8) How much is the lenders Underwriting Fee?
9) What level of recourse (also called personal guarantee) is required by the lender if any?
10) How much equity is the borrower expected to invest?
June 11, 2013 Mr. LLC OH Reference: (the "Property Dear Mr. Please be advised that Capital Partners LLC ("* 3"), in its capacity as originating and processing agent, has obtained preliminary terms from a capital source (the "Lender") for your loan request as captioned herein. This Term Sheet is contingent upon final approval and does not constitute a commitment to lend. Lender: or any of its correspondents, affiliates, successors or assigns, or any other lending entity funding the transaction Applicant/Guarantor: Mr. Investments, Ltd. LLC Any other member with 20% or greater ownership. Borrower: To-be-approved special-purpose entity Recourse: This loan shall be full recourse to Borrower and Guarantors. Subject Property: A 508-unit aparment community known as address of OH Apartments having an Collateral: The Loan will be secured by (a) a first priority mortgage lien on the Property; (b) an assignment of leases and rents; (c) a pledge of membership interests in Borrower, and (d) a first security interest in all furnishing, fixtures and equipment located within the Property that is owned by the Borrower. Loan Amount: $5,300,000, limited to 60.00% of total project costs Estimated Sources and Use of Proceeds: $5,300,000 60.00% Purchase Price $5,800,000 65.70% Proposed Loan Borrower Equity $3,531, 925 40.00% Interest Reserve $250,000 2.80% $171,925 $2,500,000 1.90% 28.30% Lender Fee Capital Improvements Est. Closing Costs $8,821,925 100.00% Total Uses Total Sources $100,000 1.10% $8,821,925 100.00% Interest Rate: 9.00% fixed for the term of the Loan. The Loan Amount shall be distributed pursuant to a construction draw schedule which will be made part of the Loan Documents and interest shall only be charged on funded capital (including funded reserves). Amortization: Interest-only Loan Term: 36-months Extension: Two six (6) month extension options are available. Provided there shall be no existing default, the extension will be granted upon: (a) Borrower's written request no less than thirty (30) days prior to the maturity of the Loan, and (b) The payment to Lender of an extension fee equal to 2.00% of the outstanding balance of the Loan. Loan Fee: 3.25% payable at closing Exit Fee: WAIVED Brokers: 1.00% payable to Borrower hereby agrees to indemnify and hold harmless Lender from and against any claim by Broker or by any other broker, finder, consultant or like agent or any person or entity for commissions or other compensation for bringing this transaction where such claim is based in whole or in part on dealings with Borrower or any affiliate thereof, and from all expenses of Lender in resisting such claim, including, without limitation, reasonable attorneys' fees and disbursements. Prepayment: Prepayment of the Loan shall be permitted at any time upon thirty (30) days notice, provided that on or prior to such prepayment the Lender shall have received, a minimum of twenty four (24) months of Interest. Lender Transfers: Lender shall have the right to freely transfer or participate the Loan, to enter into one or more secondary market transactions with respect to the Loan and to structure and restructure all of any part of the Loan as multiple tranches. Other Debt or Encumbrances: Neither the Borrower nor Key Principals shall be permitted to pledge, borrow against, or otherwise encumber the Property without the prior written consent of Lender, Major Decisions: All major decisions involving the Property, including budgets, improvements and re- zoning shall be subject to review and approval by Lender. Prior to closing, Lender shall review all zoning applications and timelines and approve all capital budgets for the Property as prepared by Borrower, if applicable. Borrower Transfers: No transfer of any interest in the Borrower is permitted except in the case of a sale of the Property in which the Loan is paid in full. Third Party Reports: Appraisal, engineering, environmental and property condition reports are required as determined by Lender. These reports must be ordered by Lender and will be the property of Lender as appropriate. Such Third Party reports shall be conducted by independent persons who are not related to Lender, its affiliates and its officers. Copies may be forwarded to Applicant only after the loan has closed or if the loan is denied. Environmental Indemnity: Borrower, its members, and Principals shall execute an Environmental Indemnity Agreement in form and substance acceptable to Lender. Legal: As a condition to the closing, Borrower's counsel shall render all customary legal opinions regarding Borrower and Principals, including but not limited to due formation, authorization, execution, non-contravention, choice of Connecticut law, enforceability of the loan transaction under Connecticut law, as applicable, and usury, Title Insurance: Lender must receive a copy of Borrower's/Owner's title insurance policy for the Property issued currently by a title insurance company satisfactory to Lender in all respects. The liens created by the pledge and the priority thereof shall be insured in favor of Lender and its successors and/or assigns, which insurance shall be issued and underwritten by an insurance carrier designated by Lender. Lockbox Agreement: Springing lockbox to be established with further details to be outlined in loan documents. Insurance: Borrower is required to provide a property and casualty insurance policy acceptable to Lender and naming Lender as first loss payee and underwritten by an insurance company approved by Lender including coverage as determined by Lender. Expenses: Applicant shall reimburse Lender for all underwriting fees and out-of-pocket expenses, including, but not limited to, third-party appraisal report costs, environmental and engineering report costs, site visit costs, legal fees and any other due diligence expenses incurred in connection with this transaction whether or not it actually closes (collectively the "Due Diligence Expenses") which costs and expenses may exceed the Due Diligence Deposit. Applicant shall be directly responsible for the payment of any other expenses incurred in connection with the Loan, such as fees charged by Borrower's counsel and any Broker fees. Upon acceptance of this Term Sheet, Applicant is required to post an "Application Deposit" equal to $50,000 to cover the costs associated with this loan request. A non- refundable Underwriting Fee of $15,000 shall be earned by Lender upon execution of this Term Sheet and deducted from the Application Deposit The Application Deposit, less Due Diligence Expenses, shall be credited against the Loan Fee payable at closing. If the Due Diligence Expenses and any other expenses required to be reimbursed to Lender at closing exceed the Application Deposit, such additional amounts shall be paid from Loan Proceeds. In the event this loan application is denied for any reason other than for those reasons listed under Break-up Fee below, any funds unused as determined above shall be refunded to Applicant. Break-up Fee: Any outstanding unused balance on deposit shall be deemed earned as a Break-up Fee and shall not be refundable to applicant if the Loan fails to close because of any of the following: Applicant withdraws this loan request or notifies Lender it no longer wishes to proceed with the Loan; 2. Applicant's fraud or misrepresentation; 3. Applicant does not provide requested documentation in a reasonable time, or 4. Applicant is not ready, willing and able to close in accordance with the terms and conditions set forth in the Term Sheet within 30 (thirty) days of the execution thereof. Reserves: At the closing of the Loan, Lender shall establish an interest reserve in an amount of $250,000. This reserve, at Lender's reasonable discretion, may be released to meet interest payment shortfalls net of free cash flow from operating activities, conduct capital improvements and pay the real estate taxes and insurance premiums that will be due during the Loan Term Special Conditions: The closing of the Loan is subject to: 1) Satisfactory completion of due diligence on the Property, the Borrower, the Principals and affiliates; 2) No material adverse change in the fair market value or condition of the Property, Borrower and Principals prior to closing; 3) The absence of any material disruption of material adverse change in current financial, banking or capital market conditions that, in the sole judgment of Lender, could materially impair the Loan; 4) Approval by Lender Investment Committee; 5) Confirmation of zoning and entitlements of the Property satisfactory to Lender; 6) Environmental Review of the Property acceptable to Lender; 7) Receipt and review of Appraisal Report acceptable to Lender; 8) Receipt of such other business credit or legal approvals as Lender shall reasonably deem necessary and appropriate, including an agreement on all required documentation for the Loan in form and substance satisfactory to Lender and its legal counsel. The terms and conditions detailed herein are valid only if this letter, along with the Application Deposit, is retured signed by Applicant no later than June 13, By signing below signing party represents that they have full authority to authorize this document on behalf of borrowing entity. This letter supersedes all prior correspondence. Yours Sincerely, Managing Principal AGREED & ACCEPTED: Date Mr. Applicant Date Mr. Authorized signatory for Ltd. Exhibit A Wiring Instructions: The First Bank of Capital Partners LLC Holding Account ABA: Account: RE
