CONSTRUCTION LOAN AGREEMENT
This CONSTRUCTION LOAN AGREEMENT is made by and between THE CANYONS
RESORT PROPERTIES, INC., a Maine corporation authorized to do business in Utah
(collectively the "Borrower") having its principal place of business and mailing
address at Sunday River ▇▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ and KEYBANK
NATIONAL ASSOCIATION, a national bank with a place of business at ▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Lender" or "Bank").
SECTION 1. DEFINITIONS AND RULES OF INTERPRETATION.
SECTION 1.1. Definitions. The following terms shall have the meanings
set forth in this SECTION 1, in the other provisions of this Agreement or the
other Loan Documents referred to below:
Affiliate(s). Any Person directly or indirectly, through one or more
intermediaries, controlling, controlled by or under common control with Borrower
or Guarantor, which, in the case of a Person which is a partnership, shall
include each of the constituent partners thereof. The term "control," as used in
the immediately preceding sentence, means, with respect to a Person that is a
corporation, the right to the exercise, directly or indirectly, of more than 50%
of the voting rights or controlling interests attributable to the shares of the
controlled corporation, and, with respect to a Person that is not a corporation,
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of the controlled Person.
Advance. Any disbursement of the proceeds of the Loan made or to be
made by the Lender pursuant to this Agreement.
Agreement. This Agreement, including the Schedules and Exhibits hereto.
Appraisal. An appraisal of the value of the Project on an as completed
basis, determined on a "fair market value" basis accepted by Lender, performed
by a qualified independent appraiser approved by the Lender.
Assignment of Declarant Rights. The Collateral Assignment of Declarant
Rights pursuant to which the Borrower assigns to Lender Borrower's interest as
declarant in and to the Condominium Declaration under the Project, to be in form
and substance satisfactory to the Lender, and to be recorded at the recording of
the Condominium Declaration.
Assignment of Income and Revenues. The Collateral Assignment of Income,
Revenues and Rentals pursuant to which the Borrower assigns to Lender Borrower's
interest as operator, manage, and lessor of the Mortgaged Property and the
Project, to be in form and substance satisfactory to the Lender.
Assignment of Project Documents. The Collateral Assignment of Project
Documents pursuant to which the Borrower assigns and grants a security interest
to Lender in the Architect's Contract, the Construction Contract, the Plans and
Specifications, and the Project Approvals, to be in form and substance
satisfactory to the Lender.
Assignment of Declarant Rights. The Collateral Assignment of Declarant
Rights pursuant to which the Borrower assigns to Lender Borrower's interest as
declarant in and to the Condominium Declaration under the Project, to be in form
and substance satisfactory to the Lender, and to be recorded at the recording of
the Condominium Declaration.
Borrower's Architect . IBI Group Architects, Engineers and Planners of
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Closing Date. The first date on which the conditions set forth in
SECTION 11 have been satisfied and Advances are to be made.
Collateral. All of (a) the property, rights and interests of the
Borrower that are or are intended to be subject to the Security Documents,
including without limitation, the Project and the Mortgaged Property.
Commercial Unit. The commercial condominium unit to be retained by
Borrower containing 38,370 square feet of commercial space consisting of front
desk/administrative areas, restaurant, shopping and commercial areas.
Completion Date. March 30, 2000.
Condominium Declaration. The document creating a condominium regime for
the Mortgaged Property to be established in accordance with the Utah Condominium
Act Title 57, Chapter 8 of the Utah Code Annotated, and establishing the
condominium hotel known as the "Sundial Lodge at The Canyons" consisting of: 149
residential Condominium Units and one Commercial Condominium Units, subject to
the execution of a Limited Joinder by Lender and the Junior Creditor.
Condominium Units. The condominium units with their appurtenant
interest in the common areas and facilities created under the Condominium
Declaration.
Construction Contract. The construction contract entered into with
Contractor providing for the construction of the Improvements.
Construction Schedule. The schedules by trade, job and subcontractor of
the estimated dates of commencement and completion of construction for the
Improvements subject to the approval of the Lender and to be attached hereto as
Exhibit A.
Construction Inspector. Construction Risk Consultants of Salt Lake
City, Utah or, at the Lender's option, either an officer or employee of the
Lender or other consulting architects, engineers or inspectors appointed by the
Lender from time to time.
Contingency Reserve. The amount(s) allocated as contingency reserve(s)
in the Project Budget in the amount of One Million Three Hundred Eighty Three
Thousand Eight Hundred ($1,383,800.00), to be advanced only in accordance with
provisions of SECTION 2.6 hereof.
Contractor. ▇▇▇▇▇▇ Construction Company, Inc. of ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇.
Debt Subordination Agreement. The agreement from Guarantor
subordinating its loans and claims with respect to advances and transfers made
to or for the benefit of Borrower including without limitation, the $4,000,000
in land, cash and prepaid expenses provided by Guarantor, such agreement to be
in form and substance acceptable to Lender.
Default. A condition or event which would, with the giving of notice or
lapse of time or both, as defined in the Security Deed, constitute an Event of
Default.
Direct Costs. The costs of the labor, materials, fixtures, machinery
and equipment required to construct, equip and complete the Improvements in
accordance with the Plans and Specifications.
Disbursement Schedule. The schedule of the amounts of Advances
anticipated to be requisitioned by the Borrower each month during the
construction of the Improvements (including an itemization of Direct Costs and
Indirect Costs), as approved by the Lender and to be attached hereto as Exhibit
B.
Drawdown Date. The date on which any Advance is made or is to be made.
Draw Request. With respect to each Advance, the Borrower's Requisition
for such Advance, and documents required by this Agreement as a condition to
such Advance.
Easement Agreements means the (i) Easement Agreement dated August 1,
1998 entered into between Junior Creditor and American Skiing Resort Properties
Inc. as assigned to Borrower duly recorded, (ii) the Development Agreement for
The Canyons Specially Planned Area (SPA) Plan entered into ASC Utah, Inc.,
Guarantor, Junior Creditor, and others dated July 14, 1998 and (iii) The
Development Improvements Agreement for The Canyons Resort by and between Summit
County, a political subdivision of the State of Utah and Guarantor dated
September 14, 1998, and (iv) The Canyons Village Resort Easement and Management
Agreement to be entered into among ASC Utah, Inc., Guarantor and Borrower in
form and substance acceptable to Lender all to be recorded in the Summit County,
Utah Public Records to the extent required to render such agreements enforceable
against all present and future owners, with releases or subordinations from all
other parties with liens or interests therein, all to be in form and substance
acceptable to Lender.
Environmental Laws. As defined in the Security Deed.
Event of Default. See SECTION 13.1.
Generally accepted accounting principles. Principles that are
consistent with the principles promulgated or adopted by the Financial
Accounting Standards Board and its predecessors, in effect for the fiscal year
ended on the Balance Sheet Date and to the extent consistent with such
principles, the prior accounting practices of the Borrower reflected in its
financial statements.
Governmental Authority. The United States of America, the State of
Utah, any political subdivision thereof, the County of Summit, Utah and any
agency, authority, department, commission, board, bureau, or instrumentality of
any of them.
Guarantor shall mean American Skiing Company Resort Properties, a
Maine corporation.
Guaranty shall mean both the Limited Guaranty of Payment and the
Unconditional Guaranty of Project Completion and Payment of Project Costs
pursuant to which Guarantor guarantees to the Lender the payment and performance
of the Obligations as set forth therein, each such Guaranty to be in form and
substance satisfactory to the Lender but which shall be limited as set forth in
the Guaranty. If not paid when due, the Limited Guaranty shall require in
addition the payment of accruing interest and costs as described in the Limited
Guaranty.
Improvements. Collectively, the buildings and improvements, drainage,
utility, infrastructure and all other common improvements to be constructed on
or about the Land in accordance with the Plans and Specifications.
Indebtedness. All obligations, contingent and otherwise, that in
accordance with generally accepted accounting principles should be classified
upon the obligor's balance sheet as liabilities, or to which reference should be
made by footnotes thereto, including in any event and whether or not so
classified: (a) all debt and similar monetary obligations, whether direct or
indirect; (b) all liabilities secured by any mortgage, pledge, security
interest, lien, charge, or other encumbrance existing on property owned or
acquired subject thereto, whether or not the liability secured thereby shall
have been assumed; and (c) all guarantees, endorsements and other contingent
obligations whether direct or indirect in respect of indebtedness of others.
Indemnity Agreement. The Indemnity Agreement Regarding Hazardous
Materials pursuant to which the Borrower agrees to indemnify the Lender with
respect to Hazardous Materials and Environmental Laws, such Indemnity Agreement
to be in form and substance satisfactory to the Lender.
Indirect Costs. Mean and include title insurance premiums, survey
charges, engineering fees, architectural fees, real estate taxes, appraisal
costs, commitment fees and interest payable to the Lender under the Loan,
premiums for insurance, marketing, advertising and leasing costs, brokerage
commissions, legal fees, accounting fees, overhead and administrative costs, and
all other expenses which are expenditures relating to the Project and are not
Direct Costs.
Junior Creditor. Wolf Mountain Resort L.C., a Utah limited liability
company with a place of business in Park City, Utah.
Land. The real property located on 1.902 acre site located on or about
The Canyons Drive, Snyderville, Summit County, Utah known as "Sundial Lodge
Buildings 8 and 9" as described in Exhibit A to the Security Deed, together with
the Easement Agreements which shall include easements for access, parking,
construction and construction staging and storage, signage, ski on and ski off
access, utilities, drainage and other purposes in order to permit the
functioning of the Improvements as a condominium ski area hotel.
Lease. Leases, licenses and agreements, whether written or oral,
relating to the use or occupation of space in the Improvements or on the Land by
Persons other than the Borrower.
Lender. KeyBank National Association, its successors and assigns.
Loan. The construction loan in the amount of up to $29,000,000 which is
the subject of this Agreement.
Loan Amount. The sum of $29,000,000 or Seventy-Seven Percent (77.0%) of
the value of the Project as completed as determined by the Appraisal approved by
Lender, whichever is less, to be advanced as construction progresses and in
accordance with the terms and conditions specified.
Loan Documents. This Agreement, the Note, the Indemnity Agreement, the
Guaranty, the Subordination Agreement, the Debt Subordination Agreement, and the
Security Documents, the Subordination Agreement from the Junior Creditor, and
all other agreements, documents and instruments now or hereafter evidencing,
securing or otherwise relating to the Loan.
Maturity Date. The earlier to occur of Eighteen (18) months from the
date of this Agreement or June 30, 2000, whichever date occurs first.
Mortgaged Property. The Land [including the Easement Agreements], the
Improvements and the Personal Property.
Note. The Promissory Note.
Obligations. The indebtedness, obligations and liabilities of the
Borrower to the Lender existing on the date of this Agreement or arising
thereafter, direct or indirect, joint or several, absolute or contingent,
matured or unmatured, liquidated or unliquidated, secured or unsecured, arising
by contract, operation of law or otherwise, to the extent that any such
obligation arises or is incurred under this Agreement or any of the other Loan
Documents or in respect of any of the Advances or the Note or other instruments
at any time evidencing any thereof.
Permitted Encumbrances. Those encumbrances on the Mortgaged Property
permitted by the Security Deed.
Person. Any individual, corporation, trust, partnership or other legal
entity, and any government or any governmental agency or political subdivision
thereof.
Personal Property. All materials, furnishings, fixtures, furniture,
machinery, equipment and all items of tangible personal property now or
hereafter owned or acquired by the Borrower, wherever located, and either (i) to
be located on or incorporated into the Mortgaged Property, (ii) used in
connection with the construction of the Mortgaged Property (iii) to be used in
connection with the operation or maintenance of the Mortgaged Property,
including without limitation all apparatus, fixtures and articles of personal
property owned by the Borrower now or hereafter attached to or used or procured
for use in connection with the operation or maintenance of the Mortgaged
Property (except property belonging to lessees or other occupants of the
Mortgaged Property), together with any and all replacements thereof and
additions thereto.
Plans and Specifications. The plans and specifications for the
Improvements to be prepared by Borrower and reviewed and approved by Borrower's
Architect and Contractor and more particularly identified on Exhibit C attached
hereto.
Project. The Mortgaged Property and Personal Property.
Project Approvals. All approvals, consents, waivers, orders,
agreements, acknowledgments, authorizations, permits and licenses required under
applicable Requirements or under the terms of any restriction, covenant or
easement affecting the Project, or otherwise necessary or desirable, for the
ownership and acquisition of the Mortgaged Property, the construction and
equipping of the Improvements, and the use, occupancy and operation of the
Project following completion of construction of the Improvements, whether
obtained from a Governmental Authority or any other Person.
Project Budget. The budget for total estimated Project Costs attached
hereto as Exhibit D, which includes: (a) a line item cost breakdown for Direct
Costs by trades, jobs and subcontractors; (b) a line item cost breakdown for
Indirect Costs; and (c) a schedule of the sources of funds to pay Project Costs,
indicating by item the portion of Project Costs to be funded through the Loan
and Required Equity Funds.
Project Costs. The sum of all Direct Costs and Indirect Costs that will
be incurred in connection with the acquisition of the Land and the construction,
equipping and completion of the Improvements constituting the Project.
Promissory Note. The commercial note in the principal face amount of
the Loan Amount from Borrower to Lender evidencing the Loan, to be in form and
substance satisfactory to the Lender.
Purchase and Sale Agreements. The purchase and sale agreements for
individual Residential Units in the Project, to be in form and substance
acceptable to Lender.
Real Estate. All real property at any time owned, leased (as lessee or
sublessee) or operated by the Borrower.
Required Equity Funds. Such amount as the Lender shall determine from
time to time pursuant to SECTION 9.16 hereof.
Requirements. Any law, ordinance, code, order, rule or regulation of
any Governmental Authority relating in any way to the acquisition and ownership
of the Project, the construction of the Improvements, or the use, occupancy and
operation of the Project following the completion of construction of the
Improvements, including those relating to subdivision control, zoning, building,
use and occupancy, fire prevention, health, safety, sanitation, handicapped
access, historic preservation and protection, tidelands, wetlands, flood
control, access and earth removal, and all Environmental Laws.
Residential Units. The 149 individual Condominium Units created under
the Declaration of the Condominium which are the subject of the Purchase and
Sale Agreements.
Security Agreement. The Commercial Security Agreement pursuant to which
the Borrower grants a security interest in and to the personal property forming
the Project, such Security Agreement to be in form and substance satisfactory to
the Lender.
Security Deed. The Deed of Trust and Security Agreement pursuant to
which the Borrower grants a mortgage lien and security interest in and to the
Project, such Security Deed to be in form and substance satisfactory to the
Lender, including any supplements thereto in order to include all Easement
Agreements.
Security Documents. The Security Deed, the Security Agreement, the
Assignment of Project Documents, the Assignment of Declarant Rights, the
Assignment of Purchase and Sale Agreements, Assignment of Income and Revenues,
the Financing Statements, the Guaranty from the Guarantor and any other
agreement, document or instrument now or hereafter securing the Note.
Subordination Agreement. The Subordination Agreement from Junior
Creditor subordinating Junior Creditor's claims, security interest and mortgage
liens under a certain $2,097,495.60 loan secured by a junior deed of trust, to
be in form and substance satisfactory to the Lender.
Survey. An ALTA/ACSM survey of the Land and the Improvements, such
survey to be satisfactory to the Lender in form and substance, provided that an
update of the 1997 survey shall be acceptable so long as the surveyor
recertifies such survey to Lender and the Title Insurance Company agrees to
provide survey coverage thereunder.
Surveyor Certificate. With respect to any Survey, a certificate
executed by the surveyor who prepares such Survey dated as of a recent date and
containing such information relating to the Project as the Lender or the Title
Insurance Company may require, such certificate to be satisfactory to the Lender
in form and substance.
Taking. Any condemnation for public use of, or damage by reason of,
the action of any Governmental Authority, or any transfer by private sale in
lieu thereof, either temporarily or permanently.
Title Insurance Company. First American Title Insurance Company with a
place of business at Salt Lake City, Utah.
Title Policy. An ALTA standard form title insurance policy issued by
the Title Insurance Company (with such reinsurance or co-insurance as the Lender
may require, any such reinsurance to be with direct access endorsements) in an
amount not less than the Loan Amount insuring the priority of the Security Deed
and each advance under the Loan, and that the Borrower holds marketable fee
simple title to the Project, subject only to such exceptions as the Lender may
approve and which shall not contain exceptions for persons in occupancy or
matters which would be shown by a survey, shall not insure over any matter
except to the extent that any such affirmative insurance is acceptable to the
Lender in its sole discretion, and shall contain a pending disbursements clause
or endorsement and such other endorsements and affirmative insurance as the
Lender in its discretion may require.
SECTION 2. AGREEMENT TO MAKE ADVANCES; LIMITATIONS.
SECTION 2.1. Agreement to Make Advances. Subject to the terms and
conditions of this Agreement and pursuant to the Note, the Lender agrees to lend
to the Borrower and the Borrower may borrow from time to time between the
Closing Date and the Maturity Date upon submission by the Borrower of a Draw
Request in accordance with SECTION 3.1, such amounts as are requested by the
Borrower up to a maximum aggregate principal amount equal to the Loan Amount to
pay for the acquisition of the Land and the Project Costs actually incurred by
the Borrower and reflected in the Project Budget as being funded as a part of
the Loan.
Each Draw Request for an Advance hereunder shall constitute a
representation and warranty by the Borrower that the conditions set forth in
this Agreement have been satisfied on the date of such Draw Request.
On the Maturity Date, the Lender's obligation to make advances on the
Loan shall terminate, provided however that Lender may at its option make
advances on the Loan after the Maturity Date without waiving its right to
terminate such continuing advances.
SECTION 2.2. Project Budget. The Project Budget reflects, by category
and line items, the purposes and the amounts for which funds to be advanced by
the Lender under this Agreement are to be used.
SECTION 2.3. Amount of Advances. In no event shall the Lender be
obligated to advance more than the Loan Amount. In no event shall any Advance
for Direct Costs of constructing the Improvements exceed an amount equal to:
(a) the total value of the labor, materials, fixtures, machinery
and equipment completed, approved and incorporated into the
Land or the Improvements prior to the date of the Draw Request
for such Advance, less
(b) subject to the provisions of SECTION 2.7 hereof, retainage in
an amount equal to ten percent (10.0%) of such total value,
provided that for the Construction Contract the 10% retainage
shall only apply to the first 50% of the total contract price
with any reduction in any other contracts to be based on the
prior written consent of Lender, with no retainage required
thereafter if no Event of Default is outstanding
("Retainage"), less
(c) the total amount of any Advances previously made by the
Lender for such Direct Costs.
Retainage shall be advanced by the Lender upon satisfaction of the
conditions set forth in SECTION 12.6; provided however that upon substantial
completion of the Improvements, compliance with the other provisions of SECTION
12.6 and approval of the Project for occupancy such that purchasers of
Residential Units under the Purchase and Sale Agreements are required to proceed
to closing, the Retainage may be advanced but reserving the greater of 200% of
the Direct Cost of completion of incomplete items until final completion of all
the Improvements to be provided by Borrower.
With respect to any other Direct Costs and all Indirect Costs, in no
event shall any Advance exceed an amount equal to the amount of such Direct
Costs and Indirect Costs approved by the Lender, incurred by the Borrower prior
to the date of the Draw Request for such Advance, and theretofore paid or to be
paid with the proceeds of such Advance, less the total amount of any Advances
previously made by the Lender for such Direct Costs and Indirect Costs.
SECTION 2.4. Quality of Work. No Advance shall be due unless the work
done for such Advance is then done in a good and workmanlike manner and without
defects, as confirmed by the report of the Construction Inspector.
SECTION 2.5. Cost Overruns and Savings. If the Borrower becomes aware
of any increase in Project Costs, the Borrower shall promptly notify the Lender
in writing and promptly submit a revised Project Budget to the Lender for its
approval. If there is an increase in Project Costs, no further Advances need be
made by the Lender until (a) the revised Project Budget is approved by the
Lender, and (b) the Borrower has deposited with the Lender (or made other
provision approved by Lender) any additional Required Equity Funds. If the
revised Project Budget indicates a decrease in a category or line item of
Project Costs, no reductions in Project Costs will be made or savings
reallocated by the Borrower unless and until (c) the revised Project Budget is
approved by the Lender, and (d) in the case of decreases in a category or line
item of Direct Costs, the Borrower has furnished evidence satisfactory to the
Lender that related work has been satisfactorily completed in accordance with
the Plans and Specifications and paid for in full.
SECTION 2.6. Contingency Reserve. The amount allocated as Contingency
Reserve in the Project Budget, namely the sum of One Million Three Hundred and
Eighty Three Thousand Eight Hundred Dollars ($1,383,800.00), is not intended to
be disbursed and will only be disbursed upon the prior approval of the Lender.
The disbursement of a portion of Contingency Reserve shall in no way prejudice
the Lender from withholding disbursement of any further portion of Contingency
Reserve.
SECTION 2.7. Stored Materials. Lender shall not be required to disburse
any funds for any materials, furnishings, fixtures, machinery or equipment not
yet incorporated into the Land or Improvements ("Stored Materials"), except with
the prior written consent of Lender which shall not be unreasonably withheld and
subject to Lender's receipt of a perfected first security interest in such
Stored Materials. Any disbursement for the cost of Stored Materials shall be
subject to retainage in an amount equal to ten percent (10.0%) for the first 50%
of the total price of the Construction Contract unless otherwise agreed by
Lender (thereafter no retainage shall be required) and shall be contingent upon
the Lender receiving satisfactory evidence that:
(a) the Stored Materials are ready for incorporation into the Land or
the Improvements and shall be so incorporated within a period of
30 days;
(b) the Stored Materials are stored at the Land, at a site controlled
by the Borrower, or at such other site as the Lender shall
approve, and are fully insured and protected against theft and
damage;
(c) the Stored Materials have been paid for in full or will be paid
for with the retainage funds to be disbursed and all lien rights
or claims of the supplier have been released or will be released
upon payment with disbursed funds;
(d) the Lender has or will have upon payment with disbursed funds a
perfected, first priority security interest in the Stored
Materials; and
(e) the Stored Materials are insured for an amount equal to their replacement
cost.
SECTION 3. MAKING THE ADVANCES.
SECTION 3.1. Draw Request. At such time as the Borrower shall desire to
obtain an Advance, the Borrower shall complete, execute and deliver to the
Lender the Borrower's Requisition in the form of Exhibit E attached hereto
(hereinafter referred to as "Borrower's Requisition"), accompanied by:
(a) a completed and fully itemized Application and Certificate for
Payment (AIA Document G702 or similar form approved by the Lender)
containing the certification of the Contractor and either the
Borrower's Architect or the Construction Inspector as to the
accuracy of same,
(b) copies of requisitions and invoices from subcontractors and
materialmen supporting all items of cost covered by such
application;
(c) written lien waivers from the Contractor for the current Draw
Request and, upon request from Lender from such subcontractors and
materialmen for work done and materials supplied by them which
were paid for pursuant to the next preceding Draw Request in an
amount in excess of $5,000.00;
(d) a written request of the Borrower for any necessary changes in the
Plans and Specifications, the Project Budget, the Disbursement
Schedule or the Construction Schedule;
(e) copies of all change orders and construction change directives,
accompanied by a change order summary prepared by and executed by
the Borrower, copies of all material subcontracts, and, to the
extent requested by the Lender, of all material inspection or test
reports and other documents relating to the construction of the
Improvements, not previously delivered to the Lender; and
(f) If the Borrower's Requisition includes payment for Stored
Materials it shall be accompanied by evidence as to the
satisfaction of the requirements set forth in SECTION 2.7 hereof;
(g) such other information, documentation and certification as the
Lender shall reasonably request.
SECTION 3.2. Notice and Frequency of Advances. Each Draw Request shall
be submitted to the Lender at least ten (10) business days prior to the date of
the requested Advance, and no more frequently than once each month.
SECTION 3.3. Deposit of Funds Advanced. The Borrower shall open and
maintain a non-interest bearing loan checking account with the Lender (the "Loan
Checking Account"). Absent a Default or Event of Default, the Lender shall
deposit the proceeds of each Advance into the Loan Checking Account.
At the request of Borrower or upon an Event of Default with notice to
Borrower, at its option the Lender may make any or all Advances under the Loan
to any Person to whom the Lender in good faith determines payment is due.
SECTION 3.4. Advances Do Not Constitute a Waiver. No Advance shall
constitute a waiver of any of the conditions to further Advances nor shall any
such Advance have the effect of precluding the Lender from thereafter declaring
a failure to satisfy a condition to be an Event of Default.
SECTION 4. THE NOTE; INTEREST; MATURITY AND PREPAYMENT.
SECTION 4.1 Loan Facility. Loan Facility shall be a construction loan
in the maximum amount of Twenty-Nine Million Dollars ($29,000,000.00) and shall
be used by the Borrower in accordance with the Project Budget to construct the
Improvements on the Mortgaged Property, being land, buildings and improvements
constituting a resort condominium project in Snyderville, Summit County, Utah
known as the "Sundial Lodge at The Canyons" consisting of: 149 Residential
Units, and the one Commercial Unit. Lender shall not be obligated to advance
more than 77% of the Appraised value of the Mortgaged Property.
SECTION 4.2. The Note. The obligation of the Borrower to pay the Loan
Amount or, if less, the aggregate unpaid principal amount of all Advances made
by the Lender hereunder, plus accrued interest thereon, and other fees shall be
evidenced by the Note. In the event the Note is lost, destroyed or mutilated at
any time prior to payment in full of the indebtedness evidenced thereby, the
Borrower shall execute a new note substantially in the form of the relevant
Note. The Note shall not be necessary to establish the indebtedness of the
Borrower to the Lender on account of Advances made under this Agreement. Each
Advance shall bear interest in accordance with the Note.
Borrower shall reduce the principal balance of the Loan by 100% of the net
sale proceeds of each Residential Condominium Unit. The foregoing principal
reductions may be accomplished through the payments required to obtain partial
releases of individual Residential Units, but lack of Residential Unit sales
shall not excuse Borrower's obligation to pay the entire loan balance on the
Maturity Date, when the entire Note shall be due and payable in full.
No amount prepaid by the Borrower on the Note may be reborrowed.
SECTION 4.3 Partial Releases. Lender agrees to release individual
Residential Units in order to permit their sale to third party purchasers upon
receipt of 100% of the net proceeds of the sale of Residential Units based on
the purchase price as set forth in the Assignment of Purchase and Sale
Agreements, provided that in the event of a default in the Obligations and the
commencement of foreclosure proceedings, such release shall be contingent upon
the Borrower's binding agreement that such release and application of funds to
the Obligations does not waive any otherwise uncured event of default or any
pending foreclosure. To facilitate sales, Lender will provide partial releases
in escrow to First American Title Insurance Company.
SECTION 4.4 Maturity. The Maturity Date of the Loan shall be as
provided in the Note, on which date the Borrower promises to pay all unpaid
principal of Loan facility under the Note in full with accrued interest and
other applicable charges to such date.
SECTION 5. COMMITMENT FEE; PAYMENTS AND COMPUTATIONS; CAPITAL ADEQUACY.
SECTION 5.1. Commitment Fees. The Borrower shall pay to the Lender a
commitment fee in the amount of $217,500.00 upon or before the execution of this
Agreement, of which $108,750.00 has been paid on or before Borrower's acceptance
of Lender's commitment letter.
SECTION 5.2. Funds for Payments. All payments of principal, interest,
fees and any other amounts due under the Note shall be made in accordance with
the Note.
SECTION 5.3 Operating Account. The Borrower shall maintain an operating
deposit account with the Lender. All Advances on the Loan will be made into such
account.
SECTION 6. COLLATERAL SECURITY. The Obligations shall be secured by a
perfected first priority mortgage lien and security interest in the Collateral,
whether now owned or hereafter acquired, pursuant to the terms of the Security
Documents, and by the Guaranty.
SECTION 7. CERTAIN RIGHTS OF LENDER.
SECTION 7.1. Right to Retain the Construction Inspector. The Lender
shall have the right to retain, at the Borrower's cost and expense, the
Construction Inspector to perform the following services on behalf of the
Lender:
(a) to review and advise the Lender whether in the opinion of the
Construction Inspector, the Project Budget accurately reflects all
Project Costs;
(b) to review and advise the Lender whether, in the opinion of the
Construction Inspector, the Plans and Specifications are
satisfactory for the intended purposes thereof;
(c) to make periodic inspections of the Improvements for compliance
with the Plans and Specifications and to approve the then current
Draw Request, and to advise the Lender of the anticipated cost of
and time for completion of construction of the Improvements and
the adequacy of any Contingency Reserve;
(d) to review and advise the Lender on any proposed change orders or
construction change directives; and
(e) to review the Construction Contract and subcontracts
The reasonable fees of the Construction Inspector shall be paid by the Borrower
forthwith upon billing therefor and expenses incurred by the Lender on account
thereof shall be reimbursed to the Lender forthwith upon request therefor, but
neither the Lender nor the Construction Inspector shall have any liability to
the Borrower on account of (i) the services performed by the Construction
Inspector, (ii) any neglect or failure on the part of the Construction Inspector
to properly perform its services, or (iii) any approval by the Construction
Inspector of construction of the Improvements. Neither the Lender nor the
Construction Inspector assumes any obligation to the Borrower or any other
Person concerning the quality of construction of the Improvements or the absence
therefrom of defects. The services provided by the Construction Inspector are
for the sole and exclusive benefit of Lender.
SECTION 7.2. Appraisal. The Lender's obligation to fund the Loan is
subject to an Appraisal completed by an approved appraiser and acceptable in all
respects to the Lender indicating that the amount of the Loan, as a percentage
of the value of the Mortgaged Property securing the Loan does not exceed
seventy-seven percent (77%) (the "Loan To Value Ratio").
Lender may require an Appraisal at the Borrower's cost and expense
subsequent to the closing of the Loan, provided that such an Appraisal shall not
be required more frequently than once within any 12 month period after the
closing of the Loan unless there is an outstanding uncured Event of Default
which has arisen in the preceding 90 days or unless required as a component of a
foreclosure or sale under the Security Deed.
If an Appraisal indicates that the value of the Mortgaged Property for
the Loan has decreased so that the Loan To Value Ratio exceeds seventy-seven
percent (77%) then the Borrower must either (i) make payments to the Lender
reducing the amount of the Loan to a point where the Loan To Value Ratio is
seventy-seven percent (77%) or lower, (ii) grant the Lender with mortgage liens
and security interests covering additional collateral satisfactory to the Lender
in order to reduce the Loan To Value Ratio to seventy-seven percent (77%) or
lower, or (iii) repay the Loan in full.
All reasonable costs of such future Appraisals or the grant of
additional collateral required as a result of said appraisal shall be paid by
the Borrower. The costs and expenses incurred by the Lender in obtaining such
Appraisals shall be paid by the Borrower forthwith upon billing or request by
the Lender for reimbursement therefor, and if not paid when due shall be added
to the Loan balance and bear interest.
SECTION 7.3. Charges Against Loan Checking Account. To the extent that
the same are not paid by the respective due dates thereof including any
applicable grace period, then the Lender shall have the right, and the Borrower
hereby irrevocably authorizes the Lender, to charge any account of the Borrower
with the Lender, including the Loan Checking Account, without the further
approval of the Borrower, for (i) any installment of interest due under the Note
and, (ii) any costs or expenses incurred by the Lender which are to be paid or
reimbursed by the Borrower under the terms of this Agreement or any of the other
Loan Documents (including, without limiting the generality of the foregoing, all
Construction Inspector, Appraisal and reasonable attorney's fees) or (iii) any
other sums due to the Lender under the Note, this Agreement or any of the other
Loan Documents. The Borrower shall at all times maintain and keep collected
balances in the Loan Checking Account sufficient to satisfy the foregoing
obligations on the respective due dates thereof.
SECTION 8. REPRESENTATIONS AND WARRANTIES. The Borrower represents and
warrants to the Lender as follows:
SECTION 8.1. Organization; Authority; Etc.
(a) Organization; Good Standing. Each of Borrower and Guarantor is a
corporation duly organized and is validly existing and in good standing under
the laws of the State of Maine and duly authorized to do business in the State
of Maine, and Borrower is duly authorized to do business in the State of Utah.
The Borrower has all requisite power to own its property and conduct its
business as now conducted and as presently contemplated. Borrower was organized
solely for the purpose of the development, construction, ownership, operation
and sale of the Mortgaged Property and no other purpose.
(b) Authorization. The execution, delivery and performance of this
Agreement and the other Loan Documents and the transactions contemplated hereby
by Borrower and Guarantor (i) are within the authority of such Person, (ii) have
been duly authorized by all necessary proceedings on the part of such Person,
(iii) do not conflict with or result in any breach or contravention of any
provision of law, statute, rule or regulation to which such Person is subject or
any judgment, order, writ, injunction, license or permit applicable to such
Person or any Indebtedness to such Borrower and Guarantor are a party and (iv)
do not conflict with any provision of the articles of incorporation or bylaws
of, or any agreement or other instrument binding upon, such Person.
(c) Enforceability. The execution and delivery of this Agreement and the
other Loan Documents to which each Borrower and Guarantor is a party will result
in valid and legally binding obligations of such Person enforceable against it
in accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting generally the enforcement of
creditors' rights and except to the extent that availability of the remedy of
specific performance or injunctive relief is subject to the discretion of the
court before which any proceeding therefor may be brought.
SECTION 8.2. Title to Project and other Properties.
(a) Except as disclosed in the Security Deed, the Borrower holds good
clear record and marketable fee simple absolute title to the Mortgaged Property,
and the Personal Property, subject to no other mortgages, leases, conditional
sale agreements, title retention agreements, liens or other encumbrances, other
than the mortgage lien of the Junior Creditor which is subject to the
Subordination Agreement and the Purchase and Sale Agreements subject to the
Collateral Assignment of Purchase and Sale Agreements and which contain
subordination provisions as set forth therein.
(b) Each of the Borrower and Guarantor owns all of the assets reflected
in the balance sheet of the Borrower and Guarantor respectively as delivered to
Lender (except property and assets sold or otherwise disposed of in the ordinary
course of business since that date), subject to no rights of others, including
any mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except as disclosed therein.
SECTION 8.3. Financial Statements. There has been furnished to the
Lender the financial statement of Guarantor for the fiscal period ending October
25, 1998, which has been prepared in accordance with generally accepted
accounting principles and which when considered together with the Schedules of
Guarantor as filed with the U.S. Securities and Exchange Commission, fairly
present the financial condition of Guarantor respectively as at the date
thereof. As of the date of this Agreement, there are no known liabilities or
contingent liabilities of the Borrower and Guarantor which are not disclosed in
said balance sheet and the related notes thereto and said Schedule respectively
other than the Obligations, and the obligations secured by the Permitted Liens.
Since the date of the said Schedules filed with the U.S. Securities and
Exchange Commission , there has occurred no material adverse change in the
financial condition or business of the Borrower or Guarantor, other than changes
in the ordinary course of business that have not had any material adverse
effect.
SECTION 8.5. Franchises, Patents, Copyrights, Etc. The Borrower
possesses all franchises, patents, copyrights, trademarks, trade names, licenses
and permits, and rights in respect of the foregoing, adequate for the conduct of
its business substantially as now conducted without known conflict with any
rights of others.
SECTION 8.6. Litigation. Except as disclosed in Exhibit G, there are no
actions, suits, proceedings or investigations of any kind pending or threatened
against the Borrower or Guarantor before any court, tribunal or administrative
agency or board that, if adversely determined, might, either in any case or in
the aggregate, materially and adversely affect the properties, assets, financial
condition or business of Borrower and Guarantor respectively or materially
impair the right of Borrower and Guarantor respectively to carry on business
substantially as now conducted by it, or result in any material liability which
might affect the Project not adequately covered by insurance or for which
adequate reserves are not maintained on the balance sheet of such Person, or
which question the validity of this Agreement or any of the other Loan
Documents, or which will adversely affect the ability of the Borrower to
construct, use and occupy the Improvements or to pay and perform the
Obligations.
SECTION 8.7. No Materially Adverse Contracts, Etc. Except as disclosed
in Exhibit G, Borrower and Guarantor respectively are not subject to any
corporate or other legal restriction, or any judgment, decree, order, rule or
regulation that has or is expected in the future to have a materially adverse
effect on the business, assets or financial condition of the Borrower or
Guarantor respectively. The Borrower is not a party to any contract or agreement
that has or is expected to have any materially adverse effect on the Borrower.
SECTION 8.8. Compliance With Other Instruments, Laws, Etc. Except as
disclosed in Exhibit G, the Borrower and Guarantor respectively are not in
violation of their articles of incorporation, by-laws, or any agreement or
instrument to which they may be subject or by which they or any of they
properties may be bound, including without limitation any Indebtedness or any
decree, order, judgment, statute, license, rule or regulation, in any of the
foregoing cases in a manner that could result in the imposition of material
penalties or materially and adversely affect the financial condition, properties
or business of the Borrower or Guarantor respectively.
SECTION 8.9. Tax Status. Each of the Borrower and Guarantor (a) has
made or filed all federal and state income and all other tax returns, reports
and declarations required by any jurisdiction to which they are is subject and,
(b) have paid all taxes and other governmental assessments and charges shown or
determined to be due on such returns, reports and declarations, except those
being contested in good faith and by appropriate proceedings pursued with
diligence. There are no unpaid taxes in any material amount claimed to be due by
any taxing authority, and the Borrower and Guarantor know of no basis for any
such claim.
SECTION 8.10. No Event of Default. No Default or Event of Default has
occurred and is continuing under the Loan Documents or any other loan
obligations or documents to which Borrower is a party.
SECTION 8.11. Absence of Other Liens, Etc. There is no financing
statement, security agreement, chattel mortgage, real estate mortgage or other
document filed or recorded with any filing records, registry, or other public
office, that purports to cover, affect or give notice of any present or possible
future lien on, or security interest in any Collateral or any rights relating
thereto.
Borrower shall obtain and record a Subordination Agreement from the
Junior Creditor covering the Mortgaged Property, including without limitation
the Easement Agreements.
SECTION 8.12. Setoff, Etc. The Collateral and the Lender's rights with
respect to the Collateral are not subject to any setoff, claims, withholdings or
other defenses. The Borrower is the owner of the Collateral free from any lien,
security interest, encumbrance and any other claim or demand except as permitted
in the Security Deed and the junior mortgage in favor of the Junior Creditor
subject to the Subordination Agreement.
SECTION 8.13. Environmental Compliance. Except as set forth in Schedule
8.13 attached hereto, the Borrower is in full compliance with the
representations, covenants and warranties regarding the Environmental Laws and
Hazardous Materials as set forth in the Security Deed.
SECTION 8.14. Subsidiaries. The Borrower has no Subsidiaries. Borrower
is a wholly owned subsidiary of Guarantor.
SECTION 8.15. Availability of Utilities. All utility services necessary
and sufficient for the construction, development and operation of the Project
for its intended purposes are presently available to the boundaries of the
Mortgaged Property with respect to which the Security Deed creates a valid and
enforceable first lien, including, but not limited to, water supply, storm and
sanitary sewer, electric and telephone facilities, cable television, and
drainage, with the certificate of an independent professional engineer or other
evidence acceptable to Lender that such utility services are available.
SECTION 8.16. Access/Utilities/Independent Building. (a) The rights of
way for all roads and utility services necessary for the full utilization of the
Improvements for their intended purposes have been established pursuant to valid
and enforceable private easements set forth in Exhibit A to the Security Deed or
shall be established pursuant to Easement Agreements to the satisfaction of
Lender, and all such roads and utility lines shall have been completed, or all
necessary steps have been taken by the Borrower and/or such Governmental
Authority to assure the complete construction and installation thereof prior to
the date upon which access to the Project via such roads will be necessary. All
curb cuts, driveways, water supplies, electrical, fire protection, subsurface
sanitary sewer and storm water lines shown on the Plans and Specifications are
presently existing or have been fully approved by the appropriate Governmental
Authority.
The Land and Improvements are fully independent in all respects
including, without limitation, in respect of parking, structural integrity,
heating, ventilating and air conditioning, plumbing, mechanical and other
operating and mechanical systems, fuel, and electrical, sanitation, drainage,
drinking water systems, or binding arrangements shall be established under the
Easement Agreements to the Lender's satisfaction .
Borrower shall seek to have the Land separately assessed for purposes of
real estate tax assessment and payment. Until such separate assessment, Borrower
shall pay or cause to be paid all real estate taxes on the Land.
The Land and Improvements and building service equipment, sewage
disposal facilities, parking, and all paved or landscaped areas related to or
used in connection with the Improvements are located wholly within the perimeter
lines of the Land including the Easement Agreements.
The Land and all Condominium units shall have an easement for direct
access to snow skiing trails under the Easement Agreements.
SECTION 8.17. Condition of Project. Neither the Project nor any part
thereof is now damaged or injured as result of any fire, explosion, accident,
flood or other casualty or has been the subject of any Taking, and to the
knowledge of the Borrower, no Taking is pending or contemplated.
SECTION 8.18. Compliance with Requirements. The Plans and
Specifications and construction of the Improvements pursuant thereto and the use
and occupancy of the Project contemplated thereby comply with all Requirements.
SECTION 8.19. Project Approvals. Except as set forth on Schedule
8.19(a) hereto, the Borrower has obtained all Project Approvals and fully
complies with all Requirements without any variances or waivers. Except as set
forth on Schedule 8.19(a) hereto, all Project Approvals obtained by the Borrower
as listed and described on Schedule 8.19(b) hereto have been validly issued and
are in full force and effect. The Borrower has no reason to believe that any of
the Project Approvals not heretofore will not be obtained in the ordinary course
following completion of the Improvements in accordance with the Plans and
Specifications.
SECTION 8.20. Construction Contract. The Construction Contract shall be
in full force and effect with a maximum guaranteed price of $33,225,000.00 and
both the Borrower and the Contractor shall thereafter be full compliance with
their respective obligations under the Construction Contract. The work to be
performed by the Contractor under the Construction Contract is the work called
for by the Plans and Specifications, and all work required to complete the
Improvements in accordance with the Plans and Specifications is provided for
under the Construction Contract.
SECTION 8.21. Other Contracts. Except as provided in the Project
Budget, the Borrower has made no contract or arrangement of any kind or type
whatsoever (whether oral or written, formal or informal), the performance of
which by the other party thereto could give rise to a lien or encumbrance on the
Project.
SECTION 8.22. Real Property Taxes; Special Assessments. There are no
overdue, unpaid or outstanding real estate or other taxes or assessments on or
against the Project or any part thereof which are payable by the Borrower or any
prior owner. No abatement proceedings are pending with reference to any real
estate taxes assessed against the Project.
SECTION 8.23. Violations. The Borrower has received no notices of, or
has any knowledge of, any violations of any applicable Requirements or Project
Approvals.
SECTION 8.24 Plans and Specifications. The Borrower has furnished the
Lender with true and complete sets of the Plans and Specifications. The Plans
and Specifications so furnished to the Lender comply with all Requirements, all
Project Approvals, and all restrictions, covenants and easements affecting the
Project, and have been approved by the Contractor, the Borrower's Architect, and
such Governmental Authority as is required for construction of the Improvements.
SECTION 8.25. Project Budget. The Project Budget accurately reflects
all Project Costs.
SECTION 8.26. Feasibility. To the best of Borrower's knowledge, each of
the Construction Schedule and the Disbursement Schedule is realistic and
feasible, and is accurate to date.
SECTION 8.27. Purchase and Sale Agreements; Leases. The Purchase and
Sale Agreements as set forth in the exhibit to the Assignment of Purchase and
Sale Agreements constitute the sole agreements and understandings presently
outstanding which relate to sale of Condominium Units in the Mortgaged Property.
The Purchase and Sale Agreements will general gross sale proceeds totaling
$42,559,700. Borrower has received and invested directly into the Project the
initial deposits under the Purchase and Sale Agreements totaling $3,989,170, and
upon the completion of the roof for the Project, Borrower shall obtain and
utilize and additional deposit in the amount of $3,989,170 for the expenses of
the Project.
Borrower expressly represents to Lender that the use of the purchasers'
deposits under the Purchase and Sale Agreements for the expenses of the Project
is proper and legal under the terms of the Purchase and Sale Agreements, the
Utah Condominium Act and all other applicable laws, regulations and
requirements.
All Purchase and Sale Agreements shall be collaterally assigned to
Lender as security for the Obligations under the Assignment of Purchase and Sale
Agreements. Borrower shall promptly update Lender in writing the status of the
Purchase and Sale Agreements at such intervals and in such form as Lender may
request and in any event no less frequently than once each month, and shall duly
perform its obligations under the Purchase and Sale Agreements. Borrower shall
obtain from First American Title Insurance Company, the escrow agent for the
deposit under the Purchase and Sale Agreements, a letter of agreement upon terms
and conditions satisfactory to Lender pursuant to which the escrow agreement
confirms the deposit balances it is holding, agrees to provide Lender with
information regarding the status of the deposits and acknowledges Lender's
security interest in the deposits subject however to the rights of the
purchasers under the Purchase and Sale Agreements.
Other than the Purchase and Sale Agreements, there are no Leases,
occupancies, rights, privileges or licenses in or to the Residential Units, the
Commercial Unit or any other part of the Mortgaged Property.
No leasing, brokerage or like commissions, fees or payments are due from
the Borrower or any other person to any third party or Affiliate in respect of
the Purchase and Sale Agreements in excess of the amount disclosed to Lender and
as set forth in the Project Budget.
SECTION 8.28. Other Material Real Property Agreements; No Options.
There are no material agreements pertaining to the Mortgaged Property, the
Improvements or the operation or maintenance of either thereof other than as
expressly described in this Agreement (including the Schedules hereto), the
Security Deed, or otherwise disclosed in writing to the Lender by the Borrower;
and no person or entity has any right or option to acquire the Mortgaged
Property or any portion thereof or interest therein.
SECTION 8.29. Effect of Draw Request. Each Draw Request submitted to
the Lender as provided in SECTION 3.1 hereof shall constitute an affirmation
that the representations and warranties contained in SECTION 8 of this Agreement
and in the other Loan Documents remain true and correct as of the date thereof;
and unless the Lender is notified to the contrary, in writing, prior to the
Drawdown Date of the requested Advance or any portion thereof, shall constitute
an affirmation that the same remain true and correct on the Drawdown Date.
SECTION 9. AFFIRMATIVE COVENANTS OF THE BORROWER. The Borrower
covenants and agrees that, so long as the Loan is outstanding or the Lender has
any obligation to make any Advances:
SECTION 9.1. Punctual Payment. The Borrower will duly and punctually
pay or cause to be paid the principal and interest on the Loan and all other
amounts provided for in the Note, this Agreement and the other Loan Documents.
SECTION 9.2. Commencement, Pursuit and Completion of Construction. The
Borrower will continue construction of the Improvements, will diligently pursue
construction of all Improvements in accordance with the Construction Schedule,
will complete construction of the Improvements prior to the Completion Date, at
least 10 days prior to the expiration of the each Purchase and Sale Agreement
for each Unit, all in accordance with the Plans and Specifications, in full
compliance with the Condominium Declaration and all restrictions, covenants and
easements affecting the Project, all Requirements, and all Project Approvals,
and with all terms and conditions of the Loan Documents, the Purchase and Sale
Agreements, and the Condominium Declaration without deviation from the foregoing
and the requirements of the Purchase and Sale Agreements unless the Borrower
obtains the prior approval of the Lender, the purchasers under the Purchase and
Sale Agreement if required, and the surety company or companies issuing any
Payment and Performance Bonds in the amount of not less than the Construction
Contract. The Borrower will pay all sums and perform all such acts as may be
necessary or appropriate to complete such construction of the Improvements, free
from any liens, claims or assessments (actual or contingent) asserted against
the Project for any material, labor or other items furnished in connection
therewith.
SECTION 9.3. Correction of Defects. The Borrower will promptly correct
or cause to be corrected all defects in the Improvements or any departure from
the Plans and Specifications, the Requirements, the Condominium Declaration and
the Purchase and Sale Agreements not previously approved by the Lender and
purchasers.
SECTION 9.4. Records and Accounts. The Borrower will (a) keep true and
accurate records and books of account in which full, true and correct entries
will be made in accordance with generally accepted accounting principles and (b)
maintain adequate accounts and reserves for all taxes (including income taxes),
depreciation and amortization of its properties, contingencies, and other
reserves.
SECTION 9.5. Financial Statements, Certificates and Information. The
Borrower will deliver or cause to be delivered to the Lender:
(a) Guarantor Financial Statements. As soon as practicable, but in any
event not later than one hundred twenty (120) days after the end of
each fiscal year of the Guarantor, the consolidated balance sheet of
the Guarantor at the end of such year and statement of income,
statement of retained earnings and statement of cash flows for such
year, each setting forth in comparative form the figures for the
previous fiscal year and all such statements to be in reasonable
detail, prepared in accordance with generally accepted accounting
principles consistently applied (except where otherwise noted), and
accompanied by an unqualified "audit" opinion for American Skiing
Company prepared by an independent certified public accounting firm
acceptable to Lender with the Guarantor's statement provided at a
consolidating level, and any management letter from such accounting
firm;
(b) Contingent Liabilities. Contemporaneously with the delivery of the
financial statements referred to in clause (a) above, a statement of
all contingent liabilities of the Guarantor which are not reflected in
such financial statements or referred to in the notes thereto, and a
statement of projected cash flows of the Borrower for the current
fiscal year, all in reasonable detail and certified by the principal
financial or accounting officer of the Borrower and Guarantor;
(c) Tax Returns. copies of all federal and state income tax returns as signed
and filed within fifteen (15) days of the last day when due (including any
extensions of the filing date) for Borrower and Guarantor;
(d) SEC Filings. with respect to the Guarantor, copies of all completed Forms
10K, 10Q and 8K filed by Guarantor with the U.S. Securities and Exchange
Commission, including without limitation Guarantor's annual audited
financial statements and quarterly interim statements; and
(e) Other. from time to time such other financial data and information as the
Lender may reasonably request regarding Borrower and Guarantor, including
quarterly internally prepared statements and financial covenant compliance
within 30 days of the end of each quarter.
SECTION 9.6. Year 2000 Compliance: All of Borrower's and Guarantor's
computer hardware and software shall provide the following functions:
(a) consistently handle date information before, during and after January 1,
2000, including, but not limited to, accepting date input, providing date
output and performing calculations on dates or portions of dates;
(b) function accurately in accordance with the specifications of such computer
hardware or software and without interruption before, during and after
January 1, 2000, without any change in operations associated with the
advent of the new century;
(c) respond to two-digit date input in a way that resolves any ambiguity as to
century in a disclosed, defined and predetermined manner; and
store and provide output of date information in ways that are unambiguous as to
century.
SECTION 9.7. Notices.
(a) Defaults. The Borrower will promptly notify the Lender in writing of
the occurrence of any Default or Event of Default, specifying the nature and
existence of such Default or Event of Default and what action the Borrower is
taking or proposes to take with respect thereto.
(b) Environmental Events. The Borrower will promptly give notice to the
Lender (i) of any material violation of any Environmental Law that the Borrower
reports in writing or is reportable by such Person in writing (or for which any
written report supplemental to any oral report is made) to any federal, state or
local environmental agency and (ii) upon becoming aware thereof, of any inquiry,
proceeding, investigation, or other action, including a notice from any agency
of potential environmental liability, or any federal, state or local
environmental agency or board, that in either case involves the Project or has
the potential to materially affect the assets, liabilities, financial conditions
or operations of the Borrower or the Lender's liens or security interests
pursuant to the Security Documents.
(c) Notification of Claims against Collateral. The Borrower will,
immediately upon becoming aware thereof, notify the Lender in writing of any
setoff, claims, withholdings or other defenses to which any of the Collateral,
or the Lender's rights with respect to the Collateral, are subject.
(d) Notice of Nonpayment. The Borrower will immediately notify the
Lender in writing if the Borrower receives any notice of nonpayment for amounts
in excess of $25,000 in the aggregate from all sources, whether oral or written,
from laborers, subcontractors or materialman for any labor or materials
furnished in connection with the construction of the Improvements.
(e) Notice of Litigation and Judgments. The Borrower and Guarantor will
give notice to the Lender in writing within fifteen (15) days of becoming aware
of any litigation or proceedings threatened in writing or any pending litigation
and proceedings affecting the Project or affecting the Borrower or Guarantor or
to which the Borrower is or is to become a party involving an uninsured claim
against the Borrower or Guarantor that could reasonably be expected to have a
materially adverse effect on the Borrower or Guarantor and stating the nature
and status of such litigation or proceedings. The Borrower will give notice to
the Lender, in writing, in form and detail satisfactory to the Lender, within
ten (10) days of any judgment not covered by insurance, final or otherwise,
against the Borrower in an amount in excess of $25,000.00.
SECTION 9.8. Existence; Maintenance of Properties. The Borrower will do or
cause to be done all things necessary to preserve and keep in full force and
effect its existence as a Maine corporation. The Borrower will do or cause to be
done all things necessary to preserve and keep in full force all of its rights
and franchises.
The Borrower (a) will cause the Land and Improvements to be maintained
and kept in good condition, repair and working order and supplied with all
necessary equipment, (b) will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Borrower may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times, and (c)
will continue to engage primarily in the businesses now conducted by it and in
related businesses.
SECTION 9.9. Insurance; Bonds.
(a) The Borrower will obtain and maintain insurance with respect to the
Project as required by the Security Deed.
(b) The Borrower will itself obtain and maintain and will require the
Contractor to obtain and maintain at all times during the construction of the
Improvements the insurance required by the Construction Contract and such other
insurance as may be reasonably required by the Lender (including, without
limitation, commercial general liability insurance, comprehensive automobile
liability insurance, all-risk contractor's equipment floater insurance,
workmen's compensation insurance and employer liability insurance), and to
contain the written agreement of the insurer to give the Lender ten (10) days
prior written notice of cancellation, nonrenewal, modification or expiration.
(c) The Borrower will require the Borrower's Architect and any other
architect, engineer or design professional providing services in connection with
the construction of the Improvements to obtain, provide evidence of and maintain
professional liability insurance covering any claims asserted with respect to
the Project for such insurance to be in such amounts and form, to include such
coverages and endorsements, and to be issued by such insurers as shall be
approved by the Lender, and to contain the written agreement of the insurer to
give the Lender ten (10) days prior written notice of cancellation, nonrenewal,
modification or expiration.
(d) The Borrower will obtain and provide to the Lender or will cause the
Contractor to obtain and provide to the Lender such Payment and Performance
Bonds in 100% of the amount of the Construction Contract naming the Lender under
a "dual obligee" rider, all in form, and issued by a bonding company
satisfactory to Lender.
SECTION 9.10. Taxes/Liens.
The Borrower will pay all taxes, assessments and other governmental
charges in accordance with the Security Deed.
The Borrower will promptly pay and discharge (by bonding or otherwise)
all claims for labor, material or supplies that if unpaid might by law become a
lien or charge against the Project or any part thereof or might affect the
priority of the lien created by the Security Deed with respect to any Advance
made or to be made by the Lender under this Agreement.
SECTION 9.11. Inspection of Project, Other Properties and Books.
(a) The Borrower shall permit the Lender and the Construction Inspector,
at the Borrower's expense, to visit and inspect the Project and all materials to
be used in the construction thereof and will cooperate with the Lender and the
Construction Inspector during such inspections (including making available
working drawings of the Plans and Specifications); provided that this provision
shall not be deemed to impose on the Lender or the Construction Inspector any
obligation to undertake such inspections.
(b) The Borrower shall permit the Lender to examine the general books of
account of the Borrower (and to make copies thereof and extracts therefrom) and
to discuss the affairs, finances and accounts of the Borrower with, and to be
advised as to the same by, its officers, all at such reasonable times and
intervals as the Lender may reasonably request.
SECTION 9.12. Compliance with Laws, Contracts, Licenses, and Permits. Each
of the Borrower and Guarantor will comply with, (a) the applicable laws and
regulations wherever its business is conducted, including all Environmental Laws
and all Requirements, (b) the provisions of its corporate charter, and other
charter documents and by-laws, (c) all agreements and instruments by which it or
any of its properties may be bound, including the Architect's Contract, the
Construction Contract, the Purchase and Sale Agreements, the Requirements and
all restrictions, covenants and easements affecting the Project, (d) all
applicable decrees, orders and judgments, and (e) all licenses and permits
required by applicable laws and regulations for the conduct of its business or
the ownership, use or operation of its properties, including, in the case of the
Borrower, all Project Approvals.
SECTION 9.13. Project Approvals/Easement Agreements. The Borrower will
promptly obtain all Project Approvals and Easement Agreements not heretofore
obtained by the Borrower and will furnish evidence thereof promptly upon
request. The Borrower shall comply with the Requirements and Project Approvals
to construct the Improvements and to use, occupy and operate the Project
following completion. The Borrower will also promptly obtain all utility
installations and connections required for the Project, and will furnish with
evidence thereof. Lender shall not be required to make or continue any Advances
if Borrower has not obtained the Easement Agreements required under this
Agreement.
SECTION 9.14. Use of Proceeds. The Borrower will use the proceeds to
construct on the Land two 6 story buildings known as buildings 8 and 9 with a
total of 192,559 square feet of space plus 170 underground parking spaces,
containing 149 Residential Units located on the upper 5 floors and a Commercial
Unit on the first floors containing 38,370 square feet of front
desk/administrative areas and commercial space, common spaces and related
infrastructure located at The Canyons Ski Area, Summit County, Utah (the
"Improvements") in accordance with the Plans and Specifications and the
requirements of the Purchase and Sale Agreements and for paying for Project
Costs in accordance with the Project Budget.
SECTION 9.15. Project Costs. The Borrower will pay all Project Costs in
excess of the Loan Amount, regardless of the amount.
SECTION 9.16. Required Equity/Insufficiency of Loan Proceeds.
Borrower shall obtain a minimum Required Equity consisting of $4,000,000
in cash, Land and services supplied by the Guarantor plus the initial deposits
from the Purchase and Sale Agreements for the Residential Units in the amount of
$3,989,170, and of which shall be invested into the Project prior to the first
Loan Advance. In addition within 30 days of the completion of the roof for the
Project, Borrower shall obtain $3,989,170 in additional cash deposits from the
purchasers of the Residential Units under the Purchase and Sale Agreements,
which sum shall be invested directly in the Project before additional Loan
Advances will be made.
If at any time while the Loan Advance is outstanding or the Lender has
any obligation to make Advances hereunder, the Lender shall in its sole
discretion determine that the remaining undisbursed portion of the Loan Advance
for the Project, together with the undisbursed or undrawn balance of Required
Equity Funds and any other sums previously applied to Project Costs or deposited
by the Borrower with the Lender in connection with the Loan, is or will be
insufficient to fully complete and equip the Improvements in accordance with the
Plans and Specifications and the Purchase and Sale Agreements, to pay all other
Project Costs, to pay all interest accrued or to accrue on the Loan during the
term of the Loan from and after the date hereof, and to pay all other sums due
or to become due under the Loan Documents (or as to any budget category or line
item in the Project Budget, if the undisbursed funds for such category or line
item are or will be insufficient to fully pay for the costs attributed to such
budget category or line item), regardless of how such condition may be caused,
the Borrower will, within seven (7) days after written notice of such
determination from the Lender, deposit with and pledge to the Lender such sums
of money in cash as the Lender may require, in an amount sufficient to remedy
the condition described in such notice, and sufficient to pay any liens for
labor and materials alleged to be due and payable at that time in connection
with the Improvements.
At the Lender's option, no further Advances need be made until this
section has been complied with. All such monies deposited shall be additional
security for the Obligations and shall be disbursed by Lender in the same manner
as Advances before any further Advances of the Loan proceeds shall be made.
SECTION 9.17. Laborers, Subcontractors and Materialmen. The Borrower will
furnish to the Lender at its request, from time to time, affidavits listing all
subcontractors, materialmen, and any other Persons who might or could claim
statutory or common law liens and are furnishing or have furnished labor or
material to the Project or any part thereof and their invoices and demands for
payment. The Borrower will also furnish from time to time upon request of
Lender, lien waivers bearing a then current date and prepared on a form
satisfactory to the Lender from the Contractor and such subcontractors or
materialmen as the Lender may designate.
SECTION 9.18. Further Assurances.
(a) Regarding Construction. The Borrower will furnish all instruments,
documents, boundary surveys, footing or foundation surveys, certificates, plans
and specifications, title and other insurance, reports and agreements and each
and every other document and instrument required to be furnished under this
Agreement and the other Loan Documents.
(b) Regarding Preservation of Collateral. The Borrower will execute and
deliver to the Lender such further documents, instruments, assignments and other
writings, and will do such other acts necessary or desirable to establish,
preserve and protect the Collateral, as the Lender may reasonably require.
(c) Regarding this Agreement. The Borrower will cooperate with, do such
further acts and execute such further instruments and documents as the Lender
shall reasonably request to carry out to its satisfaction the transactions
contemplated by this Agreement and the other Loan Documents.
SECTION 9.19. Financial Covenants. The Borrower covenants and agrees that,
so long as the Loan is outstanding:
a) Appraised Value. The outstanding balance of the Loan shall not at
any time exceed seventy-seven percent (77%) of the Appraised Value
of the entire Mortgaged Property. If as a result of any such
Appraisal such ratio is greater than the percentages of the Loan
specified above and Borrower fails to reduce the outstanding Loan
balance or provide additional collateral securing the Loan then
such event shall, at the option of Lender, be an Event of Default
under this Agreement which shall entitle Lender to exercise any
one or more default remedies under the Loan Documents as set forth
in said documents and this Agreement.
b) Borrower's Liquidity. Borrower shall obtain and maintain on hand a
minimum of Ten Million Dollars ($10,000,000.00) in cash or
marketable securities consisting obligations of the United States
of America or securities listed and regularly traded national
securities exchanges in the United States (i.e., New York or
NASDAQ national market securities) and which are acceptable to
Lender, or in the alternative Borrower shall have not less than
$10,000,000 in cash readily available under written, binding
commitments arising out of the Guarantor's $85,000,000
subordinated debt offering all in form and substance acceptable to
Lender.
c) Guarantor Tangible Net Worth. Guarantor shall maintain a tangible
net worth equal to or greater than the sum of: Forty Million
Dollars ($40,000,000); plus, Ten percent (10%) of Guarantor's net
income after July 26, 1998, measured on a consolidated basis as of
the end of each fiscal quarter.
d) Guarantor's EBITDA. Guarantor shall maintain a ratio of "Earnings
Before Interest, Taxes, Depreciation and Amortization of Deferred
Charges" (EBITDA) to cash interest expense liabilities incurred of
not less than 1.25 to 1.00 measured on a consolidated basis as of
the end of each fiscal quarter. "EBITDA" means, calculated for the
period of the previous four fiscal quarters, the consolidated net
earnings of Guarantor plus the aggregate amounts deducted in
determining such net income in respect of interest expenses,
taxes, depreciation and amortization; but not, however, giving
effect to extraordinary losses or gains in calculating net income.
SECTION 10. NEGATIVE COVENANTS OF THE BORROWER. The Borrower covenants and
agrees that, so long as the Loan is outstanding or the Lender has any obligation
to make any Advances:
SECTION 10.1. Restriction on Leases/Release of Purchase and Sale
Agreements. The Borrower will not become a party to or agree to any Lease of the
Mortgaged Property without the prior approval of the Lender, except for leases
of the Commercial Unit upon commercially reasonable terms subject to the prior
consent of Lender which consent shall not be unreasonably withheld.
The Borrower will not amend, supplement or otherwise modify, or
terminate or cancel, or accept the surrender of, or grant any concessions to or
waive the performance of any material obligations of any purchaser under any
Purchase and Sale Agreement for Residential Units, without the prior approval of
the Lender. The Borrower will not, directly or indirectly, cause or permit to
exist any condition which would result in the termination or cancellation of, or
which would relieve the performance of any obligations of any tenant under any
Purchase and Sale Agreement for Residential Units.
SECTION 10.2. Restriction on Change Orders. The Borrower will not cause,
permit or suffer to exist any deviations from the Plans and Specifications and
will not approve or consent to any change order or construction change directive
without the prior approval of the Lender, each purchaser of Residential Units if
required, and the surety company or companies issuing any Payment and
Performance Bonds, if any.
SECTION 10.3. No Amendments, Terminations or Waivers. The Borrower will not
terminate, amend, or otherwise modify the Architect's Contract or the
Construction Contract without the prior approval of the Lender, and in the case
of the Construction Contract, of any surety or surety companies issuing any
Payment and Performance Bonds. The Borrower will not, directly or indirectly,
waive or agree or consent to the waiver of, the performance of any obligations
of any other party under the Architect's Contract or the Construction Contract.
SECTION 10.4. Compliance with Environmental Laws. The Borrower will not do
any of the following: (a) use any of the Real Estate or any portion thereof as a
facility for the handling, processing, storage or disposal of Hazardous
Materials (b) cause or permit to be located on any of the Real Estate any
underground tank or other underground storage receptacle for Hazardous Materials
except in full compliance with Environmental Laws, (c) generate any Hazardous
Materials on any of the Real Estate except in full compliance with Environmental
Laws, or (d) conduct any activity at any Real Estate or use any Real Estate in
any manner so as to cause a Release.
SECTION 10.5 Distributions by Borrower/Transactions with Affiliates.
Borrower shall not declare or pay any dividends or other distributions on
corporate stock, whether in cash or in kind, or make any distributions of any
kind whatsoever out of the property, assets, income or revenues of Borrower on
account of or in respect to all or any of the stock of Borrower, unless
expressly permitted with the specific prior written consent of Lender.
Borrower will not enter into any leases make any loans or payments of
money (other than reasonable salaries and reimbursable expenses incurred in the
ordinary course of Borrower's business) to officers, directors, stockholders or
Affiliates of Borrower.
No officer, trustee, directors, shareholder or employee of Borrower or
any Affiliate of Borrower is presently a party to or shall engage in any
transaction with a Borrower, whether for services, for the rental or sale of
real or personal property, or in conjunction with any other transaction or any
nature, which results in a Borrower making a payment or providing other
consideration in excess of fair market value.
SECTION 10.6 Indebtedness. Borrower shall not create, incur, assume,
guarantee, agree to purchase, repurchase or provide funds in respect of, or
otherwise become or be or remain liable with respect to, any Indebtedness,
recourse or non-recourse, direct or indirect, nor guaranty or otherwise become
liable for the obligations of others, whether financial or contractual, except:
(a) The Indebtedness evidenced by the Note;
(b) The obligations of Borrower as a guarantor of the obligations of
Guarantor under the ASC East, Inc. $120 million 12% Senior
Subordinated Notes due 2006, which obligations shall remain unsecured
are fully subordinated to the obligations of Borrower under the Loan
and this Agreement;
(c) instruments endorsed for deposit in the ordinary course of Borrower's
business operations;
(d) unsecured trade Indebtedness incurred in the ordinary course of
business due not more than 60 days from the date the goods or services
are provided;
(e) The obligations of Borrower to Summit County, Utah under the Easement
Agreements; and
(f) the obligations of Borrower and Guarantor to Junior Creditor in the
principal amount not to exceed $2,097,495.60, provided that such
obligations are subject to the Subordination Agreement as herein
provided.
This limitation shall extend without limitation to guaranties, capitalized
leases, lease purchase agreements, operating or cash flow guaranties, and/or
joint venture or partnership financing.
SECTION 10.7 Liens. Borrower shall not create, incur, assume or permit to
exist any mortgage, lien, charge, security interest, attachment, lien or other
encumbrance on any of its properties or assets, whether voluntary or
involuntary, except:
(a) liens in respect of taxes, fees, assessments and other governmental
charges not yet due provided, however, that Borrower shall not be
required to pay any such tax, assessment, charge and other
governmental charges if the same shall not at the time be due and
payable or can be paid thereafter without penalty or if the validity
thereof shall currently be contested in good faith by appropriate
proceedings and, if Borrower shall have set aside on Borrower's books
adequate reserves with respect to such tax, assessment, or charge and
which do not in the aggregate materially detract from the value of the
property of Borrower or materially impair the sale of Residential
units in the Property;
(b) liens in respect of pledges or deposits under workmen's compensation,
unemployment insurance, social security laws or similar legislation or
in connection with appeal and similar bonds incidental to litigation,
mechanics', laborers' and materialmen's and similar liens, if the
obligations secured by such liens are not then delinquent or if such
obligations are being contested in good faith by Borrower and adequate
reserves have been set aside therefor, and which do not in the
aggregate materially detract from the value of the property of
Borrower or materially impair the use thereof in the operation of its
business or materially impair the sale of Residential units in the
Property;
(c) judgment liens for an award of Ten Thousand Dollars (U.S.$10,000.00)
or less which shall not have been in existence for more than sixty
(60) days after the creation thereof, or if a stay of execution shall
have been obtained, for a period longer than thirty (30) days after
the expiration of such stay; and
(d) junior mortgage in favor of Junior Creditor, subject however to the
Subordination Agreement, which agreement shall include provisions as
follows:
i) requiring the Junior Creditor to join in the creation of the
Condominium Units to the extent required to validly form a
condominium under the Utah Condominium Act.
ii) that insurance proceeds and condemnation awards with respect
to the Mortgaged Property shall be applied in such manner as
Lender may direct, including applicable to the expenses of
reconstruction and rebuilding of the Mortgaged Property or
to reduction of the Loan balance;
iii) providing that 100% of the net sale proceeds of the
Condominium Units shall be applied to the Loan until the
Loan is paid in full, and that the Junior Creditor shall
release its junior lien in order to permit the sale of
Condominium Units to buyers under the Purchase and Sale
Agreements; and
iv) contain such other provisions as Lender may require.
SECTION 10.7 Single Line of Business. Borrower is not engaged and will not
engage in any business other than the development, construction, ownership,
operation and sale of the Mortgaged Property.
SECTION 11. CONDITIONS TO INITIAL ADVANCES. The obligation of the Lender to
make the initial Advances on each Note shall be subject to the satisfaction of
the following conditions precedent:
SECTION 11.1 Initial Advance on Note . The obligation of the Lender to make
the initial Advances on the Note shall be subject to the satisfaction of the
following conditions precedent:
a) Loan Documents. Each of the Loan Documents shall have been duly
executed, acknowledged as required, delivered by the respective
parties thereto and recorded if required with the appropriate
recording office, shall be in full force and effect and shall be in
form and substance satisfactory to the Lender.
b) Purchase and Sale(s). The Purchase and Sale Agreements shall have been
duly executed by the respective parties thereto, shall be in full
force and effect, and shall be in form and substance satisfactory to
the Lender and in accordance with this Agreement and the Collateral
Assignment of Purchase and Sale Agreements.
c) Certified Copies of Organization Documents. With respect to each of
Borrower and Guarantor, Lender shall have received a certificate of
good standing from the Maine Secretary of State, and a certificate of
foreign corporation from the Utah Secretary of State, and if required
by Lender, a certified copy of the articles of incorporation, bylaws
and any other of its organization documents .
d) Resolutions. All actions necessary for the valid execution, delivery
and performance by the Borrower and Guarantor of this Agreement and
the other Loan Documents have been duly and effectively taken,
including without limitation delivery to Lender of resolutions adopted
by its directors authorizing the transactions described herein, each
certified by its clerk as of a recent date to be in full force and
effect.
e) Incumbency Certificate; Authorized Signers. The Lender shall have
received from each of the Borrower and Guarantor an incumbency
certificate, dated as of the Closing Date, signed by a duly authorized
officer of the Borrower and Guarantor and giving the name of each
individual who shall be authorized to act on behalf of Borrower and
Guarantor.
f) Validity of Liens. The Security Documents shall create in favor of the
Lender a legal, valid and enforceable continuing first lien and
security interest in the Collateral.
g) Legal Opinions. The Lender shall have received favorable opinions
addressed to the Lender and dated as of the Closing Date, from ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇. Esq. of Portland, Maine, and from ▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇
of Salt Lake City, Utah in form and substance satisfactory to Lender
and Lender's counsel (i) stating that all Loan documents have been
duly authorized, executed and delivered by Borrower and Guarantor and
are valid, binding and enforceable against Borrower and Guarantor,
including, without limitation, the choice of law provisions of the
Loan documents subject to general principles of equity and bankruptcy
laws of general application, (ii) indicating the due organization,
legal existence and good standing of Borrower, and the Guarantor in
its state of organization and in the state where the Project is
located, (iii) indicating that the Condominium Declaration and the
Purchase and Sale Agreements are in compliance with the Utah
Condominium Act and all related Requirements subject to the recording
thereof (other than land use, building and other specialized codes)
applicable to the creation and sale of the Residential Units, and (iv)
stating that there is no action, suit or proceeding pending or
threatened against or affecting Borrower or the Project, before any
court, administrative agency, arbitrator or governmental authority
h) Certificate re Compliance of Improvements with the Requirements. A
certificate from the Architect or another qualified professional or
attorney acceptable to Lender indicating that the construction of the
Improvements and the use, occupancy and operation thereof following
completion of construction assuming that the improvements are
constructed in accordance with applicable plans and specifications,
that adequate utility services are currently available to service the
Project, and are in compliance with the Requirements.
i) Documentation under with Requirements. Copies of all permits,
correspondence, approvals, votes, actions and agreements evidencing
Borrower's and the Project's compliance with all Requirements.
j) Contractor's Consents. An agreement from the Contractor in favor of
Lender with respect to the Project in form and substance acceptable to
Lender including an agreement to notify Lender in the event of a
default and consenting to continue to the construction of the
Improvement for Lender under the Construction Contract in the event of
a default under any of the Loan Documents. k) Architect's Consents. An
agreement from the Architect in favor of Lender with respect to the
Project in form and substance acceptable to Lender including an
agreement to notify Lender in the event of a default and consenting to
the Lender's use of the plans and specifications prepared by such
Architect, without further cost to the Lender other than as specified
in the Borrower's Architect's contract, in the event of a default
under any of the Loan Documents.
l) Lien Search. The Lender shall have received a certification from Title
Insurance Company (which shall be updated from time to time at the
Borrower's expense upon request by the Lender) and from the Maine and
Utah Secretaries of State that a search of the public records
disclosed no liens, security agreements, mortgages, leases, financing
statements, agreements or other matters which affect the Collateral
and that no real estate taxes, assessments or other assessments are
past due, except for the Security Documents, and for Junior Creditor's
mortgage lien which shall be subject to the Subordination Agreement.
m) Notices. All notices required by any Governmental Authority under
applicable Requirements shall have been filed.
n) Performance; No Default. The Borrower shall have performed and
complied with this Agreement and no Event of Default exists.
o) Representations and Warranties. The representations of warranties made
in the Loan Documents or otherwise made by or on behalf of the
Borrower therewith or after the date thereof shall have been true and
correct in all respects when made and shall also be true and correct
in all respects on the Drawdown Date.
p) Proceedings and Documents. All proceedings in connection with this
Agreement and the other Loan Documents shall be satisfactory to the
Lender in form and substance, and the Lender shall have received all
information and such counterpart originals or certified copies of such
documents and such other certificates, opinions or documents as the
Lender and the Lender's counsel may reasonably require.
q) Construction Documents. Each of the Architect's Contract and
Construction Contract shall have been duly executed and delivered by
the respective parties thereto, shall be in full force and effect, and
shall be in form and substance satisfactory to the Lender. The
Construction Cost shall be established by contracts at least 80% of
the cost which are for a fixed price, and the total Construction Cost
shall not exceed $12,901,183.00 in the aggregate.
r) Subcontracts. The Borrower shall have delivered to the Lender, and the
Lender shall have approved, a list of all subcontractors and
materialmen who have been or, to the extent identified by the
Borrower, will be supplying labor or materials for the Project, a copy
of the subcontract to be used by the Contractor if any, and correct
and complete photocopies of all executed subcontracts and contracts.
s) Junior Creditor Agreements. The Borrower and Guarantor shall deliver
copies of all contracts and agreements with the Junior Creditor to
which they or any predecessors are a party or which may affect the
Mortgaged Property.
t) Other Contracts. The Borrower shall have delivered to the Lender
correct and complete photocopies of all other executed contracts with
contractors, engineers or consultants for the Project, and of all
development, management, brokerage, sales or leasing agreements for
the Project.
u) Construction Inspector Report. The Lender shall have received a
satisfactory report regarding the Plans and Specifications, the
Construction Contract and the Project Budget.
v) Deliveries. The following items or documents shall have been delivered
to the Lender by the Borrower and shall be in form and substance
satisfactory to the Lender:
(i) The commitment for the Title Policy with a current update of
title;
(ii) Duplicate originals or certified copies of all policies of
insurance required to be obtained and maintained during the
construction of the Improvements;
(iii) Evidence that the sum of (i) the proceeds of the Loan and
(ii) the unexpended portions of the Required Equity Funds
delivered to the Lender on the Closing Date or to be
delivered thereafter will be sufficient to cover all Project
Costs reasonably anticipated to be incurred to complete the
Improvements prior to Completion Date, to carry the Project
through the Maturity Date, to satisfy the requirements of
the Purchase and Sale Agreements and to satisfy the
obligations of the Borrower to the Lender under this
Agreement;
(iv) Evidence of access, availability of utilities and Project
Approvals as required by this Agreement and the Purchase and
Sale Agreements;
(v) An environmental site assessment report or reports of one or
more qualified environmental engineering or similar
inspection firms approved by the Lender, which report or
reports shall indicate a condition of the Land and any
existing improvements thereon in all respects satisfactory
to the Lender in its sole discretion and upon which report
or reports the Lender is expressly entitled to rely;
(vi) A Survey of the Land and Surveyor's Certificate;
(vii) Any Required Equity Funds from Borrower in excess of the
Loan proceeds as required in order to complete the Project
shall have been delivered to the Lender, to the extent then
due , and Lender acknowledges that the prepaid expenses
incurred and paid for by Borrower, Guarantor or their
affiliates with respect to the Project as set forth in the
Project Budget shall be considered a part of the Required
Equity subject to submission of appropriate verification
reasonably satisfactory to Lender; and
(viii) Evidence that the Purchase and Sale Agreements remain in
full force and effect.
(ix) Plans and Specifications and approval thereof by any
necessary Governmental Authority;
(x) Evidence that the sum of (a) the proceeds of the Loan and
(b) the unexpended portions of the Required Equity Funds
delivered to the Lender on the Closing Date or to be
delivered thereafter will be sufficient to cover all Project
Costs reasonably anticipated to be incurred to complete the
Improvements prior to Completion Date, to carry the Project
through the Maturity Date, to satisfy the requirements of
the Purchase and Sale Agreements and to satisfy the
obligations of the Borrower to the Lender under this
Agreement;
(xi) The Easement Agreements conforming to the requirements of
this Agreement;
(xii) Acknowledgment and agreement from the escrow agent
conforming to the requirements of this Agreement;
(xiii) The Subordination Agreement and
(xiv) A Draw Request complying with the provisions of SECTION 3.1
hereof.
SECTION 12. CONDITIONS OF SUBSEQUENT ADVANCES. The obligation of the Lender
to make any Advance after the initial Advance on each Note shall be subject to
the satisfaction of the following conditions precedent:
SECTION 12.1. Prior Conditions Satisfied. All conditions precedent to the
initial Advance and any prior Advance shall continue to be satisfied as of the
Drawdown Date of such subsequent Advance.
SECTION 12.2. Performance; No Default. The Borrower shall have performed
and complied with this Agreement, and on the Drawdown Date there shall exist no
Default or Event of Default.
SECTION 12.3. Representations and Warranties. Each of the representations
and warranties made by the Borrower in the Loan Documents or otherwise shall
have been true and correct in all respects on the date on when made and shall
also be true and correct in all material respects on the Drawdown Date of such
Advance (except to the extent of changes resulting from transactions
contemplated or permitted by the Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not adverse).
SECTION 12.4. No Damage. The Improvements shall not have been injured or
damaged by fire, explosion, accident, flood or other casualty, unless the Lender
shall have received insurance proceeds sufficient in the judgment of the Lender
to effect the satisfactory restoration of the Improvements and to permit the
completion thereof on or prior to the Completion Date.
SECTION 12.5. Receipt of the Lender. The Lender shall have received the
following items or documents which shall be in form and substance satisfactory
to the Lender:
(a) Draw Request. A Draw Request complying with the requirements of this
Agreement;
(b) Endorsement to Title Policy. A "date down" endorsement to the Title
Policy indicating no change in the state of title and containing no
survey exceptions not approved by the Lender, which endorsement shall
increase the amount of the Title Policy to the aggregate amount of the
Loan advanced on or before the effective date of such endorsement;
(c) Current Survey. An updated Survey if required by the Title Insurance
Company or the Lender;
(d) Approval by Construction Inspector. Approval of the Draw Request for
such Advance by the Construction Inspector;
(e) Lien Waivers under Construction Contracts. Evidence that the
Construction Contract is in full force and effect, without any change
orders which have not been approved by Lender, and that lien waivers
as required by Lender and the Title Insurance Company have been
obtained from the Contractor and such all contractors, subcontractors,
materialmen or suppliers as Lender may require, all in form and
substance satisfactory to the Lender and the Title Insurance Company;
and
(f) Purchase and Sale Agreements. Evidence that the Purchase and Sale
Agreements remain in full force and effect.
SECTION 12.6. Release of Retainage. In addition to the conditions
hereinbefore set forth in this Article 12, the Lender's obligation to make any
Advance of Retainage shall be subject to receipt by the Lender of the following:
(a) Purchasers. Evidence satisfactory to the Lender that the purchasers
under the Purchase and Sale Agreements have approved the construction
of the Improvements in accordance with the Purchase and Sale
Agreements, such that each purchaser is obligated to close under the
Purchase and Sale Agreements.
(b) Project Approvals. Evidence satisfactory to the Lender that the
Borrower has obtained all remaining Project Approvals from, given all
notices to, and taken all such other actions with respect to, such
Governmental Authority as may be required under the Requirements for
the permanent use and occupancy of the Improvements for their intended
uses.
(c) Approval by Construction Inspector. Notification from the Construction
Inspector to the effect that the Improvements have been completed in a
good and workmanlike manner in accordance with the Plans and
Specifications.
(d) Final Survey. If required by the Title Company or Lender, a final
Survey acceptable to the Lender showing the as-built location of the
completed Improvements.
(e) Certificate of the Borrower's Architect. A certificate of the
Borrower's Architect that the Improvements have been completed in
accordance with the Plans and Specifications and that the Improvements
comply with all applicable Requirements and Project Approvals and are
in all respects (except for work to be performed by tenants) ready for
occupancy.
(f) Payment of Costs. Evidence satisfactory to the Lender that all sums
due for the construction of the Improvements have been paid in full
(or will be paid out of the funds requested to be advanced) and that
no party claims or has a right to claim any statutory or common law
lien arising out of the Project.
(g) Final Lien Waivers. Final lien waivers (in a form satisfactory to the
Lender and the Title Insurance Company) from the Contractor and such
laborers, subcontractors and materialmen as may be requested by the
Lender, duly executed and, if requested, notarized.
(h) Consent by Surety. Satisfactory evidence that the surety company or
companies issuing any Payment and Performance Bonds, if any, have
consented to final payment to the Contractor or any subcontractor
named as principal therein.
(i) Warranties. Copies of the warranty issued by the Contractor
to the Borrower pursuant to the Construction Contract, if
any, and of all other warranties issued to the Borrower by
subcontractors and manufacturers for labor performed and
materials supplied in connection with the construction of
the Improvements.
(j) Insurance. Duplicate original or certified copies of all policies
of insurance required by the Security Deed to be obtained and
maintained by the Borrower following completion of construction of
the Improvements.
SECTION 13. EVENTS OF DEFAULT AND REMEDIES.
SECTION 13.1. Events of Default. If any of the following ("Events of
Default" or if either or both notice or lapse of time is required, then, prior
to such notice and/or lapse of time, "Defaults") shall occur:
(a) Borrower fails to make payment when due and payable within ten (10)
days of when due, of the (i) interest or (ii) principal or any other
amount due on either the Note after same shall have become due,
whether at the stated date of maturity or any accelerated date of
maturity or at any time fixed for payment; or
(b) Borrower fails to pay as and when due and payable any other sums
required to be paid by Borrower under any Loan Documents (including,
but not limited to, any payments required for taxes and insurance
premiums) and continuance of such failure for a period of ten (10)
days after written notice thereof from Lender; or
(c) Borrower fails to duly observe or perform any other term, covenant,
condition or agreement contained in this Agreement or the Loan
Documents, and the continuance of such failure for a period of thirty
(30) days after written notice thereof from Lender, except as
otherwise provided herein; or
(d) any representation or warranty made in writing by or on behalf of
Borrower herein or in connection with any of the transactions
contemplated hereby shall prove to have been false or incorrect in any
material respect on the date as of which made; or
(e) any violation of the loan to value covenants set forth in Article IV
of this Agreement; or
(f) any other event of default which continues beyond any applicable cure
period, either under any other Loan Documents, including without
limitation any Security Documents, Guaranty or under other agreement
entered into between Lender and the Borrower, whether or not it is
governed by or secures this Agreement; or
(g) Borrower or Guarantor fails to pay at maturity or within any
applicable grace period any obligation for money borrowed or credit
advanced, or any other material agreement by which it is bound,
evidencing or securing money borrowed or credit advanced, including
without limitation the loan from the Junior Creditor, and such failure
or default shall continue without waiver thereof --- beyond any period
of grace provided with respect thereto, which failure or default shall
or could have a material adverse effect upon the financial condition
of Borrower or Guarantor provided, however, that Borrower and
Guarantor shall not be required to pay any such third -------- -------
party debt, tax, assessment, charge or levy if the same shall not at
the time be due and payable or can be paid thereafter without penalty
or if the validity thereof shall currently be contested in good faith
by appropriate proceedings and, except as to debts, and if Borrower
shall have set aside on Borrower's books adequate reserves with
respect to such judgment, tax, assessment, charge or levy; or
(h) The entry of a decree or order for relief with respect to Borrower or
Guarantor in an involuntary case under the federal bankruptcy laws, as
now or hereafter constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law or appointing a receiver,
liquidator, trustee, custodian (or similar official) of any Borrower;
or
(i) The commencement by any Borrower and/or Guarantor of a voluntary case
under the federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or the consent by any Borrower or
Guarantor to the appointment of or taking possession by a receiver,
liquidator, trustee, custodian (or other similar official) of any
Borrower or for any substantial part of its property, or the making by
any Borrower of any assignment for the benefit of creditors, or the
insolvency or the failure of any Borrower generally to pay its debts
as such debts become due, or the taking of action by any Borrower in
furtherance of any of the foregoing; or
(j) if any order shall be entered in any proceeding by or against any
Borrower or Guarantor decreeing or permitting the dissolution or
liquidation of Borrower and/or Guarantor or the winding-up of its
affairs and such order shall remain in effect for more than thirty
days, whether or not consecutive; or
(k) if there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty (30) days after notice thereof to
Borrower and/or Guarantor, whether or not consecutive, any final
judgment against Borrower and/or Guarantor beyond any applicable
appeal period, in an amount in excess of $10,000 or which precludes
Borrower's sale of individual Residential units in the Mortgaged
Property; or
(l) if any of the Loan Documents shall be canceled, terminated, revoked or
rescinded otherwise than in accordance with the terms thereof or with
the express prior written agreement, consent or approval of Lender, or
any action at law, suit or in equity or other legal proceeding to
cancel, revoke or rescind any of the Loan Documents shall be commenced
by or on behalf of Borrower and/or Guarantor, or any court or any
other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment,
order, decree or ruling to the effect that, any one or more of the
Loan Documents is illegal, invalid or unenforceable in accordance with
the terms thereof; or
(m) Borrower and/or Guarantor shall be indicted for a federal crime, a
punishment for which could include the forfeiture of any assets of
Borrower and/or Guarantor
THEN and in any such event, Lender may, at its option, without further
notice of its election and without demand, do any one or more of the following,
all of which are authorized by Borrower:
(1) Forthwith suspend or terminate, in the discretion of Lender, the
commitment of Lender to make Loans to Borrower hereunder and
Lender shall be relieved of all obligations to make any Loans to
Borrower, provided that Borrower shall not be relieved of any of
its obligations hereunder or under the Loan Documents, and that
Lender may immediately suspend Advances upon a Default without
need to await the expiration of any notice or cure period
established above;
(2) Declare all amounts owing hereunder or with respect to the Note
due and payable in full together with all interest thereon and all
other payments due hereunder and under the Note, all without
presentment, demand, notice or protest, all of which are hereby
waived;
(3) Exercise any one or all of the rights and remedies of mortgagee,
secured party and creditor under the Loan Documents, the
provisions of the Uniform Commercial Code and any other applicable
law upon default by a borrower, whether by suit in equity, action
at law or other appropriate proceeding, whether for the specific
performance of any covenant or agreement contained in this
Agreement and the other Loan Documents or any instrument pursuant
to which the Obligations to such Lender are evidenced, and, if
such amount shall have become due, by declaration or otherwise,
proceed to enforce the payment thereof or any other legal or
equitable right of such Lender. Such remedies may be exercised in
such order and at such times as Lender deems appropriate, against
all or portions of the Collateral. No remedy herein conferred upon
any Lender or the Agent or the holder of any Note is intended to
be exclusive of any other remedy and each and every remedy shall
be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by
statute or any other provision of law.
(4) Set-off against any and all deposits, accounts, certificate of
deposit balances, claims, or other sums at any time credited by or
due from Lender and against all other property of Borrower in the
possession of any Lender or under its control.
(5) Obtain the appointment of a receiver upon application to a court
of competent jurisdiction as a matter of right and without regard
to the asserted value of the security for the Obligations, with
the receiver having the express power and authority to complete
the Improvements, to perform the Borrower's obligations under the
Purchase and Sale Agreements and to deliver deeds and other
closing documents under the Purchase and Sale Agreements.
Lender may proceed to realize, from time to time, upon any portion or all
of the collateral security for such amounts then due and payable, in such order
as Lender may elect. No remedy herein conferred upon Lender is intended to be
exclusive of any other remedy, and each and every remedy shall be cumulative and
shall be in addition to all other remedies given hereunder or at law.
SECTION 13.2. Completion of Project. If any one or more of the Events of
Default shall have occurred, regardless of whether the obligation to make
Advances has been terminated or the Note accelerated under SECTION 13.1, the
Lender may cause the Project to be completed and may enter upon the Land and
construct, equip and complete the Project, with such changes therein as the
Lender may, from time to time, and in its sole discretion, deem appropriate. In
connection with any construction of the Project, the Lender may either directly
or through a receiver:
(a) use any funds of the Borrower, including any balance which may be held
by the Lender as security or, if Borrower is entitled to the same the
funds held in escrow under the Purchase and Sale Agreements, and any
funds remaining unadvanced under the Loan;
(b) employ existing contractors, subcontractors, agents, architects,
engineers, and the like, or terminate the same and employ others;
(c) employ security watchmen to protect the Project;
(d) make such additions, changes and corrections in the Plans and
Specifications as shall, in the judgment of the Lender, be necessary
or desirable;
(e) take over and use any and all Personal Property contracted for or
purchased by the Borrower, if appropriate, or dispose of the same as
the Lender sees fit;
(f) execute all applications and certificates on behalf of the Borrower
which may be required by any Governmental Authority or Requirements or
contract documents or agreements;
(g) pay, settle or compromise all existing or future bills and claims
which are or may be liens against the Project, or may be necessary for
the completion of the Improvements or the clearance of title to the
Project;
(h) enter into new Purchase and Sale Agreements, and modify or amend
existing Purchase and Sale Agreements, all as the Lender shall deem to
be necessary or desirable;
(i) prosecute and defend all actions and proceedings in connection with
the construction of the Improvements or in any other way affecting the
Land or the Improvements and take such action and require such
performance as the Lender deems necessary under any Payment and
Performance Bonds;
(j) fulfill any obligations of Borrower under the Requirements and the
Purchase and Sale Agreements; and
(k) take such action hereunder, or refrain from acting hereunder, as the
Lender may, in its sole and absolute discretion, from time to time
determine, and without any limitation whatsoever, to carry out the
intent of this SECTION 13.2.
The Borrower shall be liable to the Lender for all costs paid or incurred for
the construction, equipping and completion of the Project, whether the same
shall be paid or incurred hereunder or otherwise. All payments made or
liabilities incurred by the Lender hereunder of any nature whatsoever shall be
deemed Advances under this Agreement and shall be secured by the Security
Documents. To the extent that any costs so paid or incurred by the Lender,
together with all other Advances made by the Lender hereunder, exceed the Loan
Amount, the amount of such excess costs shall be added to the Loan Amount, and
the Borrower's obligation to repay the same, together with interest thereon at
the Default Rate, shall be deemed to be evidenced by this Agreement and secured
by the Security Documents. Lender shall not be obligated to continue such
construction longer than it shall see fit and it may thereafter, at any time,
change any course of action undertaken by it or abandon such construction and
decline to make further payments, whether or not the Project shall have been
completed. The construction, equipping and completion of the Project shall be
deemed to include any action necessary to cure any Event of Default by the
Borrower under any of the terms and provisions of any of the Loan Documents.
SECTION 13.3 Other Remedies. If any one or more of the Events of Default
shall have occurred, then regardless of any other actions taken by Lender, the
Lender may proceed to protect and enforce its rights and remedies under this
Agreement, the Note or any of the other Loan Documents by suit in equity, action
at law or other appropriate proceeding, whether for the specific performance of
any covenant or agreement contained in this Agreement and the other Loan
Documents or any instrument pursuant to which the Obligations are evidenced,
including the appointment of a receiver. No remedy under this Agreement or in
any of the other Loan Documents is intended to be exclusive of any other remedy.
Each and every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or thereunder or now or hereafter existing at law
or in equity or by statute or any other provision of law.
SECTION 13.4 Waivers. The Borrower hereby waives to the extent not
prohibited by applicable law (a) all presentments, demands for performance,
notices of nonperformance (except to the extent required by the provisions
hereof or of any of the other Loan Documents), protests and notices of dishonor,
(b) any requirement of diligence or promptness on the Lender's part in the
enforcement of its rights (but not fulfillment of its obligations) under the
provisions of this Agreement or any of the other Loan Documents, and (c) any and
all notices of every kind and description which may be required to be given by
any statute or rule of law and any defense of any kind which the Borrower may
now or hereafter have with respect to its liability under this Agreement or
under any of the other Loan Documents.
The rights, remedies, powers, privileges, and discretions of the
Lender hereunder shall be cumulative and not exclusive of any rights or remedies
which it would otherwise have. No delay or omission by the Lender in exercising
or enforcing any of the Lender's rights and remedies shall operate as, or
constitute a waiver thereof. No waiver by the Lender of any Event of Default or
of any default under any other agreement shall operate as a waiver of any other
default hereunder or under any other agreement. No single or partial exercise of
any of the Lender's rights or remedies, and no other agreement or transaction,
of whatever nature entered into between the Lender and the Borrower at any time,
either express or implied, shall preclude the other or further exercise of the
Lender's rights and remedies. No waiver by the Lender of any of the Lender's
rights and remedies on any one occasion shall be deemed a waiver on any
subsequent occasion, nor shall it be deemed a continuing waiver. All of the
Lender's rights and remedies and all of the Lender's rights, remedies, powers,
privileges, and discretions under any other agreement or transaction are
cumulative, and not alternative or exclusive, and may be exercised by the Lender
at such time or times and in such order of preference as the Lender in its sole
discretion may determine.
Notice: Under Maine law, no promise, contract or agreement to lend
money, extend credit, forbear from collection of a debt or make any
other accommodation for the repayment of a debt for more than Two
Hundred and Fifty Thousand Dollars ($250,000) may be enforced in court
against Lender unless the promise, contract or agreement is in writing
and signed by Lender. Accordingly, Borrower cannot enforce any oral
promise unless it is contained in a loan document signed by Lender, nor
can any change, forbearance or other accommodation relating to the
loan, this agreement or any other loan document be enforced, unless it
is in writing and signed by Lender.
SECTION 13.5 No Obligation of Lender to Complete Improvements. In the event
that the Lender exercises the right to take possession of the Improvements and
the Project under this Agreement, whether directly or through a receiver, it
shall not be obligated to continue the construction of the Project at all or, if
it does so continue the construction, longer than it shall deem appropriate, in
its sole discretion, and may at any time abandon such construction and equipment
and refuse to make further payments for the account of the Borrower, whether or
not the Project have been completed and without affecting the validity of the
Security Documents and any other security given by the Borrower to the Lender
for advances already made under this paragraph and other provisions of this
Agreement.
SECTION 14. SETOFF. Regardless of the adequacy of any collateral, during
the continuance of any Event of Default, any deposits (general or specific, time
or demand, provisional or final, regardless of currency, maturity, or the branch
of the Lender where such deposits are held) or other sums credited by or due
from the Lender to the Borrower and any securities or other property of the
Borrower in the possession of the Lender may be applied to or set off against
the payment of the Obligations and any and all other liabilities, direct, or
indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, of the Borrower to the Lender.
SECTION 15. EXPENSES. The Borrower agrees to pay (a) the reasonable costs
of producing and reproducing this Agreement, the other Loan Documents and the
other agreements and instruments mentioned herein, (b) any taxes (including any
interest and penalties in respect thereto) payable by the Lender (other than
taxes based upon the Lender's net income), including any recording, transfer,
mortgage or intangibles taxes in connection with the Security Deed, or other
taxes payable on or with respect to the transactions contemplated by this
Agreement, including any taxes payable by the Lender after the Closing Date, (c)
all title insurance premiums, and the reasonable fees, expenses and
disbursements of the Lender's counsel to the Lender incurred in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, the making of each Advance hereunder, and
amendments, modifications, approvals, consents or waivers hereto or hereunder,
(d) the fees, expenses and disbursements of the Lender incurred in connection
with the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, and the making of each Advance hereunder
(including all fees paid to the Construction Inspector, Appraisal fees, and
surveyor fees) (e) all reasonable out-of-pocket expenses (including reasonable
attorneys' and paralegals' fees and costs, and the fees and costs of
consultants, accountants, auctioneers, receivers, brokers, property managers,
appraisers, investment bankers or other experts retained by the Lender in
connection with (i) the enforcement of or preservation of rights under any of
the Loan Documents against the Borrower or the administration thereof after the
occurrence of a Default or Event of Default and (ii) any litigation, proceeding
or dispute whether arising hereunder or otherwise, in any way related to the
Lender's relationship with the Borrower or defending any counterclaims, cross
claims or attacks against Lender by Borrower or any other Person, and (f) all
reasonable fees, expenses and disbursements of the Lender incurred in connection
with UCC searches, UCC filings, title rundowns, title searches or mortgage
recordings. The covenants of this Section shall survive payment or satisfaction
of payment of all amounts owing with respect to the Note.
SECTION 16. INDEMNIFICATION. Except for Lender's gross negligence or
willful misconduct or Lender's breach of Lender's obligations under this
Agreement or the Loan Documents, the Borrower agrees to indemnify and hold
harmless the Lender from and against any and all claims, actions and suits,
whether groundless or otherwise, and from and against any and all liabilities,
losses, damages and expenses of every nature and character arising out of this
Agreement or any of the other Loan Documents or the transactions contemplated
hereby and thereby including, without limitation, (a) any brokerage, leasing,
finders or similar fees, (b) any disbursement of the proceeds of any of the
Advances, (c) any condition of the Project whether related to the quality of
construction or otherwise, (d) any actual or proposed use by the Borrower of the
proceeds of any of the Advances, (e) any actual or alleged violation of any
Requirements or Project Approvals, (f) the Borrower entering into or performing
this Agreement or any of the other Loan Documents or (g) Borrower's failure to
comply with the Purchase and Sale Agreements or any other obligations to the
purchasers of Condominium Units, of (h) with respect to the Borrower and their
respective properties and assets, the violation of any Environmental Law, the
Release or threatened Release of any Hazardous Materials or any action, suit,
proceeding or investigation brought or threatened with respect to any Hazardous
Materials (including, but not limited to claims with respect to wrongful death,
personal injury or damage to property), in each case including, without
limitation, the reasonable fees and disbursements of counsel incurred in
connection with any such investigation, litigation or other proceeding. In
litigation, or the preparation therefor, the Lender shall be entitled to select
its own counsel and, in addition to the foregoing indemnity, the Borrower agrees
to pay promptly the reasonable fees and expenses of such counsel. If, and to the
extent that the obligations of the Borrower under this Section are unenforceable
for any reason, the Borrower hereby agrees to make the maximum contribution to
the payment in satisfaction of such obligations which is permissible under
applicable law.
SECTION 17. LIABILITY OF THE LENDER. No action shall be commenced by the
Borrower for any claim against the Lender under the terms of this Agreement
unless written notice thereof, specifically setting forth the claim of the
Borrower, shall have been given to the Lender at least fifteen (15) Business
Days prior to the commencement of such action. In no event shall the Lender be
liable to the Borrower, or anyone claiming by, under or through the Borrower,
for any special, exemplary, punitive or consequential damages, whatever the
nature of the breach of the terms of this Agreement by the Lender, such damages
and claims therefor being expressly waived by the Borrower.
SECTION 18. RIGHTS OF THIRD PARTIES. This Agreement including without
limitation the obligation to make Advances, are solely and exclusively for the
benefit of the Lender; no other Person may enforce or shall be deemed to be a
beneficiary thereof. In particular, the Lender makes no representations and
assumes no obligations as to third parties concerning the quality of the
construction by the Borrower of the Improvements or the absence therefrom of
defects or Lender's requirement of compliance with this Agreement or the Loan
Documents.
SECTION 19. SURVIVAL OF COVENANTS, ETC. All covenants, agreements,
representations and warranties made herein, in the Note, in any of the other
Loan Documents shall be deemed to have been relied upon by the Lender,
notwithstanding any investigation heretofore or hereafter made by Lender, shall
survive the making of the Advances, and shall continue in full force and effect
so long as any amount due under this Agreement or the Note or any of the other
Loan Documents remains outstanding or the Lender has any obligation to make any
Advances.
SECTION 20. PARTICIPATION; ETC.
SECTION 20.1. Participations. The Lender may sell participations to one or
more banks or other entities in all or a portion of the Lender's rights and
obligations under this Agreement and the other Loan Documents; provided that (a)
any such sale or participation shall not affect the rights and duties of the
Lender hereunder to the Borrower.
SECTION 20.2. Pledge by the Lender. The Lender may at any time pledge all
or any portion of its interest and rights under this Agreement (including all or
any portion of the Note) to any of the twelve Federal Reserve Banks organized
under SECTION 4 of the Federal Reserve Act, 12 U.S.C. SECTION 341. No such
pledge or the enforcement thereof shall release the Lender from its obligations
hereunder or under any of the other Loan Documents.
SECTION 20.3. No Assignment by the Borrower. The Borrower shall not assign
or transfer any of its rights or obligations under any of the Loan Documents
without the prior approval of the Lender.
SECTION 21. RELATIONSHIP. The relationship between the Lender and the
Borrower is solely that of a lender and borrower, and nothing contained herein
or in any of the other Loan Documents shall in any manner be construed as making
the parties hereto joint venturers, partners, fiduciaries or any other
relationship other than lender and borrower.
SECTION 22. NOTICES. Each notice, demand, election or request provided for
or permitted to be given pursuant to this Agreement shall be given as specified
in the Note.
SECTION 23. GOVERNING LAW. This Agreement and each of the other Loan
Documents, except as otherwise specifically provided therein shall for all
purposes be construed in accordance with and governed by the laws of Maine
(excluding the laws applicable to conflicts or choice of law), except to the
extent the Security Documents are required to be governed by the laws of the
State of Utah.
SECTION 24. CONSENT TO JURISDICTION; WAIVERS. THE BORROWER HEREBY
IRREVOCABLY AND UNCONDITIONALLY (A) SUBMITS TO PERSONAL JURISDICTION IN THE
STATES OF MAINE AND UTAH OVER ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, AND (B) WAIVES
ANY AND ALL PERSONAL RIGHTS UNDER THE LAWS OF ANY STATE (I) TO THE RIGHT, IF
ANY, TO TRIAL BY JURY, (II) TO OBJECT TO JURISDICTION WITHIN THE STATES OF UTAH
AND MAINE OR VENUE IN ANY PARTICULAR FORUM WITHIN THE STATES OF UTAH AND MAINE,
AND (III) TO THE RIGHT, IF ANY, TO CLAIM OR RECOVER ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN ACTUAL DAMAGES.
NOTHING CONTAINED HEREIN, HOWEVER, SHALL PREVENT THE LENDER FROM BRINGING ANY
SUIT, ACTION OR PROCEEDING OR EXERCISING ANY RIGHTS AGAINST ANY COLLATERAL AND
AGAINST THE BORROWER, AND AGAINST ANY PROPERTY OF THE BORROWER, IN ANY OTHER
STATE. INITIATING SUCH SUIT, ACTION OR PROCEEDING OR TAKING SUCH ACTION IN ANY
STATE SHALL IN NO EVENT CONSTITUTE A WAIVER OF THE AGREEMENT CONTAINED HEREIN
THAT THE LAWS OF THE STATE OF MAINE SHALL GOVERN THE RIGHTS AND OBLIGATIONS OF
THE BORROWER AND THE LENDER HEREUNDER OR THE SUBMISSION HEREIN BY THE BORROWER
TO PERSONAL JURISDICTION WITHIN THE STATES OF UTAH AND MAINE.
SECTION 25. HEADINGS. The captions in this Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
SECTION 26. COUNTERPARTS. This Agreement and any amendment hereof may
be executed in several counterparts and by each party on a separate
counterpart
originals.
SECTION 27. ENTIRE AGREEMENT, ETC. The Loan Documents and any other
documents executed in connection herewith or therewith express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except as provided in SECTION 28.
Entire Agreement. This Agreement, together with the other Loan
Documents, (a) constitutes the entire and final understanding and agreement of
the parties with respect to the general subject matter hereof, including without
limitation any obligation to lend money or extend credit, or to delay in the
collection or enforcement of any such obligation; (b) supersedes all prior
negotiations, discussions, and agreements with respect thereto; (c) may not be
contradicted by evidence of any alleged oral agreement; and (d) may not be
amended, modified, or rescinded in any manner except by written agreement signed
by the parties which clearly and unequivocally expresses an intent to amend,
modify, or rescind the same.
SECTION 28. CONSENTS, AMENDMENTS, WAIVERS, ETC. Except as otherwise
expressly set forth in any particular provision of this Agreement, any consent
or approval required or permitted to be given by the Lender may be given, and
any term of this Agreement or of any other Loan Document may be amended, and the
performance or observance by the Borrower of this Agreement or such other Loan
Documents, the continuance of any Default or Event of Default may be waived
with, but only with, the written consent of the Lender. No waiver shall extend
to or affect any obligation not expressly waived or impair any right consequent
thereon. No course of dealing or delay or omission on the part of the Lender in
exercising any right shall operate as a waiver thereof or otherwise be
prejudicial thereto. No Advance made by the Lender hereunder during the
continuance or any Default or Event of Default shall constitute a waiver
thereof. No notice to or demand upon the Borrower shall entitle the Borrower to
other or further notice or demand in similar or other circumstances.
SECTION 29. TIME OF THE ESSENCE. Time is of the essence.
SECTION 30. SEVERABILITY. The provisions of this Agreement are severable,
and if any one clause or provision hereof shall be held invalid or unenforceable
in whole or in part, then such invalidity or unenforceability shall affect only
such clause or provision, or part thereof, and shall not in any manner affect
any other clause or provision of this Agreement.
IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
a sealed instrument as of December 18, 1998 at Portland, Maine.
The Canyons Resort Properties, Inc.
by: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Witness its Vice President
KEYBANK NATIONAL ASSOCIATION
by: ▇▇▇▇ ▇▇▇▇
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Witness its Vice President
