EXECUTION COPY
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BUILDING LOAN AGREEMENT
Dated as of August 24th, 1999
among
AH BATTERY PARK OWNER, LLC
as the Borrower,
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders
and
KEY CORPORATE CAPITAL, INC.
as the Agent
AMOUNT OF BUILDING LOAN:
THIRTY SIX MILLION FOUR HUNDRED FIFTY SIX THOUSAND
FOUR HUNDRED FOUR AND 00/100 DOLLARS
($36,456,404.00)
LOCATION OF PROPERTY:
000 Xxxxx Xxx Xxxxxx
Xxxxx Xxxxxxxxxxx Neighborhood
Xxxxxxx Xxxx Xxxx
Xxx Xxxx, Xxx Xxxx
SECTION:1
BLOCK:16
LOT:P/03, Site 20B
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TABLE OF CONTENTS
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ARTICLE PAGE
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ARTICLE I
PARTICULAR TERMS; DEFINITIONS..........................................3
Section 1.1 Definitions.............................................3
Section 1.2 Singular and Plural....................................16
ARTICLE II(A)
LOAN FACILITY.........................................................16
Section 2A.1 Loans..................................................16
Section 2A.2 Notes..................................................17
Section 2A.3 Interest Rate..........................................17
Section 2A.4 Payment of Interest....................................18
Section 2A.5 Payment of Principal...................................18
Section 2A.6 Prepayment.............................................18
Section 2A.7 Procedure for Payment..................................18
Section 2A.8 Indemnification........................................19
Section 2A.9 Reimbursement..........................................19
Section 2A.10 Changes................................................20
Section 2A.11 Extension Periods......................................21
Section 2A.12 Lenders' Rights........................................22
Section 2A.13 Acceleration of Maturity...............................22
Section 2A.14 Costs of Collection....................................23
Section 2A.15 Late Charges...........................................23
ARTICLE II(B)
LOAN DISBURSEMENTS/REQUIRED EQUITY....................................23
Section 2B.1 Procedure for Loan Borrowing and Interest Rate
Election...............................................23
Section 2B.2 Amount of Disbursements for Hard Costs.................24
Section 2B.3 Stored Materials.......................................25
Section 2B.4 Intentionally Omitted..................................26
Section 2B.5 Intentionally Omitted .................................26
Section 2B.6 Intentionally Omitted..................................26
Section 2B.7 Funding Limitations....................................26
Section 2B.7(A)Loan Balancing.........................................27
Section 2B.8 Retainage..............................................27
Section 2B.9 Place of Disbursement..................................28
Section 2B.10 Intentionally Omitted..................................28
Section 2B.11 Expenses and Disbursements Secured by Loan Documents...28
Section 2B.12 Other Limitations and Requirements.....................29
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TABLE OF CONTENTS
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ARTICLE PAGE
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Section 2B.13 Contract Verification..................................29
Section 2B.14 Budget Reallocations...................................29
Section 2B.15 Required Equity........................................30
Section 2B.16 Pro Rata; Commitments..................................31
Section 2B.17 Sharing of Setoffs.....................................31
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER............................32
Section 3.1 Representations and Warranties of Borrower.............32
ARTICLE IV
COVENANTS OF BORROWER.................................................37
Section 4.1 Affirmative Covenants of Borrower......................37
Section 4.2 Negative Covenants of Borrower.........................45
ARTICLE V
EVENTS OF DEFAULT.....................................................48
Section 5.1 Events of Default......................................48
Section 5.2 Grace Periods..........................................52
Section 5.3 Rights of Agent and Lenders............................52
Section 5.4 Limited Recourse Obligations...........................54
ARTICLE VI
CONDITIONS TO LENDERS'OBLIGATIONS TO MAKE LOAN DISBURSEMENTS..........54
Section 6.1 Conditions Precedent to First Disbursement.............54
Section 6.2 Documents To Be Delivered..............................54
Section 6.3 Conditions to Funding of Advances......................60
Section 6.4 Last Disbursement of Hard Costs........................61
ARTICLE VII
THE AGENT.............................................................63
Section 7.1 Appointment; Powers and Immunities.....................63
Section 7.2 Limitations on Agent...................................64
Section 7.3 Reliance by Agent......................................67
Section 7.4 Defaults...............................................68
Section 7.5 Rights of Agent as a Lender............................68
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TABLE OF CONTENTS
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ARTICLE PAGE
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Section 7.6 Indemnification........................................68
Section 7.7 Consequential Damages..................................69
Section 7.8 Payee of Note Treated as Owner.........................69
Section 7.9 Lenders' Knowledge; Nonreliance on Agent and Other
Lenders................................................69
Section 7.10 Failure to Act.........................................70
Section 7.11 Resignation or Removal of Agent........................70
Section 7.12 Reliance by Borrower...................................70
Section 7.13 Apportionment of Payments..............................70
Section 7.14 Successors and Assigns.................................71
ARTICLE VIII
GENERAL PROVISIONS....................................................73
Section 8.1 No Waiver; Modifications in Writing....................73
Section 8.2 Agent's Approval.......................................73
Section 8.3 Standing...............................................73
Section 8.4 Notices................................................73
Section 8.5 Amendments.............................................75
Section 8.6 Assignment.............................................75
Section 8.7 Governing Law..........................................75
Section 8.8 Severability of Provisions.............................75
Section 8.9 Headings...............................................75
Section 8.10 Waiver of Trial by Jury................................76
Section 8.11 Submission to Jurisdiction; Service of Process.........76
Section 8.12 Lender's Remedies Cumulative...........................76
Section 8.13 Counterparts...........................................77
Section 8.14 Trust Fund.............................................77
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ANNEX
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Annex I - List of the Lenders
EXHIBITS
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Exhibit A - Legal Description
Exhibit B - Permitted Encumbrances
Exhibit C - Affidavit Pursuant to Section 22
of the Lien Law of the State of New York
Exhibit D - Architect's Certificate
Exhibit E - Developer's Certificate
Exhibit F - Occupancy Schedule/Pro Forma Rentals
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THIS BUILDING LOAN AGREEMENT (this "AGREEMENT") dated as of this 24th day
of August, 1999, by and among AH BATTERY PARK OWNER, LLC, an Ohio limited
liability company, with an office at c/o Alliance Holdings, Inc., 000 Xxxxxxxxxx
Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxxxx 00000 (the "BORROWER"), Key Corporate
Capital Inc., a Michigan corporation having an administrative office at 000
Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000-0000 ("KCCI "), as agent (in such capacity,
the "AGENT"), and the financial institutions listed in Annex I hereto, including
KCCI, and each other financial institution which has been or may be assigned an
interest herein pursuant to Section 7.14, as evidenced by an Assignment and
Acceptance Agreement (each, a "LENDER" and, collectively, the "LENDERS").
W I T N E S S E T H:
WHEREAS, Borrower is the actual, beneficial and record ground lessee of a
certain tract of land consisting of approximately .449 acres located in the
Borough of Manhattan, City and State of New York, which is more particularly
described in EXHIBIT A attached hereto and made a part hereof (the "LAND");
WHEREAS, On or about June 30, 1999, Borrower executed the commitment
letter (the "Commitment Letter") of the Lenders to make loans to finance various
construction and non-construction costs relative to Borrower's development of a
218 unit independent living/assisted living complex to be known as The Hallmark
at Battery Park City containing a floor area of approximately 219,615 square
feet of "floor area" (as such term is defined in the Zoning Resolution of the
City of New York) to be built on the Land in accordance with this Agreement, and
in compliance with the Plans and all Requirements, as further described herein
under the definition of "IMPROVEMENTS", subject to all the conditions and
requirements of said Commitment Letter, all of which are incorporated by
reference herein, provided, however, in the event of a conflict between the
terms of the Commitment Letter and the terms of this Agreement or any of the
other Loan Documents, the terms of this Agreement and/or the Loan Documents
shall control in all cases.
WHEREAS, Pursuant to the Commitment Letter, the financing will consist of
two components; (i) the Building Loan (hereinafter defined) in the amount of
$36,456,404.00, which will be advanced ratably by the Lenders from time to time
in accordance with the terms of this Agreement, and (ii) the Soft Cost Loan
(hereinafter defined) in the amount of $12,668,596.00, which will be advanced
ratably by the Lenders to Borrower, upon and subject to the terms and conditions
set forth in that certain Soft Cost Loan Agreement of even date herewith between
Lender to Borrower (the "SOFT COST LOAN AGREEMENT").
WHEREAS, The Building Loan will be advanced to Borrower for and on account
of Hard Costs (as defined below) and the Soft Cost Loan will be advanced to
Borrower on account of Soft Costs (as defined below).
WHEREAS, This Agreement provides for the funding of Advances (hereinafter
defined) of the Building Loan for Hard Costs and for the repayment of the
Building Loan, all upon and subject to the terms and conditions set forth
herein.
WHEREAS, The Building Loan is evidenced by one or more promissory notes,
of even date herewith, in the aggregate original principal amount of $36,456,404
(individually and collectively, the "BUILDING LOAN NOTE") and the Soft Cost Loan
is evidenced by one or more promissory notes, of even date herewith, in the
aggregate original principal amount of $12,668,596.00 (individually and
collectively, the "SOFT COST NOTE"). The Building Loan Note and this Agreement
are secured by a Building Loan Leasehold Mortgage, Security Agreement and
Assignment of Rents (the "BUILDING LOAN MORTGAGE"), of even date herewith, made
by Borrower in favor of the Lenders, and recorded in the Office of the City
Register, New York County, (the "OFFICIAL RECORDS"), covering the Property and
by other collateral as described herein and in the Commitment Letter. The Soft
Cost Note and the Soft Cost Loan Agreement are secured by a Soft Cost Leasehold
Mortgage, Security Agreement and Assignment of Rents (the "SOFT COST MORTGAGE"),
of even date herewith, made by Borrower in favor of the Lenders, recorded in the
Official Records, covering the Property and by other collateral as described in
the Soft Cost Loan Agreement and in the Commitment Letter.
WHEREAS, Completion (hereinafter defined) of construction of the
Improvements and the payment and performance by Borrower of all obligations of
Borrower under this Agreement and otherwise in connection with the Building Loan
and the Soft Cost Loan and the payment of all sums due with respect to both the
Building Loan and the Soft Cost Loan are to be guaranteed by the entity
identified under the definition of Guarantor below, who is executing a
Completion Guaranty, a Payment Guaranty and an Operating Deficit Guaranty, to be
dated of even date herewith (collectively, the "GUARANTY"), in favor of the
Lenders.
WHEREAS, In connection with the Building Loan and the Soft Cost Loan,
Borrower and Guarantor are executing in favor of the Lenders an Environmental
Indemnity Agreement, to be dated of even date herewith (the "ENVIRONMENTAL
INDEMNITY").
WHEREAS, Borrower and Developer (hereinafter defined) have also executed
and delivered to the Lenders in respect of the Building Loan and the Soft Cost
Loan, the Assignment of Contracts, Permits, Licenses and Approvals, of even date
herewith, relating to the Plans, the General Contract and the Architect=s
Agreement (all as defined below), and certain other contracts and rights and
interests of Borrower and Developer, as Borrower's agent, with respect to the
construction and operation of the Project (the "ASSIGNMENT OF CONTRACTS"),
including, without limitation, all contracts, rights and interests described
therein.
WHEREAS, The Commitment Letter, this Agreement, the Soft Cost Loan
Agreement, the Building Loan Note, the Soft Cost Note, the Building Loan
Mortgage, the Soft Cost Mortgage, the Security Agreement, the UCC Financing
Statements, the Assignment of Contracts, the Guaranty, the Environmental
Indemnity and all other documents evidencing or securing the Building Loan or
the Soft Cost Loan are referred to herein as the "LOAN DOCUMENTS."
WHEREAS, The Lenders have advised Borrower that, subject to the terms and
conditions of this Agreement, and based upon the representations, warranties,
covenants and undertakings of Borrower herein contained, the Lenders are willing
to make such Advances of the Loan to Borrower on the terms and conditions
hereinafter set forth.
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NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
PARTICULAR TERMS; DEFINITIONS
-----------------------------
Section 1.1 Definitions. For all purposes of this Agreement, the following
terms, except as otherwise expressly provided or unless the context requires
otherwise, shall have the respective meanings hereinafter specified:
"ADVANCE" - Shall have the meaning set forth in Section 2A.1.
"AFFILIATE" - With respect to any person (including any person,
corporation, limited liability company,
partnership or other business organization), any
person which directly or indirectly controls, or
is controlled by, or is under common control with
such person. For the purposes of this definition,
however, the parties acknowledge that Developer
and Guarantor are not currently Affiliates of
Borrower.
"AGENCY FEE" - A fee equal to $10,000 per annum payable to Agent,
for its own account, with the first such payment
payable by Borrower to Agent on the Closing Date,
with all subsequent payments being due on each
anniversary thereof through the Maturity Date as
the same may be extended by the First Extension
Period and the Second Extension Period (which
Agency Fee shall be prorated for partial years and
refunded as applicable).
"AGENT" - Key Corporate Capital Inc., a national banking
association and its successor appointed pursuant
to Section 7.11.
"AGENT'S INSPECTING
CONSULTANT" - Xxxxxxx & Xxxxxxxx Associates, Inc.
"AGENT'S INSPECTING
CONSULTANT FEES" - All reasonable fees and disbursements of Agent's
Inspecting Consultant.
"AGENT'S COUNSEL" - Xxxxx, Day, Xxxxxx & Xxxxx, and/or such other
counsel as Agent may select.
"AGENT'S COUNSEL FEES" - All reasonable fees and disbursements of Agent's
Counsel.
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"AGGREGATE CHANGE ORDER
AMOUNT" - $1,000,000.
"APPLICABLE LIBOR RATE" - Shall have the meaning set forth in the Note.
"APPRAISAL" - A written appraisal report, prepared in response
to an engagement letter issued by Agent, at
Borrower's sole cost and expense, in accordance
with the Uniform Standards of Professional
Appraisal Practice applicable to Federally Related
Transactions as set out in Appendix A to the real
estate appraisal regulations adopted by the Office
of the Comptroller of the Currency pursuant to the
Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") (Sub-part C of
12 C.F.R. 34) by an appraiser reasonably
satisfactory to the Lenders who shall deliver to
the Lenders its written authorization for reliance
by the Lenders on the Appraisal.
"APPROVED LEASES" - Collectively, all leases or other rental or
occupancy agreements of the Improvements that
comport with the requirements of Section 4.2(i)
hereof and the Ground Lease, which have been
approved by Agent and the Ground Lessor (unless
such approval is not required pursuant to such
Section 4.2(i) or the Ground Lease, as
applicable), and are fully executed.
"ARCHITECT'S AGREEMENT" - The architect's agreement, dated December 8, 1998
entered into by Developer on Borrower's behalf,
and Borrower's Architect.
"ASSIGNMENT AND ACCEPTANCE
AGREEMENT" - An Assignment and Acceptance Agreement entered
into by KCCI or another Lender and an Assignee (as
defined in Section 7.14), pursuant to which the
Assignee shall acquire all or a portion of KCCI's
or such other Lender's Commitment and shall become
a Lender party to this Agreement.
"ASSIGNMENT OF CONTRACTS" - The Assignment of Contracts, Permits, Licenses and
Approvals dated the date hereof made by Borrower
and Developer to Agent for the ratable benefit of
Lenders.
"BANC ONE FINANCING" - Shall mean the equity financing obtained by Member
and/or Alliance Holdings, Inc. from Banc One
Capital Partners IV, Ltd., or an affiliate
thereof, as more particularly described in Section
2B.15 hereof.
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"BANKRUPTCY CODE" - The United States Bankruptcy Code, 11 U.S.C. " 101
et. seq., as amended from time to time, and all
regulations promulgated thereunder and rules of
practice and procedure applicable thereto.
"BORROWER" - Shall have the meaning set forth in the preamble
hereto.
"BORROWER'S ARCHITECT" - Xxxxxxx Xxxxxxxxxxxx Xxxxxx Efron, Architects
"BUDGET" - Shall mean the Final Budget.
"BUILDING LOAN" - Shall have the meaning set forth in Section
2A.1(a).
"BUILDING LOAN AGREEMENT" - Shall have the meaning set forth in the Recitals
hereto.
"BUILDING LOAN MORTGAGE" - Shall have the meaning set forth in the Recitals
hereto.
"BUILDING LOAN NOTE" - Shall have the meaning set forth in the Recitals
hereto.
"CHANGE ORDER" - Any amendment or modification to the Plans, the
General Contract or any Major Contract.
"CHANGE ORDER AMOUNT" - $100,000.
"CLOSING DATE" - August 25, 1999.
"COLLATERAL" - The Premises, the Project and all property and
interests in property (now owned or hereafter
acquired) upon which a Lien is granted under any
of the Loan Documents.
"COMMITMENT" - Shall have the meaning set forth in Section 2B.16.
"COMMITMENT FEE" - The aggregate sum of $368,437.50, $184,219 of
which was previously paid by Borrower to KCCI, and
the remaining $184,218.50 of which is payable to
Agent, for its own account or for the ratable
benefit of the Lenders, on the Closing Date.
"COMPLETION" or
"COMPLETION OF THE
IMPROVEMENTS" - Shall be deemed to have occurred upon the
occurrence of all of the following: (i) the
Improvements comprising the Project shall be fully
paid and 100% complete in accordance with the
Plans, all Requirements and the requirements of
the Ground Lease, all as determined by Agent and
Agent's Inspecting Consultant in accordance with
the procedure set forth in Section 2B.2 below;
(ii)
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all on-site and off-site improvements, including,
without limitation, all utility services and
fixtures and equipment required for access to and
operation of the Improvements shall be 100%
complete; (iii) a temporary certificate of
occupancy for the full use and occupancy of the
entire Premises has been issued (it being
expressly understood that Borrower shall proceed
as expeditiously as possible to secure a final
Certificate of Occupancy, in any event within two
(2) years of issuance of the temporary certificate
of occupancy) or its equivalent issued by the
applicable governmental authority for the
Improvements comprising the Project, and all other
reasonable evidence that the City of New York
and/or the Battery Park City Authority have
acknowledged the completion of all work required
by it to meet all legal requirements and the
requirements under the Ground Lease, as
applicable, including, without limitation, all
zoning and building requirements; (iv) all Permits
and Licenses, if any, required for the operation
of the Project as an independent living/assisted
living complex under all applicable legal
requirements have been issued; (v) all of the
requirements set forth in Section 6.4 of this
Agreement for the final disbursement of Hard Costs
shall have been satisfied; (vi) the opening of the
Project shall have been scheduled to occur within
thirty (30) days.
"COMPLETION DATE" - The date that occurs eighteen (18) calendar months
after the Closing Date, subject to extension for
Force Majeure (it being expressly understood,
however, that the Maturity Date shall not be
extended by reason of Force Majeure).
"COMPLETION GUARANTY" - The Completion Guaranty dated the date hereof made
by Guarantor in favor of Agent, for the ratable
benefit of the Lenders.
"CONSTRUCTION
ADMINISTRATION FEE" - A fee equal to $25,000, payable to Agent, for its
own account on the Closing Date.
"DEBT SERVICE
COVERAGE RATIO" - NOI, less the sum of (i) five percent (5%) of
Project Revenues, and (ii) an annual capital
expenditure reserve equal to $250 per unit,
divided by all interest, principal amortization
and other payments due with respect to the
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Loans and any other debt (other than interest
payments pursuant to Mezzanine Financing permitted
hereunder) of Borrower during the applicable
period.
"DEFAULT RATE" - Shall have the meaning set forth in the Note. In
no event shall the Interest Rate or the Default
Rate exceed the maximum interest rate permitted
under applicable law.
"DEVELOPER" - Shall mean Brookdale Living Communities of New
York - BPC Inc., a Delaware corporation.
"DEVELOPMENT AGREEMENT" - The Amended and Restated Development Agreement
made as of August 24, 1999 by Borrower, as owner,
and Developer.
"DEVELOPMENT FEE" - The Development Fee set forth in the Budget.
"DOMESTIC BUSINESS DAY" - Any day other than a Saturday or Sunday or a day
when commercial banks are authorized or required
by law to close in Cleveland, Ohio.
"DRAW REQUEST" - A written statement of Borrower on a Standard AIA
Form G702 and G703 setting forth the Loan
disbursement sought by Borrower under this
Agreement, which shall constitute an affirmation
by Borrower that the representations and
warranties of Article III remain true and correct
as of the date thereof and will be so on the date
of disbursement, which draw request shall be (i)
signed by Borrower, or by Developer on behalf of
Borrower, approved in writing by Borrower's
Architect, all subject to confirmation and
approval by Agent and Agent's Inspecting
Consultant, and (ii) accompanied by lien waivers
or releases as required by Sections 6.3 and 6.4
below.
"ENGINEER" - Xxxxxxx Xxxxxxxxxxxx Xxxxxx Efron, Architects
"ENGINEER'S AGREEMENT" - The engineer's agreement, dated December 8, 1998,
entered into by Developer on Borrower's behalf,
and the Engineer.
"ENVIRONMENTAL INDEMNITY
AGREEMENT" - The Environmental Indemnity Agreement dated the
date hereof made by Borrower and Guarantor in
favor of Agent for the ratable benefit of Lenders.
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"EURODOLLAR BUSINESS DAY" - Any Domestic Business Day on which commercial
banks are open for international business
(including dealings in dollar deposits) in London,
England.
"EVENT OF DEFAULT" - Shall have the meaning set forth in Article V
hereof.
"FFE" - Furniture, fixtures and equipment referred to in
the Budget.
"FACILITY SUMMARY REPORT" - Shall have the meaning set forth in Section
4.1(dd) hereof.
"FINAL BUDGET" - The budget delivered to, approved and initialed by
Agent on or before Closing Date, as same may be
amended from time to time with Agent's prior
written consent in accordance with Section
7.2(b)(iv) or as line items within same may be
reallocated in accordance with Section 2B.14.
"FINANCIAL STATEMENTS" - The financial statements of Borrower and Guarantor
heretofore delivered to Agent in connection with
the Loan, as supplemented from time to time.
"FORCE MAJEURE" - Delays in construction of the Improvements caused
by or attributable to acts of God, unusual weather
conditions, strikes, lockouts or labor disputes
(including those involving Borrower if Borrower
has used all reasonable means to conclude the
strike, lockout or labor dispute short of
conceding Borrower's position in the labor matter)
inability to obtain an adequate supply of
materials, fuel, water, electricity, labor or
other supplies, casualty, governmental action,
accidents, breakage, repairs, or other conditions,
matters or events which are not within the
reasonable control of Borrower and not
attributable to the bad faith of Borrower or its
agents, excluding the lack of funds, including,
without limitation, the lack of funds due to a
failure to perform any obligations hereunder,
provided (i) the Budget, at all times, remains in
balance, or if same is not in balance, Borrower
and/or Guarantors have complied with Section
2B.7(A) hereof, (ii) Borrower notifies Agent
within five (5) days of the occurrence of the
Force Majeure event and the length of the
anticipated delay, but in no event shall said
relief exceed ninety (90) days in the aggregate,
and (iii) Borrower has been granted similar relief
under the Ground Lease and all Requirements, as
necessary.
"FORWARD TREASURY LOCK
AGREEMENT" - The agreement, dated as of the date hereof,
between Borrower, as counterparty, and KCCI (which
shall name
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Guarantor as credit support provider), or dated as
of a future date, between Borrower and/or
Guarantor, as counterparty, and a third party
financial institution reasonably acceptable to
Agent, as the case may be, pursuant to which the
Interest Rate Protection Facility shall be
purchased in accordance with the requirements of
Section 4.1(kk) hereof, it being expressly
understood that notwithstanding anything contained
herein or in any of the other Loan Documents,
payments of additional interest and other amounts
due under the Forward Treasury Lock Agreement
shall be secured by the Soft Cost Mortgage, the
Guaranties and the other Loan Documents if, and
only to the extent that, KCCI and one or more of
the other Lenders are the parties providing the
Interest Rate Protection Facility.
"GENERAL CONTRACT" - The general contract, dated December 30, 1998,
entered into by Borrower, or by Developer on
Borrower's behalf, and the General Contractor
providing for a maximum fixed price.
"GENERAL CONTRACTOR" - HRH Construction Corporation
"GOVERNMENTAL AUTHORITY" - The United States, the City of New York, State of
New York and any political subdivision thereof,
and any agency, department, commission, board,
bureau or instrumentality of any of them which
exercises jurisdiction over Borrower, any of the
Guarantors or the Premises.
"GROUND LEASE" - That certain Ground Lease, dated as of August 24,
1999, between Battery Park City Authority, as
Ground Lessor, and Borrower, as Tenant, pursuant
to which Borrower holds the leasehold on the Land
and Improvements.
"GROUND LESSOR" - Battery Park City Authority.
"GUARANTY" OR "GUARANTIES"- Shall mean the Payment Guaranty, the Completion
Guaranty, the Operating Deficit Guaranty or any of
them.
"GUARANTOR" - Brookdale Living Communities, Inc., a Delaware
corporation, or any additional guarantor or
substitute Guarantor permitted under Section
4.2(m).
"HARD COSTS" - All costs that constitute "costs of the
improvement" under the New York Lien Law and
included in the Budget.
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"IMPROVEMENTS" - An assisted living/independent living complex
containing approximately 218 units and
approximately 219,615 square feet of "floor area"
(as such term is defined in the Zoning Resolution
of the City of New York), including without
limitation all on-site and off-site improvements,
including, without limitation, all utility
services and fixtures and equipment required for
access to and operation of the complex to be
constructed on the Land, all of which is more
particularly described in the Plans.
"INITIAL CLOSING" - The date of the initial funding of the Loan.
"INITIAL ESTIMATED COST" - Shall mean $62,624,077, i.e. the maximum amount of
the Loan ($49,125,000) plus the amount of the
Required Equity ($13,499,077).
"INTEREST RATE" - Shall mean the Prime Rate or Applicable LIBOR Rate
as provided in the Note.
"INTEREST RATE PROTECTION
FACILITY" - Shall mean the interest rate protection which
shall be purchased in accordance with the
requirements of Section 4.1(kk) hereof pursuant to
the Forward Treasury Lock Agreement (hereinafter
defined), it being expressly understood that all
amounts that may be due to KCCI (or any other
Lender who shall become a party to the Forward
Treasury Lock Agreement) shall be secured on a
pari passu basis by the Building Loan Mortgage,
the Soft Cost Mortgage, the Guaranties and the
other Loan Documents, and accordingly,
notwithstanding the second priority nature of the
Soft Cost Mortgage, all recoveries pursuant to the
Building Loan Mortgage, the Soft Cost Mortgage and
the other Loan Documents shall be shared on a pari
passu basis among the Lenders who are parties to
this Loan Agreement and the Lenders who are
parties to the Forward Treasury Lock Agreement in
accordance with their relative interests in the
Loan on the one hand and in the Forward Treasury
Lock Agreement on the other; it being expressly
understood, however, that, notwithstanding
anything contained herein or in any of the other
Loan Documents, the additional interest and other
amounts that may be due to the party providing the
Interest Rate Protection Facility shall be secured
by the Soft Cost Mortgage, the Guaranties and the
other Loan Documents if, and only to the extent
that, KCCI and one or more of the Lenders are the
parties providing the Interest Rate Protection
Facility.
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"INTERMEDIATE THRESHOLD" - Shall have the meaning set forth in Section
4.1(cc) hereof.
"LAND" - Shall have the meaning set forth in the Recitals
hereto.
"LEASEHOLD ENTITY" - Shall have the meaning set forth in Section
7.2(b)(ix) hereof.
"LENDER" or "LENDERS" - KCCI and the other financial institutions listed
in Annex I, and each other financial institution
which has been assigned an interest herein
pursuant to Section 7.14.
"LIEN" - Any mortgage, pledge, lien, security interest,
judgment lien, mechanic's lien, installment
purchase agreement or other third party right,
charge or encumbrance of any kind affecting the
Land.
"LIBOR INTEREST PERIOD" - Shall have the meaning set forth in the Note.
"LIBOR RATE" - Shall have the meaning set forth in the Note.
"LIQUID ASSETS" - Shall mean assets in the form of cash, cash
equivalents, obligations of (or fully guaranteed
as to principal and interest by) the United States
or any agency or instrumentality thereof (provided
the full faith and credit of the United States
supports such obligation or guarantee),
certificates of deposit issued by a commercial
bank having net assets of not less than
$500,000,000, securities listed and traded on a
recognized stock exchange or traded over the
counter and listed in the National Association of
Securities Dealers Automatic Quotations, liquid
debt instruments that have a readily ascertainable
value and are regularly traded in a recognized
financial market, or any unused portion of any
credit line maintained with a bank which must have
an Standard & Poor's rating of "A" or better, none
of which are subject to specific pledge, lien or
other encumbrance.
"LOAN" - Shall have the meaning set forth in Section
2A.1(a).
"LOAN DOCUMENTS" - Shall have the meaning set forth in the Recitals
hereto.
"MAJOR CONTRACTS" - Any contract entered into by Borrower relating to
the Improvements in an amount equal to or
exceeding $200,000.
"MAJOR CONTRACTOR" - Any contractor party to a Major Contract.
11
"MAJOR SUBCONTRACT" - Any contract between the General Contractor and a
subcontractor relating to the Improvements in an
amount equal to or exceeding $200,000.
"MAJOR SUBCONTRACTOR" - Any subcontractor party to a Major Subcontract.
"MANAGEMENT AGREEMENT" - The Management Agreement made as of August 24th,
1999, by Borrower, as owner, and Developer, as
manager.
"MANAGEMENT FEE" - Shall mean the management fee payable to Manager
under the Management Agreement.
"MANAGER" - Brookdale Living Communities of New York - BPC
Inc., a Delaware corporation.
"MATURITY DATE" - February 28, 2001, subject to extension pursuant
to the terms of Section 2A.11 of this Agreement.
"MEMBER" - AH Battery Park Member, LLC, an Ohio limited
liability company, the sole member and manager of
Borrower.
"MEMBERSHIP AGREEMENT" - The Amended and Restated Operating Agreement of
Borrower, dated as of June 19, 1999.
"MEZZANINE FINANCING" - Shall have the meaning set forth in Section
2B.15(b) hereof.
"MORTGAGE" - The Building Loan Mortgage and the Soft Cost
Mortgage, each dated of even date herewith, made
by Borrower, as mortgagor, to Agent, as mortgagee,
for the ratable benefit of the Lenders, which
Building Loan Mortgage secures the Building Loan
Note and encumbers, among other things, and is a
first lien on, Borrower's leasehold interest in
the Premises and which Soft Cost Mortgage secures
the Soft Cost Note and encumbers, among other
things, and is a second lien on, Borrower's
leasehold interest in the Premises.
"NOI" - Project Revenues, less all ordinary and customary
operating expenses actually incurred and paid by
Borrower, other than the Management Fee (certified
by Borrower or by the Developer or Manager on
behalf of Borrower and approved by the Agent), in
connection with the ownership and operation of the
Project.
"NOTE" or "NOTES" - Shall have the meaning set forth in Section 2A.2.
12
"OBLIGATION" - All obligations of Borrower to Agent and the
Lenders under this Agreement, the Notes or the
other Loan Documents or any related instrument or
document, howsoever created, arising or evidenced,
whether direct or indirect, absolute or
contingent, or now or hereafter existing, or due
or to become due.
"OPERATING DEFICIT
GUARANTY" - The Operating Deficit Guaranty dated the date
hereof made by Guarantor in favor of Agent, for
the ratable benefit of the Lenders.
"PAYMENT GUARANTY" - The Payment Guaranty dated the date hereof made by
Guarantor in favor of Agent, for the ratable
benefit of the Lenders.
"PERMITTED ENCUMBRANCES" - The items listed in Exhibit B hereto and any
easements or licenses granted with the written
consent of Agent, which shall not be unreasonably
withheld if such easements and/or licenses are
reasonably necessary for and beneficial to the
operation of the Project, or any other
encumbrances expressly permitted under this
Agreement.
"PLANS" - The preliminary and the final plans and
specifications, including all shop drawings (which
shop drawings will be kept at the Project site for
inspection by Agent or Agent's Inspecting
Consultant), for the construction and equipping of
the Improvements prepared (in accordance with, and
which conform to, the requirements set forth in
Article 11 of the Ground Lease, including, without
limitation, (a) the Requirements, the Master
Development Plan, the Design Guidelines and the
Construction Documents (as all of such terms are
defined in the Ground Lease) and (b) the
provisions of Section 11.02 of the Ground Lease
governing the review and approval by the lessor of
the plans and specifications) by Borrower's
Architect, and approved by Agent, Agent's
Inspecting Consultant and the Ground Lessor to the
full extent required under the Ground Lease and
(in the case of final plans, to the extent
necessary to satisfy any Requirement) the
applicable Governmental Authorities, as amended or
modified by all Change Orders approved hereunder
by Agent.
"POLLUTANT" - Any solid, liquid, gaseous or thermal contaminant,
including smoke, vapor, radon, soot, fumes, acids,
alkalis, chemicals, waste, petroleum products or
by products,
13
asbestos (including, without limitation, friable
asbestos, airborne asbestos or any substance or
material containing asbestos), PCBs, phosphates,
lead or other heavy metals, chlorine, radon gas,
any "HAZARDOUS SUBSTANCE" or "POLLUTANT" or
"CONTAMINANT" as defined in the Comprehensive
Environmental Response, Compensation and Liability
Act, as amended, any "HAZARDOUS WASTE" as defined
in the Resource Conservation and Recovery Act, any
"POLLUTANT" as defined in the Clean Water Act
and/or any "HAZARDOUS AIR POLLUTANT" as defined in
the Clean Air Act, and the regulations adopted
pursuant thereto, or any other toxic or hazardous
wastes or materials as defined, identified or
classified under any Requirement, and any
regulations adopted pursuant thereto.
"PREMISES" - Borrower's leasehold interest in the Land, the
Improvements, the building materials, personal
property and all other items owned and/or leased
by Borrower and described in the granting clause
of the Mortgage, and any other personal property
owned and/or leased by Borrower and used in the
construction or operation of the Improvements,
including all fixtures, furnishings and equipment
necessary to operate the Improvements for its
intended purpose.
"PREPAYMENT" - Shall mean any mandatory or optional prepayment of
the Loan or any part thereof pursuant to Section
2A.6 hereof.
"PRIME RATE" - Shall have the meaning set forth in the Note.
"PROJECT" - The Premises, including without limitation, the
Land, the Improvements, all on-site and off-site
improvements, including without limitation, all
utility services and fixtures and equipment
required for access to or operation of the
Improvements.
"PROJECT DOCUMENTS" - The Ground Lease, the Development Agreement, the
Management Agreement, the Assignment of Contracts,
the General Contract, the Architect's Agreement,
the Engineer's Agreement, the Plans, all necessary
Project permits, the Approved Leases, the Major
Contracts and the Major Subcontracts.
"PROJECT REVENUES" - All fixed rent or other income (including expense
reimbursements) actually received by Borrower in
connection with its ownership and occupancy of the
Premises, as reasonably determined by Agent based
upon
14
the most current Facility Summary Report then in
Agent's possession.
"PRO RATA" - Shall have the meaning set forth in Section
2B.16(i) hereof.
"PROTECTIVE ADVANCES" - Any disbursements and advances pursuant to any of
the Loan Documents (which disbursements and
advances shall be deemed to be "ADVANCES" made
hereunder) which Agent deems necessary or
desirable to preserve or protect the Collateral or
any portion thereof or to enhance the likelihood
or maximize the amount of repayment of the
Advances and other Obligations.
"REQUIRED EQUITY" - The aggregate sum of $13,499,077, to be
contributed by Borrower for costs incurred in the
development and construction of the Improvements,
which contribution may be made in the form of cash
and/or the Mezzanine Financing as more
particularly described in Section 2B.15 hereof.
"REQUIREMENT" - Any law, statute, ordinance, order, rule or
regulation of a Governmental Authority applicable
to Borrower, any Guarantors or the Premises,
including, but not limited to, laws, ordinances,
orders, rules or regulations with regard to
zoning, land use, building or environmental
matters.
"REQUISITE LENDERS" - Lenders (including Agent) whose Pro Rata
participation (not including the participation of
any of the Lenders which Agent has determined to
be in default), in the aggregate, are equal to or
greater than sixty-six and two-thirds percent (66
2/3%).
"RETAINAGE" - Shall have the meaning set forth in Section 2B.2
hereof.
"SIGNIFICANT PARTY" - Borrower or Guarantor.
"SOFT COST LOAN" - Shall have the meaning set forth in Section
2A.1(a) hereof.
"SOFT COST LOAN AGREEMENT"- Shall have the meaning set forth in the Recitals
hereto.
"SOFT COST MORTGAGE" - Shall have the meaning set forth in the Recitals
hereto.
"SOFT COST NOTE" - Shall have the meaning set forth in the Recitals
hereto.
15
"SOFT COSTS" - All non-construction or soft costs that do not
constitute "costs of the improvement under the New
York Lien Law" and are delineated as such in the
Final Budget.
"STABILIZATION" - Shall have the meaning set forth in Section
4.1(cc) hereof.
"SUBSTANTIAL COMPLETION" - Shall be deemed to have occurred upon the last to
occur of the following dates: (i) the date of
issuance of a temporary certificate of occupancy
covering all of the Premises, and (ii) the date
upon which the first resident takes possession of
their unit.
"SUPERMAJORITY LENDERS" - Lenders (including Agent) whose Pro Rata
participation (not including the participation of
any of the Lenders which Agent has determined to
be in default), in the aggregate, are equal to or
greater than seventy-five percent (75%).
"TITLE INSURER" - The issuer of the title insurance policy required
by Section 6.2(m) hereof, which issuer shall be
Chicago Title Insurance Company.
"UCC FINANCING
STATEMENTS" - The UCC-1 Financing Statements executed by
Borrower, as debtor, in favor of Agent, as secured
party, to be filed in connection with the personal
property described in the Mortgage and the
Assignment of Contracts.
"UNANIMOUS LENDERS" - All of the Lenders (including Agent, but not
including the participation of any of the Lenders
which Agent has determined to be in default),
collectively.
Section 1.2 Singular and Plural. Words used herein in the singular, where
the context so permits, shall be deemed to include the plural and vice versa.
ARTICLE II(A)
LOAN FACILITY
-------------
Section 2A.1 Loans. (a) Subject to the terms and conditions of this
Agreement, including without limitation, (i) the funding limitations embodied in
Section 2B.7 hereof and (ii) the loan balancing requirements of Section 2B.7(A)
hereof, each Lender, severally, and not jointly, agrees to make a series of
advances to fund Hard Costs in an aggregate principal amount of up to
$36,456,404 (each an "ADVANCE" and collectively, the "ADVANCES"; all of the
Advances of all of the Lenders under this Agreement collectively, the "BUILDING
LOAN" and together with Advances in an aggregate principal amount of up to
$12,668,596 under the Soft Cost Loan
16
Agreement, (the "SOFT COST Loan"; the Building Loan and Soft Cost Loan being
referred to collectively as the "LOAN" OR "LOANS"), to or for the benefit of
Borrower, in an aggregate principal amount for any Lender not to exceed the
amount set forth under the heading "LOAN COMMITMENT" opposite the name of such
Lender on Annex I.
(b) The Building Loan shall be fully secured by the Building Loan Mortgage
and the other Collateral described herein and in the other Loan Documents. The
Building Loan Mortgage shall secure the indebtedness described in the Building
Loan Note or Notes and herein, and any future loans, advances, payments and
disbursements by Lenders pursuant to this Agreement or the Building Loan
Mortgage shall be added to the principal indebtedness under the Building Loan
Notes.
(c) This Agreement shall remain in full force and effect after the Loan is
fully funded and throughout the term of the Loan and any extensions thereof for
the purpose of governing the rights and obligations of Borrower, Agent and
Lenders but not for the benefit of any third persons.
Section 2A.2 Notes. The Advances made by each Lender pursuant to Section
2A.1(a) shall be evidenced by one or more promissory notes of Borrower dated of
even date herewith (such Building Loan Notes and Soft Cost Notes, the "NOTE"or
"NOTES"), payable to the order of such Lender and representing the obligation of
Borrower to pay the unpaid principal amount of the Advances under the Loans made
by such Lender, with interest thereon at the Interest Rate and, after the
occurrence and during the continuance of any Event of Default, at the Default
Rate. Each Lender is hereby authorized to record the date and amount of each
Advance of the proceeds of the Loans made by such Lender and the date and amount
of each payment or prepayment of principal of the Loans made to such Lender on
the schedule annexed to and constituting a part of such Lender's Note, and any
such recordation shall constitute prima facie evidence of the accuracy of the
information so recorded in the absence of manifest error; provided, however,
that the failure by any Lender to make any such recordation on its Note shall
not affect any of the obligations of Borrower under such Note or this Agreement.
Section 2A.3 Interest Rate.
(a) Advances of the Loans shall bear interest at the Applicable
LIBOR Rate or the Prime Rate pursuant to the provisions of the Note. After the
occurrence and during the continuance of any Event of Default hereunder,
Advances of the proceeds of the Loan shall bear interest at the Default Rate.
(b) Notwithstanding the foregoing, only so much of the outstanding
principal amount of the Loan as would not become due and payable during the
applicable LIBOR Interest Period shall be designated as a LIBOR Rate Loan and
the remaining principal balance shall be designated as a Prime Rate Loan. Prime
Rate Loans will bear interest at the Prime Rate. "PRIME RATE" means the rate of
interest per annum announced by the Cleveland office of KeyBank National
Association ("KEYBANK") as its Prime Rate, whether or not such rate is publicly
announced. The Prime Rate is not necessarily the lowest rate charged by KeyBank
for commercial or other types of loans, it being understood that the Prime Rate
is only one of the bases for computing interest on loans made by the Agent and
that, by basing interest on the
17
Prime Rate, the Agent and the Lenders have not committed to charge, and Borrower
has not in any way bargained for, interest based on a lower or the lowest rate
at which the Agent or the other Lenders may now or in the future make loans to
other borrowers. Any interest rate based on the Prime Rate shall be adjusted on
and as of the effective date of any change in the Prime Rate. Each determination
of the Prime Rate by the Agent shall be conclusive. As of August 23, 1999, the
Prime Rate is currently 8.0%.
Section 2A.4 Payment of Interest. Prior to maturity, whether by
acceleration or otherwise, interest on the Advances shall be payable at the
Interest Rate or Interest Rates provided in the Note, with each interest payment
being due on the twenty-fourth (24th) day of the first full calendar month
following the date on which the first Advance is made hereunder, and subsequent
interest payments being due thereafter monthly on the twenty-fourth (24th) day
of each month regardless of the applicable Interest Rate. After maturity, by
acceleration or otherwise, interest on the Advances shall be payable on the date
described in the preceding sentence or earlier, or more frequently, on demand of
Agent.
Section 2A.5 Payment of Principal. The entire principal amount of the
Loan, or so much thereof as may be outstanding on the Maturity Date (together
with all outstanding interest and other sums due hereunder or under the Notes,
the Mortgage and the other Loan Documents), shall be paid as provided herein and
in the Notes on the Maturity Date, or on such earlier date as may result from an
acceleration of the Maturity Date in accordance with Section 2A.13 hereof. If
the Maturity Date is extended in accordance with Section 2A.11(c), Borrower
shall make installment payments of the principal of the Advances monthly on the
twenty fourth (24th) day of each month, commencing with the first month
following such extension, in amounts determined in accordance with Section
2A.11, and the entire remaining principal amount of the Advances shall be paid
on the Maturity Date as so extended, or on such earlier date as may result from
an acceleration of the Maturity Date in accordance with Section 2A.13 or 5.3(a)
hereof.
Section 2A.6 Prepayment. Subject to the provisions of Sections 2A.8, 2A.9
and 2A.10 hereof, upon not less than three (3) Domestic Business Days' prior
written notice to Agent specifying the intended date of prepayment, Borrower
shall have the right to prepay the outstanding principal amount of the Advances,
in whole or in part, without premium or penalty but with all accrued interest
and breakage fees on the amount being prepaid to the date of such prepayment.
Each partial prepayment must equal at least $100,000 or some $100,000 increment
thereof. Amounts of principal prepaid will not be readvanced by Lenders as new
Advances.
Section 2A.7 Procedure for Payment. Each payment on the Notes, including
each prepayment of principal and each payment of interest, shall be made by
Borrower to Agent at its office at 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx
00000-0000, in lawful money of the United States of America, in immediately
available funds, by 1:00 P.M., Cleveland, Ohio time, on the due date for such
payment without setoff or counterclaim. Subject to Section 7.13 below, Agent
shall distribute such payments ratably to the Lenders on the day of receipt, if
received by 1:00 P.M. as aforesaid, and on the following Domestic Business Day,
if received after 1:00 P.M., in like funds as received. The failure of Borrower
to make any such payment by the aforesaid time shall not constitute a default
hereunder, provided that such payment is made on such due date, but any such
payment received by Agent after 1:00 P.M., Cleveland, Ohio time, on such due
date shall be deemed to have been made on the next Domestic Business Day or
Eurodollar Business Day,
18
as the case may be, for the purpose of calculating interest on the Advances. If
any payment under the Notes or any other Loan Document shall be due and payable
on a day which is not a Domestic Business Day or Eurodollar Business Day, as the
case may be, the due date thereof shall be extended to the next Domestic
Business Day or Eurodollar Business Day, as the case may be (except as otherwise
provided in the definition of LIBOR Interest Period), and interest shall be
payable at the applicable rate specified herein during such extension.
Section 2A.8 Indemnification. Notwithstanding anything to the contrary
contained herein or in any other Loan Document, Borrower agrees that if (a) any
repayment or prepayment of any Advance is made for any reason (other than as
contemplated in the last sentence of the definition of LIBOR Interest Period in
the Note) on a day prior to the last Eurodollar Business Day of the then
effective LIBOR Interest Period, or (b) by any other action of Borrower or by
reason of an acceleration of the Note, an Applicable LIBOR Rate is terminated on
a day prior to the last Eurodollar Business Day of the then effective LIBOR
Interest Period with respect to such Applicable LIBOR Rate, Borrower shall
indemnify each Lender against, and pay on demand directly to each Lender, any
loss, liability, expense, penalty or other charge suffered or incurred by such
Lender as a result of such repayment or termination of such Applicable LIBOR
Rate, including, without limitation, (i) any loss, liability, expense, penalty
or other charge suffered or incurred by such Lender during the period from the
date of receipt of such repayment or acceleration to the last Eurodollar
Business Day of the LIBOR Interest Period in question if the rate of interest
obtainable by such Lender upon the redeployment of an amount of funds equal to
such repayment is less than the interest rate computed by reference to the
Applicable LIBOR Rate in effect during the LIBOR Interest Period in question, or
(ii) any loss, liability or expense suffered or incurred by such Lender in
liquidating prior to maturity eurodollar deposits or other deposits, as the case
may be, in amounts which correspond to such payment. A certificate of such
Lender giving a reasonably detailed calculation of the amount of any such loss
or expense shall be deemed conclusive in the absence of manifest error. The
amounts payable by Borrower under this Section 2A.8 shall expressly exclude any
margin that any such Lender may have anticipated over any Applicable LIBOR Rate.
Section 2A.9 Reimbursement. Borrower agrees to reimburse each Lender for
its costs in complying during the term of the Notes with all applicable laws,
executive orders and regulations of the governments of the United States, the
United Kingdom and any other applicable government, and of any regulatory or
administrative agency thereof (including, without limitation, the Bank of
England, the Board of Governors of the Federal Reserve System or any other
governmental body claiming jurisdiction), including any increase in said costs
due to a change therein or in the interpretation thereof, which impose, modify
or deem applicable any reserve, asset maintenance or special deposit or capital
adequacy requirements on the obligation of Lender to make Advances or on
deposits obtained in the London interbank eurodollar market or other markets in
respect of Advances subject to LIBOR, or which subject such Lender to any tax
with respect to its Note or change the basis of taxation of payments to such
Lender of principal, interest or fees payable under its Note (except for any
tax, or changes in the rate of any tax, based upon the net income or profits of
such Lender) or which impose any other similar conditions with respect to the
Advances or the obligation of such Lender to make Advances under the Loan. The
increased cost to a Lender in complying with laws, executive orders or
regulations which impose, modify or deem applicable any reserve, asset
maintenance or special deposit or capital adequacy requirements on the
obligation of a Lender to make Advances under
19
the Loan or on deposits obtained in the London interbank eurodollar market or
other markets shall be computed by determining the amount by which such
requirements effectively increase such Lender's cost of making and maintaining
the deposits attributable to the Advances subject to LIBOR and by computing the
additional interest which would have been owing to such Lender if such effective
increase had been added to the Applicable LIBOR Rate for purposes of determining
the Applicable LIBOR Rate during the affected period. A certificate of a Lender
giving a reasonably detailed calculation of the amount of such costs shall be
deemed conclusive in the absence of manifest error. Agent shall give Borrower
written notice of any such increased cost of any Lender's making and maintaining
the deposits attributable to Advances subject to LIBOR upon Agent's receipt of
notice of the same. Notwithstanding anything to the contrary stated in this
Section 2A.9, no such increased costs shall be recoverable from Borrower with
respect to any period more than 120 days prior to the date Agent shall provide
Borrower with written notice of such increased costs incurred by any Lender, and
such increased costs shall only be imposed by a Lender who actually is incurring
such increased costs and only so long as such Lender is exercising similar
rights against other borrowers to whom such Lender is lending money at rates
based on the LIBOR Rate. Furthermore, Borrower shall not be required to pay such
increased costs due solely to a change in location of the Lender's office
extending the Advances that are subject to LIBOR. Borrower may, during a period
of the fifteen (15) Domestic Business Days following receipt by Borrower of any
such notice to reimburse any such increased costs which are material in amount,
either (i) demand that the Lender requesting reimbursement of the increased
costs, within such period, assign its Advances bearing interest at the
Applicable LIBOR Rate to one or more assignees which Borrower or Agent
identifies, in accordance with any applicable provisions of this Agreement,
including, without limitation Section 7.14(b), upon payment in immediately
available funds of a purchase price therefor equal to the unpaid principal
amount thereof, together with interest accrued with respect thereto to the date
of such assignment and all fees and other charges accrued or payable under the
terms of this Agreement for the benefit of such Lender with respect thereto to
the date of such assignment, and if such payment is made within such period such
Lender shall so assign its Advances bearing interest at the Applicable LIBOR
Rate, or (ii) within such period, repay the portion of the Loan owing the Lender
who requests the increased costs, together with interest accrued with respect
thereto to the date of such repayment and all fees and other charges accrued or
payable under the terms of this Agreement with respect thereto for the benefit
of such Lender to the date of such repayment, any such repayment being for the
sole credit of such Lender and not for any other Lender. All expenses incurred
by Agent in connection with the foregoing shall be for the sole account of
Borrower and shall constitute an Obligation hereunder. Each Lender hereby
represents that, as of the date hereof, such Lender is not subject to Federal
Reserve Board reserve requirements. Any assignee of a portion of any Lender's
Commitment hereunder shall make the foregoing representation as of the closing
of such assignment.
Section 2A.10 Changes. Notwithstanding anything to the contrary contained
herein, in the Notes, in the Mortgage or in any other Loan Document, if, prior
to or during any LIBOR Interest Period with respect to which LIBOR is in effect,
any change in any law, treaty, regulation or official directive, or in the
interpretation thereof, by any governmental body charged with the administration
thereof, shall make it unlawful for any Lender to fund or maintain its funding
in eurodollars or other dollars of the Advances subject to the Applicable LIBOR
Rate or otherwise to give effect to such Lender's obligations as contemplated
hereby, (a) Agent may by notice to Borrower declare that such Lender's
obligations in respect of the
20
Applicable LIBOR Rate are terminated forthwith, (b) the Applicable LIBOR Rate
shall forthwith cease to be in effect, and interest shall from and after such
date be calculated at the Prime Rate unless Borrower shall thereafter elect, in
accordance with the terms hereof, an individual Applicable LIBOR Rate not
subject to such illegality, and (c) Borrower agrees to indemnify such Lender
against any loss, cost, or expense actually incurred as provided in Section 2A.8
hereof. A certificate of such Lender giving a reasonably detailed calculation of
the amount of any such loss, expense, penalty or other charge shall be deemed
conclusive in the absence of manifest error. As noted in Section 2A.6 above,
Borrower may, in accordance with said Section, prepay the Loan at any time but
any such prepayment shall not diminish Borrower's obligations under Sections
2A.8, 2A.9 and 2A.10 hereof, through the date such Lender receives full payment
of its Note and all sums due with respect to the Notes, including without
limitation, any sums due under Sections 2A.8, 2A.9 and 2A.10 hereof.
Section 2A.11 Extension Periods.
(a) Provided the Loan is not then in default, Completion has been
achieved, the Improvements are then fully open and operating, and all
requirements for the final disbursement of Hard Costs set forth in Section 6.4
of this Agreement have been satisfied, Borrower may, subject to the requirements
of this Section 2A.11, extend the maturity of the Notes for the period from the
day next succeeding the Maturity Date through the date that occurs eighteen (18)
months after the Maturity Date (the "FIRST EXTENSION PERIOD"), and for an
additional period from the day next succeeding the last day of the First
Extension Period through the date that occurs twelve (12) months after the last
day of the First Extension Period (the "SECOND EXTENSION PERIOD"; the First
Extension Period and the Second Extension Period are sometimes hereinafter
collectively referred to as the "EXTENSION Periods").
(b) Borrower's right to extend the maturity of the Notes for the
First Extension Period shall be conditioned upon the satisfaction of the
following requirements, as determined by Agent: (i) Borrower shall have
delivered written notice of its desire to extend the maturity of the Notes and
said written notice must be delivered to Agent not later than sixty (60) days
prior to the then effective Maturity Date, (ii) at the time of delivery of such
notice, Completion shall have occurred and (iii) no Event of Default hereunder
or under any of the other Loan Documents shall have occurred and be continuing
and there shall be no outstanding payment default under the Loans.
(c) Borrower's right to extend the maturity of the Notes for the
Second Extension Period shall be conditioned upon the satisfaction of the
following requirements, as determined by Agent: (i) the maturity of the Notes
shall have been extended for the First Extension Period, (ii) Borrower shall
have delivered written notice of its desire to extend the maturity of the Notes
and said written notice must be delivered to Agent not later than sixty (60)
days prior to the expiration of the First Extension Period, which notice shall
be accompanied by payment of an extension fee equal to 25 basis points (.0025)
of the outstanding principal amount of the Notes (plus any unfunded principal
made available to Borrower during the Second Extension Period), (iii) no Event
of Default hereunder or under any of the other Loan Documents shall have
occurred and be continuing and there shall be no outstanding payment default
under the Loans and (iv) at the time of delivery of such notice, Completion
shall have occurred, and the Project shall have achieved, and be capable of
maintaining, based upon Agent's reasonable
21
determination, a minimum Debt Service Coverage Ratio calculated on a prospective
basis for the first quarter of the Second Extension Period (i.e. including
actual figures from quarters 8, 9, 10 and 11 and including projected principal
payments during the Second Extension Period) of not less than 1.2 to 1.0, and
(v) in the event that the Requisite Lenders request a new or updated Appraisal,
Borrower furnishes to Agent an Appraisal, at Borrower's sole cost and expense,
reasonably satisfactory in all material respects to the Lenders and evidencing a
loan to value ratio not greater than 75%. Upon the extension of the Maturity
Date pursuant to this Section 2A.11(c), the outstanding principal balance of the
Loan shall amortize in equal monthly installments of principal payable beginning
on the first day of the Second Extension Period. The monthly principal
amortization payments shall be determined at the commencement of the Second
Extension Period based upon a 25-year amortization schedule; provided, that the
monthly principal amortization payments shall be adjusted from time to time,
based on the foregoing 25-year amortization schedule, to include the amount of
Advances, if any, made to Borrower during the Second Extension Period.
(d) In no event shall the Maturity Date of the Notes be extended
beyond the Extension Periods.
Section 2A.12 Lenders' Rights. Borrower acknowledges and agrees that an
individual Lender may wish to purchase one or more deposits in order to fund or
maintain its funding of the Advance subject to LIBOR during the applicable LIBOR
Interest Period. Any Lender shall be entitled to fund and maintain its funding
of all or any part of such Advance in any manner it sees fit, provided that all
determinations hereunder (including, without limitation, all determinations
under Sections 2A.8, 2A.9 and 2A.10 hereof) shall be made as if such Lender had
actually funded and maintained that Advance to be subject to LIBOR during the
applicable LIBOR Interest Period through the purchase of eurodollar deposits or
other deposits, as the case may be, in an amount equal to such Advance subject
to LIBOR and having a maturity corresponding to such LIBOR Interest Period.
Borrower agrees that for purposes of Sections 2A.8, 2A.9 and 2A.10 hereof any
reference to a Lender therein shall also include any Lender that has signed an
Assignment and Acceptance Agreement in accordance with Section 7.14(b) of this
Agreement to the extent of its Pro Rata share in such Advance bearing interest
at the Applicable LIBOR Rate, and in this respect Borrower agrees that Agent, on
behalf of any such assignee, may collect directly from Borrower, and Borrower
agrees to pay to Agent (but Borrower shall not be required to pay the same
directly to any such assignee), any sums owing to such participant under
Sections 2A.8, 2A.9 and 2A.10 hereof.
Section 2A.13 Acceleration of Maturity. The Notes, including all principal
thereof and interest thereon, however termed, shall become due and payable at
the option of Agent upon the occurrence of any of the following (subject to any
applicable cure periods specified in this Agreement):
(a) Any default shall occur and continue beyond any notice or cure
period under this Agreement, the Building Loan Mortgage or any other Loan
Document, or if a Significant Party shall be in default beyond any applicable
notice or cure period under or attempt to terminate any Loan Document;
22
(b) A Significant Party shall fail to comply beyond any applicable
notice or cure period with any of the covenants made by it in this Agreement,
any Note, the Mortgage or in any other Loan Document, or at any time any
representation or warranty made by a Significant Party to Agent or any Lender in
this Agreement or in any other Loan Document or in any certificate or statement
delivered in connection therewith shall be false or misleading to an extent
deemed by Agent, in its reasonable judgment, to be material; or
(c) Any other Event of Default under this Agreement, the Mortgage or
any other Loan Document shall occur.
Section 2A.14 Costs of Collection. If any Note shall be collected by legal
proceedings or through any court or shall be referred to an attorney because of
any default, Borrower agrees to pay all reasonable attorney's fees and court
costs incurred by Agent as well as the Lenders.
Section 2A.15 Late Charges. In the event that any payment of interest,
principal, or principal and interest shall not be paid when due (whether by
acceleration or otherwise), a "LATE CHARGE" calculated at the rate of five
percent (5%) on such overdue installment shall be charged by Agent for the
purpose of defraying the expenses incident to handling such delinquent payments,
which "LATE CHARGE" shall be payable on the same day of the month as payments of
interest, provided, however, in no event shall Borrower be required to pay a
late fee greater than the maximum amount permitted under applicable laws. Such
charge shall be in addition to, and not in lieu of, any other remedy Agent or
any Lender may have and is in addition to any reasonable fees and charges of any
agents or attorneys which Agent is entitled to employ upon any default by
Borrower hereunder or under any other Loan Document, whether authorized herein
or by law.
ARTICLE II(B)
LOAN DISBURSEMENTS/REQUIRED EQUITY
----------------------------------
Subject to the provisions of this Agreement, and upon Borrower's
satisfaction of the applicable requirements of this Agreement, including,
without limitation, the conditions to disbursements set forth in Article VI
hereof, and also subject to the funding limitations of Section 2B.7, each Lender
severally, and not jointly, agrees to make Advances hereunder from time to time
in accordance with Article II(A), but not more than once a month except as
provided in Section 2A.3(b) regarding Loan interest and Section 2B.1, and
Borrower will accept each Lender's Advance representing a proportionate share of
the amount of the Loan as follows:
Section 2B.1 Procedure for Loan Borrowing and Interest Rate Election. Draw
Requests for Hard Costs and Soft Costs shall be submitted prior to Completion at
least once, but at all times no more than once, per month on or about the same
date of each month. Borrower shall submit a so-called "PENCIL COPY REQUISITION"
to Agent's Inspecting Consultant prior to the submission of a Draw Request.
Within five (5) Domestic Business Days of Agent's Inspecting Consultant's
receipt of the pencil copy requisition, Agent's Inspecting Consultant shall
review the pencil copy requisition, inspect the Project and provide comments to
Borrower. Borrower
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shall submit a total Draw Request, within ten (10) calendar days thereafter, in
duplicate to Agent and Agent's Inspecting Consultant which includes the Draw
Request for Hard Costs in accordance with Agent's Inspecting Consultant's
comments related thereto and the Draw Request for Soft Costs, and Borrower shall
simultaneously send a summary of the Draw Request to each of the other Lenders
for informational purposes. Within ten (10) Domestic Business Days of Agent's
receipt from Borrower of the total Draw Request, Agent shall review and approve
or disapprove the Draw Request and, if such Draw Request is approved, shall
cause the same to be funded within such ten (10) Domestic Business Day period,
subject, however, to satisfaction of the conditions set forth or referred to in
this Article II(B). All Draw Requests must be accompanied by such supporting
documentation as Agent may require, including, without limitation, a cost
breakdown, which must be certified as to accuracy by Borrower and be consistent
in form and substance with the cost breakdown set forth in the Budget in
aggregate total and itemization and limitations set forth in the General
Contract, if any, and lien waivers from all contractors, subcontractors and
suppliers supplying goods or services related to the Improvements in the sum of
all prior disbursements for all of Borrower's preceding Draw Requests, but only
including supporting invoices upon the specific request of Agent. The Budget
shall serve as the disbursement control for each line item, and neither Agent,
nor any Lender shall be required to disburse Loan proceeds or make Advances for
any line item in excess of the amounts specified in the Final Budget, (as the
same may be amended due to Budget reallocations pursuant to Section 2B.14
hereof), as payable from Loan proceeds. No later than three (3) Eurodollar
Business Days prior to the date of the requested Advance and disbursement of
Loan proceeds, Borrower shall notify Agent whether such Advance shall initially
bear interest at the Prime Rate or the Applicable LIBOR Rate or a combination
thereof subject to the limitations set forth in Section 2A.3 and Section 2A.10.
Upon receipt of such Draw Request from Borrower, Agent shall promptly, but no
later than two (2) Eurodollar Business Days prior to the anticipated
disbursement date, notify each Lender of the pending Draw Request and the
anticipated disbursement date. Provided that all of the conditions set forth in
Article VI have been satisfied and Agent approves the Draw Request, then by no
later than 11:00 a.m., Cleveland time, on the disbursement dates specified in
Agent's notice to each Lender, (A) each Lender other than Agent shall make
available to Agent an amount in immediately available funds equal to such
Lender's Pro Rata share of the Advances to be made and disbursed by Agent (as
determined by Agent), and Agent, as a Lender, shall also make available its Pro
Rata share of such Advances, and (B) Agent shall then make available to Borrower
the amount of such Advances, which shall correspond to the amount approved for
disbursement by Agent by wire transferring to the account of Borrower maintained
by Borrower or by Developer on behalf of Borrower as set forth in Section 2B.9
the aggregate amount of said Advances. No such Advances or disbursements shall
be made until the Title Insurer has verbally provided Agent with advice (i.e.,
no change in title not theretofore approved by Agent) required by Section 6.3(e)
hereof and has committed to issue the title continuation and endorsement
referred to therein.
Section 2B.2 Amount of Disbursements for Hard Costs.
(a) The amount of any disbursement for Hard Costs (excluding FFE)
shall not at any time exceed an amount equal to (i) the percentage of completion
evidenced by inspections of the Improvements by Agent's Inspecting Consultant,
times (ii) the estimated total Hard Costs set forth in the Budget and approved
by Agent, minus (iii) an amount equal to ten percent (10%)
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(or such greater amount as may be stipulated in the General Contract) of the
value of the work completed for which payment is sought (the "RETAINAGE"). The
foregoing retainage percentage may be reduced to 0% (or such greater amount as
may be stipulated in the General Contract) when the Improvements are 50%
completed and the other requirements of Section 2B.8 have been satisfied, but no
Retainage previously withheld shall be released to Borrower when the foregoing
reduction in percentage occurs. The aggregate of all of the Retainage shall only
be released in accordance with Section 2B.8 below.
(b) Prior to each disbursement hereunder, Agent's Inspecting
Consultant shall inspect the Improvements to verify that the Draw Request
accurately reflects the percentage of construction completed to date. The
percentage of completion of construction at any time and the estimated total
cost of Hard Costs shall be determined by Agent based upon advice from Agent's
Inspecting Consultant, and Agent's reasonable determination shall be final and
binding on Borrower. Agent's Inspecting Consultant may disapprove the amount, or
any portion thereof, requested for any work if it shall deem such work not to be
in accordance with the Plans or inferior in quality in any material respect to
the quality that is required in the Plans.
Section 2B.3 Stored Materials. In the case of items stored safely and
securely off-site in a bonded warehouse or on the premises of a fabricator or
some other secure facility reasonably acceptable to Agent and Agent's Inspecting
Consultant and not yet incorporated into the Improvements ("STORED MATERIALS"),
each Lender agrees that it will fund as part of an Advance its proportionate
share of the cost of Stored Materials at the times Hard Costs are funded and
prior to their incorporation into the Improvements provided that:
(a) Borrower or Developer has an obligation under the General
Contract or any purchase order to advance or pay for such Stored Materials;
(b) Agent has received executed conditional bills of sale (subject
only to receipt of payment) or other proof reasonably satisfactory to it
evidencing Borrower's unencumbered title in and to such Stored Materials;
(c) Agent, acting on behalf of Lenders, has been granted a first
priority security interest, subject only to any interest that the Ground Lessor
may have under the applicable provisions of the Ground Lease, and perfected same
through the filing of UCC-1 financing statements as required, in such Stored
Materials prior to or simultaneous with it making any such Advance;
(d) such Stored Materials are fully insured in an amount and with an
insurance company satisfactory to Agent, in its sole discretion, under a policy
containing a standard New York mortgagee endorsement or the equivalent thereof
as well as travel insurance with respect to off-site Stored Materials, and Agent
is provided a certificate of insurance evidencing such insurance;
(e) each item comprising such Stored Materials are properly and
securely stored and clearly marked with, among other things, Borrower's or
Developer's name and the job number so as to segregate and distinguish same from
the property of others, and Agent's
25
Inspecting Consultant has inspected such Stored Materials and has approved the
identity, quality and quantity of same;
(f) Agent has received a xxxx of lading or other proof reasonably
satisfactory to it evidencing the warehouseman's receipt and acceptance of such
Stored Materials and a copy of the executed contract with the warehouseman,
which shall expressly provide that any security interest that such warehouseman
might have in the Stored Materials is subordinate to the security interest held
by the Agent on behalf of the Lenders;
(g) the value of Stored Materials shall not exceed $5,000,000.00 in
the aggregate, unless Agent, in its sole discretion agrees to a greater amount
for prefabricated Stored Materials;
(h) Borrower provides lien waivers from all suppliers supplying such
Stored Materials in the sum received by each such supplier for all of Borrower's
preceding Draw Requests; and
(i) Borrower has provided written notice to Agent and Agent's
Inspecting Consultant of an impending Draw Request covering any costs of Stored
Materials two weeks prior to the submission of such Draw Request.
(j) such Stored Materials are to be incorporated into the
Improvements within sixty (60) days of delivery to the Project Site or such
longer time as is not detrimental to the timely completion of the Project as
required hereunder, and is approved by Agent in its sole discretion.
Section 2B.4 Intentionally Omitted
Section 2B.5 Intentionally Omitted
Section 2B.6 Intentionally Omitted
Section 2B.7 Funding Limitations. At no time shall any Lender be obligated
to make Advances to Borrower for more than Lender's Pro Rata share of what such
Lender is then required to fund, pursuant to Draw Requests submitted by Borrower
and approved by Agent, to the party seeking payment or, in the case of
reimbursement, to the party seeking reimbursement, or to disburse (prior to the
satisfaction of the requirements for the reduction of Retainage set forth in
Section 2B.8 hereof) for Hard Costs (prior to the last Advance for Hard Costs
hereunder) Loan proceeds in amount(s) which exceed, separately for any
individual line item or in the aggregate for all line items, 90% of Hard Costs
(subject, however, to the provisions of Section 2B.8 hereof) multiplied by the
percentage of completion of construction then attained for the Improvements, as
determined by Agent's Inspecting Consultant. Agent shall not unreasonably
withhold its consent to a request by Borrower for access to funds from the
Contingency portion of the Budget, so long as there is not then an Event of
Default in existence and the Loan, is, and after such use of Contingency funds
shall remain, in balance.
26
Section 2B.7(A) Loan Balancing. Anything contained in this Agreement to
the contrary notwithstanding, it is expressly understood and agreed that the
Loan shall at all times be "IN BALANCE." The Loan shall be deemed to be "IN
BALANCE" only at such time and from time to time, as Agent may determine in its
reasonable discretion, that the then undisbursed portion of the Loan and the
then unpaid portion of the Required Equity (it being expressly understood that
no Advances of the Loans shall be made until the Required Equity is fully paid)
equals or exceeds the amount necessary for the timely and full payment of all
costs and expenses relative to construction and leasing of the Project,
including without limitation, all Hard Costs and Soft Costs for (i) all work
done and not theretofore paid for or to be done in connection with the
completion of the construction of the Improvements in accordance with the Plans,
applicable Requirements and the Ground Lease, including, without limitation, the
installation of all utility services, fixtures and equipment required for access
to and operation of the Improvements both on-site and off-site, and (ii) all
other costs incurred and not theretofore paid for, or to be incurred in
connection with the Premises, including, without limitation all Hard Costs, all
Soft Costs, all interest on the Loan, and the amount of any interest reserve or
interest contingency (as reasonably determined by Agent). Borrower agrees that
if Agent reasonably determines that the Loan is not "IN BALANCE", Borrower
shall, within thirty (30) days after written demand by Agent, deposit the
deficiency with Agent (the "DEFICIENCY DEPOSIT"), which Deficiency Deposit shall
first be exhausted before any further disbursement of the Loans is made, or, if
the Loan is not in balance due, in whole or in part, to the insufficiency of the
interest reserve line item of the Budget, at Borrower's option, in lieu of
making a Deficiency Deposit with respect to such interest deficiency, direct the
Agent, by written notice, to permanently reduce the remaining available
Development Fee line item of the Budget in sufficient amount to increase the
interest reserve line item of the Budget and thereby cause the Loan to then be
"in balance" which notice shall be accompanied by the written consent of the
Developer to such permanent reduction of the payment of the Development Fee from
Loan proceeds. Notwithstanding anything contained in the foregoing to the
contrary, Borrower shall comply with all requirements of the New York Lien Law.
The Lenders shall not be obligated to make Advances and Agent shall not be
obligated to make any Loan disbursement of proceeds of Advances if and so long
as the Loan is not in balance. Among the various events that could cause the
Loan to be "OUT OF BALANCE" are determinations by Agent that (i) the Budget is
insufficient or inadequate, or (ii) the Improvements (based upon the progress
and pace of construction through the date of such determination) will not be
Completed and occupied in accordance with the Occupancy Schedule set forth on
EXHIBIT F. In making any determination as to the projected interest component of
any completion/lease up cost calculation, Agent shall use the then-current rates
on the Advances. In making any determination as to whether the Loan is in
balance, Agent shall consider, among other things, the Budget, the amount
available in the Contingency line item of the Budget, the progress of
construction and overall the status of the Project.
Section 2B.8 Retainage.
(a) The Retainage held-back but not disbursed by the Lenders as
Advances covering retention for Hard Costs in accordance with the provisions of
Section 2B.2 shall, subject to the terms and conditions hereof, be disbursed to
Borrower, or, at Agent's option after the occurrence and continuance of an Event
of Default hereunder or under any other Loan Document directly to the General
Contractor or any Major Subcontractor in accordance with the
27
General Contract, upon satisfaction of the conditions for the receipt of the
final disbursement set forth in Section 6.4 hereof.
(b) Notwithstanding the foregoing restraints on the release of
Retainage, each Lender agrees, upon the written request of Borrower, to reduce
the retainage of the General Contractor with respect to all disbursements made
hereunder subsequent to the date of such written request from ten percent (10%)
to zero percent (0%) provided that, at the time such reduction in Retainage is
requested: (i) there is no default or any event which with the giving of notice
(if notice is required hereunder) or passage of time would constitute an Event
of Default by Borrower or any Guarantor hereunder or under any other Loan
Document, (ii) Developer on behalf of Borrower has a corresponding obligation
under the General Contract or applicable Major Contract to reduce, or there is a
corresponding provision in the General Contract or such Major Contract which
requires or permits, with the approval of Borrower and Agent, a reduction of the
percentage of Retainage at the time said reduction is requested, (iii) the
Improvements are at least fifty percent (50%) completed and Agent receives a
certification from Agent's Inspecting Consultant as to same along with a
certification that the completed construction is in accordance with the Plans;
and (iv) the work for which the disbursement is requested has been completed by
the contractor or subcontractor in question and Agent receives a certification
from Agent's Inspecting Consultant as to same. No Retainage previously withheld
shall be released to Borrower when the foregoing reduction in percentage occurs.
The aggregate of all of the Retainage remaining shall only be released after
Completion has occurred and all of the requirements of Section 6.4 have been
satisfied.
Section 2B.9 Place of Disbursement. All Loan disbursements shall be made
at Agent's office in Cleveland, Ohio or any other office of Agent hereafter
selected and notified to Borrower from time to time by Agent. Unless Agent and
Borrower otherwise agree, all disbursements will be made by wire transfer
directly into Developer's segregated construction loan account maintained for
the Project with LaSalle Bank National Association located in Chicago, Illinois.
During the term of the Development Agreement or the Management Agreement,
Borrower hereby specifically and irrevocably directs Agent to make all Advances
to the account of Developer as described in the preceding sentence, and receipt
of Advances by Developer, shall for all purposes satisfy any funding obligations
of Lenders hereunder.
Section 2B.10 Intentionally Omitted.
Section 2B.11 Expenses and Disbursements Secured by Loan Documents. (a
Agent may, at Agent's option, at any time and from time to time after the
occurrence of an Event of Default under any Loan Document while the same shall
be continuing, disburse, from the amounts made available to it by the Lenders,
all or any part of any particular Draw Request or the Retainage either (i) to
Borrower for disbursement in accordance with the Draw Request, (ii) to the
General Contractor, Major Subcontractor in accordance with the General Contract,
Major Contractor or other party, either directly or by check jointly payable to
Borrower and such party, for all costs payable to such party, (iii) at
Borrower's expense, to the Title Insurer, which shall pay said monies to the
parties owed payment; or (iv) to any Guarantor in connection with such
Guarantor's performance of the Guaranty Obligations (as defined in the
Completion Guaranty).
28
(b) At any time and from time to time and whether before or after a
default hereunder, whether or not Borrower shall have submitted a Draw Request
therefor, Agent shall disburse to itself and for the ratable benefit of the
Lenders from Loan proceeds sums necessary to pay, when due, all interest due
Lenders and all expenses reimbursable to Agent and Lenders hereunder, including,
without limitation, Agent's Counsel Fees and Agent's Inspecting Consultant Fees.
Unless an Event of Default by Borrower hereunder exists, the foregoing
reimbursable expenses will not be funded by Agent without giving Borrower an
opportunity to review and approve same, which approval may not be unreasonably
withheld or delayed, it being understood that reasonable expenses which Borrower
fails to approve may nonetheless be funded by or reimbursed to Lender, which
will make final good faith determination as to whether expenses are reasonable.
No such disbursement shall be deemed to cure or remedy any default by Borrower
hereunder.
(c) The execution of this Agreement by Borrower constitutes an
irrevocable direction to make the disbursements in the manner set forth in
Sections 2B.11(a) and 2B.11(b), and no further authorization from Borrower shall
be necessary to warrant such disbursements, and all such disbursements shall
satisfy pro tanto the obligations of Lenders hereunder and shall be secured by
the lien of the Mortgage as fully as if made to Borrower, regardless of the
disposition thereof by the General Contractor, or any Major Contractor, Major
Subcontractor, Title Insurer or other person.
Section 2B.12 Other Limitations and Requirements. The making of any
disbursement by Agent shall not be deemed an acceptance or approval by Agent or
any Lender (for the benefit of Borrower or any third person) of the work done or
Improvements constructed. Notwithstanding anything contained herein to the
contrary, neither Agent nor any Lender shall have any obligation to lend
hereunder unless Agent is, at all times satisfied that the Improvements can be
constructed lien-free in accordance with the Plans, and be open and ready for
occupancy by the Completion Date for the sums set forth in the Budget.
Section 2B.13 Contract Verification. From time to time, Agent may forward
to all contractors, subcontractors, material suppliers, architects, engineers
and other parties listed on any Draw Request, a contract verification to
ascertain the correctness of the amount of the contract for each contractor,
subcontractor, material supplier, architect, engineer and any other party as
contained on the statement. In the event of any discrepancy between the amounts
shown by the executed copies of the contracts, the Draw Request, and the
verification of contract forms, Agent shall have the right to require that such
discrepancies be eliminated to its full satisfaction.
Section 2B.14 Budget Reallocations. Agent agrees not to unreasonably
withhold its consent to Budget reallocations requested by Borrower provided (i)
that at the time of any such request, there is no Event of Default then existing
hereunder or under any other Loan Document, (ii) the Loan is "in balance" as
defined in Xxxxxxx 0X.0, (xxx) in the case of reallocation of savings, such
savings are actual cost savings for work completed and fully paid for in
connection with the construction of the Improvements or are cost savings that
will be realized upon completion of work in progress, all as documented to the
reasonable satisfaction of Agent, and all applicable requirements of the New
York Lien Law are complied with, at the sole expense of Borrower, as determined
by Agent in its sole discretion upon the advice of counsel, and (iv) under no
circumstances may items designated in the Budget as Hard Costs be allocated to
items
29
designated in the Budget as Soft Costs, or vice versa until Agent shall have
granted its prior written consent thereto, which consent shall not be
unreasonably withheld, and all applicable requirements of the New York Lien Law
are complied with, at the sole expense of Borrower, as determined by Agent in
its sole discretion upon the advice of counsel.
Section 2B.15 Required Equity.
(a) Lender shall not be obligated to make any Advances hereunder
until Borrower shall have contributed the full amount of the Required Equity and
the full amount of the Required Equity shall have been fully disbursed to fund
Project costs set forth in the Budget and approved by the Agent, with evidence
of such payments delivered to the Agent promptly after the making thereof and
prior to disbursement of any proceeds of the Loan. The Required Equity may be
contributed by Borrower in the form of cash (including without limitation by
means of the Banc One Financing obtained by Member and/or Alliance Holdings,
Inc., provided same complies with Section 2B.15(b) hereof) or may be contributed
by means of the Mezzanine Financing, all on the terms set forth herein, or any
combination of cash and the Mezzanine Financing, prior to or following the
Closing Date or prior to or following the date in which the Required Equity is
fully funded. As of the date hereof, Borrower has delivered to Lender, in form
acceptable in all respects to Agent, evidence that Borrower has contributed or
shall contribute the full amount of the Required Equity (i) by paying, prior to
the Closing Date designated project costs approved in writing by Agent and
identified in the Budget and/or (ii) by procuring an irrevocable commitment or
commitments to fund Project costs incurred after the Closing Date and approved
by the Agent.
(b) For the purposes of this Agreement, "MEZZANINE FINANCING" shall
mean financing obtained by Borrower or Member from a lender reasonably
acceptable to the Requisite Lenders. Both the Mezzanine Financing and the Banc
One Financing must comply with the following terms and conditions: (i) such
financing shall at no time be secured by any interest in the Premises or any
part of the Project, but the Banc One Financing may be secured by a pledge of
the equity interest of Alliance Holdings, Inc. in Member and the Mezzanine
Financing may be secured by a pledge of the equity interest in Borrower by
Member; (ii) the Banc One Financing and the Mezzanine Financing shall be
subordinated to the Loans pursuant to a subordination and standstill agreement
in form and substance satisfactory to the Requisite Lenders; (iii) principal
payments in connection with such financing shall be deferred until the Loan has
been fully repaid, (iv) interest payments in connection with such financing
shall be deferred until such time as the Debt Service Coverage Ratio on the
Project has exceeded 1.4:1.0 for at least two (2) consecutive calendar quarters;
(v) the lender providing the Banc One Financing or the Mezzanine Financing shall
not have any right to prevent Agent from foreclosing on the Project or otherwise
enforcing its rights under this Agreement or the other loan documents executed
by Borrower in connection with the Loan and, in the event of a default by
Borrower or Member of any of the terms and conditions of the Banc One Financing
or the Mezzanine Financing, such lender shall not have any right to foreclose on
the Project, but subject to the terms and conditions of the subordination and
standstill agreement executed by such lender in favor of Lender, shall have the
right to foreclose on the equity interest of Borrower held by Member or on the
equity interest of Member held by the members of Member; and (vi) the terms and
conditions of such financing and the agreements embodying the same shall be
otherwise reasonably acceptable to the Requisite Lenders in all respects.
30
Section 2B.16 Pro Rata; Commitments. (i) As used herein, the terms "PRO
RATA," "RATABLE," "PROPORTIONATE" and words of similar import when used with
reference to the Lenders mean (unless the context clearly otherwise indicates)
pro rata according to the unpaid principal amounts owing to the respective
Lenders under the Notes, or, if no principal is then owing to any Lender,
according to the Commitment, as the case may be, of the respective Lenders.
(ii) As used in this Agreement, the "COMMITMENT" of each Lender at
any time means (A) the decimal figure set forth in Annex I opposite the name of
the Lender multiplied by THIRTY SIX MILLION FOUR HUNDRED FIFTY SIX THOUSAND FOUR
HUNDRED FOUR AND 00/100 DOLLARS ($36,456,404.00) minus (B) the outstanding
principal balance of the Building Loan that was advanced by such Lender.
Section 2B.17 Sharing of Setoffs. Each Lender agrees that if it shall,
through the exercise of a right of Lender's lien, setoff or counterclaim against
Borrower, or pursuant to a secured claim under Section 506 of Title 11 of the
United States Code or other security or interest arising from, or in lieu of,
such secured claim, received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, obtain payment (voluntary or
involuntary) in respect of any Advance or Advances as a result of which the
unpaid principal portion of its Advances shall be proportionately less than the
unpaid principal portion of the Advances of any other Lender, such Lender shall
be deemed simultaneously to have purchased from such other Lender at face value,
and shall promptly pay to such other Lender the purchase price for, a
participation in the Advance or Advances of such other Lender, so that the
aggregate unpaid principal amount of the Advances and participation in the
Advances held by each Lender shall be in the same proportion to the aggregate
unpaid principal amount of all the Advances then outstanding as the principal
amount of such Lender's Advances under its Note prior to such exercise of
Lender's lien, setoff or counterclaim or other event was to the principal amount
advanced under all of the Notes outstanding prior to such exercise of Lender's
lien, setoff or counterclaim or other event; provided, however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section and
the payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. Borrower
expressly consents to the foregoing arrangements and agrees that any Lender
holding a participation in an Advance deemed to have been so purchased may
exercise any and all rights of Lender's lien, setoff or counterclaim with
respect to any and all moneys owing by Borrower to such Lender by reason thereof
as fully as if such Lender had made an Advance directly to Borrower in the
amount of such participation.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
------------------------------------------
Section 3.1 Representations and Warranties of Borrower. Borrower
represents and warrants that:
(a) Borrower. Borrower is a duly formed Ohio limited liability
company, is in good standing under the laws of the State of Ohio, is fully
authorized to do business in the State of New York, and has full power and
authority to consummate the transactions contemplated hereby;
(b) Borrower's Sole Member. The sole member of Borrower is Member.
Member is a duly formed Ohio limited liability company, is in good standing
under the laws of the State of Ohio, and has full power and authority to
consummate the transactions contemplated hereby as the sole member and manager
of Borrower. At all times while the Loan is outstanding, except as otherwise
permitted by Section 4.2(m) below, Member shall be the sole member and manager
of Borrower and shall own not less than one hundred percent (100%) of Borrower.
The sole member and manager of Member is Alliance Holdings, Inc. Alliance
Holdings, Inc. is a duly formed Pennsylvania corporation, and is in good
standing under the laws of Pennsylvania. At all times while the Loan is
outstanding, except as otherwise permitted by Section 4.2(m) below, Alliance
Holdings, Inc. shall be the sole member and manager of Member;
(c) Guarantor and Developer/Manager. Guarantor is a duly formed
Delaware corporation, is in good standing under the laws of Delaware and has
full power and authority to consummate the transactions contemplated by the
Guaranties. Developer is a duly formed Delaware corporation, is in good standing
under the laws of the Delaware, is fully authorized to do business in the State
of New York and has full power and authority to consummate the transactions
contemplated under the Development Agreement, the Management Agreement and the
Assignment of Contracts;
(d) Enforceability. All Loan Documents executed by Borrower have
been duly authorized, executed and delivered, constitute the valid and binding
obligations of Borrower, and are enforceable against Borrower in accordance with
their respective terms;
(e) Organizational Documents. The Membership Agreement has been duly
executed by the parties thereto, is in full force and effect, and there exist no
defaults thereunder or any event that with passage of time and the giving of
notice if notice is hereunder required would constitute a default thereunder;
(f) Financial Information. The Financial Statements of Borrower
heretofore delivered to Agent fairly and accurately present the financial
condition of Borrower as of the date thereof and no materially adverse change
has occurred in the financial condition reflected therein since the date
thereof. The Financial Statements have been prepared in accordance with sound
accounting methods, principles and standards consistently applied and do not
fail to state any information necessary to make such Financial Statements not
materially misleading;
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(g) Insolvency. Borrower is not insolvent (as such term is defined
in the Bankruptcy Code) and will not be rendered insolvent by execution of this
Agreement or any other Loan Document to which it is a party or by the
consummation of the transactions contemplated thereby;
(h) Budget. The Budget presents a full, accurate and complete
representation of all costs, expenses and fees which Borrower expects to incur
or pay or anticipates becoming obligated to pay to complete construction of the
Improvements;
(i) Litigation. There are no actions, suits or proceedings pending,
or to the knowledge of Borrower or Guarantor, as applicable, threatened, against
or affecting Borrower, Guarantor or the Premises with respect to which an
adverse decision is reasonably likely that would have a material adverse effect
on Borrower, Guarantor or the Premises, or involving the validity or
enforceability of the Mortgage, or the priority of the lien thereof, or the
validity or enforceability of any Loan Document to which Borrower or Guarantor
is a party, at law or in equity, before or by any Governmental Authority, and
Borrower is not operating under or subject to, in default or in violation with
respect to, any order, writ, injunction, decree or demand of any court or any
Governmental Authority which would reasonably be expected to materially and
adversely affect its ability to perform its obligations hereunder;
(j) Legal and Contractual Restrictions. The consummation of the
transactions contemplated hereby and the performance by Borrower or Guarantor of
their respective obligations under this Agreement, the Mortgage, the Notes, the
Security Agreement, the Payment Guaranty, the Completion Guaranty, the Operating
Deficit Guaranty, the Environmental Indemnity Agreement, or any other Loan
Document will not result in any breach of, or constitute a default under, any
mortgage, deed of trust, lease, bank loan or credit agreement, organizational
document or other material agreement or instrument to which Borrower or
Guarantor is a party or by which Borrower or Guarantor may be bound or affected;
(k) Governmental Authority. No authorization or approval or other
action by, and no notice to or filing with, any Governmental Authority or
regulatory body is required for the due execution, delivery and performance by
Borrower or Guarantors of the Loan Documents that is required prior to the date
hereof and has not yet been obtained;
(l) Other Contracts. There is no default on the part of Borrower
under or with respect to this Agreement, the Note, the Mortgage, any Approved
Lease or any other Loan Document, and no event has occurred and is continuing
which with the giving of notice (if notice is hereunder or thereunder required)
and the passage of time would constitute a default under any of the aforesaid
documents;
(m) Usury. The maximum interest rate or interest rates for the Loan
are not to Borrower's knowledge, after consultation with counsel, usurious;
(n) Counterclaims and Defenses. Borrower has no counterclaims,
offsets or defenses with respect to the Loan or with respect to the Notes or any
other Loan Document;
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(o) Lien of Mortgage. To Borrower's knowledge, after consultation
with counsel and the Title Insurer, the Building Loan Mortgage will, upon
recordation thereof be a good and valid first lien on Borrower=s leasehold
interest in the Premises (other than intangible personal property), subject to
the Permitted Encumbrances, and upon such filing and recordation and the filing
of the UCC Financing Statements in the proper offices, Agent will have a
perfected, good and valid first security interest in all items of personal
property described in the granting clause of the Building Loan Mortgage, the
Security Agreement and the Assignment of Contracts, subject to the Permitted
Encumbrances;
(p) Encumbrances. Except for the Permitted Encumbrances, the
Premises are not and will not be encumbered by any other Lien not expressly
permitted hereunder or hereafter approved in writing by Agent, it being
understood that Agent will not unreasonably withhold its approval of any
reasonably necessary beneficial easements;
(q) Approved Leases. With respect to the Approved Leases and any
other leases affecting the Premises, Borrower shall, on a continuing basis, be
deemed to have represented and warranted that the same are in full force and
effect, have not been modified or amended in any material respect without the
consent of Agent, not more than ten percent (10%) of Approved Leases are subject
to actual or alleged Borrower defaults, and all conditions to the effectiveness
thereof required to be satisfied as of the date hereof have been satisfied;
(r) Condemnation, Eminent Domain, Access. Borrower has not received
any notice of, and is not aware of, any actual, proposed or threatened exercise
of the power of eminent domain or other taking by any governmental or
quasi-governmental body or agency of all or any portion of the Premises or any
interest therein, and no condition exists and no application is pending that
would unreasonably inhibit use and occupancy of the Premises for its intended
purpose or adversely modify, restrict or inhibit full access, ingress or egress
to the Project from the adjacent roadways in any material respect;
(s) Casualty. The Premises have not suffered any casualty or loss
since the date of the appraisal required to be delivered to Agent under the
provisions of this Agreement;
(t) Pollutants. Except as specifically identified and disclosed in
the environmental reports delivered to Lender, the Premises has never been used
by Borrower to generate, manufacture, refine, produce, store, handle, transfer,
process or transport any Pollutants in violation of any Environmental Law and
Borrower has not used in the past, nor does Borrower intend to use, or permit to
be used, in the future, during construction or otherwise the Premises for the
purpose of generating, manufacturing, refining, producing, storing, handling,
transferring, processing or transporting of any Pollutant in violation of any
Environmental Law. Except as specifically identified and disclosed in the
environmental reports delivered to Lender, Borrower has no knowledge of any
Pollutant having been allowed to spill, leak, escape, be discharged, dumped,
emptied or otherwise disposed of or dealt with on the Premises or incorporated
into the Improvements or allowed to be discharged or drained into or on any
property adjacent to the Premises or into any waters on or adjacent to the
Premises or onto lands from which such Pollutants might seep, flow or drain into
such waters in violation of any Environmental Law. The Premises (i) is not
included or proposed to be included on the National Priorities List issued
pursuant to Comprehensive Conservation Environmental
34
Response, Compensation and Liability Act ("CERCLA") by the United States
Environmental Protection Agency ("EPA") or on the inventory of other potential
"PROBLEM" sites issued by the EPA, (ii) has not otherwise been identified by EPA
as a potential CERCLA site or included or proposed for inclusion on any list or
inventory issued pursuant to any state environmental statute or issued by any
other Governmental Authority, and (iii) is not located in a "WETLANDS". Borrower
has not received any notice of, nor does Borrower have any knowledge of, any
occurrence or circumstance which with notice or passage of time would give rise
to a claim or Lien under or pursuant to any environmental rule, regulation,
Requirement or statute of any Governmental Authority pertaining to any
Pollutant.
(u) Subdivision. The Land consists of one separate tax lot and is
not part of a larger tract owned or leased by Borrower, and there are and will
be no encroachments on or from the Land except as shown on the survey delivered
by Borrower pursuant to this Agreement or as expressly permitted under
applicable Requirements and approved by Agent and any adjacent property owner
whose rights are affected by such encroachment;
(v) Access. The Project has access to legally dedicated and accepted
roads;
(w) Borrower is, or by January 1, 2000 shall be, Year 2000 Compliant
(as hereinafter defined). "Year 2000 Compliant" shall mean that all software,
embedded microchips, and other processing capabilities utilized by and material
to the business operations or financial condition of Borrower (including,
without limitation, business operations conducted by Developer on Borrower=s
behalf under the Development Agreement and the Management Agreement) are able to
interpret and manipulate data on and involving all calendar dates correctly and
without causing any abnormal ending scenario, including in relation to dates in
and after the year 2000. Upon Lender=s written request, Borrower shall
reasonably demonstrate (or shall cause Developer to reasonably demonstrate)
compliance with the preceding covenant.
(x) Plans. The Plans, have been approved by Borrower and Guarantor,
and before the initial Advance, said Plans shall be approved by Agent, the
Ground Lessor and, to the extent required by any Requirement or any restrictive
covenant, the appropriate Governmental Authority and the beneficiary of any such
covenant;
(y) Construction Performed. All construction heretofore or hereafter
performed complies and shall comply with all Requirements and the Ground Lease;
Borrower has fully paid for all work performed through the date hereof (except
for any retainage expressly provided for in the relevant Project Document) and
has received lien waivers for all such work; the Improvements will be
constructed wholly within the perimeter of the Land and substantially in
accordance with the Plans; there are no structural defects in the Improvements
(it being intended that the absence of structural defects shall be a
pre-condition to the funding of any Draw Request); no violation of any
Requirement or the Ground Lease exists with respect thereto and the anticipated
use thereof complies with all Requirements and the Ground Lease and restrictive
covenants affecting the Land and all requirements for such use have been
satisfied to the extent possible as of the date hereof;
(z) Utilities. All utility services necessary for the construction
of the Improvements and the operation thereof for their intended purpose are
available at the
35
boundaries of the Land, including, without limitation, water supply, storm and
sanitary sewer facilities, gas, electrical, and telephone facilities and the
installation of said utility services to the Improvements can and will be
completed by the Completion Date. Borrower has received permission, to the
extent required, from the appropriate Governmental Authority and/or the provider
of each utility service to connect the Improvements into each utility service
provided the Improvements are constructed in accordance with the Plans;
(aa) Compliance. All zoning, planning, land use (including, without
limitation, the Zoning Resolution of the City of New York), construction,
renovation, and environmental approvals, authorizations, licenses or permits
necessary as of the date hereof to permit the Improvements to be constructed and
operated shall be listed on a schedule to be delivered by Borrower to Agent on
the Closing Date (together with copies of items listed in said schedule), and
have been or will be acquired by Borrower as and when required, are or will be
in full force and effect and Borrower has received no notice of a violation,
revocation or termination of same and any rights to appeal the granting of such
approvals have expired with no appeals being taken. Said permits are the only
permits necessary to construct the Improvements in accordance with all
Requirements. The Improvements, as described in the Plans and when completed,
will comply with all zoning, environmental, air quality, subdivision, planning,
building, land use (including, without limitation, the Zoning Resolution of the
City of New York), and other similar types of laws, rules, regulations,
ordinances, requirements, planning approvals and permit conditions imposed by
any Governmental Authority. Any zoning or subdivision approval is based on no
real property, or rights appurtenant thereto, other than the Land and rights
encumbered by the lien of the Mortgage. To Borrower's knowledge, after
consultation with counsel, the Improvements as, and to be, improved and used are
not in violation of any covenants, conditions or restrictions of any kind or
nature, whether or not of record, affecting all or any part of the Land or any
interest therein. No amendment or change in any such permit, license or variance
and no amendment or change in zoning or any other land use control has been
sought or obtained or will be sought or obtained;
(bb) Contracts. Borrower or Developer on Borrower's behalf has not
made and is not aware of any contract or arrangement of any kind binding on
Borrower or Developer on Borrower=s behalf in an amount in excess of $50,000,
except those disclosed in writing on a schedule to be delivered to Agent on the
Closing Date (or which may be entered into subsequent to the date hereof and
disclosed in writing to Agent);
(cc) Information. To Borrower's knowledge, no information,
certification or report submitted to Agent by or on behalf of Borrower pursuant
to this Agreement or otherwise in connection with the Loan or Borrower's
requests or applications therefor contains any material misstatement of fact or
fails to state a material fact necessary to make the information not misleading
in any material respect;
(dd) Draw Request. Each Draw Request, and the receipt of the funds
requested thereby, shall have the effect stated in the definition of the term
"DRAW REQUEST" and be accompanied by the items in said definition and such other
items as are required by this Agreement;
36
(ee) Use of Proceeds. Borrower will employ the Loan proceeds in
accordance with the Budget and will not require and will not avail itself of any
additional extension of credit for any purpose without Agent's prior written
consent;
(ff) Broker. Borrower has not retained the services of any broker in
connection with the Loan (other than Xxxxxxxx Xxxxxxx Partners); and
(gg) Investment Company Act; Other Regulations. Borrower is not an
"INVESTMENT COMPANY", or a company "CONTROLLED" by an "INVESTMENT company,"
within the meaning of the Investment Company Act of 1940, as amended. Borrower
is not subject to regulation under any Federal or State statute or regulation
which limits its ability to incur the Obligations or any other indebtedness.
LENDER ACKNOWLEDGES THAT BORROWER HAS RELIED SOLELY ON THE
DEVELOPER'S CERTIFICATE IN THE FORM ATTACHED HERETO AND MADE A PART HEREOF AS
EXHIBIT E IN MAKING THE REPRESENTATIONS RELATING TO THE PREMISES AND THE PROJECT
(AS DISTINGUISHED FROM THOSE REPRESENTATIONS RELATING TO BORROWER AND ITS
ORGANIZATION) CONTAINED IN THIS SECTION 3.1 AND ELSEWHERE IN THIS AGREEMENT AND
OTHER LOAN DOCUMENTS. IN THE EVENT THAT DEVELOPER'S OBLIGATIONS UNDER THE
DEVELOPER'S CERTIFICATE SHALL TERMINATE PURSUANT TO THE TERMS THEREOF, BORROWER
SHALL BE DEEMED TO HAVE MADE ALL OF THE REPRESENTATIONS IN THIS ARTICLE 3.1 ON
ITS OWN ACCORD AND WITHOUT RELIANCE ON THE DEVELOPER'S CERTIFICATE. BORROWER
EXPRESSLY ACKNOWLEDGES AND AGREES THAT NOTWITHSTANDING THE FOREGOING
ACKNOWLEDGMENT BY LENDER, ANY MISREPRESENTATION CONTAINED HEREIN OR IN THE OTHER
LOAN DOCUMENTS, WHETHER OR NOT MADE IN RELIANCE ON THE DEVELOPER'S CERTIFICATE,
SHALL BE DEEMED A DEFAULT HEREUNDER BY BORROWER, SUBJECT TO ALL OF THE
APPLICABLE PROVISIONS OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
ARTICLE IV
COVENANTS OF BORROWER
---------------------
Section 4.1 Affirmative Covenants of Borrower. Borrower covenants with
Agent, for itself and for the ratable benefit of the Lenders, that, throughout
the term of the Loan and any extensions thereof, Borrower will:
(a) Structure of Borrower. Comply with all Requirements in order to
maintain Borrower in good standing as a validly existing limited liability
company under the laws of the State of Ohio, authorized to do business in
the State of New York;
(b) Performance of Obligations. Promptly comply with all conditions
of this Agreement and the other Loan Documents with which Borrower is
required to comply and any Requirement, the Ground Lease and/or
restrictive covenant affecting the Land;
(c) Notices. Promptly (upon transmittal or receipt) deliver to Agent
copies of all material notices and correspondence with respect to: (i) any
Project Document, (ii)
37
any Loan Document, (iii) the financial condition of Borrower, (iv) Agent's
and Lenders' security, and (v) any violation or potential violation of any
Requirement or any approval, authorization, or permit issued in regard to
the Premises or Improvements, and Borrower will promptly respond fully to
any inquiry of Agent made with respect thereto, and will permit Agent,
upon Agent's written request, to participate in any inquiry, hearing or
meeting with regard to any of the foregoing and will furnish Agent, on
demand, proof of compliance, or proof of the action Borrower is taking in
order to comply, reasonably satisfactory in all respects to Agent;
provided that Lender acknowledges that pursuant to the Development
Agreement and the Management Agreement, Borrower has delegated to
Developer certain of Borrower's duties under this Agreement and the other
Loan Documents. Accordingly, during the term of the Development Agreement
and/or Management Agreement, (i) Lender shall rely on any notice, demand
or request for Advances from Developer as if such notices, demands or
requests for Advances were made by Borrower, (ii) any notice, demand or
request for Advances or modifications not signed by Developer shall be
ineffective and (iii) Agent shall not act upon any request by Borrower for
a material modification to any of the Loan Documents unless the same is in
writing signed by both Borrower and Developer;
(d) Additional Documents. Execute and deliver to Agent, from time to
time, and as reasonably requested by Agent, such other documents as shall
be reasonably necessary to provide the rights and remedies to Agent and
Lenders granted or provided by the Loan Documents;
(e) Maintenance of Premises. Maintain the Premises in good repair
and safe condition at all times and if at any time any Pollutant shall be
discovered buried under, manufactured or processed or stored on the Land
in violation of Requirements, Borrower will promptly remove same in
accordance with any and all Requirements;
(f) Insurance. Maintain, at all times, insurance on the Premises in
accordance with the requirements of the Mortgage;
(g) Draw Request. Prior to Completion and satisfaction of all
requirements of Section 6.4 hereof, submit to Agent at least once, but no
more than once each calendar month a Draw Request (except Borrower may
make an additional Draw Request to pay Interest or as otherwise provided
herein);
(h) Payment of Fees. On the Closing Date and thereafter promptly
when due, pay the Commitment Fee, the Construction Administration Fee, the
Agency Fee, Agent's Counsel Fees, Agent's Inspecting Consultant fees, all
costs and expenses required to satisfy the conditions of this Agreement
and all costs and fees of whatever nature incurred by Agent acting on its
own behalf or as agent for itself and any participating Lenders in
connection with the negotiation, consummation, execution, closing,
syndication, administration and/or collection of the Loan, but
specifically excluding any expenses incurred in connection with the
negotiation, consummation, execution and closing of the Loan by any Lender
(other than KCCI (individually or as Agent)) in excess of $5,000 each.
Without limiting the generality of the foregoing, Borrower will pay: (i)
mortgage recording taxes and recording fees, title insurance premiums and
costs, escrow
38
fees, flood zone determination fees, survey fees, appraisal costs, Agent's
environmental audit and site inspection fees; and (ii) all reasonable fees
and expenses incurred by Agent, and its respective agents and
representatives in connection with any Event of Default under any Loan
Document or the enforcement thereof. To the extent Agent, after the
Initial Closing, deems it necessary in its reasonable judgment to employ
counsel and/or consultants for any purpose relative to the Loan, the
reasonable fees and expenses of such counsel and/or consultants shall be
borne by Borrower. Any such fees and expenses incurred by Agent are to be
paid promptly by Borrower in no event later than ten (10) Business Days
from Agent's delivery of an invoice to Borrower. Borrower hereby agrees to
indemnify and hold Agent harmless with respect to all of the foregoing
costs, fees and expenses;
(i) Use of Proceeds. Borrower shall receive the Advances of the
Building Loan made hereunder and shall hold same in trust solely for, and
shall expend, Building Loan proceeds solely for the purpose of paying
costs of the improvement as defined in the New York Lien Law, and
identified in the Budget and Borrower shall utilize Advances of the Soft
Cost Loan solely for the purpose of paying costs identified in the Budget
as Soft Costs. Borrower represents and agrees that it will not require and
agrees that it will not avail itself of any additional extension of credit
for the requisition and development of the Premises or the construction of
the Improvements (except for financing expressly permitted hereunder). An
affidavit pursuant to Section 22 of the Lien Law of the State of New York,
is attached hereto as EXHIBIT C and made a part hereof;
(j) Construction. Cause the construction of the Improvements to be
prosecuted with diligence and continuity so as to complete and equip the
same in accordance with the Plans, the Ground Lease, all Requirements and
the Budget on or before the Completion Date free and clear of Liens or
claims for Liens other than Permitted Encumbrances. Borrower will promptly
deliver a copy of all proposed and executed Change Orders to Agent and
Agent's Inspecting Consultant;
(k) Standard of Construction. Construct and achieve Completion of
the Improvements substantially in accordance with the Plans to the
reasonable satisfaction of Agent and Agent's Inspecting Consultant and
will not permit, and will promptly remove, any encroachment on the Land
unless the same is insured over by the Title Insurer to the reasonable
satisfaction of Agent, and Borrower will not allow the Improvements to
encroach on any adjoining property or street, and if any such encroachment
exists Borrower will promptly remove same unless the same is insured over
by the Title Insurer to the reasonable satisfaction of Agent;
(l) Inspections. Subject to the Approved Leases, permit Agent,
Agent's Inspecting Consultant and/or Agent's agents and the other Lenders
at all reasonable times to enter upon the Premises, and to inspect the
Improvements and all materials to be used in the construction thereof and
to examine all Plans which are or may be kept at the construction site,
and will cooperate, and cause the General Contractor and the Major
Contractors (and will use good faith efforts to cause the Major
Subcontractors) to cooperate, with Agent's Inspecting Consultant to enable
it to perform its functions;
39
(m) Correction of Defects. Upon demand of Agent based upon the
advice of Agent's Inspecting Consultant, correct any structural defect in
the Improvements or any departure from the Plans deemed by Agent to be
material, and the disbursement of any Loan proceeds shall not constitute a
waiver of Agent's right to require compliance with this covenant with
respect to any such defects or departures from the Plans; notwithstanding
the foregoing, neither Agent nor Agent's Inspecting Consultant shall have
any affirmative duty to Borrower or any third party to inspect for said
defects or to call them to the attention of Borrower or anyone else and
the failure to do so shall in no event give rise to any claim or liability
to or on the part of any party;
(n) Bonds. Obtain and deliver to Agent material and labor payment
bonds and performance bonds, which bonds must be reasonably acceptable to
Agent, for the General Contractor, naming Agent, for the ratable benefit
of the Lenders, as a dual obligee thereunder;
(o) Letter Agreements. Require Borrower's Engineer and Architect,
the General Contractor and each Major Contractor to timely execute and
deliver to Agent a letter in the form previously approved by the Agent;
(p) Foundation Survey. Deliver to Agent a foundation survey
complying with the requirements provided by Agent to Borrower on the
Closing Date upon completion of the foundation;
(q) As-Built Survey. Deliver to Agent an as-built ALTA/ACSM survey
complying with the requirements set forth in the Commitment Letter upon
Completion of the Improvements;
(r) Indemnification. Protect, defend, indemnify and hold Agent and
Lenders, and Agent's and each Lender's officers, directors, shareholders,
employees and agents harmless from all claims, expenses, costs, losses,
injury, liabilities (including liability for penalties), judgments, fines,
damages, settlements, causes of actions, suits, demands, including
attorneys fees and costs, arising from or related to: (i) any brokerage
commissions or finder's fees claimed by any broker or other party arising
by reason of the execution hereof or the consummation of the transactions
contemplated hereby (except by any such broker or other party retained by
Lender), (ii) any actions or omissions relative to the Premises including,
without limitation, contract, personal injury (other than for Agent's or
Lenders' gross negligence or wilful misconduct) or property damage claims,
(iii) the Improvements or the construction thereof, (iv) the existence of
any encroachment (except as shown on the survey delivered by Borrower
pursuant to this Agreement and approved by Agent or as may be permitted
under Section 4.1(k)) upon the Land or from any part of the Improvements
encroaching on any adjoining property, street or easement, and (v) any
action or lien pursuant to any environmental Requirement or clean up or
compensation act, including the failure to comply with the terms of any
order issued by any federal, state or municipal department or agency
having regulatory authority over environmental matters with regard to the
Premises or any other property owned by Borrower or the presence or
existence of any Pollutant in violation of Requirements. If any action,
suit or proceeding arising from any of the foregoing is
40
brought against Agent or any Lender, Borrower will resist and defend such
action, suit or proceeding or cause the same to be resisted and defended
by counsel designated by Borrower (which counsel shall be reasonably
satisfactory to Agent), unless, due to a conflict of interest, Agent or
any Lender require such action, suit or proceeding to be resisted and
defended by counsel of its own selection and is represented by such
counsel (in which case Borrower shall be liable for the payment of Agent's
and such Lender's reasonable attorney's fees), provided that prior to the
occurrence and continuance of default, Agent or any Lender shall not
settle or release any claim without the written consent of Borrower, which
approval shall not be unreasonably withheld or delayed. If and to the
extent that the foregoing provisions of this Section may be unenforceable
for any reason, Borrower hereby agrees to make the maximum contribution to
payment and satisfaction of each of the indemnified liabilities which is
permissible under applicable law. If Borrower shall fail to do any act or
thing which it has covenanted to do hereunder or any representation or
warranty on the part of Borrower contained herein or in any Loan Document
shall be breached and such breach shall continue beyond any applicable
notice and grace periods, Agent or any Lender may (but shall not be
obligated to) do the same or cause it to be done or remedy any such
breach, and may expend its funds for such purpose; provided, however, that
no such action by Agent or any Lender shall relieve Borrower of any
liability in connection with such failure or breach or be deemed to
constitute a waiver of any default under this Agreement or such Loan
Document. Any and all amounts so expended by Agent or any Lender shall be
repayable to them by Borrower, promptly after Agent's demand therefor,
with interest at the Default Rate from the date of expenditure by Lender
to the date of repayment. The obligations of Borrower under this Section
4.1(r) shall survive the termination of this Agreement and the discharge
of Borrower's other obligations hereunder. Notwithstanding the foregoing,
to the extent the Guarantor shall have performed its obligations under the
Guaranties and/or the Environmental Indemnity pertaining to the preceding
obligations, neither Borrower nor any Guarantor shall be liable for
duplicative fees and costs incurred by Agent or Lenders in connection with
such obligations;
(s) Security Interests. Grant Agent, for the ratable benefit of
Lenders, a first lien and security interest, subject only to Permitted
Encumbrances and liens permitted hereunder and that the Ground Lessor may
have under the applicable provisions of the Ground Lease, in and to all
furnishings, fixtures and equipment and other personal property owned
and/or leased by Borrower and used in the operation of the Improvements
immediately upon acquisition of same or any part of same and will deliver
to Agent, promptly following demand, copies of all documents which
evidence Borrower's title to or a leasehold interest in any materials,
fixtures or articles incorporated in the Improvements. Borrower shall not
enter into conditional sales contracts or lease agreements for equipment
to be used in the construction or operation of the Improvements, except
for office equipment, furniture and other machinery or equipment used in
the day-to-day operation and maintenance of the Improvements, the value of
which in the aggregate shall not exceed $500,000;
(t) Permits. Obtain and keep all permits, licenses and
authorizations required for the construction, use and operation of
Premises, including without limitation the temporary certificate of
occupancy covering the Improvements, in full force and effect,
41
promptly comply with all conditions thereof, and upon Agent's request,
promptly deliver to Agent evidence of compliance and promptly notify Agent
of any violation, revocation or termination of same;
(u) Easements. Procure such easements, cross easements or operating
agreements as Agent may reasonably deem necessary for the use of the
Premises and will submit same to Agent for approval prior to the execution
thereof by Borrower, accompanied by a drawing or survey showing the
location thereof;
(v) Compliance with Requirements. Promptly comply with all
Requirements which affect the Premises or for which a notice of violation
or non-compliance has been issued and promptly deliver to Agent evidence
of such compliance and copies of any such notices of violation or
non-compliance;
(w) Payment of Claims; Notice to Agent of Claims. Promptly pay all
costs and expenses incurred in connection with the Premises, and Borrower
shall cause the Premises to be kept free and clear of any Liens other than
Permitted Encumbrances. Within thirty (30) days after filing of any Lien,
Borrower shall cause such Lien to be discharged, released of record or
bonded over for a sum and in a manner by a reputable surety each in all
respects acceptable to Agent; notify Agent in writing within ten (10) days
thereof should any mortgage, lien, notice of lien, stop notice,
encumbrance or charge or any other security instrument whatsoever against
the Property (other than the Permitted Encumbrances), Improvements,
Personal Property, or other collateral covered by the Loan Documents or
any part thereof come to Borrower=s attention. Borrower shall do all acts
and execute all additional documents required by Agent to maintain the
priority of the lien of the Building Loan Mortgage and the Soft Cost
Mortgage and to comply with the Lien Law of the State of New York.
(x) Financial Statements. Furnish to Agent: (i) Commencing on
Completion and with respect to monthly statements ending upon the
achievement of the Intermediate Threshold with respect to Borrower, not
later than forty-five (45) days after the end of each calendar month, and,
not later than one hundred twenty (120) days after the close of Borrower's
fiscal year, a balance sheet, a statement of profit and loss, and a
statement of changes setting forth in comparative form figures for the
preceding month or year, as the case may be. The annual statements
delivered by Borrower shall be certified by an officer of Borrower or
Developer. After the Intermediate Threshold has occurred, Borrower may
submit quarterly statements in lieu of the monthly statements required
hereunder. All such financial statements shall be certified by an officer
of Borrower or Manager; (ii) With respect to Guarantor, not later than
forty-five (45) days after the end of each calendar quarter, and, not
later than one hundred twenty (120) days after the close of Guarantor's
fiscal year, a balance sheet, a statement of profit and loss, and a
statement of changes setting forth in comparative form figures for the
preceding year or quarter, as the case may be. The annual statements (but
not the quarterly statements) delivered by Guarantor shall be audited and
certified by Ernst & Young LLP or another firm of independent certified
public accountants, reasonably acceptable to Agent. All such financial
statements shall be certified by officer of Guarantor; (iii) Such other
financial
42
statements required pursuant to the terms of the Mortgage or as may be
reasonably requested by Agent;
(y) Approved Leases. Use reasonable efforts to fully lease the
Improvements. All leases must comply with the leasing guidelines set forth
in Section 4.2(i) hereof. Borrower shall obtain the prior written approval
of Agent for each lease if required by Section 4.2(i).
(aa) Additional Documents. Execute and deliver to Agent, from time
to time, such other documents as shall be reasonably necessary to provide
the rights and remedies granted or provided by the Loan Documents;
(bb) Rent Rolls. From and after the date of Completion, deliver to
Agent, (i) not less than monthly prior to Stabilization and quarterly
thereafter, on or before the fifth (5th) day of such month or calendar
quarter, as the case may be, a rent roll and a "Leasing Report" relative
to any vacant units which shall summarize resident applications received
and leasing progress, certified by Borrower or Manager on behalf of
Borrower to be true and complete and containing Borrower's or Manager's
certification that, except as specifically noted, (1) all of the Leases
then in effect comport with the requirements of Section 4.2(i) hereof,
including the requirement that such Leases do not vary in any material way
from the form of lease previously approved by Agent and the requirement
that the fixed rent under each such Lease is not less than the rates set
forth on EXHIBIT F; (2) there have been no prepayments under such Leases
greater than thirty (30) days (except for security deposits shown on such
rent roll); and (3) the aggregate of (x) the revenues from such Leases and
(y) the pro forma rentals for the then vacant units determined in
accordance with the pro forma rentals set forth on Exhibit F are no less
than ninety-five percent (95%) of the total pro forma rentals set forth on
Exhibit F, and otherwise containing such information and being in such
form as Agent may reasonably require, and (ii) not less than one hundred
twenty (120) days following the end of Borrower=s fiscal year, an annual
pro forma operating statement for the Improvements, prior to Completion,
Borrower shall deliver to Agent a monthly Leasing Report;
(cc) Operating Budget/Cash Flow. Deliver to the Agent facility
summary reports for the Project in form and substance satisfactory to
Agent, which shall be broken down on a line item basis (including a line
item for NOI) and shall include an occupancy summary and a profit and loss
summary (each, a "FACILITY SUMMARY REPORT"). Such Facility Summary Reports
will be provided monthly from Substantial Completion until Stabilization
has been achieved, with quarterly reports being permitted after
Stabilization has been achieved, within forty-five (45) days after the end
of each calendar month or quarter, as applicable. As used
herein,"STABILIZATION" shall mean, and shall have been achieved, when the
Debt Service Coverage Ratio for the Project following the Intermediate
Threshold has exceeded 1.2 to 1.0 for at least three (3) consecutive
calendar months. As used HEREIN,"INTERMEDIATE THRESHOLD" (which must occur
no later than the twelfth (12th) month following Substantial Completion to
be effective) shall mean, and shall have been achieved when: (i) at least
six (6) months have elapsed since Substantial Completion; (ii) not less
than 87.5% of the units then scheduled to be occupied, as set forth in the
Occupancy Schedule attached hereto and made a part hereof as EXHIBIT F,
are
43
then occupied and all payments are being made in accordance with the terms
of Approved Leases, and (iii) the NOI of the Project on a cumulative basis
for the period from Substantial Completion through the last day covered by
the most recent monthly Facility Summary Report submitted by Borrower and
approved by Agent, as set forth in such Facility Summary Report, is no
less than 87.5% of the projected NOI set forth in the Budget (or any
revised projected NOI approved by the Requisite Lenders in writing for
such respective period);
(dd) Debt Service Coverage Ratio. Achieve and maintain a minimum
Debt Service Coverage Ratio for the Project, as determined by Agent based
upon information provided by Borrower within forty-five (45) days of the
end of each calendar quarter, of (i) 1.0 to 1.0 at the end of quarters 5
and 6 following Substantial Completion; and (ii) 1.2 to 1.0 at the end of
quarter 7 following Substantial Completion, and each quarter subsequent
thereto, as determined quarterly on a rolling basis including up to four
quarters commencing with quarter 7. For example, in quarter 8, the
calculation will include figures from quarters 7 and 8 only; in quarter
10, the calculation will include figures from quarters 7, 8, 9 and 10.
(ee) Occupancy of the Project. Achieve and maintain occupancy of the
Project after Substantial Completion, as established to Agent's
satisfaction, at not less than the following scheduled levels measured at
the end of such period:
Quarter 2 following Substantial Completion: 43.75%
Quarter 3 following Substantial Completion: 55.13%
Quarter 4 following Substantial Completion: 65.63%
Quarter 5 following Substantial Completion: 76.13%
Quarter 6 following Substantial Completion: 83.13%
Quarters 7-10 following Substantial Completion: 83.13%
(ff) Guarantor's Net Worth. Provide to Agent a certificate, in form
reasonably acceptable to Agent, on a quarterly basis, within forty-five
days (45) of the end of each calendar quarter, evidencing that Guarantor's
minimum net worth is equal to $70,000,000.
(gg) Guarantor's Liquidity. Provide to Agent a certificate, in form
reasonably acceptable to Agent, on a quarterly basis, within forty-five
(45) days of the end of each calendar quarter, evidencing that Guarantor
has Liquid Assets equal to at least $5,000,000.
(hh) Compliance With Ground Lease. Comply in all respects with the
Ground Lease, including, without limitation, the provisions of Article 11
thereof governing construction of the Project, and the provisions of
Article 40 thereof governing non-discrimination and comply with all of the
instruments and agreements with which Borrower is required to comply
pursuant to the Ground Lease, including, without limitation, the Master
Lease, the Master Development Plan and the Design Guidelines.
44
(ii) Post-Closing Conditions. Borrower shall satisfy the
Post-Closing Conditions set forth in Section 2B.7, if any, on or before
the Post-Closing Delivery Date and in no event later than the Post-Closing
Default Date.
(jj) Agent's Sign on the Premises. Authorize Agent (i) to erect, at
its option, and solely at Agent's expense, a sign on the Premises
indicating that Agent and the Lenders are the source of the financing for
the Improvements and (ii) to use Borrower's name and the location of the
Improvements in any published advertisement. Any sign must be in
compliance with applicable ordinances and the Ground Lease and shall be
removed upon Completion;
(kk) Borrower and/or Guarantor on Borrower's behalf shall establish
and maintain the Interest Rate Protection Facility and comply with the
Forward Treasury Lock Agreement. Borrower and/or Guarantor on Borrower's
behalf shall establish the Interest Rate Protection Facility by effecting
transactions pursuant to the Forward Treasury Lock Agreement as follows:
in an amount not less 25% of the aggregate original principal amount of
the Loan on or before the Closing Date; in an amount not less than 50% of
the aggregate original principal amount of the Loan on or before the
thirtieth (30th) day following the Closing Date; in an amount not less
than 75% of the aggregate original principal amount of the Loan on or
before the sixtieth (60th) day following the Closing Date; and in an
amount not less than 100% of the aggregate original principal amount of
the Loan on or before the ninetieth (90th) day following the Closing.
Section 4.2 Negative Covenants of Borrower. Borrower will not, without the
prior written consent of Agent throughout the term of the Loan and any
extensions thereof:
(a) Interest in Premises. Except for Approved Leases and other
Permitted Encumbrances, create, effect, consent to, contract for, agree to
make, suffer or permit any conveyance, sale, assignment, transfer, lien,
pledge, mortgage, security interest, encumbrance or alienation of the
Land, the Improvements or any interest in a portion of the Land or the
Improvements, whether effected directly, indirectly, voluntarily,
involuntarily, or by operation of law or otherwise. No other financing or
mortgaging of the Land or the Improvements shall be permitted while the
Loan or any portion thereof is outstanding, it being understood that
neither the BancOne financing nor the Mezzanine Financing (provided they
always comport with the requirements of Section 2B.15(b) hereof) shall
violate this provision;
(b) Ownership. Change the ownership (directly or indirectly) or the
structure of Borrower or its members, and no member shall sell, assign,
pledge, hypothecate or encumber or transfer its membership interest in
Borrower provided, however, that the foregoing provision shall not be
deemed violated by (i) a foreclosure and acquisition of the equity
interest in Borrower or Member by the lender (or an affiliate of the
lender) providing the Mezzanine Financing or the Banc One Financing,
provided that the Banc One Financing or Mezzanine Financing, as
applicable, and such foreclosure and acquisition, complies in all respects
with Section 2B.15(b) and the subordination and standstill agreement
delivered by such lender pursuant to Section 2B.15(b); (ii) an
45
acquisition of the equity interest in Borrower directly by Developer (or
any other wholly owned subsidiary of the Guarantor) on the express terms
and conditions set forth in Section 4.2(m) hereof; or (iii) any change of
ownership of Alliance Holdings, Inc., provided Brookdale Living
Communities of New York - BPC, Inc. is then the Developer under the
Development Agreement and the Manager under the Management Agreement and
the foregoing agreements are then in full force and effect. Borrower shall
not permit or allow the Membership Agreement to be amended, terminated or
modified;
(c) Amendment to Documents. Except as permitted hereunder, (i)
modify or amend or terminate (other than by full performance thereof) any
Loan Document, or (ii) modify or amend or terminate any Project Document
(except as permitted in Section 4.2(d) below and except for non-material
changes to Approved Leases that do not have the effect of reducing the
aggregate revenues from the Leases to less than ninety-five percent (95%)
of the "gross potential rents" for the applicable period set forth on
Exhibit F hereto, without the prior consent of Agent which consent will
not be unreasonably withheld (as to Project Documents only);
(d) Change Orders. Without the written consent of Agent, Ground
Lessor (if required), any lessee under an Approved Lease (if required
under such Approved Lease), any Governmental Authority whose permission
may be required, or any other person or entity whose consent may be
required by any easement, agreement or other document, suffer or permit
any material modification of or material deviation from the Plans, nor
shall Borrower allow any change orders to be executed or permit the
performance of any work pursuant to any Change Order which exceeds the
Change Order Amount (whether an add or a deduct or a reallocation) or the
Aggregate Change Order Amount (whether an add or a deduct or a
reallocation), or which (regardless of the amount) adversely affects the
quality of the Improvements, or which adversely affects the quality of any
of the materials or equipment to be used in the Improvements, or which
increases or reduces the floor space as set forth in the Plans, or which
modifies any of the parameters set forth in the definition of
Improvements, or which might result in any increase in the Budget.
Borrower will not make any changes which could give rise to a defense by
the bonding company to its obligations under the payment and performance
bonds required hereunder, or which are deemed by Agent's Inspecting
Consultant to adversely affect the structural integrity of the
Improvements;
(e) Other Agreements. Execute any contract or become party to any
arrangement for the performance of work on the Premises in excess of
$200,000 without first providing written notice to Agent and, if Agent
shall so request, without providing a copy of such proposed contract to
Agent;
(f) Agreements Affecting the Premises. Without the prior consent of
Agent, which consent shall not be unreasonably withheld or delayed (such
consent having been granted with respect to the Development Agreement, the
Management Agreement, the Ground Lease, the General Contract, the
Architect's Agreement, Approved Leases and the Engineer's Agreement) enter
into any development, leasing, management or other similar agreement that
constitutes a Major Contract, or fail to provide a letter, in form and
substance satisfactory to Agent, executed by the other party to said
agreement
46
(including those agreements to which Agent has consented) to the effect,
that upon a default under any Loan Document and Agent's acquisition and/or
obtaining control of the Premises on behalf of the Lenders through
foreclosure, sale or other means, such agreement shall terminate upon
Agent's request at no cost to Agent and Lenders (provided that no such
letter will be required if the agreement in question contains the
foregoing provision);
(g) Pollutants. Either during construction or thereafter, permit the
Premises to be used to generate, manufacture, prepare, produce, store,
handle, transfer, process, spill or empty or otherwise dispose of any
Pollutant in violation of any Requirement, and if same is found to exist,
Borrower shall take all steps to promptly remove such Pollutants in
accordance with all Requirements;
(h) Subdivision. File any application or seek any subdivision
approval for the Land or file or record any subdivision or parcel map or
accept any subdivision approval, nor shall Borrower consent to, join in,
knowingly permit or approve any change in the zoning of the Land unless
required by law or with Agent's prior written consent;
(i) Leasing and Leasing Guidelines. Borrower will not enter into any
lease of all or any portion of the Premises unless the following
conditions are met: such lease or similar agreement is an Approved Lease
or (1) such lease does not vary in any material way from the form of lease
provided to and approved by Agent (and the Ground Lessor, to the full
extent required under the Ground Lease, a copy of which consent, if
required, shall be delivered to Agent) prior to the execution of any such
lease by Borrower, (2) the fixed rent under such lease, when aggregated
with the fixed rent payable under all leases then in effect and the pro
forma rentals for the then vacant units set forth on Exhibit F, is not
less than ninety-five percent (95%) of the total pro forma rentals set
forth on Exhibit F, and (3) the term thereof shall be not less than six
(6) months;
(j) Termination of Lease. Terminate or accept the surrender of any
lease, (other than the agreements pursuant to which the assisted
living/independent living units are occupied), without the prior written
consent of Agent unless, with respect to termination of any lease, the
lessee is in default thereunder after the expiration of any notice or
grace periods;
(k) General Contract. Terminate or accept the surrender of, or amend
or modify, the General Contract, (except for Change Orders expressly
permitted hereunder) without the prior written consent of Agent, which
consent shall not be unreasonably withheld or delayed;
(l) Other Contracts. Terminate or accept the surrender of, or amend
or modify in any material respect, the Development Agreement or the
Management Agreement, without the prior written consent of Agent, which
consent shall not be unreasonably withheld or delayed; and
(m) Mergers, Admission of New Members. Except as expressly permitted
by Section 4.2(b) or this Section 4.2(m), none of Borrower, Member, or
Guarantor will
47
merge or consolidate with, or sell, assign, lease or otherwise dispose of
all or substantially all of its assets to, any other person, or permit any
other person to be admitted as a new or substitute member or manager in
Borrower, except that Guarantor may directly or through a wholly-owned
Affiliate acquire (and assume all obligations of) Borrower or Member;
provided, however that, notwithstanding the foregoing, and only if there
are then no outstanding Events of Default, and (i) Agent shall have
received written notice thirty (30) days prior to any proposed merger or
consolidation of Guarantor, (ii) such Guarantor shall have delivered to
Agent copies of all documents to effect such merger or consolidation,
(iii) Agent shall have determined in its sole and absolute discretion that
following such proposed merger or consolidation the surviving entity will
meet the minimum net worth and liquidity requirements of Sections 4.1(ff)
and 4.1(gg) hereof), (iv) such Guarantor shall have caused to be delivered
to Agent such opinions of counsel as Agent may reasonably request, which
opinions shall be satisfactory to it in all respects, and (v) such
Guarantor shall have paid any and all expenses, including, without
limitation, reasonable legal expenses, in connection with Agent's review
of any of the foregoing, then no further approval of said transaction
shall be required, provided, the surviving entity assumes in writing all
obligations of Guarantor under the Guaranties to Lender.
ARTICLE V
EVENTS OF DEFAULT
-----------------
Section 5.1 Events of Default. The following shall constitute defaults
hereunder and upon the giving of notice and the passage of time, if any provided
in Section 5.2, shall, unless a right to cure exists under this Agreement or the
applicable Loan Document and such default is cured as provided herein or
therein, constitute "EVENTS OF DEFAULT" hereunder:
(a) if any default shall occur and continue beyond any notice (if
notice is required) and cure period (if a cure period is provided) under the
Mortgage or any other Loan Document including, without limitation the Soft Cost
Loan Agreement, or if a Significant Party shall be in default beyond applicable
notice and cure periods under or attempt to terminate any Loan Document, and
such default continues beyond any such notice and cure period;
(b) if Borrower shall fail to pay when due any installment of
interest or principal or the Agency Fee or any other sums payable, or if
Borrower shall fail to reimburse any Lender, when required, any sums due under
this Agreement, the Notes, the Mortgage or any other Loan Document, or if
Borrower shall fail to comply with any monetary covenant made by it in any Loan
Document;
(c) if a Significant Party shall fail to comply with any of the
nonmonetary covenants made by it in this Agreement (including, without
limitation, any violation of the negative covenants set forth in Section 4.2(b)
or 4.2(m) or the covenant to execute new Notes as provided in Section 7.14(b)),
the Notes, the Mortgage or in any other Loan Document, or if at any time any
representation or warranty made by a Significant Party to Agent or any Lender in
this Agreement or in any other Loan Document or in any certificate delivered in
connection
48
herewith shall be false or misleading to an extent deemed by Agent, in its
reasonable judgment, to be material;
(d) if a judgment is entered against the Borrower, or if there is a
levy upon any ownership interest in the Borrower, which in the reasonable
judgment of Agent would materially and adversely affect the ability of such
party to perform any of its respective obligations under any Loan Document, or,
subject to the provisions of Section 1.06(c) of the Mortgage, a lien for the
performance of work, the supply of materials or otherwise, be filed against the
Premises and such judgment or lien remains unsatisfied or unbonded for a period
of thirty (30) days after notice of filing thereof, provided that within said
thirty (30) day period the Premises are not the subject of any writ, levy,
execution or sequestration; provided, however, the Borrower may timely appeal
same provided said appeal is in good faith, is diligently pursued, said appeal
is permitted by law, said appeal has the effect of staying any type of action on
such judgment or lien, the Borrower posts any security required by law which
security shall be reasonably satisfactory to Agent, and said appeal does not
subject Agent or the Premises to any civil or criminal penalties;
(e) if a Significant Party shall (i) suspend or discontinue its
business, or (ii) make an assignment for the benefit of creditors, or (iii)
admit in writing its inability to pay its debts as they become due, or (iv) file
a voluntary petition in bankruptcy, or (v) become insolvent (as defined in the
Bankruptcy Code), or (vi) file any petition or answer seeking for itself any
reorganization, arrangement, composition, readjustment of debt, liquidation or
dissolution or similar relief under any present or future statute, law or
regulation of any jurisdiction, or (vii) petition or apply to any tribunal for
any receiver, custodian or any trustee for any substantial part of its property,
or (viii) be the subject of any such proceeding commenced against it which
remains undismissed for a period of sixty (60) days, or (ix) file any answer
admitting or not contesting the material allegations of any such petition filed
against it, or of any order, judgment or decree approving such petition in any
such proceeding, or (x) seek, approve, consent to, or acquiesce in any such
proceeding, or in the appointment of any trustee, receiver, custodian,
liquidator, or fiscal agent for it, or any substantial part of its property, or
an order is entered appointing any such trustee, receiver, custodian, liquidator
or fiscal agent and such order remains in effect for sixty (60) days;
(f) if an order for relief is entered under the Bankruptcy Code or
any other decree or order is entered by a court of competent jurisdiction (i)
adjudicating a Significant Party bankrupt or insolvent, or (ii) approving as
properly filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of a Significant Party, or (iii) appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator (or other
similar official) of a Significant Party or of any substantial part of the
property of any thereof (other than a decedent's estate), or (iv) ordering the
winding up or liquidation of the affairs of a Significant Party and any such
decree or order continues unstayed and in effect for a period of sixty (60)
days;
(g) if the Premises, or any interest therein, be sold or in any
manner encumbered or conveyed without the prior written consent of Agent, except
as expressly permitted hereunder (or if any interest in Borrower be sold,
assigned, pledged or encumbered except as permitted by Section 4.2(b) and
Section 4.2(m), including in connection with the Mezzanine Financing or the Banc
One Financing);
49
(h) if the Premises or any part thereof shall be condemned or
damaged by fire or other casualty unless the requirements set forth in the
Mortgage for restoration of the Premises are promptly commenced and satisfied;
(i) if Borrower shall enter into any lease of the Premises which
does not qualify as an Approved Lease under this Agreement or if Borrower shall
be in default under ten percent (10%) or more of the Approved Leases;
(j) if, except as otherwise permitted hereunder in each case,
Borrower shall materially amend, modify or vary any Approved Lease, or if
Borrower shall consent to or acquiesce in the surrender of any Approved Lease,
or if more than ten percent (10%) of Approved Leases shall be terminated unless
a lessee is in default thereunder after the expiration of any notice or grace
periods;
(k) if any material provision of this Agreement or any of the Loan
Documents shall at any time for any reason cease to be valid and binding on any
Significant Party, or shall be declared to be null and void, or the validity or
enforceability thereof shall be contested by any Significant Party, or a
proceeding shall be commenced by any Governmental Authority having jurisdiction
over any Significant Party seeking to establish the invalidity or
unenforceability thereof, or a Significant Party shall deny that it has any or
further liability or obligation under this Agreement or any of the Loan
Documents; provided, however, that if a proceeding shall be commenced by any
Governmental Authority seeking to establish the invalidity or unenforceability
of this Agreement or any other Loan Document, a Significant Party may timely
contest the validity of such proceeding provided said contest is in good faith,
is diligently pursued, said contest is permitted by law, said contest has the
effect of staying any type of action pursuant to such proceeding, the
Significant Party posts any security required by law which security shall be
reasonably satisfactory to Agent, and said contest does not subject Agent, or
any Lender, or the Premises to any civil or criminal penalties;
(l) (i) if at any time any representation or warranty made by any
Significant Party in the Payment Guaranty, the Completion Guaranty, the
Operating Deficit Guaranty, the Environmental Indemnity Agreement or any other
Loan Document or any certificate executed by any Significant Party in connection
with the Loan or any other Loan Document shall be false or misleading to an
extent deemed material as reasonably determined by Agent, or (ii) if any
Guarantor shall fail to comply with any covenant made by it in the Payment
Guaranty, the Completion Guaranty, the Operating Deficit Guaranty, or the
Environmental Indemnity Agreement and such failure is not cured by Guarantor
within the time period provided in the Payment Guaranty, the Completion
Guaranty, the Operating Deficit Guaranty, or the Environmental Indemnity
Agreement, as the case may be, or if a default (except as set forth in (l)(i)
above) by Guarantor shall occur under the Payment Guaranty, the Completion
Guaranty, the Operating Deficit Guaranty, or the Environmental Indemnity
Agreement and shall continue beyond any applicable grace period, or if Guarantor
shall revoke or attempt to revoke, disavow, contest, commence any action or
raise any defense against its obligations under the Payment Guaranty, the
Completion Guaranty, the Operating Deficit Guaranty, or the Environmental
Indemnity Agreement;
50
(m) if Borrower executes any conditional xxxx of sale, chattel
mortgage or other security instrument covering any materials, fixtures or
personal property used in the construction or operation of the Improvements, or
intended to be incorporated therein except as expressly permitted hereunder or
by Agent or required under the Ground Lease;
(n) if the construction of the Improvements is not carried on with
reasonable dispatch or at any time be discontinued for a period of ten (10) or
more consecutive Domestic Business Days for reasons other than Force Majeure or
if the Project does not open as scheduled within thirty (30) days of the
Completion Date;
(o) if the Improvements, in the reasonable judgment of Agent, (i)
are not or cannot be completed lien-free on or before the Completion Date,
subject to Force Majeure, or (ii) are not completed lien-free (it being
understood that Permitted Encumbrances are not prohibited liens hereunder), or
if Completion has not occurred on or before the Completion Date, subject to
Force Majeure;
(p) if Agent or its representatives or Agent's Inspecting Consultant
are not permitted, subject to Approved Leases, at all reasonable times, to enter
upon the Premises and to inspect the Improvements and the construction thereof
and all materials, fixtures and articles used or to be used in the construction
thereof and to examine all Plans, or if Borrower shall fail within seven (7)
days to furnish to Agent or its authorized representative, when requested in
writing, copies of such Plans;
(q) if the temporary certificate of occupancy or the permanent
Certificate of Occupancy, as applicable, covering the Project shall be revoked
or expire;
(r) if Borrower is unable to satisfy any condition of its right to
the receipt of an Advance requested hereunder for a period in excess of thirty
(30) days;
(s) if Agent's Inspecting Consultant certifies that the construction
of the Improvements is not substantially in accordance with the Plans or
substantially in accordance with applicable Requirements;
(t) except as expressly provided in Section 4.2(b) and 4.2(m), if at
any time while the Loan is outstanding, Member (or any successor entity
permitted hereunder or otherwise approved by Agent) shall own and control less
than one hundred percent (100%) of Borrower or shall cease to be the sole member
and manager of Borrower (subject to Developer's special management rights
pursuant to the Membership Agreement); or
(u) if Borrower shall fail to secure a Certificate of Occupancy for
the full use and occupancy of the entire Premises within two (2) years of the
date of issuance of the temporary certificate of occupancy;
(v) if Borrower shall be in default under the Ground Lease beyond
the applicable notice and cure periods afforded to Borrower thereunder;
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(w) if Borrower shall fail to satisfy the Post-Closing Conditions on
or before the Post-Closing Default Date; or
(x) if Borrower shall fail to cause Guarantor to establish, maintain
and comply with the Cap Agreement and the Interest Rate Protection Facility.
Section 5.2 Grace Periods. The defaults described in Section 5.1 shall
constitute Events of Default hereunder upon the giving of the following notices
and the passage of the following time periods:
(a) with respect to any default under Section 5.1(b) above, five (5)
Domestic Business Days after the occurrence of such default; notwithstanding
anything contained herein to the contrary, neither Agent nor any Lender shall
have any obligation to give written notice of such default;
(b) with respect to any non-monetary default under Sections 5.1(c),
(h), (l)(i) or (q) above, thirty (30) days after the date written notice of such
default is sent to Borrower by Agent, provided that if such default is not
curable within such thirty (30) day period, then Borrower shall have up to
ninety (90) additional days to cure same, provided Borrower promptly commences
and at all times is diligently attempting to cure such default, Agent has
determined in its reasonable discretion that the continued existence of such
default will not adversely affect the collateral for the Loan and that there are
no other defaults hereunder;
(c) with respect to any of the defaults described in Section 5.1(n),
(o), (p), (r) or (s) above, ten (10) days after the date notice of such default
is sent to Borrower by Agent and the same is not cured with such ten (10) day
period; and
(d) with respect to any of the defaults described in Sections
5.1(a), (d), (e), (f), (g), (i), (j), (k), (l)(ii), (m), (t) or (u) above, there
shall be no requirement that Agent or any Lender send notice of default and
there shall be no opportunity to cure, except as may be applicable in Section
5.1(l).
(e) notwithstanding anything contained herein or in any of the Loan
Documents, upon the occurrence of an Event of Default, in the event Agent (i)
declares the entire principal amount under the Notes then outstanding due and
payable in accordance with any of the Loan Documents or (ii) institutes
foreclosure proceedings in accordance with the terms of the Mortgage, Borrower
shall not have the right or opportunity to cure any Event of Default thereafter
without first receiving Lender's consent.
Section 5.3 Rights of Agent and Lenders. Subject to Section 6.3(b) hereof,
(a) upon the occurrence and during the continuation of a default, Agent and
Lenders may, without notice to Borrower, cease funding amounts not yet advanced
hereunder or under the Loan. Upon the occurrence and continuation of an Event of
Default, Agent may, in its sole discretion, at the same or different times, in
addition to any right or remedy available to it under the Mortgage or any other
Loan Document or permitted by law or equity, declare the Obligations and all
sums then owing by Borrower hereunder to be forthwith due and payable, whereupon
all such sums shall become and be immediately due and payable without
presentment, demand, notice and
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protest, notice of dishonor, notice of intent to accelerate, notice of
acceleration or notice of any other kind, except as may be specifically required
under this Agreement or the Note or the Mortgage, and Agent, for the ratable
benefit of the Lenders, shall have the right to enter into possession of the
Premises and perform any and all work and labor necessary to complete the
Improvements and employ watchmen to protect the Premises and the Improvements
and all sums expended by Agent in connection with the construction of the
Improvements shall be deemed to have been paid to Borrower and secured by the
lien of the Mortgage (as shall any other sums advanced by Agent for whatsoever
purpose relative to the Loan or the Improvements). For this purpose, Borrower
hereby constitutes and appoints Agent its true and lawful attorney-in-fact with
full power of substitution to complete the Improvements, and hereby empowers
said attorney or attorneys after the occurrence and during the continuance of an
Event of Default to do the following: to use any funds of Borrower including any
balance which may be held in escrow and any funds which may remain unadvanced
hereunder for the purpose of completing the Improvements; to make such additions
and changes and corrections in the Plans which shall be necessary to complete
the Improvements; to rent the Premises; to employ such contractors,
subcontractors, agents, architects and inspectors as shall be required for said
purposes; to pay, settle or compromise all existing bills and claims which are
or may be Liens against the Premises, or may be necessary or desirable for the
completion of the work or the clearance of title; to execute all applications
and certificates in the name of Borrower which may be required by any
construction contract; and to do any and every act with respect to the
construction of the Improvements which Borrower may do in its own behalf. It is
understood and agreed that this power of attorney shall be deemed to be a power
coupled with an interest and cannot be revoked. Said attorney-in-fact shall also
have power to prosecute and defend all actions or proceedings in connection with
the construction of the Improvements and to take such action and require such
performance as it deems necessary. Borrower hereby assigns and quitclaims to
Agent, for the ratable benefit of the Lenders, all sums not advanced hereunder
and all sums in escrow or any sums deposited with Agent which sums may be used
for any purpose associated with the Loan as Agent may desire.
(b) Agent shall have the right, after the occurrence and
continuation of an Event of Default, at its option, and in addition to any right
or remedy available to it under this Agreement, the Mortgage or any other Loan
Document, to effectuate the transfer in the name of Borrower of all permits,
rights and privileges relative to the construction, operation, zoning and
planning of the Improvements (the "PERMITS") to Agent, for the ratable benefit
of Lenders, to the extent permitted by law. For this purpose, Borrower hereby
constitutes and appoints Agent its true and lawful attorney-in-fact with full
power of substitution to complete the transfer and hereby empowers said attorney
or attorneys after the occurrence and during the continuation of an Event of
Default to execute any and all documents, certificates, applications and forms
for the transfer of the Permits and to pay all expenses necessary for such
transfer. It is understood and agreed that this power of attorney shall be
deemed to be a power coupled with an interest which cannot be revoked. Said
attorney-in-fact shall also have the power to prosecute and defend all actions
or proceedings in connection with the aforesaid transfer and to take such action
and require such performance as is deemed necessary.
(c) Agent shall have the right, after the occurrence and
continuation of an Event of Default, to apply any payments or recoveries it
receives on account of the Obligation to principal, interest, expenses and other
sums due with respect to the Loan in such order as Agent,
53
in its sole discretion, may elect, regardless of the manner in which any such
payments or recoveries are allocated or reflected in any foreclosure, judgment,
or deficiency or allocation proceeding relative to foreclosure of the Mortgage.
Section 5.4 Limited Recourse Obligations. Notwithstanding anything to the
contrary contained herein or in any of the other Loan Documents, Borrower's
officers, directors, employees, members, partners, managers, shareholders,
incorporators or agents, but specifically excluding Borrower, Guarantor and
Developer (herein called the "BORROWER'S GROUP"), shall have no personal
liability for the payment of the Notes or for the performance or observance of
the covenants, representations and warranties of Borrower contained herein or in
any of the other Loan Documents, and Agent and the other Lenders agree not to
seek any damages or personal money judgment against any member of the Borrower's
Group for any default under the Notes or under any instrument now or hereafter
securing the Notes, but in such event will look solely to Borrower, Guarantor,
Developer and the security for the indebtedness evidenced by the Notes; provided
that nothing shall preclude Agent or any Lender from exercising its remedies
against Borrower, including, without limitation, obtaining and enforcing a
judgment against Borrower in connection with the foreclosure of the Mortgage or
any security interest created by the Loan Documents or making a claim in
bankruptcy for amounts owed as evidenced by the Loan Documents, and provided
further that nothing contained above shall be deemed (a) to limit or restrict
any other type of action or proceeding against Borrower nor affect the lien of
the Mortgages, (b) to be a release or impairment of the obligations of Borrower
under the Notes, this Mortgage or any other Loan Documents, (c) to limit the
Agent or any Lender from enforcing its rights under the Notes, the Mortgages,
the Building Loan Agreement, the Soft Cost Loan Agreement or any other Loan
Document, (d) to constitute a waiver, release or discharge of any indebtedness
or obligation under the Notes or secured by the Mortgages, the Security
Agreement or the Assignment of Contracts or (e) to affect the personal liability
of the Guarantor under the Completion Guaranty, the Payment Guaranty or the
Operating Deficit Guaranty.
ARTICLE VI
CONDITIONS TO LENDERS'
----------------------
OBLIGATIONS TO MAKE LOAN DISBURSEMENTS
--------------------------------------
Section 6.1 Conditions Precedent to First Disbursement. Neither Agent nor
any Lender shall be obligated to make any Advances or disburse any Loan proceeds
hereunder, including the first disbursement of Loan proceeds, until (a) Borrower
shall have contributed the full amount of the Required Equity and the full
amount of the Required Equity shall have been fully disbursed to fund Project
costs set forth in the Budget and approved by Agent, all as more particularly
set forth in Section 2B.15 hereof, (b) Borrower and Guarantor shall have
established the Interest Rate Protection Facility pursuant to the Forward
Treasury Lock Agreement and (c) all the other conditions of this Agreement,
including without limitation, this Article VI have been satisfied at or before
the Initial Closing.
Section 6.2 Documents To Be Delivered. On the Closing Date and prior to
Agent making the first disbursement of Loan proceeds hereunder, Agent shall have
received this Agreement and it shall also have received the following items, and
unless identified in Section
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2B.7 as a Post-Closing Condition, each of the following items heretofore
received by Agent shall be deemed to have been accepted and approved by Agent:
(a) the executed Soft Cost Loan Agreement;
(b) the executed Building Loan Notes and Soft Cost Notes;
(c) the executed Building Loan Mortgage and Soft Cost Mortgage;
(d) the executed Security Agreement;
(e) the UCC Financing Statements;
(f) the executed Assignment of Contracts;
(g) the executed Payment Guaranty;
(h) the executed Completion Guaranty;
(i) the executed Operating Deficit Guaranty;
(j) the executed Environmental Indemnity Agreement;
(k) a certified copy of the fully executed Ground Lease;
(l) Estoppel and Recognition Agreement executed by the Ground Lessor
and all other parties having an interest in the Land;
(m) certified copies of the fully executed Development Agreement and
the fully executed Management Agreement, each containing a provision that such
agreement is subordinate to the Mortgage, and that such agreement, at Agent's
election, may be terminated or continued upon any foreclosure of the Mortgage or
acquisition of title to the Premises by Agent or Leasehold Entity (as defined in
Section 7.2);
(n) an Appraisal of the Land and the Improvements and a Market
Feasibility Study prepared by Xxxxxxxx, Xxxxx & Andreas, Inc., which shall be in
all respects satisfactory to Agent;
(o) the Commitment Fee, Construction Administration Fee, the first
installment of the Agency Fee, Agent's Inspecting Consultant Fees, the expenses
of the other Lenders (subject to the $5,000 cap on the expenses of each such
Lender set forth in Section 4.1(h)), and Agent's Counsel Fees which are then due
and payable;
(p) such advice from Agent's Inspecting Consultant as Agent shall
reasonably require with respect to the construction of the Improvements and
matters incidental thereto;
55
(q) a current title commitment from the Title Insurer (in all
respects satisfactory to Agent's Counsel) which shall set forth a description of
the Land, shall have attached thereto copies of all instruments which appear as
exceptions in the commitment, and a paid ALTA Loan (Form 1992) title insurance
policy (the "POLICY") issued by the Title Insurer, covering the Premises, and in
form and substance reasonably acceptable to Agent and Agent's Counsel. The
Policy shall insure KCCI as Agent for itself and the other Lenders described in
this Agreement, as same may be amended from time to time, and their successors
and assigns, that the Building Loan Mortgage, for the full principal amount of
the Building Loan, is a valid first lien, and that the Soft Cost Mortgage, for
the full principal amount of the Soft Cost Loan, is a valid second lien, on
Borrower's leasehold interest in the Land, the Improvements, the Project and all
other real property subject to the granting clause of the Building Loan
Mortgage, free and clear of all defects and encumbrances except such as may be
set forth on EXHIBIT B attached hereto and made a part hereof or as Agent or
Agent's Counsel shall approve in writing (the "PERMITTED ENCUMBRANCES"). The
Policy shall contain: (i) full coverage against mechanic's and materialmen's
liens, including, without limitation, with respect to any work performed or
materials supplied in connection with the construction of the Improvements or
acquisition of the Land prior to the Initial Closing and the recording of the
Mortgage, (ii) other than the Permitted Encumbrances, no encroachments or survey
or other exceptions not theretofore approved by Agent and Agent's Counsel, (iii)
a pending disbursements endorsement obligating the Title Insurer to provide
title continuations and endorsements contemplated by Section 6.3(e) and other
provisions of this Agreement, and (iv) variable rate (additional interest),
comprehensive, and same as survey endorsements and such other endorsements and
affirmative insurance as Agent may require, including, without limitation,
appropriate insurance with regard to restrictions, covenants and other
agreements affecting the Premises or to the effect that the enforcement of same
will not result in a forfeiture or reversion of title or otherwise adversely
affect the Mortgage, as well as affirmative insurance that the proposed
Improvements comply with any such restrictions, covenants or agreements and
further against the forced removal of said Improvements or a comprehensive
endorsement, and with all so-called "Standard Exceptions" deleted;
(r) an original current ALTA/ACSM survey of the Premises, complying
with the requirements set forth in the Commitment Letter;
(s) an original current site plan of the Premises showing the
Improvements to be constructed and the relation of the Improvements by distances
to the perimeter of the Land and the set-back lines;
(t) evidence that all approvals required to be obtained at or prior
to such time under the Ground Lease have been obtained and all deliveries
required under the Ground Lease have been made (including, without limitation,
pursuant to Article 11 and Article 40 thereof);
(u) evidence of compliance with all applicable zoning requirements
and land use planning requirements, including, without limitation, an
Architect's Certificate of Compliance with local governmental zoning and
building ordinances, including, without limitation the Requirements, the Master
Development Plan, the Design Guidelines and the Construction Documents as
defined in the Ground Lease and the opinion of Borrower's counsel as to
compliance with the use provisions of the Zoning Code of the City of New York;
56
(v) a list and copies (when obtained by Borrower) of, all approvals,
authorizations or permits required by any Governmental Authority, including land
use, zoning and planning, construction, environmental and operational for the
Premises for the purposes contemplated by the Plans;
(w) a certificate, in form and substance acceptable to Agent, from
Borrower that all approvals, authorizations, certificates, licenses, and permits
referred to in the preceding paragraph are or will be in full force and effect,
have not been and will not be amended or modified and Borrower has not received
any notice that there are any violations of said permits or that any Permits are
in default or have been revoked, suspended or terminated;
(x) all of the Engineer's or Architects' Contracts and the General
Contractor's contract, containing all of the provisions required pursuant to the
Ground Lease, including, without limitation, the provisions set forth in Section
11.05(b) of the Ground Lease and Section 40.2 (a) through (e) of the Ground
Lease), each certified by Borrower to be a true and complete copy thereof,
together with a letter signed by each of the Engineer, the Architect and the
General Contractor in a form substantially acceptable to Agent, which shall
provide (i) that such party shall complete the Project for Agent and the Lenders
at Agent's option and at Agent's request if a Loan default occurs, and otherwise
in accordance with this Agreement and (ii) that the agreement with such party
may be terminated upon foreclosure of the Mortgage or acquisition of the
Property by Agent or a Leasehold Entity;
(y) a list of all known and contemplated contractors,
subcontractors, and materialmen to be used for development of the Project, when
and as available;
(z) a complete set of Plans, certified by Developer on behalf of
Borrower, and evidence satisfactory to Agent of approval by the Ground Lessor,
Borrower's Architect and the General Contractor and all other necessary parties;
(aa) dual-obligee labor and material payment bonds and performance
bonds with respect to the General Contract (in amounts not less than the full
amount of the contract price thereunder unless waived by Agent in writing in its
sole discretion) and naming Borrower and Agent as co-obligees, said bonds to be
issued by companies reasonably acceptable to Agent and in form and amount
reasonably satisfactory to Agent;
(bb) letters from local utility companies or municipal authorities
stating that gas, electric, sewer and water will be available to the Premises
upon Completion of the Improvements in sufficient quantities to serve the
Improvements for their intended purpose;
(cc) soil analysis (including drainage) results, together with the
proposed methodology to develop the Project for its intended use based on soil
condition, certified by a qualified engineer, which has been approved by Agent
prior to the date hereof;
(dd) evidence (including a Phase I, and if warranted a Phase II,
environmental assessment) indicating that the Premises are free from all
Pollutants with respect to which remediation is required or the presence in
concentration of which is in violation of environmental laws, and are free of
all other contamination which, even if not so regulated, is
57
known to pose a hazard to the health of any person on or about the Premises, and
that the Premises is not in a "Wetlands" or "Flood Plain" area, and contains no
underground storage tanks or oil or gas xxxxx (it being expressly acknowledged
by Borrower that the Agent reserves the right, at Borrower's expense, to retain
an independent consultant to review any such evidence submitted by Borrower);
(ee) as to Borrower, (i) a copy of the Membership Agreement
certified by the sole member and manager of Borrower to be a true and complete
copy thereof; (ii) the limited liability certificate of Borrower; (iii) evidence
that the formation of Borrower and the filing of its limited liability
certificate comply with all Requirements; (iv) resolutions of the sole member
and manager of the sole member and manager of Borrower in all respects
acceptable to Agent;
(ff) as to Guarantor, (i) a copy of its bylaws, certified by an
officer of Guarantor to be a true and complete copy thereof; (ii) the
certificate of incorporation of Guarantor; (iii) evidence of Guarantor's
authority to execute the Loan Documents to which Guarantor is a party and the
Guaranties authorizing the action required of such Guarantor in all respects
acceptable to Agent and (iv) evidence that the formation of Guarantor and the
filing of its certificate of incorporation comply with all Requirements;
(gg) the Borrower's and Guarantor's Federal Tax I.D. Number;
(hh) as to Developer, (i) a copy of its bylaws, certified by an
officer of Developer to be a true and complete copy thereof; (ii) the
certificate of incorporation of Developer; (iii) evidence of Developer's
qualification to transact business in New York; (iv) evidence of Developer's
authority to execute the Development Agreement and the Management Agreement and
the Assignment of Contracts for the benefit of Lenders; (v) evidence that the
formation of Developer and the filing of its certificate of incorporation comply
with all Requirements;
(ii) an opinion of Borrower's and each Guarantor's counsel to the
effect that (i) upon due authorization and execution by the parties thereto and
upon such recording or filing thereof as may be specified in the opinion, the
Building Loan Notes, the Soft Cost Notes, the Building Loan Mortgage, the Soft
Cost Mortgage, this Agreement, the Soft Cost Loan Agreement, the Assignment of
Contracts, the Security Agreement, the Environmental Indemnity Agreement, the
Payment Guaranty, the Completion Guaranty, the Operating Deficit Guaranty and
the other Loan Documents will be legal, valid and binding instruments,
enforceable against Borrower or Guarantor, as the case may be, as a party
thereto in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization or similar laws affecting the
rights of creditors generally; (ii) the amounts to be received by Agent, for the
ratable benefit of the Lenders, as interest constitute lawful interest and are
neither usurious nor illegal; (iii) there is no threatened or pending litigation
that might affect the Loans, the Premises, the Project or for which an adverse
decision is reasonably likely which would materially and adversely affect the
ability of the Guarantor or Borrower to perform their respective obligations
under the Loan Documents; (iv) the Loan and the transactions contemplated by the
Loan Documents do not violate any provision of any law, restriction or document
affecting Borrower, any Guarantor, the Project or the Premises; (v) Borrower is
a validly formed and existing limited liability company under the laws of the
State of Ohio, it is duly qualified to transact business in
58
the State of New York, it has the legal capacity to own, develop and operate the
Premises, the Project and the Improvements and to perform its obligations under
the Loan Documents, and that the Loan and the execution of the Loan Documents
has been duly authorized by the sole member of Borrower and that the Loan
Documents have been duly executed and delivered; (vi) Guarantor is a validly
formed and existing corporation under the laws of the State of Delaware, it has
the legal capacity to perform its obligations under the Loan Documents to which
it is a party, and the execution of the Payment Guaranty, the Completion
Guaranty, the Operating Deficit Guaranty, the Environmental Indemnity Agreement
and the other Loan Documents to which Guarantor is a party have been duly
authorized by the board of directors of Guarantor and that the Loan Documents to
which Guarantor is a party have been duly executed and delivered by Guarantor;
(vii) such other matters concerning the Loan, the Loan Documents, Borrower,
Guarantors, the Premises, the Improvements and the Project as Agent or Agent's
Counsel may reasonably require (including an opinion with respect to zoning of
the Premises (only as to compliance of the contemplated use with applicable
Requirements) and the Project), provided, however, the opinion of the Borrower's
and the Guarantor's in-house legal counsel will be acceptable with respect to
the following items: (i) there is no pending, or to its best knowledge,
threatened, litigation that might affect the Loans, the Premises, the Project or
for which an adverse decision is reasonably likely which would materially and
adversely affect the ability of the Guarantor or Borrower to perform their
respective obligations under the Loan Documents; (ii) the Loan Documents shall
have been duly executed by Borrower and the Guarantor, as applicable, and (iii)
the Loans has been duly authorized by Borrower and the Guaranties duly
authorized by the Guarantor.;
(jj) the policies of insurance required by Agent pursuant to the
requirements of the Mortgage, (or certificates, to the extent permitted under
the Mortgage), accompanied by evidence of the payment of the premiums therefor;
(kk) advice from the Title Insurer to the effect that a search of
the public records discloses no conditional sales contracts, chattel mortgages,
leases of personalty, financing statements or title retention agreements filed
and/or recorded against Borrower, except the Mortgage and the financing
statements in favor of Agent, for the ratable benefit of the Lenders, filed in
connection with the Mortgage, the Security Agreement and the Assignment of
Contracts;
(ll) an analysis and verification of the Budget and line item
breakdown and timing to complete the Project prepared at Borrower's sole cost
and expense by independent third party consultants selected by Agent with no
conditions or facts objectionable to Agent;
(mm) the Final Budget, which shall include a cost breakdown and
separate itemization of all Hard Costs and Soft Costs for the Project by line
item, and such backup information or materials as Agent may require;
(nn) the Project development schedule provided by Borrower and
development supervisor setting forth the approximate start and finish dates of
all major stages of the Project (and providing that the development of the
Project has commenced prior to the date hereof ), in such format as Agent and
Borrower may reasonably agree;
59
(oo) INTENTIONALLY OMITTED
(pp) current certified financial statements of Guarantor (and
Borrower, if the same have been prepared at the time of the Closing);
(qq) a list of deposits or other advances made by potential
occupants of the Project; and
(rr) all other items required by the Commitment Letter or the
Closing Checklist previously delivered by Agent's Counsel to Borrower.
Section 6.3 Conditions to Funding of Advances. Before the funding of any
Advance, each of the following conditions must be satisfied:
(a) Conditions Precedent. All conditions of Section 6.2 shall have
been and remain satisfied;
(b) Defaults. There shall be no default by Borrower or any
Guarantor, or any event which with the giving of notice (if required hereunder)
and passage of time would constitute a default, under any Loan Document, and all
such documents shall be in full force and effect; notwithstanding the foregoing,
and except for Section 5.1(r) defaults, Agent will not unreasonably refuse to
fund an Advance if the Borrower has otherwise satisfied all requirements for the
Advance, the default in question is non-monetary, and would be completely cured
by or in connection with the funding of the Advance.
(c) Representation and Warranties. The representations and
warranties made in Article III hereof shall be true and correct in all material
respects on and as of the date of the disbursement with the same effect as if
made on such date;
(d) Additional Documents. Agent shall have received and approved:
(i) a Draw Request, (ii) such advice from Agent's Inspecting Consultant (which
advice shall inure to Lenders' benefit only) as Agent shall reasonably require,
and (iii) such additional documents as Agent may reasonably require, including,
but not limited to, all Major Contracts;
(e) Title Endorsements. Agent shall have received, in connection
with each Draw Request, a notice of title continuation and an endorsement to the
title insurance policy theretofore delivered, indicating that, since the
preceding disbursement, there has been no change in the state of title not
theretofore approved by Agent, which endorsement shall have the effect of
increasing the coverage of the policy by an amount equal to the disbursement
then made, together with an update to the comprehensive endorsement;
(f) Loan Documents. Agent shall have reasonably approved all Loan
Documents and other items required to be submitted to it;
(g) Lien Waivers. Executed lien waivers or releases of lien (i) from
all contractors, subcontractors, suppliers and others which have or are
supplying labor, materials, goods or services related to the Project or the
Improvements in the sum of all prior
60
disbursements for all of Borrower's preceding Draw Requests, and (ii) with
respect to any items of the type described in the preceding clause (i) in a
pending Draw Request for which Borrower is seeking reimbursement based on its
prior payment of that item, together with such evidence as Agent may require
that no notices of lien or stop notices have been filed and that nothing has
occurred which could, in Agent's sole opinion, jeopardize the superiority of the
lien of the Mortgage over any possible lien. Notwithstanding the foregoing,
monthly lien waivers shall not be required (except upon completion of their
contracts) from any party whose total contract price is less than $25,000;
(h) Loan in Balance. The Building Loan and the Soft Cost Loan shall,
in Agent's sole opinion, be "in balance" as defined in Section 2B.7(A) and Agent
shall be reasonably satisfied that Completion of Construction on or before the
Completion Date can reasonably be achieved;
(i) No Termination of Contracts, Licenses, Permits or Approvals .
None of the documents covered by the Assignment of Contracts or the bonds
relating to the General Contract shall have been terminated, modified or revoked
without Agent's prior written consent other than the Change Orders expressly
permitted hereunder pursuant to Section 4.2(d), and;
(i) Post-Closing Deliveries. On or before the Post-Closing Delivery
Date, the Post-Closing Conditions shall have been satisfied.
Section 6.4 Last Disbursement of Hard Costs. In the case of the last
disbursement of Hard Costs and release of the Retainage, all of the above
conditions shall be met or waived and Agent shall have received and approved:
(a) Certificate of Occupancy. A temporary certificate of use and
occupancy, certificate of completion or its equivalent covering all portions of
the Improvements or other evidence of the approval by any Governmental Authority
of the Improvements to the extent any such approval is a condition of the lawful
use and occupancy of the Improvements, including the approval by the local board
of fire underwriters or its equivalent, and evidence that Borrower has obtained
all permits required by any Requirement to operate the Improvements for their
intended purposes, provided that Borrower shall proceed as expeditiously as
possible to secure the final certificate of occupancy (in any event within two
(2) years of issuance of the temporary certificate of occupancy), or its
equivalent issued by the applicable governmental authority for the Improvements
comprising the Project, and all other reasonable evidence that the City of New
York and/or the Battery Park City Authority has acknowledged the completion of
all work required by it to meet all legal requirements and the requirements
under the Ground Lease, as applicable, including, without limitation, all zoning
and building requirements;
(b) Title Insurer's Advice. Advice from Title Insurer to the effect
that the Improvements have been constructed lien-free and an additional
endorsement to the Title Policy increasing coverage to include the final
Building Loan Advance and insuring such other matters as Agent may reasonably
require including, without limitation, that the Improvements do not encroach on
any easement, right-of-way or land of others and do not violate any Requirements
including, without limitation, those related to set-backs and height
restrictions;
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(c) As-Built Survey. A final "AS BUILT" ALTA/ACSM survey showing the
Improvements located wholly within the perimeter of the Land, and otherwise
complying with the requirements as provided in the Commitment Letter;
(d) Completion Certificates. Completion of Construction shall have
occurred and certificates of completion from Borrower=s Architect and Engineer
(and Agent's Inspecting Consultant) stating that the Improvements have been
completed substantially in accordance with the Plans and all applicable
requirements of the Ground Lease and of Governmental Authorities and that an
authorized representative of the party executing the certificate made such
periodic inspections of the Improvements during the course of construction as it
deemed necessary as the basis of such certification, and any other evidence
reasonably required by Agent that the Improvements have been substantially
completed in accordance with the Plans and in compliance with all requirements
of the Ground Lease and of Governmental Authorities, and that all items of a
"punch list" nature which Agent has identified have been waived in writing or
corrected to Agent's reasonable satisfaction.
(e) Architect=s Certificate/Compliance With Laws. An architect's
certificate (in the form of the sample attached hereto and made a part hereof as
EXHIBIT D) and such other evidence as Agent may require to establish that the
Improvements are free of structural defects and can be legally occupied and that
the use and occupancy of the Improvements as an assisted living/independent
living complex comply in all material respects with all applicable zoning,
subdivision and building codes and other Requirements, including, but not
limited to, compliance with the National Environmental Policy Act, Americans
with Disabilities Act and any other applicable Federal, state, municipal or
local Requirements. Such evidence of zoning compliance shall be in the form of a
letter (which must be in all regards acceptable to Agent) from Borrower's
Architect and/or its zoning counsel.
(f) Final Lien Waivers. Such final lien waivers, certificates and
estoppels as Agent or the Title Company may reasonably require from Borrower=s
Architect and Engineer, the General Contractor, and all subcontractors and
material suppliers which have performed work on the Improvements or provided
labor, materials or supplies in connection therewith certifying receipt of the
final payment of all sums owing to each of such parties from Borrower with
respect to the Improvements and stating that each such party has no claim
against Borrower, the Improvements or any Loan funds arising out of or in
connection with such work, labor, materials or supplies.
(g) Borrower's Affidavit. An affidavit duly executed by Borrower or
by Developer on behalf of Borrower stating that each person providing any
material or performing any work in connection with the construction or
Completion of the Improvements, the General Contractor and all subcontractors
and material suppliers have been paid in full or will be paid in full from the
proceeds of such final Advance, that all withholding taxes have been paid and
that lien waivers have been received from all contractors, subcontractors and
suppliers who have performed work or supplied materials in connection with the
construction of the Improvements for Borrower, the General Contractor and all
subcontractors.
(h) Final As-Built Plans and Specifications. A final set of as-built
site, architectural, structural, mechanical, plumbing, electrical and
landscaping Plans for the
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completed Improvements, marked to show all changes made during the course of
construction, and satisfactory to Agent.
(i) Warranties and Guaranties. Copies of all warranties and
guaranties issued in connection with the Improvements.
(j) Insurance. Borrower shall have delivered to Agent evidence
reasonably satisfactory to Agent that all property damage, business interruption
or rental loss, liability and other insurance coverage for the completed
Improvements, as required under the Loan Documents, are in full force and effect
with all premiums paid.
(k) Reserve Requirement. The undisbursed portion of the Building
Loan and/or the Soft Cost Loan shall include a reserve for interest and other
costs relative to the Property, the Building Loan and the Soft Cost Loan in all
respects acceptable to Agent, and both the Building Loan and the Soft Cost Loan
shall be in balance, as determined by Agent.
ARTICLE VII
THE AGENT
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Section 7.1 Appointment; Powers and Immunities. Subject to Section 7.2
below, each Lender hereby irrevocably appoints and authorizes Agent to act as
its agent hereunder and under the other Loan Documents with such powers as are
specifically delegated to Agent by the terms hereof and thereof, together with
such other powers as are reasonably incidental thereto. Unless expressly limited
by the terms of Section 7.2 below, all provisions of this Agreement or the other
Loan Documents which require the consent or approval of Agent shall be consented
to, or not consented to, and approved by, or not approved by, Agent in its sole
discretion. Agent: (a) shall have no duties or responsibilities except as
expressly set forth in this Agreement and the other Loan Documents, and shall
not by reason of this Agreement or any other Loan Document be a trustee for any
Lender; (b) shall not be responsible to the Lenders for any recitals,
statements, representations or warranties contained in this Agreement or any
other Loan Document, or in any certificate or other document referred to or
provided for in, or received by any Lender under, this Agreement or any other
Loan Document, or for the validity, effectiveness, genuineness, enforceability
or sufficiency of this Agreement or any other Loan Document or any other
document referred to or provided for herein or therein or for any failure by
Borrower to perform any of its obligations hereunder or thereunder; (c) shall
not be required to initiate or conduct any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent requested by the
Unanimous Lenders or Requisite Lenders, as provided in Section 7.2 below, and
then only on terms and conditions satisfactory to Agent; (d) may consult with
the other Lenders, but shall have sole authority to approve all Draw Requests
hereunder and make any determinations required by Section 2B.15, (e) upon
Agent's determination that an Event of Default as set forth in Section 5.1 above
has occurred, may (i) declare that such Event of Default exists, (ii) accelerate
the Obligations as provided in Section 5.3 above, and (iii) manage litigation,
including foreclosure proceedings, and (f) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any other Loan
Document or any other document
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or instrument referred to or provided for herein or therein or in connection
herewith or therewith, except for its own gross negligence or willful
misconduct. In administering the Loan, Agent shall have no greater
responsibility to the Lenders than it would have if Agent were the sole Lender
hereunder and will be deemed to have exercised reasonable care in performing its
duties hereunder if it exercises the level of care substantially equal to that
which Agent accords its own loans. Agent may employ agents and attorneys-in-fact
and shall not be responsible for the negligence or misconduct of any such agents
or attorneys-in-fact selected by it with reasonable care. Except as expressly
provided herein, the provisions of this Article VII are solely for the benefit
of Agent and the Lenders, and Borrower shall not have any rights as a third
party beneficiary of any of the provisions hereof. In performing its functions
and duties under this Agreement and under the other Loan Documents, Agent shall
act solely as agent of the Lenders and does not assume and shall not be deemed
to have assumed any obligation towards or relationship of agency or trust with
or for Borrower. The duties of Agent shall be ministerial and administrative in
nature, and Agent shall not have by reason of this Agreement or any other Loan
Document a fiduciary relationship in respect of any Lender.
Section 7.2 Limitations on Agent. Notwithstanding anything to the contrary
contained in Section 7.1 above:
(a) Unanimous Lender Consent. The consent of the Unanimous Lenders
shall be required for the following actions, waivers and amendments:
(i) an increase in the principal amount of the Loan;
(ii) a reduction of the rate or amount of interest on any of
the Advances or any fees (other than the Agency Fee) or other
amounts payable to the Lenders except as provided hereunder;
(iii) the postponement of the Maturity Date (except with
respect to any extension permitted by the terms of Section 2A.11 of
this Agreement) or a waiver of any of the conditions to the
extension of the Maturity Date under Section 2A.11;
(iv) the assignment of any right or interest in or under this
Agreement or any of the other Loan Documents by Borrower;
(v) the release of any of the Collateral or the release of any
Guarantor or any other obligor under a Loan Document from any of its
obligations thereunder (except upon the complete and indefeasible
payment of the Loan and except upon Agent's determination that the
criteria for reduction of the Guaranty Obligations as set forth in
the Payment Guaranty have been met);
(vi) the amendment of the definition of "REQUISITE LENDERS,"
"SUPERMAJORITY LENDERS" or "UNANIMOUS LENDERS";
(vii) the amendment of any of the provisions of this Article
VII;
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(viii) the waiver or amendment of any of the affirmative
covenants of Borrower set forth in Section 4.1 (a) concerning the
structure of Borrower, Section 4.1 (e) concerning maintenance of the
Premises, Section 4.1 (h) concerning payment of fees, Section 4.1(i)
concerning use of proceeds of the Loan, Section 4.1(j) concerning
completion by the Completion Date, Section 4.1 (n) concerning bonds,
Section 4.1 (r) concerning indemnification, Section 4.1 (s)
concerning security interests, Section 4.1(x) concerning delivery of
Guarantor's financial statements, Section 4.1(bb) concerning
delivery of rent rolls and Leasing Reports as to both the delivery
of such items and compliance with the requirements thereof, Section
4.1(cc) concerning delivery of Facility Summary Reports as to both
the delivery of such items and compliance with the requirements
thereof, Section 4.1(dd) concerning Debt Service Coverage Ratios,
Section 4.1(ee) concerning minimum occupancy levels, Section 4.1(ff)
concerning Guarantor's net worth and Section 4.1(gg) concerning
Guarantor's liquidity;
(ix) the waiver or amendment of any of the negative covenants
of Borrower set forth in Section 4.2 (a) concerning interest in the
Premises, Section 4.2 (b) and Section 4.2(m) concerning ownership,
and Section 4.2 (g) concerning Pollutants;
(x) the waiver of any Event of Default described in Sections
5.1 (a) concerning default beyond the cure period, Section 5.1 (b)
concerning any monetary default, Section 5.1 (d) concerning judgment
against a Significant Party, Section 5.1 (e) concerning bankruptcy
proceedings, Section 5.1 (f) concerning a bankruptcy order, Section
5.1 (g) concerning transfer of the Premises, Section 5.1 (h)
concerning casualty or condemnation of the Premises, Section
5.1(l)(ii) concerning Guarantor's obligation under the Guaranties
and the Environmental Indemnity Agreement and Section 5.1(t)
concerning Member's ownership and control of Borrower;
(xi) the amendment of Section 2B.15 concerning Borrower's
obligation to contribute the Required Equity, the amendment of
Section 2B.15 concerning the requirement that the Mezzanine
Financing shall be subordinate to the Loans, the extension of the
grace periods set forth in Section 5.2, the amendment of Section 5.3
concerning rights of Agent and Lenders, Section 5.4 concerning
limited recourse obligations, Section 7.14 concerning successors and
assigns or Section 8.5 concerning amendments to this Agreement;
(xii) disposition of the Premises with financing by the
Leasehold Entity;
(xiii) the waiver of the covenants of Guarantor set forth in
the Guaranties as to Guarantor's minimum net worth and minimum
liquidity; and
(xiv) any amendment to the Ground Lease.
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(b) Requisite Lender Consent. The consent of the Requisite Lenders
shall be required for the following actions, waivers and amendments:
(i) the waiver of any Event of Default described in Sections
5.1 other than those requiring the consent of the Unanimous Lenders
pursuant to Section 7.2(a)(x) above;
(ii) the waiver of Borrower's obligation to pay the late fees
set forth in Section 2A.3;
(iii) actions taken by Agent under Section 2B.2(b) that
contradict the advice of Agent's Inspecting Consultant or the waiver
or amendment of any of the provisions set forth in Sections 2B.2(a)
concerning the release of Retainage, Section 2B.5 concerning
disbursement of the Development Fee, Section 2B.7 concerning funding
limitations, Section 2B.7(A) concerning loan balancing requirements,
and Section 2B.8 concerning reduction or release of Retainage for
Hard Costs except for the release of Retainage by Agent on a line
item basis as permitted by Section 2B.8;
(iv) an amendment to the Budget (other than a reallocation
pursuant to Section 2B.14) or the granting of consent to a Change
Order required pursuant to Section 4.2(d) to the extent such
amendment or Change Order is material, "material" meaning that (a)
individually or in the aggregate with all previous amendments, such
amendment or Change Order results in an increase or decrease in the
Budget in excess of $500,000 or (b) such amendment or Change Order
would reduce the value of the Project;
(v) the making of Protective Advances (with notice of same
made to the Lenders promptly thereafter) in an aggregate amount in
excess of $250,000; provided, however, that approval from the
Requisite Lenders shall not be required for Agent to fund Protective
Advances (with notice of same made to the Lenders promptly
thereafter), in any amount without limitation in the case of an
emergency (in Agent's reasonable judgment) or for sums expended for
real estate taxes, other governmental charges, insurance premiums
and utility charges;
(vi) the waiver or amendment of any of the affirmative
covenants of Borrower set forth in Section 4.1 (f) concerning
insurance, Section 4.1 (j) concerning construction of the
Improvements (other than the requirement of completion by the
Completion Date, which, as provided in Section 7.2(a)(viii) shall
require the consent of the Unanimous Lenders), Section 4.1 (k)
concerning standard of construction, Section 4.1 (m) concerning the
correction of defects, Section 4.1 (p) concerning the foundation
survey, Section 4.1 (q) concerning the as-built survey, and Section
4.1 (w) concerning the payment of claims;
(vii) the waiver or amendment of any of the negative covenants
of Borrower set forth in Section 4.2 (h) concerning subdivision of
the Land, and Section 4.2 (j) concerning termination of leases;
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(viii) the waiver or amendment of any of the provisions set
forth in Section 6.3 concerning conditions to funding, and Section
6.4 concerning the last disbursement of Hard Costs;
(ix) acquisition of the Premises by foreclosure by an entity
wholly owned and controlled (directly or indirectly) by Agent to
hold title to the Premises following foreclosure or acceptance of a
deed in lieu of foreclosure (the "LEASEHOLD Entity") or by
acceptance of a deed in lieu of foreclosure by the Leasehold Entity;
(x) structure of the entity to serve as the Leasehold Entity;
(xi) plan for management of the Premises by the Leasehold
Entity, including, for example, an operating budget and capital
improvements budget, leasing guidelines, management and leasing
agent criteria, and plan for marketing and disposition of the
Premises;
(xii) disposition of the Premises without financing by the
Leasehold Entity; and
(xiii) determinations as to the declaration of an Event of
Default and the exercise of Lender=s remedies hereunder or under the
other Loan Documents after an Event of Default.
(c) Supermajority Lender Consent. The consent of the Supermajority
Lenders shall be required for the following actions, waivers or amendments:
(i) any admission of any new or substitute member in or
manager of Borrower that requires Agent or Lender consent under
Section 4.2(b) or Section 4.2(m) hereof; or
(ii) any merger or consolidation involving any Guarantor that
requires Agent or Lender consent under Section 4.2(b) or Section
4.2(m) hereof.
(d) Lender Consent. At any time that Agent desires the consent of
the Lenders pursuant to this Section 7.2, Agent shall provide written notice of
the proposed action, waiver or amendment to each Lender together with Agent's
recommendation. Each Lender shall provide written notice to Agent within seven
(7) Domestic Business Days of such Lender's receipt of Agent's notice granting
or denying such Lender's consent to such proposed action, waiver or amendment.
Failure of any Lender to respond to Agent within such time frame shall be deemed
to be a grant of such Lender's consent in favor of the action, waiver or
amendment recommended by Agent in such notice.
Section 7.3 Reliance by Agent. Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by
telephone, telecopy, telegram or cable) believed by it to be genuine and correct
and to have been signed or sent by or on behalf of the
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proper person or persons, and upon advice and statements of legal counsel,
independent accountants or other experts selected by Agent. As to any matters
not expressly provided for by this Agreement or any other Loan Document, Agent
shall in all cases be fully protected in acting, or in refraining from acting,
hereunder and thereunder in accordance with instructions signed by the Requisite
Lenders, and such instructions of the Requisite Lenders in any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders.
Section 7.4 Defaults. Agent shall not be deemed to have knowledge of the
occurrence of a default or an Event of Default (other than the nonpayment of
principal of or interest on the Loans) unless Agent has received notice from a
Lender or Borrower specifying such default or Event of Default and stating that
such notice is a "NOTICE OF DEFAULT". In the event that Agent receives such a
notice of the occurrence of a default or an Event of Default, Agent shall give
prompt notice thereof to the Lenders. Agent shall give each Lender prompt notice
of each nonpayment of principal of or interest on the Loans whether or not it
has received any notice of the occurrence of such nonpayment. Agent shall take
such action hereunder with respect to such default or Event of Default as shall
be directed by the Unanimous Lenders or Requisite Lenders as provided in Section
7.2 above, provided that, unless and until Agent shall have received such
directions, Agent may (but shall not be obligated to) take such action, or
refrain from taking such action, with respect to such default or Event of
Default as it shall deem advisable in the best interests of the Lenders.
Section 7.5 Rights of Agent as a Lender. With respect to Advances made by
it, KCCI in its capacity as a Lender hereunder shall have the same rights and
powers hereunder as any other Lender and may exercise the same as though it were
not acting as Agent, and the term "LENDER" or "LENDERS" shall, unless the
context otherwise indicates, include KCCI in its individual capacity. Agent may
(without having to account therefor to any Lender) accept deposits from, lend
money to and generally engage in any kind of banking, trust or other business
with Borrower (and any of its Affiliates) as if it were not acting as Agent, and
Agent may accept fees and other consideration from Borrower for services in
connection with this Agreement or any other Loan Document or otherwise without
having to account for the same to the Lenders.
Section 7.6 Indemnification. Each Lender severally agrees to indemnify
Agent, to the extent Agent shall not have been reimbursed by Borrower (and if
Lenders indemnify Agent but Borrower later reimburses Agent, then Agent is to
return the earlier paid amount to the Lenders), ratably in accordance with its
Commitment, for any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including, without
limitation, counsel fees and disbursements) or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against Agent
in any way relating to or arising out of this Agreement or any other Loan
Document or any other documents contemplated by or referred to herein or therein
or the transactions contemplated hereby or thereby (excluding, unless an Event
of Default has occurred and is continuing, the normal administrative costs and
expenses incident to the performance of its agency duties hereunder) or the
enforcement of any of the terms hereof or thereof or any such other documents;
provided, however, that no Lender shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct of Agent.
If any indemnity furnished to Agent for any purpose shall, in the opinion of
Agent, be
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insufficient or become impaired, Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished.
Section 7.7 Consequential Damages. AGENT SHALL NOT BE RESPONSIBLE OR
LIABLE TO ANY LENDER, BORROWER OR ANY OTHER PERSON OR ENTITY FOR ANY PUNITIVE,
EXEMPLARY OR CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY UNLESS AGENT DELIBERATELY FAILS TO REMIT TO ANY LENDER ITS PRO
RATA SHARE OF LOAN PAYMENTS MADE BY BORROWER OR FAILS TO ADVANCE MONIES ADVANCED
BY A LENDER TO FUND A DRAW REQUEST WHICH COMPLIED WITH ALL OF THE TERMS AND
CONDITIONS OF THIS AGREEMENT.
Section 7.8 Payee of Note Treated as Owner. Agent may deem and treat the
payee of any Note as the owner thereof for all purposes hereof unless and until
a written notice of the assignment or transfer thereof shall have been filed
with Agent and the provisions of Section 7.14 have been satisfied. Any requests,
authority or consent of any person who at the time of making such request or
giving such authority or consent is the holder of any Note shall be conclusive
and binding on any subsequent holder, transferee or assignee of that Note or of
any Note or Notes issued in exchange therefor or replacement thereof.
Section 7.9 Lenders' Knowledge; Nonreliance on Agent and Other Lenders.
Each Lender agrees that it has, independently and without reliance on Agent or
any other Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of Borrower and decision to enter into
this Agreement and that it will, independently and without reliance upon Agent
or any other Lender, and based on such documents and information as it shall
deem appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. Agent shall not be required to keep itself informed as to the
performance or observance by Borrower of this Agreement or any of the other Loan
Documents or any other document referred to or provided for herein or therein or
to inspect the properties or books of Borrower or any other person. Except for
notices, reports and other documents and information expressly required to be
furnished to the Lenders by Agent hereunder or under the other Loan Documents,
Agent shall not have any duty or responsibility to provide any Lender with any
credit or other information concerning the affairs, financial condition or
business of Borrower or any other person (or any of their Affiliates) which may
come into the possession of Agent; provided that, (i) promptly after receipt
from Borrower and/or Guarantor, Agent shall send the Lenders copies of all
financial information furnished by Borrower and/or Guarantor (including, without
limitation, those set forth in Section 4.1(x) (financial statements), Section
4.1(bb) (rent rolls), Section 4.1(cc) (Facility Summary Reports), Section
4.1(ff) (certificates of Guarantor's net worth) and 4.1(gg) (certificates of
Guarantor's Liquid Assets) as well as all material notices furnished by Borrower
and/or Guarantor and (ii) upon the written request of a Lender, provided such
request is reasonable in scope under the circumstances, Agent shall request that
Borrower and/or Guarantor provide any information or documentation that Agent
shall have the right to request from Borrower and/or Guarantor hereunder or
under any of the other Loan Documents and upon the receipt of such information
or documentation shall promptly deliver the same to such Lender and any other
Lenders.
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Section 7.10 Failure to Act. Except for action expressly required of Agent
hereunder or under the other Loan Documents, Agent shall in all cases be fully
justified in failing or refusing to act hereunder and thereunder unless it shall
receive further assurances to its satisfaction by the Lenders of their
indemnification obligations under Section 7.6 against any and all liability and
expense which may be incurred by Agent by reason of taking, continuing to take,
or failing to take any such action.
Section 7.11 Resignation or Removal of Agent. Agent (a) may resign at any
time by giving notice thereof to the Lenders, Guarantor and Borrower, and (b)
may not be removed as Agent unless Lenders (other than Agent and other than any
Lender then in default) holding no less than 75% of the Commitments vote in
favor of such removal, or, in the case of a removal due to a material breach of
or material default in Agent's obligations under this Article VII that shall not
have been cured within thirty (30) days after written notice to Agent, may not
be removed as Agent unless Lenders holding no less than 75% of the Commitments,
excluding the Commitment of Agent, vote in favor of such removal, provided,
however, that in no event may the Agent be removed unless two (2) or more
Lenders vote in favor of such removal. Upon any such resignation or removal, the
Lenders (by majority vote and including KCCI, based upon their respective
outstanding Commitments) shall have the right to appoint a successor Agent,
subject to the rights of Guarantor set forth in 7.14(b) hereof. If no successor
Agent shall have been so appointed by the Lenders within 30 days after the
retiring Agent's notice of resignation, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent. Any successor Agent shall be a bank
which is reasonably acceptable to Borrower (and Guarantor, as provided in
Section 7.14(b) hereof) and which has a combined capital and surplus of at least
$500,000,000. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring or
removed Agent, and the retiring or removed Agent shall be discharged from its
duties and obligations hereunder for matters occurring after the successor Agent
takes over. After any retiring Agent's resignation or removal hereunder as
Agent, the provisions of this Article VII shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent hereunder.
Section 7.12 Reliance by Borrower. (a) Notwithstanding anything to the
contrary in this Agreement or in any Assignment and Acceptance Agreement, the
Lenders and Agent hereby agree that throughout the term of the Loan:
(b) Borrower, Developer and Guarantor shall have the right without
the need of any inquiry or investigation to rely on the appointment of Agent as
agent for all of the Lenders for the purposes and with the powers specifically
set forth herein and the continuance of that appointment throughout the term of
the Loan unless Borrower, Developer and Guarantor has received notice pursuant
to Section 7.11 of the resignation of Agent and designation of a replacement
Agent.
(c) The right of Borrower, Developer and Guarantor hereunder to rely
upon and look to Agent shall continue during the term of the Loan and no
dispute, complaint or claim between any Lender and Agent shall impair or negate
such right of Borrower to rely upon and look exclusively to Agent as set forth
in this Article VII; provided, however, that if and at such time as a
replacement Agent or co-Agent has been duly appointed in the place of Agent
70
originally named herein (or in the place of any earlier replacement Agent or
co-Agent(s) appointed in accordance with the terms hereof), Borrower shall rely
on such replacement Agent or co-Agent(s) and shall no longer rely on any prior
Agent.
Section 7.13 Apportionment of Payments. All payments of principal and
interest in respect of outstanding Advances, all payments of fees (other than
the Construction Administration Fee and the Agency Fee) and all other payments
in respect of any other Obligations, shall be allocated among such of the
Lenders as are entitled thereto, in proportion to their respective Pro Rata
shares or otherwise as provided herein. Agent shall apply all payments in
respect of any Obligations and all proceeds of Collateral in the following
order: First, to pay principal of and interest on any portion of the Advances
which Agent may have advanced on behalf of any Lender other than KCCI for which
Agent has not then been reimbursed by such Lender or Borrower; Second, to pay
principal of and interest on any Protective Advance for which Agent has not then
been paid by Borrower or reimbursed by the Lenders; Third, to pay Obligations in
respect of any fees, expense reimbursements or indemnities then due to Agent;
Fourth, to pay any outstanding Obligations in respect of any fees, expense
reimbursements or indemnities then due to the Lenders; Fifth, to pay interest
due in respect of Advances; Sixth, to the ratable payment or prepayment of
principal outstanding on Loans in the order of priority determined by Agent;
Seventh, to the ratable payment of all other Obligations; and Eighth, as
Borrower designates.
Section 7.14 Successors and Assigns. (a) Subject to Section 7.14(b) below,
each Lender may at any time sell to one or more persons (each a "PARTICIPANT")
participating interests in its Pro Rata share of the Loan, any of its
Commitments or any other of its interests hereunder relating thereto, all on
such terms as such Lender may deem acceptable. In the event of any such sale of
a participating interest to a Participant, the assigning Lender's obligations
under this Agreement shall remain unchanged, such assigning Lender shall remain
solely responsible to the other parties hereto for the performance of such
obligations, such assigning Lender shall remain the holder of its Note issued
hereunder for all purposes under this Agreement, and Agent and Borrower shall
continue to deal solely and directly with such assigning Lender in connection
with the rights and obligations derived through the assigning Lender under this
Agreement.
(b) Each Lender may at any time assign to one or more banks or financial
institutions (each an "ASSIGNEE") all or any of its rights and obligations under
this Agreement, its Note and the other Loan Documents, and such Assignee shall
assume all such rights and obligations, pursuant to an Assignment and Acceptance
Agreement executed by such Assignee, all on such terms as such Lender and Agent
may deem acceptable, provided that (i) such Lender retains an interest of not
less than $10,000,000 in the Loan, (provided, however, that the amount of the
interest that European American Bank shall be required to retain shall be not
less than $5,000,000 and provided further that the foregoing minimums shall not
apply after an Event of Default hereunder or under any of the other Loan
Documents); (ii) such Lender assigns an interest of not less than $5,000,000
(provided, however, that the foregoing minimum shall not apply after an Event of
Default hereunder or under any of the other Loan Documents); (iii) such Lender
pays to Agent an administrative fee of $2,500.00 for each such assignment, and
(iv) Agent and Guarantor approve the Assignee, which approval shall not be
unreasonably withheld (provided, however that Guarantor shall not have the
foregoing approval rights with respect to such assignee following an Event of
Default hereunder or under any of the other Loan
71
Documents). Guarantor shall also have the right to approve any replacement of
KCCI as the Agent hereunder and under the other Loan Documents, which approval
shall not be unreasonably withheld, except that (i) Guarantor shall not have
such approval rights following an Event of Default hereunder or under any of the
other Loan Documents and (ii) upon the resignation of KCCI, Fleet National Bank
shall be first considered as the replacement Agent and Guarantor shall have no
approval rights with respect to the appointment of Fleet National Bank as
replacement Agent. Upon the execution, delivery and acceptance of such
Assignment and Acceptance Agreement in accordance with this Agreement, from and
after the effective date of the assignment effected thereby, (x) the Assignee
thereunder shall be a party hereto and, to the extent of that portion of the
Loan covered by such Assignment and Acceptance Agreement, have the rights and
obligations of a Lender hereunder with a Commitment as set forth therein, and
(y) the assigning Lender shall, to the extent provided in such Assignment and
Acceptance Agreement, relinquish its rights and be released from its obligations
under this Agreement (and, in the case of an Assignment and Acceptance Agreement
covering all or the remaining portion of an assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto).
Such Assignment and Acceptance Agreement shall be deemed to amend this Agreement
to the extent, and only to the extent, necessary to reflect the addition of such
Assignee as a Lender party to this Agreement and the resulting adjustment
arising from the purchase by such Assignee of all or a portion of the rights and
obligations of the assigning Lender under this Agreement, its Note and the other
Loan Documents. On or prior to the effective date of the assignment effected by
such Assignment and Acceptance Agreement, Borrower shall execute and deliver to
Agent in exchange for the assigning Lender's Note or Notes a new Note or Notes
to the order of the Assignee in an amount equal to the Commitment assumed by it
pursuant to such Assignment and Acceptance Agreement and a new Note or Notes to
the order of such assigning Lender in an amount equal to the Commitment retained
by it hereunder. Such new Note or Notes shall be dated as of the Closing Date
and shall otherwise be in the form of the Note or Notes replaced thereby. The
Note or Notes surrendered by the assigning Lender shall be marked "CANCELLED".
Borrower shall assist KCCI in the process of syndicating the Loans and
Commitments to the extent reasonably requested by KCCI.
(c) Borrower authorizes any Lender to disclose to any Participant,
Assignee or other transferee (each a "TRANSFEREE") and any prospective
Transferee any and all financial information in such Lender's possession
concerning Borrower which has been delivered to such Lender by Borrower pursuant
to this Agreement or which has been delivered to such Lender by Borrower in
connection with such Lender's credit evaluation prior to entering into this
Agreement.
(d) Anything in this Section 7.14 to the contrary notwithstanding, any
Lender may assign and pledge all or any portion of the Advances and/or
obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any Operating Circular issued by
such Federal Reserve Bank, provided that any payment in respect of such assigned
Advances and/or obligations made by Borrower to the assigning and/or pledging
Lender in accordance with the terms of this Agreement shall satisfy Borrower's
obligations hereunder in respect of such assigned Advances and/or obligations to
the extent of such payment. No such assignment shall release the assigning
and/or pledging Lender from its obligations hereunder.
72
(e) KCCI agrees to furnish to Borrower upon Borrower's written request a
copy of any Assignment and Acceptance Agreement between KCCI and any Assignee
executed pursuant to paragraph (b) above.
(f) This Agreement shall be binding on the parties hereto and their
respective successors and assigns.
ARTICLE VIII
GENERAL PROVISIONS
------------------
Section 8.1 No Waiver; Modifications in Writing. No Advance or
disbursement of Loan proceeds hereunder shall constitute a waiver of any of the
conditions of Agent's or any Lender's obligation to make further Advances or
disbursements. Agent may by written notice to Borrower, at any time and from
time to time, waive in whole or in part and absolutely or conditionally, any
default or Event of Default hereunder subject to the provisions of Section 7.2.
Any such waiver shall be subject to such conditions or limitations as shall be
specified in any such notice. In the case of any such waiver, the rights of
Borrower shall be otherwise unaffected, and any default or Event of Default so
waived shall be deemed to be cured and not continuing to the extent and on the
conditions or limitations set forth in such waiver, but no such waiver shall
extend to any subsequent or other default or Event of Default, or impair any
right, remedy or power consequent thereupon.
Section 8.2 Agent's Approval. All proceedings taken in connection with the
Loan and all Draw Requests, documents, agreements or contracts required or
contemplated by this Agreement or any other Loan Document shall be reasonably
satisfactory to Agent, and all parties thereto shall have received copies (or
certified copies where appropriate in such counsel's judgment) of all documents
which they may reasonably request in connection therewith.
Section 8.3 Standing. All conditions to the obligations of Agent and the
Lenders to make Advances and disbursements hereunder are imposed solely and
exclusively for the benefit of Agent, the Lenders and their assigns, and no
other person shall have standing to require satisfaction of such conditions in
accordance with their terms or be entitled to assume that Agent or Lenders will
refuse to make Advances or disbursements in the absence of strict compliance
with any or all thereof, and no other person shall, under any circumstances, be
deemed to be the beneficiary of such conditions, any or all of which may be
freely waived in whole or in part by Agent at any time if in its sole discretion
it deems it advisable to do so (subject to the provisions of Section 7.2
hereof), it being further understood that Agent and Lenders shall have no
obligation to see to it that the Improvements are properly and/or timely
completed or to supervise the construction of the Improvements or to supervise,
direct or review the distribution or disbursements of Loan proceeds. Neither
Agent nor any Lender, by making the Loan or by any other action taken pursuant
to the Loan Documents, shall be deemed to be a partner or joint venturer with
Borrower.
Section 8.4 Notices. All notices, demands, instructions and other
communications required or permitted to be given to or made upon either party
hereto or any other person shall be
73
in writing and shall be personally delivered or sent by registered or certified
mail, postage prepaid, return receipt requested, or by prepaid courier, and
shall be deemed to be given for purpose of this Agreement in regard to
registered or certified mail, three (3) days after mailing, and in regard to
personal delivery or prepaid courier, on the day that such writing is delivered.
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section, notices, demands, instructions and other
communications in writing shall be given to or made upon the following persons
at their respective addresses indicated below:
If to Borrower:
AH Battery Park Owner, LLC
c/o Alliance Holdings, Inc.
000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Telecopy: (000) 000-0000
with a copy to Developer:
Brookdale Living Communities of New York - BPC, Inc.
c/o Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx, Xx.
Telecopy: (000) 000-0000
and with a courtesy copy to:
Brookdale Living Communities, Inc.
00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx
Telecopy: (000) 000-0000
Squire, Xxxxxxx & Xxxxxxx, LLP
0000 Xxxxxxxxxx Xxxxxx
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Telecopy: (000) 000-0000
74
If to Agent:
Key Corporate Capital Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xx. Xxxxx X. Xxxxxx
Vice President
Telecopy: (000) 000-0000
with a courtesy copy to:
Xxxxx, Day, Xxxxxx & Xxxxx
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Attention: Xxxxxxxxxx X. Xxxx, Esq.
Telecopy: (000) 000-0000
If to a Lender, to such Lender at its address or telecopier number set forth on
the signature page hereof or in the Assignment and Acceptance Agreement pursuant
to which it became a party hereto. Notices may alternatively be sent to such
other address as any of the parties may from time to time designate by written
notice given as herein required. Rejection or refusal to accept or inability to
deliver because of changed addresses or because no notice of changed address was
given shall be deemed a receipt of such notice. The effectiveness of such notice
will not be affected by the giving or lack thereof of courtesy copies of such
notice.
If any day on which any notice, demand, instruction or other communication
is given or sent by any party hereto is not a Domestic Business Day, such
notice, demand, instruction or other communication shall be deemed to have been
given or sent on the Domestic Business Day next succeeding such non-Domestic
Business Day.
Section 8.5 Amendments. Neither this Agreement nor any provision hereof
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought, and in the case of the
Lenders, which is approved as provided in Section 7.2 hereof.
Section 8.6 Assignment. Borrower shall not assign or transfer any of its
rights hereunder without the prior written consent of Agent.
Section 8.7 Governing Law. This Agreement shall be governed by the laws of
the State of New York without regard to principles of conflict of laws.
Section 8.8 Severability of Provisions. Any provision of this Agreement
which is prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without affecting the validity or enforceability
of the rest of such provision.
Section 8.9 Headings. Article, Section and other headings used in this
Agreement are for convenience of reference only and shall not affect the
construction of this Agreement.
75
Section 8.10 Waiver of Trial by Jury. AGENT, LENDERS AND BORROWER SHALL
AND DO HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
BROUGHT BY ANY OF THE PARTIES HERETO AGAINST ANY OTHER PARTY ON ANY MATTERS
WHATSOEVER ARISING OUT OF OR IN ANY WAY IN CONNECTION WITH THE LOAN, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT.
Section 8.11 Submission to Jurisdiction; Service of Process
(a) The Borrower irrevocably submits to the non-exclusive
jurisdiction of the courts of the State of New York, the courts of the United
States for the Southern District of the State of New York, and appellate courts
from any thereof, over any suit, action or proceeding arising out of or relating
to this Note. The Borrower hereby irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding brought in any such court
and any claim that any such suit, action or proceeding brought in such a court
has been brought in an inconvenient forum. Without limiting Borrower's right to
appeal any such final judgment in accordance with applicable Requirements,
Borrower agrees that a final judgment in any such suit, action or proceeding
brought in such a court shall be conclusive and binding upon Borrower.
(b) The Borrower hereby irrevocably appoints CT Corporation System
as its authorized agent to accept and acknowledge, on behalf of Borrower,
service of any and all process which may be served in any suit, action or
proceeding of the nature referred to above in any such court. The Borrower
represents and warrants that such agent has agreed in writing to accept such
appointment and that Borrower has delivered to the Agent a true copy of such
designation and acceptance. Said designation and appointment shall be
irrevocable. If such agent shall cease so to act, Borrower covenants and agrees
that it shall irrevocably designate and appoint without delay another such agent
satisfactory to the Agent and shall promptly deliver to the Agent evidence in
writing of such other agent's acceptance of such appointment.
(c) Process may be served in any suit, action or proceeding of the
nature referred to above (i) by the mailing of copies thereof by registered or
certified air mail, postage prepaid return receipt requested, to Borrower at its
address set forth above or to such other address of which Borrower shall have
given written notice to the Agent, or (ii) without affecting the efficacy of any
service made pursuant to clause (i) above, if Borrower shall not have filed an
appearance within twenty-one days after the date of such mailing, by serving a
copy thereof upon CT Corporation System, at its office at 0000 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, as Borrower's agent for service of process. The Borrower
agrees that such service shall be deemed in every respect effective service of
process upon Borrower in any such suit, action or proceedings and shall, to the
fullest extent permitted by law, be taken and held to be valid personal service
upon and personal delivery to Borrower. Nothing in this Section shall affect the
right of the Agent to serve process in any manner permitted by law or limit the
right of the Agent to bring proceedings against Borrower in the courts of any
other jurisdiction or jurisdictions.
Section 8.12 Lender's Remedies Cumulative. Each and every right, remedy
and power hereby granted to Agent or any Lender or allowed it by law or other
agreement shall be cumulative and not exclusive and may be exercised by Agent or
such Lender from time to time.
76
Section 8.13 Counterparts. This Agreement may be executed by the parties
hereto separately in any number of counterparts, each of which shall be an
original and all of which collectively shall constitute one and the same
agreement.
Section 8.14 Trust Fund. Borrower agrees that it will receive the Advances
secured by the Mortgage and will hold the right to receive such Advances as a
trust fund to be applied first for the purpose of paying the cost of improvement
(as defined in New York Lien Law), if any, and will apply the same first to the
payment of such costs before using any part of the total of the same for any
other purpose and will comply with Section 13 of the New York Lien Law. Borrower
will indemnify and hold Lender harmless against any loss or liability,
reasonable cost or expense, including, without limitation, any judgments,
reasonable attorneys' fees, costs of appeal, bonds and printing costs, arising
out of or relating to any proceeding instituted by any claimant alleging a
violation by Borrower or Lender of any applicable lien law including, without
limitation, any section of Article 3A of the New York Lien Law. The provision of
this Section shall survive the payment and performance of Borrower's obligations
under this Agreement and the other Loan Documents.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first set forth above.
Borrower: AH BATTERY PARK OWNER, LLC,
an Ohio limited liability company
BY: AH Battery Park Member, LLC, an Ohio
limited liability company, its sole
member and manager
By: Alliance Holdings, Inc., a
Pennsylvania corporation, its sole
member and manager
By: /s/ Xxxxx X. Xxxxxxx
------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------
Title: President
-----------------------
The Agent: KEY CORPORATE CAPITAL INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
Vice President
The Lenders: KEY CORPORATE CAPITAL INC.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------
Xxxxx X. Xxxxxx
Vice President
FLEET NATIONAL BANK
By: /s/ Xxxxxxxx Xxxxxxxxx
-----------------------------
Xxxxxxxx Xxxxxxxxx
Vice President
EUROPEAN AMERICAN BANK
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------
Xxxxxx Xxxxxxxx
Group Vice President
ANNEX I
Lender Pro Rata Share
------ --------------
Key Corporate Capital Inc. 45.03816794%
Fleet National Bank 34.60559796%
European American Bank 20.00000000%
EXHIBIT A
---------
LEGAL DESCRIPTION
All that certain plot, piece or parcel of land, situate, lying and being in the
Borough of Manhattan, County of New York, City and State of New York, bounded
and described as follows:
BEGINNING at the intersection of the southerly line of Xxxxxxxx Street and the
westerly line of North End Avenue;
THENCE southerly along the westerly line of North End Avenue, a distance of
196.00 feet to a point on the northerly line of Xxxxxx Street;
THENCE westerly along said northerly line of Xxxxxx Street, a distance of 100.00
feet to the division line between Parcel 20C on the west and Parcel 20B on the
east;
THENCE northerly along said division line at right angles to the preceding
course, a distance of 196.00 feet to the southerly line of Xxxxxxxx Street;
THENCE easterly along said southerly line of Xxxxxxxx Street, a distance of
100.00 feet to the point of BEGINNING.
EXHIBIT B
---------
Permitted Encumbrances
1. Terms, covenants, conditions and provisions of Declaration of Covenants
and Restrictions made by Battery Park City Authority dated 3/15/84
recorded on 3/21/84 in Reel 776 Page 360.
2. Terms, covenants, conditions and provisions of unrecorded Settlement
Agreement made between the City of New York and New York State Urban
Development Corporation, dated as of 6/6/80 as recited in amendment to
Option to Purchase recorded in Reel 1133 Page 582. Said Agreement was
amended by unrecorded amendments dated 6/9/80, 8/15/86, 6/28/89, 12/30,89,
5/18/90, 10/15/93, 4/10/95 and 10/1/96.
3. Terms, covenants and conditions in connection with Option to Purchase,
dated 6/6/80 granted to the City of New York as set forth in Agreement
between New York State Urban Development Corporation, BPC Development
Corporation, Battery Park City Authority and the City of New York, dated
as of 6/6/80 recorded on 6/11/80 in Reel 527 Page 153, as amended by
Amendment to Option to Purchase between Battery Park City Authority and
the City of New York, dated 8/15/86 recorded 10/22/86 in Reel 1133 Page
582 and further amended by Second Amendment to Option to Purchase between
Battery Park City Authority and the City of New York, dated as of 5/18/90
recorded 5/30/90 in Reel 1697 Page 294.
4. Terms, covenants and conditions of the Declaration of Restrictions dated
6/15/83 made by Battery Park City Authority recorded on 6/20/83 in Reel
696 Page 551.
5. Unrecorded Memo of Understanding dated 11/8/79 among the Governor of the
State of New York, the Mayor of the City of New York and the President and
Chief Executive Officer of the Urban Development Corporation and Battery
Park City Authority as amended by unrecorded amendments recited in
Amendment to Option to Purchase recorded in Reel
1133 Page 582.
6. Unrecorded Westway Agreement dated 00/0/00 xxxxxxx Xxxxxxx Xxxx Xxxx
Authority, Battery Park City Development Corporation and the People of the
State of New York as amended by Unrecorded Amendment dated 9/9/82 and
further amended by the Second Unrecorded Amendment of Westway Agreement
dated 6/83 recited in that certain Easement and Conveyance between Battery
Park City Authority and the People of the State of New York dated 10/29/85
recorded 11/20/85 in Reel 987 Page 949.
7. Distinctive Street Improvement Maintenance Declaration dated 1/13/86
recorded 9/17/90 in Reel 1729 Page 352.
8. Memorandum of Ground Lease by the Battery Park City Authority, as ground
lessor, and AH Battery Park Owner, LLC, as ground lessee, dated as of
August 24, 1999, to be recorded in the Office of the City Register, New
York County
9. Subordination, Nondisturbance and Attornment Agreement by the Battery City
Authority, as master lessor, and AH Battery Park Owner, LLC, as ground
lessee, dated as of August 24, 1999, to be recorded in the Office of the
City Register, New York County
10. Building Loan Leasehold Mortgage, Security Agreement and Assignment of
Leases and Rents, by AH Battery Park Owner, LLC, as mortgagor, in favor of
Key Corporate Capital Inc., as Agent for the Lenders and Mortgagee, dated
as of August 24, 1999, to be recorded in the Office of the City Register
New York County
11. Soft Cost Leasehold Mortgage, Security Agreement and Assignment of Leases
and Rents, by AH Battery Park Owner, LLC, as mortgagor, in favor of Key
Corporate Capital Inc., as agent for the Lenders and mortgagee, dated as
of August 24, 1999, to be recorded in the Office of the City Register New
York County
12. UCC-1 Financing Statements from AH Battery Park Owner, LLC, as debtor, in
favor of Key Corporate Capital Inc. as Agent for the Lenders and secured
party, dated as of August 24, 1999, to be filed in various jurisdictions
13. Recognition Agreement by the Battery Park City Authority, as ground
lessor, and KCCI and the other Lenders, dated as of August 24, 1999, to be
recorded in the Office of the City Register, New York County
14. Memorandum of Property Option Agreement by AH Battery Park Owner, LLC, as
grantee, and Brookdale Living Communities of New York - BPC, Inc., as
grantor, dated as of August 24, 1999, to be recorded in the Office of the
City Register, New York County, with respect to that certain Property
Option Agreement, which, by its terms, is subordinate to the Mortgages and
the other Loan Documents executed in favor of KCCI and the other Lenders
2
EXHIBIT C
---------
Affidavit Pursuant to Section 22 of
-----------------------------------
the Lien Law of the State of New York
-------------------------------------
(See Attached)
EXHIBIT D
Form of Architect's Certificate
-------------------------------
[LETTERHEAD OF ARCHITECT]
Dated:_____________
Key Corporate Capital Inc., as Agent
000 Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000-0000
Attention: Xx. Xxxxx X. Xxxxxx
Vice President
Re: Loans in the aggregate maximum amount of $49,125,000 to AH Battery
Park Owner, LLC (the "BORROWER") for the construction of
improvements (the "PROJECT") located at 000 Xxxxx Xxx Xxxxxx,
Xxxxxxx Xxxx Xxxx, Xxx Xxxx, Xxx Xxxx
Ladies and Gentlemen:
The undersigned is the Architect for the above Project pursuant to that
certain architect's agreement, dated __________________, 199_, with Brookdale
Living Communities of New York-BPC, Inc. ("DEVELOPER"), the developer of the
Project on behalf of the Borrower, a true copy of which agreement we deliver to
you herewith (which agreement, together with any and all renewals, extensions
and modifications thereof and all exhibits and addenda thereto is hereinafter
referred to collectively as the "ARCHITECT'S AGREEMENT").
In consideration of lenders ("LENDERS") for whom you are acting as Agent
(the "AGENT") making mortgage loans ("LOANS") to the Borrower to finance the
construction of the Project, we agree with respect to said Project that upon
receipt of written notice from the Agent that the Borrower has defaulted under
any of the loan documents, we shall continue to act as Architects for the
Project, PROVIDED that the Agent and/or the Lenders agrees to pay all sums owed
us as the Architects for work previously performed to the extent that the
Borrower has not received construction Loans designated for payment of such
work, and we as Architects shall be reimbursed in accordance with the provisions
of the Architect's Agreement for services thereafter rendered on the Agent's
behalf, PROVIDED that unless and until Lender requests that we continue
performance under the Architect's Agreement as provided in the preceding clause,
Lender shall not be liable for any of the obligations of Borrower to us under
the Architect's Agreement.
We further acknowledge and consent to the collateral assignment by the
Borrower to the Agent of (i) all its rights under the Architect's Agreement and
(ii) all plans, specifications, drawings, renderings, and models related to the
Project, to secure the Loans made by the Lenders to the Borrower in respect to
the Project and any other obligations which may also be secured thereby.
4
We advise you that we are not aware of any breach or default under the
Architect's Agreement.
We agree that whether or not the Borrower elects to continue the
employment of us as Architects after the date hereof, the Agent shall hereafter
succeed to, and have all of the rights of the Borrower in, said plans,
specifications, drawings, renderings, and models (collectively, the "PLANS"),
and, without limiting the generality of the foregoing, may use such materials to
complete the Project.
We hereby agree that we will not, without Lender=s prior written approval,
agree to any alteration, modification, amendment to or release or discharge (in
whole or in part) of the Architect's Agreement or the Plans, or waive or claim
any waiver in respect of any provisions thereof, or perform any work pursuant to
any "material" change order. A change order shall be deemed "material" if (a) it
affects the value or use of the Project, or (b) it increases or decreases the
costs of construction of the Project by more than $100,000 or (c) when added to
other change orders not requiring the approval of Lender under clause (b) above,
it increases or decreases the costs of construction of the Project by more than
$1,000,000.
The rights of the Agent hereunder shall extend to its successors and
assigns (including any purchaser upon foreclosure of the mortgage securing the
Borrower's Loans, any receiver in possession of the Project, and any corporation
formed by or on behalf of any such person), and this letter also inures to the
benefit of any guarantor of the Loans that undertakes, at the Agent's request,
to complete the Project and perform the Borrower's obligations to the Agent and
the Lenders in respect thereof.
It shall not be necessary for you to acknowledge your agreement to the
foregoing, as this letter is intended to constitute, upon delivery of a signed
copy hereof, a binding obligation of the undersigned without the necessity of
any such acknowledgment by you.
The obligations of the undersigned hereunder may not be terminated without
the prior written consent of the Agent. This letter shall bind the successors
and assigns of the undersigned.
Very truly yours,
[NAME OF ARCHITECT]
By: ______________________________
Name:
Title:
5
EXHIBIT E
---------
Developer's Certificate
-----------------------
Brookdale Living Communities of New York-BPC, Inc., a Delaware corporation
("Developer"), hereby represents and warrants to AH Battery Park Owner, LLC, an
Ohio limited liability company ("Borrower"), and Key Corporate Capital Inc.,
Fleet National Bank and European American Bank (collectively, "Lender") that
each of the representations and warranties contained in that certain Building
Loan Agreement and that certain Soft Cost Loan Agreement (collectively, the
"Loan Agreement") dated as of the date hereof by and between Borrower and Lender
and each of the Loan Documents (as defined in the Loan Agreement) which relate
to the Premises (as defined in the Loan Agreement) (specifically excluding any
representations or warranties relating to Borrower or its member and/or
affiliates) is true, correct and complete in all material respects.
Notwithstanding the foregoing, if any of the aforementioned representations
and/or warranties contained in the Loan Agreement and/or the Loan Documents are
limited to the knowledge or best knowledge of Borrower, then such
representations and/or warranties shall be limited to the knowledge or best
knowledge, respectively, of Developer. Developer's obligations hereunder shall
terminate (unless Developer or its affiliates have exercised its rights to
acquire the Property or an interest in Borrower or its member) upon the earlier
to occur of the (a) date upon which the Management Agreement (as defined in the
Loan Agreement and the Development Agreement (as defined in the Loan Agreement)
are terminated and (b) the date upon which the indebtedness evidenced by the
Note (as defined in the Loan Agreement) is repaid; provided, however, any
liability arising prior to such date shall not terminate. Notwithstanding
anything to the contrary contained herein, in no event shall any officer,
director, employee, member, manager, shareholder, incorporator or agent of
Developer or Developer's affiliates be personally liable for any of Developer's
obligations hereunder.
Dated: August ,1999
DEVELOPER:
BROOKDALE LIVING COMMUNITIES OF NEW YORK-BPC,INC.,
a Delaware corporation
By:
-----------------------------------------
Name:
-----------------------------------------
Its:
-----------------------------------------
EXHIBIT F
---------
Occupancy Schedule/Pro Forma Rental
-----------------------------------
Minimum Occupancy Levels
------------------------
Quarter 2 following Substantial Completion: 43.75%
Quarter 3 following Substantial Completion: 55.13%
Quarter 4 following Substantial Completion: 65.63%
Quarter 5 following Substantial Completion: 76.13%
Quarter 6 following Substantial Completion: 83.13%
Quarters 7-10 following Substantial Completion: 83.13%
Pro Forma Rentals
-----------------
MONTHLY FEE ANNUAL FEE TOTAL
UNIT MIX IL. # OF UNITS (PER UNIT) (PER UNIT) ANNUAL FEE
-------- --- ---------- ----------- ---------- ----------
Studio IL 24 $3,750 $45,000 $ 1,080,000
One Bedroom IL 126 $4,550 $54,600 $ 6,879,600
Two Bedroom IL 48 $5,150 $61,800 $ 2,966,400
Studio AL 19 $4,250 $51,000 $ 969,000
One Bedroom AL 1 $5,050 $60,600 $ 60,600
218 $4,570 $54,842 $11,955,600
