EXHIBIT 99.17
FINAL COMMITMENT
July 29, 1999
Berkshire Realty Holdings, L.P.
Attention: Xxxxxxx X. Xxxxx, Chairman
Xxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxxxxxxx 00000
Re: Financing of 57 Multifamily Apartment Properties Located in
Texas, South Carolina, North Carolina, New York, Maryland,
Georgia and Florida, Owned By Affiliated Entities of
Berkshire Realty Holdings, L.P. ( the "Transaction")
Gentlemen:
This Final Commitment (the "Final Commitment") is entered into by and
between Xxxxxx Mortgage Group, Inc. ("Lender") and Berkshire Realty Holdings,
L.P. ("Berkshire," and collectively with each of its to-be affiliated entities
that will own the Premises (as hereinafter defined), the "Borrower") and the
other signatories hereto to define the final terms of the Transaction. The
individual components of the Transaction are each referred to herein
collectively and individually as the "Loan." The Federal Home Loan Mortgage
Corporation will be referred to herein as "Freddie Mac."
TERMS
1. Loan Amount: The aggregate Loan Amount (the "Loan Amount") is expected to be
and will not exceed Seven Hundred Eight Million Three Hundred Forty-Four
Thousand and 00/100 Dollars ($708,344,000.00), assuming the financing of all
properties described on Exhibits A-1 and A-2 (collectively, the "Premises"), but
will be reduced by the amount attributable to any property Exclusions, as
defined in paragraph 12 below. The exact Loan Amount shall be determined once
the Interest Rate (as defined below) is locked pursuant to paragraph 3 below.
The actual Loan Amount for each Loan shall be rounded down to the nearest
$1,000. The correlation between Interest Rate and Loan Amount for Pool Two and
Pool One is described in paragraphs 3(a)(v) and 3(b) below. The Transaction is
to be structured in two pools (respectively, "Pool One" and "Pool Two"), as set
forth on Exhibits A-1 and A-2.
2. Loan Term: The terms for Pool One and Pool Two are as follows:
Pool One: Term: Seventy-two (72) months
Lockout Period: Not applicable
Yield Maintenance Period: Not applicable
Pool Two: Term: Eighty-four (84) months
Lockout Period: Not applicable
Prepayment: Yield Maintenance (78 months) with a minimum
prepayment premium of 1% or Defeasance; no prepayment premium
required during the six (6) month period from expiration of
yield maintenance until the end of the Loan Term.
The formula used to calculate prepayment premiums during yield maintenance
is set forth in the Note (as hereinafter defined) relative to Pool Two. For both
pools, prepayment, in whole or part, shall be permitted under the terms set
forth in the Loan Documents (as hereinafter defined). Borrower is required to
pay 115% of the then-current unpaid principal balance of an individual Loan for
purposes of releasing an individual property in either pool from the
cross-collateralization agreement and the Security Instrument that
relates to such property, and the additional 15% will be applied as provided in
the Loan Documents without payment of the prepayment premium.
3. Interest Rate: Interest shall be payable on all unpaid principal amounts of
the Loan from the date of closing through the date of repayment of the Loan at a
contract rate of interest (the "Interest Rate") selected and confirmed as set
forth herein and as provided in the Loan Documents (as defined below).
(a) The Interest Rate on Pool Two (fixed rate) shall be determined as
provided below in this paragraph 3(a). The Freddie Mac guaranty fee for Pool Two
shall be 84 basis points and the servicing fee shall be 6.5 basis points.
Borrower acknowledges, however, due to treasury and dealer spread fluctuations
that the Interest Rate for Pool Two cannot be fixed until the Borrower accepts
this Final Commitment and all fees required herein and then due and payable have
been received by Xxxxxx in immediately available funds. The Interest Rate on
Pool Two shall be subject to market conditions until the Interest Rate is
locked. Borrower must "lock" the Interest Rate ("Rate Lock") which will fix the
Loan Amount for every Loan in Pool Two simultaneously by completing the
following procedures:
(i) Borrower shall deposit with Xxxxxx (to be held in escrow until
Rate Lock) a fee (the "Rate Lock Fee") equal to 3% of the
total anticipated Loan Amount of Pool Two (or such lesser
amount as may be acceptable to the purchaser (the "Investor")
of the participation certificates ("PC's") to be issued by
Freddie Mac in connection with Pool Two). Lender will endeavor
to obtain a Rate Lock Fee less than 3%. This deposit must be
in the form of cash and will be refunded to the Borrower after
Freddie Mac issues the PC's. If the interest rate has been
locked and the Transaction fails to close by October 15, 1999
as that date may be extended as provided in paragraph 19, the
Rate Lock Fee will be applied as set forth in paragraph 23.
(ii) Borrower shall give Lender twenty-four (24) hours notice of
Borrower's desire to Rate Lock, including the designation of a
two (2) hour period (the "Rate Lock Window") during which Rate
Lock will occur and which must be wholly contained within the
hours of 9:00 AM to 4:00 PM Eastern Standard Time, Monday
through Friday, excluding any holiday observed by the Federal
Reserve Bank.
(iii) During the Rate Lock Window, Lender will quote current
interest rates available in the market via telephone
conversation.
(iv) In the event the Borrower, Whitehall Street Real Estate
Limited Partnership XI ("Whitehall"), The Berkshire Companies
Limited Partnership ("Xxxxx") and Blackstone Real Estate
Partners III L.P., Blackstone Real Estate Partners III FF L.P.
and Blackstone Real Estate Holdings III L.P. (collectively,
"Blackstone") find the rate quoted for Pool One and Pool Two
pursuant to subparagraph (iii) above to be acceptable and
authorize Lender to Rate Lock by telephone, they will
acknowledge their acceptance via recorded telephone
conversation. Borrower represents and warrants to Lender that
any one of Xxxxxxx Xxxxx, Xxxxx Xxxxx and Xxxxxx Xxxxx is
authorized to Rate Lock via recorded telephone conversation.
At this point, the Interest Rate will be deemed locked at the
quoted rates, constituting a binding offer by the Borrower to
accept the Loan on the terms conveyed on the recorded line and
set forth in Certificate Confirming Loan Amount, Interest Rate
and Payment of Fees (the "Certificate"), an example of which
is attached to this Final Commitment as Exhibit C and a
substantially
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final form of which shall be provided to Borrower, Whitehall,
Xxxxx and Blackstone prior to Rate Lock. Immediately
following Rate Lock, Xxxxxx will fax the completed
Certificate to the Borrower confirming said terms. This
Certificate must be executed by the Borrower, Whitehall, Xxxxx
and Blackstone and immediately faxed back to Lender. This date
shall be the "Rate Lock Date."
(v) In the event that the locked Interest Rate on the Loans in
Pool Two does not exceed 7.705% the aggregate Loan Amount for
the Loans in Pool Two shall be $503,713,000.00, which shall be
the maximum Loan Amount for Pool Two. In the event that the
Interest Rate on the Pool Two Loans is in excess of 7.705%,
the aggregate Loan Amount on the Pool Two Loans will be
reduced as shown on Exhibit D.
(vi) In the event the Interest Rate is not locked within ten (10)
business days after the date this Commitment is fully
executed, Borrower shall not be entitled to lock an Interest
Rate, Lender shall have no obligation to close the Transaction
and the Good Faith Deposit (as hereinafter defined) and the
Rate Lock Fee shall be returned to Borrower.
(b) The Interest Rate on Pool One (floating rate) shall be equal to the
thirty (30) day LIBOR (the "LIBOR") plus a spread equal to the number of basis
points determined on the Rate Lock Date and approved by the Borrower (inclusive
of any guaranty fee and servicing fee) and shall float with LIBOR during the
term. In the event that the Interest Rate on Pool One does not exceed 6.580% the
aggregate Loan Amount for the Loans in Pool one shall be $204,631,000, which
shall be the Maximum Loan Amount for Pool One. In the event that the Interest
Rate on the Pool One Loans is in excess of 6.580%, the aggregate Loan Amount on
the Pool One Loans will be reduced as shown on Exhibit E. The Rate Lock on Pool
One with respect to the spread above LIBOR must occur simultaneously with the
Rate Lock on Pool Two and shall follow the same procedure.
(c) On the Rate Lock Date, Borrower shall (i) purchase a three (3) year
interest rate cap for the benefit of Lender ("3 Year Cap") to be in place on the
date of closing at not more than 300 basis points over LIBOR on the Rate Lock
Date with a notional amount equal to the full portion of the Loan Amount
attributed to Pool One, and (ii) purchase a three (3) year interest rate cap for
the benefit of Lender ("4-6 Year Cap") to be in place upon the expiration of the
3 Year Cap for years 4-6 of the Loan Term at not more than 300 basis points over
LIBOR on the Rate Lock Date, for a notional amount equal to one-half (1/2) of
the portion of the Loan Amount attributed to Pool One. Borrower shall fund an
escrow on a monthly basis commencing at closing in an amount necessary to fund
the purchase price of an additional interest rate cap for the benefit of Lender
(the "Additional Cap") to be in place upon the expiration of the 3 Year Cap for
years 4-6 of the Loan Term at not more than 300 basis points over LIBOR on the
Rate Lock Date with a notional amount equal to the excess of the Loan balance
attributable to Pool One Loans over the notional amount for the 4-6 Year Cap.
The escrow for the Additional Cap shall be adjusted semi-annually to reflect
prepayments of Loans in Pool One and changes in the anticipated cost of the
Additional Cap. Borrower shall purchase the Additional Cap prior to the
expiration of the 3 Year Cap. In the event that the Loans in Pool One have been
prepaid to an extent that their aggregate Loan Amount is less than the notional
amount of the 3 Year Cap, the 4-6 Year Cap or the Additional Cap (to the extent
purchased), the Lender shall permit a modification of the agreements related to
the applicable rate cap (the "Rate Cap Agreements") or partial sale thereof to
reduce the notional amount of such cap to an amount not less than the then
aggregate Loan Amount relating to the Loans in Pool One. The counterparty on
each of the Rate Cap Agreements shall have a rating of not less than Aa3 by
Xxxxx'x or AA- by Standard and Poor's.
(d) From and after Rate Lock, the Certificate shall represent the final
understanding of Borrower, Whitehall, Blackstone and Xxxxx with respect to the
Interest Rate and the other matters addressed therein; provided, however, that
the Loan Amount shall remain subject to reduction because of Exclusions as set
forth in paragraph 12 of this Final Commitment. In no event shall Borrower,
Whitehall, Blackstone or Xxxxx have any right from and after Rate Lock to
contest the Interest Rate or
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the other matters set forth in the Certificate or to claim that the same
represent a breach of any warranty or representation by the Lender.
4. Payments: The Borrower shall pay (i) at closing, adjusted interest from
the date of closing through the end of the closing month, (ii) commencing on
the first (1st) day of the second (2nd) full month following closing, and
continuing through the Loan Term, monthly payments of principal and interest
calculated on an amortization period of 360 months, and (iii) with the final
scheduled monthly installment, all remaining principal and accrued interest,
fees and charges, repaid in full. Interest for Pool One and Pool Two will be
calculated on a 30/360 basis. In the event the loans in Pool Two are closed
in the same month that the PCs are issued, the first amortization payment
will be due on those loans on the first day of the first full month following
closing.
5. Loan Documents: All documents evidencing and/or securing the Loan shall be on
Freddie Mac's Uniform Instruments heretofor delivered to Borrower (and any other
documents approved by Freddie Mac) for each Loan; including, without limitation,
the promissory note (the "Note"), the deed of trust, mortgage or deed to secure
debt (whichever applies, the "Security Instrument"), the replacement reserve
agreement, the repair escrow agreement, the borrower's certificate, the
cross-collateralization agreement, pledge agreements related to the Rate Cap
Agreements, the financing statements and the exceptions to non-recourse guaranty
required pursuant to paragraph 7 below (collectively, the "Loan Documents").
Xxxxxxxx agrees to execute the Loan Documents, as required, at closing. The
terms and conditions of Freddie Mac's Uniform Instruments shall be modified or
amended only as agreed to by Xxxxxxxx, Xxxxxx and Freddie Mac to accurately
reflect the terms of the Loan. Certain document modifications agreed to as of
this date are evidenced by a marked Loan Document set initialed by counsel to
Xxxxxxxx, Xxxxxx and Freddie Mac. The Rate Cap Agreements and the pledge
agreements and the legal opinions related thereto must incorporate commercially
reasonable terms as determined by Xxxxxx and Freddie Mac in their discretion.
Borrower and Xxxxxx acknowledge and agree that the form of all Loan Documents
shall be finalized (in a manner consistent with the marked Loan Documents
referred to above) not less than thirty (30) days prior to closing.
6. Security: Lender shall receive (i) a first mortgage lien on the Premises and
appurtenant facilities and improvements, and a first priority security interest
in all personal property owned by the Borrower, machinery, equipment, building
materials, contract rights, accounts, furniture, fixtures, royalties and other
rights related thereto, as well as all leases, rents, revenues and proceeds
therefrom (ii) an assignment of the rate caps pursuant to the Rate Cap
Agreements, and (iii) all proceeds of the foregoing. Each Loan shall be
cross-collateralized and cross-defaulted within their respective pools to the
extent a cross is permitted under applicable law and as approved by Freddie Mac.
Pool One and Pool Two will not be cross-collateralized and cross-defaulted
inter-pool.
7. Borrower, Guarantors and Liability of Borrower: On the closing date, each of
the properties comprising the Premises shall be titled in a single asset, single
purpose entity whose organizational documents have been reviewed and approved by
Xxxxxx. Xxxxxx agrees that such single purpose entity shall not be required to
have an independent director. The personal liability of the Borrower shall be
limited as set forth in the Loan Documents. Berkshire (but no other entity or
individual) must execute an Exceptions to Non-Recourse Guaranty; which shall
include, without limitation, liability should Borrower voluntarily file for
bankruptcy protection or be the subject of a collusive involuntary bankruptcy
filing.
8. Escrow Deposits:
(a) The Borrower shall make an initial deposit with the Lender at closing,
and subsequent monthly deposits as required by the Loan Documents, to pay when
due, the annual amount of taxes, assessments, and similar annual charges, as
reasonably estimated by the Lender, to be held by the Lender in escrow for the
payment of such charges when due. Interest will accrue at an annual rate of 2%
for the benefit of the Borrower. The Lender shall determine the initial deposit
to fund the escrow at closing. Thereafter, deposits sufficient, in the
aggregate, for the full payment of each such charge must be in the Lender's
escrow account on the first (1st) day of the month preceding the month in which
such charge is due, and the Borrower shall be obligated for any deficiency. All
escrow deposits are subject to
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adjustment based on anticipated charges, as reasonably estimated by the
Lender, when actual charges are unknown.
(b) Lender has waived its requirements for initial and ongoing deposits to
escrow for the cost of the insurance policies required by the Security
Instrument.
(c) The replacement reserve escrow deposits shall be calculated for
each property based on the amount of $250.00 per unit per year, but shall be
initially waived. Lender's waiver of these escrow requirements shall be
immediately rescinded with respect to all loans in a Pool upon (i) a decline
of the aggregate debt service coverage rates as determined by Freddie Mac in
accordance with its standard practice, including considering any subordinate
debt ("DCR") of that pool below 1.15 (for Pool One, DCR shall be calculated
based upon the lesser of (i) the then-current interest rate on Pool One Loans
plus 200 basis points and (ii) the spread on the Pool One Loans plus the
strike rate set forth in the 3 Year Cap or the 4-6 Year Cap, as applicable)
based upon annual audit of the properties or (ii) the occurrence of an event
of default. Interest will accrue to the benefit of the Borrower at 2% per
annum.
(d) Borrower shall establish an escrow with Lender pursuant to repair
escrow agreements related to individual properties in the amounts and for the
items set forth in Exhibit F.
(e) The Borrower shall deposit in escrow with the Lender at closing
$22,976,000 of the Loan proceeds from Pool One, to be held by Lender in an
interest bearing account or other investment vehicle agreed upon by Xxxxxxxx and
Lender until the acquisition of the Courts of Avalon Apartments, Pikesville,
Maryland, the entering into of the Security Instrument and the
Cross-Collateralization Agreement with respect thereto and the satisfaction of
the other Freddie Mac Requirements (as hereinafter defined) with respect
thereto; provided, however, that the amount escrowed pursuant to this sentence
shall be reduced to equal the final Loan Amount attributable to Courts of Avalon
Apartments. Upon such satisfaction, all of such proceeds except $9,000,000 shall
be released to Borrower from such escrow. Such $9,000,000 shall be released from
such escrow upon the earliest to occur of (i) the release of the Courts of
Avalon Apartments from the cross-collateralization agreement and the Security
Instrument related thereto or (ii) the date on which 94% of the rental units at
Courts of Avalon Apartments, Pikesville, Maryland, have been occupied by tenants
for ninety (90) consecutive days at the underwritten rental rates or upon
Borrower providing the Lender a then-current certified rent roll complying with
Freddie Mac Requirements showing economic effective rents, as determined by
Freddie Mac in accordance with its standard practices, to be no less than
$295,570 per month. If the acquisition of the Courts of Avalon Apartments and
the satisfaction of the Freddie Mac Requirements with respect thereto have not
occurred on or prior to January 1, 2000, Borrower shall have the right to a
release of such escrow upon prepayment of an amount equal to 115% of the amount
placed into escrow pursuant to the first sentence of this paragraph 8(e).
9. Loan Requirement: Borrower acknowledges that it is familiar with Freddie Mac
standard program requirements ("Freddie Mac Requirements") and agrees to close
each Loan in accordance with all of Freddie Mac Requirements; including, without
limitation, the conditions attached hereto as Exhibit G, and the title and
survey instructions based on such Freddie Mac Requirements and previously
supplied to Borrower. Without limiting the generality of the foregoing, Xxxxxxxx
also agrees to satisfy the specific requirements attached hereto as Exhibit F.
10. Special Provisions:
(a) Substitution of Collateral. Each Security Instrument for a Pool Two
Loan shall contain language providing that, at any time after the date which is
nine (9) months after the date of the Security Instrument, Lender shall consent
to the substitution of the portion of the Premises defined in such Security
Instrument with another multifamily property located in the United States of
America, without an adjustment in the Interest Rate, provided that Borrower
satisfies certain conditions specifically detailed in the Security Instrument;
including, without limitation Borrower's payment of a fee to Freddie Mac in the
amount of (i) 25 Basis Points of that portion of the Loan Amount originally
allocated to the subject property on each of the first 10 substitutions, and
(ii) 50 Basis Points on each substitution thereafter,
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together with the Lender fees set forth on Exhibit H and all reasonable third
party costs of Lender associated with the substitution, including, without
limitation, the reasonable fees of Xxxxxx's counsel, and all expenses for
title work, other third party reports, recordation and other related matters.
(b) Defeasance. The Note evidencing each Loan in Pool Two shall contain
language providing that Borrower may cause a release of the portion of the
Premises defined in that Security Instrument for such Loan from the lien of
the Security Instrument upon the presentation of acceptable securities to
secure the Loan in place of the portion of the Premises defined in such
Security Instrument, such release to be made on a date when a scheduled
monthly payment is due under the Note, or upon prepayment of the release
price for the applicable portion of the Premises, as described in the Loan
Documents. Such release shall be contingent upon the satisfaction of certain
conditions specifically detailed in the Note; including, without limitation
Borrower's payment of a review fee of $2,000.00 per event of defeasance, the
Lender fees set forth on Exhibit H and the reasonable fees of Xxxxxx's
accountants and legal counsel and any and all other reasonable third party
costs and expenses relating to recordation and other evidence of the release.
(c) Assumption/Release. Each Security Instrument for a Pool Two Loan shall
contain language providing that upon an approved Transfer, as defined in the
Security Instrument, and execution of (i) an assumption agreement by the
transferee, in form reasonably acceptable to Lender, stating, among other
things, that the transferee shall perform all obligations of Borrower set forth
in the Note, the Security Instrument and the other Loan Documents and (ii) a
guaranty that, at Xxxxxx's election, shall be in the same form executed in
conjunction with the Loan or on the form customarily required by Xxxxxx at the
time of the Transfer, executed by a guarantor approved by Xxxxxx in its
reasonable discretion, in which such guarantor assumes all obligations under the
prior guaranty. In the event that a clean Phase I environmental report and
acceptable engineer's report are provided to Lender, the prior guarantor and the
Borrower shall be released from liability related to the property being
transferred and the Loan being assumed; provided that, at Xxxxxxxx's option, the
assumption and release shall relate only to obligations arising after the date
of Transfer. The approval of any assumption shall be conditioned upon the
satisfaction of certain provisions specifically detailed in the Security
Instrument; including, without limitation, Borrower's payment of a review fee to
be divided between Freddie Mac and Xxxxxx (which shall be the lesser of 100
Basis Points of that portion of the Loan Amount originally allocated to the
subject property or $120,000.00 for each loan reviewed) and the reasonable fees
of Xxxxxx's accountants and legal counsel, any and all reasonable third party
expenses related to third party reports, any and all Lender out-of-pocket costs
and expenses, and such other fees of the Lender as shown on Exhibit H relating
to any re-underwriting of the subject loan or the pool required by Freddie Mac,
and the costs and expense of title reports and endorsements, recordation and
other evidence of the assumption. Individual properties that are sold, with the
applicable Loan being assumed, shall be released from the cross-default and
cross-collateralization provisions of the security instruments provided that (i)
the property being sold/released (the "Released Mortgage") has a minimum 1.35
DCR (or a minimum DCR of 1.30, but only if (A) subordinate Freddie Mac financing
has been placed on such property as provided in paragraph 10(d) hereof (any such
property, a "Subordinated Debt Property") and (B) Borrower pays to Freddie Mac
an additional fee equal to 0.5% of the sum of (y) the portion of the Loan Amount
originally allocated to such Subordinated Debt Property and (z) the principal
amount of such subordinate Freddie Mac financing; provided that Borrower shall
be entitled to releases of Subordinate Debt Properties with a DCR less than 1.35
(but greater than or equal to 1.30) only with respect to properties having
aggregate Loan Amounts not exceeding 25% of the aggregate Loan Amounts of the
Pool Two properties), (ii) the mortgages originally cross-collateralized and
cross-defaulted with the Released Mortgage, including the Released Mortgage (the
"Original Mortgages"), have an aggregate minimum 1.35 DCR (in the case of
properties which are not Subordinated Debt Properties) or 1.30 (in the case of
Subordinated Debt Properties), and (iii) the mortgages remaining of those
originally cross-collateralized and cross-defaulted with the Released Mortgage,
after removal of the Released Mortgage, have an aggregate DCR greater than or
equal to the DCR on the Original Mortgages immediately prior to the removal of
the Released Mortgages. Assumption/release will be specifically prohibited in
the Security Instruments on Pool One.
(d) Subordinate Debt. The Security Instruments will contain language
permitting subordinate Freddie Mac financing to be placed on the Premises, up to
an 80% loan-to-value ratio as
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determined by Freddie Mac on each property, on or after the date which is
twelve (12) months after the date of the Security Instrument and prior to the
final two (2) years of the Loan Term. The subordinate financing shall be in
accordance with then applicable Freddie Mac Requirements, with such
modifications to the applicable loan documents as are consistent with the
terms and conditions of the applicable Loans (with respect to, by way of
example but not limitation, prepayment premiums, maturity date, defeasance,
substitution, release and assumption) and the modifications to the Freddie
Mac Uniform Instruments contemplated by this Final Commitment. Such
subordinate debt shall be conditioned upon the satisfaction of certain
conditions specifically detailed in the Security Instrument; including,
without limitation Borrower's payment of a fee to Freddie Mac of $5,000.00,
the Lender fees set forth in Exhibit H and the reasonable fees of Xxxxxx's
accountants and legal counsel and any and all reasonable third party costs
and expenses relating to necessary third party reports and title reports and
endorsements, recordation and other evidence of the subordinate debt.
11. Fees:
(a) Good Faith Deposit: Upon execution of this Commitment the Borrower
will be required to deposit with Lender the amount of $5,000,000 (the "Good
Faith Deposit") by wire transfer of funds. This Good Faith Deposit will be
transferred to Freddie Mac upon Rate Lock and held by Freddie Mac until closing.
In the event the Transaction fails to close, the Good Faith Deposit shall be
deemed earned by Freddie Mac at the time of Rate Lock and is non-refundable,
subject to the terms of paragraph 23.
In the event that the Transaction closes, the Good Faith Deposit shall be
applied at closing against the Freddie Mac Pool One Transaction Fee, the Freddie
Mac Pool Two Transaction Fee and any other fees, costs and expenses owing to
Lender hereunder.
(b) Freddie Mac Pool One Transaction Fee: The Borrower shall pay to the
Lender for the account of Freddie Mac at closing, a Freddie Mac Pool One
Transaction Fee equal to 1.25% of the aggregate Loan Amount of Pool One. This
charge is deemed earned by Freddie Mac upon Xxxxxxxx's execution of this Final
Commitment, is payable at closing, and is non-refundable, except as provided in
paragraph 23.
(c) Freddie Mac Pool Two Transaction Fee: The Borrower shall pay to the
Lender for the account of Freddie Mac at closing a Freddie Mac Pool Two
Transaction Fee in an amount equal to one-half of one percent (0.50%) of the
aggregate Loan Amount for Pool Two. This charge is deemed earned by Freddie Mac
upon Xxxxxxxx's execution of this Final Commitment, is payable at closing, and
is non-refundable, except as provided in paragraph 23.
(d) Lender Origination Fee: Borrower shall pay to Lender an Origination
Fee in the amount of One Million Dollars ($1,000,000.00), one-half of such
Origination Fee to be paid upon acceptance of this Final Commitment and the
remaining amount to be paid at closing. Each portion of the Origination Fee
shall be deemed fully earned on payment or as otherwise provided in paragraph
23, and thereafter such portion shall be non-refundable. Lender acknowledges
receipt of the non-refundable $50,000.00 Initial Engagement Fee, which amount
shall be applied against the Origination Fee at closing.
(e) Lender LIBOR Loan Fee: Borrower shall pay to Lender a Lender LIBOR
Loan Fee in the amount of 0.05% of the Pool One Loan Amount, one-half of such
loan fee to be paid upon acceptance of this Final Commitment and the remaining
amount to be paid at closing. Each portion of the Lender LIBOR Loan Fee shall be
deemed fully earned on payment, or as otherwise provided in paragraph 23, and
thereafter such portion shall be non-refundable.
(f) Additional Lender Origination Fee: Borrower shall pay to Lender an
Additional Lender Origination Fee in an amount equal to the greater of $375,000
or the origination fee for Berkshire Towers (as set forth below), $187,800 of
such loan fee to be paid upon acceptance of this Final Commitment and the
remaining amount to be paid at closing. Each portion of the Additional Lender
Origination Fee shall be deemed fully earned on payment, or as otherwise
provided in paragraph 23, and thereafter such portion shall be non-refundable.
Xxxxxx agrees, however, to process an application for the financing of a
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property known as Berkshire Towers located in Silver Spring, Maryland with an
origination fee equal to the greater of $375,000 or 0.75% of the final,
agreed upon loan amount for such property; and, in the event that Lender
issues a commitment to finance such property and such financing closes,
Xxxxxx agrees that the Additional Lender Origination Fee shall be credited to
the origination fee due Lender in connection with the financing of Berkshire
Towers.
12. Exclusion of Loans: In the event one or more of the Loans in the
Transaction fails to meet the physical condition, environmental, survey or
title standards specified in the Freddie Mac Requirements (other than
deficiencies specified in Exhibit F), Xxxxxx and Freddie Mac reserve the
right to exclude any such Loans from the Transaction ("Exclusions"). Xxxxxx
and Xxxxxxxx acknowledge and agree, to the best of their respective
knowledge, that each property meets the Freddie Mac Requirements as to
physical condition and environmental matters as of the date hereof, except as
expressly provided in Exhibit F. If an Exclusion occurs, Borrower shall pay
an exclusion fee equal to the amount set forth in paragraph 23(b).
13. Intentionally deleted.
14. Closing: Closing of every Loan shall commence at the offices of Xxxxxx's
special counsel on a date and at a time mutually agreeable but allowing no less
than three (3) business days prior to funding of the Loan, which funding in any
event must not occur later than October 15, 1999 (as extended as provided
herein, the "Outside Closing Date") it being agreed that the actual closing date
may occur prior to the Outside Closing Date, but not prior to September 15, 1999
and not between September 16, 1999 and September 30, 1999, inclusive. The
Outside Closing Date may be extended pursuant to paragraph 19 and the date of
expiration of each such extension shall be deemed the Outside Closing Date.
Xxxxxxxx agrees to cooperate with Xxxxxx so that all Loan Documents can be
executed by 11:00 a.m. on the day prior to funding and to request that the
recording of the Security Instruments, the financing statements and the
assignment of security instrument to Freddie Mac for every Loan occur prior to
4:00 p.m. on the date of funding. The Lender shall wire funds to the title
insurance company issuing the title insurance policies in connection with the
Loan and such funds shall be disbursed in accordance with the written
instructions of the Lender and Borrower to such closing agent and with a
settlement statement approved by the Borrower. Otherwise, closing shall be
accomplished by a "New York style" closing.
15. Expenses:
(a) Borrower shall pay when due, whether or not the Loan closes, all
reasonable third party expenses, fees and charges in respect to the Loan, its
processing and its closing, or in any way connected therewith, including,
without limitation, appraisal fees, survey costs, title insurance costs,
architectural fees, engineering fees, inspections fees, legal fees, mortgage or
similar taxes and all attorneys' fees and legal costs of Lender. The cost of
legal counsel to Lender shall be as set forth in paragraph (b) below. Lender
acknowledges receipt of the Initial Engagement Fee, the Application Fee, the
Commitment Fee and an additional fee respecting the Park Colony Phase II
properties (collectively, the "Received Fees"), for a total shown on Exhibit H.
Lender has expended in third party costs and underwriting/processing fees as
shown on Exhibit H. If the Transaction fails to close, the Received Fees and any
additional fees subsequently received and paid or applied by Lender, or earned
by third parties but not yet disbursed to them by Xxxxxx, shall not be returned.
Any unexpended, unearned Received Fees as of that date shall be returned to
Borrower.
(b) The amount of the fees of Xxxxxx's Special Counsel (as designated in
Paragraph 16 below) shall be determined as follows: (i) a fixed fee of $4,000
for each property that is a part of the Premises for the property level real
estate and closing work, a fixed rate of $1,500 for each of the four (4)
properties originally contemplated to be a part of the Premises but not included
on Exhibit A, and an additional amount computed on a time charge basis at the
standard hourly rates of Xxxxxx's Special Counsel for work on modifications to
any loan documents requested by counsel to Borrower for the purpose of
minimizing recording taxes and for work on other special issues as authorized by
Borrower or its counsel, (ii) a fee computed on a time charge basis at the
standard hourly rates of Xxxxxx's Special Counsel for structuring the
transaction and negotiating loan documents, and (iii) all out-of-pocket
8
expenses and disbursements of Xxxxxx's Special Counsel. Xxxxxx acknowledges
receiving a retainer (along with any future retainers, the "Legal Fee
Retainer") in the amount of $122,000. Upon the execution of this Commitment,
Borrower shall deposit an additional Legal Fee Retainer of $112,000. The
Legal Fee Retainer shall be applied against the fixed fees described in (i)
above. The fees billed at hourly rates and the expenses and disbursements
described in (iii) shall be paid by Borrower on a monthly basis within ten
(10) business days after the transmittal of a statement from Lender to
Borrower, but in no event later than the earlier of the actual closing date
or the Outside Closing Date.
16. Closing Attorney: The Lender's special counsel shall be Xxxx X. Xxxxxxxx,
Esquire, and Xxxxxxx X. Xxxxxx, Esquire, Xxxx & Valentine, L.L.P., 0000 Xxxx
Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 (mailing address: Post Office Xxx 0000,
Xxxxxxxx, Xxxxxxxx 23218) (telephone number (000) 000-0000) herein referred
to as Special Counsel.
17. Engagement Letter/Application Letter/Conditional Commitment: The Loan terms
set forth in the Engagement Letter by and between Xxxxxxxx and Xxxxxx, dated
November 2, 1998 (the "Engagement Letter"), the Application Letter by and
between Xxxxxxxx and Xxxxxx, dated November 2, 1998 (the "Application Letter")
and the Revised Conditional Commitment dated May 26, 1999 (the "Conditional
Commitment") are superceded by the Loan terms as stated in this Final
Commitment.
18. Further Assurances: Berkshire, the general partners of Berkshire and each
Borrower hereby expressly acknowledge (i) that Xxxxxx has entered or will enter
into a Purchase Agreement (the "Purchase Agreement") with Freddie Mac pursuant
to which Freddie Mac will acquire every Loan from Lender, (ii) that Lender is
strictly obligated to close every Loan and deliver the same, and (iii) that
failure of Lender to deliver every Loan will be construed by Freddie Mac and/or
the Investor as a breach of Xxxxxx's obligations and may subject Lender to
serious damages, including the imposition of other fees. Therefore, but subject
to paragraph 23, Berkshire, its general partners and each Borrower hereby
expressly agree:
(i) to perform all of the requirements, terms and conditions
contained herein at the time and in the manner herein and as
reasonably required by Freddie Mac;
(ii) to refrain from taking any action that would result in
Xxxxxx's inability to close timely and deliver the Loan to
Freddie Mac;
(iii) on the request of Xxxxxx, to re-execute or ratify any of the
Loan Documents and to execute any other documents as may be
reasonably necessary to effect the delivery of the Loan to
Freddie Mac; provided that Xxxxxx shall return the prior
version of any document that is re-executed and provided
further such Loan Documents and other documents do not impose
greater liability or other obligation, monetary or otherwise,
on Berkshire, its general partners and/or any Borrower (or its
Principals) than is contemplated by this Final Commitment; and
(iv) to indemnify and hold Lender harmless for any breach of
Xxxxxx's obligations to Freddie Mac and/or the Investor
because of any act or omission of Borrower.
19. Extension Fee.
(a) Borrower acknowledges that under Xxxxxx's agreement with the Investor,
Lender will be required to close every Loan on or before October 15, 1999 and to
deliver the PC's to the Investor within twenty-five (25) days after the Outside
Closing Date. If Rate Lock occurs and every Loan (other than Exclusions) is not
closed and funded on or before October 15, 1999, the Outside Closing Date shall
be extended for three consecutive thirty (30) day periods upon Borrower paying
to Lender an extension fee to be specified in the Certificate for each and every
thirty (30) day extension of the Outside Closing Date beyond October 15, 1999;
provided, however, that in no event shall the funding of the Loan occur after
December 14, 1999 until January 5, 2000, which shall be the final date on which
the Loan may fund. In the event that Rate Lock occurs and every Loan (other than
Exclusions) is closed, Xxxxxxxx also agrees
9
to pay upon demand a delivery extension fee to be specified in the
Certificate for each thirty (30) day extension if the PCs have not been
delivered to the Investor within twenty-five (25) days after the Outside
Closing Date because of Xxxxxxxx's failure to comply with this Commitment.
Any extension fee applicable to a period of less than thirty (30) days (i.e.,
the period commencing on the Outside Closing Date immediately prior to the
extension and ending on the date of the actual closing or the PC delivery, as
the case may be) will be prorated based upon the length of such extension
expressed in the number of weeks (rounding up on any partial week) divided by
four (4).
(b) Borrower acknowledges that under Xxxxxx's agreement with Freddie
Mac, Xxxxxx will be required to close every Loan on or before October 15,
1999 and to deliver every Loan within one, two or three business days after
the closing date, depending upon the closing date, with evidence of recording
to be provided to Freddie Mac within three (3) business days after funding.
If Rate Lock occurs and every Loan (other than Exclusions) is not closed and
funded on or before October 15, 1999, the Outside Closing Date shall be
extended for consecutive periods described below upon Borrower paying to
Lender for the account of Freddie Mac the following fees. Borrower shall pay
an extension fee for an extension of the Outside Closing Date until October
29, 1999 in the amount of $125,000, an additional extension fee of $200,000
for a further extension of the Outside Closing Date to November 14, 1999, an
additional extension fee of $200,000 for a further extension of the Outside
Closing Date to November 30, 1999, an additional extension fee of $200,000
for a further extension of the Outside Closing Date to December 14, 1999 and
a final extension fee of $1,000,000 for an extension of the Outside Closing
Date to January 5, 2000; provided, however, that in no event shall the
funding of the Loan occur after December 14, 1999 until January 5, 2000,
which shall be the final date on which the Loan may fund. In the event that
Rate Lock occurs and every Loan is closed (other than Exclusions), Xxxxxxxx
also agrees to pay upon demand the same extension fee as set forth in the
preceding sentence if the PCs have not been delivered to the Investor within
twenty-five (25) days after the Outside Closing Date because of Borrower's
failure to comply with this Commitment.
(c) Notwithstanding anything in this Paragraph 19 to the contrary, in the
event Lender and/or Freddie Mac and/or their agents are solely responsible for
any delay in the Loan closing or the delivery of the PCs to the Investor, no
fees, costs or deposits shall be charged to the Borrower for any extension.
(d) Borrower shall pay the fee for any extension of the Outside Closing
Date contemplated in paragraphs 19(a) and (b) above by wire transfer of
immediately available funds, which must be received by Lender prior to the
expiration of the then-current Outside Closing Date.
(e) Borrower acknowledges that pursuant to the Purchase Agreement, Freddie
Mac is not obligated to issue the PC during the last six (6) business days of
the calendar month and in such event the next issue date shall be no later than
the fifth (5th) business day of the next calendar month.
20. Advertising: Upon closing of the Loan, Xxxxxx and Freddie Mac shall be
deemed to have the Borrower's approval to use Berkshire's name and the name of
any affiliated Borrowers (but not the names of Berkshire's partners), the names
and locations of the Premises and such other information concerning the
Transaction as Lender and/or Freddie Mac shall, in the exercise of reasonable
business judgement, deem appropriate for advertising purposes. Borrower shall
have the right to review and approve all proposed advertising; provided, that
such approval shall not be unreasonably withheld or delayed. Upon closing of the
Loan, Borrower shall have corresponding advertising rights, subject to the prior
approval of Xxxxxx and Freddie Mac: provided, that such approval shall not be
unreasonably withheld or delayed.
21. Reliance: This Final Commitment is for the sole benefit of the Borrower and
shall not be relied upon by any other party. Xxxxxx and Xxxxxxxx intend and
agree that no party shall be construed to be a third party beneficiary of this
Final Commitment and that Borrower shall not be deemed a third party beneficiary
of the Purchase Agreement. Xxxxxxxx shall indemnify and hold Lender harmless
from and against the claims of agents, brokers and any other third party
claimants making demand upon Xxxxxx as a result of the origination,
underwriting, closing, delivery or servicing of the Loan and claiming to have
10
dealt with Borrower or Xxxxxxxx's agents. The Loan Documents shall contain
customary indemnification provisions with respect to such matters.
22. Exclusivity/Confidentiality:
(a) Berkshire, its general partners and each Borrower covenant and
agree that, until the earlier of (i) the closing of the Loan or (ii) the
Outside Closing Date, Berkshire, its general partners and/or Borrowers shall
not contact, solicit, negotiate with or otherwise communicate or deal with
any other party for the purposes of financing all or any portion of the
Transaction (other than Loans that are Exclusions) or any substitute
transaction(s) respecting the Premises; including, without limitation, any
transactions involving secondary financing, or the issuance of, or swap for
or with any PC's or other secondary market financing vehicle; provided,
however that if the closing of the Transaction does not occur on the
scheduled closing date by reason of the act or omission of Lender or Freddie
Mac, then the exclusive granted herein shall expire on such scheduled closing
date.
(b) Berkshire, its general partners and each Borrower acknowledge and
agree that the terms of the Engagement Letter, Application Letter,
Conditional Commitment and this Final Commitment, and any communications
relating thereto are and have been strictly confidential and have not and
shall not be disclosed by Berkshire, its partners or Borrowers except as (i)
authorized by Xxxxxx and Freddie Mac in conjunction with the Transaction,
(ii) to the extent required in any proxy statement or filing with the
Securities and Exchange Commission related to the Transaction, (iii) to the
extent that such disclosure is necessary, to accountants, attorneys and other
professional consultants for the sole purpose of closing the Loan, and (iv)
to the extent required in connection with any consent solicitation or
offering memorandum relating to the Transaction.
(c) The provisions of this paragraph 22 shall survive the termination of
this Final Commitment pursuant to paragraph 3(a)(vi).
23. Damages:
(a) Except as provided in paragraphs 23(c) and (d) below, in the event
Rate Lock occurs, but no Loan closes by the Outside Closing Date, then: (i)
Freddie Mac shall retain the Good Faith Deposit and any extension fee paid by
Borrower pursuant to paragraph 19(b) in full satisfaction of Borrower's
obligation to pay the Freddie Mac Pool One Transaction Fee and the Freddie Mac
Pool Two Transaction Fee as set forth in paragraphs 11(b) and (c), in full
satisfaction of all other fees, costs and expenses due to Freddie Mac in
connection with the Transaction, and in full satisfaction of Freddie Mac's other
damages incurred because the Transaction does not close; (ii) Lender shall have
earned the remainder of the Origination Fee, the remainder of the Additional
Lender Origination Fee and the remainder of the Lender LIBOR Loan Fee (such
amounts, collectively, the "Lender Fee Amount"); Borrower shall pay Lender the
Lender Fee Amount, an amount equal to lost value of Xxxxxx's servicing rights
for the Loan, and all amounts due pursuant to paragraphs 15 and 21 within three
(3) business days after written demand therefor; and Xxxxxxxx further agrees to
pay any other damages Lender is able to prove; and (iii) Borrower shall pay to
Lender, and shall indemnify and hold Lender harmless against, any actual damages
due to the Investor by reason of locking the Interest Rate on the Pool Two Loans
(the "Investor Damages"). No Investor Damages shall be paid with respect to the
Pool One Loans. Lender, at its option, shall have the right to enforce any
rights or remedies it may have at law or in equity with respect to the
collection of any amounts due to Lender under this paragraph 23(a) and Borrower
shall pay all costs of such collection, including, but not limited to,
reasonable attorney's fees and disbursements (which, as such costs and expenses
relate to Investor Damages, shall be included in the definition of "Investor
Damages"). Notwithstanding anything in this Final Commitment to the contrary,
Investor Damages shall not be limited to the Rate Lock Fee. Any amount of the
Rate Lock Fee which exceeds Investor Damages and the amounts due Lender as
provided in (ii) above shall be refunded to the Borrower promptly after Investor
Damages are determined.
(b) Except as provided in paragraphs 23(c) and (d) below, in the event
Rate Lock occurs and a portion of the Loan closes by the Outside Closing Date
but a portion of the Loan is subject to Exclusions pursuant to paragraph 12,
then: (i) Freddie Mac shall retain from the Good Faith Deposit an
11
amount equal the Freddie Mac Pool One Transaction Fee or the Xxxxxxx Mac Pool
Two Transaction Fee, as applicable, multiplied by the portion of the Loan
Amount attributable to the Exclusions and shall also retain the full amount
of any extension fee paid by Borrower pursuant to paragraph 19(b) in full
satisfaction of Borrower's obligation to pay the Xxxxxxx Mac Pool One
Transaction Fee and the Xxxxxxx Mac Pool Two Transaction Fee relating to the
Exclusions, in full satisfaction of all other fees, costs and expenses due to
Freddie Mac in connection with the Exclusions, and in full satisfaction of
Freddie Mac's other damages incurred relating to the Exclusions, (ii) Lender
shall have earned the portion of the Lender LIBOR Loan Fee multiplied by the
portion of the Loan Amount attributable to the Exclusions and Borrower shall
pay the portion of such fee to Lender at closing in full satisfaction of
Xxxxxx's damages related to the Exclusions other than Investor Damages; and
(iii) Borrower shall pay to Lender, and shall indemnify and hold Lender
harmless against, any Investor Damages due to the Investor related to any of
the Pool Two Loans that are Exclusions. Any amount of the Rate Lock Fee which
exceeds Investor Damages and the amounts due Lender as provided in (ii) above
shall be refunded to the Borrower promptly after Freddie Mac issues the PCs
and Investor Damages are determined.
(c) In the event that Rate Lock occurs but no Loan closes by the
Outside Closing Date because the merger contemplated by the partnership
agreement of Berkshire (the "Merger") does not occur by reason of a lack of
shareholder approval or a lawsuit filed to injoin such Merger, and Borrower
has otherwise complied with the terms, covenants and conditions of this
Commitment in all material respects, then Freddie Mac shall retain $2,500,000
from the Good Faith Deposit in accordance with paragraph 23(a)(i) above and
Lender shall refund the remaining $2,500,000 to Borrower promptly after
receipt thereof from Freddie Mac. In addition, in the event that Rate Lock
occurs but no Loan closes by the Outside Closing Date because (a) this Final
Commitment is terminated pursuant to paragraph 24 or (b) the Merger does not
occur because any of the conditions to the Merger Agreement have not been
satisfied, because of any matter referred to in the preceding sentence, or
because of a superior third-party offer, Borrower shall be liable to Lender
for (and only for) the Lender Fee Amount, the Investor Damages and any
amounts due pursuant to paragraphs 15 and 21 hereof.
(d) In the event the Transaction fails to close solely due to an act or
omission of Xxxxxx or Freddie Mac, then Xxxxxx shall return the Good Faith
Deposit promptly after the receipt thereof from Freddie Mac and shall return the
amount by which the Rate Lock Fee exceeds any Investor Damages. Borrower shall,
in addition, have the right to proceed against Lender for any actual damages
(including costs of collection)provable by Borrower by reason of the failure of
the Transaction to close.
(e) The parties have agreed in this paragraph 23 on sole and exclusive
remedies which the parties agree are reasonable as damages for such occurrences.
The parties hereby mutually waive any defense as to the validity of any such
remedies stated in this paragraph 23 as they may appear on the grounds that such
remedies are void as penalties. Other than as expressly provided in paragraph
15, paragraph 21 and this paragraph 23, the parties shall not be liable for any
loss of profits, loss of use, or indirect special, incidental, consequential,
punitive or exemplary damages of any kind in connection with or arising out of
this Final Commitment whether alleged as a breach of any provision of this Final
Commitment or whether alleged in connection with tortious conduct. The parties'
respective maximum liability regardless of the form of action shall not, where
maximum amounts are specified in this paragraph 23, in any event exceed such
maximum amounts.
12
24. Termination of the Commitment: The Lender may terminate this Final
Commitment if:
(a) any material adverse change shall occur at any time prior to the
closing of the Loan with respect to (i) the Premises as a whole, or (ii) the
credit of the Borrower taken as a whole excluding any financing of other
properties of Borrower; or
(b) any material part of the Premises as a whole shall have taken in
condemnation or other like proceeding, or any such proceeding is pending or
threatened at the time of the Loan closing or any material part of the Premises
taken as a whole is damaged and not repaired to the Lender's satisfaction prior
to closing.
25. Time is of the Essence: Time is of the essence as to Xxxxxxxx's undertakings
in this Final Commitment.
26. Governing Law: This Final Commitment shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia.
27. Counterparts: This Final Commitment may be executed in any number of
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute a single agreement.
We appreciate your review and approval of the terms and matters set forth
in this Final Commitment and look forward to working with you further in
finalizing this Transaction.
Very truly yours,
XXXXXX MORTGAGE GROUP, INC., a
District of Columbia corporation
By: /s/ Xxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx
Title:
Attached Exhibits:
Exhibit A - List of Properties/Loan Pools
Exhibit B - Intentionally Deleted
Exhibit C - Example of Certificates Confirming Loan Amount, Interest Rate and
Payment of Fees
Exhibit D - Pool Two - Interest Rate/Loan Amount Schedule
Exhibit E - Pool One - Interest Rate/Loan Amount Schedule
Exhibit F - Schedule of Repairs and Specific Freddie Mac Requirements
Exhibit G - General Freddie Mac Requirements
Exhibit H - Lender Fees
13
The undersigned hereby accepts the foregoing Final Commitment and agrees to be
bound by the terms, requirements and conditions set forth herein.
Date: July 29, 1999
BERKSHIRE REALTY HOLDINGS, L.P.
By: WXI/BRH Gen-Par LLC, general partner, for
Berkshire Realty Holdings, L.P. and individually
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxx
--------------------------------
Title: Vice President
--------------------------------
By: BRE/Berkshire GP L.L.C., general partner,
for Berkshire Realty Holdings, L.P. and individually
By: /s/ Xxxx X. Xxxx
--------------------------------------
Name: Xxxx X. Xxxx
--------------------------------
Title: Vice President
--------------------------------
By: Aptco Gen-Par, L.L.C. , general partner,
for Berkshire Realty Holdings, L.P. and individually
By: /s/ Xxxxxxx Xxxxx
--------------------------------------
Name: Xxxxxxx Xxxxx
--------------------------------
Title: Chairman
--------------------------------
14
