EX-99 3 amended-file.htm TAX INDEMNITY AGREEMENT EXHIBIT 10.22 TAX INDEMNITY AGREEMENT ----------------------- THIS TAX INDEMNITY AGREEMENT (the "Agreement") is made and entered into this 17th day of November, 1997 by and among PRIME GROUP REALTY,...
EX-99
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amended-file.htm
TAX INDEMNITY AGREEMENT
EXHIBIT 10.22
TAX INDEMNITY AGREEMENT
-----------------------
THIS TAX INDEMNITY AGREEMENT (the "Agreement") is made and entered into
this 17th day of November, 1997 by and among PRIME GROUP REALTY, L.P., a
Delaware limited partnership ("Prime"), ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ("Casati") and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ ("▇▇▇▇▇").
W I T N E S S E T H:
-------------------
WHEREAS, Casati and ▇▇▇▇▇ are the only partners of ▇▇▇▇▇▇-▇▇▇▇▇
Partnership, an Illinois partnership ("C-H Partnership");
WHEREAS, C-H Partnership is the sole general partner of Continental Towers
Associates-I, an Illinois Limited Partnership ("CTA"), and Casati and ▇▇▇▇▇ are
limited partners of CTA;
WHEREAS, CTA is the owner of the entire beneficial interest in American
National Bank and Trust Company of Chicago Trust No. 40935, established pursuant
to a Trust Agreement dated July 26, 1977 ("Trust No. 40935") and First Bank N.A.
Trust No. 5602, established pursuant to a Trust Agreement dated September 27,
1976 ("Trust No. 5602");
WHEREAS, Trust No. 40935 and Trust No. 5602 collectively are the owners of
the real estate located at ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, legally
described on Exhibit A and commonly known as Continental Towers (the "Real
Estate");
WHEREAS, the Real Estate is subject to mortgage liens in favor of General
Electric Capital Corporation ("GECC") which secure an indebtedness (the "Loan")
owned in part by GECC and in part by Great Oak LLC ("Great Oak"); the terms of
the Loan are set forth in that certain Loan Modification and Amended and
Restated Loan Agreement dated as of June 1, 1995 by and among GECC, Trust No.
40935, CTA, C-H Partnership, Casati and ▇▇▇▇▇ (the "Loan Agreement");
WHEREAS, under the terms of the Loan Agreement, the entire principal
balance and all unpaid interest become due and payable on October 1, 1998;
WHEREAS, if the Loan is not paid at maturity and GECC and Great Oak
foreclose the mortgages, Casati and ▇▇▇▇▇ will become liable to pay substantial
state and federal taxes in their capacities as limited partners of CTA and as
partners in C-H Partnership through its general partnership interest in CTA;
WHEREAS, GECC and Great Oak have agreed to extend the maturity date of the
Loan for 15 years;
WHEREAS, Prime has agreed to provide Casati and ▇▇▇▇▇ the indemnity
against state and federal income taxes for the time period and in those certain
events set forth in this Agreement;
NOW, THEREFORE, in consideration of the matters set forth in the recitals
and the mutual covenants set forth hereafter, the parties agree as follows:
1. Definitions. The following terms shall have the meanings set
------------ forth below:
"Affiliate" shall mean a Person that directly, or indirectly through
one or more intermediaries, controls, or is controlled by, or is under
common control with a specified Person (any Person which is controlled by
Casati and ▇▇▇▇▇ acting together shall be considered an Affiliate of each
of them).
"Agreement" shall have the meaning set forth in the recitals.
"Casati" shall have the meaning set forth in the recitals.
"Casati Obligation" shall have the meaning set forth in Paragraph 11.
"C-H Partnership" shall have the meaning set forth in the recitals.
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"CTA" shall have the meaning set forth in the recitals.
"Final Determination" shall mean (i) a decision, judgment, decree or
other order by any court of competent jurisdiction, which decision,
judgment, decree or other order has become final after all allowable
appeals by either party to the action have been exhausted or the time for
filing such appeal has expired, or in any case where judicial review shall
at the time be unavailable because the proposed adjustment involves a
decrease in net operating loss carry forward or a business credit carry
forward, a decision, judgment, decree or other order of an administrative
official or agency of competent jurisdiction, which decision, judgment,
decree or other order has become final (i.e. where all administrative
appeals have been exhausted by all parties thereto), (ii) a closing
agreement entered into in connection with an administrative or judicial
proceeding with the consent of Prime or as otherwise permitted in
Paragraph 5 of the Agreement, or (iii) the expiration of the time for
instituting a claim for refund, or if such a claim was filed, the
expiration of the time for instituting suit with respect thereto.
"GECC" shall have the meaning set forth in the recitals.
"Great Oak" shall have the meaning set forth in the recitals.
"▇▇▇▇▇" shall have the meaning set forth in the recitals.
"▇▇▇▇▇ Obligation" shall have the meaning set forth in Paragraph 12.
"Indemnification Event" shall mean (i) a sale, exchange,
foreclosure, deed in lieu of foreclosure or other disposition of all or
any portion of the Real Estate (or a transaction that is treated as a
sale, exchange or other disposition of all or any portion of the Real
Estate for federal income tax purposes) other than pursuant to an exercise
of the Option, (ii) a refinancing or repayments of the Loan (other than
from Modified NOI or from payments required under Paragraphs 11 and 12),
(iii) any other action by CTA or New General Partner, (iv) any transfer,
cancellation, discharge (other than repayments from Modified NOI or from
payments required under Paragraphs 11 and 12), amendment or modification
or all of any portion of the Loan or the rights of Prime under the Loan
Agreement, or (v) any change in the direct or indirect beneficial
ownership of the New General Partner or any increase in the direct or
indirect beneficial ownership of Prime by the New General Partner or any
direct or indirect owner thereof that is contrary to Paragraph 2c, which
in respect of any of clauses (i), (ii), (iii), (iv) or (v) above occurs
after the closing of the Basic Transaction and which results in or creates
the risk of a Tax Event with respect to Casati or ▇▇▇▇▇.
"Indemnification Expiration Date" shall mean January 5, 2013.
"Indemnification Security" shall mean that Prime shall either
deposit into escrow with an independent escrow agent which is reasonably
acceptable to Prime, Casati and ▇▇▇▇▇, on terms reasonably acceptable to
Prime, Casati, and ▇▇▇▇▇, immediately available funds in an amount equal
to 50% of the Total Indemnity Amount based on the then current information
or deliver to Casati and ▇▇▇▇▇ an unconditional, irrevocable letter of
credit in an amount equal to 50% of the Total Indemnity Amount based on
the then current information issued by a national bank which is one of the
100 largest national banks in the United States ranked on total assets and
which has a long-term credit rating of A or above by Standard & Poor's
Ratings Group or an equivalent rating by ▇▇▇▇▇'▇ Investor Services;
provided, however, that if the equity market capitalization of Prime Group
Realty Trust ("PGRT"), the general partner of Prime, at any time falls
below $200,000,000 for more than 30 consecutive trading days, Prime shall
deposit 100% of the Total Indemnity Amount in escrow or furnish a letter
of credit meeting the requirements set forth above to Casati and ▇▇▇▇▇ in
immediately available funds in an amount equal to 100% of the Total
Indemnity Amount. The terms of any such letter of credit shall provide
that such letter of credit may be drawn in full by the Indemnitees if ten
(10) days before the expiration of such letter of credit, either such
letter of credit has not been replaced by a new letter of credit in an
amount not less than that of the letter of credit being replaced and
otherwise on terms identical to the letter of credit being replaced or
Prime has otherwise placed an amount in escrow in accordance with this
Agreement. If the Total Indemnity Amount increases or decreases because of
the passage of time or a change in the information upon which they are
calculated, Prime shall be obligated to provide additional security in
accordance with the requirements set forth above within 30 days after
receipt of the revised calculation, or, in the case of a decrease, shall
have the right to return of any excess security as provided in this
Agreement.
"Indemnitee" or "Indemnitees" shall mean Casati or ▇▇▇▇▇, or both of
them (as the context may require), and, to the extent provided herein,
their respective successors and assigns hereunder.
"Independent Tax Counsel" shall mean (i) such one of the following
as Prime, in its sole discretion, may select: ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ &
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ Will & ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ Slate
▇▇▇▇▇▇▇ & ▇▇▇▇, Cravath ▇▇▇▇▇ & ▇▇▇▇▇, or ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇; or (ii) if
each such law firm is conflicted or unwilling to serve as Independent Tax
Counsel, another law firm selected by Casati and ▇▇▇▇▇ which is reasonably
acceptable to Prime.
"Loan" shall have the meaning set forth in the recitals.
"Loan Agreement" shall have the meaning set forth in the recitals.
"Modified NOI" shall mean Adjusted Net Operating Income (as defined
in the Loan Agreement) but excluding therefrom any revenues from a sale,
exchange or other disposition of all or any portion of the Real Estate
other than pursuant to an exercise of the Option.
"New General Partner" shall have the meaning set forth in Paragraph
2.
"Person" shall mean any individual, general partnership, limited
partnership, limited liability company, trust, estate, association,
corporation or other entity.
"Prime" shall have the meaning set forth in the recitals.
"Real Estate" shall have the meaning set forth in the recitals.
"Regulations" shall mean the Income Tax Regulations promulgated
under the Code, whether temporary or final, as such Regulations may be
amended from time to time, including corresponding provisions of
succeeding Regulations.
"Tax Event" shall mean, with respect to any Indemnitee, the
inclusion of any item of taxable income or gain in the gross income of
such Indemnitee for federal income tax purposes, other than (i) income or
gain attributable to cash and/or other property distributed to an
Indemnitee, received by an Indemnitee, or held by CTA for the benefit of
an Indemnitee, including without limitation rents and other income
received from the operation of the Property in the ordinary course of
business, and (ii) income or gain from Modified NOI.
"Tax Indemnity Amount" shall have the meaning set forth in Paragraph
3.
"Total Indemnity Amount" shall have the meaning set forth in
Paragraph 3.
"Trust No. 5602" shall have the meaning set forth in the recitals.
"Trust No. 40935" shall have the meaning set forth in the recitals.
2. Basic Transaction. Prime, Casati, Heise, GECC, Great Oaks and
-------------------
Certain Affiliates of the foregoing have entered into, or have agreed to
enter into the following agreements (items a, b, c and d below are
collectively referred to as the "Basic Transaction"):
a. Prime has entered into a certain Asset Purchase Agreement
dated October 21, 1997, with Continental Offices Ltd. and Continental
Offices Ltd. Realty, Affiliates of Casati and ▇▇▇▇▇, pursuant to which
it agreed to purchase certain assets, including the contract to manage
the Real Estate.
b. Prime has entered into a certain Loan Purchase Agreement dated as
of November 6, 1997, with GECC and Great Oaks pursuant to which it has
agreed to purchase the Loan from GECC and Great Oaks, subject to Prime's
satisfactory completion of a due diligence investigation.
c. Prime, C-H Partnership, Casati and ▇▇▇▇▇ have agreed to enter
into an amendment to the limited partnership agreement of CTA (the "CTA
Agreement") pursuant to which the interest of C-H Partnership as the
general partner of CTA will be converted to that of a limited partner and
a party designated by Prime will be admitted to CTA as the sole general
partner (the "New General Partner"). The New General Partner shall not be
related to Prime. For purposes of the foregoing, the New General Partner
shall not be considered related to Prime provided (i) the New General
Partner does not, directly or indirectly (by contract (which shall not
include the Management Agreement (defined below)), attribution under Code
Section 267(c) or other arrangement), own or otherwise have the right to
receive the benefit of 10% or more of the capital or profits interests in
Prime; (ii) Prime does not, directly or indirectly (by contract (which
shall not include the Management Agreement (defined below)), attribution
under Code Section 267(c) or other arrangement), own or otherwise have the
right to receive the benefit of 10% or more of the capital or profits
interests of the New General Partner; (iii) the same person or persons do
not, directly or indirectly (by contract (which shall not include the
Management Agreement (defined below)), attribution under Code Section
267(c) or other arrangement), own or otherwise have the right to receive
the benefit of 10% or more of the capital or profits interests of each of
the New General Partner and Prime; and (iv) in the judgment of ▇▇▇▇▇▇▇ &
▇▇▇▇▇, the New General Partner is not considered related to Prime on the
date hereof within the meaning of any section of the Code or any provision
of the Regulations which would constitute or create a risk of a Tax Event
with respect to any Indemnitee upon the admission of the New General
Partner. Prime hereby covenants that there shall be no increase in the
levels of direct or indirect ownership or beneficial rights referred to in
clauses (i), (ii) and (iii) of the immediately preceding sentence beyond
the thresholds set forth therein from and after the closing of the Basic
Transaction through and including the Indemnification Expiration Date. For
purposes of the provisions governing the maintenance of partners' capital
accounts in the Regulations under Code Section 704(b), the book value of
the Real Estate and other property of CTA shall not be adjusted in
connection with the admission of the New General Partner.
The CTA Agreement will be amended to provide that the New General
Partner and CTA shall not take any action that would constitute an
Indemnification Event with respect to any Indemnitee, unless concurrently
with such action, Prime has satisfied the requirements set forth in
Paragraph 4 hereof that are required to be satisfied at such time. The
Indemnitees agree to reasonably cooperate with the New General Partner to
restructure any transaction proposed by the New General Partner to avoid
creating an Indemnification Event. In addition, the CTA Agreement will be
further amended to provide that the Indemnitees (including, in the case of
disability of Casati or ▇▇▇▇▇, his personal representative) shall give,
and shall cause C-H Partnership to give, their consent to any proposed
event requiring their consent, as described in the CTA Agreement, unless
both (i) the proposed event would constitute an Indemnification Event with
respect to any Indemnitee, and (ii) Prime fails to satisfy the
requirements set forth in Paragraph 4 that are required to be satisfied at
such time; provided that (x) each such consent shall be subject to the
condition that, at the time of the closing of the event being consented
to, Prime satisfies all of the requirements set forth in Paragraph 4 that
are required by Paragraph 4 to be satisfied at such time, and (y) the
nature and structure of the event consented to has not changed in any
material way. If Prime and the Indemnitees cannot agree as to whether a
proposed event is an Indemnification Event which results in or creates the
risk of a Tax Event, the Indemnitees shall not be required to give their
consents until the formal legal opinion of Independent Tax Counsel has
been obtain pursuant to Paragraph 4. The obligation of the Indemnitees
pursuant to the immediately preceding sentence shall be enforceable by an
action for specific performance. Finally, the CTA Agreement shall be
amended to provide that, upon the first to die of the Indemnitees, the
surviving Indemnitee shall have an irrevocable proxy of any successor of
the decedent Indemnitee to consent to matters described above and shall
vote such proxy in the same manner as his own consent.
d. Immediately before Prime purchases the Loan, GECC, Great Oak,
Trust No. 40935, CTA, C-H Partnership, Casati and ▇▇▇▇▇ will enter into an
amendment to the Loan Agreement in the form attached as Exhibit B.
e. At the time that Prime purchases the Loan, CTA and Trust No.
40935 shall enter into an arm's length, 15-year, nonterminable management
agreement with Prime or an Affiliate of Prime that delegates to the
manager the broadest authority to manage and operate the Real Estate
consistent with the CTA Agreement (the "Management Agreement").
f. CTA will direct Trust No. 40935 to enter into, with a party
designated by Prime, a 15-year option to purchase, from time to time,
portions of the Real Estate which are not improved with buildings, to
permit the construction of additional improvements on the Real Estate (the
"Option"). The option shall be exercisable, from time to time, upon 90
days' notice of scheduled commencement of construction of each proposed
improvement upon such Real Estate, upon payment in immediately available
funds, equal to the appraised fair market value of such Real Estate at the
time of exercise. CTA will also direct Trust No. 40935 and, if
appropriate, Trust No. 5602 to enter into a reciprocal cross-easement
agreement creating the easements necessary to construct and operate the
new facilities in coordination with the existing office buildings and
commercial building.
3. Tax Indemnity Amounts. Subject to the provisions of Paragraphs 5 and 6,
if a Tax Event occurs with respect to either or both Indemnitees as a result of
an Indemnification Event which takes place prior to the Indemnification
Expiration Date, Prime shall pay in immediately available funds to each
Indemnitee the sum of the following amounts based upon the amount of taxable
income or gain included in the gross income of each for federal income tax
purposes:
(i) the federal and applicable state income tax payable on such
income or gain, calculated as the product of the then current highest
stated marginal federal and applicable state tax rates applicable to each
component of such income or gain that is subject to a different rate by
reason of the character thereof (for example, capital gains, depreciation,
recapture and ordinary income) multiplied by the amount of each applicable
component of such income or gain (the applicable state tax rate being that
of the state in which such Indemnitee is then a resident for state income
tax purposes, but in no event greater than the higher of the highest
stated marginal income tax rate imposed on individual residents by the
State of Illinois or the highest stated marginal income tax rate imposed
on individual residents by the State of Florida); plus
(ii) any federal and applicable state interest, penalties or
additions to tax for understatement of tax liability; plus
(iii) a "gross-up" amount equal to the federal and applicable state
income tax payable on the amount payable under this Paragraph 3
(calculated in the same manner described in clause (i)), such that the
amounts described in clauses (i) and (ii) are received by such Indemnitee
on a net, after-tax basis; less
(iv) any deductions, credits or other federal and applicable state
income tax benefits then realized and resulting from (a) the Tax Event,
(b) the related Indemnification Event, and (c) the payment of the
underlying taxes, interest and penalties.
The amount payable to each of Indemnitee pursuant to this calculation is the
"Tax Indemnity Amount" with respect to such Indemnitee, and the sum of these Tax
Indemnity Amounts is the "Total Indemnity Amount." Except as provided in
Paragraph 10, the maximum amount of taxable income and gain referred to in
clause (i) on which the Tax Indemnity Amount in respect of Casati can be based
is $90,724,668 and in respect of ▇▇▇▇▇ is $32,337,592.
4. Payment of Indemnity and Deposit of Indemnification Security. The
determination of whether an event or proposed event that would otherwise
constitute an Indemnification Event results in or creates a risk of a Tax Event
to either Indemnitee shall be determined by the agreement of Prime and the
Indemnitees. If for any reason Prime and the Indemnitees in good faith do not
agree as to this determination, Prime shall obtain Independent Tax Counsel's
opinion regarding the tax consequences of the event or proposed event. The cost
of obtaining such opinion shall be paid 50% by Prime and 50% by the Indemnitees.
a. If Independent Tax Counsel issues a formal legal opinion to both
the Indemnitees and Prime that the event should not result in a Tax Event
with respect to either Indemnitee, the Indemnitees shall report the
transaction on their respective income tax returns without including any
taxable income or gain from the event.
b. If (i) Independent Tax Counsel is not willing to issue a formal
legal opinion that the event should not result in a Tax Event with respect
to either Indemnitee, (ii) Independent Tax Counsel is willing to issue a
formal legal opinion that the Indemnitees have a reasonable basis (within
the meaning of Treasury Regulation Section 1.6662-3(b)(3)) for reporting
the transaction on their respective income tax returns without including
any taxable income or gain from such event and without making specific
disclosure of the relevant facts on the return, as described in Treasury
Regulation Section 1.6662-3(c) (or that such a reporting position
satisfies such other standard as may then be in effect such that the
Indemnitees should not be subject to penalties or additions to tax other
than those based upon an understatement of tax liability not due to
negligence if they file their income tax returns without including any
taxable income from the transaction and without making specific disclosure
of the relevant facts on the return), then the Indemnitees shall report
the transaction on their respective income tax returns without including
any taxable income or gain from the event. In such event, as a condition
to the reporting by the Indemnitees as described above, Prime shall
provide the Indemnification Security if at any time between the date of
such event and a Final Determination with respect to such event, the
equity market capitalization of PGRT is less than $400,000,000.
c. If the conditions set forth in subparagraph a or subparagraph b
are not met, the Indemnitees shall report the Tax Event on their
respective tax returns and Prime shall pay to each Indemnity his Tax
Indemnity Amount with respect to such Tax Event. Such payment shall be
made in full in immediately available funds at one of the following times,
as Prime, in its sole discretion, may select:
(i) not later than ten (10) days before the date on which such
Indemnitee's income tax return for the tax year in which the
Indemnification Event occurs is due (without extension) (the "Return
Due Date"), in which case the Tax Indemnity Amount shall be
discounted by the then current yield on 90-day treasury notes, from
the Return Due Date to such date of payment, provided that, on or
before the date of the occurrence of the Indemnification Event,
Prime provides the Indemnification Security with respect to such Tax
Event in the amount of 100% of the Total Indemnity Amount; or
(ii) on the date of the occurrence of the Indemnification
Event, in which case the Tax Indemnity Amount shall be discounted by
the then current yield on one-year treasury notes, from the Return
Due Date to such date of payment.
d. If the conditions set forth in either subparagraph a or
subparagraph b are met, Prime shall remain liable for any Tax Indemnity
Amounts with respect to such event. In such case, Prime shall pay the Tax
Indemnity Amounts, if any, in immediately available funds within ten (10)
business days after a Final Determination that such event constituted a
Tax Event with respect to any Indemnitee, but not later than the date for
which any tax payable by the Indemnitees with respect to such Tax Event is
due.
5. Contest Provisions.
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a. The New General Partner shall be entitled to contest, as tax
matters partner of CTA in accordance with the CTA Agreement as part of the
unified audit of CTA, any claim in respect of any "partnership" item of
CTA that, if successful, would result in a Tax Event (a "Partnership Level
Issue"). Each Indemnitee shall take such action or refrain from taking
such action as may be reasonably necessary in order to cause each item
which is the subject of a potential Tax Event to be contested as a
Partnership Level Issue. If the New General Partner contests a Partnership
Level Issue that, if successful, would result in a Tax Event, Prime's
obligation to pay any Tax Indemnity Amounts shall, at Prime's election, be
deferred until thirty (30) days after a Final Determination of the
Indemnitees' respective federal income tax liabilities in respect of a Tax
Event, provided that, upon receipt of the 30-day letter from the Internal
Revenue Service, Prime furnishes the Indemnification Security.
b. If an audit or proceeding involving a potential Tax Event is
being conducted in a proceeding involving an Indemnitee, which cannot be
transferred to CTA as a partnership item (an "Indemnitee Level Issue"),
such Indemnitee hereby agrees to promptly notify Prime in writing of such
adjustment, and such Indemnitee shall tender the defense of such
Indemnitee Level Issue to such legal counsel as Prime may select and which
is reasonably acceptable to such Indemnitee ("Contest Counsel"). Such
Indemnitee agrees to reasonably cooperate with Contest Counsel in
connection with any such proceedings and to follow the advice of Contest
Counsel with respect to decisions as to whether to contest such Indemnitee
Level Issue, the extent and choice of forum with respect to such contest
and other material issues relating thereto. Contest Counsel shall
represent an Indemnitee only in connection with such issues as could
potentially result in a Tax Event with respect to such Indemnitee, and,
unless such Indemnitee, in its sole discretion, otherwise consents,
Contest Counsel shall not represent such Indemnitee with respect to any
other issues, without regard to whether such other issues are being
concurrently challenged by the Internal Revenue Service or other tax
authority or appear on the same tax return as the Indemnitee Level Issue
in question. Each Indemnitee shall make available to Contest Counsel
copies of such Indemnitee's tax returns and other information and
materials pertinent to the contest of the Indemnitee Level Issue;
provided, however, if any information relating to matters other than the
Indemnitee Level Issue in question are included in materials furnished to
Contest Counsel, such materials shall be furnished only upon the agreement
by Contest Counsel to maintain such information on a strictly confidential
basis and to not disclose any such information to any person (including
without limitation Prime, New General Partner or any Affiliates of either
of them) without the prior written consent of such Indemnitee.
c. If Prime recommends acceptance of a settlement offer in respect
of an Indemnitee Level Issue or if the New General Partner recommends the
acceptance of a settlement offer in respect of a Partnership Level Issue,
but the Indemnitees decline to accept such offer in writing within 30 days
(i) the obligation of Prime to make indemnity payments as the result of
any such contest or proceedings shall not thereafter exceed the obligation
that it would have had if such contest had been settled or proceedings
terminated on the basis recommended by Prime or the New General Partner,
as applicable, and (ii) in the case of an Indemnitee Level Issue, Prime
shall have no further liability for costs or other expenses in respect of
such contest.
d. Notwithstanding the foregoing, neither Indemnitee will have any
obligation to contest any action with respect to an Indemnitee Level Issue
(i) unless such items could give rise to a federal income tax liability
(disregarding other items in the assessment and considering effects in
future years) in excess of $25,000, (ii) unless Prime furnishes the
Indemnification Security as set forth herein, (iii) without Prime paying
when due, reasonable third-party costs and out-of-pocket expenses
including reasonable legal, witness and accounting fees and other expenses
and, in the case of proceedings before the Court of Federal Claims or
Federal District Court (subject to the agreement by Prime to not litigate
in Tax Court, which agreement may be withheld in Prime's sole discretion),
the amount of tax (and any applicable interest and penalties) for which
refund is claimed, and (iv) to the extent such Indemnitee waives in
writing Prime's obligation to indemnify such Indemnitee for such items, in
which case all third-party costs and out-of-pocket expenses described in
clause (iii) thereafter incurred by such Indemnitee and all taxes of such
Indemnitee would be paid by such Indemnitee.
e. An Indemnitee shall not settle any Indemnitee Level Issue without
Prime's prior written consent; provided that an Indemnitee shall not be
required to contest any proposed adjustment and may settle any such
proposed adjustment if such Indemnitee shall waive his right to indemnity
under this Agreement with respect to such adjustment and any Tax Event
that results from such adjustment and, in the case of proceedings before
the Court of Federal Claims or Federal District Court, shall pay to Prime
the amount of tax (and any applicable interest and penalties) previously
paid or advanced by Prime with respect to such adjustment or the contest
of such adjustment.
6. Exclusions from Indemnity. In executing this Agreement, Casati and
▇▇▇▇▇ acknowledge that they have been advised by tax counsel satisfactory to
them that entering into the transactions described in Paragraph 2 do not cause
Casati or ▇▇▇▇▇ to recognize taxable income or gain and that they have agreed to
proceed in reliance on this advice and will have no claim against Prime under
the terms of this Agreement if Casati or ▇▇▇▇▇ does recognize taxable income or
gain as a result of entering into these transactions. Furthermore,
notwithstanding the provisions of Paragraph 4, but subject to Paragraph 10,
Prime shall have no obligation to make an indemnity payment or provide the
Indemnification Security to an Indemnitee if such Indemnitee recognizes taxable
income or gain as a result of:
(i) The allocations of income, gain, loss, deduction and credit set
forth in the CTA Agreement not being respected under Sections 704(b) and
704(c) of the Code, except as a result of the exercise of discretion by
the New General Partner;
(ii) (A) Any change in, or amendment to, the Code or any other
federal tax statute, which is effective on or after the date of this
Agreement, (B) any final or temporary Regulation, which is enacted or
adopted after the date of this Agreement, or (C) any court decision (other
than a decision to which CTA, an Indemnitee or any Affiliate thereof is a
party) issued after the date of this Agreement;
(iii) A voluntary or involuntary sale, assignment, transfer or other
disposition by such Indemnitee of any interest in CTA or any part thereof;
(iv) The failure of such Indemnitee to take timely action or follow
the proper procedures in reporting his distributive share from CTA or
contesting a claim made by the Internal Revenue Service in accordance with
applicable law and Regulations;
(v) The gross negligence or the willful misconduct of such
Indemnitee or any Affiliate thereof;
(vi) Any guarantee by such Indemnitee or a person related to such
Indemnitee of the Loan or any other debt of CTA or its Affiliates;
(vii) Any recapture of CTA losses or items of deduction or loss that
were allocated to such Indemnitee after the closing of the Basic
Transaction;
(viii) Any acts by any relative of such Indemnitee on behalf
of Prime or any Affiliate thereof beyond his or her actual authority;
(ix) Any bad debt deduction claimed by Prime with respect to the
Loan pursuant to Code Section 166 at any time after 1997; or
(x) Any failure by Prime to recognize as gross income for income tax
purposes the amounts referred to as "Contingent Interest" in the 1997
Promissory Note dated December 12, 1997, evidencing the Loan (the "Note"),
as such amounts accrue under the terms of the Note.
7. Transfers by Prime and PGRT; Other Events Requiring Security.
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a. Prime agrees that it shall not transfer, absolutely or as
security by pledge or hypothecation, all or any portion of the Loan or any
of its rights under the Loan Agreement or other instruments evidencing or
securing the Loan prior to the Indemnity Expiration Date unless Prime
confirms in writing its continuing liability under this Agreement.
b. At all times during the term of this Agreement, PGRT shall be the
general partner of Prime, unless, concurrently with the termination of
PGRT's status as the general partner of Prime, PGRT agrees in writing to
continue to be liable for the obligations of Prime under this Agreement to
the same extent as if PGRT continued to be the general partner of Prime.
c. During the term of this Agreement, PGRT shall not merge with or
into another entity, with such other entity being the survivor of the
merger (the "Survivor"), unless (i) the Survivor acknowledges in writing
its assumption of the liability of PGRT, as general partner of Prime, for
the obligations of Prime hereunder, and (ii) the equity market
capitalization of the Survivor is no less than that of PGRT immediately
prior to such merger. In the event of such a merger, all references to the
equity market capitalization of PGRT under this Agreement shall thereafter
be deemed to refer to the equity market capitalization of the Survivor.
d. If at any time (x) there occurs one or more sales or other
dispositions of assets by PGRT (or one or more entities controlled by
PGRT, including without limitation Prime) and/or distributions by PGRT to
its shareholders, in an aggregate amount exceeding the lesser of
$100,000,000 or 33% of the gross assets of PGRT during any continuous
twelve-month period, and (y) immediately following any such event the
equity market capitalization of PGRT is less than $200,000,000, then (i)
from and after the date of such event, none of Prime, the New General
Partner (on its own behalf or on behalf of CTA) or any Affiliate of any of
the foregoing shall have the right to cause an Indemnification Event
without providing the Indemnification Security in the amount of 100% of
the Total Indemnity Amount concurrently with the closing of such
Indemnification Event; and (ii) the Indemnitees shall have the right (but
not the obligation) to at any time purchase the New General Partner's
interest in CTA and/or all of the ownership interests in the New General
Partner (such choice to be determined in the Indemnitees' sole discretion)
in exchange for the payment of cash to the owner of the applicable
interest in the amount of $1,000. For purposes of clause (x) above, the
amount and percentage of assets disposed of or distributed shall be
measured by the book value of such assets as reported in accordance with
generally accepted accounting principles, consistently applied, on the
financial statements of PGRT for the period immediately preceding the
applicable disposition or distribution; and to the extent that an asset is
disposed of by PGRT and the proceeds thereof are distributed by PGRT to
its shareholders, only the greater of the book value of the disposed
property or the distribution proceeds shall be taken into account for
purposes of determining whether the thresholds in clause (x) have been
exceeded.
e. If at any time:
(i) The terms of the Loan Agreement or any related document (as each
may be modified from time to time) provide that a failure by the
obligor under the Loan to make periodic payments of a specified
minimum amount (other than payments determined on the basis of Net
Operating Income, Adjusted Net Operating Income (as such terms are
defined in the Loan Agreement) or some modification thereof) prior
to the Maturity Date (as defined in the Loan Agreement, as modified
from time to time) shall constitute a default under the Loan, an
acceleration of the Maturity Date of the Loan, or otherwise entitle
the holder of the Loan to foreclose or otherwise realize upon the
collateral securing the Loan (without regard to any additional
conditions on such consequences that are of a procedural or
administrative nature, including but not limited to the giving of
notice or the passage of time) (such condition is referred to as a
"Minimum Debt Service Requirement," and the specified minimum
payments described above in this clause (i) for any period are
referred to as the "Minimum Debt Service" for such period);
(ii) The Loan is then pledged, assigned or hypothecated as
security for any debt obligation;
(iii) Prime is not then providing the Indemnification Security in
the amount of 100% of the Total Indemnity Amount; and
(iv) For the immediately preceding calendar month, the Annualized
Revised Modified NOI is less than the aggregate Minimum Debt Service
for such immediately preceding calendar month and the succeeding
eleven (11) calendar months thereafter;
then within ten (10) days following the end of such immediately preceding
calendar month Prime shall provide, and shall thereafter maintain, the
Debt Service Security. For purposes of the foregoing, the following terms
shall have the meanings set forth below:
"Revised Modified NOI" shall mean Modified NOI (as defined in this
Agreement), except that for this purpose subparagraph (h) of the
definition of "Operating Costs" in the Loan Agreement shall be
deemed to read as follows:
"(h) Recurring capital expenditures required to operate the
Premises as a first class office development of not more than
$40,000 per calendar month shall be included in Operating Costs."
"Annualized Revised Modified NOI" shall mean the Revised Modified
NOI for the period of the immediately preceding calendar month and
the succeeding eleven (11) calendar months thereafter, determined by
taking into account the anticipated rents receivable during such
period only with respect to leases then in effect and not in default
and the anticipated Operating Costs (as defined in the Loan
Agreement with the revision described above) during such period but
not less than such Operating Costs for the most recently ended
twelve-calendar month period. "Debt Service Security" shall mean
that Prime shall either deposit into escrow with an independent
escrow agent which is reasonably acceptable to Prime, Casati and
▇▇▇▇▇, on terms reasonably acceptable to Prime, Casati and ▇▇▇▇▇,
immediately available funds in an amount equal to the Debt Service
Security Amount or deliver to Casati and ▇▇▇▇▇ an unconditional,
irrevocable letter of credit in an amount equal to Debt Service
Security Amount issued by a national bank which is one of the 100
largest national banks in the United States ranked on total assets
and which has a long-term credit rating of A or above by Standard &
Poor's Ratings Group or an equivalent rating by ▇▇▇▇▇'▇ Investor
Services. The terms of any such escrow or letter of credit shall
provide that the funds in such escrow or such letter of credit may
be drawn upon by Casati or ▇▇▇▇▇ when and to the extent necessary to
fund the Minimum Debt Service. The terms of any such letter of
credit shall further provide that such letter of credit may be drawn
in full by Casati or ▇▇▇▇▇ if ten (10) days before the expiration of
such letter of credit, either such letter of credit has not been
replaced (subject to adjustment of the Debt Service Security Amount)
by a new letter of credit in an amount not less than that of the
letter of credit being replaced and otherwise on terms identical to
the letter of credit being replaced or Prime has otherwise placed an
amount in escrow in accordance with this Agreement. If the Debt
Service Security Amount increases or decreases as provided below,
Prime shall be obligated to provide additional security in
accordance with the requirements set forth above within ten (10)
days after the receipt of the revised calculation, or in the case of
a decrease, shall have the right to a return of any excess security
as provided in this Agreement.
"Debt Service Security Amount" shall initially mean the product of
(x) the Time Factor multiplied by (y) the excess of the Minimum Debt
Service described in clause (iii) above over the Annualized Revised
Modified NOI described in clause (iii) above. At the end of each
calendar month following the initial provision of the Debt Service
Security, the Debt Service Security Amount shall be recalculated
based on the components thereof determined as of the then most
recently ended calendar month and the Debt Service Security shall be
increased or reduced as described in the definition thereof.
"Time Factor" shall mean (i) if the equity market capitalization of
PGRT is less than $300,000,000 for more than 90 consecutive calendar
days, the number of whole or partial twelve-month periods between
the applicable date of determination of the Debt Service Security
Amount and January 5, 2013; or (ii) in all other cases, five (5).
8. Release of Indemnification Security. If Prime has furnished
Indemnification Security under the terms of this Agreement, the amount of such
Indemnification Security with respect to an Indemnitee shall be reduced or the
Indemnification Security shall be released if:
a. in the case in which the Indemnification Security has been
furnished in connection with an Indemnification Event, to the extent
applicable statutes of limitations expire without a claim being made that
such Indemnitee has recognized taxable income, there is a Final
Determination that such Indemnitee's return was correct as filed or that
an amount smaller than the Tax Indemnity Amount is owed to such Indemnitee
and such amount has been paid by Prime in accordance with this Agreement;
b. in the case in which the Indemnification Security has been
furnished to protect against the possibility that an Indemnification Event
may occur in the future, the basis of such Indemnitee's interest in CTA
has been increased pursuant to Section 1014 of the Code and no
Indemnification Event has occurred (subject to the provisions of Paragraph
9); or
c. in the event the amount of Indemnification Security is
reduced because of an increase in the equity market capitalization of
PGRT.
The amount of any such reduction shall be determined based on a recalculation of
the Total Indemnity Amount or the Tax Indemnity amount (as may apply) taking
into account the events described above.
9. Basis Increase Under Section 1014. If the tax basis of an Indemnitee's
partnership interest in CTA has been increased pursuant to Section 1014 of the
Code, and a corresponding adjustment has been made to the tax basis of the
assets of CTA pursuant to an election under Section 754 of the Code, then (i)
the obligations of Prime to the successor to such Indemnitee under this
Agreement with respect to an Indemnification Event occurring after the effective
date of such adjustments shall apply only with respect to such an
Indemnification Event that results in or creates a risk of the recognition of
income to such successor of the Indemnitee from the discharge of indebtedness
(which shall not include a foreclosure or deed in lieu of foreclosure with
respect to the Loan), and Prime shall be able to foreclose upon the Property to
the extent provided in the Loan Agreement or receive a
deed in lieu of foreclosure with respect to the Loan on or after such time
without any obligation hereunder to such successor, and (ii) any Indemnification
Security then in place with respect to such Indemnitee shall be reduced or
released as provided in Paragraph 8.
10. Tax Savings. If (i) Prime has made a payment to an Indemnitee pursuant
to Paragraph 4 of this Agreement, (ii) such Indemnitee shall realize with
respect to any year beginning prior to the Indemnification Expiration Date, any
actual reduction in federal or applicable state income tax liability that would
not have been realized but for the Tax Event, the related Indemnification Event
or the payment of the underlying tax, interest and penalties, which tax
reduction was not taken into account in calculating Prime's payment to such
Indemnitee, then such Indemnitee shall pay to Prime an amount equal to the
actual reduction in federal and applicable state income tax realized by such
Indemnitee (based upon the then current highest marginal federal and applicable
state income tax rates applicable to such Indemnitee on the particular type of
tax reduction). If an Indemnitee makes a payment to Prime pursuant to the
immediately preceding sentence, and such Indemnitee subsequently recognizes
gross income for federal income tax purposes, which recognition arises out of
the tax benefit that resulted in such payment to Prime, then Prime shall pay to
such Indemnitee an amount calculated as provided in Paragraph 3 of this
Agreement with respect to such income inclusion, at the time described in
Paragraph 4 of this Agreement. The immediately preceding sentence shall apply
notwithstanding the maximum Tax Indemnity Amounts set forth in Paragraph 3 of
this Agreement, the limitations of Paragraph 9 of this Agreement or any other
provision of this Agreement. Each Indemnitee agrees to act in good faith to
claim any tax benefits or savings (including filing claims for refunds and
amended tax returns) and take such other actions as may be reasonable to
minimize the net amount of any indemnity payment due from Prime hereunder and to
maximize the amount of its tax savings; provided, however, that neither
Indemnitee shall be required to take any action which, in its good faith
judgment, would have an adverse economic consequence in excess of the amount of
the tax benefits and/or tax savings therefrom.
11 Casati Payment. At the closing of Prime's purchase of the Loan, Casati
shall pay to Prime the sum of $4,049,500 as a capital contribution to CTA and as
a payment of accrued interest on the Loan. Subject to Paragraph 13, Casati
hereby promises to pay to Prime, as a capital contribution to CTA and as a
payment of accrued interest on the Loan, the additional amount of $888,300, with
simple interest on the unpaid balance at the rate of 8% per annum, in
installments as follows: $177,660 of principal plus interest on the outstanding
balance from the date hereof or the date of the last payment made hereunder on
the first and each succeeding anniversary of the date hereof until the fifth
anniversary, at which all remaining amounts owed under this paragraph will be
paid (the "Casati Obligation"). Casati reserves the right to prepay all or part
of the Casati Obligation at any time without penalty or premium. Any prepayment
shall be applied to the last installment. The Casati Obligation is a personal
obligation of Casati. Prime shall have no obligation to make any indemnification
payment or provide any Indemnification Security to Casati if the Casati
Obligation is not paid when due as provided above, in accordance with Paragraph
15b.
12 ▇▇▇▇▇ Payment. At the closing of Prime's purchase of the Loan, ▇▇▇▇▇
shall pay to Prime the sum of $1,735,500 as a capital contribution to CTA and as
a payment of accrued interest on the Loan. Subject to Paragraph 13, ▇▇▇▇▇ hereby
promises to pay to Prime, as a capital contribution to CTA and as a payment of
accrued interest on the Loan, the additional amount of $380,700, with simple
interest on the unpaid balance at the rate of 8% per annum, in installments as
follows: $76,140 of principal plus interest on the outstanding balance from the
date hereof or the date of the last payment made hereunder on the first and each
succeeding anniversary of the date hereof until the fifth anniversary, at which
all remaining amounts owed under this paragraph will be paid (the "▇▇▇▇▇
Obligation"). ▇▇▇▇▇ reserves the right to prepay all or any part of the ▇▇▇▇▇
Obligation at any time without penalty or premium. Any prepayment shall be
applied to the last installment. The ▇▇▇▇▇ Obligation is a personal obligation
of ▇▇▇▇▇. Prime shall have no obligation to make any indemnification payment or
provide any Indemnification Security to ▇▇▇▇▇ if the ▇▇▇▇▇ Obligation is not
paid when due as provided above, in accordance with Paragraph 15b.
13 Exercise of Option.
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a In addition to the other obligations of Prime under this
Agreement, concurrently with each acquisition of any portion of the Real
Estate pursuant to an exercise of the Option, Prime shall pay to each
Indemnitee an amount equal to the sum of (i) the product of the taxable
gain included in the gross income of such Indemnitee for federal income
tax purposes as a result of such transaction, multiplied by the then
highest stated marginal federal and applicable state tax rates then
applicable to long-term capital gains of individuals, plus (ii) an amount
equal to 23% of the amount described in clause (i).
b Notwithstanding the foregoing, the aggregate gain (of the
Indemnitees together) on which the amount described in clause (i) of
Paragraph 13a shall be calculated shall be limited to the amount of such
aggregate gain (determined on a cumulative basis with respect to all sales
of portions of the Real Estate sold pursuant to exercises of the Option)
in excess of $1,000,000 over the tax basis of the portions of the Real
Estate sold pursuant to exercises of Option.
c Notwithstanding the foregoing, if at any time Prime is obligated
to make a payment to an Indemnitee pursuant to Paragraph 13a, and at such
time the Casati Obligation or the ▇▇▇▇▇ Obligation (as may apply to such
Indemnitee) has not been paid in full, then the amount payable by Prime to
such Indemnitee pursuant to Paragraph 13a shall be reduced by the unpaid
portion of the Casati Obligation or the ▇▇▇▇▇ Obligation (as may apply to
such Indemnitee); and the unpaid portion of the Casati Obligation and/or
the ▇▇▇▇▇ Obligation (as may apply) shall be reduced to the extent of such
reduction in the obligation of Prime under Paragraph 13a with respect to
such Indemnitee, with such reduction being applied first to the payments
required next in time pursuant to the Casati Obligation or the ▇▇▇▇▇
Obligation (as may apply).
14 Covenants Regarding Basic Transaction. Each party hereto agrees to
report the Basic Transaction for income tax purposes on a basis consistent with
the position that the Basic Transaction will not cause any Indemnitee to
recognize taxable income or gain for federal income tax purposes, including
without limitation the positions that (a) the Basic Transaction will not
constitute a disposition by CTA of all or any portion of the Property; (b) the
Basic Transaction will not constitute any reduction in the issue price (as such
term is used in Code Sections 1272 through 1274 and the Treasury Regulations
thereunder) of the Loan or any exchange of the Loan for any other obligation
having a lower issue price for federal income tax purposes; and (c) the Basic
Transaction will not otherwise result in any cancellation or discharge (or
deemed cancellation or discharge for federal income tax purposes) of all or any
portion of the Loan. Furthermore, the parties agree that the CTA Agreement shall
be amended to require the New General Partner (on its own behalf and on behalf
of CTA) to report the Basic Transaction for income tax purposes in a manner
consistent with the immediately preceding sentence and to continue at all times
thereafter to maintain such reporting position. By executing this Agreement, the
New General Partner agrees (on its own behalf and on behalf of CTA) to report
the Basic Transaction as described in the immediately preceding sentence.
15 Section 15 Defaults.
-------------------
a If at any time Prime commits a Prime Section 15 Default (as
defined below), then, immediately upon the occurrence of such Prime
Section 15 Default, Prime shall provide the Indemnification Security in
the amount of 100% of the Total Indemnity Amount. A "Prime Section 15
Default" shall mean (i) any failure by Prime to provide the
Indemnification Security or to pay any Tax Indemnity Amount in the
applicable amounts at the applicable times in accordance with Paragraph 4
and Paragraph 5a, and such failure is not cured within ten (10) days after
any Indemnitee notifies Prime in writing, describing the specific failure
at issue, of such failure; (ii) any failure by Prime, any Affiliate of
Prime or the New General Partner to comply with any provision of Paragraph
7, and such failure is not cured within ten (10) days after any Indemnitee
notifies Prime in writing, describing the specific failure at issue, of
such failure; or (iii) any failure by Prime, any Affiliate of Prime or the
New General Partner (acting either on its own behalf or on behalf of CTA)
to comply with the provisions of Paragraph 14.
b If at any time any Indemnitee commits an Indemnitee Section 15
Default (as defined below), then, immediately upon the occurrence of such
Indemnitee Section 15 Default, Prime shall have no further obligations to
such Indemnitee under the terms of this Agreement. "Indemnitee Section 15
Default" shall mean (i) any failure by an Indemnitee to make payments in
accordance with the terms of Paragraph 11 or Paragraph 12 (but subject to
Paragraph 13); (ii) any failure by an Indemnitee to give his consent to a
transaction by CTA in accordance with the provisions described in
Paragraph 2c; or (iii) any failure by an Indemnitee to comply with the
provisions of Paragraph 4a. Notwithstanding the foregoing, in no event
shall an Indemnitee Section 15 Default occur unless and until ten (10)
days have expired after the receipt by such Indemnitee of written notice
from Prime describing the specific failure without such failure having
been cured.
16 Litigation Expenses. In any action between the parties hereto to
enforce any of the terms of this Agreement, the prevailing party or parties
shall be entitled to recover expenses, including reasonable attorneys' fees,
whether or not such action is prosecuted to judgment. For this purpose, the term
"prevailing party" shall include, without limitation, a party who dismisses any
action for recovery hereunder in exchange for payment of sums allegedly due,
performance of covenants allegedly breached or consideration substantially equal
to the relief sought in such action.
17 Applicable Law. This Agreement shall, in all respects, be
---------------
governed by the laws of the State of Illinois, without regard to conflicts of
law principles.
18 Severability. Nothing contained herein shall be construed so as to
require the commission of any act contrary to law, and wherever there is any
conflict between any provisions contained herein and any present or future
statute, law, ordinance or regulation contrary to which the parties have no
legal right to contract, the latter shall prevail; but the provisions of this
Agreement which are affected shall be curtailed and limited only to the extent
necessary to bring them within the requirements of the law. If any provision of
this Agreement shall be held to be invalid, the same shall not affect the
validity, legality or enforceability of the remainder of this Agreement.
19 Further Assurances. Each of the parties hereto shall execute and
deliver any and all additional papers, documents and other assurances, and shall
do any and all acts and things reasonably necessary in connection with the
performance of their obligations hereunder to carry out the intent of the
parties hereto.
20 Successors and Assigns. Except as provided below, this Agreement shall
not be assignable by any Indemnitee (including to any heir or the estate of an
Indemnitee) except with the express written consent of Prime, which may be
withheld in its sole discretion. Except as provided in Paragraph 7, Prime shall
not assign this Agreement without the express written consent of each
Indemnitee, which may be withheld in his sole discretion. Notwithstanding the
first sentence of this Paragraph 20:
a Any person acting on behalf of an Indemnitee during the lifetime
of such Indemnitee (including but not limited to any trustee in bankruptcy
and any legal representatives in the case of incompetency) shall be
entitled to the full benefit of and the right to enforce all provisions of
this Agreement to the same extent as such Indemnitee;
b If an event occurs during the lifetime of any Indemnitee which
gives rise to any right or benefit of such Indemnitee under this Agreement
(without regard to whether such right or claim to benefit is asserted or
becomes due during the lifetime of such Indemnitee), including but not
limited to the right to any Tax Indemnity Amount or the benefit of the
Indemnification Security, then from and after the death of such
Indemnitee, the estate and heirs of such Indemnitee shall be entitled to
enforce all rights and receive all benefits arising from such event
hereunder, to the same extent as the Indemnitee would be so entitled
during his lifetime; and
c From and after the death of any Indemnitee, the estate of such
Indemnitee and any other successor to all or any portion of such
Indemnitee's direct or indirect partnership interest in CTA shall be
entitled to the rights and benefits of such Indemnitee to the extent set
forth in Paragraph 9.
21 Number and Gender. In this Agreement, the masculine, feminine or neuter
gender and the singular or plural number shall each be deemed to include the
others whenever the context so requires.
22 Non-Waiver; Good Faith. No waiver by any party hereto of any breach of
this Agreement or any provision shall be deemed to be a waiver of any preceding
or succeeding breach of the same or any other provision. Each party agrees to
act in good faith in regard to all provisions of this Agreement.
23 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
24 Full Authority. Each of the parties and signatories to this Agreement
has the full right, power, legal capacity and authority to enter into and
perform the parties' respective obligations hereunder, and no approvals or
consents of any other Person are necessary in connection therewith.
25 Captions. The captions appearing at the commencement of Paragraphs of
this Agreement are descriptive only and for convenience in reference. Should
there be any conflict between any such caption and the paragraph at the head of
which such caption appears, the Paragraph and not such caption shall control and
govern in the construction of this Agreement.
26 Cross Reference. In this Agreement, unless otherwise
-----------------
specifically provided, any reference to a Paragraph by number shall mean that
corresponding Paragraph in this Agreement.
27 Parties in Interest. Nothing in this Agreement, whether express or
implied, is intended to confer any rights or remedies under or by reason of this
Agreement on any Persons other than the parties and their respective successors
and permitted assigns, nor is anything in this Agreement intended to relieve or
discharge the obligation or liability of any third Persons to any party to this
Agreement, nor shall any provision give any third Person any right of
subrogation or action over or against any party to this Agreement.
28 Entire Agreement. This Agreement constitutes the entire understanding
and agreement of the parties with respect to the subject matter hereof, and any
and all prior agreements, understandings or representations with respect to such
subject matter are hereby terminated and canceled in their entirety and are of
no further force or effect.
29 Effectiveness. Notwithstanding any other provision of this Agreement,
this Agreement shall come into effect only if, and concurrently with, the
closing of the Basic Transaction. Unless and until such closing occurs, this
Agreement shall be of no force or effect.
30 Execution by New General Partner. Concurrently with, and as a condition
to, the New General Partner being admitted to CTA as its general partner, the
New General Partner shall execute this Agreement as an additional party hereto.
The rights and obligations of the other parties hereto shall be as set forth
herein without regard to whether or when this Agreement is executed by the New
General Partner.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, its
General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
Title: President and
Chief Executive Officer
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
The undersigned, being the New General Partner, hereby executes this
Agreement as an additional party hereto, as of December __, 1997.
WILLIAMSBURG GROUP L.L.C., an Illinois
limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------
Managing Member