Exhibit 99.3
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 XXXXXXX X. XXXXXXX ("XXXXXXX" 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 000 Xxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxx and
000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx, 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
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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
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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
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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. 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.
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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
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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.
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
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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: /s/ XXXXXXX X. XXXXXXX
ITS: PRESIDENT
PRIMESTONE INVESTMENT PARTNERS L.P.
BY: PG/PRIMESTONE, LLC, ITS MANAGING GENERAL PARTNER
BY: THE PRIME GROUP, INC., ITS ADMINISTRATIVE MEMBER
BY: /s/ XXXXXXX X. XXXXXXX
ITS: PRESIDENT
PG/PRIMESTONE, LLC
BY: THE PRIME GROUP, INC., ITS ADMINISTRATIVE MEMBER
BY: /s/ XXXXXXX X. XXXXXXX
ITS: PRESIDENT
PRIME GROUP VI, L.P.
BY: PGLP, INC., ITS GENERAL PARTNER
BY: /s/ XXXXXXX X. XXXXXXX
ITS: PRESIDENT
PRIME GROUP LIMITED PARTNERSHIP
BY: /s/ XXXXXXX X. XXXXXXX
ITS: MANAGING GENERAL PARTNER
/s/ XXXXXXX X. XXXXXXX
XXXXXXX X. XXXXXXX
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CADIM INC.
PER: /s/ XXXXX XXXXXX
PER: /s/ XXXXXXX XXXXXXXXX
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