LOAN COMMITMENT FORM AND VARIATIONS
TABLE OF CONTENTS
LOAN COMMITMENT FORM
MEMORANDUM TO ATTORNEY PREPARING COMMITMENT
LENDER'S OPTIONAL PROVISIONS FOR LOAN COMMITMENT
1 Guarantor
2 Prepayment
3 Borrower's Required Equity Owners
4 Rental Requirements
6 Required Deposit Accounts
7 Interest Rate Swap Agreement
8 N.J. Disclosure Regarding Lender's Counsel
9 N.J. Environmental Provisions
10 Limiting Lender's Liability To Return Of Commitment
Fee
BORROWER'S RIDER TO LOAN COMMITMENT
1 Inconsistency
2 Reasonableness
3 Occupancy Agreements
4 Conditions
5 Liquidated Damages
6 Notice of Default
7 Sole Discretion of the Lender
8 Rate Lock
LOAN COMMITMENT FORM 1
___________________, 199_
{{{31/BORROWER}}} {{{32/ADDRESS OF BORROWER}}} Re: Loan in the amount of ${{{19/AMOUNT OF
Dear Ladies and Gentlemen: {{{1/LENDER}}} (the "Lender
") hereby offers to make a loan
to {{{31/BORROWER}}} (the "Borrower
"), subject to the terms and
conditions set forth in this commitment letter (called the "Commitment
"). This Commitment is also subject to: 1) all laws,
regulations, and governmental requirements which are (or may
hereafter be) applicable to the Lender, and 2) the Supplemental
Commitment Provisions attached to this Commitment as Schedule A
(the "Supplemental Commitment Provisions "), which are hereby
incorporated in and made a part of this Commitment.
1. Loan Amount
The amount of the loan to be made by the Lender to the
Borrower pursuant to this Commitment is ${{{19/AMOUNT OF LOAN}}} (the "Loan
").
2. Interest
1 This commitment is for a LIBOR rate loan. It follows the
conventional format now generally used by lenders, since it specifies the material "business" terms, and then provides that the remaining terms are specified in loan documents to be prepared by the Lender. An alternative form of commitment could be much shorter. Although it
would contain the material "business" terms, it would not include the "boilerplate" that typically appears in commitments. Instead, this alternative form of commitment would contain, as appendices, the loan documents that the Lender intends to use. This will also protect the lender against the common complaint by the borrower that the provisions of the closing documents are not spelled out in the commitment. While this might be objectionable to some lenders who believe that the time required to draft the loan documents would delay the issuance of the commitment, however, document assembly software simplifies the preparation of the initial draft of the loan documents. See Chapter 2 of the main text of this book for more details
regarding loan commitments generally. This Chapter may discuss variations of the following form which are not included in such form and which are applicable to your particular transaction.
The annual rate of interest on the Loan will be equal to
the sum of: 1) Adjusted LIBOR (defined below) plus 2)
{{{70.2.2.2/SPREAD OVER ADJUSTED LIBOR}}}% per annum (the sum of
the rates specified in 1) and 2) of this sentence being called
"Note LIBOR
"). "Adjusted LIBOR " is, with respect to each day
during each Interest Period (defined below), the annual rate of
interest (rounded to the next higher 1/100 of 1%) for U.S.
dollar deposits of {{{70.2.1.2.1/LIBOR PERIOD}}} maturity as
reported on Associated Press-Dow Jones Telerate page 3750 as of
11:00 a.m., London time, on the second London business day
("London Business Day
") before the relevant Interest Period
begins (or if not so reported, then as determined by the Lender
from another recognized source or interbank quotation), adjusted
for reserves by dividing that rate by 1.00 minus the LIBOR
Reserve %. "LIBOR Reserve %
" is the maximum percentage reserve
requirement (rounded to the next higher 1/100 of 1% and
expressed as a decimal) in effect for any day during the
Interest Period under the Federal Reserve Board's Regulation D
for Eurocurrency Liabilities as defined therein. Notwithstanding the foregoing, if the Borrower has hedged the
Note LIBOR by entering into an interest rate swap agreement with
the Lender, Adjusted LIBOR shall be rounded five decimal places
in accordance with the 1991 ISDA Definitions published by the
International Swaps and Derivatives Association, Inc. "Interest
Period " means, initially, the period commencing on the Closing
Date and ending on the first Re-Set Date, and thereafter, each
period commencing on the last day of the immediately preceding
Interest Period and ending one month thereafter, but in no event
after the Maturity Date. "Re-Set Date
" means the same day of
each month (except as provided below) during the term of the
Loan, the first of which Re-Set Dates shall be {{{70.2.5/FIRST
RE-SET DATE}}}. Each subsequent Re-Set Date shall be the same
day in each subsequent calendar month, provided, however, that
if such date in any such subsequent calendar month during the
Term shall not be a London Business Day, then the Re-Set Date
for such calendar month shall be the next succeeding London
Business Day, unless the next such succeeding London Business
Day would fall in the next calendar month, in which event the
Re-Set Date for such calendar month shall be the next preceding
London Business Day. Interest on the Loan will be calculated
daily, on the basis of the actual number of days elapsed, over a 360 day year, and shall be payable in arrears.
3. Amount Of Loan Payments
Subject to Section of this Commitment, monthly
installments of principal and interest shall be payable in an amount equal to the sum of:
(i) all interest, at an annual interest rate equal to
Note LIBOR, to the extent accrued during the applicable Interest Period, plus (ii) a principal payment equal to the principal
portion of the fixed payment that would be required to
repay the Loan in full, in substantially equal payments,
amortized over a hypothetical {{{73.2.1/AMORTIZATION
PERIOD}}}-year term at a fixed interest rate equal to the
interest rate on the Loan at the beginning of such
Interest Period (provided that the Lender may, at its
option, use a different point or points, at any time
during the Loan term, for choosing the interest rate that
will be the basis for calculating the amount of the Loan payments as provided in this paragraph).
In addition, the Borrower shall pay to the Lender, on the
Maturity Date, a final installment in the amount of the unpaid
principal balance, together with all accrued and unpaid interest
and all other sums due pursuant to the Loan Documents. If the
first Re-Set Date is other than the Closing Date, interest only
on the unpaid principal balance of the Loan from the Closing
Date to the first Re-Set Date shall be paid on the first Re-Set
Date. Thereafter, a monthly installment payment of principal
and interest (determined as provided above in this paragraph) will be payable on the last day of each Interest Period.
4. Loan Term
The Loan will mature on {{{25/MATURITY DATE}}} (the
"Maturity Date
"), at which time the unpaid principal balance of
the Loan, and all accrued interest, together with all unpaid
fees, expenses and other sums, if any, to the extent payable to
the Lender pursuant to the Loan Documents, will be due and payable.
5. Use Of Loan Proceeds
The proceeds of the Loan will be used by the Borrower as
follows: {{{99.2/USE OF LOAN PROCEEDS}}}. The Loan must, at all
times while the Loan is outstanding, be secured by a
{{{57/PRIORITY OF LENDER'S LIEN}}} mortgage on the real property
and improvements located at {{{53/ADDRESS OF REAL ESTATE}}} and
designated as {{{54/TAX MAP IDENTIFICATION OF REAL ESTATE}}}
(such real property and improvements being called the "Real
Estate "). The Loan must also be secured by all rents and other
proceeds from the Real Estate, and all tangible and intangible
property of the Borrower which is used in connection with, or which otherwise relates to, the Real Estate.
6. Manner Of Payment
The Borrower shall make all payments due under the Loan
Documents in unconditionally and immediately available federal
funds (not subject to any chargeback or credit) in such manner
as may be requested by the Lender. At the Lender's request, the
Borrower shall: 1) deliver to the Lender a written consent to
allow the Lender to debit the Borrower's account with the Lender
for each payment which is due and payable under the Loan
Documents, and 2) the Borrower shall deposit and maintain in
such account, from time to time such funds as shall be
sufficient to make all payments which are payable under the Loan
Documents from time to time. The minimum balance in such
account, at any given time, shall be not less than the amount
which shall be payable under the Loan Documents to the Lender
during the next 30 days. The Borrower shall remain personally
liable for all payments under the Loan Documents, even following
the deposit by the Borrower of funds into such account, provided
that the Borrower shall be credited with a payment on account of
its obligations under the Loan Documents as and to the extent
the Lender makes a debit to the account which is final against
the Borrower and all third parties and is not subject to any
other credit or chargeback or any other claim, counterclaim, right of recoupment, or defense of any party.
7. Commitment Fee
The Borrower hereby agrees to pay to the Lender a
nonrefundable commitment fee of ${{{20/COMMITMENT FEE}}} (the
"Commitment Fee
") in the following installments: (i)
${{{20.1/INSTALLMENT OF COMMITMENT FEE AT COMMITMENT}}} at the
time of execution by the Borrower of this Commitment; and (ii)
${{{20.2/INSTALLMENT OF COMMITMENT FEE AT CLOSING}}} on the
Closing Date. The Commitment Fee shall be deemed earned upon
the execution and delivery by the Borrower of this Commitment to
the Lender. The Borrower hereby acknowledges that the
Commitment Fee is a liquidated damages amount which is
reasonable in the light of the anticipated harm caused by any
breach by the Borrower of this Commitment, the difficulties of
proof of loss, and the inconvenience or nonfeasibility of
otherwise obtaining an adequate remedy. The Commitment Fee
represents reasonable compensation to the Lender for expenses,
work and services arising from the negotiation and preparation
of this Commitment and preparing the Loan for closing, as well
as loss of other investment opportunities by reason of allocating the amount of the Loan for the commitment period.
8. Environmental Report
This Commitment is conditioned upon the Lender's receipt of
a "Phase I" environmental report with respect to the Mortgaged
Property (defined below) (the "Environmental Report
"), in form
and substance satisfactory to the Lender, assessing the
environmental condition of the Mortgaged Property. The
Environmental Report must be prepared in accordance with ASTM
Standard E 1527-93 (or any successor or replacement provision),
and, at the option of the Lender, such other standards and
practices which may be recommended by ASTM, the International
Organization for Standardization ("ISO"), and other reputable
organizations. The Lender shall have the right to require
additional environmental assessments (including, without limitation, soil tests, tests for the presence of any storage
tank, tests of the integrity of any storage tank, an asbestos
survey, an air monitoring survey, and a "Phase II" environmental
assessment), which additional assessments shall be deemed to be
a part of the Environmental Report. The Lender shall have the
right not to fund the Loan, and to terminate its obligations
under this Commitment, if the Environmental Report discloses any
environmental contamination of the Security (defined below) by
any hazardous materials or any other material environmental
concern relating to the Mortgaged Property, as determined by the
Lender in its sole discretion. The Environmental Report will be
ordered by the Lender (except that any "Phase II" environmental
report may, at the Lender's discretion, be ordered by the
Borrower) from an environmental engineering company acceptable
to the Lender. The fee for the Environmental Report shall be
paid by the Borrower. Upon acceptance of this Commitment, the
Borrower shall pay to the Lender the sum of ${{{21/ENVIRONMENTAL
REPORT DEPOSIT}}} (the "Environmental Report Deposit
") on
account of the estimated cost of the Environmental Report. In
the event the actual cost of the Environmental Report exceeds
the Environmental Report Deposit, the Borrower shall pay such
excess cost to the Lender on its demand, but in no event later
than the Closing Date. In the event that the actual cost of the
Environmental Report is less than the Environmental Report
Deposit actually paid to the Lender, such excess shall be
credited against the balance of the Commitment Fee due at Closing or refunded to the Borrower, at the Lender's discretion.
9. Real Estate Inspection
The provisions of this Commitment are subject to and
conditioned upon the Lender's receipt of an engineering survey
(the "Real Estate Inspection
"), in form and substance
satisfactory to the Lender, which shall demonstrate that: 1)
there are no structural defects at the Mortgaged Property, and
2) all heating, plumbing, electrical, air-conditioning and
mechanical systems serving the Mortgaged Property are in proper
working order. The Real Estate Inspection shall also describe
the measurements and the gross and net square footage of each
building at the Mortgaged Property. The Real Estate Inspection
will be ordered by the Lender from an engineer acceptable to the
Lender. The fee for the Real Estate Inspection shall be paid by
the Borrower. Upon acceptance of this Commitment the Borrower
shall pay to the Lender the sum of ${{{22/REAL ESTATE INSPECTION
DEPOSIT}}} (the "Real Estate Inspection Deposit
") on account of
the estimated cost of the Real Estate Inspection. In the event
the actual cost of the Real Estate Inspection exceeds the Real
Estate Inspection Deposit, the Borrower shall pay such excess
cost to the Lender on demand, but in no event later than the
Closing Date. In the event that the actual cost of the Real
Estate Inspection is less than the Real Estate Inspection
Deposit actually paid to the Lender, such overpayment shall be
credited against the balance of the Commitment Fee due at Closing or refunded to the Borrower, at the Lender's discretion.
10. Appraised Value
The Lender's obligation to fund the Loan is subject to the
Lender's receipt of an independent appraisal of the Real Estate,
in form and substance satisfactory to the Lender (the "Appraisal
"). The Appraisal must demonstrate that the current
fair market value of the Borrower's interest in the Real Estate
(to the extent such interest is mortgaged to the Lender pursuant
to the Loan Documents) is not less than ${{{99.3/MINIMUM
APPRAISED VALUE OF REAL ESTATE}}}. The Appraisal must also
refer to the Environmental Report and Engineering Survey, and
must reflect the cost of each capital expenditure recommended by
the Environmental Report or the Engineering Survey. The
Appraisal will be ordered by the Lender from an appraiser
acceptable to the Lender. The fee for the Appraisal shall be
paid by the Borrower. On or before the date of the Borrower's
execution of this Commitment, the Borrower shall pay to the
Lender ${{{23/APPRAISAL DEPOSIT}}} (the "Appraisal Deposit
") on
account of the estimated cost of the Appraisal. In the event
the actual cost of the Appraisal exceeds the Appraisal Deposit,
the Borrower shall pay the difference to the Lender on demand,
but in no event later than the Closing Date. In the event that
the actual cost of the Appraisal is less than the Appraisal
Deposit actually paid to the Lender, such excess shall be
credited against the balance of the Commitment Fee due at Closing or refunded to the Borrower, at the Lender's discretion.
11. Lender's Legal Expenses
The Lender may engage legal counsel, at the Borrower's
expense, to prepare and review documents and information
relating to, and otherwise represent the Lender with respect to,
the Loan, the Loan Documents, and the Security (the "Lender's
Counsel ").
12. Borrower's Right To Prepay
The Loan may be prepaid in whole or in part on the last day
of an Interest Period, without penalty or premium; provided,
however, that any partial prepayments shall be in a principal
amount of not less than ${{{80.2/MINIMUM PREPAYMENT}}}, or
multiples thereof. Any prepayment must also be accompanied by
payment of all accrued and unpaid interest due to the date of
prepayment on the principal amount prepaid and all other fees,
expenses and other sums due and owing under the Loan Documents.
Any partial prepayment will be applied to installments of principal due in their inverse order of maturity.
13. Payments For Taxes And Insurance
At the option of the Lender, the Borrower will pay to the
Lender, at the time each installment of principal and interest
is due and payable under the Loan Documents, one twelfth (1/12)
of: 1) the annual taxes, assessments, and other governmental
charges levied or assessed against the Mortgaged Property (all
such taxes, assessments, and charges being called "Taxes
"), and
2) the annual premiums for property, liability, and other
insurance required to be maintained by the Borrower with respect
to the Security pursuant to the Loan Documents (such premiums
being called the "Premiums
"). Such payments by the Borrower on
account of Taxes and Premiums will be held by the Lender to be
used by the Lender on account of the payment of Taxes and
Premiums. All amounts paid to the Lender pursuant to this
paragraph, and all other reserves and deposit accounts held by
the Lender, and all other monetary collateral for the Loan, are
collectively called the "Reserves
." All Reserves may be
commingled with general funds of the Lender. The Lender shall
not have any obligation to pay any interest on the Reserves to
the Borrower, or to deposit the Reserves in an interest-bearing
account. However, if the Lender deposits any of the Reserves in
an interest-bearing account, then the interest on such Reserves
shall be payable to the Borrower, after deducting the Lender's
reasonable administrative expenses in connection with such
Reserves. At the Lender's request, the Borrower will also pay
to the Lender, on the Closing Date, a tax service fee (in the
amount specified by the Lender) for the purpose of defraying the
expense incident to monitoring the payment of Taxes. If the
Lender does not exercise its option specified above in this
paragraph to have payments made to the Lender on account of
Taxes and Premiums, then the Borrower shall promptly pay and discharge all Taxes and Premiums when due.
14. Default Payments By Borrower
From the earlier of: 1) the Maturity Date, or 2) any Event
of Default under the Loan Documents, the unpaid balance of the
Loan will, at the Lender's option, bear interest at a rate per
annum equal to the greater of: A) {{{78.1/FIXED DEFAULT RATE}}}%
per annum, or B) the sum of: 1) {{{78.2/SPREAD OVER PRE-DEFAULT
RATE}}}% per annum, plus 2) the interest rate per annum which
would be applicable, under the Loan Documents, to such unpaid
balance if such Maturity Date or Event of Default had not
occurred. In addition, if any payment of principal, interest,
or other charge pursuant to the Loan Documents is not received
by the Lender on or before the due date for such payment, then a
late charge of {{{77.1/LATE CHARGE %}}}% of such overdue payment
will be payable by the Borrower to the Lender on the earlier of
1) demand by the Lender, or 2) the next scheduled monthly payment under the Loan Documents.
15. Closing and Closing Date
The "Closing " means a closing at which the Loan (or any
part thereof) is initially advanced by the Lender, and the Loan
Documents (as hereinafter defined) are executed and delivered to
the Lender. The date on which the Closing occurs is called the
"Closing Date
." The Closing will take place at the offices of
{{{12/LENDER'S ATTORNEY}}}, {{{13/LAW FIRM OF LENDER'S ATTORNEY}}}, {{{14/ADDRESS OF LENDER'S ATTORNEY}}}, or at such
other location as may be designated by the Lender.
{{{27/OUTSIDE CLOSING DATE}}} (the "Outside Closing Date
") is
the date by which the Borrower is required to fulfill its
obligations under this Commitment and close the Loan. The
Borrower may give notice to the Lender scheduling a date and
time for the Closing, on or before the Outside Closing Date, by
giving at least ten (10) days prior notice to the Lender of such
date and time. If the Loan is not closed by the Outside Closing
Date (unless extended in writing by the Lender, or unless the
Closing does not occur as a result of the Lender's default under
this Commitment after notice of such default from the Borrower
and the Lender's failure to cure such default within thirty (30)
days after such notice), then this Commitment will terminate and
the Lender shall have no further obligations under this Commitment.
16. Borrower's Acceptance
The Lender will have no obligation under this Commitment
unless, within ten (10) days following the date of this
Commitment, the Borrower (and each Guarantor, if any) has
accepted this Commitment by signing the "Acceptance" attached
hereto on the enclosed duplicate counterparts of this Commitment
and returning such counterparts, together with checks in the
amount of the Commitment Fee (or the portion payable on or
before the date of this Commitment), the Appraisal Deposit, the
Environmental Report Deposit and the Real Estate Inspection
Deposit, as applicable, to the Lender. Until the Lender
receives the accepted Commitment and the foregoing fees, the Lender shall have no obligation under this Commitment.
17. No Trial By Jury; Borrower's Consent To Jurisdiction
THE BORROWER, EACH GUARANTOR (IF ANY), AND THE LENDER
KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVE ANY RIGHT THEY MAY
HAVE TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING BETWEEN THE
BORROWER AND THE LENDER IN CONNECTION WITH OR ARISING OUT OF
THIS COMMITMENT AND THE TRANSACTIONS RELATED HERETO. THE
BORROWER IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE COURTS
OF THE STATE OF {{{87/STATE WHOSE LAW GOVERNS}}} AND ANY UNITED
STATES DISTRICT COURT LOCATED IN THE STATE OF {{{87/STATE WHOSE
LAW GOVERNS}}} IN ANY ACTION OR PROCEEDING IN CONNECTION WITH OR ARISING OUT OF THIS COMMITMENT.
If the terms and conditions set forth in this Commitment
are acceptable, please sign and return the enclosed copy of this Commitment in accordance with Section
of this Commitment above.
Very truly yours,
{{{1/LENDER}}}
ACCEPTANCE BY BORROWER
Intending to be legally bound, the Borrower hereby accepts
the foregoing Commitment, including the terms and conditions of
the Supplemental Commitment Provisions attached as Schedule A
to
the Commitment. WITNESS/ATTEST:
____________________ {{{31/BORROWER}}}
Consented and Agreed to by each Guarantor:WITNESS/ATTEST:
____________________ {{{61/GUARANTOR}}}
Dated:_____________________
The Borrower represents that its federal taxpayer identification
number (or social security number, in the case of an individual Borrower) is: {{{43/BORROWER'S TAXPAYER ID NO.}}}.
The Guarantor represents that its federal taxpayer identification number (or social security number, in the case of
an individual Guarantor) is: {{{64.2/GUARANTOR'S TAXPAYER ID NO.}}}.
The Borrower represents that its legal counsel is:
{{{46/BORROWER'S ATTORNEY}}}, {{{47/LAW FIRM OF BORROWER'S ATTORNEY}}}, {{{48/ADDRESS OF BORROWER'S ATTORNEY}}}.
The Guarantor represents that its legal counsel is: {{{65/GUARANTOR'S ATTORNEY}}}, {{{66/LAW FIRM OF GUARANTOR'S ATTORNEY}}}, {{{67/ADDRESS OF GUARANTOR'S ATTORNEY}}}.
SCHEDULE A
Supplemental Commitment Provisions
In addition to the terms and conditions set forth in the
Commitment made by {{{1/LENDER}}} and accepted by
{{{31/BORROWER}}} to which this Schedule A
is annexed (such
Commitment, together with this Schedule A
and all other
Schedules thereto, being collectively called the "Commitment
"),
the Loan shall be subject to the terms and conditions set forth
below. All capitalized terms not otherwise defined in this
Schedule A
shall have the same meanings given to such terms in
the Commitment.
18. Loan Documents and Security
The Borrower's obligation to repay the Loan will be
evidenced or secured, as applicable, by such documents,
instruments, certificates, opinions and assurances as the Lender
or its counsel may reasonably request including, without
limitation, each of the following loan documents (all such
documents, instruments, certificates, opinions and assurances
being collectively called the "Loan Documents
"), each of which
must be in form and substance satisfactory to the Lender and its counsel:
1.1Loan Agreement
. If requested by the Lender, a loan
agreement executed by the Borrower and the Lender (the "Loan Agreement
").
1.2 Promissory Note
. A promissory note made by the
Borrower to the Lender in the original principal amount of the Loan (the "Promissory Note
").
1.3 Mortgage And Security Agreement
. A valid
{{{57/PRIORITY OF LENDER'S LIEN}}} lien mortgage and
security agreement (such mortgage and security
agreement being collectively called the "Mortgage
")
against: 1) the Real Estate, 2) all improvements now
or hereafter constructed on the Real Estate, 3) all
fixtures and personal property of the Borrower now
or hereafter located on the Real Estate or used in
connection with the Real Estate, and 4) all Reserves
(the Real Estate, and such improvements, fixtures,
personal property, and Reserves being collectively called the "Mortgaged Property
").
1.4 Assignment of Rents . An absolute assignment of
leases and rents (the "Assignment of Rents
")
providing for the assignment to the Lender by the
owner of the Mortgaged Property of: 1) all of its
right, title and interest in and to all leases,
tenancies, and other occupancy agreements, now
existing or hereafter arising, relating to the
Mortgaged Property (or any part thereof or interest
therein) (all such leases, tenancies, and occupancy
agreements being collectively called the "Occupancy
Agreements "), and 2) all rents, deposits, issues and
profits arising under the Occupancy Agreements or
otherwise from the Mortgaged Property (or any part thereof or interest therein).
1.5 Lien Documents
. The Borrower will grant a lien on,
and a security interest in, all security for each
obligation of the Borrower under the Loan Documents
(all such security being called the "Security
"). If
the Borrower is not the sole owner of the Security,
then the Borrower shall arrange for the owner of
each interest in the Security, other than the
Borrower, to grant such lien and security interest
to the Lender, and the Borrower shall also provide
such assurances and insurance to the Lender as it
may request in its sole discretion confirming that
such lien and security interest are not available or subject to the rights of any third party.
1.6 UCC-1s
. Uniform Commercial Code financing statements
granting to the Lender a perfected {{{57/PRIORITY OF
LENDER'S LIEN}}} lien on and security interest in
all fixtures, machinery, equipment, books and
records and other tangible and intangible personal
property which are now owned or hereafter acquired
by the owner of the Mortgaged Property and which are
located on or used in connection with the
construction, operation or maintenance of the Mortgaged Property.
1.7 Deposit and Debit Agreement
. A Deposit and Debit
Agreement (the "Deposit and Debit Agreement
")
providing that: 1) the Borrower shall maintain in an
account with the Lender a minimum balance which, at
each time during the term of the Loan, shall be
sufficient to pay all amounts which are due and
payable under the Loan Documents during the next
thirty (30) days, and 2) the Lender is authorized to
charge such account for all payments due under the Loan Documents or in connection with the Loan.
1.8 Resolutions and Certificate Of Borrower . The
Borrower's resolutions and certificate that all of
its representations and warranties in the Loan
Documents are true and complete, containing, as
appendices, copies of the Borrower's organizational
documents, as amended to the Closing (certified as
being true and complete copies by the Borrower, and
if any counterpart of any such document has been
filed with a governmental office, then also
certified by such governmental office as a true and
complete copy). The Borrower is, and, while the
Loan is outstanding, will continue to be, {{{40/TYPE OF BORROWER}}}.
1.9 Legal Opinion Of Borrower's Counsel
. A legal
opinion of the Borrower's independent counsel. The
identity of the law firm providing such opinion must
be reasonably satisfactory to the Lender, and such
opinion shall contain such provisions as the Lender may reasonably request.
1.10 Additional Items
. Each of the other documents,
certificates and instruments set forth in the
Supplemental Commitment Provisions, which documents,
certificates and instruments are incorporated in this Commitment by reference.
19. Occupancy Agreements
2.1 Lender's Approval . All Occupancy Agreements which are
effective on or after before the Closing Date must be submitted
to the Lender for review and approval at least ten (10) business
days prior to the Closing Date. All proposed Occupancy
Agreements must be submitted to the Lender for its review and
approval prior to execution. All Occupancy Agreements must be
in writing and subordinate to the lien of the Mortgage and
contain terms and conditions acceptable to the Lender. However,
at Lender's option, the Lender may subordinate its lien to any
Occupancy Agreement. The Lender shall have no obligation to grant rights of nondisturbance to any tenant.
2.2 Tenant Estoppel Certificates
. The Borrower shall
deliver to the Lender, on or before the Closing Date, an
estoppel certificate, in the form required by the Lender, from each tenant and other occupant of the Mortgaged Property.
2.3 Rent Roll
. The Borrower represents and
acknowledges that the rent roll for the Mortgaged Property,
attached to this Commitment as Schedule B
(the "Rent Roll "), is
true, correct and complete as of the date of this Commitment,
and there is no material omission from such Rent Roll. A pre-
condition to the Closing is that the Rent Roll shall continue to
be true, correct and complete in all respects as of the Closing
Date. The Lender shall have no obligation to fund the Loan if
the rents from the Mortgaged Property, as of the Closing Date, are less than the rents set forth on the Rent Roll.
20. Other Closing Documents
The provisions of the Commitment are subject to and
conditioned upon the Borrower's obtaining, at its expense, and
submitting to the Lender and its counsel, at least ten (10)
business days prior to the Closing Date, the following
documents, each of which must be in form and substance satisfactory to the Lender and its counsel:
3.1 Title Commitment
. A title insurance commitment issued
by a title insurance company ("Title Insurance Company
")
acceptable to the Lender, together with copies of all documents
identified therein, and pursuant to which the Title Insurance
Company agrees to issue to the Lender on the Closing Date an
ALTA form (or such other form which is reasonably required by the Lender) 2
of Loan Policy acceptable to the Lender insuring the
Mortgage as a valid {{{57/PRIORITY OF LENDER'S LIEN}}} lien for
the full amount of the Loan, free and clear of all liens and
encumbrances, whether of record or otherwise, and subject only
to such exclusions from coverage and such exceptions to title as
may be approved by the Lender in writing, and containing such
endorsements as the Lender may require (and, if required by the
Lender, with co-insurance or reinsurance with direct access
agreements issued by such title insurance companies as are
acceptable to the Lender). The title commitment shall specify
that the Borrower is the sole owner of the Real Estate. The
title commitment shall also name the Lender, its successors and
assigns, as the insured under the Loan Policy and shall include
county and upper court judgment and bankruptcy court searches,
tax and assessment searches, and county and state financing
statement searches. Title to the Real Estate shall be good and marketable and insurable.
3.2 Survey
. An "as-built" boundary and location survey
of the Real Estate prepared for the Lender by a land surveyor
licensed in the State of {{{56/STATE IN WHICH REAL ESTATE IS
LOCATED}}} and acceptable to the Lender. Such survey must be
based on an inspection of the Real Estate (and such survey must
2 Note that some states, such as California, New York, and Texas, require special
title insurance forms. See Chapter 7 of the main text of this book regarding title
insurance requirements.
be dated, or redated as of a date which is) not earlier than
three (3) months prior to the Closing. Such survey must also be
certified to the Title Insurance Company and the Lender, and
their respective successors and assigns, and insurable by the
Title Insurance Company. Further, the survey must: 1) comply
with the minimum detail requirements for an Urban Survey as
adopted by the American Land Title Association and American
Congress on Surveying and Mapping, 2) be otherwise satisfactory
to the Lender, and 3) show: (i) the boundaries of the Real
Estate by courses and distances, together with a metes and
bounds description corresponding to such survey; (ii) the
location of all improvements; (iii) the location and width of
all easements, utility lines, rights-of-way and building set-
back lines and notes referencing the book and page numbers for
the instruments granting the same; (iv) the location of all
encroachments and restrictions, if any, affecting the Real
Estate; (v) the location of all adjoining streets, the distance
to and names of the nearest intersecting streets, and (vi) the
certification of the surveyor as to (A) whether the roads
abutting the Real Estate are publicly dedicated, (B) the acreage
of the Real Estate, (C) whether the parcels comprising the Real
Estate (if applicable) are contiguous without any gores, gaps,
overlaps or strips of land separating them, and (D) such other
matters as reasonably requested by the Lender or its counsel.
An existing survey (which is more than three (3) months old as
of the Closing) with a survey affidavit of no change may be used only if approved by the Lender.3.3 Property, Liability, and Other Insurance
. Original
policies of insurance, each in effect for a period of not less than one (1) year following the Closing Date, as follows:
[a] Comprehensive "all-risk" fire and extended
coverage hazard insurance (including the following
endorsements: i) vandalism, ii) malicious mischief, iii)
"Operation of Building Laws," "Demolition Costs" and
"Increased Cost of Construction Endorsements," iv) an
"agreed amount" endorsement waiving all co-insurance
provisions, and v) an "Ordinance or Law Coverage" or
"Enforcement" endorsement if any of the improvements on
the Mortgaged Property are legal non-conforming uses or
structures) covering the Mortgaged Property in an
aggregate amount not less than one hundred per cent
(100%) of the agreed upon full insurable replacement
value of the Mortgaged Property (including coverage for
loss of contents owned by the Borrower), with a waiver of
depreciation, and insuring the Lender as the first mortgagee under a standard mortgagee endorsement clause;
[b] comprehensive general public liability insurance
covering injury and damage to persons and property, on an
"occurrence" rather than a "claims made" basis, with
limits and other terms which are acceptable to the
Lender, and naming the Lender as a certificate holder,
and covering at minimum the following risks: i) premises
and operations, ii) products and completed operations on
an "if any" basis, iii) independent contractors, iv)
blanket contractual liability for all written and oral
contracts, and v) contractual liability pursuant to the
indemnities in the Loan Documents to the extent such
contractual liability coverage for indemnities is commercially available at reasonable premiums;
[c] if the Real Estate is located within a flood
hazard area or flood zone (as determined by the Lender),
then flood insurance in the maximum available amount
through the Federal Flood Insurance Program (and such
private flood insurance as the Lender may request) and
insuring the Lender as the first mortgagee under a standard mortgagee endorsement clause;
[d] insurance which complies with the workers'
compensation and employers' liability laws of all states in which the Borrower shall have employees;
[e] business income insurance sufficient to pay, for
a period of not less than twelve (12) months, normal
operating expenses of or gross income from the Mortgaged
Property, and designating the Lender as the first
mortgagee, and containing an extended period of indemnity
endorsement which provides that after any loss to the
improvements on the Mortgaged Property (and any personal
property located thereon) has been repaired, the
continued loss of income will be insured until such
income either returns to the same level it was at prior
to the loss, or the expiration of twelve (12) months from
the date of the loss, whichever first occurs, and
notwithstanding that the policy may expire before the end of such period;
[f] boiler and machinery insurance in such amounts as
the Lender shall require, provided the Mortgaged Property contains equipment of such nature;
[g] during each period when there is any construction
on or alteration of the Mortgaged Property or any
improvements thereto, i) owner's contingent or protective
liability insurance covering claims not covered by or
under the commercial general liability insurance policy
specified in subparagraph above, and ii) the insurance
provided in subparagraph above written in a "builder's
risk" completed value form (on a non-reporting basis, and
including permission to occupy the Mortgaged Property); and[h] such other insurance as the Lender may require
from time to time including, without limitation,
earthquake insurance (if any of the Mortgaged Property is
located in an area with a material risk of seismic
activity), mine subsidence insurance, and environmental
liability insurance, in amounts and with carriers reasonably satisfactory to the Lender.
The Borrower shall furnish each policy on or prior to the
Closing Date, and thereafter, upon renewal of such policies,
either the policy itself or a certificate (provided the
Mortgaged Property is identified and specifically allocated
insurance amounts are shown). In addition, each insurance
policy shall include a provision that such policy will not be
cancelled, altered, or in any way limited in coverage or reduced
in amount, unless the Lender is notified in writing at least
thirty (30) days prior to such cancellation or change. Each
insurance policy must be written, on such forms as are
reasonably acceptable to the Lender, by insurance companies
authorized or licensed to do business in the State of
{{{56/STATE IN WHICH REAL ESTATE IS LOCATED}}}. Each such
insurance company must have a rating, which is not less than the
minimum rating required by the Lender, from a reputable rating
agency selected by the Lender, and each such insurance company must be otherwise acceptable to the Lender.
3.4 Coastal, Flood, and Wetland Zones
. Satisfactory
evidence that the Real Estate is not located within a coastal
hazard area, flood hazard area, flood zone, or wetland (as determined by the Lender).
3.5 Formation Documents
. Copies of the organizational
documents of the Borrower and each Guarantor, if any, as amended
to the Closing Date, including, without limitation, (i) the
partnership agreement and certificate of partnership if the
Borrower or any Guarantor is a general partnership, (ii) the
certificate of limited partnership and limited partnership
agreement if the Borrower or Guarantor is a limited partnership,
(iii) the certificate of incorporation and bylaws if the
Borrower or any Guarantor is a corporation, and (iv) the
certificate of formation and the operating agreement if the
Borrower or any Guarantor is a limited liability company. With
respect to each such certificate which is filed in a
governmental office, the Borrower and each Guarantor shall
deliver to the Lender a copy of such certificate as filed in
such office. If the Borrower or any Guarantor is an entity with
respect to which a certificate of good standing is available
from any jurisdiction in which such entity was organized or in
which it has qualified to do business, then such entity shall
deliver to the Lender a good standing certificate, dated not
more than 30 days before the Closing Date, from each such
jurisdiction attesting that such entity is in good standing in such jurisdiction.3.6 C/O, Building, and Zoning
. Evidence in the form of,
but not limited to, environmental permits, use permits, zoning
permits, certificates of occupancy and certificates of no
building violations, that the use and occupancy of the Mortgaged
Property is in compliance with all laws, ordinances and
regulations (including all applicable environmental, zoning,
building, use and subdivision laws, ordinances and regulations).
All approvals and permits must: 1) be legally valid, 2) be
current as of the Closing, 3) cover all improvements to the Real
Estate, and 4) remain in full force and effect throughout the
term of the Loan. In the event that any of such approvals or
permits is invalidated, rescinded or suspended, the Lender will
not be obligated to close the Loan during the period that any invalidation, rescission or suspension continues.
3.7 Additional Searches
. A current search (dated not
more than thirty (30) days before the Closing) against each
Guarantor, if any, for suits and judgments, tax liens, UCC
financing statements, or bankruptcy filings (such search to be
in form and substance satisfactory to the Lender), indicating
that there are no outstanding judgments, suits, tax liens, UCC- 1s, or pending bankruptcy filings applicable to such Guarantor.
3.8 Agreements
. A management agreement (if the Mortgaged
Property is not occupied by the Borrower exclusively for the
conduct of its business), and all service agreements (such as,
for example, elevator and boiler maintenance, garbage removal,
and utilities) which are reasonably necessary for the normal
operation and maintenance of the Mortgaged Property, each of
which must expressly provide that they may not be modified or
terminated without the Lender's approval. Each such agreement
specified in this subparagraph (collectively called the "Service
Agreements ") must be in form and substance satisfactory to the
Lender.
3.9 Other Documents
. Such other documents, instruments
and certificates including, without limitation, proofs, opinions
and other assurances, as the Lender or the Lender's Counsel may reasonably require.
21. Terms and Conditions Of Closing Documents
The Commitment is subject to the execution (by the Borrower
and each Guarantor, if any) of the Loan Documents. The Lender
may require the Loan Documents to contain such representations,
warranties, affirmative and negative covenants, indemnities,
closing conditions, defaults, events of default and remedies as
are typically required by the Lender for transactions such as
the Loan. The Lender also has the right to modify its standard
forms from time to time, such as in order to reflect changes in
the law or lending practices. The Lender may also make such
changes as it may deem appropriate, in its sole discretion, to
reflect the particular circumstances relating to the Loan. The
Borrower acknowledges that not every provision imposing duties,
burdens or limitations on the Borrower has been set forth in the
Commitment. The failure of the Borrower and the Lender to reach
agreement on such provisions shall not be deemed a breach by the
Lender of the Commitment. Such provisions shall include, among
other things, the following (however, even if any particular
provision is not specified below or in this Commitment, the
Lender may nonetheless include such provision in the Loan
Documents so long as such provision is included in the Lender's
standard forms, as the same may be modified or extended as
provided above, or such provision is reasonably required by the Lender or its counsel):
4.1 Loan to Value Percentage
. The Borrower shall
maintain a Loan to Value Percentage of not more than
{{{75.2/MAXIMUM LOAN TO VALUE %}}}%. "Loan to Value Percentage
"
means the outstanding balance of the Loan at the time in
question divided by the then current fair market value of the
Borrower's interest in the Mortgaged Property, as determined by the Lender in its reasonable judgment.
4.2 No Subordinate Lien
. Neither the Borrower nor any
Guarantor shall pledge, grant a security interest in, mortgage,
assign, encumber or otherwise create a lien on any of its
respective property (whether tangible or intangible, and whether
now owned or hereafter acquired) in favor of any person or
entity other than the Lender, except for those liens, security
interests and encumbrances existing on the date of this
Commitment and previously disclosed in writing to, and approved in writing by, the Lender.
4.3 No Loan By Borrower Or Any Guarantor
. Neither the
Borrower nor any Guarantor shall make any loan or advance to any
other person or entity, including, without limitation, officers,
directors, shareholders, principals, partners or affiliates of the Borrower or any Guarantor (if any).
4.4 No Other Debt Of Borrower Or Any Guarantor . Neither
the Borrower nor any Guarantor shall create, incur or assume any
indebtedness for borrowed money other than existing indebtedness previously disclosed to and approved by the Lender in writing.
4.5 No Other Guarantee
. Neither the Borrower nor any
Guarantor shall assume, guarantee, endorse or otherwise become
directly or contingently liable for the obligations of any other
person or entity except by endorsement of negotiable instruments
for deposit into such person's account, for collection in the ordinary course of business.
4.6 No Transfer Of Interests In Borrower
. No Guarantor,
or any other person or entity, shall, whether voluntarily,
involuntarily or by operation of law, sell, transfer, convey,
assign, pledge, encumber or grant a security interest in, any
ownership interests in the Borrower to or in favor of any person or entity other than the Lender.
4.7 Due On Sale Or Transfer
. The owner of the Mortgaged
Property shall not cause or permit any transfer of all or any
portion of the Mortgaged Property, whether voluntarily, involuntarily or by operation of law, without the prior written
consent of the Lender. A "transfer
" includes: (i) the direct
or indirect sale, transfer or conveyance of the Mortgaged
Property or any portion thereof or interest therein; (ii) the
execution of an installment sale contract or similar instrument
affecting all or any portion of the Mortgaged Property; (iii) if
the owner of the Mortgaged Property, or any general partner
thereof, is a corporation, partnership, or other entity, the
transfer (whether in one transaction or a series of transactions) of any stock, partnership, or other ownership
interests in such entity; (iv) if the owner of the Mortgaged
Property, or any general partner thereof, is a corporation or
other entity, the creation or issuance of new stock or other
ownership interests by which an aggregate of more than 10% of
such entity's stock or other ownership interests shall be vested
in a party or parties who are not now stockholders or holders of
ownership interests; and (v) an agreement by the owner of the
Mortgaged Property leasing all or a substantial part of the
Mortgaged Property (for other than actual occupancy by a space
tenant thereunder) or a sale, assignment or other transfer of,
or the grant of a security interest in and to, any Occupancy Agreements.
4.8 No Subordinate Lien
. The owner of the Mortgaged
Property shall not create, or permit to exist, any mortgage,
pledge, lien, security interest (including, without limitation,
a purchase money security interest), encumbrance, attachment,
levy, distraint or other judicial process on or against all or
any portion of the Mortgaged Property (including, without
limitation, fixtures and other personalty), without the prior
written consent of the Lender. If any lien or encumbrance is
filed or entered without the consent of the owner of the
Mortgaged Property, then such lien or encumbrance shall be
removed of record within fifteen (15) days after it is filed or entered.4.9 Right To Apply Insurance or Condemnation Proceeds To
Loan . In the event of partial or total condemnation or damage
to or destruction of the Mortgaged Property, the insurance
proceeds or condemnation award will be payable to the Lender and
the Lender will have the option, in its sole discretion, of
applying all or any portion of such proceeds or award to (i)
reduction of the outstanding principal balance of the Loan, (ii)
restoration, replacement or repair of the Mortgaged Property in
accordance with the Loan Documents and the Lender's standard
construction loan disbursement conditions and requirements; or
(iii) the owner of the Mortgaged Property, subject to the rights of third parties.
4.10 New Appraisals
. The Lender shall have the right
during the term of the Loan to conduct or have conducted, at the
Borrower's expense, updated appraisals of the Mortgaged Property
in form and substance satisfactory to the Lender; provided,
however, that the Borrower shall not be required to pay for such
updated appraisals so long as: (i) no event of default exists
under the Loan Documents; and (ii) such updated appraisal is not
required by applicable law, rule or regulation or the
interpretation or administration thereof by any governmental
authority or comparable agency charged with the interpretation or administration thereof.
4.11 Environmental Report
. The Lender reserves the right
during the term of the Loan to conduct or require the Borrower
to conduct, at the Borrower's expense, such environmental
inspections, audits and tests, and such tests for Hazardous
Substances (defined below) as the Lender shall deem necessary or
advisable from time to time; provided, however, that the
Borrower shall not be required to pay for such environmental
inspections, audits and tests so long as: (i) no event of
default exists under the Loan Documents; and (ii) the Lender has
no cause to believe in its sole reasonable judgment that there
has been a release or a threatened release of any Hazardous
Substance at the Mortgaged Property or that the Borrower or the
Mortgaged Property is in violation of any applicable
Environmental Rule (defined below). "Hazardous Substance
" means
any material or substance that, whether by its nature or use, is
now or hereafter defined or regulated as a hazardous waste,
hazardous substance, pollutant or contaminant under any
Environmental Rule, or which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or
otherwise hazardous or which is or contains petroleum, gasoline,
diesel fuel, another petroleum hydrocarbon product, asbestos,
asbestos-containing materials or polychlorinated biphenyls.
"Environmental Rules
" mean all present and future laws,
statutes, common law, ordinances, rules, regulations, orders,
codes, licenses, permits, decrees, judgments, directives (or the
equivalent) of or by any Public Body (defined below) and
relating to or addressing the protection of the environment or
human health or safety, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C. Sections 9601, et
seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Sections 1801 et seq.), and the Resource Conservation
and Recovery Act, as amended (42 U.S.C. Sections 6901, et seq.),
and the regulations adopted and publications promulgated
pursuant thereto. "Public Body
" includes each of the following:
1) the federal government, 2) any state or local government or
any political subdivision of any state or local government, or
3) any agency, court or body of either the federal government,
or any state or local government or any other political
subdivision of any state or local government, exercising
executive, legislative, judicial, regulatory or administrative functions.
4.12 Defaults By Obligors
. In addition to any defaults
described in the Commitment, each action or omission specified
below in this Section
shall be deemed to be a default by the
Borrower and by each Guarantor (if any) under each of the Loan
Documents (each action or omission specified below being called an "Event of Default
"):
[a] Non-payment when due of any sum required to be
paid to the Lender under any of the Loan Documents.
[b] A breach of any covenant in the Loan Documents
relating to the maintenance of insurance, the payment of
taxes, the restrictions on transfer of title and creation
of liens, the giving of required notices, the
restrictions relating to leases and rents, the
restrictions on organizational restructurings, the maintenance of business operations, and certain financial covenants.
[c] A breach by the Borrower, or any Guarantor, or
any other person providing collateral pursuant to or
obligated to perform under any Loan Document (the
Borrower, each Guarantor, and each such other person
being collectively called the "Obligors
") of any other
term, covenant, condition, obligation or agreement under
any Loan Document, and the continuance of such breach for a period of fifteen (15) days after written notice.[d] Any representation or warranty made by the
Borrower or any Obligor in any Loan Document or to induce
the Lender to enter into the transactions contemplated
under this Commitment proves to be false, incorrect or
misleading in any material respect as of the date when made.
[e] With respect to any Obligor, the filing of a
voluntary or involuntary bankruptcy petition; an
assignment for the benefit of creditors; the appointment
of a custodian, receiver, liquidator or trustee, or any
action to effect any of the foregoing; insolvency
(however defined), or not paying one's debts generally as they become due.
[f] The death, dissolution, liquidation, merger,
consolidation or reorganization of any Obligor, or the
institution of any proceeding to effect any of the foregoing.
[g] A default under any other obligation by any
Obligor in favor of the Lender, including, without
limitation, obligations arising under swap agreements (as
defined in 11 U.S.C. § 101, or any successor or
replacement provision), or under any document securing or
evidencing such obligation, whether or not such obligation is secured by the Mortgaged Property.
[h] There is any material adverse change to any of
the Mortgaged Property.
[i] A material deterioration in the financial
condition of any Obligor or the occurrence of any event
which, in the reasonable opinion of the Lender, impairs
the financial responsibility of any Obligor and its or their ability to repay the Loan.
[j] The filing, entry or issuance of any judgment,
execution, garnishment, attachment, distraint or lien against any Obligor or its or their property.
[k] A default under any other obligation secured by
the Mortgaged Property or any part thereof.
[l] A default by any Obligor under any term,
provision or condition of the Swap Agreement
documentation.
4.13 Lender's Right To Offset
. Upon the occurrence of an
Event of Default, the Lender shall have the right immediately
and without notice or other act, to offset (as against the
obligations of any Obligor to the Lender) any sum owed by the
Lender or any affiliate in any capacity to such Obligor, or any
property of such Obligor in the possession of the Lender or any affiliate.
22. Financial Disclosures
So long as there is either any outstanding indebtedness of
the Borrower to the Lender pursuant to the Loan Documents, or
any obligation of the Lender pursuant to the Loan Documents,
then the Borrower and each Guarantor (if any) shall furnish to
the Lender the following information, prepared in accordance
with generally accepted accounting principles consistently
applied and otherwise in form and substance satisfactory to the Lender in its sole discretion:
5.1 Not later than one hundred twenty (120) days after the
end of each fiscal year, annual financial statements of the
Borrower including, without limitation, statements of financial
condition, income and cash flows, a reconciliation of net worth,
a listing of all contingent liabilities, notes to financial
statements, and any other information requested by the Lender,
certified by a certified public accountant acceptable to the
Lender as being in accordance with generally accepted accounting principles.
5.2 Not later than one hundred twenty (120) days after the
end of each interim fiscal half year, management prepared
financial statements of the
