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EXHIBIT (A)(2)
KEYCORP REAL ESTATE CAPITAL MARKETS, INC.
000 XXXXXX XXXXXX
XXXXXXXXX, XXXX 00000
November 3, 1997
Xx. Xxxx X. Xxxxxxxx
Chief Financial Officer
Plasti-Line, Inc.
000 Xxxx Xxxxx Xxxxx
Xxxxxxxxx, XX
Re: Premises: American Sign Building
0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX
Dear Xx. Xxxxxxxx:
KEYCORP REAL ESTATE CAPITAL MARKETS, INC. ("Lender"), xxxxxx agrees to
make a permanent first fee mortgage loan (the "Loan") subject to the terms and
conditions set forth below and in the attached General Conditions and Special
Conditions, if any:
ARTICLE A: BORROWER
NAME: TBD single-asset, special purpose entity
PRINCIPAL PLACE OF BUSINESS ADDRESS: 000 Xxxx Xxxxx Xxxxx
Xxxxxxxxx, XX
TYPE OF ENTITY
[ ] Corporation [ ] Generral Partnership [ ] Joint Venture
[ ] Limited Partnership [ ] Business Trust [ ] Limited Liability
Company
[ ] Other
TAXPAYER IDENTIFICATION NUMBER:
STATE OF ORGANIZATION:
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WARRANTY OF NON-FOREIGN BORROWER
Borrower represents and warrants to Lender that Borrower is not a
"foreign person" within the meaning of Section 1445(f)(3) of the
Internal Revenue Code of 1986.
SINGLE PURPOSE, BANKRUPTCY REMOTE ENTITY
Borrower shall be a "single purpose, bankruptcy remote entity" as
described in Subsection 7(p) of the General Conditions at closing and
throughout the term of the Loan.
ARTICLE B: LOAN TERMS
AMOUNT
The principal amount of the Loan shall not exceed $ SEE EXHIBIT A: TERM
SHEET, ITEM 1. (the "Loan Amount"). The Loan Amount may be decreased as provided
in the Section of this Commitment entitled INTEREST RATE.
INTEREST RATE
This loan request is being underwritten using an assumed rate per annum
equal to SEE EXHIBIT A: TERM SHEET, ITEM 2. (the "Assumed Rate") as the
projected interest rate on the Loan. Upon satisfaction of the conditions set
forth in the Commitment for setting the interest rate on the Loan, the actual
interest rate (the "Applicable Rate") will be set (the "Rate Lock") on a date
(the "Rate Lock Date") between now and the closing date of the Loan (the
"Closing Date").
Depending upon market conditions on the Rate Lock Date, the Applicable
Rate may be different from the Assumed Rate used in approving the application.
In the event the Applicable Rate established on the Rate Lock Date is higher
than the Assumed Rate, Lender reserves the right to reduce the Loan Amount to
reflect the ability of the Property to carry the debt at the debt service
coverage ratios of SEE EXHIBIT A: TERM SHEET, ITEM 3.. The debt service coverage
ratio will be based on the actual loan constant at time of closing as determined
by Xxxxxx in its sole and absolute discretion.
Assuming the Loan satisfies the debt service ratios set forth in the
preceding paragraph, the rate of interest will be calculated on the Rate Lock
Date by adding SEE EXHIBIT A: TERM SHEET, ITEM 4. basis points over the yield to
maturity for the nearest U.S. Treasury bonds or other obligations having the
nearest equivalent maturity of SEE
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EXHIBIT A: TERM SHEET, ITEM 5. years (rounded up to the nearest one-eighth of
one percent) as determined by Xxxxxx on the Rate Lock Date in accordance with
the provisions of the Section of this Commitment entitled RATE LOCK.
PAYMENTS
Interest only shall be due on the Closing Date for interest from the
Closing Date to and including the last day of the month in which the Closing
Date occurs. Thereafter, combined monthly payments of principal and interest
shall be due and payable commencing on the first day of the second full calendar
month following the Closing Date and on the first day of each calendar month
thereafter. The amount of the monthly payment of principal and interest will be
determined by Xxxxxx on the Rate Lock Date. The monthly payments of principal
and interest will be based on a schedule which would fully amortize the Loan
over a SEE EXHIBIT A: TERM SHEET, ITEM 6.
year term.
MATURITY DATE
The unpaid principal balance of the Loan together with all accrued but
unpaid interest thereon, additional interest, if any, and all other sums due
under the Loan Documents (defined in Article E of this Commitment), shall be due
and payable on the SEE EXHIBIT A: TERM SHEET, ITEM 7. anniversary of the first
day of the full calendar month following the Closing Date or (ii) the Closing
Date if the closing occurs on first day of the calendar month (the "Maturity
Date").
PREPAYMENT
The principal balance of the Loan may not be prepaid in whole or in
part prior to the SEE EXHIBIT A: TERM SHEET, ITEM 8. Loan Year (defined in
Section 5 of the General Conditions). During the SEE EXHIBIT A: TERM SHEET, ITEM
8. Loan Year or any time thereafter, the principal balance of the Loan may be
prepaid in whole, but not in part, upon not less than sixty (60) days prior
written notice to Lender specifying the date on which prepayment is to be made
(the "Prepayment Date") which date must be a Payment Date and upon the payment
of:
(i) all accrued interest to and including the Prepayment Date;
(ii) all other sums due under the Note (defined in Article E of
this Commitment), the Security Instrument (defined in Article E of this
Commitment) and all other Loan Documents; and
(iii) the Prepayment Consideration (defined in Section 5 of the
General Conditions).
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The principal balance specified in any such irrevocable notice of
prepayment shall be absolutely and unconditionally due and payable on the
Prepayment Date. Lender shall not be obligated to accept any prepayment of the
principal balance of the Loan unless it is accompanied by the sums referenced in
(i), (ii) and (iii) above.
Notwithstanding anything to the contrary herein, provided no Event of
Default (defined in Subsection 7(e) of the General Conditions) exists under the
Note, the Security Instrument or the other Loan Documents, in the event of any
prepayment (i) in connection with or as a result of a casualty or condemnation
or (ii) which occurs during the last three (3) months of the Loan Year, no
Prepayment Consideration shall be due in connection therewith.
ARTICLE C: RATE LOCK
Not less than seven (7) Business Days (defined in Section 5 of the
General Conditions) after compliance with all of the requirements of this
Commitment (provided such compliance occurs at least ten (10) Business Days
prior to the expiration date of the Commitment), Borrower shall be entitled to
request Rate Lock from Lender. Such request must be in writing and must be sent
by facsimile transmission to Lender to the attention of Xxxxxxx Xxxxxx, KeyCorp
Real Estate Capital Markets, Inc. Not later than the next Business Day, Lender
shall send by facsimile transaction a Rate Lock confirmation (the "Rate Lock
Confirmation"). THE NEXT BUSINESS DAY XXXXXX WILL LOCK THE INTEREST RATE VIA
TELEPHONE WITH THE BORROWER. THE BORROWER WILL THEN COMPLETE THE RATE LOCK
CONFIRMATION BY FILLING IN THE INTEREST RATE, INITIALING THE INTEREST RATE, AND
RETURNING THE RATE LOCK CONFIRMATION TO LENDER VIA FACSIMILE. In the event
Borrower does not (i) meet the requirements to request Rate Lock, (ii) request
Rate Lock, (iii) sign AND INITIAL the Rate Lock Confirmation, or (iv) confirm by
telephone the receipt by Lender of such Rate Lock Confirmation, within the above
time periods, Xxxxxx's obligation to fund the Loan pursuant to this Commitment
shall terminate. The closing of the Loan must take place within three (3)
Business Days of the Rate Lock Date.
Notwithstanding anything to the contrary contained in this Commitment,
Borrower shall not be entitled to Rate Lock unless Lender shall have received
the entire Origination Fee (defined in the Section of this Commitment entitled
ORIGINATION FEES under Article b) in immediately available funds, prior to
Xxxxxxxx's request for Rate Lock.
ARTICLE D: COLLATERAL
PROPERTY TO BE MORTGAGED
Approximately 230,000 sf industrial property located at 0000 Xxxxxxxxxx
Xxxx, Xxxxxxxx, XX, (the "Premises"),more particularly described in Borrower's
application and other information submitted to Lender by Xxxxxxxx, together with
the
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improvements (the "Improvements") constructed or to be constructed on the
Premises and all fixtures, equipment and articles of personal property now or
hereafter affixed to or used in the management, maintenance or operation of the
Property (defined below), including any replacements and additions thereto, and
such other security as may be required by Lender (collectively, the "Property").
ARTICLE E: LOAN DOCUMENTS
The Loan shall be evidenced by the promissory note of Borrower made
payable to the order of Lender (the "Note") and shall be secured by the Loan
Documents (as defined below), including, but not limited to, the following:
SECURITY INSTRUMENT
A duly recorded mortgage, mortgage deed, deed of trust, trust deed,
security deed, deed to secure debt or other real estate security instrument
customary in the jurisdiction in which the Premises are located (the "Security
Instrument") given by Borrower to Lender, constituting a valid first mortgage
lien, subject to no other liens or encumbrances, on the good and marketable fee
simple absolute title to the Property, subject only to such exceptions as shall
be approved by Lender and its counsel.
ASSIGNMENT OF LEASES AND RENTS
A first-priority present assignment (the "Assignment of Leases and
Rents") given by Borrower to Lender of all present and future leases of all or
any part of the Property and all renewals thereof (the "Leases") and all rents,
additional rents, revenues, issues and profits derived from the Property (the
"Rents").
SECURITY AGREEMENT
A security agreement between Borrower and Xxxxxx constituting a valid
first priority security interest, free of chattel mortgages, security
agreements, conditional sales contracts and other liens or title retention
arrangements, shall be granted by Borrower on all fixtures, equipment and
articles of personal property now or hereafter affixed to or used in the
management, maintenance and operation of the Property (other than trade fixtures
or personal property of space tenants owned by such tenants at the expiration of
their lease term). Such security interest shall be granted in the Security
Instrument or in a separate agreement if Xxxxxx's counsel requires such an
agreement. Xxxxxxxx shall also execute and deliver such UCC Financing Statements
as Xxxxxx's counsel may request.
OTHER ASSIGNMENTS
Present assignments to Lender, at its option, of (a) Xxxxxxxx's
interest in any other contracts and agreements or of any other rights of
Borrower relating to the
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Property, including, but not limited to, any and all operating leases or
agreements, management agreements, service contracts and maintenance contracts,
(b) the final plans and specifications for Improvements with the preparing
architect's consent to Xxxxxx's use and any assignable rights with respect to
any permits, approvals or variances relating to such Improvements, (c) all
refunds, rebates, or credits in connection with a reduction in real estate taxes
and assessments charged against the Property as a result of tax certiorari or
any proceeding for reduction, and (d) all proceeds received by Borrower in
connection with any buy-out, termination or other modification of any of the
Leases.
ENVIRONMENTAL INDEMNITY
An Environmental Indemnity Agreement from Borrower and PLASTI-LINE,
INC..("Indemnitor(s)"), who shall agree to indemnify Lender (i) for all costs
incurred by Lender in connection with the removal of hazardous substances from
the Property, regardless of whether or not Borrower caused the presence of such
hazardous substance; and (ii) against any loss, cost, damage or expense that
Lender may incur, directly or indirectly, as a result of or in connection with
the assertion against Lender of any claim relating to the presence or removal of
any hazardous substance on the Property. The indemnities contained in the
Environmental Indemnity Agreement shall survive the satisfaction, termination or
assignment of the Note, the Security Instrument and any other Loan Documents.
OTHER DOCUMENTS
Such other documentation as Lender may require in order to adequately
protect and perfect Xxxxxx's security interest.
The documents referred to in this Section, together with such other
documents executed in connection with the Loan, are sometimes collectively
referred to as the "Loan Documents".
ARTICLE F: EXCULPATION
Subject to the Limitations on Exculpation set forth in Subsection 7(n)
of the General Conditions and the Special Conditions, if any, the Security
Instrument shall provide that Lender's sources of satisfaction of the Loan shall
be the Property and the Rents, and other collateral given to Lender to secure
the Loan, and that Lender shall not seek to enforce any judgment out of any
other assets of Borrower, for any sums which shall be payable under the Note,
the Security Instrument or any other Loan Documents or for any deficiency
remaining after a foreclosure of the Security Instrument.
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ARTICLE G: REQUIRED PROPERTY INFORMATION
APPRAISAL, ENVIRONMENTAL SITE
ASSESSMENT AND BUILDING CONDITION REPORTS
Lender shall receive at Borrower's sole cost and expense (i) an
appraisal of the Property stating an appraised value of $ 4,670,000
(satisfactory to Lender in its sole discretion), (ii) written reports with
respect to certain environmental conditions at the Property and (iii) a Building
Condition Report (defined in the General Conditions), each in form and substance
satisfactory to Lender and in accordance with the provisions set forth in the
General Conditions and Special Conditions, if any. The appraisal, environmental,
and engineering professionals, their qualifications, the scope and methodology
of their investigations, their reports and the recommendations set forth therein
and the form, scope and substance of their certifications to Lender shall be
acceptable to Lender in all respects.
SITE INSPECTION
Representatives or agents of Lender may conduct site inspections of the
Property on behalf of Lender. All fees and expenses in connection with such
inspections shall be paid by Borrower.
ESTOPPEL LETTERS
At Lender's option, Estoppel letters satisfactory in form, scope and
substance to Lender shall be delivered from all of the commercial tenants at the
Property.
ARTICLE H: RESERVE REQUIREMENTS
COMPLETION/REPAIR RESERVE
Borrower shall, at closing, deposit an amount TO BE DETERMINED BY
LENDER IN ITS SOLE DISCRETION BASED ON ITS REVIEW OF THE BUILDING CONDITION
REPORT (the "Repair Deposit") into a non-interest bearing escrow account with
Lender for the completion or renovation of certain capital improvements to the
Property identified and recommended in the Building Condition Report, which
items shall be completed as required by Lender to Lender's satisfaction not
later than six (6) months after the Closing Date. The Repair Deposit shall
represent 125% of the estimated cost to complete all the repairs and
replacements to the capital improvements required by Xxxxxx and recommended by
Xxxxxx's consulting engineer. Lender shall disburse amounts from the Repair
Deposit to reimburse Borrower for the costs incurred in connection with the
foregoing repairs and replacements upon satisfaction by Borrower of certain
conditions and the delivery of certain items required by Xxxxxx.
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REPLACEMENT RESERVE
Lender shall require Borrower to deposit an amount TO BE DETERMINED BY
LENDER IN ITS SOLE DISCRETION BASED ON ITS REVIEW OF THE BUILDING CONDITION
REPORT (the "Replacement Reserve") at the closing of the Loan into an interest
bearing escrow account with Lender to cover the estimated costs of periodic
repairs, replacements and improvements of certain specified portions of the
Property including, but not limited to, the replacement or maintenance of
building system components and items that have been identified by the Building
Condition Report. Lender shall be entitled to adjust the monthly deposits into
the Replacement Reserve in order to cover additional costs of such periodic
repairs, replacements and improvements throughout the term of the Loan. Lender
shall disburse amounts from the Replacement Reserve to reimburse Borrower for
the costs incurred in connection with the foregoing periodic repairs,
replacements and improvements upon satisfaction by Borrower of certain
conditions and the delivery of certain items required by Lender.
ARTICLE I: FEES
Xxxxxxxx agrees to pay to Xxxxxx the fees set forth below in connection
with this Commitment for the Loan. All fees paid to Lender hereunder shall be in
immediately available funds at Xxxxxx's office at 000 Xxxxxx Xxxxxx, Xxxxxxxxx,
Xxxx 00000
APPLICATION FEE
Lender acknowledges receipt of the amount of SEE EXHIBIT A: TERM SHEET,
ITEM 9. (the "Application Fee") from Borrower as a non-refundable application
fee to cover Xxxxxx's cost with respect to Borrower's application for the Loan.
PROCESSING DEPOSIT
Lender acknowledges receipt of the amount of SEE EXHIBIT A: TERM SHEET,
ITEM 10. (the "Processing Deposit") to be held by Xxxxxx without interest. The
Processing Deposit shall be applied by Lender against any fees and expenses
incurred or paid by Lender in connection with the processing, underwriting or
closing of the Loan, including without limitation, property inspection fees,
appraisal fees, travel expenses of Lender's personnel, environmental site
assessment fees, loan closing fees, costs of tax lien searches, Building
Condition Report fees, Xxxxxx's counsel's fees and disbursements and other loan
fees. Any portion of the Processing Deposit not applied by Lender toward
expenses as set forth herein shall be returned by Lender to Borrower within
thirty (30) days after the closing of the Loan or in the case where the Loan
does not close and is not funded, within thirty (30) days after written request
for same by Xxxxxxxx. All expenses incurred by Xxxxxx in connection with the
processing, underwriting or closing of the Loan shall be the responsibility of
Borrower and to the extent the Processing Deposit is insufficient to cover all
such expenses, Borrower shall
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deliver such additional amounts as required by Xxxxxx at the closing of the Loan
or if the Loan does not close, within five (5) Business Days after written
demand by Xxxxxx.
GOOD FAITH DEPOSIT
Lender acknowledges receipt of SEE EXHIBIT A: TERM SHEET, ITEM 11. as a
good faith deposit (the "Good Faith Deposit") which shall be held by Lender
without interest. If Borrower fails to close or accept funding of the Loan for
any reason on or before the expiration date of this conditional Commitment, the
Good Faith Deposit shall be retained by Xxxxxx as liquidated damages (and not as
a penalty) in full compensation of Xxxxxx's damages in view of the difficulty of
establishing Xxxxxx's damages for loss of investment income resulting from
Xxxxxxxx's failure to close the Loan. Notwithstanding the foregoing, if (i)
Lender fails to fund the Loan for reasons other than (A) Borrower's failure to
comply with the conditions to closing as set forth in Section 6 of the General
Conditions or the Special Conditions, if any, or (B) the occurrence of any of
the events set forth in Section 21 of the General Conditions, or (ii) Borrower
fails to sign the Rate Lock Confirmation solely because the Applicable Rate
determined by Lender at Rate Lock exceeds the Assumed Rate and the Loan Amount
is substantially reduced below the Loan Amount set forth under the Section of
this Commitment entitled AMOUNT, as determined by Xxxxxx in its sole discretion,
in either case the Good Faith Deposit shall be returned to Borrower within five
(5) Business Days following written request by Borrower. If the Loan shall close
in accordance with this conditional Commitment, the Good Faith Deposit shall be
applied by Lender toward the balance of the Origination Fee (defined in the
Section of this Commitment entitled ORIGINATION FEES) due it at Rate Lock.
ORIGINATION FEES
Borrower shall pay Lender an origination fee in the amount of SEE
EXHIBIT A: TERM SHEET, ITEM 12. (the "Origination Fee"). The Origination Fee
shall be deemed fully earned upon acceptance of the Commitment and shall cover
Xxxxxx's cost for the origination of the Loan. The Origination Fee shall be paid
by Xxxxxxxx as follows:
(i) Upon Xxxxxxxx's acceptance of this Conditional
Commitment, a portion of the Origination Fee equal to SEE EXHIBIT A:
TERM SHEET, ITEM 13. (the "Commitment Fee") shall be due and payable
from Borrower. The Commitment Fee shall be deemed earned on receipt and
shall be non-refundable unless (A) Lender fails to fund the Loan for
reasons other than (1) Borrower's failure to comply with the conditions
to closing as set forth in Section 6 of the General Conditions or the
Special Conditions, if any, or (2) the occurrence of any of the events
set forth in Section 20 of the General Conditions, or (B) Borrower
fails to sign the Rate Lock Confirmation solely because the Applicable
Rate determined by Lender at Rate Lock exceeds the Assumed Rate and the
Loan Amount is substantially reduced below the amount set forth under
the Section of this Commitment entitled AMOUNT, as determined by Lender
in its
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sole discretion, in which case the Commitment Fee paid by Borrower
shall be refunded to Borrower within five (5) Business Days following
written request by Xxxxxxxx.
Application Fees, Property inspection fees, appraisal fees,
environmental site assessment fees, title insurance and survey fees,
Xxxxxx's counsel's fees and disbursements, loan closing fees and other
loan fees are non-refundable and are not included as part of the
Origination Fee but are separate obligations of Borrower. The $10,000
processing deposit will be returned, except for costs Lender has
already incurred.
(ii) At the time Borrower intends to request Rate Lock,
Borrower shall pay to Lender in immediately available funds prior to
making its request for Rate Lock, the balance of the Origination Fee.
Such additional amount .shall be deemed earned in full upon receipt by
Xxxxxx.
(iii) Notwithstanding anything contained in this Commitment
to the contrary, upon the closing of the Loan, in accordance with this
Commitment, Lender shall refund to Borrower that portion of the
Origination Fee collected that exceeds SEE EXHIBIT A: TERM SHEET, ITEM
12. of the actual Loan Amount.
ARTICLE J: TERM OF COMMITMENT
This Commitment is effective upon Xxxxxx's issuance of this letter to
Xxxxxxxx. This Commitment expires on the earlier of (i) January 30, 1998 and
(ii) the date set forth for the closing of the Loan at the time of Rate Lock, by
which time ALL THE CONDITIONS OF THIS COMMITMENT MUST BE SATISFIED AND the Loan
must have closed and funded or this Commitment shall be of no further force and
effect.
ARTICLE K: CONDITION TO ACCEPTANCE
If this Conditional Commitment is acceptable to you, please sign at the
place indicated on the following page on the enclosed duplicate hereof and
return the same together with a check in the amount of SEE EXHIBIT A: TERM
SHEET, ITEM 14. on account of the Commitment Fee to Lender at Lender's offices
at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000 within seven (7) days of the date
hereof. If this Commitment and the Commitment Fee are not received by Lender
within this seven (7) day period, this Commitment shall terminate and shall be
of no further force and effect.
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KEYCORP REAL ESTATE CAPITAL
MARKETS, INC.
By: /s/ XXXXXX X. XXXXXX
---------------------------------
Name: Xxxxxx X. Xxxxxx
-------------------------------
Title: Closing Manager
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cc:
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XXXXXXXX'S ACCEPTANCE
Borrower hereby unconditionally accepts the foregoing Conditional
Commitment and the attached General Conditions and Special Conditions if any, in
accordance with their terms and conditions and agrees to be bound thereby. This
acceptance shall be deemed effective when received together with the Commitment
Fee by Xxxxxx.
By:
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Name:
--------------------------
Title:
-------------------------
Borrower's Counsel:
-------------------------
-------------------------
[ADDRESS] -------------------------
[TELEPHONE]-------------------------
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GENERAL CONDITIONS TO COMMITMENT
1. INTEREST.
(a) Interest on the Loan shall be computed on the basis
of the actual number of days elapsed over a 360-day year. Such interest shall be
paid, in arrears, on the first day of each calendar month during the term of the
Loan.
(b) It is not intended by any provision of this
Commitment to charge interest at a rate in excess of the maximum rate of
interest permitted to be charged to Borrower under applicable law, but if,
nevertheless, interest in excess of said maximum rate shall be paid on the Loan,
the excess amount shall be returned or, to the extent permitted by applicable
law, be applied in reduction of the principal amount of the Loan, in Xxxxxx's
sole discretion.
2. EXPENSES. Borrower shall pay all expenses in connection with
the Loan contemplated hereby including, but not limited to, all fees and
disbursements of Lender's counsel (and, if outside the State of Ohio, of
Xxxxxx's local counsel in the jurisdiction where Borrower is organized or where
the Property is located) including fees and disbursements incurred in connection
with the preparation and delivery of releases from the lien of the Security
Instrument, travel expenses of Lender's personnel related to the making of the
Loan, appraisal fees, engineering fees, title insurance premiums, survey
charges, mortgage and documentary stamp taxes, if any, note intangible taxes, if
any, recording charges and brokerage fees and commissions, costs of tax lien
searches and other loan fees. To the extent incurred, the foregoing expenses
shall be paid by Borrower whether or not the Loan shall close or be funded.
Wherever it is provided for herein that Borrower pay the costs and expenses in
connection with a particular item, such costs and expenses shall include, but
not be limited to, all legal fees and disbursements of Lender, whether with
respect to retained firms, the reimbursement for the expenses of in-house staff
or otherwise.
3. COUNSEL. Messrs. XXXXX, DAY, XXXXXX, & XXXXX attn: TO BE
DETERMINED, will act as Xxxxxx's counsel in this transaction and Borrower or its
counsel is requested to contact said firm promptly after accepting this
Commitment to confirm their closing requirements and to arrange for the closing
of the Loan. The entire closing of the Loan shall take place at Xxxxxx's
counsel's offices in New York or as otherwise determined by Xxxxxx on a date
mutually agreed upon by the respective counsel after all closing requirements
are satisfied. No broker, agent, or other person is authorized to represent
Lender in any way in connection with this transaction, except Xxxxxx's
authorized officers and such counsel acting in the State of Ohio.
4. APPROVAL. All mortgage and title documents executed and
delivered in connection with the closing of the Loan, all title policies and
surveys, all Borrower organizational documents, all legal opinions, all
insurance policies and coverage and
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insurance companies, all required evidence of compliance with all applicable
laws and regulations, and all other evidence, information and material required
by Lender or its counsel, shall be in form, scope and substance satisfactory to
Lender's counsel who must approve title to the Property, the legality, validity
and enforceability of all documents pertaining to the Loan, all proceedings in
connection therewith and all other matters relating to the Loan and the closing.
5. PREPAYMENT CONSIDERATION
(a) "Business Day" shall mean a day on which commercial
banks are not authorized or required by law to close in New York, New York.
(b) "Loan Year" shall mean each 365 or 366, as
applicable, day period after the first day of the first calendar month after the
Closing Date (or the Closing Date if the Loan closes on the first day of a
calendar month).
(c) "Prepayment Consideration" shall mean an amount equal
to the greater of (i) one percent (1%) of the principal balance of this Note
being prepaid, or (ii) the product of (A) the ratio of the amount of the
principal balance of this Note being prepaid over the outstanding principal
balance of this Note on the Prepayment Date (after subtracting the scheduled
principal payment on such Prepayment Date), multiplied by (B) the present value
as of the Prepayment Date of the remaining scheduled payments of principal and
interest from the Prepayment Date through the Maturity Date (including any
balloon payment) determined by discounting such payments at the Discount Rate
(as hereinafter defined) less the amount of the outstanding principal balance of
this Note on the Prepayment Date (after subtracting the scheduled principal
payment on such Prepayment Date). The "Discount Rate" is the rate which, when
compounded monthly, is equivalent to the Treasury Rate (as hereinafter defined),
when compounded semiannually. The "Treasury Rate" is the yield calculated by the
linear interpolation of the yields, as reported in Federal Reserve Statistical
Release H.15-Selected Interest Rate under the heading U.S. government
securities/Treasury constant maturities with maturities with maturity dates (one
longer and one shorter) most nearly approximating the Maturity Date. (In the
event Release H.15 is no longer published, Lender shall select a comparable
publication to determine the Treasury Rate.) Lender shall notify Borrower of the
amount and the basis of determination of the required prepayment consideration.
(d) "Treasury Rate" shall mean the yield calculated by
the linear interpolation of the yields, as reported in the Federal Reserve
Statistical Release H. 15-Selected Interest Rates under the heading U. S.
Government Securities/Treasury constant maturities for the week ending prior to
the Prepayment Date, of U.S. Treasury constant maturities with maturity dates
(one longer and one shorter) most nearly approximating the Maturity Date. In the
event Release H. 15 is no longer published, Lender shall select a comparable
publication to determine the Treasury Rate. Lender shall notify Borrower of the
amount and the basis of determination of the required
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Prepayment Consideration which shall be conclusive and binding on Borrower
absent manifest error
6. CONDITIONS TO CLOSING. Not less than ten (10) Business Days
prior to the Closing Date Lender shall have received the following:
(a) Debt Service Coverage. Satisfactory evidence to
Lender, including, without limitation, the Leases, an appraisal, and a rent
roll, which supports, in Lender's determination, the projected debt service
coverages (after deducting all required reserves, determined by Xxxxxx, from net
operating income) as required by Article B of this Commitment.
(b) Appraisal. An appraisal of the Property prepared by
an independent appraiser holding an M.A.I. designation who shall be designated
and engaged by Xxxxxx and licensed in the state where the Property is located.
Such appraisal shall be addressed to Lender and (i) shall be prepared in
accordance with current federal regulatory requirements, (ii) shall support the
projected debt service coverages (after deducting all required reserves,
determined by Lender, from net operating income) as required by Article B of
this Commitment, (iii) shall note any readily visible environmental conditions;
and (iv) shall be satisfactory to Lender in all other respects. The fee for said
appraisal shall be paid by Xxxxxxxx. The appraisal shall also indicate the basis
of and the assumptions used in calculating the appraised value.
(c) Title Policy. An ALTA title insurance policy with a
liability limit of not less than the principal amount of the Loan insuring the
Security Instrument to Lender as a first lien on the good and marketable fee
simple absolute title to the Property and issued by a title insurance company
(with co-insurance or re-insurance with direct access agreements as Lender may
require) in such forms, amounts and by such title insurance company(ies) as
shall be satisfactory to Lender and its counsel. The title insurance policy
shall be subject only to such exceptions as shall be approved by, and shall
contain such endorsements as may be required by, Xxxxxx's counsel.
(d) Survey. A current title survey of the Premises. The
survey shall be prepared by a licensed or registered land surveyor acceptable to
Lender, certified to Lender and the title insurance company and containing the
current ALTA/ACSM certification, which shall show a state of facts in form,
scope and substance acceptable to Lender including, but not limited to, an
adequate and accurate legal description, interior lot lines, if any, the
location of all adjoining streets and roads, the distance to and names of the
nearest intersecting streets, the location of all recorded and all physical
boundary lines, all strips, gores and overlaps with adjacent properties, the
location of all Improvements on the Premises, locations of utilities,
elevations, high water marks, easements and rights-of-way, whether of record or
apparent, ingress and egress to and from the Property and natural and
constructed objects affecting the Premises and showing any encroachments and/or
discrepancies with any recorded instruments or existing boundary markers.
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16
(e) Metes/Bounds Description. A metes and bounds
description of the Property acceptable to Lender.
(f) Opinion of Counsel. An opinion of counsel in form,
scope and substance satisfactory to Lender and Xxxxxx's counsel. Said opinion
shall cover such matters as Xxxxxx's counsel may request including, but not be
limited to, the following: that Borrower, each general partner or managing
member of Borrower, as applicable, any guarantors of Borrower's obligations
under the Loan Documents (the "Guarantors") and any Indemnitor(s), are duly
organized, validly existing and in good standing (if applicable) under the laws
of the State of their formation or incorporation and in the State where the
Property is located; that the execution and delivery of the Loan Documents have
been duly authorized; that the Loan Documents are not usurious and that the same
are valid, binding and enforceable in accordance with their terms and do not
violate or contravene any statute or contractual restriction binding on
Borrower, each general partner or managing member of Borrower, as applicable,
any Guarantors or any Indemnitor(s).
(g) Organizational Documents. If Borrower, any general
partner of Borrower or any Guarantor or Indemnitor is a corporation, a
certificate of incorporation certified by the Secretary of State of the State of
incorporation, a Certificate of Good Standing issued by the .Secretaries of
State of the State of incorporation and the State where the Property is located,
a copy of the by-laws certified by an officer of the corporation and a certified
copy of the corporate resolution authorizing the transaction in form
satisfactory to Lender and its counsel. If Borrower, any general partner of
Borrower or any Guarantor or Indemnitor is a partnership, a copy of the
partnership agreement with all amendments thereto certified by each general
partner of Xxxxxxxx, a filed partnership certificate certified by the Secretary
of State of the State of formation, and any other such evidence of partnership
authority as Xxxxxx's counsel may require shall be submitted to Lender in form
satisfactory to Lender and its counsel. If Borrower, any general partner of
Borrower, any Guarantor or Indemnitor is a limited liability company, a copy of
the articles of organization certified by the Secretary of State of the State of
organization, a copy of the operating agreement with all amendments thereto
certified by each managing member, and such other evidence of company authority
as Xxxxxx's counsel may require shall be submitted to Lender in form
satisfactory to Lender and its counsel. If Borrower, any general partner or
member of Borrower or any Guarantor or Indemnitor is a legal entity other than a
corporation, a partnership or a limited liability company, all organizational
documentation of such entity as Lender's counsel shall require shall be
delivered to Lender and its counsel in form satisfactory to Lender and its
counsel.
(h) Legal Compliance. Evidence, in form and substance
satisfactory to Lender and Xxxxxx's counsel, confirming that the Improvements on
the Property and the use thereof are in full compliance with the applicable
zoning, subdivision, environmental protection, toxic waste, asbestos and all
other applicable federal, state or
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17
local laws and ordinances, and all rules, regulations and requirements of any
and all governmental or quasi-governmental authorities having jurisdiction over
the Property with respect to the foregoing. The evidence shall include any and
all certificates, licenses, permits, approvals or consents therefor, including
certificates of occupancy or their legal equivalents permitting the use and
occupancy of the Property for the then present use and as intended by this
Commitment, a violations search of all applicable municipal agencies and
departments and, in addition, if required by Xxxxxx's counsel an opinion of
Xxxxxxxx's counsel or architect as to the foregoing. Such evidence shall be
based on the ownership of the Property without reference to easements or other
interests in real property. If Lender determines that the Property is not in
compliance with applicable access laws, Lender may impose additional conditions,
require monetary reserves, change the Loan Amount or decline to make the Loan.
(i) Leases. Leases and related documentation satisfactory
to Lender in all respects. If the Leases shall be written on a standard form of
lease, Borrower shall, prior to the closing of the Loan, submit such standard
forms of residential and commercial leases to Lender for Lender's approval. True
and complete copies of all existing Leases, and any amendments or modifications
thereto, and all Leases executed between the date of execution of this
Commitment and the closing of the Loan shall be delivered to Lender. If the
Property is used for multifamily housing, Borrower shall deliver and certify to
Lender a rent roll as set forth in Subsection (m) below in lieu of copies of all
Leases. Notwithstanding the foregoing, Lender reserves the right to receive and
approve any and all Leases affecting the Property.
(j) Service Contracts. Any and all management, operating
and/or service agreements covering the Property. Such agreements shall be
satisfactory in form and substance to Lender and shall be in full force and
effect and free from default by either party on the date of closing. All such
agreements shall be assigned to Lender. Lender, at its option, may require the
parties to any such agreement to enter into an agreement with Lender which shall
provide as follows:
(i) copies of all notices given or received under any
such agreement shall he sent to Lender:
(ii) Lender shall have the right but not the obligation to
perform any term, condition or agreement of Borrower under any such
agreement and to cure any default of Borrower under any such agreement
within specified additional time periods: and
(iii) such other provisions as Lender may require.
(k) Financial Statements. Certified financial statements
of Xxxxxxxx, each principal of Borrower and each of the Guarantors and the
Indemnitor(s) for the prior fiscal year prepared and certified by a nationally
recognized firm of certified public accountants, which financial statements
shall be in form and substance
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18
acceptable to Lender. If audited financial statements are not available for a
Borrower, Guarantor or Indemnitor, then Xxxxxxxx, Guarantor or Indemnitor, as
applicable, shall furnish financial statements acceptable to Xxxxxx including a
statement by such party's accountant, managing general partner, managing member
or chief financial officer, certified by the managing general partner, managing
member or the chief financial officer, whichever the case may be, describing the
basis of the presentation and certifying the financial statement as being true
and correct. Borrower, Guarantor and the Indemnitor(s) shall also deliver to
Lender federal and state income tax returns for the last two (2) calendar years
prepared by an independent certified public accountant, satisfactory to Lender.
At closing, Xxxxxxxx, each principal, managing member and general partner of
Xxxxxxxx, each Guarantor and each Indemnitor shall certify to Lender that there
has been no material adverse change since the audit and certification of the
most recent financial statement delivered to Lender.
(1) Insurance. Insurance policies or certificates
satisfactory to Lender as to amounts, types of coverage and the companies by
whom such policies are underwritten.
(i) Policies of insurance issued by carriers and
containing terms satisfactory to Lender in its sole discretion shall be
delivered to Lender in accordance with the following requirements:
(A) Property Insurance. Insurance with respect
to the Improvements and building equipment insuring against
any peril now or hereafter included within the classification
"All Risks of Physical Loss" in amounts at all times
sufficient to prevent Lender from becoming a co-insurer within
the terms of the applicable policies and under applicable law,
but in any event such insurance shall be maintained in an
amount which, after application of deductible, shall be equal
to the full insurable value of the Improvements and building
equipment, the term "full insurable value" to mean the actual
replacement cost of the Improvements and building equipment
(without taking into account any depreciation, and exclusive
of excavations, footings and foundations, landscaping and
paving) determined annually by an insurer, a recognized
independent insurance broker or an independent appraiser
selected and paid by Xxxxxxxx and in no event less than the
coverage required pursuant to the terms of any Lease:
(B) Liability Insurance. Comprehensive general
liability insurance, including bodily injury, death and
property damage liability, insurance against any and all
claims, including all legal liability to the extent insurable
and imposed upon Lender and all court costs and attorneys'
fees and expenses, arising out of or connected with the
possession, use, leasing, operation, maintenance or condition
of the Property in such amounts as are generally available at
commercially
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19
reasonable premiums and are generally required by
institutional lenders for properties comparable to the
Property but in any event for a combined single limit of at
least $6,000,000 ;
(C) Workers' Compensation Insurance. Statutory
workers' compensation insurance with respect to any work on or
about the Property;
(D) Business Interruption Insurance. Business
interruption and/or loss of "rental income" insurance in an
amount sufficient to avoid any co-insurance penalty and to
provide proceeds which will cover a period of not less than
one (1) year from the date of casualty or loss, the term
"rental income" to mean the sum of (A) the total then
ascertainable Rents payable under the Leases and (B) the total
ascertainable amount of all other amounts to be received by
Borrower from third parties which are the legal obligation of
the tenants, reduced to the extent such amounts would not be
received because of operating expenses not incurred during a
period of non-occupancy of that portion of the Property then
not being occupied:
(E) Boiler and Machinery Insurance. Broad form
boiler and machinery insurance (without exclusion for
explosion) covering all boilers or other pressure vessels,
machinery, and equipment located in, on or about the Property
and insurance against loss of occupancy or use arising from
any breakdown in such amounts as are generally required by
institutional lenders for properties comparable to the
Property;
(F) Flood Insurance. If required by Lender,
flood insurance in an amount at least equal to the lesser of
(A) the principal balance of the Note, or (B) the maximum
limit of coverage available for the Property under the
National Flood Insurance Act of 1968, The Flood Disaster
Protection Act of 1973 or the National Flood Insurance Reform
Act of 1994, as each may be amended;
(G) Builder's Risk Insurance. At all times
during which structural construction, repairs or alterations
are being made with respect to the Improvements (A) owner's
contingent or protective liability insurance covering claims
not covered by or under the terms or provisions of the above
mentioned commercial general liability insurance policy; and
(B) the insurance provided for in Subsection 6(1)(i)(A)
written in a so-called builder's risk completed value form (1)
on a non-reporting basis, (2) against all risks insured
against pursuant to Subsection 6(1)(i)(A), (3) including
permission to occupy the Property, and (4) with an agreed
amount endorsement waiving co-insurance provisions; and
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20
(H) Other Insurance. Such other insurance with
respect to the Property against loss or damage of the kinds
from time to time customarily insured against and in such
amounts as are required by institutional lenders for
properties comparable to the Property.
(i) All insurance provided for in
herein shall be obtained from a similar or successor
service) (each such insurer shall be referred to
below as a "Qualified Insurer"). All insurers
providing insurance required by this Commitment shall
be authorized to issue insurance in the state in
which the Property is located. The Policy referred to
in Subsection 6(1)(i)(B) above shall name Lender as
an additional named insured and the Policies referred
to in Subsection 6(1)(i)(A), (D), (E), (F) and (G),
and as applicable (H), above shall provide that all
proceeds be payable to Lender. The Policies referred
to in Subsections 6(1)(i)(A), (E), (F) and (G) shall
also contain: (i) a standard "non-contributory
mortgagee" endorsement or its equivalent relating,
inter alia, to recovery by Lender notwithstanding the
negligent or willful acts or omission of Lender; (ii)
to the extent available at commercially reasonable
rates, a waiver of subrogation endorsement as to
Lender; and (iii) an endorsement providing for a
deductible per loss of an amount not more than that
which is customarily maintained by prudent owners of
similar properties in the general vicinity of the
Property, but in no event in excess of $10,000. The
Policy referred to in Subsection 6(1)(i)(A) above
shall provide coverage for contingent liability from
Operation of Building Laws, Demolition Costs and
Increased Cost of Construction Endorsements together
with an "Ordinance or Law Coverage" or "Enforcement"
endorsement if any of the Improvements or the use of
the Property shall at any time constitute legal
non-conforming structures or uses. All Policies shall
contain (i) a provision that such Policies shall not
be cancelled or terminated, nor shall they expire,
without at least thirty (30) days' prior written
notice to Lender in each instance; and (ii) include
effective waivers by the insurer of all claims for
Insurance Premiums (defined below) against any loss
payees, additional insureds and named insureds (other
than Borrower). Certificates of insurance with
respect to all renewal and replacement Policies shall
be delivered to Lender not less than ten (10) days
prior to the expiration date of any of the Policies
required to be maintained hereunder, which
certificates shall bear notations evidencing payment
of applicable premiums (the "Insurance Premiums").
Originals or certificates of such replacement
Policies shall be delivered to Lender promptly after
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21
Xxxxxxxx's receipt thereof but in any case within
thirty (30) days after the effective date thereof. If
Borrower fails to maintain and deliver to Lender the
original Policies or certificates of insurance
required by this Security Instrument, upon ten (10)
days' prior notice to Borrower, Lender may procure
such insurance at Borrower's sole cost and expense.
(ii) Borrower shall comply with all
insurance requirements and shall not bring or keep or
permit to be brought or kept any article upon any of
the Property or cause or permit any condition to
exist thereon which would be prohibited by an
insurance requirement, or would invalidate the
insurance coverage required hereunder to be
maintained by Borrower on or with respect to any part
of the Property pursuant to this Subsection 6(1).
(m) Rent Roll and Operating Statement. A recent
operating statement and a current rent roll listing each and
every Lease, identifying the leased premises, names of all
tenants, square footage or other identification of space
leased, monthly rental and all other charges payable under the
Lease, date to which paid, term of Lease, date of occupancy,
date of expiration, rent arrears, amounts taken in settlement
of outstanding arrears, collections of rent for more than one
(1) month in advance, any and every special provision,
concession or inducement granted to tenants and such other
information as is reasonably requested by Lender. Borrower
shall sign. date, and certify the operating statement and the
rent roll as true and accurate. For multifamily properties,
the rent roll shall indicate which units are governed by rent
regulations, and Borrower shall certify that the rents do not
exceed the legal rent permitted to be collected under the
applicable rent regulations.
(n) Estoppel Letters. The estoppel letters
described in the Section of the Commitment entitled ESTOPPEL
LETTERS, if any. The estoppel letters delivered to Lender
shall provide, among other things, that:
(i) the Lease constitutes the entire
agreement between the landlord and the tenant;
(ii) the Lease has not been modified or
amended, except as specifically set forth in the
estoppel letter;
(iii) the Lease is in full force and
effect and the term is as per the Lease;
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22
(iv) the premises demised under the
Lease have been completed and the tenant has taken
possession of the same on a rent-paying basis;
(v) neither the tenant nor the landlord
under the Lease is in default under any of the terms,
covenants or provisions of the Lease and the tenant
knows of no event which, but for the passage of time
or the giving of notice, or both, would constitute an
event of default under the Lease by tenant or the
landlord thereunder;
(vi) neither the tenant nor the landlord
under the Lease has commenced any action or given or
received any notice for the purpose of terminating
the Lease;
(vii) all rents, additional rents and
other sums due and payable under the Lease have been
paid in full and no rents, additional rents or other
sums payable under the Lease have been paid for more
than one (1) month in advance of the due dates
thereof;
(viii) there are no offsets or defenses to
the payment of the rents, additional rents, or other
sums payable under the Lease;
(ix) the tenant has no option or right
of refusal to purchase any portion of the Property;
and
(x) the tenant has deposited the
security deposit set forth in the Lease with
landlord.
To the extent that estoppel letters are not delivered
for certain tenants, Lender may, in its sole discretion,
accept an estoppel letter from Borrower with respect to such
tenant's occupancy at the Property certified by Borrower as
being true and correct.
(o) U.C.C. Searches. U.C.C. Searches
against such parties as Lender may require showing that the
Property to the extent appropriate is owned by Borrower free
from any liens and encumbrances.
(p) Environmental Site Assessment. The
Environmental Site Assessment described in the Section of the
Commitment entitled APPRAISAL, ENVIRONMENTAL SITE ASSESSMENT
AND BUILDING CONDITION REPORTS. Such environmental site
assessment shall include an analysis with respect to the
following
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23
environmental conditions at the Property, which shall be
prepared by independent qualified environmental professionals
selected and engaged by Xxxxxx:
(i) a Phase I environmental site
assessment assessing the presence of environmental
contaminants, PCBs or storage tanks at the Property
conducted in accordance with ASTM Standard E 1527-93,
or any successor thereto published by ASTM;
(ii) an asbestos survey of the Property
which shall include random sampling of materials and
air quality testing;
(iii) if the Property is used for
residential housing, an assessment of the presence of
lead based paint, lead in water and radon in the
Improvements; and
(iv) such further site assessments as
Lender may require due to the results obtained in
(i), (ii) or (iii) above.
Borrower shall obtain permission for such
environmental professional to enter upon the Property for
purposes of conducting such environmental assessment. At least
twelve Business Days prior to the closing of the Loan, the
environmental professional shall telephone Xxxxxx's
environmental technical staff to provide an oral report, prior
to submitting the written Environmental Report.
The Environmental Report shall be accompanied by
Xxxxxx's standard Letter of Understanding Regarding
Environmental Assessment of Property providing that the
environmental assessment and the Environmental Report meet
Xxxxxx's requirements and that Xxxxxx and its successors and
assigns are entitled to rely on such environmental assessment
and such Environmental Report.
Borrower acknowledges and agrees that, based on any
information in such Environmental Report or any uncertainties
raised thereby, Xxxxxx reserves the absolute right, in its
sole and exclusive discretion, to decline to fund the Loan, to
impose additional conditions that must be met prior to or
after the closing of the Loan (including but not limited to
requiring additional investigation into environmental
conditions in connection with the Property, testing and
sampling of soil, water, air, building materials, or other
substances or materials), and/or to change any terms and
conditions of the Loan, including but not limited to the
principal amount thereof, the interest rate, representations
and warranties, covenants, guaranties, indemnities, and/or
other terms
-11-
24
and conditions of the Loan. If Lender declines to fund the
Loan, the Commitment Fee, the Origination Fee, and the
Processing Deposit paid by Borrower shall be applied by Lender
in accordance with the terms of this Commitment.
(q) Building Condition Reports. An engineer's
building condition report in form and substance satisfactory
to Lender, prepared by a consulting engineer selected and
engaged by Xxxxxx, and any additional or supplemental reports
that may be required by Xxxxxx. The reports shall evaluate the
physical condition of the Property, identifying conditions
requiring immediate or near term attention and estimate the
approximate cost of remediation (the "Building Condition
Report"). A remediation program and budget satisfactory to
Xxxxxx and Xxxxxx's consulting engineer must be agreed upon
with Borrower prior to closing. All fees and expenses in
connection with the Building Condition Report shall be paid by
Xxxxxxxx.
(r) Property Matters. Evidence satisfactory to
Lender of the following:
(i) that the Property is served by all
utilities required for the current or contemplated
use thereof. All utility service is provided by
public utilities and the Property has accepted or is
equipped to accept such utility service;
(ii) that all public roads and streets
necessary for service of and access to the Property
for the current or contemplated use thereof have been
completed, are serviceable and all-weather and are
physically and legally open for use by the public;
and
(iii) that the Property is served by
public water and sewer systems.
(s) Termite Inspection Report. [FOR MULTIFAMILY
PROPERTIES ONLY] A termite inspection report of the Property
in form and substance satisfactory to Lender.
7. SECURITY INSTRUMENT PROVISIONS. The Security Instrument shall
contain, among other things, the following provisions:
(a) Tax Escrow. Lender shall require Borrower to deposit
monthly in escrow, without interest, 1/12th of the annual real estate taxes,
water and sewer charges and assessments, as estimated by Xxxxxx. An initial
escrow deposit with respect to the foregoing taxes, charges and assessments will
be collected from Borrower at
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25
closing in order to establish an escrow to enable Lender to make such payments
to the appropriate taxing authority when due.
(b) Insurance Escrow. Lender shall require Borrower to
deposit monthly in escrow, without interest, 1/12th of the annual fire and other
hazard insurance premiums, as estimated by Lender. An initial escrow deposit for
the foregoing insurance premiums will be collected from Borrower at closing to
establish an escrow to enable Lender to make such payments of premiums to the
appropriate insurance company when due
(c) Late Payment. In the event any payment is not made
prior to the fifth (5th) day after its due date, a late charge of five percent
(5%) of the total payment due will be charged for the late payment.
(d) Due on Sale/Encumbrance. Any sale, assignment,
encumbrance, including, without limitation, subordinate financing or other
transfer of any portion of the Property, and any sale, transfer or hypothecation
of any interest in Borrower, or any partner, member or shareholder of Borrower
without Xxxxxx's prior written consent, shall be a default under the Security
Instrument. Lender may condition the consent required upon (i) the modification
of the Security Instrument, (ii) the assumption of the Security Instrument and
the other Loan Documents as modified, by the proposed transferee, (iii) the
payment of a transfer fee by Xxxxxxxx, (iv) the payment by Borrower of all
Lender's out-of-pocket expenses, including, without limitation, all of Lender's
attorneys' fees, (v) the approval by a Rating Agency of the proposed transferee,
(vi) the proposed transferee's continued compliance with the single purpose
entity requirements set forth in Subsection (p) below and (vii) such other
conditions as Lender may reasonably require at the time such consent is sought.
The fee referred to in (iv) above shall be payable by Borrower whether or not
Lender consents to the transfer.
(e) Default Rate. Borrower will pay, from the date an
event of default occurs under the Security Instrument, the Note or any of the
other Loan Documents (an "Event of Default") through the earlier of the date
upon which the Event of Default is cured or the date upon which the Loan is paid
in full, interest on the unpaid principal balance of the Note at a per annum
rate equal to the lesser of (a) five percent (5%) plus the Applicable Rate and
(b) the maximum interest rate which Borrower may by law pay or Lender may charge
and collect (the "Default Rate").
(f) Security Deposits. Upon the occurrence of an Event of
Default, to the extent permitted by law, Borrower will transfer to Lender all
security deposit accounts (the "Security Deposits") with respect to Leases
relating to the Property, which will be held by Lender in accordance with the
terms of each respective Lease. In the event Lender is not permitted by law to
hold the Security Deposits, Borrower shall deposit the Security Deposits into an
account with a federally insured institution as
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26
approved by Xxxxxx. To the extent required by law, Lender shall hold the
Security Deposits in an interest bearing account selected by Lender in its sole
discretion.
(g) Default Prepayment. If a Default Prepayment (defined
below) occurs, Borrower shall pay to Lender the entire principal amount of the
Loan and all accrued interest thereon. including. without limitation, the
following amounts:
(i) if the Default Prepayment occurs prior to the time
when prepayment of the principal balance of the Loan is permitted, an
amount equal to the sum of (A) the present value of the interest
payments which would have accrued on the principal balance of the Loan
(outstanding as of the date of such Default Prepayment) at the
Applicable Rate from the date of such Default Prepayment to the first
date prepayment is permitted pursuant to the Commitment discounted at a
rate equal to the Treasury Rate except that such Treasury Rate shall be
based on the U. S. Treasury constant maturity most nearly approximating
the date upon which prepayment is first permitted pursuant to the
Commitment, and (B) the Prepayment Consideration calculated as of the
first date prepayment is permitted pursuant to the Commitment; and
(ii) if the Default Prepayment occurs at a time when
prepayment of the principal balance of the Loan is permitted, the
Prepayment Consideration.
For purposes of the Commitment, the term "Default Prepayment" shall mean a
prepayment of the principal amount of the Loan made after the occurrence of any
Event of Default or an acceleration of the Maturity Date under any
circumstances, including, without limitation, a prepayment occurring in
connection with reinstatement of the Security Instrument provided by statute
under foreclosure proceedings or exercise of a power of sale, any statutory
right of redemption exercised by Borrower or any other party having a statutory
right to redeem or prevent foreclosure. any sale in foreclosure or under
exercise of a power of sale or otherwise.
(h) Leases. (i) Borrower may enter into a proposed Lease
(including the renewal or extension of an existing Lease ("a Renewal Lease"))
without the prior written consent of Lender, provided such proposed Lease or
Renewal Lease (A) provides for rental rates and terms comparable to existing
local market rates and terms (taking into account the type and quality of the
tenant) as of the date such Lease is executed by Borrower (unless, in the case
of a Renewal Lease, the rent payable during such renewal, or a formula or other
method to compute such rent, is provided for in the original Lease), (B) is an
arms-length transaction with a bona fide, independent third party tenant, (C)
does not have a materially adverse effect on the value of the Property taken as
a whole, (D) is subject and subordinate to the Security Instrument and the
lessee thereunder agrees to attorn to Lender, and (E) is written on the standard
form of lease approved by Lender. All proposed Leases which do not satisfy the
requirements set forth in this Commitment shall be subject to the prior approval
of Lender and its counsel, at Xxxxxxxx's expense. Borrower shall promptly
deliver to Lender copies of
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27
all Leases which are entered into pursuant to this Subsection together with
Borrower's certification that it has satisfied all of the conditions of this
Subsection.
(ii) Borrower (A) shall observe and perform all
the obligations imposed upon the lessor under the Leases and shall not do or
permit to be done anything to impair the value of any of the Leases as security
for the Debt; (B) upon request, shall promptly send copies to Lender of all
notices of default which Borrower shall send or receive thereunder; (C) shall
enforce all of the material terms, covenants and conditions contained in the
Leases upon the part of the tenant thereunder to be observed or performed, (D)
shall not collect any of the Rents more than one (1) month in advance (except
security deposits shall not be deemed Rents collected in advance); (E) shall not
execute any other assignment of the lessor's interest in any of the Leases or
the Rents; and (F) shall not consent to any assignment of or subletting under
any Leases not in accordance with their terms, without the prior written consent
of Lender.
(iii) Borrower may, without the consent of Lender,
amend, modify or waive the provisions of any Lease or terminate, reduce rents
under, accept a surrender of space under, or shorten the term of, any Lease
(including any guaranty, letter of credit or other credit support with respect
thereto) provided that such action (taking into account, in the case of a
termination, reduction in rent, surrender of space or shortening of term, the
planned alternative use of the affected space) does not have a materially
adverse effect on the value of the Property taken as a whole, and provided that
such Lease, as amended, modified or waived, is otherwise in compliance with the
requirements of this Security Instrument and any subordinate agreement binding
upon Lender with respect to such Lease. A termination of a Lease with a tenant
who is in default beyond applicable notice and grace periods shall not be
considered an action which has a materially adverse effect on the value of the
Property taken as a whole. Any amendment, modification, waiver, termination,
rent reduction, space surrender or term shortening which does not satisfy the
requirements set forth in this Subsection shall be subject to the prior approval
of Lender and its counsel, at Borrower's expense. Borrower shall promptly
deliver to Lender copies of amendments, modifications and waivers which are
entered into pursuant to this Subsection together with Borrower's certification
that it has satisfied all of the conditions of this Subsection.
(iv) Notwithstanding anything contained herein to
the contrary, Borrower shall not, without the prior written consent of Xxxxxx,
enter into, renew, extend, amend, modify, waive any provisions of, terminate,
reduce rents under, accept a surrender of space under, or shorten the term of,
any Major Lease. The term "Major Lease" shall mean any lease of space more than
50,000 sf, including the current lease at closing to Plasti-Line, Inc..
(i) Estoppel Certificates. At Lender's request, Borrower
shall deliver, from time to time, estoppel certificates in form and substance
satisfactory to
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Lender from Borrower and all commercial tenants under then existing Leases which
Lender in its discretion designates.
(j) Right of Redemption. If the statutes of the
jurisdiction in which the Property is located provide for a right of redemption
but permit Borrower to waive that right, such provisions shall be incorporated
in the Security Instrument. All parties necessary to join in the Security
Instrument or other Loan Documents to release any marital interest(s) in the
Property shall do so.
(k) Financial Statements.
(A) Borrower, Indemnitor(s) and Guarantors, if
any, shall keep adequate books and records of account in accordance with
generally accepted accounting principles ("GAAP"), or in accordance with other
methods acceptable to Lender, consistently applied and furnish to Lender: (i)
monthly certified rent rolls signed and dated by Borrower, detailing the names
of all tenants of the Improvements, the portion of Improvements occupied by each
tenant, the base rent and any other charges payable under each Lease and the
term of each Lease, including the expiration date, the extent to which any
tenant is in default under any Lease, and any other information as is reasonably
required by Lender, within twenty (20) days after the end of each calendar
month; (ii) quarterly operating statements of the Property, prepared and
certified by Borrower in the form required by Lender, detailing the revenues
received, the expenses incurred and the net operating income before and after
debt service (principal and interest) and major capital improvements for that
quarter and containing appropriate year to date information, within thirty (30)
days after the end of each fiscal quarter; (iii) an annual operating statement
of the Property detailing the total revenues received, total expenses incurred,
total cost of all capital improvements, total debt service and total cash flow,
to be prepared and certified by Borrower in the form required by Lender, or if
required by Lender, an audited annual operating statement prepared and certified
by an independent certified public accountant acceptable to Lender, within sixty
(60) days after the close of each fiscal year of Borrower; (iv) an annual
balance sheet and profit and loss statement of Borrower, any Guarantors and any
Indemnitor(s) in the form required by Lender, prepared and certified by the
respective Borrower, Guarantors and/or Indemnitor(s), or if required by Lender,
audited financial statements prepared by an independent certified public
accountant acceptable to Lender, within sixty (60) days after the close of each
fiscal year of Borrower, Guarantors and Indemnitor(s), as the case may be; and
(v) an annual operating budget presented on a monthly basis consistent with the
annual operating statement described above for the Property, including cash flow
projections for the upcoming year, and all proposed capital replacements and
improvements at least fifteen (15) days prior to the start of each fiscal year
(B) Upon request from Xxxxxx, Borrower, any
Guarantor and any Indemnitor shall furnish in a timely manner to Lender: (i) a
property management report for the Property, showing the number of inquiries
made and/or rental
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29
applications received from tenants or prospective tenants and deposits received
from tenants and any other information requested by Xxxxxx, in reasonable detail
and certified by Borrower (or an officer, general partner, member or principal
of Borrower if Borrower is not an individual) under penalty of perjury to be
true and complete, but no more frequently than quarterly; and (ii) an accounting
of all security deposits held in connection with any Lease of any part of the
Property, including the name and identification number of the accounts in which
such security deposits are held, the name and address of the financial
institutions in which such security deposits are held and the name of the person
to contact at such financial institution, along with any authority or release
necessary for Lender to obtain information regarding such accounts directly from
such financial institutions.
(C) Borrower, any Guarantor and any Indemnitor
shall furnish Lender with such other additional financial or management
information (including State and Federal tax returns) as may, from time to time,
be reasonably required by Xxxxxx in form and substance satisfactory to Lender.
(D) Borrower, any Guarantor and any Indemnitor
shall furnish to Lender and its agents convenient facilities for the examination
and audit of any such books and records.
(1) Environmental Matters. Borrower shall represent,
warrant and covenant with respect to the items set forth in Subsections 9(a)-(c)
of these General Conditions and shall additionally represent, warrant and
covenant that:
(i) there are no hazardous or toxic substances in, on or
under the Property, except those that are in compliance with applicable
federal, state and local environmental laws;
(ii) there are no environmental permits required for
current or anticipated uses of the Property; and
(iii) Borrower shall, at its cost and expense, comply with
all written requests of Lender to effectuate remediation of any
condition in, on, under or from the Property or any directive from any
governmental authority.
(m) Indemnification. Borrower and Indemnitor(s), if any,
shall indemnify Lender for all costs incurred by Lender in connection with the
removal of hazardous wastes from the Property, regardless of whether Borrower
caused the presence of such hazardous substance; and shall indemnify Lender
against any loss, cost, damage or expense that Lender may incur, directly or
indirectly, as a result of or in connection with the assertion against Lender of
any claim relating to the presence or removal of any hazardous substance on the
Property. The Security Instrument shall also contain an indemnity from Borrower
with respect to its obligations under certain provisions of ERISA (defined
below). In addition, Borrower shall indemnify Lender
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against any loss, costs, damage, or expense that Lender may incur arising out of
the following: (i) its ownership of the Security Instrument or the Property;
(ii) the Loan Documents or any enforcement action taken by Lender in connection
therewith; (iii) any accident or injury occurring on the Property; (iv) any
claims asserted against Lender by reason of its alleged obligations under any
Lease; (v) the payment of any brokerage commission to anyone in connection with
funding the Loan; or (vi) any misrepresentation made by Borrower to Lender in
the Security Instrument or the other Loan Documents. The indemnifications
contained in the Security Instrument with respect to the presence of hazardous
substances at the Property and Xxxxxxxx's obligations with respect to ERISA
shall survive the satisfaction, termination or assignment of the Security
Instrument, the Note and the other Loan Documents.
(n) Limitations on Exculpation.
(i) The exculpation provided for in Article F of this
Commitment shall not: (A) constitute a waiver, release or impairment of
any obligation evidenced or secured by the Note or the Security
Instrument; (B) impair the right of Lender to name Borrower as a party
defendant in any action or suit for judicial foreclosure and sale under
the Security Instrument; (C) affect the validity or enforceability of
any indemnity, guaranty, master Lease or similar instrument made in
connection with the Note or the Security Instrument, including without
limitation, the Environmental Indemnity Agreement; (D) impair the right
of Lender to obtain the appointment of a receiver; (E) impair the
enforcement of the Assignment of Leases and Rents; or (F) impair the
right of Lender to enforce Borrower's obligations and liabilities under
certain indemnities relating to (1) certain taxes relating to the
making and/or recording of the Security Instrument or the Note, (2) the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")
or (3) certain asbestos, toxic waste or other hazardous substances
affecting the Property, including without limitation, the Environmental
Indemnity Agreement.
(ii) Notwithstanding the provisions of this Subsection (i)
to the contrary, Borrower shall be personally liable to Lender for the
losses it incurs due to: (i) fraud or intentional misrepresentation by
Borrower or any other person or entity in connection with the execution
and the delivery of this Note, the Security Instrument or the Other
Security Documents or any documents or certificate now or at any time
during the term of the Loan evidenced by the Note; (ii) Borrower's
misapplication or misappropriation of Rents received by Borrower after
the occurrence of and during the continuance of an Event of Default;
(iii) Borrower's misapplication or misappropriation of tenant security
deposits or Rents collected in advance; (iv) the misapplication or the
misappropriation of insurance proceeds or condemnation awards; (v)
personal property taken from the Property by or on behalf of Xxxxxxxx
and not replaced with personal property of the same utility and of the
same or greater value; (vi) any act of arson by Borrower; or (vii) any
fees or commissions paid by
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Borrower after the occurrence of and during the continuance of an Event
of Default to any principal, affiliate, member or general partner of
Borrower or Guarantor in violation of the terms of the Note, the
Security Instrument or the Other Security Documents.
(iii) Notwithstanding the foregoing, the agreement of
Lender not to pursue recourse liability as set forth in subsection (i)
above SHALL BECOME NULL AND VOID and shall be of no further force and
effect in the event of a sale, transfer or encumbrance by Borrower
without Lender's prior consent or if the Property or any part thereof
shall become an asset in (i) a voluntary bankruptcy or insolvency
proceeding, or (ii) an involuntary bankruptcy or insolvency proceeding
(other than one filed by Xxxxxx) which is not dismissed within ninety
(90) days of filing.
(o) Representations and Warranties.
(i) Borrower shall make representations and warranties
including, without limitation, the following:
(A) that Xxxxxxxx has good title to the Property
and the Property is free and clear of all liens, encumbrances,
servitudes and easements, recorded or unrecorded except as set
forth in the marked-up commitment for title insurance to be
delivered and approved by Xxxxxx;
(B) that all fixtures and articles of personally
attached to the Property or used or usable in connection with
the operation of the Property are owned by Borrower and not
subject to any conditional bills of sale, chattel mortgages or
any other liens except as approved by Xxxxxx;
(C) that no petition in bankruptcy has ever been
filed by or against Xxxxxxxx, Guarantor, Indemnitor or any
related entity, or any principal thereof, in the last seven
(7) years, and neither Borrower, Guarantor, Indemnitor nor any
related entity, or any principal thereof, in the last seven
(7) years has ever made any assignment for the benefit of
creditors or taken advantage of any insolvency act or any act
for the benefit of debtors;
(D) that the Property complies with all
applicable federal, state and local laws, ordinances, rules
and regulations including, without limitation, building codes,
zoning ordinances, land use and environmental laws, access
laws, rules, regulations, orders and requirements;
(E) that a true and complete rent roll has been
delivered;
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(F) that all of such Leases are arms-length
agreements with bona fide, independent third parties, there
are no prior assignments of any Lease or any portion of Rents,
additional Rents, charges, issues or profits due and payable
or to become due and payable thereunder which are outstanding
and have priority to the Assignment of Leases and Rents, the
Leases have not been modified or amended except as
specifically stated, each Lease is in full force and effect,
each Lease is subordinate in lien and payment to the Security
Instrument, no party under the Lease is in default, all Rents
due have been paid in full and no Rent has been paid more than
one month in advance, no tenant under any Lease has an option
to purchase the Property or any portion thereof and there are
no defenses or offsets against the enforcement of any Lease;
(G) that there is no litigation, pending or
threatened, against Borrower, any Guarantor or any Indemnitor
of the Loan;
(H) that any and all construction work,
alterations and repairs with respect to the Property have been
paid for in full and no notice of any mechanics' or
materialmen's liens or of any claims of right to any such
liens have been received;
(I) that all financial data and documentation
furnished on behalf of Xxxxxxxx is true, complete and correct
as of the date of the closing of the Loan;
(J) that Borrower has not defaulted under its
obligations with respect to any other outstanding
indebtedness;
(K) that the Property is assessed for real
estate tax purposes as one or more wholly independent tax lot
or lots, separate from any adjoining land or improvements not
constituting a part of such lot or lots, and no other land or
improvements is assessed and taxed together with the Property
or any portion thereof;
(L) that the Loan is solely for the business
purpose of Xxxxxxxx, and is not for personal, family,
household, or agricultural purposes; and
(M) that the relationship between Xxxxxxxx and
Xxxxxx is solely that of debtor and creditor, and Xxxxxx has
no fiduciary or other special relationship with Borrower, and
no term or condition of this Commitment, the Security
Instrument, the Note or the other Loan Documents shall be
construed so as to deem the relationship of Borrower and
Lender to be other than that of debtor and creditor.
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(ii) Borrower shall represent and warrant in the Security
Instrument with respect to its compliance with certain ERISA
provisions.
(p) Special Covenants. Borrower shall covenant and agree
that it has not and shall not:
(i) engage in any business or activity other
than the ownership, operation and maintenance of the Property,
and activities incidental thereto;
(ii) acquire or own any material asset other than
(i) the Property, and (ii) such incidental personal property
as may be necessary for the operation of the Property;
(iii) merge into or consolidate with any person or
entity or dissolve, terminate or liquidate in whole or in
part, transfer or otherwise dispose of all or substantially
all of its assets or change its legal structure, without in
each case Lender's consent;
(iv) fail to preserve its existence as an entity
duly organized, validly existing and in good standing (if
applicable) under the laws of the jurisdiction of its
organization or formation, and qualification to do business in
the state where the Property is located, if applicable, or
without the prior written consent of Lender, amend, modify,
terminate or fail to comply with the provisions of Borrower's
Partnership Agreement, Articles or Certificate of
Incorporation, Articles of Organization or similar
organizational documents, as the case may be;
(v) own any subsidiary or make any investment
in, any person or entity without the consent of Lender;
(vi) commingle its assets with the assets of any
of its general partners, members, affiliates, principals or of
any other person or entity;
(vii) incur any debt, secured or unsecured, direct
or contingent (including guaranteeing any obligation), other
than the Loan, except for trade payables in the ordinary
course of its business of owning and operating the Property
provided that such debt is not evidenced by a note and paid
when due;
(viii) become insolvent and fail to pay its debts
and liabilities from its assets as the same shall become due;
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(ix) fail to maintain its records, books of
account and bank accounts separate and apart from those of the
partners, members, principals and affiliates of Borrower, the
affiliates of a partner, member or principal of Borrower and
any other person or entity;
(x) enter into any contract or agreement with
any general partner, member, principal or affiliate of
Borrower, Guarantor or Indemnitor, or any general partner,
member, principal or affiliate thereof, except upon terms and
conditions that are intrinsically fair and substantially
similar to those that would be available on an arms-length
basis with third parties other than any general partner,
member, principal or affiliate of Borrower, Guarantor or
Indemnitor, or any general partner, member, principal or
affiliate thereof;
(xi) seek the dissolution or winding up in whole,
or in part, of Borrower;
(xii) fail to correct any known misunderstandings
regarding the separate identity of Xxxxxxxx;
(xiii) hold itself out to be responsible for the
debts of another person;
(xiv) make any loans or advances to any third
party (including any general partner, member, principal or
affiliate of Borrower or any general partner, member,
principal or affiliate thereof);
(xv) fail to file its own tax returns;
(xvi) agree to, enter into or consummate any
transaction which would render Borrower unable to furnish any
ERISA certification required pursuant to the Security
Instrument;
(xvii) fail either to hold itself out to the public
as a legal entity separate and distinct from any other entity
or person or to conduct its business solely in its own name in
order not (i) to mislead others as to the identity with which
such other party is transacting business, or (ii) to suggest
that Borrower is responsible for the debts of any third party
(including any general partner, member, principal or affiliate
of Borrower or any general partner, member, principal or
affiliate thereof;
(xviii) fail to maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business
operations;
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(xix) file or consent to the filing of any
petition, either voluntary or involuntary, to take advantage
of any applicable insolvency, bankruptcy, liquidation or
reorganization statute, or make an assignment for the benefit
of creditors; [or]
(xx) share any common logo with or hold itself
out as or be considered as a department or division of (i) any
general partner, principal, member or affiliate of Borrower,
(ii) any affiliate of a general partner, principal or member
of Borrower, or (iii) any other person or entity.[; or]
8. SECONDARY MARKET. Lender may, at any time, sell, transfer or
assign the Loan, the Loan Documents, and any or all servicing rights with
respect to the Loan, grant participations in the Loan or issue mortgage
pass-through certificates or other securities evidencing a beneficial interest
in the Loan in a rated or unrated public offering or private placement (the
"Securities"), and may forward to each purchaser, transferee, assignee,
servicer, participant, investor in such Securities, or any Rating Agency rating
such Securities (collectively, the "Investor"), or prospective Investor all
documents and information Lender has with respect to the Loan as Lender deems
necessary or desirable. Borrower, the Guarantors and Indemnitor(s), if any,
shall furnish and consent to Lender furnishing to such Investors or such
prospective Investors all information concerning the Loan, the Property, the
Leases and the financial condition of Borrower, any Guarantor, any Indemnitor,
and the Property in such form, substance and detail as Lender, such Investor or
such prospective Investor may request. Upon any such transfer, Borrower, the
Guarantors and the Indemnitor(s) shall provide an estoppel certificate to the
Investor or any prospective Investor in form and content satisfactory to Lender,
such Investor or such prospective Investor together with such other documents as
Lender may reasonably require.
9. ENVIRONMENTAL REPRESENTATIONS. Borrower represents, warrants
and covenants as of the date of this Commitment and as of the date of the
Borrower's acceptance of this Commitment, that:
(a) the Property is not currently used in a manner, and
to the best of Xxxxxxxx's knowledge no prior use (by Borrower or any prior
owner) has occurred, which violates applicable federal, state or local
environmental laws;
(b) neither Borrower nor any tenant has received any
notice from a government agency for a violation of such laws and if such notice
is received, Borrower shall immediately notify Lender;
(c) Borrower shall not cause nor permit any tenant to
cause a violation of any applicable federal, state or local environmental laws,
nor permit any environmental liens to be placed on the Property;
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36
(d) Xxxxxxxx and Indemnitor(s) shall indemnify Lender for
all costs incurred by Lender in connection with the removal of hazardous wastes
from the Property, regardless of whether Borrower caused the presence of such
hazardous waste; and
(e) Borrower and Indemnitor(s) shall indemnify Lender
against any loss, costs, damage or expense that Lender may incur, directly or
indirectly, as a result of or in connection with the assertion against Lender of
any claim relating to the presence or removal of any hazardous waste on the
Property.
10. OTHER DOCUMENTATION. Borrower shall provide Lender with such
other evidence, information and material as Lender or its counsel may reasonably
require.
11. NO ORAL CHANGE. The Commitment may not be modified, amended,
waived, extended, changed, discharged or terminated orally, or by any act or
failure to act on the part of Lender or Borrower, but only by an agreement in
writing signed by the party against whom the enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.
12. NOTICES. All notices or other written communications hereunder
shall be deemed to have been properly given (i) upon delivery, if delivered in
person or by facsimile transmission with receipt acknowledged by the recipient
thereof and confirmed by telephone by sender, (ii) one (1) Business Day after
having been deposited for overnight delivery with any reputable overnight
courier service, or (iii) three (3) Business Days after having been deposited in
any post office or mail depository regularly maintained by the U.S. Postal
Service and sent by registered or certified mail, postage prepaid, return
receipt requested, addressed to Borrower or Lender, as the case may be, at the
addresses set forth on the first page of this Commitment or addressed as such
Party may from time to time designate by written notice to the other parties.
EITHER PARTY BY NOTICE TO THE OTHER MAY DESIGNATE ADDITIONAL OR DIFFERENT
ADDRESSES FOR SUBSEQUENT NOTICES OR COMMUNICATIONS.
13. GOVERNING LAW. This Commitment has been issued by Xxxxxx in
Cleveland, Ohio from where all advances of the Loan, closing of the Loan,
delivery of any additional security and all matters incidental to the Loan or
this Commitment shall take place. This Commitment and all other Loan Documents
shall be governed by and construed in accordance with the laws of the State of
Ohio and the applicable laws of the United States of America. Notwithstanding
the foregoing, however, the laws of the State where the Property is located
shall apply with respect to (a) the creation, perfection, priority and
enforcement of the lien or the pledge, as the case may be, of (i) the Security
Instrument, (ii) the Assignment of Leases and Rents and (iii) to the extent the
escrow accounts created pursuant to the Completion/Repair and Security Agreement
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37
and the Replacement Reserve and Security Agreement are located in the State
where the Property is located, the Completion/Repair and Security Agreement and
the Replacement Reserve and Security Agreement, and (b) the determination of
deficiency judgments.
14. WAIVER/SURVIVAL. The provisions of this Commitment cannot be
waived or modified unless such waiver or modification be in writing and signed
by both Borrower and Lender. The terms of this Commitment which are not
incorporated in the formal Loan Documents shall, to the extent applicable,
survive the closing of the Loan and remain binding on the parties. This
Commitment is for the benefit only of the parties thereto and no third party
shall have any interest therein or in the proceeds of the Loan. This Commitment
sets forth the entire agreement between Borrower and Lender, and all other
agreements shall be deemed to have merged herewith. Where terms and conditions
of this Commitment differ from the terms and conditions of the Loan as applied
for, this Commitment shall prevail. Borrower acknowledges that Xxxxxx has made
no representations or warranties to Borrower except those as set forth herein.
15. NON-ASSIGNABILITY. This Commitment is issued in response to
Xxxxxxxx's application for a loan and in reliance upon the representations made
in such application. This Commitment and the proceeds thereof are not assignable
by Borrower to any other person, corporation, partnership or limited liability
company without Xxxxxx's consent in writing. For the purposes of this Section,
an assignment shall be deemed to include (i) if Borrower is a corporation, the
voluntary or involuntary sale, conveyance or transfer of Borrower's stock (or
the stock of any corporation directly or indirectly controlling Borrower by
operation of law or otherwise) or the creation or issuance of a new stock by
which an aggregate of more than 10% of Borrower's stock shall be vested in a
party or parties who are not now stockholders, (ii) if Borrower is a
partnership, the change, removal or resignation of a general partner or managing
partner, or (iii) if Borrower is a limited liability company, the change,
removal or resignation of a managing member.
16. PUBLICITY. In the event the Loan contemplated herein is made,
Xxxxxx shall have the right to issue press releases, advertisements and other
promotional materials describing in general terms or in detail, Xxxxxx's
participation in such transaction.
17. CONFIDENTIALITY. This Commitment is being furnished to
Borrower on a confidential basis and may not be reproduced, used, distributed or
disclosed to third parties prior to acceptance, except with Xxxxxx's prior
written consent.
18. CLOSING FUNDS. All funds required to be paid by Borrower to
Lender at closing must be in the form of certified funds or made by wire
transfer of immediately available federal funds.
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38
19. OBLIGATIONS TO FUND. If, on or before the Closing Date, any of
the following shall have occurred, Lender shall have no obligation to close and
fund the Loan under this Commitment:
(a) Casualty/Damage. Any of the Property shall have been
damaged and not repaired to Lender's satisfaction or been taken in condemnation
or other similar proceeding, or any such proceeding shall be pending;
(b) Structural Damage. If there shall have been a
structural change in the physical condition of any portion of the Property;
(c) Violations. Any notice of violations of any municipal
ordinances shall have been filed against the Property by any municipal
department;
(d) Bankruptcy. If Borrower, any Guarantor or Indemnitor
or any partners, members or principal shareholders or officers of any of them,
or any tenant under any lease deemed by Lender to be material to Lender's
security or any guarantor of any such lease shall be the subject of any
bankruptcy, reorganization or insolvency proceeding;
(e) Environmental. Discovery of any environmental
conditions at the Property unacceptable to Lender;
(f) Site Inspection. An unsatisfactory Engineer's Report
or site inspection conducted by Lender or any engineering firm retained by
Xxxxxx;
(g) Adverse Financial Change. The income and expenses of
the Property, the Leases, the occupancy of the Property and all other features
of the transaction, including the financial condition of Borrower, any Guarantor
or Indemnitor, as represented in this Commitment, in any loan application or in
any other documents and communications presented to Lender in order to induce
Lender to make the Loan shall have materially changed;
(h) General Legal Compliance. Any action, suit or
proceeding, judicial, administrative or otherwise is pending against or
affecting Borrower or the Property;
(i) Representations and Warranties. If the
representations and warranties contained herein are false or incorrect in any
respect; or
(j) Default. If any condition occurs or shall have
occurred which would be deemed an Event of Default under the Loan Documents if
they were in effect.
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39
20. BROKER INDEMNIFICATION. Borrower represents that it shall pay
any and all brokerage commissions owed to any broker in this transaction. It is
understood and agreed that any broker is the agent for Xxxxxxxx and that no
statement, acts or representations on the part of it or its agents shall be
considered binding upon Lender. It is further understood and agreed that by
Xxxxxx's issuance of the Commitment it shall be under no obligation for payment
of any brokerage commission or fee of any kind with respect to the Commitment
and that by Xxxxxx's issuance of the Commitment to the Borrower, Xxxxxxxx agrees
to pay the fee and commission of any broker and to indemnify, save harmless and
defend Xxxxxx from and against any and all claims asserted by any broker for
brokers' or finders' fees and commissions in connection with the negotiation,
execution and consummation of the Loan, the Commitment, such indemnity to
include Xxxxxx's counsel fees.
21. REPRESENTATIONS AND WARRANTIES. All representations and
warranties made by Borrower herein shall also be deemed made as of the Closing
Date.
22. SOLE DISCRETION OF LENDER. Wherever pursuant to this
Commitment (a) Lender exercises any right given to it to approve or disapprove,
(b) any arrangement or term is to be satisfactory to Lender, or (c) any other
decision or determination is to be made by Lender, the decision of Lender to
approve or disapprove, all decisions that arrangements or terms are satisfactory
or not satisfactory and all other decisions and determinations made by Lender,
shall be in the sole and absolute discretion of Lender and shall be final and
conclusive, except as may be otherwise expressly and specifically provided
herein
SPECIAL CONDITIONS TO COMMITMENT
Borrower must enter in to a twenty-five (25) year lease with
Plasti-Line, Inc. at rental rates at least 5% above market rents, as determined
by an independent appraisal. The lease must be an absolute net lease with CPI
increase at least every five (5) years, and must be satisfactory to Lender in
its sole and absolute discretion.
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40
EXHIBIT A: TERM SHEET
1. Loan Amount: $3,500,000
2. Assumed Interest Rate: 9.25%
3. Debt Service Coverage Ratio: 125%
4. Basis Points over the applicable U.S.
Treasury Bonds: 300
5. Maturity Date of U.S. Treasury Bonds: 10 Year U.S. Treasury
6. Amortization Period: 25 Years
7. Maturity Date of Loan: tenth (10th)
8. Prepayment Lockout Period: sixth (6th)
9. Application Fee: $2,500
10. Processing Deposit: $10,000
11. Good Faith Deposit: Not Applicable
12. Origination Fee: 1.0% of the Loan Amount
13. Portion of Origination Fee due with
Commitment: 1/2% of the Loan Amount
14. Check Amount to be Returned with
Commitment: $30,000.00
15. [Miscellaneous]:
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16. [Miscellaneous]:
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17. [Miscellaneous]:
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KeyCorp Real Estate Capital Markets, Inc. Closer:
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1. Date:
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