THE TENDER OFFER CONTEMPLATED IN THIS AGREEMENT HAS NOT YET COMMENCED, AND
THIS AGREEMENT IS NEITHER AN OFFER TO PURCHASE NOR A SOLICITATION OF AN
OFFER TO SELL SECURITIES. ANY TENDER OFFER WILL BE MADE ONLY THROUGH AN
OFFER TO PURCHASE AND RELATED LETTER OF TRANSMITTAL. INVESTORS AND
SECURITY HOLDERS ARE STRONGLY ADVISED TO READ THE TENDER OFFER STATEMENT
REGARDING THE TENDER OFF IF AND WHEN SUCH DOCUMENT IS FILED AND BECOMES
AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION.
ANY SUCH TENDER OFFER STATEMENT WOULD BE FILED BY CADIM INC. WITH THE SEC.
INVESTORS AND SECURITY HOLDERS MAY OBTAIN A FREE COPY OF THE TENDER OFFER
STATEMENT (IF AND WHEN FILED AND AVAILABLE) AND OTHER RELEVANT DOCUMENTS ON
THE SEC'S WEB SITE AT: XXX.XXX.XXX. ANY SUCH TENDER OFFER STATEMENT AND
RELATED MATERIALS MAY ALSO BE OBTAINED FOR FREE BY DIRECTING SUCH REQUESTS
TO CADIM INC. AT 000-000-0000.
SUPPORT AND STANDSTILL AGREEMENT
THIS SUPPORT AND STANDSTILL AGREEMENT (this "Agreement") is entered
into as of this 30th day of August, 2001 by and among CADIM INC. (together
with its affiliates, "CADIM"), THE PRIME GROUP, INC. ("PGI"), PRIME GROUP
REALTY TRUST ("PGE") and PRIME GROUP REALTY, L.P. ("PGLP").
WHEREAS, CADIM and PGI (the "Acquiring Parties") submitted to PGE
a written offer letter dated August 23, 2001 (the "Offer Letter")
expressing interest in pursuing a potential business combination
transaction with PGE.
WHEREAS, the Acquiring Parties and PGE, and their respective
advisors, have participated in discussions regarding the Offer Letter and
the parties wish to enter into further negotiations with respect to
completing a transaction of the type discussed in the Offer Letter, except
that the Acquiring Parties have agreed that the proposed offer price shall
be $14.50 per common share, Series A Preferred Share and common unit of
PGLP (the Offer Letter including the new proposed offer price shall be
referred to herein as the "Proposal").
NOW, THEREFORE, in consideration of PGE's expressed willingness to
enter into negotiations with the Acquiring Parties and their respective
undertakings herein, the parties do hereby agree as follows:
1. Good Faith Negotiations; Due Diligence. PGE and the Acquiring
Parties will promptly commence good faith negotiations concerning the
structuring, terms, conditions, approvals and implementation of a possible
business combination transaction of the type summarized in the Proposal
(the "Proposed Transaction") and the parties will use their reasonable best
efforts to negotiate in good faith and execute definitive documentation on
reasonable and customary terms subject to CADIM's satisfaction with its due
diligence investigation during the Thirty-Day Period (as defined herein).
PGE will promptly provide CADIM with all reasonable due diligence materials
concerning PGE, its operating partnership, PGLP and their respective
subsidiaries and affiliates, all of their respective properties and other
assets, as well as information concerning PGE's and PGLP's obligations and
liabilities, as CADIM may reasonably request.
2. Confidentiality. CADIM agrees that (a) all information regarding
PGE, PGLP and their subsidiaries furnished to CADIM, whether prior to or
after the date of this letter, in connection with CADIM's consideration of
the Proposed Transaction (the "Evaluation Materials") will be kept strictly
confidential, and (b) the Evaluation Materials will be used solely for the
purpose of determining the desirability of the Proposed Transaction;
provided, however, that Evaluation Materials may be disclosed to any of
CADIM's or PGI's Representatives who need to know such information for the
purpose of assisting CADIM and PGI in evaluating the Proposed Transaction
(it being understood that such Representatives will be informed by CADIM or
PGI, as applicable, of the contents of this Agreement and that, by
receiving such information, such Representatives are agreeing to be bound
by this Agreement). The term "Evaluation Materials" does not include
information which was or becomes available to CADIM or its Representatives
on a non-confidential basis from a source other than PGE, its affiliates or
their Representatives, provided that neither CADIM nor any of its
Representatives is aware that such source is under an obligation (whether
contractual, legal or fiduciary) to PGE to keep such information
confidential.
For purposes hereof, "Representatives" means a party's affiliates,
directors, trustees, officers, employees, controlling shareholders or
owners, legal and financial advisors, accountants and other agents and
representatives.
If CADIM is requested in any judicial or administrative proceeding
or by any governmental or regulatory authority to disclose any Evaluation
Materials, CADIM will give PGE prompt notice of such request so that it may
seek an appropriate protective order. If, in the absence of a protective
order CADIM is nonetheless legally compelled to disclose Evaluation
Materials, CADIM may make disclosure of such information to the extent it
is legally required to disclose without liability hereunder.
At any time after termination of discussions by either party to
this Agreement with respect to the Proposed Transaction, upon the written
request of PGE, CADIM will promptly redeliver or cause to be redelivered to
PGE all copies of the Evaluation Materials furnished to or held by CADIM
hereunder or destroy such materials.
3. Exclusivity and Standstill. During the period of 30 calendar days
from the date hereof or such other date as the parties may mutually agree
in writing (the "Thirty-Day Period"), subject to such Thirty-Day Period as
it relates to exclusivity being modified pursuant to paragraph 5, while
CADIM conducts its due diligence relating to PGE and PGLP and in
consideration of the substantial time, effort and expense that CADIM will
undertake, PGE agrees (a) that it shall not, and shall use its best efforts
to ensure that its affiliates, officers, trustees, Representatives or
agents shall not, take any action, either directly or indirectly, to
initiate, assist, solicit or encourage, any inquiries or the making or
implementation of any proposal or offer (including, without limitation, any
proposal or offer to its shareholders) with respect to a Transaction (as
hereafter defined) other than a Transaction among CADIM, PGI, Prime Group
VI, L.P., Primestone Investment Partners L.P., Prime Group Limited
Partnership, Xxxxxxx X. Xxxxxxx, PGE and their respective shareholders and
affiliates (any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal") or engage in any negotiations concerning, or
provide any confidential information or data to, or have any discussions
with, any person relating to an Acquisition Proposal, or otherwise
facilitate any effort or attempt to make or implement an Acquisition
Proposal or take any other action which may be reasonably expected to lead
to any Acquisition Proposal; and (b) that it will immediately cease any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing and will advise such
parties that it is not in a position to negotiate further with them during
the Thirty-Day Period; provided, however, that the Board of Trustees of PGE
or its Committee of Independent Trustees may furnish information to
(pursuant to a confidentiality agreement on terms and conditions customary
for similar transactions) and enter into discussions or negotiations with
any person or entity that makes a bona fide Acquisition Proposal during the
Thirty-Day Period that was not initiated, assisted, solicited or encouraged
in violation of this Agreement, but only if (i) the Committee of
Independent Trustees of the Board of Trustees of PGE, after consultation
with and consideration of the advice of its independent financial advisors
and outside legal counsel, determines in good faith that the Acquisition
Proposal, if consummated as proposed, would result in a transaction more
favorable to its stockholders than the Proposed Transaction (taking into
account all relevant legal, financial, regulatory and other aspects of the
proposal), (ii) such Acquisition Proposal is for 100% of the outstanding
shares of beneficial interest of PGE (other than the Series B Preferred
Shares) and 100% of the outstanding units of PGLP, (iii) the Committee of
Independent Trustees of the Board of Trustees of PGE, after consultation
with and consideration of the advice of its independent legal counsel,
determines in good faith that such action is necessary for the Board of
Trustees or its Committee of Independent Trustees to comply with its
fiduciary duties to its stockholders under applicable law (any Acquisition
Proposal satisfying each of the preceding clauses (i)-(iii) above shall be
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referred to as a "Superior Acquisition Proposal") and (iv) prior to
furnishing such information to, or entering into discussions or
negotiations with, such person or entity, PGE provides written notice to
CADIM that it is furnishing information to, or entering into discussions or
negotiations with, such other person or entity in accordance with the
provisions of this Section; provided, however, that nothing contained in
this Agreement shall prohibit the Board of Trustees or its Committee of
Independent Trustees from complying, to the extent applicable, with Rules
14d-9 and 14e-2 promulgated under the Securities Exchange Act of 1934, as
amended, with regard to an Acquisition Proposal. A "Transaction" means a
merger, acquisition, tender offer, exchange offer, consolidation or similar
business combination transaction involving, or any purchase of all or any
material portion of the assets or any equity securities of, PGE, PGLP or
any subsidiary of either (excluding the sale of Dearborn Center, the sale
of any joint venture interests similar to that in the Lupert & Xxxxx
transaction and other sales of, or joint ventures relating to, real
property in the ordinary course of business consistent with past practice),
or any other sale, dividend, split, reorganization, recapitalization,
restructuring, spin-off or other disposition of equity securities of PGE,
PGLP or any subsidiary of either or any similar transaction involving,
directly or indirectly, PGE, PGLP or any subsidiary of either. In addition,
the definition of Superior Acquisition Proposal contained in any definitive
documentation shall contain a condition that the Superior Acquisition
Proposal is not conditioned on obtaining financing.
4. Reimbursement and Due Diligence Break-Up Fee. If PGE determines to
pursue a Superior Acquisition Proposal during the Thirty-Day Period (or the
Fifteen-Day Period as defined in paragraph 5 below), then (i) PGE and PGLP
shall pay solely to CADIM an aggregate break-up fee in the amount of $5.0
million (or $10.0 million as provided in paragraph 5 below) promptly
following the event triggering this provision, and (ii) PGE shall reimburse
CADIM and PGI for all of their respective reasonable fees and disbursements
of counsel, accountants and other consultants and other reasonable
out-of-pocket costs incurred subsequent to the date of this Agreement in
connection with analyzing, structuring, participating in the negotiations
of the terms and conditions, drafting and other activities related to the
Proposed Transaction and the approvals and other actions needed for the
implementation thereof, and in assisting CADIM's due diligence
investigation of PGE in connection with the Proposed Transaction (the
"Reimbursement"). Such Reimbursement shall be made within 30 days of CADIM
or PGI, as applicable, submitting copies of the invoices for such costs to
PGE. CADIM will not pay, directly or indirectly, any portion of any amount
that it may receive pursuant to clause (i) of the first sentence of this
paragraph to PGI or any officer or trustee of PGE.
5. Modification of Standstill and Exclusivity Period. If CADIM
provides written notice to PGE (the "Notice") at any time on or prior to
the expiration of the Thirty-Day Period that it intends to proceed with the
Proposed Transaction at the offer price of $14.50 per share (subject to
appropriate adjustment for any issuance of equity securities of PGE or
PGLP) and that Cadim is satisfied with its due diligence investigation,
then the parties agree to use their reasonable best efforts to continue to
negotiate in good faith and execute definitive documentation during the
15-day period immediately following the date on which the Notice is
delivered (such period being the "Fifteen-Day Period"). During the
Fifteen-Day Period, the provisions of paragraphs 3 and 4 shall remain in
effect with Fifteen-Day Period being substituted for Thirty-Day Period
therein (i.e., the provisions of paragraphs 3 and 4 shall expire at the end
of the Fifteen-Day Period); provided, however, that the aggregate break-up
fee payable solely to CADIM pursuant to paragraph 4 during the period of
time, if any, commencing at the time the Notice is delivered and ending at
the end of the Thirty-Day Period shall be in the amount of $10.0 million.
By way of example, if the Notice is delivered 20 days after the date
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hereof, the break-up fee shall be $10.0 million from the delivery of the
notice through the tenth day following that date, thereafter the break-up
fee shall be $5.0 million for the remaining 5 days of the Fifteen-Day
Period and the exclusivity and standstill provisions of paragraph 3 shall
extend for 5 days after the Thirty-Day Period.
6. Subsequent Break-Up Fee. PGE and CADIM agree that the definitive
documentation shall contain an aggregate break-up fee in the amount of
$20.0 million payable solely to CADIM (in addition to Reimbursement of
expenses) under normal and customary circumstances. CADIM will not pay,
directly or indirectly, any portion of any amount that it may receive as a
break-up fee to PGI or any officer or trustee of PGE.
7. No Disclosure. Without the prior written consent of the other
party, none of PGE, CADIM or PGI will, and each of such parties shall cause
their respective affiliates and Representatives not to, make any release to
the press or other public disclosure, or make any statement to any
employee, competitor, customer, client or supplier of any of such parties
or any of their subsidiaries or to any other person, with respect to either
the fact that discussions or negotiations are taking place concerning the
Proposal or the existence or contents of this letter, except for such
public disclosure as may be necessary, based on advice of such party's
outside counsel, for the party proposing to make the disclosure not to be
in violation of or default under any applicable law, regulation or
governmental order, in which event such party shall, prior to making such
disclosure, inform the other parties of such proposed disclosure and
reasonably cooperate with such other parties regarding the proposed content
of such disclosure.
8. Remedies. It is understood and agreed that money damages may not
be a sufficient remedy for any breach of this Agreement by a party hereto
or any of its Representatives or affiliates and that the aggrieved party
shall be entitled to equitable relief, including injunction and specific
performance, as a remedy for such breach, and each party further waives any
requirement for securing or posting of any bond in connection with such
remedy. Such remedies shall not be deemed to be the exclusive remedies for
a breach by a party hereto of this agreement but shall be in addition to
all other remedies at law or equity to the aggrieved party, including all
other remedies provided for herein.
9. Choice of Law. This Agreement shall be governed by the internal
laws of the State of Illinois and without regard to the conflicts of laws
provisions thereof.
10. Several Obligations. The obligations of the parties pursuant to
this Agreement are the several obligations of the respective parties, and
no obligations shall be joint and several among any parties.
[signature page follows]
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WITNESS the execution hereof under seal as of the day and date
first above written by CADIM, PGI and PGE, each by their duly authorized
officer.
CADIM INC.
By:_________________________________________
Title:_________________________________
By:_________________________________________
Title:_________________________________
THE PRIME GROUP, INC.
By:_________________________________________
Title:_________________________________
PRIME GROUP REALTY TRUST
By:_________________________________________
Title:_________________________________
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, its
General Partner
By:_______________________________________
Title________________________________
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