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EXHIBIT 10.8.5
[LOGO] NATIONWIDE
INSURANCE
DO NOT MAKE ANY MODIFICATIONS IN THE BODY OF
THIS APPLICATION/CONTRACT. ANY MODIFICATIONS
ARE TO BE ENUMERATED IN EXHIBIT "B" ATTACHED
HERETO.
PART I
Application/Contract For Mortgage Loan With
Nationwide Life Insurance Company
1. APPLICATION/CONTRACT: This application is an offer made by Applicant (as
defined in Section 3 below) to Nationwide Life Insurance Company
(hereinafter "Nationwide) to enter into a contract for the mortgage loan
described herein (hereinafter "Mortgage Loan). This Application/Contract
for Mortgage Loan (hereinafter "Application/Contract") is collectively
comprised of PART I, PART II, Exhibit A, and Exhibit B. PART II, Exhibit A,
and Exhibit B are attached hereto and incorporated herein by reference.
Upon Nationwide's written acceptance hereof, or upon Applicant's written
acceptance of any counteroffer made by Nationwide in response hereto, this
Application/Contract together with any accepted counteroffer, will
constitute a Contract for Mortgage Loan, whereby Nationwide agrees to loan
to Borrower (as defined in Section 4 below) upon Applicant/▇▇▇▇▇▇▇▇'s full
and timely compliance with the terms and conditions of this
Application/Contract, and whereby Borrower agrees to accept the Mortgage
Loan from Nationwide.
2. LOAN CORRESPONDENT: This Application/Contract is issued through
▇▇▇▇▇▇▇-▇▇▇▇▇, INC., (hereinafter "Loan Correspondent"). Applicant agrees
to deal with the Loan Correspondent on any matter arising from issuance of
this Application/Contract, or in respect to the loan closing.
Applicant/Borrower and its legal counsel will be receiving specific closing
instructions from the Loan Correspondent, Nationwide, and/or Nationwide's
legal counsel.
3. APPLICANT: State the name(s) of the person(s) or entity(ies) applying for
the Mortgage Loan (hereinafter "Applicants"):
▇▇▇▇▇▇▇ PROPERTIES RESIDENTIAL, L.P.
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4. BORROWER: State the name of the borrowing entity as it will appear on the
record of title (hereinafter "Borrower"); and (a) if Borrower is a
partnership, list the partners and percentage of ownership interest of each
partner, (b) if a corporation, list the state of incorporation and the
principal shareholders; or (c) if a trust, list the beneficiaries and
trustees. Please also list all underlying entities of the Borrower. Any of
the general partners or beneficiaries of Borrower are general partnerships,
list the partners of these general partnerships also.
▇▇▇▇▇▇▇ PROPERTIES RESIDENTIAL, L.P.
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Nationwide is to receive from the Applicant/Borrower for its review and
approval copies of all partnership and/or trust agreements, and copies of
articles of incorporation, corporate bylaws, and certificates of good
standing (from the state of incorporation and from the state where the
Security Property, as herein defined, is located) as well as copies of the
same for all underlying entities of the Borrower.
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5. RESPONSIBLE INDIVIDUALS: State the name(s) of that (those) individual(s)
who will be assuming personal liability for those items enumerated in the
"Exculpation" section of this Application/Contract and who will be signing
the indemnifications called for in the "ENVIRONMENTAL AUDIT AND
INDEMNIFICATION" and "ACCESSIBILITY INSPECTION AND INDEMNIFICATION"
sections of the Application/Contract (hereinafter "Responsible
Individuals"):
▇▇▇▇▇▇▇ REALTY INVESTORS, INC.
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6. GUARANTORS: If a guarantee of the Mortgage Loan is required under Paragraph
b. of Exhibit "A" of this Application/Contract, or is required pursuant to
other provisions of this Application/Contract, state below those
individuals who will unconditionally, jointly, and severally guarantee the
Mortgage Loan (hereinafter "Guarantors"):
▇▇▇▇▇▇▇ REALTY INVESTORS, INC.
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7. MAJOR TENANTS: State below the major tenants that occupy space in or
adjacent to the Security Property (hereinafter "Major Tenants"):
N/A
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8. FINANCIAL STATEMENTS: Please attach hereto current financial statements,
which have been signed and dated, for the Applicant, for the Borrower, for
all principals of the Borrower, for any Guarantors of the Mortgage Loan
required pursuant to the terms of this Application/Contract, and for all
Responsible Individuals. Current financial statements shall include a
balance sheet, income tax returns, and cash flow statements for all real
estate projects owned by the aforementioned individuals and/or entities.
9. LOAN TERMS:
(a) Maximum Loan Amount: $8,400,000.
(b) Interest Rate: 7.15% percent per annum.
(c) Term and Amortization: The Mortgage Loan will be for a 10-year term,
with any unpaid principal balance due at the end of the term. Payments
are to be based upon a 30-year amortization schedule.
(d) Monthly Payment: $56,734.17 due by the 15th day of each month
(hereinafter "Due Date").
Monthly payments shall be calculated on the basis of a 360-day year
composed of twelve 30-day months.
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10. DESCRIPTION OF SECURITY: Describe the property that will secure the
Mortgage Loan (hereinafter "Security Property"): (Please complete all parts
of this section.)
▇▇▇▇▇▇ ▇▇▇▇▇ APARTMENTS
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Name of Property
APARTMENTS ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------- -----------------------------------
Type of Property Street and Number
(office, retail, apt., industrial, etc.)
DULUTH GWINNETT GA 30136
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City County State Zip Code
22.5 ACRES 180 UNITS APPROXIMATELY 244,839 NRA
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Land (acres/sq.ft.) Building Improvements On-site (hereinafter "Improvements")
APPROXIMATELY 360 SPACES
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Parking Spaces
*(Gross building area, net rentable area, number units/rooms, etc.)
PEACHTREE INDUSTRIAL FEE SIMPLE TO BE BUILT
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- Abutting dedicated ways Fee Improvements
simple/leasehold estate Existing/Proposed
* (Public or private roadways which provide access to the Security
Property. If roadways are private, any agreements setting forth use
and maintenance of such roadways are subject to the review and
approval of Nationwide)
Is the Security Property a separate parcel and does it comply with all
applicable subdivision ordinances and plat acts?
X
-------------------------------- -------------------------------
YES NO
If NO, please explain what is being done to plat the Security Property or
to bring the Security Property into compliance:
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11. CLOSING DATE AND FUNDING REQUIREMENTS: The loan disbursement shall take
place at the closing on OR BEFORE 6/1/98 (hereinafter "Closing Date"), upon
completion of the Improvements in accordance with the approved final plans,
specifications, and soils report and in compliance with the terms and
conditions of this Application/Contract. This Application/Contract shall
expire on the Closing Date and thereafter Nationwide shall have no further
obligation to fund the Mortgage Loan. Nationwide may, in its sole
discretion, unilaterally extend the Closing Date. Time is of the essence
with respect to this Application/Contract. Exhibit "A" attached hereto
outlines any other conditions or specific requirements that must be
satisfied for funding to occur.
12. SITE INSPECTION: Nationwide will make a site inspection of the Security
Property to substantiate the loan amount and projected feasibility.
Applicant/Borrower will pay to Nationwide $2,500 to defray its cost of
making such inspection (hereinafter "Site Inspection Fee"). This Site
Inspection Fee is to be paid at the time this Application/Contract is
submitted to Nationwide for its review. Under no circumstances will the
Site Inspection Fee be refunded by Nationwide.
13. LETTER OF CREDIT: Any letter of credit required by this
Application/Contract shall mean an irrevocable and unconditional letter of
credit issued by a commercial bank acceptable to Nationwide having minimum
total assets of $500,000,000, and tangible capital and surplus equal to no
less than six (6) percent of total assets (hereinafter "Letter of
Credits"). Borrower, any Guarantors, and the Responsible Individuals shall
personally, jointly, severally, and unconditionally guarantee payment of
any Letter of Credit and any renewals and/or replacements thereof, in the
event the bank issuing the Letter of Credit becomes insolvent, files, or
has filed against it, any bankruptcy or similar proceeding, is closed
(either temporarily or permanently), placed in receivership,
conservatorship, or liquidation by the Federal Deposit Insurance
Corporation, the Resolution Trust Corporation, or any other local, state,
or federal governmental agency, or if the bank refuses or fails to honor
the Letter of Credit when presented by Nationwide. In addition, in the
event any of the aforementioned events take place, Nationwide, in its sole
discretion, may require that Borrower obtain a replacement Letter of Credit
from a bank or other financial institution acceptable to Nationwide, in its
sole discretion, or that Borrower pledge other security acceptable to
Nationwide, in its sole discretion, with respect to the obligation secured
by the Letter of Credit.
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14. APPLICATION DEPOSIT: Applicant/Borrower shall deposit with Nationwide the
sum of $84,000 as an application deposit (hereinafter "Application
Deposit") in connection with this Application/Contract. Nationwide may
deposit this Application Deposit into its bank account. The deposit by
Nationwide of such Application Deposit shall not constitute acceptance or
approval of the Application/Contract. In the event Nationwide denies the
Application/Contract, the Application Deposit shall be refunded to the
Applicant without interest. Conversely, if the Application/Contract is
approved by Nationwide, the Application Deposit shall be credited to the
Commitment Fee required under the COMMITMENT FEE section herein and shall
be retained by Nationwide or resumed to Applicant in accordance with this
COMMITMENT FEE section.
15. COMMITMENT FEE: As partial consideration for Nationwide's agreement to loan
funds in the amounts and on the terns set forth herein, Applicant/Borrower
shall deliver to Nationwide upon Nationwide's acceptance of this
Application/Contract $84,000 in cash and a Letter of Credit in the amount
of $168,000 with an expiration date of no earlier than six (6) months after
the Closing Date of this Application/Contract (the cash and Letter of
Credit are collectively hereinafter referred to as the "Commitment Fee").
The Commitment Fee shall be returned to Applicant/Borrower after the
Mortgage Loan has closed in accordance with the terms and conditions of
this Application/Contract and Nationwide has received the original executed
note; but should the Mortgage Loan not close as provided for in this
Application/Contract due to a failure of the Borrower to fulfill the terms
and conditions of this Application/Contract, or if this
Application/Contract shall be cancelled as set forth in sub-paragraphs (a)
through (c) of the FINANCIAL RESPONSIBILITY paragraph herein, in each case
strictly according to the terms thereof, then Nationwide shall have the
option, without giving prior notice to Applicant/Borrower and without
incurring liability of any kind, to cancel this Application/Contract and
terminate all Nationwide's obligations hereunder. Upon cancellation of this
Application/Contract, Nationwide shall have the right to retain the
Commitment Fee in full and in addition, to pursue all legal and equitable
remedies available to Nationwide, including without limitation, suit to
collect provable damages (including loss of bargain) in excess of the
Commitment Fee.
In the event, however, that the Mortgage Loan does not close because
Nationwide has not approved the inspecting architect's report, the soils
report, the plans and specifications, the environmental report, the leases,
or the Security Property, or because one of the events outlined in
sub-paragraphs (d) or (e) of the FINANCIAL RESPONSIBILITY section herein
has occurred, then the Commitment Fee, less Nationwide's out-of-pocket
expenses, shall be refunded to the Applicant/Borrower, provided, however,
that Applicant/Borrower shall use its best efforts to correct any
deficiencies in such reports, leases or the Security Property. If
Applicant/Borrower does not use its best efforts to correct any such
deficiencies to Nationwide's satisfaction, then Nationwide may cancel this
Application/Contract and terminate all Nationwide's obligations hereunder.
Upon cancellation of this Application/Contract, Nationwide shall have the
right to retain the Commitment Fee and, in addition, to pursue all legal
and equitable remedies available to Nationwide, including without
limitation, suit to collect provable damages (including loss of bargain) in
excess of the Commitment Fee.
Election of any remedy by Nationwide shall not be deemed a waiver of any
alternative remedy set forth herein or available to Nationwide at law or
equity.
16. SUBMISSION INFORMATION: Upon delivery of this Application/Contract or
shortly thereafter, Applicant and/or the Loan Correspondent shall provide
Nationwide with any documentation and information requested by Nationwide
that is reasonably necessary for Nationwide to evaluate the feasibility of
the Mortgage Loan, including, but not limited to, such items as an
appraisal, site plan (showing the location of Improvements, parking, means
of ingress and egress and other easements), operating statements, leasing
information, a current rent roll, leases, plans and specifications for the
building(s), surveys, legal description of the Security Property, copies of
restrictive covenants and easements affecting the Security Property, credit
reports, bank references, information about pending litigation affecting
the Security Property, the Borrower, Guarantors, or Responsible
Individuals, and partnership agreements, trust agreements, articles of
incorporation, or other organizational documents.
17. MODIFICATIONS: This Application/Contract shall be deemed to contain all the
terms, conditions, and understandings between Nationwide and
Applicant/Borrower with respect to the Mortgage Loan and shall supersede
any and all prior understandings and agreements, written or oral, relating
thereto. The terms and conditions of this Application/Contract shall be
waived or modified only by written instrument signed by the parties hereto
except that extensions for the period for acceptance of the
Application/Contract or for extension of the Closing Date may be executed
by Nationwide unilaterally. Any modifications made to this
Application/Contract are not to be made in the body of the
Application/Contract but are to be enumerated in Exhibit B attached hereto.
Modifications should specifically reference that section of the
Application/Contract that is being modified.
18. APPLICANT/BORROWER: This Application/Contract is made by the undersigned
Applicant. Applicant shall be obligated to form Borrower (if Borrower has
not yet been formed as a legal entity) and shall cause the Borrower to
perform its obligations under this Application/Contract. Upon its legal
formation, Borrower shall be deemed to be bound and liable hereunder to the
same degree as Applicant.
19. ASSIGNMENT: This Application/Contract, the proceeds of the Mortgage Loan,
and any rights hereunder shall not be assignable by Applicant or Borrower
without Nationwide's prior written consent. Any attempted assignment
without such prior written consent shall be null and void and, at
Nationwide's option, shall constitute a default hereunder and shall result
in this Application/Contract being terminated and of no further force and
effect. Further, no third party shall rely upon the existence of this
Application/Contract without written confirmation from Nationwide that the
Application/Contract remains unchanged, that it has not been terminated,
and that the Applicant/Borrower is not in default hereunder. Nationwide, at
its option, may assign all or a portion of the Mortgage Loan to an
affiliated company or companies. If a portion of the Mortgage Loan is so
assigned, ▇▇▇▇▇▇▇▇ shall be asked to execute more than one promissory note
secured by one security instrument. All legal documentation for the
Mortgage Loan shall show both Nationwide and its affiliate(s), as the
lender. All ancillary documents, including, but not limited to, the survey,
environmental report, hazard insurance, and title insurance, must be
certified to and show the insured as both Nationwide and its affiliate(s).
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Applicant has reviewed this Application/Contract, and understands that this
Application/Contract is subject to the terms and conditions of PART I, PART
II, Exhibit A, and Exhibit B of this Application/Contract, unless amended in
writing and signed by both Applicant and Nationwide.
▇▇▇▇▇▇▇ PROPERTIES RESIDENTIAL, L.P.
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NAME OF APPLICANT
By: ▇▇▇▇▇▇▇ Realty Investors, Inc., Its General Partner
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, CFO
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Signature(s)
PLEASE USE A PEN WITH OTHER THAN BLACK INK TO SIGN THIS
APPLICATION/CONTRACT AND DO NOT FORGET TO FILL IN THE DATE OF
SIGNATURE BELOW.
Applicant's Mailing Address:
▇▇▇▇▇▇▇ PROPERTIES RESIDENTIAL, L.P.
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ATLANTA, GA 30350
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DATE OF SIGNATURE: 11/4/97
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NATIONWIDE HEREBY ACCEPTS THE ABOVE APPLICATION/CONTRACT FOR
MORTGAGE LOAN SUBJECT TO NATIONSWIDE'S LETTER DATED
N/A , 19 .
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NATIONWIDE LIFE INSURANCE COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ DATE: DECEMBER 19, 1997
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Name ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
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Title
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[LOGO] NATIONWIDE
INSURANCE
Nationwide is on your side
NATIONWIDE LIFE INSURANCE COMPANY
HOME OFFICE: ONE NATIONWIDE PLAZA - COLUMBUS, OHIO 43216
PART II
STANDARD TERMS AND CONDITIONS
APPLICATION/CONTRACT FOR MORTGAGE LOAN WITH
NATIONWIDE LIFE INSURANCE COMPANY
1. SECURITY: The Mortgage Loan shall be evidenced by a promissory note
(hereinafter "Note") and shall be secured by:
(a) A duly recorded mortgage or deed of trust and security agreement
(hereinafter "Mortgage or Deed of Trust") which constitutes a valid
first lien upon the fee simple estate (or leasehold estate, if
applicable) of the Security Property as identified in PART I of this
Application/Contract and the Improvements located (or to be
constructed) thereon.
(b) A first lien on all of the Borrower's furnishings, fixtures, and
equipment located on or used in the operation of the Security Property
(hereinafter the "Personal Property") as evidenced by a security
agreement and UCC-1 financing statements in recordable form. Borrower
may not sell, lease, or otherwise transfer the Personal Property
without Nationwide's prior written consent.
(c) An unconditional present assignment to Nationwide of all present and
future leases for space in the Security Property, and all rents,
issues, and profits arising from the leasing of the Security Property.
Such assignment shall include an assignment of any fees that permit
the tenant to terminate its lease which fees are payable to the
landlord under the terms and conditions of any of the Security
Property's leases.
(d) Such other documentation evidencing and securing the Mortgage Loan as
may be required by Nationwide or Nationwide's counsel.
2. PREPAYMENT PRIVILEGE:
(a) VOLUNTARY: During the term of the Mortgage Loan, full prepayment of
the Note shall be permitted upon the Borrower delivering to Nationwide
thirty (30) days prior written notice of the Borrower's intent to
prepay the Mortgage Loan in full, together with a premium equal to the
greater of
(i) The sum of (a) the present value of the scheduled monthly
payments on the Mortgage Loan from the date of prepayment to the
maturity date and (b) the present value of the amount of
principal and interest due on the maturity date of the Mortgage
Loan (assuming all scheduled monthly payments due prior to the
maturity date were made when due); minus (c) the outstanding
principal balance of the Mortgage Loan as of the date of
prepayment. The present values described in (a) and (b) are to be
computed on a monthly basis as of the date of prepayment,
discounted at the yield to maturity of the U.S. Treasury Note or
Bond that is closest in maturity to the maturity date of the
Mortgage Loan as reported in the Wall Street Journal on the fifth
business day preceding the date of prepayment; or
(ii) One percent of the outstanding principal balance of the Mortgage
Loan.
(b) INVOLUNTARY: In the event the Mortgage Loan is declared due and
payable in full due to a default in the repayment of the Note, or in
the event the Mortgage Loan is declared due and payable due to a
default in any of the terms, covenants and conditions contained in the
Mortgage or Deed of Trust or in any of the other loan documents
executed as evidence of or as further security for the Mortgage Loan,
there shall be paid therewith an involuntary prepayment premium equal
to the voluntary prepayment premium then payable.
(c) APPLICATION OF INSURANCE PROCEEDS OR CONDEMNATION AWARDS: The
application of any insurance proceeds or condemnation awards to the
reduction of the outstanding principal balance of the Mortgage Loan
shall be at par with no prepayment premium due and payable and the
monthly payment shall be reduced accordingly.
(d) PREPAYMENT DURING LAST NINETY DAYS: During the last ninety (90) days
of the term of the Mortgage Loan, the Borrower may prepay at par the
full outstanding principal balance of the Mortgage Loan.
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3. ADDITIONAL LOAN TERMS:
(a) DEFAULT INTEREST RATE: The lesser of (i) the highest rate of interest
allowable under the laws of the state in which the Security Property
is located, or (ii) the then applicable rate of interest of the Note
plus five (5) percent per annum. The default rate of interest shall
apply only if the entire outstanding principal balance of the Mortgage
Loan shall become due and payable, whether at maturity, by
acceleration or otherwise.
(b) LATE PAYMENT CHARGE: Prior to acceleration, a late payment charge of
five cents ($.05) for each dollar of principal and/or interest not
paid by the Due Date shall accrue to the benefit of Nationwide each
month the payment is delinquent as reimbursement for additional
administrative costs incurred by Nationwide as a result of the late
payment. A payment of principal and/or interest shall be deemed to
have been paid on the Due Date if the envelope bearing said payment is
postmarked by the U.S. Postal Service on or before said Due Date, is
correctly addressed, and bears adequate first-class postage.
(c) TAX AND INSURANCE ESCROW: On the Closing Date, a tax and insurance
escrow shall be established and adequate funds shall be deposited with
Nationwide to bring the tax and insurance escrow into balance at that
time. Thereafter, in addition to and concurrent with each monthly
installment of principal and interest, a tax and insurance escrow
deposit shall be made by Borrower. The amount of the escrow deposit
shall be set by Nationwide based upon the latest available data and
the funds shall be deposited with Nationwide so that the tax and
insurance escrow account equals an amount sufficient to pay one year's
taxes and one year's insurance premiums at least thirty (30) days
prior to the due dates for the payment of taxes and insurance
premiums.
(d) LOAN YEAR: A "Loan Year" shall mean each twelve (12)-month period
beginning with the first full monthly installment of principal and/or
interest due under the terms of the Note and each anniversary thereof.
(e) CURE PERIODS: Borrower shall have no period in which to cure a
monetary default. A non-monetary default is any default which is not a
monetary default or an incurable default as defined in the Note.
Borrower shall have thirty (30) days after written notice thereof from
Nationwide to cure a non-monetary default, unless the non-monetary
default cannot be cured within said thirty (30) day period in which
event Borrower shall have a reasonable period of time to complete
cure, provided that action to cure such non-monetary default is
commenced within said thirty (30) day period and Borrower is, in
Nationwide's sole judgment, diligently pursuing a cure to completion.
4. PLANS, SPECIFICATIONS, AND SOILS REPORT: Applicant/Borrower shall submit to
Nationwide within thirty (30) days of Nationwide's acceptance of this
Application/Contract a complete set of final (or "as-built" if the
Improvements are completed as of the date of this Application/Contract)
plans and specifications for the Improvements constructed or to be
constructed on the Security Property (hereinafter "Plans and
Specifications"); each sheet of said plans is to be dated and signed by the
project architect and bear his seal. Nationwide shall also receive a copy
of the professional soils engineer's report on the site along with his
recommendations (hereinafter "Soils Reporting"). The Plans and
Specifications and the Soils Report are subject to the review and approval
of Nationwide.
5. INSPECTING ARCHITECT: Nationwide shall appoint an architect of its choice
(hereinafter "Inspecting Architect") to review, at Applicant/▇▇▇▇▇▇▇▇'s
expense, the Plans and Specifications, and the Soils Report. If the
Improvements are under construction, the Inspecting Architect shall make
monthly inspections of the Improvements being constructed on the Security
Property during the construction period and shall issue written reports to
Nationwide indicating that the Improvements are being constructed in
accordance with the final Plans and Specifications and in accordance with
the recommendations of the Soils Report. If the Improvements are complete
as of the date of this Application/Contract, the Inspecting Architect shall
inspect the Security Property and shall issue a written report stating that
the Improvements were, to the best of his/her knowledge, completed in
accordance with the Plans and Specifications submitted to Nationwide and in
accordance with the recommendations of the Soils Report. The Inspecting
Architect shall also comment on the structural and operational integrity of
the Improvements, specifically referencing the construction detail, the
HVAC system, and the roofing system. Any deficiencies disclosed by any of
the Inspecting Architect's reports must be corrected to Nationwide's
satisfaction prior to the Closing Date of the Mortgage Loan.
6. ENVIRONMENTAL AUDIT AND INDEMNIFICATION: Prior to the Closing Date of the
Mortgage Loan, an environmental engineer, satisfactory to Nationwide, shall
perform, at Applicant/Borrower's expense, an environmental audit of the
Security Property, which audit shall be subject to the review and approval
of Nationwide. The environmental audit shall be addressed to Nationwide and
shall include reports and investigations of any current or past use of the
Security Property, as well as of other properties contiguous to the
Security Property, and shall demonstrate that the Security Property
(including the ground water of the Security Property)
(a) is in compliance with all laws, rules, and regulations of any federal,
state, county, or local governmental authority relating to
environmental matters within the jurisdiction of such governmental
authority, and
(b) does not contain any chemical, material, or substance in excess of
legal limits exposure to which is prohibited, limited, or regulated by
any federal, state, county, or local governmental authority, or which
is known to pose a hazard to the health and safety of the occupants of
the Security Property, and
(c) does not contain asbestos in any form, and
(d) does not contain an underground storage tank of any kind, and
(e) has not been used, and is not currently being used for any activities
involving, directly or indirectly, the use, generation, treatment,
storage, or disposal of any hazardous or toxic chemical, material,
substance or waste.
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Nationwide reserves the right to retain, also at Applicant/▇▇▇▇▇▇▇▇'s expense, a
consultant to review any report prepared by the environmental engineer and/or to
conduct its own investigation of the Security Property. If any hazardous or
toxic chemical, material substance or waste is revealed in such audit,
Applicant/Borrower shall remove same or otherwise adequately dispose of same and
restore the Security Property to a condition acceptable to Nationwide, in its
sole discretion, prior to the Closing Date.
Further, the Borrower and the Responsible Individuals shall indemnify and hold
Nationwide harmless from and against any and all losses, liabilities, damages,
injuries, costs, expenses, and claims of any and every kind whatsoever, incurred
or suffered by, or asserted against Nationwide with respect to, or as a direct
or indirect result of, the presence on, under, or about the Security Property,
or the escape, seepage, leakage, spillage, discharge, emission, or release from,
the Security Property of any hazardous materials, including, without limitation,
any losses, liabilities, damages, injuries, costs, expenses, or claims asserted
or arising under any hazardous waste laws, regardless of whether or not caused
by, or within the control of Borrower. The indemnification shall survive the
repayment and satisfaction of the Mortgage Loan unless at such time Borrower
provides Nationwide an environmental report acceptable to Nationwide showing the
Security Property to be free of hazardous materials and not in violation of
hazardous waste laws; however, the Borrower shall not be liable under the
indemnity if the Security Property becomes contaminated subsequent to
Nationwide's acquisition of the Security Property by foreclosure or by
acceptance of a deed in lieu thereof, or subsequent to any transfer of ownership
which was approved or authorized by Nationwide. The burden of proof under this
subparagraph with regard to establishing the date upon which such chemical,
material or substance was placed or appeared in, on, or under the Security
Property shall be upon Borrower.
7. ACCESSIBILITY INSPECTION AND INDEMNIFICATION: The Inspecting Architect
shall also provide a written opinion as to whether the Improvements are in
compliance with all provisions governing accessibility for the disabled
under The Fair Housing Act of 1988, The Americans With Disabilities Act and
any amendments thereto or any other accessibility laws. Further, the
Borrower and the Responsible Individuals shall indemnify and hold
Nationwide harmless from and against any and all losses, liabilities,
damages, injuries, costs, expenses, and claims of any and every kind
whatsoever, incurred or suffered by, or asserted against Nationwide with
respect to, or as a direct or indirect result of, noncompliance with the
foregoing laws, as amended, or any other similar, present or future laws
applicable to the Security Property. The indemnification shall survive the
repayment and satisfaction of the Mortgage Loan; provided, however,
Borrower shall not be liable for compliance with any accessibility laws
that first become effective, or for any violation of any accessibility laws
resulting from alterations or improvements to the Security Property that
are performed, subsequent to Nationwide's actually acquiring title to the
Security Property pursuant to foreclosure or acceptance of deed in lieu
thereof, or subsequent to any transfer of ownership of the Security
Property that has the prior written approval of Nationwide; provided that
such transferee assumes in writing all obligations of Borrower with respect
to compliance with accessibility laws under the Deed of Trust/Mortgage and
Accessibility Indemnity Agreement.
8. COMMENCEMENT OF CONSTRUCTION: If the Improvements are to be constructed,
this Application/Contract may be cancelled at Nationwide's option and all
fees retained if construction of the Improvements has not commenced within
ninety (90) days of the date that this Application/Contract is accepted by
Nationwide.
9. LEASES: All existing leases, or any other leases hereinafter created, shall
be subject to the review and approval of Nationwide, shall be for a minimum
term of three (3) years (not applicable if Security Property is an
apartment project) and shall be assigned, in form and content acceptable to
Nationwide, as additional security for the Mortgage Loan. At Nationwide's
option, any lease may be made superior or subordinate to the Mortgage or
Deed of Trust.
As an accommodation to the Borrower, Nationwide will approve a standard
lease form. Notwithstanding the approval of a standard lease form,
Nationwide specifically reserves the right to approve each lease wherein
the tenant occupies more than ten (10) percent of the net leasable area of
the Improvements, or the lease term, excluding renewal options, exceeds
five (5) years; said review shall include a review of the prospective
tenant's current financial statements and the most recent Dun & ▇▇▇▇▇▇▇▇▇▇
credit report on said tenant, all to be provided through
Applicant/Borrower. Borrower may deal with smaller tenants (those taking
3,000 square feet of space or less) in the ordinary course of business
without Nationwide's consent.
10. TENANT FINISH AND CONSTRUCTION ESCROW ACCOUNT: There shall be an escrow
account established on the Closing Date in an amount equal to one hundred
twenty-five (125) percent of the total estimated cost of completing all
unleased, unoccupied, and unfinished leasable space in the Improvements and
the cost of completing any other construction items, including, but not
limited to, landscaping and paving. The Inspecting Architect shall estimate
the costs of completion in writing within ten days prior to the Closing
Date. The funds shall be placed in an interest-bearing escrow account, with
interest earned payable to the Borrower, and will be made available to the
Borrower as the construction is completed and the unfinished leasable space
is actually finished and occupied by tenants under leases approved by
Nationwide without default of either party. The space shall be deemed
"actually finished and occupied by tenants" when the tenant(s)" has(have)
provided Nationwide with estoppel certificate(s), acceptable to Nationwide
in its sole discretion, the Inspecting Architect has inspected the finished
space and provided Nationwide with a written report stating that the tenant
finish has been completed, the governmental entity having jurisdiction over
the Security Property has issued unconditional Certificates of Occupancy
for the subject space, and Nationwide has received a title update showing
no new liens of record. Any funds escrowed for tenant finish and other
construction work which are not disbursed within twelve (12) months of the
Closing Date shall be applied at par against the then outstanding principal
balance of the Mortgage Loan, and the monthly payment shall be reduced
accordingly. Nationwide, at its option, may unilaterally extend the
expiration date for the completion of the space and the completion of other
construction items and for the release of escrowed funds.
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11. MORTGAGE OR DEED OF TRUST COVENANTS: The Mortgage or Deed of Trust shall
contain those items customarily found in such documents including, but not
limited to, the following provisions:
(a) TRANSFER: The entire outstanding principal balance of the Mortgage
Loan, together with accrued unpaid interest and other sums required by
the loan documents, shall become immediately due and payable upon the
Borrower assigning, mortgaging, or otherwise conveying any interest in
the Security Property, or if there is a change in the controlling
interest of Borrower, without the prior written consent of Nationwide.
Notwithstanding the above, if Nationwide approves a transfer of the
Security Property or a change in the controlling interest in the
Borrower, Nationwide reserves the right to charge an assumption fee
and/or to change the monthly payment to reflect a change in the
Mortgage Loan's interest rate, an initiation of amortization or a
modification of the existing amortization schedule. Notwithstanding
the foregoing, there will be no change in the maturity date of the
Note.
If a transfer of the Security Property or a controlling interest in
Borrower is approved by Nationwide, Nationwide must receive, for its
review and approval, copies of all transfer and other related
documents, such transferee must assume in writing all obligations of
the Borrower under the loan documents, and Borrower must pay all costs
and expenses in connection with such transfer and assumption,
including, without limitation, all fees and expenses incurred by
Nationwide.
(b) INSURANCE: Borrower shall furnish insurance policies to Nationwide
evidencing the following coverages and amounts, properly assigned to
Nationwide by a standard mortgagee clause:
(i) Fire, extended coverage, and other hazards as requested from
time to time by Nationwide, covering all Improvements for their
full replacement cost, less excavating and foundation costs,
provided, however, in no case shall the amount of insurance be
less than the difference between the amount of the Mortgage Loan
and eighty (80) percent of appraised land value of the Security
Property.
(ii) Rent loss insurance, without a co-insurance provision, in an
amount equal to not less than twelve (12) months of scheduled
rental income from the Security Property; or, if applicable,
business interruption insurance in an amount sufficient to pay
debt service, operating expenses, taxes, and insurance for the
Security Property for a period of twelve (12) months.
(iii) Comprehensive public liability insurance in an adequate amount,
taking into consideration the property type being insured and
the corresponding liability exposure. The amount of liability
insurance shall be subject to the approval of Nationwide.
(iv) Flood insurance, if the Security Property lies within a Special
Flood Hazard Area as designated on the Department of Housing and
Urban Development's Maps, or another flood prone area. If the
Security Property is not in a Special Flood Hazard Area,
Nationwide must receive a certification from a registered land
surveyor or a licensed engineer to this effect.
(v) Any other insurance coverage deemed necessary by Nationwide.
(c) INSURANCE PROCEEDS: Borrower shall assign all insurance proceeds relating
to damage or destruction of the Security Property to Nationwide. Nationwide
shall release the insurance proceeds to the Borrower as restoration
progresses, if the loss or damage from fire or other casualty is in an
amount less than fifty (50) percent of the outstanding principal balance of
the Mortgage Loan, subject to the following conditions:
(i) Borrower is not in default under the terms, covenants, and
conditions of the loan documents or any other agreements between
Borrower and Nationwide.
(ii) The Improvements shall be at least eighty (80) percent leased after
restoration pursuant to leases approved in writing by Nationwide.
(iii) Nationwide approves in writing the plans and specifications for
restoration.
(iv) There are sufficient funds on deposit at all times with Nationwide
to complete the rebuilding, as certified by an architect approved by
Nationwide.
(v) Borrower provides suitable completion, payment and performance
bonds, and builder's all risk insurance in form and amount
acceptable to Nationwide.
(vi) The insurer does not assert any defense to payment under such
policies against the Borrower or any tenant of the Security
Property pursuant to the insurance policy covering the
Improvements of the Security Property.
(vii) Nationwide shall have the option of applying, at par, any surplus
insurance proceeds which remain after rebuilding to the reduction of
the outstanding principal balance of the Mortgage Loan.
(viii) Funds shall be disbursed not more often than once each month and in
not more than five (5) increments of not less than $50,000 each,
except for the last disbursement.
(ix) Prior to any disbursement, an inspecting engineer/architect of
Nationwide's choice, whose fees shall be paid by Borrower, shall
certify completion of work in place in accordance with approved
plans and specifications, and in accordance with all applicable
building codes, zoning ordinances, and all other local or federal
governmental regulations.
Page 10 of 19
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(x) Such other conditions as would customarily be required by a local
construction or are otherwise reasonable.
In the event of loss or damage by fire or other casualty in an amount
greater than fifty (50) percent of the outstanding principal balance of the
Mortgage Loan, Nationwide, at its sole option, may require the Borrower to
use any insurance proceeds to either immediately rebuild any portion or all
of the Improvements or Nationwide shall apply the insurance proceeds to the
outstanding principal balance of the Mortgage Loan. Any reduction of the
outstanding principal balance of the Mortgage Loan as a result of the
application of the casualty insurance proceeds shall be at par and the
monthly payment shall be reduced accordingly.
(d) ADDITIONAL INSURANCE REQUIREMENTS: All policies required of
Applicant/Borrower shall be written with companies which have a rating as
published in the current issue of Best's Key Rating Guide of at least
A:VIII, shall be in forms satisfactory to Nationwide, shall cite
Nationwide's interest as mortgagee in standard non-contributory mortgagee
clauses effective as of the Closing Date, shall be maintained throughout
the term of the Mortgage Loan without cost to Nationwide, shall be
deposited with Nationwide, and shall contain such provisions as Nationwide
deems necessary or desirable to protect its interest, including, without
limitation, a provision for thirty (30) days prior written notice to
Nationwide of the insurance company's intent to cancel the policy. Said
insurance requirements shall specifically be set forth in the Mortgage or
Deed of Trust. If a blanket policy is issued, a certified copy of said
policy shall be furnished together with an Evidence of Insurance (▇▇▇▇▇
Form 27) for property insurance and a Certificate of Insurance (▇▇▇▇▇ Form
25-S) for liability insurance indicating that Nationwide is the insured
under said policies with regard to the Security Property and that coverages
with respect thereto are in the required amounts.
(e) CONDEMNATION: Nationwide shall receive an assignment of all claims, awards,
proceeds, or rights of action in connection with any condemnation of or
eminent domain proceeding affecting the Security Property. Nationwide
reserves the right, at its sole option, to apply any condemnation awards to
the reduction of the outstanding principal balance of the Mortgage Loan at
par or to hold the awards in an escrow account to be used for the cost of
restoring the Security Property. Notwithstanding the above, if any part of
the Improvements shall be condemned by any governmental authority having
jurisdiction over the Security Property or if so much of the Security
Property shall be condemned by any governmental authority having
jurisdiction over the Security Property that the Security Property is in
violation of applicable parking, zoning, platting or other ordinances, or
fails to comply with the terms of the Major Tenant leases, in each case,
Nationwide shall be entitled to apply all condemnation proceeds to the
repayment of the outstanding principal balance of the Mortgage Loan, at
par, and Nationwide shall have the further right to call the Mortgage Loan
due and payable in full without the imposition of a prepayment premium.
(f) MANAGEMENT AND LEASING RESTRICTION: During the term of the Mortgage Loan,
Borrower, or its designee who shall be approved by Nationwide, shall be the
exclusive manager and leasing agent of the Security Property. Any
management or leasing agreement shall be subordinate to the Mortgage or
Deed of Trust and shall be subject to the review and approval of
Nationwide. If there is no formal management agreement, Borrower shall
provide Nationwide with a letter so stating and further stating the name of
the person or entity charged with the responsibility of managing the
Security Property.
(g) SECONDARY FINANCING: There shall be no secondary financing of the Security
Property.
(h) MAINTENANCE OF THE SECURITY PROPERTY: Borrower shall not commit, suffer, or
permit any waste or deterioration of the Security Property in any respect
nor alter the Improvements nor erect any additional improvements or make
additions to the existing Improvements on the Security Property without the
prior written consent of Nationwide. The foregoing restriction shall not
apply to erection or removal of non-load-bearing interior walls or
alterations required by the terms of tenant leases which have been approved
by Nationwide. Borrower shall cause the Security Property to comply at all
times with all applicable federal, state, and local laws related thereto.
Borrower shall not use, generate, treat, store, or dispose of any hazardous
chemical, material, substance, or waste on the Security Property, nor will
Borrower knowingly allow any tenant of the Security Property to use,
generate, treat, store, or dispose of any hazardous chemical, material,
substance, or waste on the Security Property. Nationwide shall have the
right to inspect the Security Property at any time during normal business
hours.
(i) ANNUAL STATEMENTS: Borrower shall furnish to Nationwide, within one hundred
twenty (120) days of the end of the Borrower's fiscal year, annual
statements (income statements and balance sheets) for the Borrower and the
Security Property. These statements shall be in form acceptable to
Nationwide and shall be prepared in accordance with generally accepted
accounting principles and shall include a rent roll certified as true and
correct by the Borrower and current annual sales figures for all Major
Tenants if required under their respective leases or otherwise available.
If the Mortgage Loan is in default at any time, for any reason, Nationwide
shall have the right to require that these financial statements be audited
and certified by a certified public accountant approved by Nationwide, the
cost of which shall be paid by the Borrower. In addition, Nationwide may,
upon prior notice, inspect and make copies of all books and records
relating to the Security Property during normal business hours. A charge of
$200 per month for administrative expenses shall be assessed for each
successive month that financial statements are not delivered to Nationwide
after the expiration of the one hundred twenty (120)-day period.
(j) Leases: The Borrower agrees to keep and perform all terms, conditions, and
covenants of all leases affecting the Security Property on its part to be
kept and performed.
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(k) EXCULPATION: The liability of Borrower with respect to the payment of
principal and interest under the Note shall be "non-recourse", and
Nationwide's source of satisfaction of said indebtedness and ▇▇▇▇▇▇▇▇'s
other obligations under the Note and under any of the other loan documents
shall be limited to the Security Property and Nationwide's receipt of the
rents, issues, and profits from the Security Property. Nationwide shall not
seek to procure payment out of other assets of the Borrower or any person
or entity comprising the Borrower, or to seek any judgment (except as
hereinafter provided) for any sums which are or may be payable under the
Note, Mortgage/Deed of Trust, or any of the other loan documents, as well
as any claim or judgment (except as hereinafter provided) for any
deficiency remaining after foreclosure of the Mortgage/Deed of Trust.
Notwithstanding the foregoing, nothing herein contained shall be deemed to
be a release or impairment of the indebtedness evidenced by the Note or the
security therefor intended by the other loan documents or be deemed to
preclude Nationwide from exercising its rights to foreclose the
Mortgage/Deed of Trust or to enforce any of its other rights or remedies
under the loan documents. It is expressly understood and agreed that the
aforementioned limitation on liability shall in no way affect or apply to
Borrower's or Responsible Individuals' continued liability for the
following items:
(i) fraud or misrepresentation made in connection with the Note or
any of the other loan documents governing, securing, or
pertaining to the payment thereof;
(ii) failure to pay taxes prior to delinquency or to pay assessments,
charges for labor or materials, or any other charges which may
create liens on any portion of the Security Property;
(iii) the misapplication of (a) proceeds of insurance covering any
portion of the Security Property, or (b) proceeds of the sale or
condemnation of any portion of the Security Property, or (c)
rentals received by or on behalf of the Borrower subsequent to
the date on which Nationwide makes written demand therefor
pursuant to any instrument governing, securing, or pertaining to
the payment of the Note;
(iv) causing or permitting waste to occur in, on, or about the
Security Property and failure to maintain the Security Property,
excepting ordinary wear and tear;
(v) the return to Nationwide of all unearned advance rentals and
security deposits paid by tenants of the Security Property and
not refunded to or forfeited by such tenants;
(vi) the return to Nationwide of any and all fees paid to Borrower by
tenants of the Security Property which fees permit tenants to
terminate their leases;
(vii) loss by fire or casualty to the extent not compensated by
insurance proceeds collected by Nationwide;
(viii) the return of, or reimbursement for all Personal Property owned
by the Borrower taken from the Security Property by or on behalf
of the Borrower, out of the ordinary course of business, and not
replaced by items of equal or greater value than the original
value of the Personal Property so removed;
(ix) all court costs and reasonable attorneys' fees actually incurred
which are provided for in the Note or in any other loan documents
governing, securing, or pertaining to the payment of the Note;
(x) (a) removal of any chemical, material, or substance in excess of
legal limits to which exposure is prohibited, limited, or
regulated by any federal, state, county, or local authority which
may or could pose a hazard to the health and safety of the
occupants of the Security Property, regardless of the source of
origination, (b) the restoration of the Security Property to
comply with all governmental regulations pertaining to hazardous
waste found in, on, or under the Security Property, regardless of
the source of origination, and (c) any indemnity or other
agreement to hold Nationwide harmless from and against any and
all losses, liabilities, damages, injuries, costs, and expenses
of any and every kind arising as a result of the existence and/or
removal of hazardous materials, toxic substances, or hazardous
waste and from the violation of hazardous waste laws. The
Borrower shall not be liable hereunder if the Security Property
became contaminated subsequent to Nationwide's acquisition of the
Security Property by foreclosure or acceptance of a deed in lieu
thereof or subsequent to any transfer of ownership of the
Security Property which was approved or authorized by Nationwide;
provided that such transferee assumes in writing all obligations
of Borrower with respect to compliance with environmental laws
under the Deed of Trust/Mortgage and Environmental Indemnity.
Liability under this section shall extend beyond repayment of the
Note and compliance with the terms of the Mortgage or Deed of
Trust unless at such time Borrower provides Nationwide an
environmental assessment report acceptable to Nationwide showing
the Security Property to be free of hazardous materials and not
in violation of hazardous waste laws. The burden of proof under
this subparagraph with regard to establishing the date upon which
such chemical, material, or substance was placed or appeared in,
on, or under the Security Property shall be upon Borrower;
(xi) (a) any and all costs incurred in order to cause the Improvements
to comply with the accessibility provisions of The Fair Housing
Act of 1988, The Americans With Disabilities Act, and any other
accessibility laws, and (b) any indemnity or other agreement to
hold Nationwide harmless from and against any and all losses,
liabilities, damages, injuries, costs, or expenses of any kind
arising as a result of non-compliance with any accessibility
laws; provided, however, Borrower shall not be liable for
compliance with any accessibility laws that first become
effective, or for any violation of any accessibility laws
resulting from alterations or improvements to the Security
Property that are performed, subsequent to Nationwide's actually
taking possession of the Security Property pursuant to
foreclosure of the Mortgage/Deed of Trust or acceptance of deed
in lieu thereof, or subsequent to any transfer of ownership of
the Security Property that has the prior written approval of
Nationwide; provided that such transferee assumes in writing all
obligations of Borrower with respect to compliance with
accessibility laws under the Deed of Trust/Mortgage and
Accessibility Indemnity Agreement.
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(xii) Obligations under any Letter(s) of Credit held by Nationwide as
outlined in the LETTER OF CREDIT section of this
Application/Contract;
The Responsible Individuals will be required to execute a separate
indemnity agreement wherein they agree to personally, jointly, severally,
and unconditionally indemnify Nationwide for all sums due Nationwide under
items (i) through (xii) above. Moreover, the Borrower and said Responsible
Individuals shall become personally liable, jointly and severally, for the
entire amount of the Mortgage Loan (including all principal, interest, and
other charges) in the that the Borrower (1) violates the covenant governing
the placing of subordinate financing on the Security Property or (2)
violates the covenant restricting transfers of interest in the Security
Property or transfers of ownership interests in the Borrower.
The obligations of the Borrower in subparagraphs (i) through (xii) above,
except as provided herein, shall survive the repayment and satisfaction of
the Mortgage Loan.
So long as a guaranty with respect to repayment of principal and interest
is in force and effect, the "non-recourse" nature of the Mortgage Loan as
to repayment of principal and interest as expressed above shall be
suspended and of no force or effect.
12. FINANCIAL RESPONSIBILITY: Nationwide may terminate this
Application/Contract and retain the Commitment Fee and pursue other
remedies reserved herein if at any time prior to the Closing Date, any of
the following events occur:
(a) Borrower, any Guarantor, or any of the Responsible Individuals has
made a general assignment for the benefit of creditors, or there is
filed by or against the Borrower, any Guarantor or any of the
Responsible Individuals, a petition in bankruptcy or for the
appointment of a receiver, or there commences under any bankruptcy or
insolvency law, proceedings for the Borrower's, Guarantor's, or any of
the Responsible Individual's relief, or for the compromise, extension,
arrangement, or adjustment of the Responsible Individual's
obligations, or there is an outstanding money judgment against the
Borrower, Guarantor, or any of the Responsible Individuals.
(b) There has been more than a ten (10) percent decline in Borrower's,
Guarantor's, or any of the Responsible Individual's tangible net worth
from that represented to Nationwide in the financial statements
provided to Nationwide at the time this Application/Contract was
submitted to Nationwide. Current financial statements shall be
presented to Nationwide no later than ten (10) days prior to the
Closing Date.
(c) There is filed by or against the Borrower, any general partner of
▇▇▇▇▇▇▇▇, any Guarantor, or any of the Responsible Individuals pending
litigation which, in Nationwide's sole discretion, would have a
materially adverse impact on the financial condition of any of the
aforementioned parties or their ability to repay the loan. Any such
litigation must be disclosed in writing to Nationwide which disclosure
must include the nature and status of the litigation.
(d) There has been a material adverse change in the financial condition
and/or operating results of any of the Major Tenants. Current
financial statements for the latest period available showing balance
sheets and operating results shall be presented to Nationwide no later
than ten (10) days prior to the Closing Date.
(e) Any of the Major Tenants makes a general assignment for the benefit of
creditors, or there is filed by or against any such Major Tenants a
petition in bankruptcy or for the appointment of a receiver, or there
commences under any bankruptcy or insolvency law proceedings for the
Major ▇▇▇▇▇▇'s relief, or for the compromise, extension, arrangement,
rearrangement, reorganization, or adjustment of any of the Major
Tenant's obligations.
13. CLOSING:
(a) At least thirty (30) days prior written notice shall be given by
Applicant/Borrower to Nationwide of Applicant's/▇▇▇▇▇▇▇▇'s readiness
to close the Mortgage Loan. Nationwide and Nationwide's counsel shall
have the full thirty (30)-day period to review and/or prepare all
legal documents and all other documents required under the terms of
this Application/Contract. The burden of assembling and presenting all
materials and of curing all matters determined to be objections or
title defects is the responsibility of the Applicant/Borrower. Federal
Reserve Funds for the closing will be wired to the entity charged with
closing the Mortgage Loan and disbursing funds on the Closing Date,
provided that Nationwide receives at least twenty-four (24) hours
notice thereof. The Closing Date shall not be on a Friday or the last
business day of the month unless the Borrower agrees in writing to
assume responsibility for the payment of interest on the Mortgage Loan
in the event of a delay in the receipt of funds caused by a delay
within the Federal Reserve System or the receiving bank.
Interest shall accrue from the date of wiring.
The following shall be furnished to Nationwide prior to the Closing
Date and any subsequent disbursements, if any:
(i) Photographs of the completed Improvements.
(ii) Certificates of occupancy and all necessary licenses from
appropriate governmental authorities and evidence satisfactory to
Nationwide that all utilities necessary for the operation of the
Security Property have been installed and the installation fees
have been paid.
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(iii) Legal opinions dated as of the Closing Date, in form and substance
satisfactory to Nationwide, from ▇▇▇▇▇▇▇▇'s counsel who shall be licensed
to practice law in the state in which the Security Property is located,
and to the extent Nationwide requests, from Nationwide's outside counsel,
which Nationwide deems necessary or appropriate in a project of this
kind, including, but not limited to, the following: that all documents
evidencing and securing the Mortgage Loan contemplated hereby have been
duly authorized, executed, and delivered by the Borrower and are legal,
valid, binding obligations of the Borrower enforceable in accordance with
their respective terms; that the partnership/corporation/trust (as the
case may be) and all entities comprising the Borrower are duly organized,
validly existing, and in good standing, pursuant to all applicable laws
and are authorized to do business in the state in which the Security
Property is located; that the partnership/corporation/trust (as the case
may be) has the authority to borrow money and to own the Security
Property and to carry on its operations as conducted and as proposed to
be conducted; that the Mortgage Loan does not violate the usury laws of
the state where the Security Property is located; that there is no
action, suit, or legal proceeding pending, or to the knowledge of such
counsel, after due inquiry of Borrower, threatened against or affecting
the partnership/corporation/trust, its partners, officers, or trustees
(as the case may be) any Guarantor or any Responsible Individual or the
Security Property before or by any court, administrative agency or other
governmental authority or any arbitrator; that neither the execution nor
the delivery of this Application/Contract or the documents evidencing and
securing the Mortgage Loan, nor compliance with the provisions of the
loan documents will conflict with or result in a breach of any of the
provisions of, or constitute a default under the partnership
agreement/corporate by-laws, articles of incorporation, and
regulations/trust indenture (as the case may be) or of any applicable
law, judgment, order, writ, injunction, decree, rule, or regulation of
any court, administrative agency, or other governmental authority, or any
determination or award of any arbitrator, or of any agreement or other
instrument to which the Borrower is a party or by which the Borrower is
bound; that no reports have come to the attention of such counsel
indicating that the Security Property is in violation of any
environmental laws, rules or regulations enacted by federal, state, or
local authorities having jurisdiction over the Security Property; and as
to such other matters incidental to the transaction herein contemplated
as Nationwide may reasonably request. If the borrowing entity has been
formed in a state other than the state in which the Security Property is
located, Nationwide shall require a legal opinion from an attorney
licensed to practice law in the state of formation opining to the
Borrower's due formation and good standing within the state of formation.
(iv) Copy of all title company closing statements.
(v) AIA Certificate of Substantial Completion executed by the Borrower, the
project general contractor, and the project architect indicating that the
Improvements have been completed in accordance with the final plans and
specifications, including any grading, seeding, landscaping, paving, and
all other on-site and off-site improvements impacting the operation of
the Security Property.
(vi) Estoppel certificates executed by each tenant occupying any portion of
the Security Property in the form currently required by Nationwide (not
applicable if the Security Property is an apartment project).
(vii) A rent roll that is certified as true and complete by the Borrower and
showing all tenants in occupancy, the address or suite number (or
apartment number for apartments) taken by each tenant, the square footage
being occupied by each tenant (except on apartment projects), the date of
lease expiration for each tenant, and the minimum annual rent (or monthly
rent for apartments) paid by each tenant.
(viii) Borrower's certificate executed by the Borrower on the Closing Date
stating that no part of the Security Property has been damaged and not
repaired to Nationwide's satisfaction, nor taken in condemnation or other
similar proceeding, nor that such proceeding is pending, or to the best
of the Borrower's knowledge, threatened; that direct connections have
been made to abutting public water, sewer, gas, electrical, and telephone
facilities and that the Improvements are ready for occupancy; that the
original building permit and an unconditional certificate of occupancy or
other unconditional certificate of appropriate governmental authorities
evidencing compliance with all zoning, building, and other applicable
regulations, have been issued. The Borrower's certificate shall also
state that there are no lawsuits pending, or, to the best of the
Borrower's knowledge, threatened against the Borrower, the Guarantors,
any of the Responsible Individuals or the Security Property, nor are
there any judgments outstanding against the Borrower, the Guarantors, or
any of the Responsible Individuals. ▇▇▇▇▇▇▇▇ shall also represent and
warrant to Nationwide that Borrower is not engaged, and has not at any
time since ▇▇▇▇▇▇▇▇'s acquisition of the Security Property, engaged in a
"pattern of racketeering activity" within the meaning of 18 U.S.C. ss.
1961, as amended, or within the meaning of any similar local, state, or
federal law, nor has Borrower committed any other act or engaged in any
other pattern of actions, the potential results of which might include
forfeiture of Borrower's interest in the Security Property.
(ix) Mortgagee's title insurance policy with mechanic's lien protection and
without survey exception issued by a title company acceptable to
Nationwide. Said policy shall also include ALTA Form 3.1 zoning and ALTA
Form 9 comprehensive endorsements, or their equivalents if permissible by
state law, and such other endorsements as required by Nationwide or
Nationwide's counsel. If a 3.1 zoning endorsement or similar endorsement
is not available under state law, Nationwide shall be furnished with
other documentary evidence satisfactory to Nationwide that the Security
Property complies with all applicable zoning requirements. Furthermore,
Nationwide shall require evidence satisfactory to Nationwide that the
Security Property currently complies and, upon foreclosure, will comply
with all applicable subdivision ordinances and plat acts.
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(x) A current certified as-built survey of the property disclosing all
improvements, encroachments, easements and rights-of-way, abutting
streets, and the number of parking spaces (including those reserved for
the handicapped). The survey must meet the minimum standard detail
requirements as adopted in 1992 by The American Land Title Association
and American Congress On Surveying & Mapping (and any subsequent
requirements), must show a state of facts acceptable to Nationwide and
the title company issuing the required title policy, be prepared and
certified by a duly registered land surveyor or licensed engineer, and be
revised and recertified upon completion of construction least two (2)
weeks prior to the Closing Date showing the Improvements as constructed
on the site. The legal description of the Security Property shall be
shown on the face of the survey and a flood hazard certification attached
if applicable. The certification must also state whether abutting streets
and other means of ingress and egress have been publicly dedicated and
accepted for maintenance by the local governmental authority having
jurisdiction over the Security Property. If abutting streets or other
means of ingress and egress are privately owned, the certification must
specifically state this fact and an agreement for maintenance and repair
must be provided to Nationwide for its review and approval.
(xi) Certification by Borrower of the total cost of construction of the
Security Property. If said costs are less than the loan amount, the loan
amount shall be reduced to an amount no greater than this total certified
cost. (Applicable only if Improvements have been completed within the
last thirty-six (36) months.) For purposes of this paragraph, the date of
completion of construction of the Security Property shall be May 1998.
(b) Whether or not a closing occurs, Applicant/▇▇▇▇▇▇▇▇ agrees to pay or
reimburse Nationwide for all fees and expenses incidental to the Mortgage
Loan herein contemplated, including, but not limited to, legal fees,
Commitment Fee, Inspecting Architect fee, survey fee, Site Inspection
Fee, title fee, environmental engineer and/or consultant fee, and closing
costs.
(c) The Mortgage Loan shall also be subject to all legal requirements
Nationwide's counsel may reasonably assert in order to assure that
Nationwide's lien constitutes a valid first priority encumbrance against
the Security Property. Further, the Mortgage Loan shall be subject to
evidence satisfactory to Nationwide and Nationwide's counsel, in their
sole discretion, that the Security Property complies in all respect with
all federal, state, county, or municipal laws, ordinances, rules and
regulations applicable thereto. In addition, the Mortgage Loan is further
subject to the Borrower providing Nationwide or Nationwide's counsel with
such additional documentation as Nationwide's counsel may reasonably
require or which is customarily required by institutional mortgage
lenders.
14. PARTNERSHIP AGREEMENT/TRUST INDENTURE/ARTICLES OF INCORPORATION: The
partnership agreement/trust indenture/articles of incorporation (as the
case may be) establishing and governing the operation of Borrower and the
same for all underlying entities comprising Borrower and for the
Guarantors and/or Responsible Individuals (if Guarantors and/or
Responsible Individuals are not individuals) shall be subject to review
and approval by Nationwide.
15. ADVERTISING: Applicant/Borrower hereby authorizes Nationwide to
publicize, without divulging the specific terms thereof, in advertising,
press releases, or other material the fact that Nationwide has provided
the permanent financing for the Security Property. Subject to local code
requirements, Nationwide is authorized to display a sign on the Security
Property during the construction period (only applicable if Improvements
are to be built) referring to Nationwide as the provider of permanent
financing.
16. LIMITATION OF INTEREST: In no event shall Nationwide be entitled to
receive, nor shall Borrower be obligated to pay, or contract to pay any
amount as interest or as a charge for the use of money which exceeds the
maximum rate of interest that may be charged or contracted for under the
laws of the state in which the Security Property is located. If
Nationwide receives or contracts to receive an amount which exceeds such
maximum rate, said amount shall be applied to reduce the outstanding
principal balance of the Mortgage Loan, or otherwise credited to the
Borrower and not computed or received by Nationwide as interest. This
provision shall prevail in any agreement between Nationwide and
Applicant/Borrower.
17. SEPARATE AGREEMENT: A separate agreement executed by the appropriate
parties, providing for the maintenance and operation of all common access
ways, parking facilities, and other common areas or facilities, including
a party wall agreement between parties in interest in contiguous
buildings, shall be executed and placed of record prior to the recording
of the loan documents. Any such agreement shall be subject to
Nationwide's prior review and approval.
If there are outparcels that are not part of the Security Property or
that may be released from the Security Property after the Closing Date,
said outparcels shall be legally subdivided from the balance of the
Security Property and the subdivision map shall be in appropriate form
for recording with the county clerk's office. This replat shall comply
with all applicable requirements, and said replat shall be executed and
acknowledged by the appropriate governmental entities. Covenants
governing the outparcel(s) shall include cross easements for ingress,
egress, and parking, and restrictions limiting the height and square
footage of any improvements constructed or to be constructed on the
outparcel(s).
Said covenants shall (i) comply with all provisions in the leases for
space in the Security Property; (ii) be subject to Nationwide's prior
written approval; (iii) comply with all zoning ordinances of record; and
(iv) be filed of record.
18. SURVIVAL OF TERMS: All the terms and conditions of this
Application/Contract not expressly set forth in the loan documents or
other instruments executed and delivered by the Borrower with respect to
the Mortgage Loan shall survive the closing of the Mortgage Loan and
shall remain in full force and effect. If there is a conflict between the
terms of this Application/Contract and the loan documents, the loan
documents shall govern.
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Page 16 of 19
17
EXHIBIT "A"
The funding of the Mortgage Loan is further conditioned upon the following:
a. The following leases (which are subject to the review and approval by
Nationwide) are to be in full force and effect as of the Closing Date of
the Mortgage Loan and the tenant(s) shall be in occupancy, open for
business, and paying rent in accordance with the terms of their lease,
without default of either party:
DATE OF AREA TERM MINIMUM
TENANT LEASE (SO. FT.) (YRS.) ANNUAL RENT
------ ----- --------- ------ -----------
AS A CONDITION OF CLOSING, THE SECURITY PROPERTY SHALL BE AT LEAST 50% OCCUPIED
(90 UNITS) AT AN AVERAGE LEASE RENT OF NOT LESS THAN $0.65 PER SQUARE FOOT.
b. Execution of a guarantee (hereinafter called "Guarantees") by the
Borrower and Guarantors whereby the Mortgage Loan as to both payment and
performance is unconditionally, jointly, and severally guaranteed for the
full amount of the Mortgage Loan. This Guarantee shall be in full force
and effect on the Closing Date. The Guarantee shall be released when the
Net Operating Income generated by the Security Property is at least equal
to 1.25 times the annual debt service payments due under the terms of the
loan documents ("Guarantee Coverage Tests") for a period of at least
three consecutive months. For purposes of this paragraph, "Net Operating
Income" shall mean the annualized rents and expense reimbursements to be
received from tenants pursuant to leases approved by Nationwide where the
tenants are paying rent (i.e., any free rent periods must have expired),
are in occupancy and open for business, minus Operating Expenses, all of
which are to be calculated as of the time of the requested release of the
Guarantee. Operating Expenses for purposes hereof shall be the annualized
expenses of the Security Property, including, but not limited to, a
management fee equal to 4 percent of the annualized rental income and
also including other operating expenses of $3,259 per unit; provided,
however, that annualized Operating Expenses for purposes hereof shall not
be less than $659,227. Property tax expenses shall be calculated assuming
the completed Improvements are fully assessed and using the most recent
tax rate available (whether certified or not).
c. Borrower shall deliver to Nationwide a Letter of Credit with an
expiration date of no earlier than 12 months after the Closing Date in
form and substance satisfactory to Nationwide in an amount equal to 2
times the annualized deficit that exists at closing between the Net
Operating Income being generated by the Security Property and 1.10 times
the annual debt service payments due under the terms of the loan
documents. For purposes of this paragraph, "Net Operating Income" shall
mean the annualized rents and expense reimbursements to be received from
tenants of the Security Property pursuant to leases approved by
Nationwide where the tenants are paying rent (i.e., any free rent periods
must have expired), are in occupancy, and open for business, minus
Operating Expenses, all of which are to be calculated as of the Closing
Date. Operating Expenses for purposes hereof shall be the annualized
expenses of the Security Property, including, but not limited to, a
management fee equal to 4 percent of the annualized rental income and
other operating expenses of $3,259 per UNIT; provided, however, that
annualized Operating Expenses for purposes hereof shall not be less than
$659,227. Property tax expenses shall be calculated assuming the
completed Improvements are fully assessed and using the most recent tax
rate available (whether certified or not). This Letter of Credit shall be
released by Nationwide when Net Operating Income received is at least
1.10 times ("Shortfall Coverage Tests") as great as the annual debt
service on the Mortgage Loan for a period of three consecutive months. If
the Shortfall Coverage Test is not satisfied within 9 months of the
Closing Date or, if at any time during the existence of the Letter of
Credit, there is a default by the Borrower under the terms of the loan
documents, Nationwide may redeem the Letter of Credit and apply the cash
proceeds therefrom to the reduction of the outstanding principal balance
of the Mortgage Loan at par, or to the payment of any other amounts owed
by Borrower to Nationwide under the terms of the loan documents. In the
event Nationwide is unable to collect the full amount of said Letter of
Credit for any reason, the Borrower, any Guarantors, and the Responsible
Individuals shall remain unconditionally liable for the face amount of
said Letter of Credit.
d. To determine whether ▇▇▇▇▇▇▇▇ qualifies for a release of the Guarantee
and/or Letter of Credit, Borrower shall deliver to Nationwide such
information as Nationwide may reasonably request including, without
limitation (i) a current rent roll certified to be true and correct by
Borrower, (ii) a true and complete copy of all fully executed leases
entered into which are being used to satisfy the criteria for release,
(iii) unconditional certificates of occupancy for the completed tenant
spaces, (iv) an unqualified estoppel certificate on Nationwide's standard
form (or such other form as may be acceptable to Nationwide) from each
tenant whose lease is being used to satisfy the criteria for release, and
(v) actual operating statements for the Security Property which will
identify all operating expenses associated with the Security Property.
(Estoppel certificates are not necessary for apartment projects.) Rental
income from any Major Tenant shall not be included in these calculations
if such Major ▇▇▇▇▇▇ makes a general assignment for the benefit of
creditors, or there is filed by or against any such Major Tenant a
petition in bankruptcy or for the appointment of a receiver, or there
commences under any bankruptcy or insolvency law proceedings for the
Major ▇▇▇▇▇▇'s relief, or for the compromise, extension, arrangement,
rearrangement, reorganization, or adjustment of any of the Major ▇▇▇▇▇▇'s
obligations.
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Page 18 of 19
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EXHIBIT "B"
Below are the only modifications made to the Application/Contract. If there are
no modifications, so state.
SEE ATTACHED EXHIBIT "B"
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EXHIBIT "B"
APPLICATION/CONTRACT BY AND BETWEEN
NATIONWIDE LIFE INSURANCE COMPANY AND
▇▇▇▇▇▇▇ PROPERTIES RESIDENTIAL, L.P.
Below are the only modifications made to the Application/Contract on the ▇▇▇▇▇▇
▇▇▇▇▇ Apartments.
1. In Part II, Paragraph 3(e), add the following at the end of the
paragraph: "For a monetary default, Nationwide will give notice and a
five-day right-to-cure (defined as a "Monetary Cure Period). Such
Monetary Cure Period shall be limited to one per loan year for the term
of the loan. It is understood and agreed a monetary default does not
waive Nationwide's right to the late payment charge described in Part II,
Paragraph 3(b)."
2. In Part II, Paragraph 3(c), add the following: "Notwithstanding the
foregoing, Nationwide will waive the above requirements by separate
letter so long as title to the Security Property remains with Borrower or
with an affiliate or subsidiary of Borrower, there is no default under
the Mortgage/Deed of Trust, the Standard Lease form has not changed, and
paid tax receipts and evidence of payment of insurance premiums, prior to
their applicable due dates, are received by Nationwide in a timely
manner."
3. In Part II, Paragraph 5, delete the last sentence and replace with the
following sentence, "In the event Nationwide does not approve Inspecting
Architect's report, Borrower may terminate this Application/Contract and
the Commitment Fee less Nationwide's out of pocket expenses shall be
refunded to the Borrower."
4. In Part II, Paragraph 9, insert the following after the words
"hereinafter created" in the first line: "and not on the standard lease
form approved by Nationwide."
5. In Part II, Paragraph 10 should be deleted in its entirety.
6. In Part II, Paragraph 11(a), add the following to the end of the first
paragraph: "Notwithstanding the foregoing, Borrower shall have the
one-time right to transfer the Security Property to another party,
provided the transferee is acceptable to Nationwide, in its sole
discretion, without a change in the loan terms, so long as Borrower pays
Nationwide a cash assumption fee equal to 1% of the outstanding principal
balance of the loan. This one-time right of transfer shall apply only to
Borrower and not to any subsequent transferee. It is understood and
agreed that upon such transfer, Borrower shall be relieved from all
liability under the loan documents for events occurring subsequent to the
date of the approved transfer.
"It is also understood and agreed that Nationwide will allow the transfer
of the Security Property without Nationwide's consent and without change
in the loan terms or payment of a transfer fee provided (i) the transfer
is made to the general partner of the Borrower; (ii) there is no change
in the ownership interests of the general partner of the Borrower other
than in the ordinary course of business; and (iii) Nationwide shall be
given prompt notice and documentation of such transfer, and Borrower
shall pay all of Nationwide's out of pocket expenses associated with such
transfer."
7. In Part II, Paragraph 11(b), Subsection (v), insert the word "reasonably"
before the word "deemed."
8. In Part II, Paragraph 1l(c), Subparagraph (ii) should be deleted.
9. In Part II, Paragraph 1l(d), in the fourth line, before the words "shall
be deposited with Nationwide" insert "a certified copy of which."
10. In Part II, Paragraph 11(f), insert the following: "Nationwide
acknowledges that ▇▇▇▇▇▇▇ Properties Residential, L.P. is an approved
manager and leasing agent subject to Nationwide's review and approval of
the management and leasing agreements."
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EXHIBIT "B"
CONTINUED
11. In Part II, Paragraph 13(ix), insert the following at the end of the
paragraph: "Notwithstanding the foregoing, Nationwide will waive the
aforementioned zoning endorsement provided it receives satisfactory
evidence and assurances regarding zoning compliance from the local
municipality."
12. In Exhibit "A", after Paragraph (d), insert the following: "Nationwide
acknowledges that Paragraphs (b), (c), and (d) in this Exhibit shall be
applicable in the event that the debt coverage ratio of the Security
Property on the Closing Date is less than 1.25, and if on the Closing
Date the debt coverage ratio is 1.25 or greater, Paragraphs (b), (c), and
(d) shall be of no force or effect."
13. In Part II, Paragraph 11 (i), insert the following: "Nationwide
acknowledges that the Borrower is ▇▇▇▇▇▇▇ Properties Residential, L.P.
which is the entity through which the Company, ▇▇▇▇▇▇▇ Realty Investors,
Inc. conducts business and owns all of its real estate assets. As the
sole general partner of ▇▇▇▇▇▇▇ Properties Residential, L.P., the Company
controls the Borrower. Therefore, the audited financial statements to be
furnished to Nationwide are those of the Company, ▇▇▇▇▇▇▇ Realty
Investors, Inc. It is understood that the Borrower will furnish the
Security Property's operating statements to Nationwide within 120 days of
each calendar year end."
14. In Part I, Paragraph 15, second paragraph, second line, after the words
"Security Property," insert the following: "including without
limitations, all title and survey matters relating to the Security
Property."
15. In Part II, Paragraph 4, in the first line, "thirty (30) days" is changed
to "ninety (90) days."
16. Part I, Paragraph 9(b): Insert at the end of the paragraph the following:
"Notwithstanding the foregoing, Borrower may extend the expiration date
for no more than two consecutive 30-day periods, provided however, that
in any event, the Closing Date of the Application/Contract shall not be
later than July 31, 1998. As a condition to each 30-day extension, the
Borrower will pay to Nationwide a non-refundable extension fee in an
amount equal to the following: The loan amount times the difference
between the current Application/Contract interest rate and the then
current corresponding 30-day U.S. Treasury Bill Rate as published in the
Wall Street Journal on the fifth business day preceding the Closing Date
for the applicable extension divided by 12. For example, if the 30-day
U.S. Treasury Bill Rate is 5.30%, then the non-refundable extension fee
for a 30-day period is calculated as follows: ($8,400,000 times (7.15%
less 5.30%) divided by 12 = $12,950). Borrower must give Nationwide
written notice of its intention to exercise each extension option at
least seven business days prior to expiration of the Closing Date or
extended Closing Date."
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