EXHIBIT 10.30
FIRST AMENDMENT TO CREDIT AGREEMENT
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This First Amendment to Credit Agreement is made as of the 15th day of
December, 1997 (the "First Amendment Effective Date"), 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 the certain Credit Agreement
dated as of November 17, 1997 (the "Existing Agreement"); and
WHEREAS, the parties have agreed to amend the Existing Agreement to
provide for an increase in the Total Commitment from $225,000,000 to
$235,000,000 and in certain other respects.
NOW, THEREFORE, the parties hereby agree that effective upon the date
hereof the Existing Agreement is amended as follows:
1. Increase in Total Commitment. BankBoston hereby increases its
Commitment to the amount shown on the revised Schedule 1.2 attached hereto.
The Borrower shall execute and deliver to BankBoston a Note (the "Additional
Note") in an amount equal to the difference between BankBoston's Commitment as
shown on said revised Schedule 1.2 and the Note dated November 17, 1997
delivered to BankBoston at the time it became a party to the Credit Agreement.
The second sentence of Section 2.3 is amended to read as follows: "One or
more Notes shall be payable to the order of each Lender and the aggregate
principal amount of the Notes held by each Lender shall be equal to such
Lender's Commitment."
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:
Additional Properties. Real Estate Assets which hereafter become
Mortgaged Properties or Assigned Mortgage Properties pursuant to Section 5.3.
Applicable Margin. As of any date of determination:
(i) 1.20%, if Total Liabilities are less than 30% of Total Adjusted
Assets, or
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(ii) 1.35%, if Total Liabilities are equal to or less than 45% of Total
Adjusted Assets but the condition set forth in clause (i) of this definition
is not satisfied,
(iii) 1.50% if Total Liabilities exceed 45% of Total Adjusted Assets.
Any change in the Applicable Margin caused by a change in ratio of Total
Liabilities to Total Adjusted Assets shall become effective on the 46th day
following the end of the fiscal quarter at which such ratio was computed as
shown on a Compliance Certificate which reflects such change in said ratio
above or below the 30% level or the 45% level. Notwithstanding anything to the
contrary in this definition for so long as the Continental Towers Property is
an Assigned Mortgaged Property, the Applicable Margin will be increased to
1.75% during the period from December 15, 1997 through February 14, 1998 and
will be thereafter further increased to 2.00%.
Appraised Value. The market value of each of the Mortgaged Properties,
determined by the Requisite Lenders based upon the most recent Appraisals
obtained pursuant to Section 5.4(b), Section 7.12 or Section 10.14. In
determining Appraised Value the Requisite Lenders shall exclude any value
associated with any unimproved land or unoccupied Buildings located on the
applicable Mortgaged Property.
Assigned Mortgaged Properties. The Real Estate Assets designated as such
on Schedule 1.1, the Buildings thereon and all other property described in the
Security Deeds relating thereto and any other Real Estate Assets, Buildings
thereon and other property described in the Security Deeds assigned to the
Agent pursuant to Section 5.3(c).
Assigned Notes. The Promissory Notes secured by the Security Deeds on
the Assigned Mortgaged Properties acquired by the Borrower and assigned to the
Agent.
Assigned Note Assignments. The Assignments of Liens and Documents from
Borrower to the Agent pursuant to which the Assigned Notes and all related
loan documents and Security Documents are assigned to the Agent.
Borrowing Base Value. With respect to each Mortgaged Property, an amount
equal to (i) two times the Net Operating Income for the most recently
completed two fiscal quarters, minus the Reserve Amount for such Mortgaged
Property, divided by (ii) a capitalization rate equal to 0.09 for the West
▇▇▇▇▇▇ Drive Property or 0.10 for any other Mortgaged Property, provided
however that with respect to each Assigned Mortgaged Property, the Net
Operating Income for purposes of this definition shall be the lesser of its
Net Operating Income computed pursuant to the definition thereof or the actual
amount of interest paid (but not prepaid) on the applicable Assigned Note
during such period.
Collateral Value. With respect to each Mortgaged Property an amount
equal to the lesser of is Appraised Value or its Borrowing Base Value,
provided that the Collateral Value of an Assigned Mortgaged Property shall not
exceed the lesser of (i) the Borrower's net acquisition cost for the Assigned
Note and related documents or (ii) the
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outstanding principal amount of the applicable Assigned Note and provided that
effective on March 15, 1998 the Collateral Value of the Continental Towers
Property shall become zero.
Continental Towers Property. The Assigned Mortgaged Property known as
Continental Towers located at or near Golf Road, Rolling Meadows, Illinois.
Mortgaged Properties. The (a) Real Estate Assets described on Schedule
1.1 hereto and such other Real Estate Assets which may be subsequently
conveyed to the Agent as Additional Properties to secure the Obligations in
accordance with Section 5.3 hereof, excluding from the foregoing any Real
Estate Assets which the Agent may release pursuant to Section 5.5 hereof, as
such Real Estate Assets are more particularly described in the Security Deeds;
(b) the Buildings and Building Service Equipment located thereon and (to the
extent assignable) all Permits relating thereto; and (c) all other property
incident to any of same described in any Security Document or other Loan
Document. The term Mortgaged Properties also includes the Assigned Mortgaged
Properties.
Real Estate Assets. Those fixed and tangible properties consisting of
land, buildings and/or other improvements owned by the Borrower, by any
Guarantor, by any of the Related Companies or by any Permitted Joint Venture
at the relevant time of reference thereto, including without limitation, the
Mortgaged Properties, but excluding all leaseholds other than leaseholds under
ground leases having an unexpired term of at least 30 years. The term Real
Estate Assets also includes the properties subject to the Security Deeds
relating to the Assigned Mortgaged Properties.
Security Deeds. The mortgages and deeds of trust from the Mortgagor to
the Agent pursuant to which the Mortgagor shall convey the Mortgaged
Properties as security for the Obligations and the mortgages which secure the
Assigned Notes and which are assigned to the Agent pursuant to the Assigned
Note Assignments.
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.
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 end of the
most recent fiscal quarter (including any restricted cash other than tenant
deposits), plus (ii) the product of (a) EBITDA for the most recent two fiscal
quarters, 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 end of the most recent
fiscal quarter 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
such balance sheet had been disposed of prior to the first day of the
applicable period of two fiscal quarters
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3. Amendment to Section 5.3. Section 5.3 is hereby amended and restated
to read as follows:
Section 5.3. Additional Properties.
(a) A Real Estate Asset owned by the Borrower or by a Guarantor may
become an additional Mortgaged Property if (i) the Requisite Lenders, in their
sole discretion, approve such Real Estate as being eligible to become a
Mortgaged Property and (ii) all of the conditions set forth in Section 5.4 are
satisfied with respect to such Real Estate Asset. Borrower shall provide the
Agent with a notice of each proposed Additional Property describing such
property, its estimated value and its estimated net operating income together
with a current rent roll and the most current operating statements available
with respect thereto. If the Agent determines that additional information is
needed to sufficiently describe such property, it may request a supplemental
notice from the Borrower containing such additional information. When such
notice is satisfactory to the Agent, it shall send a copy to each Lender and
any Lender which fails to notify the Agent of its objection within five (5)
Business Days after its receipt of such notice shall be deemed to have granted
its approval of the eligibility of such Real Estate Asset to become an
Additional Property. In the event that the Requisite Lenders grant such
approval and all of the conditions set forth in Section 5.4 are satisfied, the
Agent shall notify the Borrower and within ten (10) days thereafter the
Borrower and the Company shall execute and deliver an Indemnity Agreement and
the Mortgagor shall execute and deliver to the Agent a Security Deed, an
Assignment of Rents and Leases and UCC-1 financing statements, which Security
Documents shall be in substantially the form of the Security Documents
executed and delivered herewith with such changes as the Agent may deem
desirable to address the laws of the State where the Additional Property is
located or the factual circumstances of the Additional Property. Such
Additional Properties shall be deemed to be Mortgaged Properties upon the
recording and filing of such Security Documents and the Agent's receipt of
satisfactory evidence thereof.
(b) After the Continental Towers Property has been released as an
Assigned Mortgaged Property pursuant to Section 5.5, another Real Estate Asset
may become an Assigned Mortgaged Property if (i) the Requisite Lenders, in
their sole discretion, approve such Real Estate Asset as being eligible to
become an Assigned Mortgaged Property, (ii) the Requisite Lenders, in their
sole discretion, approve the terms and conditions of the proposed Assigned
Note and related documents and (iii) all conditions set forth in Section 5.4
are satisfied with respect to such Real Estate Asset. If the Requisite
Lenders grant such approvals, then upon satisfaction of the conditions set
forth in Section 5.4 and execution and delivery of the Assigned Note
Assignment, the original of the Assigned Note endorsed to the Agent and all
other documents required by the Agent in connection therewith, the Agent shall
revise Schedule 1.1 to include such Additional Property as an Assigned
Mortgaged Property. At any time there shall be no more than one Assigned
Mortgaged Property hereunder.
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(c) The Agent and the Lead Lenders shall use their best efforts to
complete their review of the documents submitted with respect to each
Additional Property and notify the Borrower as to whether the conditions in
Section 5.4 are satisfied with ten (10) Business Days after receipt of the
last of the items required pursuant to Section 5.4.
4. Amendment to Section 5.5. Section 5.5 is hereby amended and restated
to read as follows:
Section 5.5. Release of Mortgaged Properties. The Borrower may request
that the Agent release any Mortgaged Property from the lien of the Security
Documents and the Agent shall grant such requested release provided that (i)
the requested release is consented to by the Requisite Lenders and (ii) 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. Each Lender agrees to respond to any such request for Requisite
Lender consent within five (5) business days and agrees to not unreasonably
withhold its consent. The Borrower may request releases of a portion of a
Mortgaged Property consisting of undeveloped land to be developed by Borrower
or sold provided that in addition to the requirements set forth above, the
Borrower shall also submit such additional information as may be reasonably
requested by the Agent including, without limitation, (i) an updated survey
and endorsements to the Title Policy; (ii) an updated Appraisal of the
remaining portion of the Mortgaged Property and (iii) evidence that the
division of the Mortgaged Property pursuant to the requested release will not
result in violation of any zoning ordinance or other applicable laws and
ordinances. If the Borrower shall request the release of any Mortgaged
Property which is adjacent to any other Mortgaged Property which is not to be
simultaneously released, the Agent may require the establishment of
appropriate easements and maintenance agreements satisfactory to the Agent
relating to any shared utilities, drainage facilities, access drives or walks,
parking areas or other shared facilities.
5. Amendment to Section 8.3 (e). Section 8.3 (e) is hereby amended and
restated to read as follows:
(e) Investments made in the ordinary course of the Borrower's
business, in (i) any mortgages the acquisition of which is expressly approved
by the Requisite Lenders, (ii) mortgages and notes receivable having an
aggregate principal amount, exclusive of any investments in mortgages which
may have been so expressly approved by the Requisite Lenders of not more than
$25,000,000, (iii) Permitted Joint Ventures (to the extent permitted by
Section 8.4(a)), or (iv) Interest Rate Contracts;
6. Amendment to Section 9.1. Section 9.1 is hereby amended and restated
to read as follows:
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Section 9.1. Collateral Value. The Borrower will not at any time
permit the Outstanding Principal Amount 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.
7. 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 5.3(b) is hereby deleted.
(f) Schedule 6.18 is replaced by Schedule 6.18 attached hereto.
(g) Schedule 6.22(d) is replaced by Schedule 6.22(d) attached
hereto.
(h) Schedule 6.22(l) is supplemented by adding thereto the rent
rolls each of the Additional Properties which have been added
to Schedule 1.1 since the Effective Date of the Existing
Agreement.
8. Approval of Investments in Mortgages. Pursuant to Section
8.3(e)(ii) of the Credit Agreement the Requisite Lenders hereby approve the
Borrower's Investments in the notes receivable and mortgages relating to the
Continental Towers Property and relating to the property at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇.
9. 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. The term Mortgaged Properties as used in said representations and
warranties includes the Properties listed on Schedule 1.1 attached hereto.
10. Effectiveness of Loan Documents. On the First Amendment Effective
Date each Guaranty and each Security Deed shall be amended to reflect the
increase of the Total Commitment and the execution and delivery of the
Additional Notes. All references in the Existing Agreement to said Loan
Documents shall mean and be in reference to said Loan Documents as so amended.
The Borrower hereby confirms that each of the Security
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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. Every reference contained in the Loan Documents to the Notes
shall be deemed to include the Additional Notes. 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.
11. 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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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of the date first set forth above.
WITNESS: BANKBOSTON, N.A.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇
Its: Vice President
PRUDENTIAL SECURITIES CREDIT
CORPORATION
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III
Its: Vice President
PRIME GROUP REALTY TRUST
By: /s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Executive Vice President
PRIME GROUP REALTY, L.P.
By: PRIME GROUP REALTY TRUST,
its managing general partner
By: /s/ W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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W. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Executive Vice President
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