EXHIBIT NO. 10.7
OMNIBUS FIRST MODIFICATION TO
MEZZANINE LOAN DOCUMENTS
THIS OMNIBUS FIRST MODIFICATION TO MEZZANINE LOAN DOCUMENTS (this
"Agreement") is made and dated as of March 19th, 2003 by and among PRIME/▇▇▇▇▇▇▇
DEVELOPMENT COMPANY, L.L.C., a Delaware limited liability company ("Borrower"),
LNR EASTERN LENDING, LLC, a Georgia limited liability company ("Lender"), 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 (hereinafter defined).
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Lender and Borrower are party to that certain Mezzanine Loan
Agreement, as amended by that Omnibus First Modification to Mezzanine Loan
Documents, that Omnibus Second Modification to Mezzanine Loan Documents and that
Omnibus Third Modification to Mezzanine Loan Documents, all dated as of the date
hereof (collectively, 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 dated as of March 12, 2001,
as amended by that certain Amendment to Omnibus First Modification to Senior
Loan Documents dated as of January 2, 2002 (as amended, the "First Senior
Modification"), that certain Omnibus Second Modification to Senior Loan
Documents dated as of March 26, 2002 and that certain Omnibus Third Modification
to Senior Loan Documents dated as of July 16, 2002 (as so amended, the "Senior
Loan Agreement");
WHEREAS, Borrower has requested that the Lender approve that certain Lease
Agreement, dated as of February 9, 2001, between the Property Owner, as
landlord, and Citadel Investment Group, L.L.C. ("Citadel"), as tenant, for
approximately 281,417 NRSF of office space at the Project (the "Citadel Space"),
as 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");
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
▇▇▇▇▇▇ Drive Venture, L.L.C. (the "Prior Landlord") to Citadel and that certain
letter dated November 16, 2000 from the Prior Landlord to Citadel, that certain
Fourth Amendment to Lease Agreement dated December 19, 2001, and that certain
Fifth Amendment to Lease dated as of October 30, 2002 (as amended, the "Wacker
Lease") relating to approximately 161,488 square feet of office space located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ (the "Wacker Space") owned by ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, L.P. (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 ▇▇▇▇▇▇ Lease (the "▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ Reimbursement Obligations against the rental payments otherwise due
from Citadel under the Citadel Lease;
WHEREAS, the provisions of the Citadel Lease relating to the ▇▇▇▇▇▇
Reimbursement Obligations violate certain single purpose entity requirements
(the "SPE Requirements") contained in the Loan Documents;
WHEREAS, in conjunction with a prior mezzanine loan (the "Prior Loan")
made by Deutsche Bank Trust Company Americas (formerly Bankers Trust Company),
as a lender and as an agent for other lenders (collectively, the "Prior
Lenders"), to the Borrower, and as an inducement to the Prior Lenders to approve
the Citadel Lease, the Property Owner, Borrower, ▇▇▇▇▇ ▇▇▇▇▇▇▇ L.L.C. ("▇▇▇▇▇")
and PGLP agreed to escrow certain funds, modify certain loan documents
evidencing the Prior Loan 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, Bankers Trust Company, PGLP, ▇▇▇▇▇
and J. ▇▇▇▇ ▇▇▇▇▇▇▇ Development Company ("▇▇▇▇▇▇▇"), as of February 21, 2001;
WHEREAS, in furtherance of the agreements made in the Consent Agreement,
Prior Lenders, Borrower, Senior Agent, Property Owner, PGLP, ▇▇▇▇▇ and ▇▇▇▇▇▇▇
entered into that certain Reserve Account Agreement (the "Prior Reserve Account
Agreement") dated as of March 12, 2001 relating to accounts established, in
part, to protect the Prior Lenders' interest in the Project
(the "Citadel Reserve Accounts");
WHEREAS, the Prior Loan has on this date been satisfied with the proceeds
of that new mezzanine loan (the "Loan") made by the Lender to the Borrower as
evidenced by, among other things, that certain Mezzanine Loan Agreement of even
date herewith by and between Lender and Borrower (the "Loan Agreement");
WHEREAS, the Prior Reserve Agreement has been terminated in conjunction
with the satisfaction of the Prior Loan, though the parties hereto desire to
enter into a new reserve account agreement on the terms and conditions set forth
herein; and
WHEREAS, this Agreement constitutes an amendment to the Loan Agreement.
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. [Intentionally Deleted].
Section 2. Waiver.
The Lender hereby waives 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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇
Reimbursement Obligations (as such term is defined in that
certain Omnibus First Modification to Mezzanine Loan
Documents, dated as of March __, 2003, by and among the
Lender, 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 ▇▇▇▇▇▇ 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, ▇▇▇▇▇▇
Reimbursement Obligations (as defined in that certain Omnibus
First Modification to Loan Documents, dated as of March __,
2003, by and among the Lender, Borrower, Property Owner and
Guarantor (the "Omnibus Modification")) with respect to any
portion of the ▇▇▇▇▇▇ 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 __, 2003, by and among
Lender, Borrower, Property Owner and Guarantor at the time of
such Event of Default (it being understood that Guarantor
shall have no liability hereunder with respect to ▇▇▇▇▇▇
Reimbursement Obligations relating to any portion of the
▇▇▇▇▇▇ 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 "▇▇▇▇▇▇ 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) The Lender hereby reaffirms its approval of the Citadel Lease heretofore
delivered to it.
(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
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 ▇▇▇▇▇▇ 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 ▇▇▇▇▇▇ 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.
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 Lender.
The Lender, by its execution of this Agreement, hereby confirms that it
has consented to and approved, to the extent required under the Loan Documents,
the terms and conditions of this Agreement, the Reserve Account Agreement, and
the First Senior Modification.
Section 7. Miscellaneous.
(a) Governing Law. Except as provided in Section 11.2 of the Loan Agreement, 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 Florida.
(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.
[Signatures on Next Page(s)]
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.
PRIME/▇▇▇▇▇▇▇ 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/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Its: Co-President
PRIME GROUP REALTY, L.P., a Delaware
limited partnership
By: Prime Group Realty Trust, a
Maryland real estate investment
trust, its managing general partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President