EXHIBIT 10.1
FIRST AMENDMENT TO
TAX INDEMNIFICATION AGREEMENT
This FIRST AMENDMENT TO TAX INDEMNIFICATION AGREEMENT (this "Amendment")
is made and entered into as of March 15, 2000, by and among Xxxxxxx X. Xxxxx,
an individual, Narco Enterprises, Inc., an Illinois corporation, Xxxxx Group
Limited, a Delaware corporation, and Prime Group Realty, L.P., a Delaware
limited partnership (the "Operating Partnership").
W I T N E S S E T H:
WHEREAS, the parties hereto entered into that certain Tax
Indemnification Agreement, dated as of November 17, 1997 (the "Tax
Indemnification Agreement"), a photocopy of which is attached hereto as
EXHIBIT A, pursuant to which the Operating Partnership agreed to indemnify
the Xxxxx Indemnitees (as defined in the Tax Indemnification Agreement)
against certain tax liabilities upon the terms and subject to the conditions
set forth in the Tax Indemnification Agreement;
WHEREAS, on the date hereof, The Xxxxx Group, L.L.C., a Delaware limited
liability company and a general partner of the Operating Partnership (the
"NAC General Partner"), and the Operating Partnership have agreed to convert
the NAC General Partner's Common Units of General Partner Interest in the
Operating Partnership into an equal number of Common Units of Limited Partner
Interest in the Operating Partnership (the "Conversion") subject to the
satisfaction of the condition, among others, that the Tax Indemnification
Agreement be concurrently amended as set forth herein; and
WHEREAS, the Xxxxx Indemnitees will directly or indirectly benefit from
the Conversion and therefore desire to amend the Tax Indemnification
Agreement as set forth herein.
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. AMENDMENT. The Tax Indemnification Agreement is hereby amended by
deleting Section 4(c) thereof in its entirety and inserting in lieu thereof
the following:
"(c) to the extent that a Xxxxx Indemnitee recognizes an amount in
respect of an Income Inclusion that is indemnifiable pursuant to Section 3 of
this Agreement for any UpREIT taxable year beginning prior to the end of the
Indemnity Term, UpREIT will pay such Xxxxx Indemnitee as its indemnity
obligation under this Agreement a percentage of the amount described in
Section
4(a) based upon the period in which the relevant taxable sale or
disposition of Xxxxx Properties occurs, as follows:
Percentage of Amount
Calculated
Period Ending in Section 4(a)
---------------- --------------------
December 31, 1998 100%
December 31, 1999 90%
December 31, 2000 80%
December 31, 2001 70%
December 31, 2002 60%
December 31, 2003 50%
December 31, 2004 40%
December 31, 2005 30%
December 31, 2006 20%
December 31, 2007 10%
2. CONDITION TO EFFECTIVENESS. This Amendment shall become effective
contemporaneously with, and subject to, the approval by Prime Group Realty
Trust's common shareholders of the issuance by Prime Group Realty Trust of up
to 927,100 (subject to any applicable anti-dilution adjustments) of its
common shares of beneficial interest upon exchange of the New LP Common Units
3. REFERENCE TO AND EFFECT ON THE TAX INDEMNIFICATION AGREEMENT. The
Tax Indemnification Agreement is hereby deemed to be amended to the extent
necessary to effect the matters contemplated by this Amendment. Except as
specifically provided for hereinabove, the provisions of the Tax
Indemnification Agreement shall remain in full force and effect.
4. COUNTERPARTS. This Amendment may be executed in counterparts, all of
which together shall constitute one agreement binding on all the parties
hereto, notwithstanding that all such parties are not signatories to the
original or the same counterpart. Each party shall become bound by this
Amendment immediately upon affixing its signatures hereto.
5. SEVERABILITY. Any invalidity, illegality or unenforceability of any
provision of this Amendment shall not render invalid, illegal or
unenforceable the remaining provisions hereof.
6. HEADINGS. The headings contained herein are for convenience of
reference only and shall not be deemed to be part of this Amendment.
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7. APPLICABLE LAW. This Amendment shall be construed in accordance with
and governed by the laws of the State of Illinois without regard to the
principles of conflicts of law.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.
PRIME GROUP REALTY, L.P., a
Delaware limited partnership
By: Prime Group Realty Trust
Its: General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------
Its: Senior Vice President
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NARCO ENTERPRISES, INC., an
Illinois corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name:
-----------------------------
Its:
-----------------------------
XXXXX GROUP LIMITED, a Delaware
corporation
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name:
-----------------------------
Its:
-----------------------------
/s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx
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