EXHIBIT 10.2
FORM OF
RIGHT OF FIRST OFFER AGREEMENT
by and between
PRIME GROUP REALTY, L.P.
a Delaware limited partnership
and
THE PRIME GROUP, INC.,
an Illinois corporation
Dated as of: November ______, 1997
RIGHT OF FIRST OFFER AGREEMENT
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THIS RIGHT OF FIRST OFFER AGREEMENT (the "Agreement") is made as of the
_____ day of November, 1997, by and between PRIME GROUP REALTY, L.P., a Delaware
limited partnership ("Purchaser") and THE PRIME GROUP, INC., an Illinois
corporation ("Seller").
WITNESSETH:
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WHEREAS, Huntley Development Limited Partnership, an Illinois limited
partnership ("HDLP"), an affiliate of Seller, is the fee owner of that certain
parcel of unimproved real estate comprising approximately 360 acres in the
Village of Xxxxxxx, County of Xxxx and State of Illinois, which parcel is
legally described on Exhibit A attached hereto and made a part hereof (the
"Property"); and
WHEREAS, concurrently with the execution and delivery of this Agreement,
Purchaser is acquiring from Seller and/or certain affiliates of Seller,
interests in certain other buildings, facilities and parcels of land in which
Seller and/or certain of its affiliates have an interest; and
WHEREAS, Purchaser desires to acquire, a right of first offer to develop
(or develop and acquire an ownership interest in) (to "Develop") the Property,
or a portion thereof, upon and subject to the terms and conditions hereinafter
set forth; and
NOW, THEREFORE, in consideration of Purchaser's acquisition of interests in
the certain buildings, facilities and parcels of land from Seller and certain of
its affiliates, the mutual covenants and agreements contained in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Seller and Purchaser agree as follows:
1. Grant of Right of First Offer. Seller hereby grants, or agrees to
cause to be granted, to Purchaser the exclusive right of first offer to Develop
the Property (the "Right") upon the following terms and conditions:
If, at any time prior to the termination of this Agreement Seller or HDLP
should determine, in its sole discretion, that all or a portion of the Property
shall be utilized for the construction of an office or industrial facility to be
owned and leased to third parties by Seller, HDLP or another affiliate of Seller
or held by Seller, HDLP or another affiliate of Seller for sale to a third
party, Seller shall offer, or shall cause HDLP or such other affiliate of
Seller to offer, Purchaser the right to Develop such office or industrial
facility before offering other parties the right to develop the Property for
such uses. Seller shall notify, or shall cause HDLP or such other affiliate of
Seller to notify (the entity providing such notice is referred to as the
"Offeree") Purchaser of the offer (the "Offer") in the manner provided herein
for the giving of notice, which notice shall be accompanied by a written
statement setting forth the terms of the Offer, and Purchaser shall have the
right of first offer to Develop the portion of the Property (which may be all of
the Property) which is subject to the Offer (the "Subject Parcel") on the same
terms and
conditions as are contained in the Offer; provided, however, that the closing of
the sale of the Subject Parcel pursuant to the Offer shall occur no earlier than
thirty (30) days after Purchaser has been notified of the Offer. Purchaser
shall give Offeree written notice of Purchaser's election to Develop the Subject
Parcel pursuant to the Offer within fifteen (15) days after Purchaser's receipt
of the notice of the Offer, and should Purchaser elect to Develop the Subject
Parcel pursuant to the Offer, Purchaser's notice of same shall be accompanied by
a written statement of the proposed terms of such development, and the
development of the Subject Parcel by Purchaser shall occur as provided in the
Offer, subject to the thirty (30) day period provided above. In the event
Purchaser fails to notify Offeree of its election within said fifteen (15) day
period or elects not to Develop the Subject Parcel pursuant to the Offer,
Seller, HDLP or such affiliate of Seller shall have the right to offer the
Subject Parcel to third parties or Develop the Subject Parcel itself on the same
economic terms and substantially the same other terms as are contained in the
Offer; provided, however, that in the event either Seller, HDLP or such
affiliate of Seller does not commence to Develop the Subject property, or the
sale of the Subject Parcel to a third party pursuant to the Offer does not
close, within one hundred fifty (150) days of the date of the delivery of the
Offer, Seller shall renotify Purchaser and the Subject Parcel shall again be
subject to all of the terms and provisions of this Agreement.
Notwithstanding anything to the contrary contained herein, Seller and HDLP
reserve the right, and shall be entitled, at any time, to sell or otherwise
convey, dedicate or grant the Property or any portion thereof or any interest
therein to a third party or parties which intends to use the Property for any
purpose whatsoever (including for use as an office or industrial building or
facility) so long as neither Seller, HDLP nor any affiliate of Seller
participates in the development of such portion of the Property that is
contemplated to be used for office or industrial purposes, and the Right shall
not apply in connection with any such sale, conveyance, dedication or grant.
2. Expiration Date. If Purchaser does not timely exercise the Right in
the manner provided herein on or before November ______, 2012 (the "Expiration
Date"), regardless of whether or not Purchaser has an opportunity to exercise
the Right, or if Purchaser elects not to exercise the Right (or is deemed to
have so elected because of its failure to timely exercise the Right) and the
Property is developed by a third-party developer, or if the property is sold or
otherwise conveyed, dedicated or granted to a party which intends to use the
Property for primarily non-office or non-industrial purposes, or if construction
of improvements on the Property intended to be used for primarily non-office or
non-industrial purposes is commenced, then in any such event this Agreement and
the Right shall, without further action of any party, automatically terminate
and be null, void and of no further force or effect, and neither party shall
have any further rights or obligations hereunder or with respect to the Right.
3. Entry onto the Property. Upon the receipt by Purchaser of the Offer
described in Section 1 hereof, Purchaser and/or Purchaser's agents shall have
the right during the period of time when this Agreement is in effect, at
reasonable times and on reasonable advance notice to Offeree, to enter onto the
Property or portion thereof set forth in the Offer for purposes of
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surveying the Property and undertaking soil boring and other tests. All
surveying and soil boring and other tests shall be performed at Purchaser's sole
cost and expense and Purchaser shall deliver copies of all such surveys and the
results of all such tests to Offeree at no cost or expense to Offeree. Purchaser
hereby indemnifies, protects and holds Seller, HDLP and the affiliates of Seller
harmless and agrees to defend Seller, HDLP and the affiliates of Seller from and
against any and all claims, demands, loss, cost, damage, expense and liability
(including, without limitation, personal injury and property damage claims and
mechanics' or other liens), including reasonable attorneys' fees and litigation
costs, caused by or occurring in connection with the presence of Purchaser or
Purchaser's agents on the Property or the exercise by Purchaser of any of its
surveying and testing rights under this Section 3. In addition, Purchaser shall
keep the Property free from any liens of its surveying and testing rights under
this Section. Purchaser, at its sole cost and expense, shall restore the
Property to the same condition as existed prior to its entry onto the Property
to the same condition as existed prior to its entry onto the Property.
Notwithstanding anything to the contrary contained herein, the provisions of
this Section shall survive the term of this Agreement (regardless of whether or
not the Right is exercised), as well as any closing of the sale of the Property
pursuant hereto or to any contract entered into between Seller, HDLP or an
affiliate of Seller and Purchaser pursuant to any Offer.
4. Time of the Essence. Purchaser and Seller hereby acknowledge and agree
that time is and shall be of the essence hereof. Notwithstanding anything to
the contrary contained herein, in the event the due date for performance of any
obligation hereunder falls on a day other than a business day, the date for
performance of such obligation shall be extended to the next following business
day.
5. Covenants Running with the Land; Specific Performance. The covenants
and agreements of Seller under this Agreement are intended to be and shall be
covenants running with the land with respect to the Property and shall be
binding upon Seller and Seller's heirs, representatives, successors and assigns.
This Agreement shall be specifically enforceable by Purchaser and by Purchaser's
heirs, representatives, successors and assigns.
6. Notices. Any notice, request, demand, instruction or other document to
be given or served hereunder or under any documents or instrument executed
pursuant hereto shall be in writing and shall be delivered personally or sent by
United States registered or certified mail, return receipt requested, or by
overnight express courier, postage prepaid and addressed to the parties at their
respective addresses set forth below, and the same shall be effective upon
receipt if delivered personally or two (2) business days after deposit in the
mails or deposit with an overnight express courier. A party may change its
address for receipt of notices by service of a notice of such change in
accordance herewith.
If to Purchaser: Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
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Attn: General Counsel
With a copy to: Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxxx
If to Seller: The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: President
With a copy to: The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
7. Successors and Assigns; No Merger. All the terms and conditions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. The terms and provisions of this Agreement
shall survive the entity and shall not merge or be deemed to merge, into any
contract entered into between Seller and Purchaser pursuant to any Offer.
8. Severability. In the event that any term or provisions of this
Agreement, or the application thereof to any particular party or circumstance,
is found by a court of competent jurisdiction to be invalid or unenforceable (in
whole or in its application to a particular party or circumstance), the
remaining terms and provisions of this Agreement or the application thereof to
different parties or circumstances, as the case may be, shall not be affected
thereby and this agreement shall remain in full force and effect in all other
respects.
9. Governing Law; Counterparts. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois. This Agreement
and any document or instrument executed pursuant hereto may be executed in any
number of counterparts, each of which shall be deemed an original but all of
which together shall constitute one and the same instrument.
10. Due Authorization; Binding Agreement. Seller and Purchaser each
hereby represent and warrant to each other that the execution, delivery and
performance of this Agreement has been duly and validly authorized by all
necessary action of such party, and constitutes a legal, valid and binding
obligation of such party enforceable against such party in accordance with the
terms hereof.
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11. Consents and Approvals. Seller and Purchaser each hereby represent
and warrant to each other that no consent, waiver, approval or authorization of,
or notice to, any other person, is required to be obtained or given by such
party in connection with the execution, delivery and performance of this
Agreement, except for such consents, approvals or authorizations which have been
obtained.
12. Further Assurances. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use his or its best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary and proper under applicable laws and regulations or otherwise
to consummate and effect the transactions contemplated by this Agreement
including, without limitation, obtaining all required consents and approvals,
making all required filings and applications and complying with or responding to
any requests by governmental agencies, in each case to the extent reasonably
required.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
PURCHASER:
PRIME GROUP REALTY, L.P., a Delaware
limited partnership
By: PRIME GROUP REALTY TRUST,
a Maryland real estate investment trust,
its Managing General Partner
By:
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Name:
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Title:
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SELLER:
THE PRIME GROUP, INC.,
an Illinois corporation
By:
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Name:
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Title:
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