Exhibit 10.10
Exhibit 10.10 Credit Agreement, dated April 25, 2005.
CREDIT AGREEMENT
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This Credit Agreement ("Agreement"), dated as of April 25, 2005, is by and
among ACROSS AMERICA REAL ESTATE DEVELOPMENT CORP., a Colorado corporation
("Company"), GDBA INVESTMENTS, LLLP, a Colorado limited liability limited
partnership, G. XXXXX XXXXXXX, and XXXXX X. XXXXXXX (collectively "Guarantor")
and VECTRA BANK COLORADO, NATIONAL ASSOCIATION ("Lender").
RECITALS:
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A. Company is engaged in the business of acquiring parcels of real estate
throughout the lower 48 states of the United States for build-to-suit small box
retail real estate construction projects to be leased and/or sold to various
credit tenants.
B. Company has applied to Lender for a guidance line of credit facility for
individual development and construction loans to be made to the Company and its
operating subsidiaries, which, in the aggregate will not exceed $10,000,000.00
("Loans") for the purpose of acquiring parcels of land and to pay for the costs
incurred in the development and construction of the improvements required under
the leases to be approved by Lender, all in accordance with plans and
specifications to be approved by Lender.
C. Lender has agreed to make a credit facility available to Company,
subject to Lender's credit approval and underwriting of the economics of each
such project, including, without limitation, Lender's approval of the lease,
budget, schedule, appraisal, construction contracts, title, zoning,
environmental condition and other aspects of each project, on the terms and
conditions stated herein.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT:
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Section 1. Definitions.
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The following words shall have the following meanings when used in this
Agreement.
"Advance" or "Advances" shall mean a disbursement or disbursements made
under any Loan pursuant to the terms of the Loan Documents for the Project and
this Agreement.
"Agreement" shall mean this Credit Agreement as may be amended or modified
from time to time, together with all exhibits and schedules attached to this
Agreement from time to time.
"Approved Appraisal" shall mean an appraisal of the Project (i) ordered by
the Lender, (ii) prepared by an appraiser satisfactory to the Lender, (iii)
prepared in accordance with the requirements of Section 3.3, (iv) in compliance
with all federal and state standards for appraisals, (v) reviewed and approved
by the Lender and (vi) in a form and substance satisfactory to the Lender in its
sole discretion.
"Approved Leases" shall mean the lease for the Project approved by Lender
subsequent to the Closing Date as more fully provided herein.
"Borrower" shall mean the Company and each operating subsidiary of the
Company formed for each Project, collectively.
"Borrower's Deposits" shall mean such cash sums as may be deposited or may
be required to be deposited into the Collateral Account, including, but not
limited to, the proceeds from insurance claims, and additional sums deposited by
Borrower as required in this Agreement.
"Borrower's Equity" shall mean the capital infusion contributed or to be
contributed by Borrower into the Project in the form of cash or Subordinated
Debt prior to any Advance under the Project Loan which shall be in the amount
not less than if Project Costs are equal to or less than the appraised value as
stated in the approved Appraisal, twenty-five percent (25%) of the Project Costs
up to the appraised value of the Real Property plus 100% Project Costs in excess
of the appraised value of the Real Property. In addition to the Borrower's
Equity requirement, the Borrower is obligated to fund cost overruns as provided
in Section 4.5 below.
"Business Day" means (i) with respect to any borrowing, payment or rate as
provided in the Note, a day (other than a Saturday or Sunday) on which banks
generally are open in Denver, Colorado for the conduct of substantially all of
their commercial lending activities and on which dealings in United States
dollars are carried on in the London interbank market and (ii) for all other
purposes, a day other than a Saturday, Sunday or any other day on which national
banking associations are authorized or obligated to close.
"Certified" shall mean, in connection with any document or instrument to be
delivered to Lender, that the same is certified by a principal of Borrower, that
such document or instrument is true, complete and correct.
"Closing Date" shall mean the date of the first Advance under each Loan.
"Collateral" shall mean the Real Property, the Improvements, the Collateral
Account, and all other real and personal property in which Lender has obtained a
lien, security interest or assignment as described in any and all of the
Security Documents.
"Collateral Account" shall mean a depository account to be opened and
maintained with Lender into which Lender may deposit Advances and in which
Borrower may be required, under the terms contained herein to deposit Borrower's
Deposits and other sums as described herein.
"Completion Date" shall mean the date not later than the date scheduled for
occupancy of the Lessee under that applicable Approved Lease.
"Construction Contracts" shall mean the construction and development
contracts between Borrower or its agents and all Contractors and other persons
for the construction of the Improvements, including, with limitation, the
General Contractor's Contract as may be amended from time to time with Lender's
consent as provided herein.
"Contractors" shall mean the General Contractor and all architects,
engineers, subcontractors, sub-subcontractors, material suppliers or any other
party who might now or may in the future claim or have the right to claim a
mechanic's lien upon all or any portion of the Project.
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"Debt Service Coverage Ratio" means, for any period, the ratio calculated
by dividing the (i) proforma NOI of the Approved Lease before interest expense,
capitalized interest, taxes, amortization and depreciation for such period by
(ii) the amount equal to the principal and interest payments that would be due
and payable during a one year period based upon the amount necessary to fully
amortize a hypothetical loan in an amount equal to the Maximum Project Loan
Amount, using both (a) an interest rate equal to 2.20% plus the three-month
average Treasury rate (for treasuries having a ten (10) year maturity) as of the
last day of the most recent calendar month in equal installments over an assumed
amortization period of 25 years ("DSCR(a)"), and (b) an interest rate equal to
6.0% plus the three (3) month average Treasury rate (for treasuries having a ten
(10) year maturity) as of the last day of the most recent month in equal
installments over an assumed amortization period of 25 years ("DSCR(b)").
"Deed of Trust" shall mean the deed of trust (or if approved by Lender, a
mortgage) to be delivered to Lender at each Closing for each Loan encumbering
the Real Property and the Improvements of the Project given by the owner for the
benefit of Lender, as the same may be amended, modified, extended, renewed,
restated, supplemented or partially released from time to time.
"Event of Default" shall mean and include any of the Events of Default set
forth below in the section titled "Events of Default."
"GAAP" shall mean generally accepted accounting principals consistently
applied.
"GDBA" shall mean GDBA Investments, LLLP, a Colorado limited liability
limited partnership.
"General Contractor" shall mean any contractor selected by Borrower and
approved by Lender to act as the general contractor for any Project.
"Governmental Authority" shall mean the governmental or quasi-governmental
agency or board having zoning and land use authority over the Real Property.
"Guaranty" shall mean the Unconditional Continuing Guaranty of Payment
executed by the Guarantor.
"Guarantor" shall mean, collectively, GDBA Investments, LLLP, G. Xxxxx
Xxxxxxx and Xxxxx X. Xxxxxxx.
"Improvements" shall mean the buildings and all improvements located on the
Real Property including, without limitation, foundations, all structural,
heating, air conditioning, ventilation and electrical improvements, all tenant
finish improvements, and the Improvements to be constructed with the proceeds of
the Loan.
"Inspector" shall mean the consulting firm hired by Lender, at Borrower's
expense, to perform periodic observations of the Project and to advise Lender as
to conformance of the Improvements, as constructed, with the Construction
Contracts. The initial Inspector shall be as designated by Lender, and may be
changed from time to time in Lender's absolute discretion.
"Interest Rate" shall mean the rate of interest to accrue on the
Obligations, which shall be the London Inter Bank Offered Rate plus 225 basis
points to be adjusted monthly as more fully provided in the Notes.
"Lender" shall mean Vectra Bank Colorado, National Association, and its
successors and assigns.
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"Lessee" shall mean any one or more persons or entities who lease or occupy
space within the Project under an Approved Lease.
"Liquidity" shall mean, at any time, the sum of (i) the unencumbered cash
of Guarantor, (ii) the value of the unencumbered cash equivalents (as determined
in accordance with GAAP) of Guarantor that are acceptable to Lender and (iii)
the value of any marketable securities owned by Guarantor that are acceptable to
Lender (Lender shall determine whether a security is marketable in its
reasonable judgment) that are not pledged as security for other debts; provided
that Liquidity shall not include amounts that Guarantor may be entitled to
Borrow under any lines of credit or other lending arrangements. Liquidity shall
be determined by Lender quarterly based upon the most recent bank and brokerage
account statements of Guarantor delivered to Lender pursuant to this Agreement.
"Loan Documents" shall mean collectively this Agreement, all promissory
notes for the Loans, all construction loan agreements for each Project, the
Security Documents, and any other document now or hereafter evidencing or
securing the Loan as may be hereafter modified or amended.
"Loan Expenses" shall mean all expenses, charges, costs and fees of Lender
referred to or necessitated by the terms of this Agreement, including, without
limitation, all recording and registration fees, charges and taxes, title
insurance charges and premiums, legal fees and disbursements of counsel for
Lender, documentation and processing fees, copying expenses, courier charges for
delivery of documents, loan commitment fees, costs of consultants retained by
Lender, long-distance telephone charges, costs of surveys, environmental audit
expenses, fees of any architect or engineer and other professional retained by
Lender in connection with this Agreement, costs of premiums on surety company
bonds, appraisal fees and out-of-pocket expenses of Lender in administering this
Agreement, regardless of whether incurred before or after the Closing Date.
"Material Adverse Event" shall mean any circumstance, occurrence or event
which, in the reasonable discretion of Lender, may materially and adversely
affect the present or prospective financial condition or operations of Borrower
or Guarantor or materially impair the ability of Borrower or Guarantor to
perform its obligations under the Loan Documents.
"Maturity Date" shall mean the maturity date stated in the Note evidencing
each Loan.
"Maximum Project Loan Amount" shall mean the maximum principal amount of
each Loan for each Project determined by Lender in accordance with Section 2.2
regardless of the amount actually disbursed.
"NOI" shall mean the proforma, gross income from the Project based upon
actual lease rates contained in the Approved Lease, annualized, less all
Operating Expenses, as reasonably determined by Lender.
"Note" or "Notes" shall mean the promissory note(s) for each Loan executed
in connection with each Project payable to the order of Lender in the Maximum
Project Loan Amount as may be amended, modified, extended, renewed, restated or
supplemented from time to time.
"Obligations" shall mean all of the direct and indirect, matured or
unmatured financial and other obligations, covenants and agreements to be
performed by Borrower to or for the benefit of Lender under any of the Loan
Documents, including, without limitation, Borrower's obligation to repay to
Lender all principal and interest due under each Loan.
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"Operating Expenses" shall mean all actual ordinary and normal expenses
computed on a rolling four quarter basis of the operation of the Real Property
and shall include amounts reasonably estimated by Borrower to be reserved for
the payment of taxes, insurance, security deposits and similar current
liabilities, including any management fees.
"Project(s)" shall mean the performance of, as distinct separate projects,
(i) the acquisition of a parcel of Real Property in connection with an Approved
Lease, and (ii) the development and construction of the Improvements in
connection with leasing of such Real Property to be completed by the landlord
under an Approved Lease entered into subsequent to the Closing Date, all to be
accomplished in accordance with the Project Budget, the Project Schedule, and
the Project Plans and Specifications.
"Project Budget" shall mean a budget prepared for each Project, approved by
Lender as provided herein, for the costs of acquiring the Real Property and the
development and construction of the Improvements for those specific line items
and in amounts not to exceed the amounts shown in the Project Budget or for the
costs of the construction of the Improvements under an Approved Lease for each
Project.
"Project Costs" shall mean the total costs of each Project as reflected in
the Project Budgets, including land, hard costs, soft costs, loan fees and
leasing commissions.
"Project Plans and Specifications" shall mean all plans, specifications,
engineering studies and other construction documents approved by Lender for each
Project for the construction of the Improvements as may be amended from time to
time with Lender's consent.
"Project Schedule" shall mean the construction schedule prepared by
Borrower for each Project, which shall be subject to approval by Lender,
together with any amendments thereto approved by Lender.
"Real Property" shall mean the real estate acquired for the Project and all
Improvements.
"Security Documents" shall have the meaning ascribed in Section 3.1 hereof.
"Subordinated Debt" shall mean any indebtedness of the Borrower owed to
Company or any Guarantor invested into the Project to pay the acquisition,
development and/or construction costs related to the Project that is expressly
subordinated and made junior to the payment and performance in full of the
Obligations, both in payment and in lien priority, pursuant to subordination
agreements in a form satisfactory to Lender.
"Title Company" shall mean a title company selected by Lender to insure the
priority of the Deed of Trust for the Project.
Section 2. Loan Commitment; Project Approval.
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Lender and Borrower agree that Lender's obligation to make Loans to or for
benefit of Borrower is subject to the following terms and conditions.
2.1 Underwriting and Credit Approval.
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Lender shall have no obligation to make any Loan or Advances until and unless
Lender has completed its credit analysis of the Project and has approved the
Loan under the Lender's then existing credit standards and policies. Lender
shall have reviewed and approved all aspects of the Project as more fully
provided herein, including without limitation each of the following: Approved
Appraisal, Project Budget, Project Schedule, Construction Contracts, Approved
Lease, Project Budget, General Contractor, Project Condition and all of the
conditions to initial disbursement as provided below. Lender offers no assurance
that any individual Project will be approved. Lender shall be under no
obligation to approve any particular Project. Lender shall be under no
obligation to make a Loan unless and until it has approved the Project, and then
the closing and funding of the Loan shall be subject to the conditions set forth
in Sections 2, 3 and 4 below.
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2.2 Conditions for Project Approval.
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In addition to all other conditions for Advances contained in this Agreement and
the Loan Documents, the following conditions precedent shall apply to Lender's
approval for each Project:
a. Project Type. The proposed Project must be for a pre-leased,
build-to-suit retail, commercial or industrial construction project,
located within the lower 48 states of the continental United States, for
either (i) small box retail for a nationally or regionally recognized
franchise from a franchiser approved by Lender (which can include, but not
limited to Family Dollar, Advanced Auto Parts, IHOP, Lone Star Steak House
and Grease Monkey) or (ii) for a "tunnel" full service car washes. No
residential, hotel or motel projects shall qualify.
b. Approved Lease. No Loan shall be approved for any Project unless
and until Borrower has obtained a lease for the Project and the lease and
the prospective tenant have been approved by Lender as an Approved Lease
under Section 2.3 below. There shall have occurred no event of default or
breach under the Approved Lease and no Material Adverse Event shall have
occurred affecting the Lessee under the Approved Lease.
c. Borrower Due Diligence. Borrower shall have delivered to Lender a
copy of the Project due diligence gathered by Borrower, including the
following:
1. Lease for Project
2. Market overview
3. Description of the development site
4. Development plan
5. Financial model and projections
6. Capital requirements
7. Company history and background, including previous financing
rounds
8. Management overview and biographies
9. Financial statement information including tax returns of the
developer and franchisee/tenant.
10. Tenant references
d. Budget. Borrower shall have submitted to Lender a proposed budget
for the Project itemizing the gross costs, including the direct or indirect
costs for the acquisition of the Real Property and the construction of the
Improvements for the Approved Lease, certified by Borrower, which shall be
in a form and content satisfactory to Lender and shall be subject to
approval by Lender. Borrower shall have submitted the Project Schedule for
the Project to Lender for its approval.
e. Construction Contracts. Lender shall have received certified copies
of the true, accurate and complete copies of the Construction Contracts,
the form and content of which shall be subject to Lender's approval. The
Construction Contract of the General Contractor shall be a firm and binding
fixed price contract for the construction of the Improvements. Thereafter,
such Contracts shall remain in full force and effect and no Material
Adverse Event shall have occurred affecting any of such Construction
Contracts.
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f. Approved Appraisal. Lender shall have received, obtained and
approved an Approved Appraisal for the Project.
g. Maximum Project Loan Amount. Each Loan shall be for an amount,
determined by Lender, not to exceed the lesser of 75% of the appraised
value of the Real Property under the Approved Appraisal for the Project or
75% of the Project Costs.
h. Debt Service Coverage Ratio. The Approved Lease must reflect a pro
forma NOI, as determined by Lender, that is in compliance with the Debt
Service Coverage Ratio. For a lease to be approved, the Debt Service
Coverage Ratio using the DSCR(a) formula must equal or exceed 1.25 to 1 and
the Debt Service Coverage Ratio using the DSCR(b) formula must equal or
exceed 1.0 to 1.
Lender shall have ten days after receipt of all of the information required
above in which to review and approve or reject the proposed Project. If Lender
fails to respond within such ten (10) days, the proposed project and the
proposed lease shall be deemed as having not been approved by Lender. Even if
approved, the Lender's obligation to disburse funds under a Loan for an approved
Project shall be subject to the terms and conditions stated in Section 3 below.
2.3 Approval of Leases.
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All new proposed leases and each proposed tenant for each Project must be
pre-approved by Lender in accordance with the following:
a. The lease must be a bona fide lease executed in Borrower's ordinary
course of business.
b. Lender must have received a complete copy of the proposed lease
(together with all exhibits, work orders and other related documents) to be
executed by the Lessee and Borrower, clearly specifying the rental rate and
all free rental periods, concessions and commissions related to the lease.
c. Unless disclosed to and approved by Lender, the Lessee must be a
person or entity who is not affiliated with or controlled by or under
common control with Borrower, any member of Borrower or Guarantor.
d. The term of the Lease must be for a minimum of 10 years from the
date of completion.
e. The rental rate of the Lease must reflect a proforma NOI that will,
upon completion, comply with the Debt Service Coverage Ratio. For a lease
to be approved, the Debt Service Coverage Ratio using the DSCR(a) formula
must equal or exceed 1.25 to 1 and the Debt Service Coverage Ratio using
the DSCR(b) formula must equal or exceed 1.0 to 1.
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f. The terms of the lease, including without limitation, the
subordination language, shall be acceptable to Lender.
g. The present and future financial condition and business prospects
of the proposed tenant shall be acceptable to Lender and Lender shall have
received financial statements and a credit bureau report on the proposed
tenant.
h. Any additional information reasonably requested by Lender
concerning the proposed tenant or the terms of the lease.
2.4 Note; Payment Terms.
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Each Loan shall be evidenced by a Note to be executed at closing of each loan
and shall be payable upon the terms provided therein, which may include, but not
be limited to, the following:
a. As more fully provided in the Notes, interest shall accrue at the
Interest Rate.
b. All accrued and unpaid interest shall be due and payable monthly
commencing on the 30th day after the date of the Note.
c. If not sooner paid, the entire unpaid principal balance, all
accrued and unpaid interest, and all other amounts payable under each Note
shall be due and payable in full on the date that is the twelfth month
anniversary of the date of the Note; provided, however that each Note shall
have a single six-month extension option subject to the following
conditions that must be satisfied as determined by the Lender: i. the
completion of the Project is scheduled to be completed in compliance with
the Project Budget and the Project Schedule, ii. the Lessee is in
compliance with the Approved Lease, no event of default or breach has
occurred under the Approved Lease, no material adverse event shall have
occurred affecting the Lease and the Lessee shall not have the option to
terminate the Approved Lease, iii. there shall have occurred no Event of
Default nor shall there have occurred any event that with the passage of
time or giving of notice, or both, would constitute an Event of Default,
and iv. Borrower shall have paid the extension fee as defined in section
2.6 below.
2.5 Expiration of Facility.
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This facility shall expire twelve (12) months from the date hereof at which time
Lender shall have no obligation to review or approve any additional Projects,
but the Loan Documents shall remain in full force and effect until paid in full.
2.6 Loan Fees and Expenses.
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a. On the date of Closing, Borrower shall pay to Lender a
non-refundable loan fee for each Loan in the amount of 1/2 of one percent
of the Maximum Project Loan Amount.
b. On the date of Closing, Borrower shall pay to Lender all Loan
Expenses.
c. For any extension approved by Lender, subject to the conditions
stated herein, for any Note, an extension fee of 1/4 of one percent of the
Maximum Project Loan Amount.
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Section 3. Conditions Precedent to Closing of Each Loan.
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Lender shall have no obligation to make the initial Advance under a Loan for a
Project approved by Lender on the Closing Date, unless Lender has approved the
Project, the Approved Lease, the Project Budget and Project Schedule as provided
in Section 2 above and, in addition, each of the following conditions precedent
have been strictly satisfied or have been waived by Lender:
3.1 Loan Documents.
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Borrower and Guarantor, where appropriate, shall have executed and delivered any
and all documents and instruments requested by Lender in a form and substance
satisfactory to Lender, in Lender's sole discretion, to evidence and secure the
Loan, including, without limitation, the following:
a. A promissory note for the Loan;
b. A construction loan agreement for the Project;
c. The following security instruments ("Security Documents"):
(1) A first priority lien Deed of Trust encumbering the Real
Property and the Improvements;
(2) The Financing Statements;
(3) A Security Agreement encumbering all personal property
related to the Project;
(4) A Pledge Agreement for the Collateral Account;
(5) A valid and effectual Present Assignment of Rents and
Leases;
(6) A valid and effectual Assignment of all Project Plans
and Specifications and Construction Contracts;
(7) Any other documents which Lender may reasonably request
of Borrower as necessary, supplementary or convenient to perfect
Lender's security interest in the Collateral.
3.2 Loan Fee/Expenses.
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At the closing, Borrower shall pay to Lender the Loan fees and all of Lender's
out-of-pocket Loan Expenses incurred in connection with the closing of the Loan
and the closing of the initial Advance.
3.3 Appraisal.
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Lender shall have received an Approved Appraisal of the Real Property certified
to Lender and issued by an MAI designated appraiser chosen by Lender containing
a final dollar estimate of the market value of the Real Property, as completed,
as leased, with appropriate discounting, and conforming with Lender's
underwriting standards and rules and regulations of the Office of the
Comptroller of the Currency. The appraisal shall be reviewed by and found to be
satisfactory to Lender in its sole discretion. The maximum amount of the
principal balance of the Loan shall not exceed a loan-to-value ratio stated in
Section 2.2 above and thereafter the maximum amount of the principal balance of
the Loan shall not exceed the loan-to-value ratio stated in Section 2.2 above.
3.4 Plat.
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Lender shall have received a copy of all plats, planned unit development maps,
planned building group maps, and preliminary or final site development plans for
the Real Property.
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3.5 Survey/Flood Hazard.
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Lender shall have received a land survey plat certified to Lender and the Title
Company prepared and certified by a professional land surveyor licensed in the
state where the Project is located, which shall be prepared in accordance with
the ALTA/ASCM standards for urban surveys including items 1-13 on Table A.
Lender shall have received a certification, from a company of its choice,
certifying that no portion of the Real Property is located within a Federal
Emergency Management Agency identified flood plain area and state the map number
or within any other flood hazard area.
3.6 Title.
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Borrower shall hold fee simple title to the Real Property, subject only to the
exceptions to title approved by Lender.
3.7 Title Insurance.
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Lender shall have received a title insurance commitment from the Title Company
in form and substance satisfactory to Lender, together with legible copies of
all documents affecting title, in which the Title Company has committed to
insure the lien of the Deed of Trust for the benefit of Lender as a first
priority lien encumbering the Real Property and Improvements under an ALTA loan
policy 1992 form, subject to no exceptions other than to those which Lender has
specifically consented to in writing ("Permitted Exceptions") and such other
endorsements as Lender may request. The title commitment shall call for the
deletion of all standard preprinted exceptions (including survey exceptions). At
Lender's option, the policy to be issued will provide mechanics lien coverage.
The title commitment may contain a pending disbursement clause acceptable to
Lender. The title commitment shall require the policy to contain such
endorsements as Lender may request. The commitment will be accompanied by such
re-insurance and co-insurance agreements and endorsements as Lender may require.
3.8 Plans / Specs / Engineering Reports.
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Borrower shall have delivered to Lender the Project Plans and Specifications
approved by the required Governmental Authorities, which shall be in a form and
content satisfactory to Lender and shall be subject to approval by Lender.
Lender shall have received all engineering reports and other reports, data and
information required by Lender to indicate that the Real Property is suitable
for its intended use, without extraordinary land preparation or expense. Any
recommendation in such reports must have been complied with or incorporated into
the Project Plans and Specifications.
3.9 Environmental Compliance.
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Lender shall have received a current Phase I environmental audit of the Real
Property in a form and substance acceptable to Lender, issued by an
environmental engineering firm acceptable to Lender, prepared in accordance with
the ASTM standards for environmental site assessments. The environmental
assessment shall indicate that the Real Property and Improvements do not
contain, incorporate nor is threatened by contamination from any hazardous
materials and/or hazardous substances, including, but not limited to, asbestos,
PCBs, underground storage tanks, ground water or soil contamination, and that
the Real Property does not contain any wetlands or endangered species habitat.
In the event that the environmental audit indicates that further sampling and
analysis is warranted, Lender may require further testing and evaluation at
Borrower's expense. If the environmental reports or audits disclose risk of
environmental liability or if the auditors make recommendations regarding the
abatement or removal of hazardous materials or substances, Lender may refuse to
make Advances or disbursements until such risk has been removed or Borrower has
performed all measures recommended by the auditor. At closing, Borrower shall
have executed and delivered to Lender an environmental indemnity agreement
(which may be contained in the construction loan agreement) indemnifying Lender
against all environmental risks and liabilities, in a form acceptable to Lender.
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3.10 Zoning.
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Lender shall have received evidence that the Real Property is properly zoned for
the Improvements and their intended use and that such zoning is final and not
subject to challenge.
3.11 Mechanic's Lien Waivers.
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Lender shall have received the lien waivers for any work performed or materials
supplied by Contractors prior to the Closing Date.
3.12 Insurance.
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Lender shall have received evidence of insurance as required in any of the Loan
Documents. All evidence of insurance shall be on an ACCORD 27 form.
3.13 Utilities.
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Lender shall have received evidence that all utilities and services to the Real
Property, including, without limitation, water, sewer, gas and electric, and
telephone are available in amounts sufficient to service the on-site
Improvements for their intended use.
3.14 Permits.
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Lender shall have received a copy of grading, building and any other permit
required from any Governmental Authority necessary for the construction of the
Improvements and the same shall be in full force and effect.
3.15 Organizational Documents.
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Lender shall have received a copy of all organizational documents (including
operating agreements if the entity is a limited liability company) of Borrower,
and its operating subsidiary that owns the Project and their managing
members/managers, and their managing partners evidencing that each of them is
validly existing and in good standing under all states in which they are either
formed or in which they are conducting business. Lender shall have received
certificates of good standing from the secretaries of state or similar
governmental authority indicating they are in good standing.
3.16 Borrowing Resolution.
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Borrower shall have delivered to Lender a copy of a written consent of its
owners/members consenting to (i) Borrower's execution, delivery and performance
of the Loan, (ii) the execution and delivery and performance of all of
Borrower's obligations under the Loan Documents, and (iii) authorizing the
officers of Borrower to request all Advances under the Loan and permitting
Lender to rely on the signature of any person purporting to be a manager of
Borrower for an Advance under the Loan.
3.17 Legal Opinion.
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Borrower shall cause its independent legal counsel, acceptable to Lender, to
issue and deliver to Lender its legal opinion that Borrower is a duly formed,
validly existing corporation in good standing under the laws of the state of
Colorado; and that the Loan Documents and the Guaranty have been duly executed
and delivered by Borrower and Guarantor and are enforceable in accordance with
their terms.
3.18 Representations.
---------------------
All representations and warranties by Borrower shall remain true, correct and
complete.
3.19 No Event of Default.
-------------------------
No Event of Default shall exist, and no event shall have occurred or condition
exist that, after notice of lapse of time, or both, would constitute an Event of
Default.
3.20 Owner's Equity.
--------------------
Lender shall have received evidence sufficient to indicate that Borrower
has invested the minimum Borrower's Equity in the form of cash or Subordinated
Debt. If Lender has not received sufficient evidence indicating the minimum
Borrower's Equity, Lender may require Borrower to make a Borrower's Deposit to
be held by Lender in the Collateral Account and disbursed in accordance with the
disbursement procedures contained herein.
11
3.21 Leases.
------------
Lender shall have received a copy of the executed Approved Lease affecting the
Real Property. Lender shall have received a subordination, non-disturbance and
attornment agreement, in the form attached hereto as Exhibit B or in such other
form acceptable to Lender, executed by the Lessee. No materially adverse event,
such as bankruptcy, shall have occurred concerning the Lessee
3.22 GDBA Agreement to Fund.
----------------------------
GDBA shall have delivered to Lender a waiver in a form acceptable to Lender
waiving any rights under the Agreement to Fund, dated November 11, 2004, between
Borrower and GDBA with respect to the Project. If GDBA has recorded any lien or
security interest against the Project, GDBA shall have executed debt and lien
subordination agreements, in a form and content acceptable to Lender, in which
GBDA shall have agreed that it will not accept payment and will not take any
collection actions until the Lender's Loan is paid in full.
3.23 Subordinated Debt.
-----------------------
If any portion of the Borrower's Equity is funded or is to be funded in the form
of Subordinated Debt, then Company and/or GDBA, as appropriate, shall have
executed debt and lien subordination agreements, in a form and content
acceptable to Lender, in which the Company and/or GBDA shall have agreed that it
will not accept payment and will not take any collection actions until the
Lender's Loan is paid in full.
3.24 Payment and Performance Bonds.
-----------------------------------
Lender shall have received certified copies of all Construction Contracts and a
payment and performance bond from the General Contractor for the full amount of
the Construction Contract, with a dual oblige endorsement issued to Lender, all
in a form and content acceptable to Lender.
Section 4. General Provisions for all Advances.
-----------------------------------------------
4.1 Advances.
-------------
Subject to the strict satisfaction of the conditions contained in this
Agreement, Borrower may request and the Lender shall make Advances on each Loan
in the manner set forth in each Project Loan, only for the amounts and for the
cost items set forth in the Project Budget.
4.2 Satisfaction of Conditions.
-------------------------------
Although Lender shall have no obligation to make any Advance unless and until
all of the conditions and prior performances set forth herein have been kept,
fulfilled or performed, and until all inspections, certifications, releases,
waivers, or paid bills or other requirements set forth herein have been made,
delivered and complied with, Lender, at its sole discretion, may make Advances
prior to that time without waiving or releasing any of the requirements or
conditions of this Agreement; but Borrower shall continue to be strictly
obligated and subject thereto, and all such conditions, prior performances and
other requirements shall nevertheless be strictly and punctually complied with
and fulfilled and performed; and, notwithstanding any such disbursement, Lender,
at its sole discretion, may discontinue any further Advances at any time until
all of the conditions, prior performances and other requirements of this
Agreement have been strictly fulfilled, performed and complied with.
4.3 Excess Advances.
--------------------
Borrower shall immediately repay any Advance received by Borrower in excess of
the amount Borrower is entitled to under the provisions of this Agreement.
4.4 Other Discretionary Disbursements/Advances.
-----------------------------------------------
At its discretion, Lender may pay, but shall not be obligated to pay, from the
Collateral Account or the undistributed proceeds of any Loan, even without a
disbursement request, any of the following: (a) Loan Fees; (b) Loan Expenses;
(c) after an Event of Default, any amounts necessary to remove defects of title
to the Real Property, or to pay liens and other encumbrances on the Real
Property, which are prior to Lender's interest in the Real Property or which
claim a priority over Lender's interest in the Real Property; (d) amounts due
and payable to third persons in accordance with the terms and provisions of this
Agreement, the Note, or the Loan Documents; (e) amounts to preserve or protect
any Collateral securing the Loan in accordance with the terms of this Agreement;
and (f) after an Event of Default, amounts necessary to complete the
Improvements in accordance with the Construction Contracts and the Project Plans
and Specifications. Any such payments shall for all purposes be deemed to be an
Advance on the Loan. If the amount so disbursed results in total Advances
12
exceeding the maximum principal amount of the Loan, or if such Advances when
added to disbursements requested by the draw documents, exceed such amount, it
shall nevertheless be deemed to be subject to the terms and conditions of this
Agreement, to accrue interest in the same manner as all other disbursements
hereunder, to be repaid by Borrower in the manner set forth herein, and shall be
secured by the Collateral. Lender shall be under no obligation to advance to
Borrower an amount in excess of the maximum principal amount of the Loan, even
if, after making the optional Advances allowed under this Section the remaining
Loan funds are inadequate to complete construction of the Project.
4.5 Project Cost Overruns.
--------------------------
If, at any time, the remaining costs of completing any Project exceeds the
remaining undisbursed portion of the Loan allocated for that Project, as
determined by Lender, whether such increase is a consequence of modifications or
amendments to the Construction Contracts or cost overruns, then, Lender shall
not be obligated to approve any Advances or further disbursements from the
Collateral Account until such time as Borrower has either provided evidence that
it has advanced from its own funds all expenses of such cost overruns or has
paid additional sums into the Collateral Account as hereinafter provided. Lender
shall have the right to demand that Borrower pay into the Collateral Account
additional sums as calculated by Lender in its reasonable discretion sufficient
to complete the Project in accordance with the Construction Contracts such that
the amounts so deposited into the Collateral Account and the remaining
undisbursed balance of the Loan allocated to the Project is in an amount that
equals or exceeds the revised Project Budget. Lender shall have no obligation to
make disbursements from the Collateral Account or make any Advances under the
Loan until such funds have been deposited with Lender, as Lender may request
from time to time in accordance with the provisions of this Agreement. Such
funds shall constitute a portion of Borrower's Deposits. The Collateral Account
shall be an account maintained with Lender into which all of Borrower's Deposits
shall be deposited and into which Advances on the Loan may be deposited and
against which checks may be drawn for the purpose of disbursing the proceeds for
the purposes described herein and for the other purposes described in this
Agreement. Borrower shall not have the right to withdraw the funds for any
purpose. No interest shall accrue on the funds deposited into the Collateral
Account. All funds in the Collateral Account are pledged as additional
Collateral for the Loan.
Section 5. Responsibility for Completion/Indemnity.
---------------------------------------------------
Lender assumes no responsibility for completion of all or any portion of any
Project. Lender shall have no obligation to any person to complete any portion
of any Project, to apply undisbursed portions of the Loan to claims outstanding
for the construction of any Project, or to exercise any of its rights hereunder.
Nothing herein shall be construed as establishing a relationship between the
Lender and any other party except the debtor/creditor relationship between
Borrower and Lender. Lender shall owe no duty to any person to review any of the
Construction Contracts, to insure compliance with Construction Contracts, to
inspect the construction of the Improvements, or to warn Borrower or any other
party of any defect or mistake in the Improvements. By accepting, reviewing or
approving anything to be observed, performed or fulfilled by Borrower, Lender
shall not be deemed to have warranted or represented the sufficiency, legality,
effectiveness, completeness, correctness or legal effect of the same or of any
term, provision or condition thereof. All inspections are conducted for the sole
benefit of Lender. Neither the Borrower, Guarantor, Contractors, or any contract
purchaser or other person may rely, or have any right to rely, upon Lender's
determination of the appropriateness of any Advance, approval of any inspection,
or Lender's approval of any other matter contained herein. Borrower shall, on
demand, indemnify, defend and hold harmless Lender, its agents, participants,
affiliates, officers, directors and employees of and from any and all
liabilities, claims, demands, actions, causes of action, costs and expenses,
including, without limitation, reasonable attorney fees and costs and expenses
reasonably incurred in preparing or defending against any litigation or claim,
action, suit, proceeding or demand of any kind or character, asserted against
Lender or incurred by Lender at any time by reason of, arising out of, or
related to, directly or indirectly, the construction of the Project, the
condition of the Real Property, or any injury, death or accident occurring on or
about the Real Property.
13
Section 6. Conditions Precedent to Subsequent Disbursements.
------------------------------------------------------------
Lender shall have no obligation to make any disbursements for any Improvements
until, as to each such disbursement, all of the following conditions precedent
are strictly satisfied, substantial completion being insufficient:
6.1 Prior Conditions.
---------------------
All conditions precedent listed in Sections 2, 3, and 4 have been satisfied and
continue to be satisfied on an on-going basis, and any written request by Lender
for any updated, additional or revised documentation or information required
thereunder has been satisfied within a reasonable time, but not more than ten
(10) days following such request.
6.2 Title Update.
-----------------
If required by Lender, Lender shall have received the title insurance policies
excepting from coverage only the permitted exceptions and adding affirmative
protection for those matters requested by Lender and shall have received before
each and every disbursement (other than a disbursement solely for interest)
subsequent to the initial disbursement endorsements (Form 107.3) as requested by
Lender to the title policy indicating that since the preceding Advance, there
has been no change in the status of title and no other exceptions not
theretofore approved by Lender. No Material Adverse Event shall have occurred
affecting title to the Real Property.
6.3 Construction.
-----------------
The Improvements are being and have been constructed to date substantially in
accordance with the Construction Documents, the Project Budget, and the Project
Schedule.
6.4 SNDA.
---------
Lender shall have received a subordination, non-disturbance and attornment
agreement, on a form approved by Lender, from each tenant in the Project within
sixty (60) days following closing, unless Lender has exempted the tenant whose
lease provides for automatic subordination.
6.5 Casualty.
-------------
The Improvements shall not have been materially damaged by any casualty, unless
Lender shall have received insurance proceeds in an amount deemed by Lender to
be sufficient for complete repair of the damage and that when added to the
undisbursed balance of the Loan are sufficient for completion of the Project in
accordance with the Construction Documents.
6.6 Updated Appraisal.
----------------------
The disbursement requested shall not cause the outstanding principal balance of
the Loan to exceed the maximum loan-to-value ratio or loan to cost ratio stated
in Section 2.2 above. If requested by Lender, Lender shall have received an
updated appraisal. If an Event of Default exists, if Lender has reasonable cause
to believe that the value of the Real Property has been impaired for any reason
whatsoever, if an appraisal is required in order to comply with regulatory
requirements, if the appraisal is ordered in connection with an extension of the
Maturity Date or a casualty loss to the Improvements, then the cost of such
appraisal shall be at Borrower's expense; provided that Borrower shall not be
responsible for the cost of more than one appraisal annually. Otherwise, such
appraisal shall be conducted at the Lender's expense.
6.7 Financials.
---------------
No Material Adverse Event shall have occurred affecting Borrower or Guarantor.
Lender may require that Borrower provide it with satisfactory evidence that
there is not pending against Borrower or any Guarantor a petition in bankruptcy,
whether voluntary or otherwise, any assignment for the benefit of creditors or
petition seeking reorganization or arrangement pursuant to federal bankruptcy
laws or of any similar state law, or any other action brought pursuant to the
aforesaid bankruptcy laws. Upon request of Lender, Borrower shall supply Lender
with a written certification stating that no condition exists, which materially
adversely affects the financial condition of Borrower, or the Real Property.
Lender may also conduct a credit investigation which Lender deems advisable or
order any and all credit reports upon Borrower and Guarantor, and such
investigation or reports shall not reveal any Material Adverse Event.
14
6.8 Construction.
-----------------
Borrower shall not have done or permitted anything to be done that would
materially and negatively affect the completion of the Project or the
performance of any of the Construction Contracts.
6.9 Compliance.
---------------
Borrower shall have theretofore complied with all of its covenants and
agreements contained in this Agreement, the Note and the other Loan Documents,
and all representations and warranties of Borrower contained herein or in any
other Loan Document shall be true as of the date of disbursement as if first
made on that date; and there shall not exist an Event of Default nor shall there
exist the occurrence of an event which with the passage of time or notice, or
both, would result in an Event of Default.
6.10 Contractors.
-----------------
For each proposed Project, Borrower shall have provided a list certified by
Borrower and General Contractor of all subcontractors with whom Borrower or
Contractors have contracted, a list certified by each subcontractor shown on
such list containing all subcontractor's suppliers, and subcontractors, and
evidence that all persons shown on such lists have received payment for all work
performed for the period covered by the previous Disbursement Request, and that
all such persons have executed appropriate lien waivers for such work and
materials furnished. Such evidence may include, but is not necessarily limited
to, copies of canceled checks, original invoices, and original lien waivers.
6.11 Mechanic's Liens.
----------------------
Lender shall have received the lien waivers described in Sections 4 and 5.
Lender shall not have received a notice of intent to file a mechanic's lien and
no statement of lien or other mechanic's lien shall have been recorded affecting
all or any of the Real Property.
6.12 Owners Equity.
-------------------
Lender shall have received evidence sufficient to indicate that Borrower has
invested into the Project the minimum Borrower's Equity in the form of cash or
Subordinated Debt. If Lender has not received sufficient evidence, Lender
may require Borrower to invest such amounts and provide evidence of the same as
a condition to any Advance or may require Borrower to make a Borrower's Deposit
to be held by Lender in the Collateral Account and disbursed prior to any
Advances on the Loan.
Section 7. Representations and Warranties.
------------------------------------------
Borrower represents and warrants to Lender that as of the date of this Agreement
and as of the date of each disbursement of the Loan proceeds:
7.1 Recitals.
-------------
The recitals and statements of intent appearing in this Agreement are true,
correct and complete.
7.2 Organization.
-----------------
Across America Real Estate Development Corp. is a corporation validly formed,
existing and in good standing under the laws of the state of Colorado.
7.3 Power and Authorization.
----------------------------
Borrower has the full power to carry out its business now being conducted. The
execution, delivery and performance of all Loan Documents by Borrower, to the
extent to be executed, delivered or performed by Borrower: (a) have been duly
authorized by all necessary corporate action; (b) do not require the consent or
approval of any other person, regulatory authority or governmental body; and (c)
do not conflict with, result in violation of, or constitute a default under any
provision of any agreement or other instrument binding upon Borrower, or any
law, governmental regulation, court decree or order applicable to Borrower.
7.4 Enforceability.
-------------------
This Agreement constitutes, and any instrument or agreement required hereunder
to be given by Borrower when delivered will constitute, legal, valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms, subject to bankruptcy and insolvency laws affecting the rights
of creditors generally.
15
7.5 Litigation and Claims.
--------------------------
There exists no litigation or claim (including those for past-due taxes) against
Borrower or the Collateral which is pending, or for which Borrower has received
written notice, and no other event has occurred which may materially adversely
affect Borrower's financial condition or properties.
7.6 Financial Information.
--------------------------
The financial statements of Borrower supplied to Lender disclosed their true and
complete financial condition as of the date of the statements, and there has
been no Material Adverse Event subsequent to the date of the most recent
financial statements supplied to Lender. Borrower does not have any material
contingent obligations except as disclosed in such financial statements.
7.7 Taxes.
----------
All tax returns and reports of Borrower that are or were required to be filed
have been filed, and all taxes, assessments and other governmental charges have
been paid in full.
7.8 Location of Borrower's Offices and Records.
-----------------------------------------------
The principal place of business of Borrower is located at 0000 Xxxxx Xxxxxx,
Xxxxxx, Xxxxxxxx.
7.9 Information.
----------------
All information heretofore or contemporaneously herewith furnished by Borrower
to Lender for the purposes of or in connection with this Agreement or any
transaction contemplated hereby is, and all information hereafter furnished by
or on behalf of Borrower to Lender will be, true, and accurate in every material
respect on the dates which such information is dated or certified; and none of
such information is or will be incomplete by omitting to state any amendment,
modification or any material fact necessary to make such document information
not misleading.
7.10 Survival of Representations and Warranties.
------------------------------------------------
Each request by Borrower for an Advance shall constitute an affirmation on the
part of Borrower that the above representations and warranties are true, correct
and complete as of the time of such request. Borrower understands and agrees
that Lender is relying upon the above representations and warranties in making
the Loan to Borrower. Borrower further agrees that the foregoing representations
and warranties shall be continuing in nature and shall remain in full force and
effect until such time as the Loan shall be paid in full.
Section 8. Affirmative Covenants.
---------------------------------
Borrower covenants and agrees with Lender that, while this Agreement is in
effect, Borrower and Guarantor will perform the following:
8.1 Payment of Loan.
--------------------
Borrower shall promptly pay and perform when due all obligations of Borrower
contained herein or in another Loan Document.
8.2 Payment of Laborers and Materialmen.
----------------------------------------
Promptly and fully pay all laborers and materialmen for the Improvements in such
amounts and at such times as necessary to prevent mechanics liens upon the Real
Property. Borrower shall, upon demand, defend and indemnify Lender of and from
all claims, suits or proceedings brought by any person allegedly unpaid for
labor or materials supplied to the Project. This indemnity shall survive
repayment and satisfaction of this Loan.
8.3 Completion of Improvements.
-------------------------------
Borrower shall proceed with construction without interruption and promptly
complete the Improvements not later than the Maturity Date in a good and
workmanlike manner according to the Project Plans and Specifications, free from
all liens and encumbrances, and in accordance with the Construction Documents,
and all applicable ordinances and statutes, zoning laws, and all regulations and
building codes of any governmental or municipal agency having jurisdiction over
the Improvements.
16
8.4 Enforcement of Contracts.
-----------------------------
Borrower shall strictly enforce the Construction Documents to ensure that the
Contractors are required to promptly and diligently perform all of their
obligations thereunder and in such a manner as to preserve Lender's security in
the Real Property and Improvements.
8.5 Additional Contractor Lists.
--------------------------------
Borrower, promptly upon request of Lender from time to time, shall furnish to
Lender correct lists of the Contractors, all subcontractors, suppliers and
materialmen employed or retained in connection with the construction of the
Improvements, together with, if required by Lender, copies of each such
contract. Each such list shall show the name, address and telephone number of
each such person, a general statement of the nature of the work to be done, the
labor and materials to be supplied, the names of materialmen if known, and the
approximate dollar value of such labor or work with respect to each. Lender
shall have the right to telephone or otherwise communicate with the Contractors,
each subcontractor and materialman to verify the facts disclosed by said list or
by any Disbursement Request, or for any other purpose.
8.6 No Other Security Interests.
--------------------------------
No materials, equipment, fixtures or any other part of the Improvements or
articles of personal property placed in the Improvements shall be purchased or
installed under any security agreement or other arrangements wherein the seller
reserves or purports to reserve the right to remove or to repossess any such
items or to consider them personal property after their incorporation into the
Improvements.
8.7 Maintenance of Licenses and Permits.
----------------------------------------
Borrower shall maintain in full force and effect all rights and licenses
necessary to carry on its business, and all permits, licenses, consents and
approvals necessary for the construction, maintenance and operation of the
Improvements. Borrower shall maintain its present existence and shall maintain
executive personnel and management at a level of experience and ability
equivalent to present personnel and management.
8.8 Litigation.
---------------
Promptly inform Lender in writing of: (a) any Material Adverse Event affecting
Borrower's financial condition; (b) all litigation and claims and all threatened
litigation and claims affecting Borrower which could materially affect the
financial condition of Borrower; and (c) all litigation concerning all or any
portion of the Collateral. In the event that such litigation concerns or affects
any of the Collateral, Lender may engage counsel to make an appearance and
defend Lender's interest in the Collateral, all at Borrower's expense. In
addition, in the event that such litigation asserts a lien or a claim to title
of all or any portion of the Collateral, Borrower shall, at Lender's election,
also either post a bond or deliver other cash security with Lender (or with the
court in the case of a mechanic's lien) in an amount of one-and-one-half times
the amount of such claims within thirty (30) days of the date of the initiation
of such litigation (provided that if the lien is recorded, such as a mechanic's
lien, then the bond or security shall be posted within thirty (30) days of
recording). Such bond or cash security shall be held by Lender (or with the
court in the case of a mechanic's lien) until the conclusion of such litigation
and may be used at Borrower's election to settle such litigation. If not settled
or concluded in favor of Borrower, the bond or cash security may be used by
Lender to either pay off such claimants or may be applied against the Loan. If
cash security is pledged, Borrower may use the cash to settle any such dispute
(provided that the funds will only be released upon a final and complete
settlement of the claims).
8.9 Financial Records.
----------------------
Borrower shall maintain its books and records in accordance with the accounting
principles historically used by Borrower, applied on a consistent basis, and
Borrower will permit Lender to examine and audit Borrower's books and records at
all reasonable times. All books and records shall separately account for the
income and expenses attributable to the Real Property. Borrower shall deliver to
Lender the following financial information, all of which shall be in a form and
content reasonably acceptable to Lender, on or before the date specified below:
17
a. Whenever requested and in any event within ninety (90) days after
the end of each fiscal year, Borrower shall furnish to Lender its (i)
unqualified audited annual financial statements prepared by a certified
public accountant acceptable to Lender, (ii) a balance sheet, (iii)
statement of income and expenses, and (iv) statement of cash flows that
include the results of the financial operations of Borrower. To the extent
that they comply with the requirements of this section, Borrower may
furnish to Lender the reports filed with the Securities and Exchange
Commission.
b. Semi-annually and as soon as practicable and in any event within
forty-five (45) days after the end of each semi-annual period, Borrower
will furnish a certified, internally-prepared balance sheet, income
statement and operating statements.
c. Within forty-five (45) days after each calendar quarter, Borrower
shall furnish a covenant compliance certificate in the form of Exhibit A
for the prior quarter certifying compliance with the financial/liquidity
covenants, together with a copy of all brokerage and bank statements used
to support the certification.
d. Within forty-five (45) days of filing with the Internal Revenue
Service, Borrower shall furnish a certified copy of its federal income tax
returns, together with all K-1s, 1099s, sub chapter S corporation and
partnership income tax returns, W-2s and other schedules and exhibits, and,
if any extensions are filed, Borrower shall furnish Lender with a copy of
any extensions within five (5) days of filing the same with the Internal
Revenue Service.
e. Borrower shall furnish such additional reasonable information and
statements, lists of assets and liabilities, aging of receivables and
payables, inventory schedules, budgets, forecasts, tax returns, and other
reports with respect to Borrower's financial condition, the Real Property,
and business operations as Lender may reasonably request from time to time.
8.10 Insurance.
---------------
In addition to any insurance required under any other Loan Document, Borrower
shall obtain, maintain or cause to be maintained and shall deliver to the Lender
policies of insurance, at its expense, providing the following:
a. Policies of insurance evidencing bodily injury, death or property
damage liability coverages in amounts not less than $1,000,000.00 (combined
single limit), and an excess/umbrella liability coverage in an amount not
less than $2,000,000.00 shall be in effect with respect to the Borrower.
Such policies must be written on an occurrence basis so as to provide
blanket contractual liability, broad form property damage coverage, and
coverage for products and completed operations.
b. "Special Cause of Loss" insurance on the Improvements in an amount
not less than the full insurable value on a replacement cost basis of the
insured Improvements and personal property related thereto. During the
construction period, such policy shall be written in the so-called
"Builder's Risk Completed Value Non-Reporting Form" with no coinsurance
requirement and shall contain a provision granting the insured permission
to occupy. Such policy shall not contain an exclusion for terrorist losses.
c. If applicable, evidence of worker's compensation insurance coverage
satisfactory to Lender.
18
d. If the Real Property, or any part thereof, lies within a "special
flood hazard area" as designated on maps prepared by the Department of
Housing and Urban Development, a National Flood Insurance Association
standard flood insurance policy, plus insurance from a private insurance
carrier if necessary, for the duration of the Loan in the amount of the
full insurable value of the Improvements.
e. Such other insurance as the Lender may require, which may include,
without limitation, errors and omissions insurance with respect to the
contractors, architects and engineers, earthquake insurance, rent abatement
and/or business loss.
All insurance policies shall (i) be issued by an insurance company having a
rating of "A" VII or better by A.M. Best Co., in the Best's Rating Guide, (ii)
name the Lender as an additional insured on all liability insurance and as
mortgagee and lender loss payee on all casualty insurance, (iii) provide that
the Lender is to receive thirty (30) days written notice prior to non-renewal or
cancellation, (iv) be evidenced by a certificate of insurance to be held by the
Lender, and (v) be in form and amounts acceptable to the Lender. Borrower will
provide Lender with loss payee endorsements, non-contributing mortgagee's
endorsements, or other endorsements as Lender may require. If any insurance
policies are blanket policies, they shall contain an agreed amount endorsement,
in amounts reasonably approved by Lender.
8.11 Insurance Reports.
-----------------------
In addition to any reports required in the Deed of Trust, Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or certificates
of insurance in form satisfactory to Lender, including stipulations that
coverages will not be cancelled or diminished without at least 30 days prior
written notice to Lender. In connection with all policies covering the Real
Property, Borrower shall furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may reasonably
request, including, without limitation the following: (a) the name of the
insurer; (b) the names of all insureds and loss payees; (c) the risks insured;
(d) the amount of the policy; (e) the properties insured; (f) the then-current
property values on the basis of which insurance has been obtained, and the
manner of determining those values; and (g) the expiration date of the policy.
8.12 Other Agreements.
----------------------
Borrower shall comply with all material easements, covenants, declarations,
other agreements affecting the Real Property including, without limitation,
whether now or hereafter existing, between Borrower and any other party and
notify Lender immediately in writing of any default in connection with any other
such agreement. As used in this Section "Material" shall mean having an economic
impact of $10,000.00 or more.
8.13 Taxes, Charges and Liens.
------------------------------
Borrower shall discharge when due any of its other obligations, including,
without limitation, all assessments, taxes, governmental charges, levies and
liens of every kind and nature imposed upon Borrower or its properties, income
or profits prior to the date on which penalties would attach, and all lawful
claims that, if unpaid, might become a lien or charge upon any of Borrower's
properties, income or profits, including, but not limited to, the Real Property;
provided, however, Borrower will not be required to pay and discharge any such
assessment, tax, charge, xxxx, xxxx or claim that affects the Collateral so long
as: (a) the amount or legality of the same shall be contested in good faith by
appropriate proceedings; (b) Borrower promptly notifies Lender of the contest
and keeps Lender informed as to the status of the contest; (c) the contest and
delay in payment of such tax would not, in Lender's opinion, jeopardize Lender's
security interest in or the value of the Collateral; (d) within thirty (30) days
of the date the same became due, Borrower shall either (i) have established,
with Lender's approval, on its books adequate reserves with respect to such
contested assessment, tax, charge, xxxx, xxxx or claim in accordance with
generally-accepted accounting practices, or (ii) if Lender has not approved the
reserve, have posted a bond in favor of Lender, issued by a surety acceptable to
Lender in an amount equal to one and one-half of the amount of such lien; and
(e) Borrower promptly pays all amounts ultimately determined to be payable.
19
8.14 Operations.
----------------
Borrower shall conduct its business affairs in a reasonable and prudent manner
and in compliance with all applicable federal, state and municipal laws,
ordinances, rules and regulations respecting its properties, charters,
businesses and operations, all minimum funding standards and other requirements
of the Employee Retirement Income Security Act of 1974, as amended, and other
laws applicable to Borrower's employee benefit plans, if any. Borrower's sole
business is the development, construction and rental of the Real Property.
Borrower shall not engage in any business other than the ownership, development,
construction and rental of the Real Property.
8.15 Inspection of Books.
Borrower shall permit employees or agents of Lender,
at its own expense, at any reasonable time to inspect any and all Collateral and
Borrower's other properties and to examine or audit Borrower's books, accounts
and records and to make copies and memoranda of Borrower's books, accounts and
records. If Borrower now or at any time hereafter maintains any records
(including, without limitation, computer-generated records and computer software
programs for the generation of such records) in the possession of a third party,
Borrower, upon reasonable request of Lender, shall notify such party to permit
Lender free access to such records at all reasonable times and to provide Lender
with copies of any records it may request, all at Borrower's expense.
8.16 Collateral Inspection.
a. Borrower shall permit Lender and its representatives,
including Inspector, to enter upon the Real Property and observe the
construction of the Improvements and all materials to be used in
construction thereof; permit them to examine the Real Property
Construction Documents; all detailed plans and shop drawings for the
Improvements, and all of Borrower's books, records, contracts and bills
with respect to the Improvements; and cause the subcontractors to
cooperate with Lender in this regard. Observation by Lender of
construction shall be for the purpose of protecting the security of the
Loan only, and such observation shall in no way be construed as an
acknowledgement that the Construction Documents have been complied with
or that the construction is free from defect or in compliance with the
terms of this Agreement.
b. In addition, Inspector, at Borrower's expense, shall make
regular observations of the Real Property as construction progresses
and at all critical times during construction to determine that the
work is progressing in a timely manner and in compliance with the
Project Schedule, to review each request for a loan disbursement to
reasonably ascertain that all construction to the date of request has
been completed to the extent indicated in Borrower's request and to
furnish Lender with full and complete reports of the construction and
provide Borrower with copies of such reports.
8.17 Bonds.
-----------
In the event that a mechanic's or other lien is filed encumbering the Real
Property, Borrower shall, in addition to the other requirements of the Loan
Documents, immediately notify Lender thereof and, upon request of Lender, obtain
for the benefit of Lender a corporate surety bond in an amount and with sureties
satisfactory to Lender or, at Borrower's election, a cash deposit to be
deposited with the Title Company or the court in such a manner as to cause the
lien to be satisfactorily released within thirty (30) days of the date filed.
8.18 Correction of Defects.
---------------------------
Borrower shall proceed diligently to correct material defects and the completion
of Improvements described in the Construction Contracts.
8.19 Lien Waivers.
------------------
Borrower shall obtain lien waivers from all Contractors through the use of check
endorsements and lien waiver forms acceptable to Lender.
20
8.20 Publicity.
---------------
Borrower shall permit Lender to install a sign or billboard at the Real Property
indicating that Lender has provided construction financing and to otherwise use
Borrower's name and the Project in the promotion of Lender's business in
accordance with all local ordinances and signage restrictions.
8.21 Financial Covenants.
-------------------------
Except as otherwise noted, all capitalized terms in this paragraph and not
otherwise defined in this Agreement shall have the meanings determined in
accordance with GAAP. In addition, except as otherwise noted, all financial
computations shall be made in accordance with GAAP. Until the Loan is re-paid in
full, Guarantor shall maintain:
a. Guarantor's Liquidity. At all times, Guarantor shall maintain a
minimum Liquidity of $15,000,000.00, to be measured quarterly using
xxxx-to-market accounting.
8.22 Leases.
------------
Borrower shall exercise its good faith, best efforts to comply with and perform
all of its obligations under each Approved Lease. Borrower shall provide to
Lender, within five (5) days of Borrower's receipt, copies of any
correspondence, notices, demands or proposed amendments pertaining to all
Approved Leases. If Lender so requests, Borrower shall from time to time obtain
from any Lessee and deliver to Lender estoppel certificates, and, if required in
the tenant's leases, a subordination, non-disturbance and attornment agreement,
all in a form and substance approved by Lender.
8.23 Additional Assurances.
---------------------------
Borrower shall make, execute and deliver to Lender such promissory notes,
mortgages, deeds of trust, security agreements, financing statements,
instruments, documents and other agreements as Lender or its attorneys may
reasonably request to evidence and secure the Loan and to perfect all security
interests and liens in the Collateral.
Section 9. Negative Covenants.
------------------------------
Borrower covenants and agrees with Lender that Borrower shall not, without the
prior written consent of Lender, which consent may be withheld in Lender's sole
and absolute discretion, engage or permit any of the following to occur:
9.1 Continuity of Operations.
-----------------------------
Borrower shall not: (a) engage in any business activities substantially
different than those in which Borrower is presently engaged; (b) cease
operation, liquidate, merge or consolidate with any other entity; (c) change its
management or turn over management of its affairs to any other person; (d)
change its name or operate its business under any assumed name, or (e) change
the state of its formation.
9.2 Liens.
------------
Borrower shall not pledge, encumber or collaterally assign any of the
Collateral, except to Lender.
9.3 Change in Accounting Period.
--------------------------------
Change the times of commencement or termination of their fiscal year or other
accounting periods, or change its methods of accounting other than to conform to
generally-accepted accounting principles applied on a consistent basis.
9.4 Loans, Acquisitions and Guaranty.
-------------------------------------
Borrower shall not loan money or assets, purchase or acquire any interest in any
other enterprise or entity, or incur any obligation as surety or guarantor other
than in the ordinary course of business.
9.5 Special Districts.
----------------------
Borrower shall not seek to form or consent to the formation of any special
district in which the Real Property would be located, including, without
limitation, any special improvement district, business improvement district,
metropolitan district, weed district, recreational district or any other
governmental or quasi-governmental entities that have authority to make
assessments against the Real Property. In the event such district is proposed,
Borrower shall immediately give Lender notice of such event and Borrower agrees
to exercise its good faith, reasonable efforts to oppose the formation of such
district.
21
9.6 Approved Leases.
--------------------
Borrower shall not execute or enter into a new lease affecting the Real Property
or a renewal or extension of an existing Approved Lease without having obtained
Lender's Consent to the terms and rental rates of the proposed lease and
Lender's approval of the financial and business conditions and prospects of the
proposed Lessee. Borrower shall not terminate, cancel, amend, extend, waive,
assign or rescind all or any portion of any Approved Lease. Borrower shall not
subordinate any Approved Lease to any lien other than the lien of the Deed of
Trust. Borrower shall not exercise any remedy to xxx any Lessee or to terminate
any Approved Lease and shall not enter into any lease buy-outs. Lease buy-outs
shall be subject to approval by Lender with an acceptable replacement tenant.
All proceeds from lease buy-outs in excess of funds estimated for tenant
improvements and leasing commission for such space shall be applied to the
principal balance of the Loan. Borrower will not make, consent to or permit any
new lease or agreement for the occupancy of all or any portion of the Real
Property, except for Approved Leases. Borrower shall not collect any rent or
other charge from any Lessee more than thirty (30) days in advance of the date
due. Borrower shall not offer or commit to any free rent, rent rebate, rent
abatement or any other cancellation of rent due under any Approved Lease.
9.7 Alteration of Project Documents.
------------------------------------
For each Project, Borrower shall not permit any material change in the Project
Plans and Specifications, Construction Contracts, or the Project Budgets without
Lender's prior written consent. Borrower shall not make or permit any material
reallocations among the line items contained in the Project Budgets without
Lender's prior written consent. As used in this Section, the term "Material"
shall mean having an economic impact of $25,000.00 or more or which increases
any line item in any Project Budget by five percent (5%) or more; provided that
if Borrower has permitted any number of change orders or modifications which
have increased the costs of all Projects by $100,000.00 in the aggregate, then
the term "Material" shall thereafter mean having an economic impact of
$10,000.00. Borrower shall not permit any change in the Project Plans and
Specifications. Any requested changes shall be submitted on a form acceptable to
Lender and accompanied by a copy of the portion of the Project Plans and
Specifications applicable to the changes. Prior to implementing any change order
which increases the costs of completing the Project, Borrower shall make a
Borrower's Deposit with Lender of sufficient cash to cover the cost of all
change orders that increase the cost of the Improvements. All such funds shall
be held by Lender and disbursed in the manner provided herein for the Collateral
Account and are hereby assigned to Lender as additional security for the Loan
and all other indebtedness of Borrower arising hereunder
9.8 Contractor's Insurance.
---------------------------
All Contractors shall maintain the types, amounts and coverages of insurance
reasonably requested by Lender.
9.9 New Fees.
-------------
Borrower shall not permit any new agreement or enter into any modification or
amendment of any contracts, participation agreements, facilities fee agreements,
tap purchase agreements, development agreements, or any other financial
arrangements between Borrower and any Governmental Authority or any district in
which the Real Property is located which would cause or create any new or
additional fees or charges assessable against the Real Property.
9.10 Change in Status of Real Property.
---------------------------------------
Borrower shall not consent to any modification, amendment, cancellation or
change in the zoning, utility agreements, condominium maps, plats, easements,
covenants, declarations, licenses and permits affecting or concerning the Real
Property.
9.11 Loan-to-Value.
-------------------
Permit the unpaid principal balance of any Loan plus all amounts committed and
not yet advanced thereunder to exceed seventy-five percent (75%) of the value of
the Real Property, upon completion of renovation and stabilization, as approved
or determined by Lender in its sole discretion after its review of the latest
Approved Appraisal. If for any reason the loan-to-value percentage exceeds said
percentage, then Borrower shall upon Lender's demand, immediately reduce the
unpaid principal balance of the Loan to reduce the loan-to-value percentage to,
at or below said percentage.
22
9.12 Loan-to-Cost.
------------------
Permit the outstanding principal balance of any Loan to exceed a loan-to-cost
ratio of seventy-five percent of the acquisition and Project costs for the Real
Property. If for any reason the loan to cost ratio exceeds said percentage, the
Borrower shall upon Lender's request immediately reduce the outstanding
principal of the Loan to below such percentages.
9.13 Government Regulation.
---------------------------
Be or become subject at any time to any law, regulation, or list of any
government agency (including, without limitation, the U.S. Office of Foreign
Asset Control list) that prohibits or limits Lender from making any advance or
extension of credit to Borrower or from otherwise conducting business with
Borrower, or fail to provide documentary and other evidence of Borrower's
identity as may be requested by Lender at any time to enable Lender to verify
Borrower's identity or to comply with any applicable law or regulation,
including, without limitation, Section 326 of the USA Patriot Act of 2001, 31
U.S.C. Section 5318.
Section 10. Events of Default.
------------------------------
Each or any one of the following shall constitute an Event of Default under this
Agreement.
10.1 Event of Default.
----------------------
The occurrence of any one or more of the following events or conditions shall
constitute an "Event of Default" under this Agreement.
a. Any failure to pay any principal or interest under the Note when
the same becomes due and payable and such failure continues for ten (10)
days after notice thereof to Borrower, or the failure to pay any other sum
due under the Note, this Agreement or any Loan Document when the same shall
become due and payable and such failure continues for ten (10) days after
notice thereof to Borrower. No notice, however, shall be required for any
amounts due upon maturity of the Note.
b. Any failure or neglect to perform or observe any of the covenants,
conditions or provisions of this Agreement, the Note, any Loan Document or
any other document or instrument executed or delivered in connection with
the Loan (other than a failure or neglect described in one or more of the
other provisions of this Section 10) and such failure or neglect either
cannot be remedied or, if it can be remedied, it continues unremedied for a
period of thirty (30) days after notice thereof to Borrower.
c. Any warranty, representation or statement contained in this
Agreement, in the Note or in any Loan Document or any other document or
instrument executed or delivered in connection with the Loan, or made or
furnished to Lender by or on behalf of Borrower, that shall be or shall
prove to have been false when made or furnished.
d. The filing by Borrower or any Guarantor (or against Borrower or
such Guarantor to which Borrower or such Guarantor acquiesces or that is
not dismissed within sixty (60) days after the filing thereof) of any
proceeding under the federal bankruptcy laws now or hereafter existing or
any other similar statute now or hereafter in effect; the entry of an order
for relief under such laws with respect to Borrower or such Guarantor; or
the appointment of a receiver, trustee, custodian or conservator of all or
any part of the assets of Borrower or such Guarantor.
e. The insolvency of Borrower or any Guarantor or the execution by
Borrower or any Guarantor of an assignment for the benefit of creditors; or
the convening by Borrower or any Guarantor of a meeting of their creditors,
or any class thereof, for purposes of effecting a moratorium upon or
extension or composition of its debts; or the failure of Borrower or any
Guarantor to pay their debts as they mature; or if Borrower or any
Guarantor are generally not paying their debts as they mature.
f. The admission in writing by Borrower or any Guarantor that they are
unable to pay their debts as they mature or that they are generally not
paying their debts as they mature.
23
g. The death or incapacity or dissolution of any Guarantor or the
revocation of any Guaranty by any Guarantor.
h. Any levy or execution upon, or judicial seizure of any portion of
any Collateral.
i. Any attachment or garnishment of, or the existence or filing of any
lien or encumbrance, other than any lien or encumbrance permitted by a Deed
of Trust, against any portion of any Collateral that is not removed or
released within thirty (30) days after its creation.
j. The institution of any legal action or proceedings to enforce any
lien or encumbrance upon any portion of any Collateral or security for the
Loan, that is not dismissed within thirty (30) days after its institution
other than for mechanics lien or which a bond has been posted as provided
herein.
k. The occurrence of any default under the Note, any of the Loan
Documents or any other document or instrument executed or delivered in
connection with the Loans and the expiration of any applicable notice and
cure period.
l. The occurrence of any event of default under any document or
instrument given by Borrower, any Guarantor, or any entity owned by all or
any of the same persons or entities that own Borrower in connection with
any other indebtedness or obligation of Borrower, any Guarantor, or any
such entity owed to Lender.
m. Any such action shall be taken by any Governmental Authority that
would materially and adversely affect timely substantial completion of the
Project by the Completion Date or the use or occupation of the Project for
their intended purpose and such action shall not have been reversed or
remedied within a period of thirty (30) days from the taking thereof.
n. If Borrower fails to construct the Improvements in substantial
accordance with the Construction Documents and such failure is not cured
within twenty (20) days after written notice of such default by Lender to
Borrower or if the failure is for a reason beyond the control of Borrower,
then for a reasonable time not to exceed sixty (60) days, so long as
Borrower is diligently pursuing a cure.
o. If any Governmental Authority should declare a default under any
subdivision agreement or otherwise refuses to issue any permits necessary
for the development of any Project or any certificates of occupancy
required for the occupancy of any Project as a result of any action or
failure to act attributable to Borrower.
p. A transfer, sale or conveyance of any of the Collateral prohibited
under any of the Loan Documents.
q. The failure of the Guarantor to pay any amounts due under any Loan
within five (5) days of the date the same became due.
r. The failure or neglect of Guarantor to perform or observe any of
the covenants, conditions or provisions of Guaranty within ten (10) days of
notice or any breach of any warranty or representation contained in the
Guaranty.
24
Section 11. Effect of an Event of Default; Remedies.
----------------------------------------------------
If any Event of Default shall occur, Lender, at Lender's option, may cease
making any Advances under any Loan and/or may accelerate the Obligations, at
Lender's option, to become immediately due and payable. Upon an Event of
Default, Lender shall have no obligation to review and approve any new proposed
projects. Upon an Event of Default, all sums due under the Loan Documents shall
accrue interest at a rate ("Default Rate") of interest equal to 4% per annum
over the pre-default rate of interest. In addition to accelerating the
Obligations due and payable under the Loan, Lender may exercise any other remedy
it may have under this Agreement, any Loan Document, or any Security Document,
or those available at law or in equity or by statute, including, without
limitation, the rights of specific performance. Lender may elect to enforce the
Loan or any of its rights or remedies successively, concurrently, or
consecutively, in any order and at any time or from time to time as it may so
determine in its sole and absolute discretion. No failure or delay on the part
of Lender in exercising any right, power or privilege under this Agreement, the
Loan Documents or under the law, and no course of dealing between Borrower and
Lender shall operate as a waiver hereof or thereof, nor shall any single or
partial exercise of any right, power or privilege hereunder preclude any other
or further exercise of any other right, power or privilege. Borrower hereby
waives any defense or claim of marshalling or that Lender must proceed against
any particular Collateral in any particular order or at any particular time.
Without limiting the foregoing, upon the occurrence of an Event of Default,
Lender shall have the right, acting on its own behalf or through a court
appointed receiver which may be appointed upon ex parte application without
notice to Borrower, to take possession of the Collateral and perform any and all
work it deems advisable or necessary to protect the Improvements and complete
them substantially in accordance with the Construction Documents. Borrower
hereby irrevocably constitutes and appoints Lender and/or any court appointed
receiver its attorney-in-fact with full power and authority upon the occurrence
of an Event of Default to do all or any of the following: (a) take possession
of, protect and complete the Improvements; (b) use funds not disbursed pursuant
to the Loan for the purpose of completing the Improvements and payment of costs
related thereto; (c) make such additions, changes and corrections in the
Construction Documents as deemed necessary or desirable by Lender to complete
the Project without loss to Lender; (d) employ such Contractors, subcontractors,
agents, architects and other persons that Lender deems necessary or desirable to
complete the Project; (e) pay, settle or compromise all existing invoices,
charges and claims relating to the Real Property and/or the Improvements as it
deems necessary for completion of the Improvements and clearance of title to the
Real Property for protection of its interest; (f) prosecute and defend all
actions and proceedings in connection with construction of the Improvements and
apply the proceeds of any judgment in any such action against any of the
Obligations as it determines in its sole discretion; (g) execute, acknowledge
and deliver all instruments and documents in the name of Borrower and do and
perform all acts in the name of Borrower that Lender deems necessary or
appropriate to complete the construction of the Improvements; (h) lease the Real
Property and execute and deliver leases in the name of Borrower. Nothing
contained in this Section shall prohibit Lender from altering the Construction
Documents to effect a reduction of the cost of any item therein when in the
exercise of reasonable judgment Lender determines that such action is necessary
to provide for the sale of all or a portion of the Improvements or to protect or
enhance the value of the Improvements or Real Property as security for
satisfaction of the Obligations. No delay or failure of Lender in the exercise
of any right or remedy shall be deemed a waiver of any further exercise of such
right or remedy or of any other rights of Lender as to any security for the
Obligations, and shall not affect the rights of Lender to enforce payment of the
Loan and to recover judgment for any portion thereof remaining unpaid. The
rights and remedies herein expressed are cumulative and not exclusive of any
right or remedy that may be available to Lender under its Loan Documents or by
law or otherwise. Borrower specifically waives any obligation of Lender, if any,
to accept a deed in lieu or to pursue any Collateral at any particular time.
25
Section 12. Action Upon Agreement.
----------------------------------
12.1 No Third Party Beneficiaries.
----------------------------------
This Agreement is made for the sole protection and benefit of the parties hereto
and no other person or organization shall have any right of action hereon.
12.2 Integration.
-----------------
This Agreement embodies the entire Agreement of the parties with regard to the
subject matter hereof. There are no representations, promises, warranties,
understandings or agreements expressed or implied, oral or otherwise, in
relation thereto, except those expressly referred to or set forth herein.
Borrower acknowledges that the execution and delivery of this Agreement is its
free and voluntary act and deed, and that said execution and delivery have not
been induced by, nor done in reliance upon, any representations, promises,
warranties, understandings or agreements made by Lender, its agents, officers,
employees or representatives.
12.3 Modifications.
-------------------
No promise, representation, warranty or agreement made subsequent to the
execution and delivery of this Agreement by either party hereto, and no
revocation, partial or otherwise, or change, amendment or addition to, or
alteration or modification of, this Agreement shall be valid unless the same
shall be in writing signed by all parties hereto.
12.4 No Joint Venture.
----------------------
Lender and Borrower each have separate and independent rights and obligations
under this Agreement. Nothing contained herein shall be construed as creating,
forming or constituting any partnership, joint venture, merger or consolidation
of Borrower and Lender for any purpose or in any respect.
Section 13. General.
---------------------
13.1 Setoff. Borrower hereby grants to Lender a security interest in, and Lender
is hereby authorized at any time and from time to time, without prior notice to
Borrower (any such notice being expressly waived by the Borrower), to set off
and apply, any and all accounts and deposits (general or special, time or
demand, provisional or final) at any time held by Lender, or any branch,
subsidiary, or affiliate of Lender, and all other indebtedness at any time owing
by Lender or any branch, subsidiary, or affiliate of Lender, to or for the
credit or the account of Borrower (including all accounts held jointly with
another, but excluding any XXX or Xxxxx accounts, or any trust accounts for
which a security interest would be prohibited by law), against any and all of
the Obligations of Borrower now or hereafter existing under the Loan Documents.
Such security interest may be enforced, and such right of setoff may be
exercised, by Lender irrespective of (i) whether or not Lender shall have made
any demand under the Loan Documents and (ii) whether such Obligations are
contingent, matured, or unmatured. Lender agrees promptly to notify Borrower
after any such setoff and application, provided that the failure to give such
notice shall not affect the validity of such setoff and application. The rights
of Lender under this paragraph are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which Lender may have.
13.2 Survival and Severability.
-------------------------------
This Agreement shall survive the making of the Loan and shall continue so long
as any part of the Loan, or any extension or renewal thereof, remains
outstanding. If any provision of this Agreement is held to be invalid, illegal,
or unenforceable in any jurisdiction, the validity, legality and enforceability
of that provision in any other jurisdiction, and the validity, legality and
enforceability of the remaining provisions hereof in all jurisdictions, shall
not be affected or impaired in any way.
26
13.3 Discretionary Rights.
--------------------------
All rights, powers and remedies granted Lender herein, or otherwise available to
Lender, are for the sole benefit and protection of Lender, and Lender may
exercise any such right, power or remedy at its option and in its sole and
absolute discretion without any obligation to do so. In addition, if, under the
terms hereof, Lender is given two or more alternative courses of action, Lender
may elect any alternative or combination of alternatives, at its option and in
its sole and absolute discretion. All monies advanced by Lender under the terms
hereof and all amounts paid, suffered or incurred by Lender in exercising any
authority granted herein, including reasonable attorneys' fees, shall be secured
by the Security Documents, shall bear interest at the highest rate payable on
the Loan until paid, and shall be due and payable by Borrower to Lender
immediately without demand.
13.4 Standard of Review.
------------------------
Whenever any of the Loan Documents require Lender's consent or approval, such
consent or approval may be granted or withheld by Lender in Lender's sole and
absolute discretion, for any reason or no reason whatsoever, unless the context
of such sentence specifically requires Lender to act reasonably. In such cases,
it shall be reasonable for Lender to act in accordance with the terms of the
Loan Documents or as would otherwise be reasonable for national banks located in
Denver, Colorado. In either case, Lender may impose additional conditions and
requirements prior to granting such consents or approvals.
13.5 Indemnity.
---------------
Borrower shall indemnify and hold Lender harmless from and against all claims,
costs, expenses, actions, suits, proceedings, losses, damages and liabilities of
any kind whatsoever, including but not limited to attorneys' fees and expenses,
arising out of any matter relating, directly or indirectly, to the Loan, to the
ownership, development, construction, or sale of the Real Property and
Improvements, whether resulting from internal disputes of Borrower, disputes
between Borrower and any Guarantor, or whether involving other third persons or
entities, or out of any other matter whatsoever related to any of the Loan
Documents, or any property encumbered thereby, but excluding any claim or
liability which arises as the direct result of the gross negligence or willful
misconduct of Lender. This indemnity provision shall continue in full force and
effect and shall survive not only the making of the Loan and the Advances but
shall also survive the repayment of the Loan and the performance of all of
Borrower's other obligations hereunder.
13.6 Joint and Several.
-----------------------
If Borrower consists of more than one person or entity their liability shall be
joint and several. The provisions hereof shall apply to the parties according to
the context thereof and without regard to the number or gender of words or
expressions used.
13.7 Time of Essence.
---------------------
Time is expressly made of the essence of this Agreement.
13.8 Notices.
-------------
All notices required or permitted to be given hereunder shall be in writing and
may be given in person or by United States mail, by delivery service or by
electronic transmission. All notices (excluding payment notices) given to
Borrower by Lender shall be given to Guarantor contemporaneously therewith. Any
notice directed to a party to this Agreement shall become effective upon the
earliest of the following: (a) actual receipt by that party; (b) delivery to the
designated address of that party, addressed to that party; or (c) if given by
certified or registered United States mail, twenty-four (24) hours after deposit
with the United States Postal Service, postage prepaid, addressed to that party
at its designated address. The initial designated address of a party shall be
the address of that party shown below or such other address as that party, from
time to time, may specify by notice to the other parties.
27
Borrower: Across America Real Estate Development
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Guarantor: G. Xxxxx Xxxxxxx GDBA Investments, LLLP
0000 Xxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxx X. Xxxxxxx
00 Xxxxxxxxx Xxxxxx
Xxxxxxx Xxxx, XX 00000
Lender: Vectra BankColorado, NA
0000 Xxxx Xxxxxxxxx, Xxxxx X-000
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
13.9 Payment of Costs.
----------------------
Borrower shall pay upon demand all costs and expenses arising from the
preparation of this Agreement, the closing of the Loan, the making of Advances
and the monitoring and administration of the Loan, including but not limited to
title insurance premiums, other title company charges, recording and filing
fees, costs of Uniform Commercial Code searches, Lender's in-house and outside
attorneys' fees, if any, Lender's documentation fee, Lender's inspection fees,
environmental review fees, appraisal and appraisal review fees, any intangible
or recording taxes and any other charges that may be imposed on Lender as a
direct result of this transaction.
13.10 Choice of Law.
--------------------
This Agreement shall be governed by and construed according to the laws of the
State of Colorado, without giving effect to conflict of laws principles.
13.11 Successors.
-----------------
Except as otherwise provided herein, this Agreement shall be binding upon, and
shall inure to the benefit of, the parties hereto and their successors and
assigns.
13.12 Headings.
---------------
The headings or captions of sections and paragraphs in this Agreement are for
reference only, do not define or limit the provisions of such sections or
paragraphs, and shall not affect the interpretation of this Agreement.
13.13 Assignments and Participations and Information Sharing.
-------------------------------------------------------------
Lender, at any time, shall have the right to sell, assign, transfer, or
negotiate the Loan and the Loan Documents, in whole or in part, and to grant
participation interests in the Loan and the Loan Documents. Borrower hereby
acknowledges and agrees that any such disposition shall give rise to a direct
obligation of Borrower to each such assignee or participant. Lender is
authorized, without any limitations whatsoever, to share with any actual or
prospective assignee or participant, any Lender's affiliate, any derivative
counter parties and any rating agencies, any customer information or document
that Lender may have or obtain regarding the Loan, the Loan Documents, the
Projects, Borrower, or any Guarantor of the Loan. In addition, Lender is
authorized, without any limitations whatsoever, to furnish such information to
affiliates of Lender.
13.14 Counterparts.
-------------------
This Agreement may be executed in counterparts, all of which executed
counterparts shall together constitute a single document. Signature pages may be
detached from the counterparts and attached to a single copy of this Agreement
to physically form one document.
13.15 Partial Payments.
-----------------------
Borrower agrees that partial payments of any installment or amount due to
Lender, even if indorsed and negotiated by Lender, shall not constitute an
accord and satisfaction of the full installment or amount due unless Borrower
follows the following procedures: Any proposal by Borrower for a partial
payment/accord and satisfaction must be presented directly to the officer
handling the administration of the Loan, together with correspondence
specifically requesting that Borrower be relieved of the balance of the
obligation, and stating the specific dollar amount of the requested release.
28
Lender may unilaterally reject such proposal. Such proposal shall only be deemed
accepted if such officer responds to Borrower in writing specifically relieving
Borrower of the balance of the obligation by identifying the amount forgiven in
a specific dollar amount. In the event Lender cashes an instrument under which
Borrower asserts an accord and satisfaction, Lender shall have one (1) year from
the date the instrument was negotiated to return the partial payment and rescind
the accord and satisfaction.
13.16 USA PATRIOT ACT NOTIFICATION.
-----------------------------------
The following notification is provided to Borrower pursuant to Section 326 of
the USA Patriot Act of 2001, 31 U.S.C. Section 5318:
IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT.
-----------------------------------------------------------------
To help the government fight the funding of terrorism and money laundering
activities, Federal law requires all financial institutions to obtain, verify
and record information that identifies each person or entity that opens an
account, including any deposit account, treasury management account, loan, other
extension of credit, or other financial services product. What this means for
Borrower: When Borrower opens an account, if Borrower is an individual Lender
will ask for Borrower's name, taxpayer identification number, residential
address, date of birth, and other information that will allow Lender to identify
Borrower, and if Borrower is not an individual Lender will ask for Borrower's
name, taxpayer identification number, business address, and other information
that will allow Lender to identify Borrower. Lender may also ask, if Borrower is
an individual to see Borrower's driver's license or other identifying documents,
and if Borrower is not an individual to see Borrower's legal organizational
documents or other identifying documents.
13.17 WAIVER OF SPECIAL DAMAGES.
--------------------------------
BORROWER WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT BORROWER
MAY HAVE TO CLAIM OR RECOVER FROM LENDER IN ANY LEGAL ACTION OR PROCEEDING ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
13.18 JURY WAIVER.
------------------
BORROWER, GUARANTOR AND LENDER HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND
UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY
DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG THEM
ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, ANY OTHER LOAN DOCUMENT
OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER. THIS PROVISION IS A MATERIAL
INDUCEMENT TO LENDER TO PROVIDE THE FINANCING DESCRIBED HEREIN OR IN THE OTHER
LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first above written.
"Lender"
VECTRA BANK COLORADO, NATIONAL ASSOCIATION
By: /s/
----------------------------------------------
Vice President
"Borrower"
ACROSS AMERICA REAL ESTATE DEVELOPMENT CORP.,
a Colorado corporation
By: /s/
----------------------------------------------
President
29
"Guarantor"
GDBA INVESTMENTS, LLLP,
a Colorado limited liability limited partnership
By: /s/ Xxxxx Xxxxxxx
----------------------------------------------
G. Xxxxx Xxxxxxx, General Partner
/s/ Xxxxx Xxxxxxx
----------------------------------------------
G. Xxxxx Xxxxxxx, Individually
/s/ Xxxxx X. Xxxxxxx
----------------------------------------------
Xxxxx X. Xxxxxxx, Individually
30
EXHIBIT A
As of the Quarter Ending ____________________
The undersigned hereby certifies to Bank that the following financial
information has been taken from the Guarantor's books and records which are
complete and accurate and the following calculations of the financial covenants
specified in the Credit Agreement are true and correct:
a) Guarantor shall not permit Guarantors' liquidity at any time to be less than
$15,000,000 to be measured quarterly.
x Required Actual
$15,000,000 $____________
b) Attached hereto are the brokerage and bank account statements upon which
Guarantor is relying in order to certify compliance with the above liquidity
covenant.
The undersigned further certifies that (a) Guarantor is in compliance with all
covenants contained in the Credit Agreement, and (b) there has been no Event of
Default under the Credit Agreement, which has not been cured or waived, and no
potential Event of Default has occurred.
GDBA INVESTMENTS, LLLP,
a Colorado limited liability
limited partnership
By:
-------------------------------
Title:
-------------------------------
Date:
-------------------------------
------------------------------
Guarantor
------------------------------
Guarantor
31
EXHIBIT B
(SNDA)
32
