EXHIBIT 10.24
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT made and entered into this 10th day of
April, 1996, by and between XXXXXXXX HOSPITALITY LIMITED PARTNERSHIP, a Virginia
limited partnership, (the "Borrower"), and MERCANTILE-SAFE DEPOSIT & TRUST
COMPANY, a Maryland banking corporation (the "Bank").
WITNESSETH:
WHEREAS, Borrower is the owner of all that parcel of land located in
Pulaski County, Virginia (the "Dublin Property") more particularly described in
Exhibit A-1 attached hereto and by this reference made a part hereof;
WHEREAS, Borrower is the owner of all that parcel of land located in
Xxxxx, Xxxx County, Delaware (the "Dover Property" and together with the Dublin
Property, the "Property"), more particularly described in Exhibit A-2 attached
hereto and by this reference made a part hereof;
WHEREAS, the Borrower has applied to the Bank for a loan in a total
principal amount not to exceed Six Million Five Hundred Thousand Dollars
($6,500,000) (the "Loan"), a portion of the proceeds of which shall be used to
finance the Project (as hereinafter defined); and
WHEREAS, Bank has agreed to make the Loan on the terms and conditions set
forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and for Ten Dollars
($10.00) and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Borrower, Grantor and Bank agree as follows:
ARTICLE I
TERMS AND DEFINITIONS
In addition to the other terms herein defined, the following terms shall
have the meanings set forth in this Article I whenever used in this Agreement
unless the context clearly indicates a contrary meaning:
1.01. Act of Bankruptcy: The filing of a petition in bankruptcy under the
United States Bankruptcy Code, 11 U.S.C. 101 et seq. (and all future acts
supplemental thereto or amendatory thereof) or the commencement of a proceeding
under any other applicable law concerning insolvency, reorganization or
bankruptcy by or against the Borrower or any other guarantor, as debtor.
1.02. Borrower's Amended Deed of Trust: Collectively, (i) that certain
Second Amended and Restated Deed of Trust and Security Agreement of Borrower of
even date herewith granting and conveying to Bank a lien and security interest
on certain real, personal and miscellaneous property of Borrower, as more fully
described therein, located in Xxxxxx County, Tennessee, and (ii) those certain
Amended and Restated Deeds of Trust and Security Agreements dated of even date
herewith executed by Borrower granting and conveying to Bank a lien and security
interest on certain real, personal and miscellaneous property of Borrower, as
more fully described in each Deed of Trust, located in (a) King Xxxxxx County,
Virginia, (b) Xxxxxx Xxxxxx County, Virginia, and (c) Xxxxxx County, West
Virginia.
1.03. Building: Collectively, (i) that certain fifty (50) room hotel to be
constructed on the Dublin property (individually the "Hampton Inn"), and (ii)
that certain sixty-four (64) room hotel to be constructed on the Dover Property
(individually, the "Comfort Inn").
1.04. Business Day: Any day on which Bank is open for business of the
nature required by this Agreement.
1.05. Closing Date: The date of this Agreement.
1.06. Completion Date: The date on which the Project is required to be
substantially completed in accordance with the Plans and Specifications, being
October 1, 1997.
1.07. Construction Contract: Collectively, (i) the construction contract
between Borrower and the Dublin General Contractor pertaining to the
construction of the Dublin Improvements; and (ii) the construction contract
between the Borrower and the Dover General Contractor, pertaining to the
construction of the Dover Improvements.
1.08. Deed of Trust: Collectively, (i) the Borrower's Amended Deed of
Trust; (ii) the Dublin Deed of Trust; (iii) the Dover Mortgage; and (iv) the
IDOT.
1.09. Dover Mortgage: That certain Mortgage and Security Agreement dated
of even date herewith executed by the Borrower granting and conveying to Bank a
lien and security interest on the Dover Land and certain personal and
miscellaneous property of the Borrower, as more fully described therein.
1.10. Dublin Deed of Trust: That certain Deed of Trust and Security
Agreement dated of even date herewith executed by the Borrower granting and
conveying to Bank a lien and security interest on the Dublin Land and certain
personal and miscellaneous property of the Borrower, as more fully described
therein.
1.11. Event of Default: Any one or more of the events described in Section
7.1 hereof.
1.12. Guarantor: Collectively, Solomons Beacon Inn Limited Partnership,
Xxxxxxxx Hospitality Trust, Inc. and Xxxxx X. Xxxxxxxx.
1.13. Guaranty: Collectively, those certain guaranty agreements
dated of even date herewith executed by the Guarantor.
1.14. General Contractor: Best & Xxxxxx, Inc. with respect to the Dublin
Property (the "Dublin General Contractor") and Xxxxxxxx Construction, Inc. with
respect to the Dover Property (the "Dover General Contractor").
1.15. IDOT: That certain Indemnity Deed of Trust and Security Agreement
dated of even date herewith executed by Solomons Beacon Inn Limited Partnership
granting and conveying to Bank a lien and security interest on certain real,
personal and miscellaneous property of Solomons Beacon Inn Limited Partnership
located in Xxxxxxx County, Maryland, as more fully described therein.
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1.16. Improvements: The Building and all other structures or buildings now
or hereafter erected or placed on the Property, together with any and all
alterations, additions, accessions and replacements thereof. The Improvements
include those improvements on or to be on the Dublin Property (the "Dublin
Improvements") and those improvements on or to be on the Dover Property (the
"Dover Improvements").
1.17. Interest Payment Date: The periodic dates described in the Note on
which payments of accrued interest on all advances from time to time outstanding
under the Loan shall be due and payable, being on the first calendar day of each
month.
1.18. Interest Rate: The fluctuating annual rate of interest payable from
time to time on the Loan, in accordance with the Note.
1.19. Land: Collectively, all of that real property (i) located in Pulaski
County, Virginia consisting of 5.53 acres (the "Dublin Land"), and (ii) located
in Kent County, Delaware, consisting of 1.323 acres (the "Dover Land"), all as
more particularly described in Exhibits A-1 and A-2 attached hereto.
1.20. Leases: Any and all leases and subleases which may have been
heretofore executed or which may be hereafter executed in connection with, or
for, the use and occupancy of the Project or the Property (or any part thereof),
together with all extensions, renewals, modifications, amendments, supplements
and substitutions thereto.
1.21. Loan: the loan made by Bank to Borrower in the amount of Six Million
Five Hundred Thousand Dollars ($6,500,000).
1.22. Loan Documents: Collectively, this Agreement, the Note, the Deed of
Trust, the Guaranty, one or more Financing Statements, and all other documents
executed and delivered by Borrower, Guarantor or any other third party to
evidence or secure the Loan.
1.23. Major Subcontractor or Supplier: A contractor or supplier for the
Project, performing services or providing supplies in the aggregate of more than
$50,000.
1.24. Note: That certain Second Amended and Restated Deed of Trust Note
dated of even date herewith from the Borrower to the Bank evidencing the Loan.
1.25. Other Leases: Any and all leases and subleases which may have been
heretofore executed or which may be hereafter executed in connection with, or
for, the use and occupancy of the Other Property (or any part thereof), together
with all extensions, renewals, modifications, amendments, supplements and
substitutions thereto.
1.26. Other Property: Collectively, the property encumbered by the
Borrower's Amended Deed of Trust and the IDOT.
1.27. Plans and Specifications: Those certain plans and specifications
approved or to be approved by the Bank for the Improvements.
1.28. Prime Rate: The annual percentage rate periodically chosen and
recorded by the Bank as an index, at, above and below which interest rates are
established.
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1.29. Project: Collectively, (i) the refinancing of certain indebtedness
of Borrower, and (ii) the Improvements to be constructed on the Dublin Land (the
"Dublin Project") and the Improvements to be constructed on the Dover Land (the
"Dover Project"), which together shall consist of the construction of the
Building and parking areas, together with appurtenant development activities.
1.30. Property: Collectively, the property encumbered by the Dover
Mortgage (the "Dover Property") and the Dublin Deed of Trust (the "Dublin
Property").
1.31. State: The State of Maryland.
1.32. Supplements: Any and all extensions, renewals, modifications,
amendments, supplements and substitutions.
1.33. Title Company: Xxxxxxx Title Guaranty Company.
ARTICLE II
THE LOAN
2.1 Loan:
(a) Commitment--Subject to Borrower's satisfaction of the
requirements and conditions set forth in this Agreement, Bank agrees to make
Loan advances under the Note to Borrower from time to time prior to the
Completion Date in an aggregate principal amount not to exceed $6,500,000.
(b) Borrowing Procedure--Borrower shall give Bank at least 7 days
prior notice of the amount of any proposed borrowing, and at least 2 days prior
notice of the additional information with respect to such borrowing by sending a
requisition request in the form specified in Section 4.1. Bank may act on any
request or instruction believed by it in good faith to be genuine and authentic,
and shall incur no liability to Borrower as a result thereof.
(c) Interest--Accrued interest on the aggregate amount of advances
outstanding under the Loan shall be paid on each Interest Payment Date and at
maturity in accordance with the Note.
2.2. Due Date Extension: If any payment of principal of, or interest on,
the Loan falls due on a Saturday, Sunday or other day which is not a Business
Day, then such due date shall be extended to the next following Business Day,
and additional interest shall accrue and be payable for the period of such
extension.
2.3. Making of Payments: All payments (including prepayments) of principal
of, or interest on, the Loan, shall be made in U.S. Dollars and in immediately
available funds at the principal office of Bank in Baltimore, Maryland or at
Banks affiliate, Citizens National Bank, in Burtonsville, Maryland. All such
payments shall be made without any set-off or counterclaim, and free and clear
of any restrictions or conditions, and free and clear of and without deduction
for or on account of, any present or future taxes, levies, imposts, duties,
charges, fees, deductions or
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withholdings of any nature now or hereafter imposed by any governmental or other
authority.
2.4. Use of Loan Proceeds: Upon compliance with and subject to all of the
terms and conditions of this Agreement, Lender will advance the Loan to or for
the account of Borrower. Lender shall disburse the proceeds of the Loan so long
as no Event of Default (defined herein) has occurred and is continuing, for the
following purposes, and for no other purposes:
(a) The (i) payment of the fees for filing and recording any
documents, financing statements and any other curative documents that Lender may
deem necessary to file for record in order to perfect or protect the liens and
security interest created hereby or by any of the other Loan Documents, (ii)
payment to NationsBank, for purchase of a Promissory Note of Borrower in an
amount not to exceed $1,705,200, (iii) payment for labor, services, materials
and supplies used or furnished in site improvement for, and in the construction
of, the Project, as limited by the last two sentences of this subsection, (iv)
payment for the cost of the construction, acquisition, and installation of
utility services or other facilities and all real and personal property deemed
necessary in connection with the Project, as limited by the last two sentences
of this subsection, and (v) payment for the miscellaneous expenses incidental to
any of the foregoing items, including, loan fees, legal fees, costs incurred by
or on behalf of Lender and the premium on any surety bond. The loan proceeds to
be advanced hereunder in connection with the Dublin Improvements shall not
exceed $2,043,890, except as allowed pursuant to subsection (d) below: The Loan
proceeds to be advanced hereunder in connection with the Dover Improvements
shall not exceed $2,750,910 except as allowed pursuant to subsection (d) below:
(b) Payment of any sums required to reimburse Borrower for advances
made by Borrower or Grantor for any of the above items or for any other costs
incurred for work done or caused to be done by it which are properly chargeable
to the Project.
(c) The cost breakdown and loan budget submitted by Borrower shall
describe in sufficient detail to Lender, the application of loan proceeds for
construction of the Project and such amounts of other expenses attributable to
the Project. The cost breakdown and loan budget are attached hereto as Exhibit
B.
(d) Prior to beginning construction on the earlier of the Dublin
Improvements or the Dover Improvements, Borrower may submit a revised budget
amending the amount of funds required for one or both of the Dublin and Dover
Improvements, so long as the total amount of all loan proceeds anticipated for
all purposes does not exceed Six Million Five Hundred Thousand Dollars
($6,500,000). After construction has begun, in the event of a cost overrun on
either the Dublin Improvements or the Dover Improvements, and a surplus of funds
on the other Improvements, Borrower may submit documentation to Bank showing
both the cost overrun and surplus. With Bank's prior consent, which shall not be
unreasonably denied, Borrower may apply the surplus funds to offset the cost
overrun, notwithstanding anything to the contrary in this Agreement.
ARTICLE III
CONDITIONS AND REQUIREMENTS FOR INITIAL LOAN ADVANCE
The obligation of Bank to make the initial advance of Loan proceeds is
subject to Borrower's satisfaction of the requirements and conditions and
conditions set forth below with
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respect to either the Dublin Project or the Dover Project unless waived in
writing by Bank. For purposes of the following, the Dublin Project shall be
considered separate and distinct from the Dover Project unless explicitly stated
otherwise:
3.1. Delivery of Documents Prior to Advance: Bank shall have received the
following documents, in form and substance satisfactory to it, and to its
counsel, prior to such initial Loan advance with respect to either the Dublin or
Dover Project, as the case may be;
(a) ALTA mortgagee's title insurance policy issued on behalf of the
Title Company on the Property and Improvements and on the Other Property,
without exception as to survey or mechanic's or materialman's liens,
guaranteeing to Bank as mortgagee a first lien on the good and marketable fee
simple title thereto, subject to no other liens, and with only such other title
exceptions set forth in those Commitments for Title Insurance issued by the
Title Company or as Bank may approve in writing.
(b) A current survey of the Land and the Other Property, with a
metes and bounds description, certified as to accuracy, showing the location of
existing and proposed easements, rights-of-way and improvements, and showing the
perimeter boundaries of the Land and other Property;
(c) Copies of the demolition, building and grading permits
pretaining to the Project, public works agreements, if any, and evidence that
the Project, as proposed, meets all zoning requirements for its intended use and
is properly sub-divided;
(d) Evidence that the Other Property is properly zoned and
subdivided and certificates of occupancy and other operating licenses related to
Other Property;
(e) Certificates evidencing coverage for the Improvements under All
Risk Builders Risk Insurance, including extended coverage, fire, collapse, flood
(or evidence Property is not in a floor hazard area), vandalism and malicious
mischief, naming Bank as loss payee under the mortgagee clause, in an amount
acceptable to Bank, and a copy of General Contractor's public liability
insurance for the Project;
(f) Certificate of public liability insurance and Property and
Casualty Insurance, where applicable, insuring Borrower's interest in the Land
and Other Property as the case may be, naming Bank as loss payee or mortgagee,
in amounts and with insurance companies acceptable to Bank;
(g) Certificate of worker's compensation insurance for Borrower
(unless Borrower has no employees) and General Contractor in amounts and with an
insurance company acceptable to Bank for the Project;
(h) Evidence as to the availability of adequate sewer, water and
other utilities to the Project and all necessary permits therefor:
(i) Soil test, exploratory report or other information necessary for
satisfactory evidence of soil conditions with regard to the Land and the
Improvements to be constructed for the Project;
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(j) One set of the final Plans and Specifications, final project
cost budget, and two copies of the site plans for the Project, all as approved
by the Bank;
(k) A fully executed copy of the Construction Contract and all
contracts with architects, engineers, construction managers, Major
Subcontractors and Major Suppliers then under contract for the Project;
(l) Cost breakdown of all Project costs setting forth in such
categories as reasonably required by Bank, the utilization of all proceeds of
the Loan, and any additional funds available or necessary for completion of the
Project, as well as as projected draw/progress schedule;
(m) All governmental approvals and certifications required for
commencement of construction of the Project;
(n) Copies of all executed Leases and Other Leases and subordination
agreements from any and all tenants;
(o) Environmental screening report, satisfactory to Bank that the
Project is free from any type of environmental hazard, hazardous substance or
other similar conditions and satisfactory review by Bank of existing
environmental reports on the Other Property;
(p) An appraisal report covering the Property and updated appraisal
letters covering the Other Property in form and content satisfactory to the
Bank; and
(q) Such other documents as Bank or its counsel reasonably may have
requested, or as Bank may have required in the Bank's Commitment, in connection
with the Loan or the Improvements.
3.2. Delivery of Loan Documents and Fees: Borrower shall have executed and
delivered to Bank at closing the Loan Documents to be executed by them, and all
other documents and instruments required from Borrower in connection with the
Loan. In addition, Borrower shall have paid at closing $32,500 representing the
Loan fee due to Bank, together with all title insurance fees, legal fees and the
fees of Bank's consulting engineer due to that date.
3.3. Agreements with Engineer and General Contractor: Borrower's General
Contractor and Engineer shall have executed and delivered to Bank at closing
their agreements, pursuant to which each agrees (i) to continue performance of
its contract in accordance with the terms of the contract on Bank's behalf on
the occurrence of an Event of Default, if so requested by Bank, provided that
Bank gives it notice of its intention to require continued performance and of
Bank's intention to pay in accordance with the terms of the contract, and (ii)
not to permit or execute any change order materially increasing or decreasing
the cost or scope of the Project without the prior written consent of Bank,
which shall not be unreasonably withheld. A "material" increase or decrease
shall include any change which would result in a cost increase (or decrease)
which, together with all prior unapproved changes, results in an aggregate cost
increase (or decrease) of $25,000 or more.
3.4. Legal Opinions: Bank shall have received from counsel for the
Borrower, and Guarantor, legal opinions in form and substance reasonably
satisfactory to Bank with respect to such matters incident to the Loan as Bank
may require.
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3.5 Representation and Warranties: The representations and warranties set
forth in Article V hereof shall be true and correct in all material respects on
and as of the Closing Date, and no Event of Default shall then exist under this
Agreement.
3.6. Recordation: The Deed of Trust and the related UCC financing
statements and all other Loan Documents requiring filing or recordation shall
have been filed or recorded in the appropriate public records as may be
necessary and appropriate to evidence and perfect the liens and security
interests thereby created.
3.7. Title Insurance Policy: Bank shall have received the title insurance
policy issued by the Title Company pursuant to the binder described in Section
3.1(a) hereof, in form and substance satisfactory to Bank, dated as of the
Closing Date, insuring the lien of the Deed of Trust as a valid first mortgage
lien, and subject only to such title exceptions as Bank has theretofore approved
in writing.
ARTICLE IV
REQUIREMENTS AND CONDITION
FOR ALL LOAN ADVANCES
The obligation of Bank to make any Loan advance for construction of the
Dublin Improvements or the Dover Improvements (which Improvements shall be
independent of each other for purposes of this Article IV, unless explicitly
stated otherwise) is subject to the Borrower's satisfaction of the following
requirements and conditions:
4.1. Submission of Disbursement Requests: Disbursements by Bank shall be
made upon receipt by Bank of a requisition which (a) includes an AIA approved
progress payment form which shall be signed by the General Contractor and
approved by the Bank's consulting engineer, (b) prepared in trade breakdown
form, and in such detail as may be reasonably required by Bank, and (c) subject
to Section 4.2 hereof, shall be for no more than ninety percent (90%) of the
value of the work performed and material in place in accordance with the Plans
and Specifications for the appropriate Project as approved by the Bank's
Inspector. Each requisition shall indicate the percentage of completion and the
amounts expended or costs incurred for work done and necessary material
delivered to the appropriate Project. Each requisition shall contain such
details concerning the appropriate Project as Lender shall reasonably require
and the certification by the Borrower that (i) none of the items for which funds
are being requisitioned has formed the basis for any advance theretofore made
from the proceeds of the Loan, (ii) each item for which funds are being
requisitioned is a proper item to be paid from the proceeds of the Loan and is
necessary in connection with the appropriate Project, (iii) no notice of any
lien, right to lien or attachment upon or claim affecting the right to receive
payment of, any of the monies payable under such requisition to any of the
persons named therein has been received, or if any notice of any such lien,
attachment or claim has been released or discharged or will be released or
discharged upon payment of the requisition, (iv) such requisition contains no
items representing payment on account of any retained percentages that are
entitled to be retained at the date of the requisition, (v) with respect to each
item for payment for labor, or materials and equipment, that the labor was
actually performed or that the materials and equipment were actually furnished
to the appropriate Project, (vi) such materials and equipment are not subject to
any lien or security interest or the funds requisitioned are to be used to
satisfy any such lien or security interest, (vii) when added to the total of
prior
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requisitions for construction costs, subject to Section 4.2 hereof, does not in
amount exceed ninety percent (90%) of the amount of the Loan multiplied by the
percentage of the appropriate Project performed and material in place, (viii)
all inspections required to be made by any public authority have been made and
the appropriate Project approved, and (ix) the balance of the proceeds of the
Loan not yet advanced and the Borrower's other funds deposited with Lender, if
any, are sufficient to complete the appropriate Project within the Completion
Date and in accordance with the Plans and Specifications.
4.2. Retainage: Loan advances for construction costs shall be subject to
the following retainage requirements: an amount equal to ten percent (10%) of
each requisition shall be held back as retainage, until such time as the
Improvements are ninety percent (90%) completed, as certified by Bank and Bank's
consulting engineer for the Project whereupon half of the retainage will be
released thereby reducing the retainage to five percent (5%). The remaining
retainage shall be released upon satisfaction of the conditions specified in
Section 4.4 herein.
4.3. Conditions to Disbursements: The obligation of Bank to make any
disbursements hereunder shall be subject to satisfaction of the following
requirements and conditions with respect to the particular Project:
(a) The Borrower shall have submitted a complete and fully executed
disbursement request, duly approved and certified as provided in Section 4.1
hereof, at least 7 days prior to the date funding is being requested;
(b) In the opinion of the Bank's consulting engineer, the Project
can be completed in accordance with the Plans and Specifications on or prior to
the Completion Date for an amount not greater than the undisbursed portion of
the Loan, as such may be modified pursuant to the conditions of Section 2.4
hereof. In the event the Borrower requests any changes in the Plans and
Specifications from those approved by Bank, prior to any disbursement of loan
proceeds, such changes shall be approved by Bank, and the Bank's consulting
engineer;
(c) Bank shall have received copies of all reports, as available,
required to satisfy requirements of all applicable governmental agencies having
jurisdiction over the Project;
(d) No Event of Default, nor any event or state of facts which with
notice or passage of time or both would constitute an Event of Default, shall
then exist under the Loan Documents or under any Lease;
(e) Bank shall receive, upon request to the Borrower, a
bring-to-date title search which indicates no intervening liens or encumbrances
and no other title exceptions other than those approved by Bank;
(f) Bank shall have received waivers of liens from the General
Contractor and each Major Subcontractor and Supplier for all work performed or
materials included in the last previous requisition within thirty (30) days from
the date of funding of said requisition or prior to the next requisition,
whichever shall first occur;
(g) As soon as footings and foundations for the Building are in,
furnish Bank a location survey prepared by a registered surveyor showing the
actual location of the Improvements on the Land with relation to the boundary
lines thereof, and indicating that such
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location is in compliance with all setback and other applicable restrictions and
all easement requirements; and
(h) Bank shall not be required to disburse more than the maximum
principal amount, as such maximum principal amount may be limited pursuant to
Section 2.4 hereof; and
(i) Bank shall not be required to disburse more frequently than once
each month per Project.
4.4. Additional Conditions for Final Advance: In addition to all other
conditions set forth in this Article IV, the obligation of Bank to make the
final advance under the Loan on account of the Dublin Improvements or the Dover
Improvements, including release of all retainage to such date with respect to
such Improvements shall be subject to Bank's receipt of the following:
(a) Final waivers of liens from the General Contractor and all Major
Subcontractors and Suppliers;
(b) Certificates of completion, in form and substance reasonably
satisfactory to Bank from the General Contractor;
(c) Copy of the certificate of use and occupancy (or such other
certificate or permit as may be necessary to entitle Borrower to the full use
and occupancy of the Improvements) issued for the appropriate Improvements;
(d) Copies of such additional permits and licenses for operation of
the appropriate Improvements as may be necessary or required by governmental
authorities having jurisdiction over the appropriate Improvements;
(e) An as-built survey acceptable to Bank;
(f) Copies of the approved, as-built Plans and Specifications;
(g) Permanent fire and extended coverage insurance and business
interruption insurance in amount and form acceptable to Bank;
(h) Final approval of the appropriate Improvements by any tenant
under any then existing Lease, if such tenant's obligations under the Lease are
contingent upon the tenant approving all or a portion of the Project.
4.5. Insufficiency of Loan Proceeds: If at any time during the term of
this Agreement, the Bank determines, after reasonable consultation with the
Project architect and the Bank's consulting engineer that the remaining
undisbursed portion of the Loan proceeds (as limited by Section 2.4 hereof) are
insufficient for any reason to complete either the Dublin Improvements or the
Dover Improvements or any part of the Improvements substantially in accordance
with the Plans and Specifications, the Borrower shall, within ten (10) days
after receipt of written notice thereof (including a statement of the basis for
such insufficiency) from Bank, deposit with Bank or its designee such sums of
money in cash (from sources other than the Loan) as reasonably may be required
to eliminate such insufficiency. Any amount so deposited by the Borrower shall
stand as additional security for Borrower's obligations under this Agreement,
and may be disbursed at
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Bank's option before any further Loan advances are made hereunder.
Notwithstanding the introductory clause of this Article IV, in the event the
Bank determines, after reasonable consultation with the Project architect and
the Bank's consulting engineer there are insufficient funds to complete for
either the Dublin or the Dover Improvements, the Bank shall not be required to
make any additional advances on either Project until the deficiency is remedied.
4.6. Authorized Disbursements: Notwithstanding any other provision of this
Article IV, the Borrower and Grantor hereby irrevocably authorizes Bank, at the
option of Bank, to make disbursements of Loan proceeds (i) jointly to Borrower
and to any contractor or materialmen furnishing labor, services or materials in
the construction of the Project for any amounts due them in connection
therewith, or (ii) directly to Bank for interest, fees and any other amounts
required to be paid to Bank under the Note or the other Loan Documents. No
further authorization from Borrower shall be necessary for Bank to make such
direct disbursements, and all such disbursements shall satisfy pro tanto the
obligation of Bank hereunder and shall be secured by the Deed of Trust.
4.7. Disbursements Do Not Constitute Waiver: No disbursement of any Loan
proceeds by Bank shall constitute a waiver of any of the conditions for
disbursement contained in this Agreement nor shall such disbursement constitute
an obligation of Bank to make further disbursements or, in the event the
Borrower or Grantor is unable to satisfy any such condition, shall any such
disbursement have the effect of precluding Bank from thereafter declaring such
inability to be an Event of Default.
4.8. Additional Advance: In the event that the aggregate amount of all
advances under this Agreement, upon completion of the entire Project (including
the Dublin Improvements and the Dover Improvements taken together) as required
hereunder and after satisfaction of all of the conditions for the final advance,
shall have been less than $6,500,000, Borrower may request and Bank shall
disburse up to the lesser of (i) Five Hundred Thousand Dollars ($500,000) or
(ii) the remaining undisbursed Loan proceeds to Borrower for payment of a
developer's fee. Any remaining undisbursed Loan proceeds shall be deemed
advanced and simultaneously be applied to prepay the Loan in the manner set
forth in the Note for prepayments.
4.9. Stored Materials. No disbursements will be made for materials which
are not physically incorporated into the Improvements, other than for materials
actually delivered to the site or off-site, and stored in a place, secured and
insured against theft, vandalism and other damage, all in a manner satisfactory
to the Bank.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to Bank as of the date hereof, and is
deemed to represent and warrant as of the date it submits any disbursement
request to Bank hereunder, that:
5.1. Certificate and Status: The Borrower is a limited partnership in good
standing in the Commonwealth of Virginia, the State of Maryland, the State of
Tennessee, the State of West Virginia and the State of Delaware and all
representations and warranties made by Borrower in this Agreement and in the
other Loan Documents are true, complete and correct.
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5.2. Authority: The Borrower has power and authority to enter into and
execute and deliver this Agreement and each of the other Loan Documents executed
and delivered by it and to incur and perform the obligations provided for herein
and therein (including the borrowing of the Loan), all of which have been duly
authorized by all proper and necessary action and all material governmental
licenses, authorizations, consents and approvals required. No consent or
approval of any other person or public authority or regulatory body is required
as a condition to the validity or enforceability of this Agreement or any of
such other Loan Documents, or if required the same has been duly obtained.
5.3. Binding Obligations: This Agreement and each of the other Loan
Documents executed and delivered by the Borrower have been properly executed by
the Borrower, constitute valid and legally binding obligations of the Borrower,
and are enforceable against the Borrower, in accordance with their respective
terms.
5.4. Litigation: There is no litigation or proceeding pending or, so far
as the Borrower knows, threatened before any court or administrative agency
which will materially adversely affect the financial condition or operations of
the Borrower or the authority of the Borrower to enter into, or the validity or
enforceability of, this Agreement or any of the other Loan Documents executed
and delivered by the Borrower.
5.5. No Conflicting Agreements: There is (i) no provision of any existing
mortgage, pledge, lien, security interest, charge, encumbrance, contract or
agreement binding on the Borrower or affecting its property nor any judgment,
decree, or order of court binding on Borrower, and (ii) to the best knowledge of
the Borrower, no law, statute, rule or regulation binding upon the Borrower or
affecting any of its property, which would conflict with or in any way prevent
the execution, delivery or performance of the terms of this Agreement or of any
of the other Loan Documents executed and delivered by the Borrower, or which
would be in default or violated as a result of such execution, delivery or
performance.
5.6. Financial Information: All financial information heretofore furnished
to the Bank and to the other parties to this transaction concerning the Borrower
are complete and correct in all material respect, and fairly presents the
financial position of the Borrower. There are no material liabilities, direct or
indirect, fixed or contingent, of which the Borrower is aware except as
reflected therein. There has been no material adverse change in the financial
condition or operations of the Borrower since the dates of such financial
information (and to the Borrower's knowledge no such material adverse change is
pending or threatened), and the Borrower has not guaranteed the obligations of
or made any investment in or advances to, any person except as disclosed in such
information. The Borrower has good and marketable title to all of its properties
and assets, and all of such properties and assets are free and clear of
encumbrances (other than as permitted by the Bank), except as reflected in such
information.
5.7. Tax Returns: The Borrower has filed or caused to be filed all
required federal, state and local tax returns and has paid all taxes shown on
such returns as such taxes have become due. No claims have been assessed and are
unpaid with respect to such taxes, except as shown in the financial information
referred to in subsection 5.6 above.
5.8. Liens on Property: There exist no mortgage, pledge, lien, security
interest, charge or other encumbrances (except as permitted by Bank) on or with
respect to the Property or Other Property.
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5.9. Place of Business: The Borrower has its principal place of business
in the State.
5.10. Utilities: All utility services necessary for the construction and
operation of the Improvements for their intended purposes are or will be
available at the boundaries of the Land, including water supply of sufficient
quantity and pressure, storm and sanitary sewer facilities of adequate
capacities, gas, electric and telephone facilities. The Borrower has procured,
or hereby agrees to use its best efforts to procure, from the appropriate State,
county, municipal, and other authorities and corporations, connection and
discharge arrangements for the supply of water, gas, electricity and other
utilities and sewage and industrial waste disposal for the operation of the
Project.
5.11. Roads: All roads necessary for the full utilization of the Project
for their intended purposes have either been completed or the necessary rights
of way therefor have either been acquired by the Borrower or the appropriate
governmental authority or have been dedicated to public use and accepted by such
governmental authority or will be so acquired or dedicated within a period of
time satisfactory to Bank, and all necessary steps have been taken by the
Borrower and such governmental authority to assure the complete construction and
installation thereof in accordance with law and all applicable governmental or
quasi-governmental requirements.
5.12. Zoning, etc. The Improvements, and the use of the Project for its
intended use will not violate any zoning or other ordinance, regulation or law,
restrictive covenant or agreement (either now in existence or known by the
Borrower to be proposed) applicable to the Property or its use, and all
requirements for such use have been satisfied. The Borrower shall not initiate,
join in, or consent to any change in any restrictive covenant, easement, zoning
ordinance or other public or private restriction further limiting, or
restricting the uses which may be made of the Property or any part thereof.
5.13. Cost Breakdown: The cost breakdown (in trade breakdown form) for the
Project supplied to Lender is complete and accurate as of the date hereof based
on all information now available to the Borrower, and the Borrower has no
knowledge of any material change in the amount shown thereon which is likely to
occur.
5.14. Inspection: The Borrower will permit the Bank, its agents and the
Bank's inspector to enter upon the Property at all reasonable times and as often
as may be reasonably requested, to inspect the Improvements and all materials to
be used in connection with the construction thereof, and to examine all detailed
plans and drawings which are or may be kept at the construction site.
5.15. Maintenance and Repair of the Property; Compliance with Laws; etc.
Following completion of construction of the Project, the Borrower will, at its
sole cost and expense:
(a) Maintenance and Repair. Keep and maintain the Project and each
part thereof in good condition, working order and repair, and make all necessary
or appropriate repairs, replacements and renewals thereto so that each part
thereof shall at all times be in good condition, fit and proper for the
respective purposes for which it was originally intended, erected, or installed
and to insure that the security for the Loan shall not be impaired.
(b) Obstructions. Use its best efforts to keep and maintain all
portions of the Project and the sidewalks, curbs and passageways adjoining the
same in a clean and orderly condition, free of dirt, rubbish, snow, ice and
unlawful obstructions.
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(c) Permits, Licenses, Etc. Procure or cause to be procured, any and
all necessary permits, certificates, licenses or other authorizations required
for the use of the Project, and observe and comply with all conditions and
requirements necessary to preserve and extend any and all rights, licenses,
permits, privileges, franchises and concessions which are now applicable to the
Project or which may be applicable in the future.
(d) Structural Injury, Nuisance, Waste and Other Prohibited Uses.
Not use or occupy the Project or permit the same to be used or occupied in any
manner which would cause structural injury to the Improvements or which would
cause the value or the usefulness of the Project or any part thereof to diminish
(ordinary wear and tear excepted), or which would constitute a public or private
nuisance, or waste.
(e) Compliance with Laws. Not use or occupy the Project or knowingly
permit the same to be used or occupied contrary to any uniformly applicable laws
affecting the Project and the occupancy, operation or use thereof, whether or
not any such laws which may be hereafter enacted involve a change of policy on
the part of the governmental body enacting the same; provided, however, that if
such laws prohibit the use of the Property for the use of the Project
contemplated hereunder, the Borrower may use the Project for any lawful purpose
that is approved by the Bank; provided further that the Borrower may, at its
sole cost and expense, in good faith and by appropriate and diligent
proceedings, contest the validity or applicability of any such law.
5.16. Management Agreements. There are no management agreements in effect
with respect to any portion of the Property or Other Property. No management
agreement shall be entered into with respect to the Property or Other Property
or any portion thereof, unless such management agreement is subordinate to the
lien of the Deed of Trust and approved by the Bank in writing, which approval
shall not be unreasonably withheld.
ARTICLE VI
COVENANTS
The Borrower covenants and agrees that, so long as any portion of the Loan
remains unpaid, the Borrower will:
6.1. Construction of Improvements: Cause the Improvements to be completed
substantially in accordance with the final Plans and Specifications on or before
the Completion Date, free and clear of all liens other than the Deed of Trust.
The Borrower shall not permit any material changes in the Plans and
Specifications without the prior written consent of the Bank's consulting
engineer and all governmental authorities to whom such Plans and Specifications
are required to be submitted.
6.2 Maintenance of Property; Insurance: Keep the Improvements and all of
the Property useful or necessary in the operation of the Project in good working
order and condition, to insure that the security for the Loan shall not be
impaired. The Borrower will obtain or cause to be obtained and maintain in full
force and effect all insurance required hereby and by the Deed of Trust. Upon
completion of the Project or the occupancy thereof, whichever shall first occur,
the Borrower shall obtain and deliver to Bank, and thereafter maintain, policies
of fire and extended coverage insurance in form and with companies satisfactory
to Bank in an amount not less than the full insurable value of the Project (and
in any event not less than amounts sufficient to prevent any co-insurance
liability of the Borrower, or Bank) with loss payable to Bank.
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6.3. Availability of Funds: Upon request by Bank, furnish Bank
satisfactory evidence that the funds necessary to complete the Project in excess
of the proceeds of the Loan have been advanced by or are available to the
Borrower.
6.4. Certifications, Licenses, Permits, etc.: Obtain or cause to be
obtained prior to the final advance all certifications, licenses, permits and
governmental approvals as may be necessary or required to operate the Project.
6.5. Taxes and Claims: Pay and discharge all taxes prior to the date on
which penalties attach thereto, and all lawful claims which, in unpaid, might
become an encumbrance upon any of their properties, subject to the right of the
Borrower to contest the same in accordance with the approval of Bank. If the
Borrower fails to pay any of such taxes at the time or in the manner provided in
this Section, Bank may, at its option, pay such taxes and Borrower shall pay to
Bank the amount of any sum so paid, with interest thereon as provided in Article
VIII hereof.
6.6. Compliance With Laws: Comply with all applicable laws.
6.7. Books and Records: Keep and require by contract the General
Contractor to keep, adequate records and books of account with respect to the
Property, the Improvements, and its business in accordance with generally
accepted accounting principles; and permit the Bank, by its agents, accountants,
and attorneys, to visit and inspect the Property and the Improvements, to
examine such records and books of account and to discuss the affairs, finances
and accounts pertaining thereto with agents of the Borrower at its offices
during normal business hours and at such other reasonable times as may be
requested by the Bank.
6.8. Inspection: Permit the Bank, its agents and the Bank's inspector to
enter upon the Property at all reasonable times and as often as may be
reasonably requested, to inspect the Improvements and all materials to be used
in connection with the construction thereof, and to examine all detailed plans
and drawings which are or may be kept at the construction site.
6.9. Prohibition on Sale, Lease, etc.: Not hereafter mortgage, assign,
convey, sell, lease (except under tenant leases which have first been approved
in writing by Bank prior to becoming effective) or otherwise dispose of or
encumber its interest in the Property, or any part thereof, or the income stream
therefrom, or permit any such action to be taken, or permit any change in any
controlling interest of the Borrower except as permitted pursuant to the terms
of the Deed of Trust.
6.10. Notices: Promptly give written notice to Bank (i) all litigation
affecting the Borrower, the Property, the Other Property, or any portion of the
Project, and (ii) all complaints and charges made by any governmental authority
having jurisdiction over the Project which may materially delay or require
material changes in the construction of the Improvements or otherwise impair the
security of Bank.
6.11. Payment of Obligations: Pay and discharge at or before maturity all
its material obligations and liabilities, including (without limitation) tax
liabilities, the costs and expenses of constructing and equipping the
Improvements, and claims for labor, materials, and supplies that, if unpaid,
might become liens on the Borrower's property, except such as are being
contested in good faith by appropriate proceedings. The Borrower will maintain
in accordance with generally accepted accounting principles appropriate reserves
for the accrual of any such obligations and liabilities.
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6.12. Further Assurances: Upon request by Bank, do any act or execute any
additional documents (including, but not limited to, security agreements and
financing statements on any personalty owned by the Borrower and included or to
be included in the Project) as may be reasonably required by Bank to confirm the
lien and security interest of the Deed of Trust, or any other collateral
document.
6.13. Alterations, Additions and Improvements: Not, except for the
Project, construct any additional improvements on the Property without the prior
written consent of the Bank, and no portion of the Improvements, or any other
improvements or equipment now or hereafter covered by the lien and security
interest of this Agreement or the Deed of Trust, shall be removed, demolished or
materially altered, without the prior written consent of the Bank. The Borrower
will complete and pay for, within a reasonable time, any permitted structure at
any time in the process of construction on the Property, and will:
(a) Compliance With Restrictions. Construct, erect and complete any
permitted improvements on any part of the Property (i) in good and workmanlike
manner and substantially in accordance with all applicable laws and in
accordance with the orders, rules and regulations of the National Board of Fire
Underwriters, or any other body hereafter constituted exercising similar
functions, (ii) entirely on lots or parcels of Property, (iii) so as not to
encroach upon any easement or right of way or upon the land of others, (iv)
wholly within the building restriction lines however established, and (v) so as
not to violate use and other restrictions contained in prior conveyances, zoning
ordinances or restrictions;
(b) Insurance. Furnish, in connection with any such work, general
public liability insurance for the benefit of the Bank, as its interest may
appear, in the limits required by the Bank;
(c) Payment. Promptly pay for all such improvements; and
(d) Liens. Discharge or bond (to the reasonable satisfaction of
Bank) any and all liens filed against the Property, and upon the request of the
Bank, deposit with the Bank or court having jurisdiction a surety bond or other
security satisfactory to the Bank to assure the payment for and completion of
any such changes, additions, alterations, substitutions, replacements, removals
or improvements.
All such changes, additions, alterations, substitutions, replacements,
removals and improvements shall become a part of the Project and subject to the
lien and security interest of the Deed of Trust.
6.16. Fees of Bank's Inspector and Engineer: Pay the reasonable fees, if
any, of the Bank's inspector, attorneys, appraiser and engineer in connection
with the Loan.
6.17. Performance of Other Agreements. The Borrower shall duly and timely
perform and observe all of the covenants, agreements and conditions on its part
to be performed or observed pursuant to the Loan Documents in all material
respects.
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ARTICLE VII
DEFAULT: REMEDIES
7.1. Defaults. An Event of Default shall be deemed to have occurred under
this Agreement on the occurrence of any one or more of the following events:
(a) Any representation or warranty made herein or any statement or
representation made in any certificate, report or opinion (including legal
opinions), financial statement or other instrument furnished in connection with
this Agreement (including requisitions), or any of the other Loan Documents,
proves to have been incorrect in any material respect when made; or
(b) (i) Borrower fails to pay within fifteen (15) days of when due
and payable any payments or any other charges or sums on or under the Note
(whether upon maturity, on any installment date, after acceleration, after
notice of prepayment, or otherwise), or (ii) the Borrower fails to pay when due
(subject to applicable grace period, if any) any other payment required by this
Agreement or any of the other Loan Documents to be paid by the Borrower; or,
(c) The Borrower fails to duly and promptly perform, comply with or
observe any of the terms, covenants, conditions or agreements contained herein,
other than pertaining to insurance requirements herein for which there shall be
no such cure period, which default shall remain unremedied for thirty (30) days
(or such other cure period as may be specified herein) after notice to the
Borrower thereof; provided, however, that if such default be such that it cannot
be corrected within thirty (30) days (or such other cure period as may be
specified herein), it shall not be an Event of Default if, in the opinion of the
Bank reasonably exercised, the Borrower is taking appropriate corrective action
to cure the default and if such default will not, in the sole judgment of the
Bank, impair the security for the Loan; or
(d) An Event of Default occurs under the Deed of Trust or under any
of the other Loan Documents; or
(e) The Borrower fails to complete the construction of the Project
on or before the Completion Date; or
(f) The Bank's consulting engineer reasonably determines that there
is not sufficient time to complete the construction of the Project on or before
the Completion Date; or
(g) Subject to conditions beyond the control of the Borrower, work
on the Project (i) does not commence, with respect to the Dover Project, within
sixty (60) days of the Closing Date, or with respect to the Dublin Project,
within ninety (90) days of the Closing Date, or (ii) stops for a period of
fifteen (15) consecutive days or (iii) is not proceeding in a manner reasonably
satisfactory to the Bank; or
(h) Any interlocutory mechanics' liens are established against the
Project and are not caused to be discharged or bonded against by the Borrower
within thirty (30) days after it receives notice of the establishment thereof;
or
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(i) The Bank and its agents, including the Bank's consulting
engineer, are not permitted, at all reasonable times, to enter upon the
Property, to inspect the Project and all materials, fixtures and articles used
or to be used in the construction or renovation of the Improvements, and to
examine all detailed plans, show drawings and specifications which relate to the
Improvements or the appurtenances thereto or to be used in the operation
thereof; or the construction or renovation is not substantially in accordance
with the Plans and Specifications, and the Borrower fails promptly upon notice
thereof from the Bank to commence and diligently proceed to correct the same
(the Bank to determine in its reasonable discretion whether the Borrower is
acting promptly and diligently); or
(j) The Borrower does not disclose to the Bank upon demand, the
names of all Major Subcontractors and material Suppliers with whom the borrower
has contracted for the construction of the Improvements or for the furnishing of
labor or materials therefor; or
(k) The Borrower is unable to satisfy any condition of its right to
receive disbursement from the Bank for a period in excess of thirty (30) days
from the date the requisition therefor is received by the Bank; or
(l) Any survey required by the Bank during the period of
construction shows any matters not approved by the Bank and such matters are not
removed within thirty (30) days after notice thereof to the Borrower; or
(m) The Borrower fails to comply with any requirement of any
governmental authority having jurisdiction within thirty (30) days after notice
in writing from such authority of such requirement shall have been given to the
Borrower; or if any proceeding is commenced or action taken to enforce any
remedy for a violation of any requirement of a governmental authority or any
restrictive covenant affecting the Property or any part thereof.
7.2. Remedies of Bank on Default: Whenever any Event of Default referred
to in Section 7.1 hereof shall have occurred, the Bank may refuse or refrain
from making any advance of Loan proceeds hereunder, and take such other actions
against the Borrower, or Property as it may deem to be appropriate, as permitted
by law. In addition, the Bank, in its sole discretion, may take any one or more
of the following remedial steps:
(a) Acceleration. Declare the unpaid principal of the Note and all
interest accrued thereon, together with all other moneys payable hereunder, to
be immediately due and payable, by notice in writing to that effect delivered to
the Borrower, and upon such declarations, all such moneys shall become
immediately due and payable, without protest, presentment, further notice or
demand, all of which are expressly waived by the Borrower, at the place of
payment provided in such notice, anything in this Agreement or in the Note to
the contrary notwithstanding.
(b) Legal Action.
(i) by mandamus or other suit, action or proceeding at law
or in equity, enforce all rights of the Bank, and require the Borrower to carry
out any agreement with or for the benefit of the Bank, and to perform its or
their duties under this Agreement, the Deed of Trust, and the other Loan
Documents;
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(ii) bring suit upon the Note;
(iii) by action or suit in equity enjoin any acts or things
which may be unlawful or in violation of the rights of the Bank; or
(iv) take whatever action at law or in equity as may appear
necessary or desirable to collect the payments and other amounts then due and
thereafter to become due or to enforce performance and observance of any
obligation, agreement or covenant of the Borrower or any other party under this
Agreement or under any of the other Loan Documents.
(c) Books and Records. Have access to and inspect, examine and make
copies of the books and records and any and all accounts and similar data of the
Borrower.
(d) Protection of Property. Without resort to judicial process, take
such steps as they deem appropriate to protect the Project from depredation or
injury, including (without limitation) employment of watchmen or other
protective services, and any expenses incurred by the Bank in taking such steps
shall be paid by the Borrower as provided in Article VIII hereof.
(e) Completion of Project. Lender shall have no obligation to
advance any portion of the undisbursed proceeds of the Loan to Borrower. Lender
may enter upon the Property for the purpose of causing the continuation or
completion of the Project and causing the Borrower's obligations hereunder to be
fulfilled, and for such purposes the Borrower each hereby appoints the Bank as
its lawful attorney-in-fact, with full power of delegation and substitution, to
act for such purpose in the Borrower's name, to:
(i) continue the completion of the Project,
(ii) avail itself and procure performance of all contracts
theretofore made by the Borrower,
(iii) modify such contracts, or to enter into new contracts
with the same or other contractors, architects, suppliers or agents, as may be
reasonably necessary to complete the Project,
(iv) make such corrections or changes in the Plans and
Specifications as may be reasonably necessary to complete the Project,
(v) pay, settle or compromise any bills, claims or liens
incurred in connection with the completion of the Project,
(vi) prosecute or defend any action or proceeding in
connection therewith, to execute such applications and certificates as may be
required by governmental authority or any agreement by the Borrower,
(vii) perform any other act and execute and deliver all
documents and instruments as may be appropriate for such purposes, and
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(viii) use any funds not yet advanced hereunder or otherwise
allocated or made available therefor to pay the cost thereof, it being
specifically agreed that this power of attorney is a power coupled with an
interest which cannot be revoked.
Any disbursement of funds for such purposes shall be deemed disbursements
pursuant to this Agreement and secured by this Agreement and the Deed of Trust.
In addition, if it shall be reasonably necessary for the Bank to disburse any
amounts in order to accomplish such purposes, the Borrower agrees to reimburse
the Bank for the amount of such excess, together with interest thereon as
provided in Article VIII hereof, and authorizes the Bank to apply funds received
from the sale or rental of any portions of the Project to the repayment of such
excess before the same are applied for any other purpose. Any action taken by
the Bank hereunder may, in the sole discretion of the Bank, be thereafter
terminated or changed, and this Agreement or any action taken hereunder shall in
no way be construed as imposing any obligation upon the Bank to act or continue
to act on the Borrower's behalf or otherwise to complete the Project or fulfill
any obligation of the Borrower in connection with the Project.
(f) Possession of Project. Take possession of the Project and have,
hold, manage, lease and operate the same on such terms and for such period of
time as the Bank may deem proper; and collect and receive all rents, income and
profits of the property, with or without taking possession of the Project, with
full power to make from time to time all alterations, renovations, repairs or
replacements thereto as may seem proper to the Bank, and to apply such rents,
income and profits to the payment of:
(i) the reasonable cost of such alterations, renovations,
repairs and replacements and expenses incident to the taking and retaining
possession of the Project and the management and operation thereof and keeping
the same properly insured, and
(ii) all taxes and any other encumbrances which may be prior
in lien or payment to the Borrower obligations hereunder, and
(iii) the Borrower's obligations hereunder, together with
all costs and reasonable attorney's fees, in such order of priority as to any of
such items as the Bank in its sole discretion may determine, any law, custom or
use to the contrary notwithstanding.
(g) Repossession of Collateral. Proceed under the Uniform Commercial
Code as to all or any part of the collateral, and in conjunction therewith
exercise all of the rights, remedies and powers of a secured party under the
applicable Uniform Commercial Code, including, without limitation, taking
possession of the collateral pursuant to Section 9-503 of the Uniform Commercial
Code without resort to judicial process. Upon the occurrence of any Event of
Default hereunder, the Borrower shall assemble all of the collateral, and make
the same available at the Property. Any notification required by Section 9-504
of the Uniform Commercial Code shall be deemed reasonably and properly given if
given in the manner specified for other notices under this Agreement, at least
15 days before any sale or other disposition of the collateral. Disposition of
the collateral shall be deemed commercially reasonable if made pursuant to a
public offering advertised at least twice in a newspaper of general circulation
in the community where the collateral is located.
(h) Foreclosure. Exercise its rights under the Guaranty or any other
guarantor of the Loan and its rights of foreclosure and other remedies available
under the Deed of Trust.
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7.3 No Remedy Exclusive; Delays or Omissions; Waiver of Breach: No
action taken pursuant to this Article VII shall relieve the Borrower or any
other person from its obligations hereunder or under any of the other Loan
Documents, all of which shall survive any such action, and the Bank (to the
extent provided above) may take whatever action at law or in equity as may
appear necessary and desirable to collect the payments and other amounts then
due and thereafter to become due and/or to enforce the performance and
observance of any obligation, agreement or covenant of the Borrower hereunder or
of any other person under any of the Loan Documents.
No remedy herein conferred upon or reserved to the Bank is intended to
be exclusive of any other available remedy or remedies, but each and every such
remedy shall be cumulative and shall be in addition to every other remedy given
under this Agreement or under the other Loan Documents or now or hereafter
existing at law or in equity or by statute. Should any right or remedy granted
herein be held to be unlawful, the Bank shall be entitled to every other right
and remedy provided in this Agreement and by law or in equity. No delay or
omission to exercise any right or power accruing Upon any default, omission or
failure of performance hereunder or under the Loan Documents shall impair any
such right or power or be construed to be a waiver thereof, but any such right
and power may be exercised from time to time and as often as may be deemed
expedient. In the event any agreement contained in this Agreement should be
breached by the Borrower and is thereafter waived by the Bank, such waiver shall
be limited to the particular breach so waived and shall not be deemed to waive
any other breach. No waiver, amendment, release or modification of this
Agreement shall be established by conduct, custom or course of dealing, but
solely by an instrument in writing duly executed by the Bank. In order to
entitle the Bank to exercise any remedy reserved to it in this Article, it shall
not be necessary to give any notice, other than such notice as may be herein
expressly required.
ARTICLE VIII
MISCELLANEOUS
8.1. Reimbursement of Advances Made or Other Costs Incurred by Bank: If
the Borrower fails to make any payment or to perform any other of the Borrower's
obligations hereunder, the Bank, after notice to and demand upon the Borrower,
without waiving any default or releasing the Borrower from any of its
obligations hereunder, and without being under any obligation to do so, may make
such payment or perform any of the Borrower's obligations. All amounts so paid
by the Bank, and all costs, fees and expenses reasonably incurred by the Bank,
whether in connection with such payment or such performance or otherwise in
connection with their respective duties and responsibilities under this
Agreement and the other Loan Documents, shall be immediately due and payable by
the Borrower upon demand therefor, as additional payments hereunder, together
with interest thereon as provided in Section 8.2 below. In addition,
notwithstanding anything in this Agreement to the contrary, in the event that
the Borrower should default under any of the provisions of this Agreement, and
the Bank should employ attorneys or incur other expenses for the collection of
amounts due hereunder or the enforcement of performance or observance of any
obligation or agreement on the part of the Borrower herein contained, the
Borrower agrees that it will on demand therefore pay to the Bank the reasonable
fees of such attorneys and such other reasonable expenses so incurred.
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8.2. Interest on Additional Payments and Reimbursements: Without
limiting any other provisions for the payment of interest, additional interest,
late charges, premiums or like charges under any of the Loan Documents, in any
instance in which any sum other than principal, premium (if any), and interest
is due from the Borrower to the Bank as a direct payment, reimbursement or
otherwise, and no specific provision is made with respect to the payment of
interest thereon or the rate of interest thereon is not otherwise specified,
such sum shall bear interest from the date on which it becomes due until paid in
full at the Interest Rate plus 2% per annum.
8.3. Indemnification of Bank
(a) Claims in Connection with the Project. Except where same
results from the fraud, willful misconduct or negligence of Bank, (1) the
Borrower shall protect, indemnify, and save harmless the Bank and its agents
against and from any and all claims incurred by, or asserted or imposed against,
any of them, and any loss or expense (including all attorneys' fees) in
connection therewith, by reason of the Bank's participation in the financing of
the construction of the Improvements, any accident, injury (including death) or
damage to any person or property, however caused, resulting from, connected with
or growing out of any act of commission or omission of the Borrower or any
agents, assignees, contractors or subcontractors of the Borrower or any use,
nonuse, possession, occupation, condition, operation, service, design,
construction, acquisition, maintenance or management of, or on, or in connection
with, the Project, or any part thereof, until the date this Agreement is
terminated, regardless of whether such claims are against or are suffered or
sustained by the Bank or its agents, (2) the Bank shall not be liable for any
damage or injury occurring during the Loan term to persons or property of the
Borrower or any of its agents or any other person who or which may be upon the
Property, and the Borrower hereby releases the Bank from, and agrees that it
shall not be liable for, and the Borrower shall hold it harmless from, any such
liability, and (3) the Borrower may, and if so requested by the Bank, shall
undertake to defend, at its sole cost and expense, any and all claims brought
against the Bank or any of its agents in connection with any of the matters
mentioned in this Section, provided that the Bank shall give the Borrower timely
notice of and forward to the Borrower every demand, notice, summons or other
process received with respect to any claim within the purview hereof.
(b) Approvals of Project. Neither the approval by the Bank of the
Plans and Specifications, nor any subsequent inspections or approvals of the
Project during or after construction shall constitute a warranty or
representation by the Bank or any of its agents as to the technical sufficiency,
adequacy or safety or any structure or any of its component parts, including
without limitation, any fixtures, equipment or furnishings, nor shall such
approvals or inspections constitute such a warranty or representation as to the
subsoil conditions or any other physical condition or feature pertaining to the
Project. All acts, including any failure to act, relating to the Project by any
agent, representative or designee of the Bank are performed solely for the
benefit of the Bank to assure repayment of the Loan and are not for the benefit
of the Borrower or the benefit of any other person.
8.4. Nonassignability: Neither the Loan nor any advance thereunder may
be assigned by Borrower without the prior written consent of Bank. Neither the
Loan nor any advances hereunder shall be subject to the process of any court
upon legal action by or against Borrower, its stockholders, its partners, or by
or against anyone claiming under or through Borrowers or its stockholders or
partners. For the purposes of this Agreement, the Loan shall remain in the
custody of Bank until Borrower complies with each and all of the provisions
hereof; provided, however, that nothing herein contained shall be considered as
in any way modifying, affecting or subordinating the obligations heretofore
given or to be given by Borrower as security for the Loan and the same shall be
and remain in full force and effect, this Agreement being intended only as
additional security and protection for the Loan and to assure its use for the
purposes intended by Bank and Borrower.
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8.5. Liability of Bank: All conditions of the obligations of Bank
hereunder, including any obligation to make disbursements under the Loan, are
imposed solely and exclusively for the benefit of Bank and its successors and
assigns, and no other person or entity shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that Bank will refuse to disburse sums under the Loan in the absence of
strict compliance with any and all thereof. No other person or entity shall,
under any circumstances, be deemed to be a beneficiary of such conditions, any
and all of which may be freely waived in whole or in part by Bank at any time if
in its discretion it deems it desirable to do so.
8.6. No Partnership, Joint Venture, Agency: Borrower and Bank
acknowledge that the relationship between them created hereby and by the other
Loan Documents is that of debtor and creditor and is not intended to be and
shall not in any way be construed to be that of a partnership, joint venture, or
principal and agent; and that the activities of Bank in connection with the
construction and equipment of the Improvements and disbursement of the Loan
shall not be deemed to make Bank a partner, joint venturer, or principal or
agent of Borrower, but rather shall be deemed solely for the purpose of
protecting Bank's security for the Loan.
8.7. Notices: All notices, requests and demands upon the respective
parties hereto shall be deemed to have been given or made when delivered against
hand receipt or by nationally recognized overnight delivery or forty-eight (48)
hours after being deposited in the United States mail, postage prepaid and
certified, and addressed as follows:
(1) If to Bank:
MERCANTILE-SAFE DEPOSIT & TRUST COMPANY
0 Xxxxxxx Xxxxx - Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
ATTN: Xxxxxxx X. Xxxx, Vice President
With copies to:
Xxxxx X. Xxxxxxxxx, Esquire
Xxxxxxxxx Xxxxxx Xxxx & Xxxxxxxxx, LLP
2115 First Maryland Building
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
(2) If to Borrower:
Xx. Xxxxx X. Xxxxxxxx
The Xxxxxxxx Companies
00000 Xxx Xxxxxxxx Xxxx
Xxxxxx Xxxxxx, Xxxxxxxx 00000
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With copies to:
Xxxxxxx X. Xxxxxxxx, Esquire
Xxxxxxxxx, Xxxxxxx & Xxxxx
Xxxx Xxxxxxx, Suite 400
000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
or to such other address with respect of any party as such party shall notify
the others in writing.
8.8. Amendment; No Implied Waiver: This Agreement may be amended, and
Borrower may take any action herein prohibited, or omit to perform any act
required to be performed by it, only if Borrower shall first obtain the prior
written consent of Bank to such amendment, action or omission to act. No failure
of Bank to exercise and no delay in exercising any right, power or privilege
under this Agreement or the other Loan Documents shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege.
8.9. Survival of Agreements: All agreements, covenants, representations
and warranties of Borrower made in this Agreement shall survive the execution
and delivery of this Agreement and the other Loan Documents, and the making of
all disbursements hereunder, regardless of any investigation made by or on
behalf of Bank.
8.10. Entire Agreement; Successors and Assigns; Time of the Essence:
This Agreement and the other Loan Documents contain the entire terms of the
agreement with respect to the Loan, and no representations, inducements,
promises or agreements between Borrower and Bank not set forth herein or in the
other Loan Documents shall be of any force or effect. This Agreement shall be
binding upon and shall inure to the benefit of Borrower and Bank and their
respective successors and the Bank's assigns, whether so expressed or not. Time
is of the essence under this Agreement.
8.11. Severability: In case any one or more provisions contained in this
Agreement or the other Loan Documents should be deemed invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein or therein shall in no way be affected or
impaired thereby and shall be enforceable to the maximum extent permitted by
law.
8.12. Descriptive Headings: The headings of the articles, sections and
paragraphs of this Agreement are for the convenience of reference only, and are
not considered to be a part hereof and shall not limit or otherwise affect any
of the terms hereof.
8.13. Governing Law: This Agreement is made, executed and delivered in
the State of Maryland, and Maryland law shall govern its interpretation,
performance and enforcement.
[SIGNATURES FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, the Borrower and Bank have caused this Agreement to
be executed and delivered as of the day and year first above written.
WITNESS: MERCANTILE-SAFE DEPOSIT & TRUST
COMPANY
/S/ [ILLEGIBLE SIGNATURE] By: /s/ Xxxxxxx X. Xxxx (SEAL)
--------------------- ----------------------------------
Xxxxxxx X. Xxxx, Vice President
XXXXXXXX HOSPITALITY LIMITED
PARTNERSHIP
/s/ [ILLEGIBLE SIGNATURE] By: /S/ Xxxxx X. Xxxxxxxx (SEAL)
--------------------- -----------------------------------
Xxxxx X. Xxxxxxxx, President
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