EXHIBIT NO. 10.13
RESERVE ACCOUNT AGREEMENT
THIS RESERVE ACCOUNT AGREEMENT (this "Agreement") is made and dated as of
March 19th, 2003 by and among DEARBORN CENTER, L.L.C., a Delaware limited
liability company (the "Senior Borrower"), BAYERISCHE HYPO- UND VEREINSBANK AG,
NEW YORK BRANCH ("Senior 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 Senior Loan Agreement (as defined below) (each, a
"Senior Lender" and, collectively, the "Senior Lenders"), LNR EASTERN LENDING,
LLC, a Georgia limited liability company ("Mezzanine Lender"), PRIME/XXXXXXX
DEVELOPMENT COMPANY, L.L.C., a Delaware limited liability company (the
"Mezzanine Borrower") and PRIME GROUP REALTY, L.P., a Delaware limited
partnership ("PGLP").
W I T N E S S E T H:
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WHEREAS, Senior Agent and Senior Borrower are party to that certain Credit
Agreement, dated as of January 5, 2001, as the same has been amended by that
Omnibus First Modification to Senior Loan Documents dated March 12, 2001, as
amended by that Amendment to Omnibus First Modification to Senior Loan Documents
dated January 2, 2002 (as so amended, the "First Senior Modification"), that
Omnibus Second Modification to Senior Loan Documents dated March 26, 2002 and
that Omnibus Third Modification to Senior Loan Documents dated July 16, 2002
(the "Third Senior Modification") (as so amended, the "Senior Loan Agreement"),
pursuant to which the Senior Lenders have agreed to make a loan (the "Senior
Loan") to the Senior Borrower as more fully set forth therein;
WHEREAS, Mezzanine Borrower and Mezzanine Lender are party to that certain
Mezzanine Loan Agreement, dated of even date herewith, as the same has been
amended by that certain Omnibus First Modification to Mezzanine Loan Documents,
that Omnibus Second Modification to Mezzanine Loan Documents and that Omnibus
Third Modification to Mezzanine Loan Documents (the "Third Mezzanine
Modification"), all of even date herewith (as so amended, the "Mezzanine Loan
Agreement"), pursuant to which the Mezzanine Lender has agreed to make a loan
(the "Mezzanine Loan") to the Mezzanine Borrower as more fully set forth
therein;
WHEREAS, Senior Borrower, as landlord, and Citadel Investment Group, L.L.C.
("Citadel"), as tenant, have heretofore entered into that certain Lease
Agreement, dated as of February 9, 2001, as the same has been amended by that
certain First Amendment to Lease Agreement, dated as of February 21, 2001, that
certain Second Amendment to Lease Agreement and First Amendment to Work Letter
Agreement dated as of August 19, 2002, and that certain Third Amendment to Lease
Agreement and Second Amendment to Work Letter Agreement dated as of August 19,
2002 (as amended, the "Citadel Lease") for approximately 281,417 NRSF of office
and storage space at the Project (as defined in the Senior Loan Agreement) (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. (the "Prior Landlord") to Citadel, that certain
letter dated November 16, 2000 from the Prior Landlord to Citadel, that certain
Fourth Lease Amendment dated December 19, 2001, and that certain Fifth Lease
Amendment dated as of October 30, 2002 (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 Xxx Xxxxx Xxxxxx Xxxxx
Xxxxxxx, L.P. (the "Wacker Landlord");
WHEREAS, as a condition to entering into the Citadel Lease, Citadel
requested that the Senior 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 Senior Borrower in respect of the
Xxxxxx Reimbursement Obligations against the rental payments otherwise due from
Citadel under the Citadel Lease;
WHEREAS, the parties hereto (other than Mezzanine Lender), Bankers Trust
Company (n/k/a Deutsche Bank Trust Company Americas), as a lender and as agent
for other lenders ("BT"), Xxxxx Xxxxxxx L.L.C. ("Xxxxx") and J. Xxxx Xxxxxxx
Development Company ("Xxxxxxx") are parties to that Reserve Account Agreement
dated as of March 12, 2001 (the "Prior Agreement"), which on this date has been
terminated and replaced with this Agreement;
WHEREAS, immediately prior to the date hereof, the aggregate amount on
deposit in the Senior Citadel Reserve Account (as defined in the Prior
Agreement) and in the Second Senior Citadel Reserve Account (as defined in the
Third Senior Modification) was $12,586,880.00; and
WHEREAS, the parties hereto desire to memorialize certain agreements with
respect to the Senior Citadel Reserve Account (as defined below), the Third
Senior Modification and the Third Mezzanine Modification in accordance with the
covenants, agreements, representations and warranties set forth herein.
NOW, THEREFORE, in consideration of the covenants, agreements,
representations and warranties set forth in this Agreement, the parties hereto
hereby covenant, agree, represent and warrant as follows:
Section 1. Establishment and Maintenance of Senior Citadel Reserve Account.
(a) A segregated account entitled the "Senior Citadel Reserve Account" has
heretofore been established with the Senior Agent (the "Senior Citadel Reserve
Account").
(b) The Senior Citadel Reserve Account (i) is and shall be in the name of
Senior Borrower as pledgor and Senior Agent as pledgee (and, upon Senior Agent's
request, shall bear a designation clearly indicating that the funds deposited
therein are held by the Senior Agent as a trustee for the Senior Lenders) and is
and shall be under the sole dominion and control of the Senior Agent and held in
accordance with the terms and provisions of this Agreement, (ii) is and shall be
a segregated account, (iii) is not and shall not be evidenced by a certificate
of deposit, passbook or other instrument and (iv) is and shall contain only
funds held for the benefit of the Senior Lenders in accordance herewith.
Pursuant to the terms hereof, the Senior Citadel Reserve Account is also pledged
to Mezzanine Lender on a secondary and subordinate basis, that is, secondary and
subordinate to the rights, title and interest of Senior Agent therein. For the
purpose of perfecting Mezzanine Lender's security interest in and to the Senior
Citadel Reserve Account and the Reserve Funds (as hereinafter defined), Senior
Agent will, after the payment in full of the Senior Loan, comply with
instructions originated by the Mezzanine Lender directing disposition of the
funds in the Senior Citadel Reserve Account and the Reserve Funds without
further consent of Mezzanine Borrower or Senior Borrower.
(c) The Senior Agent shall invest amounts held in the Senior Citadel
Reserve Account in Cash and Cash Equivalents (as defined in the Senior Loan
Agreement) at the written direction of Senior Borrower. All earnings on Cash and
Cash Equivalents shall be credited to the Senior Citadel Reserve Account and
shall only be disbursed in accordance with this Agreement.
Section 2. Funding of the Account.
(a) Senior Agent has heretofore caused or shall immediately cause the
monies held in the Second Senior Citadel Reserve Account to be transferred to
and deposited in the Senior Citadel Reserve Account.
(b) Commencing on April 1, 2003, and continuing on the first (1st) Business
Day of each calendar month thereafter through and including January 1, 2004,
PGLP shall deposit into the Senior Citadel Reserve Account the amount of Seven
Hundred Sixty-Seven Thousand Forty-Nine and No/100 Dollars ($767,049.00)
(collectively, the "Monthly Installments"). In addition, PGLP is due to receive
a commission of $542,221.00 upon the commencement date of the Citadel Lease (as
defined in the Mezzanine Loan Agreement), which amount, once due and owing by
the Senior Borrower and/or Mezzanine Borrower and otherwise payable to PGLP,
shall instead be promptly deposited into the Senior Citadel Reserve Account by
the Senior Borrower and/or Mezzanine Borrower, or if such amount is
inadvertently paid to PGLP, by PGLP (the "Citadel Commission"). Once the Citadel
Commission has been deposited into the Senior Citadel Reserve Account, PGLP
shall receive a credit against the Monthly Installment next coming due in the
amount of the Citadel Commission so deposited. All monies now on deposit or
hereafter deposited in the Senior Citadel Reserve Account (including all
interest earned thereon) shall be referred to herein as the "Reserve Funds".
(c) The parties hereto acknowledge and agree that pursuant to that certain
Dearborn Center Registration Agreement (the "Registration Agreement") entered
into by and between Senior Borrower and U.S. Equities Realty, LLC ("US
Equities"), and related to the Citadel Lease, Senior Borrower paid to US
Equities a full leasing commission (the "Outside Leasing Commission") upon full
execution of the Citadel Lease. Additionally, the terms of the Registration
Agreement provide that US Equities is required to return to Senior Borrower
one-half (1/2) of the Outside Leasing Commission in certain circumstances.
Senior Borrower hereby agrees that the Registration Agreement (including,
specifically, the right to receive any refund of the Outside Leasing Commission
from US Equities) has been (and is hereby further) collaterally assigned to each
of the Senior Agent (on a first priority basis) and Mezzanine Lender (on a
subordinate basis) pursuant to certain of the documents securing the Senior Loan
and the Mezzanine Loan, respectively. Senior Agent and Mezzanine Lender hereby
agree that the full Outside Leasing Commission shall be permitted to be paid as
aforesaid. Senior Borrower hereby agrees that in the event that US Equities
returns any portion of the Outside Leasing Commission to Senior Borrower (the
"Returned Outside Leasing Commission"), Senior Borrower promptly shall deposit
the same into the Senior Citadel Reserve Account (in addition to, and not in
substitution of, amounts otherwise required to be deposited into the Senior
Citadel Reserve Account in accordance with this Agreement, except as provided in
Section 4 below), to be held and disbursed in accordance with the terms and
provisions of this Agreement.
(d) All amounts required to be deposited or funded by PGLP, Senior Borrower
and/or Mezzanine Borrower, as the case may be, into the Senior Citadel Reserve
Account may also be deposited or funded by PGLP, Senior Borrower and/or
Mezzanine Borrower, provided that such amounts are funded or deposited within
the same time frame such amounts are to be deposited or funded by PGLP, Senior
Borrower and/or Mezzanine Borrower, as the case may be, hereunder.
(e) Notwithstanding the foregoing, the amount of the Monthly Installments
due pursuant to Section 2(b) above shall be subject to adjustment as provided in
Section 4 below.
Section 3. Disbursements from the Account.
(a) From and after February 1, 2004, and only after all Monthly
Installments have been paid in full pursuant to Section 2(b) above (as same may
be adjusted pursuant to the terms of Section 4 below) though except as provided
in Section 3(c) below, the Reserve Funds shall be made available to Senior
Borrower to pay the Xxxxxx Reimbursement Obligations (thereafter due and owing
to Citadel), it being understood and agreed that the Xxxxxx Reimbursement
Obligations shall mean the gross amount owing by Citadel on a monthly basis to
the Xxxxxx Landlord under the Xxxxxx Lease LESS the aggregate of all revenues
actually received by Citadel in respect of Approved Subleases (as hereinafter
defined) (the "Rental Income"). Reserve Funds shall be made available to Senior
Borrower for payment of the Xxxxxx Reimbursement Obligations upon the
satisfaction of those conditions set forth in Section 3(b) below.
In addition to the foregoing (and the provisions of Section 3(c) below),
from and after February 1, 2004, and only after all Monthly Installments have
been paid full pursuant to Section 2(b) above (as same may be adjusted pursuant
to the terms of Section 4 below), the Reserve Funds shall be made available to
Senior Borrower for the purposes set forth in Section 3(c)(i), (ii), (iii), and
(iv) below (subject to satisfaction of the conditions to disbursement set forth
in Section 3(c) below).
(b) Provided that no Default or Event of Default under, and as defined in,
the Senior Loan Agreement and no Default or Event of Default under and as
defined in the Mezzanine Loan Agreement and no default by any of Mezzanine
Borrower, Senior Borrower or PGLP (such entities being, collectively, referred
to as the "Borrower Parties") under this Agreement has occurred and is
continuing, Reserve Funds may be released from the Senior Citadel Reserve
Account (as provided in Section 3(a) above) (i) at the written request of the
Senior Borrower upon delivery to the Mezzanine Lender and the Senior Agent of
evidence reasonably satisfactory to both the Senior Agent and the Mezzanine
Lender of (x) the amount owing to the Xxxxxx Landlord pursuant to the Xxxxxx
Lease for any given month (but excluding months prior to January 2004) and (y)
the amount of all revenue received by Citadel in respect of the Approved
Subleases for such corresponding month and (ii) to pay Senior Borrower interest
(on a quarterly basis) that is earned on the Reserve Funds from and after the
date hereof. In the event that the Senior Agent and the Mezzanine Lender
disagree as to the satisfaction of the foregoing conditions (x) and (y) with
respect to any requested disbursement under subpart (i), such disbursement shall
not be made and such amounts shall remain on deposit in Senior Citadel Reserve
Account.
(c) Notwithstanding anything herein contained, Reserve Funds may be
released from the Senior Citadel Reserve Account prior to February 1, 2004 and
before all the Monthly Installments have been paid in full, provided the
conditions set forth in this Section 3(c) have been satisfied, and only for the
following purposes:
(i) To pay a $129,862.68 leasing commission to Xxxxxx X. Xxxxxxx Inc.
("Xxxxxxx") relative to 10,028 square feet of additional space in the
Xxxxxx Space leased by Xxxxxx & Xxxxxxxxx ("Xxxxxx");
(ii) To pay a total of $405,450 in tenant improvement costs (the
"XxXxxxx TI Expense") associated with the Xxxx XxXxxxx/The XxXxxxx
Financial Group sublease with Citadel;
(iii) To pay Senior Borrower interest (on a quarterly basis) that is
earned on the Reserve Funds from and after the date hereof; and
(iv) To pay up to $1,429,129, of any leasing commissions that become
due and payable with respect to leases executed relative to the Project
from and after the date hereof, renewals of existing Project-related leases
executed or exercised after the date hereof or any expansions of existing
Project-related leases executed or exercised after the date hereof.
The disbursements of Reserve Funds set forth in this Section 3(c) shall be made
provided (x) no Default or Event of Default under, and as defined in, the Senior
Loan Agreement has occurred and is continuing and no default or Event of Default
under and as defined in the Mezzanine Loan Agreement has occurred and is
continuing and no default by any of the Borrower Entities exists under this
Agreement has occurred and is continuing, (y) as to subpart (c) (i) above,
Senior Agent and Mezzanine Lender have received a leasing commission statement
from Xxxxxxx and evidence reasonably satisfactory to Senior Agent and Mezzanine
Lender that such leasing commission is then due and owing Xxxxxxx, and (z) as to
subpart (c) (ii) above, Senior Agent and Mezzanine Lender have received (A)
evidence reasonably satisfactory to each of them that the XxXxxxx TI Expenses
have been incurred and are due and owing and (B) lien waivers reasonably
acceptable to each of them relating to the associated tenant improvement work.
In the event Senior Agent and Mezzanine Lender agree that a disbursement under
this subpart (c) should be made but cannot agree on the amount to be disbursed,
the lesser of the amounts determined by the Senior Agent and the Mezzanine
Lender shall be disbursed, in which case none of Senior Borrower, Mezzanine
Borrower or PGLP shall be deemed to have waived its ability to contest that a
greater amount should have been disbursed. Furthermore, if one of Senior Agent
or Mezzanine Lender determines that a disbursement under this subpart (c) should
not be made and the other determines that a disbursement should be made, such
disbursement shall not be made, in which case none of Senior Borrower, Mezzanine
Borrower or PGLP shall be deemed to have waived its ability to contest that such
disbursement should have been made.
(d) Upon the occurrence of a Full Release (hereinafter defined), the Senior
Borrower shall be entitled to receive all of the Reserve Funds then on deposit
in the Senior Citadel Reserve Account (together with any accrued interest
thereon), less any amounts required to pay the Xxxxxx Reimbursements Obligations
incurred by any of the Borrower Parties prior to such Full Release and any
amounts necessary to fulfill any conditions to or costs payable by any of the
Borrower Parties in connection with such Full Release. "Full Release" shall mean
(x) the Xxxxxx Landlord has terminated the Xxxxxx Lease in writing, (y) Citadel
has been released in writing from its rental obligation under the Xxxxxx Lease
and (z) the Senior Agent and the Mezzanine Lender have received evidence
reasonably satisfactory to each of them that no further Xxxxxx Reimbursement
Obligations will exist after the date of the termination of the Xxxxxx Lease.
(e) Upon the occurrence of a Partial Release (hereinafter defined), the
Senior Borrower shall be entitled to receive a portion of the Reserve Funds in
an amount determined by Senior Agent and Mezzanine Lender such that, after such
disbursement to Senior Borrower, an amount of Reserve Funds shall remain on
deposit in the Senior Citadel Reserve Account that will be sufficient (as
reasonably determined by Senior Agent and Mezzanine Lender) to satisfy the
remaining Xxxxxx Reimbursement Obligations after taking into consideration the
adjusted amount of the Xxxxxx Space by reason of the Partial Release. "Partial
Release" shall mean (1) the Xxxxxx Landlord has terminated a portion of the
Xxxxxx Lease in writing, (2) Citadel has been released in writing from its
rental obligation with respect to the terminated portion of the Xxxxxx Lease and
(3) the Senior Agent and the Mezzanine Lender have received evidence reasonably
satisfactory to each of them that no further Xxxxxx Reimbursement Obligations
will exist with respect to the terminated portion of the Xxxxxx Lease after the
date of such partial termination of the Xxxxxx Lease. In the event that the
Senior Agent and the Mezzanine Lender both agree that the foregoing conditions
have been satisfied but are unable to agree on the amount of the Reserve Funds
to be returned to Senior Borrower, the lesser of the amounts determined by the
Senior Agent and the Mezzanine Lender shall be returned to the Senior Borrower,
in which case neither Senior Borrower nor Mezzanine Borrower shall be deemed to
have waived its ability to contest that a greater amount of Reserve Funds should
have been released by reason of such Partial Release.
(f) In the event that the Senior Borrower has deposited the Returned
Outside Leasing Commission into the Senior Citadel Reserve Account as required
pursuant to Section 2(c) above, (x) the Returned Outside Leasing Commission
shall be available for disbursement in the same manner as all other Reserve
Funds as provided in this Agreement, and (y) the Monthly Installments shall be
subject to adjustment as provided in Section 4 below.
(g) Notwithstanding anything to the contrary contained herein, upon the
final payment in full of the Senior Loan (in accordance with Section 2.5 of the
Senior Loan Agreement) and the Mezzanine Loan (in accordance with Section 2.5 of
the Mezzanine Loan Agreement), all amounts then remaining on deposit in the
Senior Citadel Reserve Account (together with any accrued interest thereon)
shall be released to the Senior Borrower or the Mezzanine Borrower, as
applicable.
Section 4. Adjustment of Monthly Installments.
(a) Upon written request of Senior Borrower delivered to Senior Agent and
Mezzanine Lender, Senior Borrower may request that the amount of the Monthly
Installment be reduced. Subject to the terms of this Section 4 and provided no
Event of Default exists under either the Senior Loan Agreement or the Mezzanine
Loan Agreement, the Monthly Installment shall be reduced in conjunction with (i)
an increase in the Rental Income (the "Increased Rental Income") beyond those
amounts contemplated or set forth, as of the date hereof, in the Approved
Subleases existing as of the date hereof, or (ii) Approved Subleases executed
subsequent to the date hereof relative to any Xxxxxx Space, the 10 LaSalle Space
(hereafter defined) or the Rookery Premises (hereafter defined) that is vacant
as of the date hereof. The amount of such reduction shall be determined by
Senior Agent and Mezzanine Lender based upon the anticipated reduction in the
Xxxxxx Reimbursement Obligations by reason of either the Increased Rental Income
or the leasing revenue to be generated by each such Approved Sublease executed
subsequent to the date hereof (the "Additional Leasing Revenue"). With each
written request for a reduction in the Monthly Installment amount, Senior
Borrower shall also deliver to Senior Agent and Mezzanine Lender, as
appropriate, a copy of the Approved Sublease, a tenant estoppel letter from the
subtenant or other appropriate party (in form and substance reasonably
acceptable to the Senior Agent and the Mezzanine Lender, though Senior Agent and
Mezzanine Lender agree that any tenant estoppel letter in the form substantially
and materially similar to that attached to the corresponding Approved Sublease
shall be deemed acceptable), evidence of the Increased Rental Income or the
Additional Leasing Revenue, as the case may be, and such other documents as
Senior Agent and Mezzanine Lender shall reasonably request, including without
limitation, a pro forma calculation of such Increased Rental Income or
Additional Leasing Revenue, as the case may be. In the event that the Senior
Agent and the Mezzanine Lender disagree as to the amount of the reduction in the
Monthly Installment amount within ten (10) days of receipt of the written
request for a reduction, the amount of the Monthly Installment shall be reduced
by the lesser of the amount of the Senior Agent's and the Mezzanine Lender's
determination of the reduction, provided both the Senior Agent and the Mezzanine
Lender agree that a reduction is appropriate (in which case none of Senior
Borrower, Mezzanine Borrower or PGLP shall be deemed to have waived its ability
to contest that a greater reduction in Monthly Installment should have been
granted). In the event one or both of the Senior Agent and the Mezzanine Lender
determine that a reduction in the Monthly Installment amount is not appropriate,
then no such reduction shall occur and the Monthly Installment amount shall not
be changed (in which case, none of Senior Borrower, Mezzanine Borrower or PGLP
shall be deemed to have waived its ability to contest that a reduction should
have been granted). The term "10 LaSalle Space" shall refer to (i) that space
that is the subject of that lease dated April 30, 2000 by and between Xxxxxx and
Metropolitan Life Insurance Company ("MetLife"), as amended by that First
Amendment to Office Lease dated May 23, 2002 and that Second Amendment to Office
Lease dated as of October, 2002 (pursuant to which Xxxxxx leases approximately
4,744 rentable square feet on the 29th floor of the building located at 00 Xxxxx
XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx), and (ii) that space that is the subject of
that sublease dated February 25, 1999 by and between Xxxxxx and Xxxx Management
Services, Inc. (pursuant to which Xxxxxx leases approximately 18,846 rentable
square feet on the 26th floor of the building located at 00 Xxxxx XxXxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx). The "Rookery Premises" shall refer to approximately
14,265 rentable square feet on the 4th floor of that building known as The
Rookery Building located in Chicago, Illinois, that is the subject of that lease
dated July 1, 1994 by and between Xxxxxx, as successor by merger to Lee, Mann,
Smith, McWilliams, Xxxxxxx & Xxxxxx, and LaSalle Bank National Association, as
Successor Trustee to LaSalle National Bank, as Trustee under Trust Agreement
dated December 12, 1988 and known as Trust No. 113979, as amended by that
certain First Amendment to Office Lease Agreement dated as of August 1, 2001.
(b) In the event either Senior Agent or Mezzanine Lender reasonably
determines, at any time subsequent to the date hereof, that the amount of the
Xxxxxx Reimbursement Obligations has increased or may increase by reason of,
among other things, an anticipated reduction in the amount of rental income to
be derived from the subtenants of the Xxxxxx Space, the amount of the Monthly
Installment amount shall be increased upon written notice delivered by either
(or both) of Senior Agent or (and) Mezzanine Lender to the other parties hereto
identifying the amount of such increase and the basis thereof. The amount of any
such increase shall be equal to an amount reasonably determined by Senior Agent
and/or Mezzanine Lender, such that based upon all amounts anticipated to be on
deposit in the Senior Citadel Reserve Account as of January 1, 2004 (assuming
that the Monthly Installment due on such date will be paid) would be adequate to
satisfy the remaining Xxxxxx Reimbursement Obligations, as determined by Senior
Agent and/or Mezzanine Lender. If Senior Agent and Mezzanine Lender both agree,
in good faith, that the Monthly Installment amount shall be increased, but
cannot agree on the amount of such increase within ten (10) days of the written
notice declaring an increase in the Monthly Installment, the Monthly Installment
amount shall be increased by the greater of the two determinations.
Section 5. Security Agreement.
(a) Senior Borrower hereby pledges, transfers and assigns to the Senior
Agent for the benefit of the Senior Lenders, and grants to the Senior Agent for
the benefit of the Senior Lenders, as additional security for the payment and
performance of the Senior Loan and the obligations of the Senior Borrower under
the other Senior Loan Documents, a continuing perfected security interest in and
to, and a general first lien upon, (i) the Senior Citadel Reserve Account and
all of the Senior Borrower's right, title and interest in and to all cash,
property or rights transferred to or deposited in the Senior Citadel Reserve
Account from time to time by or on behalf of the Senior Borrower, (ii) all
earnings, investments and securities held in the Senior Citadel Reserve Account
and (iii) any and all proceeds of the foregoing. This Agreement and the pledge,
assignment and grant of security interest made hereby shall secure payment of
all amounts payable by the Senior Borrower to the Senior Lenders under the
Senior Loan Agreement and the other obligations of the Senior Borrower under the
Senior Loan Documents. The Borrower Parties further agree to execute,
acknowledge, deliver, file or do at their sole cost and expense, and hereby
irrevocably grants to Senior Agent a power of attorney on behalf of the Borrower
Parties, to execute and perform (provided the applicable Borrower Party has
failed to so execute or perform), all other acts, assignments, notices,
agreements or other instruments (including UCC financing statements) as the
Senior Agent may reasonably require in order to effectuate, assure, convey,
secure, assign, transfer and convey unto the Senior Agent any of the rights
granted by this Section 5(a). Upon (x) payment in full of the Senior Loan as set
forth in Section 2.5 of the Senior Loan Agreement and the payment in full of the
Mezzanine Loan as set forth in Section 2.5 of the Mezzanine Loan Agreement, or
(y) the final disbursement of all amounts previously deposited into the Senior
Citadel Reserve Account (provided that no additional funding of the Senior
Citadel Reserve Account is required under this Agreement thereafter), the Senior
Agent shall release the rights granted hereby in accordance with Section 2.5 of
the Senior Loan Agreement.
(b) Senior Borrower hereby pledges, transfers and assigns to the Mezzanine
Lender, and grants to the Mezzanine Lender, as additional security for the
payment and performance of the Mezzanine Loan and the obligations of the
Mezzanine Borrower under the other Mezzanine Loan Documents, a continuing
perfected security interest in and to, and a general second lien, subject and
subordinate to all rights, title and interest (including lien rights) of the
Senior Agent for the benefit of the Senior Lenders contained herein or granted
hereby, upon, (i) the Senior Citadel Reserve Account and all of the Senior
Borrower's and Mezzanine Borrower's right, title and interest in and to all
cash, property or rights transferred to or deposited in the Senior Citadel
Reserve Account from time to time by or on behalf of the Senior Borrower and/or
the Mezzanine Borrower, (ii) all earnings, investments and securities held in
the Senior Citadel Reserve Account and (iii) any and all proceeds of the
foregoing. This Agreement and the pledge, assignment and grant of security
interest made hereby shall secure payment of all amounts payable by the
Mezzanine Borrower to the Mezzanine Lender under the Mezzanine Loan Agreement
and the other obligations of the Mezzanine Borrower under the Mezzanine Loan
Documents. The Borrower Parties further agree to execute, acknowledge, deliver,
file or do at their sole cost and expense, and hereby irrevocably grant to
Mezzanine Lender a power of attorney on behalf of the Borrower Parties, to
execute and perform (provided the applicable Borrower Party has failed to so
execute or perform), all other acts, assignments, notices, agreements or other
instruments (including UCC financing statements) as the Mezzanine Lender may
reasonably require in order to effectuate, assure, convey, secure, assign,
transfer and convey unto the Mezzanine Lender any of the rights granted by this
Section 5(b). Upon (x) payment in full of the Mezzanine Loan as set forth in
Section 2.5 of the Mezzanine Loan Agreement, or (y) the final disbursement of
all amounts previously deposited into the Senior Citadel Reserve Account
(provided that no additional funding of the Senior Citadel Reserve Account is
required under this Agreement thereafter), the Mezzanine Lender shall release
the rights granted hereby in accordance with Section 2.5 of the Mezzanine Loan
Agreement.
(c) The parties hereto agree and acknowledge that the Senior Citadel
Reserve Account, and all amounts on deposit therein from time to time, including
interest earned thereon, shall constitute additional collateral for the Senior
Loan and may, upon the occurrence of an Event of Default under and as defined in
the Senior Loan Agreement, be applied by the Senior Agent in accordance with the
Senior Loan Documents.
(d) The parties hereto agree and acknowledge that the Senior Citadel
Reserve Account, and all amounts on deposit therein from time to time, including
interest earned thereon, also constitutes additional collateral for the
Mezzanine Loan, subject to the terms of Section 5(b) above, and may, upon the
occurrence of an Event of Default under and as defined in the Mezzanine Loan
Agreement and provided the Senior Loan has been paid in full, be applied by the
Mezzanine Lender against amounts owing to it under the Mezzanine Loan Documents.
(e) The parties hereto agree and acknowledge that this Agreement is a "Loan
Document" under each of the Senior Loan and the Mezzanine Loan and that a
default hereunder shall constitute an Event of Default under the Senior Loan
Agreement and the Mezzanine Loan Agreement (subject to the specific terms and
conditions of each of the Senior Loan Agreement and the Mezzanine Loan
Agreement).
Section 6. Approval of Subleases and Expansions.
(a) From and after the date hereof, Senior Borrower shall not enter into
any sublease of any portion of the Xxxxxx Space unless such sublease is an
Approved Sublease.
(b) The exercise of any expansion rights, extension options or rights of
first offer under Article 34 of the Xxxxxx Lease shall require the prior written
consent of Senior Agent and the Mezzanine Lender, which consent may be withheld
or conditioned upon the further modification of the terms of the Senior Loan and
the Mezzanine Loan and/or the establishment of additional reserves and
restrictions, in either case, in the sole discretion of Senior Agent and the
Mezzanine Lender.
(c) "Approved Sublease" shall mean any lease or sublease of all or any
portion of the Xxxxxx Space which either (i) has been approved in writing by the
Mezzanine Lender and the Senior Agent, or (ii) meets all of the following
criteria:
(A) is co-terminus with the expiration date of the Xxxxxx Lease (as
that expiration date may have been extended pursuant to Article
34 of the Xxxxxx Lease at the time such lease or sublease is
executed);
(B) satisfies all of the requirements of Article 20 of the Xxxxxx
Lease;
(C) is to a tenant that either (1) has a net worth (on a GAAP basis)
of no less than five (5) times the annual gross rent payable
under such sublease and an operating cash flow for the prior
calendar year of no less than two (2) times the annual gross rent
payable under such sublease, or provides an unconditional
guaranty of all of the obligations of such tenant under such
sublease from an entity which satisfies the conditions set out in
the foregoing clause (1), or (2) provides a cash security deposit
or an Acceptable Form Letter of Credit (as hereinafter defined)
from an entity reasonably acceptable to Mezzanine Lender and
Senior Agent in an amount equal to or greater than one full year
of gross rent under such sublease. "Acceptable Form Letter of
Credit" shall mean an irrevocable letter of credit which provides
by its terms that either (x) such letter of credit shall be
automatically renewed (no more frequently than annually) during
the entire term of the Approved Sublease or (y) such letter of
credit may be drawn upon if a replacement letter of credit is not
provided at least 30 days in advance of its expiration date, and
is in all other respects reasonably satisfactory to Mezzanine
Lender and Senior Agent;
(D) provides for a minimum net rental amount of $24 per square foot
and a tenant improvement allowance by the landlord of no more
than $47.50 per square foot;
(E) demises no more than 50,000 square feet of the Xxxxxx Space;
(F) provides (i) that the subtenant thereunder shall perform and
discharge all of Citadel's obligations under the Xxxxxx Lease (on
a pro rata basis based on the rentable square footage subject to
such sublease), other than such obligations that can be performed
solely by Citadel, as tenant under the Xxxxxx Lease, including,
without limitation, the payment of rent under the Xxxxxx Lease,
and (ii) for other terms and conditions reasonably acceptable to
Senior Borrower that are consistent with the terms and conditions
of the Xxxxxx Lease; provided, however, that no such sublease
shall grant any sublessee (a) the right to assign the sublease or
sublease any portion of the space subject to the sublease (the
"Subleased Premises") without the consent, of the Senior
Borrower, (b) the right to expand or contract the Subleased
Premises, other than options for additional space which, if
exercised, would not cause the Subleased Premises to exceed
50,000 square feet, (c) any expansion rights (other than as
permitted in clause (b) above), contraction rights, rights of
first offer, rights of first refusal or similar rights, (d) the
right to extend the term of the sublease, (e) any termination or
cancellation rights with respect to the Subleased Premises (other
than in connection with a termination or cancellation of the
Citadel Lease), (f) any free rental periods, or (g) any other
right that is greater in scope than the rights granted to Citadel
under the Xxxxxx Lease; and
(G) such sublease does not impose upon the sublandlord or Senior
Borrower any obligation to reimburse the sublessee for such
sublessee's rental obligations in any other space currently
leased by such sublessee as an inducement for such sublessee to
sublease any portion of the Xxxxxx Space.
Section 7. Certain Matters Affecting the Senior Agent and the Mezzanine
Lender.
(a) The Senior Borrower agrees to pay or reimburse the Senior Agent, and
the Mezzanine Borrower agrees to pay or reimburse the Mezzanine Lender upon
request for all reasonable expenses, fees and charges, return items,
disbursement and advances, including reasonable attorneys' fees, incurred or
made by it, in connection with the preparation, execution, performance,
delivery, modification and termination of this Agreement and the other documents
executed in connection herewith.
(b) Neither the Senior Agent nor the Mezzanine Lender shall be liable for
any claims, suits, actions, costs, damages, liabilities or expenses or for any
interruption of services ("Liabilities") in connection with the subject matter
of this Agreement other than Liabilities caused by the gross negligence or
willful misconduct of the Senior Agent or the Mezzanine Lender, as applicable,
and the Borrower Parties hereby agree to indemnify and hold harmless the Senior
Agent and the Mezzanine Lender and their respective affiliates and the
directors, officers, employees and agents of any of them from and against any
and all Liabilities arising from or in connection with any acts or omissions
taken by the Senior Agent and/or the Mezzanine Lender, as applicable, or any of
their respective affiliates or any director, officer, employee or agent of any
of them in connection with this Agreement, other than those Liabilities caused
by the gross negligence or willful misconduct of the Senior Agent or the
Mezzanine Lender, as applicable, or such other respective indemnified parties.
In no event shall the Senior Agent or the Mezzanine Lender be liable to any
person for incidental, special, consequential or punitive damages even if
advised of the possibility thereof.
(c) The Senior Borrower shall provide the Senior Agent and the Mezzanine
Borrower shall provide the Mezzanine Lender with the Tax Identification Number
(TIN) as assigned to each of them by the Internal Revenue Service. All interest
or income earned under this Agreement shall be allocated and paid as provided
herein and reported by the recipient to the Internal Revenue Service as having
been so allocated and paid.
(d) At such time as the Senior Loan is paid in full, (i) Senior Agent (and
Senior Lenders to the extent reasonably required by Mezzanine Lender) shall
cause their respective rights, title and interest in and to the Reserve Funds
and the Senior Citadel Reserve Account to be assigned and transferred to
Mezzanine Lender, or, at Mezzanine Lender's option, to cause all Reserve Funds
then on deposit in the Senior Citadel Reserve Account to be transferred to and
deposited in another account designated by the Mezzanine Lender, which other
account shall, for the purposes of this Agreement, thereafter be deemed to be
the Senior Citadel Reserve Account and subject to all of the terms and
conditions of this Agreement, (ii) Senior Agent and Senior Lenders shall have no
further rights under this Agreement, and (iii) Mezzanine Lender shall be
entitled to (and be entitled to exercise and enjoy) all of the rights, title,
interest, benefits and remedies reserved in favor of the Senior Agent and/or the
Senior Lenders herein.
Section 8. Successors and Assigns; Assignments. This Agreement shall bind
and inure to the benefit of and be enforceable by the Senior Agent, the
Mezzanine Lender, the Senior Lenders, the Mezzanine Lender and each of the
Borrower Parties, and their respective permitted successors and assigns.
Section 9. Notices.
(a) Notices shall be sent as follows:
(i) if to Senior Borrower:
Dearborn Center, L.L.C.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx and Xxxxx Xxxxxxx, Esq.
Facsimile No. : (000) 000-0000
with a copy to:
Jenner & Block
One IBM Center
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
and
(ii) if to Mezzanine Borrower:
Prime/Xxxxxxx Development Company, L.L.C.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx and Xxxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
with a copy to:
Jenner & Block
One IBM Center
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
(iii) if to Senior Agent:
Bayerische Hypo- Und Vereinsbank AG, New York Branch
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Real Estate Lending
Facsimile No.: (000) 000-0000
with a copy to:
Bayerische Hypo- und Vereinsbank AG
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: General Counsel
and
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxx, Esq.
Facsimile No.: (000) 000-0000
(iv) if to Mezzanine Lender:
LNR Eastern Lending, LLC
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
with a copy to:
Bilzin Xxxxxxx Xxxxx Price & Xxxxxxx LLP
000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, XX 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
(v) if to PGLP:
Prime Group Realty, L.P.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxxxx and Xxxxx Xxxxxxx, Esq.
Facsimile No. : (000) 000-0000
with a copy to:
Jenner & Block
One IBM Center
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or, in each case, to such other or additional addresses as shall be designated
in writing by the respective party to the other parties hereto. Unless otherwise
expressly provided herein, all such notices, to be effective, shall be in
writing (including by facsimile), and shall be deemed to have been duly given or
made (x) when delivered by hand or by nationally recognized overnight carrier,
(y) upon receipt after being deposited in the mail, certified mail and postage
prepaid or (z) in the case of notice by fax, when sent and electronically
confirmed, addressed as set forth above, with a copy of such notice sent by any
other means provided in clauses (x) and (y) above.
Section 10. Non-Recourse.
The parties hereto intend that, with respect to Prime Group Realty Trust,
Senior Borrower and Mezzanine Borrower (and their respective partners, members,
officers and directors other than PGLP), to the extent provided in the Senior
Loan Documents and the Mezzanine Loan Documents with respect to such parties'
other obligations and liabilities under such Senior Loan Documents and Mezzanine
Loan Documents, the terms, provisions, conditions, agreements, liabilities and
obligations contained in this Agreement shall be non-recourse to all of the
parties hereto; provided, however, that the foregoing is not intended in any way
to release PGLP from its liability under the Guaranties (as defined under the
Senior Loan Agreement and under the Mezzanine Loan Agreement). Accordingly, the
non-recourse terms and provisions contained in the Senior Loan Documents and the
Mezzanine 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 11. Intercreditor Agreement.
Senior Agent and Mezzanine Lender hereby confirm that the terms and
provisions of this Agreement shall control, with respect to the subject matter
hereof, to the extent that there are any conflicts and/or inconsistencies
between this Agreement and that certain Intercreditor and Subordination
Agreement of even date herewith between Senior Agent and Mezzanine Lender (the
"Intercreditor Agreement") and, without limiting the generality of the
foregoing, that this Agreement shall govern the rights of the Mezzanine Lender
and the Senior Agent with respect to the Senior Citadel Reserve Account and all
amounts on deposit from time to time therein, Approved Subleases, disbursements
from the Senior Citadel Reserve Account, the application of any funds disbursed
from the Senior Citadel Reserve Account and the satisfaction of any conditions
relating to the use and/or disbursement of funds from the Senior Citadel Reserve
Account.
Section 12. Miscellaneous.
(a) No modification, amendment, termination or waiver of any provision of
this Agreement shall in any event be effective unless the same shall be in a
writing signed by the party against whom enforcement is sought, and then such
waiver or consent shall be effective only in the specific instance, and for the
purpose, for which given.
(b) Each of the Senior Agent and the Mezzanine Lender shall receive copies
of all reports, advices, statements and other information supplied hereunder by
any party hereto to any other party hereto.
(c) 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.
(d) 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.
(e) This Agreement replaces and supercedes the Prior Agreement.
Furthermore, as a result of this Agreement, each of the Third Senior
Modification and the Third Mezzanine Modification are hereby modified by the
deletion of Sections 1(d) and 1(e) from each of such instruments, except that
Section 1(e)(iv), as same is restated below (with revisions as reflected below),
shall not be deleted, but instead shall remain operative and in effect:
"(iv) Any and all funds in the Senior Citadel Reserve Account in
excess of $10,000,000 shall constitute Unrestricted Cash for the purposes
of the calculation of the liquidity covenant contained in Section 8(d) of
the Completion Guaranty and Section 6(d) of the Interest and Operating
Costs Guaranty and Section 6 (d) of the Guaranty of Loan Payment and
Indemnity relating to the Senior Loan (as such guaranties are amended
pursuant to this Agreement). Any and all funds in the Senior Citadel
Reserve Account may be considered (x) as a portion of "Total Assets"
solely for the purposes of the calculation of the financial covenant
contained in Section 8(e) of the Completion Guaranty and Section 6(e) of
the Interest and Operating Costs Guaranty and Section 6(e) of the Guaranty
of Loan Payment and Indemnity relating to the Senior Loan (as such
guaranties are amended pursuant to this Agreement) and (y) in the
calculation of Consolidated Net Worth relating to the financial covenant
contained in Section 8(c) of the Completion Guaranty and Section 6(c) of
the Interest and Operating Costs Guaranty and Section 6(c) of the Guaranty
of Loan Payment and Indemnity relating to the Senior Loan (as such
guaranties are amended pursuant to this Agreement). Notwithstanding the
foregoing permission from the Lender to consider funds on deposit in the
Senior Citadel Reserve Account for accounting purposes only relating to
certain financial covenants, PGLP, Borrower and Property Owner (A)
expressly acknowledge that all funds now or in the future on deposit in
the Senior Citadel Reserve Account have been pledged and assigned to the
Senior Agent (and a subordinated secondary pledge and assignment to the
Mezzanine Lender) and do not and will not constitute "assets" of PGLP or
any future bankruptcy estate of PGLP and (B) hereby irrevocably waive any
right to claim that such funds are the property of or an asset of PGLP or
any future bankruptcy estate of PGLP."
IN WITNESS WHEREOF, the parties hereto have executed this Agreement in
several counterparts (each of which shall be deemed an original) as of the date
first above written.
PRIME/XXXXXXX DEVELOPMENT COMPANY,
L.L.C., a Delaware limited liability
company
By: Prime Group Realty, L.P., a
Delaware limited partnership, its
sole member
By: Prime Group Realty Trust, a
Maryland real estate
investment trust, its
managing general partner
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Name: Xxxxx X. Xxxxxxxx
Title: Co-President
DEARBORN CENTER, L.L.C., a Delaware
limited liability company
By: Prime/Xxxxxxx Development Company,
L.L.C., a Delaware limited
liability company, its sole member
By: Prime Group Realty, L.P., a
Delaware limited partnership,
its sole member
By: Prime Group Realty
Trust, a Maryland real
estate investment
trust, its managing
general partner
By: /s/ Xxxxx X.Xxxxxxxx
--------------------
Name: Xxxxx X. Xxxxxxxx
Title: Co-President
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust, its
managing general partner
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx Xxxxxxxx
Co-President
LNR EASTERN LENDING, LLC, a Georgia
limited liability company
By: LNR PROPERTY CORPORATION EASTERN
REGION, a Georgia corporation, its
sole member
By: /s/ Xxxxxx X. Xxxxx
-------------------
Name: Xxxxxx X. Xxxxx
Title: Vice President
BAYERISCHE HYPO-UND VERINSBANK AG, NEW
YORK BRANCH, as agent
By: /s/ Xxxxx Xxxx
---------------
Name: Xxxxx Xxxx
Title: Director
By: /s/ Xxxxx X. Xxxxxx
--------------------
Name: Xxxxx X. Xxxxxx
Title: Director
