Exhibit 10.5
CONSTRUCTION LOAN AGREEMENT
for a loan in the amount of
$40,000,000.00
MADE BY AND BETWEEN
TIERRA DEL SOL RESORT (PHASE 1), LTD., a Florida limited partnership, TDS TOWN
HOMES (PHASE 1), LLC, a Florida limited liability company, XXXXX XXXXXX I REAL
ESTATE, LLC, a Florida limited liability company, TDS AMENITIES, INC., a Florida
corporation,
AND
KEYBANK NATIONAL ASSOCIATION,
a national banking association
000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Dated as of December 29, 2005
TABLE OF CONTENTS
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(CONT'D)
Page
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Article 1 INCORPORATION OF RECITALS AND EXHIBITS 1
1.1 Incorporation of Recitals. 1
1.2 Incorporation of Exhibits. 2
Article 2 DEFINITIONS 2
2.1 Defined Terms. 2
2.2 Other Definitional Provisions. 10
Article 3 BORROWER'S REPRESENTATIONS AND WARRANTIES 10
3.1 Representations and Warranties. 10
3.2 Survival of Representations and Warranties. 13
Article 4 LOAN AND LOAN DOCUMENTS 13
4.1 Agreement to Borrow and Lend; Lender's Obligation to Disburse. 13
4.2 Loan Documents. 14
4.3 Term of the Loan. 15
4.4 Prepayments. 16
4.5 Required Principal Payments. 16
4.6 Late Charge. 16
Article 5 INTEREST 16
5.1 Interest Rate. 16
5.2 Interest Rate Agreements. 17
Article 6 COSTS OF MAINTAINING LOAN 17
6.1 Increased Costs and Capital Adequacy. 17
6.2 Borrower Withholding. 18
Article 7 LOAN EXPENSE AND ADVANCES 19
7.1 Loan and Administration Expenses. 19
7.2 Lender's Attorneys' Fees and Disbursements. 19
7.3 Time of Payment of Fees and Expenses. 19
7.4 Expenses and Advances Secured by Loan Documents. 20
7.5 Right of Lender to Make Advances to Cure Borrower's Defaults. 20
Article 8 NON-CONSTRUCTION REQUIREMENTS PRECEDENT TO THE OPENING OF
THE LOAN 20
8.1 Non-Construction Conditions Precedent. 20
Article 9 CONSTRUCTION REQUIREMENTS PRECEDENT TO THE OPENING OF THE LOAN 23
9.1 Required Construction Documents. 23
Article 10 BUDGET AND CONTINGENCY FUND 24
10.1 Budget. 24
10.2 Budget Line Items. 24
10.3 Contingency Fund. 25
10.4 Optional Method for Payment of Interest. 25
Article 11 SUFFICIENCY OF LOAN 25
11.1 Loan In Balance. 25
Article 12 CONSTRUCTION PAYOUT REQUIREMENTS 26
12.1 Applicability of Sections. 26
12.2 Monthly Payouts. 26
12.3 Documents to be Furnished for Each Disbursement. 26
12.4 Retainages. 27
12.5 Disbursements for Materials Stored On-Site. 27
12.6 Disbursements for Offsite Materials. 27
Article 13 FINAL DISBURSEMENT FOR CONSTRUCTION 28
13.1 Final Disbursement for Construction. 28
Article 14 RESERVED 29
Article 15 OTHER COVENANTS 29
15.1 Borrower further covenants and agrees as follows: 29
15.2 Authorized Representative. 36
Article 16 CASUALTIES AND CONDEMNATION 36
16.1 Lender's Election to Apply Proceeds on Indebtedness. 36
16.2 Borrower's Obligation to Rebuild and Use of Proceeds Therefor. 37
Article 17 ASSIGNMENTS BY LENDER AND BORROWER 37
17.1 Assignments and Participations. 37
17.2 Prohibition of Assignments and Transfers by Borrower. 37
17.3 Prohibition of Transfers in Violation of ERISA. 38
17.4 Successors and Assigns. 38
Article 18 TIME OF THE ESSENCE 38
18.1 Time is of the Essence. 38
Article 19 EVENTS OF DEFAULT 38
Article 20 LENDER'S REMEDIES IN EVENT OF DEFAULT 40
20.1 Remedies Conferred Upon Lender. 40
Article 21 GENERAL PROVISIONS 41
21.1 Captions. 41
21.2 Modification; Waiver. 41
21.3 Governing Law. 42
21.4 Acquiescence Not to Constitute Waiver of Lender's Requirements. 42
21.5 Disclaimer by Lender. 42
21.6 Partial Invalidity; Severability. 43
21.7 Definitions Include Amendments. 43
21.8 Execution in Counterparts. 43
21.9 Entire Agreement. 43
21.10 Waiver of Damages. 44
21.11 Claims Against Lender. 44
21.12 Jurisdiction. 44
21.13 Set-Offs. 44
Article 22 NOTICES 45
Article 23 WAIVER OF JURY TRIAL 46
EXHIBITS
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EXHIBIT "A" Legal Description of Land
EXHIBIT "B" Permitted Exceptions
EXHIBIT "C" Title Requirements
EXHIBIT "D" Form of Survey Certification
EXHIBIT "E" Insurance Requirements
EXHIBIT "F" Architect's Certificate
EXHIBIT "G" Initial Budget
EXHIBIT "H" Borrower's Certificate
EXHIBIT "I" Soft and Hard Cost Requisition Form
EXHIBIT "J" Borrower's Certificate of Compliance
EXHIBIT "K" Sources and Uses of Funds
EXHIBIT "L" Survey Requirements
EXHIBIT "M" Required Contracts and Deposits
CONSTRUCTION LOAN AGREEMENT
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PROJECT COMMONLY KNOWN AS
"TIERRA DEL SOL PHASE I"
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THIS CONSTRUCTION LOAN AGREEMENT ("Agreement") is made as of December 29,
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2005, by and between TIERRA DEL SOL RESORT (PHASE 1), L.P., a Florida limited
partnership ("Tierra del Sol"), TDS TOWN HOMES (PHASE 1), LLC, a Florida limited
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liability company ("TDS Town Homes"), XXXXX XXXXXX I REAL ESTATE, LLC, a Florida
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limited liability company ("Xxxxx Xxxxxx"), TDS AMENITIES, INC., a Florida
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corporation ("TDS Amenities") (Tierra del Sol, TDS Town Homes, Xxxxx Xxxxxx and
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TDS Amenities hereinafter referred to, jointly and severally, as "Borrower"),
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and KEYBANK NATIONAL ASSOCIATION, a national banking association, its successors
and assigns ("Lender").
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W I T N E S S E T H:
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RECITALS
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A. TDS Town Homes is the owner in fee simple of land located in the County
of Polk, State of Florida, and legally described on EXHIBIT "A-1" attached
hereto, and the improvements located thereon (the "TDS Town Homes Land"), Costa
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Xxxxxx is the owner in fee simple of land located in the County of Polk, State
of Florida, and legally described on EXHIBIT "A-2" attached hereto, and the
improvements located thereon (the "Xxxxx Xxxxxx Land"), TDS Amenities is the
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owner in fee simple of land located in the County of Polk, State of Florida, and
legally described on EXHIBIT "A-3" attached hereto, and the improvements located
thereon (the TDS Amenities Land") (the TDS Town Homes Land, the Xxxxx Xxxxxx
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Land and the TDS Amenities Land hereinafter referred to as the "Land"). Each of
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TDS Town Homes, Xxxxx Xxxxxx and TDS Amenities is a wholly-owned subsidiary of
Tierra del Sol. Borrower proposes to develop and construct a luxury
townhome/condominium project as more particularly described in the definition of
"Improvements" below.
B. Borrower has applied to Lender for a revolving loan in the maximum
principal amount of FORTY MILLION AND NO/100 DOLLARS ($40,000,000.00) (the
"Loan" or the "Phase 1 Loan") to reimburse Borrower for construction and
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development of the Project, and Lender is willing to make the Loan on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE 1
INCORPORATION OF RECITALS AND EXHIBITS
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1.1 INCORPORATION OF RECITALS.
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The foregoing preambles and all other recitals set forth herein are made a
part hereof by this reference.
1.2 INCORPORATION OF EXHIBITS.
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EXHIBITS "A" through "L," to this Agreement, attached hereto, are
incorporated in this Agreement and expressly made a part hereof by this
reference.
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ARTICLE 2
DEFINITIONS
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2.1 DEFINED TERMS.
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The following terms as used herein shall have the following meanings (as
supplemented by the Addendum):
Acquisition Proceeds: As such term is defined in Section 8.1(t)(i).
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Addendum: The Addendum to Construction Loan Agreement - Condominium and
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Townhouse Project Development.
Adjusted Daily LIBOR Rate: An interest rate per annum equal to the sum of
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(a) the Daily LIBOR Rate plus (b) the LIBOR Rate Margin. The Adjusted Daily
LIBOR Rate shall change immediately and contemporaneously with any change in the
Daily LIBOR Rate.
Adjusted Prime Rate: A rate per annum equal to the sum of (a) the Prime
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Rate Margin and (b) the greater of (i) the Prime Rate or (ii) one percent (1%)
in excess of the Federal Funds Effective Rate. Any change in the Adjusted Prime
Rate shall be effective immediately from and after such change in the Adjusted
Prime Rate (or the Federal Funds Effective Rate, as applicable).
Affiliate: With respect to a specified person or entity, any individual,
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partnership, corporation, limited liability company, trust, unincorporated
organization, association or other entity which, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with such person or entity, including, without limitation, any general
or limited partnership in which such person or entity is a partner.
Agreement: This Construction Loan Agreement.
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Applicable Rate: As such term is defined in Section 5.1(a).
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Appraisal: An MAI certified appraisal of the Project performed in
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accordance with FIRREA and Lender's appraisal requirements by Integra Realty
Resources.
Architect: Xxxxxxxxx Xxxx Architects, Inc.
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Architect's Certificate: A certificate in the form of EXHIBIT "F" attached
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hereto executed by the Architect in favor of Lender.
Assignment of Rents: An assignment of leases and rents made by Borrower in
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favor of Lender assigning all leases, subleases and other agreements relating to
the use and occupancy of all or any portion of the Project, and all present and
future leases, rents, issues and profits therefrom.
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Bankruptcy Code: Title 11 of the United States Code entitled "Bankruptcy"
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as now or hereafter in effect, or any successor thereto or any other present or
future bankruptcy or insolvency statute.
Bond: A Performance Bond and Labor and Material Payment Bond in a form
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approved by Lender, with Major Subcontractor, as the case may be, as principal,
with a surety company acceptable to Lender and licensed to do business in the
State, as surety, with a dual obligee rider in favor of Lender.
Budget: The budget for the Project specifying all costs and expenses of
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every kind and nature whatever to be incurred by Borrower in connection with the
Project prior to the Maturity Date.
Budget Line Item: As such term is defined in Section 10.2.
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Business Day: A day of the year on which banks are not required or
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authorized to close in Orlando, Florida.
Buyer's Deposit Shortfall Account: As such term is defined in Section
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15.1(w).
CDD: As such term is defined in Section 8.1(t)(i).
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CDD Bonds: As such term is defined in Section 8.1(t)(i).
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CDD Bond Trustee: Suntrust Bank
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Change Order: Any request for changes in the Plans and Specifications
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(other than minor field changes involving no extra cost).
Collateral Account: As such term is defined in Section 15.1(t).
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Collateral Account LC: As such term is defined in Section 15.1(t).
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Completion Date: On or before the date twenty-one (21) months after the
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Construction Commencement Date.
Completion Guarantor: PCL Construction Enterprises, Inc., a Colorado
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corporation.
Completion Guaranty: A guaranty of the obligations of General Contractor
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under the General Contract executed by the Completion Guarantor and pursuant to
which the Completion Guarantor guarantees the timely completion of the General
Contract in accordance with all provisions of the General Contract and this
Agreement.
Condominium: As such term is defined in the Addendum.
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Condominium Unit or Condominium Units: As such term is defined in the
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Addendum.
Construction or construction: The construction and equipping of the
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Improvements in accordance with the Plans and Specifications, and all related
improvements required to be performed by Borrower under Leases and/or Contracts
of Sale (as defined in the Addendum), and the installation of all personal
property, fixtures and equipment required for the operation of the Project.
Construction Commencement Date: On or before thirty (30) days from the Date
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of Closing.
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Construction Schedule: A schedule satisfactory to Lender and Lender's
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Consultant, establishing a timetable for completion of the Construction,
showing, on a monthly basis, the anticipated progress of the Construction and
also showing that the Improvements can be completed on or before the Completion
Date. The Construction Schedule must demonstrate that Units can be delivered in
October, 2006 and each month thereafter in accordance with the General Contract.
Contingency Fund: A Budget Line Item which shall represent an amount
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necessary to provide reasonable assurances to Lender that additional funds are
available to be used if additional costs and expenses are incurred or additional
interest accrues on the Loan, or unanticipated events or problems occur.
Contract Deposit or Contract Deposits: As such term is defined in the
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Addendum.
Contract of Sale or Contracts of Sale: As such term is defined in the
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Addendum.
Control: As such term is used with respect to any person or entity,
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including the correlative meanings of the terms "controlled by" and "under
common control with", shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of such person
or entity, whether through the ownership of voting securities, by contract or
otherwise.
Daily LIBOR Rate: The rate per annum calculated by Lender in good faith,
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which Lender determines with reference to the rate per annum (rounded upwards to
the next higher whole multiple of 1/16th if such rate is not such a multiple) at
which deposits in United States dollars are offered by prime banks in the London
Interbank Eurodollar Market two LIBOR Business days prior to the day on which
such rate is calculated by the Lender in an amount comparable to the amount of
such advance and with a maturity equal to the LIBOR Rate Interest Period.
Date of Closing: December 29, 2005.
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Default or default: Any event, circumstance or condition, which, if it were
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to continue uncured, would, with notice or lapse of time or both, constitute an
Event of Default hereunder.
Default Rate: A rate per annum equal to the greater of: (i) eighteen
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percentage points (18%) per annum; or (ii) three percentage points (300 basis
points) in excess of the Applicable Rate, but shall not at any time exceed the
highest rate permitted by law.
Deficiency Deposit: As such term is defined in Section 11.1.
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Environmental Indemnity: An environmental indemnity from the Borrower and
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Guarantors, jointly and severally, indemnifying Lender with regard to all
matters related to Hazardous Material and other environmental matters.
Environmental Proceedings: Any environmental proceedings, whether civil
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(including actions by private parties), criminal, or administrative proceedings,
relating to the Project.
Environmental Report: An environmental report (a "Phase 1" environmental
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assessment) prepared at Borrower's expense by a qualified environmental
consultant approved by Lender, dated not more than six (6) months prior to the
Loan Opening Date and addressed to Lender (or subject to separate letter
agreement permitting Lender to rely on such environmental report).
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ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
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the regulations promulgated thereunder from time to time.
Escrow Account(s): As such term is defined in the Addendum.
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Event of Default: As such term is defined in ARTICLE 19.
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Federal Funds Effective Rate: Shall mean, for any day, the rate per annum
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(rounded upward to the nearest on one-hundredth of one percent (1/100 of 1%))
announced by the Federal Reserve Bank of Cleveland on such day as being the
weighted average of the rates on overnight federal funds transactions arranged
by federal funds brokers on the previous trading day, as computed and announced
by such Federal Reserve Bank in substantially the same manner as such Federal
Reserve Bank computes and announces the weighted average it refers to as the
"Federal Funds Effective Rate."
FIRREA: The Financial Institutions Reform, Recovery And Enforcement Act of
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1989, as amended from time to time.
General Contract: The general contract(s) between Borrower and General
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Contractor, pertaining to the construction of all Improvements.
General Contractor: PCL Construction Services, Inc.
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Governmental Approvals: Collectively, all consents, licenses, and permits
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and all other authorizations or approvals required from any Governmental
Authority for the Construction in accordance with the Plans and Specifications.
Governmental Authority: Any federal, state, county or municipal government,
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or political subdivision thereof, any governmental or quasi-governmental agency,
authority, board, bureau, commission, department, instrumentality, or public
body, or any court, administrative tribunal, or public utility.
Guarantor(s): The individual or collective reference to the Payment
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Guarantors and the Performance and Completion Guarantors (but specifically
excluding the Completion Guarantor), as the context shall imply.
Hazardous Material: Means and includes gasoline, petroleum, asbestos
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containing materials, explosives, radioactive materials or any hazardous or
toxic material, substance or waste which is defined by those or similar terms or
is regulated as such under any Law of any Governmental Authority having
jurisdiction over the Project or any portion thereof or its use, including: (i)
any "hazardous substance" defined as such in (or for purposes of) the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.A. Sec. 9601(14) as may be amended from time to time, or any so-called
"superfund" or "superlien" Law, including the judicial interpretation thereof;
(ii) any "pollutant or contaminant" as defined in 42 U.S.C.A. Sec. 9601(33);
(iii) any material now defined as "hazardous waste" pursuant to 40 C.F.R. Part
260; (iv) any petroleum, including crude oil or any fraction thereof; (v)
natural gas, natural gas liquids, liquefied natural gas, or synthetic gas usable
for fuel; (vi) any "hazardous chemical" as defined pursuant to 29 C.F.R. Part
1910; and (vii) any other toxic substance or contaminant that is subject to any
other Law or other past or present requirement of any Governmental Authority.
Any reference above to a Law, includes the same as it may be amended from time
to time, including the judicial interpretation thereof.
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Improvements: A luxury townhome/condominium project consisting of 114
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townhomes, 180 mid-rise residential condominium units, and one (1) commercial
condominium unit to be constructed on the Land, along with project amenities and
other improvements to be known as "Tierra del Sol", as more particularly
----------------
described in the Plans and Specifications, together with any existing
improvements not to be demolished. The Condominium will consist of five (5)
buildings (the "Condominium Buildings"), each having 36 Condominium Units, and
----------------------
will be constructed on the Xxxxx Xxxxxx Land. The Project amenities will include
a pool (including a "lazy river" feature), pool deck, two spa pools, kiddie
pool, pool equipment building, two pool-side restroom buildings, sports bar and
"beach" area and will be constructed on the TDS Amenities Land. The townhomes
will consist of twelve (12) "Monaco" townhouse buildings consisting of 74
Townhouse Units, and five "Marbella" townhouse buildings consisting of 40
Townhouse Units (the Monaco buildings and the Marbella buildings hereinafter
referred to as the "Townhouse Buildings"), and will be constructed on the TDS
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Town Homes Land. The parking area serving the Condominium Buildings (up to the
boundary of the TDS Amenities Land) will be owned by TDS Amenities until they
are deeded to the master association at or before the time control of it is
turned over to the owners.
In Balance or in balance: As such term is defined in Article 11.
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Including or including: Including but not limited to.
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Interest Rate Agreement: An Interest Rate Protection Product purchased by
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Borrower from Lender, if applicable.
Interest Rate Protection Product: An interest rate hedging product, such as
--------------------------------
a cap or swap or such other interest rate protection product.
Internal Revenue Code: The Internal Revenue Code of 1986, as amended from
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time to time.
Land: As such term is defined in Recital A.
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Laws: Collectively, all federal, state and local laws, statutes, codes,
----
ordinances, orders, rules and regulations, including judicial opinions or
precedential authority in the applicable jurisdiction.
Late Charge: As such term is defined in Section 4.6.
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Leases: The collective reference to all leases, subleases and occupancy
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agreements affecting the Project or any part thereof now existing or hereafter
executed and all amendments, modifications or supplements thereto approved in
writing by Lender.
Lender: As defined in the opening paragraph of this Agreement, and
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including any successor holder of the Loan from time to time.
Lender's Consultant: An independent consulting architect, inspector, and/or
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engineer designated by Lender in Lender's sole discretion.
LIBOR Business Day: A Business Day on which dealings in U.S. dollars are
--------------------
carried on in the London Interbank Eurodollar Market.
LIBOR Rate: The rate per annum calculated by Lender in good faith, which
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Lender determines with reference to the rate per annum (rounded upwards to the
next higher whole multiple of 1/16th if such rate is not such a multiple) at
which deposits in United States dollars are offered by prime banks in the London
Interbank Eurodollar Market two LIBOR Business days prior to the day on which
such rate is calculated by the Lender in an amount comparable to the amount of
such advance and with a maturity equal to the LIBOR Rate Interest Period.
-6-
LIBOR Rate Interest Period: With respect to each amount bearing interest at
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a LIBOR based rate, a period of one LIBOR Business day, commencing on the date a
disbursement of Loan proceeds is made, continued, or converted.
LIBOR Rate Margin: Two and three-quarters percent (2.75%) (two hundred
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seventy five (275) basis points) per annum.
Loan: As defined in Recital B.
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Loan Commitment: That certain Commitment Letter dated December 1, 2005, and
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executed by Borrower and Lender.
Loan Documents: The collective reference to this Agreement, the documents
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and instruments listed in Section 4.2, and all the other documents and
instruments entered into from time to time, evidencing or securing the Loan or
any obligation of payment thereof or performance of Borrower's or Guarantors'
obligations in connection with the transaction contemplated hereunder, and any
Interest Rate Agreement (if applicable), each as amended.
Loan Opening Date: The date of the first disbursement of proceeds of the
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Loan.
Major Subcontractor: Any subcontractor under a Major Subcontract.
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Major Subcontracts: All subcontracts between the General Contractor and any
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subcontractors and material suppliers which provide for an aggregate contract
price equal to or greater than $500,000.00.
Material Adverse Change or material adverse change: If, in Lender's
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reasonable discretion, the business prospects, operations or financial condition
of a person, entity or property has changed in a manner which could materially
impair the value of Lender's security for the Loan, prevent timely repayment of
the Loan or otherwise prevent the applicable person or entity from timely
performing any of its material obligations under the Loan Documents.
Maturity Date: December 28, 2007, unless sooner repaid.
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Maximum Outstanding Loan Amount: The maximum principal amount of the Loan,
--------------------------------
at any time outstanding, as set forth in Section 4.1(a).
Maximum Aggregate Loan Amount: As such term is defined in Section 4.1(a).
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Mortgage: The Mortgage, Assignment Rents, Security Agreement and Fixture
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Filing, executed by Borrower for the benefit of Lender securing this Agreement,
the Note, and all obligations of Borrower in connection with the Loan, granting
a first priority lien on Borrower's fee interest in the Project, subject only to
the Permitted Exceptions.
Net Cash Flow: The gross income produced by the Project from all sources
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(including but not limited to all Net Sale Proceeds (as defined in the Addendum)
and other sales and rental activities) reduced by: (a) ordinary and necessary
operating expenses actually incurred and paid with respect to the Project
(including amounts paid to affiliates of Borrowers only if preapproved by the
Lender); (b) reasonable capital expenditures actually made with respect to the
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Project (other than those funded out of Loan proceeds); and (c) reasonable
reserves for repairs and replacements to the Project (including reserves for the
condominium association, the homeowner's association, basic resort services and
reserves under the Operating Agreement), but only if and to the extent such
reserves are funded in cash and deposited with the Lender and pledged to the
Lender as security for payment of the Loan.
Net Sale Proceeds: As such term is defined in the Addendum.
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Note: A promissory note, in the Maximum Outstanding Loan Amount, executed
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by Borrower and payable to the order of Lender, evidencing the Loan.
Opening of the Loan or Loan Opening: The first disbursement of Loan
-----------------------------------------
proceeds.
Operating Account: A deposit account opened and maintained by Borrower with
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Lender, to be utilized in the manner set forth in Section 4.1(e).
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Operating Agreement: That certain Operating Agreement entered into by and
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between Xxxxxx Resort Villas & Hotels, Inc., and Sonesta Orlando, Inc. dated
January 29, 2005.
Owner's Contingency: A Budget Line Item identifying funds to be disbursed
--------------------
to Borrower, upon approved request, for the purpose of paying additional,
non-required expenses related to the Project. In no event, however, shall
Owner's Contingency be available for distribution until Lender is satisfied that
the Loan is in balance and sufficient to complete the improvements planned.
Payment Guarantor(s): Xxxxxxx X. Xxxxxx, American Leisure Holdings, Inc., a
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Nevada corporation, and TDS Development, LLC, a Florida limited liability
company.
Payment Guaranty: A guaranty of payment executed by each Payment Guarantor
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and pursuant to which the Payment Guarantors jointly and severally guarantee
payment of principal, interest and other amounts due under the Loan Documents.
Performance and Completion Guarantor(s): Xxxxxxx X. Xxxxxx, American
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Leisure Holdings, Inc., a Nevada corporation, and TDS Development, LLC, a
Florida limited liability company.
Performance and Completion Guaranty: A guaranty of performance and
--------------------------------------
completion, executed by each Performance and Completion Guarantor and pursuant
to which the Performance and Completion Guarantors jointly and severally
guarantee the lien-free and timely completion of the Project in accordance with
all provisions of this Agreement and Borrower's obligation to keep the Loan In
Balance and to pay for all cost overruns.
Permitted Exceptions: Those matters listed on Schedule B to the Title
---------------------
Policy to which title to the Project may be subject at the Loan Opening (as set
forth on EXHIBIT "B", attached hereto) and thereafter such other title
exceptions as Lender may reasonably approve in writing.
Phase 1 Loan: As such term is defined in Recital B.
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Plans and Specifications: Detailed plans and specifications for the
--------------------------
Improvements, as approved by Lender pursuant to Section 9.1(f), as modified
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hereafter with Lender's prior written approval or as otherwise expressly
permitted by this Agreement.
-8-
Prime Rate: That interest rate established from time to time by Lender as
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Lender's Prime Rate, whether or not such rate is publicly announced; the Prime
Rate may not be the lowest interest rate charged by Lender for commercial or
other extensions of credit;
Prime Rate Margin: 0 percent (0 basis points) per annum.
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Pro-Forma Projection: A pro forma statement of projected income and
---------------------
expenses of Project.
Project: The collective reference to (i) the Land, together with all
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buildings, structures and improvements located or to be located thereon,
including the Improvements, (ii) all rights, privileges, easements and
hereditaments relating or appertaining thereto, and (iii) all personal property,
fixtures and equipment required or beneficial for the operation thereof, all as
contemplated by the Plans and Specifications and the Budget.
Project Equity: As such term is defined in Section 8.1(a).
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Project Escrow Account: As such term is defined in Section 4.1(f).
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Required Permits: Each building permit, environmental permit, utility
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permit, land use permit, wetland permit and any other permits, approvals or
licenses issued by any Governmental authority which are required in connection
the Construction or operation of the Project.
Reserve Percentage: The percentage which is specified by the Board of
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Governors of the Federal Reserve System (or any successor) or any other
governmental or quasi-governmental authority with jurisdiction over Lender for
determining the maximum reserve requirement (including, but not limited to, any
marginal reserve requirement) for Lender with respect to liabilities
constituting or including (among other liabilities) Eurocurrency liabilities in
an amount equal to the Loan.
Retainage As such term is defined in Section 12.4.
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Soil Report: A soil test report prepared by a licensed engineer
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satisfactory to Lender indicating to the satisfaction of Lender that the soil
and subsurface conditions underlying the Project will support the Improvements.
State: The State of Florida.
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Subcontracts: Subcontracts for labor or materials to be furnished to the
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Project.
TDS Development, LLC, Account: As such term is defined in Section 15.1(v).
----------------------------- ---------------
Title Insurer: First American Title Insurance Company, or such other title
--------------
insurance company licensed in the State as may be approved in writing by Lender.
Title Policy: An ALTA Mortgagee's Loan Title Insurance Policy with extended
------------
coverage issued by the Title Insurer insuring the lien of the Mortgage as a
valid first, prior and paramount lien upon the Project and all appurtenant
easements, and subject to no other exceptions other than the Permitted
Exceptions and otherwise satisfying the requirements of EXHIBIT "C" attached
hereto and made a part hereof.
Townhouse Unit or Townhouse Units: As such term is defined in the Addendum.
---------------------------------
-9-
Transfer: Any sale, transfer, lease (other than a Lease approved by
--------
Lender), conveyance (other than conveyances approved by Lender), alienation,
pledge, assignment, mortgage, encumbrance hypothecation or other disposition
(other than the transfer of Townhouse Units and Condominium Units to individual
Unit purchasers) of: (a) all or any portion of the Project or any portion of any
other security for the Loan; (b) all or any portion of the Borrower's right,
title and interest (legal or equitable) in and to the Project or any portion of
any other security for the Loan; or (c) any interest (other than warrants for a
2% partnership interest in, and a pledge of partnership interests in (but not a
transfer pursuant to such pledge), Tierra del Sol Resort (Phase 1), Ltd, issued
to Stanford International Bank, Ltd.) in Borrower or any interest in any entity
which directly or indirectly holds an interest in, or directly or indirectly
controls, Borrower (other than any minority ownership interest in American
Leisure Holdings, Inc.).
Unavoidable Delay: Any delay in the construction of the Project, caused by
------------------
natural disaster, fire, earthquake, floods, explosion, extraordinary adverse
weather conditions, inability to procure or a general shortage of labor,
equipment, facilities, energy, materials or supplies in the open market, failure
of transportation, strikes or lockouts for which Borrower has notified Lender in
writing.
Unit or Units: As such term is defined in the Addendum.
-------------
Unit Release Price: The Minimum Release Price (as defined in the Addendum).
------------------
Usable Deposits: Usable Deposits are defined as (i) 10% (2nd 10% deposits)
----------------
of the gross sales contract price of each Condominium Unit; or (ii) 20% of the
gross sales contract price of each Townhouse Unit (provided the purchaser of
such Townhouse Unit(s) has executed any required waiver allowing for use of said
deposit funds).
2.2 OTHER DEFINITIONAL PROVISIONS.
-----------------------------
All terms defined in this Agreement shall have the same meanings when used in
the Note, Mortgage, any other Loan Documents, or any certificate or other
document made or delivered pursuant hereto. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement.
ARTICLE 3
BORROWER'S REPRESENTATIONS AND WARRANTIES
-----------------------------------------
3.1 REPRESENTATIONS AND WARRANTIES.
------------------------------
To induce Lender to execute this Agreement and perform its obligations
hereunder, Borrower hereby represents and warrants to Lender as follows:
(a) Borrower has good and marketable fee simple title to the Project,
subject only to the Permitted Exceptions.
(b) Except as previously disclosed to Lender in writing, no litigation
or proceedings are pending, or to the best of Borrower's knowledge
threatened, against Borrower, Completion Guarantor or any Guarantor, which
could, if adversely determined, cause a Material Adverse Change with
respect to Borrower, Completion Guarantor, any Guarantor or the Project.
There are no pending Environmental Proceedings and Borrower has no
knowledge of any threatened Environmental Proceedings or any facts or
circumstances which may give rise to any future Environmental Proceedings.
-10-
(c) Borrower is a duly organized and validly existing Florida entity,
as applicable, and has full power and authority to execute, deliver and
perform all Loan Documents to which Borrower is a party, and such
execution, delivery and performance have been duly authorized by all
requisite action on the part of Borrower.
(d) No consent, approval or authorization of or declaration,
registration or filing with any Governmental Authority or nongovernmental
person or entity, including any creditor, partner, or member of Borrower,
Completion Guarantor or any Guarantor, is required in connection with the
execution, delivery and performance of this Agreement or any of the Loan
Documents other than the recordation of the Mortgage, Assignment of Leases
and Rents and the filing of UCC-1 Financing Statements, except for such
consents, approvals or authorizations of or declarations or filings with
any Governmental Authority or non-governmental person or entity where the
failure to so obtain would not have an adverse effect on Borrower,
Completion Guarantor or such Guarantor or which have been obtained as of
any date on which this representation is made or remade.
(e) The execution, delivery and performance of this Agreement, the
execution and payment of the Note and the granting of the Mortgage and
other security interests under the other Loan Documents have not
constituted and will not constitute, upon the giving of notice or lapse of
time or both, a breach or default under any other agreement to which
Borrower, Completion Guarantor or any Guarantor is a party or may be bound
or affected, or a violation of any law or court order which may affect the
Project, any part thereof, any interest therein, or the use thereof.
(f) There is no default under this Agreement or and of the other Loan
Documents, nor any condition which, after notice or the passage of time or
both, would constitute a default or an Event of Default under said
documents.
(g) No condemnation of any portion of the Project, (ii) no
condemnation or relocation of any roadways abutting the Project, and (iii)
no proceeding to deny access to the Project from any point or planned point
of access to the Project, has commenced or, to the best of Borrower's
knowledge, is contemplated by any Governmental Authority.
(h) The amounts set forth in the Budget present a full and complete
itemization by category of all costs, expenses and fees which Borrower
reasonably expects to pay or reasonably anticipates becoming obligated to
pay to complete the Construction and operate the Project (until the Project
achieves breakeven operations). Borrower is unaware of any other such
costs, expenses or fees which are material and are not covered by the
Budget.
(i) Neither the construction of the Improvements nor the use of the
Project when completed and the contemplated accessory uses will violate (i)
any Laws (including subdivision, zoning, building, environmental protection
and wetland protection Laws), or (ii) any building permits, restrictions of
record, or agreements affecting the Project or any part thereof. Neither
the zoning authorizations, approvals or variances nor any other right to
construct or to use the Project is to any extent dependent upon or related
to any real estate other than the Land. All Government Approvals required
for the Construction in accordance with the Plans and Specifications have
been obtained or will be obtained prior to the Loan Opening, and all Laws
relating to the Construction and operation of the Improvements have been
complied with and all permits and licenses required for the operation of
the Project which cannot be obtained until the Construction is completed
can be obtained if the Improvements are completed in accordance with the
Plans and Specifications.
(j) When constructed, the Project will have adequate water, gas and
electrical supply, storm and sanitary sewerage facilities, other required
public utilities, fire and police protection, and means of access between
-11-
the Project and public highways; none of the foregoing will be foreseeably
delayed or impeded by virtue of any requirements under any applicable Laws.
(k) No brokerage fees or commissions are payable by or to any person
in connection with this Agreement or the Loan to be disbursed hereunder.
(l) All financial statements and other information previously
furnished by Borrower or any Guarantor to Lender in connection with the
Loan are true, complete and correct and fairly present the financial
conditions of the subjects thereof as of the respective dates thereof and
do not fail to state any material fact necessary to make such statements or
information not misleading, and no Material Adverse Change with respect to
Borrower or any Guarantor has occurred since the respective dates of such
statements and information. Neither Borrower nor any Guarantor has any
material liability, contingent or otherwise, not disclosed in such
financial statements.
(m) Except as disclosed by Borrower to Lender, (i) the Project is in a
clean, safe and healthful condition, and, except for materials used in the
ordinary course of construction, maintenance and operation of the Project,
is free of all Hazardous Material and is in compliance with all applicable
Laws; (ii) neither Borrower nor, to the best knowledge of Borrower, any
other person or entity, has ever caused or permitted any Hazardous Material
to be placed, held, located or disposed of on, under, at or in a manner to
affect the Project, or any part thereof, and the Project has never been
used (whether by Borrower or, to the best knowledge of Borrower, by any
other person or entity) for any activities involving, directly or
indirectly, the use, generation, treatment, storage, transportation, or
disposal of any Hazardous Material; (iii) neither the Project nor Borrower
is subject to any existing, pending, or, to the best of Borrower's
knowledge, threatened investigation or inquiry by any Governmental
Authority, and the Project is not subject to any remedial obligations under
any applicable Laws pertaining to health or the environment; and (iv) there
are no underground tanks, vessels, or similar facilities for the storage,
containment or accumulation of Hazardous Materials of any sort on, under or
affecting the Project.
(n) The Project, or each parcel comprising the Project, is or will be
taxed separately without regard to any other property and for all purposes
the Project may be mortgaged, conveyed and otherwise dealt with as an
independent parcel.
(o) Except the Operating Agreement and various amenities leases,
Borrower and its agents have not entered into any Leases, subleases or
other arrangements for occupancy of space within the Project, except for
the contracts for sale with third parties for the sale of Units.
(p) When the Construction is completed in accordance with the Plans
and Specifications, no building or other improvement will encroach upon any
property line, building line, setback line, side yard line or any recorded
or visible easement (or other easement of which Borrower is aware or has
reason to believe may exist) with respect to the Project.
(q) The Loan is not being made for the purpose of purchasing or
carrying "margin stock" within the meaning of Regulation G, T, U or X
issued by the Board of Governors of the Federal Reserve System, and
Borrower agrees to execute all instruments necessary to comply with all the
requirements of Regulation U of the Federal Reserve System.
(r) Borrower is not a party in interest to any plan defined or
regulated under ERISA, and the assets of Borrower are not "plan assets" of
any employee benefit plan covered by ERISA or Section 4975 of the Internal
Revenue Code.
-12-
(s) Borrower is not a "foreign person" within the meaning of Section
1445 or 7701 of the Internal Revenue Code.
(t) Other than "Sonesta Orlando Resorts at Tierra del Sol", Borrower
uses no trade name other than its actual name set forth herein. The
principal place of business of Borrower is as stated in Article 22.
----------
(u) Borrower's place of formation or organization is the State of
Florida.
(v) All statements set forth in the Recitals are true and correct.
(w) Neither Borrower nor Completion Guarantor nor any Guarantor is (or
will be) a person with whom Lender is restricted from doing business under
regulations of the Office of Foreign Asset Control ("OFAC") of the
Department of the Treasury of the United States of America (including,
those Persons named on OFAC's Specially Designated and Blocked Persons
list) or under any statute, executive order (including, the September 24,
2001 Executive Order Blocking Property and Prohibiting Transactions With
Persons Who Commit, Threaten to Commit, or Support Terrorism), or other
governmental action and is not and shall not engage in any dealings or
transactions or otherwise be associated with such persons. In addition,
Borrower hereby agrees to provide to the Lender with any additional
information that the Lender deems necessary from time to time in order to
ensure compliance with all applicable Laws concerning money laundering and
similar activities.
3.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
------------------------------------------
Borrower agrees that all of the representations and warranties set forth in
Section 3.1 and elsewhere in this Agreement are true as of the date hereof, will
-----------
be true at the Loan Opening and, except for matters which have been disclosed by
Borrower and approved by Lender in writing, at all times thereafter. Each
request for a disbursement under the Loan Documents shall constitute a
reaffirmation of such representations and warranties, as deemed modified in
accordance with the disclosures made and approved as aforesaid, as of the date
of such request. It shall be a condition precedent to the Loan Opening and each
subsequent disbursement that each of said representations and warranties is true
and correct as of the date of such requested disbursement. Each disbursement of
Loan proceeds shall be deemed to be a reaffirmation by Borrower that each of the
representations and warranties is true and correct as of the date of such
disbursement, as deemed modified in accordance with disclosures made and
approved as aforesaid. In addition, at Lender's request, Borrower shall reaffirm
such representations and warranties in writing prior to each disbursement
hereunder.
ARTICLE 4
LOAN AND LOAN DOCUMENTS
-----------------------
4.1 AGREEMENT TO BORROW AND LEND; LENDER'S OBLIGATION TO DISBURSE.
-------------------------------------------------------------
Subject to the terms, provisions and conditions of this Agreement and the
other Loan Documents, Borrower agrees to borrow from Lender and Lender agrees to
lend to Borrower the Loan, for the purposes and subject to all of the terms,
provisions and conditions contained in this Agreement. If Lender consists of
more than one party, the obligations of each such party with respect to the
amount it has agreed to loan to Borrower shall be several (and not joint and
several) and shall be limited to its proportionate share of the Loan and of each
advance.
-13-
(a) The maximum principal amount of the Loan shall not exceed FORTY
MILLION AND NO/100 DOLLARS ($40,000,000.00) or so much thereof as may be
advanced from time to time to or for the benefit of the Borrower subject to
the terms and conditions set forth herein. The Loan shall be a revolving
loan and Borrower may borrow, repay and reborrow funds hereunder to pay
costs as shown on the Budget; provided that (i) the maximum outstanding
principal balance shall never exceed $40,000,000.00 (the "Maximum
-------
Outstanding Loan Amount"); (ii) the aggregate principal amount borrowed may
-----------------------
not exceed $72,550,00.00 (the "Maximum Aggregate Loan Amount"); and (iii)
-----------------------------
the Borrowers have at all times complied with the terms and conditions of
the Loan Documents. In addition, at Lender's sole discretion and subject to
acceptable appraisals, upfront plan and cost reviews, the absence of
default and other factors considered by the Lender, the aggregate amount of
funds borrowed hereunder may be increased, and/or the Lender may permit
funds to be utilized for additional costs related to the development of
other portions of the Project.
(b) Lender agrees, upon Borrower's compliance with and satisfaction of
all conditions precedent to the Loan Opening and provided the Loan is In
Balance, no Material Adverse Change has occurred with respect to Borrower,
Completion Guarantor or any Guarantor, or the Project and no default or
Event of Default has occurred and is continuing hereunder, to Open the Loan
to finance a portion of the costs incurred by Borrower in connection with
the development of the Project and the construction of the Improvements, to
the extent provided for in the Budget.
(c) After the Opening of the Loan, Borrower shall be entitled to
receive further successive disbursements of the proceeds of the Loan in
accordance with Articles 9, 12 and 13 within ten (10) days after compliance
with all conditions precedent thereto, provided that (i) the Loan remains
In Balance; (ii) Borrower has complied with all conditions precedent to
disbursement from time to time including the requirements of Section 3.2
-----------
and Articles 8, 9, 12 and 13; (iii) no Material Adverse Change has occurred
----------------- --
with respect to Borrower, Completion Guarantor or any Guarantor, or the
Project and (iv) no Event of Default and no material default exists
hereunder or under any other Loan Document.
(d) To the extent that Lender may have acquiesced in noncompliance
with any requirements precedent to the Opening of the Loan or precedent to
any subsequent disbursement of Loan proceeds, such acquiescence shall not
constitute a waiver by Lender, and Lender may at any time after such
acquiescence require Borrower to comply with all such requirements.
(e) Borrower shall, prior to the Opening of the Loan, open an
Operating Account. Borrower authorizes Lender to disburse Loan proceeds by
crediting the Operating Account; provided, however, that Lender shall not
-----------------
be obligated to use such method. Lender is further authorized to pay any
principal or interest due upon the Note when and as same shall become due
by debiting funds on deposit in the Operating Account.
(f) Borrower, shall, prior to the Opening of the Loan, open an Escrow
Account (the "Project Escrow Account") to hold all Net Cash Flow from the
----------------------
Project. Once the Project begins to generate Net Cash Flow, Borrower may
only borrow from the Loan interest in excess of the Net Cash Flow so
generated.
(g) The Escrow Agent for the Project Escrow Account shall be Lender.
4.2 LOAN DOCUMENTS.
--------------
Borrower agrees that it will, on or before the Loan Opening Date, execute
and deliver or cause to be executed and delivered to Lender the following
documents in form and substance acceptable to Lender:
-14-
(a) The Addendum.
(b) The Note.
(c) The Mortgage.
(d) The Assignment of Rents.
(e) The Completion Guaranty.
(f) The Payment Guaranty.
(g) Performance and Completion Guaranty.
(h) The Environmental Indemnity.
(i) A collateral assignment of construction documents, including,
without limitation, the General Contract, all architecture and engineering
contracts, Plans and Specifications, permits, licenses, approvals and
development rights, together with consents to the assignment and
continuation agreements from the General Contractor, the architect and
other parties reasonably specified by Lender.
(j) A collateral assignment of Unit sale contracts, Governing
documents and developer's rights.
(k) A collateral assignment of all Contract Deposits.
(l) A collateral assignment of any management and/or operating
agreements.
(m) A collateral assignment of all contracts, agreements, and proceeds
related to the CDD and any associated bond offerings, to the extent
assignable.
(n) A collateral assignment of escrow accounts.
(o) A subordination, nondisturbance and attornment agreement between
Lender and each of the tenants under any lease(s), if applicable.
(p) Such UCC financing statements as Lender determines are advisable
or necessary to perfect or notify third parties of the security interests
intended to be created by the Loan Documents.
(q) Such other documents, instruments or certificates as Lender and
its counsel may reasonably require, including such documents as Lender in
its sole discretion deems necessary or appropriate to effectuate the terms
and conditions of this Agreement and the Loan Documents, and to comply with
the laws of the State.
4.3 TERM OF THE LOAN.
----------------
All principal, interest and other sums due under the Loan Documents shall
be due and payable in full on the Maturity Date without relief from valuation
and appraisement laws.
-15-
4.4 PREPAYMENTS.
-----------
Borrower shall have the right to make prepayments of the Loan, in whole or
in part, without prepayment penalty, upon not less than seven (7) days' prior
written notice to Lender (except for prepayments resulting from the sale of
Units, in which case no notice will be required). No prepayment of all or part
of the Loan shall be permitted unless same is made together with the payment of
all interest accrued on the Loan through the date of prepayment (unless said
prepayment(s) result from the sale of Units, in which event said prepayments
will be applied to principal only).
4.5 REQUIRED PRINCIPAL PAYMENTS.
---------------------------
(a) The Unit Release Price for each Unit shall be applied to the
outstanding principal balance of the Loan.
(b) All principal shall be paid on or before the Maturity Date.
4.6 LATE CHARGE.
-----------
Any and all amounts due hereunder or under the other Loan Documents which
remain unpaid more than five (5) days after the date said amount was due and
payable shall incur a fee (the "Late Charge") of the greater of four percent
-----------
(4%) per annum of said amount or twenty-five dollars ($25.00), which payment
shall be in addition to all of Lender's other rights and remedies under the Loan
Documents, provided that no Late Charge shall apply to the final payment of
principal on the Maturity Date.
ARTICLE 5
INTEREST
--------
5.1 INTEREST RATE.
-------------
(a) The Loan will bear interest at the Applicable Rate, unless the
Default Rate is applicable. The Adjusted Daily LIBOR Rate shall be the
"Applicable Rate". For each disbursement of proceeds of the Loan, Borrower
shall deliver to Lender irrevocable notice (which may be (A) verbal notice
provided that Borrower shall deliver to Lender facsimile confirmation
within twenty-four (24) hours of such verbal notice or (B) electronic mail
notice within twenty-four (24) hours of such verbal notice of the requested
amount of such disbursement. Borrower shall pay interest in arrears on the
5th day of every calendar month in the amount of all interest accrued and
unpaid. All payments (whether of principal or of interest) shall be deemed
credited to Borrower's account only if received by 12:00 noon Orlando time
on a Business Day; otherwise, such payment shall be deemed received on the
next Business Day.
(b) Interest at the Applicable Rate (or Default Rate) shall be
calculated for the actual number of days elapsed on the basis of a 360-day
year, including the first date of the applicable period to, but not
including, the date of repayment.
(c) If the introduction of or any change in any Law, regulation or
treaty, or in the interpretation thereof by any Governmental Authority
charged with the administration or interpretation thereof, shall make it
unlawful for Lender to maintain the Applicable Rate at an Adjusted Daily
LIBOR Rate with respect to the Loan or any portion thereof, or to fund the
-16-
Loan or any portion thereof in Dollars in the London interbank market, then
(1) Lender shall notify Borrower that Lender is no longer able to maintain
the Applicable Rate at an Adjusted Daily LIBOR Rate, and (2) the Applicable
Rate for any portion of the Loan for which the Applicable Rate is then an
Adjusted Daily LIBOR Rate shall automatically be converted to the Adjusted
Prime Rate.
(d) The Loan shall bear interest at the Default Rate at any time at
which an Event of Default shall exist.
5.2 INTEREST RATE AGREEMENTS.
------------------------
(a) Any indebtedness incurred pursuant to an Interest Rate Agreement
entered into by Borrower and Lender, if any, shall constitute indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan
Documents to the same extent and effect as if the terms and provisions of
such Interest Rate Agreement were set forth herein, whether or not the
aggregate of such indebtedness, together with the disbursements made by
Lender of the proceeds of the Loan, shall exceed the face amount of the
Note.
(b) Borrower hereby collaterally assigns to Lender for the benefit of
Lender any and all Interest Rate Protection Products purchased or to be
purchased by Borrower in connection with the Loan, as additional security
for the Loan, and agrees to provide Lender with any additional
documentation requested by Lender in order to confirm or perfect such
security interest during the term of the Loan. If Borrower obtains an
Interest Rate Protection Product from a party other than Lender, Borrower
shall deliver to Lender such third party's consent to such collateral
assignment. No Interest Rate Protection Product purchased from a third
party may be secured by an interest in the Project.
(c) Borrower shall, as a condition to the Opening of the Loan if
required by Lender and otherwise within ten (10) Business Days after
Lender's request, institute an interest rate hedging program through the
purchase of an Interest Rate Protection Product with respect to the Loan.
The Interest Rate Protection Product, the portion of the Loan (if less than
the Maximum Outstanding Loan Amount) to which such Interest Rate Protection
Product shall apply, and the financial institution providing the Interest
Rate Protection Product, shall be subject to Lender's prior written
approval in its sole discretion. Borrower shall afford Lender a right of
first opportunity to provide all Interest Rate Protection Products but
shall not be required to purchase such Interest Rate Protection Product
from Lender.
ARTICLE 6
COSTS OF MAINTAINING LOAN
-------------------------
6.1 INCREASED COSTS AND CAPITAL ADEQUACY.
------------------------------------
(a) Borrower recognizes that the cost to Lender of maintaining the
Loan or any portion thereof may fluctuate and Borrower agrees to pay Lender
additional amounts to compensate Lender for any increase in its actual
costs incurred in maintaining the Loan or any portion thereof outstanding,
or for the reduction of any amounts received or receivable from Borrower as
a result of:
(i) any change after the date hereof in any applicable Law,
regulation or treaty, or in the interpretation or administration
thereof, or by any domestic or foreign court, (A) changing the basis
of taxation of payments under this Agreement to Lender (other than
taxes imposed on all or any portion of the overall net income or
receipts of Lender), or (B) imposing, modifying or applying any
reserve, special deposit or similar requirement against assets of,
deposits with or for the account of, credit extended by, or any other
-17-
acquisition of funds for loans by Lender (which includes the Loan or
any applicable portion thereof) (provided, however, that Borrower
------------------
shall not be charged again the Reserve Percentage already accounted
for in the definition of the Adjusted Daily LIBOR Rate), or (C)
imposing on Lender, or the London Interbank market generally, any
other condition affecting the Loan, provided that the result of the
foregoing is to increase the cost to Lender of maintaining the Loan or
any portion thereof or to reduce the amount of any sum received or
receivable from Borrower by Lender under the Loan Documents; or
(ii) the maintenance by Lender of reserves in accordance with
reserve requirements promulgated by the Board of Governors of the
Federal Reserve System of the United States with respect to
"Eurocurrency Liabilities" of a similar term to that of the applicable
portion of the Loan (without duplication for reserves already
accounted for in the calculation of a LIBOR Rate pursuant to the terms
hereof).
(b) If the application of any Law, rule, regulation or guideline
adopted or arising out of the Basle Committee on Banking Regulations and
Supervisory Practices entitled "International Convergence of Capital
Measurement and Capital Standards", or the adoption after the date hereof
of any other Law, rule, regulation or guideline regarding capital adequacy,
or any change after the date hereof in any of the foregoing, or in the
interpretation or administration thereof by any domestic or foreign
Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Lender, with any
request or directive regarding capital adequacy (whether or not having the
force of law) of any such authority, central bank or comparable agency, has
the effect of reducing the rate of return on Lender's capital to a level
below that which Lender would have achieved but for such application,
adoption, change or compliance (taking into consideration the policies of
Lender with respect to capital adequacy), then, from time to time Borrower
shall pay to Lender such additional amounts as will compensate Lender for
such reduction with respect to any portion of the Loan outstanding.
(c) Any amount payable by Borrower under subsection (a) or subsection
------------- ----------
(b) of this Section 6.1 shall be paid within five (5) days of receipt by
--- -----------
Borrower of a certificate signed by an authorized officer of Lender setting
forth the amount due and the basis for the determination of such amount,
which statement shall be conclusive and binding upon Borrower, absent
manifest error. Failure on the part of Lender to demand payment from
Borrower for any such amount attributable to any particular period shall
not constitute a waiver of Lender's right to demand payment of such amount
for any subsequent or prior period. Lender shall use reasonable efforts to
deliver to Borrower prompt notice of any event described in subsection (a)
--------------
or (b) above, of the amount of the reserve and capital adequacy payments
---
resulting therefrom and the reasons therefor and of the basis of
calculation of such amount; provided, however, that any failure by Lender
-----------------
to so notify Borrower shall not affect Borrower's obligation to pay the
reserve and capital adequacy payment resulting therefrom.
6.2 BORROWER WITHHOLDING.
--------------------
If by reason of a change in any applicable Laws occurring after the date
hereof, Borrower is required by Law to make any deduction or withholding in
respect of any taxes (other than taxes imposed on or measured by the net income
of Lender or any franchise tax imposed on Lender), duties or other charges from
any payment due under the Note to the maximum extent permitted by law, the sum
due from Borrower in respect of such payment shall be increased to the extent
necessary to ensure that, after the making of such deduction or withholding,
Lender receives and retains a net sum equal to the sum which it would have
received had no such deduction or withholding been required to be made.
-18-
ARTICLE 7
LOAN EXPENSE AND ADVANCES
-------------------------
7.1 LOAN AND ADMINISTRATION EXPENSES.
--------------------------------
Borrower unconditionally agrees to pay all reasonable expenses of the Loan,
including all amounts payable pursuant to Sections 7.2 and 7.3 and any and all
------------ ---
other reasonable fees owing to Lender pursuant to the Loan Documents or any
separate fee agreement, and also including, without limiting the generality of
the foregoing, all recording, filing and registration fees and charges, mortgage
or documentary taxes, all insurance premiums, title insurance premiums and other
charges of the Title Insurer, printing and photocopying expenses, survey fees
and charges, cost of certified copies of instruments, cost of premiums on surety
company bonds and the Title Policy, charges of the Title Insurer or other
escrowee for administering disbursements, all fees and disbursements of Lender's
Consultant, all appraisal fees, insurance consultant's fees, environmental
consultant's fees, travel related expenses and all reasonable costs and expenses
incurred by Lender in connection with the determination of whether or not
Borrower has performed the obligations undertaken by Borrower hereunder or has
satisfied any conditions precedent to the obligations of Lender hereunder and,
if any default or Event of Default occurs hereunder or under any of the Loan
Documents or if the Loan or Note or any portion thereof is not paid in full when
and as due, all reasonable costs and expenses of Lender (including, without
limitation, court costs and reasonable counsel's fees and disbursements and fees
and costs of paralegals) incurred in attempting to enforce payment of the Loan
and expenses of Lender incurred (including court costs and reasonable counsel's
fees and disbursements and fees and costs of paralegals) in attempting to
realize, while a default or Event of Default exists, on any security or incurred
in connection with the sale or disposition (or preparation for sale or
disposition) of any security for the Loan. Borrower agrees to pay all brokerage,
finder or similar fees or commissions payable in connection with the
transactions contemplated hereby and shall indemnify and hold Lender harmless
against all claims, liabilities, costs and expenses (including attorneys' fees
and expenses) incurred in relation to any claim by broker, finder or similar
person.
7.2 LENDER'S ATTORNEYS' FEES AND DISBURSEMENTS.
------------------------------------------
Borrower agrees to pay Lender's reasonable attorney fees and disbursements
incurred in connection with this Loan, including (i) the preparation of this
Agreement, any intercreditor agreements and the other Loan Documents and the
preparation of the closing binders, (ii) the disbursement, syndication,
amendment, and administration of the Loan and (iii) the enforcement of the terms
of this Agreement and the other Loan Documents.
7.3 TIME OF PAYMENT OF FEES AND EXPENSES.
------------------------------------
Borrower shall pay all expenses and fees incurred as of the Loan Opening on
the Loan Opening Date (unless sooner required herein). At the time of the
Opening of the Loan, Lender may pay from the proceeds of the initial
disbursement of the Loan (to the extent provided for in the Budget) all Loan
expenses and all fees payable to Lender. Lender may require the payment of
outstanding fees and expenses as a condition to any disbursement of the Loan.
Lender is hereby authorized, without any specific request or direction by
Borrower, to make disbursements from time to time in payment of or to reimburse
Lender for all Loan expenses and fees (whether or not, at such time, there may
be any undisbursed amounts of the Loan allocated in the Budget for the same).
-19-
7.4 EXPENSES AND ADVANCES SECURED BY LOAN DOCUMENTS.
-----------------------------------------------
Any and all advances or payments made by Lender under this Article 7 from
---------
time to time, and any amounts expended by Lender pursuant to Section 20.1(a),
---------------
shall, as and when advanced or incurred, constitute additional indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan Documents.
7.5 RIGHT OF LENDER TO MAKE ADVANCES TO CURE BORROWER'S DEFAULTS.
------------------------------------------------------------
In the event that Borrower fails to perform any of Borrower's covenants,
agreements or obligations contained in this Agreement or any of the other Loan
Documents (after the expiration of applicable notice and grace periods, except
in the event of an emergency or other exigent circumstances), Lender may (but
shall not be required to) perform any of such covenants, agreements and
obligations, and any reasonable amounts expended by Lender in so doing and shall
constitute additional indebtedness evidenced by the Note and secured by the
Mortgage and the other Loan Documents and shall bear interest at the Default
Rate.
ARTICLE 8
NON-CONSTRUCTION REQUIREMENTS
PRECEDENT TO THE OPENING OF THE LOAN
------------------------------------
8.1 NON-CONSTRUCTION CONDITIONS PRECEDENT.
-------------------------------------
Borrower agrees that Lender's obligation to open the Loan and thereafter to make
further disbursements of proceeds thereof is conditioned upon Borrower's
delivery, performance and satisfaction of the following conditions precedent in
form and substance satisfactory to Lender in its reasonable discretion:
(a) Project Equity: Borrower shall have provided evidence reasonably
---------------
satisfactory to Lender that Borrower's cash equity invested in the Project
is not less than the difference between the total Project cost as set forth
in the Budget and the Maximum Outstanding Loan Amount (the "Project
-------
Equity"); provided, however, in no event shall Borrower's cash equity in
------ -------- -------
the Project be less than (i) 44% of the total cost of the Project as set
out in the Budget approved by Lender or (ii) $57,913,746.00, whichever is
greater. The Project Equity must be either: (i) deposited with Lender prior
to the Date of Closing, and disbursed prior to the first advance of the
Loan; or (ii) used to pay Project costs approved by Lender, with evidence
of payment delivered to Lender prior to or at Closing of the Loan. If
Usable Deposits are not equal to or greater than $16,499,640.00, in the
aggregate, pursuant to Section 8.1(b), below, Borrower's equity requirement
--------------
shall be increased on a dollar for dollar basis for each dollar that Usable
Deposits are less than $16,499,640.00. The Project Equity to be deposited
with Lender is $6,083,000.00, which shall be funded by approximately
$2,000,000.00 in cash from Borrower at the Date of Closing and a balance to
be funded in cash from requisitions paid by Bond Trustee in the approximate
amount of $2,400,000.00, as contemplated by Section 8.1(t) hereof, and in
the approximate amount of $2,600,000.00 as reimbursement for costs of
construction on CDD land.
(b) Required Contracts and Contract Deposits: Borrower shall have
--------------------------------------------
provided to Lender evidence satisfactory to Lender, in Lender's reasonable
discretion, that at least 279 Units are under approved Contracts of Sale
(which approved Contracts of Sale are shown by Borrower to be valid and
enforceable with closing dates to occur within thirty (30) days of the
issuance of a Certificate of Occupancy (or temporary certificate of
occupancy) for applicable Unit(s), as identified by the General Contract)
-20-
and all associated Contract Deposits (not to be less than $23,450,280, in
the aggregate) have been received. $16,499,640.00 of said Contract Deposits
must qualify as Usable Deposits.
(c) Title and Other Documents: Lender shall have obtained the Title
---------------------------
Policy together with legible copies of all title exception documents cited
in the Title Policy and all other legal documents affecting the Project or
the use thereof;
(d) Survey: Borrower shall have furnished to Lender an ALTA/ACSM
------
"Class A" Land Title Survey of the Project. Said survey shall be dated no
earlier than ninety (90) days prior to the Loan Opening, shall be made (and
certified to have been made) as set forth in EXHIBIT "D" attached hereto
and made a part hereof. Such survey shall be sufficient to permit issuance
of the Title Policy in the form required by this Agreement. Such survey
shall meet the requirements set forth on EXHIBIT "L", attached hereto;
(e) Insurance Policies: Borrower shall have furnished to Lender not
-------------------
less than ten (10) days prior to the date of this Agreement policies or
binders evidencing that insurance coverages are in effect with respect to
the Project and Borrower in accordance with the Insurance Requirements
attached hereto as EXHIBIT "E", for which the premiums have been fully
prepaid with endorsements satisfactory to Lender.
(f) No Litigation: Borrower shall have furnished evidence that no
--------------
litigation or proceedings, other than those matters previously disclosed to
Lender, shall be pending or threatened which could or might cause a
Material Adverse Change with respect to Borrower, Completion Guarantor or
any Guarantor, or the Project;
(g) Utilities: Borrower shall have furnished to Lender (by way of
---------
utility letters or otherwise) evidence establishing to the satisfaction of
Lender that the Project when constructed will have adequate water supply,
storm and sanitary sewerage facilities, telephone, gas, electricity, fire
and police protection, means of ingress and egress to and from the Project
and public highways and any other required public utilities and that the
Project is benefited by insured easements as may be required for any of the
foregoing;
(h) Attorney Opinions: Borrower shall have furnished to Lender an
------------------
opinion from counsel for Borrower and Guarantors covering due
authorization, execution and delivery and enforceability of the Loan
Documents and also containing such other legal opinions as Lender shall
reasonably require;
(i) Appraisal: Lender shall have obtained the Appraisal in an amount
---------
at least equal to $90,700,000.00 (based upon the Project's stabilized value
upon completion of construction) which Appraisal is satisfactory to Lender
in all respects. Lender hereby acknowledges receipt of such a satisfactory
Appraisal, and said Appraisal shall be updated, at Borrower's expense, as
and when reasonable requested by Lender;
(j) Searches: Borrower shall have furnished to Lender current
--------
bankruptcy, federal tax lien and judgment searches and searches of all
Uniform Commercial Code financing statements filed in each place UCC
Financing Statements are to be filed hereunder, demonstrating the absence
of adverse claims;
(k) Financial Statements: Borrower shall have furnished to Lender
---------------------
current annual financial statements of Borrower, Completion Guarantor, the
Guarantors, the General Contractor and such other persons or entities
connected with the Loan as Lender may request, each in form and substance
-21-
and certified by such individual as acceptable to Lender. Borrower,
Completion Guarantor and the Guarantors shall provide such other additional
financial information Lender reasonably requires;
(l) Management Agreements: Borrower shall have delivered to Lender
----------------------
executed copies of any leasing, management and development agreements
entered into by Borrower in connection with the Construction and/or the
operation of the Project;
(m) Flood Hazard: Lender has received evidence that the Project is not
------------
located in an area designated by the Secretary of Housing and Urban
Development as a special flood hazard area, or flood hazard insurance
acceptable to Lender in its sole discretion;
(n) Zoning: Borrower shall have furnished to Lender a legal opinion or
------
zoning letter as to compliance of the Project with zoning and similar laws;
(o) Organizational Documents: Borrower shall have furnished to Lender
------------------------
proof satisfactory to Lender of authority, formation, organization and good
standing in the State of its incorporation or formation and, if applicable,
qualification as a foreign entity in good standing in the state of its
incorporation or formation, of all corporate, partnership, trust and
limited liability company entities (including Borrower, Completion
Guarantor and each Guarantor) executing any Loan Documents, whether in
their own name or on behalf of another entity. Borrower shall also provide
certified resolutions in form and content satisfactory to Lender,
authorizing execution, delivery and performance of the Loan Documents, and
such other documentation as Lender may reasonably require to evidence the
authority of the persons executing the Loan Documents;
(p) No Default: There shall be no uncured Default or Event of Default
----------
by Borrower hereunder.;
(q) Easements: Borrower shall have furnished Lender all easements
---------
reasonably required for the construction, maintenance or operation of the
Project and such easements shall be insured by the Title Policy; and
(r) Additional Documents: Borrower shall have furnished to Lender such
--------------------
other materials, documents, papers or requirements regarding the Project,
Borrower, Completion Guarantor and any Guarantor as Lender shall reasonably
request.
(s) Escrow Account(s): Borrower shall open the Escrow Account(s) with
-----------------
Lender to hold Contract Deposits.
(t) CDD Bonds:
---------
(i) $9,090,130.00 of the CDD Bond (as hereinafter defined)
proceeds (the "Acquisition Proceeds") must be utilized to purchase the
--------------------
Land from the current owner, and then, concurrently, Borrower shall
cause $7,687,676.00 of such Acquisition Proceeds to be utilized in the
Project with the remaining $1,402,454.00 to satisfy the Project Equity
requirement of Section 8.1(a). Borrower must demonstrate to Lender's
satisfaction that all Acquisition Proceeds will be utilized for
qualified project costs (approved by Lender), and in accordance with
the sources and uses set forth on EXHIBIT "K". Borrower shall assign
to Lender any proceeds to be received from the funding of
approximately $25,825,000.00 of the Special Assessment Capital
Improvement Bonds (the "CDD Bonds") for the Project issued by the
----------
Westridge Community Development District (the "CDD"). Borrower
----
recognizes that any costs/expenses incurred as a result of the
issuance of the CDD Bonds (such as capitalized interest, underwriting
fees, etc.) shall not be funded from the proceeds of the Loan.
-22-
(ii) Borrower shall provide agreements related to the CDD Bond
issuance and proceeds required among the CDD, Borrower, Lender, the
CDD Bond Trustee, and any other associated parties. Further, during
the term of the Loan, no additional funding of Acquisition Proceeds
shall be permitted, and Borrower shall not seek to amend or modify the
CDD Bonds, or any documents related thereto, without Lender's consent,
which may be granted or withheld in Lender's sole discretion.
(iii) To the extent assignable, Borrower shall assign to Lender
all contracts, agreements, proceeds related to the CDD and any
associated bond offerings.
ARTICLE 9
CONSTRUCTION REQUIREMENTS PRECEDENT
-----------------------------------
TO THE OPENING OF THE LOAN
--------------------------
9.1 REQUIRED CONSTRUCTION DOCUMENTS.
-------------------------------
Borrower shall cause to be furnished to Lender the following, in form and
substance satisfactory to Lender and Lender's Consultant in all respects, for
Lender's approval in its reasonable discretion prior to the Opening of the Loan:
(a) Fully executed copies of the following, each satisfactory to
Lender and Lender's Consultant in all respects: (i) a fixed or guaranteed
maximum price General Contract with the General Contractor; (ii) Major
Subcontracts; and (iii) all contracts with architects and engineers;
(b) A schedule of values, including a trade payment breakdown, setting
forth a description of all contracts let by Borrower and/or the General
Contractor for the design, engineering, construction and equipping of the
Improvements;
(c) An initial sworn statement of the General Contractor, approved by
Borrower, Architect and Lender's Consultant covering all work done and to
be done, together with lien waivers covering all work and materials for
which payments have been made by Borrower prior to the Loan Opening;
(d) General Contractor will be required to provide Subguard insurance
from Zurich in a form approved by Lender.
(e) Copies of each of the Required Permits, except for those Required
Permits which cannot be issued until completion of Construction, in which
event such Required Permits will be obtained by Borrower on a timely basis
in accordance with all recorded maps and conditions, and applicable
building, land use, zoning and environmental codes, statutes and
regulations and will be delivered to Lender at the earliest possible date.
In all events the Required Permits required to be delivered prior to the
Opening of the Loan shall include full building permits.
(f) Full and complete detailed Plans and Specifications for the
Improvements in duplicate, prepared by the Architect;
(g) The Construction Schedule;
(h) The Soil Report;
-23-
(i) The Environmental Report; The Environmental Report shall, at a
minimum, (A) demonstrate the absence of any existing or potential Hazardous
Material contamination or violations of environmental Laws at the Project,
except as acceptable to Lender in its sole and absolute discretion, (B)
include the results of all sampling or monitoring to confirm the extent of
existing or potential Hazardous Material contamination at the Project,
including the results of leak detection tests for each underground storage
tank located at the Project, if any, (C) describe response actions
appropriate to remedy any existing or potential Hazardous Material
contamination, and report the estimated cost of any such appropriate
response, (D) confirm that any prior removal of Hazardous Material or
underground storage tanks from the Project was completed in accordance with
applicable Laws, and (E) confirm whether or not the Land is located in a
wetlands district;
(j) A report from Lender's Consultant which contains an analysis of
the Plans and Specifications, the Budget, the Construction Schedule, the
General Contract, all subcontracts then existing and the Soil Report. Such
report shall be solely for the benefit of Lender and contain (i) an
analysis satisfactory to Lender demonstrating the adequacy of the Budget to
complete the Project and (ii) a confirmation that the Construction Schedule
is realistic. Lender's Consultant shall monitor construction of the Project
and shall visit the Project at least one (1) time each month, and shall
certify as to amounts of construction costs for all requested fundings;
(k) The Architect's Certificate;
(l) Certification from an engineer or other professional reasonably
acceptable to Lender in a form acceptable to Lender confirming that any
wetlands located on the Land will not preclude the development of the
Project;
(m) A Notice of Commencement complying with applicable state or local
law; and
(n) Such other papers, materials and documents as Lender may
reasonably require with respect to the Construction.
ARTICLE 10
BUDGET AND CONTINGENCY FUND
---------------------------
10.1 BUDGET.
------
Disbursement of the Loan shall be governed by the Budget for the Project,
in form and substance acceptable to Lender in Lender's reasonable discretion.
The Budget shall specify the amount of cash equity invested in the Project, and
all costs and expenses of every kind and nature whatever to be incurred by
Borrower in connection with the Project. The Budget shall include, in addition
to the Budget Line Items described in Section 10.2 below, the Contingency Fund
described in Section 10.3 below, and amounts satisfactory to Lender for soft
costs and other reserves acceptable to Lender. The initial Budget is attached
hereto as EXHIBIT "G" and made a part hereof. Once the Budget is approved by
Lender all changes to the Budget shall in all respects be subject to the prior
written approval of Lender.
10.2 BUDGET LINE ITEMS.
-----------------
The Budget shall include as line items ("Budget Line Items"), to the extent
-----------------
determined to be applicable by Lender in its reasonable discretion, the cost of
all labor, materials, equipment, fixtures and furnishings needed for the
-24-
completion of the Construction, and all other costs, fees and expenses relating
in any way whatsoever to the Construction of the Improvements, leasing
commissions, operating deficits, real estate taxes, and all other sums due in
connection with Construction and operation of the Project, the Loan, and this
Agreement. Borrower agrees that all Loan proceeds disbursed by Lender shall be
used only for the Budget Line Items for which such proceeds were disbursed.
Lender shall not be obligated to disburse any amount for any category of
costs set forth as a Budget Line Item which is greater than the amount set forth
for such category in the applicable Budget Line Item. Borrower shall pay as they
become due all amounts set forth in the Budget with respect to costs to be paid
for by Borrower.
10.3 CONTINGENCY FUND.
----------------
The Budget shall contain a Budget Line Item designated for the Contingency
Fund. Borrower may from time to time request that the Contingency Fund be
reallocated to pay needed costs of the Project. Such requests shall be subject
to Lender's written approval in its reasonable discretion.
Borrower agrees that the decision with respect to utilizing portions of the
Contingency Fund in order to keep the Loan In Balance shall be made by Lender in
its reasonable discretion, and that Lender may require Borrower to make a
Deficiency Deposit even if funds remain in the Contingency Fund.
10.4 OPTIONAL METHOD FOR PAYMENT OF INTEREST.
---------------------------------------
For Borrower's benefit, the Budget includes a Budget Line Item for interest
payments on the Loan and, with Lender's approval, amounts due from Borrower
under any Interest Rate Agreement with respect to the Loan. Borrower hereby
authorizes Lender from time to time, for the mutual convenience of Lender and
Borrower, to disburse Loan proceeds to pay all the then accrued interest on the
Note and to pay amounts due from Borrower under any Interest Rate Agreement with
respect to the Loan, regardless of whether Borrower shall have specifically
requested a disbursement of such amount. Lender agrees that so long as there is
no default under the Loan, Lender will fund interest payments on the Loan from
the interest reserve set out in the Budget. Any such disbursement, if made,
shall be added to the outstanding principal balance of the Note and shall, when
disbursed, bear interest at the Applicable Rate. The authorization hereby
granted, however, shall not obligate Lender to make disbursements of the Loan
for interest payments or any amount due under any Interest Rate Agreement
(except upon Borrower's qualifying for and requesting disbursement of that
portion of the proceeds of the Loan allocated for such purposes in the Budget)
nor prevent Borrower from paying accrued interest or amounts due under any
Interest Rate Agreement from its own funds.
ARTICLE 11
SUFFICIENCY OF LOAN
-------------------
11.1 LOAN IN BALANCE.
---------------
Anything contained in this Agreement to the contrary notwithstanding, it is
expressly understood and agreed that the Loan shall at all times be "In
Balance", on a Budget Line Item and an aggregate basis. A Budget Line Item shall
be deemed to be "In Balance" only if Lender in its reasonable discretion
-----------
determines that the amount of such Budget Line Item is sufficient for its
intended purpose. The Loan shall be deemed to be "In Balance" in the aggregate
only when the total of the undisbursed portion of the Loan less the Contingency
Fund (subject to Borrower's reallocation rights under Section 10.3), equals or
exceeds the aggregate of: (a) the costs required to complete the construction of
the Project in accordance with the Plans and Specifications and the Budget; (b)
-25-
the amounts to be paid as retainages to persons who have supplied labor or
materials to the Project; and (c) all other hard and soft costs not yet paid for
in connection with the Project, as such costs and amounts described in clauses
-------
(a), (b) and (c) may be estimated and/or approved in writing by Lender from time
---------------
to time. Borrower agrees that if for any reason, in Lender's reasonable
discretion, the amount of such undistributed Loan proceeds shall at any time be
or become insufficient for such purpose regardless of how such condition may be
caused, Borrower will, within ten (10) days after written request by Lender,
deposit the deficiency with Lender ("Deficiency Deposit"). The Deficiency
---------------------
Deposit shall first be exhausted before any further disbursement of Loan
proceeds shall be made. Lender shall not be obligated to make any Loan
disbursements if and for as long as the Loan is not In Balance.
ARTICLE 12
CONSTRUCTION PAYOUT REQUIREMENTS
--------------------------------
12.1 APPLICABILITY OF SECTIONS.
-------------------------
The provisions contained in this Article 12 shall apply to the Opening of
----------
the Loan and to all disbursements of proceeds during Construction.
12.2 MONTHLY PAYOUTS.
---------------
After the Opening of the Loan, further disbursements shall be made during
Construction from time to time as the Construction progresses, but no more
frequently than once in each calendar month.
12.3 DOCUMENTS TO BE FURNISHED FOR EACH DISBURSEMENT.
-----------------------------------------------
As a condition precedent to each disbursement of the Loan proceeds
(including the initial disbursement at the Opening of the Loan), Borrower shall
furnish or cause to be furnished to Lender the following documents covering each
disbursement, in form and substance satisfactory to Lender:
(a) A completed Borrower's Certificate in the form of EXHIBIT "J"
attached hereto and made a part hereof and a completed Soft and Hard Cost
Requisition Form in the form of EXHIBIT "I" attached hereto and made a part
hereof, each executed by the Authorized Representative of Borrower;
(b) A completed standard AIA Form G702 and Form G703 signed by the
General Contractor, and the Architect, together with General Contractor's
unconditional waivers of lien, and all subcontractors', material suppliers'
and laborers' conditional waivers of lien, covering all work paid with the
proceeds of the prior draw requests, together with such data as Lender may
reasonably require to substantiate that all costs for which disbursement is
sought have been incurred;
(c) Evidence satisfactory to Lender that fixtures and equipment, if
any, have been paid for and are free of any lien or security interest
therein;
(d) An endorsement to the Title Policy issued to Lender covering the
date of disbursement and showing the Mortgage as a first, prior and
paramount lien on the Project subject only to the Permitted Exceptions and
real estate taxes that have accrued but are not yet due and payable and
particularly that nothing has intervened to affect the validity or priority
of the Mortgage;
-26-
(e) Copies of any proposed or executed Change Orders on standard AIA
G701 form which have not been previously furnished to Lender and which
require and are not valid without the signatures of the General Contractor,
Borrower and Architect;
(f) Copies of all construction contracts (including subcontracts)
which have been executed since the last disbursement, together with any
Bonds obtained or required to be obtained with respect thereto;
(g) All Required Permits and all other Governmental Approvals then
needed in connection with the Project; and
(h) Such other instruments, documents and information as Lender or the
Title Insurer may reasonably request.
(i) Disbursements shall be made approximately ten (10) days after
receipt of all information required by Lender to approve the requested
disbursements.
12.4 RETAINAGES.
----------
At the time of each disbursement the Lender shall withhold ten percent
(10%) (the "Retainage") of the "hard costs" contained on each requested Loan
---------
disbursement (i.e., the total amount then due the General Contractor and the
various contractors, subcontractors and material suppliers for the costs of
construction), until such time as the Project is 50% complete; provided, that
the Retainage shall not include the General Contractor's fee and general
conditions under the Construction Contract. Thereafter, the Retainage shall be
zero percent (0%). The Retainage shall be disbursed in accordance with Section
13.2 below; provided, however, upon the satisfactory completion of 100% of the
-----------------
work with respect to any individual trade or the delivery of all materials
pursuant to a purchase order in accordance with the plans and specifications as
certified by the Lender's Consultant, Lender may decide on a case by case basis
(but shall not be obligated) to permit retainages with respect to such trade
order to be disbursed to Borrower.
12.5 DISBURSEMENTS FOR MATERIALS STORED ON-SITE.
------------------------------------------
Any requests for disbursements which in whole or in part relate to
materials, equipment or furnishings which Borrower owns and which are not
incorporated into the Improvements as of the date of the request for
disbursement, but are to be temporarily stored at the Project, shall be
accompanied by evidence satisfactory to Lender that (i) such stored materials
are included within the coverages of insurance policies carried by Borrower,
(ii) the ownership of such materials is vested in Borrower free of any liens and
claims of third parties, (iii) such materials are properly insured and protected
against theft or damage, (iv) the materials used in the Construction are not
commodity items but are uniquely fabricated for the Construction, (v) the
Lender's Consultant has viewed and inspected the stored materials, and (vi) in
the opinion of the Lender's Consultant the stored materials are physically
secured and can be incorporated into the Project within forty five (45) days.
Lender may require separate Uniform Commercial Code financing statements to
cover any such stored materials.
12.6 DISBURSEMENTS FOR OFFSITE MATERIALS.
-----------------------------------
Lender may in its sole discretion, but shall not be obligated to, approve
disbursements for materials stored off-site, in which event all of the
requirements of Section 12.5 shall be applicable to such disbursement as well as
------------
any other requirements which Lender may, in its sole discretion, determine are
appropriate under the circumstances.
-27-
ARTICLE 13
FINAL DISBURSEMENT FOR CONSTRUCTION
-----------------------------------
13.1 FINAL DISBURSEMENT FOR CONSTRUCTION.
-----------------------------------
Lender will advance to Borrower the final disbursement for the cost of the
Construction (including Retainages) when the following conditions have been
complied with, provided that all other conditions in this Agreement for
disbursements have been complied with :
(a) The Improvements have been fully completed and equipped in
accordance with the Plans and Specifications free and clear of mechanics'
liens and security interests and are ready for occupancy;
(b) Borrower shall have furnished to Lender a Certificate of
Substantial Completion AIA Form G704 from the supervising architect and
General Contractor certifying that the Project has been completed in
accordance with the final plans and specifications as approved by the
Lender;
(c) Borrower shall have furnished to Lender "all risks" casualty
insurance in form and amount and with companies satisfactory to Lender in
accordance with the requirements contained herein;
(d) Borrower shall have furnished to Lender copies of all licenses and
permits required by any Governmental Authority having jurisdiction for the
occupancy of the Improvements and the operation thereof, including a
certificate of occupancy from the municipality in which the Project is
located, or a letter from the appropriate Governmental Authority that no
such certificate is issued;
(e) Borrower shall have furnished to Lender a complete "As-Built"
ALTA/ACSM final survey of the Project complying with EXHIBIT "B" attached
hereto in compliance with Section 8.1(d);
--------------
(f) All fixtures, furnishings, furniture, equipment and other property
required for the operation of the Project and to be installed by Borrower
shall have been installed free and clear of all liens and security
interests, except in favor of Lender;
(g) Borrower shall have furnished to Lender copies of all final
waivers of lien and sworn statements from contractors, subcontractors and
material suppliers and an affidavit from the General Contractor in
accordance with Chapter 713, Florida Statutes;
-----------------
(h) Borrower shall have furnished to Lender a certificate from the
Architect or other evidence satisfactory to Lender dated at or about the
Completion Date stating that (i) the Improvements have been completed in
accordance with the Plans and Specifications, and (ii) the Improvements as
so completed comply with all applicable Laws;
(i) Borrower shall have furnished to Lender a rent roll and copies of
all leases for the Project;
(j) Borrower shall have furnished to Lender tenant estoppel
certificates in form and substance acceptable to Lender; and
-28-
(k) Lender shall have received a certificate from the Lender's
Consultant for the sole benefit of Lender that the Improvements have been
satisfactorily completed in accordance with the Plans and Specifications.
If Borrower fails to comply with and satisfy any of the final disbursement
conditions contained in this Section 13.1 within sixty (60) days after the
-------------
Completion Date, such failure shall constitute an Event of Default hereunder.
13.2 DISBURSEMENT OF RETAINAGE
-------------------------
The Retainage shall be disbursed to General Contractor (less 150% of the
cost of completion of punchlist items) when all of the following conditions have
been satisfied:
(a) The Architect shall have certified, and Borrower and Lender shall
have agreed, that construction is sufficiently complete, in accordance with
the Plans and Specifications, so that the Units and other amenities
contemplated by the Plans and Specifications can be occupied for the uses
for which they are intended with only minor punchlist items and decoration
left unfinished which will not interfere with the practical utilization of
the Project for its intended purposes;
(b) a temporary certificate of occupancy shall have been issued for
the Project, subject only to such conditions as may be reasonably
acceptable to Borrower and Lender;
(c) General Contractor is in compliance with the payment and lien
provisions of the general contract,
(d) General Contractor has completed site cleanup and restoration,
including, without limitation, removal of all excess materials, rock, sand,
paving and miscellaneous debris, supplies, equipment and trailers; and
(e) All temporary utilities are disconnected.
The holdback for punchlist items shall be disbursed to General Contractor
upon satisfaction of the conditions set forth in Section 13.1 above.
ARTICLE 14
RESERVED
--------
ARTICLE 15
OTHER COVENANTS
---------------
15.1 BORROWER FURTHER COVENANTS AND AGREES AS FOLLOWS:
------------------------------------------------
(a) Required Contracts and Contract Deposits: Subject to applicable
------------------------------------------
law, prior to Closing Borrower shall have provided to Lender evidence that
257 Units are under valid Contracts of Sale, and the aggregate Contract
Deposits received in connection therewith is equal to or greater than
$18,709,560.00 (such Required Contracts and Contract Deposits are
identified on EXHIBIT "M", attached hereto). Borrower shall have used
$9,046,561.00 of said Contract Deposits to pay Project costs as identified
on the Budget, and Borrower shall have deposited $9,668,999.00 of said
funds into the Escrow Account(s).
-29-
(b) Required Contract Deposits Upon Sale of All Units: When the
-------------------------------------------------------
initial 294 Units have been sold or are under contract, Borrower shall
provide evidence to Lender showing that all Contract Deposits (collected
and to be collected; including Usable Deposits) total at least
$24,869,000.00, and that Usable Deposits equal or exceed $17,209,078.00 (or
Borrower shall provide evidence to Lender, acceptable to Lender in Lender's
sole discretion, that such Usable Deposits have been utilized in accordance
with the sources and uses of funds attached as EXHIBIT "K"). Borrower shall
provide Lender with evidence of the Contract Deposit collected for each
Unit as and when each Contract Deposit is collected.
(c) Net Sale Proceeds from Sale of All Units: When the initial 294
-------------------------------------------
Units have been sold or are under contract, Borrower shall provide evidence
to Lender showing that Net Sale Proceeds (earned or to-be earned pursuant
to effective Contracts of Sale) from the sale of the initial 294 Units
being developed in the Project must equal at least $87,060,000.00, which
Net Sale Proceeds are sufficient to cover 120% of the Maximum Aggregate
Loan Amount.
(d) Opening of Loan on or Prior to Loan Opening Date. All conditions
-------------------------------------------------
precedent to the Opening of the Loan shall be complied with on or prior to
March 30, 2006. If Borrower has not satisfied all conditions precedent to,
and otherwise qualified for, the Opening of the Loan, Lender may at its
sole option terminate Lender's obligation to fund the Loan by written
notice to Borrower.
(e) Construction of Improvements. The Improvements shall be
------------------------------
constructed and fully equipped in a good and workmanlike manner with
materials of high quality, strictly in accordance with the Plans and
Specifications (or in accordance with any changes therein that may be
approved in writing by Lender or as to which Lender's approval is not
required), and such construction and equipping will be commenced on or
before the Construction Commencement Date and prosecuted with due diligence
and continuity in accordance with the Construction Schedule and fully
completed not later than the Completion Date. The Completion Date shall be
extended in writing by Lender by the number of days resulting from any
Unavoidable Delay in the construction of the Project, (but under no
circumstances shall Lender be obligated to extend the Completion Date
beyond twenty-four (24) months beyond the Construction Commencement Date),
provided that Lender shall not be obligated to grant any such extension
unless (a) Borrower gives notice of such delay to Lender within ten (10)
days of learning of the event resulting in such delay, and (b) after giving
effect to the consequences of such delay, the Loan shall remain "In
Balance".
(f) Changes in Plans and Specifications. No changes will be made in
-------------------------------------
the Plans and Specifications without the prior written approval of Lender;
provided, however, that Borrower may make changes to the Plans and
------------------
Specifications if (i) Borrower notifies Lender in writing of such change
within seven (7) days thereafter; (ii) Borrower obtains the approval of all
parties whose approval is required, including sureties and any Governmental
Authority to the extent approval from such parties is required; (iii) the
structural integrity of the Improvements is not impaired; (iv) no material
change in architectural appearance is effected; (v) the performance of the
mechanical, electrical, and life safety systems of the Improvements is not
affected; (vi) the cost of or reduction resulting from such change (x) does
not exceed $50,000 and (y) when added to all other changes which have not
been approved in writing by Lender, the resulting aggregate cost or
reduction does not exceed $250,000.00. Changes in the scope of construction
work or to any construction related contract must be documented with a
change order on the AIA Form G701 or equivalent form.
(g) Inspection by Lender. Borrower will cooperate with Lender in
----------------------
arranging for inspections by representatives of Lender of the progress of
the Construction from time to time including an examination of (i) the
Improvements, (ii) all materials to be used in the Construction, (iii) all
plans and shop drawings which are or may be kept at the construction site,
(iv) any contracts, bills of sale, statements, receipts or vouchers in
-30-
connection with the Improvements, (v) all work done, labor performed,
materials furnished in and about the Improvements, (vi) all books,
contracts and records with respect to the Improvements, and (vii) any other
documents relating to the Improvements or the Construction. Borrower shall
cooperate with Lender's Consultant to enable him to perform his functions
hereunder. Borrower shall, upon Lender's or Lender's Consultant's request,
correct any defect in the Construction or any failure of the Construction
to comply with the Plans and Specifications.
(h) Mechanics' Liens and Contest Thereof. Borrower will not suffer or
------------------------------------
permit any mechanics' lien claims to be filed or otherwise asserted against
the Project or any funds due to the General Contractor, and will promptly
discharge the same in case of the filing of any claims for lien or
proceedings for the enforcement thereof, provided, however, that Borrower
-----------------
shall have the right to contest in good faith and with reasonable diligence
the validity of any such lien or claim provided that Borrower posts a
statutory xxxx xxxx which removes such lien from title to the Project
within twenty (20) days of written notice by Lender to Borrower of the
existence of the lien). Lender will not be required to make any further
disbursements of the proceeds of the Loan until any mechanics' lien claims
have been removed and Lender may, at its option, restrict disbursements to
reserve sufficient sums to pay 150% of the lien.
(i) Settlement of Mechanics' Lien Claims. If Borrower shall fail
----------------------------------------
promptly either (i) to discharge any such lien, or (ii) post a statutory
xxxx xxxx in the manner provided in Section 15.1(h) Lender may, at its
---------------
election (but shall not be required to), procure the release and discharge
of any such claim and any judgment or decree thereon and, further, may in
its sole discretion effect any settlement or compromise of the same, or may
furnish such security or indemnity to the Title Insurer, and any amounts so
expended by Lender, including premiums paid or security furnished in
connection with the issuance of any surety company bonds, shall be deemed
to constitute disbursement of the proceeds of the Loan hereunder. In
settling, compromising or discharging any claims for lien, Lender shall not
be required to inquire into the validity or amount of any such claim.
(j) Renewal of Insurance. Borrower shall cause insurance policies to
---------------------
be maintained in compliance with EXHIBIT "E" at all times. Borrower shall
timely pay all premiums on all insurance policies required hereunder, and
as and when additional insurance is required, from time to time, during the
progress of Construction, and as and when any policies of insurance may
expire, furnish to Lender, premiums prepaid, additional and renewal
insurance policies with companies, coverage and in amounts satisfactory to
Lender in accordance with Section 8.1(e). Borrowers shall furnish to the
--------------
Lender evidence that the insurance premiums and real estate taxes are paid,
at least five (5) days prior to the last date for payment of such amounts
before imposition of any penalty or interest or termination of the
insurance policy, as applicable.
(k) Payment of Taxes. Borrower shall pay all real estate taxes and
------------------
assessments and charges of every kind upon the Project before the same
become delinquent, provided, however, that Borrower shall have the right to
pay such tax under protest or to otherwise contest any such tax or
assessment, but only if (i) such contest has the effect of preventing the
collection of such taxes so contested and also of preventing the sale or
forfeiture of the Project or any part thereof or any interest therein, (ii)
Borrower has notified Lender of Borrower's intent to contest such taxes,
and (iii) Borrower has deposited security in form and amount satisfactory
to Lender, in its sole discretion, and has increased the amount of such
security so deposited promptly after Lender's request therefor. If Borrower
-31-
fails to commence such contest or, having commenced to contest the same,
and having deposited such security required by Lender for its full amount,
shall thereafter fail to prosecute such contest in good faith or with due
diligence, or, upon adverse conclusion of any such contest, shall fail to
pay such tax, assessment or charge, Lender may, at its election (but shall
not be required to), pay and discharge any such tax, assessment or charge,
and any interest or penalty thereon, and any amounts so expended by Lender
shall be deemed to constitute disbursements of the Loan proceeds hereunder
(even if the total amount of disbursements would exceed the face amount of
the Note). Borrower shall furnish to Lender evidence that taxes are paid at
least five (5) days prior to the last date for payment of such taxes and
before imposition of any penalty or accrual of interest.
(l) Tax and Insurance Escrow Accounts. Borrower shall, upon the
-------------------------------------
occurrence of any Event of Default, make insurance and tax escrow deposits,
in amounts reasonably determined by Lender from time to time as being
needed to pay taxes and insurance premiums when due, in an interest bearing
escrow account held by Lender in Lender's name and under its sole dominion
and control. All payments deposited in the escrow account, and all interest
accruing thereon, are pledged as additional collateral for the Loan.
Notwithstanding Lender's holding of the escrow account, nothing herein
shall obligate Lender to pay any insurance premiums or real property taxes
with respect to any portion of the Project unless the Event of Default has
been cured to the satisfaction of Lender. If the Event of Default has been
satisfactorily cured, Lender shall make available to Borrower such funds as
may be deposited in the escrow account from time to time for Borrower's
payment of insurance premiums or real property taxes due with respect to
the Project. Upon Lender's request, Borrower shall provide Lender with
copies of paid tax and insurance bills.
(m) Personal Property. All of Borrower's personal property, fixtures,
-----------------
attachments and equipment delivered upon, attached to or used in connection
with the Construction or the operation of the Project shall always be
located at the Project and shall be kept free and clear of all liens,
encumbrances and security interests.
(n) Leasing Restrictions. Without the prior written consent of Lender,
--------------------
Borrower and Borrower's agents shall not enter into any Leases (except for
the amenities leases referenced in Section 3.1).
-----------
(o) Defaults Under Leases. Borrower will not suffer or permit any
-----------------------
breach or default to occur in any of Borrower's obligations under any of
the Leases nor suffer or permit the same to terminate by reason of any
failure of Borrower to meet any requirement of any Lease including those
with respect to any time limitation within which any of Borrower's work is
to be done or the space is to be available for occupancy by the lessee.
(p) Lender's Attorneys' Fees for Enforcement of Agreement. In case of
-----------------------------------------------------
any default or Event of Default hereunder, Borrower (in addition to
Lender's attorneys' fees, if any, to be paid pursuant to Section 7.3) will
pay Lender's attorneys' and paralegal fees (including, without limitation,
any reasonable attorney and paralegal fees and costs incurred in connection
with any litigation or bankruptcy or administrative hearing and any appeals
therefrom and any post-judgment enforcement action including, without
limitation, supplementary proceedings) in connection with the enforcement
of this Agreement; without limiting the generality of the foregoing, if at
any time or times hereafter Lender employs counsel (whether or not any suit
has been or shall be filed and whether or not other legal proceedings have
been or shall be instituted) for advice or other representation with
respect to the Project, this Agreement, or any of the other Loan Documents,
or to protect, collect, lease, sell, take possession of, or liquidate any
of the Project, or to attempt to enforce any security interest or lien in
any portion of the Project, or to enforce any rights of Lender or
Borrower's obligations hereunder, then in any of such events all of the
reasonable attorneys' fees arising from such services, and any expenses,
costs and charges relating thereto (including fees and costs of
paralegals), shall constitute an additional liability owing by Borrower to
Lender, payable on demand.
(q) Appraisals. Lender shall have the right to obtain a new or updated
----------
Appraisal of the Project from time to time. Borrower shall cooperate with
Lender
-32-
in this regard. If the Appraisal is obtained to comply with this
Agreement or any applicable law or regulatory requirement, or bank policy
promulgated to comply therewith, or if an Event of Default exists, Borrower
shall pay for any such Appraisal upon Lender's request.
(r) Furnishing Information. Borrower and Guarantors shall deliver or
cause to be delivered to Lender a duly executed Certificate of Compliance
in the form of EXHIBIT "J" attached hereto within thirty (30) days after
the end of each calendar quarter, and: (i) not later than one hundred
eighty (180) days after the end of each calendar year, annual Federal
Income Tax Returns; (ii) not later than 90 days after the end of each
fiscal year, an annual, audited financial statement (or personal financial
statement, as applicable to Xxxxxxx X. Xxxxxx), and (iii) not later than 45
days after the end of each calendar quarter a company prepared interim
financial statement (as applicable to all Borrowers and Guarantors with the
exception of Xxxxxxx X. Xxxxxx). Each financial statement shall be prepared
by a certified public accountant acceptable to Lender in accordance with
generally accepted accounting principles. Each financial statement shall be
certified as true, complete and correct by its preparer and by Borrowers
or, in the case of each of the Guarantors' financial statements, by the
Guarantor to whom it relates. In addition, prior to the Loan Opening and
then not later than sixty (60) days before the end of each fiscal year of
Borrower, Borrower shall deliver to Lender the Project's updated annual
operating budget for the following fiscal year. Within fifteen (15) days
following the end of each month, Borrower shall deliver to Lender: (i)
monthly unaudited operating cash flow statements for the Project, certified
as true, complete and correct by Borrower showing actual sources and uses
of cash during the preceding month, and (ii) a current rent roll and a
summary of all leasing activity then taking place with respect to the
Project, particularly describing the status of all pending non-residential
lease negotiations, if any. Borrowers and the Guarantors shall provide such
additional financial information Lender reasonably requires. Borrower shall
during regular business hours permit Lender or any of its agents or
representatives to have access to and examine all of its books and records
regarding the development and operation of the Project. If any such
financial statement or other report or information described in this
subsection is not delivered to Lender within thirty (30) days after the
time periods stated above, Borrower agrees to pay a late charge to Lender
in the amount of $500.00 per item per day.
(s) Sign and Publicity. Upon Lender's request, Borrower shall promptly
------------------
erect a sign approved in advance by Lender in a conspicuous location on the
Project during the Construction indicating that the financing for the
Project is provided by Lender. Lender reserves the right to publicize the
making of the Loan.
(t) Collateral Account. Borrower shall provide $4,000,000.00 in the
-------------------
form of a Letter of Credit unconditionally payable to Lender (the
"Collateral Account LC") or in cash deposited with Lender and in a demand
------------------------
deposit account held in Borrower's name but under Lender's sole dominion
and control (the "Collateral Account"), and said Collateral Account or
--------------------
Collateral Account LC (in like amount) shall be pledged as additional
security for the Phase 1 Loan. Borrower may substitute cash for the
Collateral Account LC (in like amount) at any time, and upon delivery of
said cash to Lender the Collateral Account LC shall be returned to
Borrower. .
(u) TDS Development, LLC, Collateral Account. TDS Development, LLC,
------------------------------------------
shall deposit $4,000,000.00 in a demand deposit account held in TDS
Development, LLC's name (the "TDS Development, LLC, Account") but under the
-----------------------------
Lender's sole dominion and control, and said TDS Development, LLC Account
shall be pledged as additional security for the Phase 1 Loan.
Notwithstanding any contrary provision of this Agreement or any other Loan
Document:
(i) The proceeds in the TDS Development LLC Account shall be
disbursed directly to Completion Guarantor, in accordance with its
written instructions to Lender, at such time as the Loan is repaid in
full.
-33-
Borrower hereby authorizes Lender to make such disbursement
directly to Completion Guarantor, and Borrower agrees to execute such
additional authorization as may be required by Lender with respect
thereto.
(ii) In the event that Lender exercises its rights and remedies
under the Loan Documents following an Event of Default, Lender shall
realize upon the proceeds in the Collateral Account and shall use such
proceeds in full to satisfy Borrower's obligations under the Loan
Documents prior to Lender realizing upon the proceeds of the TDS
Development LLC Account and using the proceeds thereof to satisfy
Borrower's obligations under the Loan Documents; provided, however,
that Lender need not delay in proceeding against the TDS Development
LLC Account if Lender's ability to collect from the Collateral Account
is delayed or impaired. In the event that Lender realizes upon the Net
Cash Flow in the exercise of its rights and remedies under the Loan
Documents following an Event of Default, Lender shall use the Net Cash
Flow to reimburse Completion Guarantor for that amount of the TDS
Development, LLC, Account utilized by Lender to satisfy Borrower
obligations under the Loan Documents.
(iii) Any pledge by Borrower to Lender of the "Net Income" of the
Project" to secure the Phase II Loan shall not be required to be made
by Borrower in favor of Lender, and shall not be effective, until
General Contractor shall have received all payments owing from
Borrower to General Contractor under the General Contract and the
proceeds of the TDS Development, LLC Account, if any, shall have been
disbursed to Completion Guarantor in accordance with paragraph (i)
above. For purposes of this subparagraph (iii), the "Net Income of the
Project" shall mean all Net Sales Proceds less that amount equal to
repayment of the Loan in full.
(v) Buyer Deposit Shortfall Account. Borrower shall provide
---------------------------------
$2,000,000.00 in the form of a Letter of Credit unconditionally payable to
Lender ("Buyer Deposit Shortfall LC") or in cash deposited with Lender in a
--------------------------
demand deposit account held in Borrower's name but under the Lender's sole
dominion and control (the "Buyer Deposit Shortfall Account"), and said
---------------------------------
Buyer Deposit Shortfall LC and/or Buyer Deposit Shortfall Account shall be
pledged as additional collateral for the Loan. If Borrower elects to
utilize the Buyer Deposit Shortfall LC, Borrower may submit a written
request to Lender to request a draw on the Buyer Deposit Shortfall LC and
Lender shall promptly submit such draw and deposit the funds in the Buyer
Deposit Shortfall Account. The funds held in the Buyer Deposit Shortfall
Account can be drawn on by the Borrower to fund approved Project costs as
set forth in the Loan Budget. Any amounts used by the Borrower to pay for
such Project costs will be applied towards the minimum Project Equity
requirement. When Borrower has demonstrated that the full amount of the
required Project Equity has been invested in Project, any amount of the
Buyer Deposit Shortfall Account that has not been expended will be made
immediately available to Borrower and the Buyer Deposit Shortfall LC shall
be returned to Borrower.
(w) Lost Note. Upon Lender's furnishing to Borrower an affidavit to
----------
such effect, Borrower shall, if the Note is mutilated, destroyed, lost or
stolen, deliver to Lender, in substitution therefor, a new note containing
the same terms and conditions as the Note.
(x) Indemnification. Borrower shall indemnify Lender, including each
---------------
party owning an interest in the Loan and their respective officers,
directors, employees and consultants (each, an "Indemnified Party") and
-----------------
defend and hold each Indemnified Party harmless from and against all
claims, injury, damage, loss and liability, cost and expense (including
attorneys' fees, costs and expenses) of any and every kind to any persons
or property by reason of (i) the Construction; (ii) the operation or
maintenance of the Project; (iii) any breach of representation or warranty,
default or Event of Default under this Agreement or any other Loan Document
or Related Document; or (iv) any other matter arising in connection with
the Loan, Borrower, Completion Guarantor, Guarantors, or the Project. No
Indemnified Party shall be entitled to be indemnified against its own gross
negligence or willful misconduct. The foregoing indemnification shall
survive repayment of the Loan and shall continue to benefit Lender
following any assignment of the Loan with respect to matters arising or
accruing prior to such assignment.
-34-
(y) No Additional Debt. Except for the Loan, Borrower shall neither
--------------------
incur nor guarantee any indebtedness (whether personal or nonrecourse,
secured or unsecured) other than customary trade payables paid within sixty
(60) days after they are incurred.
(z) Compliance With Laws. Borrower shall comply with all applicable
----------------------
requirements (including applicable Laws) of any Governmental Authority
having jurisdiction over Borrower or the Project.
(aa) Document Review. Borrower shall provide Lender with all
----------------
condominium documents, homeowners' association documents, management
agreements and CDD documents, as applicable, which Lender shall review and
approve (which approval will not be unreasonably withheld or delayed), in
Lender's sole discretion.
(bb) Organizational Documents. Borrower shall not, without the prior
-------------------------
written consent of Lender (except as permitted pursuant to the definition
of "Transfer", above), permit or suffer (i) a material amendment or
modification of its organizational documents, (ii) the admission of any new
member, partner or shareholder, or (iii) any dissolution or termination of
its existence.
(cc) Furnishing Reports. Upon Lender's request, Borrower shall provide
------------------
Lender with copies of all inspections, reports, test results and other
information received by any Borrower, which in any way relate to the
Project or any part thereof.
(dd) Management Contracts. Borrower shall not enter into, modify,
---------------------
amend, terminate or cancel any management contracts for the Project
(including but not limited to the Operating Agreement) or agreements with
agents or brokers, without the prior written approval of Lender, which
approval shall not be unreasonably withheld or delayed.
(ee) Furnishing Notices. Borrower shall provide Lender with copies of
------------------
all material notices pertaining to the Project received by Borrower from
any Governmental Authority or insurance company within seven (7) days after
such notice is received.
(ff) Construction Contracts. Borrower shall not enter into, materially
----------------------
modify, materially amend, terminate or cancel any contracts for the
Construction, without the prior written approval of Lender, which approval
shall not be unreasonably withheld or delayed. Borrower will furnish Lender
promptly after execution thereof executed copies of all contracts between
Borrower, architects, engineers and contractors and all subcontracts
between the General Contractor or contractors and all of their
subcontractors and suppliers, which contracts and subcontracts may not have
been furnished pursuant to Section 9.1(a) at the time of the Opening of the
-------------
Loan.
(gg) Correction of Defects. Within five (5) days after Borrower
-----------------------
acquires knowledge of or receives notice of a defect in the Improvements or
any departure from the Plans and Specifications, or any other requirement
of this Agreement, Borrower will proceed with diligence to correct all such
defects and departures.
(hh) Hold Disbursements in Trust. Borrower shall receive and hold in
----------------------------
trust for the sole benefit of Lender (and not for the benefit of any other
person, including, but not limited to, contractors or any subcontractors)
all advances made hereunder directly to Borrower, for the purpose of paying
-35-
costs of the Construction in accordance with the Budget. Borrower shall use
the proceeds of the Loan solely for the payment of costs as specified in
the Budget. Borrower will pay all other costs, expenses and fees relating
to the acquisition, equipping, use and operation of the Project.
(ii) Foundation Survey. Not later than thirty (30) days after
------------------
completion of each separate foundation with respect to the Improvements,
Borrower shall furnish to Lender a survey of the Land with such foundation
of the Improvements located thereon, and also satisfying the requirements
set forth in Section 8.1(d).
(jj) Alterations. Without the prior written consent of Lender (which
-----------
consent shall not be unreasonably withheld or delayed), Borrower shall not
make any material alterations to the Project (other than completion of the
Construction in accordance with the Plans and Specifications).
(kk) Net Cash Flow Deposit. All Net Cash Flow from the Project shall
----------------------
be deposited with Lender into the Project Escrow Account, which will be a
demand deposit account in Borrower's name but under Lender's sole dominion
and control. Funds deposited into such account shall be applied against the
monthly payments of interest on the Loan and Loan proceeds will be
disbursed from the interest reserve set out in the Budget only to the
extent the Net Cash Flow is not sufficient to make such payments.
15.2 AUTHORIZED REPRESENTATIVE.
-------------------------
Borrower hereby appoints XXXXXXX X. XXXXXX or XXXXX XXXXXX as its
Authorized Representative for purposes of dealing with Lender on behalf of
Borrower in respect of any and all matters in connection with this Agreement,
the other Loan Documents, and the Loan. The Authorized Representative shall have
the power, in his discretion, to give and receive all notices, monies,
approvals, and other documents and instruments, and to take an other action on
behalf of Borrower. All actions by the Authorized Representative shall be final
and binding on Borrower. Lender may rely on the authority given to the
Authorized Representative until actual receipt by Lender of a duly authorized
resolution substituting a different person as the Authorized Representative.
ARTICLE 16
CASUALTIES AND CONDEMNATION
---------------------------
16.1 LENDER'S ELECTION TO APPLY PROCEEDS ON INDEBTEDNESS.
---------------------------------------------------
(a) Subject to the provisions of Section 16.1(b) below, Lender may
--------------
elect to collect, retain and apply upon the indebtedness of Borrower under
this Agreement or any of the other Loan Documents all proceeds of insurance
or condemnation (individually and collectively referred to as "Proceeds")
after deduction of all expenses of collection and settlement, including
reasonable attorneys' and reasonable adjusters' fees and charges. Any
proceeds remaining after repayment of the indebtedness under the Loan
Documents shall be paid by Lender to Borrower.
(b) Notwithstanding anything in Section 16.1(a) to the contrary, in
--------------
the event of any casualty to the Improvements or any condemnation of part
of the Project, Lender agrees to make available the Proceeds to restoration
of the Improvements if (i) no Event of Default exists, (ii) all Proceeds
are deposited with Lender, (iii) in Lender's reasonable judgment, the
amount of Proceeds available for restoration of the Improvements (together
with undisbursed proceeds of the Loan, if any, allocated for the cost of
the Construction and any sums or other security acceptable to Lender
deposited with Lender by Borrower for such purpose) is sufficient to pay
the full and complete costs of such restoration, ,(iv) if the cost of
-36-
restoration exceeds ten percent (10%) of the Maximum Outstanding Loan
Amount, in Lender's sole determination after completion of restoration the
Maximum Outstanding Loan Amount will not exceed 5% of the fair market value
of the Project, (v) in Lender's reasonable determination, the Project can
be restored to an architecturally and economically viable project in
compliance with applicable Laws, (vi) each Performance and Completion
Guarantor and the Completion Guarantor reaffirm its Performance and
Completion and/or Completion Guaranty (as applicable) in writing, and (vii)
in Lender's reasonable determination, such restoration is likely to be
completed not later than three months prior to the Maturity Date.
16.2 BORROWER'S OBLIGATION TO REBUILD AND USE OF PROCEEDS THEREFOR.
-------------------------------------------------------------
In case Lender does not elect to apply or does not have the right to apply
the Proceeds to the indebtedness, as provided in Section 16.1 above, Borrower
shall:
(a) Proceed with diligence to make settlement with insurers or the
appropriate Governmental Authorities and cause the Proceeds to be deposited
with Lender;
(b) In the event of any delay in making settlement with insurers or
the appropriate Governmental Authorities or effecting collection of the
Proceeds, deposit with Lender the full amount required to complete
construction as aforesaid;
(c) In the event the Proceeds and the available proceeds of the Loan
are insufficient to assure the Lender that the Loan will be In Balance,
promptly deposit with Lender any amount necessary to place the Loan In
Balance; and
(d) Promptly proceed with the presumption of construction of the
Improvements, including the repair of all damage resulting from such fire,
condemnation or other cause and restoration to its former condition.
Any request by Borrower for a disbursement by Lender of Proceeds and funds
deposited by Borrower shall be treated by Lender as if such request were for an
advance of the Loan hereunder, and the disbursement thereof shall be conditioned
upon Borrower's compliance with and satisfaction of the same conditions
precedent as would be applicable under this Agreement for an advance of the
Loan.
ARTICLE 17
ASSIGNMENTS BY LENDER AND BORROWER
----------------------------------
17.1 ASSIGNMENTS AND PARTICIPATIONS.
------------------------------
Lender may from time to time sell the Loan and the Loan Documents (or any
interest therein) and may grant participations in the Loan. Borrower agrees to
cooperate with Lender's efforts to do any of the foregoing and to execute all
documents reasonably required by Lender in connection therewith which do not
materially adversely affect Borrower's rights under the material terms and
conditions of the Loan Documents.
17.2 PROHIBITION OF ASSIGNMENTS AND TRANSFERS BY BORROWER.
----------------------------------------------------
Borrower shall not assign or attempt to assign its rights under this
Agreement and any purported assignment shall be void. Without the prior written
consent of Lender, in Lender's sole discretion, Borrower shall not suffer or
permit (a) any change in the management (whether direct or indirect) of the
-37-
Project or of Borrower (subject to the exceptions set forth in the definition of
"Transfer", above), or (b) any Transfer (except for the sale of Units).
17.3 PROHIBITION OF TRANSFERS IN VIOLATION OF ERISA.
----------------------------------------------
In addition to the prohibitions set forth in Section 17.2 above, Borrower
------------
shall not assign, sell, pledge, encumber, transfer, hypothecate or otherwise
dispose of its interest or rights in this Agreement or in the Project, or
attempt to do any of the foregoing or suffer any of the foregoing, nor shall any
party owning a direct or indirect interest in Borrower assign, sell, pledge,
mortgage, encumber, transfer, hypothecate or otherwise dispose of any of its
rights or interest (direct or indirect) in Borrower, attempt to do any of the
foregoing or suffer any of the foregoing, if such action would cause the Loan,
or the exercise of any of Lender's rights in connection therewith, to constitute
a prohibited transaction under ERISA or the Internal Revenue Code or otherwise
result in Lender being deemed in violation of any applicable provision of ERISA.
Borrower agrees to indemnify and hold Lender free and harmless from and against
all losses, costs (including attorneys' fees and expenses), taxes, damages
(including consequential damages) and expenses Lender may suffer by reason of
the investigation, defense and settlement of claims and in obtaining any
prohibited transaction exemption under ERISA necessary or desirable in Lender's
sole judgment or by reason of a breach of the foregoing prohibitions. The
foregoing indemnification shall be a recourse obligation of Borrower and shall
survive repayment of the Note, notwithstanding any limitations on recourse
contained herein or in any of the Loan Documents.
17.4 SUCCESSORS AND ASSIGNS.
----------------------
Subject to the foregoing restrictions on transfer and assignment contained
in this Article 17, this Agreement shall inure to the benefit of and shall be
-----------
binding on the parties hereto and their respective successors and permitted
assigns.
ARTICLE 18
TIME OF THE ESSENCE
-------------------
18.1 TIME IS OF THE ESSENCE.
----------------------
Borrower agrees that time is of the essence under this Agreement.
ARTICLE 19
EVENTS OF DEFAULT
-----------------
The occurrence of any one or more of the following shall constitute an
"Event of Default" as said term is used herein:
(a) Failure of Borrower (i) (A) to make any principal payment when
due, (B) to pay any interest within five (5) days after the date when due
or (C) to observe or perform any of the other covenants or conditions by
Borrower to be performed under the terms of this Agreement or any other
Loan Document concerning the payment of money, for a period of ten (10)
days after written notice from Lender that the same is due and payable; or
(ii) for a period of thirty (30) days after written notice from Lender, to
observe or perform any non-monetary covenant or condition contained in this
Agreement or any other Loan Documents; provided that if any such failure
concerning a non-monetary covenant or condition is susceptible to cure and
cannot reasonably be cured within said thirty (30) day period, then
-38-
Borrower shall have an additional sixty (60) day period to cure such
failure and no Event of Default shall be deemed to exist hereunder so long
as (Y) Borrower commences such cure within the initial thirty (30) day
period and diligently and in good faith pursues such cure to completion
within such resulting ninety (90) day period from the date of Lender's
notice; and provided further that if a different notice or grace period is
specified under any other subsection of this Section 19.1 with respect to a
------------
particular breach, or if another subsection of this Section 19.1 applies to
------------
a particular breach and does not expressly provide for a notice or grace
period the specific provision shall control.
(b) The disapproval by Lender or Lender's Consultant at any time of any
construction work which does not comply with the Plans and Specification or any
governmental requirement(s), and failure of Borrower to cause the same to be
corrected to the satisfaction of Lender or Lender's Consultant within the cure
period provided in Section 19.1(a)(ii) above.
--------------------
(c) A delay in the Construction or a discontinuance for a period of
fifteen (15) days after written notice from Lender concerning such delay or
discontinuance (other than Unavoidable Delays), or in any event a delay in
the Construction so that the same is not, in Lender's judgment (giving due
consideration to the assessment of Lender's Consultant), likely to be
completed on or before the Completion Date.
(d) The bankruptcy or insolvency of the General Contractor and failure
of Borrower to procure a contract with a new contractor satisfactory to
Lender within thirty (30) days from the occurrence of such bankruptcy or
insolvency.
(e) Any Transfer or other event in violation of Sections 17.2 or 17.3.
------------- ----
(f) Any material default by Borrower, as lessor, under the terms of
any Lease following the expiration of any applicable notice and cure
period, provided that if the Lease does not provide a notice and cure
period, then the notice and cure period provided in (a)(i) above will apply
------
to any such monetary default, and the notice and cure period provided in
(a)(ii) will apply to any such non-monetary default (which respective
-------
periods shall commence upon written notice of default from Lender).
(g) If any warranty, representation, statement, report or certificate
made now or hereafter by Borrower, Completion Guarantor or any Guarantor is
untrue or incorrect at the time made or delivered, provided that if such
breach is reasonably susceptible of cure, then no Event of Default shall
exist so long as Borrower cures said breach (i) within the notice and cure
period provided in (a)(i) above for a breach that can be cured by the
------
payment of money or (ii) within the notice and cure period provided in
(a)(ii) above for any other breach.
-------
(h) Borrower, Completion Guarantor or any Guarantor shall commence a
voluntary case concerning Borrower, Completion Guarantor or such Guarantor
under the Bankruptcy Code; or an involuntary proceeding is commenced
against Borrower, Completion Guarantor or any Guarantor under the
Bankruptcy Code and relief is ordered against Borrower, Completion
Guarantor or such Guarantor, or the petition is controverted but not
dismissed or stayed within sixty (60) days after the commencement of the
case, or a custodian (as defined in the Bankruptcy Code) is appointed for
or takes charge of all or substantially all of the property of Borrower,
Completion Guarantor or any Guarantor; or Borrower, Completion Guarantor or
any Guarantor commences any other proceedings under any reorganization,
arrangement, readjustment of debt, relief of debtors, dissolution,
insolvency or liquidation or similar Law of any jurisdiction whether now or
hereafter in effect relating to the Borrower, Completion Guarantor or any
Guarantor; or there is commenced against Borrower, Completion Guarantor or
any Guarantor any such proceeding which remains undismissed or unstayed for
a period of sixty (60) days; or the Borrower, Completion Guarantor or any
-39-
Guarantor fails to controvert in a timely manner any such case under the
Bankruptcy Code or any such proceeding, or any order of relief or other
order approving any such case or proceeding is entered; or Borrower,
Completion Guarantor or any Guarantor by any act or failure to act
indicates its consent to, approval of, or acquiescence in any such case or
proceeding or the appointment of any custodian or the like of or for it for
any substantial part of its property or suffers any such appointment to
continue undischarged or unstayed for a period of sixty (60) days.
(i) Borrower, Completion Guarantor or any Guarantor shall make an
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, or shall consent
to the appointment of a receiver or trustee or liquidator of all of its
property or the major part thereof or if all or a substantial part of the
assets of Borrower, Completion Guarantor or any Guarantor are attached,
seized, subjected to a writ or distress warrant, or are levied upon, or
come into the possession of any receiver, trustee, custodian or assignee
for the benefit of creditors.
(j) If Borrower is enjoined, restrained or in any way prevented by any
court order from constructing or operating the Project.
(k) Failure by Borrower to make any Deficiency Deposit with Lender
within the time and in the manner required by Article 11 hereof.
----------
(l) One or more final, unappealable judgments are entered (i) against
Borrower in amounts aggregating in excess of $100,000 or (ii) against
Completion Guarantor or any Guarantor in amounts aggregating in excess of
$250,000, and said judgments are not stayed or bonded over within thirty
(30) days after entry.
(m) If Borrower, Completion Guarantor or any Guarantor shall fail to
pay any debt owed by it or is in default under any agreement with Lender or
any other party (other than a failure or default for which Borrower's
maximum liability does not exceed $100,000 and Completion Guarantor or
Guarantor's maximum liability does not exceed $250,000) and such failure or
default continues after any applicable grace period specified in the
instrument or agreement relating thereto.
(n) If a Material Adverse Change occurs with respect to Borrower, the
Project, Completion Guarantor or any Guarantor.
(o) The occurrence of any other event or circumstance denominated as
an Event of Default in this Agreement or under any of the other Loan
Documents and the expiration of any applicable grace or cure periods, if
any, specified for such Event of Default herein or therein, as the case may
be.
ARTICLE 20
LENDER'S REMEDIES IN EVENT OF DEFAULT
-------------------------------------
20.1 REMEDIES CONFERRED UPON LENDER.
------------------------------
Upon the occurrence of any Event of Default, Lender may pursue any one or
more of the following remedies concurrently or successively, it being the intent
hereof that none of such remedies shall be to the exclusion of any other:
(a) Take possession of the Project and complete the Construction and
do anything which is necessary or appropriate in its sole judgment to
fulfill the obligations of Borrower under this Agreement and the other Loan
Documents, including either the right to avail itself of and procure
performance of existing contracts or let any contracts with the same
contractors or others. Without restricting the generality of the foregoing
-40-
and for the purposes aforesaid, Borrower hereby appoints and constitutes
Lender its lawful attorney-in-fact with full power of substitution in the
Project to complete the Construction in the name of Borrower; to use
unadvanced funds remaining under the Note or which may be reserved,
escrowed or set aside for any purposes hereunder at any time, or to advance
funds in excess of the face amount of the Note, to complete the
Construction; to make changes in the Plans and Specifications which shall
be necessary or desirable to complete the Construction in substantially the
manner contemplated by the Plans and Specifications; to retain or employ
new general contractors, subcontractors, architects, engineers and
inspectors as shall be required for said purposes; to pay, settle or
compromise all existing bills and claims, which may be liens or security
interests, or to avoid such bills and claims becoming liens against the
Project; to execute all applications and certificates in the name of
Borrower prosecute and defend all actions or proceedings in connection with
the Improvements or Project; to take action and require such performance as
it deems necessary under any of the Bonds to be furnished hereunder and to
make settlements and compromises with the surety or sureties thereunder,
and in connection therewith, to execute instruments of release and
satisfaction; and to do any and every act which the Borrower might do in
its own behalf; it being understood and agreed that this power of attorney
shall be a power coupled with an interest and cannot be revoked;
(b) Withhold further disbursement of the proceeds of the Loan and/or
terminate Lender's obligations to make further disbursements hereunder;
(c) Declare the Note to be immediately due and payable;
(d) Use and apply any monies or letters of credit deposited by
Borrower with Lender, regardless of the purposes for which the same was
deposited, to cure any such default or to apply on account of any
indebtedness under this Agreement which is due and owing to Lender;
(e) Take control of the Owner's Contingency; and
(f) Exercise or pursue any other remedy or cause of action permitted
under this Agreement or any other Loan Documents, or conferred upon Lender
by operation of Law.
Notwithstanding the foregoing, upon the occurrence of any Event of Default
under Section 19.1(h) with respect to Borrower, all amounts evidenced by the
---------------
Note shall automatically become due and payable, without any presentment,
demand, protest or notice of any kind to Borrower.
ARTICLE 21
GENERAL PROVISIONS
------------------
21.1 CAPTIONS.
--------
The captions and headings of various Articles, Sections and subsections of
this Agreement and Exhibits pertaining hereto are for convenience only and are
not to be considered as defining or limiting in any way the scope or intent of
the provisions hereof.
21.2 MODIFICATION; WAIVER.
--------------------
No modification, waiver, amendment or discharge of this Agreement or any
other Loan Document shall be valid unless the same is in writing and signed by
the party against which the enforcement of such modification, waiver, amendment
or discharge is sought.
-41-
21.3 GOVERNING LAW.
-------------
Irrespective of the place of execution and/or delivery, this Agreement
shall be governed by, and shall be construed in accordance with, the laws of the
State of Florida.
21.4 ACQUIESCENCE NOT TO CONSTITUTE WAIVER OF LENDER'S REQUIREMENTS.
--------------------------------------------------------------
Each and every covenant and condition for the benefit of Lender contained
in this Agreement may be waived by Lender, provided, however, that to the extent
that Lender may have acquiesced in any noncompliance with any construction or
nonconstruction conditions precedent to the Opening of the Loan or to any
subsequent disbursement of Loan proceeds, such acquiescence shall not be deemed
to constitute a waiver by Lender of such requirements with respect to any future
disbursements of Loan proceeds.
21.5 REQUIRED REAFFIRMATIONS OF GUARANTY.
-----------------------------------
Lender, in its sole discretion, may grant a request from Borrower to
---
increase the Budget related to the addition of units to the Project (thereby
increasing the Maximum Aggregate Loan Amount), on the condition that, inter
alia, each Payment Guarantor, Performance and Completion Guarantor and the
Completion Guarantor reaffirms, in writing, its Payment Guaranty, Performance
and Completion Guaranty and/or Completion Guaranty (as applicable).
21.6 DISCLAIMER BY LENDER.
--------------------
This Agreement is made for the sole benefit of Borrower and Lender, and no
other person or persons shall have any benefits, rights or remedies under or by
reason of this Agreement, or by reason of any actions taken by Lender pursuant
to this Agreement. Lender shall not be liable to any contractors,
subcontractors, supplier, architect, engineer, or other party for labor or
services performed or materials supplied in connection with the Construction.
Lender shall not be liable for any debts or claims accruing in favor of any such
parties against Borrower or others or against the Project. Lender, by making the
Loan or taking any action pursuant to any of the Loan Documents, shall not be
deemed a partner or a joint venturer with Borrower or fiduciary of Borrower. No
payment of funds directly to a contractor or subcontractor or provider of
services shall be deemed to create any third-party beneficiary status or
recognition of same by the Lender. Without limiting the generality of the
foregoing:
(a) Lender shall have no liability, obligation or responsibility
whatsoever with respect to the Construction. Any inspections of the
Construction made by or through Lender are for purposes of administration
of the Loan only and neither Borrower nor any third party is entitled to
rely upon the same with respect to the quality, adequacy or suitability of
materials or workmanship, conformity to the Plans and Specifications, state
of completion or otherwise;
(b) Lender neither undertakes nor assumes any responsibility or duty
to Borrower to select, review, inspect, supervise, pass judgment upon or
inform Borrower of any matter in connection with the Project, including
matters relating to the quality, adequacy or suitability of: (i) the Plans
and Specifications, (ii) architects, contractors, subcontractors and
material suppliers employed or utilized in connection with the
Construction, or the workmanship of or the materials used by any of them,
or (iii) the progress or course of Construction and its conformity or
nonconformity with the Plans and Specifications; Borrower shall rely
entirely upon its own judgment with respect to such matters, and any
review, inspection, supervision, exercise of judgment or supply of
information to Borrower by Lender in connection with such matters is for
the protection of Lender only, and neither Borrower nor any third party is
entitled to rely thereon; and
-42-
(c) Lender owes no duty of care to protect Borrower, Completion
Guarantor or Guarantor, against negligent, faulty, inadequate or defective
building or construction.
21.7 JOINDER/CONSENT OF LENDER.
-------------------------
The Lender shall, at Borrower's sole cost and expense, join in any
dedication or easements for roads, utilities, drainage or ingress and egress;
join in any zoning or development applications or agreements which Borrower may
submit to Polk County or any other governmental authority; join in any plat,
site plan, declaration of covenants, restrictions and easements or declaration
of condominium; provided that (i) the Loan Documents are in good standing and
not in default; (ii) the joinder, dedication, grant of easement or declaration
is consistent with the plan of development; and (iii) the consideration or
benefit realized, if any, from the dedication, grant of easement or declaration
becomes subject to the lien of the Mortgage and other Loan Documents. Joinder of
the Lender in any dedication, plat, declaration, easement, application or
agreement shall not be deemed or construed as rendering Lender liable for
constructing any improvements described therein. Lender shall not be required to
incur any liability or expenses in connection with said dedication, easement,
application, agreement, plat or declaration.
21.8 PARTIAL INVALIDITY; SEVERABILITY.
--------------------------------
If any of the provisions of this Agreement, or the application thereof to
any person, party or circumstances, shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision or provisions to persons, parties or circumstances other than those as
to whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law.
21.9 DEFINITIONS INCLUDE AMENDMENTS.
------------------------------
Definitions contained in this Agreement which identify documents,
including, but not limited to, the Loan Documents, shall be deemed to include
all amendments and supplements to such documents from the date hereof, and all
future amendments, modifications, and supplements thereto entered into from time
to time to satisfy the requirements of this Agreement or otherwise with the
consent of Lender. Reference to this Agreement contained in any of the foregoing
documents shall be deemed to include all amendments and supplements to this
Agreement.
21.10 LOAN AGREEMENT CONTROLS.
-----------------------
To the extent of any conflict or inconsistency between the Loan Commitment
and this Agreement, the provisions of this Agreement shall govern.
21.11 EXECUTION IN COUNTERPARTS.
-------------------------
This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.
21.12 ENTIRE AGREEMENT.
----------------
This Agreement, taken together with all of the other Loan Documents and all
certificates and other documents delivered by Borrower to Lender, embody the
entire agreement and supersede all prior agreements, written or oral, relating
to the subject matter hereof.
-43-
21.13 WAIVER OF DAMAGES.
-----------------
In no event shall Lender be liable to Borrower for punitive, exemplary or
consequential damages, including, without limitation, lost profits, whatever the
nature of a breach by Lender of its obligations under this Agreement or any of
the Loan Documents, and Borrower for itself, Completion Guarantor and its
Guarantors waive all claims for punitive, exemplary or consequential damages.
21.14 CLAIMS AGAINST LENDER.
---------------------
Lender shall not be in default under this Agreement, or under any other
Loan Documents, unless a written notice specifically setting forth the claim of
Borrower shall have been given to Lender within three (3) months after Borrower
first had knowledge of the occurrence of the event which Borrower alleges gave
rise to such claim and Lender does not remedy or cure the default, if any there
be, promptly thereafter. Borrower waives any claim, set-off or defense against
Lender arising by reason of any alleged default by Lender as to which Borrower
does not give such notice timely as aforesaid. Borrower acknowledges that such
waiver is or may be essential to Lender's ability to enforce its remedies
without delay and that such waiver therefore constitutes a substantial part of
the bargain between Lender and Borrower with regard to the Loan. Neither
Completion Guarantor nor Guarantors are intended to have any rights as a
third-party beneficiary of the provisions of this Section 21.13.
-------------
21.15 JURISDICTION.
------------
TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES ANY AND ALL
RIGHTS TO REQUIRE MARSHALLING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT,
ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A "PROCEEDING"),
----------
BORROWER IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS HAVING JURISDICTION IN THE COUNTIES OF POLK AND ORANGE, AND
THE STATE OF FLORIDA, AND (B) WAIVES ANY OBJECTION WHICH IT MAY HAVE AT ANY TIME
TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY SUCH COURT, WAIVES ANY
CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND FURTHER
WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH PROCEEDING, THAT SUCH COURT
DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING IN THIS AGREEMENT SHALL
PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER JURISDICTION NOR WILL
THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE JURISDICTIONS PRECLUDE THE
BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION. BORROWER FURTHER AGREES AND
CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE OF PROCESS PROVIDED FOR
UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY PROCEEDING IN ANY FLORIDA
STATE OR UNITED STATES COURT SITTING IN THE CITY OF ORLANDO AND COUNTY OF ORANGE
MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED
TO BORROWER AT THE ADDRESS INDICATED BELOW, AND SERVICE SO MADE SHALL BE
COMPLETE UPON RECEIPT; EXCEPT THAT IF BORROWER SHALL REFUSE TO ACCEPT DELIVERY,
------
SERVICE SHALL BE DEEMED COMPLETE FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO
MAILED.
21.16 SET-OFFS.
--------
After the occurrence and during the continuance of an Event of Default,
Borrower hereby irrevocably authorizes and directs Lender from time to time to
charge Borrower's accounts and deposits with Lender (or its Affiliates), and to
pay over to Lender an amount equal to any amounts from time to time due and
payable to Lender hereunder, under the Note or under any other Loan Document.
Borrower hereby grants to Lender a security interest in and to all such accounts
and deposits maintained by the Borrower with Lender (or its Affiliates).
-44-
ARTICLE 22
NOTICES
-------
Any notice, demand, request or other communication which any party hereto
may be required or may desire to give hereunder shall be in writing and shall be
deemed to have been properly given (a) if hand delivered, when delivered; (b) if
mailed by United States Certified Mail (postage prepaid, return receipt
requested), three Business Days after mailing (c) if by Federal Express or other
reliable overnight courier service, on the next Business Day after delivered to
such courier service or (d) if by telecopier on the day of transmission so long
as copy is sent on the same day by overnight courier as set forth below:
IF TO BORROWER: Tierra del Sol Resort (Phase 1), Ltd.
--------------- TDS Town homes (Phase 1), LLC
Xxxxx Xxxxxx I Real Estate, LLC.
TDS Amenities, Inc.
0000 Xxxx Xxxx Xxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone:
-------------------
Facsimile:
-------------------
with a copy to: Xxxxxx & Xxxxx LLP
0000 Xxxxx Xxxxxx
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxx, XX 00000
Attention: C. Xxxxxxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: PCL Construction Enterprises, Inc.
0000 Xxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 0-000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxxx & Xxxxxxx, P.A.
00 Xxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
-45-
IF TO LENDER: KeyBank National Association
-------------- 000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Commercial Real Estate Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxxxx & Lardner LLP
000 Xxxxx Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx, Xx., Esq.
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or at such other address as the party to be served with notice may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice.
ARTICLE 23
WAIVER OF JURY TRIAL
--------------------
BORROWER AND LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP
WHICH IS THE SUBJECT OF THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
[SIGNATURE PAGE FOLLOWS]
-46-
EXECUTED as of the date first set forth above.
BORROWER: TIERRA DEL SOL RESORT (PHASE 1), LTD a
Florida limited partnership
By: TDS MANAGEMENT, LLC, a Florida
limited liability company, its general
partner
By: /s/Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx, its Manager
TDS TOWN HOMES (PHASE 1), LLC, a Florida
limited liability company
By: TIERRA DEL SOL RESORT (PHASE 1), LTD., a
Florida limited partnership, its manager
By: TDS MANAGEMENT, LLC, a
Florida limited liability company, its
general partner
By: /s/Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx, its Manager
XXXXX XXXXXX I REAL ESTATE, LLC, a
Florida limited liability company
By: TIERRA DEL SOL RESORT (PHASE 1), LTD., a
Florida limited partnership, its manager
By: TDS MANAGEMENT, LLC, a Florida
limited liability company, its general
partner
By: /s/Xxxxxxx X. Xxxxxx
------------------------------
Xxxxxxx X. Xxxxxx, its Manager
TDS AMENITIES, INC., a Florida corporation
By: /s/Xxxxxxx X. Xxxxxx
----------------------------
XXXXXXX X. XXXXXX, President
-47-
LENDER: KEYBANK NATIONAL ASSOCIATION,
a national banking association
By: /s/Xxxxxx X. Xxxxxxxxxx
----------------------------------------
XXXXXX X. XXXXXXXXXX, Xx. Vice President
-48-
JOINDER OF GUARANTORS
The undersigned as Guarantors hereby joins in and consents to the foregoing Loan
Agreement.
GUARANTORS: /s/Xxxxxxx X. Xxxxxx
-------------------------------
XXXXXXX X. XXXXXX
AMERICAN LEISURE HOLDINGS INC.,
a Nevada corporation
By: /s/Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
TDS DEVELOPMENT, LLC, a Florida limited
liability company
By: /s/Xxxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Manager
-49-
