Agreement - PRIME GROUP REALTY TRUST - 8-14-2000

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Agreement - PRIME GROUP REALTY TRUST - 8-14-2000 Powered By Docstoc
					Exhibit 3.3 AMENDMENT NO. 40 TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P. This AMENDMENT NO. 40 TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P. (this "Amendment") is made as of June 15, 2000 by Prime Group Realty Trust, a Maryland real estate investment trust ("PGRT"), as the Managing General Partner of Prime Group Realty, L.P., a Delaware limited partnership (the "Partnership"), and on behalf of the other Partners (as hereinafter defined). Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Amended and Restated Agreement of Limited Partnership of the Partnership, dated as of November 17, 1997, by and among PGRT and the other parties signatory thereto, as amended thereafter (as so amended, the "Limited Partnership Agreement"). W I T N E S S E T H: WHEREAS, pursuant to Section 4.3.C. of the Limited Partnership Agreement, the Managing General Partner may raise all or any portion of Additional Funds required by the Partnership for the acquisition of additional properties by accepting additional Capital Contributions, including the issuance of Common Units for Capital Contributions that consist of property or interests in property; WHEREAS, pursuant to that certain Exchange Agreement dated as of December 15, 1997 by and between H Group LLC, a Delaware limited liability company ("HG"), and the Partnership (the "Exchange Agreement"), HG agreed, among other things, to grant to the Partnership an option (the "First Option") to exchange the Underlying Option (as defined in the Exchange Agreement) for 220,000 Common Units of Limited Partner Interest (subject to adjustment pursuant to the terms of the Exchange Agreement), which grant of the First Option contemplated the transfer by the Partnership to HG of 5,000 Common Units of Limited Partner Interest on the date thereof and, subject to the terms of the First Option, 5,000 Common Units of Limited Partner Interest (subject to adjustment pursuant to the terms of the Exchange Agreement) on the 15th day of each month thereafter (each such transfer a "First Option Maintenance Transfer") for such number of months set forth in the Exchange Agreement; WHEREAS, the Partnership has agreed to the terms of the grant by HG of the First Option set forth in the Exchange Agreement and desires to effect the First Option Maintenance Transfer due on June 15, 2000; WHEREAS, HG was admitted to the Partnership as an Additional Limited Partner as of December 15, 1997 pursuant to Amendment No. 2 to the Limited Partnership Agreement; WHEREAS, the Partners desire to amend the Limited Partnership Agreement to reflect the increase in outstanding Common Units resulting from the issuance of Common Units to HG in connection with the First Option Maintenance Transfer due on June 15, 2000; and

WHEREAS, Sections 2.4 and 12.3 of the Limited Partnership Agreement authorize, among other things, the Managing General Partner, as true and lawful agent and attorney-in fact, to execute, swear to, acknowledge, deliver, file and record this Amendment on behalf of each Partner that has executed the Limited Partnership Agreement and on behalf of the Partnership. NOW, THEREFORE, for good and adequate consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. ACCEPTANCE OF CAPITAL CONTRIBUTION IN EXCHANGE FOR COMMON UNITS. (a) PGRT, as Managing General Partner and on behalf of the Partnership, hereby accepts the grant of the rights consisting of the First Option during the thirtieth month of the term of the First Option from HG as a Capital

WHEREAS, Sections 2.4 and 12.3 of the Limited Partnership Agreement authorize, among other things, the Managing General Partner, as true and lawful agent and attorney-in fact, to execute, swear to, acknowledge, deliver, file and record this Amendment on behalf of each Partner that has executed the Limited Partnership Agreement and on behalf of the Partnership. NOW, THEREFORE, for good and adequate consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. ACCEPTANCE OF CAPITAL CONTRIBUTION IN EXCHANGE FOR COMMON UNITS. (a) PGRT, as Managing General Partner and on behalf of the Partnership, hereby accepts the grant of the rights consisting of the First Option during the thirtieth month of the term of the First Option from HG as a Capital Contribution having a value on the date hereof of $100,000, in exchange for 6609.0 Common Units of Limited Partner Interest which are hereby issued by the Partnership to HG pursuant to Section 4.3.C. of the Limited Partnership Agreement, and which are evidenced by Common Unit Certificate No. 69 of the Partnership. (b) Each of the Common Units of Limited Partner Interest issued to HG pursuant to this SECTION 1 shall have the same terms and provisions of the Common Units of Limited Partner Interest issued by the Partnership on November 17, 1997 except that (i) the Exchange Rights relating thereto may be exercised at any time after December 15, 2000 (as opposed to November 17, 1998) and (ii) such Common Units of Limited Partner Interest will be subject to the Registration Rights Agreement dated as of December 15, 1997 by and among PGRT, the Partnership and HG as opposed to the Registration Rights Agreement entered into by PGRT and the Partnership on November 17, 1997. Section 2. AMENDMENT OF EXHIBIT A TO THE LIMITED PARTNERSHIP AGREEMENT. Exhibit A to the Limited Partnership Agreement is hereby amended and restated to reflect the aforementioned change(s) by deleting EXHIBIT A attached thereto in its entirety, and by attaching in lieu thereof a replacement exhibit in the form of EXHIBIT A attached hereto. From and after the effectiveness of this Amendment, the amended and restated EXHIBIT A attached hereto shall be the only Exhibit A to the Limited Partnership Agreement, unless and until it is hereafter further amended. Section 3. REFERENCE TO AND EFFECT ON THE LIMITED PARTNERSHIP AGREEMENT. A. The Limited Partnership Agreement is hereby deemed to be amended to the extent necessary to effect the matters contemplated by this Amendment. Except as specifically provided for hereinabove, the provisions of the Limited Partnership Agreement shall remain in full force and effect. B. The execution, delivery and effectiveness of this Amendment shall not operate (i) as a waiver of any provision, right or obligation of the Managing General Partner, the other General Partner or any Limited Partner under the Limited Partnership Agreement except as specifically set forth herein or (ii) as a waiver or consent to any subsequent action or transaction. Section 4. APPLICABLE LAW. This Amendment shall be construed in accordance with and governed by the laws of the State of Delaware, without regard to the principles of conflicts of law. -2-

AMENDMENT NO. 40 TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. MANAGING GENERAL PARTNER: PRIME GROUP REALTY TRUST, a Maryland real estate investment trust

AMENDMENT NO. 40 TO AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF PRIME GROUP REALTY, L.P. IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. MANAGING GENERAL PARTNER: PRIME GROUP REALTY TRUST, a Maryland real estate investment trust
By: /s/ JAMES F. HOFFMAN ---------------------------------------Name: James F. Hoffman Title: Senior Vice President, General Counsel and Secretary

LIMITED PARTNERS: Each Limited Partner hereby executes this Amendment to the Limited Partnership Agreement. By: PRIME GROUP REALTY TRUST, a Maryland real estate investment trust, as attorney-in fact
By: /s/ JAMES F. HOFFMAN -----------------------------------Name: James F. Hoffman Title: Senior Vice President, General Counsel and Secretary

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EXHIBIT A* PARTNERS, NUMBER OF UNITS AND CAPITAL CONTRIBUTIONS
Managing General Partner -----------------------Prime Group Realty Trust 77 West Wacker Drive Suite 3900 Chicago, IL 60601 Attn: Richard S. Curto James F. Hoffman General Partner --------------The Nardi Group, L.L.C. c/o Stephen J. Nardi 4100 Madison Street Hillside, IL 60162 Limited Partners ---------------927,100 $18,542,0 Number of Common Units -----------15,264,835 Capital Contribut --------**

EXHIBIT A* PARTNERS, NUMBER OF UNITS AND CAPITAL CONTRIBUTIONS
Managing General Partner -----------------------Prime Group Realty Trust 77 West Wacker Drive Suite 3900 Chicago, IL 60601 Attn: Richard S. Curto James F. Hoffman General Partner --------------The Nardi Group, L.L.C. c/o Stephen J. Nardi 4100 Madison Street Hillside, IL 60162 Limited Partners ---------------The Nardi Group, L.L.C. c/o Stephen J. Nardi 4100 Madison Street Hillside, IL 60162 Carol Stream Industrial Park Joint Venture c/o Stephen J. Nardi 4100 Madison Street Hillside, IL 60162 Edward S. Hadesman Trust Dated May 22, 1992 c/o Edward S. Hadesman 2500 North Lakeview Unit 1401 Chicago, IL 60614 573,096 $8,354,7 927,100 $18,542,0 Number of Common Units -----------15,264,835 Capital Contribut --------**

151,621

$2,146,3

398,427

$7,968,5

* As amended by Amendment No. 40 to the Amended and Restated Agreement of Limited Partnership of Prime Group Realty, L.P. ** This amount shall be inserted by the Managing General Partner. Exhibit A-1

Limited Partners ---------------Carolyn B. Hadesman Trust Dated May 21, 1992 c/o Edward S. Hadesman 2500 North Lakeview Unit 1401 Chicago, IL 60614 Lisa Hadesman 1991 Trust c/o Edward S. Hadesman 2500 North Lakeview Unit 1401 Chicago, IL 60614 Cynthia Hadesman 1991 Trust c/o Edward S. Hadesman 2500 North Lakeview Unit 1401 Chicago, IL 60614

Number of Common Units -----------54,544

Capital Contribut --------$1,090,

169,053

$3,381,

169,053

$3,381,

Limited Partners ---------------Carolyn B. Hadesman Trust Dated May 21, 1992 c/o Edward S. Hadesman 2500 North Lakeview Unit 1401 Chicago, IL 60614 Lisa Hadesman 1991 Trust c/o Edward S. Hadesman 2500 North Lakeview Unit 1401 Chicago, IL 60614 Cynthia Hadesman 1991 Trust c/o Edward S. Hadesman 2500 North Lakeview Unit 1401 Chicago, IL 60614 Tucker B. Magid 545 Ridge Road Highland Park, IL 60035 Frances S. Shubert 511 Lynn Terrace Waukegan, IL 60085 Sky Harbor Associates c/o Howard I. Bernstein 6541 North Kilbourn Lincolnwood, IL 60646 Jeffrey A. Patterson c/o Prime Group Realty Trust 77 West Wacker Drive Suite 3900 Chicago, IL 60601

Number of Common Units -----------54,544

Capital Contribut --------$1,090,

169,053

$3,381,

169,053

$3,381,

33,085

$661,70

36,006

$720,12

62,149

$1,242,

110,000

$2,200,

Exhibit A-2

Limited Partners ---------------Primestone Investment Partners, L.P. c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, IL 60601 Attn: Paul A. Roehri Prime Group VI, L.P. c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, IL 60601 Attn: Michael W. Reshcke Robert J. Rudnik H Group LLC c/o Heitman Financial Ltd. 180 N. LaSalle Suite 3600 Chicago, IL 60601 Attn: Norman Perlmutter Ray R. Grinvalds 714 Blaine Court Schaumburg, IL 60173 Sandra F. Grinvalds 714 Blaine Court Schaumburg, IL 60173

Number of Common Units -----------7,944,893

Capital Contribut --------**

304,097

$6,050,50

108,606

$1,600,00

2,608

$52,16

2,608

$52,16

Limited Partners ---------------Primestone Investment Partners, L.P. c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, IL 60601 Attn: Paul A. Roehri Prime Group VI, L.P. c/o The Prime Group, Inc. 77 West Wacker Drive Suite 4200 Chicago, IL 60601 Attn: Michael W. Reshcke Robert J. Rudnik H Group LLC c/o Heitman Financial Ltd. 180 N. LaSalle Suite 3600 Chicago, IL 60601 Attn: Norman Perlmutter Ray R. Grinvalds 714 Blaine Court Schaumburg, IL 60173 Sandra F. Grinvalds 714 Blaine Court Schaumburg, IL 60173 Warren H. John, as Trustee of the Warren H. John Trust dated December 18, 1998 1730 N. Clark Street Chicago, IL 60614

Number of Common Units -----------7,944,893

Capital Contribut --------**

304,097

$6,050,50

108,606

$1,600,00

2,608

$52,16

2,608

$52,16

37,259

$745,18

** This amount shall be inserted by the Managing General Partner. Exhibit A-3

Limited Partners ---------------James M. Kane Connemara Farm 61 E. Palatine Road South Barrington, IL 60010 Gloria I. Kane Connemara Farm 61 E. Palatine Road South Barrington, IL 60010

Number of Common Units -----------13,606

Capital Contribut --------$191,5

13,606

$191,5

Managing General Partner ------------------------Prime Group Realty Trust 77 West Wacker Drive Suite 3900 Chicago, IL 60601 Attn: Richard S. Curto James F. Hoffman Prime Group Realty Trust 77 West Wacker Drive Suite 3900 Chicago, IL 60601 Attn: Richard S. Curto James F. Hoffman

Number of Preferred Units ---------------------2,000,000 Convertible Preferred Units

Capital Contribut --------**

4,000,000 Series B Preferred Units

**

Limited Partners ---------------James M. Kane Connemara Farm 61 E. Palatine Road South Barrington, IL 60010 Gloria I. Kane Connemara Farm 61 E. Palatine Road South Barrington, IL 60010

Number of Common Units -----------13,606

Capital Contribut --------$191,5

13,606

$191,5

Managing General Partner ------------------------Prime Group Realty Trust 77 West Wacker Drive Suite 3900 Chicago, IL 60601 Attn: Richard S. Curto James F. Hoffman Prime Group Realty Trust 77 West Wacker Drive Suite 3900 Chicago, IL 60601 Attn: Richard S. Curto James F. Hoffman

Number of Preferred Units ---------------------2,000,000 Convertible Preferred Units

Capital Contribut --------**

4,000,000 Series B Preferred Units

**

** This amount shall be inserted by the Managing General Partner. Exhibit A-4

EXHIBIT 10.1 FIRST AMENDMENT TO TAX INDEMNIFICATION AGREEMENT This FIRST AMENDMENT TO TAX INDEMNIFICATION AGREEMENT (this "Amendment") is made and entered into as of March 15, 2000, by and among Stephen J. Nardi, an individual, Narco Enterprises, Inc., an Illinois corporation, Nardi Group Limited, a Delaware corporation, and Prime Group Realty, L.P., a Delaware limited partnership (the "Operating Partnership"). W I T N E S S E T H: WHEREAS, the parties hereto entered into that certain Tax Indemnification Agreement, dated as of November 17, 1997 (the "Tax Indemnification Agreement"), a photocopy of which is attached hereto as EXHIBIT A, pursuant to which the Operating Partnership agreed to indemnify the Nardi Indemnitees (as defined in the Tax Indemnification Agreement) against certain tax liabilities upon the terms and subject to the conditions set forth in the Tax Indemnification Agreement; WHEREAS, on the date hereof, The Nardi Group, L.L.C., a Delaware limited liability company and a general partner of the Operating Partnership (the "NAC General Partner"), and the Operating Partnership have agreed to convert the NAC General Partner's Common Units of General Partner Interest in the Operating Partnership into an equal number of Common Units of Limited Partner Interest in the Operating Partnership (the "Conversion") subject to the satisfaction of the condition, among others, that the Tax Indemnification Agreement be concurrently amended as set forth herein; and WHEREAS, the Nardi Indemnitees will directly or indirectly benefit from the Conversion and therefore desire to amend the Tax Indemnification Agreement as set forth herein.

EXHIBIT 10.1 FIRST AMENDMENT TO TAX INDEMNIFICATION AGREEMENT This FIRST AMENDMENT TO TAX INDEMNIFICATION AGREEMENT (this "Amendment") is made and entered into as of March 15, 2000, by and among Stephen J. Nardi, an individual, Narco Enterprises, Inc., an Illinois corporation, Nardi Group Limited, a Delaware corporation, and Prime Group Realty, L.P., a Delaware limited partnership (the "Operating Partnership"). W I T N E S S E T H: WHEREAS, the parties hereto entered into that certain Tax Indemnification Agreement, dated as of November 17, 1997 (the "Tax Indemnification Agreement"), a photocopy of which is attached hereto as EXHIBIT A, pursuant to which the Operating Partnership agreed to indemnify the Nardi Indemnitees (as defined in the Tax Indemnification Agreement) against certain tax liabilities upon the terms and subject to the conditions set forth in the Tax Indemnification Agreement; WHEREAS, on the date hereof, The Nardi Group, L.L.C., a Delaware limited liability company and a general partner of the Operating Partnership (the "NAC General Partner"), and the Operating Partnership have agreed to convert the NAC General Partner's Common Units of General Partner Interest in the Operating Partnership into an equal number of Common Units of Limited Partner Interest in the Operating Partnership (the "Conversion") subject to the satisfaction of the condition, among others, that the Tax Indemnification Agreement be concurrently amended as set forth herein; and WHEREAS, the Nardi Indemnitees will directly or indirectly benefit from the Conversion and therefore desire to amend the Tax Indemnification Agreement as set forth herein. NOW, THEREFORE, for good and adequate consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. AMENDMENT. The Tax Indemnification Agreement is hereby amended by deleting Section 4(c) thereof in its entirety and inserting in lieu thereof the following: "(c) to the extent that a Nardi Indemnitee recognizes an amount in respect of an Income Inclusion that is indemnifiable pursuant to Section 3 of this Agreement for any UpREIT taxable year beginning prior to the end of the Indemnity Term, UpREIT will pay such Nardi Indemnitee as its indemnity obligation under this Agreement a percentage of the amount described in Section

4(a) based upon the period in which the relevant taxable sale or disposition of Nardi Properties occurs, as follows:
Percentage of Amount Calculated in Section 4(a) -------------------100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

Period Ending ---------------December 31, 1998 December 31, 1999 December 31, 2000 December 31, 2001 December 31, 2002 December 31, 2003 December 31, 2004 December 31, 2005 December 31, 2006 December 31, 2007

2. CONDITION TO EFFECTIVENESS. This Amendment shall become effective contemporaneously with, and

4(a) based upon the period in which the relevant taxable sale or disposition of Nardi Properties occurs, as follows:
Percentage of Amount Calculated in Section 4(a) -------------------100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

Period Ending ---------------December 31, 1998 December 31, 1999 December 31, 2000 December 31, 2001 December 31, 2002 December 31, 2003 December 31, 2004 December 31, 2005 December 31, 2006 December 31, 2007

2. CONDITION TO EFFECTIVENESS. This Amendment shall become effective contemporaneously with, and subject to, the approval by Prime Group Realty Trust's common shareholders of the issuance by Prime Group Realty Trust of up to 927,100 (subject to any applicable anti-dilution adjustments) of its common shares of beneficial interest upon exchange of the New LP Common Units 3. REFERENCE TO AND EFFECT ON THE TAX INDEMNIFICATION AGREEMENT. The Tax Indemnification Agreement is hereby deemed to be amended to the extent necessary to effect the matters contemplated by this Amendment. Except as specifically provided for hereinabove, the provisions of the Tax Indemnification Agreement shall remain in full force and effect. 4. COUNTERPARTS. This Amendment may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Amendment immediately upon affixing its signatures hereto. 5. SEVERABILITY. Any invalidity, illegality or unenforceability of any provision of this Amendment shall not render invalid, illegal or unenforceable the remaining provisions hereof. 6. HEADINGS. The headings contained herein are for convenience of reference only and shall not be deemed to be part of this Amendment. -2-

7. APPLICABLE LAW. This Amendment shall be construed in accordance with and governed by the laws of the State of Illinois without regard to the principles of conflicts of law. [signature page follows] -3-

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. PRIME GROUP REALTY, L.P., a Delaware limited partnership By: Prime Group Realty Trust Its: General Partner
By: /s/ James F. Hoffman -----------------------------

7. APPLICABLE LAW. This Amendment shall be construed in accordance with and governed by the laws of the State of Illinois without regard to the principles of conflicts of law. [signature page follows] -3-

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. PRIME GROUP REALTY, L.P., a Delaware limited partnership By: Prime Group Realty Trust Its: General Partner
By: /s/ James F. Hoffman ----------------------------Name: James F. Hoffman --------------------------Its: Senior Vice President -----------------------------

NARCO ENTERPRISES, INC., an Illinois corporation
By: /s/ Stephen J. Nardi ----------------------------Name: ----------------------------Its: -----------------------------

NARDI GROUP LIMITED, a Delaware corporation
By: /s/ Stephen J. Nardi ----------------------------Name: ----------------------------Its: ----------------------------/s/ Stephen J. Nardi -------------------Stephen J. Nardi

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EXHIBIT 10.2 PUT OPTION TERMINATION AGREEMENT This PUT OPTION TERMINATION AGREEMENT (this "Termination Agreement") is made and entered into as of March 15, 2000, by and among The Nardi Group, L.L.C., a Delaware limited liability company (the "NAC General Partner"), Prime Group Realty Trust, a Maryland real estate investment trust ("PGRT"), and Prime Group Realty, L.P., a Delaware limited partnership (the "Operating Partnership").

IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above. PRIME GROUP REALTY, L.P., a Delaware limited partnership By: Prime Group Realty Trust Its: General Partner
By: /s/ James F. Hoffman ----------------------------Name: James F. Hoffman --------------------------Its: Senior Vice President -----------------------------

NARCO ENTERPRISES, INC., an Illinois corporation
By: /s/ Stephen J. Nardi ----------------------------Name: ----------------------------Its: -----------------------------

NARDI GROUP LIMITED, a Delaware corporation
By: /s/ Stephen J. Nardi ----------------------------Name: ----------------------------Its: ----------------------------/s/ Stephen J. Nardi -------------------Stephen J. Nardi

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EXHIBIT 10.2 PUT OPTION TERMINATION AGREEMENT This PUT OPTION TERMINATION AGREEMENT (this "Termination Agreement") is made and entered into as of March 15, 2000, by and among The Nardi Group, L.L.C., a Delaware limited liability company (the "NAC General Partner"), Prime Group Realty Trust, a Maryland real estate investment trust ("PGRT"), and Prime Group Realty, L.P., a Delaware limited partnership (the "Operating Partnership"). W I T N E S S E T H: WHEREAS, the parties hereto entered into that certain Put Option Agreement, dated as of November 17, 1997 (the "Put Option Agreement"), a photocopy of which is attached hereto as EXHIBIT A, pursuant to which PGRT and the Operating Partnership granted to the NAC General Partner two options to put portions of the NAC General Partner's 927,100 Common Units of General Partner Interest in the Operating Partnership (the "Nardi GP Common Units") to PGRT and the Operating Partnership on the terms and subject to the conditions set forth

EXHIBIT 10.2 PUT OPTION TERMINATION AGREEMENT This PUT OPTION TERMINATION AGREEMENT (this "Termination Agreement") is made and entered into as of March 15, 2000, by and among The Nardi Group, L.L.C., a Delaware limited liability company (the "NAC General Partner"), Prime Group Realty Trust, a Maryland real estate investment trust ("PGRT"), and Prime Group Realty, L.P., a Delaware limited partnership (the "Operating Partnership"). W I T N E S S E T H: WHEREAS, the parties hereto entered into that certain Put Option Agreement, dated as of November 17, 1997 (the "Put Option Agreement"), a photocopy of which is attached hereto as EXHIBIT A, pursuant to which PGRT and the Operating Partnership granted to the NAC General Partner two options to put portions of the NAC General Partner's 927,100 Common Units of General Partner Interest in the Operating Partnership (the "Nardi GP Common Units") to PGRT and the Operating Partnership on the terms and subject to the conditions set forth in the Put Option Agreement; WHEREAS, the NAC General Partner and the Operating Partnership have agreed to convert the Nardi GP Common Units into an equal number of Common Units of Limited Partner Interest in the Operating Partnership subject to the satisfaction of the condition, among others, that the Put Option Agreement be concurrently terminated; and WHEREAS, the parties hereto therefore desire to irrevocably and unconditionally terminate the Put Option Agreement. NOW, THEREFORE, for good and adequate consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: Section 1. TERMINATION OF THE PUT OPTION AGREEMENT. The Put Option Agreement is hereby irrevocably and unconditionally terminated in its entirety, and from and after the date hereof the Put Option Agreement shall have no force and effect whatsoever. Section 2. CONDITION TO EFFECTIVENESS. This Termination Agreement shall become effective contemporaneously with, and subject to, the approval by PGRT's common shareholders of the issuance by PGRT of up to 927,100 (subject to any applicable anti-dilution adjustments) of its common shares of beneficial interest upon exchange of the New LP Common Units.

Section 3. SEVERABILITY. Any invalidity, illegality or unenforceability of any provision of this Termination Agreement shall not render invalid, illegal or unenforceable the remaining provisions hereof. Section 4. HEADINGS. The headings contained herein are for convenience of reference only and shall not be deemed to be part of this Termination Agreement. Section 5. COUNTERPARTS. This Termination Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Termination Agreement immediately upon affixing its signatures hereto.

Section 3. SEVERABILITY. Any invalidity, illegality or unenforceability of any provision of this Termination Agreement shall not render invalid, illegal or unenforceable the remaining provisions hereof. Section 4. HEADINGS. The headings contained herein are for convenience of reference only and shall not be deemed to be part of this Termination Agreement. Section 5. COUNTERPARTS. This Termination Agreement may be executed in counterparts, all of which together shall constitute one agreement binding on all the parties hereto, notwithstanding that all such parties are not signatories to the original or the same counterpart. Each party shall become bound by this Termination Agreement immediately upon affixing its signatures hereto. Section 6. GOVERNING LAW. This Termination Agreement shall be governed by and construed under the laws of the State of Illinois without regard to the principles of conflicts of laws. [signature page follows] -2-

IN WITNESS WHEREOF, the undersigned have executed and delivered this Termination Agreement as of the day and year first written above. THE NARDI GROUP, L.L.C.
By: /s/Stephen J. Nardi --------------------------Name: Stephen J. Nardi ------------------------Its: --------------------------

PRIME GROUP REALTY TRUST
By: /s/ James F. Hoffman --------------------------Name: James F. Hoffman --------------------------Its: Senior Vice President ---------------------------

PRIME GROUP REALTY, L.P. By: Prime Group Realty Trust Its: Managing General Partner
By: /s/ James F. Hoffman --------------------------Name: James F. Hoffman --------------------------Its: Senior Vice President

IN WITNESS WHEREOF, the undersigned have executed and delivered this Termination Agreement as of the day and year first written above. THE NARDI GROUP, L.L.C.
By: /s/Stephen J. Nardi --------------------------Name: Stephen J. Nardi ------------------------Its: --------------------------

PRIME GROUP REALTY TRUST
By: /s/ James F. Hoffman --------------------------Name: James F. Hoffman --------------------------Its: Senior Vice President ---------------------------

PRIME GROUP REALTY, L.P. By: Prime Group Realty Trust Its: Managing General Partner
By: /s/ James F. Hoffman --------------------------Name: James F. Hoffman --------------------------Its: Senior Vice President ---------------------------

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Exhibit 12.1 Prime Group Realty Trust and The Predecessor Statements Regarding Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Share Distributions

(Dollars in Thousands)
Prime Group Realty Trust - Historical Three Months Ended June 30, ---------------------2000 1999 ---------------------Earnings: Income before preferred Share distributions and Minority interests per the consolidated financial statements Interest expense Six Months Ended June 30, ---------------------2000 1999 ----------------------

Year ended December 31, ----------------1999 199 -----------------

$ 2,927 14,145

$14,916 11,545

$14,502 27,131

$22,984 21,923

$ 33,567 42,648

$30 30

Exhibit 12.1 Prime Group Realty Trust and The Predecessor Statements Regarding Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Share Distributions

(Dollars in Thousands)
Prime Group Realty Trust - Historical Three Months Ended June 30, ---------------------2000 1999 ---------------------Earnings: Income before preferred Share distributions and Minority interests per the consolidated financial statements Interest expense Amortization of debt issuance costs Earnings Six Months Ended June 30, ---------------------2000 1999 ----------------------

Year ended December 31, ----------------1999 199 -----------------

$ 2,927 14,145

$14,916 11,545

$14,502 27,131

$22,984 21,923

$ 33,567 42,648

$30 30

1,222 619 ---------------------$18,294 $27,080 ======================

2,143 1,093 ---------------------$43,776 $46,000 ======================

2,424 1 ----------------$ 78,639 $62 ================

Fixed charges: Interest expense Capitalization of interest expense Amortization of debt Issuance costs Preferred share Distributions Total fixed charges Ratio of earnings to combined fixed charges and preferred share distributions

$14,145 1,744 1,222

$11,545 1,607 619

$27,131 4,668 2,143

$21,923 2,994 1,093

$ 42,648 7,986 2,424

$30 2 1

3,037 3,030 ---------------------$20,148 $16,801 ======================

6,074 6,030 ---------------------$40,016 $32,040 ======================

12,103 7 ----------------$ 65,161 $42 ================

1.61 ======================

1.09 1.44 ======================

1.21 1 ================

Excess/(deficit) of earnings to combined fixed charges and preferred share distributions

($1,854) $10,279 ======================

$3,760 $13,960 ======================

$ 13,478 $20 ================

Funds from operations: Funds from operations(1) Interest expense Amortization of debt issuance costs Preferred share distributions Adjusted funds from operations

$13,840 14,145 1,222

$15,863 11,545 619

$29,154 27,131 2,143

28,509 21,923 1,093

$ 53,983 42,648 2,424

$47 30 1

3,037 3,030 ---------------------$32,244 $31,057 ======================

6,074 6,030 ---------------------$64,502 $57,555 ======================

12,103 7 ----------------$111,158 $88 ================

Fixed charges: Interest expense Capitalization of interest expense Amortization of debt issuance costs Preferred share distributions

$14,145 1,744 1,222

$11,545 1,607 619

$27,131 4,668 2,143

$21,923 2,994 1,093

$ 42,648 7,986 2,424

$30 2 1

3,037 3,030 ----------------------

6,074 6,030 ----------------------

12,103 7 -----------------

Total fixed charges

$20,148 $16,801 ======================

$40,016 $32,040 ======================

$ 65,161 $42 ================

Ratio of funds from Operations to combined fixed charges and preferred share distributions

1.60 1.85 ======================

1.61 1.80 ======================

1.71 2 ================

Excess of funds from operations to combined fixed charges and preferred share distributions

$12,096 $14,256 ======================

$24,486 $25,515 ======================

$ 45,997 $45 ================

(1) Funds from operations for the three and six months ended June 30, 1999 and for the years ended December 31, 1999 and 1998, and for the period from November 17, 1997 through December 31, 1997 have been restated in accordance with standards established by the Board of Governors of NAREIT in its 1999 White Paper, which results in the exclusion of certain non recurring items and the inclusion of the effects of straight line rental revenue. Years and periods prior to November 17, 1997 have not been restated due to the unavailability of certain required information.

Exhibit 12.1 Prime Group Realty Trust and The Predecessor Statements Regarding Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Share Distributions

(Dollars in Thousands)
Predecessor - Historical -------------------------------------Period from January 1, 1999 Year en through November 16, Decembe -------------------1997 1996 -------------------------------------Earnings: Loss before preferred share distributions and minority interests per the combined financial statements Interest expense Amortization of debt issuance costs Earnings

$(29,050) $(31,417) 34,417 37,217 630 594 -------------------------------------$ 5,997 $ 6,394 ======================================

Fixed charges: Interest expense Capitalization of interest expense Amortization of debt issuance costs Preferred share distributions Total fixed charges

$ 34,417 $ 37,217 630 594 -------------------------------------$ 35,047 $ 37,811 ======================================

Ratio of earnings to combined fixed charges and preferred share distributions

======================================

Deficit of earnings to combined fixed charges and preferred share distributions

$(29,050) $(31,417) ======================================

Funds from operations: Funds from operations Interest expense Amortization of debt issuance costs

$(14,461) 34,417 630

$(17,367) 37,217 594

Exhibit 12.1 Prime Group Realty Trust and The Predecessor Statements Regarding Computation of Ratios of Earnings to Combined Fixed Charges and Preferred Share Distributions

(Dollars in Thousands)
Predecessor - Historical -------------------------------------Period from January 1, 1999 Year en through November 16, Decembe -------------------1997 1996 -------------------------------------Earnings: Loss before preferred share distributions and minority interests per the combined financial statements Interest expense Amortization of debt issuance costs Earnings

$(29,050) $(31,417) 34,417 37,217 630 594 -------------------------------------$ 5,997 $ 6,394 ======================================

Fixed charges: Interest expense Capitalization of interest expense Amortization of debt issuance costs Preferred share distributions Total fixed charges

$ 34,417 $ 37,217 630 594 -------------------------------------$ 35,047 $ 37,811 ======================================

Ratio of earnings to combined fixed charges and preferred share distributions

======================================

Deficit of earnings to combined fixed charges and preferred share distributions

$(29,050) $(31,417) ======================================

Funds from operations: Funds from operations Interest expense Amortization of debt issuance costs Preferred share distributions Adjusted funds from operations

$(14,461) $(17,367) 34,417 37,217 630 594 -------------------------------------$ 20,586 $ 20,444 ======================================

Fixed charges: Interest expense Capitalization of interest expense Amortization of debt issuance costs Preferred share distributions Total fixed charges

$ 34,417 $ 37,217 630 594 -------------------------------------$ 35,047 $ 37,811 ======================================

Ratio of funds from operations to combined fixed charges and preferred share distributions

======================================

Deficit of funds from operations to combined fixed charges and preferred share distributions

$(14,461) $(17,367) ======================================

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ARTICLE 5 MULTIPLIER: 1,000

PERIOD TYPE FISCAL YEAR END PERIOD START PERIOD END CASH SECURITIES RECEIVABLES ALLOWANCES INVENTORY CURRENT ASSETS PP&E DEPRECIATION TOTAL ASSETS CURRENT LIABILITIES BONDS PREFERRED MANDATORY PREFERRED COMMON OTHER SE TOTAL LIABILITY AND EQUITY SALES TOTAL REVENUES CGS TOTAL COSTS OTHER EXPENSES LOSS PROVISION INTEREST EXPENSE INCOME PRETAX INCOME TAX INCOME CONTINUING DISCONTINUED EXTRAORDINARY CHANGES NET INCOME EPS BASIC EPS DILUTED
1

6 MOS DEC 31 2000 JAN 01 2000 JUN 30 2000 28,691 0 110,893 0 100,491 1 0 1,291,154 (50,071) 1,481,158 263,805 2 889,573 0 40 153 327,587 1,481,158 0 108,290 0 0 71,615 3 0 27,131 9,544 0 0 0 408 0 9,136 (0.20) (0.20)

Amount includes restricted cash escrows ($54,302), net deferred costs ($27,830), and other assets ($18,359). Amount includes accrued interest payable ($2,843) accrued real estate taxes ($41,012), accounts payable and accrued expenses ($31,190), liabilities for leases assumed ($2,827), dividends payable ($8,152), other liabilities ($10,811) and minority interests of ($166,970). Amount includes property operations ($24,698), real estate taxes ($20,875), depreciation and amortization ($19,066), general and administrative expenses ($4,603), and minority interests allocation ($2,373).

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