Exhibit 10.23
FORM OF
SERIES A PREFERRED SECURITIES
PURCHASE AGREEMENT
DATED AS OF NOVEMBER __, 1997
AMONG
SECURITY CAPITAL PREFERRED GROWTH INCORPORATED,
PRIME GROUP REALTY, L.P.
AND
PRIME GROUP REALTY TRUST
Table of Contents
Page
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I. PURCHASE AND SALE OF SECURITIES......................................... 1
1.1 Sale and Issuance of Series A Preferred Shares.................... 1
1.2 Closing........................................................... 2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY........................... 2
2.1 Organization, Good Standing and Qualification..................... 2
2.2 Power, Authority and Enforceability............................... 3
2.3 Capitalization; Registration Rights............................... 4
2.4 Valid Issuance of Series A Preferred Shares....................... 4
2.5 Compliance with Other Instruments................................. 4
2.6 No Registration Under the Securities Act.......................... 4
2.7 No General Solicitation........................................... 5
2.8 Financial Statements.............................................. 6
2.9 No Material Adverse Changes....................................... 6
2.10 Litigation........................................................ 6
2.11 Title to Properties; Leasehold Interests.......................... 7
2.12 Environmental Compliance.......................................... 11
2.13 Taxes............................................................. 13
2.14 Insurance......................................................... 14
2.15 Employees; ERISA.................................................. 14
2.16 REOC Status....................................................... 14
2.17 Legal Compliance.................................................. 14
2.18 Governmental Consent.............................................. 15
2.19 Investment Company................................................ 15
2.20 Knowledge Defined................................................. 15
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.......................... 15
3.1 Power, Authority and Enforceability............................... 15
3.2 Compliance with Other Instruments................................. 16
3.3 Ownership Limitations............................................. 16
3.4 Sophisticated Investor............................................ 16
3.5 Unregistered Securities........................................... 16
3.6 Access to Information............................................. 16
IV. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING..................... 16
4.1 Amendment to Amended and Restated Partnership Agreement........... 16
4.2 Series A Preferred Designation.................................... 16
4.3 Representations and Warranties.................................... 16
4.4 Performance....................................................... 17
4.5 No Material Adverse Change........................................ 17
4.6 Opinion of Company Counsel........................................ 17
4.7 Registration Rights Agreement..................................... 17
4.8 Tag-Along Agreement............................................... 17
4.9 Officer's Certificate............................................. 17
4.10 Payment of Placement Fee.......................................... 17
4.11 Proceedings....................................................... 17
4.12 Limited Waiver of Ownership Limitations........................... 18
4.13 No Injunction..................................................... 18
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4.15 Consummation of the IPO .................................... 18
V. CONDITIONS OF THE COMPANY'S OBLIGATIONS AT THE CLOSING ........... 18
5.1 Representations and Warranties ............................. 18
5.2 Performance ................................................ 19
5.4 Officer's Certificate ...................................... 19
VI. COVENANTS ........................................................ 19
6.1 No Sale of Security......................................... 19
6.2 No General Solicitation..................................... 20
6.3 Filing of Exchange Act Reports ............................. 20
6.4 Consultation and Related Rights ............................ 20
6.5 Maintenance of REIT Status ................................. 21
6.6 Change of Control .......................................... 23
6.7 Waiver of Ownership Limitations ............................ 24
6.8 No Public Disclosure ....................................... 24
6.9 Annual Certificate of Independent Public Accountants or
Company Counsel ............................................ 24
6.10 Prohibition on Issuance of Series A Preferred Shares ....... 24
6.11 Amendment to Operating Partnership Agreement ............... 24
6.12 Standstill Provisions ...................................... 25
6.13 Certificate of Company Security Ownership .................. 29
VII. TERMINATION ...................................................... 29
7.1 Termination ................................................ 29
7.2 Notice of Termination ...................................... 30
7.3 Effect of Termination ...................................... 30
VIII. MISCELLANEOUS .................................................... 31
8.1 Survival of Warranties ..................................... 31
8.2 Successors and Assigns ..................................... 31
8.3 Governing Law .............................................. 31
8.4 Counterparts ............................................... 31
8.5 Titles and Subtitles ....................................... 31
8.6 Notices ................................................... 32
8.7 Finder's Fees .............................................. 33
8.8 Expenses ................................................... 33
8.9 Amendments and Waivers ..................................... 33
8.10 Severability ............................................... 33
8.11 Entire Agreement ........................................... 34
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SERIES A PREFERRED SECURITIES PURCHASE AGREEMENT
This SERIES A PREFERRED SECURITIES PURCHASE AGREEMENT (this "Agreement") is
made as of the __ 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) The 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, that number of Series A Preferred Shares equal to the
quotient of (i) the Aggregate Purchase Price determined pursuant to Section
1.1(c) divided by (ii) the Per Share Price determined pursuant to Section
1.1(d).
(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 the lesser of (i) $40 million, (ii) 21% of the gross proceeds raised
from the sale of common shares of beneficial interest of the Company, $.01 par
value per share, in the Company's Initial Public Offering (the "IPO"), or (iii)
the amount that, when divided by the Per Share Price determined pursuant to
Section 1.1(d), would result in Investor owning 9.8% of the Company's voting
securities on a fully-diluted, fully-converted basis.
(d) The price per Series A Preferred Share (the "Per Share Price")
shall be equal to the gross issue price per Common Share in the IPO.
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 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
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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.
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 a number equal to the number of
shares determined pursuant to Section 1.1(b) are designated as "Series A
Cumulative Convertible Preferred Shares," 60 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
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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, 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 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.
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").
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2.7 No General Solicitation.
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 in 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.
2.8 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
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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 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
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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. American Land Title Association policies of title
insurance (or marked title insurance commitments having the same force and
effect as title insurance policies) 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
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use and operation of utility service to any Company Property or of any existing
driveways, roads or other means of egress and ingress to and from any of the
Company Properties has 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
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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 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) The Company has provided to Investor an accurate rent roll for
each Company Property as of August 31, 1997 (the "Rent Roll"), which identifies
and accurately describes each lease of space in each Company Property and is
included as Schedule 2.11(f) (collectively, the "Company Leases"). With respect
to each Company Lease for premises larger than 10,000 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 30
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
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notice or lapse of time or both, would constitute a default under any Material
Company Lease, (vii) 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) except as set forth in Rent Roll, 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 the tenants identified in the Rent Roll and 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 if not otherwise
identified on the Rent Roll.
(g) Schedule 2.11(g) sets forth a complete and accurate list of all
material commitments, letters of intent, options or similar written
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,
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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.
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) 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) 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,
11
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) 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) 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. (S)(S) 9601 et seq. ("CERCLA"), the Hazardous Materials Transportation
Act, as amended, 49 U.S.C. (S)(S) 1801 et seq., the Resource Conservation and
Recovery Act, as amended, 42 U.S.C. (S)(S) 9601 et seq., the Emergency Planning
and Community Right-to-Know Act of 1986, 42 U.S.C. (S)(S) 11001 et seq., the
Toxic Substances Control Act, 15 U.S.C. (S)(S) 2601 et seq., the Federal
Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. (S)(S) 136 et seq., the
Clean Air Act, 42 U.S.C. (S)(S) 7401 et seq., the Clean Water Act (Federal Water
Pollution Control Act), 33 U.S.C. (S)(S) 1251 et seq., the Safe Drinking Water
Act, 42 U.S.C. (S)(S) 300F to 300j-11, and the Occupational Safety and Health
Act, 29 U.S.C. (S)(S) 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.
12
(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 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.
13
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 against the Company, the
Operating Partnership or any of the Subsidiaries which could reasonably be
expected to result in a Material Adverse Effect.
14
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.
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
15
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 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 Amendment to Amended and Restated Partnership Agreement.
At or prior to the Closing, the amendments to the Amended and Restated
Partnership Agreement contemplated by Section 6.10 shall have been adopted.
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.
16
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 Winston & Xxxxxx, counsel for
the Company, an opinion in form and substance reasonably satisfactory to the
Investor.
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.
17
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 4.7 of the
Declaration, the Board of Trustees of the Company shall have duly adopted a
resolution in form and substance reasonably 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:
18
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.
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.
19
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.
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.
20
(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 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
21
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 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, (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.
(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
22
Declaration or the Company's debt instruments.
6.6 Change of Control
(a) If a Change of Control (as defined in 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").
(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.
23
(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 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 Amendment to Operating Partnership Agreement.
The Company and Operating Partnership shall use their best efforts to
amend the Agreement of Limited Partnership in order to effect the transactions
contemplated hereby.
24
6.12 Standstill Provisions.
(a) During the Standstill Period (as defined below), except as
provided in Section 6.11(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 (B) 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 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 (i) above) collectively would Beneficially Own more than 20% 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 6.11(a)(vi), solicit, initiate or participate in any
"solicitation" of "proxies" or
25
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 be 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;
(viii) request the Company or any of its trustees, officers,
employees or agents to amend or waive the provisions of this Section 6.11 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
26
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.
"Security Capital Investor" shall mean the Investor and any person
controlled (as such term is defined in Rule 12b-2 under the 1934 Act), 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
(i) of Section 6.11(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
27
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") to the Company of its intent and the number of shares it
wishes to tender (the "Tender Shares") in the tender offer. The
Company shall have ten business days from the date of the Tender
Notice to elect to purchase all, but not less than all, of the Tender
Shares at a price equal to the price offered in such tender offer. If
the Company so elects to purchase the Tender Shares, the closing of
such purchase shall be no later than 15 business days after the date
of the Tender Notice. If 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 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
28
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.
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
29
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.
(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, except for the warranties and representations of the
Company contained in Section 2.13 which shall survive until the expiration of
the applicable statute of limitations. 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
30
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.
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:
31
Security Capital Preferred Growth Incorporated
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxxx
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
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 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
32
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.
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:
--------------------------------
Its:
--------------------------------
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, its
managing general partner
By:
-----------------------------------
Name:
--------------------------------
Its:
--------------------------------
PRIME GROUP REALTY TRUST
By:
-----------------------------------
Name:
--------------------------------
Its:
--------------------------------
