EXHIBIT 10(P)
CONSTRUCTION LOAN AGREEMENT
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THIS CONSTRUCTION LOAN AGREEMENT (herein called "Agreement") made and
entered into as of the 11th day of January, 1999 by and between ▇▇▇▇▇ FARGO
BANK, NATIONAL ASSOCIATION, a national banking association (herein called
"Lender"), whose address is c/o Real Estate Group, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇, and ▇▇▇▇ HOLDINGS LIMITED PARTNERSHIP, a Maryland
limited partnership (herein called "Holdings"), and ▇▇▇▇ CENTERS, INC., a
Maryland corporation (herein called "SCI") (SCI and Holdings are hereinafter
collectively referred to as "Borrower"), whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
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ARTICLE 1
DEFINITIONS
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1.1 Definitions. As used in this Agreement, the following terms shall
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have the meanings indicated:
(a) Adjusted Asset Value: Adjusted Asset Value consists of the most
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recent quarter's annualized "EBITDA" (as defined below) (adjusted for property
acquisitions and dispositions) divided by ten percent (10%).
(b) Adjusted EBITDA: Adjusted EBITDA means EBITDA less a capital
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expenditure reserve equal to three percent (3%) of base rents from all property
owned (beneficially or legally) by Holdings, SCI or any Subsidiary.
(c) Affiliate: Any Person ten percent (10%) or more (but less than
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fifty percent (50%)) of the capital stock of any class of which or other equity
interest therein or the economic equivalent thereof, directly or indirectly
(e.g. through any one or more Subsidiaries), is owned separately or in the
aggregate by SCI or Holdings.
(d) Architect: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Associates.
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(e) Base Building. The Improvements other than tenant finishing work
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for space which is intended to be occupied by tenants, such as demising walls,
interior partitions, heating, ventilating and air conditioning laterals, vents
and returns, electrical lines and outlets, lighting fixtures, ceilings, door and
trim work, carpet, paint and wall coverings, all of which is the subject of
disbursement pursuant to this Agreement only under paragraph C.2.(b) of the
Disbursement Schedule attached hereto as Exhibit B.
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(f) ▇.▇. ▇▇▇▇ Entities: The current limited partners of Holdings and
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those Persons controlling, controlled by or under common control with such
current limited partners.
(g) Commitment: An agreement, if any, between Borrower and a financial
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institution or investor acceptable to Lender providing for the purchase or long-
term financing of the Trust Property upon terms and conditions reasonably
acceptable to Lender. If there is no Commitment currently in effect, then the
provisions of this Agreement pertaining thereto shall become effective at such
time as there is an effective Commitment.
(h) Completion Date: The date Substantial Completion of the Base
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Building occurs, but in no event later than October 31, 2000, which date is
subject to extension due to Force Majeure (as defined herein).
(i) Completion Deposit: An amount (if any) calculated by Lender to
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equal the difference between (i) the amount which Lender from time to time
determines to be necessary: to pay all costs to be incurred in connection with
the completion of the development of the Trust Property and the construction,
marketing, ownership, management, maintenance, operation and sale or leasing of
the Improvements in accordance with this Agreement; to pay all sums which may
accrue under the Loan Documents prior to Completion of the Improvements,
including, without limiting the generality of the foregoing, interest on the
Indebtedness to the date of Completion; and to enable Borrower to perform and
satisfy all of the covenants of Borrower contained in the Loan Documents and
(ii) the funds then unadvanced by Lender to Borrower on the Note.
(j) Construction Contracts: Any and all contracts and agreements, if
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any, written or oral, between Borrower (or any of them) and the General
Contractor and any other original contractor (all such contracts being fixed
price or guaranteed maximum and subject to prior approval of Lender after review
of, among other things, the financial statements of each such contractor)
relating in any way to the construction of the Improvements, including the
performing of labor or the furnishing of standard or specially fabricated
materials in connection therewith. Notwithstanding the foregoing, in the case of
tenant improvements, Lender's approval rights only apply to those contractors
and Construction Contracts for space in excess of 20,000 rentable square feet.
Lender agrees that such consent shall not be unreasonably withheld, conditioned
or delayed and be deemed given if not expressly withheld by Lender in writing
within five (5) business days after request for such consent and submission of
the Construction Contract and financial statements and other requested materials
relating to such contract and Construction Contractor.
(k) Construction Start Date: The date construction of the Improvements
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begins, which shall be the date the excavation for the Improvements commences,
but in no event later than June 1, 1999, which date is subject to
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extension due to Force Majeure (as defined herein) but in no event to extend
beyond three months from the applicable date set forth above in this paragraph.
(l) Deed of Trust: The Deed of Trust, Security Agreement and
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Assignment of Leases and Rents of even date herewith executed by Borrower
conveying the Trust Property to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇, ▇▇.,
as Trustees, for the benefit of Lender, as Beneficiary, to secure the repayment
of the Indebtedness and performance of the Obligations, and all amendments
thereto.
(m) EBITDA: EBITDA is the sum of the net income for the period
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analyzed, calculated in accordance with GAAP before deduction or addition of any
extraordinary gains or losses, plus (i) interest expense paid or accrued for the
period, (ii) income taxes paid or accrued for the period, and (iii) depreciation
and amortization expense incurred during the period and (iv) the minority
interests deduction related to operating partnership unit holders. EBITDA shall
include Borrower's pro rata share of EBITDA (as calculated in the foregoing
manner) of Unconsolidated Affiliates.
(n) Event of Default: Any happening or occurrence described in Article
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7 hereof.
(o) Fixed Charges: Fixed Charges shall mean Interest Expense plus
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scheduled principal amortization (excluding balloon payments on loans).
(p) Force Majeure: Any matter beyond the reasonable control of
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Borrower which causes a delay in the performance by Borrower of any of the
terms, covenants, and conditions of this Agreement, which matters shall include,
but not be limited to, labor disputes, governmental regulations or controls,
fire or other casualty, inability to obtain any material or services and acts of
God.
(q) Funds From Operations ("FFO"): FFO shall mean net income, computed
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in accordance with GAAP, before deducting minority interests, gains, or losses
from debt restructurings and sales of properties (inclusive of non-recurring
items such as asset sales or property valuation adjustments), plus real estate
depreciation and amortization expense, and after adjustments for Unconsolidated
Affiliates. Adjustments for Unconsolidated Affiliates will be calculated to
reflect Funds From Operations on the same basis.
(r) General Contractor: The general contractor engaged by Borrower (or
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any of them) and approved by Lender to construct the Improvements or any part
thereof upon in any event review of financial and other information of and
concerning such general contractor to be supplied by Borrower.
(s) Governmental Authority: Any and all courts, boards, agencies,
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commissions, offices or authorities of any nature whatsoever for any
governmental ▇▇▇▇ (▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ or
otherwise) whether now or hereafter in existence.
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(t) Gross Asset Value: Gross Asset Value consists of Adjusted Asset
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Value plus (i) construction in progress as shown on Borrower's balance sheet,
and (ii) cash and equivalents (excluding tenant deposits and other restricted
cash).
(u) Improvements: The improvements described in the Plans, being
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generally described as two (2) five (5) story office/retail buildings totaling
approximately 225,000 rentable square feet with approximately 660 parking spaces
and with related facilities and amenities and tenant improvements required under
Leases.
(v) Indebtedness: The principal of, interest on and all other amounts,
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payments and premiums due under, or secured by the Note, the Deed of Trust, and
any and all other documents now or hereafter executed by Borrower or any other
person or party in connection with the Loan evidenced by the Note.
(w) Independent Inspecting Architect: The architect, engineer, agent,
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consultant or other inspector selected and retained by Lender, at Borrower's
expense, to inspect the construction of the Improvements on behalf of Lender.
(x) Interest Expense: Interest Expense shall mean all paid, accrued or
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capitalized interest for the period, (excluding capitalized interest costs
associated with new construction provided such costs are covered by a
construction loan interest reserve), plus one hundred percent (100%) of any
paid, accrued or capitalized interest incurred, but not previously included for
purposes hereof, on any obligation for which Borrower is wholly or partially
liable under any repayment, interest carry or performance guaranty, plus a pro
rata share of Interest Expense from Unconsolidated Affiliates.
(y) Land: The real estate or interest therein described in Exhibit A
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attached hereto and incorporated herein by this reference, all fixtures or other
improvements situated thereon and all rights, titles and interests appurtenant
thereto.
(z) Leases: Any and all leases, subleases, licenses, concessions or
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other agreements (written or oral, whether now or hereafter in effect) which
grant a possessory interest in and to, or the right to use or enjoy all or any
part of the Trust Property, together with all security and other deposits made
in connection therewith.
(aa) Legal Requirements: (i) Any and all present and future judicial
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decisions, statutes, rulings, rules, regulations, permits, proffers,
certificates or ordinances of any Governmental Authority in any way applicable
to Borrower or the Trust Property, including, without limiting the generality of
the foregoing, the ownership, use, construction, occupancy, possession,
operation, maintenance, alteration, repair or reconstruction thereof; (ii) any
and all covenants, conditions or restrictions contained in any deed or other
form of conveyance or in any other instrument of any nature that relate in any
way or are applicable to the Trust
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Property, or the ownership, use or occupancy thereof; (iii) Borrower's presently
or subsequently effective by-laws and articles of incorporation or partnership,
limited partnership, joint venture, trust or other form of business association
agreement; (iv) any and all Leases; and (v) any and all leases and other
contracts (written or oral) of any nature that relate, in any way, to the Trust
Property and to which Borrower may be bound, including, without limiting the
generality of the foregoing, any lease or other contract pursuant to which
Borrower is granted a possessory interest in the Land.
(bb) Loan Documents: This Agreement, the Note, the Deed of Trust, and
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any and all other documents now or hereafter executed by Borrower (or any of
them) or any other person or party to evidence or secure the payment of the
Indebtedness or the performance and discharge of the Obligations and all
amendments thereto.
(cc) Note: The Promissory Note of even date herewith, executed by
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Borrower, payable to the order of Lender, in the amount of Thirty-Eight Million
and No/100 Dollars ($38,000,000.00), and any and all renewals, amendments,
reinstatements, rearrangements, enlargements, modifications or extensions
thereof or of any promissory note or notes given in substitution therefor.
(dd) Obligations: Any and all of the covenants, warranties,
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representations and other obligations (other than to pay or repay the
Indebtedness) made or undertaken by Borrower (or any of them) to Lender or
others as set forth in the Loan Documents, Leases, Other Agreements or any deed,
conveyance, condition, lease, sublease or other agreement pursuant to which
Borrower is granted a possessory interest in the Land.
(ee) Other Agreements. All agreements, such as architects' contracts,
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engineers' contracts, utility contracts, maintenance agreements and service
contracts, entered into by Borrower which in any way relate to the use,
operation, maintenance, enjoyment or ownership of the Trust Property or which in
any way relate to any Lease, not including Construction Contracts, Leases and
the Loan Documents.
(ff) Permits: Any and all governmental permits, approvals,
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inspections, orders, certificates and the like issued to or for the benefit of
Borrower in connection with the development, construction, use and/or occupancy
of the Trust Property, specifically including, but not limited to, all building,
excavation, sheeting, shoring, foundation, grading, and occupancy permits.
(gg) Permitted Change: Any individual change to the Plans which (A)
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involves a cost less than $250,000.00 whether such change increases or decreases
the total approved costs of the Improvements, and (B) does not delay the
Completion Date; provided, however, that when the aggregate value of all such
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changes exceeds $750,000.00 then each subsequent change shall not be considered
a Permitted Change;
(hh) Person: A natural person, corporation, partnership, limited
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liability company, trust or any other form of business organization.
(ii) Plans: Any and all contracts and agreements, written or oral,
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between Architect and Borrower, together with the plans and specifications, for
the construction of the Improvements, prepared by the Architect, and all
amendments and modifications thereof, and in all events including tenant
improvements (as and when prepared and included or incorporated into the Plans
and the specifications submitted to Lender) irrespective of whether the tenant
plans are prepared by the owner's architect, the tenant's architect, or
otherwise, a true and correct original counterpart of all of which relating to
the Base Building and for tenant improvements for tenant spaces of 20,000 or
more rentable square feet shall be delivered to Lender. Upon request of Lender,
Plans for tenant improvements for tenant spaces of less than 20,000 square feet
shall be delivered to Lender.
(jj) Subsidiary or Subsidiaries: Any Person fifty percent (50%) or
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more of the capital stock of any class or other equity interest therein or the
economic equivalent thereof, directly or indirectly (e.g. through any entity
owned wholly or in part by SCI or Holdings), is owned separately or in the
aggregate by SCI or Holdings or any Subsidiary of either SCI or Holdings, and
whose financial statements are consolidated with those of SCI or Holdings.
(kk) Substantial Completion of the Base Building: When all of the
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following have been delivered to Lender: (i) Certificate of Occupancy (or its
equivalent) from the appropriate Governmental Authority having jurisdiction over
the Trust Property for the Base Building, if the same is issuable by such
authority; (ii) Certificate of Substantial Completion from the Architect
relating to the Base Building; (iii) endorsement from the Title Company deleting
any exception in the Title Insurance relating to completion of the Base Building
and other exceptions specified by Lender which may be deleted pursuant to
applicable regulations; (iv) an Affidavit and full release of liens in
recordable form from the General Contractor and, upon request of Lender, any
such other contractor or subcontractor who has performed work on, or materials
furnished for, the Base Building whose contract therefor has a stated value in
excess of $1,000,000.00; (v) any and all "punch list" items or other items which
remain to be completed and having a cost in the aggregate in excess of
$250,000.00 have been fully and finally completed.
(ll) Title Company: The issuer of the Title Insurance.
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(mm) Title Insurance: A mortgagee's policy of title insurance, all in
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form and substance satisfactory to Lender and containing no exceptions (printed
or otherwise) which are unacceptable to Lender, issued by a title company (or,
if Lender so requires, by several title companies on a re-insured or co-insured
basis, at Lender's option) acceptable to Lender, in the face amount of the Note
and insuring
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that Lender has a first and prior lien on the Trust Property, and containing
such endorsements (including, without limitation, usury, mechanics' lien,
contiguity, access and zoning endorsements) as Lender may request subject only
to the Permitted Encumbrances described in the Deed of Trust.
(nn) Total Indebtedness: Includes recourse and non-recourse mortgage
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debt, unsecured debt, forward equity sales, letters of credit, forward purchase
obligations, capitalized lease obligations, guarantees of indebtedness,
subordinated debt and defined obligations of Borrower including, without
limitation, (i) one hundred percent (100%) of the recourse liability of Borrower
under (x) guarantees of indebtedness or (y) loans where Borrower is liable for
debt as a general partner, and (ii) Borrower's pro rata share of non-recourse
debt in unconsolidated affiliates.
(oo) Trust Property: The Land, Improvements, Leases and Other
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Agreements, all other property (real, personal or mixed) which is conveyed by
the Deed of Trust or any other Loan Document in which a mortgage, lien or
security interest is therein created and all other property (real, personal or
mixed) assigned or on which a lien or security interest is placed or granted to
secure the repayment of the Indebtedness or the performance and discharge of the
Obligations.
(pp) Unconsolidated Affiliate: An Affiliate whose United States
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Federal tax returns are not consolidated with those of either SCI or Holdings.
(qq) Unmatured Event of Default: Any happening or occurrence which
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with notice, the passage of time, or both, would constitute an Event of Default.
ARTICLE 2
BORROWER'S WARRANTIES AND REPRESENTATIONS
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Borrower hereby unconditionally warrants and represents unto Lender as
follows:
2.1 Information: Any and all information, reports, papers and other data
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(including, without limiting the generality of the foregoing, any and all
balance sheets, statements of income or loss, reconciliation of surplus and
financial data of any other kind) heretofore furnished, or hereafter furnished
to Lender by Borrower are, or when delivered will be, to the best of Borrower's
knowledge, information and belief, true and correct in all material respects and
all such materials heretofore furnished to Lender on behalf of Borrower are to
the best of Borrower's knowledge true and correct in all material respects; all
financial data of Borrower have been, or when delivered will have been, prepared
in accordance with generally accepted accounting principles consistently applied
and fully and accurately present, or will present, the financial condition of
the Borrower as of the dates thereof; and with
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respect to the financial data of Borrower heretofore furnished, no materially
adverse change has occurred in the financial condition reflected therein since
the dates thereof, except as otherwise disclosed by Borrower to Lender in
writing.
2.2 Litigation: Except as may be otherwise set forth in that certain
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Closing Certificate and Affidavit of even date herewith, there are no actions,
suits or proceedings of a material nature pending or, to the knowledge of
Borrower, threatened against or affecting (a) Borrower other than those (i)
which arise out of landlord/tenant disputes and (ii) claims for property damage
or personal injury which are covered by insurance, or (b) Borrower with respect
to the Trust Property, or involving the validity or enforceability of the Deed
of Trust or the priority of the lien created thereby; and no event has occurred
(including specifically Borrower's execution of the respective Loan Documents
and Borrower's consummation of the Loan represented thereby) which will violate,
be in conflict with, result in the breach of or constitute (with due notice or
lapse of time, or both) a default under any Legal Requirement or result in the
creation or imposition of any lien, charge or encumbrance of any nature
whatsoever on the Trust Property other than the liens created by or expressly
permitted under the Loan Documents. During the term of the Loan, Borrower will
promptly furnish to Lender written notice of any action, suit or proceeding or
any event the existence or occurrence of which would make the provisions of this
paragraph untrue.
2.3 Compliance with Legal Requirements: Borrower has (or prior to the
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commencement of construction of the Improvements will have) (i) received all
requisite building permits and approvals of the Plans relating to the Base
Building, (ii) filed and/or recorded all requisite plats and other instruments;
and (iii) in general, complied with all Legal Requirements required to be met
prior to commencement of construction of the Improvements. The Trust Property is
a legal parcel lawfully created in full compliance with all subdivision laws and
ordinances.
2.4 Streets, Easements, Utilities and Other Services: All streets,
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easements, utilities and related services necessary for the construction of the
Improvements and the operation thereof for their intended purpose are (or,
within thirty (30) days after commencement of construction of the Improvements,
will be) available to the boundaries of the Land, including potable water, storm
and sanitary sewer, gas, electric and telephone facilities and garbage removal.
2.5 Contract and Commencement of Construction: Neither Borrower (or any
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of them), nor anyone else on Borrower's behalf has (i) commenced construction of
the Improvements, (ii) purchased, contracted for or otherwise brought upon the
Land any materials specially fabricated or otherwise, to be incorporated into
the Improvements, (iii) entered into any Construction Contracts, or (iv) made
any oral or written contract or arrangement of any kind, the performance of
which by the other party thereto would or could give rise to a lien or claim on
the Trust Property, or any portion thereof.
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2.6 Validity of Loan Documents: All action on Borrower's part requisite
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for the due authorization, creation, issuance, execution and delivery of the
Loan Documents has been duly and effectively taken, and each such document
constitutes a legal and binding obligation of, and is valid and enforceable
against, Borrower and the Trust Property (as the case may be) in accordance with
the terms thereof.
2.7 Authority of Borrower:
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(a) If Borrower and any signatory who signs on its behalf is a
corporation, partnership, trust or limited liability company, it is a
corporation duly incorporated, or a partnership, trust or limited liability
company duly organized and validly existing under the laws of the state of its
incorporation or organization and duly qualified to do business in the
Commonwealth of Virginia, with requisite power and authority to (i) incur the
indebtedness evidenced by the Note; (ii) execute this Agreement, and (iii) enter
into any other instruments executed and delivered to Lender concurrently
herewith, and it is in good standing in all such states;
(b) This Agreement, the Note, and all other Loan Documents were
executed in accordance with the requirements of law and, if Borrower or any
signatory who signs on its behalf is a corporation, partnership, trust or
limited liability company, in accordance with any requirements of its articles
of incorporation, articles of partnership, partnership certificate, partnership
agreement, declaration of trust, articles of organization or operating
agreement, and any amendments thereto.
(c) The execution of this Agreement, the Note, and all other Loan
Documents, and the full and complete performance of the provisions thereof, are
authorized by the Borrower's bylaws, articles of partnership, partnership
certificate or partnership agreement, declaration of trust, articles of
organization or operating agreement, or a resolution of its board of directors
or partners or trustees or members if Borrower or any signatory who signs on its
behalf is a corporation, partnership, trust or limited liability company, and
will not result in any breach of, or constitute a default under, or result in
the creation of any lien, charge or encumbrance (other than those contained in
any of the Loan Documents) upon any property or assets of Borrower under any
indenture, mortgage, deed of trust, bank loan or credit agreement or other
instrument or agreement to which Borrower is a party or by which Borrower or the
Trust Property is bound or, if applicable, under Borrower's articles of
incorporation, bylaws, articles of partnership, partnership certificate,
agreement, declaration of trust, articles of organization or operating
agreement.
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ARTICLE 3
BORROWER'S COVENANTS
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Borrower hereby unconditionally covenants with Lender as follows:
(a) 3.1 Construction of Improvements: The construction of the
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Improvements will be commenced by Borrower on or before the Construction Start
Date, will be prosecuted by Borrower with diligence and continuity to completion
and will be completed by Borrower in a good and workmanlike manner in
substantial accordance with the Plans and other provisions of this Agreement, on
or before the Completion Date (other than for completion of tenant improvements
which shall be completed within the time period provided under each applicable
Lease) and free and clear from all liens, or claims for liens, other than the
lien and security interest created by the Loan Documents (or any of them). It is
expressly understood and agreed that, except for tenant improvements for
particular tenants' spaces which are each less than 20,000 rentable square feet,
(i) construction of the Improvements shall not be commenced unless and until
Borrower has furnished the Plans to Lender and afforded Lender the opportunity
to accept them (which acceptance shall be evidenced, if at all, by the initials
of any authorized representative of Lender thereon), (ii) when the Plans have
been furnished to Lender, no changes of a material nature will be made to them
by, or be permitted to be made to them by, Borrower, Architect or any other
person or entity without the prior written approval therefor of all requisite
Governmental Authorities, prior compliance with all requisite Legal Requirements
and prior acceptance by the Lender in its reasonable discretion; provided,
however, that the Lender's prior consent shall not be required for Permitted
Changes; and (iii) in instances where Lender does accept the Plans (or any
change therein), such acceptance shall be deemed to be strictly limited to an
acknowledgment of Lender's consent to the Improvements being constructed in
accordance therewith and shall not, in any way, be deemed to imply any warranty,
representation or approval by Lender that such Improvements, if so constructed,
will be structurally sound, will comply with all Legal Requirements, will be fit
for any particular purpose or will have a market value of any particular
magnitude. The construction of all tenant improvements to be constructed
pursuant to signed Leases shall be commenced by Borrower as required under such
tenant leases, will be prosecuted by Borrower with diligence and continuity to
completion and will be completed by Borrower in a good and workmanlike manner in
substantial accordance with the Plans and other provisions of the tenant lease,
on or before the completion date provided for in the lease and free and clear
from all liens, or claims for liens, other than the lien and security interest
created by the Loan Documents (or any of them). Lender agrees that its consent
to Plans and specifications and to changes therein shall not be unreasonably
withheld, conditioned or delayed and be deemed given if not expressly withheld
by Lender in writing within ten (10) business days after request for such
consent and submission of the Plans and specifications or revised Plans and
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specifications and other requested materials relating to such Plans and
specifications.
3.2 Affirmative Covenants:
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(a) At all reasonable times during construction of the Improvements,
Borrower will (i) permit Lender, the Independent Inspecting Architect and their
representatives to enter upon the Land and into the Improvements, to inspect the
same and all materials to be used in construction of the Improvements and to
examine the Plans, (ii) comply strictly with any and all Legal Requirements
required to be complied with incidental to such construction, (iii) deliver to
Lender, or its representatives, immediately upon demand, counterparts and/or
conditional assignments of any and all Construction Contracts, bills of sale,
statements, conveyances, receipted vouchers or agreements of any nature under
which Borrower claims title to any materials or supplies used or to be used in
the construction of the Improvements, (iv) erect and maintain on the Land, at
Borrower's sole cost and expense, in a reasonable size and location, a sign
satisfactory to Lender stating that construction financing for the Improvements
has been furnished by Lender, and stating Lender's address and phone numbers,
(v) either cause each Construction Contract having a value in excess of
$1,000,000.00 to contain a provision specifically subordinating any lien right
against the Trust Property to the liens and security interests created by the
Loan Documents or cause the other party thereto to execute any and all
instruments, acceptable in form and substance to Lender, to accomplish the same,
or to provide Lender with lien waivers or releases in accordance with the
provisions of Paragraph 6.4(b)(iv), (vi) furnish to Lender, immediately after
completion of the pouring of all concrete slabs, streets and curbstones within
the Land, and completion of the foundations of the structures forming part of
the Improvements, a survey certified to by a licensed engineer acceptable to
Lender showing all of same and that the location thereof is entirely within the
property lines of the Land and does not encroach upon, breach or violate any
building line, easement or similar restriction, (vii) use all advances made to
it by Lender for, and only for, payment of the costs itemized in Paragraph 6.2
hereof and under no circumstances use, directly or indirectly, any portion of
such advances for any other purpose, including, without limiting the generality
of the foregoing, the defrayment of living expenses or the anticipation of
profit to Borrower, (viii) obtain and maintain, or cause the General Contractor
to obtain and maintain, in full force and effect, an owner's and contractor's
liability insurance policy or policies (including workers' compensation
insurance) and a hazard insurance policy or policies in builder's all risk form
with loss payable endorsements acceptable to Lender insuring the Improvements
and all material and supplies purchased with advances hereunder against all
risks and losses, all such insurance policies to be issued by companies, in
amounts and on terms approved by Lender, and (ix) upon demand of Lender or the
Independent Inspecting Architect, correct any structural defect in the
Improvements or any material departure from the Plans not accepted by Lender
(except for those Plans whose approval by Lender is not required by this
Agreement), it being understood
11
and agreed that the advance of any Loan proceeds shall not constitute a waiver
of Lender's right to require compliance with this Paragraph 3.2 with respect to
any such defects or departures.
(b) Borrower shall use all commercially reasonable efforts to ensure
that the following are Year 2000 Compliant in a timely manner, but in no event
later than December 31, 1999: (i) the Property and Improvements; (ii) Borrower
itself; and (iii) and other major commercial properties and entities in which
Borrower holds a controlling interest. Borrower shall further make reasonable
inquiries of and request reasonable validation that each of the following are
similarly Year 2000 Compliant: (x) all major tenants or other entities from
which Borrower receives payments; and (y) all major contractors, suppliers,
service providers and vendors of Borrower. As used in this paragraph, "major"
shall mean properties or entities the failure of which to be Year 2000 Compliant
would have a material adverse economic impact upon Borrower. In furtherance of
this covenant, Borrower shall, in addition to any other necessary actions
perform a comprehensive review and assessment of all systems of Borrower, the
Property and Improvements, and, if necessary or warranted based on such review
and assessment, shall adopt a detailed plan, with itemized budget, for the
testing, remediation, and monitoring of such systems. Borrower shall, within
thirty business days of Lender's written request, provide to Lender such
certifications of or other evidence of Borrower's compliance with the terms of
this paragraph as Lender may from time to time reasonably require. Year 2000
Compliant shall mean in regard to any property or entity, that all software,
hardware, equipment, goods or systems utilized by or material to the physical
operations, business operations, or financial reporting of such property or
entity (collectively the "systems") will properly perform date sensitive
functions before, during and after the year 2000.
(c) Borrower shall commence the construction of the Improvements on or
before the Construction Start Date.
3.3 Negative Covenants:
------------------
(a) At no time shall Borrower (i) use, maintain, operate or occupy, or
allow the use, maintenance, operation or occupancy of, any portion of the Trust
Property for any purpose which violates any Legal Requirement or in any manner
which may be dangerous unless safeguarded as required by law or which may
constitute a public or private nuisance or which may make void, voidable or
cancelable or increase the premium of any insurance then in force with respect
thereto unless the insurance premium shall have been paid by such user or by
Borrower, or (ii) create or place, permit to be created or placed or, through
any act or failure to act, acquiesce in the creation or placing of, or allow to
remain, any mortgage, deed of trust, security deed, lien (statutory,
constitutional or contractual), pledge, security interest, encumbrance or charge
or conditional sale or other title retention agreement on the Trust Property (or
any portion thereof) other than those created by or expressly permitted under
the Loan
12
Documents, regardless of whether same is expressly subordinate to the liens and
security interests created in the Loan Documents. If any such mortgage, deed of
trust, security deed, lien, pledge, security interest, encumbrance or charge is
asserted against the Trust Property (or any portion thereof), Borrower shall
promptly, at its own cost and expense, (a) pay the underlying claim in full or
take any other action necessary to cause same to be released of record or if
permitted by Lender, in its sole discretion, bonded to the satisfaction of
Lender and the Title Company, and (b) within five (5) days from the date
Borrower receives notice that such mortgage, lien, pledge, security interest,
encumbrance or charge has been asserted, give Lender notice thereof. The notice
shall specify who is asserting such mortgage, lien, pledge, security interest,
encumbrance or charge and shall detail the origin and nature of the underlying
claim giving rise to the asserted mortgage, lien, pledge, security interest,
encumbrance or charge.
(b) At no time shall SCI amend or otherwise modify, in a manner which
would materially adversely affect Beneficiary, its Articles of Incorporation
without the prior written consent of Lender.
3.4 Other Covenants:
---------------
(a) At all times, SCI shall maintain a Total Indebtedness to Gross
Asset Value ratio equal to or less than 0.65:1.0.
(b) At all times, SCI shall maintain a minimum Adjusted EBITDA to
Fixed Charge coverage ratio equal to or greater than 1.60:1.
(c) At no time shall SCI make or pay annual distributions or dividends
to its shareholders (other than those reinvested pursuant to a dividend
reinvestment plan), in respect of any fiscal quarter which when aggregated with
such distributions and dividends paid in respect of the preceding three (3)
fiscal quarters exceeds ninety-five percent (95%) of FFO for such four (4)
quarters.
(d) At all times, SCI shall remain listed on the New York Stock
Exchange, and maintain its status as a Real Estate Investment Trust as
determined by the Internal Revenue Service.
(e) At all times, ▇.▇. ▇▇▇▇ Entities shall maintain an ownership
interest of thirty percent (30%) of all classes of stock of SCI and of operating
partnership interests in Holdings.
(f) During and upon completion of construction, Borrower shall provide
a marketing/leasing status report for the Trust Property within ten (10) days of
the end of each fiscal quarter in form acceptable to Lender.
(g) After Completion of the Improvements, Borrower shall provide an
operating statement, in a form acceptable to Lender, for the Trust Property
within thirty (30) days of the end of each fiscal quarter.
13
(h) SCI and Holdings shall each provide, within fifty (50) days of
each quarter end and within one hundred (100) days of each fiscal year end,
respectively, to Lender consolidated financial statements including balance
sheets, income statements, statements of cash flow and such supporting schedules
as may be reasonably requested by Lender.
(i) Borrower shall not enter into Leases other than those approved by
Lender or for which the approval of Lender is not required under Paragraph 10.4
of the Deed of Trust.
3.5 Completion Deposit: If, in the good faith judgment of the Lender, it
------------------
appears at any time or from time to time that the unadvanced Loan proceeds will
be insufficient to (a) pay all costs to be incurred in connection with the
completion of the development of the Trust Property and the construction,
marketing, ownership, management, maintenance, operation and sale or leasing of
the Improvements in accordance with the Plans and with this Agreement, (b) pay
all sums which may accrue under the Loan Documents prior to completion of
construction, including, without limiting the generality of the foregoing,
interest on the Indebtedness, and (c) enable Borrower to perform and satisfy all
of the covenants of Borrower contained in the Loan Documents, Borrower shall
within ten (10) days of written demand by Lender deposit, or shall make
arrangements satisfactory to Lender for the deposit, with Lender, of the
Completion Deposit. The Completion Deposit may be retained by Lender in a non-
interest bearing account, need not be segregated from any of Lender's other
funds and may be disbursed in accordance with the provisions of the Loan
Documents by Lender before Lender makes any further advances on the Note.
Borrower's failure to deposit the Completion Deposit with Lender shall
constitute an Event of Default hereunder. Calculation of the Completion Deposit
shall not include the land cost or the value of the Land free and clear of
encumbrances as described in Paragraph 3.6 of this Agreement.
3.6 Borrower's Contributions: The Borrower shall provide to the Lender
------------------------
prior to the first draw evidence satisfactory to Lender that the Trust Property
is free and clear of all liens and encumbrances, except as otherwise provided in
the Loan Documents. Until the occurrence of an Event of Default, and thereafter
at the option of Lender, the Borrower shall perform the development management
services for the construction and development of the Improvements without
charge.
ARTICLE 4
INSPECTION
----------
4.1 Right of Inspection: Lender, through its officers, agents or
-------------------
employees, shall have the right at all reasonable times at Borrower's expense:
14
(a) To enter upon the Trust Property and inspect the construction to
determine that it is in conformity with the Plans and all the requirements
hereof; and
(b) To examine, copy and make extracts of the books, records,
accounting data and other documents of Borrower that relate in any way to the
Trust Property, including, without limiting the generality of the foregoing, all
permits, licenses, consents and approvals of all Governmental Authorities having
jurisdiction over Borrower or the Trust Property and, to the extent the Borrower
has the power to do so or can provide assistance, all relevant books and records
of contractors and subcontractors supplying goods and/or services in connection
with the construction of the Improvements. All such books, records and documents
of Borrower shall be made available to Lender promptly upon written demand
therefor; and, at the request of Lender, Borrower shall furnish Lender with
convenient facilities for the foregoing purpose.
4.2 No Duty to Inspect: It is expressly understood and agreed that Lender
------------------
shall have no duty to supervise or to inspect the construction of the
Improvements or any books and records of any party or firm, and that any such
inspection shall be for the sole purposes of determining whether or not the
Obligations of Borrower under this Agreement are being properly discharged and
of preserving Lender's rights hereunder. If Lender, or the Independent
Inspecting Architect acting on behalf of Lender, should inspect the construction
of the Improvements or any books and records, Lender and the Independent
Inspecting Architect shall have no liability or obligation to Borrower or any
third party arising out of such inspection. Inspection not followed by notice of
default shall not constitute an acknowledgment or representation by Lender and
the Independent Inspecting Architect that there has been or will be compliance
with the Plans or that the construction is free from defective materials or
workmanship nor shall it constitute a waiver of Lender's right thereafter to
insist that the Improvements be constructed in accordance with the Plans.
Lender's failure to inspect the construction of the Improvements or any part
thereof or any books and records shall not constitute a waiver of any of
Lender's rights hereunder. Neither Borrower nor any third party shall be
entitled to rely upon any such inspection or review. Lender and the Independent
Inspecting Architect owe no duty of care to Borrower or any third person to
protect against, or inform Borrower or any third person of the existence of,
negligent, faulty, inadequate or defective design or construction of the
Improvements.
4.3 Borrower's Responsibilities: Borrower shall be solely responsible for
---------------------------
all aspects of Borrower's business and conduct in connection with the Trust
Property and Improvements, including, without limiting the generality of the
foregoing:
(a) the quality and suitability of the Plans;
(b) supervision of construction of the Improvements;
15
(c) the qualifications, financial condition and performance of all
architects, engineers, contractors, subcontractors and material suppliers,
consultants, and property managers;
(d) conformance of construction of the Improvements to the Plans, to
the Legal Requirements and to the requirements of this Agreement;
(e) the quality and suitability of all materials and workmanship;
and
(f) the accuracy of all requests for the disbursement of Loan proceeds
and the proper application of disbursed Loan proceeds.
4.4 Inspection Fee: In furtherance of Lender's rights hereunder, Lender
--------------
may, at its option, (a) require an inspection of the Trust Property by the
Independent Inspecting Architect (i) prior to each advance; (ii) at least once
each month during the course of construction even though no advance is to be
made for that month; (iii) upon Completion of the Improvements, and (iv) at
least semi-annually thereafter; and (b) require costing and a review of the
Plans for the Base Building and for tenant spaces of 20,000 rentable square feet
or more by the Independent Supervising Architect and/or a cost engineering
specialist, or any other party contracted by Lender resulting from a review or
reviews of the initial Plans and all revisions thereof as submitted from time to
time by Borrower. Borrower shall pay all fees incurred by Lender in connection
with this Paragraph 4.4. Furthermore, if Lender determines in connection with
any such costing, review or inspection that extra services will be required of
the Independent Inspecting Architect as a result of noncompliance with the
Plans, or with any Legal Requirement or as a result of deviations from
acceptable construction practices, or as a result of Borrower's failure to
satisfy the requirements of or any other Agreement, the Borrower shall pay, in
addition to the fees for such costing, review of the Plans and inspections, the
cost of all such extra services.
ARTICLE 5
ADDITIONAL SECURITY
-------------------
5.1 Construction Contracts: As additional security for the payment of the
----------------------
Indebtedness, Borrower hereby transfers and assigns to Lender all of Borrower's
right, title and interest, but not its obligations, in, under and to the
Construction Contracts upon the following terms and conditions:
(a) Borrower represents and warrants that each copy of any
Construction Contract furnished to Lender is a true and complete copy thereof
and that Borrower's interest therein is not subject to any claim, setoff or
encumbrance.
(b) Neither this assignment nor any action by Lender shall constitute
any assumption by Lender of any obligations under the Construction
16
Contracts; and Borrower shall continue to be liable for all obligations of
Borrower thereunder, Borrower hereby agreeing to perform all of its obligations
under the Construction Contracts. Borrower agrees to indemnify and hold Lender
harmless against and from any loss, cost, liability or expense (including, but
not limited to, reasonable attorneys' fees) incurred by Lender and resulting
from any failure of Borrower to so perform.
(c) At any time there shall be an uncured Event of Default, or even in
the absence of an Event of Default at any time that Lender shall believe in good
faith that the General Contractor may cease work on the construction of the
Improvements, but in any event with simultaneous notice to Borrower, Lender
shall have the right at any time (but shall have no obligation) to take, in its
name or in the name of Borrower, such action as Lender may at any time determine
to be necessary or advisable to cure any default under the Construction
Contracts or to protect the rights of Borrower or Lender thereunder. Lender
shall incur no liability if any action so taken by it or in its behalf shall
prove to be inadequate or invalid, and Borrower agrees to hold Lender free and
harmless from any loss, cost, liability or expense (including, but not limited
to, reasonable attorneys' fees) now or hereafter incurred by Lender in
connection with such action.
(d) Borrower hereby irrevocably constitutes and appoints Lender as
Borrower's attorney-in-fact, in Borrower's name or in Lender's name, to enforce
all rights of Borrower under the Construction Contracts; provided, however,
Lender shall have no obligation to enforce such rights.
(e) Prior to an Event of Default, Borrower shall have the right to
exercise its rights as owner under the Construction Contracts; provided,
however, Borrower shall not cancel or amend the Construction Contracts in any
material respect or do, omit to do, or suffer to be done any act which would
impair the security constituted by this Agreement without the prior written
consent of Lender.
(f) This assignment shall inure to the benefit of Lender, its
successors and assigns, including any purchaser upon foreclosure of the Trust
Property or any grantee under a deed in lieu of foreclosure, any receiver in
possession of the Trust Property and any corporation formed by or on behalf of
Lender which assumes Lender's rights and obligations under this Agreement.
5.2 Plans: As additional security for the payment of the Indebtedness,
-----
Borrower hereby transfers and assigns to Lender all of Borrower's right, title
and interest in and to the Plans, and agrees that when the Plans are delivered
to Lender for approval or otherwise such delivery, unless otherwise set forth in
writing accompanying such delivery, such delivery will constitute a
representation and warranty by Borrower that:
(a) The original counterparts of the Plans furnished to Lender are
true and complete;
17
(b) The schedule of the Plans delivered to Lender is a complete and
accurate description of the Plans; and
(c) The Plans are complete and adequate for the construction of the
Improvements and there have been no modifications thereof except as described in
such schedule. The Plans (other than those for tenant improvements for tenant
space of less than 20,000 square feet) shall not be modified without the prior
written consent of Lender except for Permitted Changes.
5.3 Borrower agrees that:
(a) Lender may use the Plans for any purpose relating to the
Improvements, including, but not limited to, inspections of construction and the
Completion of the Improvements;
(b) Lender's acceptance of the assignment contained in Paragraph 5.2
shall not constitute approval of the Plans by Lender;
(c) Lender has no liability or obligation whatsoever in connection
with the Plans and no responsibility for the adequacy thereof or for the
construction of the Improvements contemplated by the Plans; and
(d) Such assignment shall inure to the benefit of Lender, its
successors and assigns, including any purchaser upon foreclosure of the Trust
Property, any grantee under a deed in lieu of foreclosure, any receiver in
possession of the Trust Property and any corporation formed by or on behalf of
Lender which assumes Lender's rights and obligations under this Agreement.
5.4 Permits: As additional security for the payment of the Indebtedness,
-------
Borrower hereby transfers and assigns to Lender (to the extent assignable) all
of Borrower's right, title and interest, but not its obligations, in, under and
to the Permits upon the following terms and conditions:
(a) Borrower represents and warrants that each copy of any Permits now
or hereafter furnished to Lender is or will be a true and complete copy thereof
and that Borrower's interest therein is not subject to any claim, setoff or
encumbrance.
(b) Neither this assignment nor any action by Lender shall constitute
any assumption by Lender of any obligations under the Permits; and Borrower
shall continue to be liable for all obligations of Borrower thereunder, Borrower
hereby agreeing to perform all of its obligations under the Permits. Borrower
agrees to indemnify and hold Lender harmless against and from any loss) cost,
liability or expense (including, but not limited to, reasonable attorneys' fees)
incurred by Lender and resulting from any failure of Borrower to so perform.
(c) At any time there shall be an uncured Event of Default, or even in
the absence of an Event of Default at any time that Lender shall believe in good
18
faith that a Permit may be terminated or may expire, but in any event with
simultaneous notice to Borrower, Lender shall have the right at any time (but
shall have no obligation) to take, in its name or in the name of Borrower, such
action as Lender may at any time determine to be necessary or advisable to cure
any default under the Permits, or to protect the rights of Borrower or Lender
thereunder. Lender shall incur no liability if any action so taken by it or in
its behalf shall prove to be inadequate or invalid, and Borrower agrees to hold
Lender free and harmless from any loss, cost, liability or expense (including,
but not limited to, reasonable attorneys' fees) now or hereafter incurred in
connection with such action, and in furtherance of such rights, Borrower hereby
irrevocably constitutes and appoints Lender as Borrower's attorney-in-fact, in
Borrower's name or in Lender's name, to enforce all rights of Borrower under the
Permits; provided, however, Lender shall have no obligation to enforce such
rights.
(d) Prior to an Event of Default, Borrower shall have the right to
exercise its rights as owner under the Permits; provided, however, Borrower
shall not cancel or amend the Permits except as required to cause the same to
conform to the Plans as approved by Lender, including without limitation, any
amendment to or of the Plans, or do, omit to do, or suffer to be done any act
which would impair the security constituted by this Agreement without the prior
written consent of Lender.
(e) This assignment shall inure to the benefit of Lender, its
successors and assigns, including any purchaser upon foreclosure of the Trust
Property or any grantee under a deed in lieu of foreclosure, any receiver in
possession of the Trust Property and any corporation formed by or on behalf of
Lender which assumes Lender's rights and obligations under this Agreement.
ARTICLE 6
LENDER'S COMMITMENT
-------------------
6.1 Loan: Subject to the terms, provisions and conditions of this
----
Agreement, Lender will make and Borrower will accept, in installments, a loan in
the aggregate amount of the principal sum of the Note, it being understood that
interest as called for in the Note shall be calculated only on any sums actually
advanced and only from the dates of such advances.
6.2 Right to Disbursements: Advances shall be made to Borrower or any of
----------------------
them on the principal amount of the Note at the times and otherwise in
accordance with the Disbursement Schedule attached hereto as Exhibit B and
---------
incorporated herein by this reference. The advances on the Note shall be
disbursed, at Lender's option, (i) by Lender's check drawn upon Lender's
disbursement account and delivered to Borrower, (ii) by depositing the amount of
the disbursement to Borrower's account in a bank approved by Lender, or (iii) by
direct or joint check payment to any or all persons entitled to payment for work
performed on or materials delivered to or services performed in connection with
the construction of
19
the Improvements or the Loan evidenced by the Note. Notwithstanding anything set
forth in the Disbursement Schedule, the advance as to which Borrower shall be
entitled at any one time shall not exceed the cost of the materials, supplies
and equipment purchased for and incorporated into the Improvements or stored on
the Land in a manner acceptable to Lender. Under no circumstances shall any
portion of any advance be used for any purpose other than the payment of those
costs and fees approved by Lender as legitimately relating to the purchase price
for the Land, the cost of constructing the Improvements and the payment of the
Indebtedness. Any sums drawn under any letters of credit which may be issued by
Lender or an affiliate of Lender on behalf of Borrower in connection with the
Loan shall be deemed advances for purposes hereof, effective as of the date the
letter of credit is issued, and shall be secured by the Deed of Trust and the
other Loan Documents.
Except as may be provided otherwise in the Disbursement Schedule, for each
advance made to Borrower hereunder to the extent to be used to fund hard costs
under the Construction Contract, Lender shall retain a sum equal to five percent
(5%) thereof (or a greater percentage, if required by any Legal Requirement) so
that until a period of thirty (30) days after Substantial Completion of the Base
Building (or such longer period if permitted or required by any Legal
Requirement or if, during such longer period, a lien or claim could lawfully be
filed against the Trust Property by anyone performing work or services, or
furnishing materials or goods in connection with the Improvements) Lender shall
have in its possession a fund equal to five percent (5%) of the total cost of
the Base Building under the Construction Contract; provided, however subject to
the provisions of Paragraph 3.6 hereof and so long as Lender maintains minimum
retainage as set forth above, Lender shall advance the excess retainage held
with respect to individual contractors performing work or services, or
furnishing materials or goods in connection with the Improvements at the earlier
of (i) Lender's receipt of such contractor's final waiver of liens or (ii) the
expiration of any statutory time Period within which such contractor could
lawfully file a lien or claim against the Trust Property.
6.3 Conditions to Closing: Lender shall not be obligated to make the
---------------------
first advance to Borrower unless and until:
(a) Borrower has performed its obligations set forth in Paragraph 3.6
of this Agreement and has made any Completion Deposit which may be required at
that time.
(b) Lender has received true, legible and correct copies of the
following, in form and substance satisfactory to Lender in all respects:
(1) the Construction Contract with the General Contractor;
(2) the Plans which have been approved by Lender;
(3) a certificate from the Architect, and the Independent
Inspecting Architect, stating that the Plans have been approved by him or them
and
20
that the Construction Contracts are acceptable to him or them and satisfactorily
provide for the construction of the Improvements for the Base Building;
(4) all authorizations and permits which are then procurable and
required by any Legal Requirement for the construction and proposed use of the
Improvements;
(5) four (4) original copies of a current survey of the Land
containing the certification of the surveyor in form and substance satisfactory
to Lender and showing the perimeter of the Land by courses and distances, all
easements and rights-of-way, the boundary lines of the streets abutting the Land
and the width thereof, any encroachments and the extent thereof in feet and
inches, all acceptable to the Title Company to modify the "areas, boundaries and
encroachments" exception to the maximum extent permitted by law;
(6) the policies of insurance required by the Loan Documents
accompanied by evidence of the payment of the premium therefor;
(7) a soils investigation report from a soils engineer
satisfactory to Lender;
(8) evidence satisfactory to Lender that the Land is not located
within the 100-year flood plain or identified as a special flood hazard area as
defined by the Federal Insurance Administration;
(9) a complete project budget in form and substance satisfactory
to Lender (which is attached hereto as Exhibit E), which includes (without
---------
limitation) an allocation for tenant improvements, interest reserve and
contingency line item amounts, together with the guaranteed maximum price
contained in the Construction Contract;
(10) the tax identification number(s) assigned to the Trust
Property (i.e., county, city and school, etc.), the approximate date tax
---
statement(s) are to be issued and the date(s) taxes would become delinquent if
not paid;
(11) an enforceability and authority opinion of counsel for
Borrower satisfactory to Lender, dated as of the date of the closing and
relating to such matters with respect to this Agreement and the transaction
contemplated hereby as Lender may reasonably request ;
(12) a copy of the form of office and retail tenant lease
satisfactory to Lender to be used by Borrower in connection with the Leases;
(13) copies of all existing leases and tenant estoppels;
(14) if Borrower and any partner or venturer of Borrower is a
corporation, a partnership, a trust or a limited liability company, a copy of
Borrower's and such partner's or venturer's articles of incorporation and
bylaws,
21
partnership agreement and certificate of partnership, declaration of trust,
articles of organization and operating agreement, whichever may be applicable,
and all amendments thereto, certified by Borrower to be true, correct and
complete;
(15) a copy of the agreement between Borrower and the Architect with
respect to the Improvements, and any and all existing or future extensions,
renewals, modifications, amendments thereto (the "Architect's Contract") and a
certificate from the Architect with respect to legal, zoning, architectural
barriers and other requirements concerning the property and the Improvements
(the "Architect's Certificate");
(16) the consent of the Architect to the assignment to Lender of all
of Borrower's right, title and interest in and to the Architect's Contract and
in and to the Plans and to Lender's use thereof, and the agreement of the
Architect to perform certain services for Lender at Lender's request;
(17) Subordination, Non-disturbance and Attornment Agreements
executed by all of Borrower's tenants leasing space in the Trust Property in
effect on the date of this Agreement;
(18) a copy of the demolition permit covering the demolition of the
Existing Improvements (as defined in the Deed of Trust);
(19) a copy of any engineering agreements or any management
agreement, development agreement/asset management agreement;
(20) an Appraisal (as defined under the Note);
(21) consents to the assignment of any engineering agreements, and
the General Contractor's agreement, provided Borrower has entered into such
agreements before Closing;
(22) a current Phase One environmental report for the Land;
(23) a project cost analysis by the Independent Inspecting Architect;
(24) a copy of current tax bills for the Trust Property;
(25) evidence satisfactory to Lender of current zoning approvals for
the Improvements; and
(26) any other documents and information Lender may reasonably
require.
(c) The Loan Documents have been duly authorized, executed and
recorded or filed in accordance with applicable Legal Requirements and original
22
counterparts thereof delivered to Lender; current Uniform Commercial Code
searches have been made in the records of the Office of the Clerk of the Circuit
Court for Alexandria, Virginia, the Virginia State Corporation Commission, and
the Maryland Department of Assessments and Taxation covering Borrower, and show
no filings relating to or which could relate to the Trust Property or
Improvements;
(d) The Title Company has issued an irrevocable and unconditional
commitment to issue the Title Insurance immediately upon recordation of the Deed
of Trust and the other Loan Documents which are to be recorded;
(e) Borrower has executed, or caused to be executed, and delivered to
Lender the Disbursement Request Form attached hereto as Exhibit C or in such
other form acceptable to Lender certifying in acceptable detail the expenditures
made or expenses incurred by Borrower of the type described in Paragraph 6.2
hereinabove, with such supporting data as Lender may require, and that the
amount requested represents sums actually spent or indebtedness actually
incurred; and
(f) Borrower pays to Lender, or any other person or party entitled
thereto, all fees and costs then due and payable in connection with this
Agreement and the subject hereof including, without limiting the generality of
the foregoing, any matter set forth in Paragraph 9.1 hereof and a commitment fee
of Two Hundred Thousand Fifty-Six Seven Hundred Fifty and No/100 Dollars
($256,750.00), plus all appraisal fees, which amounts shall in no event be
refundable by Lender.
Notwithstanding the foregoing, it is agreed that the documents listed in
Exhibit D hereto need not be furnished to Lender prior to the first advance, but
---------
rather shall be submitted to and approved by Lender before Lender shall be
obligated to make cumulative advances in excess of $3,000,000.00.
6.4. Disbursement Requests: Lender shall not be obligated to make any
---------------------
subsequent advance to Borrower unless and until subparagraphs (a) through (f)
hereinbelow are first complied with for such advance. Notwithstanding anything
to the contrary contained in or inferable from any of Article 6, Lender shall
not be required to make any advance hereunder if, at the time of the requested
advance, any of the events or circumstances set forth in the following
subparagraphs (g) through (r) hereinbelow has occurred or exists:
(a) For disbursement up to Three Million and No/100 Dollars
($3,000,000.00), Borrower has executed, and delivered to Lender a Disbursement
Request Form as described in Paragraph 6.3(e) hereinabove and the data referred
to therein. For all disbursements over Three Million and No/100 Dollars
($3,000,000.00), Architect and, if Lender requests, the Independent Inspecting
Architect shall have, together with Borrower, executed, and delivered to Lender
a Disbursement Request Form.
23
(b) Lender shall have received (i) an endorsement to the Title
Insurance increasing the coverage thereof to the full amount of the sum
advanced, the first such endorsement after completion of foundations reflecting
no encroachments caused by construction of the Improvements and reflecting no
changes in the status of title or the Title Insurance since the previous
advance, except as permitted under the Loan Documents, (ii) certification from
the Architect and, if Lender elects, the Independent Inspecting Architect
stating that, in their opinion, the construction of the Improvements theretofore
performed has been in substantial accordance with the Plans, (iii) the survey
called for in Paragraph 3.2(a)(vi) hereinabove and as may be required by the
Title Company to issue the endorsement or other evidence referred to in
Paragraph (b)(i) above, (iv) at the request of Lender, lien waivers or releases
(in recordable form) from all contractors, subcontractors, laborers and
materialmen employed or furnishing materials in connection with the construction
of the Improvements whose contract exceeds $1,000,000.00, (v) all amendments,
modifications and revisions satisfactory to Lender in the form of tenant lease,
if any, (vi) at the request of Lender, a written certification signed by
Borrower as to all Leases and the names of the tenants and rents payable
thereunder, together with copies of all such Leases, and (vii) such other
certifications or evidence of cost and completion as Lender may reasonably
request.
(c) Borrower shall have performed to date its obligations under
Paragraph 3.6 above.
(d) Lender shall have received a duplicate original of all executed
Construction Contracts in form approved by Lender.
(e) Borrower is in compliance with requirements of the attached
Disbursement Schedule.
(f) The funding limitations (as applicable) set forth in Exhibit B
---------
hereto have been satisfied, as determined by Lender in its sole determination.
(g) An Event of Default or Unmatured Event of Default exists
hereunder or under any other Loan Document.
(h) The requested advance, plus the sum of the previous advances
(including retained amounts deemed to have been advanced pursuant to Paragraph
6.2 above) or other sums disbursed by Lender under the Loan Documents, exceeds
the face amount of the Note.
(i) In the good faith judgment of the Lender, Completion of the
Improvements will not occur on or before the Completion Date, regardless of the
cause of such failure of completion.
(j) In the good faith judgment of Lender, the sum of the unadvanced
Loan proceeds, plus other sums being held by Lender in escrow for
24
Borrower, is insufficient to complete the Improvements in substantial accordance
with the Plans and this Agreement.
(k) The Trust Property (or any portion thereof) is demolished or
substantially destroyed, or condemnation or similar type proceedings are
commenced with reference thereto until such time as any revision to the project
budget, construction schedule and disbursement schedule made necessary by such
event in the reasonable judgement of Lender has been agreed upon by Borrower and
Lender.
(l) Any change in the status of title to the Land or the Improvements
has occurred subsequent to the date hereof without Lender's prior written
consent.
(m) Borrower is unable to satisfy any of the requirements for a
disbursement set forth in Paragraphs 6.2 or 6.3 above.
(n) Any event has occurred which has or could give rise to a lien
claim equal or superior to the liens and security interests intended to be
created by the Loan Documents and such event shall not have been cured by
Borrower within thirty (30) days of notice thereof from Lender.
(o) An order or decree of any court of competent jurisdiction exists
enjoining the construction of the Improvements or enjoining or prohibiting
Borrower or Lender or either of them from performing their respective
obligations under this Agreement.
(p) Any material deviation from the Plans exists in the construction
of the Improvements without the prior written approval of Lender, or it
appears to Lender or Lender's Inspecting Architect that there are material
defects in the workmanship or materials .
(q) Any encroachment on or off the Land exists which has occurred
without the approval of Lender.
(r) Construction (except as scheduled) has ceased prior to
Substantial Completion of the Base Building or prior to substantial completion
of any tenant improvements for a continuous period of twenty (20) days or more
for causes other than those beyond the control of Borrower or those consented to
in writing by Lender.
6.5. Disbursements to Lender. Notwithstanding anything to the contrary
-----------------------
contained in this Article 6 or elsewhere in this Agreement, Lender shall have
the right to disburse to itself as an advance under the Loan any and all amounts
due Lender on account of the Loan (including interest and other amounts required
under the Loan Documents), without the necessity of any disbursement request or
other action by Borrower. In no event shall any such disbursement be
25
construed as a waiver of any Event of Default or any other condition to any
other disbursements to or for the benefit of Borrower.
6.6. Third-Party Beneficiaries: All conditions precedent to Lender's
-------------------------
obligation to make advances hereunder are imposed solely and exclusively for
Lender's benefit. No person or entity other than Lender shall have any standing
to require satisfaction of such conditions, or be entitled to assume that Lender
will refuse to make advances absent strict compliance therewith, and any or all
of such conditions may be freely waived (in whole or in part) by Lender at any
time or times.
ARTICLE 7
EVENTS OF DEFAULT
-----------------
Each and any of the following shall constitute an Event of Default
hereunder:
7.1 Conditions to Advances: If, at any time, Borrower is unable to
----------------------
satisfy any condition or cure any circumstance specified in Article 6 above,
including specifically the occurrence of any circumstance described in Paragraph
6.4(g) through 6.4(r), the satisfaction or curing of which being precedent to
its right to receive an advance hereunder, and such inability continues for a
period in excess of thirty (30) days after notice thereof by Lender; provided
however, that if such default is susceptible of cure but is not cured within
said thirty (30) days, so long as Borrower is diligently and continuously
pursuing such cure Lender shall permit Borrower an additional thirty (30) days
to effectuate such cure.
7.2 Voluntary Bankruptcy: If Borrower shall (a) voluntarily be
--------------------
adjudicated as bankrupt or insolvent, (b) file any petition or commence any case
or proceeding under any provision or chapter of the Federal Bankruptcy Code or
any other federal or state law relating to its insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, (c) make a general assignment for
the benefit of its creditors, (d) have an order for relief entered under the
Federal Bankruptcy Code with respect to it, (e) convene a meeting of its
creditors, or any class thereof, for the purpose of effecting a moratorium upon
or extension or composition of its debts, (f) fail to pay its debts as they
mature, (g) admit in writing that it is unable to pay its debts as they mature
or generally not pay its debts as they mature, or (h) become insolvent.
7.3 Involuntary Bankruptcy: If (a) a petition is filed or any case or
----------------------
proceeding described in Paragraph 7.2 above is commenced against Borrower, or
against the assets of Borrower, unless such petition and the case or proceeding
initiated thereby is dismissed within sixty (60) days from the date of the
filing, (b) an answer is filed by Borrower admitting the allegations of any such
petition, or (c) a court of competent jurisdiction enters an order, judgment or
decree appointing, without the consent of Borrower or any of the parties
directly or indirectly comprising Borrower or a custodian, trustee, agent or
receiver for it, or for all or any part of its property or authorizing the
taking possession by a custodian, trustee,
26
agent or receiver of it, of all or any part of its property unless such
appointment is vacated or dismissed or such possession is terminated within
thirty (30) days from the date of such appointment or commencement of such
possession but not later than five (5) days before the proposed sale of any
assets of Borrower by such custodian, trustee, agent or receiver, other than in
the ordinary course of the business of Borrower.
7.4 Payment of Indebtedness: If Borrower shall fail, refuse or neglect
-----------------------
to pay, in full, any installment or portion of the Indebtedness, whether at the
date which is the due date thereof stipulated in the Loan Documents, or at the
date which is a date fixed for payment, or by acceleration or otherwise and such
failure shall continue for more than five (5) days after notice thereof to
Borrower from Lender.
7.5 Failure in Performance of Obligations. If Borrower shall fail,
-------------------------------------
refuse or neglect to perform and discharge fully and timely any of the
Obligations as and when called for, and such failure, refusal or neglect shall
either be incurable or, if curable, shall remain uncured for a period of thirty
(30) days after notice thereof is given by Lender to Borrower, or with respect
to a material failure by Borrower to perform a material Obligation, of which
failure Borrower had actual knowledge, shall remain uncured for a period of the
longer of thirty (30) days from the date when Borrower had such actual knowledge
or ten (10) days after notice thereof is given by Lender to Borrower. In the
event that such failure, refusal or neglect, is susceptible of cure but is not
cured within such thirty (30) or ten (10) day period (as applicable), so long as
Borrower is diligently and continuously pursuing such cure, Lender shall permit
Borrower an additional thirty (30) days to effectuate such cure provided,
however, that with respect to an Unmatured Event of Default, notice to Borrower
of which was given on or before the date an Extension Period (as defined in the
Note) commenced, such extended cure period shall terminate not later than thirty
(30) days after such Extension Period commences.
7.6 False Representation. If any representation, warranty or statement
--------------------
made by Borrower or others in, under or pursuant to the Loan Documents or any
affidavit or other instrument executed in connection with the Loan Documents
shall be false or misleading in any material respect as of the date hereof
(i) and if, and only if, such representation, warranty or
statement was false or misleading due to mere inadvertence on the part of
Borrower, and was not deliberate or due to gross negligence, and Borrower shall
not take such steps to cure and cure such circumstances so as to make such
representation, warranty or statement no longer false or misleading within
thirty (30) days of the assertion of the false or misleading nature thereof by
notice from Lender to Borrower, or
(ii) with respect to a representation or warranty made in
Paragraphs 2.1, 2.3, 2.6 or 2.7 of this Agreement, which becomes false or
misleading at any time prior to repayment in full of the Indebtedness, Borrower
shall not take such steps to cure and cure such circumstances so as to make such
representation, warranty or
27
statement no longer false or misleading within thirty (30) days of the assertion
of the false or misleading nature thereof by notice from Lender to Borrower.
7.7 Dissolution, Change or Encumbrance of Ownership: If (a) Borrower
-----------------------------------------------
(if a natural person) shall die or shall (if not a natural person) dissolve,
terminate or liquidate, or (b) shall amend or modify, in a manner which would
materially adversely affect Lender, its articles of incorporation, bylaws,
articles or partnership, certificate of partnership, articles of organization,
operating agreement or other charter or enabling documents, and Lender has not
given its prior written consent to such amendments or modifications.
7.8 Disposition of Trust Property and Beneficial Interest in
--------------------------------------------------------
Borrower: If there occurs a Disposition (as defined in the Deed of Trust)
--------
without the prior written consent of Lender, it is expressly agreed that in
connection with determining whether to grant or withhold such consent, Lender
may (but is not obligated to) among other things: (i) consider the
creditworthiness of the party to whom such Disposition will be made and its
management with respect to the Trust Property, (ii) consider whether or not the
security for repayment of the Indebtedness and the performance of the
Obligations, or Lender's ability to enforce its rights, remedies and recourses
with respect to such security, will be impaired in any way by the proposed
Disposition, (iii) require as a condition to granting such consent, an increase
in the rate of interest payable under the Note or any other change in the terms
and provisions of the Note and other Loan Documents, (iv) require that Lender be
reimbursed for all costs and expenses incurred by Lender in investigating the
creditworthiness and management ability of the party to whom such Disposition
will be made and in determining whether Lender's security will be impaired by
the proposed Disposition, (v) require the payment to Lender of a transfer fee to
cover the cost of documenting the Disposition in its records, (vi) require the
payment of its reasonable attorney's fees in connection with such Disposition,
(vii) require the express assumption of payment of the Indebtedness and
performance of the Obligations by the party to whom such Disposition will be
made (with or without the release of Borrower from liability for such
Indebtedness and Obligations), (viii) require the execution of assumption
agreements, modification agreements, supplemental security documents and
financing statements satisfactory in form and substance to Lender, (ix) require
endorsements (to the extent available under applicable law) to any existing
Title Insurance insuring Lender's liens and security interests covering the
Trust Property, and (x) require additional security for the payment of the
Indebtedness and performance of the Obligations.
7.9 Encumbrance Upon Trust Property: Subject to the terms of this
-------------------------------
Agreement with respect to mechanics and materialmen's liens, if the Borrower
shall, without the prior written consent of Lender, create, place or permit to
be created or placed, or through any act or failure to act, acquiesce in the
placing of, or (if involuntary) allow to remain, any deed of trust, mortgage,
pledge, lien (statutory, constitutional or contractual), security interest,
encumbrance or charge on, or conditional sale or other title retention
agreement, with respect to the Trust
28
Property, Construction Contracts or the Plans except to the extent otherwise
permitted in the Loan Documents.
7.10 Destruction of Improvements: Sixty (60) days after the Trust
---------------------------
Property (other than the Existing Improvements as defined in the Deed of Trust)
is demolished, destroyed or substantially damaged in respect of which
demolition, destruction or damage either there are no insurance proceeds payable
or Borrower is not entitled to have insurance proceeds made available for
restoration pursuant to Paragraph 4.8 of the Deed of Trust.
7.11 Change in Financial Condition. If prior to the Substantial
-----------------------------
Completion of the Base Building, Lender reasonably determines that the
likelihood of completion of the Base Building Improvements or the completion of
any tenants improvements required by any then existing Lease is threatened by
reason of a material adverse change in the financial condition or credit
standing of Borrower or, following the Substantial Completion of the Base
Building payment of the Indebtedness or performance of the Obligations is
threatened by reason of a material adverse change in the financial condition or
credit standing of Borrower.
7.12 Foreclosure of Other Liens: If the holder of any lien or
--------------------------
security interest on the Trust Property (without hereby implying Lender's
consent to the existence, placing, creating or permitting of any such lien or
security interest) institutes foreclosure or other proceedings for the
enforcement of its remedies thereunder.
7.13 Event of Default Under Loan Documents: If an Event of Default
-------------------------------------
shall occur under any of the Loan Documents.
7.14 Failure to Complete or Prosecute Construction of Improvements:
-------------------------------------------------------------
If Completion of the Improvements does not occur on or prior to the Completion
Date or if Borrower fails to prosecute with diligence and continuity the
construction of the Improvements in accordance with the provisions hereof.
7.15 Substantial Deviation from Plans: If Borrower, without prior
--------------------------------
written consent from Lender, shall deviate in the construction of the
Improvements from the Plans previously approved by Lender, except for any
Permitted Change, or if defective materials or workmanship shall appear in the
Improvements, and has not commenced a cure thereof within five (5) days after
notice from Lender or, if the same do not relate to matters which Lender deems
to be of an emergency nature, within forty-five (45) days after written notice
thereof from Lender.
7.16 Failure to Keep Permits Effective: If Borrower shall neglect,
---------------------------------
fail or refuse to keep in full force and effect any permit, license, consent or
approval required for the construction of the Improvements or otherwise required
hereunder, or in the event of a curtailment in availability to the Land or
Improvements of utilities or other public services necessary for the full
occupancy and utilization of the Improvements for their intended purpose, and
has not commenced a cure thereof within five (5) days after notice from Lender
or, if the same do not relate to
29
matters which Lender deems to be of an emergency nature, within thirty (30) days
after written notice thereof from Lender.
7.17 Rezoning: If the Trust Property is rezoned so as to have a
--------
material adverse effect on Lender's security.
7.18 Failure to Deposit Funds: If Borrower shall fail to make any
------------------------
deposit of funds required hereunder or under the Deed of Trust, including, but
not limited to the Completion Deposit required hereunder, within the time period
provided therefor.
7.19 Failure to Deliver Tax Statements and Receipts: The failure of
----------------------------------------------
Borrower to provide to Lender the tax statements and adequate documentation
evidencing payment of taxes as provided for in Paragraph 9.16 herein which
failure is not cured within five (5) days after notice of such failure from
Lender.
ARTICLE 8
REMEDIES
--------
8.1 Rights, Remedies and Recourses: Upon the happening of any Event
------------------------------
of Default, Lender shall have, in addition to any and all other rights, remedies
and recourses available to it under any of the Loan Documents or otherwise
available at law or in equity, including specifically, but without limitation,
the right to declare immediately due and payable the unpaid advanced principal
and unpaid accrued interest on the Note and to foreclose any and all liens and
security interests securing the repayment of same, the right (a) to take
exclusive possession of the Trust Property, (b) to use any funds of Borrower,
including the Completion Deposit (if any) and any sums which may remain
unadvanced hereunder, to complete the Improvements, (c) to make such changes in
and revisions to the Plans as Lender may deem desirable, (d) to prosecute and
defend all actions or proceedings relating to the construction of the
Improvements, (e) to pay, settle or compromise all existing bills and claims
which are or may be liens against the Trust Property, or may be necessary or
desirable for the Completion of the Improvements or the clearance of title, (f)
to execute in Borrower's name all applications, certificates and other
instruments which may be required by any Construction Contracts, (g) to do any
and every act with respect to the construction of the Improvements which
Borrower may do in its own behalf, and (h) to employ such contractors,
subcontractors, agents, attorneys, architects, accountants, watchmen and
inspectors as Lender may deem desirable to accomplish any of the above purposes.
For these purposes, Borrower hereby constitutes and appoints Lender its true and
lawful attorney-in-fact with full power of substitution, which appointment shall
be coupled with an interest and irrevocable. All sums expended by Lender for any
of the above purposes shall be deemed to be advances hereunder and shall be
secured by the Loan Documents.
30
8.2 Cessation of Lender's Obligations: Upon the happening of any such
---------------------------------
Event of Default, all obligations of Lender hereunder, including specifically
any obligation to advance funds hereunder, shall immediately cease and
terminate.
8.3 Acceleration: Notwithstanding anything to the contrary herein
------------
contained or inferable from any provision of this Agreement, upon the happening
of an Event of Default as set forth in Paragraphs 7.2 (except as set forth
therein), 7.3 (except as set forth therein), 7.6 (except as set forth therein),
or 7.7 through 7.14, or 7.16 through 7.19 above, Lender may declare the
Principal Balance (defined hereby as meaning the then unpaid principal balance
on the Note), the accrued interest and any other accrued but unpaid portion of
the Indebtedness to be immediately due and payable, without further notice,
presentment, protest, demand or action of any nature whatsoever (each of which
is expressly waived by Borrower) whereupon the same shall become immediately due
and payable, at the option of Lender without notice (except as may be
hereinafter provided) or demand, which is hereby expressly waived.
ARTICLE 9
GENERAL TERMS AND PROVISIONS
----------------------------
9.1 Performance at Borrower's Expense: Without in any way limiting
---------------------------------
Paragraph 8.1 hereof, Borrower shall pay to Lender immediately upon demand all
costs and expenses incurred by Lender in connection with: (a) the preparation of
this Agreement and any and all other Loan Documents contemplated hereby
(including any amendments hereto or thereto or consents, releases or waivers
hereunder or thereunder); (b) the administration of this Agreement and the other
Loan Documents for the term of the Note as provided for in the Loan Documents;
and (c) the enforcement or satisfaction by Lender of any of Borrower's
Obligations under this Agreement or under the Loan Documents. For all purposes
of this Agreement, Lender's costs and expenses shall include, without
limitation, all appraisal fees incurred in connection with the making of the
Loan described in the Loan Documents or the extension of the Maturity Date as
provided for in the Note, the cost of engineering and inspection fees,
architectural fees, legal fees (including, without limitation, fees for trial,
appeal or other proceedings), accounting fees, environmental consultant fees (if
any), auditor fees, and the cost to Lender of any documentary taxes, recording
fees, brokerage fees, title insurance premiums and title surveys. In addition,
Borrower recognizes and agrees that formal written appraisals of the Trust
Property by a licensed independent appraiser may be required by federal
regulatory reporting requirements on an annual and/or specialized basis and,
after the occurrence of an Event of Default, by Lender's internal procedures,
and Borrower shall pay such costs if Lender incurs them. Except to the extent
that certain of these costs and expenses are included within the definition of
Indebtedness, the payment by Borrower of any of these costs and expenses shall
not be credited, in any way or to any extent, against any portion of the
Indebtedness.
31
9.2 Brokerage Fees and Commissions: Borrower hereby indemnifies Lender
------------------------------
from any responsibility and/or liability for the payment of any commission,
charge, or brokerage fee which may be payable to any party in connection with
the Loan, it being understood that all such charges, if any, will be paid by the
Borrower. Lender agrees that it has not engaged any broker in connection with
this Loan.
9.3 Time: Time is of the essence of this Agreement and each provision
----
hereof of which time is an element.
9.4 Attorneys' Fees: If Lender finds it necessary to obtain the services
---------------
of an attorney to collect all or any portion of the principal of the Note or
enforce any of its rights under the Loan Documents, Borrower shall pay such
reasonable attorneys' fees (except in connection with the enforcement of its
rights under the Loan Documents), whether or not suit is brought, or if brought,
prosecuted to judgment.
9.5 Intentionally Deleted
9.6 Approval of Lender and Further Assurances: Except as may be otherwise
-----------------------------------------
specifically provided in the Loan Documents, all instruments of insurance to be
executed and/or delivered to Lender, and all procedures to be taken in
connection with this Agreement and the Loan provided for herein, and all persons
or parties responsible in any way for the construction of the Improvements
pursuant to any of the Construction Contracts or any obligation to be performed
hereunder, or under the other Loan Documents, shall be subject to the acceptance
of Lender as to form, substance, coverage and identity. Immediately upon request
of Lender, Borrower will execute, acknowledge and deliver to Lender such further
instruments and do such further acts as Lender may deem necessary to carry out
more effectively the purpose of this Agreement or to subject to the liens and
security interests of the Loan Documents any property intended by the terms
thereof to be covered thereby, including specifically, but without limitation,
any renewals, additions, substitutions, replacements, betterments or
appurtenances to the Trust Property.
9.7 No Waiver: Any failure by Lender to insist, or any election by Lender
---------
not to insist, upon Borrower's (or any of them) strict performance of any of the
terms, provisions or conditions of the Loan Documents shall not be deemed to be
a waiver of same or of any other term, provision or condition thereof and Lender
shall have the right at any time thereafter to insist upon strict performance by
Borrower of any and all of same. In particular, no advance by Lender of any Loan
proceeds hereunder notwithstanding Borrower's failure to strictly comply with
Article 6 hereinabove shall, in any way, preclude Lender from thereafter
declaring such failure to comply to be a default or an Event of Default
hereunder as may be provided with respect to such failure.
9.8 Modification: This Agreement shall not be amended, waived, discharged
------------
or terminated orally but only by an instrument executed by the party
32
against enforcement of the amendment, waiver, discharge or termination is
sought.
9.9 Applicable Law: This Agreement has been executed under, and shall be
--------------
construed and enforced in accordance with, the laws of the Commonwealth of
Virginia from time to time in effect; except to the extent superseded by United
States federal law. This Agreement and all of the Loan Documents are intended
to be performed in accordance with and only to the extent permitted by, all
applicable Legal Requirements, but the foregoing shall not be construed to limit
the terms of the Loan Documents by application of any provision of Borrower's
Articles of Incorporation, By-laws, or Partnership, Limited Partnership, Joint
Venture, Trust, Articles of Organization, Operating Agreement or other form of
business association agreement. It is expressly stipulated and agreed to be the
intent of Borrower and Lender at all times to comply with the applicable law now
or hereafter governing the interest payable on the Indebtedness. If the
applicable law is ever revised, repealed or judicially interpreted so as to
render usurious any amount called for under the Note or under any of the Loan
Documents or contracted for, charged, taken, reserved or received with respect
to the Indebtedness, or if Lender's exercise of the option herein contained to
accelerate the maturity of the Indebtedness, or if any prepayment by Borrower
results in Borrower's having paid any interest in excess of that permitted by
applicable law, then it is Borrower's and Lender's express intent that all
excess amounts theretofore collected by Lender be credited to the principal
balance of the Note or any other principal indebtedness of Borrower to Lender
(or, if the Note and all of such other indebtedness have been paid or would
thereby be paid in full, refunded to Borrower), and the provisions of the Note,
the Deed of Trust, this Agreement and the other Loan Documents immediately be
deemed reformed and the amounts thereafter collectible hereunder and thereunder
reduced, without the necessity of the execution of any new documents, so as to
comply with the then applicable law, but so as to permit the recovery of the
fullest amount otherwise called for hereunder and thereunder. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of the
Indebtedness shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of such Indebtedness
until payment in full so that the rate or amount of interest on account of such
indebtedness does not exceed the usury ceiling from time to time in effect and
applicable to the Indebtedness, if any, for so long as the Indebtedness is
outstanding.
9.10 Severability: If any provision hereof or of any of the other Loan
-------------
Documents or the application thereof to any person or circumstance shall, for
any reasons and to any extent, be invalid or unenforceable, neither the
application of such provision to any other person or circumstance, nor the
remainder of the instrument in which such provisions is contained, shall be
affected thereby, but rather shall be enforced to the greatest extent permitted
by law.
9.11 Rights, Remedies and Recourses Cumulative: All rights, remedies and
-----------------------------------------
recourses afforded Lender by the Loan Documents or otherwise available at law or
in equity, including specifically, but without limitation, those granted by the
33
Uniform Commercial Code in effect in the Commonwealth of Virginia (a) shall be
deemed cumulative and concurrent, (b) may be pursued separately, successively or
concurrently against Borrower or anyone else obligated under any or all of the
Loan Documents, or against the Trust Property, or against any one or more of
them, at the sole discretion of Lender, (c) may be exercised as often as the
occasion therefor shall arise, it being understood by Borrower that the
exercise, failure to exercise or election to exercise any of the same shall in
no event be construed as a waiver of same or of any other right, remedy or
recourse available to Lender, and (d) are intended to be, and shall be,
nonexclusive.
9.12 Successors and Assigns: This Agreement shall be binding upon and
----------------------
inure to the benefit of the parties hereto and their respective heirs,
successors, legal representatives and assigns; provided, however, that Borrower
may not assign, transfer or in any way hypothecate its interest in the Loan
Documents or the Trust Property (or any portion thereof) without Lender's prior
written consent.
9.13 Notices: All notices or other communications required or permitted to
-------
be given pursuant to the provisions of this Agreement shall be in writing and
shall be considered as properly given if mailed by first class United States
mail, postage prepaid, registered or certified with return receipt requested, or
sent by Federal Express or other overnight delivery service, or by delivering
same in person to the intended addressee, or by prepaid telegram. Notice so
mailed shall be effective upon its receipt. For purposes of notice, the
addresses of the parties shall be as set forth below, provided, however, that
either party shall have the right to change its address for notice hereunder to
any other location within the continental United States by the giving of fifteen
(15) business days' notice to the other party in the manner set forth
hereinabove.
Borrower: ▇▇▇▇ Holdings Limited Partnership
c/o Saul Centers, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
With copy to: Shaw, Pittman, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Lender: ▇▇▇▇▇ Fargo Bank, National Association
Real Estate Group
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Attention: Loan Administration Manager
34
With copy to: ▇▇▇▇▇ Fargo Bank, National Association
Real Estate Group
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Credit Officer
9.14 Assignments and Participations: Lender may, at any time, sell,
------------------------------
transfer, assign or grant participations in any Loan or in any Loan Documents
that Borrower or the partners or joint venturers of Borrower have entered into,
executed, or granted in favor of Lender, and Lender may forward to each
participant and prospective participant all documents and information relating
to any such Loan, whether furnished by Borrower or otherwise, as Lender
determines necessary or desirable.
9.15 Lender's Right to Perform the Obligations: If Borrower shall fail,
-----------------------------------------
refuse or neglect to make any payment or perform any act required by the Loan
Documents, then Lender at any time thereafter and in any circumstance where
Lender determines that an emergency exists with simultaneous or prompt notice
thereafter to or demand upon Borrower and in other circumstances with notice to
Borrower and Borrowers' failure to cure such failure, refusal or neglect within
thirty (30) days of such notice, and without waiving or releasing any other
right, remedy or recourse Lender may have because of same, may (but shall not be
obligated to) make such payment or perform such act for the account of and the
expense of Borrower, and shall have the right to enter the Land and Improvements
for such purpose and to take all such action thereon and with respect to the
Trust Property as it may deem necessary or appropriate and Borrower hereby
irrevocably constitutes and appoints Lender as its attorney-in-fact, which
appointment shall be deemed coupled with an interest, to take the actions
described in this paragraph. If Lender shall elect to pay any statement,
invoice, tax ▇▇▇▇ or other sums due with reference to the Trust Property, Lender
may do so in reliance on any ▇▇▇▇, statement or assessment procured from the
appropriate Governmental Authority or other issuer thereof without inquiring
into the accuracy or validity thereof. Similarly, in making any payments to
protect the security intended to be created by the Loan Documents, Lender shall
not be bound to inquire into the validity of any apparent or threatened adverse
title, lien, encumbrance, claim or charge before making an advance for the
purpose of preventing or removing the same. Borrower shall indemnify Lender for
all losses, expenses, damages, claims and causes of action, including reasonable
attorneys' fees, incurred or accruing by reason of any acts performed by Lender
pursuant to the provisions of this Paragraph 9.15 or pursuant to any other
provision in the Loan Documents, except those due to Lender's gross negligence
or willful misconduct. All sums paid by Lender pursuant to this Paragraph 9.15,
together with all other sums expended by Lender to which it shall be entitled to
be indemnified, together with interest thereon at the Default Rate (as defined
in the Note) from the date of such payment or expenditure, shall constitute
advances on and additions to the Indebtedness, shall be secured by the Loan
35
Documents and shall be paid by Borrower to Lender upon demand. Prior payment by
Lender shall not be a condition precedent to the obligations of Borrower under
this indemnity.
9.16 Taxes and Assessments. Subject to Borrower's right to contest as
---------------------
provided for under the Loan Documents, Borrower shall submit to Lender copies of
tax statements and adequate documentation evidencing the due and punctual
payment of all real estate and personal property taxes, charges and assessments
levied or imposed upon the Trust Property on or before ten (10) days of the due
date of any such taxes.
9.17 Waiver of Right to Trial By Jury. Each party to this Agreement
--------------------------------
hereby expressly waives any right to trial by jury of any claim, demand, action
or cause of action (1) arising under this Agreement or any other instrument,
document or agreement executed or delivered in connection therewith, or (2) in
any way connected with or related or incidental to the dealings of the parties
hereto or any of them with respect to this Agreement or any other instrument,
document or agreement executed or delivered in connection herewith, or the
transactions related hereto or thereto, in each case whether now existing or
hereafter arising, and each party hereby agrees and consents that any such
claim, demand, action or cause of action shall be decided by court trial without
a jury, and that any party to this Assignment may file an original counterpart
or a copy of this paragraph with any court as written evidence of the consent of
the parties hereto to the waiver of their right to trial by jury.
9.18 Headings: The captions hereof are inserted for convenience of
--------
reference only and shall in no way alter, modify or define, or be used in
construing the text of this Agreement.
9.19 Supplement to Deed of Trust: The provisions of this Agreement are
---------------------------
not intended to supersede the provisions of the Deed of Trust but shall be
construed as supplemental thereto. In the event of any inconsistency between the
provisions hereof and those of the Deed of Trust, other than the selection of
laws provision, this Agreement shall be controlling. This Agreement shall remain
in effect until the Indebtedness has been paid in full.
9.20 Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall have the force and effect of an original, and
all of which shall constitute but one document.
EXECUTED under seal as of the date first above written.
WITNESS/ATTEST: BORROWER:
▇▇▇▇ HOLDINGS LIMITED PARTNERSHIP, a Maryland
limited partnership
36
[CORPORATE SEAL] By: ▇▇▇▇ Centers, Inc., a Maryland corporation
General Partner
__________________________ By: /s/
---------------------------------
▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
Chairman
[CORPORATE SEAL] ▇▇▇▇ CENTERS, INC., a Maryland corporation
By: /s/
__________________________ ---------------------------------------
▇. ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇
Chairman
▇▇▇▇▇ FARGO BANK, NATIONAL
ASSOCIATION, a national banking association
__________________________ By: /s/
---------------------------------------
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Senior Vice President
37
EXHIBIT A
---------
LEGAL DESCRIPTION
-----------------
All that certain property located in the City of Alexandria, Virginia, more
particularly described as follows:
All that entire square of ground located in the City of Alexandria, Virginia
bounded by Washington, St. Asaph, ▇▇▇▇▇▇▇▇▇ and Wythe Streets.
38
EXHIBIT B
---------
DISBURSEMENT SCHEDULE
---------------------
A. TIMING OF DISBURSEMENTS. Unless another provision of this Agreement
-----------------------
specifies otherwise, Borrower shall submit to Lender, not more frequently than
monthly, a Disbursement Request and a written itemized statement ("Progress
Certificate and Request for Payment Form") attached hereto, signed by Borrower
setting forth:
1. The total amount incurred, expended and/or due for each requested item
less prior disbursements; and
2. A description of the work performed, material supplied and/or costs
incurred or due with respect to each item for which disbursement is requested.
Each Disbursement Request submitted by Borrower shall constitute a
representation and warranty by Borrower to Lender that Borrower is in compliance
with all the conditions precedent as specified in Article 6 of this Agreement.
B. LENDER'S RIGHT TO CONDITION DISBURSEMENTS. Lender shall have the right to
-----------------------------------------
condition any disbursement upon Lender's receipt and approval of the following:
1. Architect's, inspector's and/or engineer's periodic certifications of
the percentage and/or stage of construction that has been completed and
requirements based upon any such architect's, inspectors' and/or engineer's
periodic, physical inspection of the Trust Property and Improvements;
2. Borrower's compliance with the provisions of Article 6 of this
Agreement.
The foregoing requirements shall apply to each of the disbursement categories
described in "C" below.
C. LOAN PROCEEDS ALLOCATION. The Loan proceeds in the maximum amount of
------------------------
$38,000,000.00 shall be disbursed as follows:
1. INITIAL DISBURSEMENT. Upon recordation of the Deed of Trust and
--------------------
delivery to Lender of the documents required under Paragraph 6.3 of this
Agreement, except as set forth in Exhibit D, Lender shall disburse the
approximate sum of $805,812.00 as indicated below:
(a) The sum of $256,750.00 shall be disbursed to Lender representing the
loan fee;
39
(b) The sum of $81,900.00 shall be disbursed to Commercial Settlements,
Inc. representing the title and recording charges;
(c) The sum of $425.00 shall be disbursed to Lender representing
reimbursement for the environmental review fee;
(d) The sum of $12,000.00 shall be disbursed to Lender representing
reimbursement for the Appraisal and Appraisal review fee;
(e) The sum of $38,370.00 shall be disbursed to Commercial Settlements,
Inc. representing the legal fees to be reimbursed to Wilkes, Artis, ▇▇▇▇▇▇▇ &
▇▇▇▇;
(f) The sum of $322,071.00 shall be disbursed to Commercial
Settlements, Inc. for reimbursement to Borrower of Architectural and Engineering
Costs.
(g) The sum of $9,363.00 shall be disbursed to Commercial Settlements,
Inc. for reimbursement to Borrower of Marketing Costs.
(h) The sum of $84,933.00 shall be disbursed to Commercial Settlements,
Inc. for reimbursement to Borrower of Operating Costs.
2. FUTURE DISBURSEMENTS. The balance of the Loan's proceeds in the
--------------------
approximate amount of $37,194,188.00 shall be disbursed as follows:
(a) CONSTRUCTION COSTS. In no event shall the aggregate of the
------------------
disbursements under this Paragraph 2(a) exceed the total sum of $20,000,700.00.
If the aggregate actual costs are more or less than the maximum amount
hereunder, then such additional excess amount may be reallocated from or to
Paragraph C.2(k) Hard Cost Contingency Reserve, upon Lender's approval.
(1) Upon request of Borrower, Lender shall make disbursements to
Borrower for the cost of work completed on the Improvements, which total costs
are itemized in the Progress Certificate and Request for Payment Form. Such
disbursement shall be in the amount of 95% of the aggregate amount of additional
invoices, vouchers, statements, affidavits, payroll records and/or other
documents approved by Lender, or previously submitted to Lender, which together
substantiate costs incurred on the project to justify such an advance, as of the
date of the Disbursement Request. Such disbursement shall be made upon delivery
to Lender of the above documents, less prior disbursements, but in no event
shall the aggregate of such disbursements hereunder exceed the sum of
$19,000,665.00.
(2) The five percent (5%) of costs not disbursed under this
Paragraph C.2(a)(1) above in the aggregate amount of $1,000,035.00 shall be
disbursed to Borrower when the conditions of Paragraph E of this Exhibit B
---------
Agreement have been fully complied with.
(b) TENANT IMPROVEMENT COSTS. Proceeds for tenant improvements shall
------------------------
be disbursed in the same manner as provided for in
40
Paragraph 2(a) above, except that the aggregate of such payments to Borrower
shall not exceed the sum of $6,405,000.00. Lender may require receipt and
approval of a cost breakdown, final Plans and specifications and leases. If the
actual costs are more or less than the maximum amount hereunder, then such
additional or excess amount may be reallocated from or to Paragraph C.2(k) Hard
Cost Contingency Reserve, upon Lender's approval.
(c) SITEWORK. The sum of $3,999,300.00 representing sitework shall be
--------
disbursed to Borrower upon Borrower's written request and approval by Lender. If
the actual costs are more or less than the maximum amount hereunder, then such
additional or excess amount may be reallocated from or to Paragraph C.2(k) Hard
Cost Contingency Reserve, upon Lender's approval.
(d) PROMOTION AND ADVERTISING. The sum of $90,637.00 representing
-------------------------
Promotion and Advertising shall be disbursed to Borrower upon Borrower's written
request accompanied by such invoices, statements and other supporting evidence,
as Lender may require, and upon Lender's approval. If the actual costs are more
or less than the maximum amount hereunder, then such additional or excess amount
may be reallocated from or to Paragraph C.2(l) Soft Cost Contingency Reserve,
upon Lender's approval.
(e) OPERATING COST. The sum of $115,067.00 representing Operating Cost
--------------
shall be disbursed to Borrower upon Borrower's written request and approval by
Lender. If the actual costs are more or less than the maximum amount hereunder,
then such additional or excess amount may be reallocated from or to Paragraph
C.2(k) Soft Cost Contingency Reserve, upon Lender's approval.
(f) LEGAL FEES. The sum of $78,630.00 representing Legal Fees shall be
----------
disbursed upon receipt of invoices, statements and other supporting evidence, as
Lender may require, and upon Lender's approval. If the actual costs are more or
less than the maximum amount hereunder, then such additional or excess amount
may be reallocated from or to Paragraph C.2(l) Soft Cost Contingency Reserve,
upon Lender's approval.
(g) ARCHITECT AND ENGINEERING. The sum of $776,929.00 representing
-------------------------
Architect and Engineering Fees shall be disbursed to Borrower upon Borrower's
written request accompanied by such invoices, statements and other supporting
evidence, as Lender may require, and upon Lender's approval. If the actual
costs are more or less than the maximum amount hereunder, then such additional
or excess amount may be reallocated from or to Paragraph C.2(k) Soft Cost
Contingency Reserve, upon Lender's approval.
(h) GOVERNMENT FEES. The sum of $637,000.00, representing fees
---------------
payable to applicable governmental authorities in connection with the
construction of the Improvements, shall be disbursed upon receipt of invoice
statements and other supporting evidence, as Lender may require, and upon
Lender's approval. If the actual costs are more or less than the maximum amount
41
hereunder, then such additional excess amount may be reallocated from or to
Paragraph C.2(l) Soft Cost Contingency Reserve.
(i) COMMISSION EXPENSES. The sum of $1,955,675.00, representing
-------------------
commissions, shall be disbursed upon receipt of invoice statements and other
supporting evidence, as Lender may require, and upon Lender's approval. If the
actual costs are more or less than the maximum amount hereunder, then such
additional excess amount may be reallocated from or to Paragraph C.2(l) Soft
Cost Contingency Reserve.
(j) INTEREST RESERVE. Lender is hereby authorized to disburse from
----------------
time to time, by charging the loan account, on the interest payment dates
specified in the Note, amounts equal to any unpaid interest then due Lender
after Borrower's application of the Net Income, as defined below, for the
payment of interest due Lender, as specified in the Note. In no event shall the
disbursed amounts hereunder exceed the aggregate amount of $1,548,514.00.
"Net Income" shall be defined as all cash income derived by Borrower in any
manner from the Property and/or Improvements minus all cash costs and expenses
-----
associated with the Property and/or Improvements.
Lender shall provide the Borrower with a monthly statement showing the amount of
interest so charged. Upon full disbursement of the Interest Reserve allocation,
Borrower shall make full interest payments directly to Lender in accordance with
the provisions of the Note and shall not be entitled to any further
disbursements to pay such interest.
(k) HARD COST CONTINGENCY RESERVE. The Loan proceeds in the
-----------------------------
approximate sum of $1,468,048.00 together with any amounts not otherwise
disbursed for specific purposes set forth in this Disbursement Schedule, shall
be disbursed for inspection fees, miscellaneous expenses, or any other expenses
related to the construction of the Improvements or the Loan upon request of
Borrower and approval of Lender. Any amount in the Hard Cost Contingency Reserve
reallocated to such other specific category set forth in this Disbursement
Schedule, as Borrower shall request in writing and Lender shall approve, will be
disbursed in accordance with the paragraph governing such specific purpose.
(l) SOFT COST CONTINGENCY RESERVE. The balance of the Loan proceeds in
-----------------------------
the approximate sum of $118,688.00 together with any amounts not otherwise
disbursed for specific purposes set forth in this Disbursement Schedule, shall
be disbursed for miscellaneous expenses, or interest due on the interest payment
date specified in the Note, any other expenses related to the Loan upon request
of Borrower and approval of Lender. Any amount in the Soft Cost Contingency
Reserve reallocated to such other specific category set forth in this
Disbursement Schedule, as Borrower shall request in writing and Lender shall
approve, will be disbursed for items set forth in Paragraphs C.2(d) through
C.2(i).
42
D. LOAN PROCEEDS WITHHOLDING. Lender may withhold from a disbursement, or on
-------------------------
account of subsequently discovered evidence withhold from a later disbursement
under this Agreement, or require Borrower to repay to Lender the whole or any
part of any earlier payment to Borrower, to such extent as may be necessary to
protect Lender from loss on account of (1) defective work not remedied or this
Agreement or Disbursement Schedule requirements not performed, (2) liens filed
or reasonable evidence indicating probable filing of liens, (3) failure of
Borrower to make payments to subcontractors for material or labor or (4) a
reasonable doubt that the construction can be completed with the balance of Loan
proceeds then undisbursed. When all such grounds are removed, payment shall be
made of any amount so withheld because of them.
E. FINAL ADVANCE FOR BASE BUILDING IMPROVEMENTS. The final advance for the
--------------------------------------------
Base Building Improvements (including retainage) shall not be made until thirty
(30) calendar days after the later of the date of Substantial Completion (as
defined herein), or if required by Lender, the date on which an affidavit of
completion has been recorded. In the case of each such draw request, Lender
shall have received the following as additional conditions precedent to the
requested advance, all relating to the Base Building:
(1) A certificate from Borrower's contractor certifying that the
Improvements (including any off-site improvements) have been completed in
accordance with, and as completed comply with, the Plans;
(2) Certificates from the architect and engineer, and, if required by
Lender, from the Independent Inspecting Architect, certifying that the
Improvements (including any off-site improvements) have been completed in
accordance with, and as completed comply with, the Plans and all laws and
governmental requirements;
(3) Two (2) sets of detailed "as built" Plans approved in writing by
Borrower, Borrower's architect, and each contractor;
(4) Final affidavits (in a form approved by Lender) from Borrower's
architect, engineer, and each contractor certifying that each of them and their
subcontractors, laborers, and materialmen has been paid in full for all labor
and materials for construction of the Improvements; and final lien releases or
waivers (in a form approved by Lender) by (A) Borrower's architect, engineer and
contractor and (B) all subcontractors, materialmen, and other parties who have
supplied labor, materials, or services for the construction of the Improvements,
or who otherwise might be entitled to claim a contractual, statutory or
constitutional lien against the Trust Property, whose contracts exceed
$1,000,000.00;
(5) An endorsement to the Title Insurance to remove any exception for
mechanics' or materialmen's liens or pending disbursements, with no additional
title change or exception objectionable to Lender, and with such other
endorsements required by Lender;
43
(6) Evidence satisfactory to Lender that all laws and governmental
requirements have been satisfied, including receipt by Borrower of all necessary
governmental licenses, certificates and permits (including certificates of
occupancy) with respect to the completion, use, occupancy and operation of the
Improvements, together with evidence satisfactory to Lender that all such
licenses, certificates, and permits are in full force and effect and have not
been revoked, canceled or modified; and
(7) Three (3) copies of a final as-built survey satisfactory to Lender.
F. FINAL ADVANCE FOR TENANT IMPROVEMENTS. The final advance for the tenant
-------------------------------------
improvements (including retainage) for each tenant space shall not be made until
thirty (30) calendar days after the date of substantial completion of such
tenant improvements. In the case of each such draw request, Lender shall have
received the following as additional conditions precedent to the requested
advance, all relating to such tenant improvements:
(1) A certificate from the contractor certifying that the Improvements
(including any off-site improvements) have been completed in accordance with,
and as completed comply with, the Plans;
(2) Certificates from the architect and engineer for such tenant
improvements, and, if required by Lender, from the Independent Inspecting
Architect, certifying that the Improvements (including any off-site
improvements) have been completed in accordance with, and as completed comply
with, the Plans and all laws and governmental requirements;
(3) Two (2) sets of detailed "as built" Plans approved in writing by
Borrower, the architect for the Improvements, and each contractor;
(4) Final affidavits (in a form approved by Lender) from the architect and
engineer for such tenant improvements, and each Construction Contractor
certifying that each of them and their subcontractors, laborers, and materialmen
has been paid in full for all labor and materials for construction of the
Improvements; and final lien releases or waivers (in a form approved by Lender)
by (A) the architect and engineer for such tenant improvements and contractor
and (B) all subcontractors, materialmen, and other parties who have supplied
labor, materials, or services for the construction of the Improvements, or who
otherwise might be entitled to claim a contractual, statutory or constitutional
lien against the Trust Property in respect of the Improvements, whose contracts
exceed $1,000,000.00;
(5) An endorsement to the Title Insurance to remove any exception for
mechanics' or materialmen's liens or pending disbursements, with no additional
title change or exception objectionable to Lender, and with such other
endorsements required by Lender;
44
(6) Evidence satisfactory to Lender that all laws and governmental
requirements have been satisfied, including receipt by Borrower of all necessary
governmental licenses, certificates and permits (including certificates of
occupancy, if obtainable based on the tenant improvements being funded) with
respect to the completion, use, occupancy and operation of the Improvements,
together with evidence satisfactory to Lender that all such licenses,
certificates, and permits with respect to the Improvements are in full force and
effect and have not been revoked, canceled or modified; and
(7) An estoppel certificate, in the form approved by Lender, from the
tenant demising such space that such tenant has approved the completed
Improvements.
G. SUPPLEMENTAL ADVANCE. In the event that Borrower shall have completed the
--------------------
Improvements, including without limitation all tenant improvements and all costs
and expenses payable in respect thereto shall have been paid and Lender shall
determine that no other funds are necessary for the Improvements or the leasing
or payment of costs thereof or interest accruing on the Loan, Lender may in its
sole discretion, upon the request of Borrower, and subject to the other
provisions of this Exhibit B and the Agreement as to advances, advance to
---------
Borrower any part of or all of the amount of the Loan remaining undisbursed, but
Lender shall have no obligation to do so.
45
EXHIBIT C
DISBURSEMENT REQUEST
Loan #______
Request #______
Date: __________________________________________________________________________
Borrower: ______________________________________________________________________
Contractor: ____________________________________________________________________
Total Loan Amount: ____________________________________________________________
Request made under (e.g., Building/Construction Loan Agreement Dated: __________
________________________________________________________________________________
Description of Work/Stage Draw: ________________________________________
Period from _________________________ to ___________________________________
Disburse funds by / wire to: or / check to: __________________________________
_______________________________________________________________________________
A request is hereby made for payment of the sum indicated below which we believe
to be payable in accordance with the Loan Agreement referred to above between
Borrower and Lender. Following is a summary of the payment requested, more
detail being provided in the attached PROGRESS CERTIFICATE & REQUEST FOR
PAYMENT.
Original Construction Cost (col. 1) $____________________
Total Adjusted Change Orders (col. 2 & 3) $____________________
Revised Construction Cost (col.4) $____________________
PAYMENT REQUESTED
Construction Items:
Total Completed to Date (col. 5) $___________________
Less Retention, If Any (col.6) $___________________
Total Available For Payment $___________________
Less Previous Payments (col.7) $___________________
Amount Now Due (col.8) $___________________
Non Construction Items: $___________________
TOTAL OF THIS REQUEST: (Const.&Non-Const.-col.8) $___________________
46
Total Disbursed to Date, Including This Request: $____________________
Total Undisbursed: $____________________
===============================================================================
▇▇▇▇▇ FARGO BANK USE ONLY
Date Rec'd Disb. Dept: _________ WFRA#_________ $___________________
Title Bringdown: ___________ WFMET# _________ $___________________
Inspection: __________ WFMCO ________ $___________________
Insurance Report Form: ____________ BMcG__________ $___________________
Other:_________ WFB_____________ $___________________
Borrower Notified:_____________ OTHER_________ $___________________
Copies Sent:___________ TOTAL:_________ $___________________
===============================================================================
47
EXPRESS MAIL TO:
The Appropriate Regional Office and Inspector
or
▇▇▇▇▇ FARGO BANK
DISBURSEMENT DEPARTMENT
EL SEGUNDO NOTE OPERATIONS
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Borrower and Contractor represent and warrant that (1) all representations and
warranties of Borrower contained in the Loan Documents are true and correct as
of the date hereof; (2) construction of the Improvements to the date of this
request have been performed substantially in accordance with the Plans and
specifications submitted to Lender; (3) there have been no material change
orders (any change order which is not a Permitted Change is material) which have
not been approved by Lender; (4) there is no default under the Loan Agreement or
the Construction Contract; (5) all governmental licenses and permits required
for the Improvements have been obtained and are effective; (6) for value
received, the undersigned hereby waives all rights to and claims for a lien on
the land described in the Loan Agreement and warrants that all payments required
by reason of the work referred to above and due to subcontractors, laborers and
materialmen and any others having mechanic's lien rights have been made or will
be made upon receipt of the requested funds, and each of them have waived, or
will waive, their lien rights for the period covered by this application for
payment as of ___________, 19__, except amounts retained pursuant to the terms
of the Construction Contract and only as to any amount as is specifically noted
in the Progress Certificate and Request for Payment (col. 8) attached.
Borrower represents and warrants that (1) the amount requested for non-
construction items represents the actual dollar for dollar amounts expended or
to be expended as soon as possible after receipt of this disbursement for the
items indicated, and (2) all amounts previously disbursed for non-construction
items have been paid by Borrower for the items indicated in previous
disbursement requests.
BORROWER ___________________________
Authorized Signatory
CONTRACTOR _________________________
Authorized Signatory
48
APPLICATION FOR APPROVAL OF ADVANCE BY LOAN OFFICER
================================================================================
▇▇▇▇▇ FARGO BANK USE ONLY
To: Disbursement Department
The Borrower's Application for advance of construction loan proceeds has been
reviewed by me and I hereby approve the Request / / without change / / with
change indicated below.
________________________________________________________________________________
COMMENTS: ____________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Date __________________________ Signed __________________________
(Loan Officer)
================================================================================
To: Accounting Department
You are hereby authorized to disburse $__________ as directed on the reverse
hereof.
Date ______________________ Signed _____________________________________
(Disbursement Officer or Inspector)
================================================================================
Date Disbursed: ______________________________________________________________
Time: ______________________________________________________________
Method: ______________________________________________________________
Signed: ______________________________________________________________
(Accounting Dept.)
49
EXHIBIT D
DOCUMENTS TO BE SUBMITTED PRIOR TO ADVANCE
IN EXCESS OF $3,000,000.00
(a) the General Contract;
(b) the Plans which have been approved by Lender;
(c) a certificate from the Architect, and the Independent Inspecting
Architect, stating that the Plans have been approved by him or them and that the
Construction Contracts are acceptable to him or them and satisfactorily provide
for the construction of the Improvements;
(d) a copy of the agreement between Borrower and the Architect with
respect to the Improvements, and any and all existing or future extensions,
renewals, modifications, amendments thereto (the "Architect's Contract") and a
certificate from the Architect with respect to legal, zoning, architectural
barriers and other requirements concerning the property and the Improvements
(the "Architect's Certificate");
(e) the consent of the Architect to the assignment to Lender of all
of Borrower's right, title and interest in and to the Architect's Contract and
in and to the Plans and to Lender's use thereof, and the agreement of the
Architect to perform certain services for Lender at Lender's request;
(f) a copy of any engineering agreements or development
agreement/asset management agreement;
(g) consents to the assignment of any engineering agreements and, the
General Contractor's agreement;
(h) a project cost analysis by the Independent Inspecting Architect;
(i) a copy of all building and excavation permits;
(j) a copy of the certificate of builder's risk insurance, which
coverage is subject to Lender's approval;
(k) an approved site plan and/or a subdivision plat, as applicable,
of the Land;
(l) copy of utility letters to the extent available;
(m) Borrower, Architect and, if Lender requests, the Independent
Inspecting Architect have executed and delivered to Lender the Disbursement
50
Request Form attached hereto as Exhibit C or in such other form acceptable to
Lender certifying in acceptable detail the expenditures made or expenses
incurred by Borrower for which Borrower seeks Lender disbursement of Loan
proceeds, with such supporting data as Lender may require, and that the amount
requested represents sums actually spent or indebtedness actually incurred; and
(n) assignments of the Architect's Contract, Plan, Permits and
approval, General Contractor's agreement, and engineering agreements, which
assignments shall be in a form reasonably acceptable to Lender.
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