<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 14, 1998
REGISTRATION NO. 333-51599
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NO. 1
TO
FORM S-11
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
PRIME GROUP REALTY TRUST
(EXACT NAME OF REGISTRANT AS SPECIFIED IN GOVERNING INSTRUMENT)
77 WEST WACKER DRIVE, SUITE 3900
CHICAGO, ILLINOIS 60601
(312) 917-1300
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
---------------
MICHAEL W. RESCHKE
CHAIRMAN OF THE BOARD
PRIME GROUP REALTY TRUST
77 WEST WACKER DRIVE, SUITE 3900
CHICAGO, ILLINOIS 60601
(312) 917-1300
(NAME AND ADDRESS OF AGENT FOR SERVICE)
---------------
COPIES TO:
WAYNE D. BOBERG, ESQ. J. GREGORY MILMOE, ESQ.
BRIAN T. BLACK, ESQ. SKADDEN, ARPS, SLATE,
WINSTON & STRAWN MEAGHER & FLOM LLP
35 WEST WACKER DRIVE 919 THIRD AVENUE
CHICAGO, ILLINOIS 60601 NEW YORK, NEW YORK 10022
(312) 558-5600 (212) 735-3000
APPROXIMATE DATE OF COMMENCEMENT OF THE PROPOSED SALE OF THE SECURITIES TO
THE PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
---------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 31. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
<TABLE>
<S> <C>
SEC registration fee................................................... $42,407
NASD fee............................................................... 14,875
NYSE listing fee....................................................... 50,425
Blue Sky fees and expenses............................................. 5,000
Printing and engraving expenses........................................ *
Legal fees and expenses................................................ *
Accounting and due diligence fees and expenses......................... *
Miscellaneous.......................................................... *
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Total.............................................................. $ *
=======
</TABLE>
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*To be completed by amendment.
ITEM 32. SALES TO SPECIAL PARTIES
Not applicable.
ITEM 33. RECENT SALES OF UNREGISTERED SECURITIES
The following sets forth certain information as to all securities sold by
the Company within the last three years that were not registered under the
Securities Act of 1933, as amended (the "Securities Act"). As to all such
transactions, an exemption is claimed under Section 4(2) of the Securities
Act.
On July 21, 1997, the Company issued 100 Common Shares of beneficial
interest to Mr. Reschke for $10 per share, or an aggregate consideration of
$1,000. Such Common Shares were purchased solely for investment purposes to
facilitate the organization of the Company. Immediately following the IPO, all
of the shares so acquired by Mr. Reschke were redeemed by the Company for an
aggregate redemption price of $1,000.
Simultaneously with the IPO, the Company caused the Operating Partnership to
issue 4,497,317 Common Units to the Limited Partners in exchange for their
respective interests in the Properties and the office and industrial
development, leasing and property management business to be contributed to the
Company. In addition, the Company caused the Operating Partnership to issue
and sell 4,569,893 Common Units to the Primestone Joint Venture for
$85,000,000. Simultaneously with the IPO, the Company granted options to
purchase a total of 1,113,000 Common Shares under its Share Incentive Plan to
key executives and the Company's independent trustees.
On March 25, 1998, the Company issued and sold 2,579,994 Common Shares to
institutional investors for $19.375 per share, or an aggregate consideration
of approximately $50.0 million.
On March 31, 1998, the Company issued (i) 10,000 Common Shares to William M.
Karnes pursuant to the terms of Mr. Karnes' employment agreement with the
Company and (ii) 2,500 Common Shares to Stephen J. Nardi pursuant to the terms
of Mr. Nardi's consulting agreement with the Company.
On December 15, 1997, the Company caused the Operating Partnership to issue
251,572 Common Units, having a value of approximately $5.0 million, to a third
party in exchange for such party's rights to acquire the first mortgage loan
encumbering the office building located at 180 N. LaSalle Street in Chicago,
Illinois. In addition, on each of December 15, 1997 and January 15, February
13, March 13 and April 15, 1998, the Company caused the Operating Partnership
to issue 5,000 Common Units, having an aggregate value of approximately
$500,000, to such third party to maintain an option to purchase such third
party's second mortgage encumbering the building located at 180 North LaSalle
Street.
II-1
<PAGE>
ITEM 34. INDEMNIFICATION OF TRUSTEES AND OFFICERS
The Declaration of Trust and Bylaws authorize the Company to indemnify its
present and former trustees and officers and to pay or reimburse expenses for
such individuals in advance of the final disposition of a proceeding to the
maximum extent permitted from time to time under Maryland law. The MGCL, as
applicable to Maryland REITs, currently provides that indemnification of a
person who is a party, or threatened to be made a party, to legal proceedings
by reason of the fact that such a person is or was a trustee, officer,
employee or agent of a corporation or other firm at the request of a
corporation, or is or was serving as a trustee, officer, employee or agent of
a corporation or other firm at the request of a corporation, against
judgments, fines, penalties, amounts paid in settlement and reasonable
expenses, is mandatory in certain circumstances and permissive in others,
subject to authorization by the board of trustees, a committee of the board of
trustees consisting of two or more trustees not parties to the proceeding (if
there does not exist a majority vote quorum of the board of trustees
consisting of trustees not parties to the proceeding), special legal counsel
appointed by the board of trustees or such committee of the board of trustees,
or by the shareholders, so long as it is not established that the act or
omission of such person was material to the matter giving rise to the
proceedings and was committed in bad faith, was the result of active and
deliberate dishonesty, involved such person receiving an improper personal
benefit in money, property or services, or, in the case of criminal
proceedings, such person had reason to believe that his or her act or omission
was unlawful.
The Company's officers and trustees are also indemnified pursuant to the
Partnership Agreement and their respective employment agreements, which
agreements are filed as exhibits hereto.
The Company purchased an insurance policy which purports to insure the
officers and trustees of the Company against certain liabilities incurred by
them in the discharge of their functions as such officers and trustees, except
for liabilities resulting from their own malfeasance.
ITEM 35. TREATMENT OF PROCEEDS FROM SHARES BEING REGISTERED
Not Applicable
ITEM 36. FINANCIAL STATEMENT AND EXHIBITS.
(a) Financial Statements
Prime Group Realty Trust
Pro Forma Condensed Consolidated Financial Information (unaudited):
Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1997
Pro Forma Condensed Consolidated Statement of Operations for the year
ended December 31, 1997
Prime Group Realty Trust (the Company) and Predecessor Properties:
Report of Independent Auditors
Consolidated Balance Sheet of the Company as of December 31, 1997 and
Combined Balance Sheet of the Predecessor Properties as of December 31,
1996
Consolidated Statement of Operations of the Company for the period from
November 17, 1997 to December 31, 1997 and Combined Statements of
Operations of the Predecessor Properties for the period from January 1,
1997 to November 16, 1997 and for the years ended December 31, 1996 and
1995
Consolidated Statement of Changes in Shareholders' Equity for the period
from November 17, 1997 to December 31, 1997
Combined Statements of Changes in Predecessors' Deficit for the period from
January 1, 1997 to November 16, 1997 and for the years ended December 31,
1996 and 1995
II-2
<PAGE>
Consolidated Statement of Cash Flows of the Company for the period from
November 17, 1997 to December 31, 1997 and the Combined Statements of Cash
Flows of the Predecessor Properties for the period from January 1, 1997 to
November 16, 1997 and for the years ended December 31, 1996 and 1995
Notes to Consolidated and Combined Financial Statements
Prime Industrial Contribution Properties
Report of Independent Auditors
Combined Statements of Revenue and Certain Expenses for the period from
January 1, 1997 to September 30, 1997 (unaudited) and for the period from
March 1, 1996 to December 31, 1996
Notes to Combined Statements of Revenue and Certain Expenses
IBD Properties
Report of Independent Auditors
Combined Statements of Revenue and Certain Expenses for the period from
January 1, 1997 to September 30, 1997 (unaudited) and for the year ended
December 31, 1996
Notes to Combined Statements of Revenue and Certain Expenses
NAC Properties
Report of Independent Auditors
Combined Statements of Revenue and Certain Expenses for the period from
January 1, 1997 to September 30, 1997 (unaudited) and for the year ended
December 31, 1996
Notes to Combined Statements of Revenue and Certain Expenses
Citibank Office Plaza
Report of Independent Auditors
Statements of Revenue and Certain Expenses for the period from January 1,
1997 to September 30, 1997 (unaudited) and for the year ended December 31,
1996
Notes to Statements of Revenue and Certain Expenses
Salt Creek Office Center
Report of Independent Auditors
Combined Statements of Revenue and Certain Expenses for the period from
January 1, 1997 to September 30, 1997 (unaudited) and for the year ended
December 31, 1996
Notes to Combined Statements of Revenue and Certain Expenses
280 Shuman Boulevard
Report of Independent Auditors
Statements of Revenue and Certain Expenses for the period from January 1,
1997 to September 30, 1997 (unaudited) and for the year ended December 31,
1996
Notes to Statements of Revenue and Certain Expenses
475 Superior Avenue
Report of Independent Auditors
Statements of Revenue and Certain Expenses for the period from January 1,
1997 to September 30, 1997 (unaudited) and for the year ended December 31,
1996
Notes to Statements of Revenue and Certain Expenses
II-3
<PAGE>
Continental Office Towers:
Report of Independent Auditors
Statements of Revenue and Certain Expenses for the period from January 1,
1997 to September 30, 1997 (unaudited) and for the year ended December 31,
1997
Notes to Statements of Revenue and Certain Expenses
180 North LaSalle Street:
Report of Independent Auditors
Statements of Revenue and Certain Expenses for the period from January 1,
1997 to September 30, 1997 (unaudited) and for the year ended December 31,
1996
Notes to Statements of Revenue and Certain Expenses
2675 Mayfair:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the period from January 1,
1997 to September 30, 1997
Notes to Statement of Revenue and Certain Expenses
33 North Dearborn:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the period from January 1,
1997 to September 30, 1997
Notes to Statement of Revenue and Certain Expenses
Commerce Point:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the period from January 1,
1997 to September 30, 1997
Notes to Statement of Revenue and Certain Expenses
208 South LaSalle Street:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the year ended December 31,
1997
Notes to Statement of Revenue and Certain Expenses
122 South Michigan Avenue:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the year ended December 31,
1997
Notes to Statement of Revenue and Certain Expenses
6400 Shafer Court:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the year ended December 31,
1997
Notes to Statement of Revenue and Certain Expenses
Two Century Centre:
Report of Independent Auditors
Statement of Revenue and Certain Expenses for the year ended December 31,
1997
Notes to Statement of Revenue and Certain Expenses
All other schedules are omitted because the required information is not
applicable or the information required has been disclosed in the financial
statements and related notes included in the Prospectus.
(c) Exhibits
<TABLE>
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EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
1.1* Form of Underwriting Agreement
3.1 Articles of Amendment and Restatement of Declaration of Trust of
Prime Group Realty Trust as filed as an exhibit to the Company's
1997 Annual Report on Form 10-K and incorporated herein by reference
</TABLE>
II-4
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
3.2* Form of Articles Supplementary to the Articles of Amendment and
Restatement of Declaration of Trust of Prime Group Realty Trust
3.3 Amended and Restated Bylaws of Prime Group Realty Trust as filed as
an exhibit to the Company's 1997 Annual Report on Form 10-K and
incorporated herein by reference
3.4 Amended and Restated Agreement of Limited Partnership of Prime Group
Realty, L.P. (the "Amended and Restated Agreement of Limited
Partnership") as filed as an exhibit to the Company's 1997 Annual
Report on Form 10-K and incorporated herein by reference
3.5 Amendment No. 1 to the Amended and Restated Agreement of Limited
Partnership dated as of December 15, 1998
3.6 Amendment No. 2 to the Amended and Restated Agreement of Limited
Partnership dated as of December 15, 1998
3.7 Amendment No. 3 to the Amended and Restated Agreement of Limited
Partnership dated as of January 15, 1998
3.8 Amendment No. 4 to the Amended and Restated Agreement of Limited
Partnership dated as of February 13, 1998
3.9 Amendment No. 5 to the Amended and Restated Agreement of Limited
Partnership dated as of March 13, 1998
3.10 Amendment No. 6 to the Amended and Restated Agreement of Limited
Partnership dated as of March 25, 1998
3.11 Amendment No. 7 to the Amended and Restated Agreement of Limited
Partnership dated as of April 15, 1998
4.1 Form of Redeemable Preferred Share certificate
5.1 Opinion of Miles & Stockbridge regarding the validity of the
Redeemable Preferred Shares being registered
8.1* Opinion of Winston & Strawn regarding tax matters
10.1 Form of Indemnification Agreement between Prime Group Realty Trust
and each of its trustees as filed as an exhibit to the Company's
1997 Annual Report on Form 10-K and incorporated herein by reference
10.2 Right of First Offer Agreement dated as of November 17, 1997 between
Prime Group Realty, L.P. and The Prime Group, Inc. as filed as an
exhibit to the Company's 1997 Annual Report on Form 10-K and
incorporated herein by reference
10.3 Share Incentive Plan as filed as an exhibit to the Company's 1997
Annual Report on Form
10-K and incorporated herein by reference
10.4 Employment Agreement dated as of November 17, 1997 by and between
the Company and Michael W. Reschke as filed as an exhibit to the
Company's 1997 Annual Report on Form 10-K and incorporated herein by
reference
10.5 Employment Agreement dated as of November 17, 1997 by and between
the Company and Richard S. Curto as filed as an exhibit to the
Company's 1997 Annual Report on Form 10-K and incorporated herein by
reference
10.6 Employment Agreement dated as of November 17, 1997 by and between
the Company and W. Michael Karnes as filed as an exhibit to the
Company's 1997 Annual Report on Form 10-K and incorporated herein by
reference
10.7 Employment Agreement dated as of November 17, 1997 by and between
the Company and Jeffrey A. Patterson as filed as an exhibit to the
Company's 1997 Annual Report on Form 10-K and incorporated herein by
reference
10.8 Employment Agreement dated as of November 17, 1997 by and between
the Company and Kevork M. Derderian as filed as an exhibit to the
Company's 1997 Annual Report on Form 10-K and incorporated herein by
reference
10.9 Employment Agreement dated as of November 17, 1997 by and between
the Company and Edward S. Hadesman as filed as an exhibit to the
Company's 1997 Annual Report on Form 10-K and incorporated herein by
reference
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
10.10 Contribution Agreement dated as of October 20, 1997 by and among the
Prime Group, Inc., Prime Group Realty, L.P., Prime Group Realty
Trust, Narco River Business Center, Narco Tower Road Associates,
Olympian Office Center, Tri-State Industrial Park Joint Venture,
Carol Stream Industrial Park Joint Venture, Narco Enterprises, Inc.,
The Nardi Group Ltd., Narco Construction Inc., Nardi & Co., Nardi
Asset Management, Inc. and Nardi Architectural, Inc. as filed as an
exhibit to the Company's Registration Statement on Form S-11 No.
(333-33547) and incorporated herein by reference
10.11 Option to Purchase Partnership Interests dated as of June 17, 1994
by and between KILICO Realty Corporation, and The Prime Group, Inc.;
as amended by that certain First Amendment to Option Purchase
Partnership Interests dated as of January 21, 1997 by and between
KILICO Realty Corporation and The Prime Group, Inc.; as further
amended by that certain Second Amendment to Option to Purchase
Partnership Interests dated as of July 15, 1997 by and between
KILICO Realty Corporation and The Prime Group, Inc. as filed as an
exhibit to the Company's Registration Statement on Form S-11 No.
(333-33547) and incorporated herein by reference
10.12 Option Agreement by and between Prime Group Realty, L.P. and 300 N.
LaSalle, L.L.C. as filed as an exhibit to the Company's 1997 Annual
Report on Form 10-K and incorporated herein by reference
10.13 Registration Rights Agreement dated as of November 17, 1997 between
Prime Group Realty Trust, Prime Group Realty, L.P., Primestone
Investment Partners L.P. and the other investors named therein as
filed as an exhibit to the Company's 1997 Annual Report on Form 10-K
and incorporated herein by reference
10.14 Contribution Agreement dated as of July 8, 1997 by and among LaSalle
National Trust, N.A., not personally, but solely as Trustee under
Trust Agreement dated June 15, 1982 and known as Trust No. 10-40113-
09, LaSalle National Trust, N.A., not personally, but solely as
Trustee under Trust Agreement dated September 7, 1994 and known as
Trust No. 11-9051, LaSalle National Trust, N.A., not personally, but
solely as Trustee under Trust Agreement dated March 30, 1984 and
known as Trust No. 11-107825, LaSalle National Trust, N.A., not
personally, but solely as Trustee under Trust Agreement dated August
1, 1986 and known as Trust No. 11-1358, LaSalle National Trust,
N.A., not personally, but solely as Trustee under Trust Agreement
dated August 1, 1986 and known as Trust No. 11-1357, LaSalle
National Trust
N.A., not personally, but solely as Trustee under Trust Agreement
dated January 17, 1974 and known as Trust No. 286-34, LaSalle
National Trust, N.A., not personally, but solely as Trustee under
Trust Agreement dated October 15, 1995 and known as Trust No. 11-
9869, LaSalle National Trust, N.A., not personally, but solely as
Trustee under Trust Agreement dated December 1, 1987 and known as
Trust No. 11-2868, 310 ERA Limited Partnership, MacArthur Drive
Properties, CLE Limited Partnership, 500 Lindberg Limited
Partnership, 515 Huehl Limited Partnership, 555 Huehl Limited
Partnership, Sky Harbor Associates, 1001 Technology Way, LLC, The
Grandville Road Limited Partnership, Industrial Building and
Development Company and The Prime Group, Inc.; as amended by the
First Amendment to the Contribution Agreement dated as of August 12,
1997, by and between The Prime Group, Inc., an Illinois corporation,
and LaSalle National Trust, NA, t/u/t 10-40113-09 dated June 15,
1982; LaSalle National Trust, NA, t/u/t 11-9051 dated September 7,
1994; LaSalle National Trust, NA, t/u/t 11-107825 dated March 30,
1984; LaSalle National Trust, NA, t/u/t 11-1358 dated August 1,
1986; LaSalle National Trust, NA, t/u/t 11-1357 dated August 1,
1986; LaSalle National Trust, NA, t/u/t 286-34 dated January 17,
1974; LaSalle National Trust, NA, t/u/t 11-9869 dated October 15,
1995; and LaSalle National Trust, NA, t/u/t 11-2868 dated December
1, 1987 as filed as an exhibit to the Company's Registration
Statement on Form S-11 (No. 333-33547) and incorporated herein by
reference
10.15 Environmental Remediation and Indemnification Agreement dated as of
November 17, 1997 by and between Prime Group Realty, L.P. and The
Prime Group, Inc. as filed as an exhibit to the Company's 1997
Annual Report on Form 10-K and incorporated herein by reference
10.16 Formation Agreement dated as of November 17, 1997 between Prime
Group Realty Trust, Prime Group Realty, L.P., Prime Group Realty
Services, Inc., Prime Group Limited Partnership and Jeffrey A.
Patterson as filed as an exhibit to the Company's 1997 Annual Report
on Form 10-K and incorporated herein by reference
</TABLE>
II-6
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
10.17 Asset Purchase Agreement dated as of November 17, 1997 by and among
Continental Offices, Ltd., Continental Offices Ltd. Realty and Prime
Group Realty, L.P. as filed as an exhibit to the Company's
Registration Statement on Form S-11 (No. 333-33547) and incorporated
herein by reference.
10.18 Non-Compete Agreement dated as of November 17, 1997 by and among
Prime Group Realty Trust, The Prime Group, Inc. and Michael W.
Reschke as filed as an exhibit to the Company's 1997 Annual Report
on Form 10-K and incorporated herein by reference
10.19 Option Agreement dated as of August 4, 1997 by and between
Lumbermens Mutual Casualty Company and The Prime Group, Inc. as
filed as an exhibit to the Company's Registration Statement on Form
S-11 (No. 333-33547) and incorporated herein by reference
10.20 Amended and Restated Agreement dated as of July 15, 1997 by and
among Kemper Investors Life Insurance Company, Federal Kemper Life
Assurance Company, KILICO Realty Corporation, FKLA Realty
Corporation, KR 77 Fitness Center, Inc., 77 West Wacker Limited
Partnership, K/77 Investors Limited Partnership, The Prime Group,
Inc., Prime Group Limited Partnership and Prime 77 Fitness Center,
Inc. as filed as an exhibit to the Company's Registration Statement
on Form S-11 (No. 333-33547) and incorporated herein by reference
10.21 Agreement dated as of July 18, 1997 by and among The Prime Group,
Inc., KILICO Realty Corporation, KFC Portfolio Corp. and Kemper
Investors Life Insurance Company as filed as an exhibit to the
Company's Registration Statement on Form S-11 (No. 333-33547) and
incorporated herein by reference
10.22 Series A Convertible Preferred Securities Purchase Agreement dated
as of November 11, 1997 by and between Security Capital Preferred
Growth Incorporated and Prime Group Realty Trust as filed as an
exhibit to the Company's 1997 Annual Report on Form 10-K and
incorporated herein by reference
10.23 Tax Indemnification Agreement by and between Prime Group Realty,
L.P. and Edward S. Hadesman Trust dated May 22, 1992,
Grandville/Northwestern Management Corporation, Carolyn B. Hadesman
Trust dated May 21, 1992, Lisa Hadesman 1991 Trust, Cynthia Hadesman
1991 Trust, Tucker B. Magid, Francis Shubert, Grandville Road
Property, Inc., H R Trust, Edward E. Johnson and Sky Harbor
Associates as filed as an exhibit to the Company's 1997 Annual
Report on Form 10-K and incorporated herein by reference
10.24 Tax Indemnification Agreement dated as of November 17, 1997 by and
between Prime Group Realty, L.P., Stephen J. Nardi, Narco
Enterprises, Inc. and Nardi Group Limited as filed as an exhibit to
the Company's 1997 Annual Report on Form 10-K and incorporated
herein by reference
10.25 Indemnification Agreement dated as of November 17, 1997 by and
between The Prime Group, Inc. and Prime Group Realty, L.P. as filed
as an exhibit to the Company's 1997 Annual Report on Form 10-K, as
amended by the Company's Form 10-K/A as filed with the Commission on
April 27, 1998 and incorporated herein by reference
10.26 Agreement to Contribute dated as of August 12, 1997 by and between
Tucker B. Magid and The Prime Group, Inc. as filed as an exhibit to
the Company's Registration Statement on Form S-11 (No. 333-33547)
and incorporated herein by reference
10.27 Agreement to Contribute dated as of August 12, 1997 by and between
Frances S. Shubert and The Prime Group, Inc. as filed as an exhibit
to the Company's Registration Statement on Form S-11 (No. 333-33547)
and incorporated herein by reference
10.28 Subscription Agreement by and between Prime Group Realty, L.P. and
Primestone as filed as an exhibit to the Company's Registration
Statement on Form S-11 (No. 333-33547) and incorporated herein by
reference
10.29 Credit Facility dated as of November 11, 1997 between Prime Group
Realty Trust, BankBoston, N.A. and Prudential Securities Credit
Corporation (the "Credit Facility") as filed as an exhibit to the
Company's 1997 Annual Report on Form 10-K and incorporated herein by
reference
10.30 Amendment No. 1 to the Credit Facility dated as of December 15, 1998
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
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<C> <S>
10.31 Amendment No. 2 to the Credit Facility dated as of March 16, 1998
10.32 Amendment No. 3 to the Credit Facility dated as of March 30, 1998
10.33 Amendment No. 4 to the Credit Facility dated as of April 24, 1998
10.34 Underwriting Agreement dated as of November 11, 1997 between Prime
Group Realty Trust, Prudential Securities Incorporated, Friedman,
Billings, Ramsey & Co., Inc., Smith Barney Inc. and Morgan Keegan &
Company, Inc., as representatives of the other underwriters as filed
as an exhibit to the Company's 1997 Annual Report on Form 10-K and
incorporated herein by reference
10.35 Purchase Agreement dated as of March 25, 1998 between Prime Group
Realty Trust and the purchasers thereto
10.36 Registration Rights Agreement dated as of March 25, 1998 between
Prime Group Realty Trust and the other parties thereto
10.37 Registration Rights Agreement dated as of November 17, 1997 between
Prime Group Realty Trust and Security Capital Preferred Growth
Incorporated as filed as an exhibit to the Company's Annual Report
on Form 10-K, as amended by the Company's Form 10-K/A as filed with
the Commission on April 27, 1998 and incorporated herein by
reference
10.38 Tag-along Agreement dated as of November 17, 1997 between Prime
Financing, L.P., Prime Group Limited Partnership, Prime Group II,
L.P., Prime Group III, L.P., Prime Group IV, L.P., Prime Group V,
L.P., The Prime Group, Inc., PG/Primestone, L.L.C. and Security
Capital Preferred Growth Incorporated as filed as an exhibit to the
Company's 1997 Annual Report on Form 10-K, as amended by Company's
Form 10-K/A as filed with the Commission on April 27, 1998 and
incorporated herein by reference
10.39 Placement Fee Letter dated as of November 17, 1997 between Prime
Group Realty Trust, Prime Group Realty, L.P., as Placement Agent,
and Security Capital Markets Group Incorporated as filed as an
exhibit to the Company's 1997 Annual Report on Form 10-K, as amended
by Company's Form 10-K/A as filed with the Commission on April 27,
1998 and incorporated herein by reference
10.40 Registration Rights Agreement dated as of December 15, 1997 between
Prime Group Realty Trust and certain holders of Common Units of
Prime Group Realty, L.P. as filed as an exhibit to the Company's
1997 Annual Report on Form 10-K and incorporated herein by reference
10.41 Limited Liability Company Agreement of Prime/Beitler Development
Company, L.L.C. dated as of March 30, 1998 between Penny Beitler
L.L.C. and Prime Group Realty, L.P.
12.1* Computation of Ratios of Earnings to Fixed Charges and Preferred
Share Distributions
21.1 Subsidiaries of Registrant as filed as an exhibit to the Company's
1997 Annual Report on Form 10-K and incorporated herein by reference
23.1 Consent of Miles & Stockbridge (included in Exhibit 5.1)
23.2* Consent of Winston & Strawn (included in Exhibit 8.1)
23.3+ Consent of Ernst & Young LLP
23.4+ Consent of Rosen Consulting Group
24.1+ Powers of Attorney (included on signature page in Part II of the
initial filing)
99.1* Report of Rosen Consulting Group
</TABLE>
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* To be filed by amendment.
+Previously filed.
ITEM 37. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to trustees, officers and controlling persons of the
registrant pursuant to the provisions described under Item 33
II-8
<PAGE>
above, or otherwise, the registrant has been advised that in the opinion of
the Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a trustee, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
trustee, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act of 1933 and will be
governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-11 and has duly caused this
amendment to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Chicago, State of
Illinois, on May 14, 1998.
Prime Group Realty Trust
/s/ Richard S. Curto
By: __________________________________
Richard S. Curto
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended, this
amendment to registration statement has been signed below on May 14, 1998 by
the following persons in the capacities indicated.
SIGNATURE TITLE
Chairman of the Board,
Michael W. Reschke* Trustee
- -------------------------------------
Michael W. Reschke
/s/ Richard S. Curto President and Chief Executive
- ------------------------------------- Officer (principal executive
Richard S. Curto officer), Trustee
Executive Vice President
William M. Karnes* andChief Financial
- ------------------------------------- Officer(principal financial
William M. Karnes officer)
Senior Vice President--
Roy P. Rendino* Finance and Chief Accounting
- ------------------------------------- Officer (principal
Roy P. Rendino accounting officer)
II-10
<PAGE>
SIGNATURE TITLE
Trustee
Jacque M. Ducharme*
- -------------------------------------
Jacque M. Ducharme
Trustee
Stephen J. Nardi*
- -------------------------------------
Stephen J. Nardi
Trustee
Christopher J. Nassetta*
- -------------------------------------
Christopher J. Nassetta
Trustee
Thomas J. Saylak*
- -------------------------------------
Thomas J. Saylak
Trustee
James R. Thompson*
- -------------------------------------
James R. Thompson
/s/ Richard S. Curto
*By: ___________________________
Richard S. Curto, Attorney-in-Fact
II-11
<PAGE>
Exhibit 3.5
AMENDMENT NO. 1 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF PRIME GROUP REALTY, L.P.
This AMENDMENT NO. 1 TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PRIME GROUP REALTY, L.P. (this "Amendment") is made as of
December 15, 1997 by Prime Group Realty Trust, a Maryland real estate investment
trust ("PGRT"), as the Managing General Partner of Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), and on behalf of the other
Partners (as hereinafter defined) of the Partnership. Capitalized terms used but
not otherwise defined herein shall have the meanings given to such terms in the
Amended and Restated Agreement of Limited Partnership of the Partnership, dated
as of November 17, 1997, by and among PGRT and the other parties signatory
thereto (the "Limited Partnership Agreement").
W I T N E S S E T H:
WHEREAS, on December 15, 1997, 600,000 Common Shares (the "Over-Allotment
Shares") were issued and sold by PGRT to the Underwriters (as defined in the
Underwriting Agreement) pursuant to the Underwriters' over-allotment option
granted under the Underwriting Agreement;
WHEREAS, pursuant to Section 4.3.D. of the Limited Partnership Agreement,
(i) PGRT has made a Capital Contribution of the net proceeds from the issuance
and sale of the Over-Allotment Shares, and (ii) PGRT shall receive Common Units
corresponding to such Over-Allotment Shares;
WHEREAS, the Partners desire to amend the Limited Partnership Agreement to
reflect the increase in outstanding Common Units as a result of the issuance of
600,000 Common Units to PGRT in connection with the issuance and sale by PGRT of
the Over-Allotment Shares to the Underwriters; and
WHEREAS, Section 2.4 of the Limited Partnership Agreement authorizes, among
other things, the Managing General Partner, as true and lawful agent and
attorney-in-fact, to execute, swear to, acknowledge, deliver, file and record
this Amendment on behalf of each Partner that has executed the Limited
Partnership Agreement and on behalf of the Partnership.
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Issuance of Common Units Pursuant to Section 4.3.D. of the
Limited Partnership Agreement. The net proceeds from the issuance and sale of
the Over-Allotment Shares have been received by the Partnership as a Capital
Contribution from PGRT.
<PAGE>
The Partnership hereby issues 600,000 Common Units of General Partner Interest
to PGRT, pursuant to Section 4.3.D. of the Limited Partnership Agreement, which
shall correspond to the Over-Allotment Shares. Such Common Units of General
Partner Interest issued pursuant to this Section 1 shall not be evidenced by a
Common Unit certificate unless hereafter requested by PGRT.
Section 2. Amendment of Exhibit A to Limited Partnership Agreement. Exhibit
A to the Limited Partnership Agreement is hereby amended and restated to reflect
the aforementioned change(s) by deleting Exhibit A attached thereto in its
entirety, and by attaching in lieu thereof a replacement exhibit in the form of
Exhibit A attached hereto. From and after the effectiveness of this Amendment,
the amended and restated Exhibit A attached hereto shall be the only Exhibit A
to the Limited Partnership Agreement, unless and until it is hereafter further
amended.
Section 3. Reference to and Effect on the Limited Partnership Agreement.
A. The Limited Partnership Agreement is hereby deemed to be amended to
the extent necessary to effect the matters contemplated by this Amendment.
Except as specifically provided for herein above, the provisions of the Limited
Partnership Agreement shall remain in full force and effect.
B. The execution, delivery and effectiveness of this Amendment shall
not operate (i) as a waiver of any provision, right or obligation of the
Managing General Partner, the other General Partner or any Limited Partner under
the Limited Partnership Agreement except as specifically set forth herein or
(ii) as a waiver or consent to any subsequent action or transaction.
Section 4. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
[signature page follows]
-2-
<PAGE>
AMENDMENT NO. 1 TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
MANAGING GENERAL PARTNER:
------------------------
PRIME GROUP REALTY TRUST, a
Maryland real estate investment trust
By: /s/ W. Michael Karnes
-------------------------------
Name: W. Michael Karnes
-----------------------------
Title: Chief Financial Officer
----------------------------
LIMITED PARTNERS:
----------------
Each Limited Partner hereby executes
this Amendment to the Limited
Partnership Agreement.
By: PRIME GROUP REALTY TRUST, a
Maryland real estate investment
trust, as attorney-in-fact
By: /s/ W. Michael Karnes
---------------------------
Name: W. Michael Karnes
-------------------------
Its: Chief Financial Officer
--------------------------
-3-
<PAGE>
EXHIBIT A*
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 12,980,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
General Partner
- ---------------
The Nardi Group, L.L.C 927,100 $18,542,000
c/o Stephen J. Nardi
4100 Madison Street
Hillside, IL 60162
Limited Partners
- ----------------
Edward S. Hadesman 388,677 $ 7,773,540
Trust Dated May 22, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Grandville/Northwestern 9,750 $ 195,000
Management Corporation
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Carolyn B. Hadesman 54,544 $ 1,090,880
Trust Dated May 21, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
</TABLE>
- ------------
* As amended by Amendment No. 1 to the Amended and Restated Agreement of
Limited Partnership of Prime Group Realty, L.P.
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Limited Partners
- ----------------
Lisa Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Cynthia Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Tucker B. Magid 33,085 $ 661,700
545 Ridge Road
Highland Park, IL 60035
Frances S. Shubert 28,805 $ 576,100
511 Lynn Terrace
Waukegan, IL 60085
Grandville Road Property, Inc. 7,201 $ 144,020
c/o Ms. Frances S. Shubert
511 Lynn Terrace
Waukegan, IL 60085
Sky Harbor Associates 62,149 $ 1,242,980
c/o Howard I. Bernstein
6541 North Kilbourn
Lincolnwood, IL 60646
Jeffrey A. Patterson 110,000 $ 2,200,000
c/o Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
</TABLE>
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Limited Partners
- ----------------
Primestone Investment Partners, L.P. 7,944,893 **
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Paul A. Roehri
Prime Group Limited Partnership 90,000 $ 1,800,000
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Michael W. Reshcke
Robert J. Rudnik
</TABLE>
- ------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Convertible Capital
Preferred Units Contribution
--------------- ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 2,000,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
</TABLE>
- ------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
Exhibit 3.6
AMENDMENT NO. 2 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF PRIME GROUP REALTY, L.P.
This AMENDMENT NO. 2 TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PRIME GROUP REALTY, L.P. (this "Amendment") is made as of
December 15, 1997 by and between Prime Group Realty Trust, a Maryland real
estate investment trust ("PGRT"), as the Managing General Partner of Prime Group
Realty, L.P., a Delaware limited partnership (the "Partnership"), and on behalf
of the other Partners (as hereinafter defined) and H Group LLC, a Delaware
limited liability company ("HG"). Capitalized terms used but not otherwise
defined herein shall have the meanings given to such terms in the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
November 17, 1997, by and among PGRT and the other parties signatory thereto, as
amended thereafter (as so amended, the "Limited Partnership Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to Section 4.3.C. of the Limited Partnership Agreement,
the Managing General Partner may raise all or any portion of Additional Funds
required by the Partnership for the acquisition of additional properties by
accepting additional Capital Contributions, including the issuance of Common
Units for Capital Contributions that consist of property or interests in
property;
WHEREAS, pursuant to that certain Exchange Agreement dated as of December
15, 1997 by and between HG and the Partnership (the "Exchange Agreement"), HG
has agreed, among other things, to exchange (the "Exchange") its rights (the
"Allstate Loan Acquisition Rights") to acquire the Allstate Loan (as defined in
the Exchange Agreement) for $5,000,000, which $5,000,000 is payable in that
number of Common Units of Limited Partner Interest ("Common Units") equal to (i)
$5,000,000 divided by (ii) $19.875, which is the average of the closing sale
prices of PGRT's Common Shares of Beneficial Interest ("Common Shares") on the
New York Stock Exchange during the seven (7) trading days immediately preceding
the date hereof;
WHEREAS, pursuant to the Exchange Agreement, the Partnership has agreed,
among other things, to exchange such number of Common Units for HG's Allstate
Loan Acquisition Rights;
WHEREAS, pursuant to the Exchange Agreement, HG has also agreed to grant to
the Partnership an option (the "First Option") to exchange the Underlying Option
(as defined in the Exchange Agreement) for 220,000 Common Units (subject to
adjustment pursuant to the terms of the Exchange Agreement), which grant of the
First Option contemplates the transfer by the Partnership to HG of 5,000
<PAGE>
Common Units on the date hereof and, subject to the terms of the First Option,
5,000 Common Units (subject to adjustment pursuant to the terms of the Exchange
Agreement) on the 15th day of each month hereafter for such number of months set
forth in the Exchange Agreement;
WHEREAS, the Partnership has agreed to the terms of the grant by HG of the
First Option set forth in the Exchange Agreement;
WHEREAS, it is a condition to the closing of the Exchange Agreement
that HG be admitted as an Additional Limited Partner of the Partnership;
WHEREAS, pursuant to Section 12.2.A. of the Limited Partnership Agreement,
a Person who makes a Capital Contribution to the Partnership in accordance with
the Limited Partnership Agreement shall be admitted to the Partnership as an
Additional Limited Partner subject to, among other things, (i) the transferee of
the Partnership Interest executing and delivering to the Partnership an
acceptance of all of the terms and conditions of the Limited Partnership
Agreement (including without limitation, the provisions of Section 2.4 thereof
and such other documents or instruments as may be required to effect such
admission, each in form and substance satisfactory to the Managing General
Partner and (ii) the acknowledgment by such transferee of Partnership Interest
that each of the representations and warranties set forth in Section 3.3.D.
thereof are true and correct with respect to such transferee as of the date of
the transfer of the Partnership Interest to such transferee;
WHEREAS, the Partners desire to amend the Limited Partnership Agreement to
reflect (i) the increase in outstanding Common Units resulting from the issuance
of Common Units to HG in connection with the Exchange and the grant of the First
Option; and (ii) the admission of HG as an Additional Limited Partner;
WHEREAS, Sections 2.4 and 12.3 of the Limited Partnership Agreement
authorizes, among other things, the Managing General Partner, as true and lawful
agent and attorney-in fact, to execute, swear to, acknowledge, deliver, file and
record this Amendment on behalf of each Partner that has executed the Limited
Partnership Agreement and on behalf of the Partnership.
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Acceptance of Capital Contribution in Exchange for Common Units.
(a) PGRT, as Managing General Partner and on behalf of the Partnership, hereby
accepts the Allstate Loan Acquisition Rights from HG as a Capital Contribution
having a value on the date hereof of $5,000,000, in exchange for 251,572 Common
-2-
<PAGE>
Units of Limited Partner Interest which are hereby issued by the Partnership to
HG pursuant to Section 4.3.C. of the Limited Partnership Agreement, and which
are evidenced by Common Unit Certificate No. 20 of the Partnership.
(b) PGRT, as Managing General Partner and on behalf of the
Partnership, hereby accepts the grant of the rights consisting of the First
Option during the initial month of the term of First Option from HG as a Capital
Contribution having a value on the date hereof of $100,000, in exchange for
5,000 Common Units of Limited Partner Interest which are hereby issued by the
Partnership to HG pursuant to Section 4.3.C. of the Limited Partnership
Agreement, and which are evidenced by Common Unit Certificate No. 21 of the
Partnership.
(c) Each of the Common Units of Limited Partner Interest issued to HG
pursuant to this Section 1 shall have the same terms and provisions of the
Common Units of Limited Partner Interest issued by the Partnership on November
17, 1997 except that (i) the Exchange Rights relating thereto may be exercised
at any time after the first anniversary of the date of this Amendment (as
opposed to November 17, 1998) and (ii) such Common Units of Limited Partner
Interest will be subject to the New Registration Rights Agreement (as
hereinafter defined) as opposed to the Registration Rights Agreement entered
into by PGRT and the Partnership on November 17, 1997.
Section 2. Acceptance of Terms and Conditions of the Limited Partnership
Agreement. HG hereby acknowledges its receipt of a true and complete copy of the
Limited Partnership Agreement and hereby further agrees to be bound by all of
the terms and conditions of the Limited Partnership Agreement, including without
limitation, the provisions of Section 2.4 of the Limited Partnership Agreement.
Section 3. Representations and Warranties of Additional Limited Partner. HG
hereby acknowledges, represents and warrants to PGRT and the other Partners that
each of the representations and warranties set forth in Section 3.3.D. of the
Limited Partnership Agreement are true and correct with respect to HG as of the
date hereof.
Section 4. Admission of Additional Limited Partner. HG is hereby admitted
to the Partnership as an Additional Limited Partner and shall have the rights,
and be subject to the obligations, of a Limited Partner of the Partnership.
Section 5. Amendment of Exhibit A to the Limited Partnership Agreement.
Exhibit A to the Limited Partnership Agreement is hereby amended and restated to
reflect the aforementioned change(s) by deleting Exhibit A attached thereto in
its entirety, and by attaching in lieu thereof a replacement
-3-
<PAGE>
exhibit in the form of Exhibit A attached hereto. From and after the
effectiveness of this Amendment, the amended and restated Exhibit A attached
hereto shall be the only Exhibit A to the Limited Partnership Agreement, unless
and until it is hereafter further amended.
Section 6. Conditions to Effectiveness. This Amendment shall become
effective contemporaneously with (and subject to):
(i) the consummation of the closing transactions contemplated by the
Exchange Agreement;
(ii) the execution and delivery by the Partnership to HG of (x) a Common
Unit certificate evidencing 251,572 Common Units and (y) a Common
Unit certificate evidencing 5,000 Common Units, in each case in the
form of Exhibit E attached to the Limited Partnership Agreement; and
(iii) the execution and delivery by the Partnership and HG of a
Registration Rights Agreement in the form of Exhibit B attached
hereto (the "New Registration Rights Agreement").
Section 7. Reference to and Effect on the Limited Partnership Agreement.
A. The Limited Partnership Agreement is hereby deemed to be amended
to the extent necessary to effect the matters contemplated by this Amendment.
Except as specifically provided for herein above, the provisions of the Limited
Partnership Agreement shall remain in full force and effect.
B. The execution, delivery and effectiveness of this Amendment shall
not operate (i) as a waiver of any provision, right or obligation of the
Managing General Partner, the other General Partner or any Limited Partner under
the Limited Partnership Agreement except as specifically set forth herein or
(ii) as a waiver or consent to any subsequent action or transaction.
Section 8. 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 signatories hereto.
Section 9. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
[signature page follows]
-4-
<PAGE>
AMENDMENT NO. 2 TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
MANAGING GENERAL PARTNER:
------------------------
PRIME GROUP REALTY TRUST, a
Maryland real estate investment trust
By: /s/ Jeffrey A. Patterson
---------------------------
Name: Jeffrey A. Patterson
-------------------------
Title: Executive VP
------------------------
LIMITED PARTNERS:
----------------
Each Limited Partner hereby executes this
Amendment to the Limited Partnership Agreement.
By: PRIME GROUP REALTY TRUST, a
Maryland real estate investment
trust, as attorney-in fact
By: /s/ Jeffrey A. Patterson
--------------------------
Name: Jeffrey A. Patterson
------------------------
Title: Executive VP
-----------------------
ADDITIONAL LIMITED PARTNER:
--------------------------
H GROUP LLC, a Delaware limited
liability company
By: /s/ Eric D. Mayer
--------------------------
Name: Eric D. Mayer
------------------------
Its: President
-------------------------
-5-
<PAGE>
EXHIBIT A*
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Managing General Partner
- ------------------------
12,980,000 **
Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
General Partner
- ---------------
927,100 $18,542,000
The Nardi Group, L.L.C.
c/o Stephen J. Nardi
4100 Madison Street
Hillside, IL 60162
Limited Partners
- ----------------
388,677 $ 7,773,540
Edward S. Hadesman
Trust Dated May 22, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Grandville/Northwestern 9,750 $ 195,000
Management Corporation
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Carolyn B. Hadesman 54,544 $ 1,090,880
Trust Dated May 21, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
</TABLE>
- -------------
* As amended by Amendment No. 2 to the Amended and Restated Agreement of
Limited Partnership of Prime Group Realty, L.P.
** This amount shall be inserted by the Managing General Partner.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
Number of Capital
Common Units Contribution
------------ ------------
Limited Partners
- ----------------
<S> <C> <C>
Lisa Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Cynthia Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Tucker B. Magid 33,085 $ 661,700
545 Ridge Road
Highland Park, IL 60035
Frances S. Shubert 28,805 $ 576,100
511 Lynn Terrace
Waukegan, IL 60085
Grandville Road Property, Inc. 7,201 $ 144,020
c/o Ms. Frances S. Shubert
511 Lynn Terrace
Waukegan, IL 60085
Sky Harbor Associates 62,149 $ 1,242,980
c/o Howard I. Bernstein
6541 North Kilbourn
Lincolnwood, IL 60646
Jeffrey A. Patterson 110,000 $ 2,200,000
c/o Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
</TABLE>
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
Number of Capital
Limited Partners Common Units Contribution
- ---------------- ------------ ------------
<S> <C> <C>
Primestone Investment Partners, L.P. 7,944,893 **
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Paul A. Roehri
Prime Group Limited Partnership 90,000 $ 1,800,000
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Michael W. Reshcke
Robert J. Rudnik
H Group LLC 256,572 $ 5,100,000
c/o Heitman Financial Ltd.
180 N. LaSalle
Suite 3600
Chicago, IL 60601
Attn: Norman Perlmutter
</TABLE>
- ------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Convertible Capital
Preferred Units Contribution
--------------- ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 2,000,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
</TABLE>
- -------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
Exhibit 3.7
AMENDMENT NO. 3 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF PRIME GROUP REALTY, L.P.
This AMENDMENT NO. 3 TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PRIME GROUP REALTY, L.P. (this "Amendment") is made as of January
15, 1998 by Prime Group Realty Trust, a Maryland real estate investment trust
("PGRT"), as the Managing General Partner of Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), and on behalf of the other
Partners (as hereinafter defined). Capitalized terms used but not otherwise
defined herein shall have the meanings given to such terms in the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
November 17, 1997, by and among PGRT and the other parties signatory thereto, as
amended thereafter (as so amended, the "Limited Partnership Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to Section 4.3.C. of the Limited Partnership Agreement,
the Managing General Partner may raise all or any portion of Additional Funds
required by the Partnership for the acquisition of additional properties by
accepting additional Capital Contributions, including the issuance of Common
Units for Capital Contributions that consist of property or interests in
property;
WHEREAS, pursuant to that certain Exchange Agreement dated as of December
15, 1997 by and between H Group LLC, a Delaware limited liability company
("HG"), and the Partnership (the "Exchange Agreement"), HG agreed, among other
things, to grant to the Partnership an option (the "First Option") to exchange
the Underlying Option (as defined in the Exchange Agreement) for 220,000 Common
Units of Limited Partner Interest (subject to adjustment pursuant to the terms
of the Exchange Agreement), which grant of the First Option contemplated the
transfer by the Partnership to HG of 5,000 Common Units of Limited Partner
Interest on the date thereof and, subject to the terms of the First Option,
5,000 Common Units of Limited Partner Interest (subject to adjustment pursuant
to the terms of the Exchange Agreement) on the 15th day of each month thereafter
(each such transfer a "First Option Maintenance Transfer") for such number of
months set forth in the Exchange Agreement;
WHEREAS, the Partnership has agreed to the terms of the grant by HG of the
First Option set forth in the Exchange Agreement and desires to effect the First
Option Maintenance Transfer due on January 15, 1998;
WHEREAS, HG was admitted to the Partnership as an Additional Limited
Partner as of December 15, 1997 pursuant to Amendment No. 2 to the Limited
Partnership Agreement;
<PAGE>
WHEREAS, the Partners desire to amend the Limited Partnership Agreement to
reflect the increase in outstanding Common Units resulting from the issuance of
Common Units to HG in connection with the First Option Maintenance Transfer due
on January 15, 1998; and
WHEREAS, Sections 2.4 and 12.3 of the Limited Partnership Agreement
authorizes, among other things, the Managing General Partner, as true and lawful
agent and attorney-in fact, to execute, swear to, acknowledge, deliver, file and
record this Amendment on behalf of each Partner that has executed the Limited
Partnership Agreement and on behalf of the Partnership.
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Acceptance of Capital Contribution in Exchange for Common Units.
(a) PGRT, as Managing General Partner and on behalf of the Partnership, hereby
accepts the grant of the rights consisting of the First Option during the second
month of the term of First Option from HG as a Capital Contribution having a
value on the date hereof of $100,000, in exchange for 5,000 Common Units of
Limited Partner Interest which are hereby issued by the Partnership to HG
pursuant to Section 4.3.C. of the Limited Partnership Agreement, and which are
evidenced by Common Unit Certificate No. 22 of the Partnership.
(b) Each of the Common Units of Limited Partner Interest issued to HG
pursuant to this Section 1 shall have the same terms and provisions of the
Common Units of Limited Partner Interest issued by the Partnership on November
17, 1997 except that (i) the Exchange Rights relating thereto may be exercised
at any time after December 15, 1998 (as opposed to November 17, 1998) and (ii)
such Common Units of Limited Partner Interest will be subject to the
Registration Rights Agreement dated as of December 15, 1997 by and among PGRT,
the Partnership and HG as opposed to the Registration Rights Agreement entered
into by PGRT and the Partnership on November 17, 1997.
Section 2. Amendment of Exhibit A to the Limited Partnership Agreement.
Exhibit A to the Limited Partnership Agreement is hereby amended and restated to
reflect the aforementioned change(s) by deleting Exhibit A attached thereto in
its entirety, and by attaching in lieu thereof a replacement exhibit in the form
of Exhibit A attached hereto. From and after the effectiveness of this
Amendment, the amended and restated Exhibit A attached hereto shall be the only
Exhibit A to the Limited Partnership Agreement, unless and until it is hereafter
further amended.
-2-
<PAGE>
Section 3. Reference to and Effect on the Limited Partnership Agreement.
A. The Limited Partnership 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 Limited
Partnership Agreement shall remain in full force and effect.
B. The execution, delivery and effectiveness of this Amendment shall
not operate (i) as a waiver of any provision, right or obligation of the
Managing General Partner, the other General Partner or any Limited Partner under
the Limited Partnership Agreement except as specifically set forth herein or
(ii) as a waiver or consent to any subsequent action or transaction.
Section 4. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
[signature page follows]
-3-
<PAGE>
AMENDMENT NO. 3 TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
MANAGING GENERAL PARTNER:
------------------------
PRIME GROUP REALTY TRUST, a
Maryland real estate investment trust
By: /s/ W. Michael Karnes
----------------------------------
Name: W. Michael Karnes
Title: Executive Vice President and
Chief Financial Officer
LIMITED PARTNERS:
----------------
Each Limited Partner hereby executes
this Amendment to the Limited
Partnership Agreement.
By: PRIME GROUP REALTY TRUST, a
Maryland real estate investment
trust, as attorney-in-fact
By: /s/ W. Michael Karnes
------------------------------
Name: W. Michael Karnes
Title: Executive Vice President
and Chief Financial Officer
-4-
<PAGE>
EXHIBIT A*
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 12,980,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
General Partner
- ---------------
The Nardi Group, L.L.C 927,100 $18,542,000
c/o Stephen J. Nardi
4100 Madison Street
Hillside, IL 60162
Limited Partners
- ----------------
Edward S. Hadesman 388,677 $ 7,773,540
Trust Dated May 22, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Grandville/Northwestern 9,750 $ 195,000
Management Corporation
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Carolyn B. Hadesman 54,544 $ 1,090,880
Trust Dated May 21, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
</TABLE>
- ------------
* As amended by Amendment No. 3 to the Amended and Restated Agreement of
Limited Partnership of Prime Group Realty, L.P.
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Limited Partners
- ----------------
Lisa Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Cynthia Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Tucker B. Magid 33,085 $ 661,700
545 Ridge Road
Highland Park, IL 60035
Frances S. Shubert 28,805 $ 576,100
511 Lynn Terrace
Waukegan, IL 60085
Grandville Road Property, Inc. 7,201 $ 144,020
c/o Ms. Frances S. Shubert
511 Lynn Terrace
Waukegan, IL 60085
Sky Harbor Associates 62,149 $ 1,242,980
c/o Howard I. Bernstein
6541 North Kilbourn
Lincolnwood, IL 60646
Jeffrey A. Patterson 110,000 $ 2,200,000
c/o Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Primestone Investment Partners, L.P. 7,944,893 **
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Paul A. Roehri
</TABLE>
- ------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Limited Partners
- ----------------
Prime Group Limited Partnership 90,000 $ 1,800,000
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Michael W. Reshcke
Robert J. Rudnik
H Group LLC 261,572 $ 5,200,000
c/o Heitman Financial Ltd.
180 N. LaSalle
Suite 3600
Chicago, IL 60601
Attn: Norman Perlmutter
</TABLE>
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Convertible Capital
Preferred Units Contribution
--------------- ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 2,000,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
</TABLE>
- ------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
Exhibit 3.8
AMENDMENT NO. 4 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF PRIME GROUP REALTY, L.P.
This AMENDMENT NO. 4 TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PRIME GROUP REALTY, L.P. (this "Amendment") is made as of
February 13, 1998 by Prime Group Realty Trust, a Maryland real estate investment
trust ("PGRT"), as the Managing General Partner of Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), and on behalf of the other
Partners (as hereinafter defined). Capitalized terms used but not otherwise
defined herein shall have the meanings given to such terms in the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
November 17, 1997, by and among PGRT and the other parties signatory thereto, as
amended thereafter (as so amended, the "Limited Partnership Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to Section 4.3.C. of the Limited Partnership Agreement,
the Managing General Partner may raise all or any portion of Additional Funds
required by the Partnership for the acquisition of additional properties by
accepting additional Capital Contributions, including the issuance of Common
Units for Capital Contributions that consist of property or interests in
property;
WHEREAS, pursuant to that certain Exchange Agreement dated as of December
15, 1997 by and between H Group LLC, a Delaware limited liability company
("HG"), and the Partnership (the "Exchange Agreement"), HG agreed, among other
things, to grant to the Partnership an option (the "First Option") to exchange
the Underlying Option (as defined in the Exchange Agreement) for 220,000 Common
Units of Limited Partner Interest (subject to adjustment pursuant to the terms
of the Exchange Agreement), which grant of the First Option contemplated the
transfer by the Partnership to HG of 5,000 Common Units of Limited Partner
Interest on the date thereof and, subject to the terms of the First Option,
5,000 Common Units of Limited Partner Interest (subject to adjustment pursuant
to the terms of the Exchange Agreement) on the 15th day of each month thereafter
(each such transfer a "First Option Maintenance Transfer") for such number of
months set forth in the Exchange Agreement;
WHEREAS, the Partnership has agreed to the terms of the grant by HG of the
First Option set forth in the Exchange Agreement and desires to effect the First
Option Maintenance Transfer due on February 15, 1998;
WHEREAS, HG was admitted to the Partnership as an Additional Limited
Partner as of December 15, 1997 pursuant to Amendment No. 2 to the Limited
Partnership Agreement;
<PAGE>
WHEREAS, the Partners desire to amend the Limited Partnership Agreement to
reflect the increase in outstanding Common Units resulting from the issuance of
Common Units to HG in connection with the First Option Maintenance Transfer due
on February 15, 1998; and
WHEREAS, Sections 2.4 and 12.3 of the Limited Partnership Agreement
authorizes, among other things, the Managing General Partner, as true and lawful
agent and attorney-in fact, to execute, swear to, acknowledge, deliver, file and
record this Amendment on behalf of each Partner that has executed the Limited
Partnership Agreement and on behalf of the Partnership.
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Acceptance of Capital Contribution in Exchange for Common Units.
(a) PGRT, as Managing General Partner and on behalf of the Partnership, hereby
accepts the grant of the rights consisting of the First Option during the third
month of the term of First Option from HG as a Capital Contribution having a
value on the date hereof of $100,000, in exchange for 5,000 Common Units of
Limited Partner Interest which are hereby issued by the Partnership to HG
pursuant to Section 4.3.C. of the Limited Partnership Agreement, and which are
evidenced by Common Unit Certificate No. 26 of the Partnership.
(b) Each of the Common Units of Limited Partner Interest issued to HG
pursuant to this Section 1 shall have the same terms and provisions of the
Common Units of Limited Partner Interest issued by the Partnership on November
17, 1997 except that (i) the Exchange Rights relating thereto may be exercised
at any time after December 15, 1998 (as opposed to November 17, 1998) and (ii)
such Common Units of Limited Partner Interest will be subject to the
Registration Rights Agreement dated as of December 15, 1997 by and among PGRT,
the Partnership and HG as opposed to the Registration Rights Agreement entered
into by PGRT and the Partnership on November 17, 1997.
Section 2. Amendment of Exhibit A to the Limited Partnership Agreement.
Exhibit A to the Limited Partnership Agreement is hereby amended and restated to
reflect the aforementioned change(s) by deleting Exhibit A attached thereto in
its entirety, and by attaching in lieu thereof a replacement exhibit in the form
of Exhibit A attached hereto. From and after the effectiveness of this
Amendment, the amended and restated Exhibit A attached hereto shall be the only
Exhibit A to the Limited Partnership Agreement, unless and until it is hereafter
further amended.
-2-
<PAGE>
Section 3. Reference to and Effect on the Limited Partnership Agreement.
A. The Limited Partnership 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 Limited
Partnership Agreement shall remain in full force and effect.
B. The execution, delivery and effectiveness of this Amendment shall
not operate (i) as a waiver of any provision, right or obligation of the
Managing General Partner, the other General Partner or any Limited Partner under
the Limited Partnership Agreement except as specifically set forth herein or
(ii) as a waiver or consent to any subsequent action or transaction.
Section 4. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
[signature page follows]
-3-
<PAGE>
AMENDMENT NO. 4 TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
MANAGING GENERAL PARTNER:
------------------------
PRIME GROUP REALTY TRUST, a
Maryland real estate investment trust
By: /s/ William M. Karnes
----------------------------------
Name: William M. Karnes
Title: Executive Vice President and
Chief Financial Officer
LIMITED PARTNERS:
----------------
Each Limited Partner hereby executes
this Amendment to the Limited
Partnership Agreement.
By: PRIME GROUP REALTY TRUST, a
Maryland real estate investment
trust, as attorney-in-fact
By: /s/ William M. Karnes
------------------------------
Name: William M. Karnes
Title: Executive Vice President
and Chief Financial Officer
-4-
<PAGE>
EXHIBIT A*
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 12,980,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
General Partner
- ---------------
The Nardi Group, L.L.C 927,100 $18,542,000
c/o Stephen J. Nardi
4100 Madison Street
Hillside, IL 60162
Limited Partners
- ----------------
Edward S. Hadesman 388,677 $ 7,773,540
Trust Dated May 22, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Grandville/Northwestern 9,750 $ 195,000
Management Corporation
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Carolyn B. Hadesman 54,544 $ 1,090,880
Trust Dated May 21, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
</TABLE>
- ------------
* As amended by Amendment No. 4 to the Amended and Restated Agreement of
Limited Partnership of Prime Group Realty, L.P.
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Limited Partners
- ----------------
Lisa Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Cynthia Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Tucker B. Magid 33,085 $ 661,700
545 Ridge Road
Highland Park, IL 60035
Frances S. Shubert 28,805 $ 576,100
511 Lynn Terrace
Waukegan, IL 60085
Grandville Road Property, Inc. 7,201 $ 144,020
c/o Ms. Frances S. Shubert
511 Lynn Terrace
Waukegan, IL 60085
Sky Harbor Associates 62,149 $ 1,242,980
c/o Howard I. Bernstein
6541 North Kilbourn
Lincolnwood, IL 60646
Jeffrey A. Patterson 110,000 $ 2,200,000
c/o Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Primestone Investment Partners, L.P. 7,944,893 **
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Paul A. Roehri
</TABLE>
- ------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Limited Partners
- ----------------
Prime Group Limited Partnership 47,525 $ 950,500
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Michael W. Reshcke
Robert J. Rudnik
H Group LLC 266,572 $ 5,300,000
c/o Heitman Financial Ltd.
180 N. LaSalle
Suite 3600
Chicago, IL 60601
Attn: Norman Perlmutter
Ray R. Grinvalds 5,216 $ 104,320
217 Deer Valley Drive
Barrington, IL 60010
Warren H. John 37,259 $ 745,180
1730 N. Clark Street
Chicago, IL 60614
</TABLE>
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Convertible Capital
Preferred Units Contribution
--------------- ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 2,000,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
</TABLE>
- ------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
Exhibit 3.9
AMENDMENT NO. 5 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF PRIME GROUP REALTY, L.P.
This AMENDMENT NO. 5 TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PRIME GROUP REALTY, L.P. (this "Amendment") is made as of March
13, 1998 by Prime Group Realty Trust, a Maryland real estate investment trust
("PGRT"), as the Managing General Partner of Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), and on behalf of the other
Partners (as hereinafter defined). Capitalized terms used but not otherwise
defined herein shall have the meanings given to such terms in the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
November 17, 1997, by and among PGRT and the other parties signatory thereto, as
amended therafter (as so amended, the "Limited Partnership Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to Section 4.3.C. of the Limited Partnership Agreement,
the Managing General Partner may raise all or any portion of Additional Funds
required by the Partnership for the acquisition of additional properties by
accepting additional Capital Contributions, including the issuance of Common
Units for Capital Contributions that consist of property or interests in
property;
WHEREAS, pursuant to that certain Exchange Agreement dated as of December
15, 1997 by and between H Group LLC, a Delaware limited liability company
("HG"), and the Partnership (the "Exchange Agreement"), HG agreed, among other
things, to grant to the Partnership an option (the "First Option") to exchange
the Underlying Option (as defined in the Exchange Agreement) for 220,000 Common
Units of Limited Partner Interest (subject to adjustment pursuant to the terms
of the Exchange Agreement), which grant of the First Option contemplated the
transfer by the Partnership to HG of 5,000 Common Units of Limited Partner
Interest on the date thereof and, subject to the terms of the First Option,
5,000 Common Units of Limited Partner Interest (subject to adjustment pursuant
to the terms of the Exchange Agreement) on the 15th day of each month thereafter
(each such transfer a "First Option Maintenance Transfer") for such number of
months set forth in the Exchange Agreement;
WHEREAS, the Partnership has agreed to the terms of the grant by HG of the
First Option set forth in the Exchange Agreement and desires to effect the First
Option Maintenance Transfer due on March 15, 1998;
WHEREAS, HG was admitted to the Partnership as an Additional Limited
Partner as of December 15, 1997 pursuant to Amendment No. 2 to the Limited
Partnership Agreement;
<PAGE>
WHEREAS, the Partners desire to amend the Limited Partnership Agreement to
reflect the increase in outstanding Common Units resulting from the issuance of
Common Units to HG in connection with the First Option Maintenance Transfer due
on March 15, 1998; and
WHEREAS, Sections 2.4 and 12.3 of the Limited Partnership Agreement
authorizes, among other things, the Managing General Partner, as true and lawful
agent and attorney-in fact, to execute, swear to, acknowledge, deliver, file and
record this Amendment on behalf of each Partner that has executed the Limited
Partnership Agreement and on behalf of the Partnership.
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Acceptance of Capital Contribution in Exchange for Common Units.
(a) PGRT, as Managing General Partner and on behalf of the Partnership, hereby
accepts the grant of the rights consisting of the First Option during the fourth
month of the term of First Option from HG as a Capital Contribution having a
value on the date hereof of $100,000, in exchange for 5,000 Common Units of
Limited Partner Interest which are hereby issued by the Partnership to HG
pursuant to Section 4.3.C. of the Limited Partnership Agreement, and which are
evidenced by Common Unit Certificate No. 27 of the Partnership.
(b) Each of the Common Units of Limited Partner Interest issued to HG
pursuant to this Section 1 shall have the same terms and provisions of the
Common Units of Limited Partner Interest issued by the Partnership on November
17, 1997 except that (i) the Exchange Rights relating thereto may be exercised
at any time after December 15, 1998 (as opposed to November 17, 1998) and (ii)
such Common Units of Limited Partner Interest will be subject to the
Registration Rights Agreement dated as of December 15, 1997 by and among PGRT,
the Partnership and HG as opposed to the Registration Rights Agreement entered
into by PGRT and the Partnership on November 17, 1997.
Section 2. Amendment of Exhibit A to the Limited Partnership Agreement.
Exhibit A to the Limited Partnership Agreement is hereby amended and restated to
reflect the aforementioned change(s) by deleting Exhibit A attached thereto in
its entirety, and by attaching in lieu thereof a replacement exhibit in the form
of Exhibit A attached hereto. From and after the effectiveness of this
Amendment, the amended and restated Exhibit A attached hereto shall be the only
Exhibit A to the Limited Partnership Agreement, unless and until it is hereafter
further amended.
-2-
<PAGE>
Section 3. Reference to and Effect on the Limited Partnership Agreement.
A. The Limited Partnership 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 Limited
Partnership Agreement shall remain in full force and effect.
B. The execution, delivery and effectiveness of this Amendment shall
not operate (i) as a waiver of any provision, right or obligation of the
Managing General Partner, the other General Partner or any Limited Partner under
the Limited Partnership Agreement except as specifically set forth herein or
(ii) as a waiver or consent to any subsequent action or transaction.
Section 4. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
[signature page follows]
-3-
<PAGE>
AMENDMENT NO. 5 TO AMENDED AND RESTATED AGREEMENT
OF LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
MANAGING GENERAL PARTNER:
------------------------
PRIME GROUP REALTY TRUST, a
Maryland real estate investment trust
By: /s/ Jeffery A. Patterson
__________________________
Name: Jeffrey A. Patterson
Title: Executive Vice President
LIMITED PARTNERS:
----------------
Each Limited Partner hereby executes
this Amendment to the Limited
Partnership Agreement.
By: PRIME GROUP REALTY TRUST, a
Maryland real estate investment
trust, as attorney-in fact
By: /s/ Jeffrey A. Patterson
__________________________
Name: Jeffrey A. Patterson
Title: Executive Vice President
-4-
<PAGE>
EXHIBIT A*
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Managing General Partner Common Units Contribution
- ------------------------ ------------ ------------
<S> <C> <C>
Prime Group Realty Trust 12,980,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
General Partner
- ---------------
927,100 $ 18,542,000
The Nardi Group, L.L.C
c/o Stephen J. Nardi
4100 Madison Street
Hillside, IL 60162
Limited Partners
- ----------------
388,677 $ 7,773,540
Edward S. Hadesman
Trust Dated May 22, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Grandville/Northwestern 9,750 $ 195,000
Management Corporation
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Carolyn B. Hadesman 54,544 $ 1,090,880
Trust Dated May 21, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
</TABLE>
- ------------
* As amended by Amendment No. 5 to the Amended and Restated Agreement of
Limited Partnership of Prime Group Realty, L.P.
** This amount shall be inserted by the Managing General Partner.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
Number of Capital
Limited Partners Common Units Contribution
- ---------------- ------------ ------------
<S> <C> <C>
Lisa Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Cynthia Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Tucker B. Magid 33,085 $ 661,700
545 Ridge Road
Highland Park, IL 60035
Frances S. Shubert 28,805 $ 576,100
511 Lynn Terrace
Waukegan, IL 60085
Grandville Road Property, Inc. 7,201 $ 144,020
c/o Ms. Frances S. Shubert
511 Lynn Terrace
Waukegan, IL 60085
Sky Harbor Associates 62,149 $ 1,242,980
c/o Howard I. Bernstein
6541 North Kilbourn
Lincolnwood, IL 60646
Jeffrey A. Patterson 110,000 $ 2,200,000
c/o Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Primestone Investment Partners, L.P. 7,944,893 **
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Paul A. Roehri
</TABLE>
- -----------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
Number of Capital
Limited Partners Common Units Contribution
- ---------------- ------------ ------------
<S> <C> <C>
Prime Group Limited Partnership 47,525 $ 950,500
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Michael W. Reshcke
Robert J. Rudnik
H Group LLC 271,572 $ 5,400,000
c/o Heitman Financial Ltd.
180 N. LaSalle
Suite 3600
Chicago, IL 60601
Attn: Norman Perlmutter
Ray R. Grinvalds 5,216 $ 104,320
217 Deer Valley Drive
Barrington, IL 60010
Warren H. John 37,259 $ 745,180
1730 N. Clark Street
Chicago, IL 60614
</TABLE>
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Convertible Capital
Managing General Partner Preferred Units Contribution
- ----------------------- --------------------- ------------
<S> <C> <C>
Prime Group Realty Trust 2,000,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
</TABLE>
- ---------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
Exhibit 3.10
AMENDMENT NO. 6 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF PRIME GROUP REALTY, L.P.
This AMENDMENT NO. 6 TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PRIME GROUP REALTY, L.P. (this "Amendment") is made as of March
25, 1998 by Prime Group Realty Trust, a Maryland real estate investment trust
("PGRT"), as the Managing General Partner of Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), and on behalf of the other
Partners (as hereinafter defined). Capitalized terms used but not otherwise
defined herein shall have the meanings given to such terms in the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
November 17, 1997, by and among PGRT and the other parties signatory thereto, as
amended thereafter (as so amended, the "Limited Partnership Agreement").
W I T N E S S E T H:
WHEREAS, on March 25, 1998, 2,579,994 Common Shares (the "Private Placement
Shares") were issued and sold by PGRT to certain institutional investors (the
"Purchasers") pursuant to a Purchase Agreement, dated as of March 25, 1998 (the
"Purchase Agreement"), by and among PGRT, the Partnership and such Purchasers;
WHEREAS, pursuant to Section 4.3.D. of the Limited Partnership Agreement,
(i) PGRT has made or will make a Capital Contribution of the net proceeds from
the issuance and sale of the Private Placement Shares, and (ii) PGRT shall
receive Common Units corresponding to such Private Placement Shares;
WHEREAS, the Partners desire to amend the Limited Partnership Agreement to
reflect the increase in outstanding Common Units as a result of the issuance of
2,579,994 Common Units to PGRT in connection with the issuance and sale by PGRT
of the Private Placement Shares to the Purchasers; and
WHEREAS, Section 2.4 of the Limited Partnership Agreement authorizes, among
other things, the Managing General Partner, as true and lawful agent and
attorney-in-fact, to execute, swear to, acknowledge, deliver, file and record
this Amendment on behalf of each Partner that has executed the Limited
Partnership Agreement and on behalf of the Partnership.
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Issuance of Common Units Pursuant to Section 4.3.D. of the
Limited Partnership Agreement. The net proceeds from the issuance and sale of
the Private Placement Shares have been or will be received by the Partnership as
a Capital Contribution from PGRT. The Partnership hereby issues 2,579,994 Common
Units of
<PAGE>
General Partner Interest to PGRT, pursuant to Section 4.3.D. of the Limited
Partnership Agreement, which shall correspond to the Private Placement Shares,
such issuance to be effective upon the receipt by PGRT of the aggregate purchase
price of the Private Placement Shares in accordance with the terms and
conditions of the Purchase Agreement. Such Common Units of General Partner
Interest issued pursuant to this Section 1 shall not be evidenced by a Common
Unit certificate unless hereafter requested by PGRT.
Section 2. Amendment of Exhibit A to the Limited Partnership Agreement.
Exhibit A to the Limited Partnership Agreement is hereby amended and restated to
reflect the aforementioned change(s) by deleting Exhibit A attached thereto in
its entirety, and by attaching in lieu thereof a replacement exhibit in the form
of Exhibit A attached hereto. From and after the effectiveness of this
Amendment, the amended and restated Exhibit A attached hereto shall be the only
Exhibit A to the Limited Partnership Agreement, unless and until it is hereafter
further amended.
Section 3. Reference to and Effect on the Limited Partnership Agreement.
A. The Limited Partnership 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 Limited
Partnership Agreement shall remain in full force and effect.
B. The execution, delivery and effectiveness of this Amendment shall
not operate (i) as a waiver of any provision, right or obligation of the
Managing General Partner, the other General Partner or any Limited Partner under
the Limited Partnership Agreement except as specifically set forth herein or
(ii) as a waiver or consent to any subsequent action or transaction.
Section 4. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
[signature page follows]
-2-
<PAGE>
AMENDMENT NO. 6 TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
MANAGING GENERAL PARTNER:
------------------------
PRIME GROUP REALTY TRUST, a
Maryland real estate investment trust
By:/s/ William M. Karnes
-------------------------------
Name: William M. Karnes
Title: Executive Vice President and
Chief Financial Officer
LIMITED PARTNERS:
----------------
Each Limited Partner hereby executes
this Amendment to the Limited
Partnership Agreement.
By: PRIME GROUP REALTY TRUST, a
Maryland real estate investment
trust, as attorney-in fact
By:/s/ William M. Karnes
-------------------------
Name: William M. Karnes
Title: Executive Vice President
and Chief Financial
Officer
-3-
<PAGE>
EXHIBIT A*
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Managing General Partner Common Units Contribution
- ------------------------ ------------ ------------
<S> <C> <C>
Prime Group Realty Trust 15,559,994 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
General Partner
- ---------------
The Nardi Group, L.L.C 927,100 $18,542,000
c/o Stephen J. Nardi
4100 Madison Street
Hillside, IL 60162
Limited Partners
- ----------------
388,677 $ 7,773,540
Edward S. Hadesman
Trust Dated May 22, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Grandville/Northwestern 9,750 $ 195,000
Management Corporation
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Carolyn B. Hadesman 54,544 $ 1,090,880
Trust Dated May 21, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
</TABLE>
- -----------
* As amended by Amendment No. 6 to the Amended and Restated Agreement of
Limited Partnership of Prime Group Realty, L.P.
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Limited Partners (Cont'd) Common Units Contribution
- ------------------------ ------------ ------------
<S> <C> <C>
Lisa Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Cynthia Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Tucker B. Magid 33,085 $ 661,700
545 Ridge Road
Highland Park, IL 60035
Frances S. Shubert 28,805 $ 576,100
511 Lynn Terrace
Waukegan, IL 60085
Grandville Road Property, Inc. 7,201 $ 144,020
c/o Ms. Frances S. Shubert
511 Lynn Terrace
Waukegan, IL 60085
Sky Harbor Associates 62,149 $ 1,242,980
c/o Howard I. Bernstein
6541 North Kilbourn
Lincolnwood, IL 60646
Jeffrey A. Patterson 110,000 $ 2,200,000
c/o Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Primestone Investment Partners, L.P. 7,944,893 **
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Paul A. Roehri
</TABLE>
- -------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<S> <C> <C>
Number of Capital
Limited Partners (Cont'd) Common Units Contribution
- ------------------------- ------------ ------------
<S> <C> <C>
Prime Group Limited Partnership 47,525 $ 950,500
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Michael W. Reshcke
Robert J. Rudnik
H Group LLC 271,572 $ 5,400,000
c/o Heitman Financial Ltd.
180 N. LaSalle
Suite 3600
Chicago, IL 60601
Attn: Norman Perlmutter
Ray R. Grinvalds 5,216 $ 104,320
217 Deer Valley Drive
Barrington, IL 60010
Warren H. John 37,259 $ 745,180
1730 N. Clark Street
Chicago, IL 60614
</TABLE>
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Convertible Capital
Managing General Partner Preferred Units Contribution
- ------------------------ --------------- ------------
<S> <C> <C>
Prime Group Realty Trust 2,000,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
</TABLE>
- -----------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
Exhibit 3.11
AMENDMENT NO. 7 TO AMENDED AND RESTATED
AGREEMENT OF LIMITED PARTNERSHIP
OF PRIME GROUP REALTY, L.P.
This AMENDMENT NO. 7 TO AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP OF PRIME GROUP REALTY, L.P. (this "Amendment") is made as of April
15, 1998 by Prime Group Realty Trust, a Maryland real estate investment trust
("PGRT"), as the Managing General Partner of Prime Group Realty, L.P., a
Delaware limited partnership (the "Partnership"), and on behalf of the other
Partners (as hereinafter defined). Capitalized terms used but not otherwise
defined herein shall have the meanings given to such terms in the Amended and
Restated Agreement of Limited Partnership of the Partnership, dated as of
November 17, 1997, by and among PGRT and the other parties signatory thereto, as
amended thereafter (as so amended, the "Limited Partnership Agreement").
W I T N E S S E T H:
WHEREAS, pursuant to Section 4.3.C. of the Limited Partnership Agreement,
the Managing General Partner may raise all or any portion of Additional Funds
required by the Partnership for the acquisition of additional properties by
accepting additional Capital Contributions, including the issuance of Common
Units for Capital Contributions that consist of property or interests in
property;
WHEREAS, pursuant to that certain Exchange Agreement dated as of December
15, 1997 by and between H Group LLC, a Delaware limited liability company
("HG"), and the Partnership (the "Exchange Agreement"), HG agreed, among other
things, to grant to the Partnership an option (the "First Option") to exchange
the Underlying Option (as defined in the Exchange Agreement) for 220,000 Common
Units of Limited Partner Interest (subject to adjustment pursuant to the terms
of the Exchange Agreement), which grant of the First Option contemplated the
transfer by the Partnership to HG of 5,000 Common Units of Limited Partner
Interest on the date thereof and, subject to the terms of the First Option,
5,000 Common Units of Limited Partner Interest (subject to adjustment pursuant
to the terms of the Exchange Agreement) on the 15th day of each month thereafter
(each such transfer a "First Option Maintenance Transfer") for such number of
months set forth in the Exchange Agreement;
WHEREAS, the Partnership has agreed to the terms of the grant by HG of the
First Option set forth in the Exchange Agreement and desires to effect the First
Option Maintenance Transfer due on April 15, 1998;
WHEREAS, HG was admitted to the Partnership as an Additional Limited
Partner as of December 15, 1997 pursuant to Amendment No. 2 to the Limited
Partnership Agreement;
<PAGE>
WHEREAS, the Partners desire to amend the Limited Partnership Agreement to
reflect the increase in outstanding Common Units resulting from the issuance of
Common Units to HG in connection with the First Option Maintenance Transfer due
on April 15, 1998; and
WHEREAS, Sections 2.4 and 12.3 of the Limited Partnership Agreement
authorizes, among other things, the Managing General Partner, as true and lawful
agent and attorney-in fact, to execute, swear to, acknowledge, deliver, file and
record this Amendment on behalf of each Partner that has executed the Limited
Partnership Agreement and on behalf of the Partnership.
NOW, THEREFORE, for good and adequate consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Acceptance of Capital Contribution in Exchange for Common Units.
(a) PGRT, as Managing General Partner and on behalf of the Partnership, hereby
accepts the grant of the rights consisting of the First Option during the fifth
month of the term of the First Option from HG as a Capital Contribution having a
value on the date hereof of $100,000, in exchange for 5,000 Common Units of
Limited Partner Interest which are hereby issued by the Partnership to HG
pursuant to Section 4.3.C. of the Limited Partnership Agreement, and which are
evidenced by Common Unit Certificate No. 28 of the Partnership.
(b) Each of the Common Units of Limited Partner Interest issued to HG
pursuant to this Section 1 shall have the same terms and provisions of the
Common Units of Limited Partner Interest issued by the Partnership on November
17, 1997 except that (i) the Exchange Rights relating thereto may be exercised
at any time after December 15, 1998 (as opposed to November 17, 1998) and (ii)
such Common Units of Limited Partner Interest will be subject to the
Registration Rights Agreement dated as of December 15, 1997 by and among PGRT,
the Partnership and HG as opposed to the Registration Rights Agreement entered
into by PGRT and the Partnership on November 17, 1997.
Section 2. Amendment of Exhibit A to the Limited Partnership Agreement.
Exhibit A to the Limited Partnership Agreement is hereby amended and restated to
reflect the aforementioned change(s) by deleting Exhibit A attached thereto in
its entirety, and by attaching in lieu thereof a replacement exhibit in the form
of Exhibit A attached hereto. From and after the effectiveness of this
Amendment, the amended and restated Exhibit A attached hereto shall be the only
Exhibit A to the Limited Partnership Agreement, unless and until it is hereafter
further amended.
-2-
<PAGE>
Section 3. Reference to and Effect on the Limited Partnership Agreement.
A. The Limited Partnership 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 Limited
Partnership Agreement shall remain in full force and effect.
B. The execution, delivery and effectiveness of this Amendment shall
not operate (i) as a waiver of any provision, right or obligation of the
Managing General Partner, the other General Partner or any Limited Partner under
the Limited Partnership Agreement except as specifically set forth herein or
(ii) as a waiver or consent to any subsequent action or transaction.
Section 4. Applicable Law. This Amendment shall be construed in accordance
with and governed by the laws of the State of Delaware, without regard to the
principles of conflicts of law.
[signature page follows]
-3-
<PAGE>
AMENDMENT NO. 7 TO AMENDED AND RESTATED AGREEMENT OF
LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date first written above.
MANAGING GENERAL PARTNER:
------------------------
PRIME GROUP REALTY TRUST, a
Maryland real estate investment trust
By: /s/ William M. Karnes
----------------------------------
Name: William M. Karnes
Title: Executive Vice President
LIMITED PARTNERS:
----------------
Each Limited Partner hereby executes
this Amendment to the Limited
Partnership Agreement.
By: PRIME GROUP REALTY TRUST, a
Maryland real estate investment
trust, as attorney-in-fact
By: /s/ William M. Karnes
------------------------------
Name: William M. Karnes
Title: Executive Vice President
-4-
<PAGE>
EXHIBIT A*
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 15,559,994 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
General Partner
- ---------------
The Nardi Group, L.L.C 927,100 $18,542,000
c/o Stephen J. Nardi
4100 Madison Street
Hillside, IL 60162
Limited Partners
- ----------------
Edward S. Hadesman 388,677 $ 7,773,540
Trust Dated May 22, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Grandville/Northwestern 9,750 $ 195,000
Management Corporation
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Carolyn B. Hadesman 54,544 $ 1,090,880
Trust Dated May 21, 1992
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
</TABLE>
- ------------
* As amended by Amendment No. 7 to the Amended and Restated Agreement of
Limited Partnership of Prime Group Realty, L.P.
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Limited Partners (Cont'd)
- -------------------------
Lisa Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Cynthia Hadesman 1991 Trust 169,053 $ 3,381,060
c/o Edward S. Hadesman
2500 North Lakeview, Unit 1401
Chicago, IL 60614
Tucker B. Magid 33,085 $ 661,700
545 Ridge Road
Highland Park, IL 60035
Frances S. Shubert 28,805 $ 576,100
511 Lynn Terrace
Waukegan, IL 60085
Grandville Road Property, Inc. 7,201 $ 144,020
c/o Ms. Frances S. Shubert
511 Lynn Terrace
Waukegan, IL 60085
Sky Harbor Associates 62,149 $ 1,242,980
c/o Howard I. Bernstein
6541 North Kilbourn
Lincolnwood, IL 60646
Jeffrey A. Patterson 110,000 $ 2,200,000
c/o Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Primestone Investment Partners, L.P. 7,944,893 **
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Paul A. Roehri
</TABLE>
- ------------
** This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Capital
Common Units Contribution
------------ ------------
<S> <C> <C>
Limited Partners (Cont'd)
- -------------------------
Prime Group Limited Partnership 47,525 $ 950,500
c/o The Prime Group, Inc.
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Michael W. Reshcke
Robert J. Rudnik
H Group LLC 276,572 $ 5,500,000
c/o Heitman Financial Ltd.
180 N. LaSalle
Suite 3600
Chicago, IL 60601
Attn: Norman Perlmutter
Ray R. Grinvalds 5,216 $ 104,320
217 Deer Valley Drive
Barrington, IL 60010
Warren H. John 37,259 $ 745,180
1730 N. Clark Street
Chicago, IL 60614
</TABLE>
<PAGE>
EXHIBIT A - CONT'D
Partners, Number of Units and Capital Contributions
<TABLE>
<CAPTION>
Number of Convertible Capital
Preferred Units Contribution
--------------- ------------
<S> <C> <C>
Managing General Partner
- ------------------------
Prime Group Realty Trust 2,000,000 **
77 West Wacker Drive
Suite 3900
Chicago, IL 60601
Attn: Richard S. Curto
James F. Hoffman
</TABLE>
- ------------------------
**This amount shall be inserted by the Managing General Partner.
<PAGE>
EXHIBIT 4.1
Temporary Certificate -- Exchangeable for
Definitive Engraved Certificate
When Ready for Delivery
NUMBER SHARES
PG
SEE RESTRICTIVE LEGEND ON SEE REVERSE FOR
REVERSE OF CERTIFICATE CERTAIN DEFINITIONS
CUSIP 74158J 20 2
PRIME GROUP REALTY TRUST
ORGANIZED UNDER THE LAWS OF THE STATE OF MARYLAND
PREFERRED SHARES
This Certifies that
is the owner of
FULLY PAID AND NON-ASSESSABLE SERIES B
CUMULATIVE REDEEMABLE PREFERRED SHARES
OF BENEFICIAL INTEREST,
$0.01 PAR VALUE PER SHARE, OF
PRIME GROUP REALTY TRUST
transferable only on the books of the Trust by the holder hereof in person or by
duly authorized attorney upon the surrender of this Certificate properly
endorsed. This Certificate and the shares represented hereby are issued and
shall be held subject to all of the provisions of the Declaration of Trust of
the Trust and any amendments thereto. This Certificate is not valid unless
countersigned by the Transfer Agent and registered by the Registrar.
Witness this facsimile seal of the Trust and facsimile signature of its
duly authorized officers.
Dated:
<PAGE>
CERTIFICATE OF STOCK
/s/ Michael W. Reschke /s/ James F. Hoffman
CHAIRMAN OF THE BOARD SENIOR VICE PRESIDENT,
GENERAL COUNSEL AND SECRETARY
/s/ Richard S. Curto COUNTERSIGNED AND REGISTERED
PRESIDENT AND CHIEF LASALLE NATIONAL BANK
EXECUTIVE OFFICER TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
[SEAL OF PRIME GROUP REALTY TRUST A MARYLAND TRUST]
<PAGE>
PRIME GROUP REALTY TRUST
The Trust is authorized to issue more than one class of shares of
beneficial interest. The Declaration of Trust on file in the office of the State
Department of Assessments and Taxation of the State of Maryland sets forth a
full statement of (a) all of the designations, preferences, rights, voting
powers, restrictions, limitations as to dividends, qualifications, and terms and
conditions of redemptions and other relative rights of the shares of each class
of shares authorized to be issued and (b) the authority of the Board of Trustees
to issue any preferred or special class in series, the differences in the
relative rights and preferences between the shares of each series of the extent
they have been set and the authority of the Board of Trustees to set the
relative rights and preferences of subsequent series of preferred shares.
The Equity Shares represented by this certificate are subject to
restrictions on transfer for the purpose of the Trust's maintenance of its
status as a real estate investment trust under the Internal Revenue Code of
1986, as amended (the "Code"). Subject to certain further restrictions and
except as provided in the Trust's Declaration of Trust, no person may (i)
Beneficially or Constructively Own Equity Shares in excess of 9.9% of the number
of outstanding Equity Shares, (ii) Beneficially or Constructively Own Equity
Shares that would result in the Equity Shares being Beneficially or
Constructively Owned by fewer than 100 Persons (determined without reference to
any rules of attribution) or (iii) Beneficially or Constructively Own Equity
Shares that would result in the Trust being "closely held" under Section 856(h)
of the Code, unless the conditions under Section 4.6 of the Trust's Declaration
of Trust are satisfied. Any Person who attempts to Beneficially or
Constructively Own Equity Shares in excess of the above limitations must
immediately notify the Trust in writing of such proposed or attempted Transfer.
If any restrictions above are violated, the Equity Shares represented hereby
will be converted automatically into Excess Shares which will be transferred
automatically, by operation of law, to a Share Trust to be held for the
exclusive benefit of a Beneficiary to be named by the Trust. In addition, upon
the occurrence of certain events, attempted Transfers in violation of the
restrictions described above may be void ab initio. All capitalized terms in
this legend have the meanings defined in the Trust's Declaration of Trust, as
the same may be further amended from time to time, a copy of which, including
the restrictions of Transfer, will be sent without charge to each shareholder
who so requests. Such requests must be made to the Secretary of the Trust at its
principal office.
The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM -- as tenants in common
<PAGE>
TEN ENT -- as tenants by the entireties
JT TEN -- as joint tenants with right of survivorship
and not as tenants in common
UNIF GIFT MIN ACT -- ..........Custodian...........
(Cust.) (Minor)
under Uniform Gifts to Minors
Act...........................
(State)
UNIF TRF MIN ACT -- .....Custodian (until age ...)
(Cust.)
.......under Uniform Transfers
(Minor)
to Minors Act.................
(State)
Additional abbreviations may also be used though not in the above list.
ASSIGNMENT
FOR VALUE RECEIVED, _________________________ hereby sell, assign and
transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFICATION NUMBER OF ASSIGNEE
- --------------------------------------
- --------------------------------------------------------------------------------
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF ASSIGNEE)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Series B Cumulative Redeemable Preferred Shares of Beneficial Interest
represented by the within Certificate, and do hereby irrevocably constitute and
appoint
- --------------------------------------------------------------------------------
Attorney to transfer the said shares on the books of the within named Trust with
full power of substitution in the premises.
Dated:
-------------------
X
------------------------------------------------
X
------------------------------------------------
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME(S) AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR,
WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE
WHATEVER.
<PAGE>
Signature(s) Guaranteed
By:
----------------------------------
THE SIGNATURE (S) SHOULD BE GUARANTEED
BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN
ASSOCIATIONS AND CREDIT UNIONS WITH
MEMBERSHIP IN AN APPROVED SIGNATURE
GUARANTEE MEDALLION PROGRAM), PURSUANT
TO S.E.C. RULE 17Ad-15.
- ---------------------------------------------
AMERICAN BANK NOTE COMPANY NOV 4, 1997 fm
3504 ATLANTIC AVENUE
SUITE 12
LONG BEACH, CA 90807 053384bk
(562) 989-2333
(fax) (562) 426-7450 Proof ___ REV 2
<PAGE>
[MILES & STOCKBRIDGE LETTERHEAD]
Exhibit 5.1
May 14, 1998
Prime Group Realty Trust
77 West Wacker Drive, Suite 3900
Chicago, Illinois 60601
Ladies and Gentlemen:
In connection with the registration under the Securities Act of 1933 (the
"Act") of 5,750,000 Series B Cumulative Redeemable Preferred Shares of
Beneficial Interest, $.01 par value per share (the "Preferred Shares"), of Prime
Group Realty Trust, a Maryland real estate investment trust, on its Registration
Statement on Form S-11 (No. 333-51599) (the "Registration Statement"), we have
examined such trust records, certificates and documents as we deemed necessary
for the purpose of this opinion. Based on that examination, we advise you that
in our opinion the Preferred Shares have been duly and validly authorized and,
when issued upon the terms and in the manner set forth in the Registration
Statement, will be legally issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not thereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the rules and regulations of the Securities and Exchange Commission
thereunder. The opinion expressed herein is limited to the matters set forth in
this letter and no other opinion should be inferred beyond the matters expressly
stated.
Very truly yours,
Miles & Stockbridge P.C.
By: /s/ J.W. Thompson Webb
---------------------------
Principal
<PAGE>
EXHIBIT 10.30
FIRST AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
This First Amendment to Credit Agreement is made as of the 15th day of
December, 1997 (the "First Amendment Effective Date"), by and among PRIME
GROUP REALTY, L.P., a Delaware limited partnership (the "Borrower"), PRIME
GROUP REALTY TRUST, a Maryland trust (the "Company") and BANKBOSTON, N.A. a
national banking association ("BankBoston"), PRUDENTIAL SECURITIES CREDIT
CORPORATION, a Delaware corporation ("Prudential"), the other lending
institutions which are from time to time listed on Schedule 1, (collectively,
with BankBoston and Prudential, the "Lenders") and BANKBOSTON, N.A., as agent
for itself and such other lending institutions (the "Agent").
WHEREAS, the parties hereto are parties to the certain Credit Agreement
dated as of November 17, 1997 (the "Existing Agreement"); and
WHEREAS, the parties have agreed to amend the Existing Agreement to
provide for an increase in the Total Commitment from $225,000,000 to
$235,000,000 and in certain other respects.
NOW, THEREFORE, the parties hereby agree that effective upon the date
hereof the Existing Agreement is amended as follows:
1. Increase in Total Commitment. BankBoston hereby increases its
Commitment to the amount shown on the revised Schedule 1.2 attached hereto.
The Borrower shall execute and deliver to BankBoston a Note (the "Additional
Note") in an amount equal to the difference between BankBoston's Commitment as
shown on said revised Schedule 1.2 and the Note dated November 17, 1997
delivered to BankBoston at the time it became a party to the Credit Agreement.
The second sentence of Section 2.3 is amended to read as follows: "One or
more Notes shall be payable to the order of each Lender and the aggregate
principal amount of the Notes held by each Lender shall be equal to such
Lender's Commitment."
2. Definitions: Section 1.1 of the Existing Agreement is amended to
provide that the following terms shall have the following meanings and, to the
extent that any of the following terms are already defined in the Existing
Agreement, such definitions shall be deemed to be amended and restated by the
following definitions:
Additional Properties. Real Estate Assets which hereafter become
Mortgaged Properties or Assigned Mortgage Properties pursuant to Section 5.3.
Applicable Margin. As of any date of determination:
(i) 1.20%, if Total Liabilities are less than 30% of Total Adjusted
Assets, or
1
<PAGE>
(ii) 1.35%, if Total Liabilities are equal to or less than 45% of Total
Adjusted Assets but the condition set forth in clause (i) of this definition
is not satisfied,
(iii) 1.50% if Total Liabilities exceed 45% of Total Adjusted Assets.
Any change in the Applicable Margin caused by a change in ratio of Total
Liabilities to Total Adjusted Assets shall become effective on the 46th day
following the end of the fiscal quarter at which such ratio was computed as
shown on a Compliance Certificate which reflects such change in said ratio
above or below the 30% level or the 45% level. Notwithstanding anything to the
contrary in this definition for so long as the Continental Towers Property is
an Assigned Mortgaged Property, the Applicable Margin will be increased to
1.75% during the period from December 15, 1997 through February 14, 1998 and
will be thereafter further increased to 2.00%.
Appraised Value. The market value of each of the Mortgaged Properties,
determined by the Requisite Lenders based upon the most recent Appraisals
obtained pursuant to Section 5.4(b), Section 7.12 or Section 10.14. In
determining Appraised Value the Requisite Lenders shall exclude any value
associated with any unimproved land or unoccupied Buildings located on the
applicable Mortgaged Property.
Assigned Mortgaged Properties. The Real Estate Assets designated as such
on Schedule 1.1, the Buildings thereon and all other property described in the
Security Deeds relating thereto and any other Real Estate Assets, Buildings
thereon and other property described in the Security Deeds assigned to the
Agent pursuant to Section 5.3(c).
Assigned Notes. The Promissory Notes secured by the Security Deeds on
the Assigned Mortgaged Properties acquired by the Borrower and assigned to the
Agent.
Assigned Note Assignments. The Assignments of Liens and Documents from
Borrower to the Agent pursuant to which the Assigned Notes and all related
loan documents and Security Documents are assigned to the Agent.
Borrowing Base Value. With respect to each Mortgaged Property, an amount
equal to (i) two times the Net Operating Income for the most recently
completed two fiscal quarters, minus the Reserve Amount for such Mortgaged
Property, divided by (ii) a capitalization rate equal to 0.09 for the West
Wacker Drive Property or 0.10 for any other Mortgaged Property, provided
however that with respect to each Assigned Mortgaged Property, the Net
Operating Income for purposes of this definition shall be the lesser of its
Net Operating Income computed pursuant to the definition thereof or the actual
amount of interest paid (but not prepaid) on the applicable Assigned Note
during such period.
Collateral Value. With respect to each Mortgaged Property an amount
equal to the lesser of is Appraised Value or its Borrowing Base Value,
provided that the Collateral Value of an Assigned Mortgaged Property shall not
exceed the lesser of (i) the Borrower's net acquisition cost for the Assigned
Note and related documents or (ii) the
2
<PAGE>
outstanding principal amount of the applicable Assigned Note and provided that
effective on March 15, 1998 the Collateral Value of the Continental Towers
Property shall become zero.
Continental Towers Property. The Assigned Mortgaged Property known as
Continental Towers located at or near Golf Road, Rolling Meadows, Illinois.
Mortgaged Properties. The (a) Real Estate Assets described on Schedule
1.1 hereto and such other Real Estate Assets which may be subsequently
conveyed to the Agent as Additional Properties to secure the Obligations in
accordance with Section 5.3 hereof, excluding from the foregoing any Real
Estate Assets which the Agent may release pursuant to Section 5.5 hereof, as
such Real Estate Assets are more particularly described in the Security Deeds;
(b) the Buildings and Building Service Equipment located thereon and (to the
extent assignable) all Permits relating thereto; and (c) all other property
incident to any of same described in any Security Document or other Loan
Document. The term Mortgaged Properties also includes the Assigned Mortgaged
Properties.
Real Estate Assets. Those fixed and tangible properties consisting of
land, buildings and/or other improvements owned by the Borrower, by any
Guarantor, by any of the Related Companies or by any Permitted Joint Venture
at the relevant time of reference thereto, including without limitation, the
Mortgaged Properties, but excluding all leaseholds other than leaseholds under
ground leases having an unexpired term of at least 30 years. The term Real
Estate Assets also includes the properties subject to the Security Deeds
relating to the Assigned Mortgaged Properties.
Security Deeds. The mortgages and deeds of trust from the Mortgagor to
the Agent pursuant to which the Mortgagor shall convey the Mortgaged
Properties as security for the Obligations and the mortgages which secure the
Assigned Notes and which are assigned to the Agent pursuant to the Assigned
Note Assignments.
Security Documents. The Security Deeds, the Assignments of Leases and
Rents, the Pledge Agreements and the UCC-1 financing statements, the Assigned
Note Assignments and all documents securing the Assigned Notes assigned
thereby.
Total Adjusted Assets. The sum of (i) the assets classified as cash or
cash equivalents on the consolidated balance sheet of Borrower prepared in
accordance with Generally Accepted Accounting Principles as of the end of the
most recent fiscal quarter (including any restricted cash other than tenant
deposits), plus (ii) the product of (a) EBITDA for the most recent two fiscal
quarters, times (b) two, divided by (c) 0.0975. EBITDA used to compute Total
Adjusted Assets will be computed on a pro forma basis as though the assets
reflected on the consolidated balance sheet of Borrower prepared in accordance
with Generally Accepted Accounting Principles as of the end of the most recent
fiscal quarter had been owned since the first day of the applicable period of
two fiscal quarters and as though all assets disposed of prior to the date of
such balance sheet had been disposed of prior to the first day of the
applicable period of two fiscal quarters
3
<PAGE>
3. Amendment to Section 5.3. Section 5.3 is hereby amended and restated
to read as follows:
Section 5.3. Additional Properties.
(a) A Real Estate Asset owned by the Borrower or by a Guarantor may
become an additional Mortgaged Property if (i) the Requisite Lenders, in their
sole discretion, approve such Real Estate as being eligible to become a
Mortgaged Property and (ii) all of the conditions set forth in Section 5.4 are
satisfied with respect to such Real Estate Asset. Borrower shall provide the
Agent with a notice of each proposed Additional Property describing such
property, its estimated value and its estimated net operating income together
with a current rent roll and the most current operating statements available
with respect thereto. If the Agent determines that additional information is
needed to sufficiently describe such property, it may request a supplemental
notice from the Borrower containing such additional information. When such
notice is satisfactory to the Agent, it shall send a copy to each Lender and
any Lender which fails to notify the Agent of its objection within five (5)
Business Days after its receipt of such notice shall be deemed to have granted
its approval of the eligibility of such Real Estate Asset to become an
Additional Property. In the event that the Requisite Lenders grant such
approval and all of the conditions set forth in Section 5.4 are satisfied, the
Agent shall notify the Borrower and within ten (10) days thereafter the
Borrower and the Company shall execute and deliver an Indemnity Agreement and
the Mortgagor shall execute and deliver to the Agent a Security Deed, an
Assignment of Rents and Leases and UCC-1 financing statements, which Security
Documents shall be in substantially the form of the Security Documents
executed and delivered herewith with such changes as the Agent may deem
desirable to address the laws of the State where the Additional Property is
located or the factual circumstances of the Additional Property. Such
Additional Properties shall be deemed to be Mortgaged Properties upon the
recording and filing of such Security Documents and the Agent's receipt of
satisfactory evidence thereof.
(b) After the Continental Towers Property has been released as an
Assigned Mortgaged Property pursuant to Section 5.5, another Real Estate Asset
may become an Assigned Mortgaged Property if (i) the Requisite Lenders, in
their sole discretion, approve such Real Estate Asset as being eligible to
become an Assigned Mortgaged Property, (ii) the Requisite Lenders, in their
sole discretion, approve the terms and conditions of the proposed Assigned
Note and related documents and (iii) all conditions set forth in Section 5.4
are satisfied with respect to such Real Estate Asset. If the Requisite
Lenders grant such approvals, then upon satisfaction of the conditions set
forth in Section 5.4 and execution and delivery of the Assigned Note
Assignment, the original of the Assigned Note endorsed to the Agent and all
other documents required by the Agent in connection therewith, the Agent shall
revise Schedule 1.1 to include such Additional Property as an Assigned
Mortgaged Property. At any time there shall be no more than one Assigned
Mortgaged Property hereunder.
4
<PAGE>
(c) The Agent and the Lead Lenders shall use their best efforts to
complete their review of the documents submitted with respect to each
Additional Property and notify the Borrower as to whether the conditions in
Section 5.4 are satisfied with ten (10) Business Days after receipt of the
last of the items required pursuant to Section 5.4.
4. Amendment to Section 5.5. Section 5.5 is hereby amended and restated
to read as follows:
Section 5.5. Release of Mortgaged Properties. The Borrower may request
that the Agent release any Mortgaged Property from the lien of the Security
Documents and the Agent shall grant such requested release provided that (i)
the requested release is consented to by the Requisite Lenders and (ii) there
is then no continuing Default or Event of Default under this Agreement and the
requested release will not result in any Default or Event of Default under
this Agreement and the Borrower delivers to the Agent a pro-forma Compliance
Certificate reasonably satisfactory to the Agent demonstrating that the
requested release will not result in a violation of any of the covenants in
Section 9. Each Lender agrees to respond to any such request for Requisite
Lender consent within five (5) business days and agrees to not unreasonably
withhold its consent. The Borrower may request releases of a portion of a
Mortgaged Property consisting of undeveloped land to be developed by Borrower
or sold provided that in addition to the requirements set forth above, the
Borrower shall also submit such additional information as may be reasonably
requested by the Agent including, without limitation, (i) an updated survey
and endorsements to the Title Policy; (ii) an updated Appraisal of the
remaining portion of the Mortgaged Property and (iii) evidence that the
division of the Mortgaged Property pursuant to the requested release will not
result in violation of any zoning ordinance or other applicable laws and
ordinances. If the Borrower shall request the release of any Mortgaged
Property which is adjacent to any other Mortgaged Property which is not to be
simultaneously released, the Agent may require the establishment of
appropriate easements and maintenance agreements satisfactory to the Agent
relating to any shared utilities, drainage facilities, access drives or walks,
parking areas or other shared facilities.
5. Amendment to Section 8.3 (e). Section 8.3 (e) is hereby amended and
restated to read as follows:
(e) Investments made in the ordinary course of the Borrower's
business, in (i) any mortgages the acquisition of which is expressly approved
by the Requisite Lenders, (ii) mortgages and notes receivable having an
aggregate principal amount, exclusive of any investments in mortgages which
may have been so expressly approved by the Requisite Lenders of not more than
$25,000,000, (iii) Permitted Joint Ventures (to the extent permitted by
Section 8.4(a)), or (iv) Interest Rate Contracts;
6. Amendment to Section 9.1. Section 9.1 is hereby amended and restated
to read as follows:
5
<PAGE>
Section 9.1. Collateral Value. The Borrower will not at any time
permit the Outstanding Principal Amount to exceed the sum of (i) sixty percent
(60%) of the total of the Collateral Values of the Mortgaged Properties other
than the Assigned Mortgaged Properties plus (ii) fifty percent (50%) of the
total of the Collateral Values of the Assigned Mortgaged Properties.
7. Updated Schedules to Credit Agreement. The following Schedules to
the Credit Agreement are hereby updated, supplemented or replaced as follows:
(a) Schedule 1.1 is replaced by Schedule 1.1 attached hereto.
(b) Schedule 1.2 is replaced by Schedule 1.2 attached hereto.
(c) Schedule 1.3 is replaced by Schedule 1.3 attached hereto.
(d) Schedule 1.4 is replaced by Schedule 1.4 attached hereto.
(e) Schedule 5.3(b) is hereby deleted.
(f) Schedule 6.18 is replaced by Schedule 6.18 attached hereto.
(g) Schedule 6.22(d) is replaced by Schedule 6.22(d) attached
hereto.
(h) Schedule 6.22(l) is supplemented by adding thereto the rent
rolls each of the Additional Properties which have been added
to Schedule 1.1 since the Effective Date of the Existing
Agreement.
8. Approval of Investments in Mortgages. Pursuant to Section
8.3(e)(ii) of the Credit Agreement the Requisite Lenders hereby approve the
Borrower's Investments in the notes receivable and mortgages relating to the
Continental Towers Property and relating to the property at 180 North LaSalle
Street, Chicago, Illinois.
9. Representations and Warranties. The Borrower and the Company
represent and warrant that each of the representations and warranties
contained in Section 6 is true, correct and complete in all material respects
as of the date hereof to the same extent as though made on such date and that
no Default or Event of Default has occurred and is continuing on the date
hereof. The term Mortgaged Properties as used in said representations and
warranties includes the Properties listed on Schedule 1.1 attached hereto.
10. Effectiveness of Loan Documents. On the First Amendment Effective
Date each Guaranty and each Security Deed shall be amended to reflect the
increase of the Total Commitment and the execution and delivery of the
Additional Notes. All references in the Existing Agreement to said Loan
Documents shall mean and be in reference to said Loan Documents as so amended.
The Borrower hereby confirms that each of the Security
6
<PAGE>
Documents shall continue to secure the payment and performance of all of the
Obligations under the Existing Agreement as amended hereby and the Borrower's
obligations under the Security Documents shall continue to be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Every reference contained in the Loan
Documents to the Credit Agreement shall mean and be a reference to the
Existing Agreement as amended hereby and as the Credit Agreement may be
further amended. Every reference contained in the Loan Documents to the Notes
shall be deemed to include the Additional Notes. Except as specifically
amended by this Amendment, the Existing Agreement and each of the Loan
Documents shall remain in full force and effect and are hereby ratified and
confirmed.
11. Miscellaneous. This Amendment shall be governed by, interpreted and
construed in accordance with all of the same provisions applicable under the
Existing Agreement including, without limitation, all definitions set forth in
Section 1.1, the rules of interpretation set forth in Section 1.2, the
provisions relating to governing law set forth in Section 20, the provisions
relating to counterparts in Section 22 and the provision relating to
severability in Section 26.
7
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of the date first set forth above.
WITNESS: BANKBOSTON, N.A.
By: /s/ Lori Y. Litow
- ------------------------- -----------------------
Lori Y. Litow
Its: Vice President
PRUDENTIAL SECURITIES CREDIT
CORPORATION
/s/ Fred Robustelli By: /s/ George D. Morgan
- ------------------------- -----------------------
George D. Morgan, III
Its: Vice President
PRIME GROUP REALTY TRUST
By: /s/ W. Michael Karnes
- ------------------------- -----------------------
W. Michael Karnes
Its: Executive Vice President
PRIME GROUP REALTY, L.P.
By: PRIME GROUP REALTY TRUST,
its managing general partner
By: /s/ W. Michael Karnes
- ------------------------- -----------------------
W. Michael Karnes
Its: Executive Vice President
8
<PAGE>
Exhibit 10.31
SECOND AMENDMENT TO CREDIT AGREEMENT
------------------------------------
This Second Amendment to Credit Agreement is made as of the 16th day of
March, 1998 by and among PRIME GROUP REALTY, L.P., a Delaware limited
partnership (the "Borrower"), PRIME GROUP REALTY TRUST, a Maryland trust (the
"Company") and BANKBOSTON, N.A., a national banking association ("BankBoston"),
PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware corporation ("Prudential"),
the other lending institutions which are from time to time listed on Schedule 1,
(collectively, with BankBoston and Prudential, the "Lenders") and BANKBOSTON,
N.A., as agent for itself and such other lending institutions (the "Agent").
WHEREAS, the parties hereto are parties to that certain Credit Agreement
dated as of November 17, 1997 as amended by First Amendment to Credit Agreement
dated as of December 15, 1997 (the "Existing Agreement"); and
WHEREAS, the parties have agreed to amend the Existing Agreement to
decrease the Total Commitment, to further modify the definition of Collateral
Value and to make certain other modifications.
NOW, THEREFORE, the parties hereby agree that effective upon the date
hereof the Existing Agreement is amended as follows:
1. Decrease in Total Commitment. The Total Commitment is hereby decreased
to $200,000,000 and each Lead Lender hereby decreases its Commitment to the
amount shown on the revised Schedule 1.2 attached hereto. Effective upon the
earlier to occur of (i) the date that the Continental Towers Property is no
longer an Assigned Mortgaged Property or (ii) April 24, 1998, the Total
Commitment shall be further decreased to $190,000,000. Such further decrease
shall be accomplished by decreasing the Commitment of each Lead Lender by
$5,000,000.
2. Definitions: (S)1.1 of the Existing Agreement is amended to provide
that the following terms shall have the following meanings and, to the extent
that any of the following terms are already defined in the Existing Agreement,
such definitions shall be deemed to be amended and restated by the following
definitions:
Applicable Margin. As of any date of determination:
(i) 1.20%, if Total Liabilities are less than 30% of Total Adjusted
Assets, or
(ii) 1.35%, if Total Liabilities are equal to or less than 45% of Total
Adjusted Assets but the condition set forth in clause (i) of this definition is
not satisfied,
(iii) 1.50% if Total Liabilities exceed 45% of Total Adjusted Assets.
Any change in the Applicable Margin caused by a change in the ratio of Total
Liabilities to Total Adjusted Assets shall become effective on the 46th day
following the end of the fiscal quarter at
<PAGE>
which such ratio was computed as shown on a Compliance Certificate which
reflects such change in said ratio above or below the 30% level or the 45%
level. Notwithstanding anything to the contrary in this definition for so long
as the Continental Towers Property is an Assigned Mortgaged Property, the
Applicable Margin will be 2.00%.
Collateral Value. With respect to each Mortgaged Property an amount equal
to the lesser of its Appraised Value or its Borrowing Base Value, provided that
the Collateral Value of an Assigned Mortgaged Property shall not exceed the
lesser of (i) the Borrower's net acquisition cost for the Assigned Note and
related documents or (ii) the outstanding principal amount of the applicable
Assigned Note and provided that effective on April 24, 1998 the Collateral Value
of the Continental Towers Property shall become zero.
Real Estate. All real property at any time owned, leased (as lessee or
sublessee) or operated by the Borrower, any Guarantor, or any of the Related
Companies or any Permitted Joint Venture. The term Real Estate also includes the
properties subject to the Security Deeds relating to the Assigned Mortgaged
Properties.
3. Updated Schedules to Credit Agreement. The following Schedules to the
Credit Agreement are hereby updated, supplemented or replaced as follows:
(a) Schedule 1.1 is replaced by Schedule 1.1 attached hereto.
(b) Schedule 1.2 is replaced by Schedule 1.2 attached hereto.
(c) Schedule 1.4 is replaced by Schedule 1.4 attached hereto.
4. Representations and Warranties. The Borrower and the Company represent
and warrant that each of the representations and warranties contained in (S)6 is
true, correct and complete in all material respects as of the date hereof to the
same extent as though made on such date and that no Default or Event of Default
has occurred and is continuing on the date hereof.
5. Effectiveness of Loan Documents. The Borrower hereby confirms that
each of the Security Documents shall continue to secure the payment and
performance of all of the Obligations under the Existing Agreement as amended
hereby and the Borrower's obligations under the Security Documents shall
continue to be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Every reference contained in the
Loan Documents to the Credit Agreement shall mean and be a reference to the
Existing Agreement as amended hereby and as the Credit Agreement may be further
amended. Except as specifically amended by this Amendment, the Existing
Agreement and each of the Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
6. Miscellaneous. This Amendment shall be governed by, interpreted and
construed in accordance with all of the same provisions applicable under the
Existing Agreement including, without limitation, all definitions set forth in
(S)1.1, the rules of interpretation set forth in (S)1.2, the
<PAGE>
provisions relating to governing law set forth in (S)20, the provisions relating
to counterparts in (S)22 and the provision relating to severability in (S)26.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first set forth above.
WITNESS: BANKBOSTON, N.A.
/s/ Angela M. Collins By: /s/ Lori Y. Litow
- ---------------------------- ------------------------------------
Lori Y. Litow
------------------------------------
Its: Vice President
--------------------------------
PRUDENTIAL SECURITIES CREDIT
CORPORATION
____________________________ By: /s/ Jeff K. French
------------------------------------
Jeff K. French
------------------------------------
Its: Vice President
--------------------------------
PRIME GROUP REALTY TRUST
/s/ Patrick L. McGaughy By: /s/ William M. Karnes
- ---------------------------- ------------------------------------
William M. Karnes
------------------------------------
Its: Executive Vice President and
Chief Financial Officer
--------------------------------
PRIME GROUP REALTY, L.P.
By: PRIME GROUP REALTY TRUST,
its managing general partner
/s/ Patrick L. McGaughy By: /s/ William M. Karnes
- ---------------------------- ------------------------------------
William M. Karnes
------------------------------------
Its: Executive Vice President and
Chief Financial Officer
--------------------------------
<PAGE>
SCHEDULE 1.1
Mortgaged Properties
--------------------
1. Donnelley Building, 77 West Wacker Drive, Chicago, IL
2. Hilton Parking Garage, Knoxville, TN
3. SunTrust Bank Bldg., 201 4th Ave., N., Nashville, TN
4. The Weston, 4823 Kingston Pike, Knoxville, TN
5. One Centre Square, 620 Market St., Knoxville, TN
6. Two Centre Square, 625 Gay St., Knoxville, TN
Assigned Mortgaged Properties
-----------------------------
7. Continental Towers, Rolling Meadows, Cook County, Illinois
<PAGE>
SCHEDULE 1.2
Commitments
-----------
Commitment
Lender Commitment Percentage
- ------ ---------- ----------
BankBoston, N.A. $100,000,000 50%
Prudential Securities Credit Corporation $100,000,000 50%
Total $200,000,000 100%
<PAGE>
SCHEDULE 1.4
Letters of Credit
-----------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Beneficiary IRB Project Face Amount
----------- ----------- -----------
- -------------------------------------------------------------------------------
<S> <C> <C>
First Tennessee Bank N.A. Nashville Office Building I, Ltd. $ 4,915,069.00
- -------------------------------------------------------------------------------
First Tennessee Bank N.A. Old Kingston Properties, Ltd. $ 3,583,905.00
- -------------------------------------------------------------------------------
First Tennessee Bank N.A. Professional Plaza, Ltd. $ 9,215,754.00
- -------------------------------------------------------------------------------
First Tennessee Bank N.A. Centre Square II, Ltd. $ 9,215,754.00
- -------------------------------------------------------------------------------
TOTAL $26,930,482.00
- -----
- -------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.32
THIRD AMENDMENT TO CREDIT AGREEMENT
AMONG
PRIME GROUP REALTY, L.P.
and
PRIME GROUP REALTY TRUST
and
BANKBOSTON, N.A.
and
PRUDENTIAL SECURITIES CREDIT CORPORATION
and
THE LENDERS PARTY HERETO
MARCH 30, 1998
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
(S)1. DEFINITIONS AND RULES OF INTERPRETATION................................ 1
(S)1.1. Definitions................................................... 1
(S)1.2. Rules of Interpretation.......................................20
(S)2. REVOLVING CREDIT FACILITY..............................................21
(S)2.1. Commitment to Lend; Limitation on Total Commitment............21
(S)2.2. Reduction of Commitment.......................................21
(S)2.3. The Notes.....................................................22
(S)2.4. Interest on Loans.............................................22
(S)2.5. Requests for Loans............................................23
(S)2.6. Conversion Options............................................23
(S)2.7. Funds for Loans...............................................24
(S)2.8. IRB Indebtedness Account......................................25
(S)2.9. Letters of Credit.............................................25
(S)2.10. Assignment and Reallocation of Loans on Effective Date........28
(S)2.11. Decrease in Total Commitment on Commitment Decrease Date......29
(S)3. REPAYMENT OF THE LOANS.................................................29
(S)3.1. Maturity......................................................29
(S)3.2. Mandatory Repayments of Loan..................................29
(S)3.3. Optional Repayments of Loans..................................29
(S)4. CERTAIN GENERAL PROVISIONS.............................................31
(S)4.1. Revolving Credit Facility Fees and Agent's Fee................31
(S)4.2. Commitment Fee................................................31
(S)4.3. Funds for Payments............................................31
(S)4.4. Computations..................................................32
(S)4.5. Additional Costs, Etc.........................................32
(S)4.6. Capital Adequacy..............................................33
(S)4.7. Certificate...................................................34
(S)4.8. Indemnity.....................................................34
(S)4.9. Interest on Overdue Amounts...................................34
(S)4.10. Inability to Determine Eurodollar Rate........................34
(S)4.11. Illegality....................................................34
(S)4.12. Replacement of Lenders........................................35
(S)4.13. U.S. Tax Certificates.........................................35
(S)5. COLLATERAL SECURITY; NO LIMITATION ON RECOURSE.........................35
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
(S)5.1. Collateral Security.....................................................36
(S)5.2. No Limitation on Recourse...............................................36
(S)5.3. Additional Properties...................................................36
(S)5.4. Conditions to Approval of Additional Properties.........................37
(S)5.5. Release of Mortgaged Properties.........................................38
(S)6. REPRESENTATIONS AND WARRANTIES.......................................................39
(S)6.1. Authority; Etc..........................................................39
(S)6.2. Governmental Approvals..................................................40
(S)6.3. Title to Properties.....................................................40
(S)6.4. Financial Statements....................................................41
(S)6.5. No Material Changes, Etc................................................41
(S)6.6. Franchises, Patents, Copyrights, Etc....................................41
(S)6.7. Litigation..............................................................42
(S)6.8. No Materially Adverse Contracts, Etc....................................42
(S)6.9. Compliance With Other Instruments, Laws, Etc............................42
(S)6.10. Tax Status..............................................................42
(S)6.11. Event of Default........................................................43
(S)6.12. Investment Company Act..................................................43
(S)6.13. Absence of Financing Statements, Etc....................................43
(S)6.14. Setoff, Etc.............................................................43
(S)6.15. Certain Transactions....................................................43
(S)6.16. Benefit Plans: Multiemployer Plans: Guaranteed Pension Plans............43
(S)6.17. Regulations U and X.....................................................44
(S)6.18. Environmental Compliance................................................44
(S)6.19. Subsidiaries and Affiliates.............................................45
(S)6.20. Major Leases............................................................45
(S)6.21. Loan Documents..........................................................45
(S)6.22. Mortgaged Properties....................................................46
(S)7. AFFIRMATIVE COVENANTS OF THE BORROWER................................................49
(S)7.1. Punctual Payment........................................................49
(S)7.2. Maintenance of Office...................................................49
(S)7.3. Records and Accounts....................................................49
(S)7.4. Financial Statements, Certificates and Information......................49
(S)7.5. Notices.................................................................51
(S)7.6. Existence; Maintenance of REIT Status; Maintenance of Properties........52
(S)7.7. Insurance...............................................................53
(S)7.8. Taxes...................................................................53
(S)7.9. Inspection of Properties and Books; Confidential Information............54
(S)7.10. Compliance with Laws, Contracts, Licenses, and Permits..................54
(S)7.11. Use of Proceeds.........................................................54
(S)7.12. Appraisals..............................................................54
(S)7.13. Leases; Lease Approvals.................................................55
(S)7.14. Further Assurance.......................................................55
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
(S)7.15. Environmental Indemnification..................................................55
(S)7.16. Response Actions...............................................................56
(S)7.17. Environmental Assessments......................................................56
(S)7.18. Employee Benefit Plans.........................................................56
(S)7.19. Required Interest Rate Contracts...............................................57
(S)7.20. Equity Interests in the Company................................................57
(S)7.21. Year 2000 Problem..............................................................57
(S)8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER..................................................58
(S)8.1. Restrictions on Indebtedness...................................................58
(S)8.2. Restrictions on Liens, Etc.....................................................58
(S)8.3. Restrictions on Investments....................................................60
(S)8.4. Merger, Consolidation and Disposition of Properties............................60
(S)8.5. Sale and Leaseback.............................................................61
(S)8.6. Compliance with Environmental Laws.............................................61
(S)8.7. Distributions..................................................................61
(S)8.8. Leases.........................................................................62
(S)8.9. Restrictions on the Company....................................................62
(S)9. FINANCIAL COVENANTS OF THE BORROWER.........................................................62
(S)9.1. Collateral Value...............................................................62
(S)9.2. Minimum Debt Service Coverage..................................................62
(S)9.3. Total Liabilities to Total Adjusted Assets.....................................63
(S)9.4. Minimum Tangible Net Worth.....................................................63
(S)9.5. Total Operating Cash Flow to Interest Expense..................................63
(S)9.6. EBITDA to Fixed Charges........................................................63
(S)10. CONDITIONS TO EFFECTIVENESS.................................................................63
(S)10.1. Loan Documents.................................................................63
(S)10.2. Certified Copies of Organization Documents; Good Standing Certificates.........63
(S)10.3. By-laws; Resolutions...........................................................64
(S)10.4. Incumbency Certificate; Authorized Signers.....................................64
(S)10.5. Opinions of Counsel............................................................64
(S)10.6. Payment of Fees................................................................64
(S)10.7. Validity of Liens..............................................................64
(S)10.8. Survey.........................................................................65
(S)10.9. Title Insurance; Title Exception Documents.....................................65
(S)10.10. Leases.........................................................................65
(S)10.11. Estoppel and Attornment Agreements.............................................65
(S)10.12. Certificates of Insurance......................................................65
(S)10.13. Environmental Reports..........................................................65
(S)10.14. Environmental Indemnity........................................................65
(S)10.15. Appraisals.....................................................................66
(S)10.16. Inspecting Engineers' Reports..................................................66
(S)10.17. Initial Letters of Credit......................................................66
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
(S)10.18. UCC Lien Searches.......................................................66
(S)11. CONDITIONS TO ALL BORROWINGS.........................................................66
(S)11.1. Representations True; No Event of Default; Compliance Certificate.......66
(S)11.2. No Legal Impediment.....................................................67
(S)11.3. Governmental Regulation.................................................67
(S)11.4. Proceedings and Documents...............................................67
(S)12. EVENTS OF DEFAULT; ACCELERATION; ETC.................................................67
(S)12.1. Events of Default and Acceleration......................................67
(S)12.2. Termination of Commitments; Drawing of IRB Letters of Credit............70
(S)12.3. Remedies................................................................70
(S)12.4. Distribution of Collateral Proceeds.....................................70
(S)12.5. Addition of Real Estate Assets to Cure Default..........................71
(S)13. SETOFF...............................................................................72
(S)14. THE AGENT............................................................................72
(S)14.1. Authorization...........................................................72
(S)14.2. Employees and Agents....................................................73
(S)14.3. No Liability............................................................73
(S)14.4. No Representations......................................................73
(S)14.5. Payments................................................................73
(S)14.6. Holders of Notes........................................................74
(S)14.7. Indemnity...............................................................74
(S)14.8. Agent as Lender.........................................................75
(S)14.9. Resignation.............................................................75
(S)14.10. Notification of Defaults and Events of Default..........................75
(S)14.11. Duties in the Case of Enforcement.......................................75
(S)14.12. Mandatory Resignation of Agent..........................................76
(S)15. EXPENSES.............................................................................76
(S)16. INDEMNIFICATION......................................................................77
(S)17. SURVIVAL OF COVENANTS, ETC...........................................................78
(S)18. ASSIGNMENT; PARTICIPATIONS; ETC......................................................78
(S)18.1. Conditions to Assignment by Lenders.....................................78
(S)18.2. Certain Representations and Warranties; Limitations; Covenants..........79
(S)18.3. Register................................................................80
(S)18.4. New Notes...............................................................80
(S)18.5. Participations..........................................................80
(S)18.6. Pledge by Lender........................................................81
(S)18.7. No Assignment by Borrower...............................................81
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C>
(S)18.8. Disclosure..............................................................81
(S)19. NOTICES, ETC.........................................................................81
(S)20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE...................................82
(S)21. HEADINGS.............................................................................82
(S)22. COUNTERPARTS.........................................................................83
(S)23. ENTIRE AGREEMENT.....................................................................83
(S)24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS.......................................83
(S)25. CONSENTS, AMENDMENTS, WAIVERS, ETC...................................................83
(S)26. SEVERABILITY.........................................................................84
(S)27. ACKNOWLEDGMENTS......................................................................84
(S)28. PARTNER LIABILITY....................................................................84
(S)28.1. Limited Recourse to Company.............................................84
(S)28.2. Limited Recourse to Partners of Borrower other than the Company.........85
</TABLE>
<TABLE>
<S> <C>
Exhibit A Form of Note
Exhibit B Form of Loan Request
Exhibit C Form of Compliance Certificate
Exhibit D Form of Letter of Credit Request
Exhibit E Opinion Requirements
Exhibit F Form of Assignment and Acceptance
Schedule 1 Lenders; Domestic and Eurodollar Lending Offices
Schedule 1.1 Mortgaged Properties
Schedule 1.2 Commitments and Commitment Percentages
Schedule 1.3 Related Companies, Guarantor Subsidiaries and Permitted Joint Ventures
Schedule 1.4 Letters of Credit
Schedule 6.3 Title to Properties
Schedule 6.7 Litigation
Schedule 6.18 Environmental Reports
Schedule 6.22(d) Engineering Reports
Schedule 6.22(l) Rent Rolls
Schedule 6.22(m) Service Agreements
Schedule 6.22(n) Other Material Agreements
Schedule 8.1(f) Recourse Indebtedness
Schedule 8.3(d) Investments
</TABLE>
<PAGE>
THIRD AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
This Third Amendment to Credit Agreement is made as of the 30th day of
March, 1998 by and among PRIME GROUP REALTY, L.P., a Delaware limited
partnership (the "Borrower"), PRIME GROUP REALTY TRUST, a Maryland trust (the
"Company") and BANKBOSTON, N.A., a national banking association ("BankBoston"),
PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware corporation ("Prudential"),
the other lending institutions which are from time to time listed on Schedule 1,
(collectively, with BankBoston and Prudential, the "Lenders") and BANKBOSTON,
N.A., as agent for itself and such other lending institutions (the "Agent").
WHEREAS, BankBoston and Prudential provided a secured credit facility to
the Borrower pursuant to that certain Credit Agreement dated as of November 17,
1997 as amended by First Amendment to Credit Agreement dated as of December 15,
1997 and by Second Amendment to Credit Agreement dated as of March 16, 1998 (the
"Existing Agreement"); and
WHEREAS, certain financial institutions have agreed to become Lenders and
provide Commitments as set forth on the signature pages and Schedule 1.1 hereto
and in connection therewith the parties have agreed to amend the Existing
Agreement by restating it in its entirety.
NOW, THEREFORE, the parties hereby agree that effective upon the date
hereof the Existing Agreement is amended and restated as follows:
(S)1. DEFINITIONS AND RULES OF INTERPRETATION
(S)1.1. Definitions. The following terms shall have the meanings set
forth in this (S)l or elsewhere in the provisions of this Agreement referred to
below:
Additional Properties. Real Estate Assets which hereafter become Mortgaged
Properties or Assigned Mortgage Properties pursuant to (S)5.3.
Affiliated Lenders. Any commercial bank or other commercial lender which
is (i) the parent corporation of any of the Lenders, (ii) a wholly-owned
subsidiary of any of the Lenders or (iii) a wholly-owned subsidiary of the
parent corporation of any of the Lenders.
Agent. BankBoston, N.A. acting as agent for the Lenders or any successor
agent.
Agent's Head Office. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time in writing to the Borrower.
Agreement. That certain Credit Agreement dated as of November 17, 1997 as
amended by First Amendment to Credit Agreement dated as of December 15, 1997 and
by Second Amendment to Credit Agreement dated as of March 16, 1998, and as
amended and restated by this Third Amendment to Credit Agreement, including the
Schedules and Exhibits hereto.
<PAGE>
Applicable Margin. As of any date of determination:
(i) 1.20%, if Total Liabilities are less than 30% of Total Adjusted
Assets, or
(ii) 1.35%, if Total Liabilities are equal to or less than 45% of Total
Adjusted Assets but the condition set forth in clause (i) of this definition is
not satisfied,
(iii) 1.50% if Total Liabilities exceed 45% of Total Adjusted Assets.
Any change in the Applicable Margin caused by a change in the ratio of Total
Liabilities to Total Adjusted Assets shall become effective on the 46th day
following the end of the fiscal quarter at which such ratio was computed as
shown on a Compliance Certificate which reflects such change in said ratio above
or below the 30% level or the 45% level. Notwithstanding anything to the
contrary in this definition for so long as the Continental Towers Property is an
Assigned Mortgaged Property, the Applicable Margin will be 2.00%.
Appraisals. Appraisals of the value of the Mortgaged Properties determined
on an "as is" market value basis, prepared in writing independently and
impartially by qualified MAI appraisers selected and retained by the Agent and
paid for by Borrower, the form and substance of such appraisals and final
determination of market value of the Mortgaged Properties thereunder to be
reviewed and subject to approval by the Requisite Lenders based on their
respective reviews of such appraisals pursuant to their internal appraisal
review policies and procedures. All appraisals shall be prepared in accordance
with the Uniform Standards of Professional Appraisal Practice, Supplemental
Standards Applicable To Federally Related Transactions, as further described in
Title XI of the "Financial Institutions Reform, Recovery and Enforcement Act of
1989" ("FIRREA"), and any additional standards and conditions required for
appraisals prepared for the Lead Lenders.
Appraised Value. The market value of each of the Mortgaged Properties,
determined by the Requisite Lenders based upon the most recent Appraisals
obtained pursuant to (S)5.4(b), (S)7.12 or (S)10.14. In determining Appraised
Value the Requisite Lenders shall exclude any value associated with any
unimproved land or unoccupied Buildings located on the applicable Mortgaged
Property.
Assigned Mortgaged Properties. The Real Estate Assets designated as such
on Schedule 1.1, the Buildings thereon and all other property described in the
Security Deeds relating thereto and any other Real Estate Assets, Buildings
thereon and other property described in the Security Deeds assigned to the Agent
pursuant to (S)5.3(c).
Assigned Notes. The Promissory Notes secured by the Security Deeds on the
Assigned Mortgaged Properties acquired by the Borrower and assigned to the
Agent.
Assigned Note Assignments. The Assignments of Liens and Documents from
Borrower to the Agent pursuant to which the Assigned Notes and all related loan
documents and Security
<PAGE>
Documents are assigned to the Agent.
Assignment and Acceptance. See (S)18.
Assignments of Leases and Rents. The assignments of rents and leases from
the Mortgagor to the Agent pursuant to which the Mortgagor shall grant and
assign to the Agent as agent for the Lenders a security interest in and
assignment of the Mortgagor's interest as lessor with respect to all Leases and
rents thereunder of all or any part of the Mortgaged Properties as security for
the Obligations.
BankBoston. As defined in the preamble hereto.
Base Rate. The higher of (a) the annual rate of interest announced from
time to time by BankBoston at the Agent's Head Office as its "base rate", and
(b) one half of one percent (1/2%) above the overnight federal funds effective
rate as published by the Board of Governors of the Federal Reserve System, as in
effect from time to time.
Base Rate Loans. Those Loans bearing interest calculated by reference to
the Base Rate.
Borrower. As defined in the preamble hereto.
Borrowing Base Value. With respect to each Mortgaged Property, an amount
equal to (i) two times the Net Operating Income for the most recently completed
two fiscal quarters, minus the Reserve Amount for such Mortgaged Property,
divided by (ii) a capitalization rate equal to 0.09 for the West Wacker Drive
Property or 0.10 for any other Mortgaged Property, provided however that with
respect to each Assigned Mortgaged Property, the Net Operating Income for
purposes of this definition shall be the lesser of its Net Operating Income
computed pursuant to the definition thereof or the actual amount of interest
paid (but not prepaid) on the applicable Assigned Note during such period.
Borrowing Date. The date on which any Loan is made or is to be made, and
the date on which any Loan is converted or continued in accordance with (S)2.6.
Buildings. The buildings, structures and other improvements now or
hereafter located on the Mortgaged Properties.
Building Service Equipment. All apparatus, fixtures and articles of
personal property owned by the Mortgagor now or hereafter attached to or used or
procured for use in connection with the operation or maintenance of any Building
located on or included in the Mortgaged Properties, including, but without
limiting the generality of the foregoing, all engines, furnaces, boilers,
stokers, pumps, heaters, tanks, dynamos, motors, generators, switchboards,
electrical equipment, heating, plumbing, lifting and ventilating apparatus, air-
cooling and air-conditioning apparatus, gas and electric fixtures, elevators,
escalators, fittings, and machinery and all other equipment of every kind and
description, used or procured for use in the operation of the Buildings (except
apparatus, fixtures or articles of personal property belonging to lessees or
other
<PAGE>
occupants of such building or to persons other than the Mortgagor unless the
same be abandoned by any such lessee or other occupant or person), together with
any and all replacements thereof and additions thereto.
Business Day. Any day on which banking institutions in Boston,
Massachusetts and Chicago, Illinois are open for the transaction of banking
business and, in the case of Eurodollar Rate Loans, also a day which is a
Eurodollar Business Day.
Capitalized Leases. Leases under which the Borrower is the lessee or
obligor, the discounted future rental payment obligations under which are
required to be capitalized on the balance sheet of the Borrower in accordance
with generally accepted accounting principles.
CERCLA. See (S)6.18.
Closing Balance Sheet. The pro-forma consolidated balance sheet of the
Company dated June 30, 1997 and reflecting the closing of the Formation
Transactions contained in the Prospectus Financial Statements and the related
notes thereto.
Code. The Internal Revenue Code of 1986, as amended and in effect from time
to time.
Collateral. All of the properties of the Borrower or of any Guarantor that
are or are intended to be subject to the security interests, liens and mortgages
created by the Security Documents, including, without limitation, the Assigned
Notes, the Mortgaged Properties, the Leases, the Permits and the Service
Agreements.
Collateral Value. With respect to each Mortgaged Property an amount equal
to the lesser of its Appraised Value or its Borrowing Base Value, provided that
the Collateral Value of an Assigned Mortgaged Property shall be an amount equal
to the least of: (i) its Appraised Value, (ii) its Borrowing Base Value, (iii)
the Borrower's net acquisition cost for the Assigned Note and related documents
or (iv) the outstanding principal amount of the applicable Assigned Note and
provided that effective on April 24, 1998 the Collateral Value of the
Continental Towers Property shall become zero.
Commitment. With respect to each Lender, the amount set forth from time to
time on Schedule 1.2 hereto as the amount of such Lender 's commitment to make
Loans to the Borrower. From the Effective Date until the Commitment Decrease
Date, the Commitments of the Lead Lenders will include their Temporary
Commitments.
Commitment Decrease Date. The earlier of (i) the date that the Continental
Towers Property is released as an Assigned Mortgaged Property or (ii) April 24,
1998.
Commitment Percentage. With respect to each Lender , the percentage set
forth from time to time on Schedule 1.2 hereto as such Lender 's percentage of
the Total Commitment.
Common Shares. All common shares of beneficial interest of the Company,
including,
<PAGE>
without limitation, those offered pursuant to the Equity Prospectus.
Common Units. Partnership interests representing the common equity in the
Borrower which interests are not subject to any mandatory redemption or entitled
to any distributions other than distributions based on the dividends paid on the
Common Shares.
Company. As defined in the preamble hereto.
Continental Towers Property. The Assigned Mortgaged Property known as
Continental Towers located at or near Golf Road, Rolling Meadows, Illinois.
Conversion Request. A notice given by the Borrower to the Agent of its
election to convert or continue a Loan in accordance with (S)2.6.
Default. See (S)12.1.
Delinquent Lender. See (S)14.5(c).
Distribution. The declaration or payment of any dividend or distribution of
cash or cash equivalents to the holders of any of the Equity Interests, or any
distribution or payment to any officer, employee or director of the Borrower or
the Company, other than reasonable employee compensation.
Dollars or $. Dollars in lawful currency of the United States of America.
Domestic Lending Office. Initially, the office of each Lender designated as
such in Schedule 1 hereto; thereafter, such other office of such Lender, if any,
located within the United States that will be making or maintaining Base Rate
Loans.
Drawing. The drawing of any Letter of Credit by the beneficiary thereof
which is paid by the Agent pursuant thereto.
Drawing Date. The date on which a draft under a Letter of Credit is paid
by the Agent.
EBITDA. The Borrower's earnings before interest, taxes, depreciation and
amortization, as determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles, except that rental income shall be determined on
a cash basis.
Effective Date. The date upon which this Third Amendment to Credit
Agreement shall become effective pursuant to (S)10.
Eligible Assignee. Any of (a) a commercial bank organized under the laws of
the United States, or any State thereof or the District of Columbia, and having
total assets in excess of $1,000,000,000; (b) a savings and loan association or
savings bank organized under the laws of the United States, or any State thereof
or the District of Columbia, and having a net worth of at
<PAGE>
least $100,000,000, calculated in accordance with generally accepted accounting
principles; (c) a commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation and Development
(the "OECD"), and having total assets in excess of $1,000,000,000, provided that
such bank is acting through a branch or agency located in the country in which
it is organized or another country which is also a member of the OECD; and (d)
the central bank of any country which is a member of the OECD. Notwithstanding
anything to the contrary, the term Eligible Assignee shall exclude any Person
controlling, controlled by or under common control with, the Borrower or the
Company.
Employee Benefit Plan. Any employee benefit plan within the meaning of (S)3
(3) of ERISA maintained or contributed to by the Borrower or any ERISA
Affiliate, other than a Multiemployer Plan.
Environmental Laws. See (S)6.18(a).
Environmental Reports. Reports addressed to the Agent (or addressed to the
Borrower with an acceptable reliance letter addressed to the Agent) prepared by
environmental engineering firms reasonably acceptable to the Lead Lenders
relating to environmental site assessments and other evaluations of
environmental conditions which may have been conducted with respect to the
Mortgaged Properties described in Schedule 6.18 hereto and conducted with
respect to prospective Additional Properties pursuant to (S)5.3.
Equity Interests. Collectively, all equity ownership interests in the
Borrower or the Company including, without limitation, the Common Shares, the
Preferred Shares, the Common Units and the Preferred Units.
Equity Prospectus. The prospectus dated November 12, 1997 relating to
12,380,000 Common Shares included in the Registration Statement (No. 333-33547)
of the Company on Form S-11 as filed with the Securities Exchange Commission on
August 13, 1997, as amended, as the same has been or may be further amended or
supplemented from time to time.
ERISA. The Employee Retirement Income Security Act of 1974, as amended and
in effect from time to time.
ERISA Affiliate. Any Person which is treated as a single employer with the
Borrower under (S)414 of the Code.
ERISA Reportable Event. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of (S)4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
Eurocurrency Reserve Rate. For any day with respect to a Eurodollar Rate
Loan, the maximum rate (expressed as a decimal) at which any of the Lenders
would be required to maintain reserves under Regulation D of the Board of
Governors of the Federal Reserve System (or any successor or similar regulations
relating to such reserve requirements) against
<PAGE>
"Eurocurrency Liabilities" (as that term is used in Regulation D) , if such
liabilities were outstanding. The Eurocurrency Reserve Rate shall be adjusted
automatically on and as of the effective date of any change in the Eurocurrency
Reserve Rate and the Agent shall provide the Borrower with prompt written notice
of any such change.
Eurodollar Business Day. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Agent in its sole
discretion acting in good faith.
Eurodollar Lending Office. Initially, the office of each Lender designated
as such in Schedule 1 hereto; thereafter, such other office of such Lender, if
any, that shall be making or maintaining Eurodollar Rate Loans.
Eurodollar Rate. For any Interest Period with respect to a Eurodollar Rate
Loan, the rate per annum equal to the quotient (rounded upwards to the nearest
1/16 of one percent) of (a) the rate at which the Agent is offered Dollar
deposits two Eurodollar Business Days prior to the beginning of such Interest
Period in an interbank eurodollar market where the eurodollar and foreign
currency and exchange operations of the Agent are customarily conducted, for
delivery on the first day of such Interest Period, for the number of days
comprised therein and in an amount comparable to the amount of the Eurodollar
Rate Loan to which such Interest Period applies, divided by (b) a number equal
to 1.00 minus the Eurocurrency Reserve Rate.
Eurodollar Rate Loans. Loans bearing interest calculated by reference to
the Eurodollar Rate.
Event of Default. See (S)12.1.
Existing Agreement. See recitals.
Facility Closing Date. November 17, 1997
Financeable Ground Lease. A ground lease satisfactory to the Requisite
Lenders and the Agent in their reasonable discretion, which must provide
protections for a leasehold mortgagee which include, among other things, (i) a
remaining term of no less than 30 years from the recording of the Security Deed
relating thereto; (ii) that the lease will not be terminated until the leasehold
mortgagee has received notice of a default, has had a reasonable opportunity to
cure or complete foreclosure, and has failed to do so; (iii) a new lease on the
same terms to the leasehold mortgagee as tenant if the ground lease is
terminated for any reason, (iv) non-merger of the fee and leasehold estates, (v)
free transferability of the tenant's interest under the ground lease and (vi)
that insurance proceeds and condemnation awards (from the fee interest as well
as the leasehold interest) will be applied pursuant to the terms of the
applicable leasehold mortgage.
Fixed Charges. With respect to any fiscal period of the Borrower, an amount
determined on a consolidated basis equal to the sum of (i) Interest Expense,
(ii) regularly scheduled installments of principal payable with respect to all
Indebtedness of Borrower, (iii) Indebtedness
<PAGE>
which matured during such fiscal period and was not refinanced with replacement
Indebtedness plus (iv) all Distributions paid during such period to the holders
of any Preferred Shares or Preferred Units.
Fixed Rate Prepayment Fee. See (S)3.3.
Formation Transactions. The transactions described in the Equity Prospectus
which were consummated on or before the Facility Closing Date pursuant to which
(i) the Common Shares were sold pursuant to an initial public offering of such
Common Shares and certain Preferred Shares, Common Units and Preferred Units
were sold or issued in exchange for the contribution of properties; (ii) the net
proceeds thereof received by the Company were contributed as capital to the
Borrower; (iii) the Borrower directly or indirectly acquired all assets
reflected on the Closing Balance Sheet, and (iv) certain Indebtedness secured by
Liens on the Mortgaged Properties or other Real Estate Assets was repaid and
such Liens discharged.
Funds From Operations. With respect to any fiscal period of the Borrower,
an amount equal to the Borrower's Funds From Operations determined in accordance
with the definition approved by the National Association of Real Estate
Investment Trusts, except that rental income shall be determined on a cash
basis.
Generally Accepted Accounting Principles. Principles that are (a)
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, as in effect from time to time
and (b) consistently applied with past financial statements of the Borrower
adopting the same principles and with the Prospectus Financial Statements.
Guaranteed Pension Plan. Any employee pension benefit plan within the
meaning of (S)3(2) of ERISA maintained or contributed to by the Borrower or any
ERISA Affiliate the benefits of which are guaranteed on termination in full or
in part by the PBGC pursuant to Title IV of ERISA, other than a Multiemployer
Plan.
Guarantor. Each of the Guarantor Subsidiaries.
Guarantor Subsidiaries. The partnerships, limited liability companies and
corporations designated as Guarantor Subsidiaries on Schedule 1.3 hereto and any
other partnerships, limited liability companies or corporations hereafter
approved by the Requisite Lenders which are at least 99% owned by Borrower and
which execute and deliver a Guaranty.
Guaranty. The Unconditional Guaranty of Payment and Performance from each
Guarantor to the Agent pursuant to which such Guarantor has guaranteed the
Obligations.
Hazardous Materials. See (S)6.18(b).
Indebtedness. All obligations, contingent and otherwise, that in accordance
with Generally Accepted Accounting Principles should be classified upon the
obligor's balance sheet as liabilities, or to which reference should be made by
footnotes thereto, including in any event
<PAGE>
the following whether or not so classified: (a) the Obligations, (b) all debt
and similar monetary obligations for borrowed money, whether direct or indirect;
(c) all liabilities secured by any mortgage, pledge, negative pledge, security
interest, lien, negative lien, charge, or other encumbrance existing on property
owned or acquired subject thereto, whether or not the liability secured thereby
shall have been assumed; (d) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness or obligations
of others, including any obligation to supply funds to or in any manner to
invest in, directly or indirectly, the debtor, to purchase indebtedness, or to
assure the owner of indebtedness against loss, through a master lease
transaction or an agreement to purchase goods, supplies, or services for the
purpose of enabling the debtor to make payment of the indebtedness held by such
owner or otherwise, and the obligations to reimburse the issuer in respect of
any letters of credit; and (e) joint venture and partnership obligations,
contingent or otherwise of the type set forth in (a) through (d) above.
Indebtedness shall not be deemed to include obligations under a purchase and
sale agreement or contribution agreement for the acquisition of assets by
Borrower or the Related Companies unless entered into for the purpose of
supporting the Indebtedness of the seller or contributor.
Indemnity Agreement. The Indemnity Agreement regarding Hazardous Materials
from the Borrower and the Company with respect to the Mortgaged Properties, and
any similar agreements which may be executed with respect to Additional
Properties.
Initial Letters of Credit. The Letters of Credit described on Schedule 1.4
hereto.
Inspecting Engineers' Reports. Reports addressed to the Agent (or
addressed to the Borrower with an acceptable reliance letter addressed to the
Agent) prepared by engineering firms reasonably acceptable to the Lead Lenders
relating to the structural conditions of the Buildings on the Mortgaged
Properties described in Schedule 6.22 (d) hereto and conducted with respect to
prospective Additional Properties pursuant to (S)5.3.
Interest Expense. With respect to any fiscal period of the Borrower, an
amount equal to the sum of the following with respect to all Indebtedness of the
Borrower and the Related Companies: (i) total interest expense, accrued in
accordance with Generally Accepted Accounting Principles plus (ii) all
capitalized interest determined in accordance with Generally Accepted Accounting
Principles, plus (iii) the amortization of deferred financing costs.
Interest Payment Date. As to any Base Rate Loan or Eurodollar Rate Loan,
the first day of each calendar month.
Interest Period. With respect to each Loan, (a) initially, the period
commencing on the Borrowing Date of such Loan and ending on the last day of one
of the periods set forth below, as selected by the Borrower in a Loan Request
(i) for any Base Rate Loan, the calendar month; and (ii) for any Eurodollar Rate
Loan, 1, 2 or 3 months; and (b) thereafter, each period commencing on the last
day of the next preceding Interest Period applicable to such Loan and ending on
the last day of one of the periods set forth above, as selected by the Borrower
in a Conversion Request; provided that all of the foregoing provisions relating
to Interest Periods are subject to the following:
<PAGE>
(A) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar Business Day
unless the result of such extension would be to carry such Interest Period into
another calendar month, in which event such Interest Period shall end on the
immediately preceding Eurodollar Business Day;
(B) if any Interest Period with respect to a Base Rate Loan would end
on a day that is not a Business Day, that Interest Period shall end on the next
succeeding Business Day;
(C) if the Borrower shall fail to give notice as provided in (S)2.6,
the Borrower shall be deemed to have requested a conversion of the affected
Eurodollar Rate Loan to a Base Rate Loan on the last day of the then current
Interest Period with respect thereto;
(D) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Eurodollar Business Day of a
calendar month; and
(E) the Borrower may not select any Interest Period relating to any
Eurodollar Rate Loan that would extend beyond the Maturity Date.
Interest Rate Contracts. Interest rate swaps, caps or similar agreements
providing for interest rate protection.
Investments. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock, partnership or
membership interests or Indebtedness of, or for loans, advances, capital
contributions or transfers of property to, or in respect of any guaranties (or
other commitments as described under Indebtedness), or obligations of, any
Person or for the acquisition of real property or other assets. In determining
the aggregate amount of Investments outstanding at any particular time
Investments shall be counted at their acquisition cost, including the value of
any Equity Interests issued in exchange for the contribution of property,
subject to the following: (a) the amount of any Investment represented by a
guaranty shall be taken at not less than the principal amount of the obligations
guaranteed and still outstanding; (b) there shall be included as an Investment
all interest accrued with respect to Indebtedness constituting an Investment
unless and until such interest is paid; (c) there shall be deducted in respect
of each such Investment any amount received as a return of capital (but only by
repurchase, redemption, retirement, repayment, liquidating dividend or
liquidating distribution); (d) there shall not be deducted in respect of any
Investment any amounts received as earnings on such Investment, whether as
dividends, interest or otherwise, except that accrued interest included as
provided in the foregoing clause (b) may be deducted when paid; and (e) there
shall not be deducted from the aggregate amount of Investments any decrease in
the value thereof.
IRB Documents. The Indentures of Trust, Financing Agreements, Loan
Agreements, Bonds, Notes and other documents relating to the IRB Indebtedness.
<PAGE>
IRB Indebtedness. The Indebtedness of certain of the Guarantor
Subsidiaries with respect to fourteen (14) issues of industrial development
bonds, the proceeds of which were used to acquire or develop certain of the
Additional Properties listed on Schedule 5.3(b), excluding the Indebtedness of
certain Guarantor Subsidiaries with respect to such Properties in Arlington
Heights, Illinois for so long as the bonds relating thereto are held by the
Borrower or a Related Company.
IRB Indebtedness Account. A deposit account established by the Borrower
with the Agent into which the Borrower will deposit funds as required by (S)2.8
and which the Agent will debit to reimburse the amount of Drawings paid under
the IRB Letters of Credit.
IRB Letters of Credit. The Letters of Credit issued with respect to the
IRB Indebtedness for the benefit of the respective trustees named in the IRB
Documents and the Letter of Credit expiring on or before April 15, 1998 for the
benefit of Credit Suisse First Boston, which is the issuer of certain prior
letters of credit relating to certain of the IRB Indebtedness.
Lead Lenders. BankBoston and Prudential. If a Lead Lender shall enter
into one or more assignments pursuant to (S)18 which have the effect of reducing
the Commitment of such Lender to less than $20,000,000 (which number will be
proportionately reduced in the event of any reduction in the Total Commitment
pursuant to (S)2.2), then such Lender shall no longer be a Lead Lender. If by
virtue of this immediately preceding sentence there are no longer any Lead
Lenders, then all approvals, consents and other matters which require the action
by the Lead Lenders hereunder shall thereafter require the specified action by
the Requisite Lenders.
Leases. Leases, licenses and agreements whether written or oral, relating
to the use or occupation of space in or on the Buildings or on the Mortgaged
Properties by persons other than Mortgagor, including but not limited to the
leases listed on Schedule 6.22(1).
Lenders. BankBoston, Prudential and the other lending institutions listed
from time to time on Schedule 1 hereto and any other Person who becomes an
assignee of any rights of a Lender pursuant to (S)18 or a Person who acquires
all or substantially all of the stock or assets of a Lender.
Letter of Credit. A letter of credit which is one of the Initial Letters
of Credit or is hereafter issued by the Agent for the account of the Borrower
pursuant to (S)2.9.
Letter of Credit Request. See (S)2.9.
Lien. Any lien, encumbrance, mortgage, deed of trust, pledge, restriction
or other security interest. If title to any Real Estate Asset is held by a
Subsidiary of Borrower then any pledge or assignment of Borrower's stock,
partnership interest, limited liability company interest or other ownership
interest in such Subsidiary shall be deemed to be a Lien on the Real Estate
Assets owned by such Subsidiary.
Loan Documents. This Agreement, the Notes, the Guaranties, the Security
Documents, the Indemnity Agreement and any and all other agreements, documents
and instruments now or
<PAGE>
hereafter evidencing, securing or otherwise relating to the Loans or the Letters
of Credit.
Loan Request. See (S)2.5.
Loans. Loans made or to be made by the Lenders to the Borrower pursuant to
(S)2 including, without limitation, the Loans made by the Lead Lenders under the
Existing Agreement and reallocated among the Lenders pursuant to (S)2.10.
Major Lease. A Lease of (i) 100,000 square feet or more of the gross
leasable area of a Building which is used primarily for industrial or warehouse
purposes or (ii) 25,000 square feet or more of the gross leasable area of a
Building which is used primarily for office purposes, and any guaranty of the
tenant's obligations under any such Lease.
Major Tenants. As to any Major Lease, those tenants that are parties to
that Major Lease and any guarantors of those tenants' obligations thereunder.
Material Adverse Effect. A material adverse effect on (i) any of the
Mortgaged Properties, (ii) the business, results of operations or financial
condition of the Borrower and the Related Companies taken as a whole, (iii) the
ability of the Borrower, the Company or any Guarantor to perform its obligations
under the Loan Documents, or (iv) the validity or enforceability of any of the
Loan Documents or the remedies or material rights of the Agent or the Lenders
thereunder.
Maturity Date. November 17, 2000, or such earlier date on which the Loans
shall become due and payable pursuant to the terms hereof.
Maximum Principal Amount. Maximum Principal Amount shall mean the least of
the following: (i) the maximum Outstanding Principal Amount which may exist
without causing a violation of Section 9.1; (ii) the maximum Outstanding
Principal Amount which may exist without causing a violation of Section 9.2; and
(iii) the Total Commitment.
Mortgaged Properties. The (a) Real Estate Assets described on Schedule 1.1
hereto and such other Real Estate Assets which may be subsequently conveyed to
the Agent as Additional Properties to secure the Obligations in accordance with
(S)5.3 hereof, excluding from the foregoing any Real Estate Assets which the
Agent may release pursuant to (S)5.5 hereof, as such Real Estate Assets are more
particularly described in the Security Deeds; (b) the Buildings and Building
Service Equipment located thereon and (to the extent assignable) all Permits
relating thereto; and (c) all other property incident to any of same described
in any Security Document or other Loan Document. The term Mortgaged Properties
also includes the Assigned Mortgaged Properties.
Mortgagor. With respect to each of the Mortgaged Properties, the owner
thereof.
Multiemployer Plan. Any multiemployer plan within the meaning of (S)3(37)
of ERISA maintained or contributed to by the Borrower or any ERISA Affiliate.
<PAGE>
Net Offering Proceeds. All net cash proceeds received after the date
hereof by the Borrower or the Company as a result of the sale of common,
preferred or other classes of stock of the Company or the issuance of limited
partnership interests in the Borrower after deducting customary costs and
discounts of issuance paid by Company or Borrower in connection therewith.
Net Operating Income. With respect to any fiscal period of the Borrower and
with respect to any one or more of the Real Estate Assets, the total rental and
other operating income from the operation of such Real Estate Assets after
deducting all expenses and other proper charges incurred by the Borrower in
connection with the operation of the Mortgaged Properties during such fiscal
period, including, without limitation, real estate taxes, bad debt expenses and
management fees (which fees shall not be lower than the market rate for
management fees for similar properties in the same general location and such
management fees shall be deducted when computing Net Operating Income without
regard to the extent to which such management fees are passed through to the
tenants), but before payment or provision for Fixed Charges, income taxes, and
depreciation, amortization, and other non-cash expenses, all as determined in
accordance with Generally Accepted Accounting Principles except that (a) rental
income will be determined on a cash basis, provided, however, that each payment
of prepaid rent shall be allocated to the period for which it applies, (b)
adjustments will be made so that each fiscal quarter will include one quarter of
annual real estate tax and insurance expenses, and (c) any non-recurring income
or income not directly from the operation of such Real Estate Asset, such as
interest income, shall be excluded.
Notes. See (S)2.3.
Obligations. All indebtedness, obligations and liabilities of the Borrower
or any Guarantor to any of the Lenders and the Agent, individually or
collectively, under this Agreement or any of the other Loan Documents or in
respect of any of the Loans, the Letters of Credit or the Notes or other
instruments at any time evidencing any thereof, whether existing on the date of
this Agreement or arising or incurred hereafter, direct or indirect, joint or
several, absolute or contingent, matured or unmatured, liquidated or
unliquidated, secured or unsecured, arising by contract, operation of law of
otherwise.
Outstanding Principal Amount. The sum of (i) the aggregate amount of
unpaid principal of the Loans as of any date of determination plus (ii) the
aggregate face amount of each Letter of Credit issued under (S) 2.9 which has
not expired or terminated prior to such date of determination, excluding from
the face amount of any Letter of Credit the amount by which any Unreimbursed
Drawing has reduced the availability thereunder until such availability is
reinstated pursuant to the terms of such Letter of Credit.
PBGC. The Pension Benefit Guaranty Corporation created by (S)4002 of ERISA
and any successor entity or entities having similar responsibilities.
Permits. All governmental permits, licenses, and approvals necessary for
the lawful operation and maintenance of the Mortgaged Properties.
<PAGE>
Permitted Acquisition. The acquisition by Borrower or any Related Company
of Real Estate Assets which are located in the continental United States and are
leased or intended to be leased primarily for industrial or office purposes.
Permitted Joint Ventures. Any entity in which Borrower has any direct or
indirect ownership interest, except the Company and the Related Companies and
except Prime Group Realty Services, Inc., including general partnerships,
corporations, trusts and limited liability companies, which own or propose to
develop industrial or office properties provided that neither Borrower or any
Guarantor shall have any recourse liability for the Indebtedness of such entity.
Permitted Joint Ventures existing on the date hereof are set forth in Schedule
1.3.
Permitted Developments. The construction of any new buildings or the
construction of additions expanding existing buildings or the rehabilitation of
the existing buildings (other than normal refurbishing and tenant fit up work
when one tenant leases space previously occupied by another tenant) relating to
any Real Estate Assets of the Borrower or any of the Related Companies and each
Permitted Development shall be counted for purposes of (S)8.3 from the time of
commencement of the applicable construction work until the later of (i) the date
that leases for at least 70% of the gross leasable area of such project have
been executed or (ii) the date that a final certificate of occupancy has been
issued with respect to such project, in the amount of the total projected cost
of such project.
Permitted Liens. Liens, security interests and other encumbrances
permitted by (S)8.2.
Person. Any individual, corporation, partnership, trust, unincorporated
association, business, or other legal entity, and any government or any
governmental agency or political subdivision thereof.
Pledge Agreements. The Pledge and Security Agreements between each
Guarantor Subsidiary which is a borrower under any IRB Documents and the Agent
pursuant to which certain bonds purchased with the proceeds of Drawings under
the IRB Letters of Credit would be pledged to the Agent until such bonds are
remarketed or redeemed.
Pledged Bonds. Bonds pledged to the Agent pursuant to any Pledge
Agreement.
Preferred Shares. All Preferred Shares of beneficial interest of the
Company including, without limitation, the 2,000,000 shares of Series A
Cumulative Convertible Preferred Shares as described in the Equity Prospectus.
Preferred Units. All partnership interests in the Borrower other than the
Common Units, including, without limitation, the Preferred Units described in
the Equity Prospectus.
Prepayment Date. See (S)3.3.
Prime. The Prime Group, Inc., an Illinois corporation.
Pro Forma Debt Service Charges for the Mortgaged Properties. For any
fiscal quarter of
<PAGE>
the Borrower, an amount equal to three monthly principal and interest payments
based on a twenty-five (25) year mortgage style amortization schedule,
calculated on the Pro Forma Principal Amount and an interest rate equal to the
greater of (i) the then current weighted average interest rate per annum on the
Loans or (ii) the then current ten (10) year U.S. Treasury bill yield plus 1.75%
per annum.
Pro Forma Principal Amount. (a) With respect to Compliance Certificates
delivered pursuant to (S)7.4(e), the maximum Outstanding Principal Amount at any
time during the applicable fiscal quarter; (b) with respect to Compliance
Certificates delivered pursuant to (S)2.5, 2.9(b) or (S)11.1, the Outstanding
Principal Amount after giving effect to the requested Loan or the issuance of
the requested Letter of Credit; (c) with respect to Compliance Certificates
delivered pursuant to (S)5.5 or (S)8.4(b), the Outstanding Principal Amount
after giving effect to any proposed sale or transfer including any payments on
the Loans or cancellation of Letters of Credit to be made in connection
therewith.
Properties. All Real Estate Assets, Real Estate, and all other assets,
including, without limitation, intangibles and personalty owned by the Borrower.
Prospectus Financial Statements. The Financial Statements relating to the
Company and relating to certain properties to be acquired by the Borrower or its
Subsidiaries in connection with the Formation Transactions as set forth in the
Equity Prospectus.
Prudential. As defined in the preamble thereto.
Real Estate. All real property at any time owned, leased (as lessee or
sublessee) or operated by the Borrower, any Guarantor, or any of the Related
Companies or any Permitted Joint Venture. The term Real Estate also includes
the properties subject to the Security Deeds relating to the Assigned Mortgaged
Properties.
Real Estate Assets. Those fixed and tangible properties consisting of
land, buildings and/or other improvements owned by the Borrower, by any
Guarantor, by any of the Related Companies or by any Permitted Joint Venture at
the relevant time of reference thereto, including without limitation, the
Mortgaged Properties, but excluding all leaseholds other than Financeable Ground
Leases. The term Real Estate Assets also includes the properties subject to the
Security Deeds relating to the Assigned Mortgaged Properties.
Record. The grid attached to any Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any
Lender with respect to any Loan referred to in such Note.
Recourse Indebtedness. All Indebtedness except Indebtedness with respect
to which recourse for payment is contractually limited (except for customary
exclusions) to specific assets encumbered by a lien securing such Indebtedness.
Register. See (S)18.3.
<PAGE>
Related Companies. The entities listed and described on Schedule 1.3
hereto, or thereafter, any entity whose financial statements are consolidated or
combined with the Borrower's pursuant to Generally Accepted Accounting
Principles, or any ERISA Affiliate.
Release. See (S)6.18(c)(iii).
Requisite Lenders. As of any date, the Lenders whose aggregate Commitments
constitute at least sixty-six percent (66%) of the Total Commitment provided
that the Agent must always be among the Requisite Lenders (except that (i) all
determinations by the Requisite Lenders pursuant to (S)2.5 as to whether the
conditions in (S)11 have been met and (ii) all actions by the Requisite Lenders
after an Event of Default with respect to acceleration of the Loans and the
enforcement of the Loan Documents as provided in (S)12 and in (S)14.11, shall be
made without regard to whether the Agent is among the Requisite Lenders) and
provided that the Temporary Commitments and the Commitments of any Delinquent
Lenders shall be disregarded when determining the Requisite Lenders.
Reserve Amount. With respect to any Real Estate Assets or group of Real
Estate Assets, a normalized annual reserve for capital expenditures, tenant
improvements, replacement reserves and leasing costs at the rate of $0.25 per
year per square foot of gross leasable area contained in all buildings on such
Real Estate Assets. When the Reserve Amount is used in computing an amount with
respect to a fiscal period which is shorter than a year, said amount shall be
appropriately prorated.
Responsible Officer. With respect to the Company, any one of its Chief
Executive Officer, Chief Financial Officer, Treasurer or Executive Vice
Presidents.
Security Deeds. The mortgages and deeds of trust from the Mortgagor to the
Agent pursuant to which the Mortgagor shall convey the Mortgaged Properties as
security for the Obligations and the mortgages which secure the Assigned Notes
and which are assigned to the Agent pursuant to the Assigned Note Assignments.
Security Documents. The Security Deeds, the Assignments of Leases and
Rents, the Pledge Agreements and the UCC-1 financing statements, the Assigned
Note Assignments and all documents securing the Assigned Notes assigned thereby.
Service Agreements. All service agreements between the Borrower and third
parties, whether written or oral, relating to the operation, maintenance,
security, finance or insurance of the Mortgaged Properties.
Subsidiary. Any corporation, partnership, limited liability company,
association, trust, or other business entity of which the designated parent or
other controlling Person shall at any time own directly or indirectly through a
Subsidiary or Subsidiaries at least a majority (by number of votes) of the
outstanding Voting Interests.
Surveys. Instrument surveys of the Mortgaged Properties dated or updated
to a date not
<PAGE>
more than six (6) months prior to the date the applicable property becomes a
Mortgaged Property hereunder, which shall show the location of all Buildings,
easements and utility lines on the Mortgaged Properties, shall be sufficient to
remove the survey exception from the Title Policy, shall show that all Buildings
are within the lot lines of the Mortgaged Properties, shall not show any
material encroachments by others, and shall show whether or not the Mortgaged
Properties are located in any flood hazard district as established by the
Federal Emergency Management Agency or any successor agency or are located in
any flood plain, flood hazard or wetland protection district established under
federal, state or local law and in addition shall meet the then applicable
standards of the Agent.
Syndication Lenders. The Lenders which are parties to this Third Amendment
to Credit Agreement other than the Lead Lenders.
Tangible Net Worth. Total Assets minus Total Liabilities minus all
intangibles determined in accordance with Generally Accepted Accounting
Principles.
Temporary Commitments. The Commitments of the Lead Lenders designated as
Temporary Commitments on Schedule 1.2 hereof which are to be terminated and paid
in full on the Commitment Decrease Date.
Title Insurance Company. Chicago Title Insurance Company.
Title Policy. For each Mortgaged Property an ALTA standard form title
insurance policy issued by the Title Insurance Company (with such reinsurance or
co-insurance as the Agent may require, any such reinsurance to be with direct
access endorsements) insuring the priority of the Security Deed and Assignment
of Leases and Rents and that the Mortgagor holds good and clear record
marketable fee simple title to the Mortgaged Property, subject only to the
encumbrances permitted by the applicable Security Deed or otherwise acceptable
to the Agent in its reasonable discretion and which shall not contain exceptions
for mechanics liens, persons in occupancy (other than Leases listed on Schedule
6.22(1)) or matters which would be shown by a survey (other than matters
approved by the Agent in its reasonable discretion), shall not insure over any
matter except to the extent that any such affirmative insurance is acceptable to
the Agent in its sole discretion (after consultation with the Lead Lenders), and
shall contain such endorsements and affirmative insurance as the Agent in its
reasonable discretion may require, including but not limited to (a)
comprehensive endorsement, (b) variable rate of interest endorsement, (c) usury
endorsement, (d) revolving credit endorsement, (e) doing business endorsement,
(f) ALTA form 3.1 zoning endorsement, with parking, (g) survey (same-as)
endorsement (h) access endorsement, (i) tie-in endorsement, (j) first loss
endorsement, and (k) tax parcel endorsement, to the extent that such
endorsements are available in the state where the applicable Mortgaged Property
is located.
Total Adjusted Assets. The sum of (i) the assets classified as cash or
cash equivalents on the consolidated balance sheet of Borrower prepared in
accordance with Generally Accepted Accounting Principles as of the end of the
most recent fiscal quarter (including any restricted cash other than tenant
deposits), plus (ii) the product of (a) EBITDA for the most recent two
<PAGE>
fiscal quarters, times (b) two, divided by (c) 0.0975. EBITDA used to compute
Total Adjusted Assets will be computed on a pro forma basis as though the assets
reflected on the consolidated balance sheet of Borrower prepared in accordance
with Generally Accepted Accounting Principles as of the end of the most recent
fiscal quarter had been owned since the first day of the applicable period of
two fiscal quarters and as though all assets disposed of prior to the date of
such balance sheet had been disposed of prior to the first day of the applicable
period of two fiscal quarters.
Total Assets. The aggregate book value of all assets of the Borrower and
the Related Companies consolidated and determined in accordance with Generally
Accepted Accounting Principles plus accumulated depreciation and amortization
related to Real Estate Assets.
Total Commitment. The sum of the Commitments of the Lenders, as in effect
from time to time.
Total Liabilities. The sum of the following (without duplication): (i) all
liabilities of the Borrower and the Related Companies consolidated and
determined in accordance with Generally Accepted Accounting Principles excluding
accounts payable incurred in the ordinary course of business, (ii) all
Indebtedness of the Borrower and the Related Companies whether or not so
classified, including, without limitation, all outstanding Loans under this
Agreement, and (iii) the balance available for drawing under letters of credit
issued for the account of the Borrower or any of the Related Companies.
Total Operating Cash Flow. With respect to any fiscal period of the
Borrower (i) EBITDA minus (ii) the Reserve Amount with respect to all Real
Estate Assets owned by the Borrower or any of the Related Companies.
Type. As to any Loan its nature as a Base Rate Loan or a Eurodollar Rate
Loan.
Unreimbursed Drawing. Any Drawing other than a Drawing which is reimbursed
by the Agent debiting the IRB Indebtedness Account pursuant to (S)2.8. If any
reimbursement from the IRB Indebtedness Account or any part thereof is rescinded
or must otherwise be restored or returned by the Agent upon the insolvency,
bankruptcy or reorganization of the Borrower or any Guarantor, the Drawing
reimbursed thereby shall be deemed to be an Unreimbursed Drawing.
Unused Amount. See (S)4.2
Variable Rate Indebtedness. The Loans and all other Indebtedness of the
Borrower which bears interest at a rate which is not fixed through the maturity
of such Indebtedness.
Voting Interests. Stock or similar ownership interests, of any class or
classes (however designated), the holders of which are at the time entitled, as
such holders, (a) to vote for the election of a majority of the directors (or
persons performing similar functions) of the corporation, association,
partnership, trust or other business entity involved, or (b) to control, manage
or conduct the business of the corporation, partnership, association, trust or
other
<PAGE>
business entity involved.
West Wacker Drive Property. The Mortgaged Property located at 77 West
Wacker Drive, Chicago, Illinois, as more particularly described in the Security
Deed with respect thereto.
(S)1.2. Rules of Interpretation.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to time in
accordance with its terms and the terms of this Agreement.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or
modification to such law.
(d) A reference to any Person includes its permitted successors
and permitted assigns.
(e) Accounting terms not otherwise defined herein have the
meanings assigned to them by Generally Accepted Accounting Principles applied on
a consistent basis by the accounting entity to which they refer and, except as
otherwise expressly stated, all use of accounting terms with respect to the
Borrower shall reflect the consolidated financial statements of Borrower and the
Related Companies.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by Generally
Accepted Accounting Principles, which terms are defined in the Uniform
Commercial Code as in effect in New York, have the meanings assigned to them
therein.
(h) Reference to a particular "(S)" refers to that section of
this Agreement unless otherwise indicated.
(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Agreement as a whole and not to any particular
section or subdivision of this Agreement.
(j) The words "so long as any Loan or Note is outstanding" shall
mean so long as such Loan or Note is not paid in full in cash.
(S)2. REVOLVING CREDIT FACILITY.
(S)2.1. Commitment to Lend; Limitation on Total Commitment. Subject to
the provisions of (S)2.5 and the other terms and conditions set forth in this
Agreement, each of the Lenders severally agrees to lend to the Borrower and the
Borrower may borrow, repay, and reborrow from time to time between the Facility
Closing Date and the Maturity Date upon notice
<PAGE>
by the Borrower to the Agent given and approved by the Agent in accordance with
(S)2.5, such sums as are requested by the Borrower up to a maximum aggregate
principal amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Lender 's Commitment (minus such Lender's Commitment
Percentage of the face amount of the Letters of Credit outstanding), provided
that the Outstanding Principal Amount (after giving effect to all amounts
requested) shall not at any time exceed the Maximum Principal Amount. The Loans
shall be made pro rata in accordance with each Lender's Commitment Percentage
and the Lenders shall at all times immediately adjust inter se any inconsistency
between each Lender 's outstanding principal amount and each Lender's
Commitment. Each request for a Loan hereunder shall constitute a representation
and warranty by the Borrower that the conditions set forth in (S)10 or (S)11
(whichever is applicable) have been satisfied on the date of such request and
will be satisfied on the proposed Borrowing Date of the requested Loan, provided
that the making of such representation and warranty by Borrower shall not limit
the right of any Lender not to lend upon a determination by the Requisite
Lenders that such conditions have not been satisfied.
(S)2.2. Reduction of Commitment. The Borrower shall have the right, after
the Commitment Decrease Date and prior to the Maturity Date, upon at least ten
(10) Business Days' prior written notice to the Agent, to reduce by $1,000,000
or an integral multiple of $100,000 in excess thereof, a portion of the Total
Commitment which exceeds the Outstanding Principal Amount, provided that the
Total Commitment shall not be reduced to less than the sum of $100,000,000 plus
the aggregate face amount of Letters of Credit then outstanding rounded up to
the nearest $1,000,000, whereupon the Commitments of the Lenders shall be
reduced pro rata in accordance with their respective Commitment Percentages by
the amount specified in such notice. Upon the effective date of any such
reduction, the Borrower shall pay to the Agent for the respective accounts of
the Lenders the full amount of any commitment fee then accrued on the amount of
the reduction. No reduction of the Commitments may be reinstated.
(S)2.3. The Notes. The Loans shall be evidenced by separate promissory
notes of the Borrower in substantially the form of Exhibit A hereto (each a
"Note"), and completed with appropriate insertions. One or more Notes shall be
payable to the order of each Lender in a principal amount equal to such Lender
's Commitment. The Notes executed and delivered as of the Effective Date shall
replace the Notes executed and delivered to the Lead Lenders pursuant to the
Existing Agreement. The Borrower irrevocably authorizes each Lender to make or
cause to be made, at or about the time of the Borrowing Date of any Loan or at
the time of receipt of any payment of principal on such Lender 's Note, an
appropriate notation on such Lender 's Record reflecting the making of such Loan
or (as the case may be) the receipt of such payment. The outstanding amount of
the Loans set forth on such Lender 's Record shall (absent manifest error) be
prima facie evidence of the principal amount thereof owing and unpaid to such
Lender, but the failure to record, or any error in so recording, any such amount
on the Record shall not limit or otherwise affect the obligations of the
Borrower hereunder or under any Note to make payments of principal of or
interest on any Note when due.
(S)2.4. Interest on Loans.
<PAGE>
(a) Each Base Rate Loan shall bear interest for the period commencing
with the Borrowing Date thereof and ending on the last day of the Interest
Period with respect thereto at the Base Rate.
(b) Each Eurodollar Rate Loan shall bear interest for the period
commencing with the Borrowing Date thereof and ending on the last day of the
Interest Period with respect thereto at the rate equal to the Applicable Margin
per annum above the Eurodollar Rate determined for such Interest Period.
(c) The Borrower unconditionally promises to pay interest on each
Loan in arrears on each Interest Payment Date with respect thereto.
(d) It is the intention of the parties hereto to conform strictly to
the usury and similar laws relating to interest from time to time in force, and
all agreements among Borrower, Guarantors, the Agent and the Lenders set forth
in the Loan Documents are hereby expressly limited so that in no contingency or
event whatsoever, whether by acceleration of maturity of Loans or otherwise,
shall the amount paid or agreed to be paid as interest hereunder or under the
other Loan Documents exceed the maximum rate or amount of interest permissible
under applicable usury laws or such other laws (the "Maximum Interest Amount").
In the event, for any reason whatsoever, any payment by or act of Borrower or
any Guarantor pursuant to the terms or pursuant to any requirements of any of
the Loan Documents shall result in or require payment of interest which would
exceed the Maximum Interest Amount, then ipso facto the obligation of Borrower
or such Guarantor, as the case may be, to pay interest or fees or other amounts
shall be reduced to the Maximum Interest Amount, so that in no event shall
Borrower or any Guarantor be obligated to pay any interest, perform any act, or
be bound by any requirement which would result in payment of interest in excess
of a sum which is lawfully collectible, and all sums in excess of those lawfully
collectible as interest shall, without further agreements or notice between or
by any party to this Agreement or any other Loan Document, be deemed applied to
pay the principal of the Loans immediately upon receipt of such moneys by Agent
or any Lender, with the same force and effect as though Borrower or any
Guarantor had specifically designated such sums to be applied to principal
prepayment. The provisions of this (S)2.4(d) shall control every other provision
of the Loan Documents.
(S)2.5. Requests for Loans. The Borrower shall give to the Agent written
notice in the form of Exhibit B hereto of each Loan requested hereunder (a "Loan
Request") no less than (a) three (3) Business Days prior to the proposed
Borrowing Date of any Base Rate Loan and (b) four (4) Eurodollar Business Days
prior to the proposed Borrowing Date of any Eurodollar Rate Loan. Each such
notice shall specify (i) the principal amount of the Loan requested, (ii) the
proposed Borrowing Date of such Loan, (iii) the Interest Period for such Loan,
(iv) the Type of such Loan, and (v) the purpose of such Loan, and shall be
accompanied by a statement in the form of Exhibit C hereto signed by a
Responsible Officer setting forth in reasonable detail computations evidencing
compliance with the covenants contained in (S)9 hereof after giving effect to
such requested Loan (a "Compliance Certificate"). Within one (1) Business Day
after receipt of a Loan Request, the Agent shall provide to each of the Lenders
by facsimile a copy of
<PAGE>
such Loan Request and accompanying Compliance Certificate and each Lender shall,
within 24 hours thereafter, notify the Agent if it believes that any of the
conditions contained in (S)11 of this Agreement has not been met or waived. If
such a notice is given the Requisite Lenders shall promptly determine whether
all of the conditions contained in (S)11 of this Agreement have been met or
waived. If no such notice is given by any Lender or if following such notice the
Requisite Lenders determine that the conditions contained in (S)11 have been met
or waived, each of the Lenders shall be obligated to fund its Commitment
Percentage of the requested Loans. Each such Loan Request shall be irrevocable
and binding on the Borrower and the Borrower shall be obligated to accept the
Loan requested from the Lenders on the proposed Borrowing Date. Each Loan
Request shall be in a minimum aggregate amount of $3,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(S)2.6. Conversion Options.
(a) The Borrower may elect from time to time to convert any
outstanding Loan to a Loan of another Type, provided that (i) with respect to
any such conversion of a Eurodollar Rate Loan to a Base Rate Loan, the Borrower
shall give the Agent at least three (3) Business Days' prior written notice of
such election; (ii) with respect to any such conversion of a Eurodollar Rate
Loan into a Base Rate Loan, such conversion shall only be made on the last day
of the Interest Period with respect thereto; (iii) subject to the further
proviso at the end of this section and subject to (S)2.6(b) and (S)2.6(d) hereof
with respect to any such conversion of a Base Rate Loan to a Eurodollar Rate
Loan, the Borrower shall give the Agent at least four (4) Eurodollar Business
Days' prior written notice of such election and (iv) no Loan may be converted
into a Eurodollar Rate Loan when any Default or Event of Default has occurred
and is continuing. On the date on which such conversion is being made, each
Lender shall take such action as is necessary to transfer its Commitment
Percentage of such Loans to its Domestic Lending Office or its Eurodollar
Lending Office, as the case may be. All or any part of outstanding Loans of any
Type may be converted as provided herein, provided further that each Conversion
Request relating to the conversion of a Base Rate Loan to a Eurodollar Rate Loan
shall be for an amount equal to $3,000,000 or an integral multiple of $1,000,000
in excess thereof and shall be irrevocable by the Borrower.
(b) Any Loans of any Type may be continued as such upon the
expiration of an Interest Period with respect thereto by compliance by the
Borrower with the notice provisions contained in (S)2.6 (a) ; provided that no
Eurodollar Rate Loan may be continued as such when any Default or Event of
Default has occurred and is continuing but shall be automatically converted to a
Base Rate Loan on the last day of the first Interest Period relating thereto
ending during the continuance of any Default or Event of Default of which the
officers of the Agent active upon the Borrower's account have actual knowledge.
(c) In the event that the Borrower does not notify the Agent of
its election hereunder with respect to any Loan, such Loan shall be
automatically converted to or continued as a Base Rate Loan at the end of the
applicable Interest Period.
(d) The Borrower may not request a Eurodollar Rate Loan pursuant
to (S)2.5, elect
<PAGE>
to convert a Base Rate Loan to a Eurodollar Rate Loan pursuant to (S)2.5(a) or
elect to continue a Eurodollar Rate Loan pursuant to (S)2.6(b) if, after giving
effect thereto, there would be greater than eight (8) Eurodollar Rate Loans
outstanding. Any Loan Request for a Eurodollar Rate Loan that would create
greater than eight (8) Eurodollar Rate Loans outstanding shall be deemed to be a
Loan Request for a Base Rate Loan.
(S)2.7. Funds for Loans.
(a) Subject to (S)2.5 and other provisions of this Agreement, not
later than 11:00 a.m. (Boston time) on the proposed Borrowing Date of any Loans,
each of the Lenders will make available to the Agent, at the Agent's Head
Office, in immediately available funds, the amount of such Lender's Commitment
Percentage of the amount of the requested Loans. Upon receipt from each Lender
of such amount, and upon receipt of the documents required by (S)(S)10 or 11
(whichever is applicable) and the satisfaction of the other conditions set forth
therein, to the extent applicable, the Agent will make available to the Borrower
the aggregate amount of such Loans made available to the Agent by the Lenders.
The failure or refusal of any Lender to make available to the Agent at the
aforesaid time and place on any Borrowing Date the amount of its Commitment
Percentage of the requested Loans shall not relieve any other Lender from its
several obligation hereunder to make available to the Agent the amount of such
other Lender's Commitment Percentage of any requested Loans but shall not
obligate any other Lender or Agent to fund more than its Commitment Percentage
of the requested Loans or to increase its Commitment Percentage.
(b) The Agent may, unless notified to the contrary by any Lender
prior to a Borrowing Date, assume that such Lender has made available to the
Agent on such Borrowing Date the amount of such Lender's Commitment Percentage
of the Loans to be made on such Borrowing Date, and the Agent may (but it shall
not be required to), in reliance upon such assumption, make available to the
Borrower a corresponding amount. If any Lender makes available to the Agent such
amount on a date after such Borrowing Date, such Lender shall pay to the Agent
on demand an amount equal to the product of (i) the average computed for the
period referred to in clause (iii) below, of the weighted average interest rate
paid by the Agent for federal funds acquired by the Agent during each day
included in such period, times (ii) the amount of such Lender's Commitment
Percentage of such Loans, times (iii) a fraction, the numerator of which is the
number of days or portion thereof that elapsed from and including such Borrowing
Date to the date on which the amount of such Lender's Commitment Percentage of
such Loans shall become immediately available to the Agent, and the denominator
of which is 365.
(S)2.8. IRB Indebtedness Account. On or before each date on which there is
scheduled to be a Drawing under any IRB Letter of Credit pursuant to the IRB
Documents, the Borrower will deposit in the IRB Indebtedness Account sufficient
funds such that there will be available therein on the applicable Drawing Date
the amount needed to reimburse the Agent for the amount of such Drawing. The
Borrower hereby authorizes the Agent to debit the IRB Indebtedness Account on
each Drawing Date as necessary to reimburse the Agent for each draft paid by the
Agent pursuant to any IRB Letter of Credit. All payments made by the Agent
pursuant to any
<PAGE>
drafts under the IRB Letters of Credit shall be made from funds of the Agent,
but in no event shall any such payments be made with funds from the IRB
Indebtedness Account or with any other funds obtained from the Borrower, any
Guarantor or any issuer of bonds with respect to any IRB Indebtedness.
(S)2.9. Letters of Credit.
(a) A portion of the Commitments may be used by Borrower for the issuance
of Letters of Credit by the Agent for the account of the Borrower subject to the
terms and conditions set forth herein, provided that the aggregate face amount
of all Letters of Credit shall not exceed $40,000,000 during the period from the
Effective Date until the date that all of the IRB Letters of Credit listed on
Schedule 1.4 are cancelled and terminated and thereafter shall not exceed
$15,000,000. Each Letter of Credit shall be denominated in dollars and shall be
a either a direct pay IRB Letter of Credit, a direct pay letter of credit
supporting bond related Indebtedness similar to the IRB Letters of Credit or a
standby letter of credit issued to support the obligations of Borrower in
connection with Permitted Developments. Each Letter of Credit shall expire no
later than five (5) Business Days prior to the Maturity Date. Although the Agent
shall be the issuing bank of the Letter of Credit, each Lender hereby accepts
for its own account and risk an undivided interest equal to its Commitment
Percentage in the Agent's obligations represented by each Letter of Credit
issued hereunder, and unconditionally and irrevocably agrees with the Agent
that, upon any Unreimbursed Drawing, such Lender shall promptly pay to the Agent
an amount equal to such Lender's Commitment Percentage of the amount of such
Unreimbursed Drawing. Upon the issuance of each Letter of Credit hereunder,
there shall be reserved from each Lender 's Commitment an amount equal to such
Lender's Commitment Percentage of the face amount of the Letter of Credit. Such
reserved amounts shall remain in place and shall be unavailable for borrowing
under (S)2.1 until the date that the Letter of Credit expires or is terminated.
(b) If the Borrower shall desire the issuance of any Letters of Credit or
the extension or renewal of any outstanding Letters of Credit, it shall give to
the Agent a written notice in the form of Exhibit D hereto of each Letter of
Credit requested hereunder (a "Letter of Credit Request") no less than ten (10)
Business Days prior to the proposed issuance date of the requested Letter of
Credit or prior to the expiration date of any Letter of Credit to be renewed or
extended. Each Letter of Credit Request shall specify (i) the name and address
of the beneficiary of the requested Letter of Credit, (ii) the face amount of
the requested Letter of Credit, (iii) the proposed issuance date and expiration
date of the requested Letter of Credit, (iv) the proposed form of the requested
Letter of Credit, and (v) the permitted purpose for which the Letter of Credit
will be used, and shall be accompanied by a Compliance Certificate in the form
of Exhibit C hereto signed by a Responsible Officer setting forth in reasonable
detail computations evidencing compliance with the covenants contained in (S) 9
hereof after including in the Outstanding Principal Amount the face amount of
the requested Letter of Credit. The Agent may also require that the Borrower
complete its standard letter of credit application form and submit the same and
the standard application fee together with the Letter of Credit Request. The
Letter of Credit Requests with respect to the Initial Letters of Credit are
hereby approved. Within two (2) Business Days after receipt of any other Letter
of Credit Request, the Agent shall provide to
<PAGE>
each of the Lenders by facsimile a copy of such Letter of Credit Request and
accompanying Compliance Certificate and each Lender shall, within 24 hours
thereafter, notify the Agent if it believes that any of the conditions contained
in (S)11 of this Agreement has not been met or waived such that a Loan in an
amount equal to the face amount of the requested Letter of Credit could be made
on the proposed issuance date of such Letter of Credit. If such a notice is
given the Requisite Lenders shall promptly determine whether all of the
conditions contained in (S)11 of this Agreement have been met or waived. If no
such notice is given by any Lender or if following such notice the Requisite
Lenders determine that the conditions contained in (S)11 have been met or
waived, and if the Agent determines, in its discretion, that it is willing to
issue, extend or renew the requested Letter of Credit, and that it is satisfied
with the proposed form thereof, the Letter of Credit shall be issued, extended
or renewed by the Agent and each of the Lenders shall then be obligated to the
Agent with respect to its Commitment Percentage of the Letter of Credit (as
extended or renewed, if applicable) as provided above in (S) 2.9(a).
(c) On or before the issuance date of any Letters of Credit having an
expiration date of one year or less after its issuance date, the Borrower shall
pay to the Agent for its own account an issuance fee equal to one-eighth percent
(.125%) of the face amount of the Letter of Credit. The issuance fee for any
Letter of Credit with a later expiration date will be determined by the Agent.
On or before the date of any extension or renewal of a Letter of Credit, the
Borrower shall pay to the Agent for its own account a renewal fee for each year
of the extension renewal term equal to one-tenth percent (.10%) of the face
amount of the applicable Letter of Credit. The Borrower shall pay to the Agent
for the account of the Lenders a Letter of Credit fee equal to the then
prevailing Applicable Margin per annum of the face amount of the Letter of
Credit, which Letter of Credit fee shall be due and payable in advance on the
issuance date of the Letter of Credit and on the first day of each calendar
quarter for so long as such Letter of Credit remains outstanding, and shall be
prorated for any partial quarter and paid for the actual number of days between
the issuance date and the expiration date of such Letter of Credit. Promptly
after its receipt thereof the Agent shall distribute such Letter of Credit fee
to the Lenders pro-rata in accordance with their respective Commitment
Percentages. Such fees shall be nonrefundable and shall not be further prorated
in the event that the Letter of Credit terminates prior to its scheduled
expiration date. The Borrower also agrees to reimburse the Agent for all
reasonable fees (consistent with the fee schedule of the Agent's trade services
division as then in effect), costs, expenses and disbursements of the Agent in
issuing, effecting payment under, amending or otherwise administering any Letter
of Credit.
(d) Promptly after each Unreimbursed Drawing the Agent shall notify the
Lenders and the Borrower of the amount thereof. The payment of each Unreimbursed
Drawing shall constitute an advance of a Loan which shall bear interest as a
Base Rate Loan from the Drawing Date. On the Drawing Date of each Unreimbursed
Drawing, each Lender shall pay to the Agent its Commitment Percentage of the
amount of such Unreimbursed Drawing. If the Agent receives such payment from any
Lender on a date after the Drawing Date, such Lender shall pay to the Agent on
demand an amount computed in the same manner as the amount due to the Agent from
a Lender which has made available funds for loans after the Borrowing Date
thereof pursuant to (S)2.7(b). Each Lender's obligation to pay its Commitment
Percentage of each Unreimbursed Drawing shall not be subject to the satisfaction
of the conditions set forth in (S)11. Within three
<PAGE>
(3) Business Days after each Unreimbursed Drawing, the Borrower shall deliver to
the Agent a written explanation of the facts and circumstances relating to such
drawing and a Compliance Certificate and any other information requested by the
Agent for the purpose of allowing the Lenders to determine whether the drawing
or related events have resulted in a Default or Event of Default. The Agent
shall promptly provide copies of such explanation and information to the
Lenders.
(e) The Borrower's obligations under this (S) 2.9 shall be absolute and
unconditional under any and all circumstances and irrespective of any set-off,
counterclaim or defense to payment which the Borrower may have or have had
against the Agent, any Lender or any beneficiary of a Letter of Credit. The
Borrower also agrees that the Agent shall not be responsible for, and the
Borrower's reimbursement obligations hereunder shall not be affected by, among
other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among the Borrower
and any beneficiary of any Letter of Credit or any other party to which such
Letter of Credit may be transferred or (iii) any claims whatsoever of the
Borrower against any beneficiary of such Letter of Credit or any such
transferee. The Agent shall not be liable for any error, omission, interruption
or delay in transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors,
omissions, interruptions or delays for which the Agent is liable under the
Uniform Customs and Practices for Documentary Credits. The Borrower assumes all
risks of the acts or omissions of any trustee, paying agent, tender agent or
remarketing agent under the IRB Indebtedness and the Agent shall not be
responsible for any use which may be made of the IRB Letters of Credit. The
Borrower agrees that any action taken or omitted by the Agent under or in
connection with any Letter of Credit or the related drafts or documents, if done
in accordance with the standards of care specified in the Uniform Customs and
Practices for Documentary Credits as the same may be amended from time to time,
shall be binding on the Borrower and shall not result in any liability of the
Agent to the Borrower or to any Guarantor.
(f) In the event that any Letters of Credit are in effect at the time of
an acceleration of the maturity of the Loans pursuant to (S)12.1, the amounts
which shall thereupon become immediately due and payable by the Borrower shall
include a sum equal to the aggregate face amount of such then effective Letters
of Credit. Such sum shall be deposited in a cash collateral account to be opened
by the Agent. Amounts held in such cash collateral account shall be applied by
the Agent on each Drawing Date thereafter to pay any drafts presented pursuant
to the Letters of Credit. After all Letters of Credit have been fully drawn
upon, expired or otherwise terminated, any balance remaining in such cash
collateral account shall be applied in the same manner as enforcement proceeds
under (S)12.4.
(S)2.10. Assignment and Reallocation of Loans on Effective Date. On the
Effective Date the Lead Lenders shall be deemed to have assigned to the
Syndication Lenders, and the Syndication Lenders shall be deemed to have assumed
from the Lead Lenders, a portion of the Lead Lenders' rights and obligations
under this Agreement relating to the Commitment and the Commitment Percentage
allocated to the Syndication Lenders, respectively, on Schedule 1.2. One half of
the interests so assigned to each Syndication Lender shall be deemed to have
been
<PAGE>
assigned by each Lead Lender. The Borrower acknowledges that the outstanding
principal balance of the Loans on the Effective Date is $172,500,000 and that
the Borrower has no offsets, claims or defenses with respect to such outstanding
Loans. On the Effective Date the outstanding principal balance of the Loans
shall be reallocated among the Lead Lenders and the Syndication Lenders such
that after the Effective Date the outstanding principal amount of Loans owed to
each Lender shall be equal to such Lender's Commitment Percentage of the
outstanding amount of all Loans. Not later than 11:00 a.m. (Boston time) on the
Effective Date each of the Syndication Lenders will make available to the Agent
at the Agent's Head Office in immediately available funds, the amount of such
Lender's Commitment Percentage of the outstanding principal amount of the Loans
which amounts will be distributed equally to the Lead Lenders for their own
account. In addition, the Lead Lenders shall receive and retain for their own
account 100% of the interest and unused commitment fees payable by the Borrower
hereunder attributable to the period from the Facility Closing Date through and
including the Effective Date.
(S)2.11. Decrease in Total Commitment on Commitment Decrease Date. On the
Commitment Decrease Date the Temporary Commitments of the Lead Lenders will be
terminated. The payment from the Borrower to be received by the Agent on the
Commitment Decrease Date shall be distributed among the Lenders so that after
the Commitment Decrease Date the outstanding principal amount of Loans owed to
each Lender shall be equal to such Lender's Commitment Percentage (after the
Commitment Decrease Date) of the outstanding amount of all Loans.
(S)3. REPAYMENT OF THE LOANS.
(S)3.1. Maturity. The Borrower unconditionally promises to pay on the
Maturity Date, and there shall become absolutely due and payable on the Maturity
Date, all of the Loans outstanding on such date, together with any and all
accrued and unpaid interest and charges thereon.
(S)3.2. Mandatory Repayments of Loan. If at any time the sum of the
Outstanding Principal Amount exceeds the Maximum Principal Amount, then the
Borrower shall immediately pay the amount of such excess to the Agent for the
respective accounts of the Lenders for application to the Loans.
(S)3.3. Optional Repayments of Loans. The Borrower shall have the right,
at its election, to repay the outstanding amount of the Loans, as a whole or in
part, on any Business Day, without penalty or premium; provided that the full or
partial prepayment of the outstanding amount of any Eurodollar Rate Loans made
pursuant to this (S)3.3 may be made only on the last day of the Interest Period
relating thereto, except as set forth below in this (S)3.3. The Borrower shall
give the Agent no later than 10:00 a.m., Boston time, at least three (3)
Business Days' prior written notice of any prepayment pursuant to this (S)3.3 of
any Base Rate Loans and four (4) Eurodollar Business Days, notice of any
proposed repayment pursuant to this (S)3.3 of any Eurodollar Rate Loans,
specifying the proposed date of payment of Loans and the principal amount to be
paid. The Agent shall promptly provide a copy of such notice to each Lender.
Each
<PAGE>
such partial prepayment of the Loans shall be in an integral multiple of
$100,000 and shall be accompanied by the payment of all charges outstanding on
all Loans and of accrued interest on the principal repaid to the date of payment
and shall be applied, in the absence of instruction by the Borrower, first to
the principal of Base Rate Loans and then to the principal of Eurodollar Rate
Loans. Notwithstanding anything contained herein to the contrary, the Borrower
may make a full or partial prepayment of a Eurodollar Rate Loan on a date other
than the last day of the Interest Period relating thereto, if all optional
prepayments (in whole or in part) on such Loans shall be accompanied by, and the
Borrower hereby promises to pay, a prepayment fee in an amount determined by the
Agent in the following manner:
(i) Fixed Rate Prepayment Fee. Borrower acknowledges that prepayment
or acceleration of a Eurodollar Loan during an Interest Period shall result in
the Lenders incurring additional costs, expenses and/or liabilities and that it
is impractical to ascertain the extent of such costs, expenses and/or
liabilities. (For all purposes of this Section, any Loan not being made as a
Eurodollar Rate Loan in accordance with the Loan Request therefor, as a result
of Borrower's cancellation thereof, shall be treated as if such Eurodollar Rate
Loan had been prepaid.) Therefore, on the date a Eurodollar Rate Loan is prepaid
or the date all sums payable hereunder become due and payable, by acceleration
or otherwise ("Prepayment Date"), Borrower will pay to Agent, for the account of
each Lender, (in addition to all other sums then owing), an amount ("Fixed Rate
Prepayment Fee") determined by the Agent to be the amount, if any, by which (i)
the amount of interest which would have accrued on the prepaid Eurodollar Rate
Loan for the remainder of the Interest Period at the rate applicable to such
Eurodollar Rate Loan exceeds (ii) the amount of interest that would accrue for
the same period on any readily marketable bond or other obligation of the United
States of America designated by the Agent in its sole discretion at or about the
time of such payment, such bond or other obligation of the United States of
America to be in an amount equal (as nearly as may be) to the amount of
principal so paid or not borrowed and to have a maturity comparable to the
remainder of such Interest Period, and the interest to accrue thereon to take
account of amortization of any discount from par or accretion of premium above
par at which the same is selling at the time of designation.
(ii) Upon the written notice to Borrower from Agent, Borrower shall
immediately pay to Agent, for the account of the Lenders, the Fixed Rate
Prepayment Fee. Such written notice (which shall include calculations in
reasonable detail) shall, in the absence of manifest error, be conclusive and
binding on the parties hereto.
(iii) Borrower understands, agrees and acknowledges the following:
(i) no Lender has any obligation to purchase, sell and/or match funds in
connection with the use of the Eurodollar Rate as a basis for calculating the
rate of interest on a Eurodollar Rate Loan; (ii) the Eurodollar Rate is used
merely as a reference in determining such rate; and (iii) Borrower has accepted
the Eurodollar Rate as a reasonable and fair basis for calculating such rate and
a Fixed Rate Prepayment Fee. Borrower further agrees to pay the Fixed Rate
Prepayment Fee, if any, whether or not a Lender elects to purchase, sell and/or
match funds.
(S)4. CERTAIN GENERAL PROVISIONS.
<PAGE>
(S)4.1. Revolving Credit Facility Fees and Agent's Fee. The Borrower has
paid to the Lead Lenders and the Agent revolving credit facility fees and agency
fees in the amounts specified in the Fee Agreement dated October 20, 1997 among
the Lead Lenders, BancBoston Securities, Inc., the Borrower, the Company and The
Prime Group, Inc., as amended. Borrower agrees to pay the Agent the annual
agency fee due on each anniversary of the Facility Closing Date as set forth in
said Fee Agreement. The Lead Lenders shall be responsible for any facility fees
which they may agree to pay to the other Lenders which become a party to this
Agreement. If the Borrower obtains releases of one or more Mortgaged Properties
pursuant to (S)5.5, and simultaneously or thereafter provides Additional
Properties pursuant to (S)5.3 and (S)5.4 to replace the Collateral Value of the
released property, the Borrower shall pay a substitution fee to the Agent for
its own account in the amount of $2,500 per Additional Property.
(S)4.2. Commitment Fee. The Borrower shall pay to the Agent for the
accounts of the Lenders in accordance with their respective Commitment
Percentages a commitment fee calculated at the rates set forth below per annum
on the daily amount by which the Total Commitment (as it may have been reduced
pursuant to (S)2.2) exceeds the Outstanding Principal Amount (the "Unused
Amount"):
<TABLE>
<CAPTION>
Unused Amount Fee Rate
------------- --------
<S> <C>
less than 1/3 of Total Commitment 15 basis points
at least 1/3 of Total Commitment
but less than 2/3 of Total Commitment 20 basis points
at least 2/3 of Total Commitment 25 basis points
</TABLE>
The commitment fee shall be payable on the basis of the applicable annual rate
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the date hereof, with a final payment on the Maturity Date or any
earlier date on which the Commitments shall terminate.
(S)4.3. Funds for Payments.
(a) All payments of principal, interest, closing fees, commitment
fees and any other amounts due hereunder (other than as provided in (S)4.1,
(S)4.5 and (S)4.6) or under any of the other Loan Documents, and all
prepayments, shall be made to the Agent, for the respective accounts of the
Lenders, at the Agent's Head Office, in each case in Dollars in immediately
available funds.
(b) All payments by the Borrower hereunder and under any of the
other Loan Documents shall be made without setoff or counterclaim and free and
clear of and without deduction for any taxes, levies, imposts, duties, charges,
fees, deductions, withholdings, compulsory liens, restrictions or conditions of
any nature now or hereafter imposed or levied by any jurisdiction or any
political subdivision thereof or taxing or other authority therein unless the
Borrower is compelled by law to make such deduction or withholding. If any such
obligation is imposed upon the Borrower with respect to any amount payable by it
hereunder or under any of
<PAGE>
the other Loan Documents, the Borrower shall pay to the Agent, for the
account of the Lenders or (as the case may be) the Agent, on the date on which
such amount is due and payable hereunder or under such other Loan Document, such
additional amount in Dollars as shall be necessary to enable the Lenders or the
Agent to receive the same net amount which the Lenders or the Agent would have
received on such due date had no such obligation been imposed upon the Borrower.
The Borrower will deliver promptly to the Agent certificates or other valid
vouchers for all taxes or other charges deducted from or paid with respect to
payments made by the Borrower hereunder or under such other Loan Document.
(S)4.4. Computations. All computations of interest on the Loans and of
other fees to the extent applicable shall be based on a 360-day year and paid
for the actual number of days elapsed. Except as otherwise provided in the
definition of the term "Interest Period" with respect to Eurodollar Rate Loans,
whenever a payment hereunder or under any of the other Loan Documents becomes
due on a day that is not a Business Day, the due date for such payment shall be
extended to the next succeeding Business Day, and interest shall accrue during
such extension. The outstanding amount of the Loans as reflected on the Records
from time to time shall (absent manifest error) be considered correct and
binding on the Borrower unless within thirty (30) Business Days after receipt by
the Agent or any of the Lenders from Borrower of any notice by the Borrower of
such outstanding amount, the Agent or such Lender shall notify the Borrower to
the contrary.
(S)4.5. Additional Costs, Etc. If any present or future applicable law
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Lender or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Lender or the Agent to any tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature with respect to this
Agreement, the other Loan Documents, such Lender's Commitment or the Loans
(other than taxes based upon or measured by the net income or profits of such
Lender or the Agent), or
(b) materially change the basis of taxation (except for changes
in taxes on net income or profits) of payments to any Lender of the principal of
or the interest on any Loans or any other amounts payable to any Lender under
this Agreement or the other Loan Documents, or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Agreement) any special
deposit, reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held by, or
deposits in or for the account of, or loans by, or commitments of an office of
any Lender, or
(d) impose on any Lender any other conditions or requirements
with respect to this Agreement, the other Loan Documents, the Loans, the
Commitment, or any class of loans or
<PAGE>
commitments of which any of the Loans or the Commitment forms a part;
and the result of any of the foregoing is
(i) to increase the cost to such Lender of making, funding, issuing,
renewing, extending or maintaining any of the Loans or such Lender's
Commitment, or
(ii) to reduce the amount of principal, interest or other amount
payable to such Lender or the Agent hereunder on account of the Commitments or
any of the Loans, or
(iii) to require such Lender or the Agent to make any payment or to
forego any interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the gross amount
of any sum receivable or deemed received by such Lender or the Agent from the
Borrower hereunder,
Then, and in each such case, the Borrower will, upon demand made by such Lender
or (as the case may be) the Agent at any time and from time to time and as often
as the occasion therefor may arise, pay to such Lender or the Agent, to the
extent permitted by law, such additional amounts as will be sufficient to
compensate such Lender or the Agent for such additional cost, reduction, payment
or foregone interest or other sum.
(S)4.6. Capital Adequacy. If any present or future law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) or the interpretation thereof by a court or governmental authority with
appropriate jurisdiction affects the amount of capital required or expected to
be maintained by banks or bank holding companies and any Lender or the Agent
determines that the amount of capital required to be maintained by it is
increased by or based upon the existence of its Commitment or the Loans made or
deemed to be made pursuant hereto, then such Lender or the Agent may notify the
Borrower of such fact, and the Borrower shall pay to such Lender or the Agent
from time to time on demand, as an additional fee payable hereunder, such amount
as such Lender or the Agent shall determine in good faith and certify in a
notice to the Borrower to be an amount that will adequately compensate such
Lender or the Agent in light of these circumstances for its increased costs of
maintaining such capital. Each Lender and the Agent shall allocate such cost
increases among its customers in good faith and on an equitable basis.
(S)4.7. Certificate. A certificate setting forth any additional amounts
payable pursuant to (S)(S)4.5 or 4.6 and a brief explanation of such amounts
which are due, submitted by any Lender or the Agent to the Borrower, shall be
prima facie evidence that such amounts are due and owing.
(S)4.8. Indemnity. In addition to the other provisions of this Agreement
regarding any such matters, the Borrower agrees to indemnify each Lender and to
hold each Lender harmless from and against any loss, cost or reasonable expense
(including loss of anticipated profits) that such Lender may sustain or incur as
a consequence of (a) a default by the Borrower in payment of the principal
amount of or any interest on any Eurodollar Rate Loans as and when due and
payable, including any such loss or expense caused by Borrower's breach or other
default and arising from interest or fees payable by such Lender to lenders of
funds obtained by it in order to
<PAGE>
maintain its Eurodollar Rate Loans, (b) a default by the Borrower in making a
borrowing or conversion after the Borrower has given (or is deemed to have
given) a Loan Request or a Conversion Request, and (c) the making of any payment
of a Eurodollar Rate Loan or the making of any conversion of a Eurodollar Rate
Loan to a Base Rate Loan on a day that is not the last day of the applicable
Interest Period with respect thereto, including interest or fees payable by such
Lender to lenders of funds obtained by it in order to maintain any such
Eurodollar Rate Loan.
(S)4.9. Interest on Overdue Amounts. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other overdue amounts
payable hereunder or under any of the other Loan Documents shall bear interest
compounded monthly and payable on demand at a rate per annum equal to four
percent (4%) above the Base Rate until such amount shall be paid in full (after
as well as before judgment). In addition, the Borrower shall pay to the Agent
for the account of the Lenders a late charge equal to three percent (3%) of any
amount of principal and/or interest and/or charges on the Loans which is not
paid within ten (10) days of the date when due.
(S)4.10. Inability to Determine Eurodollar Rate. In the event, prior to
the commencement of any Interest Period relating to any Eurodollar Rate Loan,
the Agent shall determine that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Loan during any Interest
Period, the Agent shall forthwith give notice of such determination (which shall
be conclusive and binding on the Borrower) to the Borrower. In such event (a)
any Loan Request with respect to Eurodollar Rate Loans shall be automatically
withdrawn and shall be deemed a request for Base Rate Loans, (b) each Eurodollar
Rate Loan will automatically, on the last day of the then current Interest
Period thereof, become a Base Rate Loan, and (c) the obligations of the Lenders
to make Eurodollar Rate Loans shall be suspended until the Agent determines that
the circumstances giving rise to such suspension no longer exist, whereupon the
Agent shall so notify the Borrower.
(S)4.11. Illegality. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or in the interpretation
or application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Rate Loans, such Lender shall forthwith give notice of such
circumstances to the Borrower and thereupon (a) the Commitment of such Lender to
make Eurodollar Rate Loans or convert Loans of another Type to Eurodollar Rate
Loans shall forthwith be suspended and (b) the Eurodollar Rate Loans then
outstanding shall be converted automatically to Base Rate Loans on the last day
of each Interest Period applicable to such Eurodollar Rate Loans or within such
earlier period as may be required by law. The Borrower hereby agrees promptly to
pay to the Agent for the account of such Lender, upon demand, any additional
amounts necessary to compensate such Lender for any reasonable costs incurred by
such Lender in making any conversion in accordance with this (S)4.11, including
any interest or fees payable by such Lender to lenders of funds obtained by it
in order to make or maintain its Eurodollar Rate Loans hereunder.
(S)4.12. Replacement of Lenders. If any of the Lenders shall make a
notice or demand
<PAGE>
upon the Borrower pursuant to (S)4.5, (S)4.6, or (S)4.11 based on circumstances
or laws which are not generally applicable to the Lenders organized under the
laws of the United States or any State thereof, the Borrower shall have the
right to replace such Lender with an Eligible Assignee selected by the Borrower
and approved by the Agent. In such event the assignment shall take place on a
date set by the Agent at which time the assigning Lender and the Eligible
Assignee shall enter into an Assignment and Acceptance as contemplated by
(S)18.1 (and clause (d) thereof shall not be applicable) and the assigning
Lender shall receive from the Eligible Assignee or the Borrower a sum equal to
the outstanding principal amount of the Loans owed to the assigning Lender
together with accrued interest thereon plus the accrued commitment fee under
(S)4.2 allocated to the assigning Lender plus an amount equal to the Fixed Rate
Prepayment Fee, if any, which would be due if the assigning Lender's Loans were
prepaid on such assignment date.
(S)4.13. U.S. Tax Certificates. Each Lender that is organized under the
laws of any jurisdiction other than the United States of America or any state or
other political subdivision thereof shall deliver to the Agent for transmission
to the Borrower, on the date it becomes a Lender, and at such other times as may
be necessary in the determination of the Borrower or the Agent (each in the
reasonable exercise of its discretion), to the extent permitted by law, such
certificates, documents or other evidence, properly completed and duly executed
by such Lender (including Internal Revenue Service Form 1001 or Form 4224 or any
other certificate or statement of exemption required by Treasury Regulations
Section 1.1441-4(a) or Section 1.1441-6(c) or any successor thereto) to
establish that such Lender is not subject to deduction or withholding of United
States federal income tax under Section 1441 or 1442 of the Internal Revenue
Code or otherwise (or under any comparable provisions of any successor statute)
with respect to any payments to such Lender of principal, interest, fees or
other amounts payable under any of the Loan Documents.
(S)5. COLLATERAL SECURITY; NO LIMITATION ON RECOURSE.
(S)5.1. Collateral Security. The Obligations shall be secured by (i) a
perfected first priority lien and security interest to be held by the Agent
(subject only to Permitted Liens) in the Mortgaged Properties, pursuant to the
terms of the Security Documents, (ii) a perfected first priority lien and
security interest to be held by the Agent in the Leases and rents pursuant to
the Assignments of Leases and Rents, (iii) a first priority pledge of any
pledged bonds purchased with the proceeds of Drawings under any IRB Letter of
Credit pursuant to the Pledge Agreements, and (iv) the Guaranties.
(S)5.2. No Limitation on Recourse. Notwithstanding the foregoing
Collateral, the Obligations are full recourse obligations of the Borrower (with
recourse to its partners limited to the extent provided in (S)28) and, to the
extent provided in the applicable Guaranty, of the Guarantors, and all of their
respective Real Estate Assets and other properties shall be available for the
indefeasible payment in full in cash and performance of the Obligations.
(S)5.3. Additional Properties.
(a) A Real Estate Asset owned by the Borrower or by a Guarantor may
become
<PAGE>
an additional Mortgaged Property if (i) the Requisite Lenders, in their sole
discretion, approve such Real Estate as being eligible to become a Mortgaged
Property and (ii) all of the conditions set forth in (S)5.4 are satisfied with
respect to such Real Estate Asset. Borrower shall provide the Agent with a
notice of each proposed Additional Property describing such property, its
estimated value and its estimated net operating income together with a current
rent roll and the most current operating statements available with respect
thereto, which operating statements, to the extent available, shall cover a
period of at least two years. If the Agent determines that additional
information is needed to sufficiently describe such property, it may request a
supplemental notice from the Borrower containing such additional information.
When such notice is satisfactory to the Agent, it shall send a copy to each
Lender and any Lender which fails to notify the Agent of its objection within
five (5) Business Days after its receipt of such notice shall be deemed to have
granted its approval of the eligibility of such Real Estate Asset to become an
Additional Property. The fact that any Lender has approved or is deemed to have
so approved the eligibility of a Real Estate Asset shall not prevent such Lender
from withholding any consent, approval or waiver required or requested of such
Lender in connection with the satisfaction or waiver of the conditions set forth
in (S)5.4 with respect to such Real Estate Asset. In the event that the
Requisite Lenders grant such approval and all of the conditions set forth in
(S)5.4 are satisfied, the Agent shall notify the Borrower and within ten (10)
days thereafter the Borrower and the Company shall execute and deliver an
Indemnity Agreement and the Mortgagor shall execute and deliver to the Agent a
Security Deed, an Assignment of Rents and Leases and UCC-1 financing statements,
which Security Documents shall be in substantially the form of the Security
Documents executed and delivered herewith with such changes as the Agent may
deem desirable to address the laws of the State where the Additional Property is
located or the factual circumstances of the Additional Property. Such Additional
Properties shall be deemed to be Mortgaged Properties upon the recording and
filing of such Security Documents and the Agent's receipt of satisfactory
evidence thereof.
(b) After the Continental Towers Property has been released as an
Assigned Mortgaged Property pursuant to (S)5.5, another Real Estate Asset may
become an Assigned Mortgaged Property if (i) all Lenders, in their sole
discretion, approve such Real Estate Asset as being eligible to become an
Assigned Mortgaged Property, (ii) the Requisite Lenders, in their sole
discretion, approve the terms and conditions of the proposed Assigned Note and
related documents and (iii) all conditions set forth in (S)5.4 are satisfied
with respect to such Real Estate Asset. If the Requisite Lenders grant such
approvals, then upon satisfaction of the conditions set forth in (S)5.4 and
execution and delivery of the Assigned Note Assignment, the original of the
Assigned Note endorsed to the Agent and all other documents required by the
Agent in connection therewith, the Agent shall revise Schedule 1.1 to include
such Additional Property as an Assigned Mortgaged Property. At any time there
shall be no more than one Assigned Mortgaged Property hereunder.
(c) The Agent and the Lenders shall use their best efforts to
complete their review of the documents submitted with respect to each Additional
Property within ten (10) Business Days after receipt of the last of the items
required pursuant to (S)5.4. With respect to the items which require approval of
the Requisite Lenders (Appraisal, Environmental Report and Inspecting Engineers'
Report) each Lender shall notify the Agent of its approval or disapproval
<PAGE>
within such ten (10) Business Day period.
(S)5.4. Conditions to Approval of Additional Properties. Prior to
acceptance of any Real Estate Asset to become an Additional Property pursuant to
(S)5.3, such property must satisfy the following conditions, which may be
modified or waived only by the written agreement of the Requisite Lenders:
(a) If the Additional Property is not owned by the Borrower or an
existing Guarantor Subsidiary, but is owned by a Related Company which is at
least 99% owned by Borrower, such Related Company must become a Guarantor
Subsidiary by delivery to the Agent of the following, all in form and substance
satisfactory to the Agent: (i) a Guaranty in substantially the form of the
Guaranty executed and delivered by the Guarantor Subsidiaries prior to the
Effective Date and (ii) good standing certificates, general partner
certificates, secretary certificates, opinions of counsel and such other
documents as may be reasonably requested by the Agent.
(b) An Appraisal of the Additional Property ordered by the Agent and
paid for by the Borrower shall have been approved by the Requisite Lenders.
(c) The Agent shall have received all of the items relating to the
Additional Property described in (S)10.8, (S)10.9, (S)10.10, (S)10.12, (S)10.13,
(S)10.16 and (S)10.18 and such items shall have been approved by the Agent or
the Requisite Lenders as required by such Sections.
(d) The Agent shall have received a Certificate executed on behalf of
the Borrower and, if applicable, the Guarantor Subsidiary which is the owner of
the Additional Property, containing the representations and warranties with
respect to the Additional Property as are set forth in (S)6, to which there
shall be attached a current rent roll for the Additional Property which shall be
deemed to supplement and become a part of Schedule 6.22(l) hereto.
(e) The Borrower shall have requested estoppel certificates in form
reasonably satisfactory to the Agent from the tenants under all Leases of the
Additional Property, shall have used its best efforts to obtain all such
estoppel certificates and shall have received such estoppel certificates as the
Lead Lenders may, in their discretion, require, and all estoppel certificates
received shall be satisfactory to the Lead Lenders.
(f) The Agent shall have received updated certificates and other
items relating to the Borrower, the Company and the applicable Guarantor
Subsidiary as described in (S)10.2, (S)10.3 and (S)10.4 and a favorable opinion
addressed to the Lenders and the Agent, in form and substance satisfactory to
the Lenders and the Agent as to the matters described on Exhibit E relating to
the Loan Documents executed by Borrower and/or the Mortgagor with respect to the
Additional Property and relating to the laws of the state where the Additional
Property is located.
(S)5.5. Release of Mortgaged Properties. The Borrower may request that
the Agent release any Mortgaged Property from the lien of the Security Documents
and the Agent shall
<PAGE>
grant such requested release provided that (i) the requested release is
consented to by the Requisite Lenders (such consent having been granted for the
release of the Continental Towers Property) and (ii) there is then no continuing
Default or Event of Default under this Agreement and the requested release will
not result in any Default or Event of Default under this Agreement and the
Borrower delivers to the Agent a pro-forma Compliance Certificate reasonably
satisfactory to the Agent demonstrating that the requested release will not
result in a violation of any of the covenants in (S)9. Each Lender agrees to
respond to any such request for Requisite Lender consent within five (5)
Business Days and agrees to not unreasonably withhold its consent. The Borrower
may request releases of a portion of a Mortgaged Property consisting of
undeveloped land to be developed by Borrower or sold provided that in addition
to the requirements set forth above, the Borrower shall also submit such
additional information as may be reasonably requested by the Agent including,
without limitation, (i) an updated survey and endorsements to the Title Policy;
(ii) an updated Appraisal of the remaining portion of the Mortgaged Property and
(iii) evidence that the division of the Mortgaged Property pursuant to the
requested release will not result in violation of any zoning ordinance or other
applicable laws and ordinances. If the Borrower shall request the release of any
Mortgaged Property which is adjacent to any other Mortgaged Property which is
not to be simultaneously released, the Agent may require the establishment of
appropriate easements and maintenance agreements satisfactory to the Agent
relating to any shared utilities, drainage facilities, access drives or walks,
parking areas or other shared facilities and evidence satisfactory to the Agent
that the property to be released is assessed as a separate tax parcel from the
Mortgaged Property which is not to be released.
(S)6. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Agent and each of the Lenders as follows, and to the extent that
the following representations and warranties relate to the Company, the Company
represents and warrants to the Agent and each of the Lenders as follows:
(S)6.1. Authority; Etc.
(a) Organization; Good Standing. The Company (i) is a Maryland real
estate investment trust duly organized, validly existing and in good standing
under the laws of the State of Maryland, (ii) has all requisite power to own its
properties and conduct its business as now conducted and as presently
contemplated, and (iii) to the extent required by law is in good standing as a
foreign entity and is duly authorized to do business in the States in which the
Mortgaged Properties are located and in each other jurisdiction where such
qualification is necessary except where a failure to be so qualified in such
other jurisdiction would not have a Materially Adverse Effect. The Borrower is a
Delaware limited partnership, and each Guarantor Subsidiary is a limited
partnership or a limited liability company formed under the laws of Illinois,
Tennessee or Delaware, and each such entity is duly organized, validly existing
and in good standing under the laws of the State of its formation, has all
requisite power to own its properties and conduct its business as presently
contemplated and is duly authorized to do business in the States in which the
Mortgaged Properties owned by it are located and in each other jurisdiction
where such qualification is necessary.
<PAGE>
(b) Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents to which the Borrower is to become a
party and the transactions contemplated hereby and thereby (i) are within the
authority of the Borrower, (ii) have been duly authorized by all necessary
proceedings on the part of the Borrower and the Company, (iii) do not conflict
with or result in any breach or contravention of any provision of law, statute,
rule or regulation to which the Borrower or the Company is subject or any
judgment, order, writ, injunction, license or permit applicable to the Borrower
or the Company and (iv) do not conflict with any provision of the Borrower's
partnership agreement or Company's declaration of trust, charter documents or
bylaws, or any material agreement or other material instrument binding upon, the
Borrower or the Company or to which any of their properties are subject. The
execution, delivery and performance of the Guaranty and the other Loan Documents
to which any Guarantor is to become a party and the transactions contemplated
hereby and thereby (i) are within the authority of such Guarantor, (ii) have
been duly authorized by all necessary proceedings on the part of such Guarantor,
(iii) do not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which such Guarantor is subject
or any judgment, order, writ, injunction, license or permit applicable to such
Guarantor and (iv) do not conflict with any provision of such Guarantor's
charter documents or bylaws, partnership agreement, limited liability company
agreement, declaration of trust, or any agreement or other instrument binding
upon such Guarantor or to which any of such Guarantor's properties are subject.
(c) Enforceability. The execution and delivery of this Agreement and
the other Loan Documents to which the Borrower is or is to become a party will
result in valid and legally binding obligations of the Borrower enforceable
against it in accordance with the respective terms and provisions hereof and
thereof, except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors' rights and except to the extent that availability of
the remedy of specific performance or injunctive relief is subject to the
discretion of the court before which any proceeding therefor may be brought. The
execution and delivery of this Agreement and the Indemnity Agreement will result
in valid and legally binding obligations of the Company enforceable against it
in accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought. The execution and
delivery of the Guaranty and the other Loan Documents to which any Guarantor is
or is to become a party will result in valid and legally binding obligations of
such Guarantor enforceable against such Guarantor in accordance with the
respective terms and provisions hereof and thereof, except as enforceability is
limited by bankruptcy, insolvency, reorganization, moratorium or other laws
relating to or affecting generally the enforcement of creditors' rights and
except to the extent that availability of the remedy of specific performance or
injunctive relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
(S)6.2. Governmental Approvals. The execution, delivery and performance
by the
<PAGE>
Borrower, the Company and each Guarantor of this Agreement and the other
Loan Documents to which the Borrower or such Guarantor is or is to become a
party and the transactions contemplated hereby and thereby do not require the
approval or consent of, or filing with, any governmental agency or authority
other than those already obtained and the filing of the Security Documents in
the appropriate records office with respect thereto.
(S)6.3. Title to Properties.
(a) The Borrower or one of the Guarantor Subsidiaries holds good
and clear record and marketable fee simple title to the Mortgaged Properties,
subject to no Liens or encumbrances except for the Permitted Liens.
(b) Except as indicated on Schedule 6.3 hereto, the Borrower or
the Related Companies own all of the properties reflected in the Closing Balance
Sheet of the Company, subject to no Liens except Permitted Liens.
(S)6.4. Financial Statements. The following financial statements have
been furnished to each of the Lenders.
(a) The Prospectus Financial Statements. The Prospectus Financial
Statements have been prepared in accordance with Generally Accepted Accounting
Principles and fairly present the financial condition of the Borrower and the
Company as at the close of business on the Facility Closing Date and the results
of operations for the applicable period. There are no direct or contingent
liabilities of the Borrower or the Company as of such date involving material
amounts, known to the officers of the Company not disclosed in the Closing
Balance Sheet of the Company contained in the Prospectus Financial Statements
and the related notes thereto. There are no material differences between the
Closing Balance Sheet and balance sheet of the Borrower and its subsidiaries
prepared on a consolidated basis in accordance with Generally Accepted
Accounting Principles prepared on the same basis and as of the same date as the
Closing Balance Sheet, other than the line item for the minority interests in
the Borrower.
(b) With respect to each Mortgaged Property, a statement prepared
by the Borrower of the rental and other income of the Borrower from the
operation of such Mortgaged Property for each of the previous four (4) fiscal
quarters, and all operating and other costs and expenses incurred by the
Borrower in connection with such Mortgaged Property during such fiscal quarters,
certified by a Responsible Officer of the Company as fairly presenting the
results of operation with respect to such Mortgaged Property for such fiscal
period.
(S)6.5. No Material Changes, Etc. The Formation Transactions and all other
events which are the basis for the assumptions used in preparation of the
Closing Balance Sheet have happened. Since the time of preparation of the
Closing Balance Sheet, there has occurred no material adverse change in the
financial condition or assets or business of the Borrower as shown on or
reflected on the Closing Balance Sheet, nor has there been any material increase
in the liabilities of the Borrower or the Company in excess of those shown
thereon other than changes in the ordinary course of business that have not had
any Material Adverse Effect either
<PAGE>
individually or in the aggregate.
(S)6.6. Franchises, Patents, Copyrights, Etc. The Borrower possesses all
franchises, patents, copyrights, trademarks, trade names, licenses and permits,
and rights in respect of the foregoing, adequate for the conduct of its business
substantially as now conducted without known conflict with any rights of others,
including all Permits except to the extent the Borrower's failure to possess the
same does not have a Material Adverse Effect.
(S)6.7. Litigation. Except as listed and described on Schedule 6.7 hereto,
there are no actions, suits, proceedings or investigations of any kind pending
or, to Borrower's knowledge, threatened against the Borrower, the Company, any
Guarantor or any of the Related Companies before any court, tribunal or
administrative agency or board that, if adversely determined, are reasonably
expected to, either in any case or in the aggregate, have a Material Adverse
Effect or materially impair the right of the Borrower, the Company, any
Guarantor or any of the Related Companies to carry on business substantially as
now conducted by it, or which question the validity of this Agreement or any of
the other Loan Documents, any action taken or to be taken pursuant hereto or
thereto, or any Lien or security interest created or intended to be created
pursuant hereto or thereto, or which will materially adversely affect the
ability of the Borrower or any Guarantor to pay and perform the Obligations in
the manner contemplated by this Agreement and the other Loan Documents.
(S)6.8. No Materially Adverse Contracts, Etc. The Borrower is not subject
to any charter, trust or other legal restriction, or any judgment, decree,
order, rule or regulation that has or is expected in the future, in the judgment
of the Company's officers, to have a Material Adverse Effect. The Borrower is
not a party to any contract or agreement that has or is expected, in the
judgment of the Company's officers, to have any Material Adverse Effect. The
Company is not subject to any charter, trust or other legal restriction, or any
judgment, decree, order, rule or regulation that has or is expected in the
future, in the judgment of the Company's officers, to have a Material Adverse
Effect. The Company is not a party to any contract or agreement that has or is
expected, in the judgment of the Company's officers, to have any Material
Adverse Effect. None of the Guarantors is subject to any charter, trust or other
legal restriction, or any judgment, decree, order, rule or regulation that has
or is expected in the future, in the judgment of the Company's officers, to have
a Material Adverse Effect. None of the Guarantors is a party to any contract or
agreement that has or is expected, in the judgment of the Company's officers, to
have any Material Adverse Effect.
(S)6.9. Compliance With Other Instruments, Laws, Etc. Neither the Borrower
nor the Company is in violation of any provision of the Borrower's partnership
agreement, the partnership agreement of any of the Guarantor Subsidiaries or of
the Company's declaration of trust, by-laws, or any agreement or instrument to
which it may be subject or by which the Borrower, any of the Guarantors or any
of their respective properties may be bound or any decree, order, judgment,
statute, license, rule or regulation, in any of the foregoing cases in a manner
that could result in the imposition of substantial penalties or have a Material
Adverse Effect.
<PAGE>
(S)6.10. Tax Status. Each of the Borrower, the Company and the Guarantor
Subsidiaries (a) has made or filed all federal and state income and all other
tax returns, reports and declarations required by any jurisdiction to which it
is subject, and (b) has paid all taxes and other governmental assessments and
charges shown or determined to be due on such returns, reports and declarations,
except those being contested in good faith and by appropriate proceedings. There
are no unpaid taxes in any material amount claimed to be due by the taxing
authority of any jurisdiction, and the officers of the Company know of no basis
for any such claim.
(S)6.11. Event of Default. No Default or Event of Default has occurred and
is continuing.
(S)6.12. Investment Company Act. The Borrower is not an "investment
company", or an "affiliated company" or a "principal underwriter" of an
"investment company", as such terms are defined in the Investment Company Act of
1940.The Company is not an "investment company", or an "affiliated company" or a
"principal underwriter" of an "investment company", as such terms are defined in
the Investment Company Act of 1940. None of the Guarantors is an "investment
company", or an "affiliated company" or a "principal underwriter" of an
"investment company", as such terms are defined in the Investment Company Act of
1940.
(S)6.13. Absence of Financing Statements, Etc. There is no financing
statement, security agreement, chattel mortgage, real estate mortgage, equipment
lease, financing lease, option, encumbrance or other document existing, filed or
recorded with any filing records, registry, or other public office, that
purports to cover, affect or give notice of any present or possible future Lien
or encumbrance on, or security interest in, any Collateral, except those in
favor of the Agent or Permitted Liens.
(S)6.14. Setoff, Etc. The Collateral and the Agent's rights with respect to
the Collateral are not subject to any setoff, claims, withholdings or other
defenses. Either the Borrower or a Guarantor is the owner of the Collateral free
from any lien, security interest, encumbrance and any other claim or demand,
except for the Permitted Liens.
(S)6.15. Certain Transactions. Except as disclosed in the Equity
Prospectus, none of the officers or employees of the Borrower, the Company or
any Guarantor are presently a party to any transaction with the Borrower, the
Company or any Guarantor (other than for services as employees, officers and
trustees) , including any contract, agreement or other arrangement providing for
the furnishing of services to or by, providing for rental of real or personal
property to or from, or otherwise requiring payments to or from any officer,
trustee or such employee or, to the knowledge of the Borrower and the Company,
any corporation, partnership, trust or other entity in which any officer,
trustee or any such employee or natural Person related to such officer, trustee
or employee (or other Person in which such officer, trustee or employee has a
direct or indirect beneficial interest) has a substantial interest or is an
officer or trustee.
(S)6.16. Benefit Plans: Multiemployer Plans: Guaranteed Pension Plans. As
of the date hereof, neither the Borrower nor any ERISA Affiliate maintains or
contributes to any Employee Benefit Plan, Multiemployer Plan or Guaranteed
Pension Plan. To the extent that Borrower, the
<PAGE>
Company or any ERISA Affiliate hereafter maintains or contributes to any
Employee Benefit Plan or Guaranteed Pension Plan, it shall at all times do so in
compliance with (S)7.18 hereof.
(S)6.17. Regulations U and X. No portion of any Loan is to be used for the
purpose of purchasing or carrying any "margin security" or "margin stock" as
such terms are used in Regulations U and X of the Board of Governors of the
Federal Reserve System, 12 C.F.R. Parts 221 and 224.
(S)6.18. Environmental Compliance. The Borrower has delivered to the Agent
the Environmental Reports with respect to the Mortgaged Properties which are
listed on Schedule 6.18. Except as may be set forth in the Environmental Reports
with respect to the Mortgaged Properties, or as described on Schedule 6.18 or in
the Equity Prospectus with respect to the other Real Estate Assets, Borrower
makes the following representations and warranties:
(a) To the best of Borrower's knowledge, none of the Borrower,
any Guarantor, any of the Related Companies or any operator of the Real Estate
or any portion thereof, or any operations thereon is in violation, or alleged
material violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under the Resource Conservation and Recovery Act ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980 as
amended ("CERCLA"), the Superfund Amendments and Reauthorization Act of 1986
("SARA"), the Federal Clean Water Act, the Federal Clean Air Act, the Toxic
Substances Control Act, or any state or local statute, regulation, ordinance,
order or decree relating to health, safety or the environment, including,
without limitation, the environmental statutes, regulations, orders and decrees
of the States in which any of the Real Estate may be located (hereinafter
collectively referred to as the "Environmental Laws"), which violation either
involves the Mortgaged Properties or would have a Material Adverse Effect.
(b) None of the Borrower, Prime, the Guarantors or the Related
Companies has received written notice from any third party including, without
limitation any federal, state or local governmental authority with respect to
any of the Mortgaged Properties, or with respect to any other Real Estate if the
same would have a Material Adverse Effect, (i) that it has been identified by
the United States Environmental Protection Agency ("EPA") as a potentially
responsible party under CERCLA with respect to a site listed on the National
Priorities List, 40 C.F.R. Part 300 Appendix B (1986) ; (ii) that any hazardous
waste, as defined by 42 U.S.C. (S)9601(5), any hazardous substances as defined
by 42 U.S.C. (S)9601(14), any pollutant or contaminant as defined by 42 U.S.C.
(S)9601(33) or any toxic substances, oil or hazardous materials or other
chemicals or substances regulated by any Environmental Laws ("Hazardous
Materials") which it has generated, transported or disposed of have been found
at any site at which a federal, state or local agency or other third party has
conducted or has ordered that the Borrower, any Guarantor or any of the Related
Companies conduct a remedial investigation, removal or other response action
pursuant to any Environmental Law; or (iii) that it is or shall be a named party
to any claim, action, cause of action, complaint, or legal or administrative
proceeding (in each case, contingent or otherwise) arising out of any third
party's incurrence of costs, expenses, losses or damages of any kind whatsoever
in connection with the release of Hazardous Materials.
<PAGE>
(c) (i) To the best of Borrower's knowledge no portion of the
Real Estate has been used for the handling, processing, storage or disposal of
Hazardous Materials except in material compliance with applicable Environmental
Laws; and no underground tank or other underground storage receptacle for
Hazardous Materials is located on any portion of the Real Estate except in
material compliance with applicable Environmental Laws; (ii) to the best of
Borrower's knowledge, in the course of any activities conducted by the Borrower,
any Guarantor, any of the Related Companies, the operators of any Real Estate or
any ground or space tenants on any Real Estate, no Hazardous Materials have been
generated or are being used on the Real Estate except in material compliance
with applicable Environmental Laws, which in the case of Real Estate other than
the Mortgaged Properties would have a Material Adverse Effect; (iii) there has
been no present, or to the best of Borrower's knowledge past, releasing,
spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting,
escaping, disposing or dumping (a "Release") or threatened Release of Hazardous
Materials on, upon, into or from the Mortgaged Properties or the other Real
Estate, which Release in the case of Real Estate other than the Mortgaged
Properties would have a Material Adverse Effect and; (iv) to the best of
Borrower's knowledge, there have been no Releases on, upon, from or into any
real property in the vicinity of any of the Real Estate which, through soil or
groundwater contamination, may have come to be located on, and which would have
a Material Adverse Effect; and (v) notwithstanding that any representation
contained herein may be limited to the knowledge of the Borrower, any such
limitation shall not affect the covenants specified in (S)7.10 or elsewhere in
this Agreement.
(S)6.19. Subsidiaries and Affiliates. The Borrower has no Subsidiaries
except for the Related Companies listed on Schedule 1.3 and does not have an
ownership interest in any entity whose financial statements are not consolidated
with the Borrower's except for the Permitted Joint Ventures listed on Schedule
1.3. The Company is not a partner in any partnership other than Borrower and
certain of the Related Companies listed on Schedule 1.3 which are limited
partnerships in which the Company has a one tenth percent (0.1%) limited
partnership interest, has no Investments in any Person other than the Borrower
and such limited partnerships and is not a member of any limited liability
company. The Company owns no material assets other than its partnership interest
in Borrower and the limited partnership interests described in this (S)6.19.
(S)6.20. Major Leases. The Borrower has delivered to the Agent complete
copies of the Major Leases and of the other Leases requested by the Agent.
(S)6.21. Loan Documents. All of the representations and warranties of the
Borrower or any Guarantor made in the other Loan Documents or any document or
instrument delivered or to be delivered to the Agent or the Lenders pursuant to
or in connection with any of such Loan Documents are true and correct in all
material respects.
(S)6.22. Mortgaged Properties. In this (S)6.22 the phrase "to the
Borrower's knowledge" shall mean the actual knowledge of the officers and
employees of the Borrower, the Company or of Prime who have had significant
responsibility for the operation, management and leasing of the applicable
Mortgaged Property. Notwithstanding that any representation contained herein
<PAGE>
may be limited to the Borrower's knowledge, any such limitation shall not affect
any covenant with respect to the same or similar subject matter contained in
(S)7 or elsewhere in this Agreement or in the Loan Documents. The Borrower makes
the following additional representations and warranties concerning the Mortgaged
Properties:
(a) Off-Site Utilities. All water, sewer, electric, gas,
telephone and other utilities are installed to the property lines of the
Mortgaged Properties and, except in the case of drainage facilities, are
connected to the Buildings located thereon and to the Borrower's knowledge are
adequate to service the Buildings in full compliance with applicable law; and to
the Borrower's knowledge the Buildings are properly and legally connected
directly to public water and sewer systems. No easements over land of others not
yet obtained are required for any such utilities, and no drainage of surface or
other water across land of others is required except as disclosed in the
Surveys.
(b) Surveys, Access; Etc. Since the date of the most recent
Survey delivered to the Agent with respect to each Mortgaged Property, there has
been no construction (except interior renovations and improvements) of
additional Buildings or additions to Buildings on such Mortgaged Property, and
to the Borrower's knowledge no takings by eminent domain affecting such
Mortgaged Property or other changes which may have caused such Survey to be no
longer accurate.
(c) Independent Building. The Buildings on each Mortgaged
Property (except as described in documents referred in the Title Policy for the
West Wacker Drive Property with respect to walkways and other common areas
shared by such property with other buildings) are fully independent from any
other real estate in all respects including, without limitation, in respect of
structural integrity, heating, ventilating and air conditioning, plumbing,
mechanical and other operating and mechanical systems, and electrical,
sanitation and water systems, all of which are connected directly to off-site
utilities located in public streets or ways. Each Mortgaged Property consists of
one or more lots which are not assessed for purposes of real estate tax
assessment and payment jointly with any land which is not a part of such
Mortgaged Property. The Buildings, all Building Service Equipment and all paved
or landscaped areas related to or used in connection with the Buildings are
located wholly within the perimeter lines of the lot or lots on which the
Mortgaged Properties are located except as disclosed in the Surveys.
(d) Condition of Building; No Asbestos. Except as set forth in
the Inspecting Engineers' Reports, to the Borrower's knowledge there are no
material defects in the roof, foundation, structural elements and masonry walls
of the Buildings or their heating, ventilating and air conditioning, electrical,
sprinkler, plumbing or other mechanical systems or their Building Service
Equipment; the Buildings are fully sprinkled; and no friable asbestos is located
in or on the Buildings except as may be disclosed in the Environmental Reports.
(e) Building Compliance with Law; Permits. The Buildings as
presently constructed and used do not, to the Borrower's knowledge, violate any
applicable federal or state law or governmental regulation, or any local
ordinance, order or regulation, including but not
<PAGE>
limited to laws, regulations, or ordinances relating to zoning, building use and
occupancy, subdivision control, fire protection, health and sanitation. To the
Borrower's knowledge, all Permits required for the operation and maintenance of
the Mortgaged Properties, including without limitation, building permits, curb-
cut permits, water connection permits, sewer extension or connection permits and
other permits relating to the use of utilities, and permits required under the
Federal Clean Air Act, as amended, the Federal Clean Water Act, as amended
(including, without limitation a so-called Section 404 Permit"), and by state
law or regulations consistent with the requirements of said Acts, have been
validly issued by the appropriate governmental Persons and are now in full force
and effect.
(f) No Required Real Property Consents, Permits, Etc. The
Borrower has received no notices of, nor has any knowledge of, any Permits,
utility installations and connections (including, without limitation, drainage
facilities, curb cuts and street openings), or private consents required for the
maintenance, operation, servicing and use of the Mortgaged Properties for their
current use which have not been granted, effected, or performed and completed
(as the case may be) or any fees or charges therefor which have not been fully
paid provided, however, that certain Permits may require periodic renewals.
(g) Suits; Judgments. To the Borrower's knowledge, there are no
outstanding notices, suits, orders, decrees or judgments relating to zoning,
building use and occupancy, subdivision control, fire protection, health,
sanitation, or other violations affecting, against, or with respect to, the
Mortgaged Properties or any part thereof, other than suits, orders, decrees or
judgments against tenants or former tenants with respect to defaults by such
tenants under their Leases or evicting or otherwise obtaining possession of the
premises occupied by such tenants.
(h) Insurance. None of the Guarantors, the Company or the
Borrower has received any written notices from any insurer or its agent
requiring performance of any material work with respect to the Mortgaged
Properties or canceling or threatening to cancel any policy of insurance.
(i) Real Property Taxes; Special Assessments. Based on the Title
Policies, there are no unpaid or outstanding real estate or other taxes or
assessments on or against the Mortgaged Properties or any part thereof which are
payable by Borrower or tenants (except only real estate taxes and assessments
not yet due and payable). Except as disclosed on the Title Policies, and to the
Borrower's knowledge there are no betterment assessments or other special
assessments presently pending with respect to any portion of the Mortgaged
Properties, and Borrower has received no notice of any such special assessment
being contemplated.
(j) Historic Status. To the Borrower's knowledge, the Buildings
are not historic structures or landmarks, and the Mortgaged Properties are not
within any historic district pursuant to any federal, state or local law or
governmental regulation.
(k) Domain. To the Borrower's knowledge, there are no pending
eminent domain proceedings against the Mortgaged Properties or any part thereof,
and no such proceedings are presently threatened or contemplated by any taking
authority.
<PAGE>
(l) Leases. A rent roll with respect to all Leases of any
portion of the Mortgaged Properties (current as of the date set forth thereon)
is accurate and completely set forth in Schedule 6.22(1) as the same shall be
supplemented each fiscal quarter by a certificate signed by an authorized
officer of Borrower. The Leases reflected on such rent roll constitute the sole
and complete agreements and understandings relating to leasing or licensing of
space in the Buildings or otherwise at the Mortgaged Properties. The Borrower
has delivered to the Agent a true and complete copy of all Major Leases. There
are no occupancies, rights, privileges or licenses in or to the Buildings or any
other part of the Mortgaged Properties other than pursuant to the Leases
reflected on the rent roll set forth in Schedule 6.22(1). Except as set forth
in Schedule 6.22(1) the Leases reflected on the Schedule 6.22(1) rent roll are
in full force and effect, in accordance with their respective terms, without any
payment default or any other material default thereunder, nor to the Borrower's
knowledge, are there any defenses, counterclaims, offsets, concessions or
rebates available to any tenant thereunder, and the Mortgagor has not given or
made, or received, any notice of default, or any material claim, which remains
uncured or unsatisfied, with respect to any of the Major Leases and, to the best
of the Borrower's knowledge there is no basis for any such claim or notice of
default by any tenant. The Schedule 6.22(1) rent roll accurately and completely
sets forth all rents payable by tenants, no tenant having paid more than one
month's rent in advance. All tenant improvements or work to be done, furnished
or paid for by the landlord, or credited or allowed to a tenant, for, or in
connection with, the Buildings pursuant to any Lease has been completed and paid
for, or provided for in a manner satisfactory to the Agent, or will be paid for
by the Borrower in the ordinary course of the Borrower's business. No leasing,
brokerage or like commissions, fees or payments are due from the Borrower in
respect of the Leases, or will be paid for by the Borrower in the ordinary
course of the Borrower's business. Except as set forth on the Schedule 6.22(1)
rent roll, all tenants under all Leases are in occupancy and operating the
premises covered by such Leases within the permitted uses under such Leases.
(m) Service Agreements. Except as listed on Schedule 6.22 (m),
there are no Service Agreements relating to the operation and maintenance of the
Mortgaged Properties or any part thereof except Service Agreements which may be
terminated at the owner's option upon not more than 60 days advance notice. To
the best of Borrower's knowledge, no default notices have been given by any
party to any Service Agreement.
(n) Other Material Real Property Agreements; No Options. Except
as listed on Schedule 6.22(n), there are no material agreements pertaining to
the Mortgaged Properties or the operation or maintenance thereof other than as
described in this Agreement (including the Schedules hereto) or otherwise
disclosed in writing to the Agent by the Borrower, and no person or entity has
any right or option to acquire any of the Mortgaged Properties or any portion
thereof or interest therein or lease any portion thereof or additional portion
thereof or provide services thereat.
(S)7. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower covenants and
agrees as follows, and to the extent that the following covenants relate to the
Company, the Company covenants and agrees as follows, so long as any Loan, Note
or Letter of Credit is outstanding or the Lenders have any obligations to make
Loans or issue Letters of
<PAGE>
Credit:
(S)7.1. Punctual Payment. The Borrower will unconditionally duly and
punctually pay the principal and interest on the Loans and all other amounts
provided for in the Note, this Agreement, and the other Loan Documents all in
accordance with the terms of the Note, this Agreement and the other Loan
Documents.
(S)7.2. Maintenance of Office. Each of the Borrower and the Company will
maintain its chief executive office in Chicago, Illinois or at such other place
in the United States Of America as the Borrower or the Company shall designate
upon written notice to the Agent to be delivered within fifteen (15) days of
such change, where notices, presentations and demands to or upon the Borrower or
the Company in respect of the Loan Documents may be given or made.
(S)7.3. Records and Accounts. Each of the Borrower and the Company will
keep true and accurate records and books of account in which full, true and
correct entries will be made in accordance with Generally Accepted Accounting
Principles.
(S)7.4. Financial Statements, Certificates and Information. The Borrower
will deliver to each of the Lenders:
(a) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Borrower, the audited
balance sheet of the Borrower and of the Company at the end of such year, and
the related audited statement of income, statement of changes in shareholders,
equity and statement of Funds From Operations and taxable income for such year,
each setting forth in comparative form the figures for the previous fiscal year
and all such statements to be in reasonable detail, prepared in accordance with
Generally Accepted Accounting Principles on a consolidated basis including the
Borrower, the Company and the Related Companies, and accompanied by an auditor's
report prepared without qualification by Ernst & Young LLP or by another
independent certified public accountant reasonably acceptable to the Agent;
(b) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each fiscal quarter of the Borrower,
copies of the unaudited balance sheets of the Borrower as at the end of such
quarter, and the related unaudited statement of income, statement of changes in
shareholders' equity and statement of Funds From Operations and estimated
taxable income for the portion of the Borrower's fiscal year then elapsed, all
in reasonable detail and prepared in accordance with Generally Accepted
Accounting Principles, together with a certification by the principal financial
or accounting officer of the Company that the information contained in such
financial statements fairly presents the financial position of the Borrower and
of the Company on the date thereof (subject to year-end adjustments), provided,
however, that such information with respect to the quarter ended September 30,
1997 shall be delivered by December 29, 1997;
(c) as soon as practicable, but in any event not later than
forty-five (45) days after the end of each of the fiscal quarters of the
Borrower, copies of a statement of the
<PAGE>
Net Operating Income for such fiscal quarter for each Mortgaged Property, and a
consolidating statement of the Net Operating Income for such fiscal quarter for
all of the Mortgaged Properties, prepared on a basis consistent with the
statements furnished pursuant to (S)6.4 (b) , and certified by a Responsible
Officer of the Company;
(d) as soon as practicable, but in any event no later than
forty-five (45) days after the end of each fiscal quarter of the Borrower, a
rent roll for each of the Mortgaged Properties, and a consolidated rent roll for
all of the Mortgaged Properties, each dated as of the end of such fiscal quarter
in form reasonably satisfactory to the Agent;
(e) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, a statement in the form of Exhibit
C hereto signed by a Responsible Officer of the Company and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained herein and (if applicable) reconciliations to reflect changes in
Generally Accepted Accounting Principles since the Facility Closing Date;
(f) as soon as practicable, but in any event not later than
ninety (90) days after the end of each fiscal year of the Company, copies of the
Form 10-K statement filed with the Securities and Exchange Commission ("SEC")
for such fiscal year, and as soon as practicable, but in any event not later
than forty-five (45) days after the end of each fiscal quarter, copies of the
Form 10-Q statement filed with the SEC for such fiscal quarter, provided that in
either case if the SEC has granted an extension for the filing of such
statements (or if a later filing is permitted by rule of the SEC with respect to
the fiscal quarter ended September 30. 1997), Borrower shall deliver such
statements to the Agent simultaneously with the filing thereof with the SEC;
(g) promptly following the filing or mailing thereof, copies of
all other material of a financial nature filed with the SEC or sent to the
shareholders of the Company or to the limited partners of the Borrower and
copies of all press releases (except local press releases relating to specific
properties) promptly upon the issuance thereof; and
(h) from time to time such other financial data and information
(including accountants' management letters) as the Agent or any Lender may
reasonably request.
(S)7.5. Notices. The Borrower will provide the following notices to the
Agent with sufficient copies for each Lender:
(a) Defaults. The Borrower will promptly notify the Agent in
writing of the occurrence of any Default or Event of Default. If any Person
shall give any notice or take any other action in respect of a claimed default
(whether or not constituting a Default or an Event of Default under this
Agreement) under any note, evidence of Indebtedness, indenture or other
obligation to which or with respect to which the Borrower, the Company, any
Guarantor or any of the Related Companies is a party or obligor, whether as
principal or surety, and if the principal amount thereof exceeds $1,000,000, and
such default would permit the holder of such note or obligation or other
evidence of Indebtedness to accelerate the maturity thereof, the Borrower shall
forthwith give written notice thereof to the Agent and each of the Lenders,
describing the notice or action and the nature of the claimed default.
<PAGE>
(b) Environmental Events. The Borrower will promptly notify the
Agent in writing of any of the following events: (i) upon Borrower's obtaining
knowledge of any violation of any Environmental Law regarding a Mortgaged
Property or any Real Estate or Borrower's operations which violation could have
a Material Adverse Effect; (ii) upon Borrower's obtaining knowledge of any
potential or known Release, or threat of Release, of any Hazardous Materials at,
from, or into a Mortgaged Property or any Real Estate which it reports in
writing or is reportable by it in writing to any governmental authority and
which is material in amount or nature or which could materially affect the value
of such Mortgaged Property or which could have a Material Adverse Effect; (iii)
upon Borrower's receipt of any notice of violation of any Environmental Laws or
of any Release or threatened Release of Hazardous Materials, including a notice
or claim of liability or potential responsibility from any third party
(including without limitation any federal, state or local governmental
officials) and including notice of any formal inquiry, proceeding, demand,
investigation or other action with regard to (A) Borrower's or any Person's
operation of a Mortgaged Property or any Real Estate if the same would have a
Material Adverse Effect, (3) contamination on, from or into a Mortgaged Property
or any Real Estate if the same would have a Material Adverse Effect, or (C)
investigation or remediation of off-site locations at which Borrower or any of
its predecessors are alleged to have directly or indirectly disposed of
Hazardous Materials; or (iv) upon Borrower's obtaining knowledge that any
expense or loss has been incurred by such governmental authority in connection
with the assessment, containment, removal or remediation of any Hazardous
Materials with respect to which Borrower, Guarantor or any of the Related
Companies may be liable or for which a lien may be imposed on a Mortgaged
Property.
(c) Notification of Liens or other Material Claims. The Borrower
will, immediately upon becoming aware thereof, notify the Agent in writing of
any Liens (except Permitted Liens) placed upon or attaching to any Mortgaged
Properties or of any other setoff, claims (including environmental claims),
withholdings or other defenses which could have a Material Adverse Effect.
(d) Notice of Litigation and Judgments. The Borrower will give
notice to the Agent in writing within fifteen (15) days of becoming aware of any
litigation or proceedings threatened in writing or any pending litigation and
proceedings affecting any of the Mortgaged Properties or affecting the Borrower,
the Company, any Guarantor or any of the Related Companies or to which the
Borrower, the Company, any Guarantor or any of the Related Companies is or is to
become a party involving an uninsured claim (or as to which the insurer reserves
rights) against the Borrower, the Company, any Guarantor or any of the Related
Companies that at the time of giving of notice could reasonably be expected to
have a Materially Adverse Effect, and stating the nature and status of such
litigation or proceedings. The Borrower will give notice to the Agent, in
writing, in form and detail satisfactory to the Agent, within ten (10) days of
any final judgment not covered by insurance against the Borrower, the Company,
any Guarantor or any of the Related Companies in an amount in excess of
$500,000.
(e) Notice of Default under Major Leases. The Borrower will
immediately notify the Agent in writing of the occurrence of any failure of any
of the Major Tenants to materially comply with any of the material terms,
covenants, conditions or agreements under any of the
<PAGE>
Major Leases.
(f) Notice of Equity Prospectus Amendment. The Company will promptly
notify the Lenders of any further amendment to the Equity Prospectus, which
notice shall include a copy of any such amendment.
(g) Notice of Expected Receipt of Net Offering Proceeds. At least
three (3) Business Days prior to the date on which the Company or the Borrower
expects to receive Net Offering Proceeds, the Borrower or the Company, as
applicable will notify the Agent of the expected amount of Net Offering Proceeds
and the expected date of receipt thereof and shall immediately notify the Agent
of any changes in the information set forth in such notice.
(S)7.6. Existence; Maintenance of REIT Status; Maintenance of Properties.
The Company will do or cause to be done all things necessary to preserve and
keep in full force and effect its existence as a Maryland trust and its status
as a self administered real estate investment trust under the Code, the
existence of Borrower as a Delaware limited partnership and the existence of
each Guarantor Subsidiary. The Borrower will do or cause to be done all things
necessary to preserve and keep in full force all of its rights and franchises
which in the judgment of the Borrower may be necessary to properly and
advantageously conduct the businesses being conducted by it, the Company or any
of the Related Companies. The Borrower (a) will cause all of the properties used
or useful in the conduct of the business of Borrower, the Company or any of the
Related Companies to be maintained and kept in good condition, repair and
working order, subject to ordinary wear and tear, and supplied with all
necessary equipment, (b) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and (c)
will continue to engage primarily in the businesses now conducted by it and in
related businesses, provided that such business shall not include the ownership
of any material assets which are not Permitted Acquisitions or Investments
permitted pursuant to (S)8.3.
(S)7.7. Insurance. The Borrower will maintain insurance on the Mortgaged
Properties as required by the Security Deeds. With respect to other properties
and businesses of Borrower, the Guarantors and the Related Companies, the
Borrower will maintain or cause to be maintained insurance with financially
sound and reputable insurers against such casualties and contingencies in
amounts, containing such terms, in such forms and for such periods as may be
reasonable and prudent in the judgment of the Company's officers.
(S)7.8. Taxes. The Borrower will pay real estate taxes, other taxes,
assessments and other governmental charges against the Mortgaged Properties
before the same become delinquent, and will duly pay and discharge, or cause to
be paid and discharged, before the same shall become overdue, all taxes,
assessments and other governmental charges imposed upon it and its other
properties, sales and activities, or any part thereof, or upon the income or
profits therefrom, as well as all claims for labor, materials, or supplies that
if unpaid might by law become a lien or charge upon any of its properties;
provided that any such tax, assessment, charge, levy or claim with respect to
properties other than the Mortgaged Properties need not be
<PAGE>
paid if the validity or amount thereof shall currently be contested in good
faith by appropriate proceedings and if the Borrower shall have set aside on its
books adequate reserves with respect thereto; and provided further that the
Borrower will pay all such taxes, assessments, charges, levies or claims
forthwith upon the commencement of proceedings to foreclose any lien that may
have attached as security therefor. Promptly after payment of real estate taxes,
other taxes, assessments and other governmental charges against the Mortgaged
Properties, Borrower will provide evidence of such payments to the Agent, in the
form of receipted tax bills or other form reasonably acceptable to the Agent.
Notwithstanding anything contained herein to the contrary, with respect to the
Mortgaged Properties, Borrower, after receipt of notice from the Agent (which
notice may be given by the Agent at any time after the occurrence of an Event of
Default) , shall deposit with Agent, on the first day of each month thereafter,
a sum determined by Agent to be sufficient to provide, in the aggregate, a fund
adequate to pay all real estate taxes, other taxes, assessments and other
governmental charges against the Mortgaged Properties at least ten (10) days
before the same becomes delinquent; and whenever the Agent determines sums
accumulated under such escrow to be insufficient to meet the obligations for
which such deposits were made, the Borrower shall pay, on the demand of the
Agent, any amount required to cover the deficiency therein.
(S)7.9. Inspection of Properties and Books; Confidential Information. The
Borrower shall permit the Lenders, through the Agent or any of the Lenders'
other designated representatives, to visit and inspect any of the Mortgaged
Properties, to examine the books of account of the Borrower, the Company and the
Related Companies (and to make copies thereof and extracts therefrom) and to
discuss the affairs, finances and accounts of the Borrower with, and to be
advised as to the same by, its officers, all at such reasonable times and
intervals as the Agent or any Lender may reasonably request. Each Lender
understands that in the course of its exercise of its rights set forth herein,
the Lender may obtain information relating to Borrower or the Company or a
Property which is of a confidential nature (the "Confidential Information").
Each Lender agrees that it will not, at any time, divulge, publish or disclose,
or authorize or permit any other person to divulge, publish or disclose, to any
Person, any of the Confidential Information, provided, however, that the
Confidential Information may be disclosed by any Lender (a) to its officers,
attorneys, and accountants, (b) to any regulator or other governmental agency
with supervisory authority over the business of such Lender, (c) to any other
Person to the extent required by applicable law or regulation, and (d) to the
extent that such Confidential Information is otherwise publicly available from
sources other than such Lender.
(S)7.10. Compliance with Laws, Contracts, Licenses, and Permits. The
Borrower will comply in all material respects, the Company will comply in all
material respects and the Borrower will cause each Guarantor and all Related
Companies to comply in all material respects, with (a) all applicable laws and
regulations now or hereafter in effect wherever its business is conducted,
including all Environmental Laws, (b) the provisions of all applicable
partnership agreements, charter documents and by-laws, (c) all agreements and
instruments to which it is a party or by which it or any of its Real Estate
Assets may be bound including the Leases, and (d) all applicable decrees,
orders, and judgments.
(S)7.11. Use of Proceeds. Subject to the provisions of (S)2.5 hereof, the
proceeds of the Loans shall be used by the Borrower for Permitted Acquisitions
and Permitted Developments,
<PAGE>
for refinancing other Indebtedness, and for working capital and other purposes
consistent with the covenants contained herein.
(S)7.12. Appraisals. The Appraised Values of the Mortgaged Properties,
including the Appraised Values of Additional Properties determined pursuant to
Appraisals approved by the Requisite Lenders pursuant to (S)10. 14 and
(S)5.4(b), may increase or decrease only upon the approval by the Requisite
Lenders of a new or updated Appraisal of such Mortgaged Property. The Agent
shall order a new or updated Appraisal of a Mortgaged Property (i) promptly
following a written request from the Borrower, (ii) in the discretion of the
Agent if the occupied percentage of the gross leasable area of the Buildings on
such Mortgaged Property for two (2) consecutive fiscal quarters is more than 20
percentage points lower than the occupancy percentage shown on the rent roll for
such Mortgaged Property attached as Schedule 6.22(l) hereto, (iii) if, in the
Agent's opinion, there has been a substantial adverse change in market
conditions; (iv) as may be required by regulatory requirements applicable to any
Lender; and (v) following an Event of Default, if requested by any Lender. The
Borrower shall provide to the Agent all available information needed to assist
in the preparation of an Appraisal and shall pay to the Agent on demand all
reasonable costs of all such Appraisals.
(S)7.13. Leases; Lease Approvals. The Borrower will not include in any
Leases any purchase option or right of first refusal to purchase any Mortgaged
Property. The Borrower will at all times exercise or enforce its material rights
under the Leases. During the continuance of an Event of Default, the Agent shall
have the right, and the Borrower hereby authorizes the Agent, to communicate
directly with any of the tenants or guarantors for any purpose contemplated by
this Agreement or any of the Security Documents. Any proposed lease which would
be a Major Lease shall be submitted to and approved by the Lead Lenders prior to
execution, along with the most recent financial statements of such proposed
tenant and any guarantor. The Borrower will not materially adversely amend,
terminate, or accept a surrender of any Major Lease or release any Major Tenant
or waive the material performance of a Major Lease by a Major Tenant, in each
case without prior approval of the Lead Lenders. The Lead Lenders shall not
unreasonably withhold their approval of any Major Lease or amendment thereof. If
the Lead Lenders fail to respond within five (5) Business Days after receipt of
any proposed Major Lease or amendment of a Major Lease, the same shall be deemed
to be approved.
(S)7.14. Further Assurance. The Borrower will cooperate with the Agent and
the Lenders and execute such further instruments and documents and perform such
further acts as the Agent and the Lenders shall reasonably request to carry out
to their satisfaction the transactions contemplated by this Agreement and the
other Loan Documents and the granting and perfecting of all liens in the
Collateral for the benefit of the Agent as agent for the Lenders.
(S)7.15. Environmental Indemnification. Each of the Borrower and the
Company, jointly and severally, covenants and agrees that it will indemnify and
hold the Agent and each Lender harmless from and against any and all claims,
expense, damage, loss or liability incurred by the Agent or any Lender
(including all reasonable costs of legal representation incurred by the Agent or
any Lender , but excluding, as applicable, for the Agent or a Lender any claim,
expense, damage, loss or liability as a result of the gross negligence or
willful misconduct of the
<PAGE>
Agent or such Lender) relating to (a) any Release or threatened Release of
Hazardous Materials on, upon, into or from any Mortgaged Property or any Real
Estate; (b) any violation of any Environmental Laws with respect to conditions
at any Mortgaged Property or the operations conducted thereon; or (c) the
investigation or remediation of off-site locations at which the Borrower or its
predecessors are alleged to have directly or indirectly disposed of Hazardous
Materials. It is expressly acknowledged by the Borrower that this covenant of
indemnification shall survive any foreclosure or any modification, release or
discharge of any or all of the Security Documents or the payment of the Loans
and shall inure to the benefit of the Agent and the Lenders, and their
successors and assigns.
(S)7.16. Response Actions. The Borrower covenants and agrees that if any
Release or disposal of Hazardous Materials shall occur or shall have occurred
on, upon, into or from any Mortgaged Property, or on, upon, into or from any
other Real Estate if the same would have a Material Adverse Effect, the Borrower
will cause the prompt containment and removal of such Hazardous Materials and
remediation of such Mortgaged Property or Real Estate as necessary to comply in
all material respects with all applicable Environmental Laws or to preserve the
value of such Mortgaged Property.
(S)7.17. Environmental Assessments. The Borrower shall diligently and
continuously comply with all recommendations set forth in the Environmental
Reports, including, without limitation, the completion of the remediation
projects described therein. Upon written request, the Borrower shall provide the
Agent with periodic reports with respect to the progress of said remediation
projects. If the Agent in its good faith judgment, after discussion with the
Borrower and the Lead Lenders, has reason to believe that the environmental
condition of any Mortgaged Property has deteriorated, after reasonable notice by
the Agent, whether or not a Default or an Event of Default shall have occurred,
the Agent may, from time to time, for the purpose of assessing and ensuring the
value of such Mortgaged Property, obtain one or more environmental assessments
or audits of such Mortgaged Property prepared by a hydrogeologist, an
independent engineer or other qualified consultant or expert approved by the
Agent to evaluate or confirm (i) whether any Hazardous Materials are present in
the soil or water at such Mortgaged Property in such quantities as to require
remediation or clean-up to prevent or mitigate damage or threats to the public
health, safety or welfare or the environment and (ii) whether the use and
operation of such Mortgaged Property complies in all material respects with all
applicable Environmental Laws. Environmental assessments may include without
limitation detailed visual inspections of such Mortgaged Property including,
without limitation, any and all storage areas, storage tanks, drains, dry wells
and leaching areas, and the taking of soil samples, surface water samples and
ground water samples, as well as such other investigations or analyses as the
Agent deems appropriate. All such environmental assessments shall be at the sole
cost and expense of the Borrower; provided, however, the Agent may not require
environmental assessments at the Borrower's expense, with respect to any
Mortgaged Property, more frequently than annually except (i) during the
continuance of an Event of Default or (ii) upon the occurrence of a Release on,
upon, into or from any Mortgaged Property.
(S)7.18. Employee Benefit Plans.
<PAGE>
(a) Representation. The Borrower and its ERISA Affiliates do not
currently maintain or contribute to any Employee Benefit Plan, Guaranteed
Pension Plan or Multiemployer Plan.
(b) Notice. The Borrower will notify the Agent promptly following the
establishment of any Employee Benefit Plan or Guaranteed Pension Plan by the
Borrower or any ERISA Affiliate.
(c) In General. Each Employee Benefit Plan maintained by the Borrower
or any ERISA Affiliate will be operated in compliance in all material respects
with the provisions of ERISA and, to the extent applicable, the Code, including
but not limited to the provisions thereunder respecting prohibited transactions.
(d) Terminability of Welfare Plans. With respect to each Employee
Benefit Plan maintained by the Borrower or an ERISA Affiliate which is an
employee welfare benefit plan within the meaning of (S)3(1) or (S)3(2)(B) of
ERISA, the Borrower, or the ERISA Affiliate, as the case may be, has the right
to terminate each such plan at any time (or at any time subsequent to the
expiration of any applicable bargaining agreement) without liability other than
liability to pay claims incurred prior to the date of termination.
(e) Multiemployer Plans. Without the consent of the Agent, the
Borrower will not enter into, maintain or contribute to, any multiemployer Plan.
(f) Unfunded or Underfunded Liabilities. The Borrower will not, at
any time, have accruing unfunded or underfunded liabilities with respect to any
Employee Benefit Plan, Guaranteed Pension Plan or Multiemployer Plan, or permit
any condition to exist under any Multiemployer Plan that would create a
withdrawal liability.
(S)7.19. Required Interest Rate Contracts. The Borrower shall maintain in
effect the Interest Rate Contracts in form and substance reasonably satisfactory
to the Lead Lenders with respect to that portion of the Variable Rate
Indebtedness which exceeds, excluding the IRB Indebtedness, the principal amount
of $125,000,000.
(S)7.20. Equity Interests in the Company. The Company will comply in all
material respects with all applicable rules and regulations of the Securities
Exchange Commission and of relating to its publicly held Common Shares and
Preferred Shares. The Company will continue to have its Common Shares listed on
the New York Stock Exchange or on one of the other major stock exchanges in the
United States, and will comply in all material respects with all applicable
rules of the stock exchange where the Common Shares are so listed. Immediately
upon the receipt of any Net Offering Proceeds, 100% thereof shall be contributed
to the Borrower as an additional capital contribution with respect to the
Company's general partnership interest in the Borrower.
(S)7.21. Year 2000 Problem. The Borrower shall promptly conduct a
comprehensive review and assessment of its computer applications and make
inquiry of its property managers with respect to the "year 2000 problem" (i.e.
the risk that computer applications may not be able
<PAGE>
to properly perform date-sensitive functions after December 31, 1999) and, based
on that review and inquiry, take appropriate actions to assure that the year
2000 problem will not result in a Material Adverse Effect.
(S)8. CERTAIN NEGATIVE COVENANTS OF THE BORROWER. The Borrower covenants
and agrees as follows, and to the extent that the following covenants relate to
the Company, the Company covenants and agrees as follows, so long as any Loan,
Note or Letter of Credit is outstanding or the Lenders have any obligation to
make any Loans or issue any Letters of Credit:
(S)8.1 Restrictions on Indebtedness. Except with the prior written consent
of the Requisite Lenders, the Borrower will not, the Company will not, and the
Borrower will not permit any Guarantor, any of the Related Companies or any
Permitted Joint Venture to create, incur, assume, guarantee or become or remain
liable, contingently or otherwise, or agree not to do any of same with respect
to any Indebtedness other than:
(a) Indebtedness to the Lenders arising under any of the Loan
Documents;
(b) current liabilities of the Borrower incurred in the ordinary
course of business but not incurred through (i) the borrowing of money, or (ii)
the obtaining of credit except for credit on an open account basis customarily
extended and in fact extended in connection with normal purchases of goods and
services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the extent
that payment therefor shall not at the time be required to be made in accordance
with the provisions of (S)7.8;
(d) Indebtedness in respect of judgments or awards that have been
in force for less than the applicable period for taking an appeal so long as
execution is not levied thereunder or in respect of which the Borrower shall at
the time in good faith be prosecuting an appeal or proceedings for review and in
respect of which a stay of execution shall have been obtained pending such
appeal or review;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary course
of business;
(f) Indebtedness of Borrower, the Company or the Related Companies
to the extent the same does not create a violation of (S)9.3, (S)9.5 or (S)9.6
provided that the maximum principal amount of Recourse Indebtedness permitted
under this paragraph shall not exceed $50,000,000 in the aggregate at any time
outstanding. Schedule 8.1(f) attached hereto sets forth the existing
Indebtedness (and proposed indebtedness for which Borrower has accepted a
commitment letter) included within such limit on Recourse Indebtedness.
(S)8.2. Restrictions on Liens, Etc. The Borrower will not, and will not
permit Guarantor, any of the Related Companies or any Permitted Joint Venture
to, (a) create or incur or agree not
<PAGE>
to create or incur or suffer to be created or incurred or to exist any lien,
encumbrance, mortgage, pledge, charge, restriction or other security interest of
any kind upon any of the Mortgaged Property of any character whether now owned
or hereafter acquired, or upon the rents, income or profits therefrom; (b)
suffer to exist for a period of more than thirty (30) days after the same shall
have been incurred any Indebtedness (not permitted by (S)8.1(c)) or claim or
demand against it that if unpaid might by law or upon bankruptcy or insolvency,
or otherwise, be given any priority whatsoever over the Security Documents; or
(c) sell, assign, pledge or otherwise transfer any rents, issues, profits,
accounts, contract rights or general intangibles relating to any of the
Mortgaged Premises; provided that the Borrower may create or incur or suffer to
be created or incurred or to exist:
(i) liens to secure taxes, assessments and other governmental
charges in respect of obligations not overdue, the Indebtedness with respect to
which is permitted by (S)8.1(c);
(ii) deposits or pledges made in connection with, or to secure
payment of, workmen's compensation, unemployment insurance, old age pensions or
other social security obligations;
(iii) liens in respect of judgments or awards, the Indebtedness with
respect to which is permitted by (S)8.1(d);
(iv) liens of carriers, warehousemen, mechanics and materialmen, and
other like liens on properties other than the Mortgaged Properties in existence
less than 120 days from the date of creation thereof in respect of obligations
not overdue, the Indebtedness with respect to which is permitted by (S)8.1(c);
(v) encumbrances consisting of easements, rights of way, covenants,
restrictions on the use of real property and defects and irregularities in the
title thereto; and other minor liens or encumbrances none of which in the
reasonable judgment of the Borrower interferes materially with the use of the
property affected in the ordinary conduct of the business of the Borrower, and
which matters (x) do not individually or in the aggregate have a materially
adverse effect on the value of the Mortgaged Property and (xx) do not make title
to such property unmarketable by the conveyancing standards in effect where such
property is located;
(vi) the Leases referenced on Schedule 6.22(l) and any other Leases
permitted by this Agreement or otherwise approved by the Lead Lenders;
(vii) presently outstanding liens and other encumbrances on the
Mortgaged Properties listed on Schedule B to the Title Policies;
(viii) liens in favor of the Agent and/or any of the Lenders granted
pursuant to the Security Documents; and
(ix) financing statements disclosed by the searches described in
(S)10.18.
<PAGE>
(S)8.3. Restrictions on Investments. The Borrower will not, and will not
permit any Guarantor, any of the Related Companies or any Permitted Joint
Venture to make or permit to exist or to remain outstanding any Investment
except Investments in:
(a) marketable direct or guaranteed obligations of the United
States of America that mature within one (1) year from the date of purchase by
the Borrower;
(b) demand deposits, certificates of deposit, repurchase
agreements, bankers acceptances and time deposits of United States banks having
total assets in excess of $1,000,000,000;
(c) securities commonly known as "commercial paper" issued by a
corporation organized and existing under the laws of the United States of
America or any state thereof that at the time of purchase have been rated and
the ratings for which are not less than " P 1 " if rated by Moody's Investors
Services, Inc., and not less than "A 1" if rated by Standard and Poor's;
(d) Investments existing or contemplated on the date hereof and
listed on Schedule 8.3(d) hereto;
(e) Investments made in the ordinary course of the Borrower's
business, in (i) any mortgages the acquisition of which is expressly approved by
the Requisite Lenders, (ii) mortgages and notes receivable having an aggregate
principal amount, exclusive of any investments in mortgages which may have been
so expressly approved by the Requisite Lenders, of not more than $25,000,000,
(iii) Permitted Joint Ventures (to the extent permitted by (S)8.4(a)), or (iv)
Interest Rate Contracts;
(f) Investments in Permitted Acquisitions;
(g) Investments in Permitted Developments which shall not exceed
20% of Total Adjusted Assets; provided that within said limit any single
development project with a total cost in excess of $30,000,000 shall only be a
Permitted Development after it has been approved by the Requisite Lenders;
(h) Investments in undeveloped land which shall not exceed 10% of
Total Adjusted Assets.
(S)8.4. Merger, Consolidation and Disposition of Properties.
(a) The Borrower will not, and will not permit the Company, any of
the Related Companies or any Permitted Joint Venture to (i) become a party to
any merger or consolidation, or (ii) agree to or effect any property acquisition
or stock acquisition (other than Permitted Acquisitions in compliance with the
other terms of this Agreement) , or (iii) enter into any joint venture or invest
in any Permitted Joint Venture unless prior to such transaction the Borrower has
provided the Lead Lenders with a notice describing such transaction, the
Borrower shall have obtained the prior consent of the Lead Lenders, provided
that no merger or consolidation shall be
<PAGE>
permitted (except mergers among the Related Companies and the Borrower) unless
the surviving entity is the Borrower, there is no material change in the type of
business conducted by the Borrower and no Default or Event of Default will
result from such transaction.
(b) Real Estate Assets may be sold or transferred except that to the
extent the aggregate sales price of all such dispositions during any fiscal
quarter shall exceed $10,000,000, prior to such sale or transfer, the Borrower
shall provide to the Agent a statement in the form of Exhibit C hereto signed by
a Responsible Officer of the Company and setting forth in reasonable detail
computations evidencing compliance with the financial covenants contained in
(S)9 after giving effect to such proposed transfer and all liabilities, fixed or
contingent, pursuant thereto.
(S)8.5. Sale and Leaseback. The Borrower will not enter into any
arrangement, directly or indirectly, whereby the Borrower shall sell or transfer
any property owned by it in order then or thereafter to lease such property or
lease other property that the Borrower intends to use for substantially the same
purpose as the property being sold or transferred. The Borrower will not permit
the Company, any of the Related Companies or any Permitted Joint Venture to
enter into any such arrangement.
(S)8.6. Compliance with Environmental Laws. The Borrower will not do, and
will not permit the Company, any of the Related Companies or any Permitted Joint
Venture to do, any of the following: (a) use any of the Real Estate or any
portion thereof as a facility for the handling, processing, storage or disposal
of Hazardous Materials except for Hazardous Materials used in the operation of
the Real Estate and in material compliance with applicable law, (b) cause or
permit to be located on any of the Real Estate any underground tank or other
underground storage receptacle for Hazardous Materials except in material
compliance with Environmental Laws, (c) generate any Hazardous Materials on any
of the Real Estate except in material compliance with Environmental Laws, or (d)
conduct any activity at any Real Estate or use any Real Estate in any manner so
as to cause a Release requiring remediation, clean up or other response action
under applicable Environmental Laws.
(S)8.7. Distributions. Borrower shall not permit the total Distributions
by it and the Company during any fiscal year to exceed 90% of Funds from
Operations for such year and shall not permit there to be more than two
consecutive fiscal quarters during which the total Distributions by Borrower and
the Company during each fiscal quarter exceed 100% of Funds from Operations for
such fiscal quarter except that such limitations may be exceeded to the extent
necessary for the Company to maintain its REIT status provided that the Company
provides the Agent with a letter from its accountants or attorneys setting forth
the basis for computation of the amount of such necessary excess Distributions.
No Distribution by the Borrower to the Company shall be made other than
simultaneously with and in the same amount as the corresponding Distribution by
the Company to the owners of the Common Shares and/or the Preferred Shares.
During any period when an Event of Default under (S)12.1(a) or (S)12.1(b) has
occurred and is continuing total Distributions by the Borrower and the Company
will not exceed the minimum amount necessary for the Company to maintain its
REIT status.
(S)8.8. Leases. The Borrower will not (i) enter into any Major Leases or
(ii) materially
<PAGE>
amend, supplement or otherwise materially modify, or terminate or cancel, or
accept the surrender of, or grant any material concessions to or waive the
material performance of any of the Major Tenants under the Major Leases, in each
case without the prior approval of the Lead Lenders as provided in (S)7.13.
(S)8.9. Restrictions on the Company. The Company will not:
(a) own any assets, or have any Investments, other than owning its
general partnership interest in the Borrower and its limited partnership
interests described in (S)6.19.
(b) engage in any business other than its activities as managing
general partner of the Borrower.
(c) directly or indirectly convey, sell, transfer, assign, pledge or
encumber any of its partnership interest in the Borrower.
(d) create, incur, assume, guarantee or become or remain liable for,
contingently or otherwise, any Indebtedness, and any recourse against the
Company with respect to the Indebtedness of the Borrower shall be limited to the
same or greater extent as recourse against the Company with respect to the
Obligations as provided in (S)28.
(S)9. FINANCIAL COVENANTS OF THE BORROWER. The Borrower covenants and
agrees as follows, so long as any Loan or Note is outstanding or any Lender has
any obligation to make any Loan:
(S)9.1. Collateral Value. The Borrower will not at any time permit the
Outstanding Principal Amount to exceed the sum of (i) sixty percent (60%) of the
total of the Collateral Values of the Mortgaged Properties other than the
Assigned Mortgaged Properties plus (ii) fifty percent (50%) of the total of the
Collateral Values of the Assigned Mortgaged Properties.
(S)9.2. Minimum Debt Service Coverage. The Borrower will not at any time
permit the Outstanding Principal Amount to exceed an amount such that: (a) the
aggregate of the Net Operating Income for all of the Mortgaged Properties,
divided by (b) Pro Forma Debt Service Charges for the Mortgaged Properties would
be less than 1.5 for any fiscal quarter of Borrower. For purposes of the
foregoing, any Real Estate Asset that became a Mortgaged Property during the
applicable fiscal quarter shall be treated as though it were a Mortgaged
Property for the entire quarter and any Real Estate Asset which is released by
Agent during such fiscal quarter shall be excluded for the entire quarter.
(S)9.3. Total Liabilities to Total Adjusted Assets. The Borrower will not
at any time permit Total Liabilities at the end of any fiscal quarter to exceed
fifty-five percent (55%) of Total Adjusted Assets.
(S)9.4. Minimum Tangible Net Worth. The Borrower will not at any time
permit the Tangible Net Worth of the Borrower to be less than $350,000,000 plus
75% of Net Offering
<PAGE>
Proceeds.
(S)9.5. Total Operating Cash Flow to Interest Expense. The Borrower will
not permit the ratio of its Total Operating Cash Flow to Interest Expense to be
less than 2.0 to 1.0 for any fiscal quarter. For the fiscal quarter ending
December 31, 1997, such covenant will be computed on a pro forma basis as though
the Formation Transactions had closed, and the Facility Closing Date had been,
October 1, 1997.
(S)9.6. EBITDA to Fixed Charges. The Borrower will not permit the ratio
of its EBITDA to Fixed Charges to be less than 1.75 to 1.0 for any fiscal
quarter. For the fiscal quarter ending December 31, 1997, such convenant will be
computed on a pro forma basis as though the Formation Transactions had closed,
and the Facility Closing Date had been, October 1, 1997.
(S)10. CONDITIONS TO EFFECTIVENESS. This Third Amendment to Credit
Agreement shall become effective when each of the following conditions precedent
have been satisfied (including any updated certificates or other documents
requested by the Agent with respect to any of the following conditions which
were previously satisfied on or about the Facility Closing Date or the dates
that certain Additional Properties became Mortgaged Properties hereunder):
(S)10.1. Loan Documents. Each of (i) this Third Amendment to Credit
Agreement, (ii) the Third Amendment to the Guaranty, (iii) the Loan Notes for
the Syndication Lenders and (iv) the replacement Loan Notes for the Lead Lenders
shall have been duly executed and delivered by the respective parties thereto,
shall be in full force and effect and shall be in form and substance
satisfactory to each of the Lenders.
(S)10.2. Certified Copies of Organization Documents; Good Standing
Certificates. The Agent shall have received (i) a Certificate of the Company to
which there shall be attached complete copies of the Borrower's Limited
Partnership Agreement and its Certificate of Limited Partnership, certified as
of a recent date by the Secretary of State of Delaware, (ii) Certificates of
Good Standing for the Borrower from the State of Delaware and each State in
which a Mortgaged Property is located, (iii) a copy of the Company's Declaration
of Trust certified by the Maryland Secretary of State, (iv) Certificates of Good
Standing for the Company from the State of Maryland and each State in which a
Mortgaged Property is located unless the Company's qualification is not required
by the laws of such state, and (v) certificates of good standing and certified
copies of partnership agreements and certificates of limited partnership with
respect to each of the Guarantor Subsidiaries.
(S)10.3. By-laws; Resolutions. All action on the part of the Borrower and
each Guarantor necessary for the valid execution, delivery and performance by
the Borrower and each Guarantor of this Agreement and the other Loan Documents
to which it is or is to become a party shall have been duly and effectively
taken, and evidence thereof satisfactory to the Agent shall have been provided
to the Agent. The Agent shall have received from the Company true copies of its
by-laws and the resolutions adopted by its Board of Directors authorizing the
transactions described herein, each certified by its secretary to be true and
complete and in effect on the
<PAGE>
Effective Date.
(S)10.4. Incumbency Certificate; Authorized Signers. The Agent shall have
received from the Company an incumbency certificate, dated as of the Effective
Date, signed by a duly authorized officer of the Company and giving the name and
bearing a specimen signature of each individual who shall be authorized: (a) to
sign, in the name and on behalf of the Company (in its own capacity and as
general partner on behalf of Borrower and on behalf of each Guarantor Subsidiary
which is a partnership), each of the Loan Documents to which the Borrower or any
Guarantor is or is to become a party; (b) to make Loan Requests and Conversion
Requests; and (c) to give notices and to take other action on behalf of the
Borrower under the Loan Documents.
(S)10.5. Opinions of Counsel. Each of the Lenders and the Agent shall have
received favorable opinions addressed to the Lenders and the Agent and dated as
of the Effective Date, substantially in the same form as, or with appropriate
provisions incorporating by reference, the opinions from Borrower's counsel
previously delivered to the Lenders and the Agent, copies of which are attached
hereto as Exhibit E. Such opinion may rely on opinions from other law firms
approved by the Agent as to matters of law applicable in the various states
where the Mortgaged Properties are located.
(S)10.6. Payment of Fees. The Borrower shall have paid to the Agent and/or
the Lead Lenders the fees pursuant to (S)4.1 and (S)2.9(a) and shall have paid
all other expenses as provided in (S)15 hereof then outstanding.
(S)10.7. Validity of Liens. The Security Documents shall be effective to
create in favor of the Agent legal, valid and enforceable first priority,
perfected liens and security interests in the Collateral covered thereby,
subject only to the Permitted Liens. All filings, recordings, deliveries of
instruments and other actions or consents necessary or desirable in the
reasonable opinion of the Agent to grant, perfect, protect and preserve such
liens and security interests shall have been duly effected. The Agent shall have
received evidence thereof in form and substance reasonably satisfactory to the
Agent.
(S)10.8. Survey. The Agent shall have received Surveys of the Mortgaged
Properties, bearing dates reasonably acceptable to the Agent, and in form and
substance reasonably acceptable to the Agent.
(S)10.9. Title Insurance; Title Exception Documents. The Agent shall have
received the Title Policies reasonably satisfactory to the Agent, together with
proof of payment of all fees and premiums for such policies. The Agent shall
have received true and accurate copies of all documents listed as exceptions
under such policies.
(S)10.10. Leases. The Agent shall have received true copies of those Leases
which the Agent may request after its review of the applicable rent roll.
(S)10.11. Estoppel and Attornment Agreements. The Agent shall have received
estoppel certificates and attornment agreements in form reasonably satisfactory
to the Lead Lenders from
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the three (3) Tenants who lease and occupy the largest amount gross leasable
area of the West Wacker Drive Property and from any other Major Tenants
specifically required by the Agent.
(S)10.12. Certificates of Insurance. The Agent shall have received (a) a
certificate of insurance as to the insurance maintained by Borrower on the
Mortgaged Properties (including flood insurance if necessary) from the insurer
or an independent insurance broker, identifying insurers, types of insurance,
insurance limits, and policy terms; (b) certified copies of all policies
evidencing such insurance (or certificates therefor signed by tile insurer or an
agent authorized to bind the insurer); and (c) such further information and
certificates from Borrower, its insurers and insurance brokers as the Agent may
reasonably request.
(S)10.13. Environmental Reports. The Agent shall have received an
Environmental Report with respect to each of the Mortgaged Properties, dated as
of a recent date, from environmental engineers reasonably acceptable to the
Agent which Environmental Reports shall have been approved by the Requisite
Lenders. The Environmental Reports on Schedule 6.18 have been so approved.
(S)10.14. Environmental Indemnity. The Agent shall have received an
executed original of the environmental indemnity described in the Equity
Prospectus from The Prime Group, Inc. for the benefit of certain of the
Guarantor Subsidiaries with respect to environmental liabilities relating to
certain of the Mortgaged Properties, together with an agreement from The Prime
Group, Inc. that the Lenders shall be a beneficiary thereunder in the event of
any foreclosure of the applicable Mortgaged Properties, which indemnity and
agreement shall be in form and substance satisfactory to the Agent and the Lead
Lenders.
(S)10.15. Appraisals. The Agent and each of the Lenders shall have received
Appraisals dated as of a recent date in form and substance satisfactory to the
Agent and the Lead Lenders (including satisfaction as to determination of
Appraised Value).
(S)10.16. Inspecting Engineers' Reports. The Agent shall have received
reports, addressed to Agent and the Lenders or accompanied by reliance letters
in favor of the Agent and the Lenders, from third party inspecting engineers
dated as of a date acceptable to the Agent as to the good structural condition
of the Buildings located on the Mortgaged Properties, which reports shall be in
form and substance satisfactory to the Agent and shall have been approved by the
Requisite Lenders. The reports on Schedule 6.22(d) have been so approved.
(S)10.17. Initial Letters of Credit. The Agent shall have received with
respect to each of the Initial Letters of Credit (i) a Letter of Credit Request
executed by Borrower, and (ii) copies of all legal opinions and certificates
delivered in connection with such replacement of letters of credit pursuant to
the applicable IRB Documents.
(S)10.18. UCC Lien Searches. The Agent shall have received UCC lien
searches of the applicable public records disclosing no conditional sales
contracts, security agreements, chattel mortgages, leases of personalty,
financing statements or other encumbrances which affect any of the Collateral
other than those relating to any liens permitted hereby and by the Security
<PAGE>
Documents.
(S)11. CONDITIONS TO ALL BORROWINGS. The obligations of the Lenders to
make any Loan, whether on or after the Facility Closing Date, shall also be
subject to the satisfaction of the following conditions precedent:
(S)11.1. Representations True; No Event of Default; Compliance Certificate.
Each of the representations and warranties of the Borrower and the Company
contained in this Agreement, the other Loan Documents or in any document or
instrument delivered pursuant to or in connection with this Agreement shall be
true in all material respects as of the date as of which they were made and
shall also be true in all material respects at and as of the time of the making
of such Loan, with the same effect as if made at and as of that time (except to
the extent of changes resulting from transactions contemplated or permitted by
this Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially
adverse, and except to the extent that such representations and warranties
relate expressly to an earlier date); the Borrower shall have performed and
complied with all terms and conditions herein required to be performed by it or
prior to the Borrowing Date of such Loan; and no Default or Event of Default
shall have occurred and be continuing on the date of any Loan Request or on the
Borrowing Date of such Loan. Each of the Lenders shall have received a
Compliance Certificate of the Borrower signed by a Responsible Officer to such
effect, which certificate will include, without limitation, computations
evidencing compliance with the covenants contained in (S)9 hereof after giving
effect to such requested Loan.
(S)11.2. No Legal Impediment. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Lender would make it illegal for such Lender to make such Loan.
(S)11.3. Governmental Regulation. Each Lender shall have received such
statements in substance and form reasonably satisfactory to such Lender as such
Lender shall require for the purpose of compliance with any applicable
regulations of the Comptroller of the Currency or the Board of Governors of the
Federal Reserve System.
(S)11.4. Proceedings and Documents. All proceedings in connection with the
transactions contemplated by this Agreement, the other Loan Documents and all
other documents incident thereto shall be reasonably satisfactory in substance
and in form to the Agent, and the Lenders shall have received all information
and such counterpart originals or certified or other copies of such documents as
the Agent may reasonably request.
(S)12. EVENTS OF DEFAULT; ACCELERATION; ETC.
(S)12.1. Events of Default and Acceleration. If any of the following
events ("Events of Default" or, if the giving of notice or the lapse of time or
both is required, then, prior to such notice or lapse of time, "Defaults") shall
occur:
(a) the Borrower shall fail to pay any principal of the Loans when
the same shall become due and payable;
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(b) the Borrower shall fail to pay any interest on the Loans or any
other sums due hereunder or under any of the other Loan Documents within five
(5) days after the same shall become due and payable or the Borrower shall fail
to deposit in the IRB Indebtedness Account sufficient funds as required by
(S)2.8;
(c) the Borrower or the Company shall fail to comply with any of its
covenants contained in (S)7.5, the first sentence of (S)7.6, the first sentence
of (S)7.7, (S)7.20, (S)8 or (S)9 hereof;
(d) the Borrower, the Company or any Guarantor shall fail to perform
any other term, covenant or agreement contained herein or in any of the other
Loan Documents (other than those specified elsewhere in this (S)12) for thirty
(30) days after written notice of such failure from Agent to the Borrower,
provided, however that if the Borrower fails to give notice of any Default as
required by (S)7.5(a), such thirty (30) day cure period shall be deemed to have
started on the date such notice should have been given;
(e) any representation or warranty of the Borrower or the Company in
this Agreement or any of the other Loan Documents or in any other document or
instrument delivered pursuant to or in connection with this Agreement, shall
prove to have been false in any material respect upon the date when made or
deemed to have been made or repeated, and shall continue to be false on the date
that the Agent or any Lender takes action based on the Default relating to such
representation or warranty, provided, however, that with respect to the
representations and warranties of the Borrower contained in (S)6.2, (S)6.3,
(S)6.13, (S)6.18 and in paragraphs (a), (c), (d), (e) and (f) of (S)6.22, if the
condition or event making the representation and warranty false is capable of
being cured by the Borrower, no enforcement action has been commenced against
the Borrower or the applicable Mortgaged Property on account of such condition
or event nor is the applicable Mortgaged Property subject to risk of forfeiture
due to such condition or event, and the Borrower promptly commences the cure
thereof after the Borrower's first obtaining knowledge of such condition or
event, the Borrower shall have a period of thirty (30) days after the date that
the Borrower first obtained knowledge of such condition or event during which
the Borrower may cure such condition or event (or, if such condition or event is
not reasonably capable of being cured within such thirty (30) day period, such
additional period of time as may be reasonably required in order to cure such
condition or event but in any event such period shall not exceed six (6) months
from the date that the Borrower first obtained knowledge of such condition or
event), and no Event of Default shall exist hereunder during such thirty (30)
day or additional period so long as the Borrower continuously and diligently
pursues the cure of such condition or event and the other conditions to such
cure period have not changed;
(f) the Borrower, the Company, any of the Related Companies or any
Permitted Joint Venture shall fail to pay at maturity, or within any applicable
period of grace, any Recourse Indebtedness, or shall fail to observe or perform
any material term, covenant or agreement contained in any agreement by which it
is bound, evidencing or securing Indebtedness for such period of time as would
permit (assuming the giving of appropriate notice if required) the holder or
holders thereof or of any obligations issued thereunder to accelerate the
maturity thereof, and
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in any event, such failure shall continue for thirty (30) days, unless the
aggregate amount of all such defaulted Recourse Indebtedness plus the amount of
any unsatisfied judgments described in paragraph (i) of this (S)12.1 is less
than $10,000,000.00;
(g) any of the Borrower, the Company or any Guarantor shall make an
assignment for the benefit of creditors, or admit in writing its inability to
pay or generally fail to pay its debts as they mature or become due, or shall
petition or apply for the appointment of a trustee or other custodian,
liquidator or receiver of any substantial part of its properties or shall
commence any case or other proceeding under any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation or
similar law of any jurisdiction, now or hereafter in effect, or shall take any
action to authorize or in furtherance of any of the foregoing, or if any such
petition or application shall be filed or any such case or other proceeding
shall be commenced against any such Person and such Person shall indicate its
approval thereof, consent thereto or acquiescence therein or any of the events
described in this paragraph shall occur with respect to any other Related
Company or any Permitted Joint Venture and such event shall have a Material
Adverse Effect;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Borrower, the Company, or
any Guarantor bankrupt or insolvent, or approving a petition in any such case or
other proceeding, or a decree or order for relief is entered in respect of the
Borrower, the Company, or any Guarantor in an involuntary case under federal
bankruptcy laws as now or hereafter constituted or any of the events described
in this paragraph shall occur with respect to any other Related Company or any
Permitted Joint Venture and such event shall have a Material Adverse Effect;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any uninsured
final judgment against the Borrower that, with other outstanding uninsured final
judgments, undischarged, against the Borrower, the Company or any of the Related
Companies plus the amount of any defaulted Recourse Indebtedness under paragraph
(f) of this (S)12.1, exceeds in the aggregate $10,000,000.00;
(j) if any of the Loan Documents or any material provision of any
Loan Documents shall be unenforceable, cancelled, terminated, revoked or
rescinded otherwise than in accordance with the terms thereof or with the
express prior written agreement, consent or approval of the Agent, or any action
at law, suit or in equity or other legal proceeding to make unenforceable,
cancel, revoke or rescind any of the Loan Documents shall be commenced by or on
behalf of the Borrower, the Company or any Guarantor, or any court or any other
governmental or regulatory authority or agency of competent jurisdiction shall
make a determination that, or issue a judgment, order, decree or ruling to the
effect that, any one or more of the Loan Documents is illegal, invalid or
unenforceable in accordance with the terms thereof;
(k) the Borrower, the Company or any Guarantor shall be indicted for
a federal crime, a punishment for which could include the forfeiture of any
assets of the Borrower;
(l) any "Event of Default," as defined in any of the IRB Documents
shall occur
<PAGE>
provided that if such Event of Default is caused by the issuer or other Person
other than the Guarantor Subsidiary, the same shall constitute an Event of
Default hereunder only if the maturity of the applicable IRB Indebtedness is
accelerated based thereon;
(m) any "Event of Default", as defined in any of the other Loan
Documents shall occur;
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Requisite Lenders shall, by notice in writing
to the Borrower declare all amounts owing with respect to this Agreement, the
Notes and the other Loan Documents to be, and they shall thereupon forthwith
become, immediately due and payable without presentment, demand, protest or
other notice of any kind, all of which are hereby expressly waived by the
Borrower; provided that in the event of any Event of Default specified in
(S)(S)12.1(g) or 12.1(h), all such amounts shall become immediately due and
payable automatically and without any requirement of notice from the Agent or
action by the Requisite Lenders.
(S)12.2. Termination of Commitments; Drawing of IRB Letters of Credit. If
any one or more Events of Default specified in (S)12.1(g) or (S)12.1(h) shall
occur, the Commitments hereunder shall forthwith terminate and the Lenders shall
be relieved of all obligations to make Loans or to provide Letters of Credit to
the Borrower. If any other Event of Default shall have occurred and be
continuing, any Lender may by notice to the Borrower terminate the Commitment
hereunder, and upon such notice being given its Commitment hereunder shall
terminate immediately and such Lender shall be relieved of all further
obligations to make Loans, provided, however, such Lender shall not be relieved
of its obligation to pay its Proportionate Share of Unreimbursed Drawings under
(S)2.9. No termination of such Lender's Commitment hereunder shall relieve the
Borrower of any of the Obligations or any of its existing obligations to such
Lender arising under other agreements or instruments. At any time after any
Commitments have been terminated pursuant hereto, the Agent may, in its sole
discretion, give such notices as may be permitted under the terms of the IRB
Letters of Credit or the related IRB Documents to cause the bonds relating to
the IRB Indebtedness to be accelerated or to cause a mandatory tender thereof or
to cause the IRB Letters of Credit to be drawn by the beneficiary thereof or to
cause the applicable IRB Letters of Credit to expire if not drawn within the
specified period after the giving of such notice.
(S)12.3. Remedies. In case any one or more of the Events of Default shall
have occurred, and whether or not the Requisite Lenders shall have accelerated
the maturity of the Loans pursuant to (S)12.1, each Lender, if owed any amount
with respect to the Loans, may, with the consent of the Requisite Lenders,
direct the Agent to proceed to protect and enforce the rights and remedies of
the Agent and the Lenders under this Agreement, the Notes, the IRB Documents or
any of the other Loan Documents by suit in equity, action at law or other
appropriate proceeding, whether for the specific performance of any covenant or
agreement contained in this Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations are evidenced, including to the
full extent permitted by applicable law the obtaining of the ex parte
appointment of a receiver and, if any amount shall have become due, by
declaration or otherwise, to proceed to enforce the payment thereof or any other
legal or equitable right of such
<PAGE>
Lender. No remedy herein conferred upon any Lender or the Agent or the holder of
any Note is intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or any
other provision of law.
(S)12.4. Distribution of Collateral Proceeds. In the event that, following
the occurrence or during the continuance of any Default or Event of Default, the
Agent or any Lender as the case may be, receives any monies in connection with
the enforcement of any of the Security Documents, or otherwise with respect to
the realization upon any of the Collateral, such monies shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs, expenses,
disbursements and losses which shall have been incurred or sustained by the
Agent in connection with the collection of such monies by the Agent, for the
exercise, protection or enforcement by the Agent of all or any of the rights,
remedies, powers and privileges of the Agent or the Lenders under this Agreement
or any of the other Loan Documents or in respect of the Collateral or in support
of any provision of adequate indemnity to the Agent against any taxes or liens
which by law shall have, or may have, priority over the rights of the Agent to
such monies;
(b) Second, to all other Obligations in such order or preference as
the Requisite Lenders may determine; provided, however, that distribution in
respect of such Obligations shall be made among the Lenders pro rata in
accordance with each Lender's respective Commitment Percentage; and provided,
further, that the Agent may in its discretion make proper allowance to take into
account any Obligations not then due and payable;
(c) Third, upon payment and satisfaction in full or other provisions
for payment in full satisfactory to the Requisite Lenders and the Agent of all
of the Obligations, and the deposit in any cash collateral account established
pursuant to (S)2.9 (f) of the amount required thereby, to the payment of any
obligations required to be paid pursuant to (S)9-504(1)(c) of the Uniform
Commercial Code of the State of New York; and
(d) Fourth, the excess, if any, shall be returned to the Borrower or
to such other Persons as are legally entitled thereto.
(S)12.5. Addition of Real Estate Assets to Cure Default. As an alternative
to the payment of cash to cure a Default under (S)9.1 or (S)9.2 hereof, the
Borrower shall have the right to offer to provide additional Collateral to the
Agent in the form of Additional Properties pursuant to (S)5.3 and (S)5.4, for
the purpose of curing a Default under (S)9.1 or (S)9.2 hereof, if the Borrower
designates such Collateral for addition within fifteen (15) days after the
occurrence of such Default and the Borrower, the Company or the Mortgagor, as
applicable, executes and delivers to the Agent a Security Deed, an Assignment of
Leases and Rents, an Indemnity Agreement and UCC-1 Financing Statements relating
to the Additional Property together with the Certificates and opinion described
in (S)5.4(d) and (S)5.4(e) within thirty (30) days after the occurrence of such
Default. The Agent and the Lenders shall accept and approve the addition of such
Collateral as a cure for such Default if such Collateral shall cure the Default
and satisfies the due diligence
<PAGE>
requirements of the Agent and the Requisite Lenders, including, without
limitation, the conditions set forth in (S)5.4 and those requirements with
respect to the Mortgaged Properties specified in (S)10 hereof, within ninety
(90) days after the occurrence of the subject Default, and at the time that such
due diligence requirements are so satisfied, no other Defaults or Events of
Default are continuing. If any such additional Collateral is provided to the
Agent in accordance with this (S)12.5, such additional Collateral shall, for all
purposes hereof, be deemed to be a "Mortgaged Property." Until the Agent and
Requisite Lenders have acknowledged in writing the cure of such Default (which
written acknowledgment will be given promptly after such cure has been completed
as herein provided), all consequences of such Default hereunder shall be
effective (except as provided in (S)8.7) and the Agent may exercise all
available remedies except that the maturity of the Loans shall not be
accelerated based solely on the Default which Borrower is diligently attempting
to cure hereunder, prior to the expiration of said ninety (90) day period.
(S)13. SETOFF. Regardless of the adequacy of any Collateral, during the
continuance of any Event of Default, any deposits (general or specific, time or
demand, provisional or final, regardless of currency, maturity, or the branch of
where such deposits are held) or other sums credited by or due from any of the
Lenders to the Borrower and any securities or other property of the Borrower in
the possession of such Lender may WITH THE PRIOR APPROVAL OF THE AGENT be
applied to or set off against the payment of Obligations and any and all other
liabilities, direct, or indirect, absolute or contingent, due or to become due,
now existing or hereafter arising, of the Borrower to such Lender. Each of the
Lenders agrees with each other Lender that (a) if an amount to be set off is to
be applied to Indebtedness of the Borrower to such Lender, other than
Indebtedness evidenced by the Notes held by such Lender, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Notes held by such Lender, and (b) if such Lender shall receive from
the Borrower, whether by voluntary payment, exercise of the right of setoff,
counterclaim, cross action, enforcement of the claim evidenced by the Notes held
by such Lender by proceedings against the Borrower at law or in equity or by
proof thereof in bankruptcy, reorganization, liquidation, receivership or
similar proceedings, or otherwise, and shall retain and apply to the payment of
the Note or Notes held by such Lender any amount in excess of its ratable
portion of the payments received by all of the Lenders with respect to the Notes
held by all of the Lenders, such Lender will make such disposition and
arrangements with the other Lenders with respect to such excess, either by way
of distribution, pro tanto assignment of claims, subrogation or otherwise as
shall result in each Lender receiving in respect of the Notes held by it its
proportionate payment as contemplated by this Agreement; provided that if all or
any part of such excess payment is thereafter recovered from such Lender, such
disposition and arrangements shall be rescinded and the amount restored to the
extent of such recovery, but without interest. Notwithstanding the foregoing, no
Lender shall exercise a right of setoff if such exercise would limit or prevent
the exercise of any other remedy, right to Collateral or other recourse against
the Borrower.
(S)14. THE AGENT.
(S)14.1. Authorization. The Agent is authorized to take such action on
behalf of each of the Lenders and to exercise all such powers as are hereunder
and under any of the other Loan
<PAGE>
Documents and any related documents delegated to the Agent, together with such
powers as are reasonably incident thereto, provided that no duties or
responsibilities not expressly assumed herein or therein shall be implied to
have been assumed by the Agent. The relationship between the Agent and the
Lenders is and shall be that of agent and principal only, and nothing contained
in this Agreement or any of the other Loan Documents shall be construed to
constitute the Agent as a trustee for any Lender.
(S)14.2. Employees and Agents. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Agreement and the other Loan Documents. The Agent
may utilize the services of such Persons as the Agent in its sole discretion may
reasonably determine, and all reasonable fees and expenses of any such Persons
shall be paid by the Borrower.
(S)14.3. No Liability. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever, except that the Agent or such other
Person, as the case may be, may be liable for losses due to its willful
misconduct or gross negligence.
(S)14.4. No Representations. The Agent shall not be responsible for the
execution or validity or enforceability of this Agreement, the Notes, any of the
other Loan Documents or any instrument at any time constituting, or intended to
constitute, collateral security for the Notes, or for the value of any such
collateral security or for the validity, enforceability or collectability of any
such amounts owing with respect to the Notes, or for any recitals or statements,
warranties or representations made herein or in any of the other Loan Documents
or in any certificate or instrument hereafter furnished to it by or on behalf of
the Borrower, or be bound to ascertain or inquire as to the performance or
observance of any of the terms, conditions, covenants or agreements herein or in
any instrument at any time constituting, or intended to constitute, collateral
security for the Notes. The Agent shall not be bound to ascertain whether any
notice, consent, waiver or request delivered to it by the Borrower or any holder
of any of the Notes shall have been duly authorized or is true, accurate and
complete. The Agent has not made nor does it now make any representations or
warranties, express or implied, nor does it assume any liability to the Lenders,
with respect to the credit worthiness or financial condition of the Borrower.
Each Lender acknowledges that it has, independently and without reliance upon
the Agent or any other Lender, and based upon such information and documents as
it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender has been independently represented by separate
counsel regarding this Agreement.
(S)14.5. Payments.
(a) A payment by the Borrower to the Agent hereunder or any of the
other Loan Documents for the account of any Lender shall constitute a payment to
such Lender subject to
<PAGE>
the pro rata rights to repayment based upon the Commitment Percentage of each
Lender. The Agent agrees promptly to distribute to each Lender such Lender's
pro rata share of payments received by the Agent for the account of the Lenders
except as otherwise expressly provided herein or in any of the other Loan
Documents.
(b) If in the opinion of the Agent the distribution of any amount
received by it in such capacity hereunder, under the Notes or under any of the
other Loan Documents might involve it in liability, it may refrain from making
distribution until its right to make distribution shall have been adjudicated by
a court of competent jurisdiction. If a court of competent jurisdiction shall
adjudge that any amount received and distributed by the Agent is to be repaid,
each Person to whom any such distribution shall have been made shall either
repay to the Agent its proportionate share of the amount so adjudged to be
repaid or shall pay over the same in such manner and to such Persons as shall be
determined by such court.
(c) Notwithstanding anything to the contrary contained in this
Agreement or any of the other Loan Documents, any Lender that fails (i) to make
available to the Agent its pro rata share of any Loan or of any Unreimbursed
Drawing or (ii) to comply with the provisions of (S)12.4 or (S)13 with respect
to making dispositions and arrangements with the other Lenders, where such
Lender's share of any payment received, whether by setoff or otherwise, is in
excess of its pro rata share of such payments due and payable to all of the
Lenders, in each case as, when and to the full extent required by the provisions
of this Agreement, or to adjust promptly such Lender's outstanding principal and
its pro rata Commitment Percentage as provided in (S)2.1 hereof, shall be deemed
delinquent (a "Delinquent Lender") and shall be deemed a Delinquent Lender
until such time as such delinquency is satisfied. A Delinquent Lender shall be
deemed to have assigned any and all payments due to it from the Borrower,
whether on account of outstanding Loans, interest, fees or otherwise, to the
remaining nondelinquent Lenders for application to, and reduction of, their
respective pro rata shares of all outstanding Loans. The Delinquent Lender
hereby authorizes the Agent to distribute such payments to the nondelinquent
Lenders in proportion to their respective pro rata shares of all outstanding
Loans. A Delinquent Lender shall be deemed to have satisfied in full a
delinquency when and if, as a result of application of the assigned payments to
all outstanding Loans of the nondelinquent Lenders, the Lenders' respective pro
rata shares of all outstanding Loans have returned to those in effect
immediately prior to such delinquency and without giving effect to the
nonpayment causing such delinquency.
(S)14.6. Holders of Notes. The Agent may deem and treat the payee of any
Note as the absolute owner or purchaser thereof for all purposes hereof until it
shall have been furnished in writing with a different name by such payee or by a
subsequent holder assignee or transferee.
(S)14.7. Indemnity. The Lenders ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions and suits
(whether groundless or otherwise), losses, damages, costs, expenses (including
any expenses for which the Agent has not been reimbursed by the Borrower as
required by (S)15), and liabilities of every nature and character arising out of
or related to this Agreement, the Notes, or any of the other Loan Documents or
the transactions contemplated or evidenced hereby or thereby, or the Agent's
actions taken hereunder
<PAGE>
or thereunder, except to the extent that any of the same shall be directly
caused by the Agent's willful misconduct or gross negligence.
(S)14.8. Agent as Lender. In its individual capacity, BankBoston shall
have the same obligations and the same rights, powers and privileges in respect
to its Commitment and the Loans made by it, and as the holder of any of the
Notes as it would have were it not also the Agent. By issuing the Letters of
Credit in its individual capacity BankBoston is bound to perform its duties and
obligations under such Letters of Credit as provided therein. BankBoston's
status as Agent hereunder shall not limit or restrict its ability to perform
such duties and obligations.
(S)14.9. Resignation. The Agent may resign at any time by giving sixty
(60) days, prior written notice thereof to the Lenders and the Borrower. Upon
any such resignation, the Requisite Lenders shall have the right to appoint a
successor Agent. Unless a Default or Event of Default shall have occurred and be
continuing, appointment of such successor Agent shall be subject to the
reasonable approval of the Borrower. If no successor Agent shall have been so
appointed by the Requisite Lenders and shall have accepted such appointment
within thirty (30) days after the giving of notice of resignation or removal, or
the Borrower has disapproved or failed to approve a successor agent within such
period, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a financial institution having a rating of not
less than A2/P2 or its equivalent by Standard & Poor's Corporation. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, such
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations as Agent hereunder.
After any retiring Agent's resignation, the provisions of this Agreement and the
other Loan Documents shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as Agent.
(S)14.10. Notification of Defaults and Events of Default. Each Lender
hereby agrees that, upon learning of the existence of a Default or an Event of
Default, it shall promptly notify the Agent thereof. The Agent hereby agrees
that upon receipt of any notice under this (S)14.10 it shall promptly notify the
other Lenders of the existence of such Default or Event of Default.
(S)14.11. Duties in the Case of Enforcement. In case one of more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if (a) so requested by
the Requisite Lenders and (b) the Lenders have provided to the Agent such
additional indemnities and assurances against expenses and liabilities as the
Agent may reasonably request, proceed to enforce the provisions of the Security
Documents authorizing the sale or other disposition of all or any part of the
Collateral and exercise all or any such other legal and equitable and other
rights or remedies as it may have in respect of such Collateral. The Requisite
Lenders may direct the Agent in writing as to the method and the extent of any
such sale or other disposition, the Lenders hereby agreeing to indemnify and
hold the Agent harmless from all liabilities incurred in respect of all actions
taken or omitted in accordance with such directions, provided that the Agent
need not comply with any such direction to the extent that the Agent reasonably
believes the Agent's compliance with such
<PAGE>
direction to be unlawful or commercially unreasonable in any applicable
jurisdiction. The Agent may take such steps as it reasonably determines for the
taking of possession or title to any Collateral, including the formation of
trusts or corporations with each Lender having a beneficial interest equal to
its pro rata percentage of the outstanding Loans.
(S)14.12. Mandatory Resignation of Agent. In the event that the Agent
enters into one or more Assignments pursuant to (S)18 having the effect of
reducing the Agent's Commitment to less than $25,000,000 (which number will be
reduced in proportion to any reduction in the Total Commitment pursuant to
(S)2.2) then the Agent shall promptly so notify the Borrower and the Lenders.
Upon the written request of the Borrower or any Lender whose Commitment exceeds
that of the Agent, which written request is made within thirty (30) days after
the Agent's notice that its Commitment is below such minimum level, the Agent
shall be obligated to resign pursuant to (S)14.9.
(S)15. EXPENSES. The Borrower agrees to pay (a) the reasonable costs of
producing and reproducing this Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of the
Lenders (other than taxes based upon the Agent's or any Lender 's net income),
including any recording, mortgage, documentary or intangibles taxes in
connection with the Security Documents and other Loan Documents, or other taxes
payable on or with respect to the transactions contemplated by this Agreement,
including any such taxes payable by the Agent or any of the Lenders after the
Facility Closing Date (the Borrower hereby agreeing to indemnify the Lenders
with respect thereto), (c) all title insurance premiums, appraisal fees,
engineer's, inspector's and surveyor's fees, recording costs and the reasonable
fees, expenses and disbursements of the Agent's counsel or any local counsel to
the Agent incurred in connection with the preparation, administration or
interpretation of the Loan Documents and other instruments mentioned herein,
each closing hereunder, and amendments, modifications, approvals, consents or
waivers hereto or hereunder, (d) the reasonable fees, costs, expenses and
disbursements of the Agent incurred in connection with the preparation,
administration or interpretation of the Loan Documents and other instruments
mentioned herein including without limitation, the reasonable costs incurred by
the Agent in connection with its inspection of the Mortgaged Properties, and the
fees and disbursements of the Agent's counsel and the Borrower's legal counsel
in preparing documentation, (e) the reasonable fees, costs, expenses and
disbursements of the Agent incurred in connection with the syndication and/or
participation of the Loans, (f) all reasonable out-of-pocket expenses (including
reasonable attorneys' fees and costs, which attorneys may be employees of any
Lender or the Agent and the fees and costs of appraisers, engineers, investment
bankers, surveyors or other experts retained by the Agent or any Lender in
connection with any such enforcement proceedings) incurred by any Lender or
the Agent in connection with (i) the enforcement of or preservation of rights
under any of the Loan Documents against the Borrower or the administration
thereof after the occurrence of a Default or Event of Default (including,
without limitation, expenses incurred in any restructuring and/or "workout" of
the Loans), and (ii) any litigation, proceeding or dispute whether arising
hereunder or otherwise, in any way related to the Agent's or the Lender 's
relationship with the Borrower, the Company, any Permitted Joint Venture or any
of the Related Companies, (g) all reasonable fees, expenses and disbursements of
the Agent incurred in connection with UCC
<PAGE>
searches, UCC filings or mortgage recordings, (h) all reasonable costs incurred
by the Agent in the future in connection with its inspection of the Mortgaged
Properties (which inspections shall occur not more frequently than annually
prior to an Event of Default), and (i) the reasonable fees, costs, expenses and
disbursements of the Agent incurred in connection with the granting of
additional Collateral by the Borrower pursuant to (S)12.5 hereof, including,
without limitation, the costs incurred by the Agent in connection with its
inspection of such additional Collateral, and the fees and disbursements of the
Agent's counsel. The covenants of this (S)15 shall survive payment or
satisfaction of payment of amounts owing with respect to the Notes.
(S)16. INDEMNIFICATION. Each of the Borrower and the Company, jointly
and severally, agrees to indemnify and hold harmless the Agent and the Lenders
and the shareholders, directors, agents, officers, subsidiaries, and affiliates
of the Agent and the Lenders from and against any and all claims, actions or
causes of action and suits whether groundless or otherwise, and from and against
any and all liabilities, losses, settlement payments, obligations, damages and
expenses of every nature and character arising out of this Agreement or any of
the other Loan Documents or the Formation Transactions or any other transactions
contemplated hereby or which otherwise arise in connection with the financing
including, without limitation unless directly caused by the gross negligence or
willful misconduct of a Lender or the Agent (but such limitation on
indemnification shall only apply to the Agent or Lender being grossly negligent
or committing willful misconduct), (a) any actual or proposed use by the
Borrower of the proceeds of any of the Loans or the Drawings of any Letters of
Credit, (b) any actual or alleged infringement of any patent, copyright,
trademark, service mark or similar right of the Borrower comprised in the
Collateral, (c) the Borrower, the Company or any Guarantor entering into or
performing this Agreement or any of the other Loan Documents or (d) any cost,
claim liability, damage or expense in connection with any harm the Borrower may
be found to have caused in the role of a broker, in each case including, without
limitation, the reasonable fees and disbursements of counsel and allocated costs
of internal counsel incurred in connection with any such investigation,
litigation or other proceeding. In litigation, or the preparation therefor, the
Lenders and the Agent shall each be entitled to select their own separate
counsel to the extent that their representation by the same counsel would
present such counsel with a conflict of interest, or would be inappropriate due
to actual or potential differing interests or because there may be defenses
available to certain of such persons that are different from or in addition to
those available to the other persons to be represented by such counsel and, in
addition to the foregoing indemnity, the Borrower agrees to pay promptly the
reasonable fees and expenses of such counsel. In the event that Agent or any
Lender is made a party to any litigation against the Company or the Borrower
relating to or arising from the Formation Transactions, the Borrower or the
Company may, or if requested by the Agent or the Requisite Lenders shall, assume
primary responsibility for the defense thereof with counsel reasonably
satisfactory to the Requisite Lenders, subject to the right of the Agent and the
Lenders to separate counsel to the extent provided in the preceding sentence.
If, and to the extent that the obligations of the Borrower or the Company under
this (S)16 are unenforceable for any reason, the Borrower and the Company hereby
agree to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The provisions of this
(S)16 shall survive the repayment of the Loans and the termination of the
obligations of the Lenders hereunder and shall continue in full force and effect
as to the Lenders so long as the possibility of any such
<PAGE>
claim, action, cause of action or suit exists.
(S)17. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Notes, in any of the other
Loan Documents or in any documents or other papers delivered by or on behalf of
the Borrower or any Guarantor pursuant hereto shall be deemed to have been
relied upon by the Lenders and the Agent, notwithstanding any investigation
heretofore or hereafter made by it, and shall survive the making by the Lenders
of the Loans, as herein contemplated, and shall continue in full force and
effect so long as any amount due under this Agreement or the Notes or any of the
other Loan Documents remains outstanding or the Lenders have any obligation to
make any Loans. The indemnification obligations of the Borrower provided herein
and the other Loan Documents shall survive the full repayment of amounts due and
the termination of the obligations of the Lenders hereunder and thereunder to
the extent provided herein and therein. All statements contained in any
certificate or other paper delivered to the Agent or any Lender at any time by
or on behalf of the Borrower pursuant hereto or in connection with the
transactions contemplated hereby shall constitute representations and warranties
by the Borrower hereunder.
(S)18. ASSIGNMENT; PARTICIPATIONS; ETC.
(S)18.1. Conditions to Assignment by Lenders. Except as provided herein,
each Lender may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Agreement (including all or a
portion of its Commitment Percentage and Commitment and the same portion of the
Loans at the time owing to it, and the Notes held by it); provided that (a) the
Agent shall have given its prior written consent to such assignment except that
such consent shall not be needed with respect to an assignment from a Lender to
one of its Affiliated Lenders or to another Lender, (b) each such assignment
shall be of a constant, and not a varying, percentage of all the assigning
Lender 's rights and obligations under this Agreement, (c) each assignment shall
be in an amount of not less than $10,000,000 that is a whole multiple of
$1,000,000, (d) each Lender either shall assign all of its Commitment and cease
to be a Lender hereunder or shall retain, free of any such assignment, an amount
of its Commitment of not less than $10,000,000 and (e) the parties to such
assignment shall execute and deliver to the Agent, for recording in the Register
(as hereinafter defined), an Assignment and Acceptance,
substantially in the form of Exhibit F hereto (an "Assignment and Acceptance"),
together with any Notes subject to such assignment. Upon such execution,
delivery, acceptance and recording, from and after the effective date specified
in each Assignment and Acceptance, which effective date shall be at least five
(5) Business Days after the execution thereof, (i) the assignee thereunder shall
be a party hereto and, to the extent provided in such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder, and (ii) the assigning
Lender shall, to the extent provided in such assignment and upon payment to the
Agent of the registration fee referred to in (S)18.3, be released from its
obligations under this Agreement.
(S)18.2. Certain Representations and Warranties; Limitations; Covenants.
By executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows: (a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned
<PAGE>
thereby free and clear of any adverse claim, the assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, the other Loan Documents or any other
instrument or document furnished pursuant hereto; (b) the assigning Lender makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or any other Person primarily or secondarily
liable in respect of any of the Obligations, or the performance or observance by
the Borrower or any other Person primarily or secondarily liable in respect of
any of the Obligations of any of their obligations under this Agreement or any
of the other Loan Documents or any other instrument or document furnished
pursuant hereto or thereto or the validity or enforceability or priority of any
lien or any Collateral; (c) such assignee confirms that it has received a copy
of this Agreement, together with copies of the most recent financial statements
referred to in (S)6.4 and (S)7.4 and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (d) such assignee will, independently and
without reliance upon the assigning Lender, the Agent or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions and Collateral decisions in
taking or not taking action under this Agreement, (e) such assignee represents
and warrants that it is an Eligible Assignee; (f) such assignee appoints and
authorizes the Agent to take such action as "Agent" on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agent by the terms hereof or thereof, together with such powers
as are reasonably incidental thereto; (g) such assignee agrees that it will
perform in accordance with their terms all of the obligations that by the terms
of this Agreement are required to be performed by it as a Lender ; and (h) such
assignee represents and warrants that it is legally authorized to enter into
such Assignment and Acceptance. Each of the Syndication Lenders shall be subject
to the provisions of this (S)18.2 to the same extent as though it were becoming
a party to this Agreement as an assignee by entering into an Assignment and
Acceptance with each Lead Lender effective on the Effective Date.
(S)18.3. Register. The Agent shall maintain a copy of each Assignment
and Acceptance delivered to it and a register or similar list (the "Register")
for the recordation of the names and addresses of the Lenders and the Commitment
Percentages of, and principal amount of the Loans owing to the Lenders from time
to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Agent and the Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrower and the Lenders at any reasonable time and from time to time upon
reasonable prior notice. Upon each such recordation, the assigning Lender agrees
to pay to the Agent a registration fee in the sum of $2,500.00. The Agent may
amend Schedules 1 and 1.2 hereof to reflect the recording of any such
assignments.
(S)18.4. New Notes. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (a) record the information contained therein in
the Register, and (b) give prompt notice thereof to
<PAGE>
the Borrower and the Lenders (other than the assigning Lender). Within five (5)
Business Days after receipt of such notice, the Borrower, at its own expense,
shall execute and deliver to the Agent, in exchange for each surrendered Note, a
new Note to the order of such Eligible Assignee in an amount equal to the amount
assumed by such Eligible Assignee pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained some portion of its Loans hereunder, a
new Note to the order of the assigning Lender in an amount equal to the amount
retained by it hereunder. Such new Notes shall provide that they are
replacements for the surrendered Notes and that they do not constitute a
novation, shall be in an aggregate principal amount equal to the aggregate
principal amount of the surrendered Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes. Within five (5) days of issuance of any new Notes
pursuant to this (S)18.4, the Borrower shall deliver an opinion of counsel,
addressed to the Lenders and the Agent, relating to the due authorization,
execution and delivery of such new Notes and the legality, validity and binding
effect thereof, and that the Obligations evidenced by the new Notes are secured
by the Collateral with the same validity, enforceability and priority as if
given on the Effective Date, in form and substance satisfactory to the Lenders.
The surrendered Notes shall be cancelled and returned to the Borrower.
(S)18.5. Participations. Each Lender may sell participations to one or
more banks or other entities in a portion of such Lender's rights and
obligations under this Agreement and the other Loan Documents not to exceed
forty-nine percent (49%) of its Commitment Percentage; provided that (a) the
Agent shall have given its prior written consent to such participation which
consent shall not be unreasonably withheld if the participant is an Eligible
Assignee, except that any Lender may sell participations to its Affiliated
Lenders without such consent, (b) each such participation shall be in an amount
of not less than $10,000,000 that is a whole multiple of $1,000,000, (c) any
such sale or participation shall not affect the rights and duties of the selling
Lender hereunder to the Borrower and the Lender shall continue to exercise all
approvals, disapprovals and other functions of a Lender, (d) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve the vote of the Lender as to waivers, amendments or
modifications that would reduce the principal of or the interest rate on any
Loans, extend the term or increase the amount of the Commitment of such Lender
as it relates to such participant, reduce the amount of any fees to which such
participant is entitled or extend any regularly scheduled payment date for
principal or interest, provided that all approvals affecting a Loan or this
Agreement under this clause (d) shall be granted or withheld by each Lender
voting its entire Commitment Percentage as a whole, and (e) no participant shall
have the right to grant further participations or assign its rights, obligations
or interests under such participation to other Persons without the prior written
consent of the Agent. The Agent shall promptly advise the Borrower in writing of
any such sale or participation.
(S)18.6. Pledge by Lender. Any Lender may at any time pledge all or any
portion of its interest and rights under this Agreement (including all or any
portion of its Note) to any of the twelve Federal Reserve Lenders organized
under (S)4 of the Federal Reserve Act, 12 U.S.C. (S)341. No such pledge or the
enforcement thereof shall release the pledgor Lender from its obligations
hereunder or under any of the other Loan Documents.
<PAGE>
(S)18.7. No Assignment by Borrower. The Borrower shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Lenders.
(S)18.8. Disclosure. The Borrower agrees that in addition to disclosures
made in accordance with standard banking practices any Lender may disclose
information obtained by such Lender pursuant to this Agreement to assignees or
participants and potential assignees or participants hereunder. Such Lender
shall obtain from each party to whom it discloses such information, the
agreement by such party to comply with the Lenders' agreements with respect to
Confidential Information set forth in (S)7.9.
(S)19. NOTICES, ETC. Except as otherwise expressly provided in this
Agreement, all notices and other communications made or required to be given
pursuant to this Agreement or the Notes shall be in writing and shall be
delivered in hand, mailed by United States registered or certified first class
mail, postage prepaid, sent by overnight courier, or sent by telegraph,
telecopy, telefax or telex and confirmed by delivery via courier or postal
service, addressed as follows:
(a) if to the Borrower, at 77 West Wacker Drive, Suite 3900,
Chicago, IL 60601, Attention: Chief Financial Officer or at such other address
for notice as the Borrower shall last have furnished in writing to the Agent;
and
(b) if to the Agent, at 100 Federal Street, Boston,
Massachusetts 02110, Attention: Real Estate Department, and to 115 Perimeter
Center Place, N.E., Suite 500, Atlanta, Georgia 30346, Attn: Lori Y. Litow, Vice
President, or such other address for notice as the Agent shall last have
furnished in writing to the Borrower.
(c) if to any Lender, at such Lender's address set forth on
Schedule 1, hereto, or such other address for notice as such Lender shall have
last furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
(S)20. GOVERNING LAW; CONSENT TO JURISDICTION AND SERVICE. THIS
AGREEMENT AND EACH OF THE OTHER LOAN DOCUMENTS, EXCEPT AS OTHERWISE SPECIFICALLY
PROVIDED THEREIN, ARE CONTRACTS UNDER THE LAWS OF THE STATE OF NEW YORK AND
SHALL FOR ALL PURPOSES BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS
OF SUCH STATE (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE
BORROWER AGREES THAT ANY SUIT BY IT FOR THE ENFORCEMENT OF THIS
<PAGE>
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS OR THE STATE OF NEW YORK OR ANY FEDERAL COURT
SITTING THEREIN AND BORROWER CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH
COURT FOR ANY SUIT BY AGENT OR ANY LENDER AND THE SERVICE OF PROCESS IN ANY SUCH
SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE ADDRESS SPECIFIED IN (S)19. THE
BORROWER HEREBY WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT SUCH SUIT IS BROUGHT IN AN
INCONVENIENT COURT. IN ADDITION TO THE COURTS OF MASSACHUSETTS AND NEW YORK OR
ANY FEDERAL COURT SITTING THEREIN, THE AGENT OR ANY LENDER MAY BRING ACTION(S)
FOR ENFORCEMENT ON A NONEXCLUSIVE BASIS WHERE ANY COLLATERAL EXISTS AND THE
BORROWER CONSENTS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURT AND THE
SERVICE OF PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWER BY MAIL AT THE
ADDRESS SPECIFIED IN (S)19.
(S)21. HEADINGS. The captions in this Agreement are for convenience of
reference only and shall not define or limit the provisions hereof.
(S)22. COUNTERPARTS. This Agreement and any amendment hereof may be
executed in several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original, and all of
which together shall constitute one instrument. In proving this Agreement it
shall not be necessary to produce or account for more than one such counterpart
signed by the party against whom enforcement is sought.
(S)23. ENTIRE AGREEMENT. The Loan Documents and any other documents
executed in connection herewith or therewith express the entire understanding of
the parties with respect to the transactions contemplated hereby. Neither this
Agreement nor any term hereof may be changed, waived, discharged or terminated,
except as provided in (S)25.
(S)24. WAIVER OF JURY TRIAL AND CERTAIN DAMAGE CLAIMS. THE BORROWER
HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM
ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE NOTES OR ANY
OF THE OTHER LOAN DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER
OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS. EXCEPT TO THE EXTENT
EXPRESSLY PROHIBITED BY LAW, THE BORROWER HEREBY WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN,
OR IN ADDITION TO, ACTUAL DAMAGES. THE BORROWER (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF THE AGENT OR ANY LENDER HAD REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE AGENT OR SUCH LENDER WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B) ACKNOWLEDGES THAT THE
AGENT AND THE LENDERS HAVE
<PAGE>
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH
THEY ARE PARTIES BY, AMONG OTHER THINGS, THE WAIVERS AND CERTIFICATIONS
CONTAINED HEREIN.
(S)25. CONSENTS, AMENDMENTS, WAIVERS, ETC. Any consent or approval
required or permitted by this Agreement may be given, and any term of this
Agreement or of any other instrument related hereto or mentioned herein may be
amended, and the performance or observance by the Borrower of any terms of this
Agreement or such other instrument or the continuance of any Default or Event of
Default may be waived (either generally or in a particular instance and either
retroactively or prospectively) with, but only with, the written consent of the
Requisite Lenders, and, in the case of amendments, with the written consent of
the Borrower other than amendments to schedules made in the ordinary course as
contemplated by this Agreement. Notwithstanding the foregoing, (i) the rate of
interest on and the term or amount of the Notes, (ii) the amount of the
Commitments of the Lenders, (iii) the amount of any fee payable to a Lender
hereunder, (iv) any provision herein or in any of the Loan Documents which
expressly requires consent of all the Lenders, (v) the funding provisions of
(S)2.4 and (S)2.5 hereof, (vi) the rights, duties and obligations of the Agent
specified in (S)14 hereof, (vii) the date or time fixed for payment of principal
or interest, (viii) any change or release having the effect of converting the
credit facility hereunder from a secured facility to an unsecured facility and
(ix) this (S)25 may not be amended without the written consent of each Lender
affected thereby, nor may the Agent release any obligor from its liability with
respect to the Obligations, without first obtaining the written consent of all
the Lenders. No waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent thereon. No course of dealing or delay or
omission on the part of the Agent or any Lender in exercising any right shall
operate as a waiver thereof or otherwise be prejudicial thereto. No notice to or
demand upon the Borrower shall entitle the Borrower to other or further notice
or demand in similar or other circumstances.
(S)26. SEVERABILITY. The provisions of this Agreement are severable, and
if any one clause or provision hereof shall be held invalid or unenforceable in
whole or in part in any jurisdiction, then such invalidity or unenforceability
shall affect only such clause or provision, or part thereof, in such
jurisdiction, and shall not in any manner affect such clause or provision in any
other jurisdiction, or any other clause or provision of this Agreement in any
jurisdiction.
(S)27. ACKNOWLEDGMENTS. The Borrower hereby acknowledges that: (i)
neither the Agent nor any Lender has any fiduciary relationship with, or
fiduciary duty to, the Borrower arising out of or in connection with this
Agreement or any of the other Loan Documents; (ii) the relationship in
connection herewith between the Agent and the Lenders, on the one hand, and the
Borrower, on the other hand, is solely that of debtor and creditor and (iii) no
joint venture or partnership among any of the parties hereto is created hereby
or by the other Loan Documents, or otherwise exists by virtue of the Facility or
the Loans.
(S)28. PARTNER LIABILITY.
(S)28.1. Limited Recourse to Company. Notwithstanding anything expressed
or implied to the contrary contained herein, the Company shall not be liable
hereunder or under any
<PAGE>
Guaranty or under any legal or equitable proceeding or by virtue of any statute,
regulation or other applicable law for (i) any payment of principal or interest
on, or any other amounts due under, any of the Loans, or (ii) any reimbursement
obligation with respect to a Drawing under a Letter of Credit, or (iii) to repay
any other indebtedness of Borrower or any Guarantor, provided, however, that
nothing herein shall be construed to prevent the Agent or any Lender from
recovering from the Company, or limit the Agent's or any Lender's recourse
against the Company for any losses, damages or costs (including, without
limitation, reasonable legal expenses), incurred by the Agent or any Lender in
connection with the Company's breach of the Company's own covenants and
agreements herein or in the Indemnity Agreement, or in connection with the
Company's fraud, misappropriation of funds (whether due to the Company's failure
to contribute Net Offering Proceeds to the Borrower, as required by (S)7.20, or
its receipt of Distributions from the Borrower in violation of (S) 8.7, or
otherwise) or any misrepresentation made by or on behalf of the Company
hereunder or in connection with the transactions contemplated hereby.
(S)28.2. Limited Recourse to Partners of Borrower other than the Company.
With respect to all partners of the Borrower other than the Company, no personal
deficiency judgment or any other judgment shall be asserted or enforced against
any such partner for payment of any amount hereunder or for observance or
performance of any of the obligations of the Borrower contained herein, except
as expressly set forth in this agreement or any other agreement or instrument or
document as an obligation of such partner in connection herewith, and provided
that the foregoing shall not affect the liability which any of such other
partners may have for any fraud, misappropriation of funds or intentional
misrepresentation made hereunder by or on behalf of the Borrower or in
connection with the transactions contemplated hereby.
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first set forth above.
WITNESS: PRIME GROUP REALTY TRUST
/s/ Ellen Duff By: /s/ William M. Karnes
- ------------------------------- -----------------------------------
William M. Karnes
Its: Executive Vice President and
Chief Financial Officer
PRIME GROUP REALTY, L.P.
By: PRIME GROUP REALTY TRUST,
its managing general partner
/s/ Ellen Duff By: /s/ William M. Karnes
- ------------------------------- -----------------------------------
William M. Karnes
Its: Executive Vice President and
Chief Financial Officer
BANKBOSTON, N.A., as Agent
/s/ Angela M. Collins By: /s/ Kevin C. Hake
- ------------------------------- -----------------------------------
Kevin C. Hake
Its: Director
<PAGE>
WITNESS: BANKBOSTON, N.A.
/s/ Angela M. Collins By: /s/ Kevin C. Hake
- -------------------------- ------------------
Kevin C. Hake
Its Director
Commitment: $62,500,000
Temporary Commitment: $5,000,000
Commitment Percentage prior to Commitment Decrease Date: 33.75%
Commitment Percentage after Commitment Decrease Date: 32.89474%
Notice Address: BankBoston, N.A.
100 Federal Street
Boston, MA 02110
Attn: Real Estate Department
With a copy to:
BankBoston, N.A.
115 Perimeter Center Place, N.E.
Suite 500
Atlanta, GA 30346
Attn: Lori Y. Litow, Vice President
Fax: (770)390-8434 or 391-9811
<PAGE>
WITNESS: PRUDENTIAL SECURITIES
CREDIT CORPORATION
By: /s/ Jeff K. French
- --------------------------- ----------------------
Commitment: $62,500,000
Temporary Commitment: $5,000,000
Commitment Percentage prior to Commitment Decrease Date: 33.75%
Commitment Percentage after Commitment Decrease Date: 32.89474%
Notice Address:
Prudential Securities Credit Corporation
One New York Plaza
New York, New York 10292.
Attn: Fuller O'Connor, Director
Phone: (212)778-3720
Fax: (212)778-3194 or 2253
<PAGE>
WITNESS: SOCIETE GENERALE
/s/ Mary [illegible] By: /s/ M. Scott Gosslee
- ----------------------------- ----------------------------
Commitment: $25,000,000
Commitment Percentage prior to Commitment Decrease Date: 12.5%
Commitment Percentage after Commitment Decrease Date: 13.1579%
Notice Address:
Societe Generale
Trammel Crow Center
2001 Ross Avenue, Suite 4900
Dallas, TX 75201
Attn: Robert Delph
Phone: (214)979-2772
<PAGE>
WITNESS: COMMERZBANK AG
- -------------------------- By: /s/ J. Timothy Shortly /s/ Paul Karlin
-------------------------- ------------------------
J. Timothy Shortly Paul Karlin
Senior Vice President Assistant Vice President
Commitment: $20,000,000
Commitment Percentage prior to Commitment Decrease Date: 10%
Commitment Percentage after Commitment Decrease Date: 10.52631%
Notice Address:
Commerzbank AG
311 South Wacker Drive
Suite 5800
Chicago, IL 60606
Attn: J. Timothy Shortly
Phone: (312)408-6900
Fax: (312)435-1486
<PAGE>
WITNESS BANQUE NATIONALE DE PARIS
/s/ William J. Krummen By: /s/ Frederick H. Moryl
- ----------------------------- -------------------------
William J. Krummen Frederick H. Moryl
Vice President and Manager Senior Vice President and
Manager
Commitment: $20,000,000
Commitment Percentage prior to Commitment Decrease Date: 10%
Commitment Percentage after Commitment Decrease Date: 10.52631%
Notice Address:
Banque Nationale de Paris
209 S. LaSalle Street
Chicago, IL 60604
Phone: (312)977-2248
Fax: (312)977-1380
<PAGE>
Exhibit A
---------
FORM OF NOTE
------------
No. ___ [Date]
[Amount]
FOR VALUE RECEIVED, the undersigned, Prime Group Realty, L.P., a Delaware
limited partnership (the "Borrower"), promises to pay to the order of [Name of
Lender] (hereinafter, together with its successors in title and assigns, called
the "Lender") at the head office of BankBoston, N.A., as Agent (the "Agent") at
100 Federal Street, Boston, Massachusetts 02110, the principal sum of [Amount in
Words][Amount in Numbers] or, if less, the aggregate unpaid principal amount of
all Loans made by the Lender to the Borrower pursuant to the Credit Agreement
dated as of November 17, 1997 among the Lender, the Borrower, Prime Group Realty
Trust, the other lending institutions named therein and the Agent, as amended
from time to time (the "Credit Agreement"). Capitalized terms used herein and
not otherwise defined herein shall have the meanings assigned to them in the
Credit Agreement. Unless otherwise provided herein, the rules of interpretation
set forth in (S)1.2 of the Credit Agreement shall be applicable to this Note.
This Note replaces, in part, the Loan Notes previously issued to the Lead
Lenders under the Credit Agreement and does not constitute a novation.
The Borrower also promises to pay (a) principal from time to time at the
times provided in the Credit Agreement and (b) interest from the date hereof on
the principal amount from time to time unpaid at the rates and times set forth
in the Credit Agreement and in all cases in accordance with the terms of the
Credit Agreement. Late charges and other charges and default rate interest shall
be paid by Borrower in accordance with the terms of the Credit Agreement. The
entire outstanding principal amount of this Note, together with all accrued but
unpaid interest thereon, shall be due and payable in full on the Maturity Date.
The Lender may endorse the record relating to this Note with appropriate
notations evidencing advances and payments of principal hereunder as
contemplated by the Credit Agreement.
This Note is issued pursuant to, is entitled to the benefits of, and is
subject to the provisions of the Credit Agreement. The principal of this Note is
subject to prepayment in whole or in part in the manner and to the extent
specified in the Credit Agreement. This Note is secured by the Security
Documents. However, the principal of this Note, the interest accrued on this
Note and all other Obligations of the Borrower are full recourse obligations of
the Borrower, and all of its Real Estate Assets, the Collateral and its other
properties shall be available for the payment and performance of this Note, the
interest accrued on this Note, and all of such other Obligations. The liability
of the partners of the Borrower hereunder is limited as set forth in (S)28 of
the Credit Agreement.
In case an Event of Default shall occur and be continuing, the entire
unpaid principal amount of this Note and all of the unpaid interest accrued
thereon may become or be declared due and payable in the manner and with the
effect provided in the Credit Agreement.
The Borrower and all endorsers hereby waive presentment, demand, protest
and notice of any kind in connection with the delivery, acceptance, performance
and enforcement of this Note, and also hereby assent to extensions of time of
payment or forbearance or other indulgences without notice.
THIS NOTE AND THE OBLIGATIONS OF THE BORROWER HEREUNDER SHALL BE GOVERNED
BY AND INTERPRETED AND DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK (EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed
in its name as an instrument under seal on the date first above written.
WITNESS: PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust,
its managing general partner
<PAGE>
________________________________ By:__________________________________
<PAGE>
Exhibit B
---------
LOAN REQUEST
------------
Prime Group Realty, L.P.
77 West Wacker Drive, Suite 3900
Chicago, IL 60601
[Date]
BankBoston, N.A., as Agent
100 Federal Street
Boston, MA 02110
Ladies and Gentlemen:
Re: Loan Request under Credit Agreement
dated as of November 17, 1997 as amended
Pursuant to (S)2.5 of the Credit Agreement dated as of November 17, 1997,
as amended, among you, certain other Lenders and us (the "Credit Agreement"), we
hereby request that you make a Loan as follows:
(i) Principal amount requested: $________________________
(ii) Proposed Borrowing Date: ___________________________
(iii) Interest Period: ___________________________________
(iv) Type: _______________________________________________
(v) Purpose of Loan: __________________________________________________
This Loan Request is submitted pursuant to, and shall be governed by, and
subject to satisfaction of, the terms, conditions and provisions set forth in
(S)2.5 of the Credit Agreement.
The undersigned hereby further certifies to you that it is in compliance
with the covenants specified in (S)9 of the Credit Agreement, and will remain in
compliance with such covenants after the making of the requested Loan, as
evidenced by a Compliance Certificate in the form of Exhibit C to the Credit
Agreement of even date herewith delivered to you simultaneously with this Loan
Request.
<PAGE>
We also understand that if you grant this request this request obligates us
to accept the requested Loan on such date. All terms defined in the Credit
Agreement and used herein without definition shall have the meanings set forth
in (S)1.1 of the Credit Agreement.
The undersigned hereby certifies to you, in accordance with the provisions
of (S)11.1 of the Credit Agreement, that the representations and warranties
contained in the Credit Agreement and in each document and instrument delivered
pursuant to or in connection therewith were true as of the date as of which they
were made, are also true at and as of the date hereof, and will also be true at
and as of the proposed Borrowing Date of the Loan requested hereby, in each case
except as otherwise permitted pursuant to the provisions of (S)11.1 of the
Credit Agreement, and no Default or Event of Default has occurred and is
continuing.
Very truly yours,
Prime Group Realty, L.P.
By: Prime Group Realty Trust,
Its managing general partner
By:_______________________________
_______________________________
Its:________________________
<PAGE>
Exhibit C
---------
Prime Group Realty, L.P.
77 West Wacker Drive, Suite 3900
Chicago, IL 60601
Compliance Certificate under
Credit Agreement dated as of November 17, 1997
The undersigned, a Responsible Officer of Prime Group Realty Trust, general
partner of Prime Group Realty, L.P. (the "Borrower"), hereby certifies on behalf
of the Borrower as of the date hereof the following:
1. No Defaults. I have read a copy of the Credit Agreement dated as of
November 17, 1997 as amended (the "Credit Agreement") among the Borrower,
BankBoston, N.A., the other lending institutions party thereto, and BankBoston,
N.A., as Agent. Terms used herein and not otherwise defined herein shall have
the meanings set forth in (S)1.1 of the Credit Agreement. No Default is
continuing in the performance or observance of any of the covenants, terms or
provisions of the Credit Agreement or any of the other Loan Documents. Without
limiting the foregoing, the Borrower has not taken any actions which are
prohibited by the negative covenants set forth in (S)8 of the Credit Agreement.
Attached hereto as Appendix I are all relevant calculations needed to determine
whether the Borrower is in compliance with (S)9, (S)8.3(e), (g) and (h) and
(S)8.7 of the Credit Agreement as of the end of the most recently completed
fiscal quarter (except that in the case of Compliance Certificates delivered
pursuant to (S)2.5, (S)2.9(b) (S)11.1, (S)5.5 or (S)8.4(b), the calculations
determining compliance with (S)9.1, (S)9.2 and (S)9.3 are based on a Pro Forma
Principal Amount (after giving effect to the proposed transaction) and is in
compliance with (S)8.7 of the Credit Agreement for the most recently completed
fiscal year.
2. No Material Changes, Etc. Except as disclosed on Appendix II hereto,
since the [date of most recent financial statements furnished to the Agent and
the Lenders], there have occurred no materially adverse changes in the financial
condition or business of the Borrower as shown on or reflected in the balance
sheet of the Borrower as at such date other than (a) changes in the ordinary
course of business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial condition of the
Borrower and (b) changes resulting from the making of the Loans and the
transactions contemplated by the Credit Agreement.
3. No Materially Adverse Contracts, Etc. Neither the Borrower nor the
Company is subject to any charter, corporate, trust, partnership or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected, in the reasonable judgment of the Company's officers, in the future to
have a Materially Adverse Effect. Neither the Borrower nor the Company is a
party to any contract or agreement that has or is expected, in the reasonable
judgment of the Company's officers, to have a Materially Adverse Effect.
Prime Group Realty, L.P.
By: Prime Group Realty Trust,
<PAGE>
Its managing general partner
By:_______________________________
_______________________________
Its:___________________________
Date:
<PAGE>
Appendix I
----------
FINANCIAL COVENANT CALCULATIONS
-------------------------------
Note: Unless otherwise indicated all calculations are as of _________________ or
for the fiscal quarter ending on such date (the "Fiscal Quarter").
1. Appraisal Value [(S)9.1]
(a) Pro Forma Principal Amount $_____________
(b) Collateral Value of Mortgaged $_____________
Properties (see attached Schedule
of Collateral Values)
(c) 60% of line (b) $____________
(d) Collateral Value of Assigned Mortgaged $____________
Properties (see attached Schedule
of Collateral Values)
(e) 50% of line (d) $____________
(f) Sum of lines (c) and (e) $____________
COVENANT: (a) should be less than (f)
<PAGE>
<TABLE>
2. Minimum Debt Service Coverage [(S)9.2]
<S> <C>
(a) Net Operating Income for all of the Mortgaged Properties: $_____________
(b) Pro Forma Debt Service Charges for Mortgaged
Properties based on three monthly payments of
mortgage style amortization of the Pro Forma
Principal Amount of $_______________ amortized
over 25 years at _______% per annum, being the
greater of the current average interest rate on the Loans
or 1.75% above the current ten year U.S. Treasury bill yield: $_____________
CALCULATIONS: (a)/(b) = _________ which is not less than 1.5
3. Total Liabilities to Total Adjusted Assets [(S)9.3]
(a) Total Liabilities: $_____________
(b) Cash and cash equivalents: $_____________
(c) EBITDA last quarter: $_____________
(d) EBITDA previous quarter: $_____________
(e) Annualized EBITDA [(c) + (d) times 2]: $_____________
(f) Line (e) divided by 0.0975: $_____________
(g) Total Adjusted Assets [(b) + (f)]: $_____________
CALCULATIONS: (a)/(g) = ____________ which is less than 55%
4. Minimum Tangible Net Worth [(S)9.4]
(a) Total Assets (GAAP assets plus depreciation
on Real Estate Assets) $_____________
(b) Total Liabilities (same as line 3(a)) $_____________
(c) Intangibles $_____________
(d) Tangible Net Worth [(a)-(b)-(c)] $_____________
(e) Net Offering Proceeds $_____________
(f) $350,000,000 plus .75 times (e) $_____________
COVENANT: Line (d) should exceed line (f)
5. Total Operating Cash Flow to Interest Expense [(S)9.5]
(a) EBITDA (same as line 3(c)) $_____________
(b) Gross leasable area of all Real Estate Assets _____________
(c) Reserve Amount ((b) times $0.25 divided by 4) $_____________
(d) Total Operating Cash Flow [(a) - (c)] $_____________
(e) Interest Expense (includes capitalized interest) $_____________
</TABLE>
<PAGE>
CALCULATIONS: (d)/(e) = _____ which is not less than 2.0
<TABLE>
6. EBITDA to Fixed Charges [(S)9.6]
<S> <C>
(a) EBITDA (same as line 3(c)) $_____________
(b) Interest Expense (same as line 5(e)) $_____________
(c) Principal installments and current maturities
not refinanced $_____________
(d) Preferred dividends and distributions $_____________
(e) Fixed Charges (sum of lines (b), (c), and (d)) $_____________
CALCULATIONS: (a)/(e) = ____________which is not less than 1.75
7. Permitted Investments [(S)8.3(e), (g) and (h)]
Attached hereto is a Schedule of all (a) Investments in
mortgages and notes receivable, (b) Permitted
Developments in process as of ________________
and (c) Investments in undeveloped land.
(a) Investments in mortgages and notes receivable
(excluding Mortgages the acquisition of which
has been expressly approved by the Requisite Lenders) $_____________
(b) Investments in Permitted Developments $_____________
(c) Total Adjusted Assets (same as line 3(g)) $_____________
(d) 20% of Total Adjusted Assets $_____________
(e) Investments in undeveloped land $_____________
(f) 10% of Total Adjusted Assets $_____________
COVENANT:
Line (a) should not exceed $25,000,000
Line (b) should not exceed line (d)
Line (e) should not exceed line (f)
8. Distributions [(S)8.7]
(a) Total Distributions during most recently ended $_____________
fiscal year
(b) Funds From Operations for said fiscal year $_____________
(c) Total Distributions during most recently ended
fiscal quarter $_____________
(d) Funds from Operations for fiscal quarter referenced
in (c) $_____________
(e) Total Distributions during the fiscal quarter preceding
the fiscal quarter referenced in (c) $_____________
</TABLE>
<PAGE>
<TABLE>
<S> <C>
(f) Funds from Operations during fiscal quarter referenced
in (e) $_____________
(g) Total Distributions during the fiscal quarter preceding
the fiscal quarter referenced in (e) $_____________
(h) Funds from Operations during fiscal quarter referenced
in (g) $_____________
</TABLE>
CALCULATIONS: (a)/(b) = _____% which is less than 90%
(c)/(d) = _____%
(e)/(f) = _____%
(g)/(h) = _____%
At least one of the three percentages immediately above is less than 100%
<PAGE>
SCHEDULE OF COLLATERAL VALUES
<TABLE>
<CAPTION>
Borrowing
Mortgaged NOI NOI Reserve Cap Base Appraised Collateral
Property Last Q Previous Q Amount Rate Value Value Value
- -------- ------ ---------- ------- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Totals:
- -------
</TABLE>
<PAGE>
SCHEDULE OF
PERMITTED INVESTMENTS
I. Mortgages:
---------
Location of Security Maker of Note Cost Outstanding Balance
- -------------------- ------------------ -------------------
<TABLE>
<CAPTION>
II. Developments:
------------
Scheduled
Project Location Size (sq. ft.) Total Project Cost Start Date Completion Date
- --------------- -------------- ------------------ ---------- ---------------
<S> <C> <C> <C> <C>
</TABLE>
III. Undeveloped Land:
----------------
Land Location Size (acres) Cost
------------- ------------ ----
<PAGE>
APPENDIX II
-----------
MATERIAL CHANGES
----------------
<PAGE>
Exhibit D
---------
LETTER OF CREDIT REQUEST
------------------------
Prime Group Realty, L.P.
77 West Wacker Drive, Suite 3900
Chicago, IL 60601
[Date]
BankBoston, N.A., as Agent
100 Federal Street
Boston, MA 02110
Ladies and Gentlemen:
Re: Letter of Credit Request under Credit
Agreement dated as of November 17, 1997 as amended
Pursuant to (S)2.9 of the Credit Agreement dated as of November 17, 1997,
as amended, among you, Prime Group Realty Trust, certain other Lenders and us
(the "Credit Agreement"), we hereby request that you issue [extend or renew, if
applicable] a Letter of Credit as follows:
(i) Name and address of beneficiary:
(ii) Face amount: $____________________
(iii) Proposed Issuance Date: ________________________
Proposed Expiration Date: _______________________
(iv) Other terms and conditions as set forth in the proposed form of
Letter of Credit attached hereto.
(v) Purpose of Letter of Credit:
<PAGE>
This Letter of Credit Request is submitted pursuant to, and shall be
governed by, and subject to satisfaction of, the terms, conditions and
provisions set forth in (S)2.9 of the Credit Agreement.
The undersigned hereby further certifies to you that it is in compliance
with the covenants specified in (S)9 of the Credit Agreement, and will remain in
compliance with such covenants after the Outstanding Principal Amount is
adjusted to include the face amount of the requested Letter of Credit, as
evidenced by a Compliance Certificate in the form of Exhibit C to the Credit
Agreement of even date herewith delivered to you simultaneously with this Letter
of Credit Request.
We also understand that if you grant this request this request obligates us
to accept the requested Letter of Credit [or extension or renewal thereof] and
pay the issuance fee [or the renewal fee] and Letter of Credit fee as required
by (S)2.9(c). All terms defined in the Credit Agreement and used herein without
definition shall have the meanings set forth in (S)1.1 of the Credit Agreement.
The undersigned hereby certifies to you, in accordance with the provisions
of (S)11.1 of the Credit Agreement, that the representations and warranties
contained in the Credit Agreement and in each document and instrument delivered
pursuant to or in connection therewith were true as of the date as of which they
were made, are also true at and as of the date hereof, and will also be true at
and as of the proposed issuance date of the Letter of Credit requested hereby,
in each case except as otherwise permitted pursuant to the provisions of (S)11.1
of the Credit Agreement, and no Default or Event of Default has occurred and is
continuing.
Very truly yours,
Prime Group Realty, L.P.
By: Prime Group Realty Trust,
Its general partner
By: _______________________________
_______________________________
Its:_____________________________
<PAGE>
EXHIBIT F
---------
FORM OF
ASSIGNMENT AND ACCEPTANCE
Dated _____________
Reference is made to the Credit Agreement, dated as of November 17, 1997
(as amended and in effect from time to time, the "Agreement"), among Prime Group
Realty, L.P., a Delaware limited partnership (the "Borrower"), Prime Group
Realty Trust, a Maryland real estate investment trust (the "Company"),
BankBoston, N.A., the other Lenders and BankBoston, N.A. as agent (the "Agent")
for itself and the other Lenders. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to such terms in the
Agreement.
_______________________________________________________________________________
(the "Assignor") and __________________________________________________________
(the "Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the Assignee
hereby purchases and assumes from the Assignor, a portion of the Assignor's
rights and obligations under the Agreement which relates to $____________ of its
Commitment and a Commitment Percentage of __% of all Loans and Letters of Credit
as of the Effective Date (as hereinafter defined).
2. The Assignor (i) represents that as of the date hereof, its Commitment
(without giving effect to assignments thereof which have not yet become
effective) is $__________ and its Commitment Percentage with respect thereto is
____%, and the outstanding balance of its Loans (unreduced by any assignments
thereof which have not yet become effective) is $__________; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Agreement, the other Loan Documents or any other
instrument or document furnished pursuant thereto on the status or value of any
Collateral, other than that it is the legal and beneficial owner of the interest
being assigned by it hereunder and that such interest is free and clear of any
adverse claim; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower, the
Company or any of their Subsidiaries or any other person which may be primarily
or secondarily liable in respect
<PAGE>
of any of the Obligations or any of their obligations under the Agreement or the
other Loan Documents or any other instrument or document delivered or executed
pursuant thereto; and (v) attaches the Note delivered to it under the Agreement
and requests that the Borrower exchange such Note for new Notes payable to each
of the Assignor and the Assignee as follows:
Notes Payable to Amount
the Order of: of Note
- ------------- -------
[Name of Assignor] [($_____)]
[Name of Assignee] [($_____)]
3. The Assignee (i) represents and warrants that it is legally authorized
to enter into this Assignment and Acceptance; (ii) confirms that it has received
a copy of the Agreement, together with copies of the most recent financial
statements delivered pursuant to (S)(S)6.4 and 7.4 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (iii) agrees
that it will, independently and without reliance upon the Assignor, any other
Lender or the Agent and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions and review
and analysis of the granting and perfecting of any purported liens and the
status and value of any Collateral in taking or not taking action under the
Agreement; (iv) confirms that it is an Eligible Assignee; (v) appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers as are reasonably incidental thereto pursuant to the terms of the
Agreement and the other Loan Documents; and (vi) agrees that it will perform all
the obligations which by the terms of the Agreement are required to be performed
by it as a Lender in accordance with the terms of the Agreement.
4. The effective date for this Assignment and Acceptance shall be
____________________________ (the "Effective Date"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Agent for acceptance
and recording in the Register by the Agent. This Assignment and Acceptance may
be executed in several counterparts and by each party on a separate counterpart,
each of which when so executed and delivered shall be an original, and all of
which together shall constitute one instrument. In proving this Assignment and
Acceptance it shall not be necessary to produce or account for more than one
such counterpart signed by the party against whom enforcement is sought.
5. Upon such acceptance and recording, from and after the Effective Date,
(i) the Assignee shall be a party to the Agreement and, to the extent provided
in this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder, and
<PAGE>
(ii) the Assignor shall, with respect to that portion of its interest under the
Agreement assigned hereunder relinquish its rights and be released from its
obligations under the Agreement.
6. Upon such acceptance and recording, from and after the Effective Date,
the Agent shall make all payments in respect of the interest assigned hereby
(including payments of principal, interest, fees and other amounts) to the
Assignee. The Assignor and Assignee shall make all appropriate adjustments in
payments for periods prior to the Effective Date by the Agent or with respect to
the making of this assignment directly between themselves.
7. THIS ASSIGNMENT AND ACCEPTANCE IS INTENDED TO TAKE EFFECT AS A SEALED
INSTRUMENT TO BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK.
IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned
has caused this Assignment and Acceptance to be executed on its behalf by its
officer thereunto duly authorized, as of the date first above written.
[NAME OF ASSIGNOR]
By:_________________________________
Title:________________________________
[NAME OF ASSIGNEE]
By:_________________________________
Title:______________________________
<PAGE>
SCHEDULE 1
Lenders; Domestic and Eurodollar Lending Offices
------------------------------------------------
BankBoston, N.A.
100 Federal Street
Boston, MA 02110
(Domestic and Eurodollar)
Prudential Securities Credit Corporation
One New York Plaza
New York, New York 10292
(Domestic and Eurodollar)
Societe Generale
Trammel Crow Center
2001 Ross Avenue, Suite 4900
Dallas, TX 75201
(Domestic and Eurodollar)
Commerzbank AG
311 South Wacker Drive
Suite 5800
Chicago, IL 60606
(Domestic and Eurodollar)
Banque Nationale de Paris
209 S. LaSalle Street
Chicago, IL 60604
(Domestic and Eurodollar)
<PAGE>
SCHEDULE 1.1
Mortgaged Properties Fee Owner
-------------------- ---------
1. Donnelley Building,
77 West Wacker Drive, Chicago, IL 77 West Wacker Limited
Partnership
2. Hilton Parking Garage, Knoxville, TN Triad Parking Company, Ltd.
3. SunTrust Bank Bldg., 201 4th Ave., N.,
Nashville, TN Nashville Office Building I,
Ltd.
4. The Weston, 4823 Kingston Pike,
Knoxville, TN Old Kingston Properties, Ltd.
5. One Centre Square, 620 Market St.,
Knoxville, TN Professional Plaza, Ltd.
6. Two Centre Square, 625 Gay St.,
Knoxville, TN Centre Square II, Ltd.
Assigned Mortgaged Properties Owner of Assigned Note
----------------------------- ----------------------
7. Continental Towers, Rolling Meadows, Borrower
Cook County, Illinois
<PAGE>
SCHEDULE 1.2
Commitments
-----------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Lender Commitment Temporary Commitment Commitment
Commitment % until % after
Commitment Commitment
Decrease Date Decrease
Date
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BankBoston, N.A. $ 62,500,000 $ 5,000,000 33.75% 32.89474%
- --------------------------------------------------------------------------------
Prudential Securities $ 62,500,000 $ 5,000,000 33.75% 32.89474%
Credit Corporation
- --------------------------------------------------------------------------------
Societe Generale $ 25,000,000 12.5% 13.1579%
- --------------------------------------------------------------------------------
Commerzbank, AG $ 20,000,000 10% 10.52631%
- --------------------------------------------------------------------------------
Banque Nationale de $ 20,000,000 10% 10.52631%
Paris
- --------------------------------------------------------------------------------
Total $190,000,000 $10,000,000 100% 100%
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
SCHEDULE 1.4
Letters of Credit
-----------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------
Beneficiary IRB Project Face Amount
----------- ----------- -----------
- ------------------------------------------------------------------------------
<S> <C> <C>
First Tennessee Bank N.A. Nashville Office Building I, Ltd. $ 4,915,069.00
- ------------------------------------------------------------------------------
First Tennessee Bank N.A. Old Kingston Properties, Ltd. $ 3,583,905.00
- ------------------------------------------------------------------------------
First Tennessee Bank N.A. Professional Plaza, Ltd. $ 9,215,754.00
- ------------------------------------------------------------------------------
First Tennessee Bank N.A. Centre Square II, Ltd. $ 9,215,754.00
- ------------------------------------------------------------------------------
TOTAL $26,930,482.00
- -----
- ------------------------------------------------------------------------------
</TABLE>
<PAGE>
Exhibit 10.33
FOURTH AMENDMENT TO CREDIT AGREEMENT
------------------------------------
This Fourth Amendment to Credit Agreement is made as of the 24th day of
April, 1998 by and among PRIME GROUP REALTY, L.P., a Delaware limited
partnership (the "Borrower"), PRIME GROUP REALTY TRUST, a Maryland trust (the
"Company") and BANKBOSTON, N.A., a national banking association ("BankBoston"),
PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware corporation ("Prudential"),
the other lending institutions which are from time to time listed on Schedule 1,
(collectively, with BankBoston and Prudential, the "Lenders") and BANKBOSTON,
N.A., as agent for itself and such other lending institutions (the "Agent").
WHEREAS, the parties hereto are parties to that certain Credit Agreement
dated as of November 17, 1997 as amended by First Amendment to Credit Agreement
dated as of December 15, 1997 and by Second Amendment to Credit Agreement dated
as of March 16, 1998 and as amended and restated by Third Amendment to Credit
Agreement dated as of March 30, 1998 (the "Existing Agreement"); and
WHEREAS, the parties have agreed to amend the Existing Agreement to further
modify the definitions of Collateral Value and Commitment Decrease Date.
NOW, THEREFORE, the parties hereby agree that effective upon the date
hereof the Existing Agreement is amended as follows:
1. Definitions: (S)1.1 of the Existing Agreement is amended to provide
that the following terms shall have the following meanings and, to the extent
that any of the following terms are already defined in the Existing Agreement,
such definitions shall be deemed to be amended and restated by the following
definitions:
Collateral Value. With respect to each Mortgaged Property an amount equal
to the lesser of its Appraised Value or its Borrowing Base Value, provided that
the Collateral Value of an Assigned Mortgaged Property shall be an amount equal
to the least of: (i) its Appraised Value, (ii) its Borrowing Base Value, (iii)
the Borrower's net acquisition cost for the Assigned Note and related documents
or (iv) the outstanding principal amount of the applicable Assigned Note and
provided that effective on May 15, 1998 the Collateral Value of the Continental
Towers Property shall become zero.
Commitment Decrease Date. The earlier of (i) the date that the Continental
Towers Property is released as an Assigned Mortgaged Property or (ii) May 15,
1998.
2. Amendment Fee. As consideration for this Amendment the Borrower shall
pay to the Agent, upon execution hereof, an Amendment Fee of $100,000.00. The
Agent shall promptly distribute such Amendment Fee among the Lenders in
proportion to their respective Commitment Percentages applicable prior to the
Commitment Decrease Date.
<PAGE>
3. Representations and Warranties. The Borrower and the Company represent
and warrant that each of the representations and warranties contained in (S)6 is
true, correct and complete in all material respects as of the date hereof to the
same extent as though made on such date and that no Default or Event of Default
has occurred and is continuing on the date hereof.
4. Effectiveness of Loan Documents. The Borrower hereby confirms that
each of the Security Documents shall continue to secure the payment and
performance of all of the Obligations under the Existing Agreement as amended
hereby and the Borrower's obligations under the Security Documents shall
continue to be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Every reference contained in the
Loan Documents to the Credit Agreement shall mean and be a reference to the
Existing Agreement as amended hereby and as the Credit Agreement may be further
amended. Except as specifically amended by this Amendment, the Existing
Agreement and each of the Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
5. Miscellaneous. This Amendment shall be governed by, interpreted and
construed in accordance with all of the same provisions applicable under the
Existing Agreement including, without limitation, all definitions set forth in
(S)1.1, the rules of interpretation set forth in (S)1.2, the provisions relating
to governing law set forth in (S)20, the provisions relating to counterparts in
(S)22 and the provision relating to severability in (S)26.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as a
sealed instrument as of the date first set forth above.
WITNESS: BANKBOSTON, N.A.
[illegible] /s/ Lori Y. Litow
____________________________ By:_____________________________________
Lori Y. Litow
_____________________________________
Vice President
Its:_________________________________
PRUDENTIAL SECURITIES CREDIT CORPORATION
Fred Robistelli /s/ Jeff K. French
____________________________ By:_____________________________________
Jeff K. French
_____________________________________
Vice President
Its:_________________________________
SOCIETE GENERALE
[illegible] /s/ M. Scott Gosslee
____________________________ By:_____________________________________
M. Scott Gosslee
_____________________________________
Its:_________________________________
<PAGE>
COMMERZBANK AG
<TABLE>
<CAPTION>
<C> <S> <C>
- ----------------------------
By: /S/ E. Marcus Perry /S/ James I. Henry
- ---------------------------- ------------------------ -----------------------
E. Marcus Perry James I. Henry
Its: Assistant Treasurer Senior Vice President
BANQUE NATIONALE DE PARIS
/S/ Debby Karen By: /S/ William J. Krummen
- ---------------------------- ------------------------------------
William J. Krummen
Its: Vice President and Manager
PRIME GROUP REALTY TRUST
/S/ Patrick L. McGaughy By: /S/ William M. Karnes
- ---------------------------- ------------------------------------
William M. Karnes
Its: Executive Vice President and
Chief Financial Officer
PRIME GROUP REALTY, L.P.
By: PRIME GROUP REALTY TRUST,
its managing general partner
/S/ Patrick L. McGaughy By: /S/ William M. Karnes
- ---------------------------- ------------------------------------
William M. Karnes
Its: Executive Vice President and
Chief Financial Officer
</TABLE>
<PAGE>
Exhibit 10.35
PURCHASE AGREEMENT
PURCHASE AGREEMENT, dated as of March 25, 1998, by and among Prime Group
Realty Trust, a Maryland real estate investment trust, Prime Group Realty, L.P.,
a Delaware limited partnership, and each of the purchasers named on the
signature pages hereof.
In consideration of the mutual covenants and agreements set forth herein
and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Agreement" means this Purchase Agreement, as the same may be amended,
supplemented or modified from time to time in accordance with the terms hereof.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the State of
New York generally are authorized or required by law or other government actions
to close.
"Charter" means the Company's Declaration of Trust, as amended by
Articles of Amendment and Restatement and in effect on the date hereof.
"Closing" has the meaning provided therefor in Section 2.2(a).
"Closing Date" has the meaning provided therefor in Section 2.2(a).
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations thereunder as in effect on the date hereof.
"Commission" means the Securities and Exchange Commission or any
similar agency then having jurisdiction to enforce the Securities Act.
"Common Shares" means the Company's common shares of beneficial
interest, par value $.01 per share.
<PAGE>
"Company" means Prime Group Realty Trust, a Maryland real estate
investment trust.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Indemnified Parties" has the meaning provided therefor in Section
5.4(a).
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
encumbrance, charge or security interest of any kind in or on such asset or the
revenues or income thereon or therefrom.
"Material Adverse Change" has the meaning provided therefor in Section
3.1(f).
"Material Adverse Effect" has the meaning provided therefor in Section
3.1(a).
"NYSE" means the New York Stock Exchange.
"Operating Partnership" means Prime Group Realty, L.P., a Delaware
limited partnership.
"Person" means an individual or a corporation, partnership, limited
liability company, trust, incorporated or unincorporated association, joint
venture, joint stock company, government (or an agency or political subdivision
thereof) or other entity of any kind.
"Private Placement Memorandum" means the Company's Private Placement
Memorandum, dated March 19, 1998, together with and including all documents
designated on the face thereof as supplements or amendments thereto, with
respect to the offering of Common Shares to a limited number of "qualified
institutional buyers" (as defined in Rule 144A under the Securities Act) and
other "accredited investors" (as defined in Rule 501(a) under the Securities
Act).
"Properties" means the properties and assets owned by the Company or
its Subsidiaries.
"Purchaser" means each Person from time to time listed on the
signature pages of this Agreement, and its permitted successors and assigns as
provided herein, including any Person who becomes party hereto by executing and
delivering a signature page hereto after the date of this Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, substantially in the form of Exhibit 1 hereto, as
-2-
<PAGE>
the same may be amended, supplemented or otherwise modified in accordance with
its terms.
"Requirements" has the meaning provided therefor in Section 3.1(m).
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Shares" means the Common Shares purchased by a Purchaser pursuant to
this Agreement.
"Subsidiary" means, with respect to any Person, (i) a corporation, a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a Subsidiary of such Person or by such Person and a Subsidiary thereof or
(ii) any other Person (other than a corporation) in which such Person, a
Subsidiary thereof or such Person and a Subsidiary thereof, directly or
indirectly, at the date of determination thereof has at least a majority
ownership interest. When used herein without reference to any Person,
"Subsidiary" means a Subsidiary of the Company.
ARTICLE II
PURCHASE OF COMMON SHARES
-------------------------
Section 2.1. Purchase of Common Shares. Subject to the terms and
conditions herein set forth, the Company agrees that it will sell to each
Purchaser and each such Purchaser agrees, severally and not jointly, that it
will purchase from the Company at the Closing Date the number of Common Shares
set forth on a signature page hereto at the price per Share as set forth on such
signature page.
Section 2.2. The Closing.
(a) For each Purchaser, the purchase and sale of the Shares to be
purchased by such Purchaser will take place at a closing (each, a "Closing") to
be held at the offices Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois
60601, at 10:00 a.m., Chicago time, on the first Business Day following the
execution of this Agreement by the Company and each Purchaser. The date and time
at which a Closing is to be concluded is the "Closing Date."
(b) Delivery of the Shares to be purchased by a Purchaser pursuant to
this Agreement shall be made at the Closing by delivery to such Purchaser,
against payment of the purchase price therefor as provided herein, of a share
certificate
-3-
<PAGE>
representing the total number of Shares to be purchased by such Purchaser
hereunder.
(c) Payment of the agreed purchase price for the Common Shares to be
purchased hereunder shall be made by or on behalf of each Purchaser by wire
transfer of same day funds to such account of the Company as shall have been
furnished to the Purchasers on or before the first Business Day prior to the
Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
Section 3.1. Representations and Warranties of the Company and the
Operating Partnership. Each of the Company and the Operating Partnership
represents and warrants, as of the date hereof and as of the Closing Date, as
follows:
(a) Organization and Good Standing of the Company. The Company is a
real estate investment trust, duly organized, validly existing and in good
standing under the laws of the State of Maryland. The Company is duly qualified
or licensed and in good standing and authorized to do business in each
jurisdiction in which the ownership or leasing of its properties or the
character of its operations makes such qualification necessary, except where the
failure to obtain such qualification, license, authorization or good standing
would not individually or in the aggregate reasonably be expected to have a
material adverse effect upon the financial condition, properties, assets,
business or results of operations of the Company and its Subsidiaries taken as a
whole (a "Material Adverse Effect"). The Company has all requisite trust power
and authority to own its assets and to carry on its businesses as presently
conducted and as presently proposed to be conducted except where a lack of such
power or authority would not reasonably be expected to have a Material Adverse
Effect.
(b) Organization and Good Standing of the Operating Partnership. The
Operating Partnership has been duly formed and is validly existing as a limited
partnership in good standing under the Delaware Revised Uniform Limited
Partnership Act. The Operating Partnership is duly qualified or licensed and
in good standing and authorized to do business in each jurisdiction in which the
ownership or leasing of its properties or the character of its operations makes
such qualification necessary, except where the failure to obtain such
qualification, license, authorization or good standing would not individually or
in the aggregate reasonably be expected to have a Material Adverse Effect. The
Operating Partnership has all requisite partnership and authority to own its
assets and to carry on its businesses as presently conducted and as presently
proposed to be conducted except where a lack of such power or authority would
not reasonably be expected to have a Material Adverse Effect.
-4-
<PAGE>
(c) Organization and Good Standing of Subsidiaries. The Subsidiaries
of the Company (other than the Operating Partnership) have each been duly
organized and is validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation. The Subsidiaries of the Company
(other than the Operating Partnership) are each duly qualified or licensed and
in good standing and authorized to do business in each jurisdiction in which the
ownership or leasing of its respective properties or the character of its
respective operations makes such qualification necessary, except where the
failure to obtain such qualification, license, authorization or good standing
would not individually or in the aggregate reasonably be expected to have a
Material Adverse Effect. Each of the Subsidiaries of the Company (other than the
Operating Partnership) has all requisite corporate, partnership or limited
liability company power and authority to own its respective assets and to carry
on its respective businesses as presently conducted and as presently proposed to
be conducted except where a lack of such power or authority would not reasonably
be expected to have a Material Adverse Effect.
(d) Authorizations. Each of the Company and the Operating
Partnership has all requisite trust or partnership power and authority to
execute, deliver and perform its obligations under this Agreement and, in the
case of the Company, the Registration Rights Agreement. The execution and
delivery by the Company and the Operating Partnership of this Agreement and by
the Company of the Registration Rights Agreement and the consummation of the
transactions contemplated hereby and thereby have been duly and validly
authorized by the Company and the Operating Partnership, as applicable.
(e) Capitalization. The authorized beneficial interests of the
Company consist of (i) 100 million Common Shares, (ii) 65 million excess shares
of beneficial interest, par value $.01 per share, and (iii) 30 million preferred
shares of beneficial interest, par value $.01 per share. All of the outstanding
shares of beneficial interest of the Company have been duly and validly issued,
fully paid and non-assessable and are not subject to any preemptive rights of
other shareholders. All of the issued and outstanding partnership interests of
the Operating Partnership have been duly and validly authorized and issued.
(f) No Material Adverse Change. Except as disclosed in the Private
Placement Memorandum, there has been no material adverse change in the financial
condition, properties, assets, business or results of operations of the Company
and its Subsidiaries taken as a whole (a "Material Adverse Change") subsequent
to November 11, 1997.
(g) Conflicting Agreements and Other Matters. Assuming the accuracy
of the representations and warranties of, and the performance of the agreements
of, the Purchasers set forth in
-5-
<PAGE>
Section 3.2 and elsewhere herein, neither the execution and delivery of this
Agreement and the Registration Rights Agreement, nor fulfillment of nor
compliance with the terms and provisions hereof or thereof, nor the issuance of
the Shares, will (i) violate any provision of any federal or state law, statute,
rule or regulation, or any order, judgment, injunction, decree, determination or
award of any federal or state court or governmental authority presently in
effect or in effect at the Closing Date having applicability to the Company or
the Operating Partnership except such violations as would not reasonably be
expected to have a Material Adverse Effect, (ii) conflict with or result in a
breach of or constitute a default under the Charter or Bylaws of the Company or
the Certificate of Limited Partnership or Amended and Restated Agreement of
Limited Partnership of the Operating Partnership, as amended, of the Operating
Partnership, (iii) require any consent, approval or notice under, or conflict
with or result in a breach of or constitute a default under, any note, bond,
mortgage, license, indenture or loan or credit agreement, or any other agreement
or instrument, to which the Company or any of its Subsidiaries is a party or by
which any of their respective properties is bound, except such consents,
approvals or notices which if not obtained would not reasonably be expected to
have a Material Adverse Effect, and except such conflicts, breaches or defaults
as would not reasonably be expected to have a Material Adverse Effect or (iv)
result in, or require the creation or imposition of any Lien upon or with
respect to any of the properties now owned or hereafter acquired by the Company
or any of its Subsidiaries.
(h) Due Execution, etc. This Agreement constitutes, and the
Registration Rights Agreement (in the case of the Company) will constitute, when
executed and delivered by the Company and the Operating Partnership, as
applicable, on the Closing Date, a legal, valid and binding obligation of the
Company and the Operating Partnership, as applicable, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or affecting creditors'
rights generally and to general principles of equity.
(i) Litigation, Proceedings, etc. Except as disclosed in the Private
Placement Memorandum, there is no action, suit, notice of violation, proceeding
or investigation pending or, to the best knowledge of the Company and the
Operating Partnership, threatened against or affecting the Company, the
Operating Partnership or any of their Subsidiaries or any of their respective
properties before or by any court, governmental or administrative agency or
regulatory authority (federal, state, county or local) which (i) challenges the
legality, validity or enforceability of this Agreement or the Registration
Rights Agreement or the legality or validity of the Shares, (ii) would
reasonably be expected to have a Material Adverse Effect or (iii) would impair
the ability of
-6-
<PAGE>
the Company or the Operating Partnership to perform fully on a timely basis any
obligations which it has under this Agreement or, in the case of the Company,
the Registration Rights Agreement.
(j) No Default or Violation. None of the Company, the Operating
Partnership or any of their Subsidiaries (i) is in violation of its respective
charter, bylaws, partnership agreement, limited liability company agreement or
other organizational document, (ii) is in breach of or in default under any
indenture, loan or credit agreement or any other agreement or instrument to
which it is a party or by which it or any of its properties is bound, except
such breaches or defaults as would not reasonably be expected to have a Material
Adverse Effect, (iii) is in violation of any order, decree, judgment or
injunction of any court, arbitrator or governmental body, except for such
violations as would not reasonably be expected to have a Material Adverse
Effect, or (iv) is in violation of any statute, rule or regulation of any
governmental authority which would (y) adversely affect the legality, validity
or enforceability of this Agreement or the Registration Rights Agreement or (z)
reasonably be expected to have a Material Adverse Effect.
(k) Status of Shares. The issuance and sale of the Shares have been
duly authorized by all necessary trust action on the part of the Company and
such Shares, when delivered to the Purchasers at the Closing against payment
therefor as provided herein, will be validly issued, fully paid and
nonassessable, and the issuance and sale of such Shares is not and will not be
subject to preemptive rights, subscription rights, conversion rights or any
other encumbrances or other contractual rights of any other shareholder of the
Company.
(l) Governmental Consents. Except as may be required by any state or
foreign securities or blue sky laws or as disclosed in or contemplated by the
Private Placement Memorandum or as may be required under any applicable law in
connection with the performance by the Company of its obligations under the
Registration Rights Agreement, and assuming the accuracy of the representations
and warranties of, and the performance of the agreements of, the Purchasers set
forth in Section 3.2 and elsewhere herein, no authorization, consent, approval
or waiver, nor any filing, qualification or registration with, any court,
governmental agency or regulatory authority or any securities exchange is
required in connection with the execution, delivery or performance by the
Company and the Operating Partnership of this Agreement and the issuance, sale
or delivery of the Shares.
(m) Conduct of Business. The Company, the Operating Partnership and
each of their Subsidiaries have obtained all permits, licenses, franchises and
authorizations (collectively "Requirements") from any government or governmental
agency, department, commission, board, bureau, instrumentality or body or
-7-
<PAGE>
any governmental official, body or tribunal, to own or lease their respective
properties and to conduct their respective facilities and businesses as now
being conducted and as proposed to be conducted in the future as described in
the Private Placement Memorandum except where failure to do so would not
reasonably be expected to have a Material Adverse Effect. All such
Requirements, the failure of which to obtain would have a Material Adverse
Effect, are in full force and effect and not the subject of any pending or, to
the Company's and the Operating Partnership's knowledge, threatened attack by
appeal or direct proceeding or otherwise.
(n) Private Placement Memorandum. The Private Placement Memorandum
does not contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements made therein, in light
of the circumstances under which they were made, not misleading.
(o) Registration Under Exchange Act. The Company has filed a
registration statement on Form 8-A under the Exchange Act with respect to the
Common Shares, and such registration statement complied in all material respects
when filed with the rules and regulations of the Commission under the Exchange
Act.
(p) Financial Statements; Exchange Act Compliance. The financial
statements and supporting schedules included in the Company's periodic filings
filed pursuant to the Exchange Act are complete and correct in all material
respects and present fairly the consolidated financial position of the Company
and its consolidated Subsidiaries as of the dates specified and the consolidated
results of their operations for the periods specified, in each case, in
conformity with generally accepted accounting principles applied on a consistent
basis during the periods involved, except as indicated therein or in the notes
thereto. The Company has timely filed all documents required to be filed with
the Commission pursuant to the Securities Act and the Exchange Act. All such
documents, when so filed, complied in form with such Acts and did not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(q) Compliance with Laws. The Company, the Operating Partnership and
their Subsidiaries are in compliance in all material respects with all
applicable laws and regulations in all jurisdictions in which the Company, the
Operating Partnership and their Subsidiaries are presently doing business and
where the failure to effect such compliance would reasonably be expected to have
a Material Adverse Effect.
(r) Properties. (i) The Company, the Operating Partnership and their
Subsidiaries own fee simple title to all real
-8-
<PAGE>
property owned by them and have good title to all other property and assets
owned by them, in each case free and clear of all Liens other than (1) those
described in the Private Placement Memorandum and (2) those which are not
material in amount; (ii) each of the Properties that is real property complies
with all applicable codes and zoning laws and regulations, except for such
failures to comply which would not individually or in the aggregate reasonably
be expected to have a Material Adverse Effect; and (iii) neither the Company nor
the Operating Partnership has any knowledge of any pending or threatened
condemnation, zoning change or other proceeding or action that will in any
manner affect the size of, use of, improvements on, construction on, or access
to the Properties that are real properties, except such proceedings or actions
that would not reasonably be expected to have a Material Adverse Effect.
(s) Insurance. The Company, the Operating Partnership and each of
their Subsidiaries carries or is entitled to the benefits of insurance in such
amounts and covering such risks as is reasonably sufficient in the circumstances
or is customary in the industry and all such insurance is in full force and
effect.
(t) Hazardous Materials. Except as disclosed in the Private
Placement Memorandum, neither the Company nor the Operating Partnership has any
knowledge of (a) the unlawful presence of any hazardous substances, hazardous
materials, toxic substances or waste materials (collectively, "Hazardous
Materials") on any of the Properties that are real properties or (b) any
unlawful spills, releases, discharges or disposal of Hazardous Materials that
have occurred or are presently occurring from such properties as a result of any
construction on or operation and use of such properties, in either case which
presence or occurrence would reasonably be expected to have a Material Adverse
Effect. Except as disclosed in the Private Placement Memorandum, in connection
with the construction on or operation and use of the Properties that are real
properties, each of the Company and the Operating Partnership represents that,
as of the date of this Agreement, it has no knowledge of any material failure by
it to comply with all applicable local, state and federal environmental laws,
regulations, ordinances and administrative and judicial orders relating to the
generation, recycling, reuse, sale, storage, handling, transport and disposal of
any Hazardous Materials.
(u) Investment Company Act. None of the Company, the Operating
Partnership or their Subsidiaries is an "investment company" within the meaning
of the Investment Company Act of 1940, as amended, and none of the Company, the
Operating Partnership or any of their Subsidiaries intends after the date hereof
to be an "investment company" within the meaning of such Act.
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<PAGE>
Section 3.2. Representations and Warranties of the Purchasers.
(a) Investment Intent. Each Purchaser, severally and not jointly and
as to itself only, represents and warrants to the Company and the Operating
Partnership that the Shares to be acquired by it hereunder are being acquired
for its own account and with no intention of distributing or reselling such
Shares or any part thereof or interest therein in any transaction which would be
in violation of the securities laws of the United States of America or any State
or any foreign country or jurisdiction.
(b) Transfer Restrictions. If a Purchaser should decide to dispose
of any of the Shares to be purchased by it, such Purchaser covenants and agrees
that it shall do so only pursuant to an effective registration statement under
the Securities Act or pursuant to an exemption from registration under the
Securities Act. In connection with any offer, resale, pledge or other transfer
(individually and collectively, a "Transfer") of any Shares other than pursuant
to an effective registration statement, the Company may require that the
transferor of such Shares provide to the Company an opinion of counsel
experienced in the area of applicable securities laws selected by the
transferor, which counsel shall be and the form and substance of which opinion
shall be, reasonably satisfactory to the Company, to the effect that such
Transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act or any State or
foreign securities laws. Each Purchaser agrees to the imprinting, so long as
appropriate, of the following legend on certificates representing the Shares:
THE SHARES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT AS SET FORTH IN THE
FOLLOWING SENTENCE. BY ITS ACQUISITION HEREOF, THE HOLDER AGREES THAT
IT WILL NOT OFFER, RESELL, PLEDGE OR OTHERWISE TRANSFER THE SHARES
EVIDENCED HEREBY, EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, OR (B) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT SUCH AS THE EXEMPTION SET
FORTH IN RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE).
The legend set forth above may be removed if and when the Shares
represented by such certificate are disposed of pursuant to an effective
registration statement under the Securities Act or in the opinion of counsel to
the Company experienced in the area of applicable securities laws such legend is
no longer required under applicable securities laws. The share certificates
shall also bear any other legends required by applicable federal, state or
foreign securities laws, which legends may be removed when, in the opinion of
counsel to the Company experienced in the applicable securities
-10-
<PAGE>
laws, the same are no longer required under the applicable requirements of such
securities laws. The Company agrees that it will provide each Purchaser, upon
request, with a substitute share certificate or certificates not bearing such
legend at such time as such legend is no longer applicable. Each Purchaser
agrees that, in connection with any Transfer of Shares by it pursuant to an
effective registration statement under the Securities Act, such Purchaser will
comply with all prospectus delivery requirements of the Securities Act. The
Company makes no representation, warranty or agreement as to the availability of
any exemption from registration under the Securities Act with respect to any
resale of Shares. No opinion of counsel will be required to be rendered
pursuant to this subsection with respect to the Transfer of any Shares on which
the restrictive legend has been removed in accordance with the foregoing
provisions.
(c) Stop Transfer Instruction. Each Purchaser agrees that the
Company shall be entitled to make a notation on its records and give
instructions to any transfer agent of the Common Shares in order to implement
the restrictions on transfer set forth in this Agreement.
(d) Purchaser Status. Each Purchaser, severally and not jointly and
as to itself only, represents and warrants to, and covenants and agrees with,
the Company and the Operating Partnership that (i) at the time it was offered
the Shares, it was, (ii) at the date hereof, it is, and (iii) at the Closing
Date, it will be, either a "qualified institutional buyer" as defined in Rule
144A under the Securities Act or an "accredited investor" as defined in Rule
501(a) under the Securities Act, and has such knowledge, sophistication and
experience in business and financial matters so as to be capable of evaluating
the merits and risks of the prospective investment in the Common Shares, and has
so evaluated the merits and risks of such investment, and is able to bear the
economic risk of such investment and is able to afford a complete loss of such
investment, and further covenants and agrees that it will provide the Company
with financial and other information the Company may request to substantiate the
accuracy of the foregoing.
(e) Authority. Each Purchaser, severally and not jointly and as to
itself only, represents and warrants to the Company and the Operating
Partnership that (i) the purchase of the Shares to be purchased by it has been
duly and properly authorized and this Agreement has been duly executed and
delivered by it or on its behalf and constitutes the valid and legally binding
obligation of such Purchaser, enforceable against the Purchaser in accordance
with its terms, subject to bankruptcy, insolvency, reorganization, moratorium
and similar laws of general applicability relating to or affecting creditors'
rights generally and to general principles of equity; and (ii) the purchase of
the Shares to be purchased by it does not conflict with or violate its charter,
bylaws or other
-11-
<PAGE>
organizational document, or any law, regulation or court order applicable to it
or its properties or assets.
(f) Access to Information. Each Purchaser acknowledges receipt of
the Private Placement Memorandum, and further acknowledges that it has been
afforded (i) the opportunity to ask such questions as it has deemed necessary
of, and to receive answers from, representatives of the Company concerning the
terms and conditions of the offering of the Common Shares and the merits and
risks of investing in the Common Shares; (ii) access to information about the
Company, the Operating Partnership and their Subsidiaries and the financial
condition, results of operations, business, properties, management and prospects
of the Company, the Operating Partnership and their Subsidiaries sufficient to
enable it to evaluate its investment in the Common Shares; and (iii) the
opportunity to obtain such additional information which the Company or the
Operating Partnership possesses or can acquire without unreasonable effort or
expense that is necessary to verify the accuracy and completeness of the
information contained in the Private Placement Memorandum.
(g) Reliance. Each Purchaser also understands and acknowledges and
agrees that (i) the Common Shares are being offered and sold without
registration under the Securities Act in a transaction that is exempt from the
registration provisions of the Securities Act and (ii) the availability of such
exemption, depends in part on, and that the Company, and for purposes of the
opinions to be delivered to the Purchasers pursuant to Section 4.1(a), Winston &
Strawn and Miles & Stockbridge, will rely upon, the accuracy and truthfulness of
the foregoing representations and such Purchaser hereby consents to such
reliance.
(h) Broker. Each Purchaser, severally and not jointly and as to
itself only, represents and warrants to the Company and the Operating
Partnership that it has dealt with no broker, finder, placement agent or any
other person or entity acting in a similar capacity with respect to the
transactions contemplated by this Agreement.
(i) Prohibited Transactions. Except as set forth in Exhibit 2
hereto, each Purchaser, severally and not jointly and as to itself only,
represents and warrants that the Shares being purchased by it are not being
acquired, directly or indirectly, with the assets of any "employee benefit plan"
covered by the Employee Retirement Income Security Act of 1974, as amended.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
Section 4.1. Conditions Precedent to Obligations of the Purchasers. The
obligation of each Purchaser to purchase the
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<PAGE>
Shares to be purchased by it hereunder is subject, at the Closing Date, to the
prior or simultaneous satisfaction or waiver of the following conditions:
(a) Such Purchaser shall have received an opinion, addressed to it
and dated the Closing Date, of (i) Winston & Strawn, counsel for the Company,
substantially in the form of Exhibit 3-A hereto, and (ii) Miles & Stockbridge,
Maryland counsel for the Company, substantially in the form of Exhibit 3-B
hereto. In rendering the foregoing opinions, such counsel may rely as to factual
matters upon certificates or other documents furnished by officers and trustees
of the Company and by government officials, and upon such other documents as
such counsel deem appropriate as a basis for such opinion.
(b) The representations and warranties made by the Company and the
Operating Partnership herein shall be true and correct in all material respects
on and as of the Closing Date with the same effect as though such
representations and warranties has been made on and as of the Closing Date after
giving effect to the sale of the Shares hereunder and the other documents
executed in connection with the transactions contemplated herein and the Company
and the Operating Partnership shall have complied in all material respects with
all agreements hereunder required to be performed by them at or prior to the
Closing Date.
(c) Except as disclosed in the Private Placement Memorandum, there
shall not have occurred any Material Adverse Change subsequent to the date of
the Private Placement Memorandum.
(d) At the Closing Date, such Purchaser shall have received a
certificate, dated the Closing Date, signed by the President and Chief Financial
Officer of the Company in their respective capacities and not individually to
the effect set forth in Sections 4.1(b) and (c), and stating that the conditions
specified in this Section 4.1 have been satisfied at the Closing Date.
(e) At the Closing Date, such Purchaser shall have received a
certificate, dated the Closing Date, signed by the Secretary or an Assistant
Secretary of the Company in such capacity and not individually and certifying
(i) that attached thereto is a true, correct and complete copy of (A) the
Company's Charter and Bylaws, (B) the Operating Partnership's Certificate of
Limited Partnership and Amended and Restated Agreement of Limited Partnership,
as amended, (C) resolutions duly adopted by the Board of Trustees of the Company
authorizing the execution and delivery of this Agreement by the Company for
itself and on behalf of the Operating Partnership and the Registration Rights
Agreement by the Company and the issuance and sale of the Shares and (D) that
no proceedings looking toward the liquidation, dissolution or reorganization of
the Company are pending or contemplated, except
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<PAGE>
as otherwise described in the Private Placement Memorandum; (ii) the incumbency
of officers executing this Agreement and the Registration Rights Agreement; and
(iii) that attached thereto is a specimen of the share certificate for the
Common Shares.
(f) Such Purchaser shall have received a share certificate in
accordance with Section 2.2(b).
(g) The Company shall have entered into the Registration Rights
Agreement for the benefit of the Purchasers, and the Purchasers shall have
received copies of such Registration Rights Agreement duly executed by the
Company in favor of such Purchasers.
Section 4.2. Conditions Precedent to Obligations of the Company. The
obligation of the Company to issue and sell the Shares hereunder is subject, as
to each Purchaser severally and not jointly, at the Closing Date, to the prior
or simultaneous satisfaction or waiver of the following conditions:
(a) The representations and warranties made by such Purchaser herein
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties have been
made on and as of the Closing Date and the Purchaser shall have provided such
evidence thereof as the Company may reasonably request.
(b) The sale of the Common Shares hereunder shall not be prohibited
or enjoined (temporarily or permanently) by any applicable law or governmental
regulation.
(c) Such Purchaser shall have delivered payment to the Company in
accordance with Section 2.2(c).
ARTICLE V
COVENANTS
---------
Section 5.1. Listing of Common Shares; Furnishing of Information.
(a) For so long as any Purchaser or Purchasers own, in the aggregate,
not less than 1,300,000 Shares, the Company covenants to use its best efforts to
continue to be a company required to file reports under Section 13(a) or 15(d)
of the Exchange Act and cause the Shares to be listed on the NYSE.
(b) For so long as a Purchaser owns Shares, the Company covenants to
timely file (or obtain valid extensions in respect thereof) all reports required
to be filed by the Company after the date hereof pursuant to Section 13(a) or
15(d) of the Exchange Act. If the Company is not at the time required to file
reports pursuant to such sections, it will prepare and furnish to each Purchaser
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<PAGE>
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act in the time period that
such filings would have been required to have been made under the Exchange Act.
Section 5.2. Broker's or Finder's Commissions. The Company and the
Operating Partnership agree to indemnify and hold harmless each Purchaser from
and against any and all claims, demands or liabilities for broker's, finder's,
placement agent's or other similar fees or commissions payable or incurred or
alleged to have been incurred by the Company, the Operating Partnership or any
of their Subsidiaries or any Person acting or alleged to have been acting on the
Company's or the Operating Partnership's behalf, in connection with this
Agreement or the issuance or sale of the Shares.
Section 5.3. Fees and Expenses. The Company, the Operating Partnership
and each Purchaser shall pay all costs and expenses incurred by it or on its
behalf in connection with this Agreement and the transactions contemplated
hereby including, without limitation, fees and expenses of its financial
consultants, accountants and counsel.
Section 5.4. Indemnification by the Company.
(a) The Company agrees to indemnify, defend and hold harmless each
Purchaser and its officers, employees, agents, advisors, directors and
affiliates, and each other person, if any, controlling such person
(collectively, the "Indemnified Parties") from and against any and all losses,
claims, damages or liabilities (or actions in respect thereof), including costs
of defense other than costs of counsel referred to in the following paragraph,
of the Indemnified Parties (as incurred) as a result of, or based upon, relating
to or arising out of, directly or indirectly, the transactions contemplated
hereby or by the Registration Rights Agreement, as a consequence of (i) any
inaccuracy in, or breach or nonperformance of, any of the representations,
warranties, covenants or agreements made by Company in, or pursuant to this
Agreement, or (ii) any pending or threatened action brought by the Company's
shareholders or creditors or any other Person other than the Indemnified Parties
or their creditors relating to, or arising out of or in connection with,
directly or indirectly, the transactions contemplated under this Agreement;
provided, however, that the Company shall not be obligated to indemnify, defend
or hold harmless any of the Indemnified Parties for any claims based solely on
actions taken by any of the Indemnified Parties other than the performance of
the covenants and agreements to be undertaken by Purchasers pursuant to the
terms and conditions of this Agreement and any other action authorized in
writing by the Company.
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<PAGE>
(b) If any claim, demand or liability is asserted by any third party
against any Indemnified Party, the Company shall have the right, unless
otherwise precluded by applicable law, to conduct and control the defense,
compromise or settlement of any action or threatened action brought against the
Indemnified Party in respect of matters embraced by the indemnity set forth in
this Section 5.4. The Indemnified Party shall have the right to employ counsel
separate from counsel employed by the Company in connection with any such action
or threatened action and to participate in the defense thereof, but the fees and
expenses of such counsel employed by the Indemnified Party shall be at the sole
expense of the Indemnified Party unless (i) the Company shall have elected not
or, after reasonable written notice of any such action or threatened action,
shall have failed to assume or participate in the defense thereof, (ii) the
employment thereof has been specifically authorized by the Company in writing,
or (iii) the parties to any such action or threatened action (including any
impleaded parties) include both the Company and the Indemnified Party and the
Indemnified Party shall in good faith determine that there may be one or more
defenses available to the Indemnified Party that are not available to the
Company or legal conflicts of interest pursuant to applicable rules of
professional conduct between the Company and the Indemnified Party (in any which
case, the Company shall not have the right to assume the defense of such action
on behalf of the Indemnified Party), in either of which events referred to in
clauses (i), (ii) and (iii) the fees and expenses of such counsel employed by
the Indemnified Party shall be at the expense of the Company (as incurred). The
Company shall not, without the written consent of the Indemnified Party, settle
or compromise any such action or threatened action or consent to the entry of
any judgment which does not include as an unconditional term thereof the giving
by the claimant or the plaintiff to the Indemnified Party a release from all
liability in respect of such action or threatened action. Unless the Company
shall have elected not or shall have after reasonable written notice of any such
action or threatened action failed, to assume or participate in the defense
thereof, the Indemnified Party may not settle or compromise any action or
threatened action without the written consent of the Company. If, after
reasonable written notice of any such action or threatened action, the Company
neglects to defend the Indemnified Party, a recovery against the latter suffered
by it in good faith, is conclusive in its favor against the Company; provided,
however, that no such conclusive presumption shall be made if the Company has
not received reasonable written notice of the action against the Indemnified
Party. The indemnity set forth in this Section 5.4 shall survive the Closing or
termination of this Agreement.
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<PAGE>
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.1. Survival of Provisions. The representations, warranties
and covenants of the Company, the Operating Partnership and the Purchasers made
herein and any statements contained in any certificate or other written
instrument delivered pursuant to this Agreement shall remain operative and in
full force and effect regardless of (a) any investigation made by or on behalf
of any Purchaser, the Company or the Operating Partnership, as the case may be,
(b) acceptance of any of the Shares and payment by the Purchasers therefor or
(c) any termination of this Agreement.
Section 6.2. Termination. This Agreement may be terminated (as
between the party electing so to terminate it and the counterparts to which
termination is directed) by giving written notice of termination to the
applicable counterparty:
(a) By the Company at any time prior to the Closing Date; or
(b) By any Purchaser if any of the conditions specified in Section
4.1 has not been met or waived by such Purchaser pursuant to the terms of
this Agreement by the Closing Date.
Section 6.3. No Waiver; Modifications in Writing. No failure or delay on
the part of the Company or any Purchaser in exercising any right, power or
remedy hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further remedy. The remedies provided for herein are cumulative and are not
exclusive of any remedies that may be available to the Company, the Operating
Partnership or any Purchaser at law or in equity. No waiver of or provision of
this Agreement shall be effective unless signed in writing by the party entitled
to the benefit thereof, provided that notice of any such waiver shall be given
to each party hereto as set forth below. Except as otherwise provided herein,
no amendment, modification or termination of any provision of this Agreement
shall be effective unless signed in writing by or on behalf of the Company, the
Operating Partnership and each Purchaser. Any amendment, supplement or
modification of or to any of this Agreement, any waiver of any provision of this
Agreement, and any consent to any departure from the terms of any provision of
this Agreement, shall be effective only in the specific instance and for the
specific purpose for which made or given. Except where notice is specifically
required by this Agreement, no notice to or demand on any party hereto in any
case shall entitle the other party hereto to any other or further notice or
demand in similar or other circumstances.
-17-
<PAGE>
Section 6.4. Communications. All notices and demands provided for
hereunder shall be in writing, and shall be given by registered or certified
mail, return receipt requested, telecopy, courier service or personal delivery,
and, if to any Purchaser, addressed to such Purchaser as shown on the signature
pages hereof or to such other address as such Purchaser may designate to the
Company in writing and, if to any other holder of Shares, at such address as
such holder shall have furnished to the Company in writing and, if to the
Company, addressed to the Company at: Prime Group Realty Trust, 77 West Wacker
Drive, Suite 3900, Chicago, Illinois 60601, Attention: President, with a copy to
Winston & Strawn, 35 West Wacker Drive, Chicago, Illinois 60601, Attention:
Wayne D. Boberg, or to such other address as the Company may designate in
writing, and shall be deemed given when received.
Section 6.5. Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute but one and the same agreement.
Section 6.6. Binding Effect; No Assignment. The rights and obligations of
the Purchasers under this Agreement may not be assigned without the prior
written consent of the Company, which consent may be withheld in its sole
discretion. Except as expressly provided in this Agreement, this Agreement shall
not be construed so as to confer any right or benefit upon any Person other than
the parties to this Agreement, and their respective successors and permitted
assigns. This Agreement shall be binding upon the Company and the Operating
Partnership and each Purchaser, and their respective successors and permitted
assigns.
Section 6.7. Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE, WITHOUT REGARD TO
PRINCIPLES OF CONFLICT OF LAWS. By execution of this Agreement, each Purchaser
agrees for the benefit of the Company and the Operating Partnership that any
action or proceeding relating to this Agreement or the Common Shares shall be
brought in the courts of the State of New York or of the United States sitting
in New York City, the Borough of Manhattan, and each Purchaser agrees to submit
to the jurisdiction of such courts in any such action or proceeding.
Section 6.8. Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
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<PAGE>
Section 6.9. Headings. The Articles and Section headings used or
contained in this Agreement are for convenience of reference only and shall not
affect the construction of this Agreement.
Section 6.10. Integration. This Agreement (including the exhibits hereto)
constitutes the entire agreement among the parties with respect to the purchase
and sale of the Shares and supersedes all prior agreements and understandings
between the parties hereto with respect to the transactions contemplated hereby,
and there are no promises or undertakings with respect to the purchase and sale
of the Shares relative to the subject matter hereof not expressly set forth or
referred to herein or in the Registration Rights Agreement.
[signature pages follow]
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<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
PRIME GROUP REALTY TRUST
By: /s/ William M. Karnes
_____________________________
William M. Karnes,
Executive Vice President and
Chief Financial Officer
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust,
its managing general partner
By: /s/ William M. Karnes
_____________________________
William M. Karnes,
Executive Vice President and
Chief Financial Officer
S-1
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
By: COHEN & STEERS CAPITAL MANAGEMENT, INC.,
as agent for each of the Purchasers listed below on this signature page
By: /s/ Joseph M. Harvey
-------------------------------
Name: Joseph M. Harvey
Title: Sr. Vice President
Address: 757 Third Avenue, 20th Floor
New York, NY 10017
Telephone: (212) 832-3232
Telecopy: (212) 832-3622
Number of Shares: 1,520,800
Price Per Share: $19.375
Aggregate Purchase Price: $19.375 Per Share
times 1,520,800 Shares
Please register Shares as follows:
Name: See Attached
Address: See Attached
Tax I.D. number of Person in whose name
the Shares are to be registered:
- --------------------------------------
PURCHASERS:
Cohen & Steers Realty Shares, Inc.
Cohen & Steers Equity Income Fund
Cohen & Steers Special Equity Fund
Cohen & Steers Realty Income Fund
Cohen & Steers Total Return Realty Fund
IBM Retirement Fund
S-2
<PAGE>
PURCHASE AGREEMENT SIGNATURE PAGE
Accepted and Agreed as of
the date first above written
By: MORGAN STANLEY ASSET MANAGEMENT, INC., as
attorney-in-fact for each of the Purchasers
listed below on this signature page
By: /s/ THEODORE R. BIGMAN
---------------------------------
Name: Theodore R. Bigman
Title: Managing Director
Address: 1221 Avenue of the Americas
22nd Floor
New York, NY 10020
Telephone: (212) 762-7248
Telecopy: (212) 762-8329
Number of Shares: 774,194
Price Per Share: $19.375
Aggregate Purchase Price: $19.375 Per Share
times 774,194 Shares
Please register Shares as follows:
Name: See Attached
Address: 1221 Avenue of the Americas
22nd Floor Attn: David Smetana
New York, NY 10020
Tax I.D. number of Person in whose name
the Shares are to be registered:
See Attached
PURCHASERS:
MS Real Estate Special Situations Inc.
Morgan Stanley Real Estate Special Situations Investors, L.P.
The Morgan Stanley Real Estate Special Situations Fund I, L.P.
The Morgan Stanley Real Estate Special Situations Fund II, L.P.
Stichting Bedrijfspensioenfonds Voor De Metaalnijverheid
Stichting Pensioenfonds ABP
MS Special Funds Pte Ltd
S-2
<PAGE>
Exhibit 1
---------
Form of Registration Rights Agreement
<PAGE>
Exhibit 2
---------
Purchasers that are "employee benefit plans" covered by the Employee
Retirement Income Security Act of 1974, as amended.
None
<PAGE>
Exhibit 3-A
-----------
Form of Opinion of Winston & Strawn
<PAGE>
Exhibit 3-B
-----------
Form of Opinion of Miles & Stockbridge
<PAGE>
Exhibit 10.36
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of March 25, 1998 among the
Company (as hereinafter defined) and the Purchasers (as hereinafter defined) who
have executed this Registration Rights Agreement.
This Registration Rights Agreement is made pursuant to the Purchase
Agreement (as hereinafter defined). The execution of this Registration Rights
Agreement is a condition to the closing of the transactions contemplated by the
Purchase Agreement.
The parties hereto hereby agree as follows:
1. Definitions. Capitalized terms used herein without definition shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
Affiliate: means, with respect to any specified Person, any other
Person directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of this
definition, "control," when used with respect to any Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "affiliated," "controlling" and "controlled" have meanings
correlative to the foregoing.
Agreement: This Registration Rights Agreement, as the same may be
amended, supplemented or modified from time to time in accordance with the terms
hereof.
Common Shares: The Company's common shares of beneficial interest,
par value $.01 per share.
Company: means Prime Group Realty Trust, a Maryland real estate
investment trust, and any successor entity thereto.
Effectiveness Date: The 90th day following the Closing Date under the
Purchase Agreement.
Effectiveness Period: As defined in Section 2(a).
Exchange Act: The Securities Exchange Act of 1934, as amended, and
the rules and regulations of the SEC promulgated pursuant thereto.
Filing Date: The 30th day following the Closing Date under the
Purchase Agreement.
Indemnified Party: As defined in Section 7(c) hereof.
<PAGE>
Indemnifying Party: As defined in Section 7(c) hereof.
Losses: As defined in Section 7(a).
Offering Notice: As defined in Section 4(a).
Other Selling Shareholders: As defined in Section 4(a).
Piggyback Offering Rights: The rights of the Purchasers to have their
Registrable Securities offered and sold to the underwriters concurrently with an
Underwritten Company Offering by the Company with respect to the sale of
Securities by the Company or by any other securityholders of the Company in
accordance with the provisions of Section 4.
Piggyback Offering Rights Period: As defined in Section 4(a).
Proceeding: An action, claim, suit or proceeding (including, without
limitation, an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.
Prospectus: The prospectus included in the Registration Statement
(including, without limitation, a prospectus that includes any information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated pursuant to the Securities
Act), as amended or supplemented by any prospectus supplement, with respect to
the terms of the offering of any portion of the Registrable Securities covered
by the Registration Statement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: The Purchase Agreement pursuant to which the
Company has agreed to sell Common Shares and Purchasers have agreed to acquire
Common Shares pursuant to the Company's Private Placement Memorandum dated March
16, 1998. Each Purchaser is a party to the Purchase Agreement.
Purchasers: Purchasers of Common Shares pursuant to the Purchase
Agreement.
Registrable Securities: The Common Shares purchased by the Purchasers
pursuant to the Purchase Agreement, upon original issuance thereof, and at all
times subsequent thereto, until, in the case of any such Common Shares, (i) it
has been registered pursuant to the Securities Act and disposed of in accordance
with the Registration Statement covering it, (ii) it is sold by the holder
thereof pursuant to Rule 144 (or any similar provisions then in effect) or (iii)
it ceases to be outstanding.
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Registration Statement: The registration statement, contemplated by
Section 2(a), including the Prospectus, amendments and supplements to such
registration statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto, and all material incorporated by reference or
deemed to be incorporated by reference in such registration statement.
Rule 144: Rule 144 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
Rule 415: Rule 415 promulgated by the SEC pursuant to the Securities
Act, as such Rule may be amended from time to time, or any similar rule or
regulation hereafter adopted by the SEC having substantially the same effect as
such Rule.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and the rules
and regulations promulgated by the SEC thereunder.
Special Counsel: Any special counsel to the holders of Registrable
Securities of whom the Company has been notified in writing.
UCO Registration Statement: As defined in Section 7(a).
Underwriter's Representative: As defined in Section 4(a).
Underwritten Company Offering: As defined in Section 4(a).
Underwritten registration or underwritten offering: A registration in
connection with which securities of the Company are sold to an underwriter for
reoffering to the public pursuant to an effective registration statement.
2. Shelf Registration.
(a) The Company shall prepare and file a "shelf" registration
statement with respect to all Registrable Securities then issued on any
appropriate form for an offering to be made on a continuous basis pursuant to
Rule 415 on or prior to the Filing Date and shall use its reasonable best
efforts to cause such Registration Statement to be declared effective by the SEC
on or prior to the Effectiveness Date and take all other reasonable actions
necessary to keep such Registration Statement continuously effective under the
Securities Act until the date which is two years after the Closing Date under
the Purchase Agreement, or in the event that a holder or holders of not less
than 1,300,000 Registrable Securities so request in writing not less than 30
days
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prior to the termination of such two-year period, until the date which is three
years after such Closing Date, or such shorter period ending when all
Registrable Securities covered by such Registration Statement have been sold
(the "Effectiveness Period"). The holders of Registrable Securities may withdraw
all or part of such securities from the Registration Statement prior to or after
the effective date of the Registration Statement.
(b) If the holders of a majority of the Registrable Securities so
elect, one offering of Registrable Securities pursuant to the Registration
Statement may be effected in the form of an underwritten offering. In such
event, and if the managing underwriters advise the Company and the holders of
Registrable Securities proposed to be sold in such offering in writing that in
their opinion the amount of Registrable Securities proposed to be sold in such
offering exceeds the amount of Registrable Securities which can be sold in such
offering, there shall be included in such underwritten offering the amount of
such Registrable Securities which in the opinion of such underwriters can be
sold, and such amount shall be allocated pro rata among the holders of such
Registrable Securities on the basis of the number of shares of Registrable
Securities requested to be included by such holders.
(c) If any of the Registrable Securities are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the holders of
a majority of the Registrable Securities included in such offering. No person
may participate in any underwritten offering hereunder unless such person (a)
agrees to sell such person's Registrable Securities on the basis provided in any
underwriting agreements approved by the persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
3. This Section is Intentionally Left Blank.
4. Piggyback Offering Rights.
(a) If, at any time during the period that commences one day after
the date which is six months after the date of this Agreement and ends on the
last day of Effectiveness Period (the "Piggyback Offering Rights Period"), (i)
any underwritten primary equity offering is proposed to be initiated by the
Company (other than any registration by the Company on Form S-4 or Form S-8, or
a successor or substantially similar form, of (A) an employee share option,
share purchase, share incentive or compensation plan or of securities issued or
issuable pursuant to any such plan, or (B) a dividend reinvestment plan) or (ii)
any underwritten equity offering is proposed to be initiated by holders of
equity securities (other than the Registrable Securities) of the Company (the
"Other Selling Shareholders") pursuant to registration rights
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granted by the Company prior to the date hereof or otherwise pursuant to that
certain Registration Rights Agreement of the Company dated as of December 15,
1997 (an "Underwritten Company Offering"), the Company shall, not later than 20
days prior to the date of such proposed offering, give written notice (an
"Offering Notice") of such proposed offering to the Purchasers, which notice
shall describe in detail the proposed plan of distribution. During the
Piggyback Offering Rights Period, Purchasers may elect, by written notice to the
Company (which notice shall specify the aggregate number of Registrable
Securities proposed to be offered and sold by such Purchaser to the underwriters
concurrently with the Underwritten Company Offering) given within 15 days after
receipt of the Offering Notice from the Company, to have any and all of the
Registrable Securities owned by it included as selling shareholders with the
shares to be sold by the Company and/or the applicable Other Selling
Shareholders to the underwriters in connection with the Underwritten Company
Offering, and the Company shall use its best efforts to cause the underwriters
to so purchase such Registrable Securities. If the representative of the
managing underwriters (the "Underwriter's Representative") should reasonably
determine that the inclusion of such Registrable Securities would adversely
affect the offering as contemplated by the Company and/or the applicable Other
Selling Shareholders, and based on such determination recommends inclusion in
such offering of fewer or none of the Registrable Securities proposed to be sold
by all Purchasers, then (x) the number of Registrable Securities of the
Purchasers included in such offering shall be reduced pro-rata among such
Purchasers (based upon the number of Registrable Securities requested to be
included in the offering), if the Company and/or the applicable Other Selling
Shareholders, as appropriate, after consultation with the Underwriter's
Representative recommends the inclusion of fewer Registrable Securities, or (y)
none of the Registrable Securities of the Purchasers shall be included in such
offering, if the Company and/or the applicable Other Selling Shareholders, as
appropriate, after consultation with the Underwriter's Representative recommends
the inclusion of none of such Registrable Securities. The rights of the
Purchasers under this Section 4 are in addition to the rights of the Purchasers
under Section 2 (it being understood that the exercise of the piggyback rights
by the Purchasers under this Section 4 will not eliminate the Purchasers' rights
to a single demand registration under Section 2(b)).
(b) Each Purchaser so proposing to sell Registrable Securities to the
underwriters in an Underwritten Company Offering pursuant to this Section 4
shall execute and deliver an underwriting agreement and such other documents and
instruments in form and substance satisfactory to the Underwriter's
Representative. In addition, each Purchaser selling Registrable Securities to
such underwriters shall be liable for any and all underwriting discounts and
commissions with respect to its Registrable Securities included in such
offering.
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(c) The rights of the Purchasers under this Section 4 are solely
piggyback in nature, and nothing in this Section 4 shall prevent the Company
and/or the applicable Other Selling Shareholders, as appropriate, from reversing
a decision to consummate an Underwritten Company Offering.
5. Registration Procedures. In connection with the Company's registration
obligations hereunder, the Company shall:
(a) Prepare and file with the SEC a Registration Statement on the
appropriate form available for the sale of the Registrable Securities by the
holders thereof in accordance with the method or methods of distribution thereof
as specified by the holders thereof, and cause the Registration Statement to
become effective and remain effective as provided herein; provided, however,
that no less than three days prior to the filing of the Registration Statement
or any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated or deemed to be incorporated therein by
reference), the Company shall furnish to the holders of the Registrable
Securities, their Special Counsel and the managing underwriters, if any, copies
of all such documents proposed to be filed, which documents (other than those
incorporated or deemed to be incorporated by reference) will be subject to the
review of such holders, their Special Counsel and such underwriters, if any; the
Company shall not file the Registration Statement or any such Prospectus or any
amendments or supplements thereto to which the holders of a majority of the
Registrable Securities, their Special Counsel or the managing underwriters, if
any, shall reasonably object, in writing, on a timely basis, and the Company
shall use its reasonable best efforts to satisfy any such objection and
thereafter make such filing.
(b) Prepare and file with the SEC such amendments, including post-
effective amendments, to the Registration Statement as may be necessary to keep
the Registration Statement continuously effective for the applicable time
period; cause the related Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
(or any similar provisions than in force) under the Securities Act; and comply
with the provisions of the Securities Act and the Exchange Act with respect to
the disposition of all securities covered by the Registration Statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented;
(c) Notify the holders of Registrable Securities to be sold, their
Special Counsel and the managing underwriters, if any, promptly (and in the case
of (i) (A) below in this paragraph in no event less than three days prior to
such filing) and (if requested by any such person) confirm such notice in
writing no later than one Business Day following the day (i) (A) when a
Prospectus or any
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Prospectus supplement or post-effective amendment to the Registration Statement
is proposed to be filed and, (B) with respect to the Registration Statement or
any post-effective amendment, when the same has become effective, (ii) of the
issuance by the SEC of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any proceedings for that purpose, (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction within the United States, or the initiation or threatening of
any proceeding or such purpose and (iv) upon the occurrence of any event which
makes any statement in the Registration Statement or Prospectus untrue in any
material respect;
(d) If requested by the managing underwriters, if any, or the holders
of a majority of the Registrable Securities being sold in connection with an
underwritten offering, (i) promptly incorporate in a Prospectus supplement or
post-effective amendment to the Registration Statement such information as the
managing underwriters, if any, and such holders reasonably agree should be
included therein, and (ii) make all required filings of such Prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
Prospectus supplement or post-effective amendment; provided, however, that the
Company shall not be required to take any action pursuant to this Section 5(d)
that would, in the opinion of counsel for the Company, violate applicable law;
(e) Furnish to each holder of Registrable Securities, their Special
Counsel, each managing underwriter, if any, and each exchange on which the
Common Share are traded, without charge, such number of conformed copies as such
persons or entities may reasonably request, of each Registration Statement and
each amendment or supplement thereto, including financial statements and
schedules, all documents incorporated or deemed to be incorporated therein by
reference, and all exhibits to the extent requested by such person (including
those previously furnished or incorporated by reference) as soon as practicable
after the filing of such documents with the SEC;
(f) Deliver to each holder of Registrable Securities, their Special
Counsel, and the underwriters, if any, without charge, as many copies of the
Prospectus or Prospectuses (including each form of prospectus) and each
amendment or supplement thereto as such persons reasonably request; and the
Company hereby consents thereto by each of the selling holders of Registrable
Securities and the underwriters, if any, in connection with the offering and
sale of the Registrable Securities covered by such Prospectus and any amendment
or supplement thereto;
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<PAGE>
(g) Prior to any public offering of Registrable Securities, use its
reasonable best efforts to register or qualify or cooperate with the holders of
Registrable Securities to be sold, the underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable
Securities for offer and sale under the securities or Blue Sky laws of all
jurisdictions within the United States, keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and do any and all other acts or things reasonably necessary or advisable to
enable the disposition in such jurisdictions of the Registrable Securities
covered by a Registration Statement; provided, however, that the Company shall
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action that would subject it to general
service of process in any such jurisdiction where it is not then so subject or
subject the Company to any tax in any such jurisdiction where it is not then so
subject;
(h) Cooperate with the holders of Registrable Securities and the
managing underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Registrable Securities to be sold and to enable
such Registrable Securities to be in such denominations and registered in such
names as the managing underwriters, if any, or holders may request at least two
Business Days prior to any sale of Registrable Securities;
(i) Promptly file all documents required to be filed under Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act during any period when the
Prospectus is required to be delivered under the Securities Act;
(j) If the Prospectus contains an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they were
made, not misleading, prepare a supplement or amendment, including a post-
effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document, in each case
promptly after the discovery by the Company or the Company's receipt of notice,
of any such misstatement or omission, so that, as thereafter delivered, such
Prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading;
(k) Cause all Registrable Securities relating to such Registration
Statement to be listed on each securities exchange, if any, on which similar
securities issued by the Company are then
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listed and make all other necessary or appropriate filings with each such
securities exchange;
(l) Enter into such agreements (including an underwriting agreement
in form, scope and substance as is customary in underwritten offerings) and take
all such other actions in connection therewith (including those reasonably
requested by the managing underwriters, if any, or the holders of a majority of
the Registrable Securities being sold) in order to expedite or facilitate the
disposition of such Registrable Securities, and in such connection in the event
of an underwritten offering, whether or not an underwriting agreement is entered
into, (i) make such representations and warranties to the holders of such
Registrable Securities and the underwriters, if any, with respect to the
business of the Company, its subsidiaries, and the Registration Statement,
Prospectus and documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, in form, substance and scope as are customarily
made by issuers to underwriters in underwritten offerings, and confirm the same
if and when requested; (ii) obtain opinions of counsel to the Company (which
counsel and opinions, in form, scope and substance, shall be reasonably
satisfactory to the managing underwriters, if any, and Special Counsel to the
holders of the Registrable Securities being sold), addressed to each selling
holder of Registrable Securities and each of the underwriters, if any, covering
the matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such Special Counsel
and underwriters; (iii) obtain "cold comfort" letters and updates thereof from
the independent certified public accountants of the Company (and, if necessary,
any other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data is, or is required to be, included in the
Registration Statement), addressed to each selling holder of Registrable
Securities and each of the underwriters, if any, such letters to be in customary
form and covering matters of the type customarily covered in "cold comfort"
letters in connection with underwritten offerings; (iv) if an underwriting
agreement is entered into, the same shall contain indemnification provisions and
procedures no less favorable to the selling holders and the underwriters, if
any, than those set forth in Section 6 hereof (or such other provisions and
procedures acceptable to holders of a majority of Registrable Securities
participating in such underwritten offering and the managing underwriters, if
any); and (v) deliver such documents and certificates as may be reasonably
requested by the holders of a majority of the Registrable Securities being sold,
their Special Counsel and the managing underwriters, if any, to evidence the
continued validity of the representations and warranties made pursuant to clause
(i) above and to evidence compliance with any customary conditions contained in
the underwriting agreement or other agreement entered into by the Company;
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(m) After filing any document incorporated by reference into a
Registration Statement deliver a copy of such document to each holder of
Registrable Securities upon request during the period the Company is obligated
to maintain an effective Registration Statement hereunder;
(n) Make reasonably available to a representative of the holders of
Registrable Securities being sold, any underwriter participating in any such
disposition of Registrable Securities, if any, and any attorney, accountant,
auditor or investment advisor retained by such selling holders or underwriters
that information which such parties would customarily require to satisfy their
due diligence obligations with respect to the offering and sale of the
Registrable Securities; provided, however, that any information that is
designated by the Company in writing as confidential at the time of delivery of
such information shall be kept confidential by such persons (and each such
holder or underwriter, as the case may be, shall be liable for any such person's
failure to so keep such information confidential), unless (i) disclosure of such
information is required by court or administrative order or is necessary to
respond to inquiries of regulatory authorities or self-regulatory organizations
(provided that in any such case, five Business Days' prior written notice is
given to the Company prior to any such disclosure of such information), (ii)
disclosure of such information, in the opinion of counsel to such person, is
required by law or pursuant to this Agreement (provided that in any such case,
five Business Days' prior written notice is given to the Company prior to any
such disclosure of such information), (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure to
safeguard by such person, or (iv) such information becomes available to such
person from a source other than the Company and such source is not bound by a
confidentiality agreement; and
(o) Comply with all applicable rules and regulations of the SEC and
make generally available to its securityholders earning statements satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder
(or any similar rule promulgated under the Securities Act), no later than 45
days after the end of any 12-month period (or 90 days after the end of any 12-
month period if such period is a fiscal year) (i) commencing at the end of any
fiscal quarter in which Registrable Securities are sold to underwriters in a
firm commitment or best efforts underwritten offering and (ii) if not sold to
underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of the Registration
Statement, which statement shall cover said 12-month period, or shorter periods
as is consistent with the requirements of Rule 158.
The Company may require each seller of Registrable Securities to
furnish to the Company such information regarding the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement and the Company may
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exclude from such registration the Registrable Securities of any seller who
unreasonably fails to furnish such information within a reasonable time after
receiving such request.
Each holder of Registrable Securities agrees that such holder will not
offer or sell any Registrable Securities or exercise such holder's rights
hereunder in violation of any foreign or domestic, federal, state or local law,
order, rule or ordinance, other than such violations that occur as a result of
any breach by the Company of any of its obligations hereunder.
Each holder of Registrable Securities agrees by acquisition of such
Registrable Securities that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 5(c) (ii), 5(c) (iii) or
5(c) (iv) or any other event as a result of which the Company has determined
that the holders of Registrable Securities should discontinue disposition
thereof, such holder will forthwith discontinue disposition of such Registrable
Securities pursuant to the applicable Prospectus until such holder is advised in
writing by the Company that the use of the applicable Prospectus may be resumed,
and, in either case, has received copies of any additional, or supplemental
filings that are incorporated or deemed to be incorporated by reference in such
Prospectus or Registration Statement.
6. Registration Expenses. All fees and expenses incident to the
performance of or compliance with this Agreement by the Company shall be borne
by the Company whether or not the Registration Statement is filed or becomes
effective and whether or not any Registrable Securities are sold pursuant to the
Registration Statement. The fees and expenses referred to in the foregoing
sentence shall include, without limitation, (i) all registration and filing fees
(including, without limitation, fees and expenses (A) with respect to filings
required to be made with the SEC, the National Association of Securities
Dealers, Inc. and any securities exchange and (B) in compliance with state
securities or Blue Sky laws (including, without limitation, reasonable and
customary fees and disbursements of counsel for the underwriters or holders in
connection with Blue Sky qualifications of the Registrable Securities and
determination of the eligibility of the Registrable Securities for investment
under the laws of such jurisdictions in the United States of America as the
managing underwriters, if any, or holders of a majority of Registrable
Securities may designate), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities and of
printing a reasonable number of prospectuses if the printing of prospectuses is
requested by the managing underwriters, if any, of the Registrable Securities
included in the Registration Statement), (iii) fees and disbursements of counsel
for the Company, (iv) fees and disbursements of all independent certified public
accountants referred to in Section 5(l) (iii) (including, without limitation,
the expenses of any special audit and "cold comfort" letters
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required by or incident to such performance) and (v) fees and expenses of all
other persons retained by the Company. In addition, the Company shall pay the
fees and expenses incurred in connection with the listing of the Registrable
Securities on the New York Stock Exchange. Except as provided above, the
holders of Registrable Securities shall pay all of their own fees and expenses
in connection with the transaction referred to in or contemplated by this
Agreement, including without limitation, all legal and advisory fees and
expenses and all discounts, commissions, fees and expenses of underwriters
(including underwriters' counsel) involved in the offer and sale of Registrable
Securities whether in an Underwritten Company Offering or otherwise.
7. Indemnification
---------------
(a) Indemnification by the Company. The Company shall,
notwithstanding termination of this Agreement and without limitation as to time,
indemnify and hold harmless each holder of Registrable Securities, the officers,
directors, agents, investment advisors and employees of each of them, each
person who controls any such holder (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) and the officers, directors,
agents and employees of each such controlling person, to the fullest extent
lawful, from and against any and all losses, claims, damages, liabilities, costs
(including, without limitation, costs of preparation and reasonable attorneys'
fees) and expenses (collectively, "Losses"), arising out of or based upon any
untrue or alleged untrue statement of a material fact contained in the
Registration Statement, any Prospectus, any form of Prospectus or in any
preliminary Prospectus, or the registration statement in connection with an
Underwritten Company Offering that includes Registrable Securities (the "UCO
Registration Statement"), any prospectus included therein, any form of such
prospectus or in any such preliminary prospectus, or arising out of or based
upon any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein (in the case of any
prospectus or form of prospectus or supplement thereto, in light of the
circumstances under which they were made) not misleading, except to the extent,
that such are based upon information regarding such holder furnished in writing
to the Company by or on behalf of such holder or any underwriter expressly for
use therein, which information was reasonably relied on by the Company in the
preparation thereof or upon information reviewed and expressly approved in
writing by such holder or underwriter expressly for use therein.
(b) Indemnification by Holder of Registrable Securities. In
connection with the Registration Statement and each UCO Registration Statement,
each holder of Registrable Securities shall furnish to the Company in writing
such information as the Company reasonably requests for use in connection with
the Registration Statement or any Prospectus and the UCO Registration Statement
and any prospectus included therein and agrees, severally and not
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jointly, to indemnify and hold harmless the Company, its trustees, officers,
agents and employees, each person who controls the Company (within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act), and the
officers, directors, agents and employees of each such controlling person, to
the fullest extent lawful, from and against all Losses arising out of or based
upon any untrue statement of a material fact contained in the Registration
Statement, any Prospectus, any form of Prospectus or any preliminary Prospectus,
or any UCO Registration Statement, any prospectus included therein, any form of
such prospectus or any omission of a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case to the
extent that such untrue statement or omission is contained in any information so
furnished expressly for inclusion in such registration statement and is
furnished in writing to the Company by or on behalf of such holder included in
the Registration Statement, such Prospectus, or any UCO Registration Statement,
any prospectus included therein, any form of such prospectus or any such
preliminary prospectus, or to the extent that such information relates to such
holder or such holder's proposed method of distribution of Registrable
Securities and was reviewed and expressly approved in writing by such holder
expressly for use in the Registration Statement, such Prospectus, such form of
Prospectus or such preliminary Prospectus, or any UCO Registration Statement,
any prospectus included therein, any form of such prospectus or any such
preliminary prospectus; provided, however, that such holder shall not be
obligated to provide such indemnification to the extent liability resulted from
the Company's failure to amend or take action promptly to correct or supplement
the Registration Statement, such Prospectus, any form of Prospectus or any
preliminary Prospectus, or any UCO Registration Statement, any prospectus
included therein, any form of such prospectus or any such preliminary
prospectus, after receiving written notice from such holder of such untrue
statement or omission. In no event shall the liability of any selling holder of
Registrable Securities hereunder be greater in amount than the dollar amount of
the proceeds received by such holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation. Notwithstanding anything in this
Section 7(b), no trustee, shareholder, officer, employee or agent of any holder
(i) that is a Massachusetts business trust and (ii) established pursuant to a
Declaration of Trust (a copy of which, together with all amendments thereto
(collectively, the "Declaration"), is on file in the office of the Secretary of
the Commonwealth of Massachusetts) provided that the name of such holder trust
refers to the Trustees under the Declaration collectively as Trustees, but not
as individuals or personally, shall be held to any personal liability hereunder,
and no resort shall be had to their private property (other than as specifically
provided in such Declaration) for the satisfaction of any indemnification
obligation hereunder, but only to the assets and estate of such holder trust.
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(c) Conduct of Indemnification Proceedings. If any Proceeding shall
be brought or asserted against any person entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall so notify the person
from whom indemnity is sought (the "Indemnifying Party") in writing, and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and the payment of all
fees and expenses incurred in connection with defense thereof; provided that the
failure of any Indemnified Party to give prompt notice shall not relieve the
Indemnifying Party of its obligations pursuant to this Agreement, except to the
extent that it shall be finally determined by a court of competent jurisdiction
(which determination is not subject to appeal or further review) that such
failure shall have prejudiced the Indemnifying Party.
Any such Indemnified Party shall have the right to employ separate
counsel in any such action, claim or proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed to pay such fees and expenses; or (2) the Indemnifying Party shall
have failed to assume the defense of such action, claim or proceeding; or (3)
the named parties to any such action, claim or proceeding (including any
impleaded parties) include both such Indemnified Party and the Indemnifying
Party, and such Indemnified Party shall have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party), it being
understood, however, that the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all Indemnified Parties (other than counsel for which the
Indemnifying Party has agreed to pay under clause (1) above), which firm shall
be designated in writing by the Indemnified Parties. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding effected without
its prior written consent. No Indemnifying Party shall, without the prior
written consent of the Indemnified Party, effect any settlement of any pending
proceeding in respect of which any Indemnified Party is a party and is entitled
to indemnity hereunder, unless such settlement includes an unconditional release
of such Indemnified Party from all liability on claims that are the subject
matter of such proceeding.
-14-
<PAGE>
(d) Contribution. If a claim by an Indemnified Party for
indemnification under Section 7(a) or 7(b) is found unenforceable by a court of
competent jurisdiction (even though the express provisions hereof provide for
indemnification in such case), then each applicable Indemnifying Party, in lieu
of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions, statements or omissions that
resulted in such Losses as well as any other relevant equitable considerations.
The relative fault of such Indemnifying Party and Indemnified Party shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact, has been
taken or made by, or relates to information supplied by, such Indemnifying Party
or Indemnified Party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action, statement or
omission. The amount paid or payable by a party as a result of any Losses shall
be deemed to include, subject to the limitations set forth in Section 7(c), any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or Proceeding.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 7(d), an Indemnifying Party that
is a holder of Registrable Securities shall not be required to contribute any
amount in excess of the amount of the proceeds actually received by such
Indemnifying Party from the sale of the Registrable Securities subject to the
Proceeding. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
8. Rule 144. The Company shall use its reasonable best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Company is not required to file
such reports, they will, upon the request of any holder of Registrable
Securities, make publicly available other information so long as necessary to
permit sales of its securities pursuant to Rule 144. The Company further
covenants that it will take such further action as any holder of Registrable
Securities may reasonably request, all to the extent required from time to time
to enable such holder to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144.
-15-
<PAGE>
9. Miscellaneous.
(a) Remedies. In the event of a breach by the Company or by a holder
of Registrable Securities, of any of their obligations under this Agreement,
each holder of Registrable Securities or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. The Company and each holder of Registrable Securities
agree that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of any of the provisions of this Agreement
and hereby further agrees that, in the event of any action for specific
performance in respect of such breach, it shall waive the defense that a remedy
at law would be adequate.
(b) Amendments and Waivers. The provisions of this Agreement
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the holders of at least a majority of the then outstanding Registrable
Securities. Notwithstanding the foregoing, a waiver or consent to depart from
the provisions hereof with respect to a matter that relates exclusively to the
rights of holders of Registrable Securities and that does not directly or
indirectly affect the rights of other holders of Registrable Securities may be
given by holders of at least a majority of the Registrable Securities to which
such waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(c) Notices. All notices and other communications provided for
herein shall be made in writing by hand-delivery, next-day air courier,
certified first class mail, return receipt requested, or facsimile to:
(i) If to the Company, at: Prime Group Realty Trust, 77 West Wacker
Drive, Suite 3900, Chicago, Illinois 60601, Attn: President (telecopier
no.: (312) 917-0460) with a copy to: Winston & Strawn, 35 West Wacker
Drive, Chicago, Illinois 60601, Attn: Wayne D. Boberg (telecopier no.:
(312) 558-5700);
(ii) If to the Purchaser, at the address specified below its name on
the signature pages hereof; or
(iii) If to any other person who is then the registered holder of any
Registrable Securities, to the address of such holder as it appears in the
stock transfer books of the Company.
-16-
<PAGE>
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given: when delivered by hand,
if personally delivered, one Business Day after being delivered to a reputable
overnight delivery service for delivery on the next Business Day; five Business
Days after being deposited in the mail, postage prepaid, if mailed; and when
receipt is acknowledged by the recipient's telecopier machine, if telecopied.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties. If any transferee of Registrable Securities shall acquire
Registrable Securities in a manner permitted under the Purchase Agreement, such
Registrable Securities shall be held subject to all of the terms and conditions
of this Agreement and shall receive all of the benefits hereof.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and, all of which taken
together shall constitute one and the same Agreement.
(f) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO CONTRACTS
MADE AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW. By execution of this Agreement, each Purchaser agrees for the
benefit of the Company that any action or proceeding relating to this Agreement
or the Common Shares shall be brought in the courts of the State of New York or
of the United States sitting in New York City, the Borough of Manhattan, and
each Purchaser agrees to submit to the jurisdiction of such courts in any such
action or proceeding.
(g) Severability. The remedies provided herein are cumulative and
not exclusive of any remedies provided by law. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent jurisdiction to
be invalid, illegal, void or unenforceable, the remainder of the terms,
provisions, covenants and restrictions set forth herein shall remain in full
force and effect and shall in no way be affected, impaired or invalidated, and
the parties hereto shall use their reasonable efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of such that may be hereunder declared invalid, illegal, void or
unenforceable.
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<PAGE>
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Further Assurances. From and after the date hereof, the Company
and each of the Purchasers each covenants and agrees to execute and deliver all
such agreements, instruments and documents and to take all such further actions
as any such respective party may reasonably deem necessary from time to time (at
the requesting party's expense) to carry out the intent and purposes of this
Agreement and to consummate and fully effect the transactions contemplated
hereby.
(j) Entire Agreement; Integration. This Agreement contains the
entire agreement of the parties hereto with respect to its subject matter and
there are no promises or undertakings with respect thereto relative to the
subject matter hereof not expressly set forth or referred to in this Agreement.
(k) Enforceability. The Company hereby represents that it is not a
party to any agreement which would adversely affect the legality, validity or
enforceability of this Agreement.
[signature pages follow]
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<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PRIME GROUP REALTY TRUST
By: /s/ William M. Karnes
_________________________
William M. Karnes,
Executive Vice President
and Chief Financial Officer
S-1
<PAGE>
REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE
--------------------------------------------
BY: COHEN & STEERS CAPITAL MANAGEMENT, INC.,
as agent for each of the Purchasers listed below on this signature page
By: /s/ Joseph M. Harvey
-------------------------------
Name: Joseph M. Harvey
Title: Sr. Vice President
Address: 737 Third Avenue, 70th Floor
New York, NY 10017
Telephone: (212) 832-3232
Telecopy: (212) 832-3622
PURCHASERS:
Cohen & Steers Realty Shares, Inc.
Cohen & Steers Equity Income Fund
Cohen & Steers Special Equity Fund
Cohen & Steers Realty Income Fund
Cohen & Steers Total Return Realty Fund
IBM Retirement Fund
S-2
<PAGE>
REGISTRATION RIGHTS AGREEMENT SIGNATURE PAGE
--------------------------------------------
MORGAN STANLEY ASSET MANAGEMENT, INC., as
attorney-in-fact for each of the Purchasers
listed below on this signature page
By: /s/ Theodore R. Bigman
---------------------------------
Name: Theodore R. Bigman
Title: Principal
Address: 1221 Avenue of the Americas
22nd Floor
New York, NY 10020
Telephone: (212) 762-7033
Telecopy: (212) 762-7536
PURCHASERS:
MS Real Estate Special Situations Inc.
Morgan Stanley Real Estate Special Situations Investors, L.P.
The Morgan Stanley Real Estate Special Situations Fund I, L.P.
The Morgan Stanley Real Estate Special Situations Fund II, L.P.
Stichting Bedrijfspensioenfonds Voor De Metaalnijverheid
Stichting Pensioenfonds ABP
MS Special Funds Pte Ltd
S-2
<PAGE>
EXHIBIT 10.41
LIMITED LIABILITY COMPANY AGREEMENT
OF
PRIME/BEITLER DEVELOPMENT COMPANY, L.L.C.
Dated as of March 30, 1998
Chicago, Illinois
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT OF
PRIME/BEITLER DEVELOPMENT COMPANY, L.L.C.
TABLE OF CONTENTS
PAGE
I. DEFINED TERMS ................................................... 1
1.01 Defined Terms ....................................... 1
1.02 Other Defined Terms: ................................ 15
1.03 Tax Matters Terms ................................... 15
1.04 Definitive Joint Venture Agreement .................. 15
II. ORGANIZATION ................................................... 15
2.01 Formation ........................................... 15
2.02 Name and Principal Place of Business ................ 15
2.03 Term ................................................ 16
2.04 Registered Agent, Registered Office and Foreign
Qualification ....................................... 16
2.05 Purpose ............................................. 16
III. MEMBERS ....................................................... 17
3.01 Admission of Members ................................ 17
3.02 Limitation on Liability ............................. 17
3.03 Prime Retail ........................................ 17
IV. CAPITAL ........................................................ 18
4.01 Initial Capital Contributions ....................... 18
4.02 Development Costs Contributions ..................... 19
4.03 Deficit Contributions ............................... 19
4.04 Capital Contributions and Remedies .................. 20
4.05 Capital Accounts .................................... 20
4.06 No Further Capital Contributions .................... 21
V. INTERESTS IN THE COMPANY ........................................ 21
5.01 Percentage Interests ................................ 21
5.02 Return of Capital ................................... 21
5.03 Ownership ........................................... 21
5.04 Waiver of Partition; Nature of Interests in the
Company ............................................. 21
VI. ALLOCATIONS AND DISTRIBUTIONS .................................. 22
6.01 Allocations ......................................... 22
6.02 Distributions ....................................... 22
<PAGE>
PAGE
VII. MANAGEMENT .................................................... 23
7.01 Management .......................................... 23
7.02 Meetings of Members ................................. 27
7.03 Managing Member ..................................... 29
7.04 Services and Fees ................................... 32
7.05 Duties and Conflicts ................................ 34
7.06 Company Expenses .................................... 34
7.07 Change in Control ................................... 35
7.08 Actions Requiring Member Approval ................... 35
VIII. CALL OPTIONS ................................................. 36
8.01 Call Option ......................................... 36
8.02 Sale Contract; Closing .............................. 39
8.03 Termination of Other Agreements ..................... 44
8.04 Power of Attorney ................................... 44
IX. BOOKS AND RECORDS .............................................. 45
9.01 Books and Records ................................... 45
9.02 Accounting and Fiscal Year .......................... 45
9.03 Reports ............................................. 45
9.04 The Company Accountant .............................. 47
9.05 Reserves ............................................ 47
9.06 The Budget and Operating Plan ....................... 47
9.07 Project Plan ........................................ 48
X. TRANSFER OF INTERESTS ........................................... 49
10.01 No Transfer of Interests ........................... 49
10.02 Permitted Transfers of Interests ................... 49
10.03 Transferees ........................................ 50
10.04 Admission of Additional Members .................... 50
XI. EXCULPATION AND INDEMNIFICATION ................................ 51
11.01 Exculpation ........................................ 51
11.02 Indemnification .................................... 51
XII. DISSOLUTION AND TERMINATION ................................... 52
12.01 Dissolution ........................................ 52
12.02 Termination ........................................ 53
12.03 Liquidating Member ................................. 54
XIII. DEFAULT BY MEMBER ............................................ 54
13.01 Events of Default .................................. 54
<PAGE>
PAGE
13.02 Effect of Event of Default ......................... 55
XIV. MISCELLANEOUS ................................................. 56
14.01 Covenants, Representations and Warranties of the
Members ............................................ 56
14.02 Further Assurances ................................. 58
14.03 Notices ............................................ 58
14.04 Governing Law ...................................... 59
14.05 Attorney Fees ...................................... 60
14.06 Captions ........................................... 60
14.07 Pronouns ........................................... 60
14.08 Successors and Assigns ............................. 60
14.09 Extension Not a Waiver ............................. 60
14.10 Creditors Not Benefited ............................ 60
14.11 Recalculation of Interest .......................... 60
14.12 Severability ....................................... 61
14.13 Entire Agreement ................................... 61
14.14 Publicity .......................................... 61
14.15 Counterparts ....................................... 61
14.16 Confidentiality: ................................... 61
14.17 Time of the Essence ................................ 62
14.18 Venue .............................................. 62
14.19 Waiver of Jury Trial ............................... 63
APPENDICES
Appendix A Tax Matters .......................................... A-1
Appendix B Common Unit Recipient Certifications ................. B-1
Exhibit 1 Legal Description for the Company Property
Exhibit 2 Preliminary Budget and Operating Plan
<PAGE>
LIMITED LIABILITY COMPANY AGREEMENT
OF
PRIME/BEITLER DEVELOPMENT COMPANY, L.L.C.
This LIMITED LIABILITY COMPANY AGREEMENT ("AGREEMENT") of PRIME/BEITLER
DEVELOPMENT COMPANY, L.L.C. is made and entered into as of March 30, 1998, by
and between PENNY BEITLER L.L.C., an Illinois limited liability company,
("BEITLER"), and PRIME GROUP REALTY, L.P., a Delaware limited partnership
("PRIME GR"), as Members.
WHEREAS, the managing general partner of Prime GR is Prime Group Realty
Trust, a Maryland real estate investment trust ("GR"), which is a reporting
company (a "Reporting Company") under the Securities Exchange Act of 1934 and
subject to federal and state laws, including Code provisions, governing real
estate investment trusts; and
WHEREAS, Beitler has succeeded to all of the right, title and interest of
J. Paul Beitler Development Company, an Illinois corporation ("Beitler DC"), as
purchaser of the Company Property under that certain Purchase and Sale
Agreement dated March 11, 1998, by and between Beitler DC and LaSalle National
Bank, as trustee under trust agreement known as Trust No. 121550 as amended
("Purchase Contract").
WHEREAS, Beitler and Prime GR desire to form a limited liability company
under the Delaware Act (as hereinafter defined) upon the terms set forth
herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
I. DEFINED TERMS
1.01 DEFINED TERMS: As used in this Agreement, the following terms have
the meanings set forth below:
"70% CALL OFFER" means a Call Offer made after the 70% Leasing Condition
has been satisfied and before the 90% Leasing Condition has been satisfied.
"90% CALL OFFER" means a Call Offer made after the 90% Leasing Condition
has been satisfied.
"70% LEASING CONDITION" means 70% Actual Occupancy of the office space of
the Building.
"90% LEASING CONDITION" means 90% Actual Occupancy of the office space of
the Building.
<PAGE>
"ACQUISITION COSTS" means an amount equal to the sum of (i) the purchase
price of the Company Property of $19.259 million, (ii) closing costs and
Acquisition Loan fees with respect thereto and (iii) amounts set forth in the
initial Budget and Operating Plan for preapproved pre-development costs and
Company Property operating costs through the date of the Construction Loan
Opening, which amount shall be $22.345 million or such other amount as is
provided therefor in the Budget and Operating Plan.
"ACQUISITION LOAN" means that certain mortgage loan by LaSalle National
Bank, Chicago, Illinois, to the Company in the principal amount of $13.5
million and secured by the Company Property.
"ACTUAL LEASES" means leases executed pursuant to this Agreement as of
the applicable date.
"ACTUAL OCCUPANCY" means that portion of the rentable square feet of the
office space of the Building which is subject to Actual Leases, expressed as a
percentage.
"ADDITIONAL CAPITAL CONTRIBUTION" has the meaning set forth in Section
4.01(c).
"ADJUSTED CAPITAL ACCOUNT DEFICIT" has the meaning set forth in Appendix
A.
"AFFILIATE" means, with respect to any Person, (a) any other Person
directly or indirectly controlling, controlled by, or under common control
with such Person, or (b) any other Person owning or controlling 25% or more of
the outstanding voting interests of such Person, or (c) any officer, director,
general partner or managing member of such Person, or (d) any other Person
which is an officer, director, general partner, managing member or holder of
25% or more of the voting interests of any other Person described in clauses
(a) through (c) of this definition.
"AGREEMENT" has the meaning set forth in the introductory paragraph
hereof.
"APPROVED BY MEMBERS", "ACTION BY MEMBERS", "DECISION BY MEMBERS" and "AS
DETERMINED BY MEMBERS" and each expression of similar import refers to and
require a formal action of Members taken at a meeting of Members or otherwise
having the effect of an action of Members taken at a meeting of Members.
"BEITLER" has the meaning set forth in the introductory paragraph hereof.
"BEITLER DC" has the meaning set forth in the introductory paragraph
hereof.
"BOOK BASIS" has the meaning set forth in Appendix A.
"BUDGET AND OPERATING PLAN" means the consolidated budget and
comprehensive Operating Plan most recently approved by the Members with regard
to the Company Property, covering the Company's anticipated operations, and
including the Project Plan, if any.
-2-
<PAGE>
"BUILDING" means the approximately 20 story building to be developed by
the Company on the site of the Company Property pursuant to the Budget and
Operating Plan, which will be comprised of approximately 150,000 square feet
of retail space on three levels fronting State Street, approximately 800,000
square feet of office space fronting on Dearborn Street, and an underground
parking garage containing approximately 280 stalls, all as approved by the
Members.
"BUSINESS DAY" means any weekday in which national banks having their
principal place of business in Chicago, Illinois are required or permitted to
be open.
"CALL OFFER" has the meaning set forth in Section 8.01.
"CALL OFFER CONDITION" means the 70% Leasing Condition or the 90% Leasing
Condition, as applicable.
"CALL OFFER DATE" means the date on which a Call Offer is delivered to
Beitler.
"CALL OFFEREE" has the meaning set forth in Section 8.01.
"CALL OFFEROR" has the meaning set forth in Section 8.01.
"CALL OFFER PRICE" means (i) with respect to a 90% Call Offer, Net
Capitalized SNOI (90%) and (ii) with respect to a 70% Call Offer, the sum of
Net Capitalized SNOI (70%) and the Unleased Space Value.
"CAPITAL ACCOUNT" means the separate account maintained for each Member
under Section 4.05.
"CAPITAL CONTRIBUTION" means, with respect to any Member, any Initial
Capital Contribution, Additional Capital Contribution, Development Costs
Contribution or Deficit Contribution made by such Member to the Company
pursuant to this Agreement.
"CAPITAL EXPENDITURES" means the cash amount of any capitalizable
expenditure (as determined in accordance with GAAP) with respect to any Actual
Lease or Projected Lease and projected to occur after the Call Offer Date
including, without limitation, tenant improvements, leasing commissions and
concessions.
"CAPITALIZED SNOI (90%)" means an amount equal to the result obtained by
dividing (i) SNOI (90%) by (ii) .085
(viz., Capitalized SNOI (90%) = SNOI (90%) ).
----------
.085
"CAPITALIZED SNOI (70%)" means an amount equal to the result obtained by
dividing (i) SNOI (70%) by (ii) .085
(viz., Capitalized SNOI (70%) = SNOI (70%) ).
----------
.085
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<PAGE>
"CAPITALIZED SNOI (UNLEASED SPACE)"means an amount equal to the result
obtained by dividing (i) SNOI (Unleased Space) by (ii) .085
(viz., Capitalized SNOI (Unleased Space) = SNOI (Unleased Space) ).
---------------------
.085
"CASH COLLATERAL" shall mean any of the following provided by Prime GR
and accepted by a Lender to secure Construction Loan Obligations: (i) cash,
debt instruments issued or guaranteed by the United States or its agencies or
instrumentalities and maturing within six months or less from the date of
acquisition; (ii) commercial paper rated P-1 or A-1 on the date of acquisition
and maturing within six months or less from the date of acquisition; (iii)
overnight time deposits (whether or not insured); (iv) interest bearing
deposits in domestic and foreign branches of United States commercial banks
having capital and surpluses of at least $250,000,000; (v) money market mutual
funds with assets of at least $750,000,000, substantially all of which assets
consist of obligations of the type described in the foregoing clauses; (vi)
similar quality short term investments; and (vii) any other collateral
accepted by a Lender therefor.
"CERTIFICATE OF FORMATION" has the meaning set forth in Section 2.01.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMMON UNITS" has the meaning set forth in Section 8.01(c).
"COMPANY" means the limited liability company formed pursuant to the
Certificate of Formation and operated pursuant to the terms of this Agreement.
"COMPANY ACCOUNTANT" has the meaning set forth in Section 9.04.
"COMPANY ASSETS" means any real estate asset or other property (real,
personal, intangible or mixed) owned by or leased to the Company, including,
without limitation, the Company Property.
"COMPANY MINIMUM GAIN" has the meaning set forth in APPENDIX A.
"COMPANY PROPERTY" means the approximately 66,768 square foot vacant land
parcel bounded by State, Dearborn, Adams and Marble Place in Chicago,
Illinois, legally described in EXHIBIT 1 to this Agreement, and all other
Company Assets and rights of the Company associated therewith.
"CONFIDENTIAL INFORMATION" has the meaning set forth in Section 14.16(a).
"CONSTRUCTION COMMENCEMENT" means the date, on or after the Construction
Loan Opening, on which construction of the Building commences and construction
continues in earnest, provided the necessary permits have been issued for the
Project by each governmental agency from which a permit is required to
commence construction in earnest of the Building.
-4-
<PAGE>
"CONSTRUCTION LOAN" means one or more mortgage loans to the Company for
the construction of the Project and refinancing the Acquisition Loan, secured
by the Company Property, on terms and conditions, including interest, fees and
other costs, approved by the Members, and pursuant to which the Lender has
committed and is bound to lend to the Company an aggregate amount not less
than 75% of the Development Costs. The Construction Loan shall be
non-recourse to each Member except to the extent, if any, otherwise agreed to
by such Member.
"CONSTRUCTION LOAN COMMITMENT" means the commitment of the Lender to make
the Construction Loan.
"CONSTRUCTION LOAN OBLIGATIONS" means any monetary obligation of the
Company or the Company Property to a Lender with respect to a Construction
Loan.
"CONSTRUCTION LOAN OPENING" means the date on which all conditions for
the initial draw or advance under the Construction Loan have been satisfied
with the sole exception of receipt by the Company of any requisite portion of
the Development Costs Contribution.
"CONTRIBUTION CONDITION" means the (i) Company has entered into
definitive loan documents relating to the Construction Loan, (ii) Construction
Loan Opening has occurred, and (iii) the Project has satisfied the Preleasing
Condition.
"CURRENT BUDGET AND OPERATING PLAN" means the Budget and Operating Plan
in effect for the current calendar year.
"DEFAULT CONTRIBUTION" has the meaning set forth in Section
13.01(b)(iii).
"DEFICIT CONTRIBUTION" has the meaning set forth in Section 4.03.
"DEFICIT SHORTFALL" has the meaning set forth in Section 4.03(a).
"DELAWARE ACT" means the Delaware Limited Liability Company Act, as
amended from time to time.
"DEVELOPMENT COSTS" means an amount equal to the excess of (i) the sum of
(A) the Acquisition Costs and (B) the total costs of development and
stabilization of the Company Property, as set forth in the Project Plan,
including (I) all hard costs such as, without limitation, shell and core
costs, skybridge costs, hard cost contingency and the costs of tenant
improvements and (II) all soft costs related to development support services,
including, without limitation, architectural and engineering costs, attorney
and accounting costs, consultant and professional fees and expenses, surveys
and appraisals, permits and utility connection fees, space planning, title and
escrow costs, credit enhancement, insurance costs and expenses, costs and
expenses for bonds, debt service payments, Building artwork, technical service
costs, leasing commissions, promotions and advertising costs, pre-opening
costs, real estate taxes, financing fees, development management costs,
opening expenses, all fees set forth in Section 7.04(a) herein
-5-
<PAGE>
payable during development and stabilization, any other site costs which are
not hard costs, and any soft cost contingency, over (ii) an amount equal to
the aggregate proceeds from tax incentive financing actually received by the
Company or paid on behalf of the Company or the Project with respect to
expenditures identified in the Project Plan.
"DEVELOPMENT COSTS COMMITMENT" means an amount equal to the excess, if
any, of (i) the Development Costs over (ii) an amount equal to the sum of (A)
the outstanding balance, if any, of the Acquisition Loan, and (B) the amount
of the Construction Loan Commitment (less any portion of clause (A) which will
be repaid by borrowings pursuant to the Construction Loan Commitment).
"DEVELOPMENT COSTS CONTRIBUTION" has the meaning set forth in Section
4.02(a).
"DISCOUNTED CAPITAL EXPENDITURES" means the total of all Lease-Related
Capital Expenditures over the remaining terms of the applicable Actual Leases
or Projected Leases after discounting each Lease-Related Capital Expenditure
from all months in which such Capital Expenditures will be made to the Call
Offer Date at a discount rate of 11.76%.
"DISCOUNTED FREE RENT" means the total of all Free Rent over the
remaining terms of the applicable Actual Leases or Projected Leases after
discounting each Free Rent item from all months in which such Free Rent will
be allowed to the Call Offer Date at a discount rate of 11.76%.
"DISCOUNTED NONREIMBURSABLE EXPENSES" means the total of all
Nonreimbursable Expenses over the remaining terms of the applicable Actual
Leases or Projected Leases after discounting each Nonreimbursable Expense from
all months in which such Nonreimbursable Expense will be incurred to the Call
Offer Date at a discount rate of 11.76%.
"EVENT OF DEFAULT" has the meaning set forth in Section 13.01.
"EXPENSES" has the meaning set forth in APPENDIX A.
"FREE RENT" means (i) any and all rent abatements which will be allowed
to tenants under the Actual Leases and/or Projected Leases which give rise to
the Projected Revenues utilized to determine the applicable Capitalized SNOI
(i.e., 90%, 70% or Unleased Space) and (ii) any and all Stated Rents under
such Actual Leases or Projected Leases which will not be received for the
period from the Call Offer Date through the date on which payment of such
Stated Rents commences.
"GAAP" means United States generally accepted accounting principles which
are consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and the Board of the American Institute of
Certified Public Accountants in existence as of the relevant date.
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"GUARANTEE CONTRIBUTION" means the lesser of (i) the aggregate amount of
the Prime Guarantees or (ii) an amount equal to the excess of (A) the maximum
amount of the Construction Loan Commitment over (B) 75% of the Development
Costs.
"GUARANTEE PAYMENT" means any payment under any guarantee or letter of
credit which is a Guarantee Contribution, or any transfer of Cash Collateral,
which payment or transfer is made or used to satisfy all or any portion of the
Construction Loan Obligations.
"IMMEDIATE FAMILY" has the meaning set forth in Section 7.07.
"INDEMNIFIED PARTY" has the meaning set forth in Section 11.02.
"INITIAL CAPITAL CONTRIBUTIONS" has the meaning set forth in Section
4.01.
"INITIAL MEMBERS" means Members Beitler and Prime GR.
"INTEREST" means, with respect to any Member at any time, all of the
right, title and interest of such Member in the Company at such time,
including, without limitation, its limited liability company interest as
defined in the Delaware Act and the right of such Member to any and all of the
benefits to which such Member may be entitled as provided in this Agreement,
together with the obligations of such Member to comply with all of the terms
and provisions of this Agreement.
"LEASE-RELATED CAPITAL EXPENDITURES" means any and all Capital
Expenditures projected in the Budget and Operating Plan or the Unleased Space
Projection or set forth in Actual Leases, as applicable, to occur after the
Call Offer Date and required or intended to generate the Projected Revenues
utilized in calculating the applicable Capitalized SNOI.
"LEASE UP SCHEDULE" has the meaning set forth in Section 8.01(b).
"LENDER" means one or more lenders of the Construction Loan.
"LIQUIDATING MEMBER" means the Member designated as such by the Members
from time to time; provided, however, that any Member that causes the
dissolution of the Company under Section 12.01(e) or with respect to which an
Event of Default has occurred shall not serve as the Liquidating Member.
"LOSS" has the meaning set forth in APPENDIX A.
"MAJOR DECISION" has the meaning set forth in Section 7.01(a).
"MANAGING MEMBER" has the meaning set forth in Section 7.03(a) hereof.
"MEMBER" means Beitler, Prime GR and/or any other Person which is
admitted as a Member of the Company from time to time in accordance with this
Agreement and applicable
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law (including any Affiliate of any of the Beitler or Prime GR to which an
Interest in the Company has been Transferred or assigned pursuant to the terms
of this Agreement). Except with respect to actions, decisions and resolutions
expressly stated herein to require the approval of the Members or of a
particular Member, Members shall have the right to participate in and control
the business and affairs of the Company only to the extent provided in Article
VII.
"MEMBER MINIMUM GAIN" has the meaning set forth in APPENDIX A.
"MEMBER NONRECOURSE DEBT" has the meaning set forth in APPENDIX A.
"MEMBER NONRECOURSE DEDUCTIONS" has the meaning set forth in APPENDIX A.
"MEMBER REPRESENTATIVE" has the meaning set forth in Section 7.02(a).
"NECESSARY EXPENSES" means all expenditures which are (A) with respect to
an Additional Capital Contribution, Acquisition Costs currently or within the
subsequent sixty (60) day period due and payable and/or (B) with respect to a
Development Costs Contribution, Development Costs currently or within the
subsequent thirty (30) day period due and payable. In each case such
expenditures shall be in accordance with, and in amounts not exceeding,
corresponding amounts specified in a Current Budget and Operating Plan for
such thirty (30) or sixty (60) day period.
"NET CAPITALIZED SNOI" means the excess of (i) Capitalized SNOI (90%),
Capitalized SNOI (70%) or Capitalized SNOI (Unleased Space), as applicable,
over (ii) the sum of the corresponding Discounted Free Rent, Discounted
Nonreimbursable Expenses, and Discounted Capital Expenditures.
"NET CASH FLOW" means, for any period, the excess of (a) Revenues for
such period over (b) Expenses for such period.
"NET LOSS" has the meaning set forth in Appendix A.
"NET OPERATING INCOME" means, for any period, the difference between
Projected Revenues and Projected Expenses for such period.
"NET PROFIT" has the meaning set forth in Appendix A.
"NON-CONTRIBUTING MEMBER" has the meaning set forth in Section 4.04(b).
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Appendix A.
"NONREIMBURSABLE EXPENSES" means the excess of (i) all Projected Expenses
for each month after the Call Offer Date over (ii) all expense and tax
reimbursements for such month to be derived from the Actual Leases or
Projected Leases on which Capitalized SNOI is based.
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"NOTICES" has the meaning set forth in Section 14.03.
"OFFEREE VALUE" has the meaning set forth in Section 8.01(c).
"OPERATING PLAN" means the overall and annual consolidated strategic and
comprehensive operating plan with regard to the Company Property and the
Company's anticipated operations as most recently approved by the Members.
"OTHER MEMBER" has the meaning set forth in Section 4.04(b).
"PARTIALLY ADJUSTED CAPITAL ACCOUNT" has the meaning set forth in
APPENDIX A.
"PAYOUT PERCENTAGES" means with regard to each Member, the percentages
set forth below opposite its name in the circumstances described below:
(i) Until such time as each of the Members shall have received
aggregate distributions pursuant to Sections 6.02 and Appendix A,
Section 3.3 (other than on account of Priority Deficit Contributions
and the preferred return thereon provided for herein) less than or
equal to their aggregate Capital Contributions made to the Company and
a 12% cumulative annual preferred return compounded quarterly on the
average daily balance of their unreturned aggregate Capital
Contributions, the Payout Percentages of the Members shall be the same
as and in accordance with their then-current Percentage Interests at
the time of such distribution.
(ii) Then, until such time as Prime GR shall have received
aggregate distributions pursuant to Sections 6.02 and Appendix A,
Section 3.3 (other than on account of Priority Deficit Contributions
and the preferred return thereon provided for herein) equal to its
aggregate Capital Contributions made to the Company, and an 18%
cumulative annual preferred return compounded quarterly on the average
daily balance of its unreturned aggregate Capital Contributions, the
Payout Percentages of the Members shall be as follows:
MEMBER PAYOUT PERCENTAGES
Beitler 20%
Prime GR 80%
(iii) Then, until such time as Prime GR shall have received
aggregate distributions pursuant to Sections 6.02 and APPENDIX A,
Section 3.3 (other than on account of Priority Deficit Contributions
and the preferred return thereon provided for herein) equal to its
aggregate Capital Contributions made to the Company, and a 22%
cumulative annual preferred return compounded quarterly on the average
daily balance of its unreturned aggregate Capital Contributions, the
Payout Percentages of the Members shall be as follows:
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MEMBER PAYOUT PERCENTAGES
Beitler 30%
Prime GR 70%
(iv) Then, until such time as Beitler shall have received the
return of his aggregate Default Contributions made to the Company, the
Payout Percentages of the Members shall be as follows:
MEMBER PAYOUT PERCENTAGES
Beitler 100%
Prime GR 0%
(v) Thereafter, the Payout Percentages of the Members shall be
as follows:
MEMBER PAYOUT PERCENTAGES
Beitler 40%
Prime GR 60%
"PERCENTAGE INTEREST" means, with respect to each Member, the ratio of
the total Capital Contributions made by such Member to the total Capital
Contributions made by all Members at any time The initial Percentage
Interest of each Member is as follows:
MEMBER PERCENTAGE INTEREST
Beitler 14.65%
Prime GR 85.35%
"PERMITTED DELAY" means the period of time that an Initial Member shall
be materially delayed or hindered in, or in any material way prevented from
the performance required hereunder by reason of fire or other casualty,
accidents, unavailability of fuel, power, supplies or materials, industry-wide
strikes, lockouts, or labor troubles (including legal or illegal picketing),
failure of power, riots, insurrection, war, acts of God, adverse weather
conditions (excluding weather conditions the occurrence of which from time to
time is not exceptional for Chicago, Illinois), any abnormal delay by
governmental authorities in issuing permits not through the fault of the
Managing Member, governmental restrictions or actions which are not now in
effect or applied, or other reason of like nature, not the fault of the
Initial Member delayed in performing work or doing acts, provided if the
Initial Member seeking an extension of time does not deliver
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written notice of such proposed Permitted Delay to the other Initial Member
within ten (10) days of the event causing the proposed Permitted Delay, the
commencement of such Permitted Delay shall be deemed to be the date upon which
such notice was actually delivered.
"PERSON" means any individual, partnership, corporation, limited
liability company, trust or other entity.
"PLANS AND SPECIFICATIONS" means the plans and specification for the
development of the Project as most recently approved by the Members.
"PREDEVELOPMENT SHORTFALL" has the meaning set forth in Section 4.01(c).
"PRELEASING CONDITION" means the required level of preleasing of the
office and retail portions of the Building on terms and conditions approved by
the Members.
"PRELIMINARY BUDGET AND OPERATING PLAN" has the meaning set forth in
Section 9.06(a).
"PRIME GR" has the meaning set forth in the introductory paragraph.
"PRIME GUARANTEES" means all guarantees, letters of credit and Cash
Collateral, and any substitutions or replacements therefor, which have been
provided by Prime GR in lieu of all or a portion of its Development Costs
Contributions, and which secure or otherwise guarantee or assure the repayment
of Construction Loan Obligations.
"PROFIT" has the meaning set forth in Appendix A.
"PROJECT" means the development of the Company Property by the Company
pursuant to the Budget and Operating Plan and the Plans and Specifications.
"PROJECT COMPLETION DEFAULT SCHEDULE" means the schedule identified as
such in the most recently approved Project Plan, if any, of the Company, which
sets forth the outside date (including a reasonable contingency period) by
which Substantial Completion is projected to have occurred as well as various
interim dates (including a reasonable contingency period) by which specific
phases of the construction of the Building and development of the Project are
projected to occur, subject to extension for Permitted Delay. Each such date
is an "Outside Completion Date."
"PROJECT LEASING DEFAULT SCHEDULE" means the schedule identified as such
in the most recently approved Project Plan, if any, setting forth the outside
dates (including a reasonable contingency period) (each an "Outside Leasing
Target Date") by which 50%, 70%, and 90% of the rentable square feet of the
office and retail space of the Building is projected to have been leased
pursuant to executed leases approved by the Members, subject to extension for
Permitted Delay. The Outside Leasing Target Date (including a reasonable
contingency period), for the
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leasing of 90% of such rentable space shall be eighteen (18) months after
Substantial Completion, subject to extension for Permitted Delay.
"PROJECT PLAN" means the construction and development plan for the
Project pursuant to the Plans and Specifications, including a budget for all
Development Costs based on actual contracts or bids approved by the Members
and costs of financing shown in the Construction Loan Commitment. After
approval by the Members, the Project Plan shall form a part of the Budget and
Operating Plan.
"PROJECTED EXPENSES" means for any period an amount equal to the sum of
all cash operating expenses of the Company Property projected in the Budget
and Operating Plan to be expended by the Company including, without
limitation, (A) utilities, (B) maintenance and repairs, (C) administrative
costs, (D) management and leasing fees, (E) cleaning, (F) security, (G)
insurance and (H) real estate taxes, personal property taxes and sales taxes,
provided that for purposes of calculating SNOI (Unleased Space), Projected
Expenses shall be zero ($0). Projected Expenses shall be calculated without
any deductions for debt service (including interest), depreciation or
amortization of the Company Property, any capitalized expenditure (as
determined in accordance with GAAP), any fees, commissions, expenses or
allowances payable to any member or Affiliate (other than the portion of the
management and leasing fees which is at market rates) or other non-cash
charges.
"PROJECTED LEASES" means the leases of retail and office space and
Storage Space of the Unleased Space on the terms projected in the Unleased
Space Projection.
"PROJECTED REVENUES" means for any period an amount equal to total gross
cash revenues projected in the Budget and Operating Plan to be received from
the Company Property for such period, including (A) the total amount payable
by all tenants, licensees, concessionaires and others occupying or having a
right to use or occupy any portion of the Company Property, including, but not
limited to, Stated Rents (B) parking fees, service income, utility and
telephone service fees. Stated Rents contained in the Budget and Operating
Plan for any space which became subject to Actual Leases subsequent to
preparation of the Budget and Operating Plan shall be replaced in calculating
Projected Revenues by the Stated Rents under such Actual Leases; provided for
purposes of calculating SNOI (Unleased Space), Projected Revenues from the
Unleased Space shall be as stated in the Unleased Space Projection.
"PROPERTY" means the Company Property or any other real estate asset
owned by the Company and all other Company Assets and rights associated with
such real estate asset.
"READILY MARKETABLE SECURITIES" means those securities that (a) are (i)
debt or equity securities of or other interests in any Person that are traded
on a national security exchange, reported on by the National Association of
Securities Dealers Automated Quotation System or otherwise actively traded
over the counter or (ii) debt securities of an issuer that has debt or equity
securities that are so traded or so reported on and that a nationally
recognized securities firm has agreed to make a market in and (b) are not
subject to restrictions on transfer as a result
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of any applicable contractual provisions or the provisions of the Securities
Act of 1933, as amended.
"REASONABLE PERIOD" has the meaning set forth in Section 13.01(c).
"RESERVE ACCOUNTS" has the meaning set forth in Section 9.05 hereof.
"REVENUES" has the meaning set forth in Appendix A.
"SALE" has the meaning set forth in Section 10.05(a).
"SHORTFALL" has the meaning set forth in Section 4.02.
"STABILIZED NET OPERATING INCOME" or "SNOI" means:
(i) With respect to a 90% Call Offer ("SNOI (90%)"), Net
Operating Income for the twelve (12) full calendar month period
following the Call Offer Date for which Projected Revenues have been
determined based on:
(A) Occupancy assumed to be the greater of Actual Occupancy or Target
Occupancy;
(B) Stated Rents from Actual Leases in place of any corresponding
amounts in the Budget and Operating Plan;
(C) For office space up to Target Occupancy and not covered by Actual
Leases, Stated Rents assumed to be the same average Stated Rents as
provided in Actual Leases of office space;
(D) For any retail space up to Target Occupancy and not covered by
Actual Leases, Stated Rents assumed to be the same average Stated
Rents as provided in Actual Leases of retail space; and
(E) For any Storage Space up to Target Occupancy and not covered by
Actual Leases, Stated Rents assumed to be the same average Stated
Rents as provided in Actual Leases of storage space.
(F) Projected Expenses as set forth in the Budget and Operating Plan
but on a fully grossed up basis.
(ii) With respect to a 70% Call Offer ("SNOI (70%)"), Net
Operating Income for the twelve (12) full calendar month period
following the Call Offer Date for which Projected Revenues have been
determined based on (A) Stated Rents from Actual Leases in place of
any corresponding amounts in the Budget and Operating Plan, (B) the
inclusion of no Projected Revenues with respect to any Unleased Space,
and (C)
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Projected Expenses as set forth in the Budget and Operating Plan but
on a fully grossed up basis.
(iii) Net Operating Income based on the Projected Revenues and
Projected Expenses set forth in the Unleased Space Projection with
respect to Unleased Space, ("SNOI (Unleased Space)").
"STATED RENT" means the stated annual rent (including base and percentage
and expense and tax reimbursements) under Actual Leases or Projected Leases,
as applicable, without deduction for rent abatements, for the twelve (12) full
calendar month period commencing for each lease the later of the Call Offer
Date or the date rents actually become payable under the lease.
"STORAGE SPACE" shall mean dedicated storage space (excluding unleased
office and retail space).
"SUBSTANTIAL COMPLETION" means the shell and core of the Building has
been completed substantially in accordance with the Plans and Specifications,
as certified to by the Project architect and tenant improvement work has
commenced.
"TARGET ACCOUNT" has the meaning set forth in APPENDIX A.
"TARGET OCCUPANCY" means 95% of the rentable square feet of each of the
retail, office and storage space of the Building.
"TAX BASIS" has the meaning set forth in APPENDIX A.
"TAX MATTERS PARTNER" has the meaning set forth in APPENDIX A.
"TRANSFER" has the meaning set forth in Section 10.01.
"TRANSFEREE" has the meaning set forth in Section 10.01.
"TRANSFER DOCUMENTS" has the meaning set forth in Section 10.06(b).
"TREASURY REGULATION" and "TREAS. REG." has the meaning set forth in
APPENDIX A.
"UNLEASED SPACE" means that portion of rentable retail, office and
storage space of the Building not subject to Actual Leases as of the Call
Offer Date (but excluding therefrom the last 5% projected to be leased in the
Lease-Up Schedule of the rentable office, retail and storage space of the
Building).
"UNLEASED SPACE PROJECTION" has the meaning set forth in Section 8.01(b).
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"UNLEASED SPACE VALUE" means the amount therefor determined as provided
in Section 8.01(b)(iii).
1.02 OTHER DEFINED TERMS: As used in this Agreement, unless otherwise
specified, (a) all references to Sections, Articles, Exhibits, Schedules or
paragraphs are to Sections, Articles, Exhibits, Schedules or paragraphs of
this Agreement, (b) "hereof" and "herein" refers to this Agreement in its
entirety and (c) each accounting term has the meaning assigned to it in
accordance with GAAP.
1.03 TAX MATTERS TERMS: Additional terms used herein are defined in
Appendix A, Tax Matters.
1.04 DEFINITIVE JOINT VENTURE AGREEMENT: This Agreement represents the
"definitive joint venture agreement executed and delivered" pursuant to the
penultimate paragraph of that certain letter agreement by and between Prime GR
and Beitler DC dated March 11, 1998 ("Letter Agreement").
II. ORGANIZATION
2.01 FORMATION: The Members hereby agree to form the Company as a
limited liability company under and pursuant to the Delaware Act, upon and
subject to the terms and conditions set forth in this Agreement. Prime GR or
any other Person authorized by Prime GR or approved by the Members is hereby
authorized and directed to form the Company by filing a certificate of
formation of the Company (the "Certificate of Formation") in the office of the
Secretary of State of the State of Delaware. Beitler or any other Person
authorized by Beitler or approved by the Members is hereby authorized to file
and record any amendments to the Certificate of Formation and such other documen
ts as may be required or appropriate under the Delaware Act or the laws of any
other jurisdiction in which the Company may conduct business or own property.
2.02 NAME AND PRINCIPAL PLACE OF BUSINESS: (a) The name of the Company
is set forth on the cover page to this Agreement. The Members may change the
name of the Company from time to time and may adopt one or more fictitious
names for use by the Company. All business of the Company shall be conducted
under such name, and title to all assets of the Company shall be held in such
name.
(b) The principal place of business and office of the Company shall be
initially located at the offices of the Managing Member, c/o J. Paul Beitler
Development Company, 181 West Madison Avenue, Suite 3900, Chicago, Illinois
60602. The Members may from time to time change such principal office and
place of business or may change or establish such additional offices or places
of business of the Company as it may deem necessary or appropriate for the
operation of the Company's business.
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2.03 TERM: The term of the Company shall commence on the date of the
filing of the Certificate of Formation pursuant to the Delaware Act and shall
continue in existence perpetually, unless sooner terminated by the Members or
further extended by the unanimous agreement of the Members, pursuant to the
provisions of this Agreement.
2.04 REGISTERED AGENT, REGISTERED OFFICE AND FOREIGN QUALIFICATION: The
name of the Company's registered agent for service of process shall be
Corporation Service Company, and the address of the Company's registered agent
and the address of the Company's registered office in the State of Delaware
shall be Corporation Service Company, 1013 Centre Road, Wilmington, Delaware
19805. Such agent and such office may be changed from time to time by the
Members. Beitler or any other Person authorized by Beitler or approved by the
Members, is hereby authorized, for the purpose of authorizing or qualifying
the Company to do business in any state, territory or dependency of the United
States in which it is necessary or expedient for the Company to transact
business, to do any and all acts and things necessary to obtain from such
state, territory or dependency any such authorization or qualification,
including any filing or recording deemed necessary for or by Prime GR.
2.05 PURPOSE: (a) The purpose of the Company shall be:
(i) To acquire, own, manage, develop, operate, finance, refinance,
lease, sell and otherwise deal with and dispose of part or all of the
Company Property;
(ii) To acquire, own, manage, develop, operate, finance, refinance,
lease, sell and otherwise deal with and dispose of part or all of any
other Property or Company Assets as determined appropriate by the
Members;
(iii) To construct and contract for and supervise all work necessary
or appropriate for construction of any improvements on the Property
and/or the Parcels (including any and all improvements ancillary
thereto) as determined appropriate by the Members; and
(iv) To conduct all activities reasonably necessary or desirable to
accomplish the foregoing purposes.
(b) The Company shall not engage in any other business or activity or
acquire any Property other than the Company Property without the approval of
the Members.
(c) The Members acknowledge and agree that the financial statements of
the Company may be required by GAAP and/or the Securities and Exchange
Commission to be consolidated at all times or from time to time with the
financial statements of Prime GR and Prime GR Trust. Accordingly, the books
and records of the Company and the financial reports required to be prepared
and furnished to the Members and/or Members pursuant to Section 9.03 shall be
prepared in accordance with GAAP and all other standards applicable to Prime
GR Trust as a Reporting Company.
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III. MEMBERS
3.01 ADMISSION OF MEMBERS: Beitler and Prime GR are hereby admitted as
members of the Company and shall be shown as such on the books and records of
the Company. Except as expressly permitted by this Agreement, no other Person
shall be admitted as a member of the Company, and no additional Interests
shall be issued, without the approval of the Members.
3.02 LIMITATION ON LIABILITY: Except as otherwise expressly provided in
the Delaware Act, the debts, obligations and liabilities of the Company,
whether arising in contract, tort or otherwise, shall be solely the debts,
obligations and liabilities of the Company, and no Member shall be obligated
personally for any such debt, obligation or liability of the Company solely by
reason of being a member of the Company. Except as otherwise expressly
provided in the Delaware Act, the liability of each Member shall be limited to
the amount of capital contributions required to be made by such Member in
accordance with the provisions of this Agreement, but only when and to the
extent the same shall become due pursuant to the provisions of this Agreement.
3.03 PRIME RETAIL: The Members agree to develop the Company Property as
three (3) separately saleable parcels, one for the parking, one for the retail
space and one for the office space (whether by means of a so-called horizontal
subdivision or by submission of the Company Property to a condominium regime),
and that notwithstanding anything to the contrary contained herein Prime GR
may assign its Interest in the Company to an entity (the "Venture") wholly
owned by Prime GR and/or its Affiliates and Prime Retail, L.P. ("Retail")
and/or its Affiliates, provided that Prime GR shall notify Beitler of its
intention to do so on or before June 1, 1998.
(a) In the event Prime GR assigns its Interest to the Venture, the Venture
shall be deemed to be an Initial Member and shall have all of the rights and
obligations of Prime GR arising hereunder.
(b) In the event the Venture exercises a Call Offer as provided in
Section 8.01, the equity interests to be paid for Beitler's Interest shall be
a combination of Common Units and operating partnership units of Retail
("Retail Units"), such that the value of the Retail Units shall bear the same
proportion to the value of the Common Units as the "profit" (calculated as
hereinafter provided) attributable to the retail space in the Building bears
to the "profit" attributable to the office space in the Building. For
purposes of this Section 3.03, the profit attributable to the retail or office
space in the Building shall be equal to the difference between (i) the Net
Capitalized SNOI attributable to the income from the retail or office space
and associated parking, as applicable, less (ii) the portion of Development
Costs allocable to the retail or office space and associated parking, as
applicable. If the Members are unable to agree upon an allocation of
Development Costs between the office space and the retail space, such
allocation shall be made by the general contractor and the architect for the
Project, whose allocation shall be binding upon the Members.
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IV. CAPITAL
4.01 INITIAL CAPITAL CONTRIBUTIONS: (a) Simultaneously with the full
execution of this Agreement, Beitler shall contribute or cause to be
contributed to the Company (i) all of Beitler's right, title, and interest in
and to the Company Property (including, without limitation, all of Beitler
DC's interest therein and the $500,000 paid by Beitler DC as earnest money
under the Purchase Contract), (ii) all of Beitler's, Beitler DC's and either
of their Affiliates' right, title, and interest in and to any reports, work
product, due diligence, test results, analyses and other evaluations regarding
the Company Property (the "Reports") (which Reports shall be deemed to have no
value), and (iii) $500,000 in cash. The Members agree that, on the date
hereof, the agreed fair market value of the contributions described in
subsection (i) above (net of any debt and other liabilities and expenses to
which such contribution is subject or which the Company is assuming) is equal
to $500,000. Upon making all of the Capital Contributions provided for in
this Section 4.01(a), Beitler's Capital Account shall be credited with an
amount equal to $1,000,000 (its "Initial Capital Contribution").
(b) Simultaneously with the full execution of this Agreement, Prime GR
shall contribute or cause to be contributed to the Company pursuant to this
Section 4.01, (i) all of Prime GR's right, title and interest in and to the
Company Property (including, without limitation, all of Prime GR's $500,000
earnest money payment under the Purchase Contract), (ii) all of Prime GR's
right, title, and interest in and to any reports, work product, due diligence,
test results, analyses and other evaluations regarding the Company Property,
if any (which shall be deemed to have no value), and (iii) $5,325,000.00 in
cash. The Members agree that, on the date hereof, the agreed fair market
value of the contributions described in subsection (i) above (net of any debt
and other liabilities and expenses to which such contributions are subject or
which the Company is assuming) is equal to $500,000. Upon making all of the
Capital Contributions provided for in this Section 4.01(b), Prime GR's Capital
Account shall be credited with an amount equal to $5,825,000.00.
(c) If at any time or from time to time after May 31, 1998, and prior to
the earlier of (i) October 1, 1999 and (ii) satisfaction of the Contribution
Condition, additional funds are required by the Company to meet the
obligations or needs of the Company as shown in the Current Budget and
Operating Plan, including, without limitation, to satisfy any operating
deficit, and there are not sufficient reserves held by the Company or
available cash flow of the Company as shown in such Current Budget and
Operating Plan (a "Predevelopment Shortfall"), the Members (or, in the case of
Necessary Expenses included in any Predevelopment Shortfall, any Member) may
(but shall not be obligated to) request Prime GR to make a further Capital
Contribution ("Additional Capital Contribution") in the amount of such
Predevelopment Shortfall. If so requested by the Members (or, in the case of
Necessary Expenses included in any Predevelopment Shortfall, by any Member),
Prime GR shall, within five (5) business days thereafter, contribute the
amount of the applicable Predevelopment Shortfall subject to the limits set
forth in Section 4.01(d). Only one Additional Capital Contribution may be
requested during any 60 day period.
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(d) The aggregate amount of all Capital Contributions made by Prime GR
pursuant to this Section 4.01 and not returned shall not at any time exceed
$7,500,000 (its "Initial Capital Contribution").
4.02 DEVELOPMENT COSTS CONTRIBUTIONS: (a) If at any time or from time
to time, subsequent to the satisfaction of the Contribution Condition and
prior to Substantial Completion, additional funds are required by the Company
to meet the obligations or needs of the Company as shown in the Current Budget
and Operating Plan, including, without limitation, to satisfy any operating
deficit or to construct any improvements or alter any improvements on the
Company Property and there are not sufficient reserves held by the Company or
available cash flow of the Company as shown in such Current Budget and
Operating Plan (a "Shortfall") and in a draw request under the Construction
Loan or a request for funding prepared by the Managing Partner which contains
substantially the same information and documentation that would be required to
request a draw under the Construction Loan, which draw request or request for
funding shall have been approved by Prime GR, which approval shall not be
unreasonably withheld or delayed, not less than five (5) business days prior
to any corresponding request of Prime GR to make a Development Costs
Contribution; the Members (or, in the case of Necessary Expenses included in
any Shortfall, any Member) may (but shall not be obligated to) request Prime
GR to make a further Capital Contribution ("Development Costs Contributions")
in the amount of such Shortfall. If so requested by the Members (or, in the
case of Necessary Expenses included in any Shortfall, by any Member), Prime GR
shall, within five (5) business days thereafter, contribute the amount of the
applicable Shortfall subject to the limits set forth in Section 4.02(b). Only
one Development Costs Contribution may be requested during any thirty (30) day
period.
(b) The aggregate amount of all Capital Contributions made by Prime GR
pursuant to this Section 4.02 and not returned shall not exceed at any time
its Development Costs Commitment. Any excess from time to time of Prime GR's
Capital Contributions over its Development Costs Commitment shall be refunded
to the extent of available Net Cash Flow as provided in Section 6.02(b).
(c) For the purpose of determining the amount of Development Costs
Contributions made by Prime GR pursuant to this Section 4.02, upon the
election of Prime GR in its sole discretion and, subject to the provisions of
Section 6.02(d), the amount of any Guarantee Contribution by Prime GR shall be
treated as if it were a cash contribution pursuant to Section 4.04(a). Any
reduction in the amount of Prime GR's Guarantee Contribution shall result in a
corresponding reduction in the amount deemed to have been made by Prime GR as
a Capital Contribution.
4.03 DEFICIT CONTRIBUTIONS: (a) If at any time or from time to time
additional funds are required by the Company to meet any obligations or needs
of the Company shown in a Current Budget and Operating Plan, including,
without limitation, to satisfy any operating deficit or to construct any
improvements or alter any improvements on the Company Property, and there are
not sufficient reserves held by the Company or available cash flow of the
Company as shown in such Current Budget and Operating Plan, and no Capital
Contribution therefor can be required under Sections 4.01 or 4.02 (a "Deficit
Shortfall"), the Members or any Member may (but shall
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not be obligated to) request that the Members make contributions in cash
("Deficit Contributions") in the amount of such Deficit Shortfall. If so
requested by the Members (or, in the case of Necessary Expenses included in
any Deficit Shortfall, by any Member), each Member may, but shall not be
required to, within fifteen (15) business days thereafter contribute its pro
rata share (based upon the relative Percentage Interests then in effect) of
the amount of the applicable Deficit Shortfall.
4.04 CAPITAL CONTRIBUTIONS AND REMEDIES: (a) Except as otherwise
provided in Section 4.01(a), Section 4.01(b), Section 4.02(c) or Section
6.02(d), all Capital Contributions shall be made by wire transfer of funds to
the Company account designated by the Members.
(b) If any Member (the "Non-Contributing Member") fails to timely make
any Capital Contribution (or any portion thereof) (a "Failed Contribution")
requested or required by Sections 4.01, 4.02 or 4.03 hereof, and any other
Member (the "Other Member") has made any share required by it to be made of
such Capital Contribution, if any, then the Other Member will have the
following rights and/or remedies:
(i) If the Failed Contribution was an Additional Capital Contribution
or a Development Costs Contribution, the Company or Beitler (acting
alone) on behalf of the Company may exercise any and all rights and
remedies available at law or in equity to enforce Prime GR's
obligation to make such Failed Contribution or for damages suffered or
incurred by Beitler or the Company by reason of the default by Prime
GR;
(ii) If the Failed Contribution was a Deficit Contribution, the Other
Member, as its sole and exclusive remedy, may cause any one (but only
one) of the following actions to be taken by delivery of notice to
such effect to the Company and the Non-Contributing Member;
(A) The Other Member may contribute the Non-Contributing
Member's pro rata share of such requested Deficit Contribution (in
which case, if such Failed Contribution is subsequently made by the
Non-Contributing Member, it shall be paid over by the Company to the
Other Member); or
(B) The Other Member may withdraw its share of such requested
Deficit Contribution.
(c) Each Member acknowledges and agrees that the other Members would not
be entering into this Agreement were it not for (i) the Members agreeing to
make the Capital Contributions provided for in Section 4.01, 4.02 and 4.03 of
this Agreement, and (ii) the remedy provisions in this Section 4.04.
4.05 CAPITAL ACCOUNTS: A Capital Account shall be maintained for each
Member in the manner set forth in Article II of APPENDIX A. The provisions of
APPENDIX A are intended to comply with the requirements of Treas. Reg. Section
signed 1.704-1(b)(2)(iv) with respect to
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substantial economic effect, and shall be interpreted and applied accordingly.
Subject to the foregoing, the determination of Capital Account and Adjustments
by the Tax Matters Partner shall be presumptively correct.
4.06 NO FURTHER CAPITAL CONTRIBUTIONS: Except as expressly provided in
this Agreement or with the prior written consent of the Members, no Member
shall be required or entitled to contribute any other or further capital to
the Company, nor shall any Member be required or entitled to loan any funds to
the Company. No Member will have any obligation to restore any negative or
deficit balance in its Capital Account upon liquidation or dissolution of the
Company, and any such negative or deficit balance shall not be deemed an asset
of the Company.
V. INTERESTS IN THE COMPANY
5.01 PERCENTAGE INTERESTS: The Percentage Interests of the Members may
be adjusted only as set forth in this Agreement.
5.02 RETURN OF CAPITAL: No Member shall be liable for the return of the
Capital Contributions (or any portion thereof) of any other Member, it being
expressly understood that any such return shall be made solely from the assets
of the Company. No Member shall be entitled to withdraw or receive a return
of any part of its Capital Contributions or Capital Account, to receive
interest on its Capital Contributions or Capital Account or to receive any
distributions from the Company, except as expressly provided for in this
Agreement or under applicable law.
5.03 OWNERSHIP: All assets of the Company (including the Company
Property) shall be owned by the Company, subject to the terms and provisions
of this Agreement.
5.04 WAIVER OF PARTITION; NATURE OF INTERESTS IN THE COMPANY: Except as
otherwise expressly provided for in this Agreement, each of the Members hereby
irrevocably waives any right or power that such Member might have:
(a) To cause the Company or any of its assets to be partitioned;
(b) To cause the appointment of a receiver for all or any portion of the
assets of the Company;
(c) To compel any sale of all or any portion of the assets of the
Company pursuant to any applicable law; or
(d) To file a complaint, or to institute any proceeding at law or in
equity, to cause the termination, dissolution or liquidation of the Company.
Each of the Members has been induced to enter into this Agreement in reliance
upon the waivers set forth in this Section 5.04, and without such waivers no
Member would have entered into this
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Agreement. No Member shall have any interest in any specific assets of the
Company (including the Company Property). The interests of all Members in
this Company are personal property.
VI. ALLOCATIONS AND DISTRIBUTIONS
6.01 ALLOCATIONS: For each Company taxable year or portion thereof, Net
Profit and Net Loss shall be allocated as provided in APPENDIX A.
6.02 DISTRIBUTIONS: Except as provided in Section 3.3 of APPENDIX A,
the Company shall make quarterly distributions of Net Cash Flow (to the extent
and if available) to the Members in the following manner and order of
priority:
(a) First, an amount of such Net Cash Flow shall be distributed
(in the order and priority set forth below) to the Members until each
of the Members has received distributions of Net Cash Flow, pursuant
to this Section 6.02(a) and Section 3.3 of APPENDIX A, in an aggregate
amount (for the current period and all previous periods) equal to the
sum of (i) the aggregate of its Deficit Contributions made pursuant to
this Agreement and (ii) a 22% cumulative annual preferred return
(unless waived or reduced by the Member entitled to receive it, in
such Member's sole discretion and without implying any obligation to
waive or reduce such preferred return) compounded quarterly on the
average daily balance of its aggregate unreturned Deficit
Contributions made pursuant to this Agreement (with distributions made
pursuant to clause (i) and clause (ii) hereof deemed to be made first
with respect to the return described in clause (ii) hereof and then
with respect to the aggregate Deficit Contributions described in
clause (i) hereof). Amounts distributable under this Section 6.02(a)
shall be distributed to the Members in the reverse order in which such
aggregate Deficit Contributions were made; that is, the most recent
Deficit Contributions made pursuant to this Agreement, together with
the corresponding cumulative 22% annual preferred return, shall be
returned or paid first to the Members having made such Deficit
Contribution, and then, the next most recent Deficit Contribution,
together with the cumulative 22% annual preferred return thereon,
shall be returned or paid to the Members having made such Deficit
Contribution, etc.; and
(b) Thereafter, an amount of the remaining Net Cash Flow equal
to the amount, if any, by which Prime GR's total Capital Contributions
made and not returned exceed its Development Costs Commitment;
(c) Thereafter, any remaining Net Cash Flow shall be distributed
to the Members in accordance with and in proportion to their
respective Payout Percentages, determined as of the moment each dollar
of such distribution is made (as the same may vary from time to time
as each dollar of such Net Cash Flow is distributed to the Members).
Any distributions made pursuant to this Section 6.02(c) or Appendix A,
Section 3.3, shall be deemed to be made first with respect to the
cumulative annual preferred return components and then with respect to
the return of the applicable Capital Contribution.
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(d) Any distribution to Prime GR representing a return of a
Capital Contribution which is a Guarantee Contribution comprised of
Cash Collateral shall be paid to Prime GR only upon the absolute
assignment (subject to the interest therein of the Lender) to the
Company by Prime GR of all or that portion of such Cash Collateral
having a value equal to the value of such distribution. Any
distribution to Prime GR representing a return of a Capital
Contribution which is a Guarantee Contribution not comprised of Cash
Collateral must, in Prime GR's sole discretion, either (i) be applied
to the Construction Loan secured by such Guarantee Contribution or
otherwise paid as a Guarantee Payment, (ii) be retained by the Company
as a cash Capital Contribution or (iii) be paid into an escrow created
by Prime GR to secure its obligation to fund the guarantee or letter
of credit comprising such Guarantee Contribution, which escrow shall
continue until the earlier to occur of (A) payment of such amount to
the Lender as a Guarantee Payment or (B) any claim with respect to
such guarantee or letter of credit of the Lender or with respect to
any Construction Loan against the Member has terminated, whereupon the
escrowed amount shall be paid to the Company as a Cash Contribution of
the Member. Any such distribution to Prime GR representing a return
of a Capital Contribution in the form of a Guarantee Contribution
shall reduce Prime GR's Capital Contributions. Any amount paid
pursuant to this Section 6.02(d) as a Cash Contribution of the Member
shall, if appropriate pursuant to this Section 6.02 or Section 3.3 of
Appendix A, thereupon be distributed to the Members.
(e) Any preferred return payable to Prime GR with respect to
Guarantee Contributions pursuant to Section 6.02(c) shall be reduced
by the amount of interest paid by the Company on a portion of the
Construction Loan equal to the amount of such Guarantee Contribution
for the period with respect to which such preferred return is due and
by any additional financing fees or other charges paid by the Company
therefor.
(f) Returns of Capital Contributions pursuant to Section 6.02(c)
shall be deemed to be made to a Member first with respect to any
Capital Contributions of such Member that are not Guarantee
Contributions and then with respect to such Member's Guarantee
Contributions. Preferred returns on Capital Contributions made to the
Company will, in each case, be calculated from the actual date of
contribution.
VII. MANAGEMENT
7.01 MANAGEMENT: (a) Except as otherwise expressly provided in this
Agreement, the business and affairs of the Company shall be vested in and
controlled by the Members. The Members shall act by means of and through
their authorized representatives appointed in writing pursuant to Section 7.02
("Member Representatives"). Each Member Representative appointed by a Member
shall act as agent for and under the sole and exclusive direction and control
of such Member and shall be free to represent the views and positions of such
appointing Member. All decisions made with respect to the management and
control of the Company and approved by the Members (except only for any
decisions which by the express terms of this Agreement require the approval of
either of the Members) shall be binding on the Company and all Members. The
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Members shall delegate certain managerial functions to the Managing Member,
who shall be responsible for performing, or for causing to be performed, such
duties as described in Section 7.03 hereof. The Members may also delegate in
writing such other of their powers, duties, responsibilities and management
functions as they may from time to time determine to the Managing Member, any
other Member, or any officer, employee or agent of any Member or the Company.
Except as otherwise expressly provided in this Agreement or as otherwise
approved by the Members or otherwise approved or provided for in the Budget
and Operating Plan, the Managing Member shall have the sole authority to
authorize and approve all matters pertaining to the Company's business, other
than the following matters (each a "Major Decision"):
(i) The making of any decision and the implementing of any decision
to acquire any Property (including without limitation the Company
Property); committing to make or increase any non-refundable deposit
in connection with the acquisition of any Property (or allowing any
refundable deposit to become non-refundable); the execution and
delivery of any agreement, contract, binding letter of intent or other
document or instrument to purchase any Property; any assignment (in
whole or in part) of any such agreement, contract, letter of intent or
other document or instrument; the taking of any action required or
permitted to be taken thereunder (including, without limitation,
approval of proposed third party costs in connection with any due
diligence and closing costs, and approval of structural/engineering
and environmental reports, in each case prior to closing) or any
decision to terminate any such agreement, contract, letter of intent
or other document or instrument (the Members agree that no Member will
be paid any acquisition fee with regard to the Company's purchase of
any Property), provided, that the Members hereby approve the
acquisition of the Company Property, the assignment of the benefits
and assumption by the Company of the obligations of the purchaser
under the Purchase Contract, entering into the Acquisition Loan, and
the payment of the "Purchase Price", "Closing Costs", "Financing
Costs" and "Due Diligence Costs" set forth in the Preliminary Budget
and Operating Plan, Exhibit 2 hereto, in amounts not to exceed the
amounts shown thereon and subject to upon presentation of actual
invoices and statements therefor;
(ii) The making of any decision to develop, rehabilitate or construct
any improvements upon any Property (or any material variation of any
decision previously approved by the Members); the expending of any
funds in connection with any such activity except to the extent
specifically provided for or contemplated in a Current Budget and
Operating Plan and the selection of any general contractor therefor
other than Morse-Diesel, unless in each case, the same has been
previously approved by the Members;
(iii) The approval of all plans and specifications, including without
limitation the Plans and Specifications and design, architectural
finishes and engineering specifications, relating to the construction
of or alteration of any improvements on the Company Property or any
other Property or material changes or modifications to such Plans and
Specifications;
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(iv) The approval of all condominium declarations, air rights
agreements, operating agreements, easements, covenants, conditions,
restrictions and other documents which will benefit or burden the
Company Property or any other Property and the approval of all
applications for or other formal correspondence relating to a
modification of the zoning for the Company Property or any other
Property;
(v) Any financing or refinancing of any Property and the use of any
proceeds thereof, including, without limitation, interim and permanent
financing, including any loan to finance part or all of the costs or
expenses of any development or construction activities to be
undertaken with regard to any Property, and any other financing or
refinancing of the operations of the Company, any modification,
extension, renewal or any recasting thereof and each draw or advance
request thereunder, provided Prime GR shall have the exclusive right
and authority to select the interest rate option to be selected by the
Company from time to time under any Acquisition Loan or Construction
Loan and, further provided, either Member may elect to extend the term
of the Acquisition Loan for six (6) months at the Company's expense
and on the terms provided in the Acquisition Loan documents.
(vi) Any sale, transfer or other disposition of all or any material
portion of any Property; (vii) The approval of any Budget and
Operating Plan and any amendments or modifications thereto;
(vii) The approval of any Budget and Operating Plan and any amendments
or modifications thereto;
(viii) The making of any expenditure or incurring of any obligation
by or on behalf of the Company not shown in, or that varies from or is
not specifically included in or contemplated under, a Current Budget
and Operating Plan;
(ix) To determine whether to request any Additional Capital
Contribution, Deficit Contribution or Development Costs Contribution
pursuant to Sections 4.01, 4.02 or 4.03 (other than for Necessary
Expenses included in any Shortfall, Predevelopment Costs Shortfall or
Deficit Shortfall);
(x) Any lease of any portion of any Property over 10,000 square feet
or for a term greater than five (5) years, including renewal options,
or any amendment or modification thereto or termination thereof; and
any other lease, or any termination thereof, which is not in
accordance with lease guidelines for such Property included in the
Current Budget and Operating Plan;
(xi) The establishment of reserves, determination of the amount of
available Net Cash Flow and, except as otherwise provided in Section
6.02 or Section 3.3 of APPENDIX A, making of distributions to Members;
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(xii) The institution of any legal proceedings in the name of the
Company, settlement of any legal proceedings against the Company and
confession of any judgment against the Company or any property of the
Company;
(xiii) The possession or use of any Property (including any portion
of any Property) for other than Company purposes;
(xiv) Any issuance or sale by the Company of any securities or of
additional interests in the Company, any merger, consolidation or
other business combination transaction involving the Company or other
monetization transaction or activities;
(xv) (A) The filing of any voluntary petition in bankruptcy on behalf
of the Company, (B) the consenting to the filing of any involuntary
petition in bankruptcy against the Company, (C) the filing of any
petition seeking, or the consenting to, reorganization or relief under
any applicable federal or state law relating to bankruptcy or
insolvency, on behalf of the Company, (D) the consenting to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator
(or other similar official) of the Company, or a substantial part of
the Property of the Company, (E) the making of any assignment for the
benefit of creditors on behalf of the Company, (F) the admission in
writing of the Company's inability to pay its debts generally as they
become due or (G) the taking of any action by the Company in
furtherance of any such action;
(xvi) The entering into of any asset or property management agreement
or leasing agreement with regard to the Company, or any Property, or
any other agreement anticipating a payment or receipt by the Company
not contemplated in the Budget and Operating Plan, aggregating in
excess of $50,000 to a single Person or related Persons or having a
term in excess of one year (unless terminable by the Company on thirty
(30) or fewer days notice);
(xvii) The engagement of any sales or placement agent or broker not
expressly permitted hereunder for the disposition, financing or
refinancing of any Property;
(xviii) Except to the extent otherwise provided herein, the entering
into or consummation of any transaction or arrangement with any Member
or any Affiliate of any Member, or any other transaction involving an
actual or potential conflict of interest;
(xix) Except to the extent otherwise provided herein, determining the
amount of overhead and other reimbursements or any compensation
payable to any Member or any of its Affiliates pursuant to the terms
hereof or any separate agreement between the Company and a Member or
any of its Affiliates;
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(xx) The appointment of the Company Accountant or any change in the
Company Accountant or the selection of any other auditor or
independent accounting firm for the Company or the making of any
decision to change any other auditor or independent accounting firm of
the Company;
(xxi) Except as otherwise provided in Section 7.04(a), the making of
any decision, taking any action or providing any consent or approval
with regard to any property management or leasing agreement or any
development or construction management agreement with any Member or
any one or more of its Affiliates;
(xxii) The approval, determination or any other action expressly
reserved to the Members under this Agreement, including, without
limitation, any modification, amendment, or renewal of any matter
previously requiring the approval of the Members.
(b) Anything herein to the contrary notwithstanding, in the case of a
default under any Acquisition Loan, Construction Loan, or other loan to the
Company, Prime GR may immediately in its sole discretion make a Capital
Contribution or take any other action on behalf of the Company it deems
appropriate to cure such default.
(c) No Member, other than the Initial Members, shall have any right or
power to participate in or have any control over the Company business, affairs
or operations or to act for or to bind the Company in any matter whatsoever
and no Member other than the Initial Members shall be required or permitted to
consent to, acquiesce in, vote on or approve any action or act taken or
decision made by the Members, except as otherwise specifically provided in
this Agreement.
(d) The Members acknowledge that Prime GR Trust, the managing general
partner of Prime GR, is a Maryland real estate investment trust ("REIT"), and
the Members authorize and direct the Managing Member to formulate, and the
Members shall approve, each Budget and Operating Plan in a manner that
recognizes the status of Prime GR Trust as a REIT and the income, asset and
operating requirements of the Code which are applicable to a REIT (the "REIT
Requirements"). The Budget and Operating Plan will include leasing guidelines
consistent with the REIT Requirements and no action shall be taken which
knowingly contravenes the REIT Requirements unless consented to by Prime GR.
7.02 MEETINGS OF MEMBERS: (a) Each of the Initial Members shall appoint
one or more individuals as representatives ("Member Representatives") who are
authorized to act on behalf of the Member with respect to meetings of Members
and any approvals of Members or such Member required hereunder. The initial
Member Representatives appointed by Beitler shall be J. Paul Beitler. The
initial Member Representatives appointed by Prime GR shall be Richard S. Curto
and Kevork M. Derderian. Each of the Members may, by written notice to the
other, remove any Member Representative appointed by such Member and appoint a
substitute therefor; provided, however, that any new Member Representative
appointed by any Member must either (i) be a partner, member, officer,
director or employee of such Member or of an
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Affiliate of such Member or (ii) be approved by a Member Representative
appointed by the other Initial Member, such approval not to be unreasonably
withheld.
(b) The presence of Member Representatives of each of the Initial
Members shall constitute a quorum for transaction of business at any meeting
of the Members, provided that if only one of the Initial Members is
represented at said meeting, such Member represented at such meeting may
adjourn the meeting at any time without further notice. The act or
affirmative vote of Member Representatives of both Initial Members shall be
the act of the Members.
(c) Any action required to be taken at a meeting of the Members or any
other action which may be taken at a meeting of the Members may be taken
without a meeting if a consent in writing, setting forth the action so taken,
is signed by a Member Representative of each Initial Member. Any such consent
signed by both the Initial Members shall have the same effect as an act of a
majority (in number) of the Members at a properly called and constituted
meeting of the Members at which all of the Members were present and voting.
(d) Member Representatives may participate in and act at meetings of the
Members through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other. Participation in such meeting shall constitute attendance in
person at the meeting of the person or persons so participating.
(e) The Members shall meet from time to time no less frequently than
quarterly, but as often as necessary or desirable to carry out its management
functions. Meetings shall be held at the principal offices of the Company
unless otherwise agreed. A Member Representative of the Managing Members
shall prepare an agenda for each such meeting and shall distribute the same to
each of the Members at least three (3) business days in advance of any such
meeting (for review and comment). Any Initial Member may convene a meeting of
Members upon at least three (3) business days' prior notice to the other
Members specifying the date, time and place of proposed meeting, the agenda
for the meeting and any documents proposed to be approved at the meeting
(unless such notice is waived in writing). A written record of all meetings
of the Members, and all decisions made by them, shall be made by the Member
Representative appointed by the Initial Members as Secretary of the Members,
and kept in the records of the Company and shall be initialed or signed by at
least one Member Representative of each Initial Member. Minutes and/or
resolutions of the Members, when initialed or signed by both Members, shall be
binding and conclusive evidence of the decisions reflected therein and any
authorizations granted thereby and the waiver of any agenda or notice
requirements with respect thereto.
(f) Except as otherwise determined by the Members, no Member or Member
Representative shall be entitled to receive any salary or other remuneration
or expense reimbursement from the Company for his services as a Member or
Member Representative.
(g) Except as otherwise agreed by the Members, the Initial Members shall
meet weekly to review the status of the Project at the principal offices of
the Company or such other location as is agreed upon. Each Initial Member
shall use its best efforts to cause a Member
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Representative or a partner, member, executive officer or director of such
Member or of an Affiliate of such Member to attend each weekly meeting. No
such weekly meeting shall constitute a meeting of the Members unless with
respect to such meeting the agenda and notice requirements of Section 7.02(e)
shall have been complied with.
7.03 MANAGING MEMBER: (a) The Members may designate one of the Members
to act as the managing member of the Company ("Managing Member") to implement
the decisions of the Members. Subject to the provisions of Section 7.01 and
the other provisions of this Agreement, the Managing Member shall (i) conduct
the business of the Company on a day-to-day basis in accordance with the
Budget and Operating Plan and such other guidelines as shall be adopted by the
Members and in accordance with the standard of care required of prudent and
experienced third-party developers and/or asset managers, as the case may be,
performing similar functions, in accordance with customary industry standards,
(ii) perform the duties assigned to it hereunder and (iii) carry out all
decisions and resolutions of the Members. The initial Managing Member shall
be Beitler, which shall remain the Managing Member until changed by action of
the Members or unless Beitler is terminated as the Managing Member pursuant to
Section 7.03(e) hereof. In the event that Beitler or any other Person should
resign or be removed as the Managing Member, Prime GR may (but shall be under
no obligation to) appoint a replacement thereof (including itself, or any
third-party at such rates of compensation as it shall reasonably determine
appropriate). Subject to the limitations set forth in this Agreement (including
, without limitation, the required approval for Major Decisions) and the
guidelines adopted by the Members, the Managing Member, on behalf of the
Company, shall have the power and authority to enter into contracts and leases
on behalf of the Company in accordance with the Current Budget and Operating
Plan approved by the Members, to make expenditures as are required to
implement a Current Budget and Operating Plan, but only to the extent that any
such expenditures and amounts required to be paid by the Company under such
contracts, leases and other instruments and documents are not in excess of the
limitations provided for in Section 7.01(a) (unless such excess has been
approved by the Members). The Managing Member shall have no power or
authority to authorize or approve any Major Decision or to take any material
action with regard thereto, unless the same has been approved by the Members.
The Managing Member shall not be entitled to receive any fees or other
compensation in respect of its activities as the Managing Member except as
otherwise provided in Section 7.04.
(b) In addition to and without limiting any other duties set forth in
this Agreement, the Managing Member shall:
(i) Oversee the operations and management on a day-to-day basis of
any and all of the assets which comprise the Company Property in
accordance with the Budget and Operating Plan;
(ii) Take all proper and necessary actions reasonably required to
cause the Company and all third parties at all times to perform and
comply with the provisions (including, without limitation, any
provisions requiring the expenditure of funds by the Company) of any
loan commitment, partnership agreement, agreement, mortgage, lease, or
other contract, instrument or agreement to which
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the Company is a party or which affects any Company Property or the
operation thereof, other than contracts, instruments or agreemen ts to
which the Managing Member or its Affiliate is a party;
(iii) Pay in a timely manner all non-disputed operating expenses of
the Company and all non-disputed taxes, assessments, charges and fees
payable in connection with the ownership, use and occupancy of the
Company Property, in accordance with the terms of a Current Budget and
Operating Plan or as otherwise provided herein;
(iv) Obtain and maintain insurance coverage on all of the Company
Property as required by the Members, with insurers selected by Prime
GR and, if feasible and more favorable to the Company, under plans
covering Prime GR and for its Affiliates; and pay all non-disputed
taxes, assessments, charges and fees payable in connection with the
ownership, use and occupancy of the Company Property in accordance
with a Current Budget and Operating Plan;
(v) Deliver to the other Members promptly upon the receipt or sending
thereof, copies of any material correspondence with any governmental
authority and copies of all notices, reports, communications, and
other material correspondence between the Company and (A) any landlord
or tenant under any lease, (B) any lender under any mortgage loan, (C)
any holder of a mortgage affecting all or any portion of any Company
Property or which relates to any existing or pending default
thereunder or to any financial or operational information required by
such Person; or (D) any Person relating to any monetary or material
non-monetary default under any material agreement to which the Company
is a party;
(vi) Prepare and deliver to all the Members monthly status reports
and other information necessary to fully advise and apprise the
Members of the status of any acquisitions of, dispositions of, leasing
of, and development activities for, or proposed acquisitions of,
dispositions of, leasing of, and development activities for any
Property and of any proposed amendments (including any variation in
proposed expenditures) to the Budget and Operating Plan (which updates
and status reports, if approved by the Members, are "Status Reports").
Such Status Reports shall include such additional information as shall
be reasonably requested by any Member and shall be delivered to the
Members as soon as reasonably practicable after the end of each such
monthly period, but in any event no later than the 5th business day
following the end of such period.
(vii) Maintain, or cause to be maintained, the books and records
provided for in Article IX and promptly deliver to the other Members
the reports, financial statements and other information provided for
in Article IX hereof;
(viii) If the Managing Member subcontracts with third parties or any
of its Affiliates for the performance, as its agent, of any of the
services to be performed
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by the Managing Member, supervise and oversee the performance of the
services performed by such third parties or Affiliates (in the event
of any such subcontract, references in this Agreement to actions taken
or to be taken by the Managing Member shall include actions taken or
to be taken by such subcontractors), provided that any such delegation
or other subcontracting must be approved in writing in advance by the
Members; and
(ix) Advising the Members as far in advance as reasonably foreseeable
with regard to the amount and timing of any Capital Contributions
which may be required by the Company or necessary to the operations of
the Company.
(c) To the extent that any of the duties of the Managing Member
described in Section 7.03(b) require the expenditure of funds or the incurring
of obligations on behalf of the Company, unless the Members shall have
expressly directed the Managing Member otherwise:
(i) the approval of any Budget and Operating Plan by the Members
shall constitute the authorization and approval of the Managing Member
to expend such funds and incur such obligations in accordance with
such Budget and Operating Plan; provided, that for each major line
item set forth in such Budget and Operating Plan, the Managing Member
is authorized to expend an amount in excess of the budgeted amount not
to exceed in the aggregate for each line item the lesser of $10,000
and 10% of such line item; and
(ii) without regard to amounts set forth in any Budget and Operating
Plan or whether any Budget and Operating Plan has been approved, the
Managing Member is hereby authorized to expend funds for emergency
repairs or other immediately necessary expenditures to avoid material
harm to the value of any Company Property.
(d) Without limiting the authority of the Managing Member pursuant to
Section 7.03(b) above, prior to making any expenditure or incurring any
obligation on behalf of the Company, the Managing Member may require the
Members to certify that such expenditure or obligation has been approved by
the Members.
(e) In addition, the Company shall reimburse the Managing Member for any
out-of-pocket costs incurred by the Managing Member but only to the extent
such expenditures were approved by the Members pursuant to Section 7.02(a).
(f) Notwithstanding anything to the contrary contained in this
Agreement, the Managing Member shall not be obligated to make any expenditures
or advance any funds on behalf of the Company except from the accounts of
funds of the Company, nor shall the Managing Member be obligated to perform
its duties and obligations hereunder if Company funds are not available in
amounts required to perform such duties and obligations. In addition, the
Managing Member shall not, without the prior approval of the Members, unless
previously approved or specifically
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provided for in a Current Budget and Operating Plan or in this Agreement, take
any action constituting a Major Decision.
7.04 SERVICES AND FEES: (a) Beitler and Prime GR will be paid by the
Company the following fees in connection with the Project:
(i) A development fee equal to $3.6 million will be divided equally
between Beitler and Prime GR and paid in equal monthly installments
during the projected period of construction, commencing with the
Construction Loan Opening;
(ii) A construction supervision fee equal to 1% of hard construction
costs (both base building and tenant improvements costs), net of
reasonable amounts paid to any third-party construction managers or
supervisors, will be divided equally between Beitler and Prime GR and
paid in equal monthly installments during the projected period of
construction, commencing with the Construction Loan Opening (all such
third-party construction managers and supervisors and all senior
employees of a Member to whom it delegates base building or tenant
improvements construction supervision are subject to the approval of
the Members, which approval shall not unreasonably be withheld);
(iii) Leasing commissions at market rates, net of market commissions
paid to outside brokers and of market salaries and commissions paid to
inside brokers employed by Beitler, all of such commissions and
salaries to be approved by the Members (which approval shall not be
unreasonably withheld or delayed), will be divided equally between
Beitler and Prime GR for a term of five (5) years commencing April 1,
1998, and paid at such times as leasing commissions are customarily
paid;
(iv) A management fee of $1.00 per square foot per annum of the
rentable area of the office and retail portions of the Building
(exclusive of salaries for the property manager, assistant property
manager, administrative assistant and accountant, which shall be paid
by the Company in addition to such management fee) will be divided
equally between Beitler and Prime GR for a term of five (5) years
commencing on Substantial Completion and paid at the intervals such
fees are customarily paid to third-party managers;
(v) All fees earned by either Member relating to the construction of
tenant improvements in the Company Property will be shared equally
between Prime GR and Beitler, including any construction supervision
fee which is paid by a tenant;
(vi) A project manager's fee equal to $1.8 million shall be payable
to Beitler at the rate of $100,000 per month for the eighteen month
period commencing with the Construction Loan Opening; and
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(vii) Prime GR shall receive a fee equal to 2%, annualized and
payable monthly in arrears, of the aggregate outstanding amount (not
to exceed $3.5 million for the purposes of calculating such fee) of
the Prime Guarantees it shall have provided from time to time to
secure repayment of any Acquisition Loan; and
(viii) Any other fees, not set forth above, earned or received at any
time by either Beitler or Prime GR, or Affiliates of either of them,
with respect to the Company Property or the Project, shall be divided
equally between Beitler and Prime GR.
(b) Prime GR, Prime Group Realty Services Inc., or an Affiliate of Prime
GR or The Prime Group, Inc. shall manage the Company Property for a term
commencing upon Substantial Completion and continuing for five (5) years
thereafter, pursuant to a written management agreement with the Company
("Management Agreement"), which shall provide for the fees set forth in
paragraph (a)(iv) above and otherwise be on customary terms and conditions
satisfactory to the Members.
(c) Beitler, or an Affiliate of Beitler of which J. Paul Beitler is the
sole managing and voting member or has substantially all the management
authority, shall be the exclusive leasing agent for the Company Property for a
Term commencing April 1, 1998 and continuing for five (5) years thereafter,
pursuant to a written leasing agency agreement with the Company ("Leasing
Agency Agreement"), which shall provide for the fees set forth in paragraph
(a)(iii) above and otherwise be on customary terms and conditions satisfactory
to the Members.
(d) Notwithstanding the generality of the foregoing, any such Management
Agreement or Leasing Agency Agreement with a Member or one or more of its
Affiliates will at all times be immediately terminable by any Member on behalf
of the Company (without penalty or fee) upon (i) the sale of the Company
Property, (ii) the transfer of all of the Interests in the Company or of the
Members other than a permitted Transfer, (iii) the expulsion, bankruptcy or
dissolution of such Member (or the occurrence of any such event to any
Affiliate of such Member which is a party to such agreement), (iv) the
occurrence of any Change in Control with regard to such Member (or the
occurrence of any such event with regard to any Affiliate of such Member which
is a party to such agreement), (v) the violation of the transfer restrictions
contained herein by such Member or any of its Affiliates, or (vi) such Member,
or any one or more of its Affiliates which is a party to such agreement (in
its capacity as a service provider under either the management or leasing
agreements with the Company), has been grossly negligent in the performance of
its duties under such agreement or has taken any action or failed to take any
action which constitutes fraud, bad faith or willful misconduct .
(e) Any agreements with any Member or an Affiliate of any Member must be
approved by the Members, and, except as otherwise provided in this Agreement,
no fees or compensation will be paid by the Company to any Member or any of
its Affiliates, unless the same has been approved by the Members or
specifically contemplated in the Budget and Operating Plan.
(f) In addition and notwithstanding the foregoing provisions of this
Section 7.04, the Members may determine that it is appropriate for the Company
to enter into agreements with one
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or more third parties to sell or provide other professional services with
respect to any Company Property or the Company, which agreements shall be
subject to the approval of the Members. The fees for services from such third
parties shall not exceed the prevailing competitive fees being charged for
such services for similar properties in the market where the subject Company
Property is located.
(g) Beitler may delegate to Beitler DC the performance of (but not the
responsibility for) any or all of its duties hereunder as Managing Member so
long as no event occurs with respect to Beitler DC which if it occurred with
respect to Beitler would constitute a Change of Control under Section 7.07
hereof.
7.05 DUTIES AND CONFLICTS: (a) The Members and their respective
officers, employees and Affiliates shall devote such time to the Company
business as they deem to be necessary or desirable in connection with their
respective duties and responsibilities hereunder. Except as otherwise
provided in this Agreement or as otherwise agreed to by the Members or as
approved by the Members, no Member nor any member, partner, shareholder,
officer, director, employee, agent or representative of any Member shall
receive any salary or other remuneration for its services rendered pursuant to
this Agreement.
(b) Each of the Members recognizes that each of the other Members and
its members, partners, shareholders, officers, directors, employees, agents,
representatives and Affiliates, have or may in the future have other business
interests, activities and investments, some of which may be in conflict or
competition with the business of the Company and that except as hereinafter
provided each of the other Members and its members, partners, shareholders,
officers and directors, employees, agents, representatives and Affiliates, are
entitled to carry on such other business interests, activities and
investments. Each of the Members may engage in or possess an interest in any
other business or venture of any kind, independently or with others,
including, without limitation, owning, financing, acquiring, leasing,
promoting, developing, improving, operating, managing and servicing real
property on its own behalf or on behalf of other entities with which any of
the Members is affiliated or otherwise, each of the Members may engage in any
such activities, whether or not competitive with the Company, without any
obligation to offer any interest in such activities to the Company or to the
other Members. Neither the Company nor the other Members shall have any
right, by virtue of this Agreement, in or to such activities, or the income or
profits derived therefrom, and the pursuit of such activities, even if
competitive with the business of the Company, shall not be deemed wrongful or
improper.
7.06 COMPANY EXPENSES: The Company shall be responsible for paying, and
shall pay, all direct fees, costs and expenses related to the business of the
Company to the extent approved by the Members or otherwise authorized by this
Agreement ("Approved Company Costs"), including: (i) acquiring, holding,
owning, developing and operating the Company Property, (ii) all fees payable
under Section 7.04, and (iii) all costs of financing, fees and expenses of
attorneys, financial advisors, accountants, appraisers, brokers and engineers,
and all other fees, costs and expenses directly attributable to the business
and operations of the Company. In the event any such Approved Company Costs
are or have been paid by any Member, such Member shall be entitled to be
reimbursed for such payment. Notwithstanding anything in this
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Agreement to the contrary, in no event shall the Company have any obligation
to pay or reimburse any Member for (a) any direct or indirect general overhead
expense of such Member or (b) the costs and expenses relating to any
employees, staff or other internal personnel necessary to conduct the
day-to-day operations of the Member or provide the financial reporting of the
Company or to oversee the operations of any Company Property, except as
expressly otherwise provided in the Leasing Agreement or the Management
Agreement or (c) any travel expenses, unless the same has been specifically
approved by the Members or is expressly authorized in this Agreement or a
Current Budget and Operating Plan.
7.07 CHANGE IN CONTROL: For purposes of this Agreement, a Change in
Control of shall occur if at any time any of the following occur:
(a) J. Paul Beitler (or an entity wholly owned and controlled by him)
ceases to (i) have substantially all the management authority of Beitler or
(ii) together with his Immediate Family, own at least a 51% equity and voting
interest in and control Beitler;
(b) J. Paul Beitler or his Immediate Family transfers all or any portion
of their respective interests in Beitler to any person or entity other than
transfers to their Immediate Family or to Affiliates of Beitler;
(c) Beitler is dissolved, terminated or liquidated or merged,
consolidated or reorganized into or with another corporation or other legal
person other than an entity controlled by J. Paul Beitler and his Immediate
Family to an extent which would satisfy paragraph (a) above if such entity
were Beitler; or
(d) Beitler sells all or substantially all of its assets to any other
person or entity other than an entity controlled by J. Paul Beitler and his
Immediate Family.
For purposes of this Agreement, the term "Immediate Family" shall mean
and refer to any spouse, ex-spouse, ancestors, lineal descendants and the
brothers and sisters of such persons, any trust established for the benefit of
any of them or any other legal entity owned and controlled exclusively by
them, or the estate or legal representatives of any such person that is
deceased.
7.08 ACTIONS REQUIRING MEMBER APPROVAL: Notwithstanding any other
provision of this Agreement, the unanimous affirmative vote or unanimous
written consent of all Members shall at all times be required to approve the
following matters:
(a) Except as otherwise provided in Section 13.02, the dissolution or
winding up of the Company;
(b) The merger or consolidation of the Company; and
(c) Amendments to this Agreement.
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VIII. CALL OPTIONS
8.01 CALL OPTION: At any time after Substantial Completion and
satisfaction of the applicable Call Offer Condition, Prime GR (the "Call
Offeror") shall have the right to make an offer as described below (the "Call
Offer") to Beitler (the "Call Offeree") as set forth below:
(a) The Call Offer shall (i) be in writing, signed by the Call Offeror
and delivered to Beitler and the Company Accountant and (ii) specify whether
it is a 90% Call Offer or a 70% Call Offer.
(b) (i) If the Call Offer is a 70% Call Offer, a proposed Unleased
Space Projection shall be prepared by the Members (or by each Member if they
cannot agree as herein provided) containing the following projections required
to determine the Unleased Space Value (without duplication of the
corresponding revenue and expense items utilized in calculating Net
Capitalized SNOI (70%)):
(A) Projected Revenues from the Projected Leases for the
twelve (12) full calendar month period following the Call
Offer Date consisting solely of Stated Rent;
(B) Free Rent which will be allowed or incurred in connection
with the Projected Leases;
(C) Lease-Related Capital Expenditures which will be incurred
in connection with Projected Leases;
(D) A Schedule for dates of execution and commencement of
each Projected Lease ("Lease-Up Schedule"); and
(E) Based on the Lease-Up Schedule, Nonreimbursable Expenses.
(ii) The Unleased Space Projection and each component thereof shall
be based on (A) reasonable lease-up timing projections and (B)
reasonable estimates of Stated Rents which will be provided for in the
Projected Leases when leased in arms-length transactions between a
willing landlord and willing tenants in the office space markets
existing as of the Call Offer Date, after due consideration to the (C)
the size, location, area, view and amenities of the Unleased Space,
(D) the rents under and history of leasing of the Building space
covered by Actual Leases as of the Call Offer Date, (E) the
availability of similar space in comparable locations and buildings in
the City of Chicago central business district ("CBD"), (F) the recent,
current and reasonably expected demand for similar space by
prospective tenants and (G) Free Rent and Lease-Related Capital
Expenditures recently, currently, and which over the near term may
reasonably be expected with respect to such similar space;
(iii) Based on the Unleased Space Projection, Capitalized SNOI
(Unleased Space) shall be determined. Based on the Free Rent,
Capitalized Expenditures and Nonreimbursable
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Expenditures projected in the Unleased Space Projection, Net
Capitalized SNOI (Unleased Space) shall be determined, which
calculated amount shall be the "Unleased Space Value".
(iv) The "Unleased Space Projection" shall be approved and "Unleased
Space Value" shall be determined as herein above provided (A) in one
or more meetings by the Initial Members within thirty (30) days of the
Call Offer Date, in which meetings the Initial Members shall use their
best efforts to reach an agreement, or (B) if no such agreement shall
be reached by the end of such thirty (30) day period ("Unleased Space
Valuation Date"), by binding arbitration as herein below in this
Section 8.02(b) provided (in which case the Unleased Space Valuation
Date shall be deferred to the thirtieth (30th) day after the date a
final Unleased Space Value is established).
(v) If as of the original Unleased Space Valuation Date, no Unleased
Space Value has been agreed upon by the Initial Members, each of the
Initial Members shall, on or before such date, give written notice to
the other specifying the name, address and professional qualifications
of the person designated to act as arbitrator on its behalf. Within
ten (10) days thereafter (A) the two (2) arbitrators shall select a
third arbitrator and notify the Initial Members thereof and (B) within
five (5) days after such notification, each of the Initial Members
shall provide the third arbitrator with its proposed Unleased Space
Projections containing such Initial Member's determination of the
Unleased Space Value ("Proposed Unleased Space Projection"), together
with the basis upon which such Initial Member calculated Unleased
Space Value, including the following items:
1. Lease-Up Schedule
2. Projected Revenues of Unleased Space
3. Stabilized Net Operating Income (Unleased Space)
4. Capitalized SNOI (Unleased Space)
5. Lease-Related Capital Expenditures relating to Unleased Space
6. Free Rent relating to Unleased Space
7. Nonreimbursable Expenses relating to Unleased Space
8. Discounted Capital Expenditures
9. Discounted Free Rent
10. Discounted Nonreimbursable Expenses
(vi) All arbitrators appointed shall be MAI Members of the American
Institute of Real Estate Appraisers with not less than ten (10) years
of experience in the appraisal of improved commercial, office building
real estate in the CBD, and be devoting substantially all of their
time to professional appraisal work at the time of appointment, and be
in all respects impartial and disinterested. Each arbitrator shall be
exculpated and indemnified by the Company to the same extent as
Members pursuant to Article XI hereof.
(vii) The decision of the third arbitrator shall be given within a
period of sixty (60) days after the appointment of such third
arbitrator, who shall notify the Initial Members in
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writing of his or her determination of which proposed Unleased Space
Value, either that prepared by Beitler or that prepared by Prime GR,
more closely approximates the third arbitrator's professional opinion
of the accurate Unleased Space Value, which proposal shall thereupon
be the Unleased Space Projection and the Unleased Space Value set
forth herein shall be the Unleased Space Value for the purpose of
determining the Call Offer Price. The third arbitrator shall select
the Unleased Space Value of either Beitler or Prime GR and associated
Unleased Space Value, and shall not have discretion to specify an
Unleased Space Value other than one of the two Unleased Space Values
submitted by Beitler and Prime GR.
(viii) Each party shall pay the fees and expenses of the arbitrator
appointed by or on behalf of such party and the reasonable fees and
expenses of the third arbitrator shall be borne equally by both
parties. If either Initial Member fails to appoint its arbitrator or
deliver its Proposed Unleased Space Projection to the third arbitrator
within the times above specified, the Proposed Unleased Space
Projection of the other Initial Member shall set the Unleased Space
Value. If the two (2) arbitrators so selected cannot agree on the
selection of the third arbitrator within the time above specified,
then either party, on behalf of both parties, may request appointment
of such third arbitrator by application to any Judge of the Circuit
Court of the County of Cook, State of Illinois, upon ten (10) days'
prior written notice to the other party of such intent.
(c) The Company Accountant shall, within 10 calendar days of the later
of the Call Offer Date or the Unleased Space Valuation Date, (i) calculate the
Call Offer Price and (ii) determine and notify the Members of the amount the
Call Offeree would receive as a Member on account of its respective Interest
and any loans made by such Member to the Company if all Company assets were
sold for the Call Offer Price, all liabilities of the Company (including any
loans by any Member to the Company) were paid in full, and the remaining
proceeds were distributed to the Members in accordance with Section 3.3 of
APPENDIX A (the "Offeree Value"). Prime GR shall purchase all of Beitler's
right, title and interest in and to its Interest and in any loans to the
Company for a cash purchase price equal to the Offeree Value, in the form of
limited partnership units in Prime GR ("Common Units"), for which purpose the
value of a Common Unit shall be equal to the average closing price on the New
York Stock Exchange of the common stock of Prime GR Trust into which the
Common Units are convertible ("Common Stock") for the 20 trading days
immediately preceding the Closing. The Common Units shall be exchangeable at
Beitler's option into unrestricted Common Stock, registered under the
Securities Act of 1933, at any time which is more than six months after the
Closing (the "Restricted Period"), provided Beitler may elect by notice to
Prime GR at or prior to Closing to cause the Restricted Period to be extended
six (6) additional months to one calendar year. Beitler shall execute at
closing or shall be deemed to have executed and shall comply with the terms of
the Common Unit Recipient Certifications in a form substantially identical to
APPENDIX B hereto.
(d) Within five (5) business days of being notified of the Offeree Value
by the Company Accountant, Prime GR shall deposit in escrow with a bank or
other financial institution selected by it, as escrowee, an earnest money
deposit in cash in an amount equal to (i) 5% multiplied by (ii) the Offeree
Value to be paid in connection with such purchase, and, if Prime GR fails to
close
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such purchase as provided in this Section 8.01, then Beitler may retain such
deposit and exercise any other rights or remedies available at law or in
equity, including the rights set forth in Article XIII. At Closing upon
receipt of the Common Units, Beitler shall return or cause the return of such
deposit to Prime GR.
(e) Each Member shall be entitled to enforce its rights under this
Section 8.01 and the Sale Contract created pursuant to Section 8.02 by
specific performance. If Prime GR defaults, and fails to cure within any
applicable cure period, under this Section 8.01 or the Sale Contract, Prime GR
shall have no further right to make any Call Offer.
(f) Prime GR may freely assign its rights and obligations pursuant to
this Section 8.01 to an Affiliate by delivering notice of such assignment to
Beitler, provided that Prime GR shall remain liable for any and all
obligations of its assignee, as if Prime GR had not assigned its rights
pursuant to this Section 8.01(f).
(g) Notwithstanding anything to the contrary herein contained, Prime GR
shall have no further right to make any Call Offer more than one year after
the later to occur of (i) the date the 90% Leasing Condition is satisfied or
(ii) the date notice thereof has been provided by Beitler to Prime GR.
(h) Prime GR Trust and Prime GR shall execute an acknowledgment to
Beitler confirming that upon the exchange of Beitler's Common Units, Beitler's
Prime GR Trust Common Stock shall be covered by, and Beitler shall be the
beneficiary of, Prime GR Trust's Registration Right Agreement dated as of
December 15, 1997.
8.02 SALE CONTRACT; CLOSING: (a) Upon delivery of the notice of
Offeree Value and/or Offeror Value by the Company Accountant pursuant to
Section 8.01(c), a binding sale contract for the purchase and sale of
Beitler's Interest under Section 8.01 ("Sale Contract") shall exist between
Beitler and Prime GR, which Sale Contract shall have the terms and provisions
set forth in Section 8.01 and this Section 8.02.
(b) The closing ("Closing") of any purchase and sale under Section 8.01
(each a "Sale") will be held at the Company's principal office and shall take
place no later than the date which is 90 calendar days after the later of the
Call Offer Date and the Unleased Space Valuation Date. All transfer, stamp
and recording taxes imposed on the transfer, and all other closing costs shall
be allocated 50% to Beitler and 50% to Prime GR. At Closing all of Beitler's
Interest shall be transferred and assigned by Beitler to Prime GR pursuant to
such stock powers, bills of sale, assignments, consents and other instruments
of transfer in such form as may reasonably be required by Beitler. Each of
Beitler and Prime GR shall use their best efforts in good faith to cause all
of the conditions to Closing to be satisfied.
(c) Beitler shall covenant and warrant at Closing as follows, all of
which shall survive the Closing:
(i) Beitler is and will be as of the Closing duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all the requisite
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power and authority to enter into and carry out the Sale Contract
according to its terms
(ii) The execution, delivery and performance of the Sale Contract and
of each of the closing documents has been duly authorized and approved
by Beitler and constitutes a legal and binding obligation of Beitler,
enforceable in accordance with its terms, except as may be limited by
bankruptcy and other laws affecting creditors' rights generally.
(iii) There is no litigation, proceeding or investigation pending, or
to the knowledge of Beitler, threatened against or affecting Beitler
or the Members of Beitler that might affect or relate to the validity
of the Sale Contract or any action taken or to be taken pursuant
thereto.
(iv) There is no tax lien, whether imposed by any federal, state,
local or other tax authority, outstanding against the assets,
properties or business of Beitler.
(v) Beitler's Interest is free from any lien, encumbrance or
restriction (including, but not limited to, any liens, encumbrances or
restrictions arising in connection with senior or other indebtedness
owed by Beitler or any of its Affiliates), except for any lien,
encumbrance or restriction created by Prime GR or expressly approved
by it in connection with the Sale or securing obligations of the
Company approved by the Members. Subject to the foregoing exception,
Beitler shall provide Prime GR with releases (in appropriate form for
filing, if applicable) of any liens, encumbrances or restrictions.
Either Prime GR or Beitler may cause the Purchase Price or a portion
thereof to be applied to any lien, encumbrance or restriction not
permitted hereunder which may be discharged by the payment of money.
(vi) That at any reasonable time and from time to time after the
Closing, Beitler will do all such further things as Prime GR may
reasonably request to perfect the transfer and delivery to Prime GR or
to its successors or assigns or to aid or assist in collecting and
reducing to possession any and all of Beitler's Interest.
(d) Prime GR and Prime GR Trust shall covenant and warrant at Closing as
follows, all of, which shall survive the Closing:
(i) Prime GR is and will be as of the Closing duly organized, validly
existing and in good standing under the laws of the State of Delaware
and has all the requisite power and authority to enter into and carry
out the Sale Contract according to its terms.
(ii) The execution, delivery and performance of the Sale Contract and
of each of the closing documents has been duly authorized and executed
by Prime GR and constitutes a legal and binding obligation of Prime
GR, enforceable in accordance
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with its terms, except as may be limited by bankruptcy and other laws
affecting creditors' rights generally.
(iii) There is no litigation, proceeding or investigation pending, or
the knowledge of Prime GR, threatened against or affecting Prime GR or
the partners of Prime GR that might affect or relate to the validity
of the Sale Contract or any action taken or to be taken pursuant
thereto, or that might have a material adverse effect on the business
or operations of Prime GR.
(iv) Prime GR Trust and Prime GR have filed or caused to be filed all
federal, state, local, foreign and other tax returns, reports,
information returns and statements required to be filed by them. Prime
GR Trust and Prime GR have paid or caused to be paid all taxes
(including interest and penalties) that are shown as due and payable
on such returns or claimed by any taxing authority to be due and
payable with respect to such returns, except those which are being
contested by them in good faith by appropriate proceedings and in
respect of which adequate reserves are being maintained on their books
in accordance with generally accepted accounting principles
consistently applied. Prime GR Trust and Prime GR do not have any
material liabilities for taxes other than those incurred in the
ordinary course of business and in respect of which adequate reserves
are being maintained by them in accordance with generally accepted
accounting principles consistently applied. Federal and state income
tax returns for Prime GR Trust and Prime GR have not been audited by
the Internal Revenue Service or state authorities. No deficiency,
assessment with respect to, or proposed adjustment of, Prime GR
Trust's or Prime GR's federal, state, local, foreign or other tax
returns is pending or, to the best of the Prime GR's knowledge,
threatened. There is no tax lien, whether imposed by any federal,
state, local or other tax authority, outstanding against the assets,
properties or business of Prime GR Trust or Prime GR.
(v) Prime GR has delivered to Beitler a complete and correct copy of
(i) the certificate of limited partnership and bylaws of Prime GR, and
(ii) the Prime GR Partnership Agreement (hereinafter defined), in each
case, as amended.
(vi) Prime GR has previously made available to the Contributor
complete and correct copies of: (i) the annual report on Form 10-K for
Prime GR Trust; (ii) all quarterly reports on Form 10-Q for Prime GR
Trust for each quarter in 1998 and 1999; (iii) definitive proxy
statement for Prime GR Trust for 1998; (iv) current report on Form
8-K for Prime GR Trust for 1998; and (v) any other form, report,
schedule and statement and filed by Prime GR Trust for 1998 with the
SEC under the Exchange Act, since January 1, 1998 (collectively, the
"SEC Documents"). As of their respective dates, each of the SEC
Documents complied in all material respects with the requirements of
the Exchange Act to the extent applicable to such SEC Document, and
none of such SEC Documents (as of their respective dates) contained an
untrue statement of a material fact required to be stated
therein
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or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except as
the same was corrected or superseded in a subsequent document duly
filed with the SEC, that has been delivered to the Contributor. Prime
GR Trust has timely filed all reports and made all filings required to
be filed under the Exchange Act with the SEC under the rules and
regulations of the SEC.
(vii) The Partnership Agreement provides for each Common Unit to
receive a distribution equal to the cash and non-cash dividends or
distributions payable upon a share of Prime GR Trust common stock.
(viii) Prime GR agrees to use the "traditional method" under Section
704(c) of the U.S. Internal Revenue Code to adjust for discrepancies
between the agreed-upon value of the various components of the Company
Property (or for any property received in exchange for the Company
Property in a like-kind exchange) and the adjusted tax basis of such
components.
(ix) Prime GR Trust has been organized in conformity with the
requirements for qualification as a real estate investment trust under
the Internal Revenue Code of 1986 (the "Code") and its method of
operation is expected to enable it to continue to satisfy the
requirements for taxation as a real estate investment trust under the
Code for the fiscal year ending December 31, 1998 and in the future.
Prime GR covenants and agrees that it shall use its commercially
reasonable efforts to cause Prime GR Trust to continue to be taxed as
a real estate investment trust under the Code unless the Board of
Trustees of Prime GR Trust determines that it is in the best interests
of the shareholders of Prime GR Trust to be taxed otherwise.
(x) Prime GR is classified as a partnership and not as an association
(or publicly traded partnership) taxable as a corporation for federal
income tax purposes."
(xi) That at any reasonable time and from time to time after the
Closing, Prime GR and Prime GR Trust will do all such further things
as Beitler may reasonably request to perfect the transfer and delivery
to Beitler or to its successors or assigns, of the Commons Units and
exchange of the Common Units for Prime GR Trust common stock.
(xii) Prime GR agrees that it will, or, it will cause any entities
controlled by Prime GR, in each case that hold an interest in the
Company Property or any portion thereof or other property of Prime GR
or its Affiliates, nonrecourse liabilities in an amount which is
sufficient to enable Beitler to avoid recognizing gain as a result of
a deemed distribution of money to Beitler relating to Common Units
owned by Beitler.
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(e) The obligation of the Prime GR to purchase Beitler's Interest shall
be subject to satisfaction on the date of the Closing (the "Closing Date") of
each of the following conditions unless waived in writing by the Purchaser:
(i) The warranties and representations of Beitler set forth in
Section 8.02(c) shall be true in all material respects at and as of
the Closing.
(ii) All the agreements and conditions to be performed or satisfied
by Beitler under the Sale Contract at or prior to the Closing shall
have been duly performed or satisfied.
(iii) The Seller shall have delivered to the Purchaser releases of
any liens or security interests as provided in Subsection 8.02(c)(i).
(iv) No third party action, suit or proceeding shall be pending
before any court or governmental body seeking relief in connection
with this Agreement or seeking to restrain or prohibit the
consummation of the Sale.
(v) An opinion of a nationally recognized law firm acting as counsel
for Beitler reasonably acceptable in form and content to Prime GR to
the effect that:
(A) Beitler is duly existing in good standing under the laws of
its state of organization with full power and authority to carry on
its businesses; and
(B) The Sale Contract constitutes the valid, binding and
enforceable obligation of Beitler.
(f) The obligation of Beitler to sell Beitler's Interest shall be
subject to satisfaction on the Closing Date of each of the following
conditions unless waived in writing by Beitler.
(i) The warranties and representations of Prime GR set forth in
Section 8.03(d) shall be true in all material aspects at and as of the
Closing.
(ii) All the agreements and conditions to be performed or satisfied
by Prime GR under the Sale Contract at or prior to the Closing shall
have been duly performed or satisfied.
(iii) No third party action, suit or proceeding shall be pending
before any court or governmental body seeking relief in connection
with this Agreement or seeking to restrain or prohibit the
consummation of the Sale.
(iv) An opinion of a nationally recognized law firm acting as counsel
for the Prime GR and Prime GR Trust reasonably acceptable in form and
content to Beitler to the effect that:
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(A) Prime GR Trust has been organized in conformity with
the requirements for qualification as a real estate investment trust
under the Code and currently qualifies to be taxed as such;
(B) Prime GR Trust is classified as a partnership and not
as an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes; and
(C) The Sole Contract constitutes the valid, binding and
enforceable obligation of Prime GR.
(v) Evidence of organization, existence and authority of Prime GR and
Prime GR Trust and the authority of each person executing documents on
behalf of each, reasonably satisfactory to Contributor;
8.03 TERMINATION OF OTHER AGREEMENTS: If Beitler's Interest is
purchased under this Article VIII, all other agreements with Beitler or its
Affiliates shall be terminated; provided, Beitler's right to receive the fees
provided in Section 7.04(a) shall not be affected by the purchase of Beitler's
Interest under this Article VIII.
8.04 POWER OF ATTORNEY: In the event that Beitler under Section 8.01 or
8.02 shall have failed or refused, within five (5) business days after receipt
of a notice from any of the other Members requesting such Call Offeree to
execute, acknowledge and deliver such documents, or cause the same to be done,
as shall be required to effectuate the provisions of Section 8.01 or 8.02,
then Prime GR may execute, acknowledge and deliver such documents for, on
behalf of and in the stead of Beitler, and such execution, acknowledgment and
delivery by Prime GR shall be for all purposes effective against and binding
upon Beitler as though such execution, acknowledgment and delivery had been by
Beitler, provided Prime GR shall have provided Beitler with at least five days
prior written notice of its intention to utilize the provisions of this
Section 8.04. Each Member does hereby irrevocably constitute and appoint each
other Member as the true and lawful attorney-in-fact of such Member and the
successors and assigns thereof, in the name, place and stead of such Member or
the successors or assigns thereof, as the case may be, to execute, acknowledge
and deliver such documents (other than any documents transferring Common
Units) in the event such Member is Beitler under the circumstances
contemplated by this Section 8.04. It is expressly understood, intended and
agreed by each Member, for such Member and its successors and assigns, that
the grant of the power of attorney to any other Member pursuant to this
Section 8.04 is coupled with an interest, is irrevocable and shall survive the
death, dissolution, termination or legal incompetency, as applicable, of such
granting Member, or the assignment of the Interest of such granting Member, or
the dissolution of the Company.
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IX. BOOKS AND RECORDS
9.01 BOOKS AND RECORDS: The Managing Member shall maintain, or cause to
be maintained, at the expense of the Company, in a manner customary and
consistent with good accounting principles, practices and procedures, a
comprehensive system of office records, books and accounts (which records,
books and accounts shall be and remain the property of the Company) in which
shall be entered fully and accurately each and every financial transaction
with respect to the operations of the Company and the ownership and operation
of the Company Property. Books, records, bills, receipts and vouchers shall
be maintained on file by or under control of the Managing Member. The
Managing Member shall maintain or cause said books and accounts to be
maintained in a safe manner and separate from any records not having to do
directly with the Company or any Company Property. The Managing Member shall
cause audits to be performed and audited statements and income tax returns to
be prepared as required by Section 9.03. Such books and records of account
shall be prepared and maintained by and under the supervision of the Managing
Member at the principal place of business of the Company or such other place
or places as may from time to time be determined by the Members. Each Member
or its duly authorized representative shall have the right to inspect, examine
and copy such books and records of account at the Company's office during
reasonable business hours.
9.02 ACCOUNTING AND FISCAL YEAR: The books of the Company shall be kept
on the accrual basis and the Company shall report its operations for tax
purposes on the accrual method. The taxable year of the Company shall end on
December 31 of each year, unless a different taxable year shall be required by
the Code.
9.03 REPORTS: (a) The Managing Member shall prepare at the Company's
expense the financial reports and other information that the Members may
determine are appropriate, including those provided for in Section 7.03(b).
In any event, the Managing Member shall prepare or cause to be prepared at the
expense of the Company and furnish to each of the Members: (i) within ten
(10) calendar days, preliminary, and within sixty (60) calendar days after the
close of each fiscal year of the Company, a final balance sheet of the Company
dated as of the end of the fiscal year, together with a related statement of
income and expense, statement of cash flow and statement of changes in
Members' capital for the Company for the fiscal year and information for the
fiscal year as to the balance in each Member's Capital Account, and all other
information reasonably required by each Member, all of which final financial
statements shall be prepared in accordance with GAAP and certified to by the
Managing Member as being, to the best of its knowledge, true and correct, and
all of which shall be audited and certified in the customary manner by the
Company Accountant (which firm shall provide such balance sheet, statement of
income and expense, statement of cash flow, statement of changes in Members'
capital and other information in draft form to the Members for review prior to
finalization and certification thereof); (ii) within ten (10) calendar days,
preliminary, and withing twenty (20) calendar days after the close of each
fiscal quarter of the Company (other than the last fiscal quarter in any
fiscal year), final balance sheet of the Company dated as of the end of and
for the fiscal quarter, together with a related statement of income and
expense, statement of cash flow and statement of changes in Members' capital
for the fiscal quarter and information for the fiscal quarter as to the
balance in each Member's Capital Account, and all other information, including
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a market update, reasonably required by each Member, all of which shall be
prepared in accordance with GAAP and certified to by the Managing Member as
being, to the best of its knowledge, true and correct; and (iii) within ten
(10) days after the end of each calendar month, an income statement (with
budget variance explanations), statement of cash flow, a sales, marketing and
development activity report indicating details with regard to any progress
made in connection with the sale, marketing or development of each Company
Property (including a report of development expenditures, with budget variance
explanations), marketing programs, sales contracts or construction contracts
or letters of intent received, entered into or closed or terminated, new
leases, renewals, extensions and terminations, and a report of capital
expenditures and land acquisition activity (if any), each for the previous
calendar month, and an accounts receivable aging report and insurance
certificate status report, each dated as of the end of the previous calendar
month. The Managing Member will also furnish to each Member, at the expense
of the Company, copies of all reports required to be furnished to any lender
of the Company at the same time furnished to the lender. Commencing July 1,
1998, the Managing Member shall, within 30 days after the end of each calendar
half-year, prepare and deliver or cause to be prepared and delivered, at the
expense of the Company to the Members for approval semi-annual updates of the
current year Budget and Operating Plan prepared by the Managing Member for
review and approval by the Members within 60 days after the end of each
calendar half-year; it is specifically understood by the Members that the
Managing Member by preparing such projections will not be deemed to be
representing or warranting or guaranteeing that the projected returns on the
Members' investments set forth therein will be attained, in whole or in part.
In addition, promptly after the end of each fiscal year the Managing Member
will use its good faith, commercially reasonable efforts to have the Company
Accountant prepare and deliver to each Member a report setting forth in
sufficient detail all such information and data with respect to business
transactions effected by or involving the Company during the fiscal year as
will enable the Company and each Member to timely prepare its federal, state
and local income tax returns in accordance with the laws, rules and
regulations then prevailing. The Managing Member will use commercially
reasonable efforts to have the Company Accountant also prepare federal, state
and local tax returns required of the Company, submit those returns to the
Members for its approval no later than 30 calendar days prior to the date
required for the filing thereof (including any extensions granted) and will
file the tax returns after they have been approved by the Members. In the
event the Members shall not desire or be able to approve any such tax return
prior to the date required for the filing thereof (including any extensions
granted), the Managing Member will timely obtain an extension of such date if
such extension is available under applicable law. To the extent required by
the Members, the Managing Member shall be required to prepare and submit any
and all reports required pursuant to this Agreement using such on-line
electronic data transmission system as required by the Members. The failure
of the Managing Member to deliver within the required time frame the financial
statements or tax returns required above shall, at Prime GR's sole election,
be grounds for termination of Beitler's rights and obligations under Section
9.01 and this Section 9.03 and to effect their transfer to Prime GR to perform
or cause to be performed at the expense of the Company.
(b) All decisions as to accounting principles shall be made by the
Members, subject to the provisions of this Agreement.
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9.04 THE COMPANY ACCOUNTANT: The Company shall retain as the regular
accountant and auditor for the Company (the "Company Accountant") a
nationally-recognized accounting firm designated by the Members. The fees and
expenses of the Company Accountant shall be a Company expense. The initial
Company Accountant shall be Ernst & Young, Chicago, Illinois, until such time
as the Members shall elect to change such Company Accountant.
9.05 RESERVES: The Members, in their discretion and subject to such
conditions as they shall determine, may establish reserves for the purposes
and requirements as it may deem appropriate (the "Reserve Accounts"). Such
Reserve Accounts will be increased by any deposits thereto from time to time
of amounts of the revenues of the Company from operations, the net proceeds
from capital transactions, and contributions and other sources, before any
distributions of such amounts to the Members, as determined reasonably
necessary by the Members. Such Reserve Accounts may, with the approval of the
Members, be charged with any expenditure for the acquisition of any Company
Property, the operation of the Company or any Company Property, the maintenance
or repair of any item and the purchase, acquisition, repair, maintenance or
construction of items at or on any Company Property and any contingent,
unforeseen or other liabilities or obligations of the Company, whether such
items are treated as current expense deductions or as capital expenditures
under GAAP. Nothing contained in this Section 9.05 shall in any way limit or
restrict the right of the Members to use other assets or funds of the Company
(other than deposits to the Reserve Accounts) for any such expenditures.
9.06 THE BUDGET AND OPERATING PLAN: (a) A preliminary budget and
operating plan for the calendar year 1998 ("Preliminary Budget and Operating
Plan") is attached as EXHIBIT 2 to this Agreement. The Preliminary Budget and
Operating Plan is hereby approved by the Members solely with respect to total
Acquisition Costs of $22.345 million, "Closing Costs", "Financing Costs", "Due
Diligence Costs", and Revenue and Expense items shown therein for the period
of March 30, 1998 through May 31, 1998 (subject in each case to the
requirements of Section 7.01(a)(i)). The remaining budget projections for
1998 and 1999 therein are good faith estimates only and subject to revision
and approval in the final Budget and Operating Plan for the calendar year 1998
to be prepared and adopted as provided in Section 9.06(b) below.
(b) The proposed form of initial Budget and Operating Plan for the
calendar year 1998 shall be prepared by the Managing Member within 30 days
after the date hereof and made available for review by the Members in draft
form for review and approval. Thereafter, the parties shall work diligently
and in good faith to approve the Budget and Operating Plan prior to June 1,
1998.
(c) For each year thereafter, the Budget and Operating Plan shall be
prepared in proposed form by the Managing Member and submitted in draft form
to the Members for approval no later than November 1 of each calendar year
with respect to the following calendar year, which approval shall not be
unreasonably withheld or delayed.
(d) The proposed form of Project Plan shall be prepared by the Managing
Members when the information requisite to the preparation of such Project Plan
is available, and made
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available for review by the Members in draft form for review and approval.
Thereafter, the parties shall work diligently and in good faith to approve the
Project Plan.
(e) The Managing Member shall review the Budget and Operating Plan in
light of developments since its approval by the Members and, no later than May
1 of each fiscal year commencing with 1999, submit any proposed revisions in
draft form to the Capital Members for approval. The Members shall use their
best efforts to approve an amended Budget and Operating Plan for the current
fiscal year or reapprove the existing Budget and Operating Plan on or before
June 30 of each such year.
(f) Each proposed form of Budget and Operating Plan shall set forth on a
monthly basis all anticipated income, capital contributions, operating
expenses, proposed and/or actual debt service terms and payments and capital
and other costs and expenses of each Company Property and for the Company
(including, without limitation, a projected 12 month expense budget, portions
of the Company Property to be developed, along with detailed development
budgets therefor, and beginning sixty (60) days prior to anticipated
Substantial Completion, a 12 month and 36 month capital plan and a 60-month
strategic operating plan), all of which will be based on the strategic and
comprehensive business plan designed to maximize the Net Operating Income of
the Company. In formulating the comprehensive Operating Plan, to the extent
reasonably feasible at the time of preparation thereof, the Managing Member
will develop strategies regarding plans for development, preparation and
release of all promotional and advertising material relating to all of the
Company Property or concerning the Company, and selection of legal counsel,
accountants, structural and environmental engineers and appraisers for the
Company to efficiently implement the Budget and Operating Plan. The Budget
and Operating Plan will include a comprehensive update of the initial
projections with regard to each Company Property and the Company. Until such
time as the Budget and Operating Plan for each Property and for the Company
for any fiscal year has been approved by the Members, the Managing Member
shall have no authority or power to enter into any contract or lease on behalf
of the Company or expend Company funds other than to the extent specifically
approved by the Members.
(g) The Managing Member will also consider and make recommendations to
the extent it deems the same appropriate regarding the amendment,
modification, alteration, change, cancellation, or prepayment of any
indebtedness evidenced by any mortgage loan presently or hereafter affecting
any Company Property, and procurement of title insurance and other insurance
for the Company, or decrease or vary the insurance carried by or on behalf of
the Company. Prior to closing the sale of any Company Property, the Managing
Member will consider and make recommendations regarding the amendment,
modification, alteration and change of any existing Budget and Operating Plan
to take into account the acquisition or sale of such Company Property. No
amendment, modification, alteration, change, etc. of any Budget and Operating
Plan will be effective until the same has been approved by the Members.
9.07 PROJECT PLAN: Each Budget and Operating Plan approved or
reapproved by the Members subsequent to approval by the Members of Plans and
Specifications, actual contracts or bids for all Development Costs, and costs
of financing as shown in the Construction Loan
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Commitment, shall include a Project Plan. In addition to a Pro Forma Project
Development and Construction Completion Schedule and a Pro Forma Leasing
Schedule, the Project Plan shall include a Project Completion Default Schedule
and a Project Leasing Default Schedule, which default schedules shall remain
in effect until amended by the Members, either as part of a new or modified
Budget and Operating Plan or otherwise. The Project Plan shall further
include the Projected Revenues and Projected Expenses of the Company Property
through projected Actual Occupancy of 95%, which projections shall be updated
each time the Budget and Operating Plan is updated.
X. TRANSFER OF INTERESTS
10.01 NO TRANSFER OF INTERESTS: (a) Except as expressly permitted or
contemplated by this Agreement, no Member may sell, assign, give, hypothecate,
pledge, encumber or otherwise transfer ("Transfer") all or any portion of its
Interest, whether directly or indirectly, without the written consent of the
other Members (which may be withheld or granted in the sole discretion of such
other Members).
(b) Any Transfer in contravention of this Article X shall be null and
void. No Member, without the prior written consent of the other Members,
shall resign from the Company except as a result of such Member's involuntary
dissolution or final adjudication as a bankrupt or in connection with a
permitted Transfer.
10.02 PERMITTED TRANSFERS OF INTERESTS: (a) Prime GR, from time to
time and in its sole discretion, without the consent of any other Member, may
sell or assign its Interest in whole or in part to any Affiliate of Prime GR
or any entity directly or indirectly controlling, controlled by or under
common control with Prime GR, or any of its Affiliates, including any
co-investment partnerships or limited liability companies formed to co-invest
alongside Prime GR. In connection with any permitted transfer by Prime GR, it
will have the absolute right to designate such transferee as a Member.
(b) Beitler, from time to time in its sole discretion, without the
consent of any other Member, may sell or assign its Interest in whole or in
part to any Affiliate of Beitler or any entity directly or indirectly
controlling, controlled by or under common control with Beitler or any member
of the Immediate Family of J. Paul Beitler. In connection with any permitted
Transfer by Beitler, it will have the absolute right to designate such
transferee as a Member. Any Transfer shall be subject to any rights of Prime
GR thereupon or thereafter to make a Call Offer pursuant to Article VII, for
which purpose all references to Beitler's Interest shall include all Interests
subject to such Transfer.
(c) Any permitted Transfer shall not relieve the transferor of any of
its obligations hereunder. Notwithstanding any Transfer and except as
provided in Section 3.03, Prime GR and Beitler shall at all times remain the
Initial Members hereunder and have all of the Initial Members' rights, duties
and obligations including, without limitation, the sole right to appoint
Member Representatives. Notwithstanding anything to the contrary contained in
this Agreement,
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no transfer of all or any part of any Interest shall be made if, as a result
thereof, any income of the Company will be subject to corporate tax. Nothing
contained in this Article X shall prohibit a Transfer indirectly of any
interest in the Company if a direct Transfer would otherwise be permitted
under this Section 10.02. Subject to Section 10.03, any transferee pursuant
to this Section 10.02 shall become a substitute Member of the Company. Each
Member and its permitted transferees shall be treated as one Member for all
purposes of this Agreement. The provisions of this Section 10.02 will not
apply to or be deemed to authorize or permit any collateral transfer of, or
grant of a security interest in, a Member's interest in the Company, or in any
Company Property (which transfer or grant shall be subject to the other
provisions of this Agreement).
10.03 TRANSFEREES: No transferee of all or any portion of any Interest
shall be admitted as a Member unless (a) such Interest is transferred in
compliance with the applicable provisions of this Agreement, (b) such
transferee shall have furnished evidence of satisfaction of the requirements
of Section 10.02 reasonably satisfactory to the remaining Members, and (c)
such transferee shall have executed and delivered to the Company such
instruments necessary to effectuate the admission of such transferee as a
Member and to confirm the agreement of such transferee to be bound by all of
the terms and provisions of this Agreement with respect to such Interest. At
the request of the remaining Members, each such transferee shall also cause to
be delivered to the Company, at the transferee's sole cost and expense, a
favorable opinion of legal counsel reasonably acceptable to the Company, to
the effect that (i) such transferee has the legal right, power and capacity to
own the Interest proposed to be transferred, (ii) such Transfer does not
violate any provision of any partnership agreement or limited liability
company agreement in which the Company owns an interest, or any loan
commitment or any mortgage, deed of trust or other security instrument
encumbering all or any portion of any Company Property and known to such
counsel, and (iii) such Transfer does not result in any income of the Company
being subject to corporate tax. As promptly as practicable after the
admission of any Person as a Member, the books and records of the Company
shall be changed to reflect such admission. All reasonable costs and expenses
incurred by the Company in connection with any Transfer of any Interest and,
if applicable, the admission of any transferee as a Member shall be paid by
such transferee.
10.04 ADMISSION OF ADDITIONAL MEMBERS: (a) No person may be admitted as
an additional Member of the Company (in contrast with admission as a
substitute Member in connection with a permitted Transfer or pursuant to
Section 3.03) without the unanimous consent of all Members, which consent may
be given or withheld in the sole discretion of the Members.
(b) Any additional Member admitted to the Company shall execute and
deliver documentation in form satisfactory to the Members accepting and
agreeing to be bound by this Agreement, and such other documentation as the
Members shall require in order to effect such person's admission as an
additional Member. The admission of any person as an additional Member shall
become effective on the date upon which the name of such person is recorded on
the books and records of the Company following the consent of the Members to
such admission.
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XI. EXCULPATION AND INDEMNIFICATION
11.01 EXCULPATION: No Member (and no member of a Member, general or
limited partner of any Member, shareholder, member or other holder of an
equity interest in such Member or officer or director or employee of any of
the foregoing) shall be liable to the Company or to any other Member for
monetary damages for any losses, claims, damages or liabilities arising from
any act or omission performed or omitted by it arising out of or in connection
with this Agreement or the Company's business or affairs; provided however,
such act or omission was taken in good faith, within the scope of authority
granted to such Person, and was not attributable in whole or in part to such
Member's or Person's fraud, bad faith, wilful misconduct or gross negligence.
11.02 INDEMNIFICATION: (a) The Company shall, to the fullest extent
permitted by applicable law, indemnify, defend and hold harmless each Member,
each member of the Members and each general or limited partner of any Member,
shareholder, member or other holder of any equity interest in such Member or
any officer, director or employee of any of the foregoing (collectively, the
"Indemnified Party"), against any losses, claims, damages or liabilities to
which such Indemnified Party may become subject in connection with any matter
arising out of or incidental to any act performed or omitted to be performed
by any such Indemnified Party in connection with this Agreement or the
Company's business or affairs; provided however, that such act or omission was
taken in good faith, was within the scope of authority granted to such Member
or applicable Indemnified Party, and was not attributable in whole or in part
to such Indemnified Party's fraud, bad faith, wilful misconduct or gross
negligence. If an Indemnified Party becomes involved in any capacity in any
action, proceeding or investigation in connection with any matter arising out
of or in connection with this Agreement or the Company's business or affairs,
the Company shall reimburse such Indemnified Party for its reasonable legal
and other reasonable out-of-pocket expenses (including the cost of any
investigation and preparation) as they are incurred in connection therewith,
provided that such Indemnified Party shall promptly repay to the Company the
amount of any such reimbursed expenses paid to it if it shall ultimately be
determined that such Indemnified Party was not entitled to be indemnified by
the Company in connection with such action, proceeding or investigation. If
for any reason (other than the bad faith, fraud, gross negligence or willful
misconduct of such Indemnified Party) the foregoing indemnification is
unavailable to such Indemnified Party, or insufficient to hold it harmless,
then the Company shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage, liability or
expense in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and such Indemnified Party on the
other hand or, if such allocation is not permitted by applicable law, to
reflect not only the relative benefits referred to above but also any other
relevant equitable considerations. Any indemnity under this Section 11.02(a)
shall be paid solely out of and to the extent of Company assets and shall not
be a personal obligation of any Member and in no event will any Member be
required or permitted without the consent of all the other Members, to
contribute additional capital under Section 4.03 to enable the Company to
satisfy any obligation under this Section 11.02.
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(b) Each Member shall indemnify and hold harmless the Company and each
of the other Members from and against any and all claims, demands,
liabilities, costs, damages, expenses and causes of action of any nature
whatsoever arising out of or incidental to (i) any act performed by or on
behalf of any such Member (including acts performed as the Managing Member) or
its Member Representative which is not performed in good faith and within the
scope of authority conferred upon such Member or its Member Representative
under this Agreement, (ii) the fraud, bad faith, wilful misconduct or gross
negligence of such Member or its Member Representative, or (iii) the breach by
the Company of any of its representations and warranties made under any
purchase, loan or other agreement entered into in connection with the
acquisition, development or sale of any Company Property, which breach was the
result of information or other matters provided and certified to the Company
by such Member or was the result of information about or matters relating to
such Member provided by such Member. Notwithstanding the foregoing, no Member
shall indemnify the Company hereunder from any claims, demands, liabilities,
costs, damages, expenses or causes of action to the extent the same are
recovered (or recoverable if made) by the Company under any policies of
insurance carried by the Company.
(c) The provisions of this Section 11.02 shall survive for a period of
four years from the date of dissolution of the Company, provided that (i) if
at the end of such period there are any actions, proceedings or investigations
then pending, an Indemnified Party may so notify the Company and the Members
at such time (which notice shall include a brief description of each such
action, proceeding or investigation and the liabilities asserted therein) and
the provisions of this Section 11.02 shall survive with respect to each such
action, proceeding or investigation set forth in such notice (or any related
action, proceeding or investigation based upon the same or similar claim)
until such date that such action, proceeding or investigation is finally
resolved, and (ii) the obligations of the Company under this Section 11.02
shall be satisfied solely out of Company assets.
(d) Notwithstanding anything to the contrary contained in this
Agreement, the obligations of the Company or any Member under this Section
11.02 (i) shall be in addition to any liability which the Company or such
Member may otherwise have and (ii) inure to the benefit of each Indemnified
Party and any successors, assigns, heirs and personal representatives of such
Persons.
XII. DISSOLUTION AND TERMINATION
12.01 DISSOLUTION: The Company shall be dissolved and its business
wound up upon the earliest to occur of any of the following events:
(a) The sale, condemnation or other disposition of all the assets of the
Company and the receipt of all consideration therefor;
(b) The election to dissolve the Company under Section 13.02(a);
(c) The expiration of the period set forth in Section 2.03;
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(d) The determination of the Members to dissolve the Company;
(e) The resignation, expulsion, bankruptcy or dissolution of any Member
or the occurrence of any other event that terminates the continued membership
of any Member in the Company, unless, within 90 days after such event, each of
the remaining Members elects in writing (i) to continue the business of the
Company and (ii) if applicable, to appoint a new Managing Member; or
(f) At the sole election of Prime GR at any time after September 30,
1999 that the Contribution Condition remains not satisfied.
Without limitation on, but subject to, the other provisions hereof, the
assignment of all or any part of a Member's Interest permitted hereunder will
not result in the dissolution of the Company. Except as otherwise
specifically provided in this Agreement, each Member agrees that, without the
consent of the other Members, no Member may withdraw from or cause a voluntary
dissolution of the Company. In the event any Member withdraws from or causes
a voluntary dissolution of the Company in contravention of this Agreement,
such withdrawal or the causing of a voluntary dissolution shall not affect
such Member's liability for obligations of the Company.
12.02 TERMINATION: In all cases of dissolution of the Company, the
business of the Company shall be wound up and the Company terminated as
promptly as practicable thereafter, and each of the following shall be
accomplished:
(a) The Liquidating Member shall cause to be prepared a statement
setting forth the assets and liabilities of the Company as of the date of
dissolution, a copy of which statement shall be furnished to all of the
Members.
(b) The Company Property shall be liquidated by the Liquidating Member
as promptly as possible, but in an orderly, businesslike and commercially
reasonable manner and subject to the provisions of the Operating Plan then in
effect or a liquidating plan approved by the Members. The Liquidating Member
may distribute Company Property in kind, only with the consent of the Members.
(c) The proceeds of sale and all other assets of the Company shall be
applied and distributed as follows and in the following order of priority:
(i) To the payment of (A) the debts and liabilities of the Company
(including any outstanding amounts due on any indebtedness encumbering
the Company Property, or any part thereof) and (B) the expenses of
liquidation.
(ii) To the setting up of any reserves which the Liquidating Member
and the Members shall determine to be reasonably necessary for
contingent, unliquidated or unforeseen liabilities or obligations of
the Company or any Member arising out of or in connection with the
Company. Such reserves may, in the discretion of the
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Liquidating Member, be paid over to a national bank or national title
company selected by it and authorized to conduct business as an
escrowee to be held by such bank or title company as escrowee for the
purposes of disbursing such reserves to satisfy the liabilities and
obligations described above, and at the expiration of such period as
the Liquidating Member may reasonably deem advisable, distributing any
remaining balance as provided in Section 12.02(c)(iii); provided,
however, that, to the extent that it shall have been necessary, by
reason of applicable law or regulation, to create any reserves prior
to any and all distributions which would otherwise have been made
under Section 12.02(c)(i) and, by reason thereof, a distribution under
Section 12.02(c)(i) has not been made, then any balance remaining
shall first be distributed pursuant to Section 12.02(c)(i).
(iii) The balance, if any, to the Members in accordance with Section
3.3 of APPENDIX A.
12.03 LIQUIDATING MEMBER: The Liquidating Member is hereby irrevocably
appointed as the true and lawful attorney in the name, place and stead of each
of the Members, such appointment being coupled with an interest, to make,
execute, sign, acknowledge and file with respect to the Company all papers
which shall be necessary or desirable to effect the dissolution and
termination of the Company in accordance with the provisions of this Article
XII; provided, however, the Liquidating Member shall have no authority or
right to make, execute, sign, acknowledge, or file any papers which result in
personal liability to any individual Member without the express consent of
such Member. Notwithstanding the foregoing, each Member, upon the request of
the Liquidating Member, shall promptly execute, acknowledge and deliver all
such documents, certificates and other instruments as the Liquidating Member
shall reasonably request to effectuate the proper dissolution and termination
of the Company, including the winding up of the business of the Company.
XIII. DEFAULT BY MEMBER
13.01 EVENTS OF DEFAULT: With respect to each of the following events
of default which is not cured (including, without limitation, by the breaching
Member reimbursing the Company for the resulting damage or loss) within a
Reasonable Period, the Member indicated shall have committed an "Event of
Default":
(a) A material violation or breach by a Member of any of the provisions
of this Agreement (other than a violation or breach of Section 4.02 or Section
4.03) causing material damage or loss to the Company.
(b) Beitler shall have committed an Event of Default if:
(i) One or more of the Outside Leasing Target Dates set forth in the
Project Leasing Default Schedule has not been met;
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(ii) One or more of the Outside Completion Dates set forth in the
Project Completion Default Schedule has not been met;
(iii) The Project is not completed within the amounts set forth as
line items in the Budget and Operating Plan, after application of
applicable contingency amounts, provided (A) any permanent savings
effected under any line item in the Budget and Operating Plan may
offset expenditure overruns in other line items upon notice (by
Beitler to Prime GR) of such savings and the basis therefor and of
Beitler's intention to reallocate from the savings budget item to the
overrun budget item; (B) Beitler may elect to permanently waive all
or a portion of the fees due or to become due it pursuant to Section
7.04 prior to Substantial Completion to offset and eliminate all or a
portion of a cost overrun; and (C) Beitler DC may contribute
additional capital to the Company to offset and eliminate all or a
portion of a cost overrun ("Default Contribution").
(iv) The Contribution Condition is not satisfied on or before
September 30, 1999; or
(v) Any default shall occur under any Acquisition Loan, Construction
Loan, or other Loan of the Company, other than such a default arising
by reason of a default hereunder by Prime GR, for which there is no
cure period or which is not cured within the applicable cure period;
provided, however, that if such default does not result from a default
by Beitler hereunder, then the remedy set forth in Section
13.02(b)(iii) shall not be applicable.
(c) As used herein, a "Reasonable Period" means:
(i) With respect to any Event of Default which is a monetary default
or referred to in Section 13.01(b)(v), three (3) business days;
(ii) With respect to any Event of Default referred to in Section
13.01(a) other than a monetary default, a period of thirty (30)
calendar days after the defaulting Member receives written notice of
its default from a non-defaulting Member; provided, however, that if
such breach can be cured but cannot reasonably be cured within such
30-day period, the period shall continue, if such defaulting Member
commences to cure the breach within such 30-day period, for so long as
such defaulting Member diligently prosecutes the cure to completion up
to a maximum of 120 calendar days (including the initial 30-day
period).
(iii) With respect to any Event of Default referred to in Section
13.01(b), a period of five (5) business days after Beitler receives
notice of such Event of Default from a non-defaulting Member.
13.02 EFFECT OF EVENT OF DEFAULT: Upon the occurrence of an Event of
Default by any Member, the non-defaulting Member shall have the right, at any
time within 120 days after
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the date written notice of the default is provided or received by such
non-defaulting Member and prior to its complete curing, upon giving written
notice of such election (the "Default Notice Date") (provided such Event of
Default is continuing through the Default Notice Date), to take any one or
more of the following actions (in addition to any other remedies or actions
provided for in this Agreement):
(a) Other than with respect to any Event of Default referred to under
Section 13.01(b), dissolve the Company.
(b) If the defaulting Member is Beitler or any Member who has received
an Interest from Beitler, then:
(i) Beitler shall, upon the Default Notice Date, be terminated as
Managing Member;
(ii) after the Default Notice Date, all Major Decisions and all other
actions of the Members shall be deemed approved, and shall be binding
on all Members if approved by Prime GR notwithstanding the objection
or failure to approve such Major Decision or such other actions by any
other Member;
(iii) any right to fees of Beitler which will accrue or otherwise
become due subsequent to the Default Notice Date will terminate (other
than the right to receive the fees provided in Section 7.04(a)(iv)
during that portion, if any, of the term provided for therein that
Prime GR or any Affiliate of Prime GR owns Prime GR's Interest in the
Company, or the Company or Prime GR or any Affiliate thereof owns the
Company Property); and
(iv) the Leasing Agency Agreement shall terminate as of the Default
Notice Date.
(c) Other than with respect to any Event of Default referred to under
Section 13.01(b), pursue any other right or remedy available at law or in
equity.
The default of any Member hereunder shall not relieve any other Member from
its agreements, liabilities, and obligations hereunder.
XIV. MISCELLANEOUS
14.01 COVENANTS, REPRESENTATIONS AND WARRANTIES OF THE MEMBERS: (a)
Each Member represents and warrants to the other Members as follows:
(i) It is duly organized, validly existing and in good standing under
the laws of its jurisdiction of formation with all requisite power and
authority to enter into this Agreement and to conduct the business of
the Company.
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(ii) This Agreement constitutes the legal, valid and binding
obligation of the Member enforceable in accordance with its terms,
subject to the application of principles of equity and laws governing
insolvency and creditors' rights generally.
(iii) Any consents or approvals required from any governmental
authority or other person or entity for the Member to enter into this
Agreement and the Company have been obtained. All limited liability
company, corporate or partnership action on the part of the Member
necessary for the authorization, execution and delivery of this
Agreement, and the consummation of the transactions contemplated
hereby, have been duly taken.
(iv) The execution and delivery of this Agreement by the Member, and
the consummation of the transactions contemplated hereby, does not
conflict with or contravene the provisions of its organizational
documents or any agreement or instrument by which it or its properties
are bound or any law, rule, regulation, order or decree to which it or
its properties are subject.
(v) The Member has not retained any broker, finder or other
commission or fee agent, and no such person has acted on its behalf in
connection with the acquisition of any Company Property or the
execution and delivery of this Agreement other than the Persons
identified in the Preliminary Plan and Budget, who are entitled to
fees in connection therewith not to exceed the amount stated therefor
under "Financing Costs".
(vi) Each Member is acquiring its interest in the Company for
investment, solely for its own account, with the intention of holding
such interest for investment and not with a view to, or for resale in
connection with, any distribution or public offering or resale of any
portion of such interest within the meaning of the Securities Act of
1933 (the "Securities Act") or any other applicable federal or state
security law, rule or regulation ("Security Laws").
(vii) Each Member acknowledges that it is aware that its interest in
the Company has not been registered under the Securities Act or under
any other Security Law in reliance upon exemptions contained therein.
Each Member understands and acknowledges that its representations and
warranties contained herein are being relied upon by the Company, the
other Members and the constituent owners of such other Members as the
basis for exemption of the issuance of interest in the Company from
registration requirements of the Securities Act and other Security
Law. Each Member acknowledges that the Company will not and has no
obligation to register any interest in the Company under the
Securities Act or other Security Laws.
(viii) Each Member acknowledges that prior to its execution of this
Agreement, it received a copy of this Agreement and that it examined
this document or caused this document to be examined by its
representative or attorney. Each Member
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does hereby further acknowledge that it or its representative or
attorney is familiar with this Agreement, and with the business and
affairs of the Company, and that except as otherwise specifically
provided in this Agreement, it does not desire any further information
or data relating to the Company, the Company Property or to the other
Members. Each Member does hereby acknowledge that it understands that
the acquisition of its interest in the Company is a speculative
investment involving a high degree of risk and does hereby represent
that it has a net worth sufficient to bear the economic risk of its
investment in the Company and to justify its investing in a highly
speculative venture of this type.
(b) Prime GR represents and warrants to Beitler that it is a Delaware
limited partnership currently existing pursuant to that certain Amended and
Restated Agreement of Limited Partnership dated as of November 17, 1997, as
amended (the "Prime GR Partnership Agreement"), and that certain Certificate
of Limited Partnership filed with Secretary of State of Delaware on March 19,
1997, (the "Prime GR Certificate of Limited"). The aforementioned Prime GR
Partnership Agreement and Prime GR Certificate of Limited Partnership have not
been terminated and continue to be in full force and effect. The managing
general partner of Prime GR is Prime Group Realty Trust, a Maryland real
estate investment trust. All necessary consents or authorizations required
for Prime GR to enter into this Agreement have been obtained or will be
obtained prior to the execution and delivery of this Agreement.
(c) Beitler represents and warrants to Prime GR that it is an Illinois
limited liability company currently existing pursuant to that certain
Operating Agreement of Penny Beitler L.L.C. dated as of March 24, 1998, as
amended. All necessary consents or authorizations required for Beitler to
enter into this Agreement have been obtained prior to the execution and
delivery of this Agreement.
(d) Each Member agrees to indemnify and hold harmless the Company and
each other Member and their officers, directors, shareholders, partners,
members, employees, successors and assigns from and against any and all loss,
damage, liability or expense (including costs and attorneys fees) which they
may incur by reason, or in connection with, any breach of the foregoing
representations and warranties by such Member and all such representations and
warranties shall survive the execution and delivery of this Agreement and the
termination and dissolution of Prime GR, Beitler and/or the Company.
14.02 FURTHER ASSURANCES: Each Member agrees to execute, acknowledge,
deliver, file, record and publish such further instruments and documents, and
do all such other acts and things as may be required by law, or as may be
required to carry out the intent and purposes of this Agreement.
14.03 NOTICES: All notices, demands, consents, approvals, requests or
other communications which any of the parties to this Agreement may desire or
be required to give hereunder (collectively, "Notices") shall be in writing
and shall be given by (a) personal delivery, (b) facsimile transmission or (c)
a nationally recognized overnight courier service for overnight delivery, fees
prepaid, addressed as follows:
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If to Beitler: J. Paul Beitler Development Company
181 West Madison Avenue
Suite 3900
Chicago, Illinois 60602
Attn: J. Paul Beitler
Facsimile No.: 312/558-3845
with a copy to: Mayer Brown & Platt
190 South LaSalle Street
Chicago, Illinois 60603
Attn: Alvin C. Katz, Esq.
Facsimile No.: 312/701-7711
If to Prime GR: c/o Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, Illinois 60601
Attn: Richard S. Curto
Facsimile No.: 312/917-0460
with a copy to: Prime Group Realty Trust
77 West Wacker Drive
Suite 3900
Chicago, Illinois 60601
Attn: James F. Hoffman, Esq.
Facsimile No.: 312/917-1684
with an additional copy to: Jones, Day, Reavis & Pogue
77 West Wacker Drive
Suite 3500
Chicago, Illinois 60601
Attn: John P.C. Duncan, Esq.
Facsimile No.: 312/782-8585
Any Member may designate another addressee (and/or change its address) for
Notices hereunder by a Notice given pursuant to this Section 14.03. A Notice
sent in compliance with the provisions of this Section 14.03 shall be deemed
given on the date of (i) receipt or refusal to accept personal delivery by the
addressee, (ii) facsimile transmission, provided electronic confirmation has
been received by the sender or (iii) the Business Day following the date of
delivery to such overnight courier.
14.04 GOVERNING LAW: This Agreement shall be governed by and construed
in accordance with the laws of the State of Illinois applicable to agreements
made and to be performed wholly within that State, except to the extent that
the laws of the State of Delaware
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may require certain provisions hereof and the Members' performance hereunder
to be governed by Delaware law.
14.05 ATTORNEY FEES: If the Company or any Member obtains a judgment
against any Member by reason of the breach of this Agreement or the failure to
comply with the terms hereof, reasonable attorneys' fees and costs as fixed by
the court shall be included in such judgment.
14.06 CAPTIONS: All titles or captions contained in this Agreement are
inserted only as a matter of convenience and for reference and in no way
define, limit, extend, or describe the scope of this Agreement or the intent
of any provision in this Agreement.
14.07 PRONOUNS: All pronouns and any variations thereof shall be deemed
to refer to the masculine, feminine, and neuter, singular and plural, as the
identity of the party or parties may require.
14.08 SUCCESSORS AND ASSIGNS: This Agreement shall be binding upon the
parties hereto and their respective executors, administrators, legal
representatives, heirs, successors and assigns, and shall inure to the benefit
of the parties hereto and, except as otherwise provided herein and subject to
the restrictions on transfers herein, their respective executors,
administrators, legal representatives, heirs, successors and assigns.
14.09 EXTENSION NOT A WAIVER: No delay or omission in the exercise of
any power, remedy or right herein provided or otherwise available to a Member
or the Company shall impair or affect the right of such Member or the Company
thereafter to exercise the same. Any extension of time or other indulgence
granted to a Member hereunder shall not otherwise alter or affect any power,
remedy or right of any other Member or of the Company, or the obligations of
the Member to whom such extension or indulgence is granted.
14.10 CREDITORS NOT BENEFITED: Nothing contained in this Agreement is
intended or shall be deemed to benefit any creditor of the Company or any
Member, and no creditor of the Company shall be entitled to require the
Company or the Members to solicit or accept any Deficit Contribution for the
Company or to enforce any right which the Company or any Member may have
against any Member under this Agreement or otherwise.
14.11 RECALCULATION OF INTEREST: If any applicable law is ever
judicially interpreted so as to deem any distribution, contribution, payment
or other amount received by any Member or the Company under this Agreement as
interest and so as to render any such amount in excess of the maximum rate or
amount of interest permitted by applicable law, then it is the express intent
of the Members and the Company that all amounts in excess of the highest
lawful rate or amount theretofore collected be credited against any other
distributions, contributions, payments or other amounts to be paid by the
recipient of the excess amount or refunded to the appropriate Person, and the
provisions of this Agreement immediately be deemed reformed, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the payment of the fullest amount
otherwise required
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hereunder. All sums paid or agreed to be paid that are judicially determined
to be interest shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the term of such obligation so that
the rate or amount of interest on account of such obligation does not exceed
the maximum rate or amount of interest permitted under applicable law.
14.12 SEVERABILITY: In case any one or more of the provisions contained
in this Agreement or any application thereof shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein and other application thereof shall not
in any way be affected or impaired thereby.
14.13 ENTIRE AGREEMENT: This Agreement, together with all Appendices
and Exhibits, contains the entire agreement between the parties relating to
the subject matter hereof, and all prior agreements relative hereto which are
not contained herein are terminated, including without limitation the Letter
Agreement. Amendments, variations, modifications or changes herein may be
made effective and binding upon the Members by, and only by, the setting forth
of the same in a document duly executed by each Member, and any alleged
amendment, variation, modification or change herein which is not so documented
shall not be effective as to any Member.
14.14 PUBLICITY: The parties agree that no Member or any of its
advisors shall issue any press release or otherwise publicize or disclose the
terms of this Agreement or the proposed terms of any acquisition of any
Property, without the consent of the Members, except as such disclosure may be
made in the course of normal reporting practices by any Member to its members,
shareholders or partners or as otherwise required by law (and prior to any
such disclosure the disclosing Member will notify the other Members and
provide them with a copy of the proposed disclosure and an opportunity to
approve such disclosure before the disclosure is made).
14.15 COUNTERPARTS: This Agreement may be executed in multiple
counterparts, each of which shall be an original but all of which together
shall constitute but one and the same agreement.
14.16 CONFIDENTIALITY: (a) The terms of this Agreement, the identity
of any person with whom the Company may be holding discussions with respect to
any investment, acquisition, disposition or other transaction, and all other
business, financial or other information relating directly to the conduct of
the business and affairs of the Company or the relative or absolute rights or
interests of any of the Members (collectively, the "Confidential Information")
that has not been publicly disclosed pursuant to authorization by the Members
is confidential and proprietary information of the Company, the disclosure of
which would cause irreparable harm to the Company and the Members.
Accordingly, each Member represents that it has not and agrees that it will
not and will direct its members, shareholders, partners, directors, officers,
agents, advisors and Affiliates not to, disclose to any Person any
Confidential Information or confirm any statement made by third Persons
regarding Confidential Information until the Company has publicly disclosed
the Confidential Information pursuant to authorization by the Members and
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has notified each Member that it has done so; provided, however, that any
Member (or its Affiliates) may disclose such Confidential Information if
required by law (it being specifically understood and agreed that anything set
forth in a registration statement or any other document filed pursuant to law
will be deemed required by law, and provided that before making any disclosure
of Confidential Information required by law (other than disclosures required
of Prime GR Trust as a Reporting Company) the disclosing Member will notify
the other Members and provide them with a copy of the proposed disclosure and
an opportunity to comment thereon before the disclosure is made) or necessary
for it to perform any of its duties or obligations hereunder or in any
property management agreement to which it is a party covering any Company
Property or necessary for the Managing Member to carry out its duties
hereunder or in connection with any Transfer permitted under this Agreement.
(b) Subject to the provisions of Section 14.16(a), each Member agrees
not to disclose any Confidential Information to any Person (other than a
Person agreeing to maintain all Confidential Information in strict confidence
or a judge, magistrate or referee in any action, suit or proceeding relating
to or arising out of this Agreement or otherwise), and to keep confidential
all documents (including, without limitation, responses to discovery requests)
containing any Confidential Information. Each Member hereby consents in
advance to any motion for any protective order brought by any other Member
represented as being intended by the movant to implement the purposes of this
Section 14.16, provided that, if a Member receives a request to disclose any
Confidential Information under the terms of a valid and effective order issued
by a court or governmental agency and the order was not sought by or on behalf
of or consented to by such Member, then such Member may disclose the
Confidential Information to the extent required if the Member as promptly as
practicable (i) notifies each of the other Members of the existence, terms and
circumstances of the order, (ii) consults in good faith with each of the other
Members on the advisability of taking legally available steps to resist or to
narrow the order, and (iii) if disclosure of the Confidential Information is
required, exercises its good faith efforts to obtain a protective order or
other reliable assurance that confidential treatment will be accorded to the
portion of the disclosed Confidential Information that any other Member
designates. The cost (including, without limitation, attorneys' fees and
expenses) of obtaining a protective order covering Confidential Information
designated by such other Member will be borne by the Company.
(c) The covenants contained in this Section 14.16 will survive the
Transfer of the Interest of a Member and the termination of the Company.
14.17 TIME OF THE ESSENCE: Time is of the essence of each and every
obligation to be performed by a Member in any capacity pursuant to this
Agreement.
14.18 VENUE: Each of the Members consents to the jurisdiction of any
court in the City of Chicago, Cook County, Illinois for any action arising out
of matters related to this Agreement. Each of the Members waives the right to
commence an action in connection with this Agreement in any court outside of
Chicago, Illinois.
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14.19 WAIVER OF JURY TRIAL: EACH OF THE MEMBERS HEREBY WAIVES TRIAL BY
JURY IN ANY ACTION ARISING OUT OF MATTERS RELATED TO THIS AGREEMENT, WHICH
WAIVER IS INFORMED AND VOLUNTARY.
[Signatures begin on next page.]
[The rest of this page left intentionally blank.]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth in the introductory paragraph hereof.
PENNY BEITLER:
PENNY BEITLER L.L.C.., an Illinois limited liability company
By: /s/ J. PAUL BEITLER
---------------------------------
J. Paul Beitler
Manager
PRIME GR:
PRIME GROUP REALTY, L.P., a Delaware limited partnership
By: Prime Group Realty Trust, a Maryland real estate investment
trust, its managing general partner
By: /s/ KEVORK DERDERIAN
---------------------------------
Name: Kevork Derderian
---------------------------------
Title: PRESIDENT OFFICE DIV.
---------------------------------
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APPENDIX A
TAX MATTERS
This Appendix is attached to and is a part of the Limited Liability
Company Agreement dated as of March 30, 1998 (the "Agreement") of
Prime/Beitler Development Company, L.L.C. (the "Company"). The provisions of
this Appendix A are intended to comply with the requirements of Treas. Reg.
Section 1.704-1(b) (2) (iv) and Treas. Reg. Section 1.704-2 with respect to
maintenance of capital accounts and partnership allocations, and shall be
interpreted and applied accordingly.
I. DEFINED TERMS
1.1 DEFINED TERMS. For purposes of this Appendix, the capitalized terms
listed below shall have the meanings indicated. Capitalized terms not listed
below and not otherwise defined in this Appendix shall have the meanings
specified in the Agreement.
"ADJUSTED CAPITAL ACCOUNT DEFICIT" means, with respect to any Member for
any taxable year of the Company, the deficit balance, if any, in such Member's
Capital Account as of the end of such taxable year, after giving effect to the
following adjustments:
(a) Credit to such Capital Account any amounts that such Member
is obligated to restore or is deemed obligated to restore as described
in the penultimate sentences of Treasury Regulation Section
1.704-2(g)(1) and in Treasury Regulation Section 1.704-2(i)(5); and
(b) Debit to such Capital Account the items described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
"BOOK BASIS" means, with respect to any asset of the Company, the
adjusted basis of such asset for federal income tax purposes; provided,
however, that (a) if any asset is contributed to the Company, the initial Book
Basis of such asset shall equal its fair market value on the date of
contribution (as agreed to by the Members), and (b) if the Capital Accounts of
the Members are adjusted pursuant to Treasury Regulation Section 1.704-1(b) to
reflect the fair market value of any asset of the Company, the Book Basis of
such asset shall be adjusted to equal its respective fair market value as of
the time of such adjustment (as agreed to by the Members), in accordance with
such Treasury Regulation. The Book Basis of all assets of the Company shall
be adjusted thereafter by depreciation as provided in Treasury Regulation
Section 1.704-1(b)(2)(iv)(g) and any other adjustment to the basis of such
assets other than depreciation or amortization.
"COMPANY MINIMUM GAIN" means "partnership minimum gain" as defined in
Treasury Regulation Section 1.704-2(d).
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"EXPENSES" means, for any period, the sum of the total gross cash
expenditures of the Company during such period, including without limitation
(a) all cash operating expenses (including all fees, commissions, expenses and
allowances paid to any third party or paid or reimbursed to any Member or any
of its Affiliates pursuant to any contract or otherwise as permitted
hereunder), (b) all debt service payments including debt service on loans made
to the Company by the Members or any of their Affiliates, (c) all expenditures
which are treated as Capital Expenditures (as distinguished from expense
deductions) under generally accepted accounting principles, (d) all real
estate taxes, personal property taxes and sales taxes, (e) all deposits to the
Company's Reserve Accounts pursuant to Section 9.05 of the Agreement, and (f)
all costs and expenditures related to any acquisition, sale, disposition,
financing, refinancing, monetization or securitization of any Company
Property, provided, however, that Expenses shall not include (i) any payment
or expenditure to the extent (A) the sources of funds used for such payment or
expenditure are not included in Revenues or (B) such payment or expenditure is
paid out of any Company Reserve Account, (ii) any expenditure properly
attributable to the liquidation of the Company, or (iii) non-cash expenses
such as depreciation or amortization.
"LOSS" means, for each taxable year or other period, an amount equal to
the Company's items of taxable deduction and loss for such year or other
period, determined in accordance with Section 703(a) of the Code (including
all items of loss or deduction required to be stated separately under Section
703(a)(1) of the Code), with the following adjustments:
(a) Any expenditures of the Company described in Section
705(a)(2)(B) of the Code or treated as Section 705(a)(2)(B)
expenditures under Treasury Regulation Section 1.704-1(b)(2)(iv)(i),
and not otherwise taken into account in computing Loss, will be
considered an item of Loss;
(b) Loss resulting from any disposition of any assets of the
Company (including any Property) with respect to which gain or loss is
recognized for federal income tax purposes will be computed by
reference to the Book Basis of such property, notwithstanding that the
adjusted Tax Basis of such property may differ from its Book Basis;
(c) In lieu of depreciation, amortization and other cost
recovery deductions taken into account in computing taxable income or
loss, there will be taken into account depreciation for the taxable
year or other period as determined in accordance with Treasury
Regulation Section 1.704-1(b)(2)(iv)(g);
(d) Any items of deduction and loss specially allocated pursuant
to Section 3.2 shall not be considered in determining Loss; and
(e) Any decrease to Capital Accounts as a result of any
adjustment to the Book Basis of Company assets pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(f) shall constitute an item of
Loss.
"MEMBER MINIMUM GAIN" means the Company's "partner nonrecourse debt
minimum gain" as defined in Treasury Regulation Section 1.704-2(i)(2).
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"MEMBER NONRECOURSE DEBT" means "partner nonrecourse debt" as defined in
Treasury Regulation Section 1.704-2(b)(4).
"MEMBER NONRECOURSE DEDUCTIONS" means "partner nonrecourse deductions" as
defined in Treasury Regulation Section 1.704-2(i)(2).
"NET LOSS" means, for any period, the excess of items of Loss over items
of Profit, if applicable, for such period determined without regard to any
items of Profit or Loss allocated pursuant to Section 3.2.
"NET PROFIT" means, for any period, the excess of items of Profit over
items of Loss, if applicable, for such period determined without regard to any
items of Profit or Loss allocated pursuant to Section 3.2.
"NONRECOURSE DEDUCTIONS" has the meaning set forth in Treasury Regulation
Section 1.704-2.
"PARTIALLY ADJUSTED CAPITAL ACCOUNT" means, with respect to any Member
for any taxable year of the Company, the Capital Account balance of such
Member at the beginning of such year, adjusted for all contributions and
distributions during such year and all special allocations pursuant to Section
3.2 with respect to such year but before giving effect to any allocations
pursuant to Section 3.1.
"PROFIT" means, for each taxable year or other period, an amount equal to
the Company's taxable income and gain for such year or other period,
determined in accordance with Section 703(a) of the Code (including all items
of income and gain required to be stated separately under Section 703(a)(1) of
the Code), with the following adjustments:
(a) Any income of the Company that is exempt from federal income
tax and not otherwise taken into account in computing Profit or Loss
will be added to taxable income;
(b) Gain resulting from any disposition of any assets of the
Company (including any Property) with respect to which gain or loss is
recognized for federal income tax purposes will be computed by
reference to the Book Basis of such property, notwithstanding that the
adjusted Tax Basis of such property may differ from its Book Basis;
(c) Any items specially allocated pursuant to Section 3.2 shall
not be considered in determining Profit; and
(d) Any increase to Capital Accounts as a result of any
adjustment to the Book Basis of Company assets pursuant to Treasury
Regulation Section 1.704-1(b)(2)(iv)(f) shall constitute an item of
Profit.
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"REVENUES" means, for any period, the sum of the total gross cash
revenues received by the Company during such period, including all receipts of
the Company from (a) proceeds from the sale or disposition of all or any
portion of any assets of the Company (including any Company Property) or the
issuance or sale by the Company of any securities or additional interests in
the Company, (b) rent (including additional rent and percentage rent) paid to
the Company, (c) concessions, (d) expense reimbursements, (e) condemnation or
casualty proceeds related to the condemnation of or casualty loss with regard
to all or any portion of the assets of the Company (including any Company
Property) (including any and all insurance awards with regard thereto), (f)
proceeds from rent or business interruption insurance, if any, (g) funds made
available to the extent such funds are withdrawn from the Company's Reserve
Accounts and deposited into the Company's operating accounts, (h) proceeds
from the financing, refinancing, monetization or securitization of the Company
or any assets of the Company (including any Company Property) (or any interest
therein), and (i) any distributions received by the Company, provided,
however, that Revenues shall not include any revenue or receipt realized by
the Company incident to the liquidation of the Company.
"TARGET ACCOUNT" means, with respect to any Member for any taxable year
of the Company, the excess of (a) an amount (which may be either a positive
balance or a negative balance) equal to the hypothetical distribution (or
contribution) such Member would receive (or contribute) if all assets of the
Company, including cash, were sold for cash equal to their Book Basis (taking
into account any adjustments to Book Basis for such year), all liabilities
allocable to such assets were then satisfied according to their terms (except
that if the nonrecourse liabilities secured by an asset exceed the Book Basis
of such asset, such calculation shall be made assuming that the asset were
transferred to the lender in satisfaction of the debt) and all remaining
proceeds from such sale were distributed pursuant to Section 6.02 (the
"Hypothetical Distribution Amount") over (b) such Member's share of Company
Minimum Gain and Member Minimum Gain immediately prior to such sale.
Notwithstanding the foregoing, unless the allocation is made pursuant to
Section 3.1(b), the Hypothetical Distribution Amount shall assume that amounts
distributable pursuant to Section 6.02(a)(ii) is zero.
"TAX BASIS" means, with respect to any asset of the Company, the adjusted
basis of such asset for federal income tax purposes as determined in
accordance with the Code.
"TAX MATTERS PARTNER" has the meaning set forth in Section 4.3.
"TREASURY REGULATION" and "TREAS. REG." means, with respect to any
referenced provision, such provision of the regulations of the United States
Department of the Treasury or any successor provision.
1.2 OTHER DEFINED TERMS. As used in this Appendix, unless otherwise
specified, (a) all references to Sections or paragraphs are to Sections or
paragraphs of this Appendix, (b) the terms "hereof" and "herein" refer to the
Agreement in its entirety, and (c) each accounting term has a meaning assigned
to it in accordance with GAAP.
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II. CAPITAL
2.1 CAPITAL ACCOUNTS: A separate Capital Account will be maintained for
each Member in accordance with Treasury Regulation Section 1.704-1(b)(2)(iv).
Consistent therewith, the Capital Account of each Member will be determined
and adjusted as follows:
(a) Each Member's Capital Account will be credited with:
(i) Any contributions of cash made by such Member to the capital of
the Company, including any Guarantee Payment, plus the Book Basis of
any property contributed by such Member to the capital of the Company
(net of any liabilities to which such property is subject or which are
assumed by the Company);
(ii) The Member's distributive share of Net Profit, Profit, and items
thereof; and
(iii) Any other increases required by Treasury Regulation Section
1.704-1(b)(2)(iv).
(b) Each Member's Capital Account will be debited with:
(i) Any distributions of cash made from the Company to such Member
plus the fair market value of any property distributed in kind to such
Member (net of any liabilities to which such property is subject or
which are assumed by such Member), including any reimbursement from
any source of any Guarantee Payment;
(ii) The Member's distributive share of Net Loss, Loss, and items
thereof; and
(iii) Any other decreases required by Treasury Regulation Section
1.704-1(b)(2)(iv).
The provisions of this Section 2.1 relating to the maintenance of Capital
Accounts have been included in this Agreement to comply with Section 704(b) of
the Code and the Treasury Regulations promulgated thereunder and will be
interpreted and applied in a manner consistent with those provisions.
2.2 BOOK BASIS ADJUSTMENTS: The Book Basis of all assets will be
adjusted to equal their respective fair market values upon the events set
forth in Treasury Regulation Section 1.704-1(b)(2) (ii)(f)(5)(i) and (ii).
2.3 TIMING OF ADJUSTMENTS. Each Investing Member's Capital Account
will normally be adjusted as of the end of each taxable year of the Company;
provided, however, that the Capital Accounts may be adjusted more frequently
if circumstances otherwise make it advisable in the judgment of the Tax
Matters Partner. All adjustments will be made in accordance with the terms of
the Agreement.
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III. ALLOCATIONS AND DISTRIBUTIONS
3.1 ALLOCATIONS: For each Company taxable year or portion thereof, Net
Profit and Net Loss shall be allocated (after all allocations pursuant to
Section 3.2 have been made) as follows:
(a) Except as provided in Section 3.1(b), Net Profit or Net Loss
shall be allocated to make the Partially Adjusted Capital Accounts of
the Members equal, as nearly as possible, their respective Target
Accounts.
(b) All items comprising Winding Up Profit and Loss shall be
allocated in such a manner so as to cause the Partially Adjusted
Capital Accounts of the Members to equal, as nearly as possible, their
respective Target Accounts.
3.2 SPECIAL ALLOCATIONS AND COMPLIANCE WITH SECTION 704(b): The
following special allocations shall, except as otherwise provided, be made in
the following order:
(a) Notwithstanding any other provision of this Article III, if
there is a net decrease in Company Minimum Gain or in any Member
Minimum Gain during any taxable year of the Company, prior to any
other allocation pursuant hereto, such Member shall be specially
allocated items of Company Profit for such year (and, if necessary,
subsequent years) in an amount and manner required by Treasury
Regulation Sections 1.704-2(f) or 1.704-2(i)(4). The items to be so
allocated shall be determined in accordance with Treasury Regulation
Section 1.704-2.
(b) Any Member who receives a distribution pursuant to clause
(ii) of Section 6.02(a) shall be allocated items of Profit until the
aggregate amount allocated pursuant to Section 3.2(b) for all periods
is equal to the aggregate amounts therefor distributed pursuant to
Section 6.02(a)(ii).
(c) Any Member who unexpectedly receives an adjustment,
allocation or distribution described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) which causes or increases a
negative balance in his or its Capital Account shall be allocated
items of Profit sufficient to eliminate such increase or negative
balance caused thereby, as quickly as possible, to the extent required
by such Treasury Regulation.
(d) Nonrecourse Deductions for any taxable year of the Company
or other period shall be allocated (as nearly as possible) under
Treasury Regulation Section 1.704-2 to the Members, pro rata in
proportion to their respective Percentage Interests.
(e) Any Member Nonrecourse Deductions for any taxable year of
the Company or other period shall be allocated to the Member that
made, or guaranteed or is otherwise liable with respect to the loan to
which such Member Nonrecourse Deductions are attributable in
accordance with principles under Treasury Regulation Section
1.704-2(i).
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(f) No allocation of Loss shall be made to any Member if, as a
result of such allocation, such Member would have an Adjusted Capital
Account Deficit. Any such disallowed allocation shall be made to the
Members entitled to receive such allocation under Treasury Regulation
Section 1.704 in proportion to their respective Percentage Interests.
3.3 DISTRIBUTIONS IN LIQUIDATION: Upon the dissolution and winding-up
of the Company, the proceeds of sale and other assets of the Company distributab
le to the Members under Section 12.02(c)(iii) shall be distributed, not later
than the latest time specified for such distributions pursuant to Treasury
Regulation Section 1.704-1(b)(2)(ii)(b)(2) to the Members in accordance with
their respective positive Capital Account balances (after adjustment to
reflect the allocations pursuant to this Article III and Article VI of the
Agreement). With the approval of the Members, a pro rata portion of the
distributions that would otherwise be made to the Members under the preceding
sentence may be distributed to a trust established for the benefit of the
Members for the purposes of liquidating Company assets, collecting amounts
owed to the Company, and paying any contingent or unforeseen liabilities or
obligations of the Company arising out of or in connection with the Company.
The assets of any trust established under this Section 3.3 will be distributed
to the Members from time to time by the trustee of the trust upon approval of
the Members in the same proportions as the amount distributed to the trust by
the Company would otherwise have been distributed to the Members under this
Agreement.
IV. TAX MATTERS
4.1 TAX ALLOCATIONS. (a) Except as otherwise provided in Section
4.1(b), all items of income, gain, loss, deduction and credit of the Company
shall be allocated to the Members for federal, state and local income tax
purposes as nearly as possible in the same manner as the corresponding
allocation of each such item for purposes of determining the Capital Accounts
of the Members.
(b) In accordance with Section 704(c) of the Code and the applicable
Treasury Regulations thereunder, income, gain, loss, deduction and tax
depreciation, amortization or depletion with respect to any asset contributed
to the capital of the Company, or with respect to any asset which has a Book
Basis different than its Tax Basis, shall, solely for federal income tax
purposes, be allocated among the Members so as to take into account any
variation between the Tax Basis of such asset to the Company and the Book
Basis of such asset. The Members may select any reasonable method or methods
for making such allocations, including without limitation, any method
described in Treasury Regulation Section 1.704-3(b), (c) or (d).
4.2 TAX MATTERS: The Members intend for the Company to be treated as a
partnership under the Code. The Members shall make all applicable elections,
determinations and other decisions under the Code, including, without
limitation, the deductibility of a particular item of expense and the
positions to be taken on the Company's tax return, and shall approve the
settlement or compromise of all audit matters raised by the Internal Revenue
Service affecting the Members generally. The Members shall each take
reporting positions on their respective federal, state and local income tax
returns consistent with the positions determined for the
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Company by the Members. The Managing Member shall cause all federal, state
and local income and other tax returns to be timely filed by the Company.
4.3 TAX MATTERS PARTNER: Prime GR shall be the tax matters ("Tax
Matters Partner") partner within the meaning of Section 6231(a)(7) of the Code
and, subject to Section 4.2, shall exercise all rights, obligations and duties
of a tax matters partner under the Code. The Members may in its discretion
designate any other Member as a substitute or alternative tax matters partner
by written notice thereof to all Members. The Tax Matters Partner shall
diligently prosecute any disputes between the Company and the Internal Revenue
Service, but shall not engage in any action or settlement regarding such
dispute without the approval of the Members.
4.5 NOTICE OF TAX EXAMINATIONS. Any Member receiving advice that the
Internal Revenue Service intends to examine any income tax return of the
Company shall promptly notify the Company.
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APPENDIX B
COMMON UNIT RECIPIENT CERTIFICATIONS
No later than one (1) business day prior to the Call Offer closing date,
each recipient of Common Units pursuant to this Agreement (each such recipient
is referred to herein as a "Common Unit Recipient") shall execute and deliver
to Prime GR a written statement wherein it shall represent, warrant and
covenant as follows:
(A) Such Common Unit Recipient is an "accredited investor" within the
meaning of Rule 501(a) promulgated under the Securities Act of 1933, as
amended (the "Securities Act"). Such Common Unit Recipient understands the
risks of, and other considerations relating to, its acquisition of the Common
Units. Such Common Unit Recipient, by reason of its business and financial
experience, together with the business and financial experience of those
persons, if any, retained by it to represent or advise it with respect to its
investment in the Common Units, (i) has such knowledge, sophistication and
experience in financial and business matters and in making investment
decisions of this type, that it is capable of evaluating the merits and risks
of an investment in Common Units of Prime GR and of making an informed
investment decision, (ii) is capable of protecting its own interests in
connection with its acquisition of Common Units or has engaged representatives
or advisors to assist such Common Unit Recipient in protecting its interests
in connection with its acquisition of Common Units and (iii) is capable of
bearing the economic risk of such investment in Common Units.
(B) The Common Units to be issued to such Common Unit Recipient will be
acquired by such Common Unit Recipient for its own account for investment only
and not with a view to, or with any intention of, a distribution or resale
thereof, in whole or in part, or the grant of any participation therein until
and unless the Common Units are exchanged for Common Shares of Prime Group
Realty Trust (the "Trust"), following the six months lock-up period applicable
to the Common Units, in accordance with the Partnership Agreement of Prime
GR. Such Common Unit Recipient shall confirm that all documents, instruments,
records and books pertaining to investment in Common Units of Prime GR and
requested by such Common Unit Recipient have been made available or delivered
to such Common Unit Recipient. Such Common Unit Recipient has had an
opportunity to ask questions of and receive answers from Prime GR, or from a
person or persons acting on Prime GR's behalf, concerning Prime GR, the terms
and conditions of the transaction contemplated by this Agreement and such
Common Unit Recipient's acquisition of Common Units. Such Common Unit
Recipient has relied upon, and is making its investment decisions, solely upon
such information as has been provided to such Common Unit Recipient by the
Operating Partnership and such Common Unit Recipient has not relied upon any
other information, literature or any oral communications. Such Common Unit
Recipient was not formed for the specific purpose of acquiring an interest in
Prime GR.
(C) Such Common Unit Recipient acknowledges that (i) the Common Units to
be issued to such Common Unit Recipient have not been registered under the
Securities Act or state securities laws by reason of a specific exemption or
exemptions from registration under the
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Securities Act and applicable state securities laws, (ii) Prime GR's reliance
on such exemptions is predicated in part on the accuracy and completeness of
the representations and warranties of the Common Unit Recipient contained
herein, (iii) such Common Units, therefore, cannot be resold unless registered
under the Securities Act and applicable state securities laws, or unless an
exemption from registration is available, (iv) there is no public market for
such Common Units and (v) Prime GR has no obligation or intention to register
such Common Units for resale under the Securities Act or any state securities
laws or to take any action that would make available any exemption from the
registration requirements of such laws. Such Common Unit Recipient, hereby
acknowledges that because of the restrictions on transfer or assignment of
such Common Units to be issued hereunder which are set forth in this Agreement
and in Prime GR Partnership Agreement, such Common Unit Recipient may have to
bear the economic risk of the investment commitment evidenced by this
Agreement and any Common Units acquired hereby for an indefinite period of
time, and that the Common Units by their terms will not be exchangeable at the
request of the holder thereof for Common Shares of the Trust prior to the
passage of six full calendar months after their issuance.
(D) The address of such Common Unit Recipient's residence or principal
place of business, as applicable, shall be set forth, together with a
statement as to whether such Common Unit Recipient has any present intention
of becoming a resident of any country, state or jurisdiction other than the
country and state in which its present principal place of business or
residence, as applicable, is sited.
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EXHIBIT 1
LEGAL DESCRIPTION FOR THE COMPANY PROPERTY
LOTS 5, 6, 7, AND THAT PART OF LOT 8 LYING EAST OF THE EAST LINE OF
DEARBORN STREET, (EXCEPTING THEREFROM THE NORTH 9 FEET OF SAID LOTS
TAKEN FOR ALLEY) IN BLOCK 141 IN SCHOOL SECTION ADDITION TO CHICAGO IN
SECTION 16, TOWNSHIP 39 NORTH, RANGE 14 EAST OF THE THIRD PRINCIPAL
MERIDIAN, IN COOK COUNTY, ILLINOIS.
Common Address of Property: THE NORTHWEST CORNER OF STATE
AND ADAMS STREET, CHICAGO, ILLINOIS
Tax Identification Number(s): 17-16-213-012-0000
17-16-213-013-0000
17-16-213-014-0000
17-16-213-015-0000
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