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
------------------------------
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:
----------
WHEREAS, 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 certain other developments and parcels of
land owned by Seller; and
WHEREAS, Seller desires to grant, and 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 the certain
other developments and parcels of land from Seller, 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 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 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 or held by Seller for sale to a third
party, Seller shall 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 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 Seller 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 to Purchaser shall occur as provided in the Offer, subject to the thirty
(30) day period provided above. In the event Purchaser fails to notify Seller of
its election within said fifteen (15) day period or elects not to Develop the
Subject Parcel pursuant to the Offer,
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 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 reserves
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 so long as Seller does not participate 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 Seller sells or
otherwise conveys, dedicates or grants the Property to a party which intends to
use the Property for primarily non-office or non-industrial purposes, or if
Seller commences construction of improvements on the Property intended to be
used for primarily non-office or non-industrial purposes, 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 Seller, to enter onto the
Property or portion thereof set forth in the Offer for purposes of 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 Seller at no cost or expense to Seller. Purchaser hereby
indemnifies, protects and holds Seller harmless and agrees to defend 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
-2-
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 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
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
-3-
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.
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.
-4-
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:
---------------------------------------
Name:
--------------------------------
Title:
-------------------------------
SELLER:
THE PRIME GROUP, INC.,
an Illinois corporation
By:
---------------------------------------------
Name:
-------------------------------------
Title
-------------------------------------
-5-
