SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Amendment No. 1)
Under the Securities Exchange Act of 1934
MIP Properties, Inc.
(Name of issuer)
Common Stock
(Title of class of securities)
553051103
(CUSIP number)
Gary P. Stevens, Esq.
J.E. Robert Companies
11 Canal Center Plaza
Suite 200
Alexandria, Virginia 22314
(703) 739-4400
(Name, address and telephone number of person
authorized to receive notices and communications)
Copy to:
Stephen W. Hamilton
Skadden, Arps, Slate, Meagher & Flom
1440 New York Avenue
Washington, DC 20005
(202) 371-7000
June 19, 1995
(Date of event which requires filing of this statement)
If the filing person has previously filed a
statement on Schedule 13G to report the acquisition which is
the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1 (b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid
with the statement [ ].
This Amendment No. 1 amends and supplements the
Schedule 13D filed with the Securities and Exchange
Commission on May 31, 1995 on behalf of JER Partners, LLC
and Joseph E. Robert, Jr. with respect to MIP Properties,
Inc. Capitalized terms used herein without definition shall
have the respective meanings ascribed thereto in such
Schedule 13D.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Item 3 is hereby amended and supplemented by
adding the following at the end thereof:
On June 19, 1995, JER obtained commitment letters
from Wells Fargo Bank for an aggregate loan amount of
approximately $50,000,000.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
4. Commitment Letter dated June 19, 1995, among Wells
Fargo Bank, JER Partners, LLC and J.E. Robert
Companies.
5. Commitment Letter dated June 19, 1995, among Wells
Fargo Bank, JER Partners, LLC and J.E. Robert
Companies.
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
June 21, 1995
(DATE)
/s/ Joseph E. Robert, Jr.
(SIGNATURE)
Joseph E. Robert, Jr.
(NAME/TITLE)
SIGNATURE
After reasonable inquiry and to the best of my
knowledge and belief, I certify that the information set
forth in this statement is true, complete and correct.
June 21, 1995
(DATE)
JER PARTNERS LLC
By: J.E. Robert Company, Inc.
(SIGNATURE)
J.E. Robert Company Inc., Member
(NAME/TITLE)
By: /s/ Joseph E. Robert, Jr.
(SIGNATURE)
Joseph E. Robert, Jr., CEO
(NAME/TITLE)
EXHIBIT INDEX PAGE NO.
4. Commitment Letter dated June 19, 1995,
among Wells Fargo Bank, JER Partners,
LLC and J.E. Robert Companies . . . . . . . . . .
5. Commitment Letter dated June 19, 1995,
among Wells Fargo Bank, JER Partners,
LLC and J.E. Robert Companies.. . . . . . . . . .
Exhibit 4
June 19, 1995
J.E. Robert Companies
11 Canal Center Plaza, Suite 200
Alexandria, Virginia 22314
Attention: Mr. Murry N. Gunty
Re:Proposed Acquisition-Related Financing
Gentlemen:
Based on our discussions and the information you have provided
to us to date, Wells Fargo Bank, N.A. ("WFB") is pleased to
commit, on the terms and conditions set forth herein, to make
the loan described herein.
BORROWER: JER Partners L.L.C., a Delaware limited liability
company ("Borrower" or "JER LLC") wholly owned by J.E. Robert
Companies ("JER") and/or its affiliates and successor by
merger to MIP Properties, Inc., a Maryland corporation, which
merger shall have been approved by a majority in interest (or
a supermajority, if required under applicable law or the
charter documents or bylaws of MIP) of the current
shareholders of MIP. Upon the consummation of such
transactions, Borrower will own the assets described on
Exhibit A hereto (the "Assets").
LENDER: Wells Fargo Bank, N.A. ("WFB" or "Lender").
THE LOAN: A senior secured term loan which would be provided
by WFB to Borrower, which would be secured by the Assets and
other collateral described below.
LOAN AMOUNT: A loan amount not to exceed 75% of lesser of (A)
the sum of (1) JER's purchase price of all of the issued and
outstanding stock, of all classes, of MIP, (2) the existing
debt on the Assets to be retired on the closing date as
previously disclosed to WFB and (3) any financing fees payable
hereunder and actual, third party out-of-pocket closing costs
(which costs shall not exceed $350,000), and (B) the sum of
the appraised values of each of the Assets actually acquired
in the transactions (and not transferred to an unaffiliated
party) and subject at closing to WFB's security interest. The
loan amount is currently estimated to be approximately $24
million.
LOAN TERM: A loan term of three (3) years from the date of
closing.
COLLATERAL: The loan shall be evidenced by a promissory note
of the Borrower (the "Note") and a loan and security agreement
between Borrower and WFB (the "Loan Agreement"), together with
such other documents as WFB in its sole and absolute
discretion deems appropriate, all of which shall be prepared
by WFB and be in form and substance satisfactory to WFB in its
sole and absolute discretion. The Note and Loan Agreement
shall be secured by a perfected first priority lien and
encumbrance on the Assets (subject, in the case of Assets that
are real property, to permitted exceptions as determined by
WFB) and proceeds thereof, all cash on hand of Borrower, and
other collateral, including without limitation that described
below, all of which shall be effected in a manner satisfactory
to WFB, which security shall be evidenced by, among other
things: a deed of trust, assignment of rents and
environmental indemnity agreement for each underlying real
estate asset; a pledge agreement with respect to each
underlying joint venture or partnership interest; a security
agreement together with an allonge and UCC-1 Financing
Statement for each promissory note evidencing a loan; a
recorded absolute assignment of each deed of trust or
mortgage, assignment of leases or other recorded security or
loan document securing an underlying loan and any other
collateral therefor; a first priority perfected security
interest in the Collection Account, and all funds therein and
the proceeds thereof; the documents referenced below; and such
other personal property, collateral, documents and items
relating to the Assets as WFB in its sole and absolute
discretion deems appropriate.
During the term of the loan:
(i) In the case of an asset that is a loan, if the Borrower
receives any additional collateral or security interests in
any property as further security, then Borrower shall
simultaneously grant to Lender a valid perfected first
priority security interest in such additional collateral and
all proceeds thereof, as additional collateral for the loan.
(ii) In the case of an asset that is a loan, upon any
foreclosure of a mortgage, deed of trust or security interest
by the Borrower, or upon any acquisition of fee title or other
title to any real estate or personal property previously
secured by a mortgage or a security interest, the Borrower
shall simultaneously grant to WFB a first priority deed of
trust, assignment of leases and security agreement with
respect to such real estate and/or a valid perfected first
priority security interest in such property as additional
collateral for the loan.
(iii) In the case of an asset that is a partnership or joint
venture interest the property of which is not already subject
to a lien in favor of WFB, in the event that Borrower acquires
either any additional interest in such partnership or joint
venture or the assets owned by such partnership or joint
venture, at Borrower's option, Borrower shall either pay the
minimum disposition price applicable to such asset or grant
WFB a first priority perfected security interest in the
partnership or joint venture interest, or the assets owned by
such partnership or joint venture, as the case may be.
INTEREST RATE: The interest rate, on a per annum basis, shall
be LIBOR plus 400 basis points. Borrower has the option to
fix the interest rate for periods of 30, 60 or 90 days but in
no event beyond the maturity date of the loan. Fixed rate
portions shall be in a minimum amount of $2,000,000 or any
integral multiple of $1,000,000 in excess of said $2,000,000
minimum. Interest will be payable monthly in arrears,
computed on the actual days elapsed in a 360-day year at the
rate set forth above, regardless of the availability of cash
flow therefor. Payments shall be due on the first day of each
calendar month.
COMMITMENT FEE: 2.00% of the committed amount of the loan,
payable at closing.
AMORTIZATION: The Borrower shall be required to make
amortization payments in the aggregate at least equal to
twenty-five percent (25%) of the original amount of the loan
on or prior to the first anniversary of the closing date and
amortization payments in the aggregate at least equal to forty
percent (40%) of the original amount of the loan on or prior
to the second anniversary of the closing date.
PREPAYMENT: The loan shall be pre-payable at any time in
whole or in part; provided, however, that upon any prepayment
of 80% or more of the loan from the proceeds of a refinancing
of the loan on or prior to the first anniversary of the
closing, Borrower shall pay a fee of two percent (2%) of the
original amount of WFB's commitment. The foregoing fees are
in addition to breakage and other fees and costs which may be
incurred in connection with the unwinding of a LIBOR fixture.
The loan shall be prepaid in an amount equal to the minimum
disposition price for any Asset subject to a prior lien in
favor of a party other than a wholly-owned subsidiary of
Borrower, or any partnership or joint venture interest owning
encumbered assets, upon the foreclosure of such prior lien or
encumbered assets (unless Borrower acquires such asset in such
foreclosure, in which case WFB shall be granted a first
priority perfected lien therein). The loan shall be prepaid
in an amount equal to the greater of gross proceeds or the
minimum disposition price for any Asset in the event of any
capital event (voluntary or involuntary) with respect to such
Asset, including without limitation damage or destruction or
condemnation.
CASH DISTRIBUTION: All parties making any payments (including
proceeds of any disposition) with respect to the collateral
shall be irrevocably instructed to make all such payments to
an operating account maintained at WFB (the "Collection
Account") that will be pledged to WFB as collateral. At the
end of each calendar month, all funds on deposit in the
account shall be distributed as set forth herein. The
Borrower's access to the Collection Account shall be
restricted, as shall be provided in the Loan Agreement. Prior
to the occurrence of an Event of Default, all amounts
collected from or with respect to collateral will be deposited
in the Collection Account and will be applied monthly as
follows:
i)first, to a management fee (the "Management Fee") payable in
arrears on the first day of each calendar month in an amount
equal to 1/12 of one percent of the gross value of the Assets
then encumbered by a lien in favor of WFB securing the loan.
ii) second, to interest on the loan.
iii) third, to the reserve account described below to be
established as security for the loan, to fund initially and
then replenish expenditures made therefrom, including but not
limited to payments made for expenses related to taxes,
insurance, security, deferred maintenance, litigation expenses
and other expenses to enforce remedies, and payments for
tenant improvements and leasing costs; provided that the
balance of the reserve account need not be funded or
replenished to a point where it exceeds the Maximum Property
Reserve Amount (as defined below).
iv) fourth, to fund a tax reserve (which shall remain in the
reserve account and pledged to WFB as collateral for the loan)
in amounts estimated to be necessary to pay income taxes on
the disposition of any portion of the collateral, after taking
into account all losses and other deductions from income
(including deductions available to Borrower due to
consolidation with other entities); such funds in the tax
reserve shall be distributed only upon recognition of such
taxes and required payment thereof.
v) fifth, to repayment of principal on the loan.
Notwithstanding the foregoing, then for so long as there is no
default under any document evidencing or securing the loan,
and provided that cash flow priorities (i) through (iv) set
forth above, shall have been satisfied for the month at issue,
then the Borrower shall be entitled to withdraw from such cash
flow an amount equal to that amount necessary to pay a 10%
annual return on all out-of-pocket investments in Borrower by
of the shareholders of Borrower, but in no event shall any
withdrawal of cash flow exceed ten percent (10%) of such cash
flow.
After the occurrence of an event of default, the Loan
Agreement shall give the Lender the discretion to apply
payments generated by the collateral or on deposit in any
account as the Lender deems fit.
RESERVE ACCOUNT: A reserve account shall be established and
maintained at WFB, in which WFB shall be granted a first
priority perfected security interest. The reserve account
shall be funded from cash flow, and shall, when fully funded,
hold amounts as follows:
Property Reserve Expenses: in an amount to be mutually agreed
upon by Borrower and WFB prior to closing; and
Tenant Improvement and Leasing Expenses: in an amount to be
mutually agreed upon by Borrower and WFB prior to closing.
Working Capital Expenses: in an amount to be mutually agreed
upon by Borrower and WFB prior to closing that will be used to
fund insurance expenses, reporting, filings, new acquisition
expenses, refinancing expenses and other entity level
expenses.
The total of the three foregoing amounts shall be referred to
herein as the "Maximum Property Reserve Amount" and shall not
in any case be less than $500,000. Amounts in the reserve
account allocated to property reserves shall only be used for
purposes of paying taxes, insurance, security, deferred
maintenance, litigation expenses and other expenses incurred
in connection with the collateral. Amounts in the reserve
account allocated to tenant improvements and leasing expenses
shall only be used for tenant improvement and leasing
expenses. Amount in the reserve account allocated to working
capital expenses shall be only be released upon WFB's consent.
MINIMUM DISPOSITION PRICES: In the event that Borrower wishes
to dispose of an asset, Borrower may do so, without WFB's
prior consent and prior to an event of default, only if the
gross disposition proceeds (net only of certain out of pocket
expenses approved by WFB) exceeds 120% of the allocated
principal amount of the loan allocated by Lender to such
asset.
MANAGER: Borrower shall engage a servicer/manager acceptable
to WFB (a servicer/manager affiliated with JER shall be
acceptable) for the Assets pursuant to a servicing and
management agreement satisfactory to WFB, which agreement
shall be assigned to WFB as collateral for the loan.
POSSESSION OF DOCUMENTS: All documents evidencing, securing
or relating to collateral in which a security interest may be
perfected by possession shall be in the possession of WFB
during the term of the loan, and the Loan Agreement shall
contain limited conditions under which Borrower may obtain the
temporary release of such documents, on an asset by asset
basis, if they are needed to enforce Borrower's rights
thereunder.
REPORTING: i) Borrower will provide annual audited statements
and an updated business plan. In addition, it will provide
monthly and quarterly cash flow reports and asset status
summary reports on a to be agreed upon basis.
ii) Borrower will notify WFB immediately after learning of any
event reasonably expected by Borrower to result in a change in
the status or value of any asset.
iii) Borrower will provide such other reports as WFB may
reasonably require.
EVENTS OF DEFAULT: The Loan Agreement shall contain those
events of default which WFB in its sole and absolute
discretion deems appropriate in a transaction of this nature,
including, without limitation, failure to make payments when
due, regardless of the availability of cash flow therefor;
breach of representations and warranties or covenants in the
Loan Agreement; bankruptcy/insolvency, judgments and
attachments.
COVENANTS: The Loan Agreement shall contain those covenants
which WFB in its sole and absolute discretion deems
appropriate in a transaction of this nature, including,
without limitation:
prohibitions against:
i) Borrower engaging in a business other than the ownership
and administration of the collateral and any property
hereafter acquired with WFB's consent upon terms and
conditions approved by WFB;
ii) any change in control pursuant to which JER and its
affiliates, and the persons and entities controlling JER on
the date hereof, no longer directly or indirectly control the
Borrower;
iii) Material change in ownership of Borrower;
iv) The transfer of the collateral or any interest therein to
an affiliate of Borrower, or Borrower otherwise engaging in a
transaction with an affiliate without WFB's prior written
consent;
v) Modification of or waiver of rights under collateral that
is a loan or a partnership or joint venture interest, without
WFB's prior written consent, which shall not be unreasonably
withheld;
vi) The imposition of any liens on any real estate or other
asset owned by a partnership or joint venture in which
Borrower is a partner;
vii) The incurrence of any indebtedness, or issuance of any
securities, by Borrower or any partnership or joint venture in
which Borrower is a partner;
viii) The engagement in any prohibited transaction for a real
estate investment trust, as defined in the Internal Revenue
Code, unless WFB is reasonably satisfied that Borrower is
otherwise a pass-through entity for federal and state income
tax purposes;
ix) The failure of Borrower to continue to qualify as a real
estate investment trust under the Internal Revenue Code or
other pass-through entity for federal and state income tax
purposes; in the event that Borrower is reorganized as a
limited liability company, WFB shall not unreasonably withhold
its consent as long as WFB is reasonably satisfied that
Borrower is otherwise a pass-through entity for federal and
state income tax purposes; and
such affirmative covenants as WFB deems appropriate including,
without limitation:
(i) Customary covenants regarding maintenance of collateral,
damage and destruction, and condemnation;
(ii) Requirement that WFB's first priority perfected lien
status in and to the collateral be maintained at all times,
and that WFB be given a first priority perfected lien in all
proceeds thereof and new collateral as provided herein and as
shall be provided in the Loan Agreement;
(iii) Requirement that Borrower vigorously enforce its rights
against all borrowers, sureties, and other providers of
collateral (including partnerships and joint ventures);
(iv) Requirement that Borrower diligently conduct diligence
and vigorously enforce its rights under any agreement pursuant
to which JER has acquired control of Borrower;
(v) a requirement that Borrower submit an updated business
plan within 60 days after closing, which business plan shall
be approved by WFB as long as it is reasonably consistent with
the preliminary business plan previously submitted by the
undersigned to WFB; and
(vi) a requirement that Borrower and J.E. Robert Companies
indemnify, defend and hold harmless Lender from and against
any and all claims, costs, damages, liabilities and other
costs and expenses arising out of or relating to any merger
transaction, tender offer or other transaction involving the
change of control of Borrower, or arising out of or relating
to the transactions contemplated hereby.
COSTS: Whether or not the loan closes, J.E. Robert Companies
will reimburse WFB for all legal fees and expenses, and all
other costs (including without limitation out of pocket costs
and internally allocated costs), incurred by WFB or its
counsel in connection with the loan, including without
limitation appraisal, environmental, and inspection costs and
expenses. Such reimbursement shall be due at the time of
closing or, if the loan does not close, promptly upon J.E.
Robert Companies' receipt from WFB of a bill of such costs and
expenses. Notwithstanding the foregoing, WFB hereby agrees
that in the event that the transactions contemplated hereby do
not close (other than due to JER's selection of another source
for financing), WFB's then unreimbursed expenses shall not
exceed $100,000. It is understood and agreed that WFB shall
not commence any appraisals, environmental assessments, or
legal diligence or documentation unless and until WFB shall
have received a deposit from JER in an amount necessary to
cover such costs and expenses. Any such funds advanced by JER
shall apply to the $100,000 cap on unreimbursed expenses
contemplated by this paragraph.
ASSIGNMENT: WFB shall have the unfettered right to sell,
assign, transfer or otherwise dispose of, participate or
syndicate the loan in whole or in part, without the Borrower's
consent.
CLOSING CONDITIONS: The definitive documentation for the loan
shall include such conditions to closing as WFB in its sole
and absolute discretion deems appropriate, including without
limitation:
(i) Satisfaction of WFB that all issued and outstanding
securities issued by Borrower are owned by JER, and that a
majority (or a super-majority in the event that applicable law
or Borrower's articles or bylaws require super-majority for
certain decisions ) of all of the members of the Board of
Directors of Borrower have been appointed by JER;
(ii)Consent by WFB (which consent shall not be unreasonably
withheld) as to the identity of all of the persons and
entities which are direct or indirect shareholders of Borrower
after consummation of the transactions contemplated hereby;
(iii) Satisfaction of WFB that the making of the loan, and the
granting of the liens by Borrower, shall not constitute a
fraudulent transfer or conveyance and that upon consummation
of the transactions contemplated hereby and upon consummation
of the acquisition of control of Borrower as described in
subparagraph (i) above, Borrower shall be solvent, and shall
have sufficient resources to meet its debts as they become
due.
(iv) Completion of such appraisals, reviews and evaluations as
may be required by WFB in order to comply with FIRREA;
(v) No material adverse change with respect to the Borrower or
the collateral from the condition (financial, physical or
otherwise) on February 28, 1995;
(vi) Completion and approval of such environmental reviews and
evaluations as may be required by WFB; provided, however, that
(1) WFB acknowledges the condition of the property commonly
known as "Harbor Point" as revealed by certain environmental
surveys previously delivered to WFB, and WFB agrees not to
object to the environmental condition of Harbor Point as
described in such environmental surveys, and (2) JER LLC
acknowledges that the definitive loan documentation will
contain covenants (A) requiring MIP to isolate the Harbor
Point Assets from the other Assets and (B) to remediate the
environmental contamination of Harbor Point if required to do
so by order of any governmental authority or court or if
required to do so in response to any lawsuit or claim;
(vii) Issuance of legal, solvency and fairness opinions
satisfactory to WFB;
(viii) Issuance of title insurance satisfactory to WFB and
receipt of tenant or borrower estoppels satisfactory to WFB;
(ix) Determination by WFB of assignability of all collateral
(with adequate protections for a lienholder in the case of
partnership or joint venture interests);
(x) Borrower's execution and delivery of the loan documents
prepared by WFB or its counsel, and the creation and
perfection of liens on each of the Assets;
(xi) (A)There shall be no amendment to, modification of,
termination of, or breach or waiver of conditions under, that
certain Agreement and Plan of Merger Agreement dated May 21,
1995 by and among JER LLC, MIP and MIP Acquisition
Corporation.
(B)MIP shall have prepared and filed, on or before June 15,
1995, with the Securities and Exchange Commission, proxy
materials relating to the proposed merger of MIP with and into
a subsidiary of JER;
(C)MIP shall have received clearance from the SEC with respect
to such proxy materials on or prior to July 25, 1995;
(D)On or prior to September 15, 1995, MIP shall have held a
meeting of its shareholders and received approval from the
holders of shares in an amount not less than the number
required to approve a short-form merger under all applicable
law, and Borrower, JER and MIP shall have received all
approvals and/or clearances as may be required or reasonably
desirable under the Hart-Scott-Rodino Antitrust Improvements
Act;
(E)On or prior to November 30, 1995, MIP shall have merged
with and into a subsidiary of JER;
(xii)The transactions contemplated by the commitment letter of
even date herewith by WFB to Shorebreeze Associates shall have
closed; provided, however, that this condition need not be
satisfied if the real property owned by Shorebreeze Associates
is sold to an unaffiliated third party concurrently with the
closing at a price providing net proceeds (without regard to
any commission or fee payable to JER LLC or its affiliates)
payable to MIP or JER LLC pursuant to their respective (and
their affiliates') interests in Shorebreeze Associates equal
to an amount not less than the minimum release price required
hereby with respect to such interest in Shorebreeze
Associates, and such net proceeds are applied in the manner
set forth in the paragraph herein captioned "Prepayment";
(xiii)WFB shall have received evidence reasonably satisfactory
to it that JER LLC has invested cash equity (exclusive of any
cash raised by sales of Assets or of assets owned by any
partnership with respect to which a partnership interest is an
Asset) in the transactions contemplated hereby of not less
than 33 1/3% of the loan amount; and
(xiv) The closing shall have occurred by November 30, 1995.
GOVERNING LAW: If issued and executed, the commitment and
loan documents shall be governed by the laws of the State of
California applicable to contracts to be wholly performed in
that State.
COMMITMENT FEE: In consideration for the commitment expressed
herein, J.E. Robert Companies hereby agrees to pay to WFB a
commitment fee on the following terms:
(i) in the event that the merger between MIP and JER or any of
its affiliates occurs at any time on or prior to November 30,
1997, and the financing described herein is not consummated
other than due to a default of WFB, J.E. Robert Companies
shall pay to WFB a fee of $250,000, plus all costs and
expenses incurred by WFB in connection herewith. Such fee and
expense reimbursement shall be payable on demand, and if not
paid within five (5) days after J.E Robert Companies' receipt
of written demand therefor, shall bear interest at WFB's prime
rate as in effect, from time to time, plus five percent (5%)
per annum; and
(ii) in the event that the merger between MIP and JER and any
of its affiliates is not consummated, J.E Robert Companies
shall pay to WFB an amount equal to all of then unreimbursed
WFB's costs and expenses incurred in connection herewith
(subject to the provisions of the paragraph captioned "Costs"
above), and if not so paid, such sum shall bear interest at
WFB's prime rate as in effect, from time to time, plus five
percent (5%) per annum. WFB acknowledges receipt of $60,000
as of June 1, 1995 in reimbursement of certain costs incurred
by WFB as of June 1, 1995.
Nothing in this section shall limit J.E. Robert Companies's
obligation to reimburse WFB for its costs and expenses, as set
forth elsewhere herein, subject to any applicable cap on
reimbursable costs and expenses set forth herein. The
agreements contained in this section shall survive the
termination of this commitment without limitation.
The foregoing is a summary of the terms and conditions for the
loan commitment contemplated hereby. Formal loan
documentation, to be prepared by WFB's counsel on WFB's
customary forms, will incorporate the foregoing terms and
conditions, and will contain such other terms, conditions,
covenants, representations, warranties and agreements as WFB
customarily requires in similar transactions.
This commitment shall be effective only if executed by an
authorized officer of J.E. Robert Companies and JER and
returned to WFB not later than 5:00 p.m. Los Angeles time on
Monday, June 19, 1995. By executing this letter in the space
provided below, J.E. Robert Companies (i) shall agree to cause
the Borrower described herein to borrow loan described herein,
and (ii) shall be personally responsible for all costs and
expenses reimbursable to WFB hereunder and shall agree to pay
such costs and expenses immediately on demand.
Without limitation of any other provision herein, WFB's
obligations under this Commitment Letter shall terminate upon
(i) the execution and delivery of any amendment to the merger
agreement between MIP and JER which is inconsistent with the
terms of this letter; or (ii) any termination, expiration or
default under the merger agreement between MIP and JER.
Notwithstanding such termination as to WFB, J.E. Robert
Companies', JER's and Borrower's obligations to WFB hereunder
shall survive such termination without limitation.
Sincerely,
/s/ Nicholas V. Colonna
Nicholas V. Colonna
AGREED TO AND ACCEPTED:
J.E. Robert Companies
By: /s/ Jonathan S. Kern
Its:________________________
JER Partners, L.L.C.
By: /s/ Jonathan S. Kern
Its:________________________
Assets
A.Real Estate
1.Long Beach Building, Long Beach, California. 125,000 sq.
ft. of office.
2.Northbay Industrial Park, Petaluma, California. 120,500 sq.
ft. of industrial.
3.Northbay Industrial Park, Petaluma, California. 11.20 Acres
of land.
4.San Dimas Corporate Center, San Dimas, California. 75,000
sq. ft. of industrial.
5.Sunwest Retail Plaza, San Bernardino, California. 21,3000
sq. ft. of retail.
B.Joint Ventures and Other Interests
1.Harbor Point, Los Angeles. 150,000 sq. ft. of retail.
Partnership interest and lender's interest.
2.Shorebreese (Phases I and II), Redwood City, California.
218,600 sq. ft. of office. Partnership interest and lender's
interest.
Exhibit 5
June 19, 1995
J.E. Robert Companies
11 Canal Center Plaza, Suite 200
Alexandria, Virginia 22314
Attention: Mr. Murry N. Gunty
Re: Proposed Acquisition Financing of
Shorebreeze I and II
Gentlemen:
Based on our discussions and the information
you have provided to us to date, Wells Fargo Bank, N.A.
("WFB") is pleased to commit, on the terms and conditions
set forth herein, to make the loan described herein.
BORROWER: Shorebreeze Associates, a California Limited
Partnership, the general partner in which shall be
Redwood Shores MIP Inc., a California corporation wholly
owned by JER Partners, L.L.C. ("JER LLC") and the limited
partners of which shall be J.H.R. Trust ("Raiser"),
Harvey E. Chapman, Jr. ("Chapman"), and MIP Properties,
Inc., a Maryland corporation wholly owned by JER LLC.
JER LLC is an affiliate of J.E. Robert Companies ("JER").
LENDER: WFB.
THE LOAN: A partial recourse loan (with customary
exceptions) which would be provided by WFB and be secured
by the properties commonly known as Shorebreeze I and II.
At Borrower's sole option, the loan shall be recourse in
the amount of $6.25 million, for which amount Raiser and
Chapman shall be jointly and severally liable.
LOAN AMOUNT: The loan amount shall not exceed 75% of the
appraised value. The loan amount is currently estimated
to be approximately $26 million.
LOAN TERM: A loan term of three years from the date of
closing.
SECURITY: A first trust deed recorded against the
properties commonly known as Shorebreeze I and II in
Redwood City, California, plus a first priority perfected
interest in the lockbox account described below.
Borrower shall be required to execute any and all
additional security documentation as is customary and
required by Wells Fargo Bank.
INTEREST RATE: The interest rate shall be LIBOR + 3.50%.
Borrower has the option to fix the interest rate for
periods of 30, 60 or 90 days but in no event beyond the
maturity date of the loan. Fixed rate portions shall be
in a minimum amount of $2,000,000 or any integral
multiple of $1,000,000 in excess of said $2,000,000
minimum. Interest shall be payable monthly in arrears
computed on the actual days elapsed in a 360-day year at
the rate set forth above, regardless of the availability
of cash flow therefor. Payments shall be due on the
first day of each calendar month.
COMMITMENT FEE: 1.50% the original principal balance of
the loan, payable at closing.
PREPAYMENT: The loan shall be pre-payable in whole only;
provided, however, that upon the repayment of the loan on
or prior to the first anniversary of the closing,
Borrower shall pay a fee of two percent (2%) of the
original amount of WFB's commitment; provided, further
that upon the repayment of the loan on or prior to the
second anniversary of the closing, Borrower shall pay a
fee of one percent (1%) of the original amount of WFB's
commitment. Notwithstanding the foregoing, there shall
be no prepayment fee in the event that the loan is
prepaid concurrently with a sale of the Property, or
partnership interests in the Borrower, to an unaffiliated
third party. (Nothing herein shall imply that the loan
is assumable, or shall not be due and payable in full
upon any transfer of all or any part of any interest in
the Borrower.) The foregoing fees are in addition to
breakage and other fees and costs which may be incurred
in connection with the unwinding of a LIBOR contract.
CASH DISTRIBUTION: Borrower shall establish a lockbox
account with Wells Fargo Bank. All tenants within the
building shall submit all payments as obligated under
their lease to the lockbox. JER LLC's appointed
management company shall be indicated as the payee to
tenants. Distribution of cash shall be as follows:
i) first, to the Borrower to pay vendors
for normal operating expenses per an
approved budget not to exceed a to be
determined amount which shall include all
property management and asset management
fees.
ii) second, to interest on the loan to be
debited by Wells Fargo Bank on the seventh
day of each month for the previous month's
interest accrued.
iii) third, to a 2 month reserve per the
budget dated March 20, 1995 (the Project
Run) for the project and submitted to WFB
(the "Budget") for normal operating and
interest expenses.
iv) fourth, to a reserve per the Budget
for tenant improvements, commissions and
other costs associated with leasing in the
buildings.
v) fifth, to a reserve per the Budget
for normal property reserves.
vi) sixth, to repay principal based on a
25 year amortization schedule.
vii) seventh, to the Borrower.
After the occurrence of an event of Default, the Loan
Agreement shall give the Lender the discretion to apply
payments generated by the Underlying Loans or on deposit
in any account as the Lender deems fit.
MANAGER: Borrower shall engage a servicer/manager
acceptable to WFB (a servicer/manager affiliated with JER
shall be acceptable, and the current manager of the
project, Raiser Shorebreeze Property Management Company,
shall be acceptable) for the Assets pursuant to a
servicing and management agreement satisfactory to WFB,
which agreement shall be assigned to WFB as collateral
for the loan.
REPORTING:
i) Borrower will provide annual audited
statements and updated business plan. In
addition, it will provide monthly and
quarterly cash flow reports as well as an
asset status summary report on a to be
agreed upon basis.
ii) Borrower will provide such other
reports as WFB reasonably require.
EVENTS OF DEFAULT: The Loan Agreement shall contain
those events of default which WFB in its sole and
absolute discretion deems appropriate in a transaction of
this nature, including, without limitation, failure to
make payments when due, regardless of the availability of
cash flow therefore breach of representations and
warranties or covenants in the Loan Agreement,
bankruptcy/insolvency, judgments and attachments.
COVENANTS: The Loan Agreement shall contain those
negative covenants which WFB in its sole and absolute
discretion deems appropriate in a transaction of this
nature, including, without limitation:
i) Borrower incurring additional
indebtedness, other than the loan from MIP
Properties Inc. contemplated by the
partnership documents for Shorebreeze
Associates previously submitted to WFB;
ii) Borrower engaging in a business other
than the ownership and administration of
the Underlying Assets;
iii) any change in control pursuant to
which JER and its affiliates, and the
persons and entities controlling JER on
the date hereof, no longer directly or
indirectly control the Borrower;
iv) The transfer of the collateral or any
interest therein to an affiliate of
Borrower, or Borrower otherwise engaging
in a transaction with an affiliate without
WFB's prior written consent; and,
such affirmative covenants as WFB deems
appropriate including, without limitation:
i) Customary covenants regarding
maintenance of collateral, damage and
destruction, and condemnation;
ii) Requirement that WFB's first priority
perfected lien status in and to the
collateral be maintained at all time;
iii) a requirement that Borrower submit an
updated business plan within 60 days after
closing, which business plan shall be
approved by WFB as long as it is
reasonably consistent with the preliminary
business plan previously submitted by the
undersigned to WFB; and
iv) a requirement that Borrower and JER
indemnify, defend and hold harmless Lender
from and against any and all claims,
costs, damages, liabilities and other
costs and expenses arising out of or
relating to the transactions contemplated
hereby.
COSTS: All of WFB's costs and expenses incurred in
connection with the transactions contemplated hereby
shall be reimbursed to WFB on the terms and conditions
(and subject to the limitations) set forth in that
certain commitment letter of even date herewith from WFB
to JER regarding a proposed merger transaction involving
affiliates of JER and MIP Properties, Inc.
ASSIGNMENT: WFB shall have the unfettered right to sell,
assign, transfer or otherwise dispose of, participate or
syndicate the Loan in whole or in part, without the
Borrower's consent.
CLOSING CONDITIONS: The definitive loan documentation
shall include such conditions to closing as WFB in its
sole and absolute discretion deems appropriate, including
without limitation:
(i) Consent by WFB (such consent not to
be unreasonably withheld) as to the
identity of all of the persons and
entities which are direct or indirect
shareholders of Borrower after
consummation of the transactions
contemplated hereby;
(ii) Satisfaction of WFB that Borrower
shall be solvent, and shall have
sufficient resources to meet its debts as
they become due;
(iii) Completion of such appraisals,
reviews and evaluations as may be required
by WFB in order to comply with FIRREA;
(iv) no material adverse change with
respect to the Borrower or the collateral
from the condition (financial, physical or
otherwise) on March 31, 1995;
(v) Completion and approval of such
environmental reviews and evaluations as
may be required by WFB;
(vi) Issuance of legal and solvency
opinions satisfactory to WFB;
(vii) Issuance of title insurance
satisfactory to WFB and receipt of tenant
and partner estoppels satisfactory to WFB;
(viii) Borrower's execution and delivery
of the loan documents prepared by WFB or
its counsel;
(ix) The transactions contemplated by the
commitment letter of even date herewith by
WFB to J.E. Robert Companies (the "MIP
Commitment Letter") shall have closed;
(x) The closing shall have occurred by
November 30, 1995.
GOVERNING LAW: If issued and executed, the commitment
and loan documents shall be governed by the laws of the
State of California applicable to contracts to be wholly
performed in that State.
The foregoing is a summary of the terms and conditions
for the loan commitment contemplated hereby. Formal loan
documentation, to be prepared by WFB's counsel on WFB's
customary forms, will incorporate the foregoing terms and
conditions, and will contain such other terms,
conditions, covenants, representations, warranties and
agreements as WFB customarily requires in similar
transactions.
This commitment shall be effective only if executed by an
authorized officer of JER and returned to WFB not later
than 5:00 p.m. Los Angeles time on Monday, June 19, 1995.
Notwithstanding the foregoing, by executing this letter
in the space provided below, J.E. Robert Companies (i)
shall agree to cause the Borrower described herein to
borrow loan described herein, and (ii) shall be
personally responsible for all costs and expenses
reimbursable to WFB hereunder and shall agree to pay such
costs and expenses immediately on demand.
Without limitation of any other provision herein, WFB's
obligations under this Commitment Letter shall terminate
upon a termination of the MIP Commitment Letter.
Sincerely,
/s/ Nicholas V. Colonna
Nicholas V. Colonna
AGREED TO AND ACCEPTED:
J.E. Robert Companies
By: /s/ Jonathan S. Kern
Its:
JER Partners, L.L.C.
By: /s/ Jonathan S. Kern
Its:
