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: ▇▇▇.▇▇▇.▇▇▇. ANY SUCH TENDER OFFER STATEMENT AND
RELATED MATERIALS MAY ALSO BE OBTAINED FOR FREE BY DIRECTING SUCH REQUESTS
TO CADIM INC. AT ▇▇▇-▇▇▇-▇▇▇▇.
AMENDED AND RESTATED SUPPORT AND STANDSTILL AGREEMENT
This AMENDED AND RESTATED SUPPORT AND STANDSTILL AGREEMENT (this
"Agreement") is entered into as of this 30th day of August, 2001 by and among
CADIM INC. (together with its affiliates, "Cadim"), THE PRIME GROUP, INC.
("PGI"), PRIME GROUP VI, L.P. ("PLP"), PRIMESTONE INVESTMENT PARTNERS, L.P.
("Primestone"), Prime Group Limited Partnership ("Prime LP"), PG/Primestone, LLC
("PGLLC") and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇" and, together with PGI, PLP,
Primestone, Prime LP and PGLLC, the "PGI Parties").
WHEREAS, Cadim and the PGI Parties have entered into a Memorandum of
Understanding, dated as of August 22, 2001 (the "Original MOU"), related to
pursuing a potential business combination transaction with Prime Group Realty
Trust ("PGE"); and
WHEREAS, in connection with entering into the Original MOU, Cadim and
the PGI Parties entered into that certain Support and Standstill Agreement dated
as of August 23, 2001 (the "Original PGI SSA"); and
WHEREAS, the Original MOU has been amended and restated by that certain
Amended and Restated Memorandum of Understanding dated as of August 30, 2001
(the "MOU") among Cadim and the PGI Parties; and
WHEREAS, the MOU contemplates that the parties will enter into this
Agreement (all capitalized terms not otherwise defined in this Agreement have
the meaning given to them in the MOU).
NOW, THEREFORE, in consideration of the foregoing, Cadim and the PGI
Parties do hereby agree as follows:
1. Implementation of Proposed Transaction; Due Diligence. Cadim and
the PGI Parties will promptly commence good faith negotiations concerning the
implementation of the business combination transaction summarized in the MOU
(the "Proposed Transaction"), including the preparation and negotiation of the
Transaction Documents to which one or more of the PGI Parties is a party. The
PGI Parties shall promptly provide Cadim with all reasonable due diligence
materials concerning a to be formed limited liability company, which will be a
private company initially controlled by PGI, which will own the entities that
own the development sites located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and all related assets including
its development personnel ("Residential Newco"), and each of the PGI Parties and
all of their respective properties, other assets, obligations and liabilities,
as Cadim may reasonably request.
2. Confidentiality. Cadim agrees that (a) all information regarding
Residential Newco and the PGI Parties 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
Representatives (as defined below) who need to know such information for the
purpose of assisting Cadim in evaluating the Proposed Transaction (it being
understood that such Representatives will be informed by Cadim of the contents
of this Agreement and that, by receiving such information, such Representatives
are agreeing to be bound by this Agreement). In any event, Cadim shall be
responsible for any breach of this Agreement by any of such Representatives. 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 the PGI Parties or any of their affiliates or any of 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 the PGI Parties to keep such information confidential.
For purposes hereof, "Representatives" means a person'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 the PGI Parties 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 any party to this
Agreement with respect to the Proposed Transaction, upon the written request of
the PGI Parties, Cadim will promptly redeliver or cause to be redelivered to the
PGI Parties all copies of the Evaluation Materials furnished to or held by Cadim
hereunder or destroy such materials, and destroy or cause to be destroyed all
notes, memoranda, schedules, analyses or compilations relating thereto or based
thereon prepared by Cadim.
3. Exclusivity and Standstill. Beginning on the date of this
Agreement and continuing, subject to the two last sentences of this
section, until the earliest to occur of (A) the date that the exclusivity
and standstill provision contained in paragraph 3 of the support and
standstill agreement executed with PGE and Prime Group Realty, L.P.
("PGLP") on the date hereof (the "PGE SSA") expires, (B) an earlier
termination of the MOU by Cadim, (C) five (5) business days after
negotiations between Cadim and the PGI Parties, on the one hand, and PGE,
on the other hand, terminate, or (D) such other date as the parties may
mutually agree in writing (such period, the "Exclusivity Period"), while
Cadim conducts its due diligence relating to PGE and its operating
partnership, PGLP, Residential Newco, and the PGI Parties and in
consideration of the substantial time, effort and expense that Cadim will
undertake, each of the PGI Parties, jointly and severally, agrees (a) that
it shall not, and shall use its best efforts to ensure that its affiliates
or Representatives 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 (i)
the refinancing of the Prudential Loan or the Vernado Loan, any loans
similar to the Cadim Residential Newco Loan, the Cadim PGI Loan or the
Cadim Mezzanine Loan or any similar financing or transaction (any such
proposal or offer being hereinafter referred to as a "Refinancing
Proposal") or (ii) a Transaction (as hereafter defined) involving PGE,
PGLP, any PGI Party or any of their affiliates, other than a Transaction
among Cadim, PGE, PGLP, the PGI Parties and their respective shareholders
and affiliates as contemplated by the MOU (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 a Refinancing
Proposal or an Acquisition Proposal, or otherwise facilitate any effort or
attempt to make or implement a Refinancing Proposal or an Acquisition
Proposal or take any other action which may be reasonably expected to lead
to any Refinancing Proposal or Acquisition Proposal; (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 or to provide any further due
diligence materials and (c) that it shall not, and shall use its best
efforts to ensure that its affiliates or Representatives shall not,
acquire, directly or indirectly, any shares of beneficial interest of PGE
or units in PGLP (whether by way of purchase, exercise of option, transfer
or otherwise, including, without limitation, from an affiliate) except in
connection with the Offer and the Merger as contemplated by the MOU;
provided, however, that this Exclusivity provision shall not restrict
Primestone from (i) having discussions with Prudential solely regarding the
Prudential Loan or (ii) having discussions with Vornado solely regarding
Vornado's right of first offer in connection with the Cadim Mezzanine Loan.
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Notwithstanding the foregoing, Cadim and PGI agree to discuss the
circumstances under which the PGI Parties may consider a Refinancing
Proposal with a third party (but not an Acquisition Proposal) in the event
that the PGE SSA is not executed. A "Transaction" means a merger,
acquisition, tender offer, exchange offer, consolidation or similar
business combination transaction involving, or any purchase of all or any
significant portion of the assets or any equity securities of, PGE, PGLP,
any PGI Party or any subsidiary of any of them, or any other sale,
dividend, split, reorganization, recapitalization, restructuring, spin-off
or other disposition of equity securities of PGE, PGLP, any PGI Party or
any subsidiary of any of them or any similar transaction involving,
directly or indirectly, PGE, PGLP, any PGI Party or any subsidiary of any
of them; provided, that a Transaction shall not include a purchase, sale or
other transaction involving assets owned by a PGI Party or any subsidiary
of a PGI Party which assets are not related to shares or units of PGE or
PGLP or assets of Residential Newco. Cadim shall provide a written notice
to the PGI Parties on or prior to the 30th day after the signing of a
support and standstill agreement with PGE if it intends to proceed with the
Proposed Transaction. Notwithstanding anything herein to the contrary, the
delivery of such notice shall extend the exclusivity period herein until
terminated pursuant to clauses (B), (C) or (D) above; provided Cadim has
also committed to make the Cadim Mezzanine Loan subject to the execution of
definitive documentation consistent with the MOU. In the event that Cadim
has timely delivered the Notice and the Transaction Documents are executed
with PGE, the Exclusivity Period shall continue until the closing of the
Proposed Transaction or such other period as shall be contained in the
Transaction Documents.
4. Covenants; Public Support; Voting. Each of the PGI
Parties agrees: (a) to publicly support the Offer and to provide CDP all
necessary assistance in connection with its due diligence review of PGE,
PGLP, Residential Newco and the PGI Parties, (b) concurrent with the
closing of the Offer, to convert all units in PGLP owned, directly or
indirectly, by any PGI Party or an affiliate into common shares of
beneficial interest of PGE, (c) to vote all shares of beneficial interest
of PGE, owned, directly or indirectly, by any PGI Party or an affiliate in
favor of the Merger, (d) not to participate in any competing Transaction
during the Exclusivity Period and (e) to prepare and file all necessary
documentation required by any state or federal regulatory agencies in
connection with the Proposed Transaction. In addition, Primestone agrees
not to issue any additional partnership interests to any party other than
PGLLC or PGI and each of PGI and PGLLC agrees not to sell, pledge, transfer
or otherwise dispose of any of its partnership units in Primestone to any
person, including, without limitation, an affiliate.
5. Expense Reimbursement. In addition to the break-up fee, if any,
pursuant to paragraph 6 below, the PGI Parties agree to reimburse Cadim and its
affiliates for all out-of-pocket costs incurred subsequent to the date of this
Agreement in connection with Cadim's due diligence investigation of the PGI
Parties and Residential Newco, all as contemplated by the MOU. Such
reimbursement shall be made within 30 days of Cadim submitting copies of the
invoices for such costs to PGI. The foregoing expense reimbursement provision
shall be set forth in the Transaction Documents.
6. Break-Up Fee. If any of the PGI Parties or any of their
Representatives violates paragraph 3 or paragraph 4(a), (b), (c) or (d) of
this Agreement, then, as liquidated damages for the violation of such
provisions, the PGI Parties (other than Primestone) shall pay to Cadim an
amount equal to $5,000,000. In addition, in the event that Cadim delivers
the Notice and if, after the end of the Thirty-Day Period (as defined in
the PGE SSA), but before the expiration of the Fifteen-Day Period (as
defined in the PGE SSA), PGE decides to pursue any Superior Acquisition
Proposal (as defined in the PGE SSA) with a price (or valuation) in excess
of $15.00 per common share of beneficial interest, the PGI Parties shall
pay to Cadim in cash within 5 business days of the closing of the
transaction contemplated by the Superior Acquisition Proposal, an amount
equal to 50% of the aggregate value received by the PGI Parties in excess
of $15.00 per common share of beneficial interest.
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7. No Disclosure. Without the prior written consent of the other party
neither Cadim nor any of the PGI Parties 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 Proposed Transaction or the existence or contents of this
Agreement, except for (i) disclosure to such party's Representatives as
allowed by paragraph 2 herein, (ii) any 13D filings or amendments to such
filings that any party determines it is required to make, and (iii) 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, at least one full
business day 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. Except as provided in paragraph 6 herein, 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.
[signature pages follow]
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The Parties have agreed to the terms and conditions contained in this
Support and Standstill Agreement on the day and date first written above.
The Prime Group, Inc.
By: __________________________________
Its: ________________________________
Primestone Investment Partners L.P.
By: PG/Primestone, LLC, its Managing General Partner
By: __________________________________
Its: ________________________________
PG/Primestone, LLC
By: __________________________________
Its: ________________________________
Prime Group VI, L.P.
By: PGLP, Inc., its general partner
By: __________________________________
Its: ________________________________
Prime Group Limited Partnership
By: __________________________________
Its: ________________________________
______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Cadim inc.
Per: _________________________________
Its: _________________________________
Per: _________________________________
Its: _________________________________
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