Exhibit 99.1
CONSENT AND AGREEMENT
This CONSENT AND AGREEMENT (this "Agreement") is entered into as of
this 16th day of November, 2001, by and among Prime Group Realty Trust, a
Maryland real estate investment trust (the "REIT"), Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), and Cadim inc. ("Cadim"), an
affiliate of Caisse de depot et placement du Quebec ("CDP").
W I T N E S S E T H:
WHEREAS, the REIT is the Managing General Partner of the
Partnership;
WHEREAS, the Partnership and Cadim have previously entered into a
Confidentiality and Standstill Agreement dated as of July 5, 2001 (the "CSA"),
as amended by a First Amendment to Confidentiality and Standstill Agreement,
dated as of October 12, 2001 (the "First Amendment"), among the Partnership, the
REIT and Cadim (as so amended, the "Confidentiality Agreement");
WHEREAS, the Partnership, the REIT, Cadim and The Prime Group,
Inc. have entered into an Amended and Restated Support and Standstill
Agreement dated as of September 14, 2001 (the "SSA");
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WHEREAS, Primestone Investment Partners L.P., a Delaware limited
partnership (the "Borrower"), the REIT, the Partnership, The Prime Group, Inc.,
an Illinois corporation ("PGI"), and certain other investors named therein have
entered into the Registration Rights Agreement dated as of November 17, 1997 (as
the same may from time to time be amended or modified in accordance with its
terms, the "Registration Rights Agreement");
WHEREAS, by letter dated November 9, 2001 (the "Cadim Letter"),
Cadim has requested that the REIT grant certain waivers to, make certain
agreements with and acknowledgements to, Cadim for the benefit of Cadim and its
affiliates, concerning, in part, the 7,944,893 outstanding common units of
limited partner interest of the Partnership that are pledged by the Borrower
(the "Pledged Units") under (i) the Loan Agreement among the Borrower and
Vornado PS, L.L.C. and the other parties thereto, dated September 26, 2000, and
(ii) the Amended and Restated Credit Agreement among P-B Finance Ltd. and the
Borrower, dated as of September 26, 2000 (collectively, the "Loan Agreements"),
and the common shares of the REIT issuable upon exchange of such common units
(collectively with the Pledged Units, the "Pledged Shares"); and
WHEREAS, the Board of Trustees (the "Board") of the REIT and the
Committee of Independent Trustees (the "Independent Committee") of the Board
have considered the various requests contained in the Cadim Letter and have
determined that certain of such requests are advisable and in the best interests
of the REIT and its shareholders.
NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby consent and agree as follows:
1. Limited Waiver of Ownership Limit. The REIT hereby acknowledges that,
subject to the provisions of Section 2 of this Agreement, the conditions set
forth in Section 4.6 of the REIT's Articles of Amendment and Restatement, as
supplemented (as so supplemented, the "Declaration of Trust") have been
satisfied and that the "Ownership Limit" (as defined in the Declaration of
Trust) is waived with respect to Cadim or CDP and any affiliate of Cadim or CDP
(other than any "individual" for purposes of Section 542(a)(2) of the Internal
Revenue Code of 1986, as amended) (x) that is controlled by Cadim or CDP and (y)
in which Cadim or CDP own at least 75% of the outstanding equity interest
(collectively, the "Cadim Entities") (but not with respect to any transferees or
purported transferees of the Cadim Entities) by the Board to the extent and only
to the extent set forth in this Agreement, the Excepted Holder Certificate
delivered by Cadim on the date hereof and attached hereto as Exhibit A and the
Resolutions of the Board attached hereto as Exhibit B (the "Board Resolutions").
Accordingly, and subject to the foregoing, the REIT hereby confirms that it has
granted a waiver of the Ownership Limit as it applies to the Cadim Entities to
the extent, and only to the extent, necessary to allow the Cadim Entities to
become the beneficial owners of all or a portion of the Pledged Shares. Nothing
contained herein shall be deemed as a limitation on any Cadim Entity's right to
transfer or assign its interest in the loans pursuant to the Loan Agreements;
provided, that any assignee or transferee of any such interest shall be subject
to the Ownership Limit unless such assignee or transferee shall have obtained a
valid waiver of the Ownership Limit from the REIT.
2. Cadim Representation, Warranty and Covenant. Notwithstanding anything
in this Agreement, the Excepted Holder Certificate or the Board Resolutions to
the contrary, Cadim hereby represents and warrants to and covenants for the
benefit of the REIT that, neither it nor any of the Cadim Entities or their
affiliates currently own or will directly or indirectly acquire or own any
interest in any of the REIT's or the Partnership's equity securities, without
the prior written approval of the REIT, other than the Pledged Shares (or a
portion thereof). The benefits to the Cadim Entities contained in this Agreement
and the Board Resolutions shall be null and void and this Agreement and the
Board Resolutions shall be revocable and subject to modification by the Board,
in each case in the event the foregoing representation, warranty and covenant is
breached; provided, however, that the foregoing representation, warranty and
covenant shall not be breached as the result of (i) the unknowing and indirect
acquisition by any of the Cadim Entities of an interest in an immaterial number
of the REIT's or the Partnership's securities if such Cadim Entity causes the
disposition of such interest promptly after it becomes aware of the consummation
of such indirect acquisition or (ii) the independent ownership or acquisition by
trustees or officers of any of the Cadim Entities of an immaterial number of
equity securities of the REIT or the Partnership for their own personal account.
3. Maryland Law Matters. The REIT hereby represents, warrants and agrees,
subject to the second sentence of the foregoing Section 2, that, pursuant to
Section 3-603(c) of the Maryland Business Combination Act (the "MBCA") set forth
in the Maryland General Corporation Law, any "business combination" (as that
term is defined in the MBCA) of the REIT with any of the Cadim Entities (or any
affiliate thereof) has been exempted from the provisions of Section 3-602 of the
MBCA, provided that the business combination is first approved by the Board,
including approval by a majority of the members of the Board who are not
"affiliates" or "associates" (as each such term is defined in the MBCA) of the
Cadim Entities (or any affiliate thereof). Notwithstanding the foregoing and
notwithstanding Section 3-601(j)(3) of the MBCA, each of the Cadim Entities will
be an "interested stockholder" (as that term is defined in the MBCA) of the REIT
if and at all times that it is an "interested stockholder" of the REIT within
the definition thereof set forth in the MBCA.
4. Confidentiality Agreement and SSA. The REIT and the Partnership hereby
grant a consent under the Confidentiality Agreement to permit the acquisition by
the Cadim Entities of all or part of the Pledged Shares either directly or by
virtue of purchasing the Loan Agreements or a participation therein. In
addition, and without in any way otherwise releasing Cadim or any of its
affiliates from their obligations under the Confidentiality Agreement and the
SSA, the REIT and the Partnership hereby acknowledge and agree (i) that the
Cadim Entities may engage in discussions with, or may at some point entertain
the possibility of a joint proposal together with, Vornado Realty Trust (or
Vornado Realty Trust and one or more of its control affiliates), regarding a
possible strategic transaction involving the Partnership and the REIT (a
"Possible Transaction"), and may act together in concert for such purpose, and
as a result may be, or may be deemed to be, a "group" under the Exchange Act of
1934, as amended (the "Exchange Act"), so long as none of such discussions,
exchanges of views or concerted activities regarding a possible proposal of a
Possible Transaction require or result in any public filing or other public
disclosure of specific discussions, specific proposals or specific concerted
activities relating to a Possible Transaction pursuant to Regulation 13D
promulgated under the Exchange Act, or otherwise, and (ii) that any such
discussions, exchanges of views, concerted activities or the formation of a
"group" for the purposes described above in this Section 4 shall not violate the
terms of the Confidentiality Agreement, including the provisions of Section 2 of
the First Amendment (it being further understood that public disclosure on
Schedule 13D by any of the Cadim Entities or Vornado Realty Trust (A) that such
parties are, or may be deemed to be, a "group" under the Exchange Act, by virtue
of their joint exercise of remedies under the Loan Agreements to obtain
beneficial ownership of the Pledged Shares (and related activities) or (B) that
such parties may in the future make a proposal regarding a Possible Transaction,
shall not violate the terms of the Confidentiality Agreement, including the
provisions of Section 2 of the First Amendment, so long as such disclosure(s) do
not include specific proposals or plans to make specific proposals); provided,
that none of the Cadim Entities may provide any "Evaluation Material" (as
defined in each of the Confidentiality Agreement and the SSA) to Vornado or any
of its affiliates, agents, advisors, etc., unless Vornado first executes and
delivers to the REIT a confidentiality and standstill agreement reasonably
acceptable to the REIT.
5. Exchange of Partnership Units. In the event that any Cadim Entity
becomes the beneficial owner of any of the Pledged Units, notwithstanding the
provisions of the Partnership Agreement, the REIT and Partnership shall cause
the exchange of all such Pledged Units for common shares of the REIT for which
such Pledged Units are then exchangeable within five business days following the
REIT and Partnership's receipt of written notice from or on behalf of any Cadim
Entity of such acquisition (it being understood that such acquisition notice
shall contain in substance the information and request that is otherwise
required in an "Exchange Exercise Notice" (as defined in Exhibit C to the
Partnership Agreement)) and shall be accompanied by appropriate evidence of
beneficial ownership by the applicable Cadim Entity of such Pledged Units
together with the physical certificate(s) representing the applicable Pledged
Units.
6. Registration Rights Agreement. Each of the REIT and the Partnership
agrees, that the Cadim Entities, to the extent they own any of the Pledged
Shares, shall be entitled to require and enforce the performance of all actions
and things required to be performed by the REIT or the Partnership under the
Registration Rights Agreement and shall be entitled to all rights thereunder to
which the Borrower is entitled. The REIT agrees that as promptly as possible
after the date hereof, the REIT will amend the prospectus constituting part of
the shelf registration statement filed pursuant to Article IV of the
Registration Rights Agreement to include the applicable Cadim Entity and/or any
permitted subsequent holder of the Pledged Shares as a selling shareholder under
such Registration Rights Agreement and that the REIT will continue to include
such Cadim Entity, and/or any subsequent permitted holder of the Pledged Shares
as such a selling shareholder under the Registration Rights Agreement for so
long as any Cadim Entity may be entitled to exercise rights under the
Registration Rights Agreement in accordance with its terms as modified hereby.
7. The Board Resolutions. The Board Resolutions were adopted by the Board
on November 14, 2001, and have not been amended, modified or rescinded and
remain in full force and effect as of the date of this Agreement. Except as set
forth in the foregoing Section 2, neither the Board nor the REIT shall, without
the prior written consent of the relevant Cadim Entities, allow the Board
Resolutions to be amended, modified or rescinded by the Board in any manner
which adversely affects any of the relevant Cadim Entities' rights under this
Agreement and the Board Resolutions.
8. Miscellaneous.
(a) No Waiver; Amendments. No failure on the part of any party
to this Agreement to exercise, no delay in exercising, and no course of dealing
with respect to, any right or remedy hereunder will operate as a waiver thereof,
nor will any single or partial exercise of any right or remedy hereunder
preclude any other further exercise of any other right or remedy. This Agreement
may not be amended, supplemented or modified except by written agreement of all
of the parties hereto.
(b) Confidentiality. Subject to the provisions of Section 4
hereof, except as otherwise required by applicable law or the rules or
regulations of any securities exchange on which the securities of such party or
any affiliate of such party are listed or traded, each of the parties hereto
agrees that it and its affiliates shall not issue or cause the publication of
any press release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party hereto,
and in such event disclosure is required, such party shall, prior to making such
disclosure, inform the other party of such proposed disclosure and reasonably
cooperate with such other party regarding the proposed content of such
disclosure.
(c) Notices. All notices and other communications required
under the terms and provisions hereof shall be in writing and shall be
addressed:
If to the REIT and/or the Partnership:
c/o Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx and Xxxxxxx X. Xxxxxxxxx
Telecopy No.: (000) 000-0000 and (000) 000-0000
With copies to:
Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
And to:
Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxxxxx
Xxxxx X. Black
Telecopy No.: (000) 000-0000
Or if to The Cadim Entities:
Cadim inc.
000 Xxxxxx Xxxxxxxx
Xxxxx 0000
X.X. Xxx 000
Xxxxxxxx Xxxxxx X0X0X0
Attn.: Xxxxx Xxxxxx
Telecopy No.: (000) 000-0000
With a copy to:
Cadim inc.
000 Xxxxxx Xxxxxxxx
Xxxxx 0000
X.X. Xxx 000
Xxxxxxxx Xxxxxx X0X0X0
Attn.: Xxxxxx Xxxxxx
Telecopy No.: (000) 000-0000
And to:
Xxxxx, Xxxxx & Xxxxx
000 X. XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx
Telecopy No.: (000) 000-0000
Or at such other place as any party may hereafter designate to
the other party hereto in writing. Any notice under this Agreement to the REIT,
Partnership or the Cadim Entities shall be in writing and sent (A) by facsimile
transmission (provided a copy of such notice is also sent on the same day by one
of the methods set forth in the following clauses (B) or (C)), or (B) by
registered or certified mail with return receipt requested (postage paid), or
(C) by a recognized overnight delivery service with charges prepaid. Any notice
under this Agreement to any party shall be deemed given only when received or
when delivery is refused or not able to be made because such party has moved
without giving notification to the other party pursuant to this Section 8(c) of
such party's new address.
(d) Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the REIT and the Partnership and their
respective successors and assigns. This Agreement shall be binding upon and
inure to the benefit of the Cadim Entities; provided, however, that the Cadim
Entities' rights, waivers, exemptions and other benefits under this Agreement
shall not be assignable to any third party and any attempted assignment shall be
null and void.
(e) Governing Law. This Consent and Agreement shall be
governed by and construed and enforced in accordance with the laws of the
State of Maryland without regard to conflicts of laws provisions thereof.
(f) Business Day. "Business Day" means, for purposes of this
Agreement, any day other than a Saturday, Sunday, or other day on which
commercial banks in Chicago, Illinois are obligated or permitted to be closed.
(g) Counterparts. This Agreement may be executed in separate
counterparts, each of which shall be deemed to be a full and complete copy of
this Agreement.
[signature page follows]
IN WITNESS WHEREOF, the undersigned, have executed this Consent and
Agreement as of the date set forth in the first paragraph of this Consent and
Agreement.
OPERATING PARTNERSHIP:
PRIME GROUP REALTY, L.P.
a Delaware limited partnership
By: Prime Group Realty Trust,
a Maryland real estate
investment trust,
its general partner
By: /s/Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
---------------------------
Title: Executive Vice President,
General Counsel & Secretary
TRUST:
PRIME GROUP REALTY TRUST,
a Maryland real estate investment
Trust
By: /s/Xxxxx X. Xxxxxxx
--------------------------
Name: Xxxxx X. Xxxxxxx
Title: Executive Vice President,
General Counsel & Secretary
CADIM:
CADIM INC.
By:/s/ X. Xxxxxxxxx
-----------------------
Name X. Xxxxxxxxx
Title: Vice President
By:/s/ X. Xxxxxxxx
-----------------------
Name: X. Xxxxxxxx
Title: Vice President
