EXHIBIT 10.12
FIFTH AMENDMENT TO CREDIT AGREEMENT
-----------------------------------
This Fifth Amendment to Credit Agreement is made as of the 1st day of
October, 1998 by and among PRIME GROUP REALTY, L.P., a Delaware limited
partnership (the "Borrower"), PRIME GROUP REALTY TRUST, a Maryland trust (the
"Company") and BANKBOSTON, N.A., a national banking association ("BankBoston"),
PRUDENTIAL SECURITIES CREDIT CORPORATION, a Delaware corporation ("Prudential"),
the other lending institutions which are from time to time listed on Schedule 1,
(collectively, with BankBoston and Prudential, the "Lenders") and BANKBOSTON,
N.A., as agent for itself and such other lending institutions (the "Agent").
WHEREAS, the parties hereto are parties to that certain Credit Agreement
dated as of November 17, 1997 as amended by First Amendment to Credit Agreement
dated as of December 15, 1997 and by Second Amendment to Credit Agreement dated
as of March 16, 1998, as amended and restated by Third Amendment to Credit
Agreement dated as of March 30, 1998 and as amended by Fourth Amendment to
Credit Agreement dated as of April 24, 1998 (the "Existing Agreement"); and
WHEREAS, the Borrower has requested that the Agent release the West Xxxxxx
Drive Property from the lien of the Security Documents but such release would
not be permitted by Section 5.5 because certain Defaults or Events of Default
would arise therefrom or from the new Indebtedness to be incurred by the
Borrower secured by the West Xxxxxx Drive Property; and
WHEREAS, the parties have agreed to amend the Existing Agreement so as to
permit the requested release of the West Xxxxxx Drive Property and to effect
certain other changes in the Existing Agreement.
NOW, THEREFORE, the parties hereby agree that effective upon the
Effective Date hereof (as determined pursuant to Paragraph 18 below) the
Existing Agreement is amended as follows:
1. DECREASE IN TOTAL COMMITMENT. The Total Commitment is hereby decreased
to $80,000,000 and each Lender hereby decreases its Commitment to the amount
shown on the revised Schedule 1.2 attached hereto. As of the Effective Date the
Commitment Percentages of the Lenders shall be adjusted as shown on said revised
Schedule 1.2. The parties shown on such revised Schedule 1.2 as having a zero
Commitment and 0% Commitment Percentage shall no longer be Lenders hereunder
after the Effective Date.
2. DEFINITIONS: Section 1.1 of the Existing Agreement is amended to provide
that the following terms shall have the following meanings and, to the extent
that any of the following terms are already defined in the Existing Agreement,
such definitions shall be deemed to be amended and restated by the following
definitions:
Applicable Margin. As of any date of determination, two and one quarter
percent (2.25%).
Collateral Account. The cash collateral account established pursuant to the
Collateral Account Agreement in which the Agent shall hold funds deposited
pursuant to Section 5.6 or Section 2.9(f).
Collateral Account Agreement. The Collateral Account Agreement dated
October 1, 1998 from the Borrower as pledgor to the Agent as secured party.
Collateral Account Balance. As of any date of determination, the aggregate
amount of all cash and other investments held in the Collateral Account.
EBITDA. The Borrower's earnings before interest, taxes, depreciation and
amortization, as determined on a consolidated basis in accordance with Generally
Accepted Accounting Principles, except that rental income shall be determined
based on contractual lease terms (to the extent that the applicable tenant is
actually paying rent in accordance with such terms).
Permitted Company Subsidiaries. Corporations, limited liability
companies or other entities, each of which is a wholly owned Subsidiary of the
Company and whose only asset is a partnership interest in a partnership or a
membership interest in a limited liability company provided that (i) such
Company Subsidiary's ownership interest in such partnership or limited liability
company does not exceed one percent (1%); (ii) the remaining 99% or more of such
partnership or limited liability company is owned by the Borrower; and (iii)
such partnership or limited liability company owns a Property which is financed
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or to be financed with or through a securitized or securitizable loan structure
and the applicable lender requires that the borrower entity be "bankruptcy
remote" by having a certain percentage of the borrower entity owned by such
corporation and, if such required percentage is less than 1%, the Company
Subsidiary's ownership interest shall not exceed the level required by such
lender.
Pro Forma Principal Amount. (a) With respect to Compliance Certificates
delivered pursuant to Section 7.4(e), the maximum Outstanding Principal Amount
at any time during the applicable fiscal quarter minus the Collateral Account
Balance on the last day of such quarter; (b) with respect to Compliance
Certificates delivered pursuant to Section 2.5, 2.9(b) or Section 11.1, the
Outstanding Principal Amount after giving effect to the requested Loan or the
issuance of the requested Letter of Credit minus the Collateral Account Balance
on the Borrowing Date or the date of issuance of such Letter of Credit; (c) with
respect to Compliance Certificates delivered pursuant to Section 5.5, Section
5.6 or Section 8.4(b), the Outstanding Principal Amount minus the Collateral
Account Balance after giving effect to any proposed sale or transfer including
any payments on the Loans or cancellation of Letters of Credit or any changes in
the Collateral Account Balance to be made in connection therewith.
Security Documents. The Security Deeds, the Assignments of Leases and
Rents, the Pledge Agreements and the UCC-1 financing statements, the Assigned
Note Assignments and all documents securing the Assigned Notes assigned thereby
and the Collateral Account Agreement.
Total Adjusted Assets. The sum of (i) the assets classified as cash or cash
equivalents on the consolidated balance sheet of Borrower prepared in accordance
with Generally Accepted Accounting Principles as of the date of determination
(including any restricted cash other than tenant deposits), plus (ii) the
product of (a) EBITDA for the most recent two fiscal quarters for which
financial statements have been provided pursuant to Section 7.4(b), times (b)
two, divided by (c) 0.0975. EBITDA used to compute Total Adjusted Assets will be
computed on a pro forma basis as though the assets reflected on the consolidated
balance sheet of Borrower prepared in accordance with Generally Accepted
Accounting Principles as of the date of determination had been owned since the
first day of the applicable period of two fiscal quarters and as though all
assets disposed of prior to the date of determination had been disposed of prior
to the first day of the applicable period of two fiscal quarters.
Total Liabilities. The sum of the following (without duplication): (i) all
liabilities of the Borrower and the Related Companies consolidated and
determined in accordance with Generally Accepted Accounting Principles excluding
the dividends payable and accounts payable and accrued expenses line items as
shown on the balance sheet included in the Company's Form 10-K and Form 10-Q
statements filed with the SEC (but not excluding the accrued interest payable
and accrued real estate taxes line items as shown on such balance sheet), (ii)
all Indebtedness of the Borrower and the Related Companies whether or not so
classified, including, without limitation, all outstanding Loans under this
Agreement, and (iii) the balance available for drawing under letters of credit
issued for the account of the Borrower or any of the Related Companies. When
compliance with Section 9.3 is being computed as of a date other than the end of
a fiscal quarter, Total Liabilities will be adjusted to reflect all changes in
the items described in clauses (ii) and (iii) of this definition since the end
of the last fiscal quarter for which financial statements have been provided
pursuant to Section 7.4(b) but it shall be presumed that other types of
liabilities have remained the same since the end of such quarter.
3. AMENDMENTS TO SECTION 2.9. The first sentence of Section 2.9 is hereby
amended and restated to read as follows: "A portion of the Commitments may be
used by the Borrower for the issuance of Letters of Credit by the Agent for the
account of the Borrower subject to the terms and conditions set forth herein,
provided that the aggregate face amount of all Letters of Credit shall not
exceed $50,000,000."
4. AMENDMENT TO SECTION 4.4. Section4.4 is hereby amended by adding the
following sentence to the end thereof: "The Borrower shall make each payment
hereunder not later than 11:00 A.M. (Eastern Time) on the day when due, to the
Agent in immediately available funds without set-off or counterclaim, and any
payments received by the Agent after 11:00 A.M. (Eastern Time) shall be deemed
to be received on the next Business Day."
5. Amendments to Section 5.1. Section 5.1 is hereby amended and restated to
read as follows:
Section 5.1. Collateral Security. The Obligations shall be secured by (i) a
perfected first priority lien and security interest to be held by the Agent
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(subject only to Permitted Liens) in the Mortgaged Properties, pursuant to the
terms of the Security Documents, (ii) a perfected first priority lien and
security interest to be held by the Agent in the Leases and rents pursuant to
the Assignments of Leases and Rents, (iii) a first priority pledge of any
pledged bonds purchased with the proceeds of Drawings under any IRB Letter of
Credit pursuant to the Pledge Agreements, (iv) a first priority pledge of any
monies or investments in the Collateral Account pursuant to the Collateral
Account Agreement and (v) the Guaranties.
6. NEW SECTION 5.6. A new Section 5.6 to read as follows is hereby added
immediately following Section 5.5:
Section 5.6. Collateral Account. If Borrower desires the release of a
Mortgaged Property from the lien of the Security Documents pursuant to Sectio
5.5 but the same would not be permitted because an Event of Default under
Section 9.1 or Section 9.2 would result from such a release, the Borrower shall
deposit in the Collateral Account established pursuant to the Collateral Account
Agreement such amount as may be required to increase the Collateral Account
Balance to a level such that the requested release will not result in a default
under Section 9.1 or Section 9.2. In the event of any subsequent increase in the
Collateral Value of the Mortgaged Properties or decrease in the Outstanding
Principal Amount, the Borrower may request that the Agent release funds from the
Collateral Account and the Agent shall grant such requested release provided
there is then no continuing Default or Event of Default under this Agreement and
the requested release will not result in any Default or Event of Default under
this Agreement and the Borrower delivers to the Agent a pro-forma Compliance
Certificate reasonably satisfactory to the Agent demonstrating that the
requested release will not result in a violation of any of the covenants in
Section 9.1 or Section 9.2.
7. NEW SECTION 7.22. A new Section 7.22 to read as follows is hereby added
immediately following Section 7.21:
Section 7.22. Distributions from Permitted Company Subsidiaries. The
Company will cause each Permitted Company Subsidiary to promptly distribute to
the Company an amount equal to any distributions received by the Permitted
Company Subsidiary from the partnership or limited liability company in which
the Permitted Company Subsidiary is a partner or member. All such amounts
distributed to the Company by any Permitted Company Subsidiary shall be
immediately contributed by the Company to the Borrower as an additional capital
contribution with respect to the Company's general partnership interest in the
Borrower.
8. AMENDMENTS TO SECTION 6.19. Section 6.19 is hereby amended and restated
to read as follows:
Section 6.19. Subsidiaries and Affiliates. The Borrower has no Subsidiaries
except for the Related Companies listed on Schedule 1.3 and does not have an
ownership interest in any entity whose financial statements are not consolidated
with the Borrower's except for the Permitted Joint Ventures listed on Schedule
1.3. The Company is not a partner in any partnership other than Borrower and
certain of the Related Companies listed on Schedule 1.3 which are limited
partnerships in which the Company has a one tenth percent (0.1%) limited
partnership interest, has no Investments in any Person other than the Borrower,
Permitted Company Subsidiaries and such limited partnerships and is not a member
of any limited liability company. The Company owns no material assets other than
its partnership interest in Borrower, its stock in the Permitted Company
Subsidiaries and the limited partnership interests described in this Section
6.19.
9. AMENDMENTS TO SECTION 8.1(f). Section 8.1(f) is hereby amended and
restated to read as follows:
(f) Indebtedness of Borrower, the Company or the Related Companies to the
extent the same does not create a violation of Section 9.3, Section 9.5 or
Section 9.6 provided that the maximum principal amount of Recourse Indebtedness
permitted under this paragraph shall not exceed $60,000,000 in the aggregate at
any time outstanding. Schedule 8.1(f) attached hereto sets forth the existing
Indebtedness (and proposed indebtedness for which Borrower has accepted a
commitment letter) included within such limit on Recourse Indebtedness.
10. AMENDMENTS TO SECTION 8.9(a). Section 8.9(a) is hereby amended and
restated to read as follows:
(a) own any assets, or have any Investments, other than owning its general
partnership interest in the Borrower, its stock or other equity interest in the
Permitted Company Subsidiaries and its limited partnership interests described
in Section 6.19.
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11. AMENDMENTS TO SECTION 9. Section 9.1, Section 9.2 and Section 9.3 are
hereby amended and restated to read as follows:
Section 9.1. Collateral Value. The Borrower will not at any time permit the
Outstanding Principal Amount (minus the Collateral Account Balance) to exceed
the sum of (i) sixty percent (60%) of the total of the Collateral Values of the
Mortgaged Properties other than the Assigned Mortgaged Properties plus (ii)
fifty percent (50%) of the total of the Collateral Values of the Assigned
Mortgaged Properties.
Section 9.2. Minimum Debt Service Coverage. The Borrower will not at any
time permit the Outstanding Principal Amount (minus the Collateral Account
Balance) to exceed an amount such that: (a) the aggregate of the Net Operating
Income for all of the Mortgaged Properties, divided by (b) Pro Forma Debt
Service Charges for the Mortgaged Properties would be less than 1.5 for any
fiscal quarter of Borrower. For purposes of the foregoing, any Real Estate Asset
that became a Mortgaged Property during the applicable fiscal quarter shall be
treated as though it were a Mortgaged Property for the entire quarter and any
Real Estate Asset which is released by Agent during such fiscal quarter shall be
excluded for the entire quarter.
Section 9.3. Total Liabilities to Total Adjusted Assets. The Borrower will
not at any time permit Total Liabilities to exceed sixty percent (60%) of Total
Adjusted Assets.
12. AMENDMENT FEE AND LETTER OF CREDIT FEES. As consideration for this
Amendment the Borrower shall pay to the Agent, upon execution hereof, an
Amendment Fee of $200,000.00. The Agent shall promptly distribute such Amendment
Fee among the Lenders in proportion to their respective Commitment Percentages
applicable after the Effective Date of this Amendment. The Borrower shall delay
the payment of the Letter of Credit Fees on the outstanding Letters of Credit
for the last fiscal quarter of 1998 from October 1, 1998 until the Effective
Date in order to permit the Agent to appropriately compute and allocate among
the Lenders the total Letter of Credit Fees for such fiscal quarter, taking into
account the changes in the Commitment Percentages and the Applicable Margin on
the Effective Date.
13. AMENDMENT TO EXHIBIT C. Exhibit C is hereby replaced by the Exhibit C
attached hereto.
14. UPDATED SCHEDULES TO CREDIT AGREEMENT. The following Schedules to the
Credit Agreement are hereby updated, supplemented or replaced as follows:
(a) Schedule 1.1 is replaced by Schedule 1.1 attached hereto.
(b) Schedule 1.2 is replaced by Schedule 1.2 attached hereto.
(c) Schedule 1.3 is replaced by Schedule 1.3 attached hereto.
(d) Schedule 1.4 is replaced by Schedule 1.4 attached hereto.
(e) Schedule 8.1(f) is replaced by Schedule 8.1(f) attached hereto.
15. REPRESENTATIONS AND WARRANTIES. The Borrower and the Company represent
and warrant that each of the representations and warranties contained in Section
6 is true, correct and complete in all material respects as of the date hereof
to the same extent as though made on such date and that no Default or Event of
Default has occurred and is continuing on the date hereof.
16. EFFECTIVENESS OF LOAN DOCUMENTS. The Borrower hereby
confirms that each of the Security Documents shall continue to secure the
payment and performance of all of the Obligations under the Existing Agreement
as amended hereby and the Borrower's obligations under the Security Documents
shall continue to be valid and enforceable and shall not be impaired or limited
by the execution or effectiveness of this Amendment. Every reference contained
in the Loan Documents to the Credit Agreement shall mean and be a reference to
the Existing Agreement as amended hereby and as the Credit Agreement may be
further amended. Except as specifically amended by this Amendment, the Existing
Agreement and each of the Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed.
17. MISCELLANEOUS. This Amendment shall be governed by, interpreted and
construed in accordance with all of the same provisions applicable under the
Existing Agreement including, without limitation, all definitions set forth in
Section 1.1, the rules of interpretation set forth in Section 1.2, the
provisions relating to governing law set forth in Section 20, the provisions
relating to counterparts in Section 22 and the provision relating to
severability in Section 26.
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18. CONDITIONS TO EFFECTIVENESS. This Fifth Amendment to Credit Agreement
shall become effective on the earliest date (the "Effective Date") that each of
the following conditions precedent have been satisfied:
(a) Documents. Each of (i) this Fifth Amendment to Credit Agreement, (ii)
the Collateral Account Agreement, (iii) UCC Financing Statements with respect to
the Collateral Account, (iv) the Fourth Amendment to the Guaranty, and (v)
replacement Loan Notes for the Lenders reflecting the amount of their
Commitments as reduced pursuant hereto shall have been duly executed and
delivered by the respective parties thereto, shall be in full force and effect
and shall be in form and substance satisfactory to each of the Lenders.
(b) Certified Copies of Amendments of Organization Documents. The Agent
shall have received a Certificate of the Company to which there shall be
attached complete copies of any amendments to the Borrower's Limited Partnership
Agreement, Borrower's Certificate of Limited Partnership the Company's
Declaration of Trust or the Company's Bylaws which have become effective since
the complete certified copies of such documents which were previously delivered
to the Agent.
(c) Resolutions. All action on the part of the Borrower and each Guarantor
necessary for the valid execution, delivery and performance by the Borrower and
each Guarantor of this Amendment and the other Loan Documents to which it is or
is to become a party shall have been duly and effectively taken, and evidence
thereof satisfactory to the Agent shall have been provided to the Agent. The
Agent shall have received from the Company true copies of the resolutions
adopted by its Board of Directors authorizing the transactions described herein,
certified by its secretary to be true and complete and in effect on the
Effective Date.
(d) Opinions of Counsel. Each of the Lenders and the Agent shall have
received favorable opinions addressed to the Lenders and the Agent and dated as
of the Effective Date, substantially in the same form as, or with appropriate
provisions incorporating by reference, the opinions from Borrower's counsel
previously delivered to the Lenders and the Agent, copies of which are attached
as Exhibit E to the Credit Agreement and as to the validity and perfection of
the pledge pursuant to the Collateral Account Agreement. Such opinion may rely
on opinions from other law firms approved by the Agent as to matters of law
applicable in the various states.
(e) Receipt of Funds for Repayment of Loans and Initial Collateral Account
Balance. The Agent shall have received funds in the aggregate amount necessary
to (i) repay in full all of the Loans outstanding hereunder as of the opening of
business on the Effective Date, (ii) fund the initial Collateral Account Balance
required by Section 5.6 and (iii) pay the fees required by Paragraph 10 of this
Amendment.
In the event that the Effective Date has not occurred on or before October
15, 1998, then this instrument shall be void and the Existing Agreement shall
remain in effect as though this instrument had never been executed.
19. RELEASE OF WEST XXXXXX DRIVE PROPERTY. Each of the Lenders hereby
consents, pursuant to Section 5.5, to the release of the West Xxxxxx Drive
Property from the lien of the Security Documents on the Effective Date hereof
and authorizes the Agent to execute and deliver a Release of Mortgage, UCC
financing statement terminations and other documents reasonably requested to
effect such release and a Fourth Amendment of the Guaranty terminating all
further obligations of 77 West Xxxxxx Limited Partnership as a Guarantor
thereunder.
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IN WITNESS WHEREOF, the undersigned have duly executed this Amendment as a
sealed instrument as of the date first set forth above.
PRIME GROUP REALTY TRUST
By: /s/ W. Xxxxxxx Xxxxxx
------------------------------------
W. Xxxxxxx Xxxxxx
------------------------------------
Its: Executive Vice President
-------------------------------
PRIME GROUP REALTY, L.P.
By: PRIME GROUP REALTY TRUST,
its managing general partner
By: /s/ W. Xxxxxxx Xxxxxx
------------------------------------
W. Xxxxxxx Xxxxxx
------------------------------------
Its: Executive Vice President
-------------------------------
BANKBOSTON, N.A.
By: /s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx
------------------------------------
Its: Vice President
-------------------------------
PRUDENTIAL SECURITIES CREDIT
CORPORATION
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Xxxx X. Xxxxxx
------------------------------------
Its:
-------------------------------
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XXXXXX BANK, N.A.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Xxxxx X. Xxxxx
------------------------------------
Its: Vice President
-------------------------------
SOCIETE GENERALE
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
------------------------------------
Its: Director
-------------------------------
COMMERZBANK AG
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx
------------------------------------
Its: Vice President
-------------------------------
By: /s/ Xxxxxxxxx Xxxxx
------------------------------------
Xxxxxxxxx Xxxxx
------------------------------------
Its: Assistant Treasurer
-------------------------------
BANQUE NATIONALE DE PARIS
By: /s/ Xxxxxx Xxxxxx du Xxxxxx
------------------------------------
Xxxxxx Xxxxxx du Bocage
------------------------------------
Its: Executive Vice President
and General Manager
-------------------------------
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SCHEDULE 1
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Lenders; Domestic and Eurodollar Lending Offices
------------------------------------------------
Domestic and Eurodollar Lending Offices: Notice Address:
---------------------------------------- ---------------
BankBoston, N.A. BankBoston, N.A.
000 Xxxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
(Domestic and Eurodollar) Attn: Real Estate Department
With a copy to:
BankBoston, N.A.
000 Xxxxxxxxx Xxxxxx Xxxxx, X.X.
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxx X. Xxxxx, Vice President
Fax: (000)000-0000 or 000-0000
Prudential Securities Credit Corporation Prudential Securities Credit
Xxx Xxx Xxxx Xxxxx Xxxxxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000 One New York Plaza
(Domestic and Eurodollar) Xxx Xxxx, XX 00000
Attn: Xxxxxx X'Xxxxxx, Director
Phone: (000) 000-0000
Fax: (000) 000-0000 or 2253
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SCHEDULE 1.1
Mortgaged Properties Fee Owner
-------------------- ---------
1. Hilton Parking Garage, Knoxville, TN Triad Parking Company, Ltd.
2. SunTrust Bank Bldg., 000 0xx Xxx., X.,
Xxxxxxxxx, XX Nashville Office Building I, Ltd.
3. The Weston, 0000 Xxxxxxxx Xxxx,
Xxxxxxxxx, XX Old Kingston Properties, Ltd.
4. Xxx Xxxxxx Xxxxxx, 000 Xxxxxx Xx.,
Xxxxxxxxx, XX Professional Plaza, Ltd.
5. Xxx Xxxxxx Xxxxxx, 000 Xxx Xx.,
Xxxxxxxxx, XX Centre Square II, Ltd.
Assigned Mortgaged Properties Owner of Assigned Note
----------------------------- ----------------------
None
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SCHEDULE 1.2
Commitments
-----------
Committment Committment
prior to prior to Commitment % Commitment
Effective Effective prior to % on and after
Lender Date Date Effective Date Effective Date
---------------------- ------------ ------------ -------------- --------------
BankBoston, N.A. $ 52,500,000 $ 40,000,000 27.6315789474% 50%
Prudential Securities $ 52,500,000 $ 40,000,000 27.6315789474% 50%
Credit Corporation
Societe Generale $ 25,000,000 $ 0 13.1578947368% 0%
Commerzbank, AG $ 20,000,000 $ 0 10.5263157895% 0%
Banque Nationale de $ 20,000,000 $ 0 10.5263157895% 0%
Xxxxx
Xxxxxx Bank, N.A. $ 20,000,000 $ 0 10.5263157895% 0%
---------------------- ------------ ------------ -------------- --------------
Total $190,000,000 $ 80,000,000 100% 100%
---------------------- ------------ ------------ -------------- --------------
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SCHEDULE 1.4
Letters of Credit
-----------------
Beneficiary Project Face Amount
------------------------- ----------------------------- -------------------
First Tennessee Bank N.A. Nashville Office Building
I, Ltd. $ 4,915,069.00
First Tennessee Bank N.A. Old Kingston Properties, Ltd. $ 3,583,905.00
First Tennessee Bank N.A. Professional Plaza, Ltd. $ 9,215,754.00
First Tennessee Bank N.A. Centre Square II, Ltd. $ 9,215,754.00
------------------------- ----------------------------- --------------------
TOTAL $ 26,930,482.00
82.00
------------------------- ----------------------------- --------------------
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SCHEDULE 8.1(f)
Recourse Indebtedness
---------------------
Lender Total Credit Amount Recourse Indebtedness
------------------------ ------------------- ---------------------
LaSalle National Bank $ 15,000,000.00 $ 15,000,000.00
Bank One, Illinois $ 48,809,587.00 $ 10,000,000.00
CIGNA Investments, Inc. $ 75,000,000.00 $ 6,215,110.00
CIBC Xxxxxxxxxxx $ 14,600,000.00 $ 7,300,000.00
LaSalle National Bank $ 13,500,000.00 $ 3,500,000.00
------------------------ ------------------- ---------------------
Total $ 42,015,110.00
------------------------ ------------------- ---------------------
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Exhibit C
---------
Prime Group Realty, L.P.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Compliance Certificate under
Credit Agreement dated as of November 17, 1997, as amended
The undersigned, a Responsible Officer of Prime Group Realty Trust, general
partner of Prime Group Realty, L.P. (the "Borrower"), hereby certifies on behalf
of the Borrower as of the date hereof the following:
1. NO DEFAULTS. I have read a copy of the Credit Agreement dated as of
November 17, 1997 as amended (the "Credit Agreement") among the Borrower,
BankBoston, N.A., the other lending institutions party thereto, and BankBoston,
N.A., as Agent. Terms used herein and not otherwise defined herein shall have
the meanings set forth in Section 1.1 of the Credit Agreement. No Default is
continuing in the performance or observance of any of the covenants, terms or
provisions of the Credit Agreement or any of the other Loan Documents. Without
limiting the foregoing, the Borrower has not taken any actions which are
prohibited by the negative covenants set forth in Section 8 of the Credit
Agreement. Attached hereto as Appendix I are all relevant calculations needed to
determine whether the Borrower is in compliance with Section 9, Section 8.3(e),
(g) and (h) and Section 8.7 of the Credit Agreement as of the end of the most
recently completed fiscal quarter (except that in the case of Compliance
Certificates delivered pursuant to Section 2.5, Section 2.9(b), Section 2.9(d)
Section 11.1, Section 5.5 or Section 8.4(b), the calculations determining
compliance with Section 9.1, Section 9.2 and Section 9.3 are computed on a
pro-forma basis as of the date of such certificate and after giving effect to
the proposed transaction, if any, with respect to which the Compliance
Certificate is being delivered), and is in compliance with Section 8.7 of the
Credit Agreement for the most recently completed fiscal year.
2. NO MATERIAL CHANGES, ETC. Except as disclosed on Appendix II hereto,
since the [date of most recent financial statements furnished to the Agent and
the Lenders], there have occurred no materially adverse changes in the financial
condition or business of the Borrower as shown on or reflected in the balance
sheet of the Borrower as at such date other than (a) changes in the ordinary
course of business that have not had any materially adverse effect either
individually or in the aggregate on the business or financial condition of the
Borrower and (b) changes resulting from the making of the Loans and the
transactions contemplated by the Credit Agreement.
3. NO MATERIALLY ADVERSE CONTRACTS, ETC. Neither the Borrower nor the
Company is subject to any charter, corporate, trust, partnership or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected, in the reasonable judgment of the Company's officers, in the future to
have a Materially Adverse Effect. Neither the Borrower nor the Company is a
party to any contract or agreement that has or is expected, in the reasonable
judgment of the Company's officers, to have a Materially Adverse Effect.
Prime Group Realty, L.P.
By: Prime Group Realty Trust,
Its managing general partner
By:_______________________________
_______________________________
Its:___________________________
Date:
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Appendix I
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FINANCIAL COVENANT CALCULATIONS
-------------------------------
Note: Unless otherwise indicated all calculations are as of ____________________
or for the fiscal quarter ending on such date (the "Fiscal Quarter") [except
that paragraphs 1, 2 and 3 have been computed on a pro-forma basis as of
___________________ and including the effect of the following proposed
transaction:_____________________.]. References herein to the "last quarter"
mean the Fiscal Quarter and references to the "prior quarter" mean the fiscal
quarter immediately preceding the Fiscal Quarter.
1. Appraisal Value [Section 9.1]
(a) Principal of Outstanding Loans $____________
(b) Aggregate Face Amount of Outstanding Letters of Credit $____________
(c) Collateral Account Balance $____________
(d) Pro Forma Principal Amount [a + b - c] $____________
(e) Collateral Value of Mortgaged $____________
Properties (see attached Schedule
of Collateral Values)
(f) 60% of line (e) $____________
(g) Collateral Value of Assigned Mortgaged $____________
Properties (see attached Schedule
of Collateral Values)
(h) 50% of line (g) $____________
(i) Sum of lines (f) and (h) $____________
COVENANT: (d) should be less than (i)
2. Minimum Debt Service Coverage [Section 9.2]
(a) Net Operating Income for all of the Mortgaged
Properties: $____________
(b) Pro Forma Debt Service Charges for Mortgaged
Properties based on three monthly payments of
mortgage style amortization of the Pro Forma
Principal Amount of $______________ amortized
over 25 years at _______% per annum, being the
greater of the current average interest rate on
the Loans or 1.75% above the current ten year
U.S. Treasury xxxx yield: $____________
CALCULATIONS: (a)/(b) = _________ which is not less than 1.5
3. Total Liabilities to Total Adjusted Assets [Section 9.3]
(a) Total liabilities from Fiscal Quarter balance sheet: $____________
(b) Accounts payable and accrued expenses $____________
(c) Dividends payable $____________
(d) Total Liabilities at end of Fiscal Quarter [a-b-c] $____________
(e) Change in Indebtedness and letters of credit
outstanding since end of Fiscal Quarter $____________
(f) Total Liabilities [d+or-e] $____________
(g) Cash and cash equivalents: $____________
(h) Income before minority interest and extraordinary
items last quarter $____________
(i) Interest Expense last quarter $____________
(j) Depreciation and amortization last quarter $____________
(k) Deferred rent receivable for prior quarter
net of effect of last quarter property sales $____________
(l) Deferred rent receivable for last quarter $____________
(m) EBITDA last quarter per operating statement[h+i+j+k-l]: $____________
(n) Proforma adjustments to last quarter EBITDA-see schedule $____________
(o) Proforma adjusted last quarter EBITDA[k+l] $____________
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(p) Income before minority interest and extraordinary items
prior quarter $____________
(q) Interest Expense prior quarter $____________
(r) Depreciation and amortization prior quarter $____________
(s) Deferred rent receivable for quarter before prior
quarter net of effect of prior quarter property sales $____________
(t) Deferred rent receivable for prior quarter $____________
(u) EBITDA prior quarter per operating statement [p+q+r+s-t]:$____________
(v) Proforma adjustments to prior quarter EBITDA-see
schedule $____________
(w) Proforma adjusted prior quarter EBITDA[u+v] $____________
(x) Annualized EBITDA [(o) + (w) times 2]: $____________
(y) Line (x) divided by 0.0975: $____________
(z) Total Adjusted Assets [(g) + (y)]: $____________
CALCULATIONS: (f)/(z) = ____________ which is less than 60%
4. Minimum Tangible Net Worth [Section 9.4]
(a) Total Assets (GAAP assets plus depreciation
on Real Estate Assets) $____________
(b) Total Liabilities (end of Fiscal Quarter) $____________
(c) Intangibles $____________
(d) Tangible Net Worth [(a)-(b)-(c)] $____________
(e) Net Offering Proceeds $____________
(f) $350,000,000 plus .75 times (e) $____________
COVENANT: Line (d) should exceed line (f)
5. Total Operating Cash Flow to Interest Expense [Section 9.5]
(a) EBITDA (for Fiscal Quarter) $____________
(b) Gross leasable area of all Real Estate Assets $____________
(c) Reserve Amount ((b) times $0.25 divided by 4) $____________
(d) Total Operating Cash Flow [(a) - (c)] $____________
(e) Interest Expense (includes capitalized interest) $____________
CALCULATIONS: (d)/(e) = _____ which is not less than 2.0
6. EBITDA to Fixed Charges [Section 9.6]
(a) EBITDA (for Fiscal Quarter) $____________
(b) Interest Expense (same as line 5(e)) $____________
(c) Principal installments and current maturities $____________
not refinanced
(d) Preferred dividends and distributions $____________
(e) Fixed Charges (sum of lines (b), (c), and (d)) $____________
CALCULATIONS: (a)/(e) = ____________which is not less than 1.75
7. Permitted Investments [Section 8.3(e), (g) and (h)]
Attached hereto is a Schedule of all (a) Investments
in mortgages and notes receivable, (b)
Permitted Developments in process as of ________________
and (c) Investments in undeveloped land.
(a) Investments in mortgages and notes receivable
(excluding Mortgages the acquisition of which
has been expressly approved by the Requisite Lenders) $____________
(b) Investments in Permitted Developments $____________
(c) Total Adjusted Assets (end of Fiscal Quarter) $____________
(d) 20% of Total Adjusted Assets $____________
(e) Investments in undeveloped land $____________
(f) 10% of Total Adjusted Assets $____________
COVENANT:
Line (a) should not exceed $25,000,000
Line (b) should not exceed line (d)
Line (e) should not exceed line (f)
8. Distributions [Section 8.7]
(a) Total Distributions during most recently ended $____________
fiscal year
(b) Funds From Operations for said fiscal year $____________
(c) Total Distributions during most recently ended
fiscal quarter $____________
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(d) Funds from Operations for fiscal quarter referenced
in (c) $____________
(e) Total Distributions during the fiscal quarter preceding
the fiscal quarter referenced in (c) $____________
(f) Funds from Operations during fiscal quarter referenced
in (e) $____________
(g) Total Distributions during the fiscal quarter preceding
the fiscal quarter referenced in (e) $____________
(h) Funds from Operations during fiscal quarter referenced
in (g) $____________
CALCULATIONS: (a)/(b) = _____% which is less than 90%
(c)/(d) = _____%
(e)/(f) = _____%
(g)/(h) = _____%
At least one of the three percentages immediately above is less than 100%
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SCHEDULE OF COLLATERAL VALUES
Borrowing
Mortgaged NOI NOI Reserve Cap Base Appraised Collateral
Property Last Q Previous Q Amount Rate Value Value Value
--------- ------ ---------- ------- ---- --------- --------- ----------
Totals:
-------
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SCHEDULE OF
PERMITTED INVESTMENTS
I. Mortgages:
----------
Location of Security Maker of Note Cost Outstanding Balance
-------------------- ------------- ---- -------------------
II. Developments:
-------------
Scheduled
Project Location Size (sq. ft.) Total Project Cost Start Date Completion Date
---------------- -------------- ------------------ ---------- ---------------
III. Undeveloped Land:
-----------------
Land Location Size (acres) Cost
------------- ------------ ----
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SCHEDULE OF PROFORMA ADJUSTMENTS TO EBITDA PURSUANT TO DEFINITION
OF TOTAL ADJUSTED ASSETS
A. Adjustments to last quarter EBITDA for acquisitions made during last quarter
[and since the end of the last quarter]
Operating
and
RE Tax EBITDA
Revenue exp. included Adjustment
(full Full property on to
Acquisition Date quarter quarter) EBITDA financials EBITDA
----------- ---- ------- --------- -------- ---------- ----------
B. Adjustments to last quarter EBITDA for dispositions made during last quarter
[and since the end of the last quarter]
Disposition Date EBITDA from property included in last quarter financials
----------- ---- --------------------------------------------------------
Total additions to last quarter EBITDA for acquisitions $____________
Total subtractions from last quarter EBITDA for dispositions $____________
Net proforma adjustments to last quarter EBITDA(enter on line 3k) $____________
C. Adjustments to prior quarter EBITDA for acquisitions made during prior
quarter and during last quarter [and since the end of the last quarter]
Operating
and
RE Tax EBITDA
Revenue exp. included Adjustment
(full Full property on to
Acquisition Date quarter quarter) EBITDA financials EBITDA
----------- ---- ------- --------- -------- ---------- ----------
D. Adjustments to prior quarter EBITDA for dispositions made during prior
quarter and during last quarter [and since the end of the last quarter]
Disposition Date EBITDA from property included in last quarter financials
----------- ---- --------------------------------------------------------
Total additions to prior quarter EBITDA for acquisitions $____________
Total subtractions from prior quarter EBITDA for dispositions $____________
Net proforma adjustments to prior quarter EBITDA(enter on line 3q)$____________
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APPENDIX II
-----------
MATERIAL CHANGES
----------------
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