EXHIBIT 10.17
OMNIBUS FIRST MODIFICATION TO SENIOR LOAN DOCUMENTS
THIS FIRST MODIFICATION TO SENIOR LOAN DOCUMENTS (this "Agreement") is made
and dated as of March 12, 2001 by and among DEARBORN CENTER, L.L.C., a Delaware
limited liability company ("Borrower"), BAYERISCHE HYPO- UND VEREINSBANK AG, NEW
YORK BRANCH ("Agent"), a banking corporation organized under the laws of the
Federal Republic of Germany, as a lender and as agent for the lenders from time
to time party to the Credit Agreement, as hereinafter defined (each, a "Lender"
and, collectively, "Lenders"), and PRIME GROUP REALTY, L.P., a Delaware limited
partnership ("PGLP"). All capitalized terms used herein but not defined herein
shall have the meanings set forth in the Credit Agreement (as hereinafter
defined).
W I T N E S S E T H:
WHEREAS, Agent and Borrower are party to that certain Credit Agreement,
dated as of January 5, 2001 (the "Credit Agreement");
WHEREAS, Prime/Xxxxxxx Development Company, L.L.C., a Delaware limited
liability company ("Mezzanine Borrower"), Bankers Trust Company, a New York
banking corporation ("Mezzanine Agent"), as agent and lender, Vornado Realty
Trust, MMBC Debt Holdings I, LLC, and New York Life Insurance Company (together
with their successors and assigns, collectively, "Mezzanine Lenders"), are party
to that certain Mezzanine Construction Loan Agreement, dated as of January 5,
2001, as the same has been amended pursuant to that certain Omnibus First
Modification to Mezzanine Loan Documents (the "First Mezzanine Amendment") of
even date herewith (as so amended, the "Mezzanine Loan Agreement");
WHEREAS, Borrower requested that Agent approve that certain Lease
Agreement, dated as of February 9, 2001, as the same had been amended by that
certain First Amendment to Lease Agreement, dated as of February 21, 2001 (as
amended, the "Citadel Lease") between Borrower, as landlord, and Citadel
Investment Group, L.L.C. ("Citadel"), as tenant, for approximately 206,146 NRSF
of office space at the Project (the "Citadel Space");
WHEREAS, Citadel is currently the tenant under a lease, dated as of August
27, 1999, as the same has been amended and modified by that certain First Lease
Amendment, dated as of November 1, 1999, that certain Second Lease Amendment,
dated as of April 2, 2000, that certain Third Lease Amendment, dated as of
September 3, 2000, that certain letter dated August 27, 1999 from One North
Xxxxxx Drive Venture, L.L.C. ("Wacker Landlord") to Citadel and that certain
letter dated November 16, 2000 from Wacker Landlord to Citadel (as amended, the
"Wacker Lease") relating to approximately 161,488 square feet of office space
located at Xxx Xxxxx Xxxxxx Xxxxx, Xxxxxxx, Xxxxxxxx (the "Wacker Space") owned
by the Wacker Landlord;
WHEREAS, as a condition to entering into the Citadel Lease, Citadel
requested that Borrower reimburse Citadel for the rental payments made by
Citadel under the Xxxxxx Lease (the "Xxxxxx Reimbursement Obligations") and
that, subject to the terms and conditions of the Citadel Lease, Citadel be
permitted to set off any amounts not paid by Borrower in respect of the Xxxxxx
Reimbursement Obligations against the rental payments otherwise due from Citadel
under the Citadel Lease;
WHEREAS, the provisions of the Citadel Lease relating to the Xxxxxx
Reimbursement Obligations violate certain single purpose entity requirements
(the "SPE Requirements") contained in the Loan Documents;
WHEREAS, as an inducement to Agent to approve the Citadel Lease, Mezzanine
Borrower, Borrower, Xxxxx Xxxxxxx L.L.C. ("Xxxxx") and PGLP agreed to escrow
certain funds, modify certain Loan Documents and otherwise take the actions
described in that certain Consent and Agreement (the "Consent Agreement"), which
was entered into by the parties to this Agreement, together with Mezzanine
Borrower and Mezzanine Agent, as of February 21, 2001;
WHEREAS, in furtherance of the agreements made in the Consent Agreement, on
the date hereof, Agent, Borrower, Mezzanine Agent, Mezzanine Borrower, PGLP,
Xxxxx and J. Xxxx Xxxxxxx Development Company ("Xxxxxxx") are entering into that
certain Reserve Account Agreement of even date herewith (the "Reserve Account
Agreement") relating to accounts established, in part, to protect Agent's
interest in the Property (the "Citadel Reserve Accounts"); and
WHEREAS, the parties hereto desire to memorialize certain agreements made
in the Consent Agreement in accordance with the covenants, agreements,
representations and warranties set forth herein.
NOW, THEREFORE, in consideration of the approval of the Citadel Lease by
Agent and the covenants, agreements, representations and warranties set forth in
this Agreement, the parties hereto hereby covenant, agree, represent and warrant
as follows:
Section 1. PGLP Lease Indemnity.
(a) PGLP hereby indemnifies and holds harmless Borrower and Agent from any
loss, cost, liability, damage or expense (including, without limitation,
reasonable attorneys' fees and costs) arising from conflicts and/or
inconsistencies between certain provisions of the Citadel Lease, the Bank One
Lease and/or the Holland & Knight Lease which Agent and the Mezzanine Agent
believe exist relating to the following expansion options, rights of first offer
and rights of first refusal (collectively, the "Granted Options") granted to the
tenants thereunder:
(i) in respect of the Citadel Lease, (x) the expansion option granted
to Citadel pursuant to Section 28 of the Citadel Lease (the "Citadel
Expansion Option") and (y) the first hold rights granted to Citadel
pursuant to Section 35 of the Citadel Lease (the "Citadel First Hold
Rights");
(ii) in respect of the Bank One Lease, (x) the right of first offer to
lease certain space in the Project granted to Bank One pursuant to Section
27 of the Bank One Lease (the "Bank One ROFO Rights"), and (y) the
expansion options granted to Bank One pursuant to Section 32 of the Bank
One Lease (the "Bank One Expansion Option"); and
(iii) in respect of the Holland & Knight Lease, the right of first
offer granted to Holland & Knight in Section 20C of the Holland & Knight
Lease (the "Holland & Knight ROFO Rights").
(b) Borrower shall, exercising its best business judgment as to timing and
tenant relations, endeavor to promptly obtain satisfactory estoppel certificates
from each of Citadel, Bank One and Holland & Knight confirming the relative
rights of each tenant with respect to the Granted Options (provided Citadel,
Bank One or Holland & Knight, as applicable, has not irrevocable waived its
rights or failed to exercise its rights with respect to the applicable Granted
Option prior to the date Borrower requests such an estoppel certificate). Such
estoppels shall include provisions reasonably satisfactory to Agent addressing
the following matters:
(i) with respect to the Bank One ROFO Rights, an acknowledgment from
Bank One that, if and to the extent the Citadel Expansion Option covers the
27th Floor of the Project, the Citadel Expansion Option is superior to the
Bank One ROFO Rights, as such Bank One ROFO Rights relate to the 27th Floor
of the Project;
(ii) with respect to the Citadel Expansion Option, if and to the
extent the Citadel Expansion Option affects any floor of the Project above
the 27th Floor of the Project, the Citadel Expansion Option is subordinate
to the Bank One ROFO Rights with respect to such floor;
(iii) with respect to the Holland & Knight ROFO Rights, an
acknowledgment from Holland & Knight that, if and to the extent the Citadel
Expansion Option applies to the 27th or higher floor of the Project, the
Holland & Knight ROFO Rights are subordinate to the Citadel Expansion
Option; and
(iv) with respect to the Citadel First Hold Rights, an acknowledgment
from Bank One (x) of the existence of the terms and conditions contained in
Section 35D of the Citadel Lease including the notice to be delivered by
Borrower to Citadel regarding the availability of the Citadel First Hold
Space located on the 24th, 25th or 26th floors of the Project (the "Citadel
First Hold Notice"), (y) that the delivery of the Citadel First Hold Notice
(and the exercise by Citadel of the Citadel First Hold Rights with respect
to the floor of the Project described in the Citadel First Hold Notice),
results in the applicable floor of the Citadel First Hold Space being
subject to a lease with another tenant (as described in Section 35D(ii) of
the Bank One Lease), and (z) that any rights of Bank One to lease a floor
of the Project which is subject to Citadel First Hold Rights shall be
subordinate to such Citadel First Hold Rights and that Bank One will not
assert any claims against the Property Owner or the Borrower relating to
Citadel's exercise of its First Hold Rights in accordance with the terms
and conditions of the Citadel Lease.
(c) Upon the receipt by Agent and Mezzanine Agent of such acceptable
estoppels, PGLP's indemnity obligation hereunder shall terminate. Until such
satisfactory estoppel certificates have been delivered relating to conflicts
and/or inconsistencies with respect to any of the Granted Options affecting the
27th floor of the Project, Borrower shall not, after the date hereof, lease or
grant any additional expansion rights, rights of first offer, rights of first
refusal or otherwise enter into any contractual arrangements with respect to all
or any portion of the 26th floor of the Project (other than those existing
rights (and other than pursuant to the exercise of those existing rights)
granted to Bank One, Holland & Knight and/or Citadel pursuant to their
respective Approved Leases) without the prior written consent of Agent and the
Mezzanine Agent.
Section 2. Waiver.
Agent, for itself and on behalf of the Lenders, hereby waives any default
or Event of Default arising under the Credit Agreement or the other Loan
Documents relating directly to Borrower's assumption of the Xxxxxx Reimbursement
Obligations.
Section 3. PGLP Guaranties.
(a) The Completion Guaranty is hereby amended as follows:
(i) the following text is inserted in Section 1 of the Completion
Guaranty on the 16th line thereof, after the semicolon and before the
phrase "and (f)":
"(f) Without limiting Guarantor's obligations (but without duplication
of payment obligations) under the Interest and Operating Costs
Guaranty, (A) payment in full of all Xxxxxx Reimbursement Obligations
(as such term is defined in that certain Omnibus First Modification to
Senior Loan Documents, dated as of March 12, 2001, by and among Agent,
Borrower and Guarantor (the "Omnibus Modification")), in the event and
only in the event that Citadel terminates the Citadel Lease pursuant
to Paragraph 1(d), Paragraph 2(b)(i), Paragraph 2(b)(iii) or Paragraph
2(i) of the Work Letter (as defined in the Citadel Lease) and (B)
payment in full of all Xxxxxx Reimbursement Obligations accruing
through and including December 31, 2002, if the Citadel Lease is not
terminated as aforesaid;"
(ii) the reference to"(f)" on each of the 16th and 18th lines of
Section 1 of the Completion Guaranty is deleted and "(g)" is inserted in
lieu thereof.
(b) The Interest and Operating Costs Guaranty is hereby amended as follows:
(i) the following text is inserted in Section 1 of the Interest and
Operating Costs Guaranty on the 10th line thereof, after the semicolon and
before the phrase "and (v)":
"(v) Without limiting Guarantor's obligations (but without duplication
of payment obligations) under the Completion Guaranty, from and after an
Event of Default, Xxxxxx Reimbursement Obligations (as defined in that
certain Omnibus First Modification to Senior Loan Documents, dated as of
March 12, 2001, by and among Agent, Borrower and Guarantor (the "Omnibus
Modification")) with respect to any portion of the Xxxxxx Space (as defined
in the Omnibus Modification) that has not been leased or subleased pursuant
to an Approved Sublease (as defined in that certain Reserve Account
Agreement, dated as of March 12, 2001, by and among Agent, Borrower,
Guarantor, Mezzanine Borrower, Mezzanine Lender, Xxxxx Xxxxxxx L.L.C. and
J. Xxxx Xxxxxxx Development Company) at the time of such Event of Default
(it being understood that Guarantor shall have no liability hereunder with
respect to Xxxxxx Reimbursement Obligations relating to any portion of the
Xxxxxx Space once it has been leased or subleased pursuant to an Approved
Sublease regardless of whether such lease or sublease subsequently
terminates or expires);
(ii) the reference to "(v)" on each of the 10th and 14th lines of
Section 1 of the Interest and Operating Costs Guaranty is deleted and
"(vi)" is inserted in lieu thereof; and
(iii) the phrase "Xxxxxx Reimbursement Obligations and" is inserted
before the phrase "Operating Expenses " in 24th line of Section 1 of the
Interest and Operating Costs Guaranty.
Section 4. Treatment of the Citadel Lease.
(a) Agent hereby reaffirms its approval of the Citadel Lease in the form
delivered on February 21, 2000 (as amended on February 21, 2001).
(b) The Citadel Lease shall only constitute a "Qualifying Lease" or an
"Approved Lease" as defined in the Credit Agreement and for purposes of the Loan
Documents solely to the extent of: (i) the rentable area of the premises demised
under the Citadel Lease which is in excess of the Xxxxxx Space; and (ii) the
rentable area of the premises demised under the Citadel Lease which is
equivalent to the rentable area of the Xxxxxx Space which either (A) is leased
pursuant to Approved Subleases (and with respect to any such rentable area
described in this clause (ii), only for so long as the applicable Approved
Sublease remains in effect) or (B) is subject to a Full Release or a Partial
Release.
Section 5. Special Senior Loan Tenant Improvement Provisions.
The parties hereto agree that proceeds of the Loan permitted to be used for
tenant improvement allowances under the Citadel Lease other than amounts
governed by the Reserve Account Agreement (such proceeds, the "Citadel TI
Costs") shall, subject to satisfaction of all conditions set forth in Section
3.3 of the Credit Agreement, be available as follows:
(a) with respect to Citadel TI Costs for 44,658 NRSF of the Citadel
Lease, proceeds shall be disbursed in accordance with the existing terms
and conditions of the Credit Agreement; and
(b) with respect to Citadel TI Costs for the remaining area demised by
the Citadel Lease, proceeds shall be made available, in accordance with the
existing terms and conditions of the Credit Agreement, so long as any of
the following shall have occurred (i) Approved Subleases are executed with
respect to the Xxxxxx Space, (ii) a Full Release has occurred, and/or (iii)
a Partial Release has occurred. In the event either of the circumstances
described in clauses (i) or (iii) above has occurred, the amount of
proceeds to be disbursed to pay for the Citadel TI Costs shall be on a pro
rata basis, based upon the area of each Approved Sublease or the portion of
the Citadel Lease that is subject to a Partial Release, as the case may be.
In the event the circumstances described in clause (ii) above has occurred,
the entire amount of proceeds shall be disbursed to pay for Citadel TI
Costs.
Section 6. Non-Recourse.
The parties hereto intend that, with respect to Prime Group Realty Trust
and Borrower, to the extent provided in the Loan Documents with respect to such
parties' other obligations and liabilities under the Loan Documents, the terms,
provisions, conditions, agreements, liabilities and obligations contained in
this Agreement shall be non-recourse to all of the parties hereto. Accordingly,
the non-recourse terms and provisions contained in the Loan Documents are, by
this reference, hereby incorporated into this Agreement as if set forth herein
in their entirety, and shall apply to each of the parties hereto as applicable.
Section 7. Miscellaneous.
(a) Governing Law. The terms and provisions hereof and the rights and
obligations of the parties hereunder shall in all respects be governed by, and
construed and enforced in accordance with, the internal laws of the State of New
York.
(b) Full Force. Except as expressly set forth herein, the Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed in
all respects.
(c) Binding; No Amendment. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
permitted assigns. This Agreement shall not be modified orally, but only by a
writing executed by all of the parties hereto.
(d) Multiple Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized representatives, all as of the date and
year first above written.
DEARBORN CENTER, L.L.C.
By: Prime/Xxxxxxx Development Company,
L.L.C., its sole member
By: Xxxxx Xxxxxxx L.L.C.,
its managing member
By: [s] J. Xxxx Xxxxxxx
J. Xxxx Xxxxxxx
Member
BAYERISCHE HYPO- UND VEREINSBANK AG,
NEW YORK BRANCH
By: [s] Xxxxx Xxxx
Xxxxx Xxxx
Director
By: [s] Xxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Managing Director
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust,
its managing general partner
By: [s] Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Co-President
