Exhibit 10.28
REGISTRATION RIGHTS AGREEMENT
Dated as of December 15, 1997
of
PRIME GROUP REALTY TRUST
for the benefit of
CERTAIN HOLDERS OF COMMON UNITS
of
PRIME GROUP REALTY, L.P.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is made as of the 15th day of
December, 1997 (this "Agreement"), among PRIME GROUP REALTY TRUST, a Maryland
real estate investment trust (the "Company"), PRIME GROUP REALTY, L.P., a
Delaware limited partnership (the "Partnership"), and H GROUP LLC, a Delaware
limited liability company ("HG"), and the Permitted Transferees (as defined
below) of HG and each other Investor (as hereinafter defined) (HG and such
other entities or Permitted Transferees are sometimes referred to herein
individually as an "Investor" and collectively as the "Investors").
W I T N E S S E T H:
WHEREAS, HG will hold the common units of limited partnership
interest in the Partnership set forth in Exhibit A hereto (which common units
of limited partnership interest, together with common units of limited
partnership interest hereafter issued to any other Person that is admitted as
a limited partner of the Partnership, are referred to herein collectively as
the "Common Units"), which Common Units may be exchanged for common shares of
beneficial interest of the Company (the "Common Shares") pursuant to certain
exchange rights set forth on Exhibit C to that certain Amended and Restated
Agreement of Limited Partnership of Prime Group Realty, L.P., dated November
17, 1997, as thereafter amended (as so amended and as from time to time
hereafter amended, the "Partnership Agreement"); and
WHEREAS, the Company has agreed to provide HG and any subsequent
Investors with certain registration rights as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, and subject to
and on the terms and conditions herein set forth, the parties hereto agree as
follows:
ARTICLE I
CERTAIN DEFINITIONS
I.1. "Agreement" is defined in the first paragraph of this Agreement.
I.2. "Blackout Termination Right" is defined in Section 5.3(b) hereof.
I.3. "Business Day" means any day on which the New York Stock Exchange
is open for trading.
I.4. "Company" is defined in the first paragraph of this Agreement.
I.5. "Effectiveness Period" is defined in Section 4.3 hereof.
I.6. "Eligible Formation Securities" means the securities defined as
"Eligible Securities" in the Formation Registration Rights Agreement.
I.7. "Eligible Securities" means all or any portion of the Common
Shares acquired by the Investors upon exchange of the Common Units. As to any
proposed offer or sale of Eligible Securities, such securities shall cease to
be Eligible Securities with respect to such proposed offer or sale when (i) a
registration statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
disposed of in accordance with such registration statement or (ii) such
securities are permitted to be disposed of pursuant to Rule
144(k) (or any successor provision to such Rule) under the Securities Act as
confirmed in a written opinion of counsel to the Company addressed to the
Investors, (iii) such securities shall have been otherwise transferred
pursuant to Rule 144 (or any successor rule) or pursuant to another
applicable exemption under the Securities Act, new certificates for such
securities not bearing a legend restricting further transfer shall have been
delivered by the Company and such securities shall be freely transferable to
the public without registration under the Securities Act or (iv) such
securities are no longer outstanding.
I.8. "Formation Investors" means the "Investors" and the "Management
Investor" as such terms are defined in the Formation Registration Rights
Agreement.
I.9. "Formation Registration Rights Agreement" means that certain
Registration Rights Agreement dated as of November 17, 1997 by and among the
Company, the Partnership and the other parties signatory thereto.
I.10. "Information Blackout" is defined in Section 5.3(a) hereof.
I.11. "Investor Group" means, with respect to an Investor, such
Investor and its Permitted Transferees.
I.12. "Investor" means HG and each Person that receives Common Units
after the date hereof and is admitted as a limited partner of the
Partnership, and any of their Permitted Transferees.
I.13. "IPO" means, with respect to an Investor, such Investor and
its Permitted Transferees and any other beneficial interest of the Company
offered simultaneously with the Common Shares.
I.14. "IPO Date" means the date of the final prospectus used by the
Company in the IPO.
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I.15. "Lock-Up Agreements" means any Lock-Up Agreement between any
other Investor and the Underwriter entered into prior to the end of the 180
day-period following the IPO Date.
I.16. "Partnership" is defined in the first paragraph of this
Agreement.
I.17. "Partnership Agreement" means that certain Amended and
Restated Agreement of Limited Partnership of Prime Group Realty, L.P., dated
November 17, 1997, as amended, and as from time to time hereafter amended.
I.18. "Participating Investor" is defined in Section 3.3(a) hereof.
I.19. "Person" means an individual, a partnership (general or
limited), corporation, real estate investment trust, joint venture, business
trust, cooperative, association or other form of business organization,
whether or not regarded as a legal entity under applicable law, a trust
(inter vivos or testamentary), an estate of a deceased, insane or incompetent
person, a quasi-governmental entity, a government or any agency, authority,
political subdivision or other instrumentality thereof, or any other entity.
I.20. "Permitted Transferees" with respect to each Investor means
the Persons which qualify as Qualified Transferees under the Partnership
Agreement.
I.21. "Registration Date" is defined in Section 2.1 hereof.
I.22. "Registration Expenses" means all expenses incident to the
Company's performance of or compliance with the registration requirements set
forth in this Agreement including, without limitation, the following: (i) the
fees, disbursements and expenses of the Company's counsel(s) (United States
and foreign), accountants and experts in connection with the registration of
Eligible Securities to be disposed of under the Securities Act; (ii) all
expenses in connection with the
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preparation, printing and filing of the registration statement, any
preliminary prospectus or final prospectus, any other offering document and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the underwriters and dealers; (iii) the cost of printing or
producing any agreement(s) among underwriters, underwriting agreement(s) and
blue sky or legal investment memoranda, any selling agreements and any other
documents in connection with the offering, sale or delivery of Eligible
Securities to be disposed of; (iv) all expenses in connection with the
qualification of Eligible Securities to be disposed of for offering and sale
under state securities laws, including the fees and disbursements of counsel
for the underwriters in connection with such qualification and in connection
with any blue sky and legal investment surveys; (v) the filing fees incident
to securing any required review by the National Association of Securities
Dealers, Inc. of the terms of the sale of Eligible Securities to be disposed
of; and (vi) fees and expenses incurred in connection with the listing of
Eligible Securities on each securities exchange or quotation system on which
the Common Shares are then listed; provided, however, that Registration
Expenses with respect to any registration pursuant to this Agreement shall
not include underwriting discounts or commissions attributable to Eligible
Securities, SEC or blue sky registration fees attributable to Eligible
Securities or transfer taxes applicable to Eligible Securities.
I.23. "Requesting Investor" means an Investor requesting
registration of its Eligible Securities in accordance with the terms hereof.
I.24. "Sales Blackout Period" is defined in Section 5.3(a)(iii)
hereof.
I.25. "SEC" means the United States Securities and Exchange
Commission.
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I.26. "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the SEC thereunder, all as the same shall be
in effect at the relevant time.
I.27. "Selling Investor" means the Requesting Investor and each
Participating Investor or any Investor who has requested registration
pursuant to Section 3.1 or Section 4.1 hereof, as applicable.
I.28. "Shelf Registration Statement" is defined in Section 4.3(a)
hereof.
I.29. "Twelve Month Date" means the date that is twelve months after
the date hereof,, and if such date is not a Business Day, the next succeeding
date that is a Business Day.
I.30. "Underwriter" means Prudential Securities Incorporated.
ARTICLE II
EFFECTIVENESS OF REGISTRATION RIGHTS
SECTION 2.1 Effectiveness of Registration Rights. This Agreement
shall become effective on the date hereof, provided, however, that the
registration of any Eligible Securities pursuant to Articles III and IV
hereof by the Investors prior to the Twelve Month Date (each such dates being
hereinafter referred to as a "Registration Date"), shall be subject to the
prior receipt of the written consent of the Company and the Underwriter (as
applicable) to the waiver of the restrictions on transfer of the Common
Shares held by the Investors requesting such consent under the terms of the
Partnership Agreement and, as applicable, their respective Lock-Up Agreements.
ARTICLE III
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REGISTRATION REQUEST
SECTION 3.1 Request. Upon written request from an Investor
requesting that the Company effect the registration under the Securities Act
of all or part of the Eligible Securities held by such Investor, which notice
may be delivered at any time after 90 days prior to the Registration Date for
the applicable Investor Group and which notice shall specify the intended
method or methods of disposition of such Eligible Securities, the Company
will use all reasonable efforts to effect (at the earliest possible date) the
registration, under the Securities Act, of such Eligible Securities for
disposition in accordance with the intended method or methods of disposition
stated in such request; provided that:
(i) if the Company shall have previously effected a
registration with respect to Eligible Securities pursuant to Article IV
hereof, the Company shall not be required to effect a registration
pursuant to this Article III until a period of one hundred twenty (120)
days shall have elapsed from the effective date of the most recent such
previous registration;
(ii) if, upon receipt of a registration request pursuant to
this Article III, the Company is advised in writing (with a copy to the
Selling Investors) by a nationally recognized independent investment
banking firm selected by the Company to act as lead underwriter in
connection with a public offering of securities by the Company that, in
such firm's opinion, a registration at the time and on the terms
requested would materially adversely affect such public offering of
securities by the Company (other than an offering in connection with
employee benefit and similar plans) (a "Company Offering") that prior
to the receipt of the notice by the Requesting Investor had been
contemplated by the Company's
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Board of Trustees to be filed (and which is in fact filed) within sixty
(60) days of receipt of the notice by the Requesting Investors, the
Company shall not be required to effect a registration pursuant to this
Article III until the earliest of (i) three months after the completion
of such Company Offering, (ii) the termination of any blackout period,
if any, required by the underwriters to be applicable to the Selling
Investors in connection with such Company Offering and agreed to in
writing by the Selling Investors, (iii) promptly after abandonment of
such Company Offering or (iv) four months after the date of written
notice requesting registration from the Investor who initially
requested registration;
(iii) if, while a registration request is pending pursuant to
this Article III, the Company determines in the good faith judgment of
the Board of Trustees of the Company, with the advice of counsel, that
the filing of a registration statement would require the disclosure of
non-public material information the disclosure of which would have a
material adverse effect on the Company or would otherwise adversely
affect a material financing, acquisition, disposition, merger or other
comparable transaction, the Company shall deliver a certificate to such
effect signed by its Chief Executive Officer, President, or any
Executive Vice President to the Selling Investors, and the Company
shall not be required to effect a registration pursuant to this Article
III until the earlier of (i) the date upon which such material
information is disclosed to the public or ceases to be material or (ii)
60 days after the Company makes such good faith determination; and
(iv) the Company shall not be required to effect (i) more than
two registrations pursuant to this Article III in any calendar year per
each Investor Group and (ii) a registration
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of Eligible Securities, the Fair Market Value of which on the date of
the registration request (determined as set forth in the Partnership
Agreement) is less than $2,500,000. No registration of Eligible
Securities under this Article III shall relieve the Company of its
obligation (if any) to effect registrations of Eligible Securities
pursuant to Article IV hereof.
SECTION 3.2 Registration Expenses. With respect to the registrations
requested pursuant to this Article III and any registration arising from an
exercise of a Blackout Termination Right (as defined below), the Company
shall pay all Registration Expenses.
SECTION 3.3 Other Investor Shares. (a) Upon receipt of the written
notice from a Requesting Investor, the Company shall give written notice to
each other Investor. Subject to Section 3.3(b) hereof, the Company shall be
required to cause the registration of securities for sale for the account of
any Investor (the "Participating Investor") in any registration of Eligible
Securities requested pursuant to this Article III who has delivered written
notice to the Company within fifteen (15) Business Days of the date of
receipt by such Participating Investor of the above-referenced written notice
from the Company (which notice from the Participating Investor to the Company
shall specify the number of shares to be disposed of and the intended method
of disposition); provided, that the Company shall not be required to cause
the registration of all of the securities requested to be registered by
Participating Investors if the Requesting Investor is advised in writing
(with a copy to the Company) by a nationally recognized independent
investment banking firm selected by the Requesting Investor (or as determined
by Section 3.3(c)) that, in such firm's opinion, registration of all of such
securities would materially adversely affect the offering and sale of
Eligible Securities then contemplated by the Requesting Investor.
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(b) If the Company cannot, pursuant to the terms of this
Section 3.3, register all of the shares requested to be registered, the
Company shall register the Maximum Amount (as defined below), and such amount
shall be allocated between each applicable Investor Group, pro rata according
to the number of shares for which registration was initially requested by
each Investor Group. The amount allocated to each Investor Group shall be
further allocated to each Selling Investor within such Investor Group pro
rata according to the number of shares for which registration was initially
requested by each Selling Investor within such Investor Group. For purposes
of this Section 3.3, "Maximum Amount" shall mean the largest number of shares
(if any) that, in the opinion of the nationally recognized underwriter
selected by the Requesting Investor (or as determined by Section 3.3(c)
hereof), for purposes of Section 3.3(a) hereof, could be offered to the
public without materially adversely affecting the offering and sale of
Eligible Securities as then contemplated by the Selling Investors.
(c) In the event that more than one Investor exercises
registration rights on the same day, the Investor who requested a
registration of the larger number of shares on such day shall be entitled to
select the lead underwriter for such registered offering (if such offering
will be underwritten). In all other cases, the first Investor to exercise
registration rights with respect to any particular registration demand shall
be entitled to select the lead underwriter for such registered offering (if
such offering will be underwritten).
Notwithstanding this Article III, each Selling
Investor may elect, in writing prior to the effective date of the
registration statement filed in connection with a registration under this
Article III, not to register its Eligible Securities in connection with such
registration; provided,
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that if such Selling Investor is one of the Requesting Investors, such
Selling Investor will be deemed to have used one of the two rights each year
to request registration of Eligible Securities under this Article III
allocated to the Investor Group of which it is a member pursuant to Section
3.1(iv) hereof.
ARTICLE IV
INCIDENTAL REGISTRATION
SECTION 4.1 Notice and Registration. If the Company proposes to
register any Common Shares, any equity securities exercisable for,
convertible into or exchangeable for Common Shares, or other securities
issued by it having terms substantially similar to Eligible Securities
("Other Securities") for public sale under the Securities Act (to the extent
to be offered for sale by the Company) on a form and in a manner which would
permit registration of Eligible Securities for sale to the public under the
Securities Act, it will give prompt written notice to the Investors of its
intention to do so, and upon the written request of any Investor delivered to
the Company within fifteen (15) Business Days after the giving of any such
notice (which request shall specify the number of Eligible Securities
intended to be disposed of by such Investor and the intended method of
disposition thereof), the Company will use all reasonable efforts to effect,
in connection with the registration of the Other Securities, the registration
under the Securities Act of all Eligible Securities which the Company has
been so requested to register by the Selling Investor(s), to the extent
required to permit the disposition (in accordance with the intended method or
methods thereof as aforesaid) of Eligible Securities so to be registered (it
being understood by the parties hereto that the Company is also obligated
under the Formation Registration Rights Agreement to similarly notify the
Formation
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Investors of the Company's intention to register as such Other Securities,
and to use all reasonable efforts to effect, in connection with the
registration of the Other Securities, the registration under the Securities
Act of all Eligible Formation Securities which the Company is so requested to
register by the Formation Investors before any Eligible Securities are
included in such registration); provided that:
(i) if, at any time after giving such written notice of its
intention to register any Other Securities and prior to the effective
date of the registration statement filed in connection with such
registration, the Company shall determine for any reason not to
register the Other Securities, the Company may, at its election, give
written notice of such determination to the Investors and thereupon the
Company shall be relieved of its obligation to register such Eligible
Securities in connection with the registration of such Other Securities
(but not from its obligation to pay Registration Expenses to the extent
incurred in connection therewith as provided in Section 4.2 hereof),
without prejudice, however, to the rights (if any) of the Investors
immediately to request that such registration be effected as a
registration under Article III hereof;
(ii) The Company will not be required to effect any
registration pursuant to this Article IV if the Company shall have been
advised in writing (with a copy to the Selling Investors) by a
nationally recognized independent investment banking firm selected by
the Company to act as lead underwriter in connection with the public
offering of securities by the Company that, in such firm's opinion, a
registration of Eligible Securities requested to be registered at that
time would materially and adversely affect the Company's own scheduled
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offering of Other Securities together with any Eligible Formation
Securities included in such registration; provided, however, that if an
offering of some but not all of the Eligible Securities requested to be
registered by the Investor(s) would not materially adversely affect the
Company's offering of Other Securities together with any Eligible
Formation Securities included in such registration, the aggregate
number of Eligible Securities requested to be included in such offering
by the Investors shall be reduced pro rata according to the total
number of Eligible Securities requested to be registered by such
Persons;
(iii) The Company shall not be required to effect any
registration of Eligible Securities under this Article IV incidental to
the registration of any of its securities in connection with mergers,
acquisitions, exchange offers, subscription offers, dividend
reinvestment plans or share options or other employee benefit plans or
in connection with any "demand registration" requested by the Formation
Investors under Article III of the Formation Registration Rights
Agreement (except that in the case of such a demand registration being
made by the Company on behalf of the Formation Investors, the Company
will promptly notify the Investors hereunder and the Investors may
request (within the time period specified by the Company) that Eligible
Securities be included in such registration of Eligible Formation
Securities, and, to the extent the Formation Investors expressly
consent to the inclusion of some or all of the Eligible Securities so
requested to be included in such demand registration of Eligible
Formation Securities, the Company will make all reasonable efforts to
effect the registration of such of the Eligible Securities so requested
to be registered..
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(iv) Notwithstanding any request under Section 4.1(a) hereof,
a Selling Investor may elect in writing prior to the effective date of
a registration under this Article IV, not to register its Eligible
Securities in connection with such registration.
(v) No registration of Eligible Securities effected under this
Article IV shall relieve the Company of its obligation (if any) to
effect registrations of Eligible Securities pursuant to Article III
hereof.
SECTION 4.2 Registration Expenses. The Company shall be responsible for
the payment of all Registration Expenses in connection with any registration
pursuant to this Article IV.
SECTION 4.3 Shelf Registration Statement
(a) Shelf Registration Statement. The Company shall as
promptly as reasonably practicable subsequent to the Twelve Month Date file
with the SEC a Registration Statement for an offering to be made on a
continuous basis pursuant to Rule 415 covering all of the Eligible Securities
(the "Shelf Registration Statement"). To the extent possible, the Shelf
Registration Statement shall be on the appropriate form permitting
registration of such Eligible Securities for resale by Investors in the
manner or manners designated by them (including, without limitation, one or
more underwritten offerings). The Company will notify each Investor when such
Shelf Registration Statement has become effective.
The Company shall use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act as
promptly as practicable after the filing of the Shelf Registration Statement
and (subject to compliance with the restrictions on registrations set forth
in Articles III and IV hereof which shall be applicable with respect to the
Shelf Registration) to keep
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the Shelf Registration Statement continuously effective under the Securities Act
until the date which is five (5) years from the date of its initial
effectiveness ("Effectiveness Period"), or such period ending either when all
Eligible Securities covered by the Shelf Registration Statement or the Eligible
Securities covered by the Shelf Registration Statement first have a Fair Market
Value (determined as set forth in the Partnership Agreement) of less than
$1,000,000 have been sold in the manner set forth and as contemplated in the
Shelf Registration Statement.
(b) Withdrawal of Stop Orders. If the Shelf Registration
Statement ceases to be effective for any reason at any time during the
Effectiveness Period (other than because of the sale of all of the securities
registered thereunder or because the Company's obligation to maintain the Shelf
Registration Statement ceases in accordance with Section 4.3 (a) because the
Fair Market Value of the Eligible Securities covered by the Registration
Statement is then less than $1,000,000), the Company shall use its best efforts
to obtain the prompt withdrawal of any order suspending the effectiveness
thereof.
(c) Supplement and Amendments. The Company shall promptly
supplement and amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration Statement, if required by the Securities Act.
ARTICLE V
REGISTRATION PROCEDURES
SECTION 5.1 Registration and Qualification. If and whenever the Company
is required to use all reasonable efforts to effect the registration of any
Eligible Securities under the Securities Act as provided in Articles III or IV
hereof, the Company will, as promptly as is practicable:
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(i) prepare, file and use all reasonable efforts to cause to
become effective a registration statement under the Securities Act
regarding the Eligible Securities to be offered;
(ii) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the Securities
Act with respect to the disposition of all Eligible Securities until
the earlier of such time as all of such Eligible Securities have been
disposed of in accordance with the intended methods of disposition by
the Selling Investors set forth in such registration statement or the
expiration of twelve months (or 30 months in the case of the Shelf
Registration Statement) after such Registration Statement becomes
effective;
(iii) furnish to the Selling Investors and to any underwriter
of such Eligible Securities such number of conformed copies of such
registration statement and of each such amendment and supplement
thereto (in each case including all exhibits), such number of copies of
the prospectus included in such registration statement (including each
preliminary prospectus and any summary prospectus), in conformity with
the requirements of the Securities Act, such documents incorporated by
reference in such registration statement or prospectus, and such other
documents as the Selling Investors or such underwriter may reasonably
request;
(iv) use all reasonable efforts to register or qualify all
Eligible Securities covered by such registration statement under such
other securities or blue sky laws of such jurisdictions as the Selling
Investors or any underwriter of such Eligible Securities shall
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reasonably request, and do any and all other acts and things which may
be reasonably requested by the Selling Investors or any underwriter to
consummate the disposition in such jurisdictions of the Eligible
Securities covered by such registration statement, except the Company
shall not for any such purpose be required to qualify generally to do
business as a foreign corporation in any jurisdiction wherein it is not
so qualified, or to subject itself to taxation in any jurisdiction
where it is not then subject to taxation, or to consent to general
service of process in any jurisdiction where it is not then subject to
service of process;
(v) use all reasonable efforts to list the Eligible Securities
on each national securities exchange or quotation system on which the
Common Shares are then listed, if the listing of such securities is
then permitted under the rules of such exchange;
(vi) (x) furnish to the Selling Investors an opinion of
counsel for the Company, addressed to them, dated the date of the
closing under the underwriting agreement, and (y) upon such Selling
Investor's request, use all reasonable efforts to furnish to the
Selling Investors a "comfort letter" signed by the independent public
accountants who have certified the Company's financial statements
included in such registration statement, addressed to them; provided
that with respect to such opinion and "comfort letter," the following
shall apply: (A) the opinion and "comfort letter" shall cover
substantially the same matters with respect to such registration
statement (and the prospectus included therein) as are customarily
covered in opinions of issuer's counsel and in accountants' letters
delivered to underwriters in underwritten public offerings of
securities and such other matters as the Selling Investors may
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reasonably request; and (B) the "comfort letter" also shall cover
events subsequent to the date of such financial statements; and
(vii) notify the Selling Investors immediately upon the
happening of any event as a result of which a prospectus included in a
registration statement, relating to a registration pursuant to Article
III or IV hereof, as then in effect, includes an untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and at
the request of the Selling Investors prepare and furnish to the Selling
Investors as many copies of a supplement to or an amendment of such
prospectus as the Selling Investors reasonably request so that, as
thereafter delivered to the purchasers of such Eligible Securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
The Company may require the Selling Investors to furnish the Company such
information regarding the Selling Investors and the distribution of such
securities as the Company may from time to time reasonably request in writing
and as shall be required by law or by the SEC in connection with any
registration. Failure of the Selling Investors to provide such information will
relieve the Company of its obligation to register such Selling Investor's
Eligible Securities.
SECTION 5.2 Underwriting. (a) If requested by the underwriters for any
underwritten offering of Eligible Securities pursuant to a registration
described in this Agreement, the Company will enter into and perform its
obligations under an underwriting agreement with such underwriters
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for such offering, such agreement to contain such representations and warranties
by the Company and such other terms and provisions as are customarily contained
in underwriting agreements with respect to secondary distributions, including,
without limitation, indemnities and contribution to the effect and to the extent
provided in Article VII hereof and the provision of opinions of counsel and
accountants' letters to the effect and to the extent provided in Section 5.1(i)
hereof. The holders of Eligible Securities on whose behalf Eligible Securities
are to be distributed by such underwriters shall be parties to any such
underwriting agreement and the representations and warranties by, and the other
agreements on the part of, the Company to and for the benefit of such
underwriters shall also be made to and for the benefit of such holders of
Eligible Securities.
(b) In the event that any registration pursuant to Article IV
hereof shall involve, in whole or in part, an underwritten offering, the Company
may require Eligible Securities requested to be registered pursuant to Article
IV hereof to be included in such underwriting on the same terms and conditions
as shall be applicable to the Other Securities being sold through underwriters
under such registration. In such case, the holders of Eligible Securities on
whose behalf Eligible Securities are to be distributed by such underwriters
shall be parties to any such underwriting agreement. Such agreement shall
contain such representations and warranties by the Company and the Selling
Investors and such other terms and provisions as are customarily contained in
underwriting agreements with respect to secondary distributions, including,
without limitation, indemnities and contribution to the effect and to the extent
provided in Article VII hereof. The representations and warranties in such
underwriting agreement by, and the other agreements on the part of, the Company
to and for the
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benefit of such underwriters shall also be made to and for the benefit of such
holders of Eligible Securities.
SECTION 5.3 Blackout Periods. (a) At any time when a registration
statement effected pursuant to Article III hereof relating to Eligible
Securities is effective, upon written notice from the Company to the Selling
Investors that the Company determines in the good faith judgment of the Board of
Trustees of the Company, with the advice of counsel, that the Selling Investors'
sale of Eligible Securities pursuant to the registration statement would require
disclosure of non-public material information the disclosure of which would have
a material adverse effect on the Company (an "Information Blackout"), the
Selling Investors shall suspend sales of Eligible Securities pursuant to such
registration statement until the earliest of:
(i) the date upon which such material information is disclosed
to the public or ceases to be material;
(ii) 60 days after the Company makes a good faith
determination that such material information ceases to be material; and
(iii) such time as the Company notifies the Selling Investors
that sales pursuant to such registration statement may be resumed.
(The number of days from such suspension of sales by the Selling Investors until
the day when such sales may be resumed under clause (i), (ii) or (iii) of this
Section 5.3(a) is hereinafter called a "Sales Blackout Period".)
(b) Any delivery by the Company of notice of an Information
Blackout during the 90 days immediately following effectiveness of any
registration statement effected pursuant to Article
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III hereof shall give the Investors the right, by written notice to the Company
within 20 Business Days after the end of such Sales Blackout Period, to cancel
such registration and obtain one additional registration right during such
calendar year (a "Blackout Termination Right") under Article III hereof.
(c) If there is an Information Blackout and if the Investors
do not exercise their cancellation right, if any, pursuant to Section 5.3(b)
hereof, or, if such cancellation right is not available, the time period set
forth in Section 5.1(ii) hereof shall be extended for a number of days equal to
the number of days in the Sales Blackout Period.
SECTION 5.4 Qualification for Rule 144 Sales. The Company will take all
actions reasonably necessary to comply with the filing requirements described in
Rule 144(c)(1) so as to enable the Investors to sell Eligible Securities without
registration under the Securities Act and, upon the written request of any
Investor, the Company will deliver to such Investor a written statement as to
whether it has complied with such filing requirements.
ARTICLE VI
PREPARATION; REASONABLE INVESTIGATION
SECTION 6.1 Preparation; Reasonable Investigation. In connection with
the preparation and filing of each registration statement registering Eligible
Securities under the Securities Act, the Company will give the Selling Investors
and the underwriters, if any, and their respective counsel and accountants,
drafts of such registration statement for their review and comment prior to
filing and such reasonable and customary access to its books and records and
such opportunities to discuss the
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business of the Company with its officers, counsel and the independent public
accountants who have certified its financial statements as shall be
necessary, in the opinion of the Selling Investors and such underwriters or
their respective counsel, to conduct a reasonable investigation within the
meaning of the Securities Act.
ARTICLE VII
INDEMNIFICATION AND CONTRIBUTION
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SECTION 7.1 Indemnification. (a) In the event of any registration of
Eligible Securities hereunder, the Company and the Partnership jointly and
severally will, and hereby do, indemnify and hold harmless, each Selling
Investor, its respective directors, trustees, officers, partners, agents,
employees and affiliates and each other person who participates as an
underwriter in the offering or sale of such securities and each other Person,
if any, who controls each such Selling Investor or any such underwriter
within the meaning of the Securities Act, against any and all losses, claims,
damages, expenses or liabilities, joint or several, actions or proceedings
(whether commenced or threatened) in respect thereof, to which each such
indemnified party may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, expenses or liabilities (or actions
or proceedings, whether commenced or threatened, in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of
any material fact contained in any registration statement under which such
securities were registered under the Securities Act, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, or any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein in light of the circumstances in which they were made
not misleading, and the Company and the Partnership will reimburse each such
Selling Investor and each such director, trustee, officer, partner, agent,
employee or affiliate, underwriter and controlling person for any legal or
any other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, expense, liability,
action, or proceeding; provided, however, that (i) the Company and the
Partnership shall not be liable in any such case to the extent that any such
loss, claim, damage, expense or liability (or action or proceeding
23
in respect thereof) arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of such Selling Investor or
underwriter specifically stating that it is for use in the preparation
thereof and (ii) the Company and the Partnership shall not be liable to any
person who participates as an underwriter in the offering or sale of Eligible
Securities or any other person, if any, who controls or is controlled by such
underwriter within the meaning of the Securities Act, in any such case to the
extent that any such loss, claim, damage, expense or liability (or action or
proceeding in respect thereof) arises out of such underwriter's failure to
send or give a copy of the final prospectus, as the same may be then
supplemented or amended, to the person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to the
written confirmation of the sale of Eligible Securities to such person if
such statement or omission was corrected in such final prospectus.
(b) Each Selling Investor severally will, and hereby does,
indemnify and hold harmless the Company, its trustees, its officers who sign
the registration statement, each Person who participates as an underwriter in
the offering or sale of such securities, and each Person, if any, who
controls the Company or any such underwriter within the meaning of the
Securities Act against any and all losses, claims, damages, expenses or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof, to which each such indemnified party may
become subject under the Securities Act or otherwise insofar as such losses,
claims, damages,
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expenses or liabilities (or actions or proceedings, whether commenced or
threatened in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact in or omission or
alleged omission to state a material fact in such registration statement, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, but only to the extent that
such statement or omission was made in reliance upon and in conformity with
written information furnished by such Selling Investor to the Company through
an instrument duly executed by or on behalf of such Selling Investor
specifically stating that it is for use in preparation thereof.
(c) Promptly after receipt by any indemnified party
hereunder of notice of the commencement of any action or proceeding involving
a claim referred to in paragraphs (a) or (b) of this Section 7.1, the
indemnified party will notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party
will not relieve the indemnifying party from any liability which it may have
to any indemnified party under paragraphs (a) or (b) of this Section 7.1.
(d) If for any reason the indemnity under this Section 7.1
is unavailable or is insufficient to hold harmless any indemnified party
under paragraphs (a) or (b) of this Section 7.1, then the indemnifying
parties shall contribute to the amount paid or payable to the indemnified
party as a result of any loss, claim, expense, damage or liability (or
actions or proceedings, whether commenced or threatened, in respect thereof),
and legal or other expenses reasonably incurred by the indemnified party in
connection with investigating or defending any such loss, claim, expense,
damage, liability, action or proceeding, in such proportion as is appropriate
to reflect the relative fault
25
of the indemnifying party on the one hand and the indemnified party on the
other. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Selling Investor and the parties'
relative intent, knowledge, access to information and opportunity to correct
or prevent such untrue statement or omission. If, however, the allocation
provided in the second preceding sentence is not permitted by applicable law,
or if the allocation provided in the second preceding sentence provides a
lesser sum to the indemnified party than the amount hereinbefore calculated,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party in such proportion as is appropriate to reflect not
only such relative fault but also the relative benefits of the indemnifying
party and the indemnified party as well as any other relevant equitable
considerations. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this paragraph (d) of Section 7.1 were
to be determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in
the preceding sentences of this paragraph (d) of Section 7.1.
(e) Indemnification and contribution similar to that
specified in this Section 7.1 (with appropriate modifications) shall be given
by the Company and the Partnership and the Selling Investors with respect to
any required registration or other qualification of securities under any
federal, state or blue sky law or regulation of any governmental authority
other than the Securities Act.
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(f) Notwithstanding any other provision of this Section
7.1, to the extent that any director, trustee, officer, partner, agent,
employee, affiliate, or other representative (current or former) of any
indemnified party is a witness in any action or proceeding, the indemnifying
party agrees to pay to the indemnified party all expenses reasonably incurred
by, or on the behalf of, the indemnified party and such witness in connection
therewith.
(g) All legal and other expenses incurred by or on behalf
of any Selling Investor in connection with investigating or defending any
loss, claim, expense, damage, liability, action or proceeding shall be paid
by the Company or the Partnership in advance of the final disposition of such
investigation, defense, action or proceeding within twenty days after the
receipt by the Company or the Partnership of a statement or statements from
the Selling Investor requesting from time to time such payment, advance or
advances. The entitlement of each Selling Investor to such payment or
advancement of expenses shall include those incurred in connection with any
action or proceeding by the Selling Investor seeking an adjudication or award
in arbitration pursuant to this Section 7.1. Such statement or statements
shall reasonably evidence such expenses incurred by the Selling Investor in
connection therewith.
(h) The termination of any proceeding by judgment, order,
settlement or conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, adversely affect the rights of any
indemnified party to indemnification hereunder or create a presumption that
any indemnified party violated any federal or state securities laws.
(i) (i) In the event that advances are not made
pursuant to this Section 7.1 or payment has not otherwise been timely made,
each indemnified party shall be entitled to seek a final
27
adjudication in an appropriate court of competent jurisdiction of the
entitlement of the indemnified party to indemnification or advances hereunder.
(ii) The Company, the Partnership and the Selling
Investors agree that they shall be precluded from asserting that the
procedures and presumptions of this Section 7.1 are not valid, binding and
enforceable. The Company, the Partnership and the Selling Investors further
agree to stipulate in any such court that the Company, the Partnership, and
the Selling Investors are bound by all the provisions of this Section 7.1 and
are precluded from making any assertion to the contrary.
(iii) To the extent deemed appropriate by the court,
interest shall be paid by the indemnifying party to the indemnified party at
a reasonable interest rate for amounts which the indemnifying party has not
timely paid as the result of its indemnification and contribution obligations
hereunder.
(j) In the event that any indemnified party is a party to
or intervenes in any proceeding in which the validity or enforceability of
this Section 7.1 is at issue or seeks an adjudication to enforce the rights
of any indemnified party under, or to recover damages for breach of, this
Section 7.1, the indemnified party, if the indemnified party prevails in
whole in such action, shall be entitled to recover from the indemnifying
party and shall be indemnified by the indemnifying party against, any
expenses incurred by the indemnified party. If it is determined that the
indemnified party is entitled to indemnification for part (but not all) of
the indemnification so requested, expenses incurred in seeking enforcement of
such partial indemnification shall be reasonably prorated among
28
the claims, issues or matters for which the indemnified party is entitled to
indemnification and for such claims, issues or matters for which the
indemnified party is not so entitled.
(k) The indemnity agreements contained in this Section 7.1
shall be in addition to any other rights (to indemnification, contribution or
otherwise) which any indemnified party may have pursuant to law or contract
and shall remain operative and in full force and effect regardless of any
investigation made or omitted by or on behalf of any indemnified party and
shall survive the transfer of any Eligible Securities by any Investor.
ARTICLE VIII
BENEFITS OF REGISTRATION RIGHTS
SECTION 8.1 Benefits of Registration Rights. Subject to the
limitations of Sections 3.1 and 4.1 hereof, each member of any Investor Group
and the Permitted Transferees of Eligible Securities of such Investor Group
may severally or jointly exercise the registration rights hereunder in such
proportion as they shall agree among themselves. No consent of any Investor
shall be required for Permitted Transferees to exercise registration rights
under this Agreement or otherwise to be entitled to the benefits of this
Agreement as applicable to all Investors. The Company agrees that monetary
damages would not compensate the Investors for a breach by the Company hereof
and the Investors shall be entitled to specific performance of this Agreement.
ARTICLE IX
MISCELLANEOUS
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SECTION 9.1 Captions. The captions or headings in this Agreement are
for convenience and reference only, and in no way define, describe, extend or
limit the scope or intent of this Agreement.
SECTION 9.2 Severability. If any clause, provision or section of
this Agreement shall be invalid or unenforceable, the invalidity or
unenforceability of such clause, provision or section shall not affect the
enforceability or validity of any of the remaining clauses, provisions or
sections hereof to the extent permitted by applicable law.
SECTION 9.3 Governing Law. This Agreement shall be construed and
enforced in accordance with the internal laws of the State of Maryland,
without reference to its rules as to conflicts or choice of laws.
SECTION 9.4 Modification and Amendment. This Agreement may not be
changed, modified, discharged or amended, except by an instrument signed by
the Company and the holder of a majority in amount of Eligible Securities;
provided, that the Company may from time to time and without the consent of
any Investor amend Exhibit A hereto to reflect the Common Units of Persons
that become Investors subject to this Agreement after the date hereof, and
may from time to time and without the consent of any Investor provide written
acknowledgments to such other Persons that such Persons are "Investors"
hereunder.
SECTION 9.5 Counterparts. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
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SECTION 9.6 Entire Agreement. This Agreement constitutes the entire
agreement and understanding among the parties and supersedes any prior
understandings and/or written or oral agreements among them respecting the
subject matter herein.
SECTION 9.7 Notices. All notices, requests, demands, consents and
other communications required or permitted to be given pursuant to this
Agreement shall be in writing and delivered by hand, by overnight courier
delivery service or by certified mail, return receipt requested, postage
prepaid. Notices shall be deemed given when actually received, which shall be
deemed to be not later than the next Business Day if sent by overnight
courier or after five (5) Business Days if sent by mail. Notice to Investors
shall be made to the address listed on the share transfer records of the
Company.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement or
caused this Agreement to be executed as of the day and year first above written.
PRIME GROUP REALTY TRUST
By:/s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Name:Xxxxxxx X. Xxxxxxxxx
Title:Executive VP
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust
its general partner
By:/s/ Xxxxxxx X. Xxxxxxxxx
-------------------------------
Name:Xxxxxxx X. Xxxxxxxxx
Title:Executive VP
H GROUP LLC
By:/s/ Xxxx X. Xxxxx
-------------------------------
Name: Xxxx X. Xxxxx
Title:President
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EXHIBIT A
H Group LLC Certf. No. 20 251,752Common Units
Certif. No. 21 5,000 Common Units
