EXHIBIT NO. 99.7
EXISTING TENANT IMPROVEMENTS AND
CITADEL CASH ESCROW AGREEMENT
ESCROW NO. 01033123
DATE: October 8, 2003
1. Capitalized terms used herein but not otherwise defined shall have the
meaning ascribed to such terms in the Contribution Agreement dated as of August
4, 2003, as amended by that certain First Amendment to Contribution Agreement,
dated as of August 18, 2003, as amended by that certain Second Amendment to
Contribution Agreement, dated as of August 29, 2003, and as further amended by
that certain Third Amendment to Contribution Agreement, dated as of October 8,
2003 (as amended, the "Contribution Agreement"), between PGRLP and ▇▇▇▇ pursuant
to which this escrow agreement is executed.
2. Prime Group Realty, L.P. ("PGRLP") is hereby depositing Nineteen Million
Eight Hundred Seventy Two Thousand Seven Hundred Forty Six and No/100 Dollars
($19,872,746) with Near North Title Insurance Company ("Escrow Agent"), which
amount shall be used to fund: (a) the payment of completion costs for the core
and shell (which PGRLP and UST (defined below) acknowledge were $5,670,959 as of
the date hereof of Bank One Center, located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Project"), and (b) to fund the costs related to tenant
improvements and allowances with respect to the Existing Leases at the Project
(the "Tenant Improvement Deposit"), which PGRLP and UST acknowledge were
$14,201,787 as of the date hereof.
3. Pursuant to Section 12.4 of the Contribution Agreement, PGRLP is also hereby
depositing Fourteen Million Six Hundred Forty Five Thousand and No/100 Dollars
($14,645,000) with Escrow Agent, which amount shall be used to fund the Landlord
Reimbursement Obligations under the Citadel Lease, and related costs and
expenses as set forth on Exhibit B attached hereto, at the Project (the "Citadel
Deposit").
4. Pursuant to Section 12.4 of the Contribution Agreement, PGRLP is also hereby
depositing Thirty Five Thousand Nine Hundred Twelve and No/100 Dollars ($35,912)
with Escrow Agent, which amount shall be used to fund the payment of any
outstanding brokerage commissions with respect to the Existing Leases at the
Project (the "Brokerage Deposit"), subject to reduction for amounts funded after
such date.
5. The Tenant Improvement Deposit, the Citadel Deposit, and the Brokerage
Deposit (collectively, the "Deposit Accounts" and individually, a "Deposit
Account") shall be deposited into separate accounts, pursuant to which PGRLP
shall have the right from time to time to withdraw the deposited funds in order
to pay the above-mentioned obligations, or direct Escrow Agent to pay the same,
pursuant to the instructions below.
A. PGRLP shall submit to Escrow Agent a written request for
disbursement, with a copy of the same to UST XI Dearborn, Ltd. ("UST") (the
"Disbursement Request"). The Disbursement Request shall include PGRLP's
certification that a copy of the same has been delivered to UST, together
with reasonably detailed back-up information supporting the request,
including, in the event that funds are to be paid directly to PGRLP,
evidence that such funds represent reimbursement to PGRLP for funds paid
directly to a third party by PGRLP or an affiliate of PGRLP.
B. The Disbursement Request shall specify (i) the reasons for the
request, (ii) whether the funds should be paid to PGRLP or at PGRLP's
direction, to a third party, (iii) the Deposit Account from which the funds
are to be withdrawn, and (iv) PGRLP's certification that the balance in
such Deposit Account, after payment of the Disbursement Request, will be
sufficient to pay the remaining costs and liabilities under the
Contribution Agreement which are covered by such Deposit Account.
C. Within five (5) business days after Escrow Agent receives the
Disbursement Request, Escrow Agent shall proceed with payment of the
requested funds, pursuant to the terms of the Disbursement Request,
provided Escrowee has received the appropriate documentation to permit
it to provide coverage under existing or future loan policies over any
lien rights associated with such payments, unless prior to the end of
such five (5) business day period Escrow Agent has received an
objection in writing to such payment from UST ("UST Objection Notice"),
which such Notice shall include: (i) UST's certification that a copy
of the same has been delivered to PGRLP; (ii) specific reasons for such
objection and (iii) the amount of the Disbursement Request to which an
objection is being raised. In the event Escrow Agent receives a UST
Objection Notice, Escrow Agent shall not pay the requested funds or
applicable portion thereof described in the UST Objection Notice,
unless it receives a joint written notice from both UST and PGRLP with
contrary instructions.
6. In the event that Dearborn Center or UST provides a sworn certification
to Escrow Agent (with a written copy delivered to PGRLP), certifying that: (a)
Dearborn Center has delivered a copy of such certification to PGRLP; and (b)
PGRLP is in default under that certain Indemnity Agreement dated October 8,
2003, after all applicable notice and cure periods, and that Dearborn Center has
satisfied said obligations (said certification shall also specify the nature of
the alleged default, the amount of the funds requested and the particular
Deposit Account), then within ten (10) business days after receiving said
certificate, Escrow Agent shall disburse the requested funds to Dearborn Center
unless, prior to the end of such ten (10) business day period Escrow Agent has
received an objection in writing to such payment request from PGRLP ("PGRLP
Objection Notice"), which such Notice will include: (i) PGRLP's certification
that a copy of the same has been delivered to UST, (ii) specific reasons for
such objection and (iii) the amount of UST's request to which an objection is
being raised. In the event Escrow Agent receives a PGRLP Objection Notice,
Escrow Agent shall not pay the requested funds or applicable portion thereof
described in the PGRLP Objection Notice unless it receives a joint written
notice from both UST and PGRLP with contrary instructions.
7. In the event that any funds remain in any of the Deposit Accounts after
all of PGRLP's obligations are completed with respect to the matters covered by
such Deposit Account, Escrow Agent shall disburse to PGRLP the remainder of all
funds in the particular Deposit Account within ten (10) business days after
receipt of a sworn certificate from PGRLP ("Final Disbursement Request") which
certificate shall contain PGRLP's certification that a copy of the same has been
delivered to UST, with a notice of the same sent to UST, unless prior to the end
of such ten (10) business day period Escrow Agent has received an objection in
writing to such disbursement from UST ("Final Disbursement Objection Notice"),
which Final Disbursement Objection Notice shall include: (i) UST's certification
that a copy of same has been delivered to PGRLP, (ii) specific reasons for such
objection and (iii) the amount of the Final Disbursement Request to which an
objection is being raised. If Escrow Agent receives a Final Disbursement
Objection Notice, Escrow Agent shall not disburse the requested funds or
applicable portion thereof described in the Final Disbursement Objection Notice
unless it receives a joint written direction from both UST and PGRLP with
contrary instructions.
8. Except as provided in Section 5C, 6 and 7 above, Escrow Agent is hereby
expressly authorized to disregard, in its sole discretion, any and all notices
or warnings given by any of the parties hereto, or by any other person or
corporation, but the said Escrow Agent is hereby expressly authorized to regard
and to comply with and obey any and all orders, judgments or decrees entered or
issued by any court with or without jurisdiction, and in case the said Escrow
Agent obeys or complies with any such order, judgment or decree of any court it
shall not be liable to any of the parties hereto or any other person, firm or
corporation by reason of such compliance, notwithstanding any such order,
judgment or decree being entered without jurisdiction or being subsequently
reversed, modified, annulled, set aside or vacated. In case of any suit or
proceeding regarding this escrow, to which said Escrow Agent is or may at any
time become a party, PGRLP and UST will each pay one-half to said Escrow Agent
upon demand of any and all costs, fees and expenses (including attorneys' fees,
whether such attorneys shall be regularly retained or specifically employed)
which it may incur or become liable for on account thereof.
9. Subject to the General Provisions set forth in Exhibit A attached to
this Escrow Agreement and specifically incorporated herein by reference, in no
case shall the above mentioned deposits be surrendered except pursuant to the
terms of this Agreement or in obedience of the process or order of court as
aforesaid.
10. Deposits made pursuant to these instructions may be invested on behalf
of PGRLP and at PGRLP's direction, provided, that any direction to Escrow Agent
for such investment shall be expressed in writing, and also provided that Escrow
Agent is in receipt of the taxpayer's identification number and investment forms
as required. Earnings arising from the investment of funds deposited hereunder,
less the cost of making such investment, shall be paid to or for the account of
PGRLP at such time as the funds deposited hereunder are surrendered by Escrow
Agent in accordance with the terms of this Agreement. Escrow Agent will, upon
request, furnish information concerning its procedures and fee schedules for
investment.
11. Except as to deposits of funds for which Escrow Agent has received
express written direction concerning investment or other handling, the parties
hereto agree that the Escrow Agent shall be under no duty to invest or reinvest
any deposits at any time held by it hereunder; and, further, that Escrow Agent
may commingle such deposits with other deposits in the manner provided for the
administration of funds under Section 3 of Illinois Banking and Finance Act
(Chap. 17, Para. 1555 Ill. Rev. Stat.). Provided, however, nothing herein shall
diminish Escrow Agent's obligation to apply the full amount in each Deposit
Account in accordance with the terms of this Agreement.
12. In the event the Escrow Agent is requested to invest deposits
hereunder, Escrow Agent is not to be held responsible for any loss of principal
or interest which may be incurred as a result of making the investments or
redeeming said investment for the purposes of these escrow instructions, unless
Escrow Agent shall act in a negligent manner.
13. Escrow fee of $_______ is to be charged to Dearborn Center, L.L.C.
14. Each of UST and PGRLP agrees to and hereby does indemnify, defend and
hold harmless the other party from and against any and all claims (including,
without limitation, mechanics', materialmen's and similar lien claims), demands,
actions, penalties, suits, damages, losses and liabilities (including, without
limitation, the cost of defense, settlement, appeal and reasonable attorneys'
fees and costs) which such party (and/or its respective officers, directors,
shareholders, members, partners, employees, trustees, agents, assigns,
successors and affiliates) may incur or suffer as a result of any objection
notice wrongfully delivered (pursuant to Section 6C, 7 and 8 of these escrow
instructions). An objection notice will be deemed to have been wrongfully
delivered if the party that delivers such notice knew or should have known that
the other party was entitled to receive the funds requested pursuant to a
request made upon Escrow Agent.
15. All notices, requests, demands or other communications required or
permitted under this Agreement shall be in writing and delivered personally or
by facsimile transmission, or by overnight courier (such as Federal Express),
addressed as follows:
If to PGRLP: Prime Group Realty, L.P.
------------ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
With a copy to: Prime Group Realty Trust
▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
And to: Jenner & Block, LLC
One IBM Plaza
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
If to UST: UST XI Dearborn, Ltd.
--------- ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Fax: 407/▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇ Ciklin ▇▇▇▇▇▇
-------------- Martens ▇▇▇▇▇▇ & ▇'▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 561/▇▇▇-▇▇▇▇
If to Dearborn
Center: Dearborn Center, L.L.C.
c/o UST XI Dearborn, Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: 407/▇▇▇-▇▇▇▇
If to Escrow
Agent: Near North National Title Insurance Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Fax: 312/▇▇▇-▇▇▇▇
All notices given in accordance with the terms hereof shall be deemed given and
received when delivered. Either party hereto may change the address for
receiving notices, requests, demands or other communication by notice sent in
accordance with the terms of this Paragraph.
16. This Agreement may be executed in any number of identical counterparts, any
or all of which may contain the signatures of fewer than all of the parties but
all of which shall be taken together as a single instrument.
17. In the event of any litigation arising out of this Agreement between PGRLP
and UST, the prevailing party shall be entitled to reimbursement of the costs
and expenses thereof from the other party, including reasonable attorney's fees
and including such costs, expenses and fees incurred or appeals of such
litigation.
[Signature page follows]
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 partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------
Title:Co-President
------------------------
UST XI DEARBORN, LTD., a Florida limited
partnership
By: ▇▇▇▇ Chicago, L.C., a Florida
limited liability company
By: Estein Management Corporation,
a florida corporation
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇,
President
DEARBORN CENTER, L.L.C.,
a Delaware limited liability company
By: UST XI DEARBORN, LTD., a Florida
limited partnership, its
administrative member
By: ▇▇▇▇ Chicago, L.C., a Florida
limited liability company,
its general partner
By: Estein Management
Corporation, a Florida
corporation, its manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Accepted and Agreed this 8th day of October, 2003:
Near North Title Insurance Company,
as Escrow Agent
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------
Name:▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title:Senior Commercial Escrow Officer
---------------------------------
EXHIBIT A TO ESCROW AGREEMENT
GENERAL PROVISIONS
1. These instructions may be supplemented, amended, or revoked in writing
only, signed by all of the parties hereto, and approved by the Escrow Agent,
upon payment of all fees, costs and expenses incidental thereto.
2. No assignment, transfer, conveyance, or hypothecation of any rights,
title, or interest in and to the subject matter of this escrow shall be binding
upon the Escrow Agent unless written notice thereof shall be served upon the
Escrow Agent and all reasonable fees, costs and expenses incident thereto have
been paid and then only upon the Escrow Agent's assent thereto in writing.
3. The Escrow Agent may receive any payment called for hereunder after the
due date thereof unless subsequent to the due date of such payment and prior to
the receipt thereof the Escrow Agent shall have been instructed in writing to
refuse any such payment.
4. The Escrow Agent shall not be personally liable for any act it may do
or omit to do hereunder as such agent, while acting in good faith and in the
exercise of reasonably prudent judgment. Escrow Agent shall be entitled to rely
upon the advice of its own attorneys in connection with any act done or omitted
by the Escrow Agent.
5. Except with respect to the UST Objection Notice, the Escrow Agent is
hereby expressly authorized to disregard any and all notices or warnings given
by any of the parties hereto, or by any other person, firm, or corporation,
excepting only orders or process of court, and is hereby expressly authorized to
comply with and obey any and all process, orders, judgments or decrees of any
court, and in case the Escrow Agent obeys or complies with any such process,
order, judgment or decrees of any court, it shall not be liable to any of the
parties hereto or to any other person, firm or corporation by reason of such
compliance, notwithstanding any such process, order, judgment or decree be
subsequently reversed, modified, annulled, set aside or vacated, or found to
have been issued or entered without jurisdiction.
6. In consideration of the acceptance of this escrow by the Escrow Agent,
the undersigned agree, jointly and severally, for themselves, their heirs, legal
representatives, successors and assigns, to pay the Escrow Agent its reasonable
charges hereunder and to indemnify and hold Escrow Agent harmless as to any
liability by it incurred to any other person, firm or corporation by reason of
its having accepted the funds deposited in the Deposit Accounts, or carrying out
any of the terms hereof, and to reimburse it for all its reasonable expenses,
including among other things, reasonable counsel fees and court costs incurred
in connection herewith. Escrow fees or charges, as distinguished from other
expenses hereunder, shall be as written above the Escrow Agent's signature at
the time of acceptance hereof.
7. The Escrow Agent shall be under no duty or obligation to ascertain the
identity, authority or rights of the parties executing or delivering or
purporting to execute or deliver these instructions or any documents or papers
or payments deposited or called for hereunder, and assumes no responsibility or
liability for the validity or sufficiency of these instructions or any documents
or papers or payments deposited or called for hereunder, other than the duty and
obligation to act in good faith and in a reasonably prudent manner.
8. In the event of any dispute between the parties hereto as to the facts
of default, the validity or meaning of these instructions or any other fact or
matter relating to the transaction between the parties, the Escrow Agent is
instructed as follows:
(a) That it shall be under no obligation to act, except under
process or order of court, or until it has been adequately indemnified to its
full satisfaction, and shall sustain no liability for its failure to act pending
such process or court order or indemnification;
(b) That it may in its sole and absolute discretion, deposit the
property described herein or so such thereof as remains in its hands with the
Clerk of the ▇▇▇▇ County, Illinois Circuit Court, in whose jurisdiction it
falls. Upon so depositing such property and filing its complaint in interpleader
it shall be relieved of all liability under the terms hereof as to the property
so deposited. The institution of any such interpleader action shall not impair
the rights of the Escrow Agent under Paragraph 6 herein.
9. The provisions of these instructions shall be binding upon the legal
representatives, heirs, successors and assigns of the parties hereto.
EXHIBIT B
The Citadel Deposit
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