Exhibit 10.19
NON-COMPETITION AND RESTRICTION AGREEMENT
THIS NON-COMPETITION AND RESTRICTION AGREEMENT (this "Agreement")
is made and entered into as of November 17, 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"), THE PRIME GROUP, INC., an Illinois corporation ("TPG"), PRIME
GROUP LIMITED PARTNERSHIP, an Illinois limited partnership ("PGLP" and,
together with TPG, the "TPG Group"), and XXXXXXX X. XXXXXXX, an individual
("Xxxxxxx").
W I T N E S S E T H:
WHEREAS, the Company, through its subsidiaries and affiliates, is
engaged primarily in the business of the acquisition, development, leasing,
marketing and management of office and industrial real estate properties;
WHEREAS, on the date hereof the Company and the Operating
Partnership are entering into a series of related transactions pursuant to
which, among other things, they will acquire substantially all of the
interests of the office and industrial real estate development, leasing and
management business of the TPG Group and its affiliates (the "Formation");
WHEREAS, Xxxxxxx and the TPG Group will continue to engage in
certain real estate-related activities after the date hereof; and
WHEREAS, as a condition to the consummation of the transactions
described above, and in an effort to eliminate potential conflicts of
interest that may arise in the future as a result of the continuing
activities of Xxxxxxx and the TPG Group, the parties hereto desire, subject
to certain conditions and exceptions set forth herein, to enter into this
Agreement restricting certain activities of Xxxxxxx and the TPG Group while
Xxxxxxx is Chairman of the Board of the Company or while the TPG Group,
Xxxxxxx and their Affiliates (as hereinafter defined) own, in the aggregate,
five percent (5%) or more of the issued and outstanding common shares of
beneficial interest of the Company ("Common Shares") and limited partner
interests in the Operating Partnership exchangeable into Common Shares on a
fully diluted basis after giving effect to the exchange into Common Shares of
all limited partner interests in the Operating Partnership and after taking
into consideration the interests of all general partners in the Operating
Partnership.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. DEFINITIONS. Certain capitalized terms used but not otherwise
defined herein shall have the meanings set forth below:
"Affiliate" means (i) any entity in which Xxxxxxx and the TPG Group
(either individually or collectively) own or control, directly or indirectly,
fifty percent (50%) or more of the outstanding equity interests, (ii) any
entity with respect to which Xxxxxxx and the TPG Group (either individually
or collectively) have the right or power, directly or indirectly, to cause
such entity to acquire an interest in any property within the Primary
Business of the Company without the consent or approval of a third party
equity owner and (iii) any entity with respect to which Xxxxxxx and the TPG
Group (either individually or collectively) have the right or power, directly
or indirectly, to withhold consent or approval of an acquisition by such
entity of an interest in any property within the Primary Business of the
Company where such consent or approval is required as a condition to
consummation of such acquisition.
"Primary Business of the Company" means any interest in any real
property within the office and industrial real estate acquisition, ownership,
development, leasing and management business, unless and until any such
business is no longer within the primary business of the Company, as
determined from time to time by a majority vote of the independent trustees
of the Company.
2. PROHIBITIONS RELATING TO OFFICE AND INDUSTRIAL PROPERTIES.
(a) Subject to SUBSECTIONS 2(b) AND 2(c) below, from and after the
date hereof and during the term of this Agreement, neither Xxxxxxx, the TPG
Group nor any Affiliate will own any real estate property or acquire any real
estate property or any direct or indirect interest therein (except any
ownership resulting from foreclosure of indebtedness), or manage any real
estate property, that is within the Primary Business of the Company,
PROVIDED, HOWEVER, that the foregoing shall not prohibit Xxxxxxx, the TPG
Group or any Affiliate from providing any mortgage financing, from acting as
lessor in a sale-leaseback transaction, from providing any other subordinated
debt with respect to any facilities or properties of the type included within
the Primary Business of the Company or from obtaining a preferred equity
position in any owner or lessee of any such type of facilities or properties.
(b) Excluded from the restrictions set forth in SUBSECTION 2(a)
are the following properties and interests: (i) any interest in the Company
or the Operating Partnership; (ii) any activity which a majority of the
independent members of the board of trustees of the Company determine not to
be competitive with any
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facility or property which the Company or Operating Partnership owns or
intends to acquire; (iii) any properties in which the TPG Group or Xxxxxxx or
any Affiliate had a direct or indirect interest prior to the Formation; and
(iv) the ownership by the TPG Group or Xxxxxxx or any Affiliate of less than
five percent (5%) of any class of securities listed on a national securities
exchange or included in the Nasdaq National Market.
(c) The restrictions set forth in SUBSECTION 2(a) shall not
prohibit the sale, lease or other disposition, or any activities incident
thereto, of any property in which the TPG Group or Xxxxxxx or any Affiliate
has an interest on the date hereof.
3. TERM. This Agreement shall be in effect from and after the date
hereof and shall continue in effect until (a) Xxxxxxx ceases to serve as
Chairman of the Board of the Company and (b) Xxxxxxx, the TPG Group and their
Affiliates cease to own five percent (5%) or more of the Common Shares of the
Company and limited partner interests in the Operating Partnership
exchangeable for Common Shares, on a fully-diluted basis after giving effect
to the exchange into Common Shares of any limited partner interests in the
Operating Partnership owned by such parties and any other party and after
taking into consideration the interests of all general partners in the
Operating Partnership.
4. REASONABLE LIMIT. The parties hereto have attempted to set forth
certain restrictions only to the extent necessary to protect the interests of
the Company. Each of Xxxxxxx and the TPG Group expressly acknowledges that
the restrictive covenant contained in SUBSECTION 2(a) above along with the
exceptions thereto contained in SUBSECTIONS 2(b) AND 2(c) above, constitutes
a reasonable restriction. If, however, the scope of enforceability of the
restrictive covenant contained in this Agreement is disputed at any time, a
court or other trier of fact may modify and enforce the covenant to the
extent that it believes is reasonable under the circumstances existing at the
time.
5. BREACH OF AGREEMENT.
(a) A party aggrieved shall notify the other party in writing of
any conflicts, disputes or claims of breach arising under this Agreement.
Within ten (10) business days after such notice is sent, the parties shall
meet, shall develop, as fully as possible, the facts relating to the
conflict, dispute or alleged breach, and shall attempt to resolve the same,
it being understood and agreed that any such resolution shall be subject to
the consent and approval of a majority of the Company's independent trustees.
If resolution of the dispute is not made to the satisfaction of the
aggrieved party within thirty (30) days after the notice is sent, the
aggrieved party may pursue its legal and equitable remedies.
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(b) In the event of breach of this Agreement, each of Xxxxxxx and
the TPG Group acknowledges that the remedy at law would be inadequate and
that, in addition to monetary damages, the Company shall be entitled, after
compliance with the dispute mechanism described in SUBSECTION 5(a) above, to
seek an injunctive order restraining such breach.
6. TRANSFERABILITY. The parties hereto agree that this Agreement
shall inure to the benefit of the Company, and its successors and assigns and
shall be transferrable and assignable by the Company in connection with the
sale or other transfer of a controlling (50%) interest in the Company to an
entity that is not an Affiliate. Upon such transfer or assignment, this
Agreement shall remain in full force and effect, under the terms herein,
between Xxxxxxx, the TPG Group and such transferees, assignees or successors
in interest. This Agreement shall be binding upon the successors and
assigns of all or substantially all of the business of the TPG Group.
7. WAIVER. The waiver by an party to this Agreement of a breach by
any party or any provision of this Agreement shall not operate or be
construed as a waiver of any subsequent breach by any other party. No waiver
of any provision of this Agreement shall be effective, unless in writing and
signed by the party waiving its rights, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which given, provided further that no waiver by the Company shall be
effective unless accompanied by a certificate of an executive officer of the
Company certifying that a majority of the independent trustees of the Company
have consented to and approved such waiver.
8. NOTICES. All notices, requests, demands and other communications
given by any party hereto shall be in writing and shall be deemed to be duly
given if delivered, or if mailed first class, return receipt requested
addressed as follows:
To the Company or the Operating To the TPG Group or any member thereof:
Partnership:
Prime Group Realty Trust c/o The Prime Group, Inc.
00 Xxxx Xxxxxx Xxxxx 00 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attention: Chief Executive Attention: Xxxxxxx X. Xxxxxxx
Officer
With a copy to: With a copy to:
Prime Group Realty Trust The Prime Group, Inc.
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00 Xxxx Xxxxxx Xxxxx 00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Attention: General Counsel Attention: General Counsel
To Xxxxxxx X. Xxxxxxx:
c/o The Prime Group, Inc.
00 X. Xxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxx
9. ENTIRE AGREEMENT. This instrument supersedes all prior
understandings and agreements of the parties hereto and contains the entire
agreement of the parties with respect to the subject matter hereof and may
not be amended or changed, except by an agreement in writing entered into by
the parties hereto.
10. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Illinois.
11. SEVERABILITY. If a court of competent jurisdiction adjudicates any
one or more of provisions of this Agreement as invalid, illegal or
unenforceable in any respect, such provision(s) shall be ineffective only to
the extent and duration of such invalidity, illegality or unenforceability
and such invalidity, illegality or unenforceability shall not affect the
remaining substance of such provision or any of this Agreement's other
provisions, and this Agreement shall be construed as if it had never
contained such invalid, illegal and unenforceable provision.
12. 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.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this
Non-Competition and Restriction Agreement to be duly executed as of the date
first above written.
COMPANY: XXXXXXX AND THE TPG GROUP:
PRIME GROUP REALTY TRUST,
a Maryland real estate
investment trust
/s/ Xxxxxxx X. Xxxxxxx
------------------------------
Xxxxxxx X. Xxxxxxx
By: /s/ W. Xxxxxxx Xxxxxx
-------------------------------
Its: Executive VP
-------------------------------
THE PRIME GROUP, INC.,
an Illinois corporation
PRIME GROUP REALTY, L.P.,
a Delaware limited partnership
By: /s/ Xxxxxx X. Xxxxxx
--------------------------
By: Prime Group Realty Trust,
its Managing General Its: Executive Vice President
Partner --------------------------
PRIME GROUP LIMITED
By: /s/ W. Xxxxxxx Xxxxxx PARTNERSHIP, an Illinois
-------------------------------- limited partnership
Its: Executive VP
-------------------------------- By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx,
Managing General Partner
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