EXHIBIT 10.18
OMNIBUS FIRST MODIFICATION TO MEZZANINE LOAN DOCUMENTS
THIS FIRST MODIFICATION TO MEZZANINE LOAN DOCUMENTS (this "Agreement") is
made and dated as of March 12, 2001 by and among PRIME/XXXXXXX DEVELOPMENT
COMPANY, L.L.C., a Delaware limited liability company ("Borrower"), BANKERS
TRUST COMPANY ("Agent"), a New York banking corporation, as a lender and as
agent for VORNADO REALTY TRUST, a Maryland real estate investment trust, MMBC
DEBT HOLDINGS I, LLC, a Massachusetts limited liability company, NEW YORK LIFE
INSURANCE COMPANY, a mutual insurance company organized under the laws of New
York State, and the other lenders from time to time party to the Loan 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 Loan Agreement.
W I T N E S S E T H:
WHEREAS, Agent, the Lenders and Borrower are party to that certain
Mezzanine Construction Loan Agreement, dated as of January 5, 2001 (the "Loan
Agreement");
WHEREAS, Property Owner and Bayerische Hypo- Und Vereinsbank AG, New York
Branch (the "Senior Agent") are party to that certain Credit Agreement, dated as
of January 5, 2001, as the same has been amended pursuant to that certain
Omnibus First Modification to Senior Loan Documents (the "First Senior
Modification") of even date herewith (as so amended, the "Senior 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 the Property Owner, 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 the Property Owner 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 the Property Owner 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, the
Property Owner, 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 Property Owner, Borrower, Senior Agent,
Agent, PGLP, Xxxxx and J. Xxxx Xxxxxxx Development Company ("Xxxxxxx"), as of
February 21, 2001;
WHEREAS, in furtherance of the agreements made in the Consent Agreement, on
the date hereof, Agent, Borrower, Senior Agent, Property Owner, PGLP, Xxxxx and
Xxxxxxx are entering into that certain Reserve Account Agreement (the "Reserve
Account Agreement") of even date hereof relating to accounts established, in
part, to protect Agent's interest in the Project (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 Property Owner, 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 the Senior 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, and shall cause the Property Owner to, 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 irrevocably 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 Senior 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, and shall not permit the Property
Owner to, 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 Senior Agent.
Section 2. Waiver.
The Lenders hereby waive any default or Event of Default arising under the
Loan Agreement or the other Loan Documents relating directly to the Property
Owner's assumption of the Xxxxxx Reimbursement Obligations.
Section 3. Amendments to the 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 18th line thereof, after the semicolon and before the
phrase "and (f)":
"(f) without limiting Guarantor's obligations under the Interest and
Operating Costs Guaranty (but without duplication of payment
obligations), (A) payment in full of all Xxxxxx Reimbursement
Obligations (as such term is defined in that certain Omnibus First
Modification to Mezzanine Loan Documents, dated as of March 12, 2001,
by and among Agent, Borrower, Property Owner and Guarantor (the
"Omnibus Modification")), in the event and only in the event that
Citadel Investment Group, L.L.C. terminates the Citadel Lease (as
defined in the Omnibus Modification) 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 18th and 22nd lines 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 under the Completion
Guaranty (but without duplication of payment obligations), from and
after an Event of Default, Xxxxxx Reimbursement Obligations (as
defined in that certain Omnibus First Modification to Loan Documents,
dated as of March 12, 2001, by and among Agent, Borrower, Property
Owner 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 that certain Reserve Account Agreement, dated as of March
12, 2001, by and among Agent, Borrower, Property Owner, Guarantor,
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 18th lines 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 30th 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 constitute an Approved Lease under the Loan
Agreement; provided, however, that the NRSF attributable to the Citadel Lease as
an Approved Lease shall be 44,658 for all purposes under the Loan Agreement
(including, without limitation, with respect to the Leasing Hurdle Date or the
calculation of the Applicable Interest Rate) until (i) a Full Release (as
defined in the Reserve Account Agreement) shall have occurred, at which time the
NRSF attributable to the Citadel Lease as an Approved Lease shall increase to
206,146, (ii) a Partial Release (as defined in the Reserve Account Agreement)
shall have occurred, at which time the NRSF attributable to the Citadel Lease as
an Approved Lease shall increase proportionately by the amount of the Xxxxxx
Space subject to the Partial Release or (iii) the execution of an Approved
Sublease, at which time, the NRSF attributable to the Citadel Lease as an
Approved Lease shall increase proportionately by the amount of Xxxxxx Space
demised by the applicable Approved Sublease.
(c) Notwithstanding the foregoing, if any Approved Sublease is actually
terminated by any subtenant (not due to any default of the sublandlord
thereunder), rejected in the bankruptcy proceeding of any subtenant, or
terminated by the sublandlord due to the default of any subtenant, the NRSF
attributable to the Citadel Lease as an Approved Lease shall be reduced by the
amount of the square footage of the rejected or terminated Approved Sublease. If
such a reduction in the NRSF attributable to the Citadel Lease as an Approved
Lease would cause the Borrower to fail to satisfy the leasing hurdle conditions
set forth in the definition of "Leasing Hurdle Date", then with respect to
Advances made after such failure, the IRR Amount and the Make-Whole Amount shall
be computed at the Applicable Pre-Hurdle Percentage until the applicable leasing
hurdle conditions have been satisfied once again.
Section 5. Non-Recourse.
The parties hereto intend that, with respect to Prime Group Realty Trust,
Borrower and Property Owner, 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 6. Consent of the Lenders.
Each of the Lenders, by their execution of this Agreement, hereby confirms
that they have consented to and approved, to the extent required under the Loan
Documents, the terms and conditions of this Agreement, the Reserve Account
Agreement, the First Senior Modification and that certain Acknowledgement of
Compliance with Consent and Agreement dated as of the date hereof among Agent,
Borrower, Senior Lender, Property Owner, Guarantor, Xxxxx and Xxxxxxx.
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.
XXXXXXX DEVELOPMENT COMPANY, L.L.C.
By: Xxxxx Xxxxxxx L.L.C., its managing member
By: [s] J. Xxxx Xxxxxxx
J. Xxxx Xxxxxxx
Member
PRIME GROUP REALTY, L.P.
By: Prime Group Realty Trust,
its managing general partner
By: [s] Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
Co-President
BANKERS TRUST COMPANY
By: [s] Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Director
VORNADO REALTY TRUST
By: [s] Xxxxxxx Xxxxxxxxxx
Xxxxxxx Xxxxxxxxxx
President
NEW YORK LIFE INSURANCE COMPANY
By: [s] Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxx
Real Estate Vice President
MMBC DEBT HOLDINGS I, LLC
By: MassMutual/Boston Capital Mezzanine
Partners,L.P., its sole member
By: Boston Mass LLC,
its general partner
By: MassMutual Mortgage Finance,
LLC, its co-manager
By: [s] Xxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Executive Director
By: Boston Capital Institutional
Advisors LLC, its co-manager
By: [s] Xxxxxx Xxxxx
Xxxxxx Xxxxx
Managing Member
