BUILDING LOAN AGREEMENT
Dated as of June 17, 1998
between
AH TEXAS OWNER LIMITED PARTNERSHIP,
as Borrower,
BLC OF TEXAS - II, L.P.,
as Manager,
and
NOMURA ASSET CAPITAL CORPORATION,
as Lender
1
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS............................................................2
SECTION 1.1 Certain Defined Terms................................2
ARTICLE II
THE LOAN..............................................................12
SECTION 2.1 Maximum Principal Amount............................12
SECTION 2.2 Payment of Budget Costs; Advances...................12
ARTICLE III
ADVANCES FOR CONSTRUCTION.............................................14
SECTION 3.1 Requests for Advance under the Loan.................14
SECTION 3.2 Frequency of Advances...............................16
SECTION 3.3 Partial Advances....................................16
SECTION 3.4 Use of Advances.....................................16
SECTION 3.5 Advances for Materials and Deposits.................16
SECTION 3.6 Reallocation........................................17
SECTION 3.7 Loan Balancing......................................18
SECTION 3.8 Direct Advances.....................................19
SECTION 3.9 Advances for Obligations............................20
ARTICLE IV
CONDITIONS PRECEDENT TO MAKING THE INITIAL ADVANCE....................23
SECTION 4.1 Representations and Warranties......................23
SECTION 4.2 Receipt of Items and Documents by Lender............23
SECTION 4.3 No Default..........................................28
SECTION 4.4 No Change...........................................28
SECTION 4.5 Borrower Equity.....................................28
SECTION 4.6 Lender's Determination..............................28
SECTION 4.7 Accounting..........................................29
SECTION 4.8 Intentionally Omitted...............................29
ARTICLE V
CONDITIONS PRECEDENT TO ADVANCES AFTER
THE INITIAL ADVANCE...................................................29
i
Page
SECTION 5.1 Article IV..........................................29
SECTION 5.2 Representations and Warranties......................30
SECTION 5.3 Receipt of Items and Documents by Lender............30
SECTION 5.4 No Default..........................................31
SECTION 5.5 Lender's Approval...................................31
SECTION 5.6 Substantial Completion Advance......................31
SECTION 5.7 Post-Substantial Completion Advances................32
ARTICLE VI
REPRESENTATIONS AND WARRANTIES........................................32
SECTION 6.1 Plans...............................................32
SECTION 6.2 No Liens............................................33
SECTION 6.3 Compliance with Building Codes, Zoning Laws, Etc....33
SECTION 6.4 Certain Agreements..................................33
SECTION 6.5 Budget..............................................33
SECTION 6.6 Adjacent Land.......................................33
SECTION 6.7 Flood Zone..........................................33
SECTION 6.8 No Prior Work.......................................34
ARTICLE VII
COVENANTS.............................................................34
SECTION 7.1 Construction........................................34
SECTION 7.2 Construction Schedule...............................35
SECTION 7.3 Budget Changes......................................35
SECTION 7.4 Inspection of Premises and Books and Records........35
SECTION 7.5 Required Notices....................................35
SECTION 7.6 Change Orders.......................................36
SECTION 7.7 Correction of Work..................................36
SECTION 7.8 No Encroachments....................................36
SECTION 7.9 Compliance with Documents...........................37
SECTION 7.10 Changes in Agreements...............................37
SECTION 7.11 Contracts...........................................37
SECTION 7.12 Bonds...............................................37
SECTION 7.13 Final Survey........................................37
SECTION 7.14 Competition.........................................37
SECTION 7.15 Protection Against Liens............................38
ARTICLE VIII
EVENTS OF DEFAULT.....................................................38
SECTION 8.1 Events of Default...................................38
ii
Page
SECTION 8.2 Acceleration of Loan................................40
SECTION 8.3 Lender's Right to Stop Disbursing Funds.............40
SECTION 8.4 Lender's Right to Complete; Sums Advanced...........41
SECTION 8.5 Loan Accounts.......................................42
SECTION 8.6 No Liability of Lender..............................42
ARTICLE IX
GENERAL CONDITIONS....................................................42
SECTION 9.1 No Waivers..........................................42
SECTION 9.2 Lender's Review.....................................43
SECTION 9.3 Submission of Evidence..............................43
SECTION 9.4 Lender Sole Beneficiary.............................43
SECTION 9.5 Contractors.........................................43
SECTION 9.6 Entire Agreement....................................43
SECTION 9.7 Amendments, Etc.....................................44
SECTION 9.8 Notices.............................................44
SECTION 9.9 Binding Effect......................................44
SECTION 9.10 Severability of Provisions..........................44
SECTION 9.11 Headings, Etc.......................................44
SECTION 9.12 Governing Law.......................................44
SECTION 9.13 No Joint Venture....................................44
SECTION 9.14 Assignment by Lender................................45
SECTION 9.15 Retention of Servicer...............................47
SECTION 9.16 Consent of Lender...................................47
SECTION 9.17 JURY TRIAL WAIVER...................................47
SECTION 9.18 Incorporation by Reference..........................48
SECTION 9.19 Counterparts........................................48
SECTION 9.20 Product of Joint Drafting...........................48
SECTION 9.21 Intentionally Omitted...............................48
SECTION 9.22 Sign................................................48
SECTION 9.23 Survival............................................48
SECTION 9.24 Time of the Essence.................................48
SECTION 9.25 Lender Reliance.....................................48
SECTION 9.26 Limitation of Liability.............................49
SECTION 9.27 Termination of Manager's Obligations................49
SECTION 9.28 Waiver of "One Action" Rule; Cross
Collateralizations..............................49
EXHIBITS
Exhibit A Land
Exhibit B Budget
Exhibit C Form of Request for Advance
iii
Exhibit D Architect's Consent and Agreement
Exhibit E General Contractor Consent and Agreement
Exhibit F Manager's Consent and Agreement
Exhibit G Engineer's Consent and Agreement
Exhibit H Manager's Affidavit
Exhibit I Pending Disbursements Clause
Exhibit J Existing Trade Contracts
Exhibit K Disbursement Account Agreement
iv
BUILDING LOAN AGREEMENT
This BUILDING LOAN AGREEMENT (this "AGREEMENT") dated as of June
17, 1998, among NOMURA ASSET CAPITAL CORPORATION, a Delaware corporation, having
its principal place of business at Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X, Xxx
Xxxx, Xxx Xxxx 00000-0000 (together with its successors and assigns, "LENDER"),
AH TEXAS Owner Limited Partnership, an Ohio limited partnership having an office
at Suite 160, 000 Xxxx xx Xxxxxxx Xxxx, Xxxxxx, XX 00000 (together with its
successors and assigns "BORROWER") and BLC OF TEXAS - II, L.P., a Delaware
limited partnership having an office at 00 Xxxx Xxxxxx Xxxxx, Xxxxx 0000,
Xxxxxxx, Xxxxxxxx 00000 (together with its successors and assigns, "MANAGER").
RECITALS:
A. Borrower is the owner of the land described on Exhibit A (the "LAND"),
which is located in Austin, Texas.
B. Manager pursuant to the Development Agreement between Borrower
and Manager dated as of the date hereof (as amended, restated, replaced,
supplemented or otherwise modified from time to time, the "DEVELOPMENT
AGREEMENT") has been delegated all responsibility to administer the construction
of the senior housing facilities on the Land including all of Borrower's
obligations to Lender under this Agreement. All references to Manager under this
Agreement shall generally refer to Manager's performance of its duties on behalf
of Borrower pursuant to the Development Agreement and Lender may rely on Manager
pursuant to the provisions of Section 9.25.
C. Borrower, Lender and Manager are parties to that certain Loan
Agreement dated as of the date hereof (as amended, restated, replaced,
supplemented or otherwise modified from time to time, the "LOAN AGREEMENT"),
pursuant to which Lender agreed, subject to the terms of the Loan Agreement, to
make a loan in an aggregate principal amount not greater than Twenty-Four
Million Two Hundred Fifty Thousand and 00/100 Dollars ($24,250,000) to fund a
portion of the costs of acquiring, developing and constructing certain senior
housing facilities on the Land.
D. Borrower, Manager and Lender are entering into this Agreement
to provide for the terms and conditions upon which Borrower and/or Manager will
construct such facilities and
Lender will advance such loan.
E. Such loan may at Lender's election be cross collateralized and
cross defaulted with one or more other loans made pursuant to a certain Master
Financing Facility Agreement entered into between Lender and Brookdale Living
Communities, Inc. (The "MASTER FINANCING
FACILITY AGREEMENT").
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used in this Agreement and unless
otherwise expressly indicated, or unless the context clearly requires otherwise:
(a) All of the agreements or instruments defined in this
Agreement mean such agreements or instruments as the same may, from time to
time, be supplemented or amended or the terms thereof waived or modified to the
extent permitted by, and in accordance with, the terms and conditions thereof
and of this Agreement and the other Loan Documents.
(b) The following capitalized terms have the meanings specified
therefor in the Loan Agreement: " ADDITIONAL LOAN STRUCTURING FEE", "AFFILIATE",
"APPROVED OPERATING EXPENSES", "ASSIGNMENT OF AGREEMENTS", "ASSIGNMENT OF
LEASE", "BORROWER OWNER", "BORROWER REPRESENTATIVE", "BUSINESS DAY", "CAPITAL
RESERVE FUND", "CASH COLLATERAL SUB-ACCOUNT", "DEFAULT", "DEFAULT RATE", "
DEVELOPMENT AGREEMENT", "DRAW FEE", "ENVIRONMENTAL GUARANTY", "EQUITY OPTION
AGREEMENT", "EURODOLLAR BUSINESS DAY", "EXPECTED CONVERSION DATE", "GOVERNMENTAL
AUTHORITY", "GUARANTOR", "HAZARDOUS SUBSTANCES", "IMPROVEMENTS", "INDEPENDENT",
"INITIAL EQUITY INVESTMENT", "INITIAL NOTE", "LEGAL REQUIREMENTS", "LENDER'S
COUNSEL", "LENDER'S COUNSEL FEES", "LIEN", "LOAN DOCUMENTS", "MANAGEMENT
AGREEMENT", "MANAGER", "MORTGAGE", "NOTE", "OBLIGATIONS", "OPERATING DEFICIT
SUBACCOUNT", "OTHER LOAN AGREEMENT", "OTHER PROPERTIES SUBORDINATE MORTGAGE",
"PAYMENT DATE", "PERMITTED ENCUMBRANCES", "PERSON", "POLICIES", "PROPERTY",
"PROPERTY OPTION AGREEMENT", "RATING AGENCY", "REMIC", "SECURITIZATION",
"SECURITIZATION POOLS", "SERVICER", "SERVICING FEE", "STATE", "SYNTHETIC LEASE",
"TAX AND INSURANCE ESCROW SUBACCOUNT", "TAXES", "TITLE CONTINUATION", "TITLE
INSURER" AND "UCC".
(c) The following terms are defined in the Sections indicated
below:
"AGENT" - 9.14(b)
"ASSIGNEE" - 9.14(a)
"CONTINGENCY LINE ITEM" - 3.6(b) "COST SAVINGS" - 3.6(a)
"DEFICIENCY ACCOUNT" - 3.7(b) "DEFICIENCY CASH COLLATERAL" -
3.7(a)(iii) "DEFICIENCY LETTER OF CREDIT" - 3.7(a)(iii) "EVENT OF
DEFAULT" - 8.1 "LEAD LENDER" - 9.14(b)(i) "LOAN" - 2.1 "LINE ITEM
COMPONENT" - 3.6(a)(i) "OTHER LOANS" - 9.29
2
"OTHER PROPERTIES" - 9.29 "SOFT COST SUPPORTING DOCUMENTATION" -
3.1(c) "TITLE INSURANCE POLICY" - 4.2 "UCC SEARCHES" - 4.2
(d) The term "INCLUDING" means including, without limitation.
(e) The following terms shall have the respective meanings set
forth below (such meanings to be equally applicable to the singular and plural
forms of the terms defined, as the
context may require):
"ADVANCE" means any portion of the Loan advanced by Lender pursuant to this
Agreement.
"ADVANCE TERMINATION DATE" means with respect to all Advances
other than Advances with respect to Punchlist Items and Retainage and Operating
Deficits Advances, the earlier of (i) fourteen (14) months after the Loan
Closing Date (subject to an Unavoidable Delay) or (ii) the Substantial
Completion Date.
"APPLICABLE MONTH" means the calendar month following the month
in which the Operating Deficits Funding Request is made.
"ARCHITECT" means the architect that is a party to the Architect's
Agreement.
"ARCHITECT'S AGREEMENT" means that certain Agreement for
Architectural Services dated April 20, 1998, between Borrower or Manager and
Xxxxxx XxXxxxxx and Associates, Ltd., or any agreement for architectural
services, including the preparation of the Plans, which Borrower or Manager may
enter into with any successor Independent Architect in accordance with the
requirements of Section 7.11.
"ARCHITECT'S CERTIFICATE" means a certificate executed by the
Architect certifying to Lender that the Premises, the Plans and the Construction
and/or renovation of the Improvements comply (or once constructed will comply)
with all Legal Requirements and that all Construction Permits required for the
Construction and/or renovation of the Improvements (given the stage of
completion thereof) have been obtained as of the relevant date from all
appropriate Governmental Authorities and have been validly and irrevocably
obtained without qualification, appeal or existence of unexpired appeal periods
which certificate shall be in form and substance satisfactory to Lender in its
discretion.
"ARCHITECT CONSENT AND AGREEMENT" means an Architect's Initial
Certification, Consent and Agreement in the form of Exhibit D.
"ARCHITECT'S UPDATE LETTER" means a letter from Architect stating
that to the best of Architect's knowledge, no event has occurred or failed to
occur which would cause the
3
representations contained in Paragraphs A., B., C., D., and E. of the
Architect's Consent and Agreement, or any subsequent Architect's Certificate to
be materially incorrect as of the date thereof.
"BOND" means, with respect to the General Contractor, a payment
bond and a performance bond in the form of AIA Document A312, with dual obligee
riders, or in such other form as may be reasonably acceptable to Lender.
"BORROWER ENTITY AGREEMENT" means that certain Amended and Restated
Agreement of Limited Partnership Agreement of Borrower.
"BUDGET" means the budget for the acquisition of the Land and
existing Improvements and construction of the Required Improvements, and
operation of the Property prior to the Original Expected Conversion Date
prepared by Manager and approved by Lender in Lender's reasonable discretion,
setting forth Manager's estimates for budgeted construction categories of all
items of costs and expenses (specifying any such item that constitutes a Soft
Cost) required for the construction of the Required Improvements in accordance
with this Agreement. The Budget is attached as Exhibit B.
"BUDGET AS ADJUSTED" means, at any given date, the Budget, as it
shall have been adjusted through such date by changes and reallocations made in
accordance with Sections 3.6 or
7.3.
"BUDGET COSTS" means Hard Costs and/or Soft Costs set forth in
the Budget as Adjusted.
"CHANGE ORDER" means any change order, amendment or modification
to the Construction Agreement and any revision, addendum, modification to or
amendment of the Plans, including, minor departures from the Plans pursuant to
field orders.
"CLOSING" means the execution and delivery of this Agreement and other
applicable Loan Documents by Borrower, Manager and Lender.
"CLOSING DATE" means the date upon which this Agreement and other
applicable Loan Documents are executed and delivered by Borrower, Manager and
Lender.
"COLLATERAL" means the Premises and all other property, real or
personal, tangible or intangible, and all rights thereto, now or hereafter
pledged, mortgaged, made subject to a Lien or
hypothecated pursuant to the Loan Documents.
"COMPLETION GUARANTY" means that certain Guaranty of Completion
made by Guarantor in favor of Lender, dated as of the date hereof the same may
thereafter from time to time be supplemented, amended, modified or extended.
4
"COMPLETED WORK" means work which has been properly performed
and/or installed pursuant to the Construction Agreement, the payment for which
has been approved by Manager,
Lender and Lender's Construction Consultant.
"CONSTRUCTION AGREEMENT" means that certain guaranteed maximum
price general construction contract dated as of December 15, 1997, between
Borrower or Manager and the General Contractor providing for the construction of
the Required Improvements, consistent with the Plans, or any agreement with an
Independent general contractor which Borrower or Manager may enter into in
accordance with the requirements of Section 7.11, together with any Change
Orders executed prior to the date hereof which have either been approved by
Lender or which do not require Lender's approval.
"CONSTRUCTION COMMENCEMENT DATE" means the date on which
construction of the Required Improvements commences, which date shall be no
later than thirty (30) days after the
Closing Date.
"CONSTRUCTION DOCUMENTS" means, collectively, the Construction
Agreement, the Development Agreement, the Architect's Agreement, the Engineer's
Agreement, and all other agreements to which Borrower, Manager or any Affiliate
of Borrower or Manager is a party in each case pertaining to the construction of
the Required Improvements.
"CONSTRUCTION PERMITS" means, collectively, all authorizations,
consents and approvals given by, and licenses, permits and certificates issued
by, Governmental Authorities (including building permits, demolition permits,
excavation permits), and all other permits, licenses and certificates which are
required for the construction, renovation, restoration or rehabilitation of the
Required Improvements in accordance with all Legal Requirements and the Plans,
and for the performance and observance of all agreements, provisions and
conditions of Borrower or Manager contained herein or in the other Loan
Documents pertaining to the construction of the Required Improvements.
"CONSTRUCTION SCHEDULE" means a construction schedule prepared by
the General Contractor showing a trade-by-trade breakdown of the estimated
periods of time for construction of the Required Improvements beginning with the
commencement of preliminary sitework footings and foundations and ending with
completion of construction of the Required Improvements in accordance with the
Plans.
"COSTS" means all Budget Costs and any other expenses incurred or
required for the construction of the Required Improvements in accordance with
this Agreement (whether or not set
forth in the Budget as Adjusted).
"DEFICIENCY" means, at any given time, the amount by which the
balance of the Loan yet to be advanced by Lender pursuant to this Agreement is
less than the actual sum, as reasonably estimated by Lender or Lender's
Construction Consultant, which will be required to complete the
5
construction of the Required Improvements in accordance with the Plans, all
Legal Requirements and this Agreement, and to pay all unpaid Costs in connection
therewith.
"DEFICIENCY COLLATERAL" means Deficiency Cash Collateral and Deficiency
Letter of Credit.
"DEPOSITS" means, collectively, all sums then on deposit in any
Loan Accounts, together with any interest accrued thereon.
"ENGINEER" means any engineer engaged by Borrower or Manager with
the prior written consent of Lender as such consent is required pursuant to
Section 7.11.
"ENGINEERING REPORT" means the structural engineering reports
with respect to the Premises, prepared by an Engineer and delivered to Lender in
connection with the Loan and any
amendments or supplements thereto delivered to Lender.
"ENGINEER'S AGREEMENT" means any agreement which relates to the
design of the Required Improvements and provides for engineering services in
connection with the construction of the Required Improvements which Borrower or
Manager may enter into with any Engineer in
accordance with the requirements of Section 7.11.
"ENGINEER'S CONSENT AND AGREEMENT" means that certain Engineer's
Initial Certification Consent and Agreement in the form of Exhibit G.
"ENVIRONMENTAL REPORT" means the Environmental Assessment Report
dated April 1998, and prepared by Maxim Technologies, Inc., or such other
Environmental Report with respect to the Premises, addressed to Lender, which
Environmental Report shall be (i) prepared by and Independent firm approved by
Lender in Lender's reasonable discretion, (ii) prepared based on a scope of work
determined by Lender, (iii) in form and content acceptable to Lender, such
Environmental Report to be conducted by an Independent environmental engineer.
"EQUITY PAYMENTS" means payments by Borrower to pay Costs, made
from the Initial Equity Investment or funds otherwise received by Borrower from
sources other than Advances or
other Obligations.
"EXISTING CONSTRUCTION DOCUMENTS" means, collectively, the
Construction Documents in effect on the Closing Date.
"EXISTING TRADE CONTRACTS" means the Trade Contracts in effect on
the Closing Date, as more particularly described on Exhibit J.
"FUTURE CONSTRUCTION DOCUMENTS" means, collectively, the Construction
Documents entered into after the date hereof.
6
"GENERAL CONTRACTOR" means Constructors & Associates, Inc., or
any successor engaged by Borrower or Manager with the prior written consent of
Lender as such consent is required pursuant to Section 7.11.
"GENERAL CONTRACTOR CONSENT AND AGREEMENT" means that certain
General Contractor Consent and Agreement in the form of Exhibit E.
"GUARANTIES" means the Completion Guaranty, the Payment Guaranty
and any other guaranty entered into by Guarantor in favor of Lender in
connection with the Loan.
"HARD COSTS" means, collectively, all costs and expenses set
forth in the Budget other than those which are denominated in the Budget as
"Soft Costs" or "SC."
INITIAL ADVANCE" means the first Advance made hereunder.
"INTERESTED PARTY" means any subsequent grantor of the Premises,
any other creditor of Borrower or Manager, any purchaser or tenant of the
Premises or any other Person with any interest in or any connection with
Borrower, Manager, the Premises or the Loan.
"LENDER'S CONSTRUCTION CONSULTANT" means EMG or such other Person
as may be designated and engaged by Lender as a replacement to consult with,
advise and render reports to Lender concerning the status of the construction of
the Required Improvements and to otherwise consult with respect to the
construction of the Required Improvements.
"LENDER'S CONSTRUCTION CONSULTANT REPORT" means a report by
Lender's Construction Consultant, based on Lender's Construction Consultant's
review and observation of the Premises, the construction of the Required
Improvements and the documentation related to the Premises and the construction
of the Required Improvements, stating whether:
(i) the work performed in connection with the construction of the
Required Improvements has been completed in a good and workmanlike
manner, reasonably satisfactory to Lender's Construction Consultant, in
accordance with the Plans and all Legal
Requirements;
(ii) the work which is the basis of the applicable Request for
Advance has been completed in accordance with the Plans and all Legal
Requirements to the reasonable satisfaction of Lender's Construction
Consultant, and whether the cost of such work is
within the applicable Line Item or Line Items;
(iii) the undisbursed amount of the Loan allocable to the
construction of such Required Improvements is sufficient to complete the
construction of such Required Improvements in accordance with the Plans;
(iv) there exists any Deficiency and, if so, the amount and nature thereof;
7
(v) the cost to complete the component of the construction of the
Required Improvements which is the subject of a Line Item is (a) less
than the amount set forth in that Line Item thereby permitting such
excess to be reallocated in accordance with Section 3.6(a), or (b) is
greater than the amount set forth in the Line Item, in either case
setting forth the amount of such excess or deficiency;
(vi) the progress of construction of the Required Improvements is
in accordance with the Construction Schedule and whether, in Lender's
Construction Consultant's reasonable judgment, Substantial Completion
will occur on or before the Outside Completion Date; and
(vii) the value of the work completed and the percentage of
completion of the Required Improvements.
"LENDER'S REPRESENTATIVES" means collectively the Lender's
Construction Consultant, the Servicer, or any of their respective designated
representatives.
"LINE ITEM" means a line item of cost or expense set forth in the Budget as
Adjusted (in compliance with Section 3.6).
"LOAN ACCOUNTS" means, collectively, the Deficiency Account,
Manager's Disbursement Account and all other accounts now or hereafter pledged
to Lender pursuant to this Agreement or any of the other Loan Documents
(including pursuant to any documents hereafter executed and delivered by
Borrower or Manager in connection with the Loan).
"MAJOR TRADE CONTRACT" means any Trade Contract that has a
contract or purchase price, as the case may be, whether initially or thereafter
by virtue of any Change Order or Change Orders, equal to or in excess of ten
percent (10%) of approved Hard Costs; for purposes of this definition of Major
Trade Contract, multiple Trade Contracts with a single contractor or supplier,
as the case may be, shall be deemed to be one Trade Contract.
"MAJOR TRADE CONTRACTOR" means any contractor or supplier, as the
case may be, under a Major Trade Contract.
"MANAGER'S AFFIDAVIT" means an affidavit in the form of Exhibit H.
"MANAGER'S CONSENT AND AGREEMENT" means that certain Manager's
Consent and Agreement in the form of Exhibit F.
"MANAGER'S DISBURSEMENT ACCOUNT" means the account of Manager in
LaSalle National Bank into which the proceeds of the Loan are to be disbursed as
referred to in Section 2.2(a) or such other account as Borrower or Manager and
Lender shall reasonably agree to be the
account into which such proceeds are to be disbursed.
8
"MATERIAL CHANGE ORDER" means any Change Order (i) which will (A)
impair the value of the Collateral in any material respect, (B) materially
change the gross square feet or the number of rentable rooms to be contained in
the Improvements, or the basic layout of the Improvements, or the number of
parking spaces to be located on the Premises after completion of the Required
Improvements, or (C) involve the use of materials, furniture, fixtures or
equipment which, when viewed as a whole, will not be at least equal in quality,
in all material respects, to the materials, furniture, fixtures and equipment
originally specified in or required by the Plans, or (ii) which changes the
scope of the work as set forth in the Plans, or (iii) which results in an
increase or decrease in any Line Item by more than $50,000, or (iv) which
results, when considered together with all previous Change Orders not requiring
Lender's approval under Section 7.6, in an increase or decrease in the aggregate
Costs of more than $150,000, or (v) which occurs at any time a Deficiency exists
or (vi) which results, when considered with all previous Change Orders, in an
increase in the aggregate Costs in excess of $500,000. After the $150,000
threshold specified in clause (iv) is exceeded and Lender approves the Material
Change Order(s) that exceeded this threshold, the amount specified in clauses
above shall be reduced to an amount equal to $20,000 and the restriction
contained in clause (iv) shall be deleted. Notwithstanding the foregoing, Change
Orders entered into prior to the Loan Closing Date shall not be deemed Material
Change Order(s) and shall not be counted in calculating any of the
aforementioned thresholds if (x) such Change Orders are funded other than by
Advances or (y) if such Change Orders are funded by Advances, the Budget has
been revised to take into account such Change Order(s), to the extent necessary,
and Lender has had an opportunity to review such Change Order(s) prior to the
Loan Closing Date.
"OPERATING DEFICITS FUNDING REQUESTS" means a request made after
Substantial Completion by Borrower or Manager to Lender for the payment of
Operating Deficits anticipated to be incurred in the following Applicable Month,
increased or decreased by any Operating Deficits
Reconciliation Amounts.
"OPERATING DEFICITS RECONCILIATION AMOUNTS" means the excess or
shortfall between the estimate provided in an Operating Deficits Funding Request
with respect to an Applicable Month and the actual Operating Deficits
experienced in such Applicable Month.
"OPERATING DEFICITS" means the excess of Approved Operating
Expenses over Operating Income during any applicable period.
"OPERATING DEFICITS ADVANCE TERMINATION DATE" means three (3)
months after the date through which Operating Deficits are projected under the
Budget to be funded by Lender
Advances.
"OPERATING PERMIT" or "OPERATING PERMITS" means, collectively,
all authorizations, consents and approvals given by and licenses, permits and
certificates issued by Governmental Authorities, including certificates of
occupancy, business licenses, state health department licenses, food service
licenses, liquor licenses, licenses to conduct business, and all other permits,
licenses and certificates which are required for the ownership, use, operation
and occupancy of the Premises in accordance with all Legal Requirements, and for
the performance and observance of all
9
agreements, provisions and conditions of Borrower and Manager contained herein
and in the other Loan Documents, and pertaining to the ownership, use, operation
and occupancy of the
Premises.
"OUTSIDE COMPLETION DATE" means the date which is on the last day
of the fourteenth (14th) month after the Closing Date, which Lender shall extend
if Lender determines in its reasonable discretion that construction was delayed
due to Unavoidable Delay.
"PAYMENT GUARANTY" means that certain Guaranty of Payment of
Note, Rate Lock Obligations, Carrying Costs and Recourse Obligations dated as of
the date hereof, made by Guarantor in favor of Lender, as the same may
thereafter from time to time be supplemented, amended, modified or extended.
"PLANS" means, collectively, the final plans, drawings and
specifications for the construction of the Required Improvements prepared by the
Architect (and other applicable design professionals, including any structural
and mechanical engineers) as required under this
Agreement,
and in compliance (and certified by the applicable design professional to be in
compliance) with all Legal Requirements and approved by each appropriate
Governmental Authority including, (i) the architectural, structural, foundation
and elevator plans and specifications prepared or to be prepared, and certified
as correct and complete, by the Architect, (ii) the mechanical, electrical,
plumbing and fire protection plans and specifications prepared or to be
prepared, and certified as correct and complete, by the engineer retained or to
be retained by the General Contractor or the Architect or any other Engineer and
(iii) other plans and specifications prepared or to be prepared by Borrower or
Manager and Borrower's or Manager's other architects, engineers and contractors,
in each case, as reasonably approved in writing by Lender and Lender's
Construction Consultant, together with all Change Orders applicable thereto,
provided that if such Change Order constitutes a Material Change Order, such
Material Change Orders have been approved in writing by Lender in accordance
with Section 7.6, which Plans shall include a description of the materials,
equipment and fixtures necessary for the construction of the Required
Improvements.
"PREMISES" means the Land and all Improvements now or hereafter existing
thereon.
"PUNCHLIST ITEMS" means, collectively, minor or insubstantial
details of construction, decoration, mechanical adjustment or installation, the
non-performance of which does not prevent
the use and occupancy of the Premises for its intended purposes.
"REQUEST FOR ADVANCE" means a request by Borrower or Manager to
Lender in the form of Exhibit C fully completed and certified by a duly
authorized representative of Borrower or
Manager.
"REQUIRED IMPROVEMENTS" means the Improvements, consisting of a
senior housing and/or assisted living facility and related facilities and
amenities, to be constructed on the Land in
accordance with the Plans and all Legal Requirements.
10
"RETAINAGE" means with respect to the Construction Agreement an
amount equal to the greater of (i) an amount equal to ten percent (10%) of the
total payments on account of Hard Costs incurred pursuant to the Construction
Agreement with respect to the construction of the Required Improvements as of
the date of the requested Advance until payments have been made in an amount
equal to fifty percent (50%) of the payments required to be made (inclusive of
any Retainage amount) with respect to the Construction Agreement, and thereafter
no amount shall be retained, or (ii) the aggregate amount permitted to be
withheld or, if greater, actually withheld, under the Construction Agreement as
of such date, subject, however, to adjustment in the case of Punchlist Items as
provided in Section 2.2(b).
"SECURITY DOCUMENTS" means, collectively, this Agreement, the
Mortgage, the Assignment of Leases, the Assignment of Agreements and all other
Loan Documents which grant Lender a security interest or other Lien or
encumbrance in any Collateral or any other
property.
"SOFT COSTS" means, collectively, all costs and expenses set
forth in the Budget which are denominated in the Budget as "Soft Costs" or "SC."
"SUBSTANTIAL COMPLETION" means (i) the substantial completion,
free of Liens (other than Permitted Encumbrances), of the construction of the
Required Improvements (other than the completion of Punchlist Items) in
compliance with all Legal Requirements and the Plans (as certified by the
Architect on standard AIA forms), such compliance and absence of Liens to be
evidenced to the reasonable satisfaction of Lender upon the advice of the
Lender's Construction Consultant; and (ii) the issuance of a final and
unappealable permanent certificate of occupancy and all other Operating Permits
which are in full force and effect for the Required Improvements; and (iii) all
Costs and other costs and expenses incurred in connection with the Required
Improvements have been paid in full or are available from the undisbursed Loan
proceeds or Deficiency Collateral.
"SUBSTANTIAL COMPLETION DATE" means the day which is five (5)
Business Days after the date on which Borrower or Manager shall have delivered
to Lender evidence reasonably
satisfactory to Lender that Substantial Completion has occurred.
"SURVEY" means a current as-built survey of the Premises prepared
by an Independent surveyor licensed by the State and certified to Lender and the
Title Insurer, in form and substance satisfactory to Lender, and prepared in
accordance with the Minimum Standard Detail Requirements for ALTA/ACSM Land
Title Surveys meeting the Accuracy Standards of an Urban Survey, with accuracy
and precision requirements modified to meet current angular and linear tolerance
requirements of the State, showing the legal (and if applicable, the metes and
bounds) description and street address of the Premises; all visible or recorded
easements, building lines, curb cuts, and party walls; all parking, sewage,
water, electricity, gas and other utility facilities, together with recording
information concerning the documents creating any such easements and building
lines; stating the net, after deduction of land dedicated or used or subject to
easements for roads, highways, fire lanes, utilities, storm drains or any other
public purpose, and gross area of the Land; and including the following Table A
items: 1, 2, 3, 4, 6, 7(a), 7(b)(1), 8, 10, 11 and 13.
11
"TITLE CONTINUATION" means an endorsement to the Title Policy
indicating that, since the last preceding Advance, there has been no change in
the state of title to the Premises and no Liens or survey exceptions other than
Permitted Encumbrances approved by Lender, which endorsement shall affirmatively
insure that no mechanic's or supplier's Liens have attached, all of which shall
have the effect of continuing the Title Policy, and insuring the continued
priority of the Lien of the Mortgage, to the date of such Advance and increasing
the coverage of the Title Policy by an amount equal to the Advance then being
made if the Title Policy does not by its terms provide for such an increase. If
available, such Title Continuation shall contain affirmative insurance that
neither public nor private conditions, covenants or restrictions, if any,
affecting the Premises have been violated and that all Taxes are current.
"TITLE INSURER" means Chicago Title Insurance Company, First
American Title Insurance Company and any reinsurer reasonably required by Lender
and/or any other national recognized title insurance company acceptable to
Lender in Lender's discretion; provided, however, that the reinsurer of any
Title Insurance Policy may include, in amounts reasonably acceptable to Lender,
and Chicago Title Insurance Company, First American Title Insurance Company, and
Commonwealth Land Title Insurance Company.
"TRADE CONTRACT" means any contract or purchase order between
either Borrower or Manager or an Affiliate of Borrower or Manager, or the
General Contractor, and any other Person pursuant to which such Person agrees to
provide labor, materials, equipment or services in connection with the
construction of the Required Improvements excluding, however, from this
definition of Trade Contract, the Architect's Agreement, the Engineer's
Agreement, the Construction Agreement, the Development Agreement, Management
Agreement and any other agreements pertaining solely to testing and engineering
and other professional services.
"TRADE CONTRACTOR" means any contractor or supplier, as the case may be,
under a Trade Contract.
"UNAVOIDABLE DELAY" means any delay or number of delays, not
exceeding ninety (90) days in the aggregate, due to conditions beyond the
control of Borrower or Manager, including, strikes, labor disputes not specific
to the work at the Premises, acts of God, the elements, enemy action, civil
commotion, fire, casualty, accidents, shortages of, or inability to obtain,
labor, utilities or material; provided, however, that any lack of funds shall
not be deemed to be a condition beyond the control of Borrower or Manager. Such
delay shall not automatically result in a day for day extension of any time
limits provided in this Agreement. Rather, after the occurrence of any such
delay Borrower or Manager shall use its best efforts to make up such delay to
the extent possible. Any such delay shall only be allowed for the lesser of
ninety (90) days, or such shorter period that Lender reasonably determines would
have resulted had such efforts been made.
12
ARTICLE II
THE LOAN
SECTION 2.1 MAXIMUM PRINCIPAL AMOUNT. Subject to the conditions
and upon the terms herein provided, Lender agrees to lend to Borrower and
Borrower agrees to borrow from Lender, in installments, a maximum aggregate
principal amount of Twenty-Four Million Two Hundred Fifty Thousand and 00/100
Dollars ($24,250,000) or such lesser amount as shall be available pursuant to
the terms of this Agreement (the "LOAN"). The Loan is the "Initial Loan"
referred to in the Loan Agreement. The Loan shall be repaid with interest, costs
and charges as more particularly set forth in the Loan Agreement, the Note and
the other Loan Documents.
SECTION 2.2 PAYMENT OF BUDGET COSTS; ADVANCES.
(a) GENERALLY.
(i) Budget Costs shall be paid by Borrower (A) first, from
the Initial Equity Investment until the Initial Equity Investment has
been fully expended to pay Budget Costs; and (B) next, subject to the
provisions of Sections 2.2(b) and 3.7, from Advances made by Lender.
(ii) Subject to the other terms and conditions of this
Agreement, Advances shall be made (A) in accordance with Requests for
Advance submitted by Borrower or Manager upon satisfaction of the
conditions precedent set forth in Articles IV and V of this Agreement
and (B) on the basis of (x) the Line Items specified in the Budget and
(y) the documented cost of work in place and performed and services
provided, or to the extent provided in Section 3.5, materials stored on
the Premises or deposits made, in each case as such cost is determined
by Lender in its reasonable discretion as provided in this Agreement;
provided, that Lender shall at no time be obligated to disburse (1) any
proceeds of the Loan for work performed, materials furnished or services
provided under Construction Documents that are not fully executed and
delivered or (2) an amount which, when added to all previous Advances,
would exceed the product of the then percentage of completion (as
determined by Lender's Consultant) of the Required Improvements
multiplied by the maximum amount of the Loan. The calculation of any
Advance shall account for Retainage as provided for in Section 2.2(b).
(iii) The proceeds of the Loan shall be advanced from time to
time on Eurodollar Business Days by transfer of such funds by Lender to
Manager's Disbursement Account or in such other manner as Lender and
Borrower or Manager may agree. Specifically, at Borrower's or Manager's
request, Lender shall make Advances directly to the Title Insurer
pursuant to an escrow agreement between Lender, Title Company and
Manager and/or Borrower, approved by Lender and providing for either (A)
the return of the Advance to Lender (which Lender will deposit in the
Cash Collateral Subaccount) if the Title Continuation cannot be issued
or (B) the disbursement of the Advance to the
13
Manager's Disbursement Account simultaneously with the delivery to
Lender of the Title Continuation. Neither Borrower nor Manager shall
deposit any other funds into Manager's Disbursement Account other than
sums sufficient to pay the administrative costs of such account.
Advances shall be made, in the case of the Initial Advance, upon
satisfaction of the conditions precedent set forth in Article IV and in
the case of any Advance made after the Initial Advance, upon
satisfaction of the conditions set forth in Article V, except to the
extent that Lender may elect to waive any of such conditions precedent.
(iv) Notwithstanding anything to the contrary contained in
this Agreement or in the other Loan Documents, in no event shall Lender
be obligated to make any Advance (other than Advances relating to
Punchlist Items and Retainage) after (A) as applicable, the Advance
Termination Date or the Operating Deficits Advance Termination Date or
(B) the occurrence of a Default or Event of Default (unless waived by
Lender in writing).
(b) RETAINAGE. The amount of Loan proceeds on account of any
Advance or portion thereof allocable to any Hard Costs shall be reduced by the
Retainage applicable to such Hard Costs. The portion of the Retainage being held
by Lender with respect to work or materials supplied by the General Contractor
will not be disbursed prior to a determination by Lender that (i) the General
Contractor has substantially completed all of the work and/or supplied all of
the materials in compliance with the General Contractor's contract and in
conformity with the Plans and this Agreement, (ii) the General Contractor will
be paid in full upon the disbursement of the portion of the Retainage being held
with respect to the General Contractor, (iii) the General Contractor or such
Trade Contractor, as applicable, executes and delivers all Lien waivers which
may be reasonably requested or required by Lender or by the Title Insurer to
induce the Title Insurer to insure the Lien of the Mortgage against any
mechanic's or materials supplier's Lien which may be filed by the General
Contractor or such Trade Contractor, as applicable, and (iv) if required by
Lender, such disbursement of such portion of the Retainage shall be approved by
any surety company which has issued a payment or performance bond with respect
to the General Contractor. The Release of any such Retainage shall be further
subject to the continued retention of Retainage for applicable Punchlist Items
in an amount equal to 200% of Lender's reasonable estimate of the cost of
completion of such Punchlist Items. Retainage with respect to any such Punchlist
Items shall be disbursed by Lender from time to time, upon completion of such
Punchlist Items to the reasonable satisfaction of Lender. Notwithstanding any
other provision contained herein, in no event will Lender be required to
disburse any funds on account of Retainage prior to the earlier to occur of (A)
the time such sums are payable pursuant to the Construction Agreement, or (B)
within thirty (30) days after the work to be performed under the Construction
Agreement is completed to Lender's satisfaction.
(c) ADVANCE UPON C/O. Upon the issuance of a permanent
certificate of occupancy for the Required Improvements, Lender may (but shall
have no obligation to) make an Advance in an amount equal to the then unadvanced
amount of the Loan (subject to Retainage in respect of Punchlist Items as
provided in subsection (b) above and Operating Deficits to be advanced pursuant
to Section 3.11).
14
ARTICLE III
ADVANCES FOR CONSTRUCTION
SECTION 3.1 REQUESTS FOR ADVANCE UNDER THE LOAN.
(a) GENERALLY. Each Request for Advance (together with the
materials required to be submitted therewith pursuant to Sections 3.1(b),
3.1(c), 3.5 and 5.3) shall be submitted to Lender and Lender's Representatives
not less than ten (10) Business Days prior to the date proposed for such Advance
in the Request for Advance. Each Request for Advance shall specify (i) the Hard
Costs and Soft Costs to be paid from the proceeds of the requested Advance and
(ii) the amount of any Retainage previously withheld and which has then become
payable pursuant to Section 2.2(b). The Request for Advance shall also include a
request for any disbursements from the Deficiency Account, with supporting
documentation describing in reasonable detail the basis for any such
disbursements. The Initial Advance shall be accompanied by the Architect's
Consent and Agreement and subsequent Advances shall be accompanied by the
Architect's Update Letter. Provided, however, if there is a Default or Lender
otherwise reasonably determines that there has been a change in the condition,
progress or other status of the construction which requires an Architect's
Certificate, Lender may request that such Architect's Certificate be provided as
a condition to a subsequent Advance.
(b) ADVANCE FOR HARD COSTS. Each Request for Advance which
requests payment for Hard Costs shall be accompanied by the following:
(i) the General Contractor's requisitions for a
disbursement which shall be on AIA Forms G702 and G703 or in another
form approved by Lender, each of which shall be certified as true and
complete by Borrower or Manager, the General Contractor and Architect
and shall be verified by Lender's Construction Consultant;
(ii) evidence reasonably satisfactory to Lender that the
full amount of the portion of the proceeds of the previous Advance made
pursuant to this Section 3.1(b) has been paid by Borrower or Manager or
the General Contractor to the Persons specified on the previous Request
for Advance in accordance with this Agreement, which evidence shall
include (A) detailed receipts for payment itemized by Line Item and (B)
an absolute, unconditional waiver of Lien with respect to the previous
Advance from the General Contractor and all Trade Contractors, all
subcontractors and all other Persons who were paid from the proceeds of
such Advance, dated on or about the date of the current Request for
Advance, covering all work done and all sums received through the date
of Borrower's or Manager's previous Request for Advance and noting that
the only amounts due and owing (other than any Retainage) are the
amounts to be paid to such Persons out of the Advance being requested
pursuant to the current Request for Advance, each of which shall be
certified as true and complete by Borrower or Manager and the General
Contractor and shall be verified by Lender's Construction Consultant;
15
(iii) a list of all Trade Contracts executed since the date
of the previous Request for Advance, together with a statement by
Borrower or Manager and the General Contractor that copies of the
current Trade Contracts have been submitted to Lender's Construction
Consultant prior to the date of such Request for Advance;
(iv) a list of all executed Change Orders entered into or
requested by Borrower or Manager, a statement by Borrower or Manager
that copies of the same have been submitted to and approved by Lender's
Construction Consultant, if required pursuant to Section 7.6, prior to
the date of the current Request for Advance, and a list of all
contemplated Material Change Orders; and
(v) evidence reasonably satisfactory to Lender that
Borrower has funded and applied the Initial Equity Investment, all other
prior Equity Payments and all prior
Advances in accordance with this Agreement.
(c) ADVANCES FOR SOFT COSTS. Any Request for Advance to pay any
Soft Cost, other than an Operating Deficits Funding Request, shall be
accompanied by such additional supporting evidence (the "SOFT COST SUPPORTING
DOCUMENTATION") as Lender shall reasonably request to demonstrate that (i) such
costs have been properly incurred, are due and payable and are within budgeted
amounts, (ii) the full amount of the portion of the proceeds of the previous
Advance made pursuant to this Section 3.1(c) has been paid out by Borrower, or
Manager or the General Contractor to the Persons specified on the previous
Request for Advance in accordance with this Agreement and (iii) Borrower or
Manager has funded and applied the Initial Equity Investment, all other prior
Equity Payments and all prior Advances in accordance with this Agreement.
SECTION 3.2 FREQUENCY OF ADVANCES. Advances shall be made no more
frequently than one Advance per calendar month; provided, however, Lender may
waive any and all conditions precedent to the making of an Advance and, after
the occurrence, and during the continuance, of an Event of Default, may make an
Advance in order to pay interest or other sums due to Lender pursuant to the
Loan Documents or for the purpose of making payments of the nature referred to
in Section 3.8 or otherwise pursuant to Lender's exercise of its remedies under
the Loan Documents.
SECTION 3.3 PARTIAL ADVANCES. If any or all conditions precedent
to making an Advance have not been satisfied on the date requested for such
Advance, Lender may, at its option, (a) waive so many of such conditions
precedent as Lender may elect, and/or (b) disburse only that portion of the
requested Advance for which all of the conditions precedent have
been satisfied.
SECTION 3.4 USE OF ADVANCES. Each Advance made to Borrower or
Manager shall be received, held and used by Borrower or Manager to pay for Hard
Costs and Soft Costs, as the case may be, which were specified on the related
Request for Advance.
16
SECTION 3.5 ADVANCES FOR MATERIALS AND DEPOSITS.
(a) STORED MATERIALS. Advances for materials stored at the Premises shall
be made, in the amount of the documented cost to Borrower or Manager of such
materials, strictly in accordance with the following terms and conditions:
(i) Borrower or Manager shall deliver to Lender bills of
sale or other evidence reasonably satisfactory to Lender of the cost of,
and Borrower's title in and to, such materials;
(ii) Borrower or Manager shall deliver to Lender evidence
reasonably satisfactory to Lender that (A) security measures have been
taken to protect such materials from theft, casualty or deterioration,
(B) such materials are finished products that are ready to be
incorporated into the Premises and (C) such materials are then intact
and undamaged;
(iii) Borrower or Manager shall provide proof satisfactory to
Lender that such materials are insured against all risk of loss for
their full replacement cost and that such insurance contains a standard
mortgagee loss payable endorsement; and
(iv) The aggregate cost of materials stored on the Premises
and not affixed thereto at any one time shall not exceed $750,000,
exclusive of HVAC chillers.
If any such materials are stolen, lost or in any other manner misplaced,
destroyed or rendered unusable prior to the making of an Advance with respect
thereto, Lender shall not be obligated to make any Advance with respect thereto
or on account of the cost of replacement thereof.
(b) DEPOSITS. Advances may be made for deposits placed with
suppliers or for materials in fabrication, or for materials stored off site, in
Lender's discretion and if so, subject to
such terms and conditions as Lender may reasonably determine.
SECTION 3.6 REALLOCATION.
(a) COST SAVINGS. Borrower or Manager, by notice to Lender, may
reallocate to any Line Item all or any portion of any Cost Savings then not
previously reallocated; provided, however, that in no event may Borrower or
Manager allocate any Cost Savings with respect to a Line Item of Hard Costs to a
Line Item of Soft Costs, unless Lender has approved such reallocation in
writing, which approval shall not be unreasonably withheld or delayed, and such
reallocation will not adversely affect the priority of the Lien of the Mortgage
(and, in requesting any such approval, Borrower or Manager shall so certify to
Lender). Upon any such reallocation of all or any portion of any such Cost
Savings to any Line Item, the amount of such Cost Savings shall no longer be
deemed "Cost Savings" hereunder, but shall be deemed to be part of the Line Item
to which such amount was reallocated. As used in this Loan Agreement, "COST
SAVINGS" shall mean and be determined as follows:
17
(i) If Lender determines, in Lender's reasonable
discretion, that the component of the construction of the Required
Improvements which is the subject of a Line Item (a "LINE ITEM
COMPONENT") has been completed without the expenditure of the entire
amount allocated in the Budget to such Line Item, and the General
Contractor and all Trade Contractors, subcontractors and other Persons
have been paid in full for work performed and materials provided with
respect to such Line Item Component, the difference between the amount
of such Line Item in the Budget and the amount so expended for such Line
Item shall be deemed to be a "COST SAVING"; or
(ii) If prior to the completion of the Line Item Component
(other than the Line Item for interest or the Contingency Line Item),
Borrower or Manager shall demonstrate to Lender's reasonable
satisfaction that, upon completion of such Line Item Component, a Cost
Saving will be realized pursuant to clause (i) above with respect to
such Line Item Component, the amount of such Cost Saving which is
demonstrated to Lender's satisfaction shall be deemed to be a "COST
SAVING".
(b) CONTINGENCY. Borrower or Manager, after notice to and
approval by Lender, which shall not be unreasonably withheld or delayed, may
reallocate to any Line Item the amount of any portion of the Contingency Line
Item which has not previously been reallocated to any other Line Item. In giving
or withholding such approval, Lender may take into account the then current
state of completion of the Required Improvements, any existing Cost overruns and
any potential Cost overruns as may then be foreseen or anticipated by Lender.
Lender shall not unreasonably withhold such approval for the reallocation of (i)
up to the first fifty percent (50%) of the Contingency Line Item, or (ii) any
amounts of the Contingency Line Item which will not cause the percentage of the
Contingency Line Item utilized through such date to exceed the percentage of the
Budget expended through such date, but may withhold such approval in its
discretion for any other reallocation. To the extent that the Contingency Line
Item is not reallocated pursuant to this Section 3.6(b), it shall be used solely
for Hard Costs of a type not included in any Line Item in the Budget and not
contemplated by the original Plans. The "CONTINGENCY LINE ITEM" shall mean the
Line Item in the Budget identified as "Contingency", which is intended to cover
the eventuality of unforeseen Costs or cost overruns.
(c) NEW LINE ITEMS. New Line Items may not be created without
Lender's prior written consent, which shall not be unreasonably withheld; and,
if created with Lender's consent, the Contingency Line Item may not be
reallocated to any such new Line Item, except as provided in Section 3.6(b). To
the extent not paid for by Cost Savings or by so reallocating the Contingency
Line Item, new Line Items must be paid for from Equity Payments other than the
Initial Equity Investment.
SECTION 3.7 LOAN BALANCING.
(a) DEFICIENCY. Lender will not be required to make Advances in
excess of the amount of any Line Item in the Budget unless Cost Savings from
other Line Items or portions of the Contingency Line Item have previously been
reallocated in accordance with Section 3.6, or
18
Equity Payments have been contributed by Borrower or Manager with respect, to
such Line Item, in amounts equal to or greater than such excess over the Budget.
If Lender determines, in its reasonable discretion, that any Deficiency exists,
then Lender will not be obligated to make any Advances after Lender provides
Borrower and Manager notice of such determination, unless and
until Borrower or Manager does any one or more of the following:
(i) establishes to Lender's reasonable satisfaction that,
contrary to Lender's prior determination, there exists no Deficiency;
(ii) reallocates Cost Savings and/or the Contingency Line
Item pursuant to Section 3.6 to eliminate the Deficiency;
(iii) deposits cash ("DEFICIENCY CASH COLLATERAL") with
Lender or Lender's designee as provided in Section 3.7(b) or delivers to
Lender, as beneficiary, one or more clean, irrevocable letters of
credit, reasonably satisfactory to Lender in form and content and as to
the bank or trust company which is the issuer (which issuer must have an
S&P credit rating of "A" or better) (a "DEFICIENCY LETTER OF CREDIT"),
in either case, or in the aggregate, in the amount of the Deficiency.
Any Deficiency Letter of Credit shall have an expiration date not
earlier than 30 days after the Expected Conversion Date, provided that
the expiration date may be one year from its issuance if the letter of
credit provides for a drawing by Lender of the full amount thereof at
any time on or after the thirtieth (30th) day preceding its stated
expiration date; or
(iv) makes one or more payments on account of Hard Costs
and/or Soft Costs (other than from the proceeds of the Initial Equity
Investment or the Loan), until the Deficiency has been eliminated;
(b) DEPOSITS REGARDING DEFICIENCY.
(i) If Borrower or Manager deposits Deficiency Cash
Collateral with Lender, Lender shall deposit same in an interest bearing
account in the name of Lender at an institution selected by Lender (the
"DEFICIENCY ACCOUNT").
(ii) Until all Obligations have been repaid in full,
Borrower and Manager shall have no right to any Deficiency Cash
Collateral on deposit in the Deficiency Account except, so long as no
Event of Default exists, (A) to fund a Deficiency pursuant to this
Section 3.7 or (B) to make a disbursement pursuant to Section
3.7(b)(iii). Until expended or applied as provided herein, any amounts
in the Deficiency Account, together with any interest thereon, shall
constitute additional security for the Obligations. At any time
following the occurrence, and during the continuance, of an Event of
Default, Lender may apply any funds on deposit in the Deficiency Account
as set forth in Section 8.5. Any Deficiency Letter of Credit shall be
held by Lender and may be drawn at any time within thirty (30) days
prior to the expiration thereof or upon the occurrence and during the
19
continuance of an Event of Default, whereupon the proceeds of the
Deficiency Letter of Credit shall be treated as Deficiency Cash
Collateral for all purposes.
(iii) If after the deposit of any Deficiency Cash Collateral,
but prior to disbursement thereof, or after the delivery of a Deficiency
Letter of Credit, but prior to the draw of all proceeds thereof,
Borrower or Manager shall establish to Lender's reasonable satisfaction
that, due to a change in circumstances, the amount of the Deficiency
Cash Collateral or the Deficiency Letter of Credit exceeds the
Deficiency, then, promptly following the request of Borrower or Manager
and provided no Default or Event of Default shall then exist, such
Deficiency Cash Collateral, up to the amount of such excess, shall be
disbursed to Borrower or Manager or the amount of any Deficiency Letter
of Credit, up to the amount of such excess, may be reduced.
(iv) Any disbursement from the Deficiency Account or any
drawdown of any Deficiency Letter of Credit by Lender shall be deemed to
constitute Equity Payments
by Borrower.
SECTION 3.8 DIRECT ADVANCES. Upon Borrower's or Manager's
request, or upon the occurrence of a Default, Lender shall have the right (but
no obligation) to make any or all Advances directly to the General Contractor,
the Trade Contractors or any other Person to whom payment is due. Such direct
Advances may be made by deposit in a bank account to be designated by Lender
which may be controlled by the General Contractor, by a Trade Contractor or by
such other Person, in each case individually or jointly with Lender, as Lender
may elect. Such direct Advances also may be made by check payable to the Person
to whom an Advance is to be made. The execution of this Agreement by Borrower
and Manager shall, and hereby does, constitute an irrevocable direction and
authorization to so disburse the Loan proceeds. No further direction or
authorization from Borrower or Manager shall be necessary or required for such
direct Advances and all such Advances shall satisfy pro tanto the obligations of
Lender hereunder and shall be secured by the applicable Loan Documents as fully
as if made directly to Borrower, regardless of the disposition thereof by the
General Contractor, any Trade Contractor or any other Person.
SECTION 3.9 ADVANCES FOR OBLIGATIONS. Proceeds of the Loan may be
used to pay interest and any other sums due and payable with respect to the Loan
or pursuant to any Loan Documents, subject to the terms and conditions of this
Agreement, including, the availability in the Budget of Loan proceeds.
Notwithstanding anything in this Agreement which may be to the contrary, Lender
shall at all times have the right (but not the obligation), by its own action,
to make Advances for the purpose of paying fees and any other sums then due and
payable to Lender with respect to the Loan or pursuant to the Loan Documents.
Lender shall provide Borrower and Manager with invoices indicating those
Advances made to or on behalf of Lender, but Lender's failure to provide such
invoices shall not prevent or impair Lender's ability to make such Advance.
SECTION 3.10 INTEREST ADVANCES. During the period during when the
Property is contemplated to experience Operating Deficits, Lender shall make
Advances to pay interest on the Loan in the amounts and at such times as
required pursuant to the terms of the Loan
20
Agreement. Lender shall provide Borrower and Manager with an invoice indicating
the amounts advanced from the interest reserve on account of such interest
payments, but Lender's failure to provide such invoices shall not prevent or
otherwise impair Lender's ability to make such
Advance.
Subject to the satisfaction of the conditions for Advances provided in this
Agreement, Advances for interest will be advanced automatically by Lender to
itself on each Payment Date in each month prior to the calendar month in which
Substantial Completion occurs and Lender shall apply such Advances to the
payment of interest then due under the Note. The failure by Lender to make any
such Advance shall not affect the obligations of Borrower under the Note and the
other Loan Documents other than the obligation to pay interest. Lender shall
have no obligation to make any Advances with respect to interest after the
occurrence of and during the uncured continuance of an Event of Default and
Borrower shall be obligated to make out-of-pocket payments of interest to Lender
at such time. Notwithstanding anything to the contrary contained in this
Agreement, the total cumulative aggregate amount of all Advances to pay interest
shall in no event exceed the amount provided in the Budget (unless there is a
reallocation under Section 3.6(b)) and Borrower or Manager shall be required to
contribute Equity Payments to fund any excess interest over such amount. To the
extent such amount has not been exceeded, Lender may, in its discretion, make
additional Advances on account of interest payments after Substantial Completion
but prior to the Conversion Date.
SECTION 3.11 OPERATING DEFICITS ADVANCES.
(a) REQUISITION PROCEDURE. During the period when the Property is
contemplated under the Budget to experience Operating Deficits, Borrower or
Manager may submit to Lender, not more frequently than monthly, Operating
Deficits Funding Requests for Advances to fund such Operating Deficits
anticipated for the Applicable Month, accompanied by all other information and
items required to satisfy all of the conditions precedent to such Advance and
other terms and conditions of this Agreement relating to such Advance. Lender
shall either approve or deny the Operating Deficits Funding Request within ten
(10) Business Days after receipt of a complete Operating Deficits Funding
Request, together with all other accompanying information and items required
therewith. Lender must approve any such Operating Deficits Funding Request
unless Lender determines (A) an Event of Default has occurred and is continuing,
(B) the Operating Deficits Funding Request violates the Loan balancing
provisions of Section 3.7, (C) the Operating Deficits Funding Request does not
relate to Approved Operating Expenses, or (D) Lender is not issued a Title
Continuation in the form required under Section 5.3(g). Subject to all of the
other terms and conditions of this Agreement, an Advance with respect to such
Operating Deficits shall be made on the later to occur of the first day of the
Applicable Month or the date of Lender's approval, which will not be
unreasonably withheld or delayed. All Advances with respect to Operating
Deficits will be made by Lender at Manager's election to one of the (a) the
Manager's Disbursement Account, or (b) if applicable, the Title Insurer pursuant
to an escrow agreement approved by Lender and providing for either (i) the
return of the Advance to Lender if the Title Continuation cannot be issued
(which Lender will deposit in the Cash Collateral Subaccount), or (ii) the
disbursement of the Advance to the Manager's Disbursement Account simultaneously
with the delivery to Lender of the Title Continuation. Borrower or Manager
shall, in connection with the Operating Deficits Funding Request submitted for
the second month following the Applicable
21
Month, prepare and submit to Lender a reconciliation certifying the amount by
which the actual Operating Deficits for the Applicable Month differed from the
Advance made by Lender on account of Operating Deficits for such Applicable
Month. The reconciliation shall be subject to review by Lender to confirm the
accuracy of the calculation therein and to confirm (through such verification as
Lender may reasonably require including review of bank account statements and
invoices) that Borrower or Manager have actually made such expenditures with
respect to Operating Deficits in the Applicable Month. Lender, upon approving
such reconciliation, shall adjust the amount of the Advance on account of
Operating Deficits to made with respect to the next occurring Applicable Month.
The total cumulative amount of all Advances made with respect to Operating
Deficits shall in no event exceed the amount specified in the Budget (unless
there is a reallocation under Section 3.6(b)) and Borrower or Manager shall be
required to fund any excess over such amount. Operating Deficits Advances with
respect to any Applicable Month shall not exceed ten percent (10%) of the amount
of Operating Deficits projected in the Budget for such Applicable Month.
Lender's obligation to make Advances with respect to Operating Deficits shall
terminate on the Operating Deficits Advance Termination Date.
(b) REALLOCATION. Notwithstanding the provisions of Section
3.6(a), Borrower or Manager in making an Operating Deficits Funding Request may
reallocate any amounts between
Line Items without limitation, except:
(i) All Advances must be with respect to Approved Operating Expenses;
(ii) No such reallocation will be allowed if Lender
reasonably determines that such reallocation would have a materially
adverse effect on the business operations at,
or the value of, the Premises;
(iii) No such reallocation will be allowed if it results
in a distribution to an Affiliate or a Person which is not Independent
except as contemplated in the Budget;
(iv) No reallocation will be allowed that would affect the
funding of the Tax and Insurance Escrow Subaccount or the Capital
Reserve Fund; and
SECTION 3.12 NO LIABILITY OF LENDER. All conditions and
requirements of this Agreement relating to the obligations of Lender to make
Advances are for the sole benefit of the parties hereto and no Interested Party
shall have the right to rely on the satisfaction of such conditions and
requirements by Borrower or Manager as a condition precedent to Lender making
any Advance.
SECTION 3.13 ADDITIONAL DOCUMENTS. In connection with each
Advance and as a condition precedent to each Advance, Borrower and/or Manager
shall execute and/or deliver to Lender additions, amendments, modifications and
supplements to the items set forth in Article IV and Article V, or otherwise as
reasonably required by Lender, including any or all of the Loan Documents, and
shall provide Lender with the full benefit of the security intended to be
22
provided under the Loan Documents; provided same will not expand Borrower's or
Manager's liability.
SECTION 3.14 DEEMED REPRESENTATIONS. The making of any Advance
shall constitute, without the necessity of specifically containing a written
statement to such effect, confirmation, representation and warranty by Borrower,
to the extent of Borrower's actual knowledge, without having conducted any
investigation, and by Manager, to Lender that all of the applicable conditions
to be satisfied in connection with the making of such Advance had been satisfied
and that all of the respective representations and warranties of Borrower and
Manager set forth in the Loan Documents are true and correct in all material
respects as of the date of such Advance, except as otherwise disclosed to Lender
in writing prior thereto. The deemed representations under this Section 3.14
shall be deemed made by Borrower only as to Borrower's representations under the
Loan Documents and by Manager only as to Manager's representations under the
Loan Documents.
SECTION 3.15 LENDER'S USE OF INDEPENDENT CONSULTANT; SERVICER.
Borrower and Manager shall permit Lender and Lender's Representatives, on
reasonable notice and at such times as reasonably requested by Lender (a) to
observe the Premises and (b) to observe and review, to the extent not then in
Lender's or Lender's Representatives possession, (i) all of the Change Orders,
(ii) all of the Trade Contracts, other contracts, Plans, notes and other
documents and, to the extent that the same are in Borrower's or Manager's
possession or accessible to Borrower or Manager, subcontracts relating to the
construction of the Required Improvements, and (iii) such other information as
Lender or Lender's Representatives shall reasonably request. All documents
required to be submitted to Lender and Lender's Representatives as a condition
of each Advance shall be furnished to Lender and Lender's Representatives, as
the case may be, at their respective addresses referred to in Section 9.8, or to
such other addresses or the attention of such other Persons as shall be
designated by Lender in a notice to Borrower and Manager. Any request for
documentation which Lender has the right to make under this Agreement may also
be made by the Servicer.
ARTICLE IV
CONDITIONS PRECEDENT TO MAKING THE INITIAL ADVANCE
Lender shall not be obligated to make the Initial Advance
hereunder unless, in addition to the conditions set forth in Article III, (which
have not been waived in writing by Lender) the following conditions shall have
been satisfied in Lender's reasonable discretion, except to the extent that
Lender may elect in writing to waive any such conditions:
SECTION 4.1 REPRESENTATIONS AND WARRANTIES. The representations
and warranties made by Borrower and Manager in Article VI of this Agreement,
Article IV of the Loan Agreement and in any other Loan Documents shall be true
and correct, in all material respects, on and as of the date of the Initial
Advance with the same effect as if made on such date.
23
SECTION 4.2 RECEIPT OF ITEMS AND DOCUMENTS BY LENDER. Lender
shall have received and approved the following items and documents, duly
executed and in recordable form where applicable, in each case in form and
substance reasonably satisfactory to Lender and where applicable, Lender's
Construction Consultant and Lender's Counsel:
(a) the Loan Agreement;
(b) the Initial Note;
(c) the Mortgage;
(d) the Guaranties;
(e) the Assignment of Leases and the Assignment of Agreements;
(f) the Environmental Guaranty;
(g) such UCC-1 Financing Statements as Lender shall deem necessary
to perfect
Lender's security interests in the Collateral;
(h) a paid title insurance policy from the Title Insurer (the
"TITLE INSURANCE POLICY") marked paid in full, in the maximum principal
amount of the Loan, insuring Lender that the Mortgage provides Lender
with a valid first priority Lien on the Premises, and which Title Policy
shall contain (i) no exception for mechanics' or materialmen's liens
except the standard Texas form language for construction loans, but
confirming that no such liens have been filed; (ii) no survey exceptions
other than those approved by Lender; (iii) no exceptions to coverage
other than Permitted Encumbrances, (iv) a pending disbursements clause,
in the form of Exhibit I; (v) such coinsurance and/or reinsurance
agreements in amounts and with companies as Lender reasonably may
require; (vi) an ALTA 9 or similar comprehensive endorsement (if
available in the State); (vii) such other endorsements or affirmative
insurance as Lender may reasonably require; (viii) a fully executed copy
of a customary title instruction letter from the Title Insurer and (ix)
coverage with respect to the Subordinate Mortgage for an amount equal to
(A) the amount of the Other Loans secured by the Subordinate Mortgage,
if an appropriate tie-in endorsement is available between or among the
policies insuring the Subordinate Mortgage and the first mortgages on
Other Properties securing the related Other Loans, or (B) if no such
tie-in endorsement is available in the State, such insurance as
reasonably satisfactory to Lender in its discretion.
.
(i) Lender shall have received satisfactory UCC reports (the "UCC
Searches"), federal tax lien, bankruptcy, state tax lien, judgment and
pending litigation searches conducted by a search firm reasonably
acceptable to Lender. Such searches shall have been received in relation
to Borrower and each owner of an equity interest in Borrower and any
affiliate of Borrower. Such searches shall have been conducted in each
of the locations designated by Lender in Lender's reasonable discretion
and shall have been dated not more
24
than fifteen (15) days prior to the Closing Date. Such searches shall
indicate that there are no conditional sales contracts, chattel
mortgages, leases of personalty, financing statements, judgments or
other litigation filed and/or recorded against Borrower, the Premises or
any other Collateral, other than Permitted Encumbrances;
(j) an original Survey of the Premises dated as of a date within
thirty (30) days
prior to the Closing Date;
(k) copies of (i) a transaction authorization executed by the
Borrower Owners authorizing Borrower's execution of this Agreement and
the other Loan Documents to which Borrower is party and Borrower's
performance of all of its obligations thereunder, (ii) the Borrower
Entity Agreement and all amendments thereto, (iii) the limited
partnership agreement of Borrower, and Borrower's certificate of limited
partnership, as filed in the appropriate governmental office(s), and
(iv) a certificate of existence for Borrower issued by the Secretary of
State of the state of Borrower's formation, all of which shall be
certified as true, correct and complete by the Borrower Representative;
(l) copies of (i) resolutions of the Board of Directors and
shareholders of the Borrower Representative authorizing the execution by
the Borrower Representative of this Agreement and the other Loan
Documents to which Borrower is a party, certified as true, correct and
complete by the Secretary of the Borrower Representative, (ii)
incumbency certificates of the officers of the Borrower Representative,
(iii) the certificate of incorporation of the Borrower Representative,
which shall be certified as being true, correct and complete by the
Secretary of State of the state of the Borrower Representative's
formation and the Secretary of the Borrower Representative, (iv) the
by-laws of the Borrower Representative, which shall be certified as
true, correct and complete by the Secretary of the Borrower
Representative, and (v) a good standing certificate and a certificate of
good standing for the Borrower Representative issued by the Secretary of
State of the state of the Borrower Representative's formation;
(m) copies of (i) resolutions of the Board of Directors of the
Guarantor authorizing the execution by the Guarantor of the Guaranties
and any other Loan Documents to which the Guarantor is party, certified
as true, correct and complete by the Secretary of the Guarantor, (ii)
incumbency certificates of the officers of the Guarantor, (iii) the
certificate of incorporation of the Guarantor, which shall be certified
as being true, correct and complete by the Secretary of State of the
state of its formation and the Secretary of the Guarantor, (iv) the
by-laws of the Guarantor, which shall be certified as true, correct and
complete by the Secretary of the Guarantor, and (v) a good standing
certificate for the Guarantor issued by the Secretary of State of the
state of the Guarantor's formation;
(n) copies of (i) authorization by the general partner of Manager
authorizing the execution by the Manager of this Agreement, the
Development Agreement, the Management Agreement and any other Loan
Documents to which the Manager is party, certified as true, correct and
complete by the general partner, secretary or other applicable officer
of Manager, (ii) incumbency certificates of the general partner of
Manager, (iii) the certificate
25
of limited partnership of Manager which shall be certified as being
true, correct and complete by the Secretary of State of the state of its
formation, (iv) the partnership agreement of Manager, which shall be
certified as true, correct and complete by the general partner of
Manager, (v) a good standing certificate for Manager and the general
partner of Manager issued by the Secretary of State of the state of
Manager's formation, and (vi) a certificate of qualification to do
business in the State for Manager and the general partner of Manager
issued by the Secretary of State of the State;
(o) opinions of counsel for Borrower and Guarantor, including a
bankruptcy non -consolidation opinion as to Borrower only. All such
legal opinions will be addressed
and delivered to both Lender and the Rating Agencies;
(p) payment of Lender's Counsel Fees, the fees of Lender's
Construction Consultant relating to the Loan, and all other
out-of-pocket expenses of Lender relating to the Loan to the extent the
foregoing are then due and payable;
(q) payment in full of the Structuring Fee payable at Closing pursuant to
the Loan Agreement;
(r) payment of the Draw Fee due with respect to the Initial
Advance pursuant to the Loan Agreement;
(s) the financial statements of the Guarantor referred to in the
Guaranties;
(t) the Environmental Report;
(u) the Policies then required to be in effect and delivered
pursuant to the Loan Agreement, together with evidence that (i) all such
Policies then have a term of at least one year from the date issued;
(ii) the premiums for such unexpired term have been paid in full; and
(iii) such Policies are in full force and effect;
(v) evidence of errors and omissions insurance carried by the
Architect, the Engineer, if any, and all engineers retained by the
General Contractor or the Architect to provide engineering services in
connection with the construction of the Required Improvements, or any
portion thereof, evidence of the maintenance of the insurance required
to be maintained by each General Contractor under the Construction
Agreement and a draft binder of the insurance to be maintained by the
General Contractor under the Construction Agreement;
(w) a letter or report of Lender's insurance consultant concerning
Borrower's compliance with the requirements of the Mortgage as to
insurance and such other matters
pertaining to insurance as Lender may request;
(x) evidence that all utilities (including, electric, gas, water,
drainage and sewage systems) which are necessary and required during the
construction of the Required
26
Improvements have been or will be completed and available in such a
manner as to assure Lender that construction of the Required
Improvements will be completed on or before the
Outside Completion Date;
(y) evidence that Borrower or Manager has paid all real estate
Taxes on, and assessments of, the Premises which are due and payable
and, if delinquent, all penalties and interest thereon;
(z) the Plans;
(aa) copies of all ground leases, space leases, licenses, easements
or other agreements or instruments pertaining to the Premises and all
other documents listed as exceptions to title in the Title Policy;
(bb) a copy of the Management Agreement, certified as true, correct and
complete by Borrower and Manager;
(cc) a copy of the Development Agreement, certified as true, correct and
complete by Borrower and Manager;
(dd) copies of the Property Option Agreement and the Equity Option
Agreement, certified as true, correct and complete by Borrower and Guarantor;
(ee) copies of the Construction Agreement, the Architect's Agreement and
the Engineer's Agreement, if any, each certified by Borrower and/or Manager to
be true and complete;
(ff) the General Contractor Consent and Agreement;
(gg) the Architect Consent and Agreement;
(hh) the Engineer's Consent and Agreement, if Borrower or Manager engages
an Engineer;
(ii) a copy of each Trade Contract in effect on the Closing Date,
and all other contracts to which Borrower, Manager or the General
Contractor then is a party (either directly or through an Affiliate)
relating to the construction of the Required Improvements or the
furnishing of labor, materials, furniture, furnishings, equipment or
services for the construction of the Required Improvements, each
certified by Borrower, Manager or the General Contractor to be true and
complete;
(jj) intentionally omitted;
(kk) intentionally omitted;
27
(ll) Bonds with respect to the General Contractor;
(mm) a copy of the Construction Schedule;
(nn) copies of all Construction Permits in existence and other
evidence that other governmental approvals necessary for the
construction of the Required Improvements are obtainable by
non-discretionary administrative procedures without the need for any
variance or waiver, whether through public hearing or otherwise, of
applicable zoning ordinances, land use regulations, building codes or
similar governmental laws and regulations;
(oo) a copy of each agreement with any Governmental Authority
pertaining to the Premises and the Required Improvements; provided that
if no such agreements exist and none are required, Borrower or Manager
shall so certify to Lender;
(pp) a certificate from and Independent licensed surveyor or an
insurance broker that the Premises are not located in a flood hazard
plain, Zone A, as indicated on the Maps of the Federal Emergency
Management Agency (or the area of the Premises that is located in a
flood hazard plain docs not impact the Improvements);
(qq) intentionally omitted;
(rr) a Request for Advance with respect to the Initial Advance
together with the related documentation required to be delivered
pursuant to Sections 3.1 (and 3.5 and 5.3, if applicable);
(ss) a Manager's Affidavit;
(tt) intentionally omitted;
(uu) Subject to Section 4.12, Lender's Construction Consultant Report with
respect to the Initial Advance ;
(vv) an update of the appraisal submitted pursuant to the Master Financing
Facility
Agreement, if reasonably requested by Lender;
(ww) a copy of the Budget;
(xx) an agreement with the bank in which the Manager's Disbursement Account
is located, in form and content satisfactory to Lender;
(yy) agreements executed by Manager under the Development Agreement
and the Management Agreement, respectively, pursuant to which Manager
agrees that (i) Lender may terminate the Management Agreement and/or
Development Agreement at any time during the continuation of an Event of
Default, (ii) Manager will at Lender's option
28
following a foreclosure or transfer by deed-in-lieu of foreclosure,
recognize and attorn to Lender or its designee as the successor owner
under the Management Agreement and/or Development Agreement, but without
any liability on the part of Lender or such designee for acts or
omissions of Borrower prior to the date of such foreclosure or transfer
and (iii) Manager's rights under the Management Agreement and under the
Development Agreement are subject and subordinate to the Loan Documents;
(zz) such other documents, instruments, opinions and approvals
(including estoppel certificates) and such reports, certificates,
affidavits and other information, as Lender, or Lender's Representatives
reasonably may require to evidence compliance by Borrower or Manager
with all provisions of this Building Loan Agreement, the Loan Agreement
and all other Loan Documents, and Lender's completion of its customary
due diligence with respect thereto and every other aspect of the
contemplated Loan transaction; and
(aaa) the Premises shall comply in all respects with any and all
Legal Requirements, and no condemnation or casualty shall have occurred
with respect to the Premises.
SECTION 4.3 NO DEFAULT. On the date of the Initial Advance and
after giving effect thereto, no Default or Event of Default shall have occurred
and be continuing.
SECTION 4.4 NO CHANGE. No material part of the Premises shall
have been condemned, or threatened with condemnation or been damaged by any fire
or other casualty, and no other change shall have occurred with respect to the
Premises or the Loan which Lender
determines to be material and relevant.
SECTION 4.5 BORROWER EQUITY. Lender shall have received evidence
that the Initial Equity Investment has been fully expended to pay Budget Costs.
SECTION 4.6 LENDER'S DETERMINATION. On the date of the Initial
Advance, Lender shall have determined the applicable Retainage and that (i) the
work that is the basis for the request for the Initial Advance has been
completed in accordance herewith (ii) there is no Deficiency and (iii)
construction is capable of proceeding in accordance with the schedule set forth
in the Budget and Substantial Completion will occur by the Outside Completion
Date.
SECTION 4.7 ACCOUNTING. Lender shall have received and approved an
accounting of all expenditures for costs shown on the Budget as having been
incurred prior to the Closing Date.
SECTION 4.8 INTENTIONALLY OMITTED.
SECTION 4.9 NO INJUNCTION. No law or regulation shall have been
adopted, no order, judgment or decree of any Governmental Authority shall have
been issued, and no
29
litigation shall be pending or threatened, which in the good faith judgment of
Lender would enjoin, prohibit or restrain, or impose or result in material
adverse effect upon the making or repayment of the Loan or the consummation of
the transactions anticipated and effected by the Loan Documents.
SECTION 4.10 SUBDIVISION. Lender receives satisfactory evidence
(including title endorsements if available) that the Land (a) constitutes a
separate lot for conveyance and real estate tax assessment purposes or (b) will
constitute such separate lot at the time of Substantial Completion, in which
case appropriate escrows will be established and Lender shall be provided with
additional due diligence and/or opinion letters demonstrating that such separate
lot status will be obtained by Substantial Completion.
SECTION 4.11 TRANSACTION COSTS. Borrower or Manager shall have
paid or caused to be paid all fees due the Lender, Lender's Counsel fees and all
other costs and expenses associated with the Closing which have been invoiced to
Borrower and/or Manager and which are then due and payable.
SECTION 4.12 LENDER'S CONSTRUCTION CONSULTANT REPORT. Lender,
rather than Borrower or Manager, shall be responsible for obtaining the Lender's
Construction Consultant Report; provided that Borrower or Manager shall be
responsible to timely provide the Lender's Construction Consultant, at
Borrower's sole cost, with all information and such access to the Premises as is
required for producing same concurrently with the Initial Advance or any
Subsequent Advance.
ARTICLE V
CONDITIONS PRECEDENT TO ADVANCES AFTER
THE INITIAL ADVANCE
Lender shall not be obligated to make any Advance subsequent to the Initial
Advance, unless in addition to the conditions set forth in Article III (which
have not been waived in writing by Lender), the following conditions are
satisfied in the reasonable discretion of Lender, except to the extent that
Lender may elect in writing to waive any such conditions:
SECTION 5.1 ARTICLE IV. All conditions set forth in Article IV
which are applicable to a subsequent Advance shall have been satisfied or waived
in writing by Lender with respect to such subsequent Advance at the time of such
subsequent Advance.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES. On the date of each
such subsequent Advance, the representations and warranties made by Borrower and
Manager in Article VI of this Agreement, Article IV of the Loan Agreement and in
any other Loan Documents shall be true and correct in all material respects on
and as of the date of such subsequent Advance with the same effect as if made on
such date.
30
SECTION 5.3 RECEIPT OF ITEMS AND DOCUMENTS BY LENDER. Lender
shall have received at least ten (10) Business Days prior to the date of the
requested Advance (unless otherwise specified below), the following items and
documents, duly executed and in each case in form and substance reasonably
satisfactory to Lender, and where applicable, Lender's Construction Consultant
and Lender's Counsel:
(a) a Request for Advance, together with the related supporting
documentation required to be delivered pursuant to Section 3.1;
(b) a Manager's Affidavit with appropriate insertions and
attachments, dated the date of the Request for Advance;
(c) either (i) the Architect's Update Letter, or (ii) the
Architect's Certificate, as selected by Lender pursuant to Section
3.1(a), dated the date of the Request for
Advance;
(d) subject to Section 4.12, a Lender's Construction Consultant
Report, dated on or about the date of the Request for Advance;
(e) copies of any Trade Contracts and any other Construction
Documents entered into since the date of the previous Request for
Advance received by Manager;
(f) copies of all amendments to any Trade Contract or any other
Construction Documents entered into since the date of the previous
Request for Advance received by Manager;
(g) a draft of the Title Continuation, which shall be
supplemented after the Advance with an executed Title Continuation,
dated through, the date of the related Advance;
(h) in the case of the Request for Advance next succeeding (i)
the date on which the foundation of the Improvements shall be
substantially complete, (ii) the Substantial Completion Date or (iii)
any date on which Lender gives Manager notice that it has reason to
believe that a survey inspection and update is necessary, a survey
inspection and update of the Survey dated after each such date and with
respect to clause (ii), prepared and submitted pursuant to Section 7.13;
(i) a reconciliation by Borrower or Manager of the progress and
cost of the construction of the Required Improvements through the date
of the Request for Advance with the Construction Schedule and the
Budget, together with a projection of such progress and cost through to
completion of the construction of the Required Improvements;
(j) evidence of Borrower's or Manager's compliance with all
recommendations (if any) set forth in the Environmental Report with
respect to the testing for and removal and disposal of Hazardous
Materials;
31
(k) payment on or before the Advance date of the Draw Fee for
such Advance and the Servicing Fee (if any) then due and payable under
the Loan Agreement, the estimated Lender's Counsel Fees, the estimated
fees of Lender's Construction Consultant relating to the Loan, and all
other reasonable out-of-pocket expenses of Lender relating to the Loan
to the extent then due and payable (and to the extent of Lender's
estimates thereof, if the amounts thereof have not been finally
determined); and
(l) all documents, reports, certificates, affidavits and other
information, as Lender, the Lender's Counsel or Lender's Representatives
reasonably may require to evidence compliance by Borrower and Manager
with all of the provisions of this Loan
Agreement.
SECTION 5.4 NO DEFAULT. On the date of each such subsequent
Advance, no Default or Event of Default shall have occurred and be continuing.
SECTION 5.5 LENDER'S APPROVAL. On the date of each subsequent
Advance, Lender shall have approved all Material Change Orders and material
changes to any other items delivered in connection with or at all related to the
construction at the Premises.
SECTION 5.6 SUBSTANTIAL COMPLETION ADVANCE. In addition to all of
the other conditions specified in this Article V, Lender shall have received at
least ten (10) Business Days prior to the date of the Substantial Completion
Advance (unless otherwise specified below), the following items and documents,
duly executed and in each case in form and substance reasonably satisfactory to
Lender, and where applicable, Lender's Construction Consultant and Lender's
Counsel:
(a) all Operating Permits, including a permanent unconditional
certificate of occupancy or its equivalent issued by the appropriate
Governmental Authority confirming
Substantial Completion;
(b) a certificate from the Architect stating that Substantial
Completion has been achieved;
(c) evidence that all utility services (including electric, gas,
water and sewage systems), parking and pedestrian and vehicular access
required for the operation, use and
maintenance of the Premises are available;
(d) the final Survey required pursuant to Section 7.13; and
(e) submission of evidence that all conditions required for
release of the Retainage as set forth in the definition of "Retainage"
have been met except for Punchlist
Items.
32
SECTION 5.7 POST-SUBSTANTIAL COMPLETION ADVANCES. Pursuant to the
Budget, Lender anticipates that subsequent to Substantial Completion, but prior
to Conversion, the business operations at the Premises will generate Operating
Deficits that will require Advances under the Loan with respect to the payment
of interest under the Loan and other Approved Operating Expenses. Additionally,
Advances with respect to completed Punchlist Items and Retainage are
contemplated subsequent to Substantial Completion. Provided that on the date of
each such subsequent Advance(s), no Default or Event of Default shall have
occurred and be continuing, Lender shall make Advances (a) from Retainage for
Punchlist Items pursuant to Section 2.2 (b), (b) with respect to interest on the
Loan pursuant to Section 3.10, and (c) with respect to Operating Deficits
pursuant to Section 3.11. If any portion of the Loan or Deficiency Cash
Collateral remain unadvanced at such time as the business operations at the
Premises are no longer generating Operating Deficits, Lender shall at Manager's
request either (i) Advance the unexpended portion of the Loan to the Cash
Collateral Subaccount for application in accordance with the provisions of
Section 3.6 of the Loan Agreement, or (ii) pay over such amounts as directed by
Manager subject to the letter of credit conditions specified below. Lender may
require, in its discretion, that Borrower or Manager deliver to Lender, as
beneficiary, one or more clean, irrevocable letters of credit, reasonably
satisfactory to Lender in form and content and as to the bank or trust company
which is the issuer (which issuer must have and S&P rating of "A" or better)
equal in amount to the funds paid over to Borrower or Manager. Any such letter
of credit shall have an expiration date not earlier than 30 days after the
Expected Conversion Date, provided that the expiration date may be one year from
its issuance if the letter of credit provides for a drawing by Lender of the
full amount thereof at any time on or after the thirtieth (30th) day preceding
its stated expiration date. Any letter of credit shall be held by Lender and may
be drawn at any time within thirty (30) days prior to the expiration thereof,
upon the occurrence and during the continuance of an Event of Default, or within
thirty (30) days prior to the Expected Conversion Date, whereupon the proceeds
of the letter of credit shall be deposited in the Cash Collateral Subaccount.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loan and enter into this Agreement
and perform Lender's obligations hereunder, Manager, hereby represents, warrants
and covenants to Lender that, as of the Closing Date and in the case of any
Advance made subsequent to the Closing Date, if any, as of the date of such
other Advance (which representations, warranties and covenants shall survive the
execution and delivery of this Agreement and the other Loan Documents, and shall
be deemed to have been relied upon by Lender regardless of any investigation
made by Lender or on its behalf):
SECTION 6.1 PLANS. The Plans have been approved, to the extent
required by applicable Legal Requirements, restrictive covenants, the Management
Agreement, and the Development Agreement, by all Governmental Authorities, the
beneficiaries of such covenants, and
the other parties to such agreements, respectively.
33
SECTION 6.2 NO LIENS. Neither Manager nor Borrower has made,
assumed or been assigned any contract or arrangement of any kind, the
performance of which by the other party thereto would give rise to a Lien
against all or any portion of the Collateral, except for (a) Permitted
Encumbrances and (b) the Architect's Agreement, the Engineer's Agreement, the
Development Agreement, the Management Agreement, the Construction Agreement, the
Trade Contracts, the Construction Documents, to the extent Lien rights are
created under any of such agreements.
SECTION 6.3 COMPLIANCE WITH BUILDING CODES, ZONING LAWS, ETC. The
current zoning law and declarations covering the Premises permit the
construction of the Required Improvements to be completed in accordance with the
Plans and, upon completion of construction in accordance with the Plans, the
Required Improvements to be operated and used as contemplated by this Agreement
and the other Loan Documents. The Premises currently and, upon completion of
construction in accordance with the Plans, the use thereof will be in all
respects in material compliance with all Construction Permits and Operating
Permits and all other Legal Requirements, and such compliance is not dependent
on any land, improvements or facilities not a part of the Premises. There are no
pending, or to Borrower's or Manager's knowledge, threatened actions, suits or
proceedings to revoke, attach, invalidate, rescind or modify the zoning
applicable to the Premises or any part thereof, any of the Construction Permits
or any of the Operating Permits, as currently existing and as contemplated to
exist upon completion of construction in accordance with the Plans, which would
have a material adverse effect on the construction or operation of the Required
Improvements.
SECTION 6.4 CERTAIN AGREEMENTS. The Management Agreement, the
Development Agreement, the Construction Agreement, the Architect's Agreement,
the Engineer's Agreement, if any, the Trade Contracts and the other Existing
Construction Documents to the extent previously executed by, or assigned to and
assumed by Manager are in full force and effect, not having been amended,
modified, terminated, assigned or otherwise changed, or the provisions thereof
waived, except as permitted hereunder, and true and complete copies of each
thereof have been furnished to Lender.
SECTION 6.5 BUDGET. The Budget contains all costs and expenses reasonably
anticipated to be incurred in connection with the acquisition of the Land and
existing Improvements and the construction of the Required Improvements.
SECTION 6.6 ADJACENT LAND. Borrower does not own any land adjacent to the
Land.
SECTION 6.7 FLOOD ZONE. Except as shown on the Survey, the
Improvements are not, and will not when constructed, be located in a flood
hazard area, Zone A, as designated by the Federal Emergency Management Agency.
SECTION 6.8 NO PRIOR WORK. Either (a) no work or construction has
been commenced on the Land and no materials have been delivered to the Land
which could, in either case, result in the imposition of a mechanic's or
materialmen's Lien on the Property prior to or on
34
parity with the Lien and security interest created by the Mortgage, or (b) the
Title Insurance Policy will insure the first priority status of the Mortgage
over such Liens without exception, except for the standard Texas form language
for construction loans, but confirming that no such liens have been filed.
ARTICLE VII
COVENANTS
SECTION 7.1 CONSTRUCTION.
(a) Borrower and Manager shall not cause or permit the
commencement of construction of any Improvements or delivery of material to the
Land until after recording of the Mortgage with the county clerk of the county
where the Land is located (unless (i) Borrower or Manager obtains a payment bond
and delivers same to the General Contractor in a fashion which would eliminate
the possibility of any mechanic's lien, filed now or in the future, obtaining
priority over the Lien of the Mortgage and/or (ii) Borrower or Manager obtains a
Title Policy acceptable to Lender in its discretion insuring over any such Lien
without exception except for the standard Texas form language for construction
loans, but confirming that no such liens have been filed, and after obtaining
all permits and approvals from all Governmental Authorities required to commence
construction. Borrower or Manager, in order to demonstrate that construction has
not commenced; shall furnish Lender with evidence required by Lender, which may
include but may not be limited to photographic evidence and/or an affidavit
executed by the Lender's Construction Consultant or by such other person as may
be approved by Lender, that at the time of and immediately after the recordation
of the Mortgage there was no commencement of construction of Improvements on the
Land or delivery of materials to the Land.
(b) Borrower or Manager shall cause the construction of the
Required Improvements to be prosecuted with diligence and continuity, in a good
and workmanlike manner, and in accordance with this Agreement in order to cause
Substantial Completion to occur on or prior
to the Outside Completion Date.
(c) Borrower or Manager shall cause the cost of each component of
the construction of the Required Improvements to be in accordance with the
Budget as Adjusted.
(d) Borrower or Manager shall cause the Required Improvements to
be constructed and completed in accordance with the Plans and all Legal
Requirements, free and clear of Liens or claims for materials supplied or for
labor or services performed in connection with the
construction of the Required Improvements or otherwise.
(e) Borrower or Manager shall cause the Construction Agreement to
provide for the work thereunder to be performed for a fixed price or guaranteed
maximum price.
35
SECTION 7.2 CONSTRUCTION SCHEDULE. Each month during the
construction of the Required Improvements, Manager shall deliver to Lender,
Lender's Construction Consultant and the Servicer a copy of the then-current
Construction Schedule.
SECTION 7.3 BUDGET CHANGES. Borrower and Manager shall not make any changes
in the Budget without Lender's prior written consent except to the extent
expressly permitted hereunder.
SECTION 7.4 INSPECTION OF PREMISES AND BOOKS AND RECORDS.
Borrower and Manager shall permit Lender or Lender's Representatives to enter
upon the Premises, at any reasonable times during business hours on reasonable
notice, with free access to inspect or examine or, to the extent not located on
the Premises, to otherwise make available in New York City to Lender, Lender's
Construction Consultant and the Servicer (i) all materials and shop drawings
pertaining to the construction of the Required Improvements; (ii) any contracts,
bills of sale, state ments, receipts or vouchers pertaining to the construction
of the Required Improvements; (iii) all work done, labor performed or materials
furnished in and about the Premises, including, in connection with the
construction of the Required Improvements; (iv) all books and records of
Borrower and Manager pertaining to the construction of the Required
Improvements; and (v) any other documents which are related to the construction
of the Required Improvements. Borrower and Manager shall promptly provide Lender
and Lender's Representatives with copies of any of the foregoing as Lender and
Lender's Representatives may from time to time reasonably request. Borrower and
Manager shall make its representatives available to meet with Lender and
Lender's Representatives upon reasonable notice at the Premises or in New York
City, to discuss Borrower's and Manager's affairs, finances and accounts
relating to the construction of the Required Improvements, and Borrower and
Manager shall cooperate, and take all reasonable steps to cause the General
Contractor, the Architect, the Engineer, if any, and the Trade Contractors to
cooperate with Lender and Lender's Representatives to enable each such Person to
perform its functions under this Agreement.
SECTION 7.5 REQUIRED NOTICES. Borrower or Manager shall give notice to
Lender promptly upon the occurrence of:
(i) any cessation of construction of the Required
Improvements for a period in excess of ten (10) consecutive calendar
days, regardless of whether or not such
cessation is due to an Unavoidable Delay;
(ii) any breach of a party's obligation, default, or event
of default under or in connection with any material contractual
obligation of Borrower or Manager;
(iii) Borrower or Manager obtaining knowledge of any actual
or threatened litigation, investigation or proceeding materially
affecting Borrower, Manager, the Borrower Representative, the Premises
or, while any Guaranty is in effect, the Guarantor;
36
(iv) any notice given pursuant to any Construction Document
alleging that there has occurred a default or other failure by Borrower
or Manager in the fulfillment of
Borrower's or Manager's obligations thereunder;
(v) any condition which results in any delay, including any
Unavoidable Delay, which could result in Substantial Completion
occurring after the date therefor set forth in the Construction Schedule
or after the Outside Completion Date, or in any further delay beyond any
delays of which Lender has been previously notified;
(vi) any Default or Event of Default; and
(vii) any other notices reasonably requested by Lender.
Each notice pursuant to this Section 7.5 shall be accompanied by a statement of
Borrower or Manager setting forth details of the occurrence referred to therein
and stating what action Borrower
or Manager proposes to take with respect thereto.
SECTION 7.6 CHANGE ORDERS. Borrower and Manager shall not
request, initiate, agree to, accept, cause or suffer any Material Change Order,
without Lender's prior written consent, which shall not be unreasonably withheld
or delayed. Approval by Lender of any Change Order (i) shall not obligate Lender
to increase the amount of the Loan, and (ii) shall not obligate Lender to make
any Advance to the extent Lender would not otherwise be obligated pursuant to
this Agreement to make such Advance. Borrower or Manager shall submit to Lender
and Lender's Construction Consultant copies of each proposed Material Change
Order, prior to, and all other Change Orders, simultaneously with entering into
such Change Order. Such submission shall identify whether the submitted Change
Order is a Material Change Order and shall include documentation satisfactory to
Lender and Lender's Construction Consultant, setting forth all additions and
subtractions previously made to or from the scope of the Required Improvements.
Change Orders not identified by Borrower as Material Change Orders will
initially be reviewed by Lender solely for the purpose of determining whether
such Change Order constitutes a Material Change Order. Lender shall promptly
(not more than five (5) Business Days after receipt) review, and approve or
disapprove, all submitted Change Orders either identified by Borrower or
Manager, or determined by Lender, to be Material Change Orders.
SECTION 7.7 CORRECTION OF WORK. Borrower or Manager shall,
promptly after notice from Lender, correct any defect in the Required
Improvements or any departure from the Plans. Borrower and Manager agree that
the making of any Advance shall not constitute a waiver of Lender's right to
require compliance with this Section 7.7 with respect to any such defects or
departures from the Plans. Borrower and Manager agree that Lender's failure to
deliver such a notice shall not constitute a waiver by Lender of any of the
Obligations.
SECTION 7.8 NO ENCROACHMENTS. Borrower or Manager shall cause the Required
Improvements to be constructed entirely within the perimeter of the Land and so
as not
37
to encroach upon or overhang any easement or right-of-way or any land of others,
and when erected shall be wholly within any applicable building restriction
lines, however established.
SECTION 7.9 COMPLIANCE WITH DOCUMENTS. Borrower and Manager shall
abide by, perform and comply with all of Borrower's and Manager's obligations,
if any, under the Architect's Agreement, the Engineer's Agreement, if any, the
Construction Agreement, the Trade Contracts, the Development Agreement, and the
other Construction Documents, and Borrower and Manager, at their sole cost and
expense, shall use all their best commercially reasonable efforts to secure or
enforce the performance of each and every material obligation, covenant,
condition and agreement to be performed by the other parties under any such
documents.
SECTION 7.10 CHANGES IN AGREEMENTS. Except with respect to Change
Orders which do not constitute Material Change Orders, neither Borrower nor
Manager shall surrender, terminate, cancel, modify, amend in any material
respect, and shall not enter into any agreement in substitution for, or consent
to the assignment of, the Architect's Agreement, the Engineer's Agreement, the
Construction Agreement, or the Development Agreement to the extent Borrower or
Manager is a party thereto, without Lender's prior written consent, which
consent shall not be unreasonably withheld. Borrower or Manager promptly will
give notice to Lender of the surrender, termination, cancellation, modification,
amendment, substitution or assignment of the other Construction Documents,
whether or not Lender consented thereto pursuant to the immediately preceding
sentence.
SECTION 7.11 CONTRACTS. Borrower shall not, without Lender's
prior written consent, which consent shall not be unreasonably withheld or
delayed, allow the assignment or amendment of any existing, or enter into any
new, Architect's Agreement, Construction
Agreement,
or Engineer's Agreement. Such consent shall not be required with respect to any
amendment constituting a Change Order which is not a Material Change Order, or
which amendment does not cause such Change Order to become a Material Change
Order. Additionally, such consent shall be based upon Lender's approval of the
terms and conditions of such assignment, amendment or new agreement and the
identity, where applicable, of the assignee or the Person executing any new
agreement, which Person shall in all cases be an Independent and properly
licensed professional.
SECTION 7.12 BONDS. The General Contractor shall be bonded
pursuant to a Bond issued by a surety satisfactory to Lender. Borrower and/or
Manager will cause Lender to be named as a co-obligee (as its interest may
appear) with Borrower and/or Manager on all Bonds obtained by Borrower or
Manager from the General Contractor.
SECTION 7.13 FINAL SURVEY. Within 60 days after Substantial
Completion has occurred, Borrower or Manager will deliver to Lender an updated
"as-built" Survey, dated no earlier than the Substantial Completion Date, with a
certification that no encroachments exist by the Improvements on land other than
the Land.
SECTION 7.14 COMPETITION. Borrower and Manager shall not, and shall not
cause or permit any of their respective Affiliates to, pursue any opportunity
for the development,
38
management or acquisition of, or investment in, any property within a five
(5)-mile radius of the Property if such other property would be in competition
with the Property, or would otherwise adversely affect the development, leasing
or operation of the Property or Borrower's or Manager's
ability to perform its obligations under the Loan Documents.
SECTION 7.15 PROTECTION AGAINST LIENS. Borrower and Manager shall
pay and discharge or bond all claims for labor, materials and services furnished
in connection with construction of the Required Improvements, diligently file a
valid notice of completion upon completion of the Required Improvements,
diligently file a valid notice of cessation in the event of a cessation of labor
for a period of 30 days or more, and take all actions reasonably required to
prevent the assertion of claims of Liens against the Property. Borrower and
Manager irrevocably appoint, designate and authorize Lender as their agent (such
agency being coupled with an interest) with the authority (but no obligation) to
file any notice of completion or cessation of labor or any other notice relating
to claims of Liens that Lender deems advisable to protect its interests under
the Loan Documents. If any stop notice or claim is asserted against Lender by
any Person furnishing labor, services, equipment or materials to the Required
Improvements, upon demand by Lender, Borrower or Manager shall take such action
as Lender may reasonably require to release Lender from any obligation or
liability with respect to such stop notice or claim, including (i) if the claim
is being contested in good faith by appropriate proceedings, obtaining a bond or
other security, in form, substance and amount reasonably satisfactory to Lender,
or (ii) payment of such claim. If either Borrower or Manager fails to take such
action, Lender may, in its discretion, file an interpleader action requiring all
claimants to interplead and litigate their respective claims, and in any such
action Lender shall be released and discharged from all obligations with respect
to any funds deposited in court.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 EVENTS OF DEFAULT. The following shall each
constitute an "EVENT OF DEFAULT" hereunder:
(a) If construction of the Required Improvements shall not be
commenced in accordance with the Construction Schedule in effect on the
Closing Date and shall not at any time be carried on with diligence and
continuity or there is any cessation of construction of the Required
Improvements for a period in excess of ten (10) consecutive calendar
days, unless the commencement of construction has been delayed, or the
cessation of construction shall have been caused by Unavoidable Delay of
which notice has been given to Lender pursuant to Section 7.5;
(b) If Borrower or Manager fails to satisfy the conditions for an
Advance for more than thirty (30) days after having made a request for
such Advance;
39
(c) If Borrower or Manager fails to permit Lender or Lender's
Representatives, at all reasonable times after reasonable notice, to
immediately enter upon the Premises for the purposes set forth in
Section 7.4 or Borrower or Manager fails to furnish to Lender or
Lender's Representatives, within a reasonable time after request
therefor and in no event more than five (5) Business Days, the materials
which Borrower or Manager is obligated to provide to Lender or Lender's
Representatives, pursuant to Section 7.4, to the extent such materials
are readily available, and any of the foregoing failures shall continue
for two (2) Business Days after such five (5) days notice thereof;
(d) If as of the close of business on the Outside Completion
Date, the Substantial Completion Date shall not have occurred except for
Unavoidable Delay, provided such Unavoidable Delay shall not excuse any
other performance by Manager or Borrower under
this Agreement or the other Loan Documents;
(e) If Lender reasonably determines during the course of
construction of the Required Improvements that the Required Improvements
cannot be completed Lien free by the Outside Completion Date in
accordance with the Plans and all Legal Requirements;
(f) If any material default by Borrower or Manager shall occur and shall
continue beyond any applicable grace period provided for therein, under the
Management Agreement, the Development Agreement, the Architect's Agreement, the
Engineer's Agreement, the Construction Agreement, any Major Trade Contract or
any other material Construction Document or Loan Document;
(g) If within thirty (30) days of Borrower's or Manager's receipt
of a notice from Lender that any Deficiency exists, Borrower or Manager
does not take any one or more of the measures referred to in Section 3.7
to eliminate such Deficiency;
(h) If Borrower or Manager does not disclose to Lender, within
ten (10) Business Days after demand, the names of all Persons with whom
Borrower or Manager has contracted with respect to the construction of
the Required Improvements, or the furnishing of labor or materials
therefor, or fails to make available for review and observation by
Lender and Lender's Construction Consultant copies of all such
contracts;
(i) If any Construction Document is amended, modified or
terminated without the prior written consent or approval of Lender to
the extent such written consent or
approval is required pursuant to this Agreement;
(j) If the Development Agreement or the Management Agreement
shall at any time cease to be in full force and effect for any reason
and a new Development Agreement, or Management Agreement as the case may
be, reasonably acceptable to Lender in form and substance shall not have
been entered into in its place within twenty (20) days after the
Development Agreement or Management Agreement, as the case may be,
ceases to be effective;
40
(k) Borrower's or Manager's failure to perform or observe any
covenant, agreement or term contained in this Agreement (other than one
described in one of the other clauses of this Section 8.1), and the
continuance of such failure for thirty (30) days after notice thereof
shall have been given to Borrower or Manager by Lender; provided,
however, that if such failure is of a nature such that it cannot be
cured by the payment of money and if such failure requires work to be
performed, acts to be done or conditions to be removed which cannot by
their nature, with reasonable diligence, be performed, done or removed,
as the case may be, within such thirty (30)-day period and Borrower or
Manager shall have commenced to cure such failure within such thirty
(30)-day period and thereafter diligently continues to prosecute such
cure, such period shall be deemed extended for so long as shall be
required by Borrower or Manager in the exercise of reasonable diligence
to cure such failure, but in no event shall such thirty (30)-day period
be so extended to be a period in excess of one hundred and twenty (120)
days;
(l) Guarantor's failure to perform or observe any covenant,
agreement or term contained in any Guaranty; provided, however, that if
such failure is of a nature such that it cannot be cured by the payment
of money, then such failure shall not constitute an Event of Default
unless it continues for thirty (30) days; provided, further, however,
that if such failure cannot be cured by the payment of money and
requires work to be performed, acts to be done or conditions to be
removed which cannot by their nature, with reasonable diligence, be
performed, done or removed, as the case may be, within such thirty
(30)-day period and Guarantor shall have commenced to cure such failure
within such thirty (30)-day period and thereafter diligently continues
to prosecute such cure, such period shall be deemed extended for so long
as shall be required by Guarantor in the exercise of reasonable
diligence to cure such failure, but in no event shall such thirty
(30)-day period be so extended to be a period in excess of one hundred
and twenty (120) days; or
(m) If any representation or warranty made in this Agreement, or
any report, certificate, financial statement or other instrument,
agreements or documents by Borrower or Manager in connection with this
Agreement, the Note or any other Loan Documents executed and delivered
by Borrower or Manager shall be false in any material respect as of the
date such representation or warranty was made or deemed to have been
made;
(n) If any Survey required or requested by Lender pursuant to the
provisions of this Agreement shows any material condition not
contemplated by the Plans, and such material condition is not removed
within thirty (30) days after notice thereof by Lender to
Borrower and Manager;
(o) If there shall occur an "EVENT OF DEFAULT" as such term is
defined in the Loan
Agreement.
SECTION 8.2 ACCELERATION OF LOAN. In addition to any other rights
and remedies which Lender may have under this Agreement and the other Loan
Documents or pursuant to law or equity, and without limitation thereof, upon and
at any time after the occurrence of any
41
Event of Default, Lender may declare the indebtedness evidenced by the Note,
together with all other sums payable thereunder and under the other Loan
Documents, immediately due and payable and may exercise Lender's rights and
remedies pursuant to any one or more of the Security
Documents.
SECTION 8.3 LENDER'S RIGHT TO STOP DISBURSING FUNDS. In addition
to any other rights and remedies which Lender may have pursuant to this
Agreement and the other Loan Documents or pursuant to law or equity, and without
limitation thereof, (a) if any Default shall occur and be continuing or any
Event of Default shall occur and be continuing, then Lender may decline to make
all or any portion of such further Advances as Lender may elect and/or (b) if
any Event of Default shall occur, any or all obligations of Lender under this
Agreement, at the option of Lender, shall cease and terminate; provided,
however, Lender may make all or any portion of any Advance so long as any such
Default or Event of Default shall exist without thereby becoming obligated to
make all or a portion of any other or further Advance or waiving Lender's right
to exercise any of Lender's rights and remedies pursuant to any one or more of
the Loan Documents or as may be available at law or equity.
SECTION 8.4 LENDER'S RIGHT TO COMPLETE; SUMS ADVANCED.
(a) LENDER'S RIGHT TO COMPLETE. In addition to any other rights
and remedies which Lender may have under this Agreement and the other Loan
Documents or pursuant to law or equity, and without limitation thereof, after
the occurrence and during the continuance of any Event of Default, Lender may
enter upon the Premises and into possession of the Premises and any other
Property (and exclude Borrower, Manager and any other persons therefrom) and
complete the construction of the Required Improvements substantially in
accordance with the Plans, with such changes therein as Lender may from time to
time deem appropriate, all at the sole risk, cost and expense of Borrower and
Manager. Lender shall have the right, at any and all times, in its discretion to
discontinue any work commenced by Lender with respect to the construction of the
Required Improvements or to change any course of action undertaken by it and
shall not be bound by any limitations or requirements of time whether set forth
herein or otherwise after the occurrence and during the continuance of any Event
of Default. Lender shall have the right and power (but shall not be obligated)
to assume all or any portion of the obligations of Borrower or Manager under any
or all Construction Documents as Lender may elect and to take over and use all
or any part or parts of the labor, materials, supplies and equipment contracted
for by or on behalf of Borrower or Manager, whether or not previously
incorporated into the Premises. In connection with any portion of the
construction of the Required Improvements undertaken by Lender pursuant to the
provisions of this Section 8.4, Lender may elect to do any or all of the
following:
(i) engage builders, general contractors, trade
contractors, suppliers, architects, engineers, inspectors and others for
the purpose of furnishing labor, materials, equipment and fixtures in
connection with the construction of the Required Improvements;
(ii) amend, modify or terminate any then existing contracts
between Borrower or Manager and any of the persons described in the
preceding clause (i);
42
(iii) pay, settle or compromise all bills or claims which may
become Liens against the Premises, or which have been or may be incurred
in any manner (A) in connection with the construction of the Required
Improvements or (B) for the discharge of Liens, encumbrances or defects
in the title of the Premises; and
(iv) take such other action (including the employment of
watchmen and the taking of other measures to protect the Property) or
refrain from acting under this
Agreement as Lender may from time to time determine.
(b) SUMS ADVANCED. Borrower and Manager shall be liable to Lender
for all sums paid or incurred for the construction of the Required Improvements
whether the same shall be paid or incurred pursuant to the provisions of this
Section 8.4 or otherwise, and all other payments made or liabilities incurred by
Lender under this Agreement of any kind whatsoever, all of which shall be paid
by Borrower or Manager to Lender upon demand with interest at the Default Rate
to the date of payment to Lender, and all of the foregoing sums, including such
interest at the Default Rate, shall be deemed and shall constitute Advances
under this Agreement and be evidenced by the Note and secured by the Security
Documents.
SECTION 8.5 LOAN ACCOUNTS. Borrower, and to the extent
applicable, Manager, each hereby irrevocably pledges to Lender, and grants
Lender a first priority security interest in, each of the Loan Accounts now or
hereafter existing, as additional security for the Obligations. Borrower or
Manager shall, immediately upon establishing any Loan Account that is in
Borrower's name, and Manager shall, immediately upon establishing any Loan
Account that is in Manager's name, cause the institution in which such account
is located to enter into an agreement with Lender reasonably satisfactory to
Lender in form and substance pursuant to which such institution (i) recognizes
Lender's first priority security interest in such account, (ii) waives such
institution's rights of setoff with respect to the account and (iii) agrees to
follow any written instructions received by Lender with respect to such account.
After the occurrence and during the continuance of an Event of Default, in
addition to all other rights and remedies available to Lender by statute or rule
of law or equity, and whether or not the Loan shall then be due and payable,
Lender may notify any such institution that Borrower or Manager, as applicable,
no longer has a right to withdraw any funds from any such Loan Accounts or to
give any instructions with regard thereto, and Lender may cause all funds in any
and all Loan Accounts to be paid to Lender for application to any Obligations
then due and payable, in such order as Lender may elect. Lender shall also have
all rights and remedies with respect to the Loan Accounts as are available at
law or equity, including under the applicable UCC. Any Loan Accounts held in the
name of Lender shall not constitute a trust fund and may be commingled with
other monies held by Lender.
SECTION 8.6 NO LIABILITY OF LENDER. Whether or not Lender elects
to employ any or all of the remedies available to it upon the occurrence of a
Default or an Event of Default, Lender shall not be liable to Borrower, Manager
or any Interested Party for the quality of construction, or the failure to
construct or complete the Required Improvements or to protect the Premises or
for payment of any expense incurred in connection with the exercise of any
remedy
43
available to Lender or for the performance or non-performance of any other
obligation of Borrower or Manager.
ARTICLE IX
GENERAL CONDITIONS
SECTION 9.1 NO WAIVERS. The making of any Advance hereunder shall
not constitute an approval or acceptance by Lender or Lender's Construction
Consultant of the work theretofore done in connection with the construction of
the Required Improvements or a waiver of any of the conditions precedent to
Lender's obligation to make further Advances (absent a statement by or the
intention of Lender that such Advance shall constitute a waiver), nor, in the
event that Borrower or Manager is unable to satisfy any such conditions
precedent, shall any such failure to insist upon Borrower's or Manager's
compliance with any obligation hereunder have the effect of precluding Lender
from thereafter declaring such inability to be a Default or an Event of Default
as herein provided. Any Advance made by Lender in the absence of strict
compliance with any or all of the conditions precedent to Lender's obligation to
make such Advance or in conjunction with a waiver by Lender of Borrower's or
Manager's compliance with any of such conditions precedent shall be deemed to
have been made pursuant to this Agreement and not in modification of the terms
hereof.
SECTION 9.2 LENDER'S REVIEW. Observation, inspection and
approvals by Lender of the Plans, the construction of the Required Improvements
and the workmanship and materials used therein shall impose no responsibility or
liability of any nature whatsoever on Lender or Lender's Construction Consultant
and Borrower, Manager nor any Interested Party, under any circumstances, shall
not be entitled to rely upon such inspections and approvals by Lender or
Lender's Construction Consultant for any reason. Approvals granted by Lender for
any matters covered under this Agreement shall be narrowly construed to cover
only the parties and facts identified in any such approval. Lender's
Construction Consultant has been or will be retained by Lender solely as a
consultant and has no authority to bind or otherwise act for or on behalf of
Lender.
SECTION 9.3 SUBMISSION OF EVIDENCE. Any condition of this
Agreement which requires the submission of evidence of the existence or
non-existence of a specified fact or facts implies as a condition the existence
or non-existence, as the case may be, of such fact or facts and Lender shall, at
all times, be free to independently establish to its reasonable satisfaction
such existence or non-existence.
SECTION 9.4 LENDER SOLE BENEFICIARY. All terms, provisions,
covenants and other conditions of the obligations of Lender to make Advances
hereunder are imposed and all funds held in any Loan Account and other
Collateral are held solely and exclusively for the benefit of Borrower, Manager
and Lender as their rights may appear. Neither Borrower, Manager nor any
Interested Party shall have standing to require satisfaction of such terms,
provisions, covenants and
44
other conditions in accordance with their terms, be entitled to assume that
Lender will refuse to make Advances in the absence of strict compliance with any
or all of such terms, covenants and other conditions or be entitled to require
any particular application of such funds. No Person, other than Lender, under
any circumstances, shall be deemed to be beneficiary of such terms, provisions,
covenants and other conditions, any or all of which may be freely waived, in
whole or in part, by Lender at any time if, in Lender's discretion, Lender deems
it advisable or desirable to do so.
SECTION 9.5 CONTRACTORS. Except as provided by law, no Trade
Contractors or any other Person dealing with Borrower or Manager, including the
Architect, the Engineer, if any, and the General Contractor, shall be, nor shall
any of them be deemed to be, third party beneficiaries of this Agreement.
SECTION 9.6 ENTIRE AGREEMENT. This Agreement, the Loan Agreement
and the other Loan Documents embody the entire agreement and understanding
between the parties with respect to the Loan and supersede and cancel all prior
loan applications, expressions of interest, commitments, agreements and
understandings, whether oral or written, relating to the subject matter hereof,
except as specifically agreed to the contrary. If and to the extent that there
is any conflict or inconsistency between the Loan Documents and the commitment
letter issued by Lender and accepted by Borrower (or its Affiliate) prior to the
date hereof with respect to the Loan, the Loan Documents shall prevail.
SECTION 9.7 AMENDMENTS, ETC. No amendment, modification,
termination, or waiver of any provision of this Agreement shall be effective
unless in writing and signed by Borrower, Manager and Lender. No consent to any
departure by Borrower or Manager from any provision of this Agreement shall in
any event be effective unless the same shall be in writing and signed by Lender,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. No notice to or demand on Borrower
or Manager in any case shall entitle Borrower or Manager to any other or further
notice or demand in similar or other circumstances.
SECTION 9.8 NOTICES. All notices, certificates, demands,
requests, approvals, consents and other communications provided for herein shall
be in writing and given in the manner provided in the Loan Agreement. The
address of Lender's Construction Consultant for such purpose is EMG Corporate
Center, 0000 XxXxxxxxx Xxxx, Xxxxxxxxx, XX 00000 (or such other address as
Lender shall notify Borrower and Manager in writing). All such notices,
certificates, demands and other communications shall be effective when received
or refused at the address to which it is required to be sent.
SECTION 9.9 BINDING EFFECT. This Agreement shall be binding upon and inure
to the benefit of Lender and its successors and assigns and shall be binding
upon Borrower, Manager and their respective permitted successors and assigns.
SECTION 9.10 SEVERABILITY OF PROVISIONS. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall be, as to such
jurisdiction, ineffective
45
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof or affecting the validity or enforceability of such
provisions in any other
jurisdiction.
SECTION 9.11 HEADINGS, ETC. The headings and captions of various
Sections of this Agreement have been inserted for convenience only and are not
to be construed as defining, modifying, limiting or amplifying, in any way, the
scope or intent of the provisions hereof.
SECTION 9.12 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the substantive laws of the State.
SECTION 9.13 NO JOINT VENTURE. Neither Borrower nor Manager is
and shall be deemed to be a joint venturer, partner, tenant in common or joint
tenant with Lender for any purpose. Lender shall not be deemed to be in privity
of contract with the General Contractor, the Architect, the Engineer, if any,
any Trade Contractor or any other Person providing services with respect to the
site development or the Land or the construction of the Improvements unless and
until, and except to the extent that, Lender shall affirmatively act to
establish any such privity pursuant to Section 8.3 or 8.4, or in the exercise of
Lender's remedies pursuant to the Mortgage or the Assignment of Agreements.
SECTION 9.14 ASSIGNMENT BY LENDER.
(a) ASSIGNMENT. Lender shall have the right, without the consent
of Borrower or Manager, to assign, transfer, sell, negotiate, pledge, grant
participations in or otherwise hypothecate its rights in and to the Loan, this
Agreement, the Note, the Mortgage and the other Loan Documents, to any other
party (an "ASSIGNEE"), provided, however, that no such assignment shall
increase, decrease or otherwise affect either Borrower's or Manager's
obligations under this Agreement or the other Loan Documents. Any Assignee
(including a pledgee) may exercise any of Lender's rights hereunder.
(b) CO-LENDING/PARTICIPATION. Lender shall have the right to
syndicate the Loan to other financial institutions through direct assignments of
interests to co-lenders or through participations to participating lenders,
either prior to the Closing Date or thereafter provided, however, that no such
assignment or participation shall increase, decrease or otherwise affect
Borrower's or Manager's obligations under this Agreement or the other Loan
Documents. In such event the following provisions shall apply:
(I) Those institutions who become co-lenders with Lender
after the Closing Date will, by virtue of assignments of the Loan from
Lender become "co-lenders" under the Loan Documents. Those institutions
who become participants of Lender after the Closing Date will, by virtue
of assignments of participation interests from Lender become
"participating lenders" pursuant to the terms of a participation
agreement with Lender. It is anticipated that Lender shall act as
administrative agent for such co-lenders (and in such role will be
referred to as "AGENT") or lead lender under such participation
agreement (and in such role will be referred to as "LEAD LENDER") or
Lender may assign the role of Agent
46
or Lead Lender to another institutional lender. The contractual
obligation of each such co-lender or participating lender to Borrower to
fund such party's respective share or participation of the Loan shall be
several and the failure of one co-lender or participating lender to fund
its pro rata share of any Advance to Borrower shall in no event obligate
any other co-lender or participating lender to increase its pro rata
share of the Loan or it pro-rata participation of any individual
Advance. Provided, however, if a co-lender or participating lender fails
to meet its funding obligations because it becomes insolvent or is
placed into receivership under any applicable federal or state laws,
regulations or orders, Lender shall either (a) purchase back such
co-lender's share of the Loan or such participating lender's Loan
participation, in which case Lender shall make such delinquent Advance,
or (b) Lender shall obtain a replacement co-lender or participating
lender which shall be obligated to make such delinquent Advance.
Provided, further, if the Agent or Lead Lender makes any Advance with
respect to a Request for Advance, which is not funded by a co-lender or
participating lender, and if such Agent or Lead Lender either fails to
(1) make an additional Advance in the amount due from such
non-performing co-lender or participating lender or (2) enforce the
remedies against such non-performing co-lender or participating lender
under the applicable co-lending or participation agreement; then to the
extent Borrower and\or Manager funds the shortfall, Borrower and\or
Manager shall be subrogated to the rights of the Agent or Lead Lender
against the non-performing co-lender or participating lender.
(ii) If Lender enters into such co-lending arrangements,
this Agreement shall be amended and restated to contain provisions
governing the relationships between and among co-lenders, Agent,
Borrower and Manager. If Lender enters into such participation
arrangements, Lender will enter into a separate participation agreement
with such participating lenders. Borrower and Manager agree to cooperate
with Lender in connection with the syndication or participation of the
Loan by, for example, assisting in the preparation of offering
materials, allowing site visits and making documents and personnel
available to prospective Assignees, co-lenders and participating
lenders.
(iii) If required by any Assignee, co-lender or
participating lender, Borrower and Manager shall enter into such
tri-party, intercreditor (or similar) agreements, each in form and
substance reasonably satisfactory to Lender. Lender and such Assignee,
co-lender and participating lender, will diligently and in good faith
use all commercially reasonable efforts to timely achieve the execution
of such agreements.
(iv) If requested by Lender, any Assignee, co-lender,
participating lender, Borrower and Manger agree to make such amendments
to the Loan Documents as may be required to (A) divide the Loan into
separate loans with different characteristics regarding interest rates,
pay rates, priority of Lien in the Premises and the Collateral and
similar matters or (B) divide the Loan into different tranches
containing such differentiated attributes. Provided, however, that in no
event shall Borrower or Manager be required to consent to any such
amendments which change or adversely affect the overall financial terms
of the Loan with respect to Borrower or Manager.
47
(v) Borrower and Manager recognize that, in connection
with assignments and participations with respect to the Loan, any or all
documentation, financial statements, appraisals and other data or copies
thereof, relevant to Borrower, Manager, any Guarantor or the Loan may be
exhibited to and retained by any participant or Assignee, co-lender,
participating lender, or prospective participant or Assignee of such
parties.
(c) REMIC/FASIT SALES. Lender may in its discretion subsequent to
the Substantial Completion of the Required Improvements, but prior to the
Conversion Date, sell the Loan to a REMIC/FASIT or otherwise elect to treat such
Loan as being included within a REMIC/FASIT. In connection with such sale or
election, Borrower and Manager shall cooperate in all respects with Lender
including providing such financial information to third parties, making such
non-material changes to the Loan Documents and indemnifying Lender in connection
therewith in accordance with provisions of Section 9.1 of the Loan Agreement.
Provided, however, that in no event shall Borrower or Manager be required to
consent to any such changes which adversely affect the overall financial terms
of the Loan with respect to Borrower or Manager. For purposes of this Section
9.14, such REMIC/FASIT shall be considered to be a "Assignee".
(d) AVAILABILITY OF RECORDS; FURTHER ASSURANCES. Borrower and
Manager acknowledge and agree that Lender may provide to any Assignee, originals
or copies of this Agreement, the Note, the Mortgage, any other Loan Documents
and any other documents, instruments, certificates, opinions, insurance
policies, letters of credit, reports, requisitions and other materials and
information at any time submitted by or on behalf of Borrower, Manager, any
Borrower Owner or Guarantor, or received by Lender in connection with the Loan.
In order to facilitate transactions with Assignees, Borrower and Manager shall
execute such further documents, instruments or agreements as Lender may
reasonably require. In addition, Borrower and Manager agree to cooperate in all
reasonable respects with Lender in the exercise of Lender's rights pursuant to
this Section 9.14, including providing such information and documentation
regarding Borrower, Manager, Borrower Owners and Guarantor and their businesses
and finances as Lender or any potential Assignee may reasonably request and to
meet with potential Assignees upon reasonable notice.
(e) EXPENSES. Lender and Borrower shall be responsible for their
respective expenses incurred in connection with any assignment under this
Section 9.14.
SECTION 9.15 RETENTION OF SERVICER. Lender reserves the right to
retain the Servicer to act as its agent hereunder with such powers as are
specifically delegated to the Servicer by Lender, whether pursuant to the terms
of this Agreement or otherwise, together with such other powers as are
reasonably incidental thereto. Prior to the occurrence of an Event of Default,
Borrower or Manager shall not be required to pay any fees or expenses incurred
by the Servicer on behalf of Lender in connection with a prepayment of the Note,
release of the Premises, assumption or modification of the Loan or enforcement
of the Loan Documents other than the Servicing Fee.
SECTION 9.16 CONSENT OF LENDER. Unless otherwise expressly stated to the
contrary, any determination or judgment made or any consent, election, approval
or waiver given,
48
by Lender pursuant to this Agreement, the Initial Note, the Mortgage or any
other Loan Document shall be made or given, as the case may be, in Lender's
discretion.
SECTION 9.17 JURY TRIAL WAIVER. EACH OF BORROWER, MANAGER, AND LENDER
HEREBY AGREES NOT TO ELECT A TRIAL BY JURY OF ANY ISSUE TRIABLE OF RIGHT BY
JURY, AND WAIVES ANY RIGHT TO TRIAL BY JURY FULLY TO THE EXTENT THAT ANY SUCH
RIGHT SHALL NOW OR HEREAFTER EXIST WITH REGARD TO THE LOAN DOCUMENTS, OR ANY
CLAIM, COUNTERCLAIM OR OTHER ACTION ARISING IN CONNECTION THEREWITH. THIS WAIVER
OF RIGHT TO TRIAL BY JURY IS GIVEN KNOWINGLY AND VOLUNTARILY BY BORROWER,
MANAGER AND LENDER, AND IS INTENDED TO ENCOMPASS INDIVIDUALLY EACH INSTANCE AND
EACH ISSUE AS TO WHICH THE RIGHT TO A TRIAL BY JURY WOULD OTHERWISE ACCRUE.
LENDER IS HEREBY AUTHORIZED TO FILE A COPY OF THIS PARAGRAPH IN ANY PROCEEDING
AS CONCLUSIVE EVIDENCE OF THIS WAIVER BY BORROWER AND MANAGER.
SECTION 9.18 INCORPORATION BY REFERENCE. Borrower and Manager
agree that the Note, the Mortgage and the other Loan Documents shall be made
subject to all the terms, covenants, conditions, obligations, stipulations and
agreements contained in this Agreement to the same extent and effect as if fully
set forth in and made a part of the Initial Note, the Mortgage and the other
Loan Documents. If there is a conflict between the terms of this Agreement and
the terms of the Loan Agreement, then the terms, covenants and conditions of the
Loan Agreement shall control. If there is a conflict between the terms of this
Agreement and any other Loan Documents, then the terms, covenants and conditions
of this Agreement shall prevail. The information set forth on the cover, and
recitals hereof and the Exhibits attached hereto are hereby incorporated herein
as a part of this Agreement with the same effect as set forth in the body
hereof.
SECTION 9.19 COUNTERPARTS. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such
counterpart.
SECTION 9.20 PRODUCT OF JOINT DRAFTING. This Agreement is, and shall be
deemed to be, the product of joint drafting by the parties hereto and shall not
be construed against any of them as the drafter hereof.
SECTION 9.21 INTENTIONALLY OMITTED.
SECTION 9.22 SIGN. At the request of Lender, Borrower or Manager
shall, subject to applicable ordinances pertaining to the Premises, and subject
to the Approval of Borrower or Manager, not to be unreasonably withheld,
conditioned or delayed, place a sign upon the Premises reciting, among other
things, the source of rehabilitation or construction financing for the
49
Premises, which sign shall be provided at the expense of Borrower or
Manager and shall remain in place until the completion of construction.
SECTION 9.23 SURVIVAL. The provisions of this Agreement shall
survive the completion of the Required Improvements; provided, however, upon the
occurrence of the Conversion Date all of the terms and provisions of this
Agreement shall be of no further force and effect (except to the extent that
certain definitions contained herein and incorporated by reference in any other
Loan Documents continue to be operative in such other Loan Documents), this
Agreement shall terminate and the Loan Agreement shall constitute and operate as
the sole loan agreement governing the operation and administration of the Loan.
SECTION 9.24 TIME OF THE ESSENCE. Time is of the essence with respect to
each and every covenant, agreement and obligation of Borrower and Manager under
this Agreement.
SECTION 9.25 LENDER RELIANCE. Except as otherwise specifically
provided in this Agreement, Lender in administering the Loan and the
disbursement of the Advances under this Agreement and the other applicable Loan
Documents, may rely exclusively upon, and deal exclusively with, Manager and
shall have no obligation to confirm with Borrower the truth, accuracy or
applicability of any instruction, representation or any other communication
received from Manager, and Lender shall have no liability to Borrower for any
action taken in such reliance.
SECTION 9.26 LIMITATION OF LIABILITY. Notwithstanding any
provision of this Agreement to the contrary, the liability of Borrower, the
Manager, and their respective agents, employees, officers, directors, partners,
etc. hereunder is limited pursuant to Section 10.1 of the Loan Agreement.
SECTION 9.27 TERMINATION OF MANAGER'S OBLIGATIONS.
Notwithstanding anything to the contrary contained herein or in any other Loan
Documents, Manager's obligations to either Lender or Borrower under this
Agreement or any other Loan Documents (except as otherwise expressly provided
for herein or therein) shall terminate upon the termination of the Development
Agreement, in which case Borrower shall succeed to all of Manager's rights,
duties and obligations under this Agreement. Subject to Section 10.1 of the Loan
Agreement, the foregoing obligations of Manager which have accrued but remain
unsatisfied prior to the termination of the Development Agreement, shall remain
in full force and effect and this Section shall not relieve Manager of such
Obligations. Further, if Manager enters into a Synthetic Lease pursuant to
Section 10.33 of the Loan Agreement or exercises any of its rights under the
Equity Option Agreement or the Property Option Agreement, then Manager's
obligations shall not terminate but rather shall remain in full force and
effect.
SECTION 9.28 WAIVER OF "ONE ACTION" RULE; CROSS COLLATERALIZATIONS.
(a) The Loan has been made by Lender pursuant to the Master
Financing Facility Agreement. The Master Financing Facility Agreement
contemplates that one (1) or more other loans (the "OTHER LOANS") made to Other
Borrowers pursuant to the Master Financing Facility
50
Agreement will, at Lender's election, be cross collateralized and cross
defaulted with the Loan and with each other, subject to Section (b) below. In
such event, such Other Loans will be secured by the Property and the Collateral,
and the Loan will be secured by the other properties and other collateral
serving as primary security for such Other Loans (the "OTHER PROPERTIES"),
subject to Section (b) below.
(b) Borrower hereby agrees that (x) with respect to the
obligations of any Other Borrower under any Other Loan made pursuant to the
Master Financing Facility Agreement, such Other Borrower's obligations shall be
cross-collateralized and cross-defaulted with the Loan until the earlier of (i)
the date on which any such Other Loan or the Loan has been converted pursuant to
the terms of the relevant Other Loan Agreement or this Agreement, as applicable,
and transferred in a Securitization for loans which have stabilized of which the
Loan or applicable Other Loans are not a part (i.e., the Loan and any Other
Loans are indifferent Securitization Pools) and (ii) Lender's election to
release the cross-default and the cross-collateralization and (y) the Loan shall
be cross-defaulted and cross-collateralized with any Other Loan which is
included in the same Securitization (as defined in this Agreement and in the
relevant Other Loan Agreement) as the Loan. During the term of any cross-default
and cross-collateralization and with respect to those Other Loans which are the
subject of such cross-default and cross-collateralization, without limitation to
any other right or remedy provided to Lender in this Agreement, the Loan
Agreement, the Master Financing Facility Agreement, or any of the other Loan
Documents, Borrower acknowledges and agrees that, to the full extent permitted
under applicable law, upon the occurrence of an Event of Default (i) Lender
shall have the right to pursue all of its rights and remedies in one proceeding,
or separately and independently in separate proceedings which it, as Lender, in
its discretion, shall determine form time to time, (ii) Lender is not required
to either xxxxxxxx assets, sell the Property or any Other Properties in any
inverse order of alienation, or be subjected to any "one action" or "election of
remedies" law or rule, (iii) the exercise by Lender of any remedies against any
Property or Other Properties will not impede Lender from subsequently or
simultaneously exercising remedies against any Property or Other Properties,
(iv) all Liens and other rights, remedies and privileges provided to Lender in
this Agreement, the Master Financing Facility Agreement (except as earlier
terminated pursuant to the terms thereof), and in the other Loan Documents
(except as earlier terminated pursuant to the terms thereof) or otherwise shall
remain in full force and effect until Lender has exhausted all of its remedies
against the Property and all Other Properties has been foreclosed, sold and/or
otherwise realized upon and (v) the Property and all the Other Properties under
the Master Financing Facility Agreement shall be security for the performance of
all of Borrower's Obligations.
51
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective duly authorized officers as of
the day and year first above written.
BORROWER:
AH Texas Owner Limited Partnership,
an Ohio limited partnership
By: AH Texas CGP, Inc., an Ohio corporation,
its sole general partner
By: __________________________________
Xxxxx X. Xxxxxxx
President
MANAGER:
BLC of Texas-II, L.P.,
a Delaware limited partnership
By: Brookdale Living Communities of Texas-II, Inc.,
a Delaware corporation, its general partner
By: __________________________________
Xxxxxx X. Xxxxxxxx, Xx.
Vice President
52
LENDER:
NOMURA ASSET CAPITAL CORPORATION,
a Delaware corporation
By:
Xxxxxx Xxxxx
Director
53
EXHIBIT A
LAND
A-1
EXHIBIT B
BUDGET
B-1
EXHIBIT C
[FORM OF REQUEST FOR ADVANCE]
____________, 1998
Nomura Asset Capital Corporation
Two World Xxxxxxxxx Xxxxxx
Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx XxXxxx
Re: REQUEST FOR ADVANCE NO. ____
Property Address:
Ladies and Gentlemen:
This Request for Advance No. ____, in the amount of $________ of
Hard Costs and the estimated amount of $ of Soft Costs, is made pursuant to the
Building Loan Agreement dated as of ____________, 1998 (the "BLA") between the
undersigned, as manager, borrower, and you, as lender. All capitalized terms
used and not defined herein shall have the respective meanings given such terms
in the BLA.
A. Manager hereby certifies to you as follows:
1. Exhibit A hereto sets forth, with respect to each Line Item, the amount
thereof incurred through and including the prior Request for Advance, the amount
thereof paid with Equity Payments, the amount thereof paid from Loan proceeds,
the amount of Retainage, if any, currently held by Lender in respect thereof and
the amount of Retainage previously released by Lender for such Line Item.
C-1
2. The following are Manger's estimates of Soft Costs for which this
Request for Advance is made, to the extent such Soft Costs are owed to Lender or
Lender's Construction Consultant:
Interest: $
Draw Fee: $
Servicing Fee: $
Lender's Construction Consultant's fee: $
Lender's Counsel Fees: $
Title and Closing Costs $___________
Management\Development fee: $___________
Manager acknowledges that Lender will determine the exact amount of such Soft
Costs, and the amount of the Advance made pursuant to this Request for Advance
(i) will be made to Borrower or Manager net of Soft Costs owing to Lender and
(ii) may be in an amount different from the amount requested herein, to the
extent actual Soft Costs vary from Manager's estimates.
3. Exhibit B hereto sets forth, by Line Item, the Hard Costs and other Soft
Costs for which this Request for Advance is made, the amount of each such Cost
to be paid from the requested Advance, the amount of each such Cost to be paid
with Equity Payments, and the amount of Retainage, if any, the release of which
is being requested.
4. Enclosed herewith are true, complete and correct copies of all items
required to be submitted under clauses (b) (c), (e), (f), (g), (h), (i), and (j)
of Section 5.3 of the BLA.
5. Enclosed herewith are copies of lien waivers covering all work paid for
from the most recent Advance.
6. Enclosed herewith is evidence of payment of the entire amount of the
most recent Advance to the persons to whom such Advance was paid.
7. Enclosed herewith is evidence that Manager has incurred all of the Soft
Costs for which this Request for Advance is made, to the extent that such Soft
Costs are not owed to Lender or Lender's Construction Consultant.
B. Manager hereby represents and warrants to Lender that except
as for the following items: ________, all of the conditions set forth in Article
V of the BLA have been satisfied by Borrower as of the date hereof (other than
the conditions set forth in Sections 5.3(d) and
5.3(l) of the BLA).
C. Manager hereby represents and warrants that except for the
following items __________, (i) there is not now existing and the making of the
Advance requested hereby will not
C-2
result in any Deficiency, (ii) the actual construction of the Improvements
accomplished to date conforms to that contemplated by the Construction Schedule.
D. Manager also requests that Lender disburse $__________ from
the Deficiency Account to pay for the Hard Costs and Soft Costs set forth by
Line Item on Exhibit C hereto.
E. Manager also requests that Lender reallocate Cost Savings
among the Line Items specified on Exhibit D hereto.
Assuming that this Request for Advance and the enclosures meet
with your approval, the following are the wire instructions for the requested
Advance:
ACCOUNT AMOUNT
Should you require any further documentation or have any questions, please
contact
-----------------------------.
Very truly yours,
BLC of Texas - II, L.P.,
a Delaware limited partnership
By: Brookdale Living Communities of Texas - II,
Inc.,
a Delaware corporation, its general partner
By: ______________________________
Xxxxxx X. Xxxxxxxx, Xx.
Vice President
By: ,
By:
Name:
Title:
C-3
EXHIBIT D
ARCHITECT'S INITIAL CERTIFICATION,
CONSENT AND AGREEMENT
(Architect's Letterhead)
___________, 199_
Nomura Asset Capital Corporation
Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxx XxXxxx
Premises: [Describe Premises]
Improvements: [Insert description of improvement]
Borrower: [Insert name of Borrower]
Manager: [Insert name of Manager]
Ladies and Gentlemen:
The undersigned, an architect duly registered and licensed in the State
of ________, (i) has been retained by Borrower Manager as Architect pursuant
to an Architect's Agreement dated _______, 199_ with Borrower Manager (as the
same may be amended or supplemented from time to time, as permitted hereby, the
"ARCHITECT'S AGREEMENT") and (ii) has prepared for Borrower Manager final
plans, the detailed working drawings, and specifications (and addenda), dated
________, 199_, and last redated and revised on _______, 199_, and identified as
set forth on Schedule "A" annexed hereto (collectively the "PLANS") in
connection with the proposed construction of the Improvements on the Premises.
The undersigned has been advised by Borrower that Borrower has requested
that Nomura Asset Capital Corporation (herein referred to, together with its
successors and assigns, as "LENDER"), make a loan to the Borrower in a maximum
principal amount of $__________ to fund a portion of the costs of constructing
the Improvements (the "BUILDING LOAN"). A complete and accurate copy of the
Architect's Agreement, with all amendments to date, is attached hereto.
The undersigned has also been advised by Borrower that the Building Loan
is to be made in accordance with the provisions of that certain building loan
agreement between Borrower, Manager and Lender to be dated on or about
_________, 199_ (the "BUILDING LOAN Agreement").
D-1
Accordingly, at Borrower's Manager request and in order to assist
Borrower Manager with providing information and representations to Lender
which Lender may rely upon in order to make an informed decision with regard to
making the Building Loan, the undersigned hereby states that:
A. The Plans comply with and conform in all respects to the requirements
of law, having been duly filed with and having been approved by [insert name of
relevant state or local authorities], and all other governmental and municipal
authorities whose approval is required, and further that the Plans are in full
compliance with all requirements and restrictions pursuant to all applicable
zoning, environmental, building, fire, health, and other governmental statutes,
ordinances, rules and regulations, as well as the requirements of the
appropriate board of fire underwriters or other such similar body acting for and
in the locality in which the Premises is located;
B. To extent obtainable at this stage of construction, all requisite
building permits, licenses, and approvals have been obtained in connection with
the construction of the Improvements and all such items shall be obtained prior
to Substantial Completion;
C. In the opinion of the undersigned, upon completion of the
construction of the Improvements substantially in accordance with the Plans, all
of the preconditions will have been met justifying the issuance of (i) a
permanent certificate or certificates of occupancy for the Improvements and (ii)
such other necessary approvals, certificates, permits and licenses that may be
required from [insert names of relevant state and local authorities], the board
of fire underwriters, or other similar body, or local or municipal fire, health,
policy, buildings, housing, environmental, zoning and planning boards, agencies,
authorities or departments and any such other governmental authorities having
jurisdiction thereover;
D. Upon completion of the construction of the Improvements substantially
in accordance with the Plans, the Improvements will be in compliance with all
zoning, environmental, and other applicable laws, statutes, ordinances, rules
and regulations, restrictions, requirements and easements then in effect, and
all existing building and other municipal or state violations filed or noted
against the Premises or the Improvements will be corrected upon or before the
completion of construction substantially in accordance with the Plans; and
E. All necessary gas, electric, water and sewage and other utilities
will be made available to the Improvements and the Premises upon completion of
the Improvements.
Additionally, at Borrower's Manager's request, the undersigned hereby
consents to the assignment of the Architect's Agreement by the Borrower
Manager to Lender in connection with the Building Loan (and to any further
assignment by Lender). The undersigned acknowledges and agrees that it will not
amend or modify or terminate or otherwise alter the Architect's Agreement
without the prior written approval of Lender and that Lender may enforce the
obligations of the Architect's Agreement with the same force and effect as if
enforced by Borrower Manager.
D-2
The undersigned warrants that (i) it has no notice of any prior
assignment of the Architect's Agreement, (ii) the Architect's Agreement is a
valid, enforceable agreement, (iii) neither party is in default of its
obligations thereunder, and (iv) all covenants, conditions, and agreements have
been performed as required therein, except those not due to be performed until
after the date hereof.
Additionally, in consideration of Lender's making of the Building Loan,
the undersigned agrees that in the event of a default by Borrower or Manager
under any of the documents now or hereafter executed and delivered in connection
with the Building Loan (collectively the "LOAN DOCUMENTS"), the undersigned
shall, at Lender's request, continue performance under the Architect's Agreement
in accordance with the terms thereof, without regard to any modifications
thereto not approved in writing by Lender, provided the undersigned is
reimbursed in accordance with the Architect's Agreement for all services
rendered to the Lender. Furthermore, in the event of any such default by
Borrower or Manager under any of Loan Documents, the undersigned agrees to make
available to Lender the "as-built" plans, if any, the detailed specifications
and working drawings (and addenda) for work performed at that time. Herewith we
are delivering a copy of our errors and omissions policy.
The undersigned further agrees that if it at any time gives a notice of
default to Borrower Manager under the Architect's Agreement, the undersigned
shall provide a copy of such notice
simultaneously to Lender.
The undersigned further agrees that if at any time Lender shall become
owner of the Premises, or otherwise required the use of the Plans, the Lender
shall have the right to use the same, together with any and all changes,
modifications, amendments, additions, enlargements, or extensions thereof,
without any cost or expense and without any payment of any additional fees or
charges to the undersigned.
Dated: __________, 199_
[ARCHITECT]
By: ____________________________
Name:
Title:
D-3
Schedule "A"
[to Exhibit D]
Schedule for Final Plans, Detailed
Specifications and Working Drawings
(and Addenda)
-------------------------------
Drawing No. Title Date & Revised Date
===============================================================================
D-4
EXHIBIT E - SUBSTITUTE WITH T:\DOCS\314730\82499\GENCONT.DOC
E-1
EXHIBIT F
MANAGER'S CONSENT AND AGREEMENT
F-1
EXHIBIT G
ENGINEER'S INITIAL CERTIFICATION,
CONSENT AND AGREEMENT
(Engineer's Letterhead)
___________, 199_
Nomura Asset Capital Corporation
Two World Xxxxxxxxx Xxxxxx, Xxxxxxxx X
Xxx Xxxx, Xxx Xxxx 00000-0000
Premises: [Describe Premises]
Improvements: [Insert more specific description of
improvement]
Borrower: [Insert name of Borrower]
Manager: [Insert name of Manager]
Ladies and Gentlemen:
The undersigned, an engineer duly registered and licensed in the State
of ________, (i) has been retained by Manager as Engineer pursuant to an
Engineer's Agreement dated _______,
199_
with Borrower (as the same may be amended or supplemented from time to time, as
permitted hereby, the "ENGINEER'S AGREEMENT") and (ii) has prepared for Manager
final plans, the detailed working drawings, and specifications (and addenda),
dated ________, 199_, and last redated and revised on _______, 199_, and
identified as set forth on Schedule "A" annexed hereto (collectively the
"PLANS") in connection with the proposed construction of the Improvements on the
Premises.
The undersigned has been advised by Manager that Borrower has requested
that Nomura Asset Capital Corporation (herein referred to, together with its
successors and assigns, as "LENDER"), make a loan to the Borrower in a maximum
principal amount of $__________ to fund a portion of the costs of constructing
the Improvements (the "BUILDING LOAN").
The undersigned has also been advised by Manager that the Building Loan
is to be made in accordance with the provisions of that certain building loan
agreement between Borrower, Manager and Lender to be dated on or about
_________, 199_ (the "BUILDING LOAN AGREEMENT").
Accordingly, at Manager's request and in order to assist Manager with
providing information and representations to Lender which Lender may rely upon
in order to make an informed decision
G-1
with regard to making the Building Loan, the undersigned hereby states that the
Plans comply with and conform in all respects to the requirements of law, having
been duly filed with and having been approved by [insert name of relevant state
or local authorities], and all other governmental and municipal authorities
whose approval is required, and further that the Plans are in full compliance
with all requirements and restrictions pursuant to all applicable zoning,
environmental, building, fire, health, and other governmental statutes,
ordinances, rules and regulations, as well as the requirements of the
appropriate board of fire underwriters or other such similar body acting for and
in the locality in which the Premises is located.
Additionally, at Manager's request, the undersigned hereby consents to
the assignment of the Engineer's Agreement by the Manager to Lender in
connection with the Building Loan (and to any further assignment by Lender). The
undersigned acknowledges and agrees that it will not amend or modify or
terminate or otherwise alter the Engineer's Agreement without the prior written
approval of Lender and that Lender may enforce the obligations of the Engineer's
Agreement with the same force and effect as if enforced by Manager.
The undersigned warrants that (i) it has no notice of any prior
assignment of the Engineer's Agreement, (ii) the Engineer's Agreement is a
valid, enforceable agreement, (iii) neither party is in default of its
obligations thereunder, and (iv) all covenants, conditions, and agreements have
been performed as required therein, except those not due to be performed until
after the date hereof.
The undersigned further agrees that if it at any time gives a notice of
default to Manager under the Engineer's Agreement, the undersigned shall provide
a copy of such notice simultaneously
to Lender.
Additionally, in consideration of Lender's making of the Building Loan,
the undersigned agrees that in the event of a default by Borrower or Manager
under any of the documents now or hereafter executed and delivered in connection
with the Building Loan (collectively the "LOAN DOCUMENTS"), the undersigned
shall, at Lender's request, continue performance under the Engineer's Agreement
in accordance with the terms thereof, without regard to any modifications
thereto not approved in writing by Lender, provided the undersigned is paid in
accordance with the Engineer's Agreement for all services rendered to the
Lender. Furthermore, in the event of any such default by Borrower or Manager
under any of Loan Documents, the undersigned agrees to make available to Lender
the "as-built" plans, if any, the detailed specifications and working drawings
(and addenda) for work performed at that time. Herewith we are delivering a copy
of our errors and omissions policy.
The undersigned further agrees that if at any time Lender shall become
owner of the Premises, or otherwise required the use of the Plans, the Lender
shall have the right to use the same, together with any and all changes,
modifications, amendments, additions, enlargements, or
G-2
extensions thereof, without any cost or expense and without any payment of any
additional fees or charges to the undersigned.
Dated: __________, 199_
[ENGINEER]
By: ____________________________
Name:
Title:
G-3
Schedule "A"
[to Exhibit G]
Schedule for Final Plans, Detailed
Specifications and Working Drawings
(and Addenda)
-------------------------------
Drawing No. Title Date & Revised Date
================================================================================
G-4
EXHIBIT H
MANAGER'S AFFIDAVIT
(to be furnished with each Request for Advance)
STATE OF ILLINOIS )
: ss.:
COUNTY OF XXXX )
____________________, being duly sworn, deposes and says:
That affiant is the _________________ of Brookdale Living
Communities of Texas -II, Inc., the general partner of BLC of Texas - II, L.P.,
a Delaware limited partnership (the "MANAGER"), has made due investigation as to
matters hereinafter set forth, and does hereby certify the following to induce
Nomura Asset Capital Corporation (together with its successors and assigns, the
"LENDER") to make and advance the sum of ________________ Dollars ($_______) to
the Manager and to AH Texas Owner Limited Partnership, an Ohio limited
partnership (the "Borrower") pursuant to the terms of that certain Building Loan
Agreement, dated as of June __, 1998, between the Lender, Borrower and Manager
(the "BUILDING LOAN AGREEMENT"), and Request for Advance No. _____, dated
_______, 199_, which Request for Advance is being submitted to the Lender
herewith:
1. All representations and warranties contained in the Building Loan
Agreement are true and correct in all material respects as of the date hereof.
2. No Default (such term and other capitalized terms used but not
otherwise defined herein having the respective meanings provided in Building
Loan Agreement) or Event of Default exists, and no event or condition has
occurred and is continuing or existing or would result from the Advance about to
be made which, with the giving of notice or the passage of time, or both, would
constitute a Default or Event of Default.
3. Construction of the Required Improvements has been carried on with
dispatch and has not been discontinued at any time for Unavoidable Delay or for
reasons within the control of the Manager in excess of that allowed under the
Building Loan Agreement except: _______________________, or in excess of that
requiring a notice to the Lender under
Section 7.4
of the Building Loan Agreement; the Required Improvements have not been damaged
by fire or other casualty, and no part of the Property has been taken by eminent
domain and no proceedings
or negotiations therefor are pending or threatened.
4. Construction of the Required Improvements is progressing in such
manner so as to assure the Substantial Completion thereof in accordance with
Building Loan Agreement.
H-1
5. All funds previously received from the Lender as Advances under
Building Loan Agreement have been expended for the sole purpose of paying Hard
Costs and Soft Costs (collectively, COSTS) previously certified to the Lender in
Requests for Advance as Costs to be paid from Loan proceeds, and no part of said
funds have been used, and the funds to be received pursuant to the Request for
Advance submitted herewith shall not be used, for any other purpose. No item of
Costs previously certified to the Lender in a Request for Advance remains unpaid
as of the date of this Affidavit.
6. All of the statements and information set forth in the Request for
Advance being submitted to the Lender herewith are true and correct in every
material respect as at the date hereof, and all Costs certified to the Lender in
said Request for Advance accurately reflect the precise amounts (or estimated
amounts, in the case of estimated Soft Costs) due. All of the funds to be
received pursuant to said Request for Advance shall be used solely for the
purpose of paying the items of cost specified therein to be paid therefrom or
for reimbursing the Manager for such items previously paid by the Manager.
7. Except as previously disclosed in writing to Lender, nothing has
occurred subsequent to the date of the Building Loan Agreement which has or may
result in the creation of any lien, charge or encumbrance upon the Property, or
any part thereof, or anything affixed thereto or used in connection therewith,
or which has or may substantially and adversely impair the ability of Borrower
or the Manager to make when due all payments of principal and interest required
under the Loan Documents or the ability of Borrower or the Manager to meet its
obligations under the Building Loan Agreement.
8. None of the labor, materials, overhead or other items of expense
specified in the Request for Advance submitted herewith have previously been
made the basis of any Request for Advance by the Manager which has been approved
by Lender.
H-2
9. All conditions, other than those exclusively within Lender's
control, to the advance referred to above and to be made in accordance with the
Request for Advance submitted herewith have been met in accordance with the
terms of the Building Loan Agreement.
BLC of Texas-II, L.P.,
a Delaware limited partnership
By: Brookdale Living Communities of Texas - II, Inc.,
a Delaware corporation, its sole general partner
By: ___________________________
Xxxxxx X. Xxxxxxxx, Xx.
Vice President
Sworn to before this ___ day of _______, 19__.
-------------------------
Notary Public
H-3
EXHIBIT I
PENDING DISBURSEMENTS CLAUSE
Pending disbursement of the full proceeds of the loan secured by the
Deed of Trust this policy insures only to the extent of the amount actually
disbursed, but increases as each disbursement is made in good faith and without
knowledge of any defects in or objections to, the title up to the face amount of
the policy. Nothing contained in this paragraph shall be construed as limiting
any exception under Schedule "B", or any printed provision of this policy.
I-1
EXHIBIT J
EXISTING TRADE CONTRACTS
J-1
EXHIBIT X
X-1
