Exhibit 99.2
SUPPORT AND STANDSTILL AGREEMENT
This SUPPORT AND STANDSTILL AGREEMENT (this "AGREEMENT") is entered
into as of this 23rd day of August, 2001 by and among CADIM INC. (together with
its affiliates, "CADIM"), THE PRIME GROUP, INC. ("PGI"), PRIME GROUP VI, L.P.
("PLP"), PRIMESTONE INVESTMENT PARTNERS, L.P. ("PRIMESTONE"), Prime Group
Limited Partnership ("PRIME LP"), PG/Primestone, LLC ("PGLLC") and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ ("▇▇▇▇▇▇▇" and, together with PGI, PLP, Primestone, Prime LP and PGLLC,
the "PGI PARTIES").
WHEREAS, Cadim and the PGI Parties have entered into a Memorandum of
Understanding, dated as of August 22, 2001 (the "MOU"), related to pursuing a
potential business combination transaction with Prime Group Realty Trust
("PGE"); and
WHEREAS, the MOU contemplates that the parties will enter into this
Agreement (all capitalized terms not otherwise defined in this Agreement have
the meaning given to them in the MOU).
NOW, THEREFORE, in consideration of the foregoing, Cadim and the PGI
Parties do hereby agree as follows:
1. IMPLEMENTATION OF PROPOSED TRANSACTION; DUE DILIGENCE. Cadim and the
PGI Parties will promptly commence good faith negotiations concerning the
implementation of the business combination transaction summarized in the MOU
(the "PROPOSED TRANSACTION"), including the preparation and negotiation of the
Transaction Documents to which one or more of the PGI Parties is a party. The
PGI Parties shall promptly provide Cadim with all reasonable due diligence
materials concerning a to be formed limited liability company, which will be a
private company initially controlled by PGI, which will own the entities that
own the development sites
located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, and all related assets including its development personnel
("RESIDENTIAL NEWCO"), and each of the PGI Parties and all of their respective
properties, other assets, obligations and liabilities, as Cadim may reasonably
request.
2. CONFIDENTIALITY. Cadim agrees that (a) all information regarding
Residential Newco and the PGI Parties furnished to Cadim, whether prior to or
after the date of this Agreement, 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
Representatives (as defined below) who need to know such information for the
purpose of assisting Cadim in evaluating the Proposed Transaction (it being
understood that such Representatives will be informed by Cadim of the contents
of this Agreement and that, by receiving such information, such Representatives
are agreeing to be bound by this Agreement). In any event, Cadim shall be
responsible for any breach of this Agreement by any of such Representatives. 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 the PGI Parties or any of their affiliates or any of 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 the PGI Parties to keep such information confidential.
For purposes hereof, "Representatives" means a person's affiliates,
directors, trustees, officers, employees, controlling shareholders or owners,
legal and financial advisors, accountants and other agents and representatives.
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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 the PGI Parties 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 any party to this
Agreement with respect to the Proposed Transaction, upon the written request of
the PGI Parties, Cadim will promptly redeliver or cause to be redelivered to the
PGI Parties all copies of the Evaluation Materials furnished to or held by Cadim
hereunder or destroy such materials, and destroy or cause to be destroyed all
notes, memoranda, schedules, analyses or compilations relating thereto or based
thereon prepared by Cadim.
3. EXCLUSIVITY AND STANDSTILL. Beginning on the date of this Agreement
and continuing, subject to the last sentence of this section, until the earliest
to occur of (A) 30 days from the date that a support and standstill agreement is
executed with PGE, (B) an earlier termination of the MOU by Cadim, (C) five (5)
business days after negotiations between Cadim and the PGI Parties, on the one
hand, and PGE, on the other hand, terminate, or (D) such other date as the
parties may mutually agree in writing (such period, the "EXCLUSIVITY PERIOD"),
while Cadim conducts its due diligence relating to PGE and its operating
partnership, Prime Group Realty, L.P. ("PGLP"), Residential Newco, and the PGI
Parties and in consideration of the substantial time, effort and expense that
Cadim will undertake, each of the PGI Parties, jointly and severally, agrees (a)
that it shall not, and shall use its best efforts to ensure that its affiliates
or Representatives shall not, take any action, either directly or indirectly, to
initiate, assist, solicit
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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 (i) the refinancing of the Prudential Loan or the Vernado Loan,
any loans similar to the Cadim Residential Newco Loan, the Cadim PGI Loan or the
Cadim Mezzanine Loan or any similar financing or transaction (any such proposal
or offer being hereinafter referred to as a "REFINANCING PROPOSAL") or (ii) a
Transaction (as hereafter defined) involving PGE, PGLP, any PGI Party or any of
their affiliates, other than a Transaction among Cadim, PGE, PGLP, the PGI
Parties and their respective shareholders and affiliates as contemplated by the
MOU (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 a
Refinancing Proposal or an Acquisition Proposal, or otherwise facilitate any
effort or attempt to make or implement a Refinancing Proposal or an Acquisition
Proposal or take any other action which may be reasonably expected to lead to
any Refinancing Proposal or Acquisition Proposal; (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
Exclusivity Period or to provide any further due diligence materials and (c)
that it shall not, and shall use its best efforts to ensure that its affiliates
or Representatives shall not, acquire, directly or indirectly, any shares of
beneficial interest of PGE or units in PGLP (whether by way of purchase,
exercise of option, transfer or otherwise, including, without limitation, from
an affiliate) except in connection with the Offer and the Merger as contemplated
by the MOU; PROVIDED, HOWEVER, that this Exclusivity provision shall not
restrict Primestone from (i) having discussions with Prudential solely regarding
the Prudential Loan or (ii) having discussions with
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Vornado solely regarding Vornado's right of first offer in connection with the
Cadim Mezzanine Loan. Notwithstanding the foregoing, Cadim and PGI agree to
discuss the circumstances under which the PGI Parties may consider a Refinancing
Proposal with a third party (but not an Acquisition Proposal) in the event that
the PGE SSA is not executed. A "TRANSACTION" means a merger, acquisition, tender
offer, exchange offer, consolidation or similar business combination transaction
involving, or any purchase of all or any significant portion of the assets or
any equity securities of, PGE, PGLP, any PGI Party or any subsidiary of any of
them, or any other sale, dividend, split, reorganization, recapitalization,
restructuring, spin-off or other disposition of equity securities of PGE, PGLP,
any PGI Party or any subsidiary of any of them or any similar transaction
involving, directly or indirectly, PGE, PGLP, any PGI Party or any subsidiary of
any of them; PROVIDED, that a Transaction shall not include a purchase, sale or
other transaction involving assets owned by a PGI Party or any subsidiary of a
PGI Party which assets are not related to shares or units of PGE or PGLP or
assets of Residential Newco. Cadim shall provide a written notice to the PGI
Parties on or prior to the 30th day after the signing of a support and
standstill agreement with PGE if it intends to proceed with the Proposed
Transaction. Notwithstanding anything herein to the contrary, the delivery of
such notice shall extend the exclusivity period herein until terminated pursuant
to clauses (B), (C) or (D) above; PROVIDED Cadim has also committed to make the
Cadim Mezzanine Loan subject to the execution of definitive documentation
consistent with the MOU.
4. COVENANTS; PUBLIC SUPPORT; VOTING. Each of the PGI Parties agrees:
(a) to publicly support the Offer and to provide CDP all necessary assistance in
connection with its due diligence review of PGE, PGLP, Residential Newco and the
PGI Parties, (b) concurrent with the closing of the Offer, to convert all units
in PGLP owned, directly or indirectly, by any PGI Party or an affiliate into
common shares of beneficial interest of PGE, (c) to vote all shares of
beneficial interest of PGE, owned, directly or indirectly, by any PGI Party
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or an affiliate in favor of the Merger and (d) to prepare and file all necessary
documentation required by any state or federal regulatory agencies in connection
with the Proposed Transaction. In addition, Primestone agrees not to issue any
additional partnership interests to any party other than PGLLC or PGI and each
of PGI and PGLLC agrees not to sell, pledge, transfer or otherwise dispose of
any of its partnership units in Primestone to any person, including, without
limitation, an affiliate.
5. EXPENSE REIMBURSEMENT. In addition to the break-up fee, if any,
pursuant to paragraph 6 below, the PGI Parties agree to reimburse Cadim and its
affiliates for all out-of-pocket costs incurred subsequent to the date of this
Agreement in connection with Cadim's due diligence investigation of the PGI
Parties and Residential Newco, all as contemplated by the MOU. Such
reimbursement shall be made within 30 days of Cadim submitting copies of the
invoices for such costs to PGI. The foregoing expense reimbursement provision
shall be set forth in the Transaction Documents.
6. BREAK-UP FEE. If any of the PGI Parties or any of their
Representatives violates paragraph 3 or paragraph 4(a), (b) or (c) of this
Agreement, then, as liquidated damages for the violation of such provisions, the
PGI Parties (other than Primestone) shall pay to Cadim an amount equal to
$5,000,000.
7. NO DISCLOSURE. Without the prior written consent of the other party
neither Cadim nor any of the PGI Parties 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
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of their subsidiaries or to any other person, with respect to either the fact
that discussions or negotiations are taking place concerning the Proposed
Transaction or the existence or contents of this Agreement, except for (i)
disclosure to such party's Representatives as allowed by paragraph 2 herein,
(ii) any 13D filings or amendments to such filings that any party determines it
is required to make, and (iii) 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, at least one
full business day 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. Except as provided in paragraph 6 herein, 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.
[signature pages follow]
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The Parties have agreed to the terms and conditions contained in this
Support and Standstill Agreement on the day and date first written above.
THE PRIME GROUP, INC. ("PGI")
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ITS: PRESIDENT
PRIMESTONE INVESTMENT PARTNERS, L.P.
BY: PG/PRIMESTONE LLC, ITS MANAGING GENERAL PARTNER
BY: THE PRIME GROUP, INC., ITS ADMINISTRATIVE MEMBER
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ITS: PRESIDENT
PG/PRIMESTONE LLC
BY: THE PRIME GROUP, INC., ITS ADMINISTRATIVE MEMBER
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ITS: PRESIDENT
PRIME GROUP, VI, L.P.
BY: PGLP, INC., ITS GENERAL PARTNER
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ITS: PRESIDENT
PRIME GROUP LIMITED PARTNERSHIP
BY: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
ITS: MANAGING GENERAL PARTNER
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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CADIM INC. ("CDP")
PER: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
PER: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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