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Exhibit (b)(6)
PW REAL ESTATE INVESTMENTS INC.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
September 19, 2000
Radiant Partners, LLC
000 Xxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Mr. Xxxxxx Xxxxxxxx
Re: First Mortgage Loan - 3rd Street, Two Rivers and 5th & Xxxxxxxx
---------------------------------------------------------------
Dear Xx. Xxxxxxxx:
PW Real Estate Investments Inc. ("Lender") is pleased to present the terms
and conditions of its commitment to make a mortgage loan to be secured by three
properties, as described below (the "Mortgage Loan") to Radiant Partners, LLC,
Xxxxxx Xxxxxxxx, Xxxx Xxxxxx and Xxxxx Xxxxxxxxxxx (collectively, the "Client").
Upon the Client's acceptance of these terms and conditions in the manner
provided below, this letter (this "Commitment Letter") will serve as Xxxxxx's
commitment to provide the loan and the Client's obligation to accept the loan,
subject to and in accordance with the following.
Borrower: A to be formed single purpose, bankruptcy-remote entity
acceptable to Lender and owned and controlled by the
Client and the providers of equity financing referred
to below.
Lender: PW Real Estate Investments Inc. or its successors or
assigns.
Property
Description: The Mortgage Loan will be secured by the following
properties (each, a "Property"): (i) certain real
property located at 000 Xxxx Xxxxxxxx Xxxxxx xx xxx
xxxx xx Xxxxxxxxx, Xxxx, consisting of a parking area;
(ii) certain real property located at 000 Xxxxx
Xxxxxxxxx Xxxxx xx xxx xxxx xx Xxxxxxxxxxx, Xxxxxxxxx,
on which is situated an office building commonly known
as the Two Rivers Business Center; and (iii) certain
real property located at 000 Xxxx Xxxxxxxx Xxxxxx xx
xxx xxxx xx Xxxxxxxx, Xxxxxxxx, on which is situated a
parking garage (together with all fixtures, equipment
and articles of personal property affixed to or used in
the management, maintenance and operation of such
Property, the "Third Street Property," the "Two
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Rivers Property" and the "5th & Xxxxxxxx Property,"
respectively).
Mortgage Loan
Amount: $7.70 million, subject to the terms and conditions set
forth in this Commitment Letter (including, without
limitation, Xxxxxx's rights to modify and reallocate
the mortgage debt and the mezzanine debt as set forth
below under the caption "Xxxxxx's Right to Restructure
Loans"). The aggregate principal amount of the Mortgage
Loan is allocable to the Properties as follows: (i)
$1.40 million is allocable to the Third Street
Property; (ii) $1.50 million is allocable to the Two
Rivers Property; and (iii) $4.80 million is allocable
to the 5th & Xxxxxxxx Property (each amount, such
Property's "Allocated Loan Amount"). The Allocated Loan
Amounts will be adjusted ratably in the event of a
Balance Transfer (as defined below).
Xxxxxx's commitment to make a first mortgage loan in
such amount is subject to: (i) a Debt Service Coverage
Ratio (as defined below) of 1.70x, and (ii) a maximum
LTV Ratio (as defined below) of 55%. If the Debt
Service Coverage Ratio and the LTV Ratio set forth
above are not maintained as of the date on which the
Mortgage Loan is to close, Lender will have the right
to reduce the Mortgage Loan amount, modify the interest
rate or refuse to close the Mortgage Loan.
For purposes of this Commitment Letter, (i) "Debt
Service Coverage Ratio" will be calculated by dividing
aggregate underwritten net operating income (on a
trailing 12-month basis) of the Properties by the
annual debt service payable on the Mortgage Loan, based
upon a constant interest rate of 11.33%; and (ii) "LTV
Ratio" means the ratio of the amount of the Mortgage
Loan to the sum of the Fair Market Values (as defined
below) of the Properties. "Fair Market Value" means
fair market value as determined by an MAI appraiser and
reviewed and approved by Lender in its sole discretion.
With respect to Xxxxxxxx's exercise of the extension
options described below, Lender may, at Lender's
option, require an MAI appraisal.
Use of Funds: Unless otherwise approved by Lender, Borrower shall use
the proceeds of the Mortgage Loan solely for the
purchase of, or repayment of existing debt encumbering,
the Properties, and for the payment of costs incurred
in connection with this transaction and other costs and
expenses.
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Term: The Mortgage Loan will mature three years from the date
of origination, subject to Borrower's right to extend
the term for two additional consecutive one-year
periods upon satisfaction of the Extension Conditions
described below. As used in this Commitment Letter,
"Term" refers to the initial three-year term and any
such extension thereof.
Extension Conditions: Each one-year extension option will be conditioned upon
satisfaction at the time of the extension of the
following conditions (the "Extension Conditions"): (i)
neither an event of default under the Mortgage Loan or
the Mezzanine Loan, nor an event that with the giving
of notice or the passage of time or both would
constitute an event of default under the Mortgage Loan
or the Mezzanine Loan, then exists or is then imminent;
(ii) Borrower requests the extension no later than 60
days and no earlier than 120 days prior to the
originally scheduled maturity date or the final day of
the first one-year extension term, as applicable; (iii)
the LTV Ratio, as determined by Lender, is no greater
than 50%; (iv) the Debt Service Coverage Ratio,
calculated as set forth above, is at least 1.75x; (v)
Borrower executes and delivers to Lender a certificate
remaking all of Borrower's closing representations and
warranties as of the date of the extension; and (vi)
Borrower pays to Lender an extension fee equal to .5%
of the then outstanding principal amount of the
Mortgage Loan.
Interest Rate: The Mortgage Loan will bear interest at a rate equal,
from time to time, to the 30-day LIBOR rate plus 250
basis points (the "Initial Floating Rate"); provided
that Lender may reduce the interest rate in connection
with a Balance Transfer as set forth below under the
caption "Lender's Right to Restructure Loans."
Interest Rate
Protection: Borrower shall purchase a 30-day LIBOR interest rate
cap with a strike price of 8.33%. Such interest rate
cap shall be for the full Term and with respect to the
full amount of the Mortgage Loan, and shall be pledged
to Lender as additional collateral for the Mortgage
Loan. The interest rate cap shall be purchased from an
entity having a "AAA" rating from Standard & Poor's
Rating Group and shall otherwise be on terms and
conditions satisfactory to Lender. If the interest rate
cap is purchased from Lender, Lender shall charge a
market rate therefor.
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Interest Computation: Interest on the Mortgage Loan will be computed on the
basis of a 360-day year and charged on the basis of the
actual number of days in any month or interest period.
Xxxxxx's Right to
Restructure
Loans: Lender and the Client have entered into a commitment
letter dated July 5, 2000 , as amended by that certain
first amendment to the commitment letter dated as of
the date hereof (as so amended, the "Mezzanine
Commitment Letter") under which Xxxxxx has agreed,
subject to the terms and conditions set forth therein,
to provide mezzanine financing (the "Mezzanine Loan")
to a newly formed company ("Newco") owned and
controlled by the Client and certain parties that will
provide equity investments for the Client's acquisition
of a portfolio of real estate assets, including the
Property, from First Union Real Estate Equity and
Mortgage Investments (the "FUR Transaction"). The
Mezzanine Loan will be secured by, among other things,
Xxxxx's direct and indirect equity interest in
Borrower.
The Client acknowledges that Lender may wish to sell or
securitize all or part of the Mortgage Loan in a
private placement, Euronote, syndication, participation
or other offering (an "Offering"), which may be
accomplished through the issuance of pass-through
certificates evidencing or securing the Mortgage Loan.
If necessary or advisable in order to facilitate an
Offering, as determined by Lender, Lender may transfer,
in one or more transactions before or after closing of
the Mortgage Loan, up to $500,000 of the principal
amount of the Mortgage Loan to the principal balance of
the Mezzanine Loan (a "Balance Transfer"); provided
that any such Balance Transfer will not materially
adversely affect or diminish the rights, obligations or
liabilities of Borrower or otherwise alter the
financial terms of the transaction between Borrower and
Lender, in either case as set forth herein and in the
Mortgage Loan Documents (as defined below). In
connection with each Balance Transfer, Lender shall set
the rate of interest payable on the portion of the
Mortgage Loan that is transferred (the "Transferred
Principal") at either (i) 15% per annum (the "Mezzanine
Rate"), or (ii) the Initial Floating Rate as of the
Closing Date. Upon any Balance Transfer in which Lender
elects to have any portion of Transferred Principal
accrue interest at the Mezzanine Rate, the interest
payable on the then remaining untransferred principal
balance of the Mortgage Loan (the "Untransferred
Principal") shall be adjusted downward as set forth in
Schedule I attached to this Commitment Letter (such
interest rate, the "Adjusted Floating Rate") so that
the combined weighted
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average interest rate on the aggregate Transferred
Principal and Untransferred Principal shall be the same
as if no such Balance Transfer had occurred.
Lender may also (i) split the Mortgage Loan into two or
more loans evidenced by separate sets of notes and
secured by separate sets of other related Mortgage Loan
Documents, or (ii) divide the Mortgage Loan into
multiple components, in either case to the full extent
required by Lender to facilitate an Offering; provided
that any such splitting or division of the Mortgage
Loan will not materially adversely affect or diminish
the rights, obligations or liabilities of Borrower or
otherwise alter the financial terms of the transaction
between Borrower and Lender, in either case as set
forth herein and in the Mortgage Loan Documents.
Borrower shall not be required to incur any third-party
out-of-pocket costs and expenses, other than legal fees
and expenses, in connection with any such modification
or severance.
Payments: Borrower shall make monthly interest payments and
payments of escrows and reserves on the 1st day of each
month, in arrears, in respect of the period ending on
the day immediately preceding the payment date.
Prepayment: The Mortgage Loan may be repaid in whole or in part, on
any interest payment date, or on any other date upon 30
days' prior written notice and payment to Lender of any
LIBOR breakage fee, in either case, upon payment of the
fee set forth below under the caption "Repayment Fee,"
and one or more of the Properties, as the case may be,
may be released from the lien of the mortgage thereon,
subject to satisfaction of conditions to be set forth
in the Mortgage Loan Documents, including, where
applicable, payment of the amount described below under
the caption "Release." If an Offering has occurred and
Borrower prepays the Mortgage Loan on a date other than
an interest payment date as provided above, Borrower
shall pay to Lender, in addition to the LIBOR breakage
fee and exit fee, interest on the then outstanding
principal amount of the Mortgage Loan through the end
of the interest period in which such prepayment is
made.
Release: Borrower may obtain a release of a Property from the
lien of the mortgage thereon, subject to satisfaction
of customary release conditions, including without
limitation the following: (i) as of the date of
release, no monetary or material non-monetary event of
default under the Mortgage Loan Documents has occurred
and is
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continuing; and (ii) Borrower pays to Lender an amount
equal to the greater of (A) the amount necessary to
cause the Debt Service Coverage Ratio after giving
effect to the release and prepayment to be equal to the
greater of the Debt Service Coverage Ratio at
origination of the Mortgage Loan and the Debt Service
Coverage Ratio immediately prior to such release and
prepayment, and (B) an amount equal to 125% of the
Allocated Loan Amount for the Property being released.
Default Interest
Rate: A rate equal to the sum of (i) the Initial Floating
Rate or the Adjusted Floating Rate, as applicable, plus
(ii) 500 basis points.
Repayment
Fee: Upon any full or partial repayment of the principal
amount of the Mortgage Loan, whether at the end of the
initial three-year term or prior thereto as provided
above under the caption "Prepayment," Borrower shall
pay to Lender a repayment fee in an amount equal to
.75% of the principal amount of the Mortgage Loan then
being repaid.
Security: The Mortgage will be evidenced by a promissory note
made by Xxxxxxxx in favor of Xxxxxx (the "Note"). The
Note will be secured by (i) for each Property, a first
mortgage and security agreement or its equivalent on
Borrower's fee simple estate in the Property (the
"Mortgages"), (ii) a first priority assignment of all
leases, rents, issues and profits with respect to each
Property (the "Assignment of Leases"), and (iii) a
first priority and perfected security interest in all
personal property, licenses, permits, contract rights,
general intangibles and other assets of Borrower used
in connection with the operation, maintenance and
management of each Property (including, without
limitation, the interest rate cap). The Mortgages will
constitute valid first liens on the good and marketable
title to the Properties, subject to no other liens or
encumbrances. At closing, title to each Property shall
be subject only to such exceptions as shall be approved
by Lender and its counsel, and shall be free of any
mechanics' or materialmen's liens or special
assessments for work completed or under construction on
the date of closing.
Non-Recourse: The Mortgage Loan will be non-recourse to Borrower and
the Client, except with respect to fraud,
misapplication of funds, unlawful acts and intentional
misrepresentation. Borrower and certain of its
beneficial owners (including the Client) will also have
liability with respect to any unauthorized transfer or
pledge of any Property or other security for the
Mortgages. In addition, Borrower and certain
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of its beneficial owners (including Radiant Partners,
LLC will have liability with respect to certain
environmental issues. Xxxxxx Xxxxxxxx, Xxxx Xxxxxx and
Xxxxx Xxxxxxxxxxx will not have any personal liability
for environmental issues, other than for any gross
negligence or willful misconduct by them with respect
to environmental issues; provided that Xxxxxxxx and
certain of its beneficial owners (including the Client)
will assign to Lender all of their respective rights
under any environmental insurance. Guaranties of
non-recourse carve-outs will be required from the
Client or other guarantors acceptable to Lender
(collectively, "Guarantors"). Guarantors shall also
indemnify Lender for actual third-party out-of-pocket
losses, liabilities, claims or costs by reason of (i) a
voluntary bankruptcy filing by Borrower, or involuntary
bankruptcy commenced or actively solicited by a
controlling or controlled affiliate of Borrower or by
any principal of Borrower or such controlling or
controlled affiliate, (ii) intentional violation of the
covenants in the Mortgage Loan Documents requiring
single purpose, bankruptcy remote status of Borrower,
or (iii) voluntary transfer of any Property or direct
or indirect ownership interests in the Properties in
violation of the Mortgage Loan Documents. The parent
entity owning the interests in Borrower will act as a
Guarantor of the non-recourse carve-outs and
out-of-pocket third party costs and liabilities
described above under a separate "Parent Guaranty."
Escrows & Ongoing
Reserves: Tenant Reserves. The security for the Mortgage Loan
will include cash reserves equaling all anticipated
Property tenant improvements, leasing commissions and
capital expenditures for the initial three-year term,
as determined by Lender. Upon any extension of the term
of the Mortgage Loan as provided above, Borrower shall
continue to maintain such reserves during the extension
term in such amounts as may be required by Lender in
its sole discretion. The reserves will be held by
Xxxxxx in an interest-bearing account with all interest
credited monthly to the Lock-box (as defined below) and
will be released during the Term for approved funding
of Property tenant improvements, leasing commissions
and capital expenditures.
Deferred Maintenance. A reserve will be established for
up-front deferred maintenance and environmental matters
in an amount equal to 125% of the costs and expenses
associated therewith, as estimated in the third-party
reports obtained by Xxxxxx as part of its due diligence
review or as otherwise determined by Lender in its sole
discretion. Upon any extension of the term of the
Mortgage Loan as provided above, Borrower shall
continue to maintain such reserve
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during the extension term in such amount as may be
required by Lender in its sole discretion.
Taxes & Insurance. A reserve in an interest-bearing
account will be established at closing and funded
monthly at 1/12th the annual amount estimated for taxes
and insurance. All taxes due within 60 days of closing
shall be paid at closing.
Capital Reserves. Up-front reserves for the initial
three-year term in interest-bearing accounts (with all
interest credited monthly to the Lock-box) will also be
established for ongoing capital replacements and
repairs and anticipated lease rollover costs, in an
amount to be determined by Lender. Upon any extension
of the term of the Mortgage Loan as provided above,
Borrower shall continue to maintain such reserves
during the extension term in such amounts as may be
required by Lender in its sole discretion.
Net Cash Flow Reserve Account. If at any time during
the Term the Debt Service Coverage Ratio falls below
1.35x, all net cash flow from the Properties after
payment of debt service, operating expenses and funding
of the security accounts will be collected and held in
a reserve account (such occurrence, a "Net Cash Flow
Sweep"). Funds will be released from such reserve when
the Debt Service Coverage Ratio again equals or exceeds
1.35x.
Lock-box: A lock-box (the "Lock-box") will be established on
terms reasonably acceptable to Lender. Until the
occurrence of either (i) a monetary or a material
non-monetary event of default under the Mortgage Loan
Documents, or (ii) a Net Cash Flow Sweep, Borrower will
have the right to use excess income from the Lock-box,
other than income payable to Lender and other parties
under this Commitment Letter and the Mortgage Loan
Documents.
Subordinate
Financing/
Transferability: Except for the Mezzanine Loan, no subordinate financing
affecting the Properties or the direct or indirect
beneficial interests in Borrower will be permitted, and
no interest in Borrower may be pledged or encumbered as
collateral for any financing or other obligation. The
Properties may not be sold or transferred without the
consent of Lender. Any transfer of an ownership
interest in Borrower or in any holder of any interest
in Borrower will be deemed a sale or transfer of the
Properties; provided that the following transfers may
be made without Xxxxxx's prior consent and without
payment of any assumption fee, upon the satisfaction of
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certain conditions as specifically set forth in the
Mortgage Loan Documents: (i) transfer(s) that singly or
in the aggregate (A) do not result in a change of
control of the subject entity and (B) consist of a
transfer of a non-controlling interest (e.g., a limited
partnership interest or a non-managing member interest
in the subject entity) representing in the aggregate
49% or less of the economic interest in the subject
entity; and (ii) transfer(s) singly or in the aggregate
of a non-controlling interest in the subject entity
representing in the aggregate 49% or less of the
economic interest in the subject entity, made by
individual interest holders to members of their
immediate families for estate planning purposes for the
benefit of such interest holders. Lender, in its sole
discretion, has the right to deny consent to any
transfer that will occur at any time within 60 days
before or after the closing or the proposed closing of
an Offering.
Subordination: All entities related to Borrower will agree to
subordinate any fees or other payments owing from
Borrower, including, without limitation, management
fees and expenses, to the payments due under the
Mortgage Loan and to the lien of the Mortgages and
other security interests held by Xxxxxx.
Cross-Default/
Cross-
Collateralization: The Mortgage Loan will be cross-defaulted with other
financings as follows (the "Cross-Default Provisions"):
o any default beyond applicable notice and cure
periods, if any, by Newco under the Mezzanine Loan
will constitute an event of default under the
Mortgage Loan;
o any default beyond applicable notice and cure
periods, if any, by a borrower owned and
controlled directly or indirectly by the Client
and the Client's equity partners under any first
mortgage loan made to such borrower by Xxxxxx and
secured by one or more properties acquired by the
Client in the FUR Transaction (any such loan, a
"FUR Property Loan"), will constitute an event of
default under the Mortgage Loan; and
o any default beyond applicable notice and cure
periods, if any, by Borrower under the Mortgage
Loan will constitute an event of default under the
Mezzanine Loan and under any FUR Property Loan.
The Mortgage Loan will be cross-collateralized with
other financings as follows (the "Cross-
Collateralization Provisions"):
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o the security for the Mezzanine Loan will
constitute additional security for the Mortgage
Loan;
o the security for any FUR Property Loan will
constitute additional security for the Mortgage
Loan; and
o the security for the Mortgage Loan will constitute
additional security for the Mezzanine Loan and for
any FUR Property Loan.
Lender may at any time in its discretion revoke any or
all of the Cross-Default Provisions and/or the
Cross-Collateralization Provisions and declare such
provisions of no further force and effect.
Post Closing
Reporting
Requirements: During the Term, Borrower shall furnish such
information with respect to each Property as required
under the Mortgage Loan Documents, including, without
limitation, the following:
o a rent roll and physical occupancy statement dated
as of the last day of each calendar month;
o monthly and year-to-date operating statements at
the end of each calendar month; and
o an annual statement of Xxxxxxxx's financial
condition, including a balance sheet and profit
and loss statement audited by a certified public
accountant acceptable to Lender.
All of the above statements shall be certified by
Borrower. Borrower will be liable for additional fees
and expenses in the event that Borrower fails to
provide any of the financial statements or information
required above within 30 days after the date upon which
such items are due to Lender.
Required Insurance: Borrower shall maintain the amounts and types of
insurance coverage on each Property described below.
Such policies shall be issued by insurers that are
licensed to do business in the state in which the
Property is located, receive a rating of "A:XII" or
better in the current Best's Insurance Reports and have
a claims paying ability rating of "A" or better by
Standard & Poor's Rating Group.
o An All-Risk policy in an amount equal to the full
replacement cost (without deduction for
depreciation) of the Property and a
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sufficient amount that the insurer would not deem
Borrower a co-insurer under said policy.
o Public Liability Insurance, $5,000,000 per
occurrence and $25,000,000 in the aggregate.
o Rent/Business Interruption Insurance in an amount
equal to the greater of gross revenues for 24
months or 24 months of operating expenses
including debt service.
o Flood Insurance if the Property is in a special
flood hazard zone (or proof satisfactory to Lender
that the Property does not lie within the
boundaries of a special flood hazard zone).
o Earthquake Insurance if the Property is located in
a seismic zone of three or greater, and the
seismic report shows a Probable Maximum Loss of
20% or greater.
o Wind Damage Insurance if the Property is located
within 15 miles from a coastline.
o Such other insurance as may be reasonably required
by Lender in order to protect its interest.
All such policies shall satisfy Lender's criteria for
insurance and provide full extended coverage, naming
Lender and its successors and/or assigns as first
mortgagee or otherwise covering Xxxxxx's interest in
the Property in a manner satisfactory to Lender. No
financing of insurance premiums will be permitted.
Premiums due under all current policies insuring all or
any part of any Property must be paid in full at or
before the closing of the Mortgage Loan.
Single Purpose
Entity: Borrower shall be structured as a bankruptcy remote
entity with an outside director or special manager, as
the case may be, and the structure of Borrower shall be
satisfactory to Lender and meet the requirements of the
rating agencies. Borrower shall have limited purpose
provisions ("Limited Purpose Provisions") in its
constituent documents satisfactory to Lender, including
provisions restricting Borrower's business activities
solely to ownership and operation of the Properties and
prohibiting Borrower from incurring debt other than the
Mortgage Loan and trade payables incurred in the
ordinary course of business which may not at any time
be more than 30 days in arrears (which prohibition
shall include loans from Borrower's partners, members
or shareholders). Borrower's
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constituent documents shall also include provisions
("Transfer Provisions") satisfactory to Lender,
prohibiting certain direct or indirect transfers of
equity interests in Borrower or of Borrower's assets.
The Limited Purpose Provisions and Transfer Provisions
may not be amended without Lender's consent, which
Lender may provide or withhold in its sole and absolute
discretion. Provisions in Borrower's constituent
documents, other than the Limited Purpose Provisions
and Transfer Provisions, may not be amended without
Lender's consent, which consent shall not be
unreasonably withheld, delayed or conditioned.
Conditions to
Xxxxxx's
Obligation to Close: Xxxxxx's obligation to fund the Mortgage Loan
contemplated hereby is conditioned upon the occurrence
of each of the following:
Loan Documents. The Mortgage Loan Documents have been
executed and delivered by the Client and/or Borrower,
as applicable, and are satisfactory in form and
substance to Lender in its sole and absolute
discretion. "Mortgage Loan Documents" means the Note,
Mortgages and Assignment of Leases as described above,
an environmental and hazardous substance
indemnification agreement, a guaranty of recourse
obligations, a borrower's certificate setting forth
various factual matters regarding the Mortgage Loan and
the Properties, and such other documents required by
Lender in connection with the Mortgage Loan.
Payment of Fees. The Client has paid all fees and other
amounts due pursuant to that certain letter dated of
even date herewith between the Client and Lender (the
"Fee Letter").
Interest Rate Cap. The Client shall have obtained an
interest rate cap as provided in this Commitment under
the caption "Interest Rate Protection."
Closing of Mezzanine Loan. Either (i) Lender and the
Client have closed (or will close simultaneously with
the closing of the Mortgage Loan) the Mezzanine Loan in
accordance with the Mezzanine Commitment Letter, or
(ii) the Client has terminated the Mezzanine Commitment
Letter in accordance with the section thereof captioned
"Breakup" and has paid all applicable fees to Lender,
including, without limitation, the "Additional
Commitment Fees" payable to Lender under that certain
fee letter dated July 5, 2000, as amended by that
certain first amendment to the fee letter dated as of
the date hereof (the "Mezzanine Fee Letter") between
Lender and the Client
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and relating to the Mezzanine Loan; provided that the
failure of the Mezzanine Loan to close will not relieve
Lender of its obligations hereunder if such failure is
due solely to a default by Lender under this Commitment
Letter or the Mezzanine Commitment Letter.
Structure of Borrower. Lender has approved, in its sole
and absolute discretion, the identity, composition and
structure of Borrower and its direct and indirect
owners.
Credit Underwriting; Due Diligence. Xxxxxx has
completed a satisfactory due diligence review of all
matters that Xxxxxx considers relevant to the Mortgage
Loan, and Xxxxxx is satisfied with the creditworthiness
of the Mortgage Loan and the Properties. Xxxxxx will
perform a credit underwriting of the Mortgage Loan,
which will include among other things an environmental
review, engineering reports, title reports, appraisal
reports, site inspections, NOI audit, review of the
reserves necessary for capital expenditures and a full
legal documentation review. The scope and methodology
of the appraisals, reports and reviews referred to
above shall be in form and substance satisfactory to
Lender in all respects, and the results of all credit
underwriting and due diligence will be subject to
Xxxxxx's complete satisfaction in its sole and absolute
discretion. The Client agrees to reasonably cooperate
in any site inspections or other due diligence at
Xxxxxx's request. Lender will endeavor to provide the
Client with the results of its environmental review and
engineering review by September 30, 2000.
Consents. The Client has obtained all consents
necessary to effect the transactions contemplated by
this Commitment Letter.
Approval of Leases. Lender shall have approved all
existing leases and all leases executed between the
date of execution of this Commitment Letter and the
closing of the Mortgage Loan. During the term of the
Mortgage Loan, all renewals of leases and all proposed
leases shall provide for rental rates comparable to
existing local market rates and shall be arms-length
transactions. After the closing of the Mortgage Loan,
Borrower shall submit to Lender for approval prior to
execution all leases proposed to be entered into by
Borrower with respect to any portion of any Property;
provided that Xxxxxx's consent shall not be required
for a Minor Lease (as defined below) entered into in an
arms length transaction on market rate terms. For
purposes of this Section of this Commitment Letter,
"Minor Lease" means a lease for less than 5,000 square
feet having
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a term of less than 10 years, and otherwise on then
prevailing market terms and conditions.
No Related Default. The Client is not in default under
the Fee Letter, the Mezzanine Commitment Letter, the
Mezzanine Fee Letter or under any other fee letter or
indemnification agreement of which Lender is the
beneficiary.
Absence of Material Adverse Change and Other Events.
None of the following circumstances have arisen and
continue to exist on the date of closing:
o Except as may be otherwise expressly provided in
this Commitment Letter, any material adverse
change in the income and expenses of any Property,
the occupancy leases and rent roll, or any other
features of the transaction as represented in this
Commitment Letter or in any other documents or
communications presented to Lender in order to
induce Lender to make the Mortgage Loan.
o Any damage to all or part of any Property that has
not been repaired to Lender's satisfaction, any
taking in condemnation or similar proceeding of
all or part of any Property or commencement of any
such proceeding affecting all or part of any
Property, or any structural change in the physical
condition of any portion of any Property.
o Any bankruptcy, reorganization or insolvency
proceeding involving (i) Borrower or any partner,
member, principal shareholder or officer of
Borrower, or (ii) any tenant under any lease
deemed by Lender to be material to Xxxxxx's
security or any guarantor of any such lease.
o Any default by Borrower or any affiliate of
Borrower in its obligations under any instruments
evidencing, securing or guaranteeing another loan
of Borrower or such affiliate.
o Discovery of any asbestos, toxic waste, or other
hazardous substance has been discovered on any
Property, including without limitation any such
discovery giving rise to the need for a Phase II
environmental investigation.
o A determination by Lender that conditions exist in
the capital markets that would adversely affect
Lender's ability to implement an Offering in which
it would receive a price at least equal to
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par; provided that Lender shall give Borrower the
option to reduce the Mortgage Loan amount to enable
Lender to achieve a price at least equal to par.
o Any delinquency in payment of real estate taxes
and assessments affecting any Property or
imposition of mechanics', materialmen's or other
liens against any Property.
Borrower Deliveries. Xxxxxx has received, at Xxxxxxxx's
sole cost and expense, each of the following items:
o A 1992 ALTA Loan Policy having a liability limit
of not less than the principal amount of the
Mortgage Loan and insuring Xxxxxx's first lien on
title to the Properties, issued in such forms and
amounts, and by such title insurance company, as
shall be satisfactory to Lender. The title
insurance policy shall be subject only to such
exceptions as shall be approved by, and shall
contain such endorsements (including without
limitation "tie-in" endorsements) as may be
required by, Xxxxxx's counsel.
o A current title survey of each Property by a
licensed or registered land surveyor acceptable to
Lender, certified to Lender and its successors and
assigns and to the title insurance company,
showing a state of facts in form, scope and
substance acceptable to Lender. Each title survey
shall be prepared in accordance with the 1997
Minimum Standard Detail Requirements for ALTA/ACSM
Land Title. The surveys should meet the
classification of an "Urban Survey" and the
following additional items from the list of
"Optional Survey Responsibilities and
Specifications" (Table A) should be added to each
survey: 2, 3, 4, 6, 7(a), 7(b), 8, 9, 10, 11 and
13. The survey certifications shall be in form,
scope and substance satisfactory to Lender.
o Appropriate opinions of Xxxxxxxx's counsel
satisfactory in form, scope and substance to
Lender and Lender's counsel, covering such matters
as specified by Lender, including without
limitation (i) the fact that the Mortgage Loan
Documents have been duly authorized, executed and
delivered by Borrower, are valid and binding upon
Borrower, and are enforceable in accordance with
their terms, (ii) the due formation and
organization of Borrower, (iii) non-consolidation
(covering Borrower's parent entities and such
other Borrower affiliates or related parties as
Lender may deem necessary in its sole discretion),
(iv) the legality of the Mortgage Loan under usury
and other applicable laws, and (v) such other
matters as may be required by Lender or its
counsel.
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16
o Certified copies of Xxxxxxxx's constituent
documents and resolutions or equivalent documents
in form satisfactory to Lender and its counsel
evidencing Borrower's authority to enter into the
Mortgage Loan.
o A certificate of Borrower stating that (i) no
material changes have occurred, and (ii) to the
best of Borrower's knowledge, (A) there are no
material pending or threatened lawsuits, claims,
criminal proceedings against Borrower and/or its
principal interest holders, (B) neither Borrower
nor its principal interest holders are the subject
of any pending or anticipated bankruptcy or
insolvency proceedings, and (B) no tenant leasing
greater than 20% of the rentable area of any
Property has any intention to vacate the premises
and/or cease the payment of rent under its lease.
o Evidence, in form and substance satisfactory to
Lender's counsel, confirming that the improvements
on each Property and the use thereof are in full
compliance with the applicable zoning,
subdivision, building, environmental protection,
toxic waste, asbestos and all other applicable
federal, state or 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. Such evidence shall include any
and all certificates, licenses, permits, approvals
or consents relating to operation of the Property
and, if required by Xxxxxx's counsel, an opinion
of Xxxxxxxx's counsel, architect or other company
approved by Xxxxxx in writing, as to the
foregoing, including certificates of occupancy or
their legal equivalents permitting the use and
occupancy of the Property for the then present use
and the use contemplated in this Commitment
Letter. Such evidence shall be based on the
ownership of the Property without reference to
easements or other interest in real property.
o If the leases affecting any Property are to be
written on a standard form of lease, a copy of
such standard form of lease, which shall be
approved by Lender. No material changes may be
made to the approved form of lease without
Lender's prior written approval.
o At Lender's request, certified copies of all
licenses and permits relating to Borrower and the
operation of each Property, any
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property management agreement and any third party
service agreements affecting any Property, and such
other due diligence materials as may be required by
Lender.
o With respect to the Two Rivers Property, estoppel
certificates in form and substance satisfactory to
Lender from (1) all Major Tenants (as defined
below), (ii) tenants representing at least 90% of
the rentable and occupied square feet occupied by
tenants occupying at least 5,000 square feet but
less than 10,000 square feet of rentable space at
the Property, and (iii) tenants representing at
least 80% of the rentable and occupied square feet
occupied by tenants occupying less than 5,000
square feet of rentable space at the Property.
Borrower shall provide such estoppel certificates
from time to time during the Term at Xxxxxx's
request but no more often than twice during any
calendar year unless and until an event of default
under the Mortgage Loan Documents shall have
occurred. For purposes of this Section of this
Commitment Letter, "Major Tenant" means a tenant
occupying at least 10,000 square feet of rentable
space at the Property pursuant to one or more
leases.
o With respect to the Third Street Property and the
5th & Xxxxxxxx Property, an estoppel certificate
in form and substance satisfactory to Lender from
any operator or lessee that occupies the Property
for the purpose of operating the parking
facilities located at such Property. Borrower
shall provide such estoppel certificates from time
to time during the Term at Xxxxxx's request.
o All mortgage and title documents executed and
delivered in connection with the Mortgage Loan and
all required evidence of compliance with all
applicable laws and regulations, in form, scope
and substance satisfactory to Xxxxxx's counsel.
o Any additional due diligence, documentation or
other information which Lender or Lender's counsel
may require, in form and substance acceptable to
Lender and its counsel.
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Brokers: It is understood and agreed that Xxxxxx will be under
no obligation to pay any brokerage commission or fee of
any kind with respect to this Commitment Letter and
that by acceptance of this Commitment Letter, the
Client 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 for brokers'
or finders' fees and commissions in connection with the
negotiations, execution and consummation of the
Mortgage Loan and this Commitment Letter, such
indemnity to include Xxxxxx's attorneys' fees.
Costs: Borrower shall pay all costs and expenses in connection
with the Mortgage Loan including, without limitation,
fees and disbursements incurred in connection with
preparation and delivery of releases from the liens of
the Mortgages, mortgage and other document recording
taxes and other charges, appraisal fees, engineering
and environmental fees, title insurance premiums and
survey charges. In addition, the Client shall promptly
pay and shall cause Borrower to promptly pay to Lender
upon request all out-of-pocket expenses incurred by
Lender and its affiliates in connection with the
underwriting, documenting and closing of the Mortgage
Loan, including, without limitation, the fees and
disbursements of legal counsel (including counsel in
the states in which the Properties are located if
retained by Lender for purposes of this transaction),
accountants, environmental experts, engineers,
appraisers, due diligence contractors, other due
diligence expenses, title insurance premiums and costs,
fees and costs of ratings agencies, and travel
expenses.
The Client shall execute and deliver a separate expense
letter under which the Client will agree to pay the
costs and expenses described above. In addition, Xxxxxx
may charge such costs and expenses against that certain
"Account" established in connection with the Mezzanine
Loan and described in the Mezzanine Commitment Letter
under the caption "Reimbursement of Expenses."
The Client's and Xxxxxxxx's obligations to pay the
costs and expenses of Lender set forth in this
Commitment Letter are separate obligations that are in
addition to, and are not included in, the fees payable
by the Client under the Fee Letter. To the extent
incurred, the Client and Borrower shall pay such costs
and expenses regardless of whether the Mortgage Loan is
funded.
Publicity: In the event the Mortgage Loan contemplated herein is
made, Xxxxxx shall have the right to issue press
releases, advertisements and other
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promotional materials describing Xxxxxx's participation
in the origination of the Mortgage Loan or the Mortgage
Loan's inclusion in any Offering.
Confidentiality: Except as otherwise required by law and until the
closing of the Mortgage Loan, Lender and the Client
shall treat as confidential the contents, terms and
existence of this Commitment Letter and the
transactions contemplated hereby; provided that Lender,
Borrower and the Client may disclose such information
to their investors (including their beneficial owners),
potential investors, employees, agents, attorneys,
accountants and other experts who require such
information in order to effectuate such transaction
and, in the case of Lender, to any rating agency, to
parties in connection with any Offering, or to any
persons as otherwise required in order to effectuate
the transaction contemplated by, or to enforce any of
Lender's rights under, this Commitment Letter. The
disclosure permitted in this Section is permitted only
to the extent an investor, potential investor,
employee, agent, attorney, accountant or other expert,
rating agency or other party receiving such information
shall agree to be bound by this confidentiality
provision prior to the disclosure of information to
such party.
Cooperation in Event
Of an Offering: In the event of an Offering in respect of the Mortgage
Loan, all representations, warranties and covenants of
Borrower made in the Mortgage Loan Documents will be
assignable to and inure to the benefit of Xxxxxx's
successors and assigns. The Client and Borrower shall
cooperate in, and shall provide Lender and its related
persons with information required or appropriate for,
such Offering, including without limitation (i)
providing information about the Client, Borrower and
the Properties, (ii) cooperating in any site
inspections or other diligence, (iii) agreeing to
amendments to the Mortgage Loan Documents that do not
materially increase the Client's or Borrower's
obligations thereunder and (iv) taking any and all
other actions that may be requested by Xxxxxx to
consummate the Offering on such terms and in such form
as Lender may determine to be necessary or desirable.
Lender shall reimburse Borrower and the Client for
their reasonable actual third party out-of-pocket costs
(including, without limitation, attorneys' fees)
incurred in performing their obligations to Lender in
connection with an Offering.
Indemnification: The Client agrees to the indemnification and other
agreements set forth in the Indemnification Agreement
attached to this Commitment Letter (the
"Indemnification Agreement"), the provisions of which
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are incorporated into this Commitment Letter by
reference and shall survive the termination, expiration
or superceding of this Commitment Letter.
Breakup: At any time prior to the funding of the Mortgage Loan,
the Client will have the right to replace Xxxxxx as
first mortgage lender for all three of the Properties,
subject to the Client's performance of its obligations
under the Fee Letter. If the Client obtains alternative
first mortgage financing for any one of the Properties,
Xxxxxx's commitment to provide financing as set forth
herein will terminate.
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Attorneys' Fees in
Litigation: In the event of any litigation, arbitration or other
dispute resolution proceedings between the Client,
Borrower or their affiliates, on the one hand, and
Lender or its affiliates, on the other hand, arising
out of or relating to this Commitment Letter or the
transaction contemplated hereby, the party prevailing
in such litigation, arbitration or proceeding will be
entitled to recover from the other party the reasonable
attorneys' fees and disbursements incurred by such
prevailing party in connection with such litigation,
arbitration or proceeding.
No Joint
Venture: Nothing contained in this Commitment Letter (i) will
constitute Lender or any of its affiliates as members
of any partnership, joint venture, association or other
separate entity with Borrower, the Client, their
respective affiliates or any other entities, (ii) may
be construed to impose any liability as such on Lender,
or (iii) constitutes a general or limited agency or may
be deemed to confer on either party hereto any express,
implied or apparent authority to incur any obligation
or liability on behalf of the other.
Joint and Several
Liability: If the Client is composed of more than one person or
entity, each such person or entity will be jointly and
severally liable for all obligations of the Client set
forth in this Commitment Letter.
Governing Law: This Commitment Letter is, and the Mortgage Loan
Documents will be, governed by and construed in
accordance with the laws of the State of New York,
without regard to principles of conflicts of laws.
Entire Agreement: This Commitment Letter and all attachments and exhibits
hereto (including the Indemnification Agreement and the
Fee Letter) contain all of the agreements and
understandings of the parties hereto relating to the
transaction and the respective obligations of Lender
and the Client in connection therewith. All other prior
negotiations, proposals, agreements and understandings
relating to the subject matter of this Commitment
Letter are hereby null and void.
Third Party
Beneficiaries: It is understood that Xxxxxx is being engaged hereunder
solely to provide the Mortgage Loan to Xxxxxxxx and
that Xxxxxx is not acting as an agent or fiduciary of,
and shall have no duties or liabilities to, the equity
holders of the Client or any third party in connection
with its engagement hereunder.
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Closing Date: The closing date for the Mortgage Loan will be on or
prior to December 31, 2000, or as otherwise agreed to
by Xxxxxx and the Client. If for any reason the closing
does not occur on or prior to December 31, 2000, Lender
will have the right to terminate its obligations under
this Commitment Letter.
Termination: All obligations of Lender under this Commitment Letter
will terminate if the Client obtains first mortgage
financing for any or all of the Properties from a
financing institution other than Lender.
Survival: Upon the termination of Xxxxxx's obligations under this
Commitment Letter pursuant to the "Closing Date" or
"Termination" sections above, all obligations of the
Client and all rights of Lender under the
Indemnification Agreement and Fee Letter, and under the
"Brokers," "Confidentiality," "Indemnification,"
"Costs," "Attorneys' Fees," "Joint and Several
Liability," and "Third Party Beneficiaries" sections of
this Commitment Letter, shall survive such termination
indefinitely.
Disclosure: The Client confirms that it has disclosed to Lender all
facts known to the Client that might adversely affect
any of the Properties and agrees to promptly inform
Xxxxxx if any such fact becomes known to the Client
prior to closing.
Assignment: The Client will have a one-time right to assign its
rights and obligations under this Commitment Letter and
the Fee Letter, in whole but not in part, to its
affiliate Radiant Ventures I, L.L.C. ("First
Assignee"), subject to (i) First Assignee's assuming
all of the Client's obligations under this Commitment
Letter and the Fee Letter, and (ii) Xxxxxx's approval,
in its sole and absolute discretion, of the composition
and structure of First Assignee. After such assignment
and assumption of the Client's rights and obligations
under this Commitment Letter and the Fee Letter, the
Client will not be released from its obligations under
this Commitment Letter and the Fee Letter. In addition,
First Assignee, upon its reconstitution into a
successor entity having the same structure and
capitalization as First Assignee (such reconstituted
entity, "Second Assignee"), will have a one-time right
to assign its rights and obligations under this
Commitment Letter and the Fee Letter, in whole but not
in part, to Second Assignee, subject to (i) Second
Assignee's assuming all of the Client's and First
Assignee's obligations under this Commitment Letter and
the Fee Letter, and (ii) Xxxxxx's approval, in its sole
and absolute discretion, of the composition and
structure of Second
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Assignee. After such assignment and assumption of the
Client's and First Assignee's rights and obligations
under this Commitment Letter and the Fee Letter from
First Assignee to Second Assignee, First Assignee will
not be released from its obligations under this
Commitment Letter and the Fee Letter. Nothing contained
in this paragraph shall modify or waive (i) Xxxxxx's
right to review and approve, in its sole discretion,
the identity, composition and structure of Borrower, or
(ii) any of Xxxxxx's other review and approval rights
contained in this Commitment Letter.
Expiration: Xxxxxx's obligations under this Commitment Letter will
expire at 5:00 p.m. New York time, on September 15,
2000, unless originals of this Commitment Letter and
the Fee Letter and the Indemnification Agreement, all
fully executed by the Client, are telecopied to Lender
(telecopy number 212-713-7998) prior to such time, with
hard copy delivered to Lender by Fedex at 0000 Xxxxxx
xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn: Ms.
Xxxxx Xxxxx.
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We look forward to working with you to successfully close this financing.
Very truly yours,
PW REAL ESTATE INVESTMENTS INC.
By: /s/ Xxxxx X. Xxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxx
Title: SVP
ACCEPTED AND AGREED BY CLIENT:
RADIANT PARTNERS, LLC
By: /s/ Xxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxx
Title: Managing Member
As Individuals
/s/ Xxxxxx Xxxxxxxx
-------------------------------
Xxxxxx Xxxxxxxx
/a/ Xxxx Xxxxxx
------------------------------
Xxxx Xxxxxx
/s/ Xxxxx Xxxxxxxxxxx
------------------------------
Xxxxx Xxxxxxxxxxx
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SCHEDULE 1
Adjusted Floating Rates[FN1]
Remaining Mortgage Loan
Transferred Principal Principal Balance Adjusted Floating Rate
--------------------- ----------------------- ----------------------
$100,000 $7.60 million 30-day LIBOR + 242 basis points
$200,000 $7.50 million 30-day LIBOR + 235 basis points
$300,000 $7.40 million 30-day LIBOR + 227 basis points
$400,000 $7.30 million 30-day LIBOR + 218 basis points
$500,000 $7.20 million 30-day LIBOR + 210 basis points
---------------
1 This Schedule sets forth the Adjusted Floating Rates that will be payable
in connection with Balance Transfers in $100,000 increments. In the event
that Lender implements a Balance Transfer other than in a $100,000
increment, the Adjusted Floating Rate will be calculated by interpolation.
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