trust and its
General Partner
By: /s/ Xxxxxxx Xxxxxxxxxx
-------------------------
Name: Xxxxxxx Xxxxxxxxxx
Title: President
Address: Vornado Realty L.P.
000 Xxxxxxx Xxxxxx,
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxxx
Xxxxxxxxx: (000) 000-0000
Telephone: (000) 000-0000
Attention: Xxxxxx Xxxxxx
Xxxxxxxxx: (000) 000-0000
Telephone: (000) 000-0000
-26-
Accepted and Agreed to:
CADIM ACQUISITION, LLC,
a Delaware limited liability company
By: Cadim Holdings U.S. Inc.,
a Delaware corporation, its sole member
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
By: /s/ Line Lefebure
--------------------------
Name: Line Lefebure
Title: Vice President
Address: c/o Mayer, Brown & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx or
Xxxx X. Xxxxxx
Xxxxxxxxx: (000) 000-0000
Telephone: (000) 000-0000
CADIM INC., a company incorporated
under the laws of Quebec
By: /s/ Xxxxxxx Xxxxxxxxx
---------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Vice President
By: /s/ Line Lefebure
----------------------------
Name: Line Lefebure
Title: Vice President
Address: 000, Xxxxxx Xxxxxxxx, Xxxxxx 0000
Xxxx Xxxxxxx 000
Xxxxxxxx, Xxxxxx X0X 0X0
Attention: Xxxxxxx Xxxxxxxxx
Facsimile: (000) 000-0000
Telephone: (000) 000-0000
-27-
Exhibit A
Schedule of Vornado Loan Documents:
Loan Agreement among Borrower, the Guarantors, Xxxxxxx and Lender
Note in the original principal amount of $62,000,000 given by Borrower
to Lender
Guaranty made by The Prime Group, Inc. to Lender
Guaranty made by Prime International, Inc. to Lender
Guaranty made by Prime Group Limited Partnership to Lender
Guaranty made by Prime Group II, L.P. to Lender
Guaranty made by PGLP, Inc. to Lender
Pledge and Security Agreement between Borrower and Lender
Deposit Account Agreement between LaSalle Bank National Association,
Borrower and Lender
Letter Agreement between Vornado Realty, L.P. and Xxxxxxx regarding
resignation upon the occurrence of certain events
Letter Agreement between Vornado Realty, L.P. and Xxxxxxx X. Xxxxx
regarding resignation upon the occurrence of certain events
Consent and Agreement of Prime Group Realty Trust and Prime Group
Realty L.P. in favor of Xxxxxx
Letter Agreement between Prime Group Realty Trust and Prime Group
Realty L.P. and Vornado Realty Trust and Vornado Realty L.P.
UCC-1 Financing Statements filed in connection with the pledge of the
collateral
Opinions of Xxxxxxxx's and the REIT's counsel
-28-
Exhibit B
Schedule of Prudential Loan Documents:
Amended and Restated Credit Agreement, dated as of September 26,
2000, between Xxxxxxxx and Xxxxxx, as assignee
First Amendment to Amended and Restated Credit Agreement ,dated as of
September 25, 2001, between Xxxxxxxx and Lender, as assignee
Amendment to Amended and Restated Credit Agreement, dated as of
October 19, 2000, between Xxxxxxxx and Lender, as assignee
Note in the original principal amount of $40,000,000 given by Borrower
to Lender, as assignee
Amended and Restated Pledge and Security Agreement, dated as of
September 26, 2000, between Borrower and Lender, as assignee
Securities Account Control Agreement, dated as of September 26, 2000,
among Borrower, Lender, as assignee, and Prudential Securities
Incorporated
Guaranty, dated as of September 26, 2000, by Guarantors to Lender, as
assignee
First Amendment to Guaranty, dated as of September 26, 2001, by
Guarantors to Lender, as assignee
UCC-1 Financing Statements filed in connection with the pledge of the
collateral
Letter Agreement, dated as of September 26, 2000, by Xxxxxxx in favor of
Xxxxxx, as assignee
Amended Letter of Agreement, dated as of September 25, 2001, by Xxxxxxx
in favor of Xxxxxx, as assignee
Amended and Restated Consent and Agreement of Primestone Partners,
dated as of September 26, 2000, by PG/Primestone L.L.C. and The Prime
Group, Inc. in favor of Xxxxxx, as assignee
Amended and Restated Consent and Agreement of Prime Group Realty,
L.P., dated as of September 26, 2002, by the REIT, on behalf of the
Operating Partnership, in favor of Xxxxxx, as assignee
Amended and Restated Consent and Agreement of Prime Group Realty
Trust, dated as of September 26, 2000, by the REIT in favor of
Xxxxxx, as assignee
Assignment and Acceptance, dated as of December 30, 1997, between
Prudential Securities Credit Corp. and P-B Finance Ltd.
Assignment of Loan and Loan Documents, dated as of October 31, 2001, by
P-B Finance Ltd. to Lender
-29-
Exhibit C
See Attached Copy of Waiver
-30-
Schedule I
The Borrower and certain of its affiliates (including Xxxxxxx,
XX/Primestone LLC, the general partner of Xxxxxxxx, and Prime Group, Inc)
have, orally and in various letters and public statements and filings,
taken the position that the Loans are not in default and stated that they
are considering all available legal rights, remedies and actions to contest
the ability of the Lender to proceed with the foreclosure auction. In
addition, such entities and persons have stated and/or publicly disclosed
that they may contest the right of Lender to proceed with the foreclosure
auction or pursue other legal procedures or proceedings or take other
actions with respect to the foregoing and Xxxxxxx has verbally indicated
that he may take other legal action against Lender in regard to the
defaults noticed on the Loans and the foreclosure procedure. Furthermore,
Xxxxxxx has challenged the Xxxxxx's proposed foreclosure sale process and
argued that such proposed process is commercially unreasonable. It has also
been disclosed in public filings that Xxxxxxx and Xx. Xxxxx have delivered
written notices to the REIT that they are rescinding the resignation letter
previously delivered by them to the Lender and gave notice to the REIT that
they no longer intend to resign from their current executive positions with
the REIT or from the Board of Trustees of the REIT. One or more of such
statements, assertions or positions have been reflected or described in the
following documents:
Letter dated October 26, 2001 to Lender from Xxxx Xxxxxx, Senior Vice
President & Chief Financial Officer of the Borrower, disputing the
existence of an Event of Default under the Vornado Loan.
Letter dated October 26, 2001 to Prudential Lender from Xxxx Xxxxxx,
Senior Vice President & Chief Financial Officer of the Borrower,
providing notice of Xxxxxxxx's dispute of the existence of an Event
of Default under the Vornado Loan.
Letter dated November 8, 2001 to Vornado Realty Trust from Xxxxxxx,
as Chairman of the Board and Chief Executive Officer of PGI,
regarding comments on the proposed foreclosure process.
Schedule 13D/A (SEC File #: 005-51993) filed on November 14, 2001 by
Xxxxxxx and the REIT.
Form 10-Q (SEC File #: 001-13589) filed on November 14, 2001 by the
REIT.
-31-
