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Exhibit (b)(4)
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 - Pecanland Mall
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Dear Xx. Xxxxxxxx:
PW Real Estate Investments Inc. ("Lender") is pleased to present the terms
and conditions of its commitment to make a first mortgage loan (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 Lender'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: Certain real property located at 0000 Xxxxxxxx Xxxx in
the City of Monroe, Ouachita Parish, Louisiana, on
which is situated a one-level enclosed regional mall
shopping center commonly known as the Pecanland Mall
(the "Improvements"), together with all fixtures,
equipment and articles of personal property affixed to
or used in the management, maintenance and operation
thereof (collectively, the Property").
Mortgage Loan
Amount: $46.0 million, subject to the terms and conditions set
forth in this Commitment Letter (including, without
limitation, Lender's rights to modify and reallocate
the mortgage debt and the mezzanine debt as set forth
below under the caption "Lender's Right to Restructure
Loans"). Lender's commitment to make a first mortgage
loan in
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such amount is subject to (i) a Debt Service Coverage
Ratio (as defined below) of 1.25x, and (ii) a maximum
LTV Ratio (as defined below) of 70%. If the Debt
Service Coverage Ratio and the LTV Ratio set forth
above are not maintained as of 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
underwritten net operating income (on a trailing
12-month basis) of the Property by the annual debt
service payable on the Mortgage Loan based upon a
constant interest rate of 10%; and (ii) "LTV Ratio"
means the ratio of the amount of the Mortgage Loan to
the Fair Market Value (as defined below) of the
Property. "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 Borrower'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 Property, and for the payment of costs incurred in
connection with this transaction and other costs and
expenses.
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 65%; (iv) the Debt Service Coverage Ratio,
calculated as set forth above, is at least 1.35x; (v)
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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 defined below) 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 7.5 %. 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 a
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.
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.
Lender'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 Lender 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,
Newco'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,
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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 $8.0 million of the principal amount of the
First 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 1 attached to this Commitment
Letter (such interest rate, the "Adjusted Floating
Rate") so that the combined weighted 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
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respect of the period ending on the day immediately
preceding the payment date.
Prepayment: Upon payment of the exit fee set forth below, the
Mortgage Loan may be repaid in whole (but not 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, and the Property may be
released from the lien of the mortgage, subject to
satisfaction of conditions to be set forth in the
Mortgage Loan Documents. 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.
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.
Exit Fee: Upon payment in full of the Mortgage Loan on or prior
to the first anniversary of the date of origination of
the Mortgage Loan, Borrower shall pay to Lender an exit
fee in the amount of $920,000. Upon payment in full of
the Mortgage Loan on or prior to the second anniversary
but after the first anniversary of the date of
origination of the Mortgage Loan, Borrower shall pay to
Lender an exit fee in the amount of $460,000. Upon
payment in full of the Mortgage Loan at any time after
the second anniversary of the date of origination of
the Mortgage Loan, but provided that the term of the
Mortgage Loan has not been extended as provided in the
section captioned "Term" above, Borrower shall pay to
Lender an exit fee in the amount of $230,000.
Security: The Mortgage will be evidenced by a promissory note
made by Borrower in favor of Lender (the "Note"). The
Note will be secured by (i) a first mortgage and
security agreement or its equivalent (the "Mortgage")
on Borrower's fee simple estate in the Property, (ii) a
first priority assignment of all leases, rents, issues
and profits with respect to the 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 the Borrower used in connection
with the operation, maintenance and management of the
Property (including, without limitation, the interest
rate cap). The Mortgage will constitute a valid first
lien on the good and marketable title to
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the Property, subject to no other liens or
encumbrances. At closing, title to the 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 the Property or other security for the
Mortgage. In addition, Borrower and certain 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 the Borrower 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 the Property or direct
or indirect ownership interests in the Property 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
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reserves will be held by Lender 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 Lender 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 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
1.20x, all net cash flow 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 1.20x.
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.
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Subordinate Financing/
Transferability: Except for the Mezzanine Loan, no subordinate financing
affecting the Property 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
Property 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 the Borrower will be deemed a sale or transfer of
the Property; provided that the following transfers may
be made without Lender's prior consent and without
payment of any assumption fee, upon the satisfaction of
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 the Borrower will agree to
subordinate any fees or other payments owing from the
Borrower, including, without limitation, management
fees and expenses, to the payments due under the
Mortgage Loan and to the lien of the Mortgage and other
security interests held by Lender.
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 Borrower under the Mortgage
Loan will constitute an event of default under the
Mezzanine Loan;
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; and
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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 Lender and
secured by property acquired by the Client in the
FUR Transaction (such loan, a "FUR Property Loan")
will constitute an event of default under the
Mortgage Loan.
The Mortgage Loan will be cross-collateralized with
other financings as follows (the "Cross-
Collateralization Provisions"):
o the security for the Mortgage Loan will constitute
additional security for the Mezzanine Loan;
o the security for the Mezzanine Loan will
constitute additional security for the Mortgage
Loan; and
o the security for any FUR Property Loan will
constitute additional security for the Mortgage
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 the 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 Borrower'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. The 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.
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Required Insurance: Borrower shall maintain the amounts and types of
insurance coverage on the Property described below.
Such policies shall be issued by insurers that are
licensed to do business in Louisiana, 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 sufficient
amount that the insurer would not deem the
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 Lender'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 party of the Property must be paid in full at or
before the closing of the Mortgage Loan.
Single Purpose Entity: The Borrower shall be structured as a bankruptcy remote
entity with an outside director or special manager, as
the case may be, and the
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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 Property
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
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
Lender's
Obligation
to Close: Lender'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, Mortgage 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
Property, 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."
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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 (as so amended, the "Mezzanine
Fee Letter") between Lender and the Client 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. Lender has completed a
satisfactory due diligence review of all matters that Lender
considers relevant to the Mortgage Loan, and Lender is
satisfied with the creditworthiness of the Mortgage Loan and
the Property. Lender 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 Lender's complete satisfaction
in its sole and absolute discretion. The Client agrees to
reasonably cooperate in any site inspections or other due
diligence at Lender'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
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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 the Property; provided that
Lender'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 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 the 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 the Property that has not
been repaired to Lender's satisfaction, any taking in
condemnation or similar proceeding of all or part of
the Property or commencement of any such proceeding
affecting all or part of the Property, or any
structural change in the physical condition of any
portion of the 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 Lender's security or any guarantor of any
such lease.
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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 the
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 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 the Property or imposition of
mechanics', materialmen's or other liens against the
Property.
Borrower Deliveries. Lender has received, at Borrower'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 Lender's first lien on title to the
Property, 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 as may be required by,
Lender's counsel.
o A current title survey of the 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. The 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
certification shall be in form, scope and substance
satisfactory to Lender.
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o Appropriate opinions of Borrower's counsel satisfactory
in form, scope and substance to Lender and Leader'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.
o Certified copies of Borrower'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 the
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
the 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 Lender's counsel, an opinion of
Borrower's counsel, architect or other company approved
by Lender 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
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16
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 the 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 the Borrower and the operation
of the Property, any property management agreement and
any third party service agreements affecting the
Property, and such other due diligence materials as may
be required by Lender.
o Estoppel certificates in form and substance
satisfactory to Lender from (i) 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 of the Mortgage Loan at Lender'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 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 Lender'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 Lender 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 Lender 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 the Commitment Letter, such
indemnity to include Lender'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 lien of the Mortgage, 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 Louisiana 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, Lender 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 Borrower'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.
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Publicity: In the event the Mortgage Loan contemplated herein is made,
Lender shall have the right to issue press releases,
advertisements and other promotional materials describing
Lender'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 Lender'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 Property, (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 Lender 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.
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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 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 Lender as first
mortgage lender for the Property, subject to the Client's
performance of its obligations under the Fee Letter.
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.
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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 Lender is being engaged hereunder
solely to provide the Mortgage Loan to Borrower and that
Lender 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.
Closing Date: The closing date for the Mortgage Loan will be on or prior
to December 31, 2000, or as otherwise agreed to by Lender
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 upon the happening of any of the following events:
(i) the Client has not obtained the TIAA Consent (as defined
in the Fee Letter) and obtains first mortgage financing from
a financing institution other than Lender; or (ii) the
Client obtains the TIAA Consent, provided that if the TIAA
Consent is conditioned upon the happening of certain events
or performance of certain acts ("TIAA Consent Conditions"),
then this Commitment Letter will remain in full force effect
subject to its terms until such time as the TIAA Consent
Conditions are satisfied, so long as (A) the Client pays to
Lender when due the fees payable under the Fee Letter, (B)
upon receipt of the TIAA Consent, the Client pays to Lender
all of Lender's out-of-pocket costs incurred in connection
with the Mortgage Loan through the date on which the TIAA
Consent is delivered, and (C) the Client makes a good faith
effort to satisfy the TIAA Consent Conditions.
Survival: Upon the termination of Lender'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
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21
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 Borrower that might adversely affect the
Property and agrees to promptly inform Lender 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) Lender'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) Lender's approval, in its sole and
absolute discretion, of the composition and structure of
Second 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) Lender's right to review and
approve, in its sole discretion, the identity, composition
and structure of Borrower, or (ii) any of Lender's other
review and approval rights contained in this Commitment
Letter.
Expiration: Lender'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 1285 Avenue
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of the Americas, 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 the Client:
RADIANT PARTNERS, LLC
By: /s/ Xxxxxx Xxxxxxxx
---------------------------
Name: Xxxxxx Xxxxxxxx
Title: Managing Member
As Individuals:
/s/ Xxxxxx Xxxxxxxx
------------------------------
Xxxxxx Xxxxxxxx
/s/ 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
--------------------- ----------------- ----------------------
$1.0 million $45.0 million 30-day LIBOR + 237 basis points
$2.0 million $44.0 million 30-day LIBOR + 224 basis points
$3.0 million $43.0 million 30-day LIBOR + 210 basis points
$4.0 million $42.0 million 30-day LIBOR + 195 basis points
$5.0 million $41.0 million 30-day LIBOR + 180 basis points
$6.0 million $40.0 million 30-day LIBOR + 164 basis points
$7.0 million $39.0 million 30-day LIBOR + 147 basis points
$8.0 million $38.0 million 30-day LIBOR + 129 basis points
---------------
1 This Schedule sets forth the Adjusted Floating Rates that will be payable
in connection with Balance Transfers in $1.0 million increments. In the
event that Lender implements a Balance Transfer other than in a $1.0
million increment, the Adjusted Floating Rate will be calculated by
interpolation.
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