Exhibit 10.23
SERIES A PREFERRED SECURITIES
PURCHASE AGREEMENT
DATED AS OF NOVEMBER 11, 1997
AMONG
SECURITY CAPITAL PREFERRED GROWTH INCORPORATED,
PRIME GROUP REALTY, L.P.
AND
PRIME GROUP REALTY TRUST
Table of Contents
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I. PURCHASE AND SALE OF SECURITIES
1.1 Sale and Issuance of Series A Preferred Shares
1.2 Closing
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
2.1 Organization, Good Standing and Qualification
2.2 Power, Authority and Enforceability
2.3 Capitalization; Registration Rights
2.4 Valid Issuance of Series A Preferred Shares
2.5 Compliance with Other Instruments
2.6 No Registration Under the Securities Act; No General Solicitation
2.7 Conformity to Securities Act; No Misstatement or Omission
2.8 Financial Statements
2.9 No Material Adverse Changes
2.10 Litigation
2.11 Title to Properties; Leasehold Interests
2.12 Environmental Compliance
2.13 Taxes
2.14 Insurance
2.15 Employees; ERISA
2.16 REOC Status
2.17 Legal Compliance
2.18 Governmental Consent
2.19 Investment Company
2.20 Knowledge Defined
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR
3.1 Power, Authority and Enforceability
3.2 Compliance with Other Instruments
3.3 Ownership Limitations
3.4 Sophisticated Investor
3.5 Unregistered Securities
3.6 Access to Information
IV. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING
4.1 Execution and Delivery of Amended and Restated Partnership Agreement
4.2 Series A Preferred Designation
4.3 Representations and warranties
4.4 Performance
4.5 No Material Adverse Change
4.6 Opinion of Company Counsel
4.7 Registration Rights Agreement
4.8 Tag-Along Agreement
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4.9 Officer's Certificate
4.10 Payment of Placement Fee
4.11 Proceedings
4.12 Limited Waiver of Ownership Limitations
4.13 No Injunction
4.15 Consummation of the IPO
V. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING
5.1 Representations and Warranties
5.2 Performance
5.3 No Injunction
5.4 Officer's Certificate
VI. COVENANTS
6.1 No Sale of Security
6.2 No General Solicitation
6.3 Filing of Exchange Act Reports
6.4 Consultation and Related Rights
6.5 Maintenance of REIT Status
6.6 Change of Control
6.7 Waiver of Ownership Limitations
6.8 No Public Disclosure
6.9 Annual Certificate of Independent Public Accountants Company Counsel
6.10 Prohibition on Issuance of Series A Preferred Shares
6.11 Structure of Operating Partnership Agreement
6.12 Standstill Provisions
6.13 Certificate of Company Security Ownership
6.14 Ownership in Strategic Hotel Capital Incorporated
VII. TERMINATION
7.1 Termination
7.2 Notice of Termination
7.3 Effect of Termination
VIII. MISCELLANEOUS
8.1 Survival of Warranties
8.2 Successors and Assigns
8.3 Governing Law
8.4 Counterparts
8.5 Titles and Subtitles
8.6 Notices
8.7 Finder's Fees
8.8 Expenses
8.9 Amendments and Waivers
8.10 Severability
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8.11 Entire Agreement
SERIES A PREFERRED SECURITIES PURCHASE AGREEMENT
This SERIES A PREFERRED SECURITIES PURCHASE AGREEMENT (this
"Agreement") is made as of the 11th day of November, 1997 by and among Prime
Group Realty Trust, a Maryland real estate investment trust (the "Company"),
Prime Group Realty, L.P., a Delaware limited partnership (the "Operating
Partnership"), and Security Capital Preferred Growth Incorporated, a Maryland
corporation (the "Investor").
W I T N E S S E T H
WHEREAS, the Company wishes to issue and sell to the Investor Series A
Cumulative Convertible Preferred Shares of Beneficial Interest, $.01 par value
per share (the "Series A Preferred Shares"), the terms of which shall be as set
forth in the Articles of Amendment and Restatement of the Company's Declaration
of Trust (the "Declaration") to be filed with the SDAT (as defined below) in
connection with the IPO (as defined below) in substantially the form of Exhibit
A hereto, in accordance with and subject to the terms and conditions set forth
herein; and
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties herein contained, the parties hereby agree
as follows:
I. PURCHASE AND SALE OF SECURITIES.
1.1 Sale and Issuance of Series A Preferred Shares.
(a) Company shall adopt and file with the State Department of
Assessments and Taxation of Maryland (the "SDAT") on or before the Closing Date
(as defined below) the Declaration.
(b) Subject to the terms and conditions of this Agreement, the
Company agrees to issue and sell to the Investor, and the Investor agrees to
purchase from the Company, 2 million Series A Preferred Shares.
(c) The aggregate purchase price (the "Aggregate Purchase
Price") for the Series A Preferred Shares issued and sold pursuant to this
Agreement shall be equal to $40 million.
(d) The price per Series A Preferred Share (the "Per Share
Price") shall be equal to $20.00.
1.2 Closing.
Upon the terms and subject to the satisfaction or waiver of
all the conditions to closing set forth in this Agreement, the closing (the
"Closing") of the purchase and sale of the Series A Preferred Shares shall take
place at the offices of Winston & Xxxxxx, 00 Xxxx Xxxxxx Xxxxx, Xxxxxxx,
Xxxxxxxx or at such other location as may be agreed upon by the Company and the
Investor.
Such Closing shall take place at 10:00 a.m., Chicago time, on the date of the
closing of the IPO, which shall be the third or fourth business day following
the pricing of the Company's initial public offering (the "IPO"), or at such
other time as may be agreed upon by the Company and the Investor (the "Closing
Date"). At the Closing, the Company shall issue and deliver to the Investor a
certificate or certificates in definitive form, registered in the name of the
Investor, representing the Series A Preferred Shares being purchased by the
Investor hereunder and the Investor shall deliver to the Company, against
delivery of the certificate or certificates representing the Series A Preferred
Shares, the Aggregate Purchase Price by wire transfer of immediately available
funds payable to the Company's order.
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
Each of the Company and the Operating Partnership represents
and warrants, as of the date of this Agreement and as of the Closing Date, that:
2.1 Organization, Good Standing and Qualification.
(a) The Company has been duly organized and is validly
existing as a real estate investment trust in good standing under the laws of
the State of Maryland with full power and authority to own, lease and operate
its properties and conduct its business as now being conducted, and has been
duly qualified to transact business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, except where the failure to so
qualify would not have a Material Adverse Effect. "Material Adverse Effect"
means any material adverse effect on the operations, assets, business, affairs,
prospects, properties, or financial or other condition of the Company, the
operating Partnership and the Subsidiaries (as defined below) taken as a whole.
(b) The operating Partnership has been duly formed and is
validly existing as a limited partnership in good standing under the Delaware
Revised Uniform Limited Partnership Act with partnership power and authority to
own, lease and operate its properties and conduct its business as now being
conducted and has been duly qualified to transact business and is in good
standing under the laws of each jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
except where the failure to so qualify would not have a Material Adverse Effect.
(c) The subsidiaries of the Company and the operating
Partnership set forth on Schedule 2.1 (the "Subsidiaries") have each been duly
organized and are validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or formation and have full power and
authority to own, lease and operate their Properties and to conduct their
businesses as now being conducted, and each Subsidiary has been duly qualified
to transact business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any business, so
as to require such qualification, except where the failure to be in good
standing or to so qualify would not have a Material Adverse Effect. None of the
Company's or the Operating Partnership's subsidiaries that are not included on
Schedule 2.1 individually or in the aggregate constitute a "Significant
Subsidiary" as defined in Rule 1-02 of Regulation S-X.
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2.2 Power, Authority and Enforceability
(a) Each of the Company and the Operating Partnership has all
requisite trust or partnership power and authority, and has taken all required
trust or partnership action necessary, to execute, deliver, and perform its
obligations under, this Agreement. The Company has all requisite trust power and
authority, and has taken all required trust action necessary, to issue and sell
the Series A Preferred Shares and the Common Shares.
(b) This Agreement has been duly executed and delivered by
each of the Company and the Operating Partnership and constitutes the legal,
valid and binding obligation of each of the Company and the operating
Partnership enforceable against each of the Company and the Operating
Partnership in accordance with its terms, except as may be limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally, and
(ii) equitable principles of general applicability relating to the availability
of specific performance, injunctive relief, or other equitable remedies.
2.3 Capitalization; Registration Rights.
After giving effect to the Company's adoption of the
Declaration, the authorized beneficial interests of the Company consists of 30
million preferred shares, par value $.01 per share, of which 2 million shares
are designated as "Series A Cumulative Convertible Preferred Shares," 65 million
excess shares, $.01 par value per share, and 100 million common shares, $.01 par
value per share. All of the issued and outstanding shares of beneficial interest
of the Company have been duly and validly authorized and issued and are fully
paid and are nonassessable. All of the issued and outstanding partnership
interests of the Operating Partnership have been duly and validly authorized and
issued. Except as disclosed in the Company's Registration Statement on Form
S-11, Registration No. 333-33547 (the "Registration Statement") , there are no
persons with registration rights or other similar rights with respect to any
securities of the Company or the Operating Partnership.
2.4 Valid Issuance of Series A Preferred Shares.
The Series A Preferred Shares when issued, sold and delivered
in accordance with the terms hereof for the consideration expressed herein, will
be duly and validly issued and nonassessable. The common shares of Beneficial
Interest of the Company issuable upon the conversion or redemption of the Series
A Preferred Shares (the "Common Shares"), when issued upon such conversion in
accordance with the Declaration will be duly and validly issued, fully paid and
nonassessable and, subject to the accuracy of the Investor's representations set
forth in Article III, will be issued in compliance with all applicable federal
and state securities laws.
2.5 Compliance with Other Instruments.
The execution, delivery and performance of this Agreement by
the Company and the Operating Partnership and the consummation by the company
and the Operating Partnership of the
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transactions contemplated hereby do not (i) result in a violation of the
Declaration, the Company's Amended and Restated Bylaws (the "Bylaws") or of the
operating Partnership's Amended and Restated Agreement of Limited Partnership or
(ii) conflict with, or constitute a default (or an event which with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of, any
agreement, indenture or instrument to which the Company, the Operating
Partnership or any of the Subsidiaries is a party, or result in a violation of
any law, rule, regulation, order, judgment or decree applicable to the Company,
the Operating Partnership or any of the Subsidiaries or by which any property or
asset of the Company, the Operating Partnership or any of the Subsidiaries is
bound or affected (except for such conflicts, defaults, terminations,
amendments, accelerations, cancellations and violations as would not,
individually or in the aggregate, have a Material Adverse Effect or materially
impair the Company's or the Operating Partnership's ability to perform its
obligations under this Agreement).
2.6 No Registration Under the Securities Act; No General
Solicitation.
Assuming the accuracy of the Investor's representations set
forth in Article III, it is not necessary in connection with the offer, sale and
delivery of the Series A Preferred Shares and the Common Shares in the manner
contemplated by this Agreement to register the Series A Preferred Shares or the
Common Shares under the Securities Act of 1933, as amended (the "Securities
Act").
None of the Company, the Operating Partnership nor any of their
respective affiliates (as defined in Rule 501(b) of Regulation D under the
Securities Act, an "Affiliate") has directly, or through any agent, (i) sold,
offered for sale, solicited offers to buy or otherwise negotiated n respect of,
any security (as defined in the Securities Act) which is or will be integrated
with the sale of the Series A Preferred Shares in a manner that would require
registration under the Securities Act of the Series A Preferred Shares or (ii)
engaged in any form of general solicitation or general advertising in connection
with the offering of the Series A Preferred Shares (as those terms are used in
Regulation D under the Securities Act), or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
2.7 Conformity to Securities Act; No Misstatement or Omission.
As of the date hereof, as of the time the Company's prospectus with
respect to its IPO, dated November 11, 1997 (the "Prospectus"), is filed with
the Securities and Exchange Commission (the "Commission") pursuant to Rule 424
(b) under the Securities Act, at any time prior to the Closing Date that any
subsequent amendment or supplement to the Company's Registration Statement on
Form S-11 (No. 333-33547) (the "Registration Statement") or the Prospectus is
filed with the Commission and at the Closing Date: (i) the Registration
Statement, as amended as of any such time and the Prospectus, as amended or
supplemented as of any such time will comply in all material respects with the
applicable requirements of the Securities Act and the respective rules and
regulations of the Commission thereunder, (ii) the Registration Statement, as
amended as of any such time, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) the
Prospectus, as
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amended or supplemented as of any such time, will not contain an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
2.8 Financial Statements.
The financial statements and supporting schedules included in
the Registration Statement are complete and correct in all material respects and
present fairly the consolidated financial position of the Company and its
consolidated Subsidiaries as of the dates specified and the consolidated results
of their operations for the periods specified, in each case, in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved, except as indicated therein or in the notes thereto.
2.9 No Material Adverse Changes.
Since December 31, 1996, (i) there has been no change in the
business, operations or financial condition, of the Company, the Operating
Partnership or the Subsidiaries or in the earnings or the ability to continue to
conduct business in the usual and ordinary course of the Company, the Operating
Partnership and the Subsidiaries, whether or not arising in the ordinary course
of business, which has a Material Adverse Effect; and (ii) except for the
transactions contemplated by this Agreement or described in the Registration
Statement, there has been no transaction entered into by the Company, the
Operating Partnership or any of the Subsidiaries other than transactions in the
ordinary course of business or transactions which would not, individually or in
the aggregate, have a Material Adverse Effect; and (iii) there have not been any
changes in the Company's or the Operating Partnership's authorized capital
(except as set forth in Section 2.3 of this Agreement) or any material increases
in the debt of the Company, the Operating Partnership and the Subsidiaries
considered as one enterprise; and (iv) there has been no actual or, to the
knowledge of the Company or the Operating Partnership, threatened revocation of,
or default under, any material contract to which the Company, the Operating
Partnership or any of the Subsidiaries is a party, which could reasonably be
expected to result in a Material Adverse Effect, except for the default by Xxxx,
Xxxxx & Xxxx under its lease at the 00 Xxxx Xxxxxx Xxxxx building.
2.10 Litigation.
Except as set forth in the Registration Statement, after
giving effect to the IPO and the transactions contemplated thereby, there is no
action, suit or proceeding (whether or not purportedly on behalf of the Company,
the Operating Partnership or any of the Subsidiaries) before or by any court or
governmental agency or body, domestic or foreign, now pending, or to the
knowledge of the Company or the Operating Partnership, threatened against or
affecting the Company, the Operating Partnership or any of the Subsidiaries
which, either alone or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or materially impair the Company's or the Operating
Partnership's ability to perform its obligations under this Agreement or the
compliance by the Company with the terms, conditions and provisions of the
Series A Preferred Shares or the Common
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Shares.
2.11 Title to Properties; Leasehold Interests.
(a) Schedule 2.11(a) sets forth a complete and accurate list
and the address of all real property owned or leased by the Company, the
Operating Partnership or any Subsidiaries or are otherwise used in the operation
or conduct of the Company's or Operating Partnership's business (collectively,
and together with the land at each address referenced in Schedule 2.11(a) and
all buildings, structures and other improvements and fixtures located on or
under such land and all easements, rights and other appurtenances to such land,
the "Company Properties"). The Company, the Operating Partnership, or in the
case of Company Properties owned by Subsidiaries that are not wholly owned
Subsidiaries of the Company, to the Company's knowledge, such Subsidiaries, owns
or own, as the case may be, good and marketable fee simple title (or, if so
indicated in Schedule 2.11(a), leasehold title) to each of the Company
Properties, in each case free and clear of any Liens, title defects, contractual
restrictions or covenants, laws, ordinances or regulations affecting use or
occupancy (including zoning regulation and building codes) or reservations of
interests in title (collectively, "Property Restrictions"), except for (i)
mortgage liens disclosed in the Registration Statement or on Schedule 2.11(a);
(ii) Property Restrictions imposed or promulgated by law or by any Government
Authority (as hereinafter defined) which are customary and typical for similar
properties and (iii) other Property Restrictions that do not individually or in
the aggregate materially impair the use or operation of any Company Property
(collectively, "Permitted Liens"). To the Company's knowledge, none of the
matters described in clauses (i), (ii) or (iii) of the immediately preceding
sentence materially interferes with, materially impairs, or is materially
violated by, the existence of any building or other structure or improvement
which constitutes a part of, or the present use, occupancy or operation (or, if
applicable, development) of, the Company Properties taken as a whole, and such
matters do not, individually or in the aggregate, have a Material Adverse
Effect. At or prior to the closing of the IPO, American Land Title Association
policies of title insurance (or marked title insurance commitments having the
same force and effect as title insurance policies) will have been issued by
national title insurance companies insuring the fee simple or leasehold, as
applicable, title of the Company, the Operating Partnership or any Subsidiaries,
as applicable, to each of the Company Properties in amounts at least equal to
the original cost thereof, subject only to Permitted Liens and, to the Company's
knowledge, such policies are valid and in full force and effect and no claim has
been made under any such policy.
(b) Except as set forth in Schedule 2.11(b), and except for
matters which would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect, the Company has no knowledge (i)
that any currently required certificate, permit or license (including building
permits and certificates of occupancy for tenant spaces) from any Government
Authority having jurisdiction over any Company Property or any agreement,
easement or other right which is necessary to permit the lawful use, occupancy
or operation of the existing buildings, structures or other improvements which
constitute a part of any of the Company Properties or which are necessary to
permit the lawful use and operation of utility service to any Company Property
or of any existing driveways, roads or other means or egress and ingress to and
from any of the Company Properties has
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not been obtained or is not in full force and effect, or of any pending threat
of modification or cancellation of any of same, or (ii) of any violation by any
Company Property of any federal, state or municipal law, ordinance, order,
regulation or requirement, including any applicable zoning law or building code,
as a result of the use or occupancy of such Company Property or otherwise.
Except as set forth in Schedule 2.11(b), the Company has no knowledge of
uninsured physical damage to any Company Property which would individually or in
the aggregate have a Material Adverse Effect. To the Company's knowledge, except
for repairs identified in Schedule 2.11(b), each Company Property, identified as
an operating property in Schedule 2.11(a) (the "Operating Properties"), (i) is
in good operating condition and repair and is structurally sound and free of
defects, with no material alterations or repairs being required thereto under
applicable law or insurance company requirements, and (ii) consists of
sufficient land, parking areas, driveways and other improvements and lawful
means of access and utility service and capacity to permit the use thereof in
the manner and for the purposes to which it is presently devoted, except, in
such case, to the extent that failure to meet such standards would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(c) The Company has no knowledge (i) that any condemnation,
eminent domain or rezoning proceedings are pending or threatened with respect to
any of the Company Properties, (ii) that any road widening or change of grade of
any road adjacent to any Company Property is underway or has been proposed,
(iii) of any proposed change in the assessed valuation of any Company Property
other than customarily scheduled revaluations, (iv) of any special assessment
made or threatened against any Company Property, or (v) that any of the Company
Properties is subject to any so-called "impact fee" or to any agreement with any
Government Authority to pay for sewer extension, oversizing utilities, lighting
or like expenses or charges for work or services by such Government Authority,
except, in the case of each of the foregoing, to the extent that same would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(d) To the Company's knowledge, each of the Operating
Properties is an independent unit which does not rely on any facilities located
on any property not included in such Operating Property to fulfill any municipal
or governmental requirement or for the furnishing to such Operating Property of
any essential building systems or utilities, other than facilities the benefit
of which inures to the Operating Properties pursuant to one or more valid
easements. Each of the Operating Properties is served by public water and
sanitary systems and all other utilities, and, to the Company's knowledge, each
of the Operating Properties has lawful access to public roads, in all cases
sufficient for the current use and occupancy of each Operating Property. To the
Company's knowledge, all parcels of land included in each operating Property
that purport to be contiguous are contiguous and are not separated by strips or
gores. To the Company's knowledge, no portion of any Company Property lies in
any flood plain area (as defined, as of the date hereof, by the U.S. Army Corps
of Engineers (the "Army Corps of Engineers") or otherwise) or includes any
wetlands or vegetation or species protected by any applicable laws. None of the
Company Properties lies in any 100-year flood plain area, as established by the
Army Corps of Engineers. To the Company's knowledge, no improvements
constituting a part of any Company Property encroach on real property not
constituting a part of such Company Property. No representation set forth in
this subsection (d) shall be deemed to be untrue unless such untruths are,
individually or in the aggregate, reasonably
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expected to have a Material Adverse Effect.
(e) To the knowledge of the Company, no Operating Property
fails to comply with the requirements of the Americans with Disabilities Act
(the "ADA") except for such non-compliance as the Company believes will not,
individually or in the aggregate, have a Material Adverse Effect.
(f) With respect to each lease of space in each Company
Property (collectively, the "Company Leases") for premises larger than 100,000
square feet of rentable space as identified on Schedule 2. 11(f) or if leased to
a tenant or affiliate of a tenant listed on Schedule 2.11(f) (collectively, the
"Material Company Leases"), except for matters which are not, individually or in
the aggregate, reasonably expected to have a Material Adverse Effect, (i) except
as noted on Schedule 2.11(f), each of the Material Company Leases is valid and
subsisting and in full force and effect as against the Company or Subsidiary, as
applicable, and, to the Company's knowledge, as against the tenant, and has not
been amended, modified or supplemented, (ii) except as noted on Schedule
2.11(f), the tenant under each of the Material Company Leases is in actual
possession of the premises leased thereunder, (iii) except as set forth on
Schedule 2.11(f), no tenant under any Material Company Lease is more than 60
days in arrears in the payment of regular recurring monthly rent, (iv) except as
noted on Schedule 2.11(f), none of the Company, the Operating Partnership or any
Subsidiaries has received any written notice from any tenant under any Material
Company Lease of its intention to vacate, (v) none of the Company, the Operating
Partnership or any Subsidiaries has collected payment of rent under any Material
Company Lease (other than security deposits) accruing for a period which is more
than one month in advance, (vi) no notice of default has been sent or received
by the landlord under any Material Company Lease which remains uncured as of the
date hereof, except as noted on Schedule 2.11(f), no default has occurred under
any Material Company Lease and, to the Company's knowledge, no event has
occurred and is continuing which, with notice or lapse of time or both, would
constitute a default under any Material Company Lease, (vii) except as disclosed
in the Registration Statement, no tenant under any of the Material Company
Leases has any purchase options or kick-out rights or is entitled to any
concessions, allowances, abatements, set-offs, rebates or refunds, (viii) except
as assigned in connection with Mortgages discussed in the Registration Statement
and except for Collateral Assignments by tenants in connection with the
financing of fixtures and inventory in the premises with bona fide institutional
lenders, none of the Material Company Leases and none of the rents or other
amounts payable thereunder has been mortgaged, assigned, pledged or encumbered
by any party thereto or otherwise, (ix) no space of a material size in the
Company Property is occupied by a tenant rent-free, (x) no tenant under any of
the Material Company Leases has asserted any claim which is likely to affect the
collection of rent from such tenant, and (xi) the landlord under each Material
Company Lease has fulfilled all of its obligations thereunder in respect of
tenant improvements and capital expenditures. Other than parties to easement
agreements, no third party has any right to occupy or use any portion of any
Company Property, with the exception of kiosk or pushcart operators, that would,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(g) Except as disclosed in the Registration Statement,
Schedule 2.11(g) sets forth a complete and accurate list of all material
commitments, letters of intent, options or similar written
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understandings made or entered into by the Company or any of its Subsidiaries as
of the date hereof, (i) to sell, mortgage, pledge or hypothecate any Company
Property or Properties, which, individually or in the aggregate, constitute at
least $50 million, or to otherwise enter into a material transaction in respect
of the ownership or financing of any Company Property, or (ii) to purchase or to
acquire an option, right of first refusal or similar right in respect of any
real property, which, individually or in the aggregate, constitute at least $50
million, which, in any such case, has not yet been reduced to a written lease or
contract, and sets forth with respect to each such commitment, letter of intent
or other understanding the principal terms thereof, with the exception of the
rights of the Company to acquire vacant land, in which case Schedule 2.11(g)
shall only set forth the location where the Company has the rights to acquire
such vacant land.
(h) The Company has disclosed to Investor all adverse matters
known to the Company with respect to or in connection with the Company
Properties which arose subsequent to the period covered by the Registration
Statement (including the Company Leases and the Tenancy Leases (as defined
below)), which would, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect.
(i) The ground leases underlying the leased Company Properties
referenced in Schedule 2.11(a) (collectively, the "Tenancy Leases") are
accurately described in Schedule 2.11(i). Each of the Tenancy Leases is valid,
binding and in full force and effect as against the Subsidiary and, to the
Company's knowledge, as against the other party thereto. Except as indicated in
Schedule 2.11(i) or disclosed in the Registration Statement in connection with
only mortgage liens, none of the Tenancy Leases is subject to any mortgage,
pledge, Lien, sublease, assignment, license or other agreement granting to any
third party any interest therein, collateral or otherwise, or any right to the
use or occupancy of any premises leased thereunder with the exception of
sub-leases with tenants of the centers constructed on the land. To the Company's
knowledge, except as set forth in Schedule 2.11(i), there is no pending or
threatened proceeding which is reasonably likely to interfere with the quiet
enjoyment of the tenant under any of the Tenancy Leases. Except as set forth in
Schedule 2.11(i), as of the last day of the month preceding the date hereof and
as of the last day of the month preceding the date of the Closing, no payments
under any Tenancy Lease are delinquent and no notice of default thereunder has
been sent or received by the Company, the Operating Partnership or any
Subsidiaries. There does not exist under any of the Tenancy Leases any default,
and, to the Company's knowledge, no event has occurred which, with notice or
lapse of time or both, would constitute such a default, except as would not,
individually or in the aggregate, be reasonably expected to result in a Material
Adverse Effect.
(j) The Company, the Operating Partnership and all
Subsidiaries have good and sufficient title to all personal and non-real
properties and assets reflected in their books and records as being owned by
them (including those reflected in the balance sheets of the Company, the
Operating Partnership and all Subsidiaries as of December 31, 1996, except as
since sold or otherwise disposed of in the ordinary course of business), free
and clear of all Liens, except for Permitted Liens which are not, individually
or in the aggregate, reasonably expected to have a Material Adverse Effect.
10
2.12 Environmental Compliance.
(a) Except as disclosed in the Registration Statement, the
Company, the Operating Partnership and each of the Subsidiaries has complied and
is in compliance with all Environmental Statutes (as hereinafter defined) except
as such non-compliance would not have a Material Adverse Effect.
(b) Except as disclosed in the Registration Statement, none of
the Company, the Operating Partnership or any of the Subsidiaries intends to use
any real property owned or occupied by any such party for the purpose of
handling, burying, storing, retaining, refining, transporting, processing,
manufacturing, generating, producing, spilling, seeping, leaking, escaping,
leaching, pumping, pouring, emitting, emptying, discharging, injecting, dumping,
transferring or otherwise disposing of or dealing with Hazardous Materials.
(c) Except as disclosed in the Registration Statement, none of
the Company, the Operating Partnership or any of the Subsidiaries has any
knowledge of any seepage, leak, escape, xxxxx, discharge, injection, release,
emission, spill, pumping, pouring, emptying or dumping of Hazardous Materials
into waters on or adjacent to any real property owned or occupied by any such
party, or onto lands from which Hazardous Materials might seep, flow or drain
into such waters.
(d) Except as disclosed in the Registration Statement, none of
the Company, the operating Partnership or any of the Subsidiaries has any
knowledge of any occurrence or circumstance that, with notice or passage of time
or both, would give rise to a claim under or pursuant to any federal, state or
local Environmental Statute pertaining to Hazardous Materials on or originating
from any real property owned or occupied by the Company, the Operating
Partnership or any of the Subsidiaries arising out of the conduct of any such
party, including without limitation pursuant to any Environmental Statute.
(e) Except as disclosed in the Registration statement, to the
knowledge of the Company, no land owned by the Company, the Operating
Partnership or any of the Subsidiaries is included or proposed for inclusion on
the National Priorities List issued pursuant to CERCLA (as hereinafter defined)
by the United States Environmental Protection Agency (the "EPA") or on the
inventory of other potential "Problem" sites issued by the EPA and has not
otherwise been publicly identified by the EPA as a potential CERCLA site or
included or proposed for inclusion on any list or inventory issued pursuant to
any other Environmental Statute or issued by any other Governmental Authority
(as hereinafter defined).
(f) As used herein, "Hazardous Material" shall include without
limitation any flammable explosives, radioactive materials, hazardous materials,
hazardous wastes, toxic substances or related materials, asbestos or any
hazardous material as defined by any federal, state or local environmental law,
ordinance, rule or regulation, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, 42
U.S.C. Sections 9601 et seq. ("CERCLA"), the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. Sections 1801 et
11
seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Sections
9601 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. Sections 11001 et seq., the Toxic Substances Control Act, 15 U.S.C.
Sections 2601 et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C. Sections 136 et seq., the Clean Air Act, 42 U.S.C. Sections
7401 et seq., the Clean Water Act (Federal Water Pollution Control Act), 33
U.S.C. Sections 1251 et seq., the Safe Drinking Water Act, 42 U.S.C. Sections
300F to 300j-11, and the Occupational Safety and Health Act, 29 U.S.C.
Sections 651 et seq, as any of the above statutes may be amended from time to
time, and in the regulations adopted and publications promulgated pursuant to
each of the foregoing (individually, an "Environmental Statute") or by any
federal, state or local governmental authority having or claiming
jurisdiction over the properties and assets described in the Company's
periodic reports filed pursuant to the Exchange Act (a "Governmental
Authority").
2.13 Taxes.
(a) The Company, the Operating Partnership and the
Subsidiaries have filed or caused to be filed all federal, state, local, foreign
and other tax returns, reports, information returns and statements (except for
returns, reports, information returns and statements the failure to file which
will not result in any Material Adverse Effect) required to be filed by them.
The Company, the Operating Partnership and the Subsidiaries have paid or caused
to be paid all taxes (including interest and penalties) that are shown as due
and payable on such returns or claimed by any taxing authority to be due and
payable with respect to such returns, except those which are being contested by
them in good faith by appropriate proceedings and in respect of which adequate
reserves are being maintained on their books in accordance with generally
accepted accounting principles consistently applied. The Company, the Operating
Partnership and the Subsidiaries do not have any material liabilities for taxes
other than those incurred in the ordinary course of business and in respect of
which adequate reserves are being maintained by them in accordance with
generally accepted accounting principles consistently applied. Federal and state
income tax returns for the Company, the Operating Partnership and the
Subsidiaries have not been audited by the Internal Revenue Service or state
authorities. No deficiency, assessment with respect to or proposed adjustment of
the Company's, the Operating Partnership's or any of the Subsidiaries' federal,
state, local, foreign or other tax returns is pending or, to the best of the
Company's, the Operating Partnership's or any of the Subsidiaries, knowledge,
threatened. There is no tax lien, whether imposed by any federal, state, local
or other tax authority, outstanding against the assets, properties or business
of the Company, the Operating Partnership or any of the Subsidiaries. There are
no applicable taxes, fees or other governmental charges payable by the Company,
the Operating Partnership or any of the Subsidiaries in connection with the
execution and delivery of this Agreement or the issuance by the Company of the
Series A Preferred Shares or the Common Shares.
(b) The Company has qualified, and will elect, to be taxed as
a real estate investment trust pursuant to Sections 856 through 860 of the
Internal Revenue Code of 1986, as amended (the "Code"), for its taxable year
ending December 31, 1997, and the Company expects under present law to so
qualify in the future.
(c) The Operating Partnership is not a publicly traded
partnership that is taxed as a
12
corporation under Section 7704 of the Code.
2.14 Insurance.
The Company, the operating Partnership and each of the
Subsidiaries carries or is entitled to the benefits of insurance in such amounts
and covering such risks as is reasonably sufficient under the circumstances or
is customary in the industry and all such insurance is in full force and effect.
2.15 Employees; ERISA.
The Company and the Operating Partnership have good
relationships with their employees and have not had any substantial labor
problems. Neither the Company nor the Operating Partnership has any knowledge as
to any intentions of any key employee or any group of employees to leave the
employ of the Company or the Operating Partnership. Other than as disclosed in
the Registration Statement, neither the Company nor the Operating Partnership
has established, sponsored, maintained, made any contributions to or been
obligated by law to establish, maintain, sponsor or make any contributions to
any "employee pension benefit plan" or "employee welfare benefit plan" (as such
terms are defined in ERISA), including, without limitation, any "multi-employer
plan." Each of the Company and the Operating Partnership is in compliance with
all applicable laws relating to the employment of labor, including provisions
relating to wages, hours, equal opportunity, collective bargaining and the
payment of Social Security and other taxes, and with ERISA, except where the
failure to so comply would not have a Material Adverse Effect.
2.16 REOC Status.
The Operating Partnership is, at all times since its creation
has been, and will continue to be a real estate operating company ("REOC") (as
such term is defined in 29 CFR 2510.3-101(e)).
2.17 Legal Compliance.
(a) Each of the Company, the Operating Partnership and each of
the Subsidiaries is in compliance with all applicable laws, rules, regulations,
orders, licenses, judgments, writs, injunctions, decrees or demands of any court
or administrative body, domestic or foreign, or of any other governmental agency
or instrumentality, domestic or foreign, except to the extent that failure to
comply would not have a Material Adverse Effect. The Company, the Operating
Partnership and each of the Subsidiaries have all necessary permits, licenses
and other authorizations required to conduct their businesses as currently
conducted, and as proposed to be conducted, except where the failure to have
such permits, licenses or other authorizations would not have a Material Adverse
Effect.
(b) Except as disclosed in the Registration Statement, there
are no adverse orders, judgments, writs, injunctions, decrees or demands of any
court or administrative body, domestic or foreign, or of any other governmental
agency or instrumentality, domestic or foreign, outstanding
13
against the Company, the operating Partnership or any of the Subsidiaries which
could reasonably be expected to result in a Material Adverse Effect.
2.18 Governmental Consent.
Other than such consents, approvals, authorizations,
declarations or filings as have already been obtained or made or which will be
made at or prior to the Closing Date, no consent, approval or authorization of,
or declaration or filing with, any governmental authority on the part of the
Company is required for the valid execution and delivery of this Agreement or
performance hereunder or the valid offer, issue, sale and delivery of the Series
A Preferred Shares pursuant to this Agreement.
2.19 Investment Company.
The Company is not an "investment company", as defined in the
Investment Company Act of 1940, as amended, nor is the Company controlled by an
"investment company."
2.20 Knowledge Defined.
As used herein the phrase "to the Company's knowledge" or
words of similar import means the actual knowledge of the individuals listed on
Schedule 2.20.
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor represents and warrants, as of the date of
this Agreement and as of the Closing Date, that:
3.1 Power, Authority and Enforceability.
(a) The Investor is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of
Maryland. The Investor has the requisite corporate power and
authority, and has taken all required corporate action necessary, to
execute, deliver, and perform its obligations under, this Agreement
and to purchase the Series A Preferred Shares hereunder.
(b) This Agreement has been duly executed and delivered by
the Investor and constitutes the legal, valid and binding obligation
of the Investor enforceable against the Investor in accordance with
its terms, except as may be limited by (i) applicable bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors, rights generally, and
(ii) equitable principles of general applicability relating to the
availability of specific performance, injunctive relief, or other
equitable remedies.
14
3.2 Compliance with Other Instruments.
The execution, delivery and performance of this Agreement by
the investor and the consummation by the Investor of the transactions
contemplated hereby do not (i) result in a violation of the
Investor's Articles of Incorporation or Bylaws or (ii) conflict with,
or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Investor is a
party, or result in a violation of any law, rule, regulation, order,
judgment or decree applicable to the Investor or by which any
property or asset of the Investor is bound or affected (except for
such conflicts, defaults, terminations, amendments, accelerations,
cancellations and violations as would not, individually or in the
aggregate, materially impair the Investor's ability to perform its
obligations under this Agreement).
3.3 Ownership Limitations.
The Investor has received a copy of the Declaration
and understands the restrictions on transfer and ownership of the
Company's shares of beneficial interest included therein related to
the qualification by the Company as a real estate investment trust
for federal income tax purposes pursuant to Sections 856 through 860
of the Code.
3.4 Sophisticated Investor.
In the normal course of its business or its
investing activities, the Investor invests in or purchases securities
similar to the Series A Preferred Shares and it has such knowledge
and experience in financial and business matters that it is capable
of evaluating the merits and risks of purchasing the Series A
Preferred Shares. The Investor is aware that it may be required to
bear the economic risk of an investment in the Series A Preferred
Shares for an indefinite period of time and it is able to bear such
risk for an indefinite period.
3.5 Unregistered Securities.
The Investor understands and acknowledges and
agrees that the Series A Preferred Shares and Common Shares have not
been registered under the Securities Act or any other applicable
securities law and, unless so registered, may not be offered, sold or
otherwise transferred except in compliance with the registration
requirements of the Securities Act or any other applicable securities
law, pursuant to an exemption therefrom or in a transaction not
subject thereto.
3.6 Access to Information.
The Investor has had access to such financial and
other information concerning the Company or any of its affiliates and
the Series A Preferred Shares as it
15
deemed necessary in connection with its decision to purchase any of
the Series A Preferred Shares, including an opportunity to ask
questions and request information from the Company.
IV. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING.
The Investor's obligations at the Closing under Section 1.2 of this
Agreement are subject to the satisfaction or waiver by the Investor
on or before the Closing of each of the following conditions:
4.1 Execution and Delivery of Amended and Restated Partnership
Agreement.
At or prior to the Closing, the Amended and Restated
Partnership Agreement contemplated by Section 6.11 shall have been
executed and delivered.
4.2 Series A Preferred Designation.
At or prior to the Closing, the Declaration shall have been
filed with and accepted for recording by the SDAT.
4.3 Representations and Warranties.
The representations and warranties of each of the Company
and the Operating Partnership contained in Article II shall be true
on and as of the Closing with the same effect as though such
representations and warranties had been made on and as of the date of
the Closing.
4.4 Performance.
Each of the Company and the Operating Partnership shall have
performed and complied in all material respects with all agreements,
obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the
Closing Date.
4.5 No Material Adverse Change.
After the date of this Agreement and through the Closing
Date, there shall not have occurred any change or event that has had
a Material Adverse Effect.
4.6 Opinion of Company Counsel.
The Investor shall have received from each of Winston &
Xxxxxx and Miles & Stockbridge, counsel for the Company, an opinion
in form and substance reasonably satisfactory to the Investor. In
rendering such opinion, Winston & Xxxxxx may rely, as to
16
matters governed by the laws of the State of Maryland, upon the
opinion of Miles & Stockbridge.
4.7 Registration Rights Agreement.
Simultaneous with the Closing, the Company and the Investor
shall have entered into a Registration Rights Agreement in
substantially the form attached hereto as Exhibit B.
4.8 Tag-Along Agreement.
Simultaneous with the Closing, the Investor shall have
entered into a Tag-Along Agreement with the other parties named
therein in substantially the form attached hereto as Exhibit C.
4.9 Officer's Certificate.
Each of the Company and the Operating Partnership shall have
delivered to the Investor on the Closing Date a certificate or
certificates signed by an authorized officer of such entity to the
effect that the facts required to exist by Sections 4.1, 4.2, 4.3,
4.4, 4.5, 4,12, and 4,13 continue to exist on the Closing Date.
4.10 Payment of Placement Fee.
At or prior to the Closing, the Company shall have entered
into a letter agreement with Security Capital Markets Group
Incorporated in the form attached hereto as Exhibit D and shall have
paid, or shall simultaneously pay, a placement fee equal to 1% of the
Aggregate Purchase Price to Security Capital Markets Group
Incorporated.
4.11 Proceedings.
All proceedings to be taken in connection with the
transactions contemplated by this Agreement and all documents
incidental thereto, shall be reasonably satisfactory in form and
substance to the Investor; and the Investor shall have received
copies of all documents which the Investor may reasonably request in
connection with said transactions and copies of the records of all
proceedings of the Company in connection therewith in form and
substance reasonably satisfactory to the Investor.
4.12 Limited Waiver of Ownership Limitations.
Subject to the Company's receipt of a certificate (the
"Certificate") from the Investor in form and substance acceptable to
the Company containing the representations and undertakings of the
nature set forth in Section 4.6 of the Declaration, the Board of
Trustees of the Company shall have duly adopted a resolution in form
and substance reasonably
17
satisfactory to the Investor, thereby waiving the application of the
Ownership Limit defined therein to the Investor and its Affiliates to
the extent provided in such resolution.
4.13 No Injunction
There shall not be in effect any order, decree or injunction
of a court or agency of competent jurisdiction which enjoins or
prohibits consummation of the transactions contemplated hereby and
there shall be no actual or threatened action, suit, arbitration,
inquiry, proceedings or investigation by or before any Governmental
Authority, court or agency of competent jurisdiction, which would
reasonably be expected to materially impair the ability of the
Company to consummate the transactions contemplated hereby or to
issue the Series A Preferred Shares or the Common Shares.
4.14 Consummation of the Formation Transactions.
The Company shall have consummated the Formation
Transactions (as defined in the Registration Statement) and the gross
issue price per common Share in the IPO shall not exceed the product
of 11.0 times Fully Diluted Pro Forma 1998 Funds from Operations per
Share. "Fully Diluted Pro Forma 1998 Funds from Operations per Share"
means (x) the Company's estimated "Funds from Operations," computed
in accordance with the resolution adopted by the Board of Governors
of the National Association of Real Estate Investments Trusts, Inc.
in its March 1995 White Paper, except with base rents reported on a
cash basis rather than a straight-line GAAP basis, for the 12 months
ended June 30, 1998 divided by (y) the number of outstanding common
shares of beneficial interest of the Company (assuming all securities
exchangeable for, exercisable for, or convertible into common shares
of beneficial interest are so exchanged, exercised or converted).
4.15 Consummation of the IPO.
The Company shall have closed the IPO on or before December
31, 1997.
V. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING.
The obligations of the Company under Section 1.2 of this Agreement
are subject to the fulfillment on or before the Closing of each of
the following conditions:
5.1 Representations and Warranties.
The representations and warranties of the Investor contained
in Article III shall be true on and as of the Closing with the same
effect as though such representations and warranties had been made on
and as of the date of the Closing.
18
5.2 Performance.
The Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement
that are required to be performed or complied with by it on or
before the date of the Closing.
5.3 No Injunction.
There shall not be in effect any order, decree or
injunction of a court or agency of competent jurisdiction which
enjoins or prohibits consummation of the transactions contemplated
hereby and there shall be no actual or threatened action, suit,
arbitration, inquiry, proceedings or investigation by or before
any Governmental Authority, court or agency of competent
jurisdiction, which would reasonably be expected to materially
impair the ability of the Investor to consummate the transactions
contemplated hereby.
5.4 Officer's Certificate.
The Investor shall have delivered to the Company and the
Operating Partnership on the Closing Date a certificate or
certificates signed by an authorized officer of the Investor to
the effect that the circumstances described in the Certificate and
the facts required to exist by Sections 5.1, 5.2 and 5.3 continue
to exist on the Closing Date.
VI. COVENANTS.
6.1 No Sale of Security.
None of the Company, the Operating Partnership or any
Affiliate of either party will sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security
(as defined in the Securities Act) which would be integrated with
the sale of the Series A Preferred Shares or the Common Shares in
a manner which would require registration under the Securities Act
of the Series A Preferred Shares or the Common Shares.
6.2 No General Solicitation.
None of the Company, the Operating Partnership or any
Affiliate of either party will solicit any offer to buy or offer
to sell the Series A Preferred Shares or the Common Shares by
means of any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
19
6.3 Filing of Exchange Act Reports.
After the date of this Agreement, the Company
will timely file all documents required to be filed with the
Commission pursuant to Section 13 or 15 of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") , and so long as any
of the Series A Preferred Shares or the Common Shares remain
issued and outstanding, shall provide to the Investor copies of
all such documents, including, without limitation, all financial
statements of the Company required to be filed with the Commission.
6.4 Consultation and Related Rights.
For so long as the Investor holds at least 50%
of the Series A Preferred Shares that it held immediately after
the Closing Date (or 50% of the Common Shares that the investor
could have obtained at that time upon conversion of such Series A
Preferred Shares whether or not such shares are then convertible),
the Investor shall have the right to directly participate (within
the meaning of 29 CFR 2510.3 -101(d)(3)(ii) ) in the management of
the Company and the Operating Partnership through and by the
following rights and powers:
(a) The right to be consulted on the appointment and
dismissal of (i) the chief executive officer, the
chief operating officer and the chief financial
officer (or any person fulfilling similar duties)
and the public accountants and public auditors for
the Company and its subsidiaries and (ii) the
managing general partner, the chief executive
officer, the chief operating officer and the chief
financial officer, or any person or persons
fulfilling similar duties, and the public auditors
and public accountants for the Operating
Partnership and its subsidiaries.
(b) The right to inspect the books and records of the
Company and the Operating Partnership.
(c) The right to be consulted concerning the
development of the Company' s and the Operating
Partnership's and their subsidiaries, annual
strategic plan that incorporates a specific
business strategy, an operating agenda, investment
and disposition objectives, and capitalization and
funding strategies.
(d) The right to be consulted concerning the annual
operating and capital budgets of the Company and
the Operating Partnership and their subsidiaries.
(e) The right to be consulted concerning Major
Transactions. "Major Transactions" means (i) any
acquisition or disposition of any assets in any
single transaction or any series of related
transactions where the aggregate purchase price
paid or received by the Company, the Operating
Partnership or
20
their subsidiaries exceeds $50,000,000, or, in
the case of dispositions, where the purchase
price received does not approximate the fair
market value of the asset sold, (ii) additional
financings in excess of $50,000,000 and (iii) a
determination by the Company's Board of
Trustees to terminate the Company's status as a
real estate investment trust pursuant to
Sections 856 through 860 of the Code.
Notwithstanding the foregoing, the Company shall have no
obligation to comply with any advice offered by the Investor in
any consultation referred to in this Section 6.3.
Investor agrees that any information obtained
through the foregoing consultation rights which is not public
shall be kept confidential, and shall not be disclosed to any
persons other than the directors, officers, employees, financial
advisors, legal advisors, and accountants of Investor who
reasonably need to have access to such information and who are
advised of the confidential nature of such information and agree
to maintain the confidentiality of such information; provided that
the foregoing obligation of Investor shall not (a) relate to any
information that (i) is or becomes generally available other than
as a result of unauthorized disclosure by Investor or by persons
to whom Investor has made such information available, or (ii) is
or becomes available to investor on a non-confidential basis from
a third party that is not, to Investor's knowledge, bound by any
other confidentiality agreement with the Company or its
Subsidiaries, or (b) prohibit disclosure of any information if
required by law, rule, regulation, court order, or other legal or
governmental process.
6.5 Maintenance of REIT Status.
(a) So long as any of the Series A Preferred Shares or
the Common Shares remain issued and outstanding,
the Company will continue to be taxed as a real
estate investment trust pursuant to Sections 856
through 860 of the Code.
(b) If the Company shall fail to continue to be
taxed as a real estate investment trust pursuant
to Sections 856 through 860 of the Code (a
"REIT-Repurchase Event") , the Investor shall
have the right to require the Company, to the
extent the Company shall have funds legally
available therefor, to repurchase any or all of
the Series A Preferred Shares or the Common
Shares held by the Investor at a repurchase
price payable in cash in an amount equal to 115%
of the liquidation preference thereof, plus
accrued and unpaid dividends whether or not
declared, if any (the "REIT-Repurchase
Payment"), to the date of repurchase or the date
payment is made available (the "REIT-Repurchase
Date") , pursuant to the offer described in
subsection (c) below (the "REIT-Repurchase
offer").
(c) Within 15 days following the Company becoming
aware that a REIT-Repurchase Event has occurred,
the Company shall mail by first class mail or
21
overnight courier a notice to the Investor
stating (A) that a REIT-Repurchase Event has
occurred and that the Investor has the right to
require the Company to repurchase any or all of
the Series A Preferred Shares or the Common
Shares then held by the investor in cash, (3)
the date of repurchase (which shall be a
business day, no earlier than 30 days and no
later than 60 days from the date such notice is
mailed, or such later date as may be necessary
to comply with the requirements of the Exchange
Act) , (C) the repurchase price and (D) the
instructions determined by the Company,
consistent with this subsection, that the
Investor must follow in order to have the Series
A Preferred Shares or the Common Shares
repurchased.
(d) On the REIT-Repurchase Date, the Company, to the
extent lawful, shall accept for payment Series A
Preferred Shares or Common Shares or portions
thereof tendered by the Investor or an affiliate
of the Investor pursuant to the REIT-Repurchase
offer and promptly mail by first class mail or
overnight courier or by wire transfer of
immediately available funds to the Investor, as
directed by the Investor, in an amount equal to
the REIT-Repurchase Payment in respect of all
Series A Preferred Shares or Common shares or
portions thereof so tendered.
(e) Notwithstanding anything else herein, to the
extent they are applicable to any
REIT-Repurchase Offer, the Company will comply
with any federal and state securities laws,
rules and regulations and all time periods and
requirements shall be adjusted accordingly.
(f) Notwithstanding the provisions of this Section
6.4, in no event shall the Company be required
to repurchase any Series A Preferred Shares at
any time that such repurchase is prohibited by
the Declaration or the Company's debt
instruments.
6.6 Change of Control
(a) If a Change of Control (as defined in Section
3.3.4(a) of the Declaration) occurs (a "Change
of Control Repurchase Event"), the Investor
shall have the right to require the Company, to
the extent the Company shall have funds legally
available therefor, to redeem any or all of the
Series A Preferred Shares or the Common Shares
held by the Investor at a repurchase price
payable in cash in an amount equal to 100% of
the liquidation preference thereof, plus accrued
and unpaid dividends whether or not declared, if
any (the "Change of Control"), to the date of
repurchase or the date payment is made available
(the "Change of Control Date"), pursuant to the
offer described in subsection (c) below (the
"Change of Control-Repurchase Offer").
22
(b) Within 15 days following the Company becoming
aware that a Change of Control Repurchase Event
has occurred, the Company shall mail by first
class mail or overnight courier a notice to the
investor stating (A) that a Change of Control
Repurchase Event has occurred and that the
Investor has the right to require the Company to
repurchase any or all of the Series A Preferred
Shares or the Common Shares then held by the
Investor in cash, (B) the date of repurchase
(which shall be a business day, no earlier than
30 days and no later than 60 days from the date
such notice is mailed, or such later date as may
be necessary to comply with the requirements of
the Exchange Act), (C) the repurchase price and
(D) the instructions determined by the Company,
consistent with this subsection, that the
Investor must follow in order to have the Series
A Preferred Shares or the Common Shares
repurchased.
(c) On the change of Control Repurchase Date, the
Company, to the extent lawful, shall accept for
payment Series A Preferred Shares or Common
Shares or portions thereof tendered by the
Investor or an affiliate of the Investor
pursuant to the Change of Control Repurchase
Offer and promptly mail by first class mail or
overnight courier or by wire transfer of
immediately available funds to the Investor, as
directed by the Investor, in an amount equal to
the Change of Control Repurchase Payment in
respect of all Series A Preferred Shares or
Common Shares or portions thereof so tendered.
(d) Notwithstanding anything else herein, to the
extent they are applicable to any Change of
Control Repurchase Offer, the Company will
comply with any federal and state securities
laws, rules and regulations and all time periods
and requirements shall be adjusted accordingly.
(e) Notwithstanding the provisions of this Section
6.5, in no event shall the Company be required
to repurchase any Series A Preferred Shares at
any time that such repurchase is prohibited by
the Declaration or the Company's debt
instruments.
6.7 Waiver of Ownership Limitations.
So long as any of the Series A Preferred Shares remain
issued and outstanding or the Investor owns more than 9.9% of the
Company's outstanding common shares of beneficial interest, the
Company shall not reverse or rescind the waiver required to be
granted pursuant to Section 4.12 of this Agreement.
6.8 No Public Disclosure.
Neither the Company nor any affiliate of the Company will
make any public disclosure concerning the transactions
contemplated by this Agreement unless the Investor has had a
reasonable time to review such disclosure. Unless in the
reasonable opinion of counsel to the Company that such disclosure
is required by applicable law, neither the Company nor any
23
affiliate of the Company will make any such public disclosure
without the Investor's Prior written consent.
6.9 Annual Certificate of Independent Public Accountants or
Company Counsel.
So long as any of the Series A Preferred Shares or the
Common Shares remain outstanding, the Company shall, on an annual
basis no later than March 31 of each year, cause its independent
public accountants or a nationally recognized law firm to provide
the Investor an opinion in form and substance reasonably
satisfactory to the Investor.
6.10 Prohibition on Issuance of Series A Preferred Shares.
The Company will not issue any Series A Preferred Shares
to any party other than the Investor or any direct or indirect
transferee and then only in compliance with the terms of the
Declaration.
6.11 Structure of Operating Partnership Agreement.
The Company and Operating Partnership shall use their
best efforts to structure the Agreement of Limited Partnership in
order to effect the transactions contemplated hereby.
6.12 Standstill Provisions.
(a) During the Standstill Period (as defined below),
except as provided in Section 6.12(a)(iii), each Security Capital
Investor will not, and will cause each of its controlled
Affiliates not to, and will use its reasonable best efforts to
cause each of its other Affiliates not to, directly or indirectly:
(i) act in concert with any other person or
Group by becoming a member of a 13D Group (as defined below) ,
other than any 13D Group comprised exclusively of Investor and one
or more of its Affiliates;
(ii) sell, transfer, pledge (other than pledges
made to commercial lending institutions securing indebtedness for
borrowed money) or otherwise dispose of (collectively, "Transfer")
any Series A Preferred Shares or Common Shares to any person if
the acquisition of such capital stock by such person would violate
the provisions of Section 4.1 of the Declaration; provided that
this Section shall not prohibit Transfers (A) between the Investor
and an Affiliate of the Investor or (2) between one or more
Affiliates of the Investor;
(iii) so long as the sum of (i) the aggregate
number of common shares of beneficial interest held by all
Security Capital Investors and (ii) the aggregate number of common
shares of beneficial interest into which the Series A Preferred
Shares held by all Security Capital Investors are convertible
(assuming that all such Series A Preferred Shares
24
are immediately convertible) is greater than 9.9% of the Company's
outstanding common shares of beneficial interest, purchase or
otherwise acquire any common shares of beneficial interest or
other securities of the Company if, after giving effect to such
purchase or acquisition, the Security Capital Investors and their
Affiliates (and any persons that are members of a 13D Group of
which any Security Capital Investor or any of their Affiliates may
be a member, notwithstanding the provisions of clause W above)
collectively would Beneficially Own more than 20.'6 of the
outstanding common shares of beneficial interest of the Company;
provided that the Security Capital Investors shall not be deemed
to have breached this covenant solely as a result of a decrease in
the aggregate number of common shares of beneficial interest
outstanding.
(iv) solicit or propose to effect or negotiate
any merger, consolidation, other business combination,
liquidation, sale of the Company or all or substantially all of
the assets of the Company and its subsidiaries or any other change
of control of the Company or similar extraordinary transaction;
(v) except with respect to seeking
representation on the Board of Trustees of the Company or a change
in the size of the Board of Trustees as provided in Section 6.12
(a)(vi), solicit, initiate or participate in any "solicitation" of
"proxies" or become a "participant" in an "election contest" (as
such terms are defined or used in Regulation 14A under the 1934
Act, disregarding clause (iv) of Rule 14a-1(1) (2) and including
an exempt solicitation pursuant to Rule 14a-2 (b) (i) ; call, or
in any way participate in a call for, any special meeting of
stockholders of the Company (or take any action with respect to
acting by written consent of the stockholders of the Company);
request, or take any action to obtain or retain any list of
holders of any securities of the Company; or initiate or propose
any stockholder proposal or participate in the making of, or
solicit stockholders of the Company for the approval of, one or
more stockholder proposals; provided that Investor shall not he
prohibited from communicating with a security holder who is
engaged in any "solicitation" of "proxies" or who is a "a
participant" in any "election contest";
(vi) seek representation on the Board of Trustees
of the Company or a change in the size of the Board of Trustees
other than in accordance with the provisions of the Series A
Preferred Shares following a default in the payment of dividends
thereon for two or more quarters;
(vii) Transfer any capital stock of such
Security Capital Investor or any capital stock of any Affiliate of
such Security Capital Investor that owns any capital stock of the
Company, or Transfer any options, warrants, convertible
securities, or other similar rights to acquire any capital stock
of such Security Capital Investor or any such Affiliate, if, after
giving effect thereto, the Beneficial Owner of such shares of
capital stock of the Company would (A) Beneficially own more than
20% of the outstanding common shares of beneficial interest of the
Company or (B) violate the Provisions of Section 4.1 of the
Declaration;
25
(viii) request the Company or any of its
trustees, officers, employees or agents to amend or waive the
provisions of this Section 6.12 or seek to challenge the legality
or effect thereof; or
(ix) assist, advise, encourage or act in concert
with any person with respect to, or seek to do, any of the
foregoing.
(b) As used in this Section, the following terms have the
respective meanings set forth below:
"Affiliate" shall have the meaning ascribed thereto in
Rule 12b-2 promulgated under the 1934 Act, as such rule is in
effect on the date hereof.
"Beneficially Own" shall mean, with respect to any
security, having direct or indirect (including through any
Affiliate) "beneficial ownership" of such security, as determined
pursuant to Rule 13d-3 under the 1934 Act, including pursuant to
any agreement, arrangement or understanding, whether or not in
writing. "Beneficial ownership" and "Beneficial Owner" shall have
correlative meanings. As used with respect to the common shares of
beneficial interest of the Company, the term shall include any
common shares of beneficial interest issuable, without regard to
any requirement of notice or the passage of time or the occurrence
of any event, pursuant to any options, warrants, or other
convertible or exchangeable securities held by the applicable
person, its Affiliates, or any member of a 13D Group of which such
person is a member.
"Covered Transaction" shall mean any merger,
consolidation, other business combination, liquidation, sale of
the Company or all or substantially all of the assets of the
Company and its subsidiaries or any other change of control of the
Company or similar extraordinary transaction, other than any
transaction in which the Company is the surviving and acquiring
corporation and in which the business or assets so acquired do
not, or would not reasonably be expected to, have a value greater
than 50% of the assets of the Company (on a consolidated basis)
prior to such transaction.
"Group" shall mean a "group" as such term is used in
Section 13(d)(3) of the 1934 Act.
"1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
"person" shall mean any individual, corporation,
partnership, limited liability company, joint venture, trust,
unincorporated organization, or other form of business or legal
entity.
"Prime Investor" shall mean The Prime Group, Inc., an
Illinois corporation ("Prime"), and any Affiliate thereof.
26
"Security Capital Investor" shall mean the investor and
any person controlled (as such term is defined in Rule 12b-2 under
the 0000 Xxx) , directly or indirectly, by Security Capital Group
Incorporated, to which any Series A Preferred Shares or Common
Shares are transferred and to which the rights under this
Agreement are assigned, by the Investor or another Security
Capital Investor, and which agrees to be bound by the terms of
this Agreement.
"Standstill Period" shall mean the period beginning on
the date hereof and ending on the first date following the date on
which the aggregate Beneficial Ownership by the Security Capital
Investors and their Affiliates (and any persons that are members
of a 13D Group of such Security Capital Investors or any of their
Affiliates are members, notwithstanding the provisions of clause W
of Section 6.12(a)) of common shares of beneficial interest of the
Company shall have been less than 9.9% of the number of
outstanding common shares of beneficial interest of the Company
(treating any common shares of beneficial interest issuable under
options, warrants, or other convertible or exchangeable securities
Beneficially owned by such Security Capital Investors, their
Affiliates, and any member of such a 13D Group as being
outstanding for this purpose) for a continuous period of 180 days.
Notwithstanding the foregoing, the Standstill Period also shall be
terminated on the earliest of:
(i) the acquisition by any person or Group other
than a Security Capital Investor or any
Affiliate thereof or a Prime Investor of
Beneficial Ownership of 20% or more of the
outstanding common shares of beneficial interest
of the Company, on a fully diluted basis;
(ii) the fifteenth business day after the
written submission by any person or Group other
than a Security Capital Investor or Affiliate of
a proposal to the Company (including to the
Board or any agent, representative or Affiliate
of the Company) with respect to, or otherwise
expressing an interest in pursuing, a Covered
Transaction; provided that, except as described
in the next paragraph, the Standstill Period
shall not terminate pursuant to this clause (ii)
if, within such period, the Board of Trustees
determines that such proposal is not in the best
interest of the Company and its stockholders and
for so long as the Board continues to reject
such proposal as a result of such determination.
If any Security Capital Investor desires to
tender any common shares of beneficial interest
into a tender offer made by a third party, which
tender offer has not been approved by the Board
of Trustees, such Security Capital Investor
shall provide a notice (the "Tender Notice") the
Company does not so elect to purchase the Tender
Shares, the Security Capital Investor may tender
the Tender Shares into the tender offer;
(iii) any breach by the Company of this
Agreement that is neither cured nor desisted
from within 30 days of receipt of written notice
of such breach and
27
which would reasonably be expected to materially
adversely affect a Security Capital Investor; or
(iv) if and whenever the Company shall be in
arrears in the payment of dividends on the
Series A Preferred Shares for two consecutive
quarters (which shall, with respect to any such
quarterly dividend, mean that any such dividend
has not been paid in full) , whether or not
earned or declared, or (ii) for two consecutive
quarterly dividend periods the Company fails to
pay dividends on its common shares of beneficial
interest in an amount per share at least equal
to $1.35 (subject to adjustment). whenever all
arrears in dividends on the Series A Preferred
Shares shall have been paid and dividends
thereon for the current quarterly dividend
period shall have been paid or declared and set
apart for payment, or the Corporation has paid
dividends on the Company's common shares of
beneficial interest in an amount per share at
least equal to $1.35 (subject to adjustment) for
two consecutive quarters, the Standstill Period
shall be reinstated, unless the Standstill
Period is terminated pursuant to any other
provisions of this Section.
"13D Group" shall mean any group of persons
acquiring, holding, voting, or disposing of capital stock of the
Company that would be required under Section 13 (d) of the 1934
Act and the rules and regulations thereunder (as in effect, and
based on legal interpretations thereof existing, on the date
hereof) to file a statement on Schedule 13D with the Securities
and Exchange Commission as a "person" within the meaning of
Section 13(d) (3) for the 1934 Act if such group Beneficially
Owned capital stock representing more than 5% of any class of
capital stock of the Company then outstanding.
6.13 Certificate of Company Security Ownership.
Upon the Company's written request, within 30 days after
December 31 of each year, the Investor shall provide to the
Company written notice stating the name and address of the
Investor, the number of Series A Preferred Shares, Common Shares
or other stock of the Company owned by the Investor or its
Affiliates, and a description of the manner in which such shares
are owned, together with such other additional information as the
Company may reasonably request in order to determine the effect,
if any, of such ownership on the Company's status as a REIT and to
ensure compliance with its undertakings, if any, set forth in the
Certificate.
6.14 Ownership in Strategic Hotel Capital Incorporated.
The Company acknowledges that an entity that may be
deemed to be an affiliate of the Investor owns more than 100% of
the capital stock of Strategic Hotel Capital Incorporated, which
is a tenant of the Company. The Company agrees that such ownership
shall not result in any shares of beneficial interest of the
Company owned by the Investor
28
being treated as Excess Shares (as defined in the Declaration).
VII. TERMINATION.
7.1 Termination
This Agreement may be terminated as follows:
(a) Mutual Consent. With the mutual written consent of
the Investor and the Company; or
(b) By the Company. By the Company, if by the Closing
Date any of the conditions provided in Article V shall not have
been satisfied, complied with or performed in any material
respect, and the Company shall not have waived the failure of
satisfaction, noncompliance, or nonperformance; or
(c) By the Investor. By the Investor, if by the Closing
Date any of the conditions provided in Article IV shall not have
been satisfied, complied with or performed in any material
respect, and the Investor shall not have waived the failure of
satisfaction, noncompliance, or nonperformance; or
(d) Automatic Termination. Automatically if the Closing
Date shall not have occurred on or before December 31, 1997, or
such later date as shall have been agreed to in writing by the
Company and the Investor.
7.2 Notice of Termination.
In the event of any termination pursuant to Section 7.1
(other than pursuant to Section 7.1(a) or Section 7.1(d) ) ,
written notice setting forth the reasons for termination shall
promptly be given by the terminating party to the other in writing.
7.3 Effect of Termination.
(a) In the event of termination of this Agreement, no
party hereto shall have any liability to any other party to this
Agreement, except as provided in this Section 7.3 and except that
nothing herein shall relieve any party from liability for any
breach of this Agreement.
(b) If this Agreement shall have been terminated for any
reason other than (i) the Investor's failure to perform any
material obligation under this Agreement or (ii) the reasons
described in Section 7.3(c), then the Company shall promptly, and
in no event later than two days after such termination, reimburse
the Investor for its reasonable out-of-pocket expenses, including
fees and disbursements of counsel.
29
(c) Notwithstanding the termination of this Agreement, if
the IPO is consummated after December 31, 1997, the Investor shall
have the right (but not the obligation) to participate in the IPO.
VIII. MISCELLANEOUS
8.1 Survival of Warranties.
The representations and warranties of the Company, the
Operating Partnership and the Investor contained in or made
pursuant to Articles II or III of this Agreement shall survive the
Closing hereunder through and until one year following the
Closing. The covenants contained in or made pursuant to Article VI
of this Agreement shall survive the Closing indefinitely, except
for any provisions which expire by their terms. The
representations and warranties contained in this Agreement shall
in no way be affected by any investigation of the subject matter
thereof made by or on behalf of the Investor or the Company.
8.2 Successors and Assigns.
Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties
hereto. Nothing in this Agreement, express or implied, is intended
to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
Except as specifically provided hereby, the Investor shall not be
permitted to assign any of its rights hereunder to any third
party, provided, however, that the Investor's rights hereunder may
be assigned to another entity controlled directly or indirectly by
Security Capital Group Incorporated that agrees in writing to be
bound by the terms of this Agreement.
8.3 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving
effect to the conflict of law Provisions thereof.
8.4 Counterparts.
This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
8.5 Titles and Subtitles.
The title and subtitles used in this Agreement are used
for convenience only and are not to be considered in construing or
interpreting this Agreement.
30
8.6 Notices.
Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall
be deemed effectively given (a) upon personal delivery to the
party to be notified, (b) on the fifth business day after deposit
with the United States Post Office, by registered or certified
mail, postage prepaid, (c) on the next business day after dispatch
via nationally recognized overnight courier or (d) upon
confirmation of transmission by facsimile, all addressed to the
party to be notified at the address indicated for such party
below, or at such other address as such party may designate by ten
(10) days' advance written notice to the other parties. Notices
should be provided in accordance with this Section at the
following addresses:
If to the Investor, to:
Security Capital Preferred Growth Incorporated
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxxx
Xxxxxx X. Xxxxxxx
Facsimile (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Company or the Operating Partnership, to:
Xxxxxxx X. Xxxxx
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000)000-0000
with a copy to:
Xxxxxx X. Xxxxxx
Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
31
Facsimile (000) 000-0000
and a copy to:
Xxxxx X. Xxxxxx
Xxxxxxx & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
8.7 Finder's Fees.
Each party represents that it neither is nor will be
obligated for any finders, fee or commission in connection with
this transaction, except that the Company shall pay a placement
fee equal to 1% of the Aggregate Purchase Price to Security
Capital Markets Group Incorporated, a broker-dealer affiliate of
the Investor. The Investor agrees to indemnify and hold harmless
the Company from any liability for any commission or compensation
in the nature of a finders' fee (and the costs and expenses of
defending against such liability or asserted liability) for which
the Investor or any of its officers, employees or representatives
is responsible. The Company agrees to indemnify and hold harmless
the Investor from any liability for any commission or compensation
in the nature of a finders, fee (and the costs and expenses of
defending against such liability or asserted liability) for which
the Company or any of its officers, employees or representatives
is responsible.
8.8 Expenses.
Except as described in Article VII or in this Section
8.8, each party shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and
performance of this Agreement. If any action at law or in equity
is necessary to enforce or interpret the terms of this Agreement,
the Amended and Restated Agreement of Limited Partnership or the
Declaration, the prevailing party shall be entitled to reasonable
attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
8.9 Amendments and Waivers.
Any term of this Agreement may be amended, and the
observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively) , only with the written consent of the Company and
the Investor. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each holder of any securities
purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each
future holder of all such securities, and the Company.
32
8.10 Severability.
If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement
shall be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms.
8.11 Entire Agreement.
This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and no party
shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically
set forth herein.
[SIGNATURE PAGE FOLLOWS]
33
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first above written.
SECURITY CAPITAL PREFERRED
GROWTH INCORPORATED
By:
--------------------------------
Name: /s/ Xxxxxx X. Xxxxxxx
--------------------------------
Its: Managing Editor
--------------------------------
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, its managing
general partner
By:
--------------------------------
Name: /s/ W. Xxxxxxx Xxxxxx
--------------------------------
Its:
--------------------------------
PRIME GROUP REALTY TRUST
By:
--------------------------------
Name: /s/ W. Xxxxxxx Xxxxxx
--------------------------------
Its: Executive Vice President
--------------------------------
34
