THE TENDER OFFER CONTEMPLATED IN THIS AGREEMENT HAS NOT YET COMMENCED, AND
THIS AGREEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SECURITIES. ANY TENDER OFFER WILL BE MADE ONLY THROUGH AN
OFFER TO PURCHASE AND RELATED LETTER OF TRANSMITTAL. INVESTORS AND
SECURITY HOLDERS ARE STRONGLY ADVISED TO READ THE TENDER OFFER STATEMENT
REGARDING THE TENDER OFF IF AND WHEN SUCH DOCUMENT IS FILED AND BECOMES
AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.
ANY SUCH TENDER OFFER STATEMENT WOULD BE FILED BY CADIM INC. WITH THE SEC.
INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THE TENDER OFFER
STATEMENT (IF AND WHEN FILED AND AVAILABLE) AND OTHER RELEVANT DOCUMENTS ON
THE SEC'S WEB SITE AT: XXX.XXX.XXX. ANY SUCH TENDER OFFER STATEMENT AND
RELATED MATERIALS MAY ALSO BE OBTAINED FOR FREE BY DIRECTING SUCH REQUESTS
TO CADIM INC. AT 000-000-0000.
AMENDED AND RESTATED SUPPORT AND STANDSTILL AGREEMENT
-----------------------------------------------------
THIS AMENDED AND RESTATED SUPPORT AND STANDSTILL AGREEMENT (this
"Agreement") is entered into as of this 14th day of September,
2001 by and among CADIM INC. (together with its affiliates, "CADIM"), THE
PRIME GROUP, INC. ("PGI"), PRIME GROUP REALTY TRUST ("PGE") and
PRIME GROUP REALTY, L.P. ("PGLP").
WHEREAS, CADIM and PGI (the "Acquiring Parties") submitted to PGE a
written offer letter dated August 23, 2001 (the "Offer Letter") expressing
interest in pursuing a potential business combination transaction with PGE.
WHEREAS, the Acquiring Parties and PGE, and their respective advisors, then
participated in discussions regarding the Offer Letter and the parties
entered into further negotiations with respect to completing a transaction
of the type discussed in the Offer Letter, except that the Acquiring
Parties agreed that the proposed offer price shall be $14.50 per common
share and common unit of PGLP (the Offer Letter including the new proposed
offer price shall be referred to herein as the "Proposal");
WHEREAS, the Acquiring Parties, PGE and PGLP entered into a Support
and Standstill Agreement, dated as of August 30, 2001 (the "Original
Support Agreement"), so that the Acquiring Parties could conduct their due
diligence and work toward completing a transaction based upon the Proposal;
WHEREAS, due to events beyond the parties control the due diligence process
has been affected, and therefore each of the parties wish to enter into
this Amended and Restated Support and Standstill Agreement in order to
extend for 13 days certain time periods for the completion of due diligence
and the exclusivity as such time periods were set forth in the Original
Support Agreement.
NOW, THEREFORE, in consideration of PGE's expressed willingness to
continue negotiations with the Acquiring Parties upon the new time frame
and their respective undertakings herein, the parties do hereby agree as
follows:
1. Good Faith Negotiations; Due Diligence. PGE and the Acquiring
Parties will continue their good faith negotiations concerning the
structuring, terms, conditions, approvals and implementation of a possible
business combination transaction of the type summarized in the Proposal
(the "Proposed Transaction") and the parties will use their reasonable best
efforts to negotiate in good faith and execute definitive documentation on
reasonable and customary terms subject to CADIM's satisfaction with its due
diligence investigation during the Exclusivity Period (as defined herein).
PGE will continue to promptly provide CADIM with all reasonable due
diligence materials concerning PGE, its operating partnership, PGLP and
their respective subsidiaries and affiliates, all of their respective
properties and other assets, as well as information concerning PGE's and
PGLP's obligations and liabilities, as CADIM may reasonably request.
2. Confidentiality. CADIM agrees that (a) all information regarding
PGE, PGLP and their subsidiaries furnished to CADIM, whether prior to or
after the date of this Agreement, in connection with CADIM's consideration
of the Proposed Transaction (the "Evaluation Materials") will be kept
strictly confidential, and (b) the Evaluation Materials will be used solely
for the purpose of determining the desirability of the Proposed
Transaction; provided, however, that Evaluation Materials may be disclosed
to any of CADIM's or PGI's Representatives who need to know such
information for the purpose of assisting CADIM and PGI in evaluating the
Proposed Transaction (it being understood that such Representatives will be
informed by CADIM or PGI, as applicable, of the contents of this Agreement
and that, by receiving such information, such Representatives are agreeing
to be bound by this Agreement). The term "Evaluation Materials" does not
include information which was or becomes available to CADIM or its
Representatives on a non-confidential basis from a source other than PGE,
its affiliates or their Representatives, provided that neither CADIM nor
any of its Representatives is aware that such source is under an obligation
(whether contractual, legal or fiduciary) to PGE to keep such information
confidential.
For purposes hereof, "Representatives" means a party's affiliates,
directors, trustees, officers, employees, controlling shareholders or
owners, legal and financial advisors, accountants and other agents and
representatives.
If CADIM is requested in any judicial or administrative
proceeding or by any governmental or regulatory authority to disclose any
Evaluation Materials, CADIM will give PGE prompt notice of such request so
that it may seek an appropriate protective order. If, in the absence of a
protective order CADIM is nonetheless legally compelled to disclose
Evaluation Materials, CADIM may make disclosure of such information to the
extent it is legally required to disclose without liability hereunder.
At any time after termination of discussions by either party to this
Agreement with respect to the Proposed Transaction, upon the written
request of PGE, CADIM will promptly redeliver or cause to be redelivered to
PGE all copies of the Evaluation Materials furnished to or held by CADIM
hereunder or destroy such materials.
3. Exclusivity and Standstill. During the period of time ending on
11:59 p.m. on October 12, 2001 or such other date as the parties may
mutually agree in writing (the "Exclusivity Period"), subject to such
Exclusivity Period as it relates to exclusivity being modified pursuant to
paragraph 5, while CADIM conducts its due diligence relating to PGE and
PGLP and in consideration of the substantial time, effort and expense that
CADIM will undertake, PGE agrees (a) that it shall not, and shall use its
best efforts to ensure that its affiliates, officers, trustees,
Representatives or agents shall not, take any action, either directly or
indirectly, to initiate, assist, solicit or encourage, any inquiries or the
making or implementation of any proposal or offer (including, without
limitation, any proposal or offer to its shareholders) with respect to a
Transaction (as hereafter defined) other than a Transaction among CADIM,
PGI, Prime Group VI, L.P., Primestone Investment Partners, L.P., Prime
Group Limited Partnership, Xxxxxxx X. Xxxxxxx, PGE and their respective
shareholders and affiliates (any such proposal or offer being hereinafter
referred to as an "Acquisition Proposal") or engage in any negotiations
concerning, or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an
Acquisition Proposal or take any other action which may be reasonably
expected to lead to any Acquisition Proposal; and (b) that it will
immediately cease any existing activities, discussions or negotiations with
any parties conducted heretofore with respect to any of the foregoing and
will advise such parties that it is not in a position to negotiate further
with them during the Exclusivity Period; provided, however, that the Board
of Trustees of PGE or its Committee of Independent Trustees may furnish
information to (pursuant to a confidentiality agreement on terms and
conditions customary for similar transactions) and enter into discussions
or negotiations with any person or entity that makes a bona fide
Acquisition Proposal during the Exclusivity Period that was not initiated,
assisted, solicited or encouraged in violation of this Agreement, but only
if (i) the Committee of Independent Trustees of the Board of Trustees of
PGE, after consultation with and consideration of the advice of its
independent financial advisors and outside legal counsel, determines in
good faith that the Acquisition Proposal, if consummated as proposed, would
result in a transaction more favorable to its stockholders than the
Proposed Transaction (taking into account all relevant legal, financial,
regulatory and other aspects of the proposal), (ii) such Acquisition
Proposal is for 100% of the outstanding shares of beneficial interest of
PGE (other than the Series B Preferred Shares) and 100% of the outstanding
units of PGLP, (iii) the Committee of Independent Trustees of the Board of
Trustees of PGE, after consultation with and consideration of the advice of
its independent legal counsel, determines in good faith that such action is
necessary for the Board of Trustees or its Committee of Independent
Trustees to comply with its fiduciary duties to its stockholders under
applicable law (any Acquisition Proposal satisfying each of the preceding
clauses (i)-(iii) above shall be referred to as a "Superior Acquisition
Proposal") and (iv) prior to furnishing such information to, or entering
into discussions or negotiations with, such person or entity, PGE provides
written notice to CADIM that it is furnishing information to, or entering
into discussions or negotiations with, such other person or entity in
accordance with the provisions of this Section; provided, however, that
nothing contained in this Agreement shall prohibit the Board of Trustees or
its Committee of Independent Trustees from complying, to the extent
applicable, with Rules 14d-9 and 14e-2 promulgated under the Securities
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Exchange Act of 1934, as amended, with regard to an Acquisition Proposal.
A "Transaction" means a merger, acquisition, tender offer, exchange offer,
consolidation or similar business combination transaction involving, or any
purchase of all or any material portion of the assets or any equity
securities of, PGE, PGLP or any subsidiary of either (excluding the sale of
Dearborn Center, the sale of any joint venture interests similar to that in
the Lupert & Xxxxx transaction and other sales of, or joint ventures
relating to, real property in the ordinary course of business consistent
with past practice), or any other sale, dividend, split, reorganization,
recapitalization, restructuring, spin-off or other disposition of equity
securities of PGE, PGLP or any subsidiary of either or any similar
transaction involving, directly or indirectly, PGE, PGLP or any subsidiary
of either. In addition, the definition of Superior Acquisition Proposal
contained in any definitive documentation shall contain a condition that
the Superior Acquisition Proposal is not conditioned on obtaining
financing.
4. Reimbursement and Due Diligence Break-Up Fee. If PGE determines to
pursue a Superior Acquisition Proposal during the Exclusivity Period (or
the Fifteen-Day Period as defined in paragraph 5 below), then (i) PGE and
PGLP shall pay solely to CADIM an aggregate break-up fee in the amount of
$5.0 million (or $10.0 million as provided in paragraph 5 below) promptly
following the event triggering this provision, and (ii) PGE shall reimburse
CADIM and PGI for all of their respective reasonable fees and disbursements
of counsel, accountants and other consultants and other reasonable
out-of-pocket costs incurred subsequent to the date of this Agreement in
connection with analyzing, structuring, participating in the negotiations
of the terms and conditions, drafting and other activities related to the
Proposed Transaction and the approvals and other actions needed for the
implementation thereof, and in assisting CADIM's due diligence
investigation of PGE in connection with the Proposed Transaction (the
"Reimbursement"). Such Reimbursement shall be made within 30 days of CADIM
or PGI, as applicable, submitting copies of the invoices for such costs to
PGE. CADIM will not pay, directly or indirectly, any portion of any amount
that it may receive pursuant to clause (i) of the first sentence of this
paragraph to PGI or any officer or trustee of PGE.
5. Modification of Standstill and Exclusivity Period. If CADIM
provides written notice to PGE (the "Notice") at any time on or prior to
the expiration of the Exclusivity Period that it intends to proceed with
the Proposed Transaction at the offer price of $14.50 per share (subject to
appropriate adjustment for any issuance of equity securities of PGE or
PGLP) and that CADIM is satisfied with its due diligence investigation,
then the parties agree to use their reasonable best efforts to continue to
negotiate in good faith and execute definitive documentation during the
15-day period immediately following the date on which the Notice is
delivered (such period being the "Fifteen-Day Period"). During the
Fifteen-Day Period, the provisions of paragraphs 3 and 4 shall remain in
effect with Fifteen-Day Period being substituted for Exclusivity Period
therein (i.e., the provisions of paragraphs 3 and 4 shall expire at the end
of the Fifteen-Day Period); provided, however, that the aggregate break-up
fee payable solely to CADIM pursuant to paragraph 4 during the period of
time, if any, commencing at the time the Notice is delivered and ending at
the end of the Exclusivity Period shall be in the amount of $10.0 million.
By way of example, if the Notice is delivered on October 5, 2001, the
break-up fee shall be $10.0 million from October 5, 2001 through and
including October 12, 2001, thereafter the break-up fee shall be $5.0
million for the remaining 8 days of the Fifteen-Day Period ending on
October 20, 2001 and the exclusivity and standstill provisions of paragraph
3 shall be extended until 11:59 p.m. on October 20, 2001.
6. Subsequent Break-Up Fee. PGE and CADIM agree that the definitive
documentation shall contain an aggregate break-up fee in the amount of
$20.0 million payable solely to CADIM (in addition to Reimbursement of
expenses) under normal and customary circumstances. CADIM will not pay,
directly or indirectly, any portion of any amount that it may receive as a
break-up fee to PGI or any officer or trustee of PGE.
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7. No Disclosure. Without the prior written consent of the other
party, none of PGE, CADIM or PGI will, and each of such parties shall cause
their respective affiliates and Representatives not to, make any release to
the press or other public disclosure, or make any statement to any
employee, competitor, customer, client or supplier of any of such parties
or any of their subsidiaries or to any other person, with respect to either
the fact that discussions or negotiations are taking place concerning the
Proposal or the existence or contents of this letter, except for such
public disclosure as may be necessary, based on advice of such party's
outside counsel, for the party proposing to make the disclosure not to be
in violation of or default under any applicable law, regulation or
governmental order, in which event such party shall, prior to making such
disclosure, inform the other parties of such proposed disclosure and
reasonably cooperate with such other parties regarding the proposed content
of such disclosure.
8. Remedies. It is understood and agreed that money damages may not be
a sufficient remedy for any breach of this Agreement by a party hereto or
any of its Representatives or affiliates and that the aggrieved party shall
be entitled to equitable relief, including injunction and specific
performance, as a remedy for such breach, and each party further waives any
requirement for securing or posting of any bond in connection with such
remedy. Such remedies shall not be deemed to be the exclusive remedies for
a breach by a party hereto of this agreement but shall be in addition to
all other remedies at law or equity to the aggrieved party, including all
other remedies provided for herein.
9. Choice of Law. This Agreement shall be governed by the internal
laws of the State of Illinois and without regard to the conflicts of laws
provisions thereof.
10. Several Obligations. The obligations of the parties pursuant to
this Agreement are the several obligations of the respective parties, and
no obligations shall be joint and several among any parties.
[signature page follows]
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WITNESS the execution hereof under seal as of the day and date first
above written by CADIM, PGI and PGE, each by their duly authorized officer.
CADIM INC.
By: /s/ Xxxxxx Xxxxxx
----------------------------------
Title: Vice President, Legal Affairs
By: /s/ Line Xxxxxxxx
-----------------------------------
Title: Vice President, Finance
THE PRIME GROUP, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Title: Senior Vice President
PRIME GROUP REALTY TRUST
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------
Title: Co-President and
Chief Investment Officer
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, its General Partner
By: /s/ Xxxxxxx X. Xxxxxxxxx
----------------------------------
Title: Co-President and
Chief Investment Officer
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