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EXHIBIT 10.23
CONSTRUCTION LOAN ADDENDUM
This Construction Loan Addendum is hereby incorporated into that certain
Construction Loan Agreement dated March 28, 1997, between FIRST UNION
NATIONAL BANK OF TENNESSEE ("Lender"), and FORT AUSTIN LIMITED PARTNERSHIP
("Borrower").
W I T N E S S E T H
WHEREAS, Lender has agreed to extend a construction loan to Borrower, on
certain terms and conditions; and
WHEREAS, one condition to Lender's agreement to extend credit to Borrower
is that Lender and Borrower must enter into a comprehensive agreement setting
forth the terms and conditions of Borrower's construction loan;
NOW, THEREFORE, as an inducement to cause Lender to extend credit to
Borrower, and for other valuable consideration, the receipt and sufficiency of
which are acknowledged, it is agreed as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, in addition to the definitions contained in the
Agreement, the following words have the definitions indicated below unless
context clearly requires otherwise:
1.1. Appraisal means that Appraisal dated December 3, 1996, whereby Xxxx X.
Plush, MAI, of Gulf/Atlantic Valuation Services, Inc. appraises the value of the
Project, "as completed," as $11,100,000.00 and "future stabilized" as
$13,200,000.00.
1.2. Architect means Xxxx Xxxxxxxx Associates, Inc.
1.3. Architect Contract means that contract for architectural services
relative to the construction of the Improvements dated February 20, 1997,
between Borrower and the Architect.
1.4. Budget means a written schedule of the Construction Costs and the
Non-construction costs as estimated by Borrower for completion of the Project.
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1.5. Building Permit means all permits necessary for the completion of the
Improvements according to the Plans and Specifications.
1.6. Business Day means any day on which Lender is open for business.
1.7. Completion Date means April 30, 1998.
1.8. Construction Contract means that contract for the construction of the
Improvements on a "fixed price" basis (or "cost plus" basis with guaranteed
maximum) dated _________________, 199_, between Borrower and the Contractor.
1.9. Construction Costs means all costs set forth in the Budget for
construction labor, materials, fixtures and furnishings incurred and to be
incurred in the development of the Project.
1.10. Construction Inspector means EMJ Construction Consultants, Inc.
1.11. Contractor means The Xxxxx Company, Inc.
1.12. Dual Obligee Performance Bond means that dual obligee bond issued by
American Home Assurance Company in favor of Borrower and Lender insuring
construction of the Improvements according to the Plans and Specifications.
1.13. Encumbrances means the liens of all real estate taxes, personal
property taxes, and other taxes and assessments; deeds of trust; mortgages;
judgment liens; restrictive covenants; easements; and other presently existing
or hereafter created restrictions or other encumbrances.
1.14. GECC means General Electric Capital Corporation.
1.15. Improvements means a building of approximately 97,500 square feet to
be constructed upon the Land according to the Plans and Specifications and all
other improvements to the Land incident thereto.
1.16. Land means the real property described in Exhibit A hereto.
1.17. Non-Construction Costs means all costs set forth in the Budget for
interest, architects fees, surveyors fees, attorneys fees, loan fees, costs for
land acquisition or the release of prior encumbrances and other costs, other
than Construction Costs, to be incurred in the development of the Project.
1.18. Plans means those plans dated November 20, 1996, with revisions dated
January 14, 1997, prepared by the Architect.
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1.19. Project means the Land and the Improvements.
1.20. Project Manager means Xxxxxxxxx Management, Inc. (KMI).
1.21. Specifications means those specifications dated November 20, 1996,
prepared by the Architect.
1.22. Survey means that survey of the Land dated December 20, 1995,
prepared by Xxxxx Survey & Drafting, Inc.
1.23. Title Company means First American Title Insurance Company.
1.24. Tri-Party Agreement means that agreement among Borrower, Lender, and
GECC relating to the Project.
ARTICLE II.
LOAN DOCUMENTS
2.1. Security Documents. Concurrently with the execution of this Agreement,
Borrower shall provide Lender with the following documents to evidence and
secure the Construction Loan, in form and substance satisfactory to Lender:
(a) Promissory Note made by Borrower in the original principal amount
of Eleven Million Six Hundred Thousand Dollars ($11,600,000.00),
payable to the order of Lender.
(b) Deed of Trust, Assignment of Rents, Security Agreement and
Fixture Filing encumbering the Project in favor of Lender,
subject only to the Permitted Encumbrances.
(c) Collateral Assignment of Construction Contract granting Lender a
first priority security interest in the Construction Contract.
(d) Collateral Assignment of Architect Contract granting Lender a
first priority security interest in the Architect Contract.
(e) Collateral Assignment of Project Management Contract granting
lender a first priority security interest in the Project
Management Contract.
(f) U.C.C. Financing Statements for filing with the Arizona Secretary
of State and the Office of the County Recorder for Pima County,
Arizona.
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(g) Other Documents as Lender may require to evidence and secure the
Construction Loan.
2.2. Other Closing Documents. Concurrently with the execution of this
Agreement, Borrower shall provide Lender with the following additional
documents, in form and substance satisfactory to Lender:
(a) Certificate of Borrower's Good Standing under applicable law
issued by the Secretary of State within thirty (30) days of the
date hereof.
(b) Certified Copy of Resolution of Borrower's Board of Directors
executed by Borrower's Secretary authorizing a named officer or
officers of Borrower to enter into this Agreement and to execute
all related documents on Borrower's behalf, and including the
Secretary's certification of the incumbency of such officer or
officers.
(c) Closing Statement listing disbursements for all closing expenses
and for the initial draw under the Construction Loan.
(d) Legal Opinion executed by Borrower's counsel addressing such
matters as Lender shall require.
(e) Evidence of Insurance as required by Article _____ hereof.
(f) Commitment of the Title Company to issue a mortgagee title
insurance policy naming Lender as the holder of a first lien on
the Project, subject only to the Permitted Encumbrances.
(g) Owner's Affidavit sufficient to induce the title company to
delete all standard exceptions from Lender's mortgagee title
insurance policy.
(h) Construction Inspector's Contract among Borrower, Lender, GECC,
and the Construction Inspector providing for inspections of the
Project by the Construction Inspector.
(i) Program Management Consultant Agreement between Borrower and
Project Manager providing for certain construction management
services.
(j) Contractor's Acknowledgment of assignment of the Construction
Contract.
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(k) Architect's Acknowledgment of assignment of the Architect
Contract.
(l) The Plans.
(m) The Specifications.
(n) The Budget.
(o) The Construction Contract.
(p) The Architect Contract.
(q) The Appraisal.
(r) The Survey and Surveyor's Report sufficient to induce the Title
Insurance Company to delete any exception for matters
determinable by survey from Lender's mortgagee title insurance
policy.
(s) The Dual Obligee Performance Bond.
(t) Copies of all Building Permits.
(t) Unlimited Guaranties by each of the ARC Entities other than
Borrower and ARCLP-Charlotte, L.L.C. Such guaranties shall be
secured by all collateral currently securing obligations of such
entities to Lender.
(u) Tri-Party Agreement among Borrower, Lender and GECC.
(u) Other Documents as Lender may require in connection with the
closing of the Construction Loan.
2.3. Delivery of Closing Documents as Conditions Precedent to Advances. If
any of the Loan Documents are not delivered to Lender concurrently with the
execution hereof, the delivery of the remainder of the Loan Documents in form
and substance acceptable to Lender shall be an express condition precedent to
Lender's making of any advances under the Construction Loan. Lender may waive
this condition as to an advance for closing costs or for any other advance by
allowing the funding thereof; provided, however, Lender's making of any such
advance(s) shall not be considered a waiver of this condition as to future
advance requests, unless Lender specifically so agrees in writing.
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ARTICLE III.
INSURANCE
3.1. Insurance During Construction. During construction of the Project, the
following insurance policies shall be maintained in force:
(a) The Improvements and all related construction equipment, supplies
and materials shall be insured against "all risks of physical
loss," including collapse and transit coverage, under a builder's
risk insurance policy in "replacement cost" or "completed value"
form. The deductible under said policy shall not exceed
$1,000.00. The provisional value stated in said policy, if in
"completed value" form, shall not be less than the maximum
insurable value of the Project "as completed." Said policy shall
also contain the "permission to occupy upon completion of work"
endorsement.
(b) The employees of the contractor and all subcontractors employed
with respect to the Project shall be covered by worker's
compensation insurance in such amounts as the law requires.
(c) Public liability insurance shall be maintained covering the acts
of Borrower, the general contractor, subcontractors, and their
employees. Such policy shall insure against all claims for
personal injury and death on an occurrence basis in an amount not
less than $1,000,000 per occurrence.
3.2. Insurance After Construction. Borrower covenants to keep the following
insurance policies in force upon the substantial completion of the Improvements:
(a) The Improvements shall be insured against fire and other hazards
included in coverage against "all risks of physical loss," under
a policy with a deductible of not more than $10,000.00 and with
the "replacement cost" endorsement.
(b) All employees of Borrower whose employment pertains to the
Project shall be covered by worker's compensation insurance in
such amounts as are required by law.
(c) Borrower shall be covered by a comprehensive public liability
insurance policy including coverage for elevators and escalators
and providing completed operations coverage. Such policy shall
insure against all claims for personal injury and death on an
occurrence basis in an amount not less than $1,000,000.00 per
occurrence.
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(d) Borrower shall maintain business interruption insurance and/or
"loss of rental value" insurance providing coverage for at least
a six (6) month period.
(e) Borrower shall insure all personalty on the Project against,
fire, theft, and other hazards as Lender may require.
(f) Borrower shall maintain such other insurance as Lender may
reasonably require.
3.3. Insured Mortgagee. All required policies of property insurance shall
name Lender as insured first mortgagee under a noncontributing mortgagee clause
acceptable to Lender. All liability policies shall name Lender as an additional
insured. Said policies shall also provide that they will not be canceled or the
coverage thereunder reduced or restricted in any way without Lender being given
at least thirty (30) days prior written notice.
3.4. Delivery of Policies, Payment of Premiums. All required policies of
insurance shall be issued by companies and in amounts, form and substance
satisfactory to Lender. Borrower shall furnish Lender with the originals of all
required insurance policies. At least thirty (30) days prior to the expiration
of each such policy, Borrower shall furnish Lender with evidence satisfactory to
Lender of the insurer's agreement to reissue said policy and of the payment of
the premium for reissuance. If Borrower fails to maintain and furnish to Lender
the policies of insurance required by this Article, Lender may obtain such
insurance or single-interest insurance for such risks covering Lender's
interest. All expenses incurred by Lender in obtaining such insurance shall be
deemed additional advances for the benefit of Borrower under the Construction
Loan.
3.5. Insurance Proceeds. Borrower agrees to give Lender prompt written
notice of any casualty to the Project. The proceeds of any insurance policy
pertaining to the Project shall be paid directly to Lender, but may be used by
Borrower to restore the Project so long as no Event of Default has occurred and
is continuing. If an Event of Default has occurred and is continuing, then
Lender may apply said proceeds, in its sole discretion, (i) to the reduction of
the Obligations, (ii) to the restoration of the Improvements, or (iii) to
Borrower with or without restriction. Borrower hereby directs all issuers of
insurance policies relating to the Project to pay all amounts due thereunder
directly to Lender and Borrower hereby appoints Lender as Borrower's
attorney-in-fact to receive any sums due under insurance policies concerning the
Project, to endorse any drafts or instruments received under such policies, and
to make proof of loss for, settle, and give binding acquittances for claims
under such policies.
3.6. Assignment of Policies Upon Foreclosure. If all or part of Project is
sold at foreclosure, all policies of insurance pertaining to the Project and
then in force shall pass to the purchaser at such sale.
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ARTICLE IV.
DISBURSEMENTS
4.1. Disbursement Requests. The administration of disbursements under the
Construction Loan shall be conducted according to the following:
(a) Form and Delivery of Requests. Disbursement requests shall be
submitted in writing on AIA Form G702 (with schedules attached)
to the following address or such other address as Lender may
direct:
First Union Corporation
Construction Loan Administration
Attention: Xxxx Xxxxx
X.X. Xxx 000000
Xxxxxxx, XX 00000
or
000 Xxxx Xxxxx xx Xxxx
Xxxxx Xxxxx
Xxxxxxx, XX 00000
If Xxxx Xxxxx is not available, disbursement requests may be submitted
to any other officer at that office of Lender. Each disbursement
request must be signed by Borrower, the Contractor, the Project
Manager, and the Architect, and must be accompanied by a certificate
signed by the Construction Inspector in form and substance
satisfactory to Lender. If Borrower satisfies the conditions stated in
herein, disbursements shall be funded within five (5) Business Days of
request. Invoices shall be submitted for disbursements of $5,000.00 or
more.
(b) Frequency and Amount of Disbursements. Lender shall not be
obligated to make disbursements more frequently than monthly.
Borrower shall request no disbursement (except the final
disbursement) for an amount less than $500,000.00.
(c) Application of Disbursements; Retainage. Borrower's draw requests
shall be made only for Non-Construction Costs actually incurred
and for Construction Costs actually incurred and arising from
labor performed and materials incorporated into the Project, with
advances for Construction Costs to be subject to a ten percent
(10%) retainage (other than the contractor's fee and general
conditions) to be administered in accordance with applicable law
until such time as the Project is fifty percent (50%) complete,
after which subsequent draws shall not be subject any further
retainage.
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No disbursements shall be made for materials stored off the
Project site. Borrower shall apply each disbursement to the
expenses itemized in the disbursement request.
(d) Additional Documents. Lender may require that affidavits,
certificates, receipts or other written evidence satisfactory to
Lender of any or all of the following be submitted with
disbursement requests:
(i) The percentage of completion of the Improvements and the
value of the Improvements already completed;
(ii) That Borrower is not in default under any document
pertaining to the Obligations;
(iii) That all construction has been performed in accordance with
the Plans and Specifications;
(iv) That the Dual Obligee Performance Bond is in full effect;
(v) That all funds previously disbursed by Lender have been
applied directly to the costs of construction of the
Improvements or to the payment of other costs permitted
under this Agreement, allocated as represented in the
disbursement requests submitted to Lender;
(vi) That the amount of undisbursed Construction Loan proceeds is
sufficient to pay the costs of completing the Improvements
in accordance with the Plans and Specifications; and
(vii) That the time remaining before the Completion Date is
sufficient to allow the timely completion of construction of
the Project.
(viii) Such other matters as Lender may reasonably require.
4.2. Conditions Precedent to Disbursements. Lender's obligation to disburse
proceeds of the Construction Loan is subject to the following conditions:
(a) Truth of Warranties. All warranties made herein and in the other
Loan Documents must be true as of the date of the submission of
the disbursement request.
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(b) Compliance with Covenants. All covenants made herein and in the
other Loan Documents must be fully complied with as of the date
of submission of the disbursement request.
(c) No Default. Borrower must not be in default under this Agreement
or under any other of the Loan Documents and no condition shall
exist that with the giving of notice, the passing of time, or
both, would constitute a default under this Agreement or under
any other of the Loan Documents.
(d) Disbursement Documentation. Lender must be satisfied that the
requirements stated herein above have been satisfied.
(e) Compliance with Budget. The requested disbursement must not cause
any expense itemized in the Budget to exceed its budgeted amount
or violate the terms of the Tri-Party Agreement.
(f) Warranties Implied in Request. The submission of a request for
advance hereunder shall constitute a warranty by Borrower that
conditions stated in (a), (b) and (c) above are satisfied as of
the date of the request.
4.3. Additional Conditions to Final Disbursement. In addition to the other
conditions set forth above, the delivery of the following documents to Lender
shall be a condition precedent to the final disbursement of retainage amounts:
(a) Architect's Certificate. A certificate of the Architect addressed
to Lender stating that the construction of the Project has been
completed in a good and workmanlike manner and in material
compliance with the Plans and Specifications.
(b) Construction Inspector's Certificate. A certificate of the
Construction Inspector addressed to Lender stating that the
construction of the Project has been completed in a good and
workmanlike manner and in material compliance with the Plans and
Specifications.
(c) Certificate of Occupancy. The original permanent Certificate of
Occupancy for the Project.
(d) Contractor's Affidavit. An affidavit of the Contractor addressed
to Lender stating that all suppliers of labor and/or materials
for the Project have been paid without any continuing dispute
over the charges or value of their materials or services, or that
the final
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disbursement will be sufficient to pay all such charges in full,
with no such dispute. Lender may also require the filing of a
notice of completion to determine the remaining claims against
the Project for labor and materials.
(e) Final Survey. A final updated survey of the Project, showing all
Improvements.
4.4. Disposition of Advances. All disbursements under the Construction Loan
shall be made by crediting a special account of Borrower at Lender, which
account shall only be used by Borrower for depositing and disbursing
Construction Loan proceeds. Lender, in its sole discretion, may choose to make
any or all disbursements under the Construction Loan directly to the appropriate
general contractor, subcontractor, laborer or materials furnisher, whether or
not a disbursement has been requested by Borrower. Any amounts advanced by
Lender directly to any of such persons or entities shall be deemed additional
advances under the Construction Loan.
4.5. Advance Not Waiver. No advance of Construction Loan proceeds hereunder
shall constitute a continuing waiver of any of the conditions to Lender's right
to declare a default or otherwise demand strict compliance with this Agreement,
unless Lender agrees to the contrary in a writing specifically referring to this
Paragraph.
4.6. Draws by Debit Memorandum. Lender may, without prior notice to
Borrower, draw any amount available under the Construction Loan to pay any
interest or expenses that are not timely paid by Borrower.
ARTICLE V.
ADDITIONAL WARRANTIES AND COVENANTS
5.1. Leases. Borrower covenants to deliver to Lender, prior to their
execution, copies of all leases of the Project which shall be in form and
content satisfactory to Lender.
5.2. Lien Waivers and Contractor Affidavits. Upon Lender's request,
Borrower shall cause the Contractor to furnish to Lender copies of all
subcontracts and purchase orders relating to construction of the Project.
Borrower shall also cause the Contractor to furnish to Lender, upon request,
statements from the Contractor and from each subcontractor and supplier (i)
stating the amount of its contract and the amount paid to date; and (ii) stating
the amount currently due for work done and materials supplied.
5.3. Plans and Specifications. The construction of the Improvements shall
be performed according to the Plans and Specifications. No changes shall be made
in the Plans and Specifications without the prior written approval of Lender,
except for changes which meet the requirements set forth in the Tri-Party
Agreement for changes not requiring prior approval. All change orders shall be
submitted on standard AIA forms.
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5.4. Access to Project. Borrower agrees to give the Construction Inspector
and Lender's agents and independent contractors access to the Project at all
times for the purpose of inspecting the progress of construction of the
Improvements. Any inspection conducted on behalf of Lender shall be for Lender's
benefit alone, and Lender's continued funding of construction after any
inspection does not imply that Lender has determined or assured that the
Improvements are being constructed in a safe manner or in accordance with the
Plans and Specifications.
5.5. Indemnification. Borrower acknowledges that it has already begun site
preparation work on the Project and agrees to provide an Indemnification
Agrement to the Title Insurance Company and to take such other actions as the
Title Insurance Company may require to affirmatively insure Lender against
mechanic's liens.
5.6. Zoning. Borrower warrants that the Project is suitably zoned to permit
construction on the Project pursuant to the Plans and Specification, and to
permit the operation of the Project for its intended use as a retirement living
facility.
5.7. Utilities. Borrower warrants that all adequate utility services for
water, sewerage, electricity, gas, and telephone services are available at the
Project and can be accessed upon payment of only the ordinary tap or hook-up
fees charged by the respective utility companies.
5.8. Subsurface Conditions. Borrower warrants that it has tested subsurface
conditions on the Project and that no condition exists that may reasonably be
expected to interfere with or delay the construction of the Improvements or the
operation thereof after completion. Without limiting the foregoing, Borrower
warrants that excavation for the Improvements is not expected to require the
blasting and/or removal of rock in excess of the amount, if any, itemized in the
Budget.
5.9. No Flood Risk. Borrower warrants that except as shown on the survey
provided to Lender, none of the Project is within the 100-year flood plain or
flood way as determined by the Department of Housing and Urban Development or by
the Army Corps of Engineers, and that the Project is not otherwise known or
believed to be a flood risk.
5.10. No Off-Site Construction. Borrower warrants that the construction of
the Improvements and the operation thereof when completed does not require the
construction of any sewer lines, water detention ponds, sewage treatment plants,
roads, or other improvements that will not be located on the Project.
5.11. Adequacy of Budget. Borrower warrants that the Budget provides
sufficient funds to complete construction of the Improvements according to the
Plans and Specifications, which provide for all of the improvements that
Borrower intends to make on the Project.
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5.12. Commencement and Completion of Construction. Borrower agrees to
commence construction of the Improvements within ten (10) days after the date of
this Agreement, and to diligently pursue such construction to completion on or
before the Completion Date in one continuous operation.
5.13. Construction Sign. Borrower agrees to promptly erect and maintain on
the Project a conspicuous project identification sign, which shall be at least
four feet by eight feet in size and which shall name Lender as construction
lender, in a format to be approved by Lender.
5.14. Books and Records. Borrower covenants to maintain complete and
accurate books and records reflecting all items of income and expense in
connection with the acquisition and construction of the Project. Borrower agrees
to make its books and records available to Lender for inspection upon request.
5.15. Notification of Claims by Subcontractors and Materialmen. Borrower
agrees to give Lender prompt written notice if Borrower receives any notice,
whether written or oral, from any laborer, subcontractor or materialman to the
effect that such party has not been paid when due for any labor or materials
furnished in connection with the construction of the Improvements.
5.16. No Violation of Laws; Permits. Borrower warrants that the
construction and operation of the Improvements will not violate in any material
respect any applicable law or regulation including, but not limited to, any law
or regulation pertaining to sewage disposal or any other environmental impact of
the Project. Borrower further warrants that all permits from necessary health
departments and other regulatory agencies that will be required to allow the
construction or operation of the Project have been obtained or, if not, the
appropriate aspect of the Plans and Specifications have been approved in writing
by such departments or agencies.
5.17. Update of Survey. After completion of the foundation stage of
construction, Lender shall be provided with an updated survey of the Project
showing the location of all improvements. Upon completion of the Project, Lender
shall be provided with a final survey of the Project so as to show the
Improvements and all appurtenances as constructed.
5.18. Capacity. Borrower warrants that it is and shall remain a duly
organized Texas limited partnership. Borrower further warrants that the
execution of all necessary consents, partnership resolutions, or other documents
has been duly performed so that the partner signing this Agreement and all
related documents on behalf of Borrower is duly authorized to bind Borrower by
his signature.
5.19. Changes in Financial Condition. Borrower covenants to give Lender
prompt written notice of the creation or discovery of any additional contingent
liability or the occurrence of any other material adverse change in the
financial condition of Borrower or of any guarantor or other person or entity
presently or hereafter liable for payment of all or part of the Obligations.
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5.20. Default Certificates. Within two (2) business days after written
request by Lender, Borrower shall provide Lender with the written certificate of
Borrower's president, general partner or other appropriate representative
stating whether, to the best of the representative's knowledge, information, and
belief, a default exists hereunder, or whether any condition or event exists
which, with the giving of notice, the passage of time, or both, would constitute
such a default. Any such defaults, events or conditions shall be described with
particularity. The certificate shall further address any specific matters
inquired of by Lender regarding possible defaults under this Agreement.
5.21. No Unpaid Taxes. Borrower warrants that Borrower is not presently
delinquent in the payment of any taxes imposed by any governmental authority or
in the filing of any tax return and that Borrower is not involved in a dispute
with any taxing authority over tax amounts due. Borrower covenants that all
future taxes assessed against Borrower shall be timely paid and that all tax
returns required of Borrower shall be timely filed.
5.22. Compliance with Law. Borrower warrants that Borrower's business
activities are conducted in accordance in all material respects with all
applicable laws and regulations, the violation of which would have a Material
Adverse Effect, and Borrower covenants that such activities shall continue to be
so conducted.
5.23. Assistance in Litigation. Borrower covenants to, upon request,
cooperatively participate in any proceeding in which Borrower is not an adverse
party to Lender and which concerns Lender's rights regarding the Obligations or
any collateral securing its payment.
5.24. Name. Borrower warrants that Borrower has not been known under or
done business (except that project referred to as ______________) under any name
other than the name used by Borrower in executing this Agreement. Borrower
agrees to give Lender at least fifteen (15) days prior written notice before
Borrower begins using any name other than that used in executing this Agreement.
5.25. Security Interest; Setoff. In order to further secure the payment of
the Obligations, Borrower hereby grants to Lender a security interest and right
of setoff against all of Borrower's presently owned or hereafter acquired
monies, items, credits, deposits and instruments (including certificates of
deposit) presently or hereafter in the possession of Lender. By maintaining any
such accounts or other property at Lender, Borrower acknowledges that Borrower
voluntarily subjects the property to Lender's rights hereunder.
5.26. Expenses. Upon demand, Borrower will advance to Lender or, at
Lender's option, reimburse Lender for, the following expenses:
(a) Taxes. All taxes that Lender may be required to pay because of
the Obligations (other than income taxes) or because of Lender's
interest in any property securing the payment of the Obligations;
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(b) Administration. All expenses that Lender may incur in connection
with the preparation, execution, or enforcement of this Agreement
or of any other document pertaining to the Obligations;
(c) Protection of Collateral. All costs of preserving, insuring,
preparing for sale (whether by improvement, repair or otherwise)
or selling any collateral securing the Obligations;
(d) Costs of Collection. All court costs and other costs of
collecting any debt, overdraft or other obligation included in
the Obligations, including compensation for time spent by
employees of Lender;
(e) Litigation. All costs arising from any litigation, investigation,
or administrative proceeding (whether or not Lender is a party
thereto) that Lender may incur as a result of the Obligations or
as a result of Lender's association with Borrower, including, but
not limited to, expenses incurred by Lender in connection with a
case or proceeding involving Borrower under any chapter of the
Bankruptcy Code or any successor statute thereto;
(f) Attorneys Fees. Reasonable attorneys' fees incurred in connection
with any of the foregoing.
If Lender pays any of the foregoing expenses, they shall become a part of the
Obligations and shall bear interest at the lower rate of Prime plus 4% per annum
or the highest lawful rate. This Paragraph shall remain in full effect
regardless of the full payment of the Obligations, the purported termination of
this Agreement, the delivery of the executed original of this Agreement to
Borrower, or the content or accuracy of any representation made by Borrower to
Lender. Provided, Lender may terminate this Paragraph by executing and
delivering to Borrower a written instrument of termination specifically
referring to this Paragraph.
5.27. Further Assurances. Borrower covenants to execute such other
assignments, security agreements, financing statements, and other documents that
Lender may deem necessary to further evidence the obligations provided for
herein or to perfect, extend, or clarify Lender's rights in any property
securing or intended to secure the Obligations. Lender is hereby appointed as
Borrower's attorney-in-fact for the signing of such documents. Borrower
acknowledges that this power of attorney is coupled with an interest and is
irrevocable.
5.28. Recitals. Borrower warrants and agrees that the recitals set forth at
the beginning of this Agreement are true.
5.29. No Burdensome Agreements. Borrower warrants that Borrower is not a
party to any contract or agreement and is not subject to any contingent
liability that does or may impair Borrower's ability to perform under the terms
of this Agreement. Borrower further
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warrants that the execution and performance of this Agreement will not cause a
default under any other contract or agreement to which Borrower or any property
securing the Obligations or any other property of Borrower is subject.
5.30. Legal and Binding Agreement. Borrower warrants that the execution and
performance of this Agreement will not violate any judicial or administrative
order or governmental law or regulation, and that this Agreement is valid and
binding in every respect according to its terms.
5.31. No Consent Required. Borrower warrants that Borrower's execution and
performance of this Agreement do not require the consent of or the giving of
notice to any third party including, but not limited to, any other lender,
governmental body or regulatory authority.
ARTICLE VI.
DEFAULT
6.1. Remedies Upon Default. Upon the occurrence of a default under this
Agreement that continues for more than thirty (30) days after the earlier of (i)
Borrower's actual knowledge of such default, or (ii) written notice thereof from
Lender, Lender may pursue any or all of the following remedies, without notice
to Borrower:
(a) Possession of Project. Lender may take exclusive possession of
the Project without the appointment of a receiver and without
prior notice to Borrower. Borrower hereby waives the benefit of
any rule of law or equity requiring notice or delay in Lender's
taking possession of the Project upon default. Lender shall not
be liable to Borrower or to any third party for any damages,
including damages for breach of any contract, that might result
from Lender's exercise of its remedies hereunder and its
ejectment, by detainer action or otherwise, of Borrower or of any
general contractor, subcontractor, or other party from the
Project. Lender may, but shall not be obligated to, retain
security guards or take other measures to protect the Project.
(b) Additional Construction. Lender may continue or resume
construction on the Project pursuant to the Plans and
Specifications or pursuant to such variations thereof or other
plans or specifications as Lender may deem appropriate. Any
construction so caused by Lender may be terminated by Lender at
any time, in its discretion. In furtherance of construction,
Lender may take any of the following action:
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(i) Lender may retain such contractors, subcontractors,
architects, engineers, laborers, and other persons and firms
as it may elect. Lender shall not be required to use any
particular person or firm because the person or firm had a
prior contract with Borrower.
(ii) Lender may purchase construction materials and supplies from
such sources as it may elect. Lender shall not be required
to use any particular supplier, because the supplier had a
prior contract with Borrower.
(iii) Lender may pay, litigate or compromise any claim for labor,
professional services or materials that may result in a lien
upon the Project.
(iv) Lender may make any applications or give any certificates
with respect to the Project including, but not limited to,
applications pertaining to zoning variances and other
applications to regulatory agencies.
(v) Lender may take any other action it may deem necessary to
protect the Project, to promote construction thereon, or to
enhance the value or marketability of the Project.
(c) Marketing of Project. Lender may retain a broker or real estate
agent to attempt to seek a buyer for all or part of the Project
on commission terms deemed reasonable by Lender, including a
retainer that may be paid whether or not the Project is sold as a
result of the broker or agent's efforts.
(d) Preservation of Financing. Lender may take any action necessary
to cure or prevent a default under any other lender's commitment
to provide financing with respect to any or all of the Project.
(e) Attorney-in-Fact. Any action taken by Lender pursuant to its
remedies hereunder may be taken by Lender in its own name or in
the name of Borrower. Borrower hereby appoints Lender as
Borrower's attorney-in-fact, with full power of substitution, to
take any action authorized by this Agreement on Borrower's
behalf. The parties acknowledge that this power of attorney is
coupled with an interest and is irrevocable. Without limiting the
foregoing, Lender is specifically authorized to initiate, pursue,
settle or dismiss judicial or administrative proceedings
pertaining to the Project.
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(f) Expenses. All expenses incurred by Lender in the pursuit of
remedies hereunder, including, but not limited to, the expenses
of construction and reasonable attorneys' fees, shall be deemed
additional advances for the benefit of Borrower under the
Construction Loan.
(g) Setoff. Lender may exercise its lien upon and right of setoff
against any monies, items, credits, deposits or instruments that
Lender may have in its possession and which belong to Borrower or
any other person or entity liable for the payments of any or all
of the Secured Indebtedness.
(h) Other Remedies. Lender may pursue any other remedies available
under any other document evidencing or securing the Obligations
or otherwise available to Lender at law or equity.
6.2. Application of Proceeds. All amounts received by Lender for Borrower's
account shall be applied as follows: First, to the payment of all expenses
incurred by Lender in exercising its rights hereunder, including attorney's
fees, and any other expenses due Lender from Borrower; Second, to the payment of
all interest due Lender; Third, to the payment of all principal due Lender, in
such order as Lender may elect; and Fourth, surplus to Borrower.
FORT AUSTIN LIMITED PARTNERSHIP
By: ARC Fort Austin Properties, Inc.
General Partner
By:___________________________________________
Title:________________________________________
FIRST UNION NATIONAL BANK OF TENNESSEE, Lender
By:___________________________________________
Title:________________________________________
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