EXHIBIT 10.1
FIRST AMENDMENT TO
SERIES A PREFERRED SECURITIES PURCHASE AGREEMENT
DATED AS OF APRIL 13, 1999
AMONG
SECURITY CAPITAL PREFERRED GROWTH INCORPORATED,
PRIME GROUP REALTY TRUST
AND
PRIME GROUP REALTY, L.P.
TABLE OF CONTENTS
PAGE
I. INVESTOR'S REDEMPTION RIGHT.. . . . . . . . . . . . . . . . . . . . . . 1
1.1 Redemption Right.. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Payment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
II. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE OPERATING
PARTNERSHIP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1 Organization, Good Standing and Qualification. . . . . . . . . . . 2
2.2 Power, Authority and Enforceability. . . . . . . . . . . . . . . . 3
2.3 Compliance with Other Instruments. . . . . . . . . . . . . . . . . 3
2.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 4
2.5 Exchange Act Compliance. . . . . . . . . . . . . . . . . . . . . . 4
2.6 No Material Adverse Changes. . . . . . . . . . . . . . . . . . . . 4
2.7 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.8 Governmental Consent . . . . . . . . . . . . . . . . . . . . . . . 5
2.9 No Violation of Purchase Agreement or Articles . . . . . . . . . . 5
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. . . . . . . . . . . . . 5
3.1 Power, Authority and Enforceability. . . . . . . . . . . . . . . . 5
3.2 Compliance with Other Instruments. . . . . . . . . . . . . . . . . 6
IV. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING . . . . . . . . . . 6
4.1 Representations and Warranties . . . . . . . . . . . . . . . . . . 6
4.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Opinion of Company Counsel . . . . . . . . . . . . . . . . . . . . 6
4.4 Officer's Certificate. . . . . . . . . . . . . . . . . . . . . . . 7
4.5 Proceedings. . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.7 Payment of Cash. . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.8 Updating Resale Shelf. . . . . . . . . . . . . . . . . . . . . . . 7
V. CONDITIONS OF THE COMPANY'S AND THE OPERATING PARTNERSHIP'S OBLIGATIONS
AT THE CLOSING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.1 Representations and Warranties . . . . . . . . . . . . . . . . . . 8
5.2 Performance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 No Injunction. . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Officer's Certificate. . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Legal Opinion of the Investor's Counsel. . . . . . . . . . . . . . 8
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VI. COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
6.1 Waiver of Compliance with Certain Covenants Contained in the
Articles. . . . . . . . . . . . . . . . . . . . . . . . . . . . .. .9
6.2 No Public Disclosure . . . . . . . . . . . . . . . . . . . . . . . .9
6.3 Fixed Charge Coverage Certificate. . . . . . . . . . . . . . . . . 10
6.4 Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
6.5 Resale Shelf Filings . . . . . . . . . . . . . . . . . . . . . . . 10
VII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
7.1 Survival of Warranties . . . . . . . . . . . . . . . . . . . . . . 10
7.2 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . 11
7.3 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.4 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
7.5 Venue; Submission to Jurisdiction. . . . . . . . . . . . . . . . . 11
7.6 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.7 Titles and Subtitles . . . . . . . . . . . . . . . . . . . . . . . 12
7.8 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
7.9 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
7.10 Effect on Articles and Purchase Agreement. . . . . . . . . . . . . 13
7.11 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . 13
7.12 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7.13 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . 14
7.14 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . . 14
7.15 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 14
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FIRST AMENDMENT TO SERIES A
PREFERRED SECURITIES PURCHASE AGREEMENT
This FIRST AMENDMENT TO SERIES A PREFERRED SECURITIES PURCHASE
AGREEMENT (this "Agreement") by and among Prime Group Realty Trust, a
Maryland real estate investment trust (the "Company"), Prime Group Realty,
L.P., a Delaware limited partnership (the "Operating Partnership"), and
Security Capital Preferred Growth Incorporated, a Maryland corporation (the
"Investor") is made as of the 13th day of April, 1999.
W I T N E S S E T H
WHEREAS, the Investor, pursuant to the Series A Preferred
Securities Purchase Agreement, dated as of November 11, 1997, among the
Company, the Operating Partnership and the Investor (the "Purchase
Agreement"), is the beneficial owner and the owner of record of 2,000,000
shares of the Company's Series A Cumulative Convertible Preferred Shares of
Beneficial Interest, $.01 par value per share (the "Series A Preferred
Shares");
WHEREAS, the Investor, the Company and the Operating Partnership
wish to amend the Purchase Agreement in order to contractually alter the
terms of the Series A Preferred Shares in accordance with the terms of this
Agreement; and
WHEREAS, the Investor, the Company and the Operating Partnership
intend that this amendment qualifies as a recapitalization under Section
368(a)(1)(E) of the Internal Revenue Code of 1986, as amended (the "Code");
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties herein contained, the parties hereby
agree as follows:
I. INVESTOR'S REDEMPTION RIGHT.
1.1 REDEMPTION RIGHT.
(a) Investor shall have the right, any time after January 15, 2002
and prior to January 15, 2004, to require that the Company redeem any or all
of the Investor's Series A Preferred Shares (the "Redemption Right") at a
redemption price payable in cash in an amount equal to 100% of the
liquidation preference thereof, plus accrued and unpaid dividends whether or
not declared, if any (the "Redemption Payment"), to the date of redemption
(the "Redemption Date"), pursuant to a notice described in subsection (b)
below (a "Redemption Notice"). A Redemption Notice may be given prior to
January 15, 2002, but may not be given subsequent to September 16, 2003 (it
being understood that no Redemption Date shall occur after January 15, 2004).
(b) The Investor may exercise its Redemption Right by providing
written notice to the Company stating (i) that the Investor is exercising its
right to require the Company to redeem any or all of its Series A Preferred
Shares then held by the Investor in cash pursuant to this
Agreement, (ii) the date of redemption (which shall be a business day, no
earlier than 120 days and no later than 150 days from the date such notice is
delivered, and (iii) the number of Series A Preferred Shares that the
Investor desires to have redeemed. On the Redemption Date, the Company will
accept for payment the number of Series A Preferred Shares selected for
redemption pursuant to the Redemption Notice and promptly pay to Investor by
wire transfer of immediately available funds to the Investor payment in an
amount equal to the Redemption Payment in respect of the number of Series A
Preferred Shares selected for redemption. If the certificate(s) which are
delivered represent more than the number of Series A Preferred Shares that
are being selected for redemption, the Company shall promptly issue and
deliver to the Investor a certificate or certificates in definitive form,
registered in the name of the Investor, representing the number of Series A
Preferred Shares, if any, which the Investor has not selected for redemption.
The Investor may exercise its Redemption Right as many times as it desires
during the two-year period by providing Redemption Notices; PROVIDED, that no
Redemption Notice shall select fewer than 50,000 Series A Preferred Shares
for redemption. Notwithstanding anything else herein, to the extent they are
applicable to any Redemption Notice, the Company will comply with any federal
and state securities laws, rules and regulations and all time periods and
requirements shall be adjusted accordingly.
1.2 PAYMENT. The Company hereby agrees to pay the Investor $400,000 in
immediately available funds on or before the Closing Date.
1.3 CLOSING.
(a) Upon the terms and subject to the satisfaction or waiver of all
the conditions to closing set forth in this Agreement, the closing shall take
place at the offices of Xxxxx, Xxxxx & Xxxxx, 000 Xxxxx XxXxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx or at such other location as may be agreed upon by the Company and the
Investor (the "Closing"). The Closing shall take place at 3:00 p.m. Chicago time
on April 13, 1999, or at such other time as may be agreed upon by the Company
and the Investor (the "Closing Date").
(b) At the Closing, the Company shall make a wire transfer of
immediately available funds to the Investor's order in an amount equal to
$400,000.
II. 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 of this Agreement and as of the Closing Date, that:
2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION.
(a) The Company has been duly organized and is validly existing as
a real estate investment trust in good standing under the laws of the State
of Maryland with full real estate investment trust power and authority to
own, lease and operate its properties and conduct its business as now being
conducted, and has been duly qualified to transact business and is in good
standing
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under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such qualification,
except where the failure to so qualify would not have a Material Adverse
Effect. "Material Adverse Effect" means any material adverse effect on the
operations, assets, business, affairs, prospects, properties, or financial or
other condition of the Company, the Operating Partnership and their
respective subsidiaries (collectively, the "Subsidiaries"), taken as a whole.
(b) 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 with partnership power and authority to own,
lease and operate its properties and conduct its business as now being conducted
and has been duly qualified to transact business and is in good standing under
the laws of each jurisdiction in which it owns or leases properties, or conducts
any business, so as to require such qualification, except where the failure to
so qualify would not have a Material Adverse Effect.
2.2 POWER, AUTHORITY AND ENFORCEABILITY
(a) Each of the Company and the Operating Partnership has all
requisite real estate investment trust or partnership power and authority, and
has taken all required trust or partnership action necessary, to execute,
deliver and perform this Agreement. The Company has all requisite power and
authority, and has taken all required action necessary, to authorize the
granting of the Redemption Right and the payment of the $400,000 in immediately
available funds as provided in this Agreement.
(b) This Agreement has been duly executed and delivered by each of
the Company and the Operating Partnership and constitutes the legal, valid and
binding obligation of each of the Company and the Operating Partnership
enforceable against each of the Company and the Operating Partnership in
accordance with its terms, except as may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, and other laws of general
application affecting enforcement of creditors' rights generally, and (ii)
equitable principles of general applicability relating to the availability of
specific performance, injunctive relief, or other equitable remedies.
2.3 COMPLIANCE WITH OTHER INSTRUMENTS.
The execution, delivery and performance of this Agreement by the
Company and the Operating Partnership and the consummation by the Company and
the Operating Partnership of the transactions contemplated hereby do not (i)
result in a violation of the Company's Articles of Amendment and Restatement,
as amended (the "Articles"), the Company's Amended and Restated Bylaws (the
"Bylaws") or the Operating Partnership's Amended and Restated Agreement of
Limited Partnership, as amended or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which the Company, the Operating
3
Partnership or any of the Subsidiaries is a party, or result in a violation
of any law, rule, regulation, order, judgment or decree applicable to the
Company, the Operating Partnership or any of the Subsidiaries or by which any
property or asset of the Company, the Operating Partnership or any of the
Subsidiaries is bound or affected (except for such conflicts, defaults,
terminations, amendments, accelerations, cancellations and violations as
would not, individually or in the aggregate, have a Material Adverse Effect
or materially impair the Company's or the Operating Partnership ability to
perform their obligations under this Agreement).
2.4 FINANCIAL STATEMENTS.
The financial statements and supporting schedules included in the
Company's periodic filings filed pursuant to the Securities Exchange Act of
1934, as amended (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 and except as indicated in the
Company's Form 8-K filed on March 31, 1999.
2.5 EXCHANGE ACT COMPLIANCE.
The Company has timely filed all documents required to be filed with
the Securities and Exchange Commission (the "Commission") pursuant to the
Exchange Act. All such documents, when so filed, complied in form with such act
in all material respects and did not, as of the date of their filing, 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.
2.6 NO MATERIAL ADVERSE CHANGES.
Since the date of the Company's Annual Report of Form 10-K for the
year ended December 31, 1998 (the "10-K"), (i) there has been no change in the
business, operations or financial condition, of the Company, the Operating
Partnership or the Subsidiaries or in the earnings or the ability to continue to
conduct business in the usual and ordinary course of the Company, the Operating
Partnership and the Subsidiaries, whether or not arising in the ordinary course
of business, which has a Material Adverse Effect; and (ii) except for the
transactions contemplated by this Agreement, there has been no transaction
entered into by the Company, the Operating Partnership or any of the
Subsidiaries other than transactions in the ordinary course of business or
transactions which would, individually or in the aggregate, have a Material
Adverse Effect; and (iii) except as set forth on SCHEDULE 2.6, there have not
been any changes in the Company's or the Operating Partnership's authorized
capital or any material increases in the debt of the Company, the Operating
Partnership and the Subsidiaries considered as one enterprise; and (iv) there
has been no actual or, to the knowledge of the Company or the Operating
Partnership, threatened revocation of, or default under, any material contract
to which the Company, the Operating Partnership or any of the Subsidiaries is a
party, which could reasonably be expected to result in a Material Adverse
Effect;
4
PROVIDED HOWEVER, that the Company makes no representation with respect to
Section 3.3.5(a)(i), or any related provision which is affected thereby, of
the Articles.
2.7 LITIGATION.
Except as set forth in the 10-K, there is no action, suit or
proceeding (whether or not purportedly on behalf of the Company, the
Operating Partnership or any of the Subsidiaries) before or by any court or
governmental agency or body, domestic or foreign, now pending, or to the
knowledge of the Company or the Operating Partnership, threatened against or
affecting the Company, the Operating Partnership or any of the Subsidiaries
which, either alone or in the aggregate, could reasonably be expected to have
a Material Adverse Effect or materially impair the Company's or the Operating
Partnership's ability to perform its obligations under this Agreement.
2.8 GOVERNMENTAL CONSENT.
No consent, approval or authorization of, or declaration or filing
with, any governmental authority on the part of the Company or the Operating
Partnership is required for the valid execution and delivery of this Agreement
or performance hereunder or thereunder.
2.9 NO VIOLATION OF PURCHASE AGREEMENT OR ARTICLES.
There is not, and has not been since the date of the Purchase
Agreement, any violation of or defaults, which have not since been cured, under
the representations, warranties or covenants contained in the Purchase Agreement
or the Articles, with respect to the Series A Preferred Shares, all of which
violations and defaults, to the Company's knowledge, are listed on SCHEDULE 2.9;
PROVIDED HOWEVER, that the Company makes no representation with respect to
Section 3.3.5(a)(i), or any related provision which is affected thereby, of the
Articles.
III. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR.
The Investor represents and warrants, as of the date of this
Agreement and as of the Closing Date, that:
3.1 POWER, AUTHORITY AND ENFORCEABILITY.
(a) The Investor is a corporation duly incorporated, validly
existing and in good standing under the laws of the state of Maryland. The
Investor has the requisite corporate power and authority, and has taken all
required corporate action necessary, to execute, deliver and perform this
Agreement and to consummate the transactions contemplated hereby.
(b) This Agreement has been duly executed and delivered by the
Investor and constitutes the legal, valid and binding obligation of the
Investor enforceable against the Investor in accordance with its terms,
except as may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and other laws of general application affecting
enforcement of creditors'
5
rights generally, and (ii) equitable principles of general applicability
relating to the availability of specific performance, injunctive relief, or
other equitable remedies.
3.2 COMPLIANCE WITH OTHER INSTRUMENTS.
The execution, delivery and performance of this Agreement by the
Investor and the consummation by the Investor of the transactions
contemplated hereby do not (i) result in a violation of the Investor's
Articles of Incorporation or Bylaws or (ii) conflict with, or constitute a
default (or an event which with notice or lapse of time or both would become
a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to
which the Investor is a party, or result in a violation of any law, rule,
regulation, order, judgment or decree applicable to the Investor or by which
any property or asset of the Investor is bound or affected (except for such
conflicts, defaults, terminations, amendments, accelerations, cancellations
and violations as would not, individually or in the aggregate, materially
impair the Investor's ability to perform its obligations under this
Agreement).
IV. CONDITIONS OF THE INVESTOR'S OBLIGATIONS AT CLOSING.
The Investor's obligations at the Closing are subject to the satisfaction
or waiver by the Investor on or before the Closing of each of the following
conditions:
4.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of each of the Company and the
Operating Partnership contained in Article III shall be true on and as of the
Closing with the same effect as though such representations and warranties had
been made on and as of the date of the Closing.
4.2 PERFORMANCE.
Each of the Company and the Operating Partnership shall have performed
and complied with all agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the date of the Closing.
4.3 OPINION OF COMPANY COUNSEL.
On the Closing Date, the Investor shall have received from each of
Winston & Xxxxxx and Miles & Stockbridge, counsel for the Company, an opinion
substantially in the form attached as EXHIBIT A and an opinion confirming the
Company's status as a real estate investment trust under the Internal Revenue
Code of 1986, as amended in the form attached as EXHIBIT B. In rendering such
opinion, Winston & Xxxxxx may rely, as to matters governed by the laws of the
State of Maryland, upon the opinion of Miles & Stockbridge.
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4.4 OFFICER'S CERTIFICATE.
Each of the Company and the Operating Partnership shall have
delivered to the Investor on the Closing Date a certificate or certificates
signed by an authorized officer of such entity to the effect that the facts
required to exist by SECTIONS 4.1, 4.2, 4.6 and 4.8 continue to exist on the
Closing Date.
4.5 PROCEEDINGS.
All proceedings to be taken in connection with the transactions
contemplated by this Agreement and all documents incidental thereto, shall be
reasonably satisfactory in form and substance to the Investor; and the Investor
shall have received copies of all documents which the Investor may reasonably
request in connection with said transactions and copies of the records of all
proceedings of the Company in connection therewith in form and substance
satisfactory to the Investor.
4.6 No Injunction
There shall not be in effect any order, decree or injunction of a
court or agency of competent jurisdiction which enjoins or prohibits
consummation of the transactions contemplated hereby and there shall be no
actual or threatened action, suit, arbitration, inquiry, proceedings or
investigation by or before any governmental authority, court or agency of
competent jurisdiction, which would reasonably be expected to materially
impair the ability of the Company to consummate the transactions contemplated
hereby.
4.7 Payment of Cash
The Company shall, prior to or concurrently with the Closing, pay to
the Investor the $400,000 provided for in SECTION 1.2 of this Agreement.
4.8 UPDATING RESALE SHELF
The Company shall, prior to the Closing, deliver to the Investor
drafts of any amendments to the Registration Statement on Form S-3 (the "Resale
Shelf") (File No. 333-64973) or Exchange Act filings which would be incorporated
by reference therein.
V. CONDITIONS OF THE COMPANY'S AND THE OPERATING PARTNERSHIP'S OBLIGATIONS AT
THE CLOSING.
The obligations of the Company and the Operating Partnership under
Article I of this Agreement are subject to the fulfillment on or before the
Closing of each of the following conditions:
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5.1 REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Investor contained in
Article III shall be true on and as of the Closing with the same effect as
though such representations and warranties had been made on and as of the
date of the Closing.
5.2 PERFORMANCE.
The Investor shall have performed and complied with all agreements,
obligations and conditions contained in this Agreement that are required to
be performed or complied with by it on or before the date of the Closing.
5.3 NO INJUNCTION.
There shall not be in effect any order, decree or injunction of a
court or agency of competent jurisdiction which enjoins or prohibits
consummation of the transactions contemplated hereby and there shall be no
actual or threatened action, suit, arbitration, inquiry, proceedings or
investigation by or before any Governmental Authority, court or agency of
competent jurisdiction, which would reasonably be expected to materially
impair the ability of the Investor to consummate the transactions
contemplated hereby.
5.4 OFFICER'S CERTIFICATE.
The Investor shall have delivered to the Company and the Operating
Partnership on the Closing Date a certificate or certificates signed by an
authorized officer of the Investor to the effect that the circumstances
described in the Certificate and the facts required to exist by SECTIONS 5.1,
5.2 and 5.3 continue to exist on the Closing Date.
5.5 LEGAL OPINION OF THE INVESTOR'S COUNSEL.
The Company shall have received as of the Closing Date, an opinion of
Xxxxx, Xxxxx & Xxxxx, counsel for the Investor, substantially in the form
attached as EXHIBIT C.
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VI. COVENANTS.
6.1 WAIVER OF COMPLIANCE WITH CERTAIN COVENANTS CONTAINED IN THE ARTICLES.
The Investor hereby waives past and future compliance by the
Company with Section 3.3.5(a)(i) of the Articles. This waiver shall be
irrevocable. This waiver shall not constitute a waiver of compliance with any
other provisions of the Articles or the Purchase Agreement. The Investor
agrees that prior to transferring any Series A Preferred Shares, it will
obtain from the prospective transferee on behalf of the Company a waiver of
past and future compliance with Section 3.3.5(a)(i) of the Articles that is
identical in substance to the waiver set forth herein and an agreement to be
bound by all of the terms and conditions of this Agreement. Without limiting
the generality of the foregoing, (a) with respect to Section 3.3.5(a)(i) of
the Articles and only Section 3.3.5(a)(i), the Investor consents, and any
subsequent transferee of Series A Preferred Shares will be deemed to have
consented, to the issuance of any preferred securities and the incurrence of
any indebtedness by the Company, the Operating Partnership or any other
subsidiaries on any date after the date hereof, notwithstanding the fact
that, immediately following such issuance and after giving effect to such
issuance and the application of the net proceeds therefrom, such entity could
not be reasonably expected to satisfy the ratio set forth in Section
3.3.5(a)(i) for the fiscal quarter immediately preceding such issuance;
PROVIDED, however, that this consent shall not in any way be construed to be
a consent by the Investor or any subsequent transferee of Series A Preferred
Shares to the issuance of any preferred securities or the incurrence of any
indebtedness which would not be in compliance with Section 3.3.5(a)(ii) of
the Articles or any other provisions or covenants contained in the Articles
or this Agreement other than Section 3.3.5(a)(i); and (b) the Investor hereby
waives, and any subsequent transferee of Series A Preferred Shares will be
deemed to have waived, any right that it may hereafter have under Section
3.3.5(b) of the Articles to require that the Company repurchase any or all of
its Series A Preferred Shares to the extent such repurchase right shall arise
from the failure of the Company to satisfy the ratio set forth in Section
3.3.5(a)(i) for any quarter; PROVIDED, however, that this waiver shall not in
any way be construed to be a waiver by the Investor or any subsequent
transferee of Series A Preferred Shares of any rights that it may have under
Section 3.3.5(b) of the Articles relating to the covenant contained Section
3.3.5(a)(ii) or any other provisions or covenants contained in the Articles
or this Agreement other than the failure to satisfy the ratio set forth in
Section 3.3.5(a)(i).
6.2 NO PUBLIC DISCLOSURE.
None of the Company, the Operating Partnership or any affiliate of
either will file any press release or Form 8-K concerning the transactions
contemplated by this Agreement other than in the form contained in the press
release attached as EXHIBIT D and the Form 8-K to be filed by the Company,
which will be identical to the press release, except that this Agreement will
be included as an exhibit thereto. In addition, the Company and the
Operating Partnership agree that neither they nor any affiliate of either of
them will make any written disclosure to the public or to the investment
community which is materially inconsistent with the disclosure contained in
the press release. The Company acknowledges and agrees that if it violates
any of the provisions of this Section 6.2, it will be liable to the Investor
in the amount of $100,000 for each violation, at the
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Investor's option, in addition to any other rights or remedies available to
the Investor, which amount shall be due and payable on the date such
disclosure is made in violation of this Section 6.2. The Investor's rights
under this Section 6.2 are personal to the Investor and shall not be
assignable to any other party whether voluntarily, by operation of law or
otherwise.
6.3 Fixed Charge Coverage Certificate.
For so long as the Investor holds any Series A Preferred Shares,
within fifteen (15) days after the end of each quarter, the Company shall
deliver to the Investor a certificate signed by the President, Chief Executive
Officer, Chief Financial Officer, Treasurer or any Vice President of the Company
setting forth the ratio of the Company's Consolidated EBITDA to its Consolidated
Fixed Charges (both as defined in the Articles), certifying whether that ratio
is at least 1.4 to 1.0 for that quarter and setting forth calculations in such
detail as is necessary to demonstrate the accuracy of such certificate.
6.4 TAX TREATMENT.
The Investor, the Company and the Operating Partnership agree to treat
the transaction described in this Agreement as a recapitalization under
Section 368(a)(1)(E) of the Code and agree to report the transaction
consistently for federal income tax purposes. Accordingly, the Company
agrees and acknowledges that it shall not be entitled to any deduction for
federal income tax purposes of the cash payment hereunder.
6.5 RESALE SHELF FILINGS
The Company agrees to use its best efforts to file any amendments to
the Resale Shelf or make any Exchange Act filings which would be incorporated by
reference therein, which in the opinion of counsel to the Company, are required
to (i) update the description of the Series A Preferred Shares contained or
incorporated by reference in the Resale Shelf and (ii) update any disclosure
contained in the Resale Shelf so that upon filing of such amendments or Exchange
Act filings, the prospectus contained in the Resale Shelf shall 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 not misleading.
Subject to Section 6.2, the Company will file such amendment or Exchange Act
filing as soon as practicable, but in no event later than five business days
after the Closing Date.
VII. MISCELLANEOUS
7.1 SURVIVAL OF WARRANTIES.
The warranties and representations of the Company, the Operating
Partnership and the Investor contained in or made pursuant to Articles II or
III of this Agreement shall survive the Closing through and until one year
following the Closing. The covenants contained in or made pursuant to
Article VI of this Agreement shall survive the Closing indefinitely, except
for any
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provisions which expire by their terms. The representations and warranties
contained in this Agreement shall in no way be affected by any investigation
of the subject matter thereof made by or on behalf of the Investor or the
Company.
7.2 SUCCESSORS AND ASSIGNS.
Except as otherwise provided herein, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the
respective successors and assigns of the parties hereto. Any person to whom
the Investor transfers any Series A Preferred Shares shall be deemed, for
purposes of this Agreement, to be an assignee of the Investor. This
Agreement shall inure to the benefit of and be binding upon the successors
and assigns of each of the parties and shall inure to the benefit of and be
binding upon each holder of the Series A Preferred Shares (including, without
limitation, the Redemption Rights and the waiver obligation contained in
Section 6.1), including, without the need for an express assignment and
assumption or any consent by the Company thereto, subsequent holders of
Series A Preferred Shares. The Company and the Operating Partnership
acknowledge and agree that all rights and obligations of this Agreement,
including, without limitation, the Redemption Rights and the waiver
obligation contained in Section 6.1, shall be automatically transferred to,
and assumed by, as the case may be, any subsequent holder of the Series A
Preferred Shares.
7.3 INTERPRETATION.
The parties hereto acknowledge that this Agreement is the product of
arm's-length negotiations between the parties, each of whom was represented by
counsel, and agree that in any dispute concerning the interpretation of any
provision of this Agreement, there will be no presumption that any provision is
to be construed against or in favor of any particular party.
7.4 GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois, without giving effect to the conflict of law
provisions thereof.
7.5 VENUE; SUBMISSION TO JURISDICTION.
The parties hereto agree that any litigation relating to this
Agreement may be brought in any court sitting in Chicago, Illinois. Each
party hereby consents to personal jurisdiction in any such action or
proceeding brought in any court, consents to service of process by mail made
upon such party and such party's agent (or in any other manner permitted by
the rules of the court in which the action or proceeding is brought) and
waives any objection to venue in any such court or to any claim that any such
court is an inconvenient forum.
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7.6 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. This document may be executed by facsimile
signature.
7.7 TITLES AND SUBTITLES.
The title and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting
this Agreement.
7.8 NOTICES.
Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively
given (a) upon personal delivery to the party to be notified, (b) on the
fifth business day after deposit with the United States Post Office, by
registered or certified mail, postage prepaid, (c) on the next business day
after dispatch via nationally recognized overnight courier or (d) upon
confirmation of transmission by facsimile, all addressed to the party to be
notified at the address indicated for such party below, or at such other
address as such party may designate by ten (10) days' advance written notice
to the other parties. Notices should be provided in accordance with this
Section at the following addresses:
If to the Investor, to:
Security Capital Preferred Growth Incorporated
00 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
Xxxxxx X. Xxxxxxx
Facsimile (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx
Xxxxx, Xxxxx & Xxxxx
000 Xxxxx XxXxxxx
Xxxxxxx, XX 00000
Facsimile: (000) 000-0000
If to the Company or the Operating Partnership, to:
Prime Group Realty Trust
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
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Attn: Xxxxxxx X. Xxxxx
Xxxxx X. Xxxxxxx
Xxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
(000) 000-0000
(000) 000-0000
with a copy to:
Xxxxx X. Xxxxxx
Xxxxx X. Xxxxx
Xxxxxxx & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Facsimile: (000) 000-0000
7.9 EXPENSES.
Each party shall pay all costs and expenses that it incurs with
respect to the negotiation, execution, delivery and performance of this
Agreement. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition
to any other relief to which such party may be entitled.
7.10 EFFECT ON ARTICLES AND PURCHASE AGREEMENT.
Except as expressly set forth in this Agreement, neither the
execution, delivery nor effectiveness of this Agreement shall operate as a
waiver of any right, power or remedy of the Investor of any rights or remedies
under the Articles, with respect to the Series A Preferred Shares, or the
Purchase Agreement, all of which the Investor hereby expressly reserves. Except
as expressly set forth in this Agreement, nothing contained herein shall require
the Investor to hereafter waive compliance with or any defaults under, or to
further amend any provisions of the Articles, with respect to the Series A
Preferred Shares, or the Purchase Agreement, whether or not similar to the
waiver effected by this Agreement.
7.11 AMENDMENTS AND WAIVERS.
Any term of this Agreement may be amended, and the observance of any
term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company, the Operating Partnership and the Investor. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any securities purchased under this Agreement at the time
outstanding (including securities into which such securities are convertible),
each future holder of all such securities, and the Company.
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7.12 SEVERABILITY.
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with
its terms.
7.13 WAIVER OF JURY TRIAL.
TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES HEREBY
IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS HEREIN
PROVIDED FOR.
7.14 TIME OF THE ESSENCE.
Time is of the essence as to all dates set forth in this Agreement
subject to any applicable grace or cure period expressly provided in this
Agreement.
7.15 ENTIRE AGREEMENT.
This Agreement and the Purchase Agreement constitute the entire
agreement among the parties with respect to the subject matter hereof and no
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth
herein or therein. The Purchase Agreement, as amended hereby, shall remain
in full force and effect and each of the parties hereby ratifies and confirms
the covenants and agreements contained in and under the Purchase Agreement,
as amended hereby. Any and all notices, requests, orders, certificates,
documents and other instruments executed and delivered concurrently with or
after the execution and delivery of this Agreement may refer to the "Series A
Preferred Securities Purchase Agreement" or may identify such Purchase
Agreement in any other respect without making specific reference to this
Agreement, but nevertheless all such references shall be deemed to include
this Agreement unless the context shall otherwise require.
* * * * *
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
SECURITY CAPITAL PREFERRED
GROWTH INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------------
Its: Presidnent
-----------------------------------
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, its managing
general partner
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------------------------
Its: President and Chief Executive Officer
-------------------------------------------
PRIME GROUP REALTY TRUST
By: /s/ Xxxxxxx X. Xxxxx
------------------------------------------
Name: Xxxxxxx X. Xxxxx
-------------------------------------------
Its: President and Chief Executive Officer
-------------------------------------------
