EXHIBIT 10.3
CONSTRUCTION LOAN AGREEMENT
BETWEEN
FERRY BUILDING INVESTORS, LLC,
A CALIFORNIA LIMITED LIABILITY COMPANY
AS BORROWER
AND
RIVERSIDE FINANCE COMPANY, L.L.C.,
A DELAWARE LIMITED LIABILITY COMPANY,
AS LENDER
EXECUTED AS OF DECEMBER 31, 2001
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT ("Agreement") is executed as of December
31, 2001, by and between FERRY BUILDING INVESTORS, LLC, a California limited
liability company ("Borrower"), and RIVERSIDE FINANCE COMPANY, L.L.C., a
Delaware limited liability company ("Lender").
RECITALS
A. Borrower owns or will own certain real property described in EXHIBIT A
hereto ("Property").
B. Borrower proposes to construct new improvements or renovate existing
improvements on the Property consisting of: seismic rehabilitation of the
historic Ferry Building, including new electrical, plumbing, HVAC, sprinkler and
life safety systems, together with all appurtenances, fixtures, and tenant
improvements now or hereafter located on the Property ("Improvements"). The
rehabilitation will result in the recreation of a dramatic interior common area
known as the "Xxxx." The ground floor is being developed for retail and
restaurant use, and the second and third floors of the building are being
developed for general office use. The Improvements shall be constructed in
accordance with plans and specifications which Borrower has heretofore, or will
hereafter deliver to Lender, as amended in order to comply with the terms and
conditions of this Agreement ("Plans and Specifications"). Borrower has
requested from Lender a loan for the purpose of such construction.
NOW, THEREFORE, Borrower and Lender agree as follows:
ARTICLE 1. DEFINITIONS
1.1. Defined Terms. The following capitalized terms generally used in this
Agreement shall have the meanings defined or referenced below. Certain other
capitalized terms used only in specific sections of this Agreement are defined
in such sections.
"Account" - means an account with Bank, account number 1422602476, in the
name of Borrower or Borrower's designee into which Loan proceeds will be
deposited./
"ADA" - means the Americans with Disabilities Act, 42 U.S.C. Sections
12101, et seq. as now or hereafter amended or modified.
"Affiliate" - means, as to any person or entity, any person or entity
which, directly or indirectly, controls, is controlled by or is under common
control with, or which has the power to control the management or operations of,
such person or entity.
"Architect" - means, collectively, Xxxxx Xxxxxx-Vegue Xxxxxxxxxxx Xxxxx
("SMWM") and Page & Xxxxxxxx ("Page").
"Architect's Agreement" - means (i) that certain agreement dated December
10, 1998 by and between Borrower and SMWM, and (ii) that certain agreement dated
April 29, 1999 by and between Borrower and Page.
"Bank" - means Bank of America.
"Bankruptcy Code" - means the Bankruptcy Reform Act of 1978 (11 U.S.C.
Section 101-1330) as now or hereafter amended or recodified.
"Bonded Work" - shall have the meaning ascribed to such term in Section
8.1.
"Border Zone Property" - means any property designated as "border zone
property" under the provisions of California Health and Safety Code, Sections
25220 et seq., or any regulation adopted in accordance therewith.
"Borrower" - means Ferry Building Investors, LLC, a California limited
liability company.
"Borrower's Funds" - means all funds of Borrower deposited with Lender
into the Borrower's Funds Account maintained with Bank pursuant to the terms and
conditions of this Agreement.
"Borrower's Funds Account" - means the account with Bank into which all
funds deposited with Lender pursuant to this Agreement shall be placed.
"Business Day" - means a day of the week (but not a Saturday, Sunday or
holiday) on which the offices of Bank are open to the public for carrying on
substantially all of Bank's business functions. Unless specifically referenced
in this Agreement as a Business Day, all references to "days" shall be to
calendar days.
"Certificate of Approval" - means a certificate in the form of EXHIBIT F.
"Completion Date" - means the date upon which Borrower satisfies the last
of the conditions for the release of the Retention, as provided in Paragraph C
of EXHIBIT D, currently estimated to be October 2002, the date by which
construction of the Improvements must be complete, subject to extension pursuant
to change orders approved by Lender as provided herein or pursuant to the
provisions of Section 4.3.
"Construction Agreement" - means that certain agreement to construct the
Improvements dated January 1, 2001 by and between Borrower and Contractor.
"Contractor" - means Plant Construction Company, L. P.
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"Deed of Trust" - means that certain Construction Deed of Trust with
Absolute Assignment of Leases and Rents, Security Agreement and Fixture Filing
of even date herewith executed by Borrower, as Trustor, to Xxxxxxx Title
Guaranty Company, as Trustee, for the benefit of Lender, as Beneficiary, as
hereafter amended, supplemented, replaced or modified.
"Deemed Approval Matter" - means any matter requiring the consent of
Lender under the Loan Documents including, without limitation, the following:
(1) contracts for which Lender approval is required hereunder, as contemplated
in Sections 4.4 and 4.5, (2) Plans and Specifications and changes thereto for
which Lender approval is required hereunder, as contemplated in Section 4.6, (3)
Borrower's contracting for any materials, furnishings, equipment, fixtures or
other parts or components of the Improvements in which any third party will
retain any interest for which Lender approval is required hereunder, as
contemplated in Section 4.8, (4) the inclusion of the Property in any assessment
district or community facilities district for which Lender approval is required
hereunder, as contemplated in Section 4.11, (5) formation and authorization
documents of Borrower and Payment Guarantor, and modifications thereto, for
which Lender approval is required hereunder, as contemplated in Sections 6.3 and
9.10, (6) the issuance of any Set Aside Letter for which Lender approval is
required hereunder, as contemplated in Section 8.1; (7) leases and leasing
parameters for which Lender approval is required hereunder, as contemplated in
Section 9.4, (8) any Subdivision Map for which Lender approval is required
hereunder, as contemplated in Section 9.6, (9) assignment of all or any portion
of Borrower's interest under the Loan documents or any moneys due or to become
due thereunder for which Lender approval is required hereunder, as contemplated
in Section 9.8, and (10) agreements providing for the management, leasing or
operation of the Property or Improvements for which Lender approval is required
hereunder, as contemplated in Section 9.9; provided, however, the Lender's right
to approve, as provided in this Agreement, (i) the Title Policy and (ii) any
transfer of the Property, any interest in Borrower, any interest in the Project
Entity or any interest in WEO other than a Permitted Transfer, shall not
constitute Deemed Approval Matters.
"Default" - shall have the meaning ascribed to such term in Section 11.1.
"Development and Management Agreements" - means, collectively, the
Development Co-Management Agreement between Xxxxx X. Xxxxxxxxx, dba The
Jefferson Company, and Borrower dated as of September 15, 1999, and the
Development Co-Management Agreement between Xxxxxx/Xxxxx, LLC and Borrower,
dated as of August 1, 1999, as amended, or any other substitute or additional
contract for development management, property management and/or brokerage
services for the Property, and any amendment thereof, in each case, that has
been approved by Lender.
"Distribution" - means any transfer of cash or other property from
Borrower to any constituent member or statutory manager thereof, whether
characterized as a distribution, dividend, redemption, fee, repayment of a loan
or otherwise, but excluding
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the payment of any fees, commissions or expenses pursuant to the Development and
Management Agreements prior to the date that Lender requires Borrower to
terminate the Development and Management Agreements under the provisions of
Section 11.6 and following the date of any reinstatement of any terminated
Development and Management Agreements under the provisions of Section 11.6.
"Effective Date" - means the date the Deed of Trust is recorded in the
Office of the County Recorder of the county where the Property is located.
"Environmental Report" - means the reports actually received by Lender as
contemplated in Section 3.1(d) of this Agreement.
"EOP Project Investor" - means WEO - Ferry Building, LLC, a Delaware
limited liability company.
"Hazardous Materials" - shall have the meaning ascribed to such term in
Section 7.1(a).
"Hazardous Materials Claims" - shall have the meaning ascribed to such
term in Section 7.1(c).
"Hazardous Materials Laws" - shall have the meaning ascribed to such term
in Section 7.1(b).
"Improvements" - shall have the meaning ascribed to such term in Recital
B.
"Lender" - means Riverside Finance Company, L.L.C., a Delaware limited
liability company.
"Lender Payment Turnaround Period" - means, provided that Borrower
delivers the applicable application for payment to Lender under cover of a
written notice stating in bold, all-capitalized letters what the outside date
for such Lender Payment Turnaround Period is for that specific application for
payment, ten (10) calendar days.
"Loan" - means the principal sum that Lender agrees to lend and Borrower
agrees to borrow pursuant to the terms and conditions of this Agreement:
FIFTY-FIVE MILLION, NINE HUNDRED THOUSAND AND NO/100THS DOLLARS ($55,900,000).
"Loan Documents" - means those documents, as hereafter amended,
supplemented, replaced or modified, properly executed and in recordable form, if
necessary, listed in EXHIBIT B as Loan Documents.
"Maturity Date" - means the earliest to occur of (i) October 31, 2004,
(ii) the date that is one hundred eighty days (180) days after the date that
either of the "B Unit" or the
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"C Unit" (with each of such quoted terms defined as provided in the Operating
Agreement of Project Entity) is transferred to the EOP Project Investor or any
person or entity controlling, controlled by or under common control with the EOP
Project Investor; and (iii) the date on which all interests of WEO in the
Project Entity are sold or otherwise transferred to any person or entity that
does not control, is not controlled by or is not under common control with
either the EOP Project Investor or WEO.
"Note" - means that certain Promissory Note Secured by Deed of Trust of
even date herewith, in the original principal amount of the Loan, executed by
Borrower and payable to the order of Lender, as hereafter amended, supplemented,
replaced or modified.
"Obligee" - shall have the meaning ascribed to such term in Section 8.1.
"Operating Agreement of Project Entity" - means the limited liability
company agreement of the Project Entity dated as of February 26, 2001, in the
form delivered to Lender, as hereafter amended, supplemented , replaced or
modified as permitted in this Agreement.
"Operating Agreement of WEO" - means that certain Amended and Restated
Operating Agreement No. 1 of Xxxxxx/Equity Office, LLC dated as of August 1,
2000, in the form delivered to Lender, as hereafter amended, supplemented ,
replaced or modified as permitted in this Agreement.
"Other Borrower Loan Documents" - means those documents, as hereafter
amended, supplemented, replaced or modified from time to time, properly executed
and in recordable form, if necessary, listed in Exhibit B as "Other Borrower
Loan Documents."
"Other Related Documents" - means those documents, as hereafter amended,
supplemented, replaced or modified from time to time, properly executed and in
recordable form, if necessary, listed in EXHIBIT B as Other Related Documents.
"Out of Balance Notice" - shall have the meaning ascribed to such term in
Section 3.1(b).
"Payment Guarantor" - means the Project Entity and Ferry Building
Associates, LLC, a California limited liability company.
"Permitted Transfers" - means transfers of interests in the Project Entity
that are permitted under the Operating Agreement of the Project Entity and
transfers of interests in Xxxxxx/Equity Office, LLC, that are permitted under
the Operating Agreement of WEO.
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"Plans and Specifications" - shall have the meaning ascribed to such term
in Recital B.
"Principal Subs" - shall have the meaning ascribed to such term in Section
4.7.
"Project Entitlements" - means the (i) Resolution of the San Francisco
Port Commission Approving the Lease Disposition and Development Agreement and
Ground Lease (Resolution No. 99-67) dated August 24, 1999, and (ii) Resolution
of the San Francisco Board of Supervisors Approving the Lease Disposition and
Development Agreement and Ground Lease (Resolution No. 1140-99) dated December
20, 1999.
"Project Entity" means WEO- Ferry Building, LLC, a Delaware limited
liability company.
"Property" - shall have the meaning ascribed to such term in Recital A.
"Required Equity Contribution" - means THIRTY-SEVEN MILLION, SEVEN HUNDRED
SIXTY-FIVE THOUSAND, NINE HUNDRED NINETY-THREE AND NO/100THS DOLLARS
($37,765,993).
"Secured Obligations" - shall have the meaning ascribed to such term in
the Deed of Trust.
"Set Aside Letter" - shall have the meaning ascribed to such term in
Section 8.1.
"Subdivision Map" - shall have the meaning ascribed to such term in
Section 9.6.
"Surety" - shall have the meaning ascribed to such term in Section 8.1.
"Title Policy" - means the LP-10 ALTA Lender's Policy of Title Insurance
as issued by Xxxxxxx Title Guaranty Company, together with such special
endorsements as Lender may require thereto, including, without limitation, forms
CLTA 100 (making particular reference to any easement or encroachment listed in
the Title Policy), 116, 116.1, 116.4 (if there are any contiguity issues, in
Lender's opinion), 116.7, 103.7 (modified to insure access to a physically open
public street sufficient to provide vehicular and pedestrian ingress and
egress), variable interest rate, separate tax parcel, and such other special
endorsements as Lender may require.
"WEO" - means Xxxxxx/Equity Office, LLC, a Delaware limited liability
company.
"Working Capital" - means all proceeds of the Loan disbursed by Lender
into the Working Capital Reserve Account maintained with Bank pursuant to the
terms and conditions of this Agreement.
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"Working Capital Reserve Account" - means the account with Bank into which
all funds disbursed as Working Capital by Lender pursuant to this Agreement
shall be placed.
1.2. Exhibits Incorporated. EXHIBITS A, B, C, D and E, all attached
hereto, are hereby incorporated into this Agreement.
ARTICLE 2. LOAN
2.1. Loan. By and subject to the terms of this Agreement, Lender agrees to
lend to Borrower and Borrower agrees to borrow from Lender the principal sum of
FIFTY-FIVE MILLION, NINE HUNDRED THOUSAND AND NO/100THS DOLLARS ($55,900,000),
said sum to be evidenced by the Note of even date herewith. The Note shall be
secured, in part, by the Deed of Trust, of even date herewith, encumbering
certain real property and improvements as legally defined therein. Amounts
disbursed to or on behalf of Borrower pursuant to the Note shall be used to
finance the acquisition and construction of the Property and Improvements and
for such other purposes and uses as may be permitted under this Agreement and
the other Loan Documents.
2.2. Loan Documents. Borrower shall deliver to Lender concurrently with
this Agreement each of the documents, properly executed and in recordable form,
as applicable, described in EXHIBIT B as Loan Documents, together with those
documents described in EXHIBIT B as Other Related Documents. Notwithstanding
anything to the contrary contained elsewhere within this Agreement, the lien of
the Deed of Trust shall not secure any obligation under any of the Loan
Documents that are designated on EXHIBIT B as not being secured by liens upon
real property.
2.3. Effective Date. The date of the Loan Documents is for reference
purposes only. The Effective Date of delivery and transfer to Lender of the
security under the Loan Documents and of Borrower's and Lender's obligations
under the Loan Documents shall be the date the Deed of Trust is recorded in the
Office of the County Recorder of the county where the Property is located.
2.4. Maturity Date; Prepayment. Upon the Maturity Date, all sums due and
owing under this Agreement and the other Loan Documents shall be repaid in full.
All payments due to Lender under this Agreement, whether at the Maturity Date or
otherwise, shall be paid in immediately available funds. Amounts owing under the
Note may be prepaid by Borrower, upon not less than thirty (30) days prior
written notice to Lender, in whole or in part, at any time, without premium or
penalty.
2.5. Credit for Principal Payments. Any payment made upon the outstanding
principal balance of the Loan shall be credited as of the Business Day received,
provided such payment is received by Lender no later than 11:00 a.m. Pacific
Time) and constitutes immediately available funds. Any principal payment
received after said time
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or which does not constitute immediately available funds shall be credited upon
such funds having become unconditionally and immediately available to Lender.
2.6. Full Repayment and Reconveyance. Upon receipt of all sums owing and
outstanding under the Loan Documents, Lender shall issue a full reconveyance of
the Property and Improvements from the lien of the Deed of Trust and otherwise
release Lender's security interest in all other personal property collateral
that secure the Loan; provided, however, that all of the following conditions
shall be satisfied at the time of, and with respect to, such reconveyance: (a)
Lender shall have received all escrow, closing and recording costs, the costs of
preparing and delivering such reconveyance and any sums then due and payable
under the Loan Documents, and (b) Lender shall have received a written release
satisfactory to Lender of any set aside letter, letter of credit or other form
of undertaking which Lender has issued to any surety, governmental agency or any
other party in connection with the Loan and/or the Property and Improvements.
Lender's obligation to make further disbursements under the Loan shall terminate
as to any portion of the Loan undisbursed as of the date of issuance of such
full release or reconveyance, and any commitment of Lender to lend any
undisbursed portion of the Loan shall be canceled.
2.7. Certificates of Approval. With respect to any Deemed Approval Matter,
such matter shall be deemed approved by Lender if Borrower delivers to Lender,
with Borrower's next request for a disbursement pursuant to Article III, below,
a properly completed and factually accurate Certificate of Approval, and Lender
does not dispute such Certificate of Approval by written notice to Borrower
delivered within five (5) Business Days following Lender's receipt thereof. Such
Lender approval shall be effective as of the date such approval was required,
unless Lender timely delivers such written notice disputing such Certificate of
Approval.
ARTICLE 3. DISBURSEMENT
3.1. Conditions Precedent. Lender's obligation to make any disbursements
or take any other action under the Loan Documents shall be subject at all times
to satisfaction of each of the following conditions precedent:
(a) There shall exist no Default, as defined in this Agreement,
Default as defined in any of the other Loan Documents, event, omission or
failure of condition which would constitute a Default after notice or lapse of
time, or both, or default by Borrower (following any applicable notice and cure
period) under any of the Other Related Documents, except to the extent that such
event, omission or failure (i) is of a nature that it could ripen into a
monetary Default, and that event, omission or failure will be cured by the
requested disbursement or with funds that Borrower is then attempting to raise
during the 60-day cure period set forth in the provisions of the final paragraph
of Section 11.1, or (ii) is of a nature that it could ripen into a non-monetary
Default, such
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event, omission or failure is curable, and Borrower is then diligently
prosecuting such cure to completion within the applicable cure period; and
(b) Any undisbursed Loan funds together with all sums, if any, to be
provided by Borrower as shown in EXHIBIT C shall be at all times equal to or
greater than the amount which Lender from time to time reasonably determines
necessary to: (i) pay, through completion, all costs of renovation, development,
construction, operation, marketing and sale or leasing of the Property and
Improvements in accordance with the Loan Documents; (ii) pay all sums which may
accrue under the Loan Documents prior to repayment of the Loan; and (iii) enable
Borrower to perform and satisfy all of the covenants of Borrower contained in
the Loan Documents. If Lender reasonably determines at any time that the
undisbursed Loan funds are insufficient for said purposes, Lender may deliver to
Borrower written notice demanding that Borrower then deposit funds equal to such
deficiency in the Borrower's Funds Account (an "Out of Balance Notice"), in
which event Borrower shall deposit the amount of such deficiency in the
Borrower's Funds Account within thirty (30) days after the date of delivery of
the applicable Out of Balance Notice; and
(c) Lender shall have received all Loan Documents, other documents,
instruments, policies, and forms of evidence or other materials requested by
Lender under the terms of this Agreement or any of the other Loan Documents,
including, without limitation, such forms of estoppel certificates and
subordination, non-disturbance and attornment agreements as Lender may then
require from existing tenants of the Property; and
(d) Lender acknowledges that it has received and approved in form
and substance satisfactory to Lender: (i) a soils report for the Property and
Improvements; (ii) an environmental questionnaire and environmental site
assessment with respect to the presence, if any, of Hazardous Materials on the
Property and Improvements; (iii) two sets of the Plans and Specifications,
certified as complete by the Architect (or if the Plans and Specifications for
the entirety of the Improvements are not then complete or some portion of the
Improvements are to be constructed using a design/build process, in either such
case pursuant to partial Plans and Specifications approved by Lender under the
provisions of Section 4.6 of this Agreement and for which a valid building
permit has been issued, then such portion of the Plans and Specifications to the
extent that payment for such portion of the Improvements is to be covered by a
current disbursement request), together with evidence of all necessary or
appropriate approvals of governmental agencies; (iv) copies of all agreements
which are material to completion of the Improvements; (v) copies of all building
permits and similar permits, licenses, approvals, development agreements and
other authorizations of governmental agencies required in connection with the
development of the Property and Improvements, or, if such approvals are to be
issued on a staged basis, then for the current and all prior stages of
development, provided that such staged development has been approved by Lender,
as contemplated in
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Section 4.6; and (vi) copies of any initial study, negative declaration,
mitigated negative declaration, environmental impact report, notice of
determination or notice of exemption prepared, adopted, certified or filed by
any governmental agency in connection with the Property; and
(e) Lender shall have received and approved evidence reasonably
acceptable to Lender that Borrower has invested the Required Equity Contribution
into the acquisition and development of the Property and Improvements, either as
shown on EXHIBIT C or otherwise.
3.2. Account, Pledge and Assignment, and Disbursement Authorization. The
proceeds of the Loan and Borrower's Funds, when qualified for disbursement,
shall be deposited into the Account or otherwise disbursed to or for the benefit
or account of Borrower under the terms of this Agreement. Disbursements
hereunder may be made by Lender upon the written request of any person who has
been authorized by Borrower to request such disbursements until such time as
written notice of Borrower's revocation of such authority is received by Lender
at the address shown in EXHIBIT D. As additional security for Borrower's
performance under the Loan Documents, Borrower hereby irrevocably pledges and
assigns to Lender the Account and all monies at any time deposited in the
Account.
3.3. Borrower's Funds Account, Pledge and Assignment. Except as otherwise
provided in this Agreement, all of the Borrower's Funds which are deposited with
Lender by Borrower as shown in EXHIBIT C, or any other provision of the Loan
Documents, shall be placed in the Borrower's Funds Account for disbursement
under this Agreement. As additional security for Borrower's performance under
the Loan Documents, Borrower hereby irrevocably pledges and assigns to Lender
the Borrower's Funds Account and all monies at any time deposited in the
Borrower's Funds Account.
3.4. Loan Disbursements. Subject to the conditions set forth in Section
3.1(b), the proceeds of the Loan and Borrower's Funds shall be disbursed in
accordance with the terms and conditions of EXHIBIT D. Disbursements made after
the deposit of Borrower's Funds shall be made first from the Borrower's Funds
Account until depleted. All disbursements shall be held by Borrower in trust and
applied by Borrower solely for the purposes for which the funds have been
disbursed. Lender has no obligation to monitor or determine Borrower's use or
application of the disbursements. Partial disbursements shall be permitted under
the terms and subject to the conditions set forth in EXHIBIT D.
3.5. Working Capital. From time to time, in Borrower's Applications for
Payment, Borrower may request the disbursement of proceeds of the Loan and
Borrower's Funds into the Working Capital Reserve Account to maintain the
balance of the Working Capital Reserve Account at the amount specified in the
Disbursement Budget, provided that amounts in the Working Capital Reserve
Account may only be used to pay reasonable costs of the design or construction
of the Improvements, and that
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Borrower shall have delivered the monthly reports with respect to the Working
Capital Reserve Account that are required under the provisions of Section 10.1
of this Agreement for all prior months. As additional security for Borrower's
performance under the Loan Documents, Borrower hereby irrevocably pledges and
assigns to Lender the Working Capital Reserve Account and all monies at any time
deposited in the Working Capital Reserve Account.
ARTICLE 4. CONSTRUCTION
4.1. Commencement and Completion. Borrower shall commence construction of
the Improvements without delay after recordation of the Deed of Trust and shall
complete construction of the Improvements on or before the Completion Date.
4.2. Commencement and Completion of Offsite Improvements. Borrower shall
commence construction of any offsite improvements required by any governmental
authority to be performed by Borrower under any Project Entitlements in
connection with the construction of the Improvements without delay after
recordation of the Deed of Trust and shall complete construction of any such
offsite improvements on or before the date required under the applicable Project
Entitlements.
4.3. Force Majeure. The time within which construction of the Improvements
must be completed shall be extended for a period of time equal to the period of
any delay directly affecting construction which is caused by fire, earthquake or
other acts of God, unexpected inclement weather, utility shortages or
interruptions, strike, lockout, acts of public enemy, riot, insurrection, or
governmental regulation of the sale or transportation of materials, supplies or
labor, the failure of any governmental authority to issue any Project
Entitlement for reasons beyond Borrower's reasonable control, the failure of any
condition of approval on any Project Entitlement for any reason beyond
Borrower's reasonable control, or any moratorium enacted by any governmental
authority over Borrower's good faith opposition that prohibits, impairs, delays
or restricts development of the Improvements; provided, however, that Borrower
shall furnish Lender with written notice satisfactory to Lender evidencing any
such delay within ten (10) days after the occurrence of any such delay. In no
event shall the time the anticipated date for completion of the Improvements be
extended beyond the Maturity Date or more than one hundred twenty (120) days
beyond the Completion Date as scheduled prior to such delay.
4.4. Construction Agreement. Borrower and Contractor have entered into the
Construction Agreement pursuant to the terms and conditions of which Contractor
is to construct the Improvements. Borrower shall require Contractor to perform
in accordance with the terms of the Construction Agreement and shall not amend,
modify or alter the Construction Agreement without Lender's prior written
consent, which consent shall not be unreasonably withheld, conditioned or
delayed. Borrower shall execute, upon Lender's request, an assignment of
Borrower's rights under the Construction Agreement
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to Lender as security for Borrower's obligations under this Agreement and the
other Loan Documents and shall cause the Contractor to consent to any such
assignment.
4.5. Architect's Agreement. Borrower and Architect have entered into the
Architect's Agreement, pursuant to which Architect is to design the
Improvements. Borrower shall require Architect to perform in accordance with the
terms of the Architect's Agreement and shall not amend, modify or alter the
Architect's Agreement without Lender's prior written consent, which consent
shall not be unreasonably withheld, conditioned or delayed. Upon Lender's
request, Borrower shall execute an assignment of the Architect's Agreement and
the Plans and Specifications to Lender as additional security for Borrower's
performance under this Agreement and the other Loan Documents and shall cause
the Architect to consent to any such assignment.
4.6. Plans and Specifications.
(a) Changes; Lender Consent. If the Plans and Specifications
contemplate staged design and construction, and if Lender has approved Plans and
Specifications that contemplate that certain stages will be designed in the
future, then any stages of such Plans and Specifications that have not been
approved by Lender as of the date of this Agreement shall be subject to Lender's
prior written approval, which consent shall not be unreasonably withheld,
conditioned or delayed. Except as otherwise provided in this Agreement, Borrower
shall not make any changes in the Plans and Specifications or the Improvements
without Lender's prior written consent if such change, taken together with all
other changes for which Lender's approval was not required hereunder, could
materially affect the overall quality or efficiency of the Improvements or the
Improvements' exterior, lobbies or building systems. Without limiting the above,
Lender agrees that Borrower may make minor changes in the Plans and
Specifications and Improvements without Lender's prior written consent, provided
that such changes do not violate any of the conditions specified herein.
Notwithstanding the foregoing, Lender shall not have any approval rights
respecting any change in the Plans and Specifications or the Improvements if
such change follows inevitably from previously approved Plans and Specifications
or changes thereto. Borrower shall at all times maintain, for inspection by
Lender, a set of working drawings of the Improvements, which, if there is staged
design that has not yet occurred, if applicable, shall at least cover the
portions of the Improvements completed and under construction or fully designed
at such time.
(b) Changes; Submission Requirements. Borrower shall submit any
proposed change in the Plans and Specifications requiring Lender's consent to
Lender prior to the commencement of construction relating to such proposed
change, at least ten (10) Business Days prior to the commencement of
construction. Requests for any change which requires consent shall be
accompanied by working drawings (or appropriate submittals)and a written
description of the proposed change, submitted on a change order form acceptable
to Lender, signed by Borrower and, if required by Lender, also by the
Page 12
Architect and the Contractor. At its option, Lender may require Borrower to
provide: (i) evidence satisfactory to Lender of the cost and time necessary to
complete the proposed change; and (ii) a deposit in the amount of any increased
costs into Borrower's Funds Account.
(c) Consent Process. Borrower acknowledges that Lender's review of
any changes and required consent may result in delays in construction and hereby
consents to any such delays. Nevertheless, Lender shall use commercially
reasonable efforts to respond to requests for approval within the time periods
provided in this Agreement.
(d) Final Plans and Specifications. Upon completion of the
Improvements, Borrower shall deliver to Lender within sixty (60) days a set of
final, as-built Plans and Specifications.
4.7. Contractor/Construction Information. Borrower shall deliver to Lender
in a form acceptable to Lender: (a) a list detailing the name, address and phone
number of each contractor, subcontractor and material supplier to be employed or
used for construction of the Improvements who is under contract or otherwise has
been selected to supply goods or services or perform work for the Project
costing in excess of $5,000 in the aggregate and any other person or entity who
delivers a Preliminary Notice to Owner or Lender under Civil Code Sections 3097
or 3098 (collectively, "Principal Subs") together with the dollar amount,
including changes, if any, reflected in each contract and subcontract for the
Principal Subs, and the portion thereof, if any, paid through the date of such
list of Principle Subs; (b) copies of each contract and subcontract identified
in such list of Principal Subs, including any changes thereto; (c) a cost
breakdown of the projected total cost of constructing the Improvements, and that
portion, if any, of each cost item which has been incurred; and (d) a
construction progress schedule detailing the progress of construction and the
projected sequencing and completion time for uncompleted work, all as of the
date of such schedule.
Borrower agrees that Lender's approval of any contractor, subcontractor or
material supplier if and to the extent permitted under the terms of this
Agreement shall not constitute a warranty or representation of qualification by
Lender. Lender may contact any contractor, subcontractor or material supplier to
discuss the course of construction.
4.8. Prohibited Contracts. Without Lender's prior written consent,
Borrower shall not contract for any materials, furnishings, equipment, fixtures
or other parts or components of the Improvements, if any third party shall
retain any ownership interest (other than lien rights created by operation of
law) in such items after their delivery to the Property and Improvements.
Borrower shall have twenty (20) days to effect the removal of any such retained
interest not otherwise permitted above, or, provided that such interest or the
holder's realization thereon will not jeopardize Borrower's title to or use of
the Property, if such retained interest cannot be reasonably removed in such
period,
Page 13
Borrower shall have commenced such removal within such time and shall diligently
pursue its removal until completed.
4.9. Liens and Stop Notices. If a claim of lien is recorded which affects
the Property or Improvements or a bonded stop notice is served upon Lender,
within twenty (20) calendar days after such recording or service or within five
(5) Business Days after Lender's demand, whichever occurs first, Borrower, at
Borrower's election, shall do one of the following: (a) pay and discharge the
claim of lien or bonded stop notice; (b) effect the release thereof by recording
or delivering to Lender a surety bond in sufficient form and amount; or (c)
provide Lender with other assurances which Lender deems, in its sole discretion,
to be satisfactory for the payment of such claim of lien or bonded stop notice
and for the full and continuous protection of Lender from the effect of such
lien or bonded stop notice.
4.10. Construction Responsibilities. Borrower shall construct the
Improvements in a workmanlike manner substantially in accordance with the Plans
and Specifications and the recommendations of any soils or engineering report
approved by Lender pursuant to Section 3.1(d) above. Borrower shall
substantially comply with all applicable laws, ordinances, rules, regulations,
building restrictions, recorded covenants and restrictions, and requirements of
all regulatory authorities having jurisdiction over the Property or
Improvements. Borrower shall be solely responsible for all aspects of Borrower's
business and conduct in connection with the Property and Improvements,
including, without limitation, for the quality and suitability of the Plans and
Specifications and their compliance with all governmental requirements, the
supervision of the work of construction, the qualifications, financial condition
and performance of all architects, engineers, contractors, material suppliers,
consultants and property managers, and the accuracy of all applications for
payment and the proper application of all disbursements. Lender is not obligated
to supervise, inspect or inform Borrower or any third party of any aspect of the
construction of the Improvements or any other matter referred to above.
4.11. Assessments and Community Facilities Districts. Without Lender's
prior written consent, Borrower shall not cause or suffer to become effective or
otherwise consent to the formation of any assessment district or community
facilities district which includes all or any part of the Property and
Improvements pursuant to: (a) the Xxxxx-Xxxx Community Facilities Act of 1982;
(b) the Municipal Improvement Act of 1913; or (c) any other comparable or
similar statute or regulation. Nor shall Borrower cause or otherwise consent to
the levying of special taxes or assessments against the Property and
Improvements by any such assessment district or community facilities district.
4.12. Delay. Borrower shall promptly notify Lender in writing of any event
causing delay or interruption of construction, or the timely completion of
construction. The notice shall specify the particular work delayed, and the
cause and period of each delay.
Page 14
4.13. Inspections. Lender shall have the right to enter upon the Property
at all reasonable times to inspect the Improvements and the construction work to
verify information disclosed or required pursuant to this Agreement. Any
inspection or review of the Improvements by Lender is solely to determine
whether Borrower is properly discharging its obligations to Lender and may not
be relied upon by Borrower or by any third party as a representation or warranty
of compliance with this Agreement or any other agreement. Lender owes no duty of
care to Borrower or any third party to protect against, or to inform Borrower or
any third party of, any negligent, faulty, inadequate or defective design or
construction of the Improvements as determined by Lender.
4.14. Surveys. Upon Lender's written request, Borrower shall promptly
deliver to Lender: (a) a current survey of the Property showing the location of
the Improvements on the Property (as constructed as of the date of such survey),
all easements, encroachments and applicable governmental set backs; and (b) upon
completion of the Improvements, an as-built survey acceptable to a title insurer
for purposes of issuing an ALTA policy of title insurance. All such surveys
shall be performed and certified by a licensed engineer or surveyor acceptable
to the title insurer.
ARTICLE 5. INSURANCE
Borrower shall, while any obligation of Borrower or Payment Guarantor
under any Loan Document remains outstanding, maintain at Borrower's sole
expense, with licensed insurers approved by Lender, the following policies of
insurance in form and substance satisfactory to Lender:
5.1. Title Insurance. A Title Policy insuring Lender, in the principal
amount of the Loan, of the validity and the priority of the lien of the Deed of
Trust upon the Property and Improvements, subject only to matters approved by
Lender in writing. During the term of the Loan, Borrower shall deliver to
Lender, within five (5) Business Days after Lender's written request, such other
endorsements to the Title Policy as Lender may reasonably require.
5.2. Property Insurance. A Builders Risk Completed Value Hazard Insurance
policy, including, without limitation, such endorsements as Lender may require,
insuring Lender against damage to the Property and Improvements in an amount
acceptable to Lender. Lender shall be named on the policy under a Lender's Loss
Payable Endorsement (form #438BFU or equivalent).
5.3. Flood Hazard Insurance. A policy of flood insurance, as required by
applicable governmental regulations, or as deemed necessary by Lender.
5.4. Liability Insurance. A policy of commercial general liability
insurance with limits as required by Lender, insuring against liability for
injury and/or death to any
Page 15
person and/or damage to any property occurring on the Property and/or in the
Improvements from any cause whatsoever.
5.5. General. Borrower shall provide to Lender the originals of all
required insurance policies, or other evidence of insurance acceptable to
Lender. All insurance policies shall provide that the insurance shall not be
cancelable or materially changed without ten (10) days prior written notice to
Lender. Lender shall be named under a Lender's Loss Payable Endorsement (form
#438BFU or equivalent) on all insurance policies which Borrower actually
maintains with respect to the Property and Improvements. Borrower shall provide
to Lender evidence of any other hazard insurance Lender may deem necessary at
any time during the Loan.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES
As a material inducement to Lender's entry into this Agreement, Borrower
represents and warrants to Lender as of the Effective Date and as of the date
each Application for Payment is submitted to Lender pursuant to EXHIBIT D
(provided, however, that to the extent circumstances have changed for reasons
beyond the reasonable control of Borrower such that Borrower must qualify such
representations and warranties as of the date of delivery of any such
Application for Payment, such qualification, to the extent it renders the
applicable representation materially untrue or breaches the applicable warranty,
shall merely be a failure of condition to Lender's obligation to disburse funds
under the provisions of EXHIBIT D, as opposed to constituting an Event of
Default) that:
6.1. Authority/Enforceability. Borrower is in substantial compliance with
all laws and regulations applicable to its organization, existence and
transaction of business and has all necessary rights and powers to own, develop
and operate the Property and Improvements as contemplated by the Loan Documents.
6.2. Binding Obligations. Borrower is authorized to execute, deliver and
perform its obligations under the Loan Documents and such obligations are and
shall continue to be valid and binding obligations of Borrower.
6.3. Formation and Organizational Documents. Borrower has delivered to
Lender all formation and organizational documents of Borrower, and of the
Payment Guarantor, and all such formation and organizational documents remain in
full force and effect and have not been amended or modified since they were
delivered to or otherwise approved by Lender. Borrower shall immediately provide
Lender with copies of any amendments or modifications of the formation or
organizational documents, to the extent permitted hereunder.
6.4. No Violation. Borrower's execution, delivery, and performance under
the Loan Documents do not: (a) require any consent or approval not heretofore
obtained
Page 16
under any partnership agreement, operating agreement, limited liability company
agreement, articles of incorporation, bylaws or other document; (b) materially
violate any governmental requirement applicable to the Property and Improvements
or any other statute, law, regulation or ordinance or any order or ruling of any
court or governmental entity; (c) materially conflict with, or constitute a
material breach or default or permit the acceleration of obligations under any
agreement, contract, lease, or other document by which the Borrower is or the
Property and Improvements are bound or regulated; or (d) materially violate any
statute, law, regulation or ordinance, or any order of any court or governmental
entity.
6.5. Compliance with Laws. Borrower has, and at all applicable times shall
have obtained, all permits, licenses, exemptions, and approvals necessary to
construct, occupy, operate and market the Property and Improvements for the
applicable stage of development and operation, and shall maintain substantial
compliance with all governmental requirements applicable to the Property and
Improvements and all other applicable statutes, laws, regulations and ordinances
necessary for the transaction of its business.
6.6. Litigation. Except as disclosed to Lender in writing, there are no
claims, actions, suits, or proceedings pending, or to Borrower's knowledge
threatened, against Borrower[, Payment Guarantor] or affecting the Property or
Improvements that are of a material nature and that, if successfully prosecuted
against Borrower or Payment Guarantor, as applicable, would create a material
adverse change in the financial condition of either Borrower or Payment
Guarantor.
6.7. Financial Condition. All financial statements and information
relating to the financial condition of Borrower, Payment Guarantor, the
Property, and the Improvements, which have been heretofore and hereafter are
delivered to Lender by Borrower, fairly and accurately represent as of the date
of such delivery the financial condition of the subject thereof and have been
prepared (except as noted therein) in accordance with generally accepted
accounting principles consistently applied. Borrower acknowledges and agrees
that Lender may request and obtain additional information from third parties
regarding any of the above, including, without limitation, credit reports.
6.8. [Deleted]
6.9. Loan Proceeds and Adequacy. The undisbursed Loan proceeds, together
with Borrower's Funds and all other sums, if any, to be provided by Borrower as
shown in EXHIBIT C, are sufficient to construct the Improvements in accordance
with the terms and conditions of this Agreement.
6.10. Accuracy. All reports, documents, instruments, information and forms
of evidence delivered to Lender concerning the Loan or security for the Loan or
required by the Loan Documents are accurate, correct and sufficiently complete
to give Lender true
Page 17
and accurate knowledge of their subject matter, and do not contain any material
misrepresentation or omission.
6.11. Tax Liability. Borrower has filed all required federal, state,
county and municipal tax returns and has paid all taxes and assessments owed and
payable by Borrower or with respect to the Property, and Borrower has no
knowledge of any basis for any additional payment with respect to any such taxes
and assessments.
6.12. Utilities. Subject to the provisions of Section 4.3 of this
Agreement, all utility services, including, without limitation, gas, water,
sewage, electrical and telephone, necessary for the development and occupancy of
the Property and Improvements are available at or within the boundaries of the
Property, or Borrower has taken all steps reasonably necessary to date to assure
that all such services will be available upon completion of the Improvements.
6.13. Compliance. Borrower is familiar with and in substantial compliance
with all governmental requirements for the development of the Property and
construction of the Improvements and, subject to the provisions of Section 4.3
of this Agreement, will substantially conform to and comply with all
governmental requirements and the Plans and Specifications.
6.14. Americans With Disabilities Act Compliance. The Improvements have
been or will be designed and shall be constructed and completed, and thereafter
maintained, in general accordance and substantial compliance with all of the
requirements of the Americans with Disabilities Act, of July 26, 1990, Pub. L.
Xx. 000-000, 000 Xxxx. 000, 00 X.X.X. Section 12101, et seq., as amended from
time to time. Borrower shall be responsible for all ADA compliance costs;
provided however, Lender acknowledges and agrees that construction and operation
of portions of the Improvements which are intended to satisfy the foregoing
representation and warranty and any related covenant of Borrower may be funded
by the Loan.
6.15. Business Loan. The Loan is a business loan transaction in the stated
amount solely for the purpose of carrying on the business of Borrower and none
of the proceeds of the Loan will be used for the personal, family or
agricultural purposes of the Borrower.
ARTICLE 7. HAZARDOUS MATERIALS
7.1. Special Representations and Warranties. Without in any way limiting
the other representations and warranties set forth in this Agreement, and after
reasonable investigation and inquiry, and except as disclosed in the
Environmental Report or otherwise disclosed in writing to Lender prior to the
date of this Agreement, Borrower hereby specially represents and warrants to the
best of Borrower's knowledge as of the date of this Agreement as follows:
Page 18
(a) Hazardous Materials. The Property and Improvements are not and
have not been a site for the use, generation, manufacture, storage, treatment,
release, threatened release, discharge, disposal, transportation or presence of
any oil, flammable explosives, asbestos, urea formaldehyde insulation,
radioactive materials, hazardous wastes, toxic or contaminated substances or
similar materials, including, without limitation, any substances which are
"hazardous substances," "hazardous wastes," "hazardous materials," "toxic
substances," "wastes," "regulated substances," "industrial solid wastes," or
"pollutants" under the Hazardous Materials Laws, as described below, and/or
other applicable environmental laws, ordinances or regulations (collectively,
the "Hazardous Materials"). "Hazardous Materials" shall not include commercially
reasonable amounts of such materials used in the ordinary course of preparation
of the Property for construction, construction of the Improvements and operation
of the Property which are used and stored in accordance with all applicable
environmental laws, ordinances and regulations.
(b) Hazardous Materials Laws. The Property and Improvements are in
substantial compliance with all laws, ordinances and regulations relating to
Hazardous Materials ("Hazardous Materials Laws"), including, without limitation:
the Clean Air Act, as amended, 42 U.S.C. Section 7401 et seq.; the Federal Water
Pollution Control Act, as amended, 33 U.S.C. Section 1251 et seq.; the Resource
Conservation and Recovery Act of 1976, as amended, 42 U.S.C. Section 6901 et
seq.; the Comprehensive Environment Response, Compensation and Liability Act of
1980, as amended (including the Superfund Amendments and Reauthorization Act of
1986, "CERCLA"), 42 U.S.C. Section 9601 et seq.; the Toxic Substances Control
Act, as amended, 15 U.S.C. Section 2601 et seq.; the Occupational Safety and
Health Act, as amended, 29 U.S.C. Section 651, the Emergency Planning and
Community Right-to-Know Act of 1986, 42 U.S.C. Section 11001 et seq.; the Mine
Safety and Health Act of 1977, as amended, 30 U.S.C. Section 801 et seq.; the
Safe Drinking Water Act, as amended, 42 U.S.C. Section 300f et seq.; and all
comparable state and local laws, laws of other applicable jurisdictions or
orders and regulations.
(c) Hazardous Materials Claims. There are no claims or actions
("Hazardous Materials Claims") pending or threatened against Borrower, the
Property or Improvements by any governmental entity or agency or by any other
person or entity relating to Hazardous Materials or pursuant to the Hazardous
Materials Laws.
(d) Border Zone Property. The Property has not been designated as
Border Zone Property under the provisions of California Health and Safety Code,
Sections 25220 et seq. and there has been no occurrence or condition on any real
property adjoining or in the vicinity of the Property that could cause the
Property or any part thereof to be designated as Border Zone Property.
Page 19
7.2. Hazardous Materials Covenants. Borrower agrees as follows:
(a) No Hazardous Activities. Except for the implementation of
remediation programs or plans required under agreements, orders or consent
decrees referenced in the Environmental Report, Borrower shall not cause or
permit the Property or Improvements to be used as a site for the use,
generation, manufacture, storage, treatment, release, discharge, disposal,
transportation or presence of any Hazardous Materials.
(b) Compliance. Except to the extent such compliance is to be the
result of the implementation of remediation programs or plans required under
agreements, orders or consent decrees referenced in the Environmental Report,
Borrower shall comply and cause the Property and Improvements to comply with all
Hazardous Materials Laws.
(c) Notices. Except for those matters set forth in the Environmental
Report or otherwise disclosed in writing to Lender prior to the date of this
Agreement, Borrower shall immediately notify Lender in writing of: (i) the
discovery of any Hazardous Materials on, under or about the Property and
Improvements; (ii) any knowledge by Borrower that the Property and Improvements
are not in material compliance with any Hazardous Materials Laws; (iii) any
Hazardous Materials Claims; and (iv) the discovery of any occurrence or
condition on any real property adjoining or in the vicinity of the Property that
could cause the Property or any part thereof to be designated as Border Zone
Property.
(d) Remedial Action. Except with respect to any Hazardous Materials,
violations of Hazardous Materials Laws and Hazardous Materials Claims that are
to be remedied by the implementation of remediation programs or plans required
under agreements, orders or consent decrees referenced in the Environmental
Report, in response to the presence of any Hazardous Materials on, under or
about the Property or Improvements, Borrower shall immediately take, at
Borrower's sole expense, all remedial action required by any Hazardous Materials
Laws or any judgment, consent decree, settlement or compromise in respect to any
Hazardous Materials Claims.
(e) Inspection By Lender. Upon reasonable prior notice to Borrower,
Lender, its employees and agents, may from time to time (whether before or after
the commencement of a nonjudicial or judicial foreclosure proceeding) enter and
inspect the Property and Improvements for the purpose of determining the
existence, location, nature and magnitude of any past or present release or
threatened release of any Hazardous Materials into, onto, beneath or from the
Property and Improvements.
(f) Hazardous Materials Indemnity. BORROWER HEREBY AGREES TO DEFEND,
INDEMNIFY AND HOLD HARMLESS LENDER, ITS DIRECTORS, OFFICERS, MEMBERS, MANAGERS,
EMPLOYEES, AGENTS, SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES,
DAMAGES,
Page 20
LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES) WHICH LENDER MAY
INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF THE USE, GENERATION, MANUFACTURE,
STORAGE, DISPOSAL, THREATENED DISPOSAL, TRANSPORTATION OR PRESENCE OF HAZARDOUS
MATERIALS IN, ON, UNDER OR ABOUT THE PROPERTY OR IMPROVEMENTS. BORROWER SHALL
IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS OWING UNDER THIS INDEMNITY,
TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL PAID AT THE
RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE. BORROWER'S
DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER SHALL SURVIVE
THE CANCELLATION OF THE NOTE AND THE RELEASE, RECONVEYANCE OR PARTIAL
RECONVEYANCE OF THE DEED OF TRUST.
(g) Legal Effect of Section. Borrower and Lender agree that: (a)
this Article VII is intended as Lender's written request for information (and
Borrower's response) concerning the environmental condition of the real property
security as required by California Code of Civil Procedure Section 726.5; and
(b) each provision in this Article (together with any indemnity applicable to a
breach of any such provision) with respect to the environmental condition of the
real property security is intended by Lender and Borrower to be an
"environmental provision" for purposes of California Code of Civil Procedure
Section 736, and as such it is expressly understood that Borrower's duty to
indemnify Lender hereunder shall survive: (i) any judicial or non-judicial
foreclosure under the Deed of Trust, or transfer of the Property in lieu
thereof; (ii) the release and reconveyance or cancellation of the Deed of Trust;
and (iii) the satisfaction of all of Borrower's obligations under the Loan
Documents.
ARTICLE 8. SET ASIDE LETTERS
8.1. Set Aside Letters. If, at Borrower's request, Lender issues any
letter or letters ("Set Aside Letter") to any governmental agency ("Obligee") or
bonding company ("Surety") whereby Lender agrees to allocate Loan proceeds for
the construction of off-site, common area, or other improvements required by any
governmental agency or for which bonds may be required ("Bonded Work") in
connection with the development of the Property, Borrower represents, warrants,
covenants and agrees as follows:
(a) The sum which Borrower requests Lender to allocate for the
Bonded Work shall be sufficient to pay for the construction and completion cost
of the Bonded Work in accordance with any agreement between Borrower and Obligee
or as may be required under the Project Entitlements, and a copy of such
agreement shall be furnished to Lender by Borrower prior to and as a condition
precedent to the issuance by Lender of any Set Aside Letter;
Page 21
(b) Lender is irrevocably and unconditionally authorized to disburse
to the Obligee or Surety all or any portion of said allocated Loan proceeds upon
a demand of such Surety or Obligee made in accordance with the terms and
conditions of the Set Aside Letter;
(c) Any disbursements or payments which Lender makes or may be
obligated to make under any Set Aside Letter, whether made directly to the
Surety, Obligee, or to others for completion of all or part of the Bonded Work,
shall be deemed a disbursement under this Agreement to or for the benefit or
account of Borrower;
(d) BORROWER SHALL DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER FROM
ANY CLAIM, DEMAND, CAUSE OF ACTION, DAMAGE, LOSS OR LIABILITY, INCLUDING,
WITHOUT LIMITATION, ANY COURT COSTS AND ATTORNEYS' FEES AND EXPENSES, WHICH
LENDER MAY SUFFER OR INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF ITS ISSUANCE
OF OR COMPLIANCE WITH ANY REQUESTED SET ASIDE LETTER. BORROWER SHALL PAY ANY
INDEBTEDNESS ARISING UNDER THIS INDEMNITY TO LENDER IMMEDIATELY UPON DEMAND OF
LENDER. BORROWER'S DUTY TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER HEREUNDER
SHALL SURVIVE THE RELEASE AND CANCELLATION OF THE NOTE AND THE FULL OR PARTIAL
RELEASE OR RECONVEYANCE OF THE DEED OF TRUST OR OTHER LOAN DOCUMENTS;
(e) Lender shall have no obligation to release any collateral or
security under the Loan Documents unless and until Lender has received a full
and final written release of its obligations under each Set Aside Letter; and
(f) Lender is not obligated to issue any Set Aside Letter and may
refuse to do so in Lender's sole and absolute discretion, excepting only the
following Set Aside Letters: None.
ARTICLE 9. COVENANTS OF BORROWER
9.1. Expenses. Borrower shall immediately pay Lender upon demand all
Lender's reasonable out-of-pocket costs and expenses actually incurred by Lender
in connection with: (a) the preparation of this Agreement, all other Loan
Documents and Other Related Documents contemplated hereby; (b) the
administration of this Agreement, the other Loan Documents and Other Related
Documents for the term of the Loan; and (c) the enforcement or satisfaction by
Lender of any of Borrower's obligations under this Agreement, the other Loan
Documents or the Other Related Documents. For all purposes of this Agreement,
Lender's costs and expenses shall include, without limitation, all appraisal
fees, cost engineering and inspection fees, legal fees and expenses, accounting
fees, environmental consultant fees, auditor fees, and the cost to Lender of any
title insurance premiums, title surveys, reconveyance and notary fees. Borrower
recognizes
Page 22
and agrees that Lender may, at its option, require inspection of the Property
and Improvements by an independent supervising architect and/or cost engineering
specialist: (i) prior to each advance; (ii) at least once each month during the
course of construction even though no disbursement is to be made for that month;
(iii) upon completion of the Improvements; and (iv) at least semi-annually
thereafter during the term of the Loan. To the extent that any of the foregoing
are performed or incurred by employees of Lender or any Affiliate of Lender, no
such costs, or any associated travel, lodging, subsistence or other expenses for
such goods and services shall be owed by Borrower.
9.2. ERISA Compliance. Borrower shall at all times comply with the
provisions of ERISA with respect to any retirement or other employee benefit
plan to which it is a party as employer, and as soon as possible after Borrower
knows, or has reason to know, that any Reportable Event (as defined in ERISA)
with respect to any such plan of Borrower has occurred, it shall furnish to
Lender a written statement setting forth details as to such Reportable Event and
the action, if any, which Borrower proposes to take with respect thereto,
together with a copy of the notice of such Reportable Event furnished to the
Pension Benefit Guaranty Corporation.
9.3. Leasing. Once the Improvements are completed and ready for occupancy,
Borrower shall use its commercially reasonable efforts to maintain all leasable
space in the Property leased at no less than fair market rental rates.
9.4. Approval of Leases. EXHIBIT E sets forth certain leasing parameters
applicable to the Property. Borrower shall not execute any proposed lease not
conforming to such leasing parameters without Lender's prior written consent,
which consent shall not be unreasonably withheld, conditioned or delayed.
9.5. Revenue to be Applied to Debt Service. Following the occurrence and
during the continuation of any Default, no Distributions shall be made or
distributed to any partner, venturer, member or equity investor of Borrower.
9.6. Subdivision Maps. Prior to recording any final map, plat, parcel map,
lot line adjustment or other subdivision map of any kind covering any portion of
the Property (collectively, "Subdivision Map"), Borrower shall submit such
Subdivision Map to Lender for Lender's review and approval, which approval shall
not be unreasonably withheld. Within ten (10) Business Days after Lender's
receipt of such Subdivision Map, Lender shall provide Borrower written notice if
Lender disapproves of said Subdivision Map. Lender shall be deemed to have
approved the Subdivision Map if such notice is not so provided to Borrower.
Within five (5) Business Days after Lender's request, Borrower shall execute,
acknowledge and deliver to Lender such amendments to the Loan Documents as
Lender may reasonably require to reflect the change in the legal description of
the Property resulting from the recordation of any Subdivision Map. In
connection with and promptly after the recordation of any amendment or other
modification to the Deed of Trust recorded in connection with such amendments,
Page 23
Borrower shall deliver to Lender, at Borrower's sole expense, a title
endorsement to the Title Policy in form and substance satisfactory to Lender
insuring the continued first priority lien of the Deed of Trust. Subject to the
execution and delivery by Borrower of any documents required under this Section,
Lender shall, if required by applicable law, sign any Subdivision Map approved,
or deemed to be approved, by Lender pursuant to this Section.
9.7. Further Assurances. Upon Lender's request and at Borrower's sole cost
and expense, Borrower shall execute, acknowledge and deliver any other
instruments and perform any other acts necessary, desirable or proper, as
determined by Lender, to carry out the purposes of this Agreement and the other
Loan Documents or to perfect and preserve any liens created by the Loan
Documents.
9.8. Assignment. Without the prior written consent of Lender, Borrower
shall not assign Borrower's interest under any of the Loan Documents, or in any
monies due or to become due thereunder, and any assignment without such consent
shall be void. In this regard, Borrower acknowledges that Lender would not make
this Loan except in reliance on Borrower's expertise, reputation, prior
experience in developing and constructing commercial real property, Lender's
knowledge of Borrower, and Lender's understanding that this Agreement is more in
the nature of an agreement involving personal services than a standard loan
where Lender would rely on security which already exists.
9.9. Management of Property. Without the prior written consent of Lender,
Borrower shall not enter into any agreement providing for the management,
leasing or operation of the Property or Improvements, other than the Development
and Management Agreements.
9.10. Governing Documents. Without the prior written consent of Lender,
Borrower shall not modify or permit to be modified the formation or
organizational documents of WEO, the Project Entity or Borrower, or any
partners, joint venturers or members thereof.
9.11. WAIVER OF FIDUCIARY CLAIMS. BORROWER ACKNOWLEDGES THAT EOP INVESTOR,
L.L.C., A DELAWARE LIMITED LIABILITY COMPANY, EOP PROJECT INVESTOR, THE PROJECT
ENTITY, AND CERTAIN AFFILIATES THEREOF (COLLECTIVELY, "EQUITY"), ARE AFFILIATES
OF LENDER. NEVERTHELESS, BORROWER ACKNOWLEDGES AND AGREES THAT LENDER IS
ADVANCING FUNDS TO BORROWER AS EVIDENCED BY THIS AGREEMENT SOLELY IN ITS ROLE AS
A THIRD PARTY LENDER, AND THAT THIS AGREEMENT AND ANY OTHER LOAN DOCUMENTS,
TOGETHER WITH LENDER'S RIGHT TO EXERCISE ITS REMEDIES AS A LENDER IN THE EVENT
OF ANY DEFAULT, IS COMPLETELY SEPARATE FROM EQUITY'S DIRECT OR INDIRECT
OWNERSHIP OF CONSTITUENT MEMBERSHIP INTERESTS IN
Page 24
BORROWER. BORROWER FURTHER ACKNOWLEDGES THAT LENDER WOULD NOT HAVE MADE THE LOAN
TO BORROWER WITHOUT THE WAIVER SET FORTH BELOW. THEREFORE, BORROWER, FOR ITSELF
AND ON BEHALF OF BORROWER'S AFFILIATES AND ALL CONSTITUENT MEMBERS AND MANAGERS
OF EITHER, HEREBY WAIVES ANY RIGHT THAT IT OR ANY SUCH AFFILIATE OR ANY OF SUCH
CONSTITUENT MEMBERS OR MANAGERS WOULD OTHERWISE HAVE, UNDER ANY OF THE LOAN
DOCUMENTS OR OTHERWISE UNDER ANY LEGAL THEORY BASED UPON STATUTORY OR COMMON
LAW, TO BRING ANY CLAIM AGAINST LENDER OR ANY PARTY THAT CONTROLS LENDER,
ASSERTING THAT LENDER'S ADVANCING FUNDS PURSUANT TO THIS AGREEMENT OR LENDER'S
EXERCISE OF ITS RIGHTS OR REMEDIES AS A LENDER HEREUNDER OR UNDER THE DEED OF
TRUST OR ANY OTHER LOAN DOCUMENTS, CONSTITUTES A BREACH BY LENDER OR ANY PARTY
THAT CONTROLS LENDER OF ANY FIDUCIARY DUTY TO BORROWER, ANY BORROWER AFFILIATE
OR TO THE CONSTITUENT MEMBERS OR MANAGERS OF EITHER. BY INITIALING BELOW,
BORROWER ACKNOWLEDGES THAT IT WAS ADVISED BY COMPETENT LEGAL COUNSEL IN
REVIEWING THIS PROVISION, INCLUDING, WITHOUT LIMITATION, A DETAILED DISCUSSION
OF THE FACT THAT LENDER'S EXERCISE OF ITS REMEDIES (FOR EXAMPLE, IN THE CONTEXT
OF COST OVERRUNS THAT BORROWER IS UNABLE TO FUND) WOULD DISPROPORTIONATELY
AFFECT BORROWER'S CONSTITUENT MEMBERS WHO HOLD DISPROPORTIONATE PROFITS INTEREST
IN BORROWER, AND THAT IT HAS ELECTED TO WAIVE ITS RIGHTS AND THE RIGHTS OF EACH
BORROWER AFFILIATE AND EACH OF THEIR CONSTITUENT MEMBERS AND MANAGERS AS
PROVIDED ABOVE IN CONSIDERATION OF LENDER'S AGREEMENT TO ADVANCE THE FUNDS
EVIDENCED BY THIS AGREEMENT.
__________________
Borrower
ARTICLE 10. REPORTING COVENANTS
10.1. Financial Information. Borrower hereby consents to Lender's
obtaining from other parties copies of any and all reports that Borrower
delivers to any party under the provisions of Article 6 of the Operating
Agreement of WEO, as well as any and all reports to be delivered to any party
under the provisions of the limited liability company agreement or operating
agreement of the Project Entity. In addition, on or before the tenth day of each
month, Borrower shall deliver to Lender a reconciliation showing the balance of
the Working Capital Reserve Account as of the beginning of the first day of the
preceding calendar month, the balance of the Working Capital Reserve as of the
end of the last day of the preceding calendar month, and a line item listing of
all expenditures,
Page 25
together with supporting documentation, of amounts expended from the Working
Capital Reserve Account during such period.
To the extent not otherwise obtained as provided above, within thirty (30)
days after Lender's request, Borrower shall also deliver to Lender such
quarterly and other financial information regarding the Property, or Borrower,
or Payment Guarantor. If audited financial information is prepared, Borrower
shall deliver to Lender copies of that information within fifteen (15) days
after its final preparation. Except as otherwise agreed to by Lender, all such
financial information shall be prepared in accordance with generally accepted
accounting principles consistently applied. Upon written request of Lender,
Borrower use good faith efforts to obtain and deliver to Lender any specific
financial reports and information pertaining to the members, managers, partners
and shareholders of Borrower.
10.2. Books and Records. Borrower shall maintain complete books of account
and other records for the Property and Improvements and for disbursement and use
of the proceeds of the Loan and Borrower's Funds, and the same shall be
available for inspection and copying by Lender upon reasonable prior notice.
ARTICLE 11. DEFAULTS AND REMEDIES
11.1. Default. The occurrence of any one or more of the following shall
constitute an event of default (hereinafter, "Default") under this Agreement and
the other Loan Documents:
(a) Monetary. Borrower's failure to pay within ten (10) Business
Days following the date of delivery of written notice from Lender to Borrower
that such amount was not received when due, any sums payable under the Note or
any of the other Loan Documents or Borrower's failure to deposit any Borrower's
Funds as and when required under this Agreement; provided, however, that if such
written notice from Lender is an Out of Balance Notice, then, in lieu of such
10-Business Day period, Borrower shall have a thirty (30) day period following
the date of delivery of such Out of Balance Notice before a Default shall occur
in which to deposit funds equal to the amount of the applicable deficiency into
the Borrower's Funds Account, as contemplated by the provisions of Section
3.1(b); further, provided, however, that no such notice or cure period shall
apply at maturity or upon acceleration; or
(b) Performance of Obligations. Borrower's failure to perform any
obligation in addition to those in Section 11.1(a) above under any of the Loan
Documents within thirty (30) days following the date of delivery of written
notice from Lender; provided, however, that if a longer or shorter cure period
is expressly provided for the remedy of any such failure, Borrower's failure to
perform will not constitute a Default until such longer or shorter date as the
specified cure period expires; but provided further, however, if such Default is
curable, but the nature of such failure is such that it cannot
Page 26
reasonably be cured within said thirty (30) days (or longer or shorter specified
cure period), then if Borrower fails to commence a cure thereof within said time
and thereafter fails to diligently pursue a cure thereof and fails to complete
same within ninety (90) days after Lender's written demand; or
(c) Construction; Use. (i) There is any material deviation in the
work of construction from the Plans and Specifications or governmental
requirements from that required under this Agreement or the appearance or use of
defective workmanship or materials in constructing the Improvements, and
Borrower fails to remedy the same to Lender's satisfaction within ten (10)
Business Days after Lender's written demand to do so, or if the nature of such
deviation or defect is curable but such that it cannot reasonably be cured
within said ten (10) Business Days, then if Borrower fails to commence a cure
thereof within said ten (10) Business Days and thereafter fails to diligently
pursue a cure thereof and complete same within ninety (90) days after Lender's
written demand; or (ii) subject to the provisions of Section 4.3, there is a
cessation of construction of the Improvements prior to completion for a
continuous period of more than fifteen (15) days; or (iii) the construction,
renovation, sale or leasing of any of the Improvements in accordance with the
Loan Documents is prohibited, enjoined or delayed for a continuous period of
more than forty-five (45) days; or (iv) subject to the provisions of Section
4.3, utilities or other public services necessary for the full occupancy and
utilization of the Property and Improvements are curtailed for a continuous
period of more than thirty (30) days; or
(d) Liens, Attachment; Condemnation. (i) The recording of any claim
of lien against the Property or Improvements or the service on Lender of any
bonded stop notice relating to the Loan and the continuance of such claim of
lien or bonded stop notice for twenty (20) days without discharge, satisfaction
or provision for payment being made by Borrower in a manner satisfactory to
Lender, subject to the provisions of Section 4.9 hereof and Section 5.5 of the
Deed of Trust ; or (ii) the condemnation, seizure or appropriation of, or
occurrence of an uninsured casualty with respect to any material portion of the
Property or Improvements that is not otherwise offset by Borrower's deposit of
sufficient restoration funds (including any applicable deductible amount under
any applicable policy of casualty insurance) into the Borrower's Funds Account
within forty-five (45) days after the occurrence of such event; or (iii) the
sequestration or attachment of, or any levy or execution upon any of the
Property or Improvements, any other collateral provided by Borrower under any of
the Loan Documents, any monies in the Account or in the Borrower's Funds
Account, or any substantial portion of the other assets of Borrower, which
sequestration, attachment, levy or execution is not released, expunged or
dismissed prior to the earlier of forty-five (45) days or the sale of the assets
affected thereby; or
(e) Representations and Warranties. (i) The material failure of any
representation or warranty of Borrower in any of the Loan Documents to be true,
correct
Page 27
and complete as of the date made, and the continuation of such failure for more
than ten (10) Business Days after written notice to Borrower from Lender
requesting that Borrower cure such failure; or
(f) Voluntary Bankruptcy; Insolvency; Dissolution. (i) The filing of
a petition by Borrower for relief under the Bankruptcy Code, or under any other
present or future state or federal law regarding bankruptcy, reorganization or
other debtor relief law; (ii) a general assignment by Borrower for the benefit
of creditors; or (iii) Borrower applying for, or the appointment of, a receiver,
trustee, custodian or liquidator of Borrower or any of its property; or
(g) Involuntary Bankruptcy. (i) The filing of any pleading or an
answer by Borrower in any involuntary proceeding under the Bankruptcy Code or
other debtor relief law which admits the jurisdiction of the court or the
petition's material allegations regarding Borrower's insolvency; or (ii) the
failure of Borrower to effect a full dismissal of any involuntary petition under
the Bankruptcy Code or under any other debtor relief law that is filed against
Borrower or in any way restrains or limits Borrower or Lender regarding the
Loan, the Property or the Improvements, prior to the earlier of the entry of any
court order granting relief sought in such involuntary petition, or forty-five
(45) days after the date of filing of such involuntary petition; or
(h) Partners; Indemnitors. The occurrence of any of the events
specified in Section 11.1(f) or 11.1(g) as to Payment Guarantor or Xxxxxx
Investors - California, LLC, a Delaware limited liability company ("WIC"); or
(i) Change In Management or Control. The occurrence of any material
management or organizational change in Borrower or in the partners, venturers or
members of Borrower, excluding Permitted Transfers, but including, without
limitation, any dispute among the constituent members or partners of Borrower,
involving as at least one of the disputants a party that is neither WEO nor
Equity (nor any party controlling, controlled by or under common control with
either), and which Lender determines, in its sole and absolute discretion, shall
have a material adverse effect on the Loan, on the Property and Improvements, or
on the ability of Borrower or its partners, venturers or members to perform
their obligations under the Loan Documents; or
(j) Loss of Priority. The failure at any time of the Deed of Trust
to be a valid first lien upon the Property and Improvements or any portion
thereof, other than as a result of any release or reconveyance of the Deed of
Trust with respect to all or any portion of the Property and Improvements
pursuant to the terms and conditions of this Agreement; or
(k) Hazardous Materials. The discovery of any significant Hazardous
Materials in, on or about the Property or Improvements subsequent to the
Effective Date (to the extent not disclosed in the Environmental Report or
otherwise disclosed in writing
Page 28
to Lender prior to the date of this Agreement); provided, however, if such
Default is curable, but the nature of such failure is such that it cannot
reasonably be cured within thirty (30) days, then if Borrower fails to commence
a cure thereof within said time and thereafter fails to diligently pursue a cure
thereof and fails to complete same within ninety (90) days after Lender's
written demand. Any such Hazardous Materials shall be "significant" for this
purpose if said Hazardous Materials, in Lender's sole discretion, have a
materially adverse impact on the value of the Property and Improvements; or
Notwithstanding any of the foregoing or anything to the contrary in this
Agreement, to the extent that any Default can be cured by the payment of money
directly to Lender, to Borrower's Funds Account or to any third party to
reimburse same for materials or services already delivered or performed or for
the purpose of delivering materials or performing services which if so done
would cure said Default, the applicable cure period specified in this Agreement
shall be extended by an additional sixty (60) days to allow Borrower to
undertake any necessary capital calls or to seek or arrange the necessary
partnership loans.
11.2. Acceleration Upon Default; Remedies. Upon the occurrence of any
Default specified in this Article XI, Lender may, at its sole option, declare
all sums owing to Lender under the Note, this Agreement and the other Loan
Documents immediately due and payable. Upon such acceleration, Lender may, in
addition to all other remedies permitted under this Agreement and the other Loan
Documents and at law or equity, apply any sums in the Account and Borrower's
Funds Account to the sums owing under the Loan Documents and any and all
obligations of Lender to fund further disbursements under the Loan shall
terminate.
11.3. Disbursements to Third Parties. Upon the occurrence of a Default
occasioned by Borrower's failure to pay money to a third party as required by
this Agreement, Lender may but shall not be obligated to make such payment from
the Loan proceeds, Borrower's Funds, or other funds of Lender. If such payment
is made from proceeds of the Loan or from Borrower's Funds, Borrower shall
immediately deposit with Lender, upon written demand, an amount equal to such
payment. If such payment is made from funds of Lender, Borrower shall
immediately repay such funds upon written demand of Lender. In either case, the
Default with respect to which any such payment has been made by Lender shall not
be deemed cured until such deposit or repayment (as the case may be) has been
made by Borrower to Lender.
11.4. Lender's Completion of Construction. Upon the occurrence of a
Default, Lender may, upon five (5) Business Days prior written notice to
Borrower, and with or without legal process, take possession of the Property and
Improvements, remove Borrower and all agents, employees and contractors of
Borrower from the Property and Improvements, complete the work of construction
and market for lease and lease space within the Property and/or Improvements.
For this purpose, Borrower irrevocably appoints Lender as its attorney-in-fact,
which agency is coupled with an interest. As
Page 29
attorney-in-fact, Lender may, in Borrower's name, take or omit to take any
action Lender may deem appropriate with respect to third parties, including,
without limitation, exercising Borrower's rights under all contracts concerning
the Property and/or Improvements, but excluding the Loan Documents.
11.5. Lender's Cessation of Construction. If Lender determines at any time
that the Improvements are not being constructed substantially in accordance with
the requirements under this Agreement, then upon the occurrence of a Default
therefor, Lender may, upon five (5) Business Days prior written notice to
Borrower, immediately cause all construction to cease on any of the Improvements
affected by the condition of nonconformance. Borrower shall thereafter not allow
any construction work, other than corrective work, to be performed on any of the
Improvements affected by the condition of nonconformance until such time as
Lender notifies Borrower in writing that the nonconforming condition has been
corrected.
11.6. Termination or Continuation of Development and Management
Agreements. Upon the occurrence of a Default wherein Lender elects to accelerate
the Loan and records a notice of default to foreclose the lien of the Deed of
Trust, Lender may elect to require Borrower to terminate the Development and
Management Agreements (and Borrower shall immediately do so), without any
termination fee or penalty, provided that all fees and expenses previously
accrued thereunder up to the effective date of such termination are paid in
full; provided however, so long as the Development and Management Agreements are
not terminated, the respective party or parties performing services thereunder
shall be entitled to continue to receive all fees and expenses owed such party
or parties under the applicable Development and Management Agreements. In the
event that Borrower reinstates the Loan under California law prior to the
foreclosure of the lien of the Deed of Trust, such Development and Management
Agreements shall be deemed to have been reinstated as of the date of such
reinstatement of the Loan.
11.7. Repayment of Funds Advanced. Any funds expended by Lender in the
exercise of its rights or remedies under this Agreement and the other Loan
Documents shall be payable to Lender upon demand, together with interest at the
rate applicable to the principal balance of the Note from the date the funds
were expended.
11.8. Rights Cumulative, No Waiver. All Lender's rights and remedies
provided in this Agreement and the other Loan Documents, together with those
granted by law or at equity, are cumulative and may be exercised by Lender at
any time. Lender's exercise of any right or remedy shall not constitute a cure
of any Default unless all sums then due and payable to Lender under the Loan
Documents are repaid and Borrower has cured all other Defaults. No waiver shall
be implied from any failure of Lender to take, or any delay by Lender in taking,
action concerning any Default or failure of condition under the Loan Documents,
or from any previous waiver of any similar or unrelated Default or
Page 30
failure of condition. Any waiver or approval under any of the Loan Documents
must be in writing and shall be limited to its specific terms.
ARTICLE 12. MISCELLANEOUS PROVISIONS
12.1. Indemnity. BORROWER HEREBY AGREES TO DEFEND, INDEMNIFY AND HOLD
HARMLESS LENDER, ITS DIRECTORS, OFFICERS, MEMBERS, MANAGERS, EMPLOYEES, AGENTS,
SUCCESSORS AND ASSIGNS FROM AND AGAINST ANY AND ALL LOSSES, DAMAGES,
LIABILITIES, CLAIMS, ACTIONS, JUDGMENTS, COURT COSTS AND LEGAL OR OTHER EXPENSES
(INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND EXPENSES) WHICH LENDER MAY
INCUR AS A DIRECT OR INDIRECT CONSEQUENCE OF: (A) THE PURPOSE TO WHICH BORROWER
APPLIES THE LOAN PROCEEDS; (B) THE FAILURE OF BORROWER TO PERFORM ANY
OBLIGATIONS AS AND WHEN REQUIRED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS; (C) ANY FAILURE AT ANY TIME OF ANY OF BORROWER'S REPRESENTATIONS OR
WARRANTIES TO BE TRUE AND CORRECT; OR (D) ANY ACT OR OMISSION BY BORROWER, ANY
CONSTITUENT PARTNER OR MEMBER OF BORROWER, ANY CONTRACTOR, SUBCONTRACTOR OR
MATERIAL SUPPLIER, ENGINEER, ARCHITECT OR OTHER PERSON OR ENTITY WITH RESPECT TO
ANY OF THE PROPERTY OR IMPROVEMENTS, EXCEPT TO THE EXTENT CAUSED OR CONTRIBUTED
TO BY THE BAD FAITH, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LENDER. BORROWER
SHALL IMMEDIATELY PAY TO LENDER UPON DEMAND ANY AMOUNTS OWING UNDER THIS
INDEMNITY, TOGETHER WITH INTEREST FROM THE DATE THE INDEBTEDNESS ARISES UNTIL
PAID AT THE RATE OF INTEREST APPLICABLE TO THE PRINCIPAL BALANCE OF THE NOTE.
BORROWER'S DUTY AND OBLIGATIONS TO DEFEND, INDEMNIFY AND HOLD HARMLESS LENDER
SHALL SURVIVE CANCELLATION OF THE NOTE AND THE RELEASE, RECONVEYANCE OR PARTIAL
RECONVEYANCE OF THE DEED OF TRUST.
12.2. Form of Documents. The form and substance of all documents,
instruments, and forms of evidence to be delivered to Lender under the terms of
this Agreement and any of the other Loan Documents shall be subject to Lender's
approval and shall not be modified, superseded or terminated in any respect
without Lender's prior written approval, except to the extent otherwise provided
in this Agreement.
12.3. No Third Parties Benefited. No person other than Lender and Borrower
and their permitted successors and assigns shall have any right of action under
any of the Loan Documents.
12.4. Notices. All notices, demands, or other communications under this
Agreement and the other Loan Documents shall be in writing and shall be
delivered to
Page 31
the appropriate party at the address set forth on the signature page of this
Agreement and as specified in EXHIBIT D (subject to change from time to time by
written notice to all other parties to this Agreement). All communications shall
be deemed served upon delivery of, or if mailed, upon receipt or rejection after
the deposit in the United States Postal Service mail, certified postage
prepaid-return receipt requested and addressed to the address of Borrower or
Lender at the address specified; provided, however, that non-receipt of any
communication as the result of any change of address of which the sending party
was not notified or as the result of a refusal to accept delivery shall be
deemed receipt of such communication.
12.5. Attorney-in-Fact. Borrower hereby irrevocably appoints and
authorizes Lender, as Borrower's attorney-in-fact, which agency is coupled with
an interest, to execute and/or record in Lender's or Borrower's name any
notices, instruments or documents that Lender deems appropriate to protect
Lender's interest under any of the Loan Documents.
12.6. Actions. Borrower agrees that Lender, in exercising the rights,
duties or liabilities of Lender or Borrower under the Loan Documents, may
commence, appear in or defend any action or proceeding purporting to affect the
Property, the Improvements, or the Loan Documents and Borrower shall immediately
reimburse Lender upon demand for all such expenses so incurred or paid by
Lender, including, without limitation, attorneys' fees and expenses and court
costs.
12.7. Right of Contest. Borrower may contest in good faith any claim,
demand, levy or assessment (other than liens and stop notices, subject to the
provisions of Section 4.9 of this Agreement) by any person other than Lender
which would constitute a Default if: (a) Borrower pursues the contest
diligently, in a manner which Lender determines is not prejudicial to Lender,
and does not impair the rights of Lender under any of the Loan Documents; and
(b) Borrower deposits with Lender any funds or other forms of assurance which
Lender in good faith determines from time to time appropriate to protect Lender
from the consequences of the contest being unsuccessful. Borrower's compliance
with this Section shall operate to prevent such claim, demand, levy or
assessment from becoming a Default.
12.8. Relationship of Parties. The relationship of Borrower and Lender
under the Loan Documents is, and shall at all times remain, solely that of
borrower and lender, and Lender neither undertakes nor assumes any
responsibility or duty to Borrower or to any third party with respect to the
Property or Improvements, except as expressly provided in this Agreement and the
other Loan Documents.
12.9. Delay Outside Lender's Control. Lender shall not be liable in any
way to Borrower or any third party for Lender's failure to perform or delay in
performing under the Loan Documents if such failure to perform or delay in
performing results directly or indirectly from, or is based upon, the action,
inaction, or purported action, of any
Page 32
governmental or local authority, or because of war, rebellion, insurrection,
strike, lock-out, boycott or blockade (whether presently in effect, announced or
in the sole judgment of Lender deemed probable), or from any Act of God or other
cause or event beyond Lender's control.
12.10. Attorneys' Fees and Expenses; Enforcement. If any attorney is
engaged by Lender to enforce or defend any provision of this Agreement, any of
the other Loan Documents or Other Related Documents, or as a consequence of any
Default under the Loan Documents, with or without the filing of any legal action
or proceeding, and including, without limitation, any fees and expenses incurred
in any bankruptcy proceeding of the Borrower, then Borrower shall immediately
pay to Lender, upon demand, the amount of all attorneys' fees and expenses and
all costs incurred by Lender in connection therewith, together with interest
thereon from the date of such demand until paid at the rate of interest
applicable to the principal balance of the Note as specified therein.
12.11. Immediately Available Funds. Unless otherwise expressly provided
for in this Agreement, all amounts payable by Borrower to Lender shall be
payable only in United States currency, immediately available funds.
12.12. Lender's Consent. Wherever in this Agreement there is a requirement
for Lender's consent and/or a document to be provided or an action taken "to the
satisfaction of Lender", it is understood by such phrase that Lender shall
exercise its consent, right or judgment in a reasonable manner given the
specific facts and circumstance applicable at the time.
12.13. Signs. Lender may place on the Property reasonable signs standard
to construction loan transactions stating that construction financing is being
provided by Lender and any other lenders or participants in the Loan, subject to
the requirements of the Project Entitlements and applicable law.
12.14. Lender's Agents. Lender may designate an agent or independent
contractor to exercise any of Lender's rights under this Agreement and any of
the other Loan Documents. Any reference to Lender in any of the Loan Documents
shall include Lender's agents, employees or independent contractors. Borrower
shall pay the costs of such agent or independent contractor either directly to
such person or to Lender in reimbursement of such costs, as applicable.
12.15. Tax Service. Lender is authorized to secure, at Borrower's expense,
a tax service contract with a third party vendor which shall provide tax
information on the Property and Improvements satisfactory to Lender.
12.16. WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY TO THIS AGREEMENT
HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY
Page 33
OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (a) ARISING UNDER THE LOAN
DOCUMENTS, INCLUDING, WITHOUT LIMITATION, ANY PRESENT OR FUTURE MODIFICATION
THEREOF OR (b) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE
DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THE LOAN DOCUMENTS
(AS NOW OR HEREAFTER MODIFIED) OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO
OR THERETO, IN EACH CASE WHETHER SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
IS NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT
OR OTHERWISE; 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 AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A
COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF ANY RIGHT THEY MIGHT OTHERWISE HAVE TO TRIAL BY
JURY.
12.17. Severability. If any provision or obligation under this Agreement
and the other Loan Documents shall be determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable, that provision shall be
deemed severed from the Loan Documents and the validity, legality and
enforceability of the remaining provisions or obligations shall remain in full
force as though the invalid, illegal, or unenforceable provision had never been
a part of the Loan Documents, provided, however, that if the rate of interest or
any other amount payable under the Note or this Agreement or any other Loan
Document, or the right of collectibility therefor, are declared to be or become
invalid, illegal or unenforceable, Lender's obligations to make advances under
the Loan Documents shall not be enforceable by Borrower.
12.18. Heirs, Successors and Assigns. Except as otherwise expressly
provided under the terms and conditions of this Agreement, the terms of the Loan
Documents shall bind and inure to the benefit of the heirs, successors and
assigns of the parties.
12.19. Time. Time is of the essence of each and every term of this
Agreement.
12.20. Headings. All article, section or other headings appearing in this
Agreement and any of the other Loan Documents are for convenience of reference
only and shall be disregarded in construing this Agreement and any of the other
Loan Documents.
12.21. Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with the laws of the State of California, except to
the extent preempted by federal laws. Borrower and all persons and entities in
any manner
Page 34
obligated to Lender under the Loan Documents consent to the jurisdiction of any
federal or state court within the State of California having proper venue and
also consent to service of process by any means authorized by California or
federal law.
12.22. Integration; Interpretation. The Loan Documents contain or
expressly incorporate by reference the entire agreement of the parties with
respect to the matters contemplated therein and supersede all prior negotiations
or agreements, written or oral. The Loan Documents shall not be modified except
by written instrument executed by all parties. Any reference in any of the Loan
Documents to the Property or Improvements shall include all or any part of the
Property or Improvements. Any reference to the Loan Documents includes any
amendments, renewals or extensions now or hereafter approved by Lender in
writing.
12.23. Joint and Several Liability. The liability of all persons and
entities obligated in any manner under this Agreement and any of the Loan
Documents shall be joint and several.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
Page 35
12.24. Counterparts. This Agreement, any of the other Loan Documents
(except for the Note), any Other Related Documents and any subsequent
modifications, amendments, waivers, consents or supplements thereof, if any, may
be executed in any number of counterparts, each of which when executed and
delivered shall be deemed to be an original and all such counterparts together,
shall constitute one and the same instrument.
IN WITNESS WHEREOF, Borrower and Lender have executed this Agreement as of
the date appearing on the first page of this Agreement.
"Lender"
Riverside Finance Company, L.L.C.,
a Delaware limited liability company
By: EOP Operating Limited Partnership,
a Delaware limited partnership,
its sole member
By: Equity Office Properties Trust,
a Maryland real estate investment trust,
its general partner
By: /s/ Xxxxxxx X. Xxxx
-----------------------
Name: Xxxxxxx X. Xxxx
---------------------
Title: Vice President
--------------------
Lender's Address:
Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
Attention: General Counsel
[SIGNATURES CONTINUED ON FOLLOWING PAGE]
Page 36
"Borrower"
Ferry Building Investors, LLC,
a California limited liability company
By: WEO - Ferry Building, LLC,
a Delaware limited liability company,
its Manager and Class A Member
By: Xxxxxx/Equity Office, LLC,
a Delaware limited liability company,
its Manager
By: Xxxxxx Investors - California, LLC,
a Delaware limited liability company,
its Manager
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------
Xxxxxx X. Xxxxxxxx
Its: Manager
Borrower's Address:
c/x Xxxxxx/Equity Office, LLC
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxx, President
Xxxxxxxxxx X. Xxxxx, General Counsel
Page 37
EXHIBIT A
DESCRIPTION OF PROPERTY
All that certain real property located in the City and County of San
Francisco, State of California, described as follows:
PARCEL ONE
The "Union Ferry Depot" so called as depicted on that certain Monument Map of
the Fifty Vara District of The City and County of San Francisco showing position
of street monument, monument line ties and street and monument lines prepared by
the direction of the Board of Supervisors under Resolution NO. 2764 (New Series)
October 12, 1908 and approved and made Official by Ordinance No. 1028 (New
Series) December 20, 1909 by said Board, Xxxxxxx Xxxxxx, City Engineer filed
January 7, 1910, K27437, and further described as follows:
Commencing at "Point No. 54", having grid coordinates of Y=477,114.71 feet,
X=1,453,645.69 feet as provided by the San Francisco Port Authority and as said
control point is shown on a coordinate listing entitled, "Ferry Terminal/FB
Renovation Survey Control", thence South 45(degree) 29' 41" West 75.35 feet to
"Point No. 6" per said Port Authority Survey, having grid coordinates of
Y=477,061.89 feet, X=1,453,591.95 feet; thence South 72(degree) 52' 41" West
80.35 feet to the True Point of Beginning; thence South 54(degree) 57' 20" West
166.72 feet; thence North 35(degree) 02' 40" West 260.59 feet; thence South
54(degree) 57' 20" West 30.25 feet; thence North 35(degree) 02' 40" West 144.30
feet; thence North 54(degree) 57' 20" East 30.00 feet; thence North 35(degree)
02' 40" West 259.90 feet; thence North 54(degree) 57' 20" East 166.97 feet;
thence South 35(degree) 02' 40" East 664.78 feet to the True Point of Beginning.
The coordinates and bearings in the above description are based upon the
California Coordinate System, Xxxx 0, XXX 0000. Distances shown are ground
distances, grid distances are obtained by multiplying ground distances by the
grid factor, 0.9999294.
Excepting therefrom all subsurface mineral deposits, including oil and gas
deposits, together with the right of ingress and egress on said land for
exploration, drilling and extraction of such mineral, oil and gas deposits, as
excepted and reserved by the State of California in Chapter 1333, Statutes of
1968 and amendments thereto, and upon terms and provisions set forth therein.
PARCEL TWO
An Easement for access described as follows:
Commencing at "Point No. 54" having grid coordinates of Y=477,114.71 feet,
X=1,453,645.69 feet as provided by the San Francisco Port Authority and as said
control point is shown on a coordinate listing entitled, "Ferry Terminal/FB
Renovation Survey Control"; thence South 45(degree) 29' 41" West 75.35 feet to
"Point No. 6" per said Port Authority Survey, having grid coordinates of
Y=477,061.89 feet, X=1,453,591.95 feet; thence South 25(degree) 53' 51" West
30.26 feet to the True Point of Beginning; thence South 46(degree) 16' 57" West
206.84 feet, more or less to the Easterly right of way line of "The
Embarcadero"; thence along said line of the Embarcadero North 42(degree) 15' 59"
West 50.21 feet and North 35(degree) 02' 40" West 0.80 feet; thence leaving said
right of way line of the Embarcadero North 54(degree) 57' 20" East 190.79 feet;
thence North 35(degree) 02' 40" West 186.24 feet to the Southerly line of that
certain lease parcel granted from San Francisco Port Commission to the Golden
Gate Bridge, Highway and Transportation District, as described in that certain
legal description entitled "FAC. 000, Xxxxx Xxxxx Xxxx, Xxxxx Terminal
Description" and shown on Drawing No. 0000-000-0, Dated June 17, 1976 attached
thereto; thence along said Lease Line North 61(degree) 51' 42" East 20.15 feet;
thence leaving said line South 35(degree) 02' 40" East 203.24 feet to the True
Point of Beginning.
The coordinates and bearings in the above description are based upon the
California Coordinate System, Zone 3 NAD 1927. Distances shown are ground
distances. Grid distances are obtained by multiplying ground distances by the
grid factor, 0.9999294.
PARCEL THREE:
A Perimeter Easement described as follows:
Parcel Three A
Commencing at "Point No. 54" having grid coordinates of Y=477,114.71 feet,
X=1,453,645.69 feet as provided by the San Francisco Port Authority and as said
control point is shown on a coordinate listing entitled "Ferry Terminal/FB
Revonation Survey Control"; thence South 45(degree) 29' 41" West 75.35 feet to
"Point No. 6" per said Port Authority Survey, having grid coordinates of
Y=477,061.89 feet, X=1,453,591.95 feet; thence South 72(degree) 52' 41" West
80.35 feet to the true point of beginning; thence North 35(degree) 02' 40" West
249.09 feet to the Westerly extension of a line on the Westerly portion of that
certain lease parcel granted from San Francisco Port Commission to the Golden
Gate Bridge, Highway and Transportation District, as described in that certain
legal description entitled "FAC.200, Ferry Plaza East, Ferry Terminal
Description", and as shown on Drawing No. 0000-000-0, dated June 17, 1976,
attached thereto; thence along said extension and along said lease line North
61(degree) 51' 42" East 30.50 feet; thence
2
continuing along said Lease Parcel Line South 28(degree) 08' 18" East 78.64
feet, and North 61(degree) 51' 42" East 9.24 feet; thence leaving said lease
parcel, South 35(degree) 02' 40" East 186.24 feet; thence South 54(degree) 57'
20" West 226.97 feet; thence North 35(degree) 02' 40" West 280.59 feet to a
point herein referred to as "Point A"; thence North 54(degree) 57' 20" East
30.25 feet; thence South 35(degree) 02' 40" East 260.59 feet; thence North
54(degree) 57' 20" East 166.72 feet to the true point of beginning, containing
19,489 square feet, more or less.
Parcel Three B
Commencing at Point "A" referred to herein above; thence North 35(degree) 02'
40" West 144.30 feet to the true point of beginning; thence North 35(degree) 02'
40" West 286.90 feet; thence North 54(degree) 57' 20" East 206.47 feet; thence
South 35(degree) 02' 40" East 416.15 feet to the Northerly line of that certain
lease parcel granted from San Francisco Port Commission to the Golden Gate
Bridge, Highway and Transportation District, as described in that certain legal
description entitled "Fac. 000, Xxxxx Xxxxx Xxxx, Xxxxx Terminal description",
and as shown on Drawing No. 0000-000-0, dated June 17, 1976, attached thereto;
thence along said lease line and an extension thereof, South 61(degree) 51' 42"
West 9.57 feet; thence North 35(degree) 02' 40" West 388.00 feet; thence South
54(degree) 57' 20" West 166.97 feet; thence South 35(degree) 02' 40" East 259.90
feet; thence South 54(degree) 57' 20" West 30.00 feet to the true point of
beginning, containing 17,063 square feet, more or less.
The coordinates and bearings in the above descriptions are based upon the
California Coordinate Systems, Zone, NAD 1927. Distances shown are ground
distances. Grid distances are obtained by multiplying ground distances by the
grid factor, 0.9999294.
PARCEL FOUR
Commencing at "Point No. 54" having grid coordinates of Y=477,114.71 feet,
X=1,453,645.69 feet as provided by the San Francisco Port Authority and as said
control point is shown on a coordinate listing entitled, "Ferry Terminal/FB
Renovation Survey Control"; thence South 45(degree) 29' 41" West 75.35 feet to
"Point No. 6" per said Port Authority Survey, having grid coordinates of
Y=477,061.89 feet, X=1,453,591.95 feet; thence South 25(degree) 53' 51" West
30.26 feet to the True Point of Beginning also being a point on the most
Northeasterly line of that certain access easement as described in an agreement
between the City and County of San Francisco, through the San Francisco Port
Commission, and Ferry Building Investors, LLC, a California Limited Liability
Company, entitled, "Ferry Building Lease Disposition and Development Agreement",
dated January 24, 2000 and as further shown on that ALTA Survey entitled,
"ALTA/ACSM Land Title Survey, at the Ferry Building, for Ferry Building
Investors, LLC" dated April 10, 2001; thence along said Northeasterly line of
access easement, North 35(degree) 02' 40" West 203.24 feet to a point on the
Southerly line of that certain Parcel Leased from the San Francisco Port
Commission to The Xxxxxx Xxxx Xxxxxx, Xxxxxxx
0
and Transportation District, as described in that certain legal description
entitled "Fac. 000, Xxxxx Xxxxx Xxxx, Xxxxx Terminal Description" and shown on
Drawing No. 0000-000-0, dated June 17, 1976 attached thereto; thence along the
Northerly line of said access easement, the Southerly line of said "Fac. 200"
Parcel and continuing along the Northeasterly line of that certain perimeter
easement as described in said agreement and ALTA Survey, South 61(degree) 51'
42" West 29.39 feet; thence along said lines of perimeter easement and FAC. 200
Parcel, the following courses: thence North 28(degree) 08' 18" West 78.64 feet;
thence South 61(degree) 51' 42" West 30.05 feet; thence, leaving said perimeter
parcel lines and continuing along said FAC. 200 Parcel, North 35(degree) 02' 34"
West 27.70 feet to a point on the Northwesterly edge of an existing concrete
deck, more or less; thence continuing along said edge of deck, more or less,
North 61(degree) 51' 42" East 139.68 feet; thence leaving said Northwesterly
edge of deck, North 28(degree) 08' 18" West 5.00 feet; thence North 61(degree)
51' 42" East 5.00 feet; thence North 39(degree) 44' 08" East 33.82 feet; thence
North 61(degree) 51' 42" East 2.00 feet; thence South 28(degree) 08' 18" East
17.74 feet to a point on the said Northwesterly edge of deck, more or less;
thence along said edge of deck, more or less, North 61(degree) 51' 42" East
150.52 feet; thence leaving said Northwesterly edge of deck, North 28(degree)
08' 18" West 5.00 feet; thence North 61(degree) 51' 42" East 41.58 feet; thence
South 28(degree) 08' 18" East 4.77 feet to a point on said Northwesterly edge of
deck, more or less; thence leaving said FAC. 200 parcel lines and continuing
along the Northwesterly line of said deck, more or less, North 61(degree) 52'
36" East 114.82 feet to the Northeasterly line of said deck; thence along said
Northeasterly line, South 35(degree) 05' 09" East 191.92 feet to the
Southeasterly line of said Deck, more or less; thence along said Southeasterly
line, South 46(degree) 15' 20" West 437.05 feet to the point of beginning,
containing 112,349 square feet, more or less.
The coordinates and bearing in the above description are based upon the
California Coordinate System, Xxxx 0, XXX 0000. Distances shown area ground
distances. Grid distances are obtained by multiplying ground distances by the
grid factor, 0.9999294.
End of Legal Description.
4
EXHIBIT B
DOCUMENTS
A. Loan Documents. The documents listed below, numbered 1 through 13,
inclusive, and amendments, modifications and supplements thereto which have
received the prior written consent of Lender, together with any documents
executed in the future that are approved by Lender and that recite that they are
"Loan Documents" for purposes of this Agreement are collectively referred to
herein as the Loan Documents.
1. This Agreement;
2. Promissory Note Secured by Deed of Trust of even date herewith in the
original principal amount of the Loan made by Borrower payable to the order of
Lender;
3. Construction Deed of Trust with Absolute Assignment of Leases and
Rents, Security Agreement and Fixture Filing of even date herewith executed by
Borrower, as Trustor, to Xxxxxxx Title Guaranty Company, as Trustee, for the
benefit of Lender, as Beneficiary;
4. State of California Uniform Commercial Code - Financing Statement -
Form UCC-1, dated December 31, 2001, prepared for Borrower as Debtor;
5. Assignment of Construction Agreements/Contractor's Consent of even date
herewith executed by Borrower and Contractor in favor of Lender;
6. Assignment of Agreements, Plans and Specifications and Architect's/
Engineer's Consent of even date herewith executed by Borrower and
Architect/Engineer in favor of Lender.
7. Repayment Guaranty of even date herewith executed by Project Entity as
Payment Guarantor in favor of Lender;
8. Security Agreement (Guarantor) of even date executed by Payment
Guarantor as Grantor in favor of Lender;
9. State of California Uniform Commercial Code - Financing Statement -
Form UCC-1, dated December 31, 2001, prepared for Payment Guarantor as Debtor.]
10. Assignment of Agreements, Plans and Specifications and Architect's/
Engineer's Consent of even date herewith executed by Borrower and
Architect/Engineer in favor of Lender;
11. Repayment Guaranty of even date herewith executed by Ferry Building
Associates, LLC, a California limited liability company ("FBA"), as guarantor in
favor of Lender;
12. Deed of Trust with Absolute Assignment of Leases and Rents, Security
Agreement and Fixture Filing of even date herewith executed by FBA, as Trustor,
to Xxxxxxx Title Guaranty Company, as Trustee, for the benefit of Lender, as
Beneficiary; and
13. State of California Uniform Commercial Code - Financing Statement -
Form UCC-1, dated December 31, 2001, prepared for FBA, as Debtor.
B. Other Related Documents (Which Are Not Loan Documents):
1. The Ferry Building Lease Disposition and Development Agreement dated
January 24, 2000 (the "LDDA") between the City and County of San Francisco,
through the San Francisco Port Commission and the Borrower;
2. The Ground Lease dated April 10, 2001 (the "Lease") between the City
and County of San Francisco, through the San Francisco Port Commission and the
Borrower;
3. The Parking Agreement (the "Parking Agreement") dated April 10, 2001
(the "Lease") between the City and County of San Francisco, through the San
Francisco Port Commission and the Borrower;
4. Ground Lessor's Estoppel Statement and Three Party Agreement dated
April 10, 2001, by and among the City and County of San Francisco, through the
San Francisco Port Commission, the Borrower and the Lender;
5. Ground Lessor's Estoppel Statement and Four Party Agreement dated
December 31, 2001, by and among the City and County of San Francisco, through
the San Francisco Port Commission, the Borrower and the Lender;
6. Master Tenant Sublease (the "Master Lease") between Borrower, as
landlord, and FBA, as tenant, dated December 31, 2001; and
7. Port's Consent to Sublease and Subordination, Nondisturbance and
Attornment Agreement (the "Port SNDA") among the Port, Ground Lessor, Borrower
and FBA, dated December 31, 2001.
-2-
EXHIBIT C
FINANCIAL REQUIREMENT ANALYSIS
The Financial Requirement Analysis set forth herein represents an analysis
of the total costs necessary in Borrower's estimation to perform Borrower's
obligations under the Loan Documents.
FERRY BUILDING - CONSTRUCTION LOAN FORECASTED COSTS(1)
Total Forecasted Costs Paid By Borrower Additional Equity to be Loan Disbursement
Costs Through 11/30/012 Contributed by Borrower Amount
---------------- ---------------------- ----------------------- -----------------
GROUND LEASE ACQUISITION $ 4,453,562 $ 1,536,895
LEASE TERMINATIONS 8,336,644 7,067,831
OFFSITE IMPROVEMENTS
FEES, PERMITS, PLANNING 383,067 315,008
PHYSICAL & ENVIRON. 2,617,880 2,639,636
PUBLIC ENVIRONMENTAL
A & E 5,368,280 4,799,788
OTHER CONSULTANTS 554,885 296,903
CONSTRUCTION 48,552,656 15,049,648
TENANT IMPROVEMENTS 8,648,549
LEASING & MARKETING 3,935,296 449,605
LEGAL 1,736,171 1,338,302
MISCELLANEOUS COSTS 390,375 330,424
DEVELOPMENT MANAGEMENT 3,548,000 2,186,639
FINANCING FEES & COSTS 1,689,196 157,969
INTEREST & CAP OP.EXP. 1,943,438 (19,670)
CONTINGENCY(3) 1,507,993
=========== =========== ========== ===========
TOTAL CASH $93,665,993 $36,148,978 $1,617,016 $55,900,000
(1) The Total Forecasted Costs shall be updated monthly by Borrower and
submitted with the following month's disbursement request, provided that the
Total Cash amount in the Total Forecasted Costs column shall not change, except
as expressly permitted in this Agreement.
(2) Borrower's Required Equity Contribution in the amount of $37,765,993
is reflected in this column.
(3) The Contingency shall be increased to the extent the Total Forecasted
Costs for any line item are decreased and shall be decreased to the extent the
Total Forecasted Costs for any line item are increased.
EXHIBIT D
DISBURSEMENT PLAN
A. Timing of Disbursement. Unless another provision of this Agreement
specifies otherwise, on or before the fifteenth (15th) day of each month,
Borrower shall submit to:
Equity Office Properties Trust
C/O Xxxxx Xxxx
Xxx Xxxxx Xxxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Phone : (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
PNC Real Estate Finance
X/X Xxxxx Xxxxxx
000 Xxxxx Xxxxxx, 00xx Xxxxx
Mail Stop : P1-XXXX-18-3
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Phone: (000) 000-0000
Facsimile: (000) 000-0000
a written itemized statement, signed by Borrower ("Application for Payment")
setting forth:
1. A description of the work performed, material supplied and/or costs
incurred or due for which disbursement is requested with respect to any line
item ("Item") shown in the Financial Requirement Analysis attached as EXHIBIT C
to this Agreement; and
2. The total amount incurred, expended and/or due for each requested Item
less prior disbursements.
Each Application for Payment by Borrower shall constitute a representation and
warranty by Borrower that Borrower is in compliance with all the conditions
precedent to a disbursement specified in this Agreement. With respect to
Borrower's remaking of the representations and warranties set forth in Article 6
of this Agreement on the date of submission of each Application for Payment, to
the extent circumstances have changed for reasons beyond the reasonable control
of Borrower such that Borrower must qualify such representations and warranties
as of the date of delivery of any such Application for
Payment, such qualification, to the extent it renders the applicable
representation materially untrue or breaches the applicable warranty, shall
merely be a failure of condition to Lender's obligation to disburse funds under
the provisions of this EXHIBIT D, as opposed to constituting an Event of
Default.
B. Lender's Right to Condition Disbursements. Lender shall have the right
to condition any disbursement upon Lender's receipt in the appropriate form of
the following submissions and Lender's reasonable determination that such
submissions comply with the requirements set forth below:
1. The Application for Payment and an itemized requisition for payment;
2. Bills, invoices, documents of title, vouchers, statements, receipts and
any other documents evidencing the total amount expended, incurred or due for
any requested Items;
3. Evidence of Borrower's use of a lien release, joint check and voucher
system acceptable to Lender for payments or disbursements to any contractor,
subcontractor, materialman, supplier or lien claimant;
4. Architect's, inspector's and/or engineer's periodic certifications of
the percentage and/or stage of construction that has been completed and its
conformance to the Plans and Specifications and governmental requirements based
upon any such architect's, inspector's and/or engineer's periodic physical
inspections of the Property and Improvements;
5. Waivers and releases of any mechanics' lien, stop notice claim,
equitable lien claim or other lien claim rights (conditional for costs to be
paid from the current Application for Payment, and unconditional for all prior
costs which have been disbursed by Lender by the twenty-fifth (25th) day of the
immediately preceding month or were to have been paid from Borrower's own funds
under the Disbursement Budget);
6. Reasonable evidence of Borrower's compliance with the provisions of the
Sections of this Agreement entitled CONSTRUCTION and AUTHORITY/ENFORCEABILITY.
Where this Agreement calls for the delivery of a certificate as evidence of any
action, such certificate, if factually accurate, shall constitute such
reasonable evidence;
7. A written release executed by any surety to whom Lender has issued or
will issue a set-aside letter and/or any public entity or agency which is a
beneficiary under any instrument of credit, set-aside letter or standby letter
of credit which Lender has issued or will issue with respect to the Loan;
8. For final payment only with respect all or any separate, independent
portion of the Improvements, valid, recorded Notice(s) of Completion for the
Improvements or any portions of the Improvements for which Notice(s) of
Completion may be recorded
-2-
under applicable law, and final payment lien release waivers (conditional with
respect to costs to be paid from such final payment, and unconditional for all
other costs);
9. Certificate of Substantial Completion from the Architect and Engineer,
if any, prior to the final retention disbursement;
10. Any other document, requirement, evidence or information that Lender
may have reasonably requested under any provision of the Loan Documents at least
thirty (30) days prior to the Application for Payment in question; and
11. Except with respect to items covered under #12 and #13 below, evidence
that any goods, materials, supplies, fixtures or other work in process for which
disbursement is requested have been incorporated into the Improvements.
12. In the event any Application for Payment includes the cost of
materials stored at a location other than the Property ("Offsite Materials"),
each of the following: (a) evidence that the Offsite Materials have been
purchased by Borrower, have been segregated from other materials in the facility
and have been appropriately marked to indicate Borrower's ownership thereof and
Lender's security interest therein; and (b) evidence that the Offsite Materials
are insured as required by this Agreement.
13. In the event that any Application for Payment includes the cost of
materials stored on the Property ("Onsite Materials"), each of the following:
(a) evidence that the Onsite Materials have been purchased for or by Borrower;
(b) evidence that the Onsite Materials are insured as required hereunder; and
(c) evidence that the Onsite Materials are stored in an area on the Property for
which adequate security is provided against theft and vandalism.
Borrower acknowledges that this approval process may result in disbursement
delays and Borrower hereby consents to all such delays; provided, however, that
Lender shall use commercially reasonable efforts to respond to all requests for
approval within the time periods designated in this Agreement.
C. Periodic Disbursement of Construction Costs, Site Work Costs and
Offsite Costs. As construction progresses, the amount of the retention as
provided under any construction contract to which Borrower is a party (the
"Retention") shall be disbursed into the Account or to or for the benefit or
account of the Borrower, Property or Improvements upon Borrower's delivery to
Lender of (1) the applicable lien releases specified above in Xxxxxxxxx X,0 of
this Exhibit D, (2) the applicable certificate specified above in Xxxxxxxxx X,0
of this Exhibit D and (3) solely with respect to the Construction Contract, a
duly issued temporary certificate of occupancy for the Improvements and
completion of the Improvements in accordance with the Plans and Specifications.
-3-
D. Partial Disbursements. No disbursement shall be made for a particular
Application for Payment unless all required supporting materials are included
for Items totaling at least sixty-five percent (65%) of the total amount of
funds requested thereunder. Subject to the foregoing, to the extent that an
unconditional lien release and waiver for an Item that was included in a prior
disbursement is not delivered to Lender prior to the date that Lender approves
the subsequent disbursement, Lender may withhold from the then current approved
disbursement an amount equal to one hundred fifty percent (150%) of the amount
for the Item(s) which had been previously funded. Thereafter, such withheld
amount shall be disbursed as part of the next ensuing disbursement upon Lender's
receipt of the missing unconditional lien release and waiver.
E. Timing of Disbursements. Lender shall exercise diligent and good faith
efforts to disburse funds for all approved Items in any Application for Payment
within the applicable Lender Payment Turnaround Period.
-4-
EXHIBIT E
LEASING PARAMETERS
Office Space: Minimum - $45.00 per square foot fully serviced; $45.00 per
square foot for tenant improvement allowance.
Retail Space:
SPACE TYPE NRA NET RENT TI ALLOWANCE
---------- --- -------- ------------
Restaurants 14,910 29.75 50.00
Cafes 5,351 29.75 50.00
Arcade 12,569 25.50 0.00
Central Pass thru 3,364 29.75 50.00
Bayside Retail 24,290 34.00 0.00
Xxxx Shops 7,400 63.75 0.00
EXHIBIT F
CERTIFICATE OF APPROVAL
This is a Certificate of Approval, as defined in that certain Construction
Loan Agreement between Ferry Building Investors, LLC, a California limited
liability company, as Borrower, and Riverside Finance Company, L.L.C., as
Lender, dated as of December __, 2001. All capitalized and undefined terms used
in this Certificate shall have the meanings given them in such Construction Loan
Agreement.
Borrower hereby certifies to Lender that since the date of the immediately
preceding Certificate of Approval [or in the case of the first Certificate of
Approval, "since the date of the execution of the Loan Agreement"], the
following matters, which require the approval of Lender under the Loan
Documents, were approved by [EOP INVESTOR] or [EOP PROJECT INVESTOR] in the
following manner:
_______________________________________________________________________________
_______________________________________________________________________________
________________________________________________, and such approval has not been
rescinded as of this date. All other matters that arose between the date of the
immediately preceding Certificate of Approval [or in the case of the first
Certificate of Approval, "since the date of the execution of the Loan
Agreement"] do not require the consent of the [EOP INVESTOR] or [EOP PROJECT
INVESTOR].
The undersigned hereby certifies that the matters set forth above are true
and correct as of this date.
_________________________________,
a _______________________________
By:______________________________
Its: ____________________________
Date:____________________________
TABLE OF CONTENTS
Page
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ARTICLE 1. DEFINITIONS............................................................................................. 1
1.1. Defined Terms.................................................................................... 1
1.2. Exhibits Incorporated............................................................................ 7
ARTICLE 2. LOAN.................................................................................................... 7
2.1. Loan............................................................................................. 7
2.2. Loan Documents................................................................................... 7
2.3. Effective Date................................................................................... 7
2.4. Maturity Date; Prepayment........................................................................ 7
2.5. Credit for Principal Payments.................................................................... 7
2.6. Full Repayment and Reconveyance.................................................................. 8
2.7. Certificates of Approval......................................................................... 8
ARTICLE 3. DISBURSEMENT............................................................................................ 8
3.1. Conditions Precedent............................................................................. 8
3.2. Account, Pledge and Assignment, and Disbursement Authorization................................... 10
3.3. Borrower's Funds Account, Pledge and Assignment.................................................. 10
3.4. Loan Disbursements............................................................................... 10
3.5. Working Capital.................................................................................. 10
ARTICLE 4. CONSTRUCTION............................................................................................ 11
4.1. Commencement and Completion...................................................................... 11
4.2. Commencement and Completion of Offsite Improvements.............................................. 11
4.3. Force Majeure.................................................................................... 11
4.4. Construction Agreement........................................................................... 11
4.5. Architect's Agreement............................................................................ 12
4.6. Plans and Specifications......................................................................... 12
4.7. Contractor/Construction Information.............................................................. 13
4.8. Prohibited Contracts............................................................................. 13
4.9. Liens and Stop Notices........................................................................... 14
4.10. Construction Responsibilities.................................................................... 14
4.11. Assessments and Community Facilities Districts................................................... 14
4.12. Delay............................................................................................ 14
4.13. Inspections...................................................................................... 15
4.14. Surveys.......................................................................................... 15
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ARTICLE 5. INSURANCE............................................................................................... 15
5.1. Title Insurance.................................................................................. 15
5.2. Property Insurance............................................................................... 15
5.3. Flood Hazard Insurance........................................................................... 15
5.4. Liability Insurance.............................................................................. 15
5.5. General.......................................................................................... 16
ARTICLE 6. REPRESENTATIONS AND WARRANTIES.......................................................................... 16
6.1. Authority/Enforceability......................................................................... 16
6.2. Binding Obligations.............................................................................. 16
6.3. Formation and Organizational Documents........................................................... 16
6.4. No Violation..................................................................................... 16
6.5. Compliance with Laws............................................................................. 17
6.6. Litigation....................................................................................... 17
6.7. Financial Condition.............................................................................. 17
6.8. [Deleted]........................................................................................ 17
6.9. Loan Proceeds and Adequacy....................................................................... 17
6.10. Accuracy......................................................................................... 17
6.11. Tax Liability.................................................................................... 18
6.12. Utilities........................................................................................ 18
6.13. Compliance....................................................................................... 18
6.14. Americans With Disabilities Act Compliance....................................................... 18
6.15. Business Loan.................................................................................... 18
ARTICLE 7. HAZARDOUS MATERIALS..................................................................................... 18
7.1. Special Representations and Warranties........................................................... 18
7.2. Hazardous Materials Covenants.................................................................... 20
ARTICLE 8. SET ASIDE LETTERS....................................................................................... 21
8.1. Set Aside Letters................................................................................ 21
ARTICLE 9. COVENANTS OF BORROWER................................................................................... 22
9.1. Expenses......................................................................................... 22
9.2. ERISA Compliance................................................................................. 23
9.3. Leasing.......................................................................................... 23
9.4. Approval of Leases............................................................................... 23
9.5. Revenue to be Applied to Debt Service............................................................ 23
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9.6. Subdivision Maps................................................................................. 23
9.7. Further Assurances............................................................................... 24
9.8. Assignment....................................................................................... 24
9.9. Management of Property........................................................................... 24
9.10. Governing Documents.............................................................................. 24
9.11. WAIVER OF FIDUCIARY CLAIMS....................................................................... 24
ARTICLE 10. REPORTING COVENANTS.................................................................................... 25
10.1. Financial Information............................................................................ 25
10.2. Books and Records................................................................................ 26
ARTICLE 11. DEFAULTS AND REMEDIES.................................................................................. 26
11.1. Default.......................................................................................... 26
11.2. Acceleration Upon Default; Remedies.............................................................. 29
11.3. Disbursements to Third Parties................................................................... 29
11.4. Lender's Completion of Construction.............................................................. 29
11.5. Lender's Cessation of Construction............................................................... 30
11.6. Termination or Continuation of Development and
Management Agreements..................................................................................... 30
11.7. Repayment of Funds Advanced...................................................................... 30
11.8. Rights Cumulative, No Waiver..................................................................... 30
ARTICLE 12. MISCELLANEOUS PROVISIONS............................................................................... 31
12.1. Indemnity........................................................................................ 31
12.2. Form of Documents................................................................................ 31
12.3. No Third Parties Benefited....................................................................... 31
12.4. Notices.......................................................................................... 31
12.5. Attorney-in-Fact................................................................................. 32
12.6. Actions.......................................................................................... 32
12.7. Right of Contest................................................................................. 32
12.8. Relationship of Parties.......................................................................... 32
12.9. Delay Outside Lender's Control................................................................... 32
12.10. Attorneys' Fees and Expenses; Enforcement........................................................ 33
12.11. Immediately Available Funds...................................................................... 33
12.12. Lender's Consent................................................................................. 33
12.13. Signs............................................................................................ 33
12.14. Lender's Agents.................................................................................. 33
12.15. Tax Service...................................................................................... 33
12.16. WAIVER OF RIGHT TO TRIAL BY JURY................................................................. 33
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12.17. Severability..................................................................................... 34
12.18. Heirs, Successors and Assigns.................................................................... 34
12.19. Time............................................................................................. 34
12.20. Headings......................................................................................... 34
12.21. Governing Law.................................................................................... 34
12.22. Integration; Interpretation...................................................................... 35
12.23. Joint and Several Liability...................................................................... 35
12.24. Counterparts..................................................................................... 36
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