Exhibit 99.1
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
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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
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"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
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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 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
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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.
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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.
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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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