Exhibit 10.14
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
AMONG
PRIME GROUP REALTY TRUST
PRIME GROUP REALTY, L.P.
PRIME GROUP LIMITED PARTNERSHIP
PRIMESTONE INVESTMENT PARTNERS L.P.
and
THE OTHER INVESTORS NAMED HEREIN
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made as of the 17th day of
November, 1997 (this "Agreement"), among PRIME GROUP REALTY TRUST, a Maryland
real estate investment trust (the "Company"), PRIME GROUP REALTY, L.P., a
Delaware limited partnership (the "Partnership"), XXXXXX X. XXXXXXXX TRUST DATED
MAY 22, 1992, GRANDVILLE/NORTHWESTERN MANAGEMENT CORPORATION, an Illinois
corporation, XXXXXXX X. XXXXXXXX, TRUST DATED MAY 21, 1992, XXXX XXXXXXXX 1991
TRUST, XXXXXXX XXXXXXXX 1991 TRUST, XXXXXX X. XXXXX, XXXXXXX X. XXXXXXX,
GRANDVILLE ROAD PROPERTY, INC., an Illinois corporation, SKY HARBOR ASSOCIATES,
an Illinois limited partnership (the foregoing other than the Company and the
Partnership being hereafter referred to collectively as a "Contributor"),
PRIMESTONE INVESTMENT PARTNERS, L.P., a Delaware limited partnership
("Primestone"), PRIME GROUP LIMITED PARTNERSHIP, an Illinois limited partnership
("Prime") and the Permitted Transferees (as defined below) of each of the
foregoing entities (such entities or Permitted Transferees are sometimes
referred to herein individually as an "Investor" and collectively as the
"Investors"). Xxxxxxx Xxxxxxxxx is referred to herein as a "Management
Investor".
W I T N E S S E T H:
WHEREAS, the Investors and the Management Investor will hold the
limited partnership interests in the Partnership set forth in Exhibit A hereto
(the "Common Units"), which Common Units
may be exchanged for common shares of beneficial interest of the Company (the
"Common Shares") pursuant to certain exchange rights set forth on Exhibit C to
that certain Amended and Restated Agreement of Limited Partnership of Prime
Group Realty, L.P., dated November 17, 1997 (the "Partnership Agreement"); and
WHEREAS, the Company has agreed to provide the Investors and the
Management Investor with certain registration rights as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to and
on the terms and conditions herein set forth, the parties hereto agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
I.1. "Agreement" is defined in the first paragraph of this Agreement.
I.2. "Blackout Termination Right" is defined in Section 5.3(b) hereof.
I.3. "Business Day" means any day on which the New York Stock Exchange
is open for trading.
I.4. "Company" is defined in the first paragraph of this Agreement.
I.5. "Contributor" is defined in the first paragraph of this Agreement.
I.6. "Contributor Investor Group" means collectively the Contributor
and their Permitted Transferees.
I.7. "Effectiveness Period" is defined in Section 4.3 hereof.
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I.8. "Eligible Securities" means all or any portion of the Common
Shares acquired by the Investors and the Management Investor upon exchange of
the Common Units. As to any proposed offer or sale of Eligible Securities, such
securities shall cease to be Eligible Securities with respect to such proposed
offer or sale when (i) a registration statement with respect to the sale of such
securities shall have become effective under the Securities Act and such
securities shall have been disposed of in accordance with such registration
statement or (ii) such securities are permitted to be disposed of pursuant to
Rule 144(k) (or any successor provision to such Rule) under the Securities Act
as confirmed in a written opinion of counsel to the Company addressed to the
Investors and the Management Investor, (iii) such securities shall have been
otherwise transferred pursuant to Rule 144 (or any successor rule) or pursuant
to another applicable exemption under the Securities Act, new certificates for
such securities not bearing a legend restricting further transfer shall have
been delivered by the Company and such securities shall be freely transferable
to the public without registration under the Securities Act or (iv) such
securities are no longer outstanding.
I.9. "Information Blackout" is defined in Section 5.3(a) hereof.
I.10. "Investor Group" means any of the Contributor Investor Group,
the Primestone Investor Group or the Prime Investor Group.
I.11. "Investor" means any of the Contributors, the Primestone
Investor Group and the Prime Investor roup, and any of their Permitted
Transferees.
I.12. "IPO" means the Company's initial public offering of Common
Shares and any other capital stock of the Company offered simultaneously with
the Common Shares.
I.13. "IPO Date" means the date of the final prospectus used by the
Company in the IPO.
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I.14. "Lock-Up Agreements" means (i) the Lock-Up Agreement, dated
November 11, 1997, among the Prime Investor Group and the Underwriter, (ii) the
Lock-Up Agreement, dated November 11, 1997, 1997, among the Contributor and the
Underwriter, (iii) the Lock-Up Agreement, dated November 11, 1997, among the
Management Investor and the Underwriter, and (iv) the Lock-Up Agreement, dated
November 11, 1997 among Primestone Investor Group and the Underwriter.
I.15. "Management Investor" is defined in the first paragraph of
this Agreement.
I.16. "Partnership" is defined in the first paragraph of this
Agreement.
I.17. "Partnership Agreement" means that certain Amended
and Restated Agreement of Limited Partnership of Prime Group Realty, L.P.,
dated November 17, 1997.
I.18. "Participating Investor" is defined in Section 3.3(a) hereof.
I.19. "Person" means an individual, a partnership (general or limited),
corporation, real estate investment trust, joint venture, business trust,
cooperative, association or other form of business organization, whether or not
regarded as a legal entity under applicable law, a trust (inter vivos or
testamentary), an estate of a deceased, insane or incompetent person, a
quasi-governmental entity, a government or any agency, authority, political
subdivision or other instrumentality thereof, or any other entity.
I.20. "Permitted Transferees" with respect to each Investor means the
Persons which qualify as Qualified Transferees under the Partnership Agreement.
The parties hereto agree that Prudential Securities Credit Corporation, as
Lender is a Permitted Transferee of Primestone.
I.21. "Prime" is defined in the first paragraph of this Agreement.
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I.22. "Primestone" is defined in the first paragraph of this
Agreement.
I.23. "Prime Investor Group" means collectively Prime and its
Permitted Transferees.
I.24. "Primestone Investor Group" mean collectively Primestone and
its Permitted Transferees.
I.25. "Primestone Registration" means at any time after the
occurrence of the Twelve Month Date the request for registration under the
Securities Act and the subsequent registration of all of the Eligible
Securities requested by Primestone to be registered.
I.26. "Registration Date" is defined in Section 2.1 hereof.
I.27. "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with the registration requirements set
forth in this Agreement including, without limitation, the following: (i) the
fees, disbursements and expenses of the Company's counsel(s) (United States
and foreign), accountants and experts in connection with the registration of
Eligible Securities to be disposed of under the Securities Act; (ii) all
expenses in connection with the preparation, printing and filing of the
registration statement, any preliminary prospectus or final prospectus, any
other offering document and amendments and supplements thereto and the
mailing and delivering of copies thereof to the underwriters and dealers;
(iii) the cost of printing or producing any agreement(s) among underwriters,
underwriting agreement(s) and blue sky or legal investment memoranda, any
selling agreements and any other documents in connection with the offering,
sale or delivery of Eligible Securities to be disposed of; (iv) all expenses
in connection with the qualification of Eligible Securities to be disposed of
for offering and sale under state securities laws, including the fees and
disbursements of counsel for the underwriters in connection with such
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qualification and in connection with any blue sky and legal investment
surveys; (v) the filing fees incident to securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of
Eligible Securities to be disposed of; and (vi) fees and expenses incurred in
connection with the listing of Eligible Securities on each securities
exchange or quotation system on which the Common Shares are then listed;
provided, however, that Registration Expenses with respect to any
registration pursuant to this Agreement shall not include underwriting
discounts or commissions attributable to Eligible Securities, SEC or blue sky
registration fees attributable to Eligible Securities or transfer taxes
applicable to Eligible Securities.
I.28. "Requesting Investor" means an Investor requesting
registration of its Eligible Securities in accordance with the terms hereof.
I.29. "Sales Blackout Period" is defined in Section 5.3(a)(iii)
hereof.
I.30. "SEC" means the United States Securities and Exchange
Commission.
I.31. "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder, all as the same shall be in
effect at the relevant time.
I.32. "Selling Investor" means the Requesting Investor and each
Participating Investor or any Investor or Management Investor who has requested
registration pursuant to Section 4.1 hereof, as applicable.
I.33. "Shelf Registration Statement" is defined in Section 4.3
hereof.
I.34. "Twelve Month Date" means the date that is twelve months after
the IPO Date, and if such date is not a Business Day, the next succeeding date
that is a Business Day.
I.35. "Underwriter" means Prudential Securities Incorporated.
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ARTICLE II
EFFECTIVENESS OF REGISTRATION RIGHTS
SECTION 2.1 Effectiveness of Registration Rights. This Agreement shall
become effective on the date hereof, provided, however, that the registration of
any Eligible Securities pursuant to Articles 3 and 4 hereof by the Investors and
Management Investor prior to the Twelve- Month Date (each such dates being
hereinafter referred to as a "Registration Date"), shall be subject to the prior
receipt of the written consent of the Company and the Underwriter to the waiver
of the restrictions on transfer of the Common Shares held by the Investors or
the Management Investor requesting such consent under the terms of the
Partnership Agreement and their respective Lock-Up Agreements.
ARTICLE III
REGISTRATION REQUEST
SECTION 3.1 Request. Upon written request from an Investor requesting
that the Company effect the registration under the Securities Act of all or part
of the Eligible Securities held by such Investor, which notice may be delivered
at any time after 90 days prior to the Registration Date for the applicable
Investor Group and which notice shall specify the intended method or methods of
disposition of such Eligible Securities, the Company will use all reasonable
efforts to effect (at the earliest possible date) the registration, under the
Securities Act, of such Eligible Securities for disposition in accordance with
the intended method or methods of disposition stated in such request; provided
that:
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III.1. if the Company shall have previously effected a
registration with respect to Eligible Securities pursuant to Article IV
hereof, the Company shall not be required to effect a registration
pursuant to this Article III until a period of one hundred twenty (120)
days shall have elapsed from the effective date of the most recent such
previous registration;
III.2. if, upon receipt of a registration request pursuant to
this Article 3, the Company is advised in writing (with a copy to the
Selling Investors) by a nationally recognized independent investment
banking firm selected by the Company to act as lead underwriter in
connection with a public offering of securities by the Company that, in
such firm's opinion, a registration at the time and on the terms
requested would materially adversely affect such public offering of
securities by the Company (other than an offering in connection with
employee benefit and similar plans) (a "Company Offering") that prior
to the receipt of the notice by the Requesting Investor had been
contemplated by the Company's Board of Trustees to be filed (and which
is in fact filed) within sixty (60) days of receipt of the notice by
the Requesting Investors, the Company shall not be required to effect a
registration pursuant to this Article III until the earliest of (i)
three months after the completion of such Company Offering, (ii) the
termination of any blackout period, if any, required by the
underwriters to be applicable to the Selling Investors in connection
with such Company Offering and agreed to in writing by the Selling
Investors, (iii) promptly after abandonment of such Company Offering or
(iv) four months after the date of written notice requesting
registration from the Investor who initially requested registration;
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III.3. if, while a registration request is pending pursuant to
this Article III, the Company determines in the good faith judgment of
the Board of Trustees of the Company, with the advice of counsel, that
the filing of a registration statement would require the disclosure of
non-public material information the disclosure of which would have a
material adverse effect on the Company or would otherwise adversely
affect a material financing, acquisition, disposition, merger or other
comparable transaction, the Company shall deliver a certificate to such
effect signed by its Chief Executive Officer, President, or any
Executive Vice President to the Selling Investors, and the Company
shall not be required to effect a registration pursuant to this Article
III until the earlier of (i) the date upon which such material
information is disclosed to the public or ceases to be material or (ii)
60 days after the Company makes such good faith determination; and
III.4. the Company shall not be required to effect (i) more
than two registrations pursuant to this Article III in any calendar
year per each Investor Group and (ii) a registration of Eligible
Securities, the Fair Market Value of which on the date of the
registration request (determined as set forth in the Partnership
Agreement) is less than $2,500,000. No registration of Eligible
Securities under this Article IV shall relieve the Company of its
obligation (if any) to effect registrations of Eligible Securities
pursuant to Article 4 hereof.
SECTION 3.2 Registration Expenses. With respect to the registrations
requested pursuant to this Article III and any registration arising from an
exercise of a Blackout Termination Right (as defined below), the Company shall
pay all Registration Expenses.
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SECTION 3.3 Other Investor Shares. (a) Upon receipt of the written
notice from a Requesting Investor, the Company shall give written notice to each
other Investor and to the Management Investor. Subject to Section 3.3(b) hereof,
the Company shall be required to cause the registration of securities for sale
for the account of any Investor or the Management Investor (the "Participating
Investor") in any registration of Eligible Securities requested pursuant to this
Article III who has delivered written notice to the Company within fifteen (15)
Business Days of the date of receipt by such Participating Investor of the
above-referenced written notice from the Company (which notice from the
Participating Investor to the Company shall specify the number of shares to be
disposed of and the intended method of disposition); provided, that the Company
shall not be required to cause the registration of all of the securities
requested to be registered by Participating Investors if the Requesting Investor
is advised in writing (with a copy to the Company) by a nationally recognized
independent investment banking firm selected by the Requesting Investors (or as
determined by Section 3.3(c)) that, in such firm's opinion, registration of all
of such securities would materially adversely affect the offering and sale of
Eligible Securities then contemplated by the Requesting Investor.
(b) If the Company cannot, pursuant to the terms of this
Section 3.3, register all of the shares requested to be registered, the Company
shall register the Maximum Amount (as defined below), and, other than for a
Primestone Registration, such amount shall be allocated between the Contributor
Investor Group, the Primestone Investor Group and the Prime Investor Group, pro
rata according to the number of shares for which registration was initially
requested by each Investor Group without giving any effect to any shares
requested to be registered by the Management
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Investor. The amount allocated to each Investor Group shall be further allocated
to each Selling Investor within such Investor Group pro rata according to the
number of shares for which registration was initially requested by each Selling
Investor within such Investor Group. Solely for purposes of the preceding
sentence, the Management Investor shall be treated as a Selling Investor within
the Prime Investor Group. Notwithstanding the foregoing, in the event the
Requesting Investor is Primestone requesting a Primestone Registration, then the
amount of Eligible Securities which the Contributor Investor Group, Prime
Investor Group and the Management Investor shall be allowed to register shall be
the Maximum Amount less the number of Eligible Securities requested to be
registered by Primestone in the Primestone Registration. For purposes of this
Section 3.3, "Maximum Amount" shall mean the largest number of shares (if any)
that, in the opinion of the nationally recognized underwriter selected by the
Requesting Investor (or as determined by Section 3.3(c) hereof), for purposes of
Section 3.3(a) hereof, could be offered to the public without materially
adversely affecting the offering and sale of Eligible Securities as then
contemplated by the Selling Investors.
(c) In the event that more than one Investor exercises
registration rights on the same day, the Investor who requested a registration
of the larger number of shares on such day shall be entitled to select the lead
underwriter for such registered offering (if such offering will be
underwritten). In all other cases, the first Investor to exercise registration
rights with respect to any particular registration demand shall be entitled to
select the lead underwriter for such registered offering (if such offering will
be underwritten).
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Notwithstanding this Article III, each Selling Investor may elect, in
writing prior to the effective date of the registration statement filed in
connection with a registration under this Article III, not to register its
Eligible Securities in connection with such registration; provided, that if such
Selling Investor is one of the Requesting Investors, such Selling Investor will
be deemed to have used one of the two rights each year to request registration
of Eligible Securities under this Article III allocated to the Investor Group of
which it is a member pursuant to Section 3.1(d) hereof.
ARTICLE IV
INCIDENTAL REGISTRATION
SECTION 4.1 Notice and Registration. If the Company proposes to
register any Common Shares, any equity securities exercisable for, convertible
into or exchangeable for Common Shares, or other securities issued by it having
terms substantially similar to Eligible Securities ("Other Securities") for
public sale under the Securities Act (whether proposed to be offered for sale by
the Company or by any other Person) on a form and in a manner which would permit
registration of Eligible Securities for sale to the public under the Securities
Act, it will give prompt written notice to the Investors and the Management
Investor of its intention to do so, and upon the written request of any Investor
or the Management Investor delivered to the Company within fifteen (15) Business
Days after the giving of any such notice (which request shall specify the number
of Eligible Securities intended to be disposed of by such Investor or Management
Investor and the intended method of disposition thereof), the Company will use
all reasonable efforts to effect, in connection with the registration of the
Other Securities, the registration under the Securities Act of all Eligible
Securities
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which the Company has been so requested to register by the Selling Investor(s),
to the extent required to permit the disposition (in accordance with the
intended method or methods thereof as aforesaid) of Eligible Securities so to be
registered; provided that:
IV.1. if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register the Other Securities, the Company may, at its election, give
written notice of such determination to the Investors and the
Management Investor and thereupon the Company shall be relieved of its
obligation to register such Eligible Securities in connection with the
registration of such Other Securities (but not from its obligation to
pay Registration Expenses to the extent incurred in connection
therewith as provided in Section 4.2 hereof), without prejudice,
however, to the rights (if any) of the Investors immediately to request
that such registration be effected as a registration under Article III
hereof;
IV.2. The Company will not be required to effect any
registration pursuant to this Article IV if the Company shall have been
advised in writing (with a copy to the Selling Investors) by a
nationally recognized independent investment banking firm selected by
the Company to act as lead underwriter in connection with the public
offering of securities by the Company that, in such firm's opinion, a
registration of Eligible Securities requested to be registered at that
time would materially and adversely affect the Company's own scheduled
offering of Other Securities; provided, however, that if an offering of
some but not all of the Eligible Securities requested to be registered
by the Investor(s) and the Management Investor
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would not materially adversely affect the Company's offering of Other
Securities, the aggregate number of Eligible Securities requested to be
included in such offering by the Investors and the Management Investor
shall be reduced pro rata according to the total number of Eligible
Securities requested to be registered by such Persons;
IV.3. The Company shall not be required to effect any
registration of Eligible Securities under this Article IV incidental to
the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or share options or other employee benefit plans.
IV.4. Notwithstanding any request under Section 4.1(a) hereof,
a Selling Investor may elect in writing prior to the effective date of
a registration under this Article IV, not to register its Eligible
Securities in connection with such registration.
IV.5. No registration of Eligible Securities effected under
this Article IV shall relieve the Company of its obligation (if any) to
effect registrations of Eligible Securities pursuant to Article III
hereof.
SECTION 4.2 Registration Expenses. The Company shall be responsible for
the payment of all Registration Expenses in connection with any registration
pursuant to this Article IV.
SECTION 4.3 Shelf Registration Statement
(a) Shelf Registration Statement. The Company shall as
promptly as reasonably practicable subsequent to the Twelve Month Date file with
the SEC a Registration Statement for an offering to be made on a continuous
basis pursuant to Rule 415 covering all of the Eligible Securities (the "Shelf
Registration Statement"). If the Shelf Registration Statement shall be on the
appropriate
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form permitting registration of such Eligible Securities for resale
by Investors in the manner or manners designated by them (including, without
limitation, one or more underwritten offerings). The Company will notify each
Investor when such Shelf Registration Statement has become effective.
The Company shall use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act as
promptly as practicable after the filing of the Shelf Registration Statement and
(subject to compliance with the restrictions on registrations set forth in
Articles III and IV hereof which shall be applicable with respect to the Shelf
Registration) to keep the Shelf Registration Statement continuously effective
under the Securities Act until the date which is two and one half years from the
date of its initial effectiveness ("Effectiveness Period"), or such period
ending when all Eligible Securities covered by the Shelf Registration Statement
have been sold in the manner set forth and as contemplated in the Shelf
Registration Statement.
(b) Withdrawal of Stop Orders. If the Shelf Registration
Statement ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the securities
registered thereunder), the Company shall use its best efforts to obtain the
prompt withdrawal of any order suspending the effectiveness thereof.
(c) Supplement and Amendments. The Company shall promptly
supplement and amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration Statement, if required by the Securities Act.
ARTICLE V
REGISTRATION PROCEDURES
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SECTION 5.1 Registration and Qualification. If and whenever the Company
is required to use all reasonable efforts to effect the registration of any
Eligible Securities under the Securities Act as provided in Articles 3 or 4
hereof, the Company will, as promptly as is practicable:
V.1. prepare, file and use all reasonable efforts to cause to
become effective a registration statement under the Securities Act
regarding the Eligible Securities to be offered;
V.2. prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all Eligible Securities until
the earlier of such time as all of such Eligible Securities have been
disposed of in accordance with the intended methods of disposition by
the Selling Investors set forth in such registration statement or the
expiration of twelve months after such Registration Statement becomes
effective;
V.3. furnish to the Selling Investors and to any underwriter
of such Eligible Securities such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus), in conformity with
the requirements of the Securities Act, such documents incorporated by
reference in such registration statement or prospectus, and such other
documents as the Selling Investors or such underwriter may reasonably
request;
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V.4. use all reasonable efforts to register or qualify all
Eligible Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as the Selling
Investors or any underwriter of such Eligible Securities shall
reasonably request, and do any and all other acts and things which may
be reasonably requested by the Selling Investors or any underwriter to
consummate the disposition in such jurisdictions of the Eligible
Securities covered by such registration statement, except the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not
so qualified, or to subject itself to taxation in any jurisdiction
where it is not then subject to taxation, or to consent to general
service of process in any jurisdiction where it is not then subject to
service of process;
V.5. use all reasonable efforts to list the Eligible
Securities on each national securities exchange or quotation system on
which the Common Shares are then listed, if the listing of such
securities is then permitted under the rules of such exchange;
V.6. (i) furnish to the Selling Investors an opinion of
counsel for the Company, addressed to them, dated the date of the
closing under the underwriting agreement, and (ii) upon such Selling
Investor's request, use all reasonable efforts to furnish to the
Selling Investors a "comfort letter" signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, addressed to them; provided
that with respect to such opinion and "comfort letter," the following
shall apply: (A) the opinion and "comfort letter" shall cover
substantially the same matters with respect to such registration
statement (and the prospectus included therein) as are customarily
covered
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in opinions of issuer's counsel and in accountants' letters
delivered to underwriters in underwritten public offerings of
securities and such other matters as the Selling Investors may
reasonably request; and (B) the "comfort letter" also shall cover
events subsequent to the date of such financial statements; and
V.7. notify the Selling Investors immediately upon the
happening of any event as a result of which a prospectus included in a
registration statement, relating to a registration pursuant to Article
III or 4 hereof, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and at
the request of the Selling Investors prepare and furnish to the Selling
Investors as many copies of a supplement to or an amendment of such
prospectus as the Selling Investors reasonably request so that, as
thereafter delivered to the purchasers of such Eligible Securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
The Company may require the Selling Investors to furnish the Company such
information regarding the Selling Investors and the distribution of such
securities as the Company may from time to time reasonably request in writing
and as shall be required by law or by the SEC in connection with any
registration. Failure of the Selling Investors to provide such information will
relieve the Company of its obligation to register such Selling Investor's
Eligible Securities.
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SECTION 5.2 Underwriting. (a) If requested by the underwriters for any
underwritten offering of Eligible Securities pursuant to a registration
described in this Agreement, the Company will enter into and perform its
obligations under an underwriting agreement with such underwriters for such
offering, such agreement to contain such representations and warranties by the
Company and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, indemnities and contribution to the effect and to the extent
provided in Article VII hereof and the provision of opinions of counsel and
accountants' letters to the effect and to the extent provided in Section 5.1(f)
hereof. The holders of Eligible Securities on whose behalf Eligible Securities
are to be distributed by such underwriters shall be parties to any such
underwriting agreement and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Eligible Securities.
(b) In the event that any registration pursuant to Article IV
hereof shall involve, in whole or in part, an underwritten offering, the Company
may require Eligible Securities requested to be registered pursuant to Article
IV hereof to be included in such underwriting on the same terms and conditions
as shall be applicable to the Other Securities being sold through underwriters
under such registration. In such case, the holders of Eligible Securities on
whose behalf Eligible Securities are to be distributed by such underwriters
shall be parties to any such underwriting agreement. Such agreement shall
contain such representations and warranties by the Company and the Selling
Investors and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, indemnities and contribution to the
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effect and to the extent provided in Article VII hereof. The representations and
warranties in such underwriting agreement by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of such holders of Eligible Securities.
SECTION 5.3 Blackout Periods. (a) At any time when a registration
statement effected pursuant to Article III hereof relating to Eligible
Securities is effective, upon written notice from the Company to the Selling
Investors that the Company determines in the good faith judgment of the Board of
Trustees of the Company, with the advice of counsel, that the Selling Investors'
sale of Eligible Securities pursuant to the registration statement would require
disclosure of non-public material information the disclosure of which would have
a material adverse effect on the Company (an "Information Blackout"), the
Selling Investors shall suspend sales of Eligible Securities pursuant to such
registration statement until the earliest of:
(i) the date upon which such material information is
disclosed to the public or ceases to be material;
(ii) 60 days after the Company makes a good faith
determination that such material information ceases to be material; and
(iii) such time as the Company notifies the Selling
Investors that sales pursuant to such registration statement may be
resumed.
(The number of days from such suspension of sales by the Selling Investors until
the day when such sales may be resumed under clause (i), (ii) or (iii) hereof is
hereinafter called a "Sales Blackout Period".)
20
(b) Any delivery by the Company of notice of an Information
Blackout during the 90 days immediately following effectiveness of any
registration statement effected pursuant to Article III hereof shall give the
Investors the right, by written notice to the Company within 20 Business Days
after the end of such Sales Blackout Period, to cancel such registration and
obtain one additional registration right during such calendar year (a "Blackout
Termination Right") under Article III hereof.
(c) If there is an Information Blackout and if the Investors
do not exercise their cancellation right, if any, pursuant to Section 5.3(b)
hereof, or, if such cancellation right is not available, the time period set
forth in Section 5.1(b) hereof shall be extended for a number of days equal to
the number of days in the Sales Blackout Period.
SECTION 5.4 Qualification for Rule 144 Sales. The Company will take all
actions reasonably necessary to comply with the filing requirements described in
Rule 144(c)(1) so as to enable the Investors or the Management Investor to sell
Eligible Securities without registration under the Securities Act and, upon the
written request of any Investor or the Management Investor, the Company will
deliver to such Investor or Management Investor a written statement as to
whether it has complied with such filing requirements.
ARTICLE VI
PREPARATION; REASONABLE INVESTIGATION
SECTION 6.1 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement registering Eligible
Securities under the Securities Act, the
21
Company will give the Selling Investors and the underwriters, if any, and
their respective counsel and accountants, drafts of such registration
statement for their review and comment prior to filing and such reasonable
and customary access to its books and records and such opportunities to
discuss the business of the Company with its officers, counsel and the
independent public accountants who have certified its financial statements as
shall be necessary, in the opinion of the Selling Investors and such
underwriters or their respective counsel, to conduct a reasonable
investigation within the meaning of the Securities Act.
ARTICLE VII
INDEMNIFICATION AND CONTRIBUTION
SECTION 7.1 Indemnification. (a) In the event of any registration of
Eligible Securities hereunder, the Company and the Partnership jointly and
severally will, and hereby do, indemnify and hold harmless, each Selling
Investor, its respective directors, trustees, officers, partners, agents,
employees and affiliates and each other person who participates as an
underwriter in the offering or sale of such securities and each other Person, if
any, who controls each such Selling Investor or any such underwriter within the
meaning of the Securities Act, against any and all losses, claims, damages,
expenses or liabilities, joint or several, actions or proceedings (whether
commenced or threatened) in respect thereof, to which each such indemnified
party may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages, expenses or liabilities (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such securities were
registered under the Securities Act, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not misleading,
and the Company and the Partnership will reimburse each such Selling Investor
and each such director, trustee, officer, partner, agent, employee or affiliate,
underwriter and controlling person for any legal or any other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, expense, liability, action, or proceeding; provided,
however, that (i) the Company and the Partnership shall not be liable in any
such case to the extent that any such loss, claim, damage, expense or liability
(or action or proceeding
23
in respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such Selling Investor or
underwriter specifically stating that it is for use in the preparation
thereof and (ii) the Company and the Partnership shall not be liable to any
person who participates as an underwriter in the offering or sale of Eligible
Securities or any other person, if any, who controls or is controlled by such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, expense or liability (or action or
proceeding in respect thereof) arises out of such underwriter's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Eligible Securities to such person if
such statement or omission was corrected in such final prospectus.
(b) Each Selling Investor severally will, and hereby does,
indemnify and hold harmless the Company, its trustees, its officers who sign the
registration statement, each Person who participates as an underwriter in the
offering or sale of such securities, and each Person, if any, who controls the
Company or any such underwriter within the meaning of the Securities Act against
any and all losses, claims, damages, expenses or liabilities, joint or several,
actions or proceedings (whether commenced or threatened) in respect thereof, to
which each such indemnified party may become subject under the Securities Act or
otherwise insofar as such losses, claims, damages,
24
expenses or liabilities (or actions or proceedings, whether commenced or
threatened in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact in or omission or
alleged omission to state a material fact in such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, but only to the extent that
such statement or omission was made in reliance upon and in conformity with
written information furnished by such Selling Investor to the Company through an
instrument duly executed by or on behalf of such Selling Investor specifically
stating that it is for use in preparation thereof.
(c) Promptly after receipt by any indemnified party hereunder
of notice of the commencement of any action or proceeding involving a claim
referred to in paragraphs (a) or (b) of this Section 7.1, the indemnified party
will notify the indemnifying party in writing of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
under paragraphs (a) or (b) of this Section 7.1.
(d) If for any reason the indemnity under this Section 7.1 is
unavailable or is insufficient to hold harmless any indemnified party under
paragraphs (a) or (b) of this Section 7.1, then the indemnifying parties shall
contribute to the amount paid or payable to the indemnified party as a result of
any loss, claim, expense, damage or liability (or actions or proceedings,
whether commenced or threatened, in respect thereof), and legal or other
expenses reasonably incurred by the indemnified party in connection with
investigating or defending any such loss, claim, expense, damage, liability,
action or proceeding, in such proportion as is appropriate to reflect the
relative fault
25
of the indemnifying party on the one hand and the indemnified party on the
other. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Investor and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. If, however, the allocation provided in the
second preceding sentence is not permitted by applicable law, or if the
allocation provided in the second preceding sentence provides a lesser sum to
the indemnified party than the amount hereinbefore calculated, then the
indemnifying party shall contribute to the amount paid or payable by the
indemnified party in such proportion as is appropriate to reflect not only such
relative fault but also the relative benefits of the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this paragraph (d) of Section 7.1 were to be determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the preceding sentences of this
paragraph (d) of Section 7.1.
(e) Indemnification and contribution similar to that specified
in this Section 7.1 (with appropriate modifications) shall be given by the
Company and the Partnership and the Selling Investors with respect to any
required registration or other qualification of securities under any federal,
state or blue sky law or regulation of any governmental authority other than the
Securities Act.
26
(f) Notwithstanding any other provision of this Section 7.1,
to the extent that any director, trustee, officer, partner, agent, employee,
affiliate, or other representative (current or former) of any indemnified party
is a witness in any action or proceeding, the indemnifying party agrees to pay
to the indemnified party all expenses reasonably incurred by, or on the behalf
of, the indemnified party and such witness in connection therewith.
(g) All legal and other expenses incurred by or on behalf of
any Selling Investor in connection with investigating or defending any loss,
claim, expense, damage, liability, action or proceeding shall be paid by the
Company or the Partnership in advance of the final disposition of such
investigation, defense, action or proceeding within twenty days after the
receipt by the Company or the Partnership of a statement or statements from the
Selling Investor requesting from time to time such payment, advance or advances.
The entitlement of each Selling Investor to such payment or advancement of
expenses shall include those incurred in connection with any action or
proceeding by the Selling Investor seeking an adjudication or award in
arbitration pursuant to this Section 7.1. Such statement or statements shall
reasonably evidence such expenses incurred by the Selling Investor in connection
therewith.
(h) The termination of any proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, adversely affect the rights of any indemnified party to
indemnification hereunder or create a presumption that any indemnified party
violated any federal or state securities laws.
(i) (i) In the event that advances are not made pursuant to
this Section 7.1 or payment has not otherwise been timely made, each indemnified
party shall be entitled to seek a final
27
adjudication in an appropriate court of competent jurisdiction of the
entitlement of the indemnified party to indemnification or advances hereunder.
(ii) The Company, the Partnership and the
Selling Investors agree that they shall be precluded from asserting that the
procedures and presumptions of this Section 7.1 are not valid, binding and
enforceable. The Company, the Partnership and the Selling Investors further
agree to stipulate in any such court that the Company, the Partnership, and the
Selling Investors are bound by all the provisions of this Section 7.1 and are
precluded from making any assertion to the contrary.
(iii) To the extent deemed appropriate by the court,
interest shall be paid by the indemnifying party to the indemnified party at a
reasonable interest rate for amounts which the indemnifying party has not timely
paid as the result of its indemnification and contribution obligations
hereunder.
(j) In the event that any indemnified party is a party to or
intervenes in any proceeding in which the validity or enforceability of this
Section 7.1 is at issue or seeks an adjudication to enforce the rights of any
indemnified party under, or to recover damages for breach of, this Section 7.1,
the indemnified party, if the indemnified party prevails in whole in such
action, shall be entitled to recover from the indemnifying party and shall be
indemnified by the indemnifying party against, any expenses incurred by the
indemnified party. If it is determined that the indemnified party is entitled to
indemnification for part (but not all) of the indemnification so requested,
expenses incurred in seeking enforcement of such partial indemnification shall
be reasonably prorated among
28
the claims, issues or matters for which the indemnified party is entitled to
indemnification and for such claims, issues or matters for which the indemnified
party is not so entitled.
(k) The indemnity agreements contained in this Section 7.1
shall be in addition to any other rights (to indemnification, contribution or
otherwise) which any indemnified party may have pursuant to law or contract and
shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party and shall
survive the transfer of any Eligible Securities by any Investor or the
Management Investor.
ARTICLE VIII
BENEFITS OF REGISTRATION RIGHTS
SECTION 8.1 Benefits of Registration Rights. Subject to the limitations
of Sections 3.1 and 4.1 hereof, each member of the Contributor Investor Group
and the Prime Investor Group, and their Permitted Transferees of Eligible
Securities may severally or jointly exercise the registration rights hereunder
in such proportion as they shall agree among themselves. No consent of any
Investor shall be required for Permitted Transferees to exercise registration
rights under this Agreement or otherwise to be entitled to the benefits of this
Agreement as applicable to all Investors. The Management Investor may not
transfer his rights under this Agreement to any other Person. The Company agrees
that monetary damages would not compensate the Investors and Management Investor
for a breach by the Company hereof and the Investors and the Management Investor
shall be entitled to specific performance of this Agreement.
29
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Captions. The captions or headings in this Agreement are
for convenience and reference only, and in no way define, describe, extend or
limit the scope or intent of this Agreement.
SECTION 9.2 Severability. If any clause, provision or section of this
Agreement shall be invalid or unenforceable, the invalidity or unenforceability
of such clause, provision or section shall not affect the enforceability or
validity of any of the remaining clauses, provisions or sections hereof to the
extent permitted by applicable law.
SECTION 9.3 Governing Law. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of Maryland, without
reference to its rules as to conflicts or choice of laws.
SECTION 9.4 Modification and Amendment. This Agreement may not be
changed, modified, discharged or amended, except by an instrument signed by all
of the parties hereto.
SECTION 9.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
SECTION 9.6 Entire Agreement. This Agreement constitutes the entire
agreement and understanding among the parties and supersedes any prior
understandings and/or written or oral agreements among them respecting the
subject matter herein.
SECTION 9.7 Notices. All notices, requests, demands, consents and other
communications required or permitted to be given pursuant to this Agreement
shall be in writing and
30
delivered by hand, by overnight courier delivery service or by certified mail,
return receipt requested, postage prepaid. Notices shall be deemed given when
actually received, which shall be deemed to be not later than the next Business
Day if sent by overnight courier or after five (5) Business Days if sent by
mail. Notice to Investors and Management Investor shall be made to the address
listed on the share transfer records of the Company.
31
IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the day and year first above written.
PRIME GROUP REALTY TRUST
By: /s/ W. Xxxxxxx Xxxxxx
-------------------------
Name: W. Xxxxxxx Xxxxxx
Title: Executive VP
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust
its general partner
By: /s/ W. Xxxxxxx Xxxxxx
-------------------------
Name: W. Xxxxxxx Xxxxxx
Title: Executive VP
PRIME GROUP LIMITED PARTNERSHIP
By: /s/ W. Xxxxxxx Xxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing General Partner
32
PRIMESTONE INVESTMENT PARTNERS, L.P.
By: PG/PRIMESTONE, L.L.C.
its general partner
By: THE PRIME GROUP, INC.
its Administrative Member
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxx
Title: Executive Vice President
By: BRE/PRIMESTONE INVESTMENT
MANAGEMENT L.L.C. its
general partner
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
33
XXXXXX X. XXXXXXXX
TRUST DATED MAY 22, 1992
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Trustee
GRANDVILLE/NORTHWESTERN
MANAGEMENT CORPORATION,
an Illinois corporation
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
XXXXXXX X. XXXXXXXX
TRUST DATED MAY 21, 1992
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Trustee
XXXX XXXXXXXX 1991 TRUST
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Trustee
XXXXXXX XXXXXXXX 1991 TRUST
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Trustee
34
XXXXXX X. XXXXX
/s/ Xxxxxx X. Xxxxx
-------------------
XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
----------------------
GRANDVILLE ROAD PROPERTY, INC.,
an Illinois corporation
By: /s/ Xxxxxx X. Xxxxxxxx
------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: President
SKY HARBOR ASSOCIATES,
an Illinois limited partnership
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Managing General Partner
35
XXXXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
------------------------
36
PRIME GROUP LIMITED PARTNERSHIP,
an Illinois Limited Partnership
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Managing General Partner
37
EXHIBIT A
Prime Group Limited Partnership 90,000 Common Units
Xxxxxxx Xxxxxxxxx 110,000 Common Units
Primestone Investment Partners, L.P. 7,944,893 Common Units
Xxxxxx X. Xxxxxxxx Trust Dated May 22, 1992 388,677 Common Units
Grandville/Northwestern Management
Corporation 9,750 Common Units
Xxxxxxx X. Xxxxxxxx Trust
dated May 21, 1992 54,544 Common Units
Xxxx Xxxxxxxx 1991 Trust 169,053 Common Units
Xxxxxxx Xxxxxxxx 1991 Trust 169,053 Common Units
Xxxxxx X. Xxxxx 33,085 Common Units
Xxxxxxx X. Xxxxxxx 28,805 Common Units
Grandville Road Property, Inc. 7,201 Common Units
Sky Harbor Associates 62,149 Common Units
