Exhibit 10.74
BUILDING LOAN AGREEMENT
Dated
as of December 26, 2007
Between
ACADIA ATLANTIC AVENUE LLC ,
as Borrower
and
BEAR STEARNS COMMERCIAL MORTGAGE, INC. ,
as Lender
MERS MIN: 8000101-0000007166-1
TABLE OF CONTENTS
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| ARTICLE I. DEFINITIONS; PRINCIPLES OF
CONSTRUCTION |
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1 |
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Section 1.1 |
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Definitions |
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1 |
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Section 1.2 |
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Principles of Construction |
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34 |
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| ARTICLE II. GENERAL TERMS |
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34 |
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Section 2.1 |
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Loan Commitment; Disbursement to
Borrower |
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34 |
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Section 2.2 |
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Interest Rate |
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38 |
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Section 2.3 |
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Loan Payment |
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39 |
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Section 2.4 |
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Prepayments |
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40 |
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Section 2.5 |
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Defeasance |
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41 |
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Section 2.6 |
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Release of Property |
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44 |
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Section 2.7 |
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Clearing Account/Cash Management |
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44 |
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Section 2.8 |
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Intentionally Omitted |
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47 |
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Section 2.9 |
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Payments Not Conditional |
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47 |
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Section 2.10 |
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Initial Advance |
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47 |
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Section 2.11 |
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Construction Advances |
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51 |
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Section 2.12 |
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Final Advance |
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55 |
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Section 2.13 |
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No Reliance |
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57 |
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Section 2.14 |
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Method of Disbursement of Loan
Proceeds |
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57 |
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Section 2.15 |
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Plan Review Process |
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59 |
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| ARTICLE III. CONDITIONS PRECEDENT |
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60 |
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Section 3.1 |
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Conditions Precedent to Closing |
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60 |
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| ARTICLE IV. REPRESENTATIONS AND
WARRANTIES |
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64 |
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Section 4.1 |
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Borrower Representations |
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64 |
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Section 4.2 |
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Survival of Representations |
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76 |
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| ARTICLE V. BORROWER COVENANTS |
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76 |
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Section 5.1 |
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Affirmative Covenants |
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76 |
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Section 5.2 |
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Negative Covenants |
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92 |
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| ARTICLE VI. INSURANCE; CASUALTY;
CONDEMNATION; REQUIRED REPAIRS |
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102 |
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Section 6.1 |
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Insurance |
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102 |
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Section 6.2 |
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Casualty and Condemnation |
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108 |
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Section 6.3 |
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Application of Net Proceeds |
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114 |
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| ARTICLE VII. RESERVE FUNDS |
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114 |
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Section 7.1 |
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Tax and Insurance Escrow Fund |
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114 |
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Section 7.2 |
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Interest Reserve |
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116 |
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Section 7.3 |
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Replacements and Replacement
Reserve |
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116 |
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Section 7.4 |
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Punch List and Deferred Maintenance
Reserve |
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120 |
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Section 7.5 |
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Intentionally Omitted |
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121 |
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Section 7.6 |
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Excess Cash Flow |
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122 |
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Section 7.7 |
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Operating Reserve |
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122 |
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Section 7.8 |
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Reserve Funds, Generally |
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122 |
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Section 7.9 |
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Letter of Credit Rights |
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123 |
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| ARTICLE VIII. DEFAULTS |
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123 |
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Section 8.1 |
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Event of Default |
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123 |
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Section 8.2 |
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Remedies |
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127 |
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Section 8.3 |
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Remedies Cumulative; Waivers |
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128 |
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| ARTICLE IX. SPECIAL PROVISIONS |
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128 |
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Section 9.1 |
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Sale of Notes and Securitization |
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128 |
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Section 9.2 |
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Securitization Indemnification |
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131 |
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Section 9.3 |
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Exculpation |
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134 |
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Section 9.4 |
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Intentionally Omitted |
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136 |
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Section 9.5 |
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Servicer |
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136 |
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| ARTICLE X. MISCELLANEOUS |
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136 |
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Section 10.1 |
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Survival |
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136 |
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Section 10.2 |
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Lender’s Discretion |
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136 |
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Section 10.3 |
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Governing Law |
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136 |
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Section 10.4 |
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Modification, Waiver in Writing |
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138 |
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Section 10.5 |
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Delay Not a Waiver |
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138 |
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Section 10.6 |
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Notices |
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138 |
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Section 10.7 |
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Trial by Jury |
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139 |
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Section 10.8 |
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Headings |
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139 |
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Section 10.9 |
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Severability |
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139 |
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Section 10.10 |
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Preferences |
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139 |
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Section 10.11 |
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Waiver of Notice |
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140 |
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Section 10.12 |
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Remedies of Borrower |
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140 |
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Section 10.13 |
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Expenses; Indemnity |
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140 |
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Section 10.14 |
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Schedules and Exhibits
Incorporated |
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141 |
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Section 10.15 |
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Offsets, Counterclaims and
Defenses |
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141 |
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Section 10.16 |
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No Joint Venture or Partnership; No
Third Party Beneficiaries |
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142 |
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Section 10.17 |
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Publicity |
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142 |
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Section 10.18 |
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Waiver of Marshalling of Assets |
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142 |
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Section 10.19 |
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Waiver of Counterclaim |
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142 |
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Section 10.20 |
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Conflict; Construction of Documents;
Reliance |
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142 |
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Section 10.21 |
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Brokers and Financial Advisors |
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143 |
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Section 10.22 |
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Prior Agreements |
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143 |
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Section 10.23 |
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Joint and Several Liability |
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143 |
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Section 10.24 |
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Certain Additional Rights of Lender
(VCOC) |
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143 |
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Section 10.25 |
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MERS |
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144 |
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-ii-
SCHEDULES
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Schedule I
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— Organizational Chart of Borrower |
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Schedule II
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— Development
Budget |
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Schedule III
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— Plans and
Specifications |
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Schedule IV
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— Construction
Schedule |
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Schedule V
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— Rent
Roll |
EXHIBITS
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Exhibit A
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Legal Description of the Land |
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Exhibit B
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Intentionally Omitted |
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Exhibit C
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Form of Datedown Endorsement |
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Exhibit D
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Section 22 Affidavit |
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Exhibit E
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Affirmation of Payment (AIA
Form G706) |
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Exhibit F
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Architect’s Certificate |
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Exhibit G
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General Contractor’s
Certificate |
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Exhibit H
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Form of Performance Letter |
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Exhibit I
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Anticipated Cost Report Form |
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Exhibit J
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Form of Lien Waivers |
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Exhibit K
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Form of Insolvency Opinion -To Be
Delivered Upon Completion |
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Exhibit L
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Form of Borrower’s
Requisition |
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Exhibit M
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Application and Certificate for
Payment (AIA Form G702) |
-iii-
BUILDING LOAN AGREEMENT
THIS BUILDING LOAN AGREEMENT , dated as of December 26,
2007 (as amended, restated, replaced, supplemented or otherwise
modified from time to time, this “ Agreement ”
or sometimes, this “ Building Loan Agreement ”),
is made by and between BEAR STEARNS COMMERCIAL MORTGAGE,
INC. , a New York corporation, having an address at 383 Madison
Avenue, New York, New York 10179 (“ Lender ”)
and ACADIA ATLANTIC AVENUE LLC , a Delaware limited
liability company, having its principal place of business at c/o
Acadia Realty Trust, 1311 Mamaroneck Avenue — Suite 260,
White Plains, New York 10605, as Borrower (“ Borrower
”).
WITNESSETH :
WHEREAS , Borrower desires to obtain the Building Loan (as
hereinafter defined) from Lender; and
WHEREAS , Lender is willing to make the Building Loan to
Borrower, subject to and in accordance with the terms of this
Agreement and the other Loan Documents (as hereinafter
defined).
NOW
THEREFORE , in consideration of the making of the Loan by
Lender and the covenants, agreements, representations and
warranties set forth in this Agreement, the parties hereto hereby
covenant, agree, represent and warrant as follows:
ARTICLE I.
DEFINITIONS; PRINCIPLES OF CONSTRUCTION
Section 1.1
Definitions .
For all
purposes of this Agreement, except as otherwise expressly required
or unless the context clearly indicates a contrary intent:
“
ADA ” shall mean the Americans with Disabilities Act
of 1992, as amended from time to time.
“
Additional Insolvency Opinion ” shall have the meaning
set forth in Section 4.1.30(c) .
“
Additional Interest Reserve Deposit ” shall have the
meaning set forth in Section 5.1.28 hereof.
“
Additional Mezzanine Borrower ” shall have the meaning
set forth in Section 5.2.13(g) hereof.
“
Additional Mezzanine Loan ” shall have the meaning set
forth in Section 5.2.13 hereof.
“
Additional Mezzanine Loan Documents ” shall have the
meaning set forth in Section 5.2.13(f) hereof.
“
Administration Fee ” shall have the meaning set forth
in the Administration Fee Agreement.
“
Administration Fee Agreement ” shall mean that certain
Administration Fee Agreement dated as of the date hereof between
Borrower and Lender.
“
Advance ” or “ Advances ” shall
mean any disbursement of the proceeds of the Building Loan by
Lender pursuant to the terms of this Agreement.
“
Affiliate ” shall mean, as to any Person, any other
Person that, directly or indirectly, is in Control of, is
Controlled by or is under common Control with such Person or is a
director or officer of such Person or of an Affiliate of such
Person.
“Affiliated Manager” shall mean any Manager in
which Borrower or Guarantor has, directly or indirectly, any legal,
beneficial or economic interest.
“
Affiliate Fees ” shall mean collectively, any
development fee, management fee, brokerage fee, commission,
distribution, reimbursement, salary, consideration sum or amount,
however characterized, payable to any Restricted Party with respect
to the Property and/or the Project.
“
Affirmation of Payment ” shall have the meaning as set
forth in Section 2.11.5(e) .
“
Aggregate Debt Service Coverage Ratio ” shall have the
meaning set forth in Section 5.2.13 hereof.
“
Agreement ” shall mean this Building Loan Agreement,
as the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
“
ALTA ” shall mean American Land Title Association, or
any successor thereto.
“
Annual Budget ” shall mean the operating budget,
including all planned Capital Expenditures, for the Property
prepared by Borrower in accordance with
Section 5.1.11.(e) hereof for the applicable
Fiscal Year or other period.
“
Anticipated Costs Report ” shall have the meaning as
set forth in Section 2.11.5(a) .
“
Approved Annual Budget ” shall have the meaning set
forth in Section 5.1.11(e) hereof.
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“Approved Bank” shall mean a bank or other
financial institution which has a minimum long term unsecured debt
rating of at least “AA” by S&P and Fitch and
“Aa2” by Moody’s.
“
Architect’s Certificate ” shall have the meaning
as set forth in Section 2.10.10 .
“
Architect’s Contract ” shall mean that certain
Professional Services Authorization between Borrower and
Borrower’s Architect dated as of March 16 2007, as the
same may be amended from time to time in compliance with the terms
hereof.
“
Assignment of Contracts ” shall mean that certain
Assignment of Agreement Permits and Contracts dated as of the date
hereof from Borrower, as assignor, to Lender, as assignee.
“
Assignment of Leases ” shall mean, collectively, the
Building Loan Assignment of Leases and the Project Loan Assignment
of Leases.
“
Assignment of Management Agreement ” shall mean that
certain Assignment of Management Agreement and Subordination of
Management Fees, dated as of the date hereof, among Lender,
Borrower and Manager, as the same may be amended, restated,
replaced, supplemented or otherwise modified from time to
time.
“
Award ” shall mean any compensation paid by any
Governmental Authority in connection with a Condemnation in respect
of all or any part of the Property.
“
Bankruptcy Action ” shall mean with respect to any
Person (a) such Person filing a voluntary petition under the
Bankruptcy Code or any other Federal or state bankruptcy or
insolvency law; (b) the filing of an involuntary petition against
such Person under the Bankruptcy Code or any other Federal or state
bankruptcy or insolvency law, in which such Person colludes with,
or otherwise assists such Person, or causes to be solicited
petitioning creditors for any involuntary petition against such
Person; (c) such Person filing an answer consenting to or
otherwise acquiescing in or joining in any involuntary petition
filed against it, by any other Person under the Bankruptcy Code or
any other Federal or state bankruptcy or insolvency law;
(d) such Person consenting to or acquiescing in or joining in
an application for the appointment of a custodian, receiver,
trustee, or examiner for such Person or any portion of the
Property; (e) such Person making an assignment for the benefit
of creditors, or admitting, in writing or in any legal proceeding,
its insolvency or inability to pay its debts as they become
due.
“
Bankruptcy Code ” shall mean Title 11 of the United
States Code, 11 U.S.C. §101, et seq. , as the
same may be amended from time to time, and any successor statute or
statutes and all rules and regulations from time to time
promulgated thereunder, and any comparable foreign laws relating to
bankruptcy, insolvency or creditors’ rights or any other
Federal or state bankruptcy or insolvency law.
“
Borrower ” shall have the meaning set forth in the
introductory paragraph hereto, together with its successors and
permitted assigns.
“
Borrower’s Architect ” shall mean Butz Wilbern,
Ltd..
3
“
Borrower’s Requisition ” shall have the meaning
set forth in Section 2.14.1 hereof.
“
BSCMI ” shall mean Bear Stearns Commercial Mortgage,
Inc., a New York corporation, and its successors in interest.
“
Budget Line ” shall have the meaning set forth in
Section 2.1.14 hereof.
“
Building Loan ” shall mean the loan made by Lender to
Borrower pursuant to this Agreement in the principal amount of up
to the Building Loan Amount.
“
Building Loan Amount ” shall mean Eleven Million, Two
Hundred Twenty-Nine Thousand, Two Hundred Sixty and 33/100 Dollars
($11,229,260.33).
“
Building Loan Assignment of Leases ” shall mean that
certain Building Loan Assignment of Leases and Rents, dated as of
the date hereof, from Borrower, as assignor, to Lender, as
assignee.
“
Building Loan Budget ” shall have the meaning set
forth in Section 2.1.14 hereof.
“
Building Loan Costs ” shall mean all Project-Related
Costs (including Hard Costs and Soft Costs) that are Costs of the
Improvements.
“
Building Loan Documents ” shall mean, collectively,
this Agreement, the Building Loan Note, the Building Loan Mortgage,
the Building Loan Assignment of Leases, as well as all other
documents now or hereafter executed and/or delivered with respect
to the Building Loan.
“
Building Loan Earn Out Advance ” shall have the
meaning set forth in Section 2.12.2
hereof.
“
Building Loan Mortgage ” shall mean that certain
Building Loan Mortgage, Assignment of Leases and Rents and Security
Agreement dated the date hereof, executed and delivered by Borrower
to Lender as security for the Building Loan and encumbering the
Property.
“
Building Loan Note ” shall mean that certain Building
Loan Promissory Note, dated the date hereof, in the principal
amount of up to the Building Loan Amount made by Borrower in favor
of Lender, as the same may be amended, restated, replaced,
supplemented or otherwise modified from time to time.
“
Business Day ” shall mean any day other than a
Saturday, Sunday or any other day on which national banks in New
York, New York, or the place of business of any Servicer are not
open for business.
4
“
Capital Expenditures ” shall mean, for any period, the
amount expended for items capitalized under GAAP (including
expenditures for building improvements or major repairs).
“
Carrying Costs ” shall mean, the sum of the following
costs associated with the Property for any specified period:
(a) Taxes, (b) Other Charges, (c) Insurance Premiums
and (d) Operating Expenses.
“Cash ” shall mean the legal tender of the
United States of America.
“
Cash and Cash Equivalents ” shall mean any one or a
combination of the following: (i) Cash, and (ii) U.S.
Obligations, and (iii) an irrevocable standby Letter of
Credit.
“
Cash Management Account ” shall have the meaning set
forth in Section 2.7.2(a) hereof.
“Cash Management Agreement” shall mean that
certain Cash Management Agreement, dated as of the date hereof, by
and among Borrower, Manager, Cash Management Bank and Lender, as
the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
“
Cash Management Bank ” shall mean Wells Fargo Bank,
N.A., a national banking association, or any successor Eligible
Institution acting as Agent under the Cash Management
Agreement.
“
Cash Management Conditions ” shall have the meaning
set forth in Section 2.7 hereof.
“
Cash Trap Event ” shall mean the occurrence of any of
the following: (a) an Event of Default; (b) any
Bankruptcy Action of Borrower or Mezzanine Borrower; (c) any
Bankruptcy Action of Manager; or (d) on or after the last day
of the Construction Term, a DSCR Trigger.
“
Cash Trap Event Cure ” shall mean:
(a) if
the Cash Trap Event is caused solely by the occurrence of:
(i)
clause (a) in the definition of “Cash Trap
Event”, a cure of the Event of Default which gave rise to the
Cash Trap Event which is accepted or waived in writing by Lender,
in its sole discretion, prior to Lender exercising any of its
rights, to accelerate the Loan, move to appoint a receiver, or
commence a foreclosure action;
(ii)
clause (c) in the definition of “Cash Trap
Event”, either (A) if such Cash Trap Event is as a
result of the filing of an involuntary petition against Manager and
not consented to by Manager, upon the same being discharged, stayed
or dismissed within thirty (30) days of such filing and such
filing (after dismissal or discharge), provided , that such
dismissal or discharge in Lender’s reasonable opinion does
not adversely impact the Loan or the Property, or
5
(B) if Borrower replaces the Manager with a Qualified Manager
pursuant to a Replacement Management Agreement approved by
Lender;
(iii) a
DSCR Trigger Event, if the Debt Service Coverage Ratio is greater
than 1.05 to 1:00 based upon the trailing six (6) month period
annualized as of two (2) consecutive Debt Service Coverage
Ratio Determination Dates occurring thereafter.
(b) provided,
that, each such Cash Trap Event Cure set forth in this definition
shall be subject to the following conditions, (i) no Event of
Default (other than that giving rise to the Cash Trap Event) shall
have occurred and be continuing under this Agreement or any of the
other Loan Documents, (ii) Borrower shall have notified Lender
in writing of its election to cure the respective Cash Trap Event,
(iii) a Cash Trap Event Cure under clauses (a)(i) and
(a)(ii) may occur no more than 3 times during the term of
the Loan, (iv) Borrower shall have paid all of Lender’s
reasonable expenses incurred in connection with such cure
including, reasonable attorney’s fees and costs; and
(v) in no event shall Borrower have the right to
“cure” a Cash Trap Event occurring by reason of a
Bankruptcy Action of Borrower or Mezzanine Borrower.
“
Cash Trap Period ” shall mean each period commencing
on the occurrence of a Cash Trap Event and continuing until the
earlier of (a) the Payment Date next occurring following the
related Cash Trap Event Cure, or (b) until payment in full of
all principal and interest on the Loan and all other amounts
payable under the Loan Documents in accordance with the terms and
provisions of the Loan Documents.
“
Casualty ” shall have the meaning set forth in
Section 6.2 hereof.
“
Casualty Consultant ” shall have the meaning set forth
in Section 6.2.4(d) hereof.
“
Casualty Retainage ” shall have the meaning set forth
in Section 6.2.4(e) hereof.
“
Clearing Account ” shall have the meaning set forth in
Section 2.7 hereof.
“
Clearing Account Agreement ” shall have the meaning
set forth in Section 2.7.1 hereof.
“
Clearing Bank ” shall have the meaning set forth in
Section 2.7 hereof.
“
Closing Date ” shall mean the date of this
Agreement.
“
Code ” shall mean the Internal Revenue Code of 1986,
as amended, as it may be further amended from time to time, and any
successor statutes thereto, and applicable U.S. Department of
Treasury regulations issued pursuant thereto in temporary or final
form.
“
Completion of the Improvements ” shall mean the
substantial completion (i.e., completion of the Project
Improvements other than Punch List Items) of the construction and
renovation of the Project Improvements substantially in accordance
with all Plans and Specifications, all Legal Requirements, all
Permitted Encumbrances and this Agreement, and that all utilities
necessary to service the Project Improvements have been connected
and are in
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operation, such completion to be evidenced to the reasonable
satisfaction of Lender and the Construction Consultant; together
with the delivery to Lender of:
(i) a
permanent or temporary certificate(s) of occupancy for the Project
Improvements and evidence that all other Governmental Approvals
have been issued and all other Legal Requirements have been
satisfied so as to allow the Project Improvements to be used and
operated in accordance with the Loan Documents and the Plans and
Specifications; and
(ii) AIA
Form G704 (Certificate of Substantial Completion) completed
and executed by Borrower’s Architect certifying the
substantial completion of the Project Improvements in accordance
with the Plans and Specifications.
“
Condemnation ” shall mean a temporary or permanent
taking by any Governmental Authority as the result or in lieu or in
anticipation of the exercise of the right of condemnation or
eminent domain, of all or any part of the Property, or any interest
therein or right accruing thereto, including any right of access
thereto or any change of grade affecting the Property or any part
thereof.
“
Condemnation Proceeds ” shall have the meaning set
forth in Section 6.2.1 hereof.
“
Construction Advance Conditions ” shall have the
meaning set forth in Section 2.11 hereof.
“
Construction Consultant ” shall mean EMG Consulting
Group, or such other Person as Lender may designate and engage as a
replacement to inspect the Project Improvements and the Property as
construction progresses and consult with and to provide advice to
and to render reports to Lender, which Person may be, at
Lender’s option upon notice to Borrower, either an officer or
employee of Lender or consulting architects, engineers or
inspectors appointed by Lender.
“
Construction Schedule ” shall mean the construction
schedule attached hereto as Schedule IV , broken down
by trade, of Borrower’s best good faith estimate of the dates
of commencement and completion of the Project Improvements
certified by Borrower to Lender in final form approved by Lender
and the Construction Consultant prior to the Closing.
“
Construction Term ” shall mean the period commencing
on the date hereof and ending on the first to occur of (i) the
Maturity Date, whether by acceleration or otherwise, (ii) the
24 th
Payment Date, and (iii) the Final Advance.
“
Contingency ” shall mean the contingency Line Item in
the Building Loan Budget and/or Project Loan Budget.
“
Contract ” shall mean shall mean any agreement
(including the General Contractor’s Agreement) entered into
by Borrower or by General Contractor, in which the Contractor or
Subcontractor thereunder agrees to provide services, labor and/or
materials in connection with the Project Improvements. All
Contracts shall require that the Contractor or Subcontractor
thereunder use union labor.
7
“
Contractor ” shall mean any contractor hired by
Borrower, including, without limitation, the General Contractor
(including subsidiaries and affiliates), supplying services, labor
and/or materials in connection with the Project.
“C
ontrol ” shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of
management, policies or activities of a Person, whether through
ownership of voting securities, by contract or otherwise.
“Controlled” and “Controlling” shall have
correlative meanings.
“
Costs of the Improvement ” shall mean those items
defined as an “improvement” and/or a “cost of
improvement” under Section 2 of Article 1 the Lien
Law.
“
Covered Disclosure Information ” shall have the
meaning set forth in Section 9.2(b)
hereof.
“
Debt ” shall mean the outstanding principal amount of
the Building Loan set forth in, and evidenced by, this Agreement,
the Building Loan Documents and the Building Loan Note, together
with all interest accrued and unpaid thereon and all other sums due
to Lender in respect of the Building Loan under the Building Loan
Note, this Agreement, the Building Loan Mortgage or any other
Building Loan Document.
“
Debt Service ” shall mean, with respect to any
particular period of time, the aggregate scheduled principal and
interest payments due under this Building Loan Agreement and the
Building Loan Note.
“
Debt Service Coverage Ratio ” shall mean a ratio for
the applicable period in which:
| |
(a) |
|
the numerator is the Net Operating Income (excluding interest
on credit accounts and using annualized operating expenses for any
recurring expenses not paid monthly (e.g., Taxes and Insurance
Premiums)) for such period as set forth in the statements required
hereunder, adjusted for a vacancy rate equal to the greater of the
actual vacancy rate, the market vacancy rate and an assumed vacancy
rate equal to five percent (5%), without deduction for (i) actual
management fees incurred in connection with the operation of the
Property less (A) management fees equal to the greater of
(1) assumed management fees of six percent (6%) of Gross
Income from Operations or (2) the actual management fees
incurred, and (B) Replacement Reserve Fund contributions equal
to $16,500.00 per annum; and |
| |
| |
(b) |
|
the denominator is the Total Debt Service for such period
assuming a thirty (30) year amortization schedule. |
“
Debt Service Coverage Ratio Determination Date ” shall
mean the earlier of the Required Completion Date and the date of
the Final Advance and the first day of each calendar month
thereafter.
8
“
Default ” shall mean the occurrence of any event
hereunder or under any other Loan Document which, but for the
giving of notice or passage of time, or both, would be an Event of
Default.
“
Default Rate ” shall mean, with respect to the Loan, a
rate per annum equal to the lesser of (a) the maximum rate
permitted by applicable law or (b) five percent (5%) above the
Interest Rate.
“
Defeasance Date ” shall have the meaning set forth in
Section 2.5.1(a)(i) hereof.
“
Defeasance Deposit ” shall mean an amount equal to the
remaining principal amount of the Note, the Defeasance Payment
Amount, any costs and expenses incurred or to be incurred in the
purchase of U.S. Obligations necessary to meet the Scheduled
Defeasance Payments and any revenue, documentary stamp or
intangible taxes or any other tax or charge due in connection with
the transfer of the Note or otherwise required to accomplish the
agreements of Section 2.5 hereof (including,
without limitation, any fees and expenses of accountants, attorneys
and the Rating Agencies incurred in connection therewith).
“
Defeasance Event ” shall have the meaning set forth in
Section 2.5.1(a) hereof.
“
Defeasance Expiration Date ” shall mean the date that
is two (2) years from the “startup day” within the
meaning of Section 860G(a)(9) of the Code for the REMIC
Trust.
“
Defeasance Payment Amount ” shall mean the amount (if
any) which, when added to the remaining principal amount of the
Note, will be sufficient to purchase U.S. Obligations providing the
required Scheduled Defeasance Payments.
“
Deferred Maintenance Condition ” shall have the
meaning set forth in Section 7.4.1 .
“
Development Budget ” shall have the meaning set forth
in Section 2.1.14 hereof.
“
Disbursement Schedule ” shall mean the schedule of the
amounts of Advances hereunder and Project Loan Advances under the
Project Loan anticipated to be requisitioned by Borrower each month
during the term of the Loan, attached hereto as part of the
Development Budget and in final form approved by Lender and the
Construction Consultant prior to the Closing Date.
“
Disclosure Document ” shall mean a prospectus,
prospectus supplement, private placement memorandum, or similar
offering memorandum or offering circular, or such other information
reasonably requested by Lender, in each case in preliminary or
final form, used to offer Securities in connection with a
Securitization.
“
Dollars ” or “ $ ” shall mean
lawful money of the United States of America.
“
Draw Request ” shall mean, with respect to each
Advance, Borrower’s Requisition for such Advance, along with
such other documents required by this Agreement to be furnished to
Lender as a condition to such Advance.
9
“
DSCR Trigger Event ” shall mean, that as of any Debt
Service Coverage Ratio Determination Date, the Debt Service
Coverage Ratio as determined by Lender based on the trailing six
(6) month period (annualized) immediately preceding the
date of such determination is less than 1.00 to 1.0.
“
Earn Out Advance ” shall have the meaning set forth in
Section 2.12.2 hereof.
“
Eligible Account ” shall mean a separate and
identifiable account from all other funds held by the holding
institution that is either (a) an account or accounts
maintained with a federal or state-chartered depository institution
or trust company which complies with the definition of Eligible
Institution or (b) a segregated trust account or accounts
maintained with a federal or state chartered depository institution
or trust company acting in its fiduciary capacity which, in the
case of a state chartered depository institution or trust company,
is subject to regulations substantially similar to 12 C.F.R.
§9.10(b), having in either case a combined capital and surplus
of at least Fifty Million and 00/100 Dollars ($50,000,000.00) and
subject to supervision or examination by federal and state
authority. An Eligible Account will not be evidenced by a
certificate of deposit, passbook or other instrument.
“
Eligible Institution ” shall mean a depository
institution or trust company, the short term unsecured debt
obligations or commercial paper of which are rated at least
“A-1+” by S&P, “P-1” by Moody’s
and “F-1+” by Fitch in the case of accounts in which
funds are held for thirty (30) days or less (or, in the case
of accounts in which funds are held for more than thirty
(30) days, the long-term unsecured debt obligations of which
are rated at least “AA” by Fitch and S&P and
“Aa2” by Moody’s).
“
Embargoed Person ” shall have the meaning set forth in
Section 5.1.42 hereof.
“
Environmental Engineer ” shall mean such environmental
engineering or similar inspection firms approved by Lender.
“
Environmental Indemnity ” shall mean that certain
Environmental Indemnification Agreement, dated as of the date
hereof, executed by Borrower and Acadia Strategic Opportunity Fund
II, LLC in connection with the Loan for the benefit of Lender, as
the same may be amended, restated, replaced, supplemented or
otherwise modified from time to time.
“
Equipment ” shall have the meaning as set forth in the
granting clause of the Building Loan Mortgage.
“
ERISA ” shall mean the Employee Retirement Income
Security Act of 1974, as amended from time to time, and the
regulations promulgated and the rulings issued thereunder.
“
Event of Default ” shall have the meaning set forth in
Section 8.1(a) hereof.
“
Excess Cash Flow ” shall have the meaning set forth in
Section 3.4(i) of the Cash Management Agreement.
10
“
Excess Cash Flow Funds ” shall have the meaning set
forth in Section 7.6 hereof.
“
Excess Cash Flow Reserve ” shall have the meaning set
forth in Section 7.6 hereof.
“
Exchange Act ” shall have the meaning set forth in
Section 9.2(a) hereof.
“
Extraordinary Expense ” shall have the meaning set
forth in Section 5.1.11(f) hereof.
“
Final Advance ” shall have the meaning set forth in
Section 2.12.1 .
“
Final Project Loan Advance ” shall mean the Final
Advance as defined in the Project Loan Agreement.
“
Final Project Report ” shall mean the report to be
prepared by the Construction Consultant of its review of the
Development Budget, Building Loan Budget, Project Loan Budget, the
Plans and Specifications, the Construction Schedule in final form,
the Disbursement Schedule, all in final form, the General
Contractor’s Agreement, the Contracts, the Major Contracts
and such other documents and information reasonably required by the
Construction Consultant.
“
FIRREA ” shall mean the Financial Institutions Reform,
Recovery and Enforcement Act of 1989, as amended from time to time,
and the regulations promulgated and rulings issued
thereunder.
“
Fiscal Year ” shall mean each twelve (12) month
period commencing on January 1 and ending on December 31
during each year of the term of the Loan.
“
Fitch ” shall mean Fitch, Inc.
“
Fixtures ” shall have the meaning set forth in the
Mortgage.
“
Force Majeure ” shall mean, with respect to the
obligations of any Person, actual delay beyond the reasonable
control of such Person, which is due to any of the following
(a) natural disaster, fire or other casualty, earthquake,
flood, explosion, abnormally inclement weather for the season in
question (as reported by an appropriate authority) or any other act
of God, (b) declared or undeclared war, acts of domestic or
international terrorism, riot, mob violence, insurrection or
sabotage, (c) the inability to procure labor, equipment,
facilities, energy, materials or supplies, the failure of
transportation, any other labor disturbance, strikes, lockouts or
actions of labor unions, in each such case, so long as such cause
is not within the reasonable control of such Person,
(d) condemnation, temporary restraining orders or injunctions,
changes after the date hereof in the requirements or
interpretations of relevant laws, in each such case, so long as
such cause is not within the reasonable control of such Person, or
(e) any other cause not within the reasonable control of such
Person; provided that, with respect to any of the
circumstances described in the foregoing clauses (a) through
(e) inclusive: (i) for the purposes of this Agreement,
any period of Force Majeure shall apply only to such person’s
performance of
11
the
obligations necessarily affected by such circumstance and shall
continue only so long as such person is continuously and diligently
using all reasonable efforts to minimize the effect and duration
thereof; and (ii) notwithstanding the foregoing, Force Majeure
shall not include (A) the unavailability or insufficiency of
funds as a result of the insolvency of such Person or any of its
Affiliates, (B) any breach of contract or default by
Borrower’s Architect, the General Contractor or any Major
Contractor under their respective contracts and agreements
concerning the Project Improvements.
“
GAAP ” shall mean generally accepted accounting
principles in the United States of America as of the date of the
applicable financial report.
“
General Contractor ” shall mean Designline
Construction Services, Inc. or any other general contractor or
construction manager, as applicable, approved by Lender and the
Construction Consultant in accordance with the terms of this
Agreement.
“
General Contractor’s Agreement ” shall have the
meaning set forth in Section 2.10.9 .
“
General Contractor’s Certificate ” shall have
the meaning set forth in Section 2.10.10.
“
Governmental Approvals ” shall mean all approvals,
consents, waivers, orders, acknowledgments, authorizations, permits
and licenses required under applicable Legal Requirements to be
obtained from any Governmental Authority for the performance of the
demolition work and construction of the Project Improvements and/or
the use, occupancy and operation of the Project Improvements before
the commencement, during and following completion of construction
and Building Loan, as the context requires, including, without
limitation, all land use, building, subdivision, zoning and similar
ordinances and regulations promulgated by any Governmental
Authority.
“
Governmental Authority ” shall mean any court, board,
agency, commission, office or other authority of any nature
whatsoever for any governmental unit (foreign, federal, state,
county, district, municipal, city or otherwise) whether now or
hereafter in existence.
“
Gross Income from Operations ” shall mean, for any
period, all sustainable income, computed in accordance with GAAP,
derived from the ownership and operation of the Property from
whatever source during such period, including , but
not limited to, Rents from tenants in occupancy, open for business
and paying full contractual rent without right of offset or credit,
utility charges, escalations, forfeited security deposits, interest
on credit accounts, service fees or charges, license fees, parking
fees, rent concessions or credits, business interruption or other
loss of income or rental insurance proceeds or other required
pass-throughs and interest on Reserves, if any, but
excluding Rents from tenants that are included in any
Bankruptcy Action, sales, use and occupancy or other taxes on
receipts required to be accounted for by Borrower to any
Governmental Authority, refunds and uncollectible accounts, sales
of furniture, fixtures and equipment, Insurance Proceeds (other
than business interruption or other loss of income or rental
insurance), Awards, unforfeited security deposits, utility and
other similar deposits and any disbursements to Borrower from the
Reserve Funds, if any.
12
“
Guarantor ” shall mean, collectively, Acadia Strategic
Opportunity Fund II, LLC, a Delaware limited liability company, and
Post Management, L.L.C., a Delaware limited liability
company.
“
Guaranty of Completion ” shall mean that certain
Guaranty of Completion, dated as of the date hereof, executed and
delivered by Acadia Strategic Opportunity Fund II, LLC in
connection with the Loan to and for the benefit of Lender, as the
same may be amended, restated, replaced, supplemented or otherwise
modified from time to time.
“
Guaranty of Recourse Carveouts ” shall mean that
certain Guaranty of Recourse Carveouts, dated as of the date
hereof, executed and delivered by Guarantor in connection with the
Loan to and for the benefit of Lender, as the same may be amended,
restated, replaced, supplemented or otherwise modified from time to
time.
“
Hard Costs ” shall mean those Building Loan Costs
which are for labor, materials, equipment and fixtures.
“
Improvements ” shall have the meaning set forth in the
granting clause of the Mortgage
“
Indebtedness ” of a Person, at a particular date,
means the sum (without duplication) at such date of (a) all
indebtedness or liability of such Person (including, without
limitation, amounts for borrowed money and indebtedness in the form
of mezzanine debt or preferred equity); (b) obligations evidenced
by bonds, debentures, notes, or other similar instruments;
(c) obligations for the deferred purchase price of property or
services (including trade obligations); (d) obligations under
letters of credit; (e) obligations under acceptance
facilities; (f) all guaranties, endorsements (other than for
collection or deposit in the ordinary course of business) and other
contingent obligations to purchase, to provide funds for payment,
to supply funds, to invest in any Person or entity, or otherwise to
assure a creditor against loss; and (g) obligations secured by
any Liens, whether or not the obligations have been assumed (other
than the Permitted Encumbrances).
“
Indemnified Liabilities ” shall have the meaning set
forth in Section 10.13(a) hereof.
“
Indemnified Persons ” shall have the meaning set forth
in Section 9.2(b) hereof.
“
Indemnifying Person ” shall mean Borrower and
Guarantor.
“
Independent Director ” shall mean a director of a
corporation or a limited liability company that is a Special
Purpose Entity and “ Independent Manager ” shall
mean a manager of a limited liability company that is a Special
Purpose Entity, in either case, who is not at the time of initial
appointment, or at any time while serving as an Independent
Director or Independent Manager, as applicable, and has not been at
any time during the preceding five (5) years: (a) a
stockholder, director (with the exception of serving as the
Independent Director or Independent Manager of a Special Purpose
Entity), officer, employee, partner, member, attorney or counsel of
Guarantor, Borrower, or any Affiliate of any of them (unless such
natural person is an Independent Director or Independent Manager
provided by a nationally recognized company
13
that
provides professional independent managers and which also provides
other corporate services in the ordinary course of business, in
which case such Person may receive reasonable fees for servicing as
Independent Director or Independent Manager of a Special Purpose
Entity); (b) a creditor, customer, supplier or other Person
who derives any of its purchases or revenues from its activities
with Guarantor, Borrower or any Affiliate of any of them;
(c) a Person controlling or under common control with any such
stockholder, director, officer, employee, partner, member,
creditor, customer, supplier or other Person; or (d) a member
of the immediate family of any such stockholder, director, officer,
employee, partner, member, creditor, customer, supplier or other
person. As used in this definition, the term “control”
means the possession, directly or indirectly, of the power to
direct or cause the direction of management, policies or activities
of a Person, whether through ownership of voting securities, by
contract or otherwise.
“
Initial Advance ” shall have the meaning set forth in
Section 2.10 hereof.
“
Initial Advance Conditions ” shall have the meaning
set forth in Section 2.10 hereof.
“
Initial Interest Reserve Deposit ” shall have the
meaning set forth in Section 7.2.1 .
“
Initial Tax and Insurance Escrow Deposit ” shall have
the meaning set forth in Section 7.1 hereof.
“Insolvency Opinion” shall mean that certain
non-consolidation opinion letter dated the date hereof delivered by
Wachtel & Masyr, LLP in connection with the Loan.
“
Insurance Premiums ” shall have the meaning set forth
in Section 6.1.1(e) hereof.
“
Insurance Proceeds ” shall have the meaning set forth
in Section 6.2.1 .
“
Intellectual Property ” shall have the meaning set
forth in Section 4.1.43 hereof.
“
Interest Period ” shall mean: (a) the period
commencing on the Closing Date and ending on the last day of the
month in which the Closing Date occurs, both dates inclusive; and
(b) the period commencing on and including the first day of
each calendar month thereafter during the term of Loan and ending
and including the last day of such calendar month.
“
Interest Rate ” shall mean seven and one hundred
forty-four one-thousandths percent (7.144%), provided, however, in
the event that on or before January 1, 2011, the Property
shall have achieved a Debt Service Coverage Ratio as determined by
Lender of 1.15 to 1.0 using a debt service constant of 7.50%, and
Borrower delivers to Lender a MAI appraisal performed, at
Borrower’s sole cost and expense, by an appraiser approved by
Lender and dated, or updated, to a date within 30 days of such
date made in compliance with FIRREA and reasonably satisfactory to
Lender in all respects; the appraisal value shall be subject to
review and confirmation and updating as to valuation by
Lender’s internal appraisal staff, whose decision shall be
final absent manifest error showing that loan-to-value ratio for
the Property is no greater than 75% assuming a fully advanced Loan,
Lender shall, upon Borrower’s written
14
request,
reduce the Interest Rate to a per annum rate equal to five and
seven hundred ninety-four one-thousandths percent (5.794%),
commencing on the first Payment Date after Borrower’s
request. Any reduction in the Interest Rate as set forth above
shall be effective commencing on the first Payment Date after
Borrower’s request for such reduction and satisfaction of the
conditions set forth above and no reduction in the Interest Rate
shall be retroactive. In the event that Borrower fails to satisfy
the conditions for a reduction of the Interest Rate within the time
periods set forth above, time being of the essence, Borrower shall
have no further right to obtain a reduction in the Interest Rate.
Notwithstanding anything to the contrary contained herein, Lender
shall have the right, in its sole discretion, at any time after the
expiration of the Construction Term and prior to a Securitization
of the Loan, to increase the Interest Rate by up to two-tenths of
one percent (0.20%).
“
Interest Reserve Account ” shall have the meaning set
forth in Section 7.2.1 .
“
Interest Reserve Deposit ” shall have the meaning set
forth in Section 7.2.1 .
“
Interest Reserve Fund ” shall have the meaning set
forth in Section 7.2.1 .
“
Interest Reserve Line Item ” shall mean the interest
reserve Line Item of the Project Loan Budget.
“
Land ” shall mean the land described on Exhibit
“A” attached hereto.
“
Lease ” shall mean any lease, sublease or subsublease,
letting, license, concession or other agreement (whether written or
oral and whether now or hereafter in effect) pursuant to which any
Person is granted a possessory interest in, or right to use or
occupy all or any portion of any space in the Property, and every
modification, amendment or other agreement relating to such lease,
sublease, subsublease, or other agreement entered into in
connection with such lease, sublease, subsublease, or other
agreement and every guarantee of the performance and observance of
the covenants, conditions and agreements to be performed and
observed by the other party thereto.
“
Legal Requirements ” shall mean, all federal, state,
county, municipal and other governmental statutes, laws, rules,
orders, regulations, ordinances, judgments, decrees and injunctions
of Governmental Authorities affecting the Property or any part
thereof, or the construction, use, alteration or operation thereof,
or any part thereof, whether now or hereafter enacted and in force,
and all permits, licenses and authorizations and regulations
relating thereto, and all covenants, agreements, restrictions and
encumbrances contained in any instruments, either of record or
known to Borrower, at any time in force affecting the Property or
any part thereof, including, without limitation, any which may
(a) require repairs, modifications or alterations in or to the
Property or any part thereof, or (b) in any way limit the use
and enjoyment thereof.
“
Lender ” shall have the meaning set forth in the
introductory paragraph hereto, together with its successors and
assigns.
“Letter of Credit” shall mean an irrevocable,
unconditional, transferable, clean sight draft letter of credit, as
the same may be replaced, split, substituted, modified,
amended,
15
supplemented, assigned or otherwise restated from time to time,
(either an evergreen letter of credit or a letter of credit which
does not expire until at least two (2) Business Days after the
Maturity Date or such earlier date as such Letter of Credit is no
longer required pursuant to the terms of this Agreement) in favor
of Lender and entitling Lender to draw thereon based solely on a
statement purportedly executed by an officer of Lender stating that
it has the right to draw thereon, and issued by a domestic Approved
Bank or the U.S. agency or branch of a foreign Approved Bank, or if
there are no domestic Approved Banks or U.S. agencies or branches
of a foreign Approved Bank then issuing letters of credit, then
such letter of credit may be issued by a domestic bank, the long
term unsecured debt rating of which is the highest such rating then
given by the Rating Agency or Rating Agencies, as applicable, to a
domestic commercial bank.
“
Liabilities ” shall have the meaning set forth in
Section 9.2(b) hereof.
“
Lien ” shall mean, any mortgage, deed of trust, lien,
pledge, hypothecation, assignment, security interest, or any other
encumbrance, charge or transfer of, on or affecting Borrower, the
Property, any portion thereof or any interest therein, including,
without limitation, any conditional sale or other title retention
agreement, any financing lease having substantially the same
economic effect as any of the foregoing, the filing of any
financing statement, and mechanic’s, materialmen’s and
other similar liens and encumbrances.
“
Lien Law ” shall mean the Lien Law of the State of New
York.
“
Line Item ” shall have the meaning set forth in
Section 2.1.14 hereof.
“
Liquidity ” means unrestricted and unencumbered Cash
and Cash Equivalents acceptable to Lender.
“
Loan ” shall mean collectively, the Building Loan and
the Project Loan.
“
Loan Agreement ” shall mean collectively, this
Building Loan Agreement, and the Project Loan Agreement.
“
Loan Documents ” shall mean collectively, the Building
Loan Documents and the Project Loan Documents, the Environmental
Indemnity, the Guaranty of Completion, the Guaranty of Recourse
Carveouts, the Cash Management Agreement, the Clearing Account
Agreement, the Assignment of Contracts, the Administration Fee
Agreement, the Rate Lock Agreement, and all other documents
executed and/or delivered in connection with the Loan.
“
Loan-to-Cost Ratio ” shall mean, as of any date, the
ratio of (i) the Total Loan Amount to (ii) the aggregate
amount of Project-Related Costs (excluding any Affiliate Fees)
actually paid as of such date plus Project-Related Costs to
be paid with the proceeds of the Advance(s) being requested by
Borrower on such date hereunder and under the Project Loan
Agreement.
“
Major Contractor ” shall mean any contractor hired by
Borrower, including, without limitation, the General Contractor
(including subsidiaries and affiliates), supplying services, labor
and/or materials in connection with the Project which is for an
aggregate contract price equal to or greater than $500,000, whether
pursuant to one contract or agreement or
16
multiple
contracts or agreements, after taking into account all change
orders, or which relates to major project elements such as steel,
concrete, HVAC systems, windows, doors and other similar
items.
“
Major Contracts ” shall mean any Contract with a Major
Contractor or Major Subcontractor.
“
Major Subcontractor ” shall mean any subcontractor
supplying services, labor and/or materials in connection with the
Project which is for an aggregate contract price equal to or
greater than $500,000, whether pursuant to one contract or
agreement or multiple contracts or agreements, after taking into
account all change orders, or which relates major project elements
such as steel, concrete, HVAC systems, windows, doors and other
similar items.
“
Management Agreement ” shall mean the Management
Agreement dated as of October 23, 2007 by and between Borrower
and Manager pursuant to which Manager is to provide management and
other services with respect to the Property, or, if the context
requires, the Replacement Management Agreement.
“
Manager ” shall mean Post Management, L.L.C., a
Delaware limited liability company, or, if the context requires, a
Qualified Manager who is managing the Property in accordance with
the terms and provisions of this Agreement pursuant to a
Replacement Management Agreement.
“Material Action” means, with respect to any
Person, to file any insolvency or reorganization case or
proceeding, to institute proceedings to have such Person be
adjudicated bankrupt or insolvent, to institute proceedings under
any applicable insolvency law, to seek any relief under any law
relating to relief from debts or the protection of debtors, to
consent to the filing or institution of bankruptcy or insolvency
proceedings against such Person, to file a petition seeking, or
consent to, reorganization or relief with respect to such Person
under any applicable federal or state law relating to bankruptcy or
insolvency, to seek or consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator, custodian, or any
similar official of or for such Person or a substantial part of its
property, to make any assignment for the benefit of creditors of
such Person, to admit in writing such Person’s inability to
pay its debts generally as they become due, or to take action in
furtherance of any of the foregoing.
“
Maturity Date ” shall mean January 1, 2020 or
such earlier date on which the final payment of principal of the
Building Loan Note becomes due and payable as therein or herein
provided, whether at such stated maturity date, by declaration of
acceleration, or otherwise.
“
Maximum Legal Rate ” shall mean the maximum
nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on
the indebtedness evidenced by the Note and as provided for herein
or the other Loan Documents, under the laws of such state or states
whose laws are held by any court of competent jurisdiction to
govern the interest rate provisions of the Loan.
“
MERS” shall have the meaning set forth in
Section 10.25 hereof.
17
“
Mezzanine Borrower ” shall have the meaning set forth
in Section 9.1 .
“
Mezzanine Loan Documents ” shall have the meaning set
forth in Section 9.1 .
“
Monthly Debt Service Payment Amount ” shall mean
(a) an amount equal to interest only on the outstanding
principal balance of the Building Loan, calculated in accordance
with Section 2.2 hereof, for each Payment Date
commencing with the Payment Date occurring in February, 2008
through and including the Payment Date occurring in January, 2015,
and (b) a constant monthly payment of $75,797.67 commencing
with the Payment Date occurring in February, 2015 and on each
Payment Date thereafter, provided, however, that in the event that
the Interest Rate is modified in accordance with the provisions of
the definition of “Interest Rate,” the Monthly Debt
Service Payment Amount shall be adjusted by Lender based upon the
modified Interest Rate and a thirty (30) year amortization
schedule, Lender’s determination of the Monthly Debt Service
Payment Amount being binding absent manifest error.
“
Moody’s ” shall mean Moody’s Investors
Service, Inc.
“
Mortgage ” shall mean, collectively, the Building Loan
Mortgage and the Project Loan Mortgage, as the same may be amended,
restated, supplemented or otherwise modified from time to
time.
“
Net Cash Flow ” shall mean, for any period, the amount
obtained by subtracting Operating Expenses and Capital Expenditures
for such period from Gross Income from Operations for such
period.
“
Net Operating Income ” shall mean the amount obtained
by subtracting Operating Expenses from Gross Income from
Operations.
“
Net Proceeds ” shall have the meaning set forth in
Section 6.2.1 hereof.
“
Net Proceeds Deficiency ” shall have the meaning set
forth in Section 6.2.4(g) hereof.
“
Net Worth ” means with respect to any Person for any
period, assets less liabilities of such Person, determined in
accordance with GAAP.
“
Note ” shall mean, collectively, the Building Loan
Note and the Project Loan Note.
“
Officer’s Certificate ” shall mean a certificate
delivered to Lender by Borrower that is signed by an authorized
officer of the general partner or managing member of
Borrower.
“
Open Period Date ” shall have the meaning set forth in
Section 2.4.1 hereof.
“
Operating Expenses ” shall mean the total of all
expenditures, computed in accordance with GAAP, of whatever kind
relating to the operation, maintenance and management of the
Property that are incurred on a regular monthly or other periodic
basis, including without limitation, utilities, ordinary repairs
and maintenance, insurance, license fees,
18
property
taxes and assessments, advertising expenses, management fees,
payroll and related taxes, computer processing charges, operational
equipment or other lease payments as approved by Lender, and other
similar costs, but excluding depreciation, Debt Service, Capital
Expenditures and contributions to the Reserve Funds.
“
Operating Reserve Account ” shall have the meaning set
forth in Section 7.7.1 hereof.
“
Operating Reserve Deposit ” shall have the meaning set
forth in Section 7.7.1 hereof.
“
Operating Reserve Funds ” shall have the meaning set
forth in Section 7.7.1 hereof.
“
Other Charges ” shall mean all maintenance charges,
impositions other than Taxes, and any other charges, including,
without limitation, vault charges and license fees for the use of
vaults, chutes and similar areas adjoining the Property, now or
hereafter levied or assessed or imposed against the Property or any
part thereof.
“
Other Debt ” shall mean the “ Debt
” as defined in both the Project Loan Agreement, and the
Mezzanine Loan Documents, if applicable.
“
Other Design Professionals ” shall mean all architects
(other than Borrower’s Architect) and engineers engaged by
Borrower and/or Borrower’s agent to work on the Project
Improvements.
“
Other Obligations ” shall have the meaning as set
forth in the Mortgage.
“
Payment Date ” shall mean February 1, 2008, and
the 1 st day of every
month thereafter during the term of the Loan until and including
the Maturity Date or, if such day is not a Business Day, the
immediately preceding Business Day.
“
Performance Letter ” shall have the meaning set forth
in Section 2.10.11(a) hereof.
“
Permitted Encumbrances ” shall mean, with respect to
the Property, collectively, (a) the Liens and security
interests created by the Loan Documents, (b) all Liens,
encumbrances and other matters disclosed in the Title Insurance
Policy, (c) Liens, if any, for Taxes imposed by any
Governmental Authority not yet due or delinquent, unless and to the
extent being contested by Borrower in compliance with the terms of
this Agreement, and (d) such other title and survey exceptions
as Lender has approved or may approve in writing in Lender’s
sole discretion, which Permitted Encumbrances in the aggregate do
not materially adversely affect the value or use of the Property or
Borrower’s ability to complete the Project or repay the
Loan.
“
Permitted Investments ” shall have the meaning set
forth in the Cash Management Agreement.
19
“
Permitted Mezzanine Lender ” shall have the meaning
set forth in Section 5.2.13 hereof.
“
Permitted Release Date ” shall mean the earlier of
(i) the Defeasance Expiration Date or (ii) the date that is
the third (3 rd ) anniversary
of the Completion of the Improvements.
“
Permitted Transfer ” means any of the following:
(a) any
transfer, directly as a result of the death of a natural Person, of
stock, membership interests, partnership interests or other
ownership interests in any Restricted Party previously held by the
decedent in question to the spouse or any lineal descendant of such
individual, or to a trust for the benefit of any one or more of
such individual, spouse or lineal descendant, so long as Borrower
delivers notice to Lender as soon as practicable thereafter and
that such Restricted Party is promptly reconstituted, if
applicable, following the death of such member, partner or
shareholder and there is no change in Control of such Restricted
Party as a result of such transfer;
(b) any
transfer, directly as a result of the legal incapacity of a natural
Person, of stock, membership interests, partnership interests or
other ownership interests previously held by the such natural
Person to the spouse or any lineal descendant of such individual,
or to a trust for the benefit of any one or more of such
individual, spouse or lineal descendant, so long as Borrower
delivers notice to Lender as soon as practicable thereafter and
that such Restricted Party is promptly reconstituted, if
applicable, following the death of such member, partner or
shareholder and there is no change in Control of such Restricted
Party as a result of such transfer,
(c) transfers
for estate planning purposes of a natural Person’s stock,
membership interests, partnership interests or other ownership
interests in a Restricted Party by the current partner(s),
shareholder(s) or member(s), as applicable, to the spouse or any
lineal descendant of such individual, or to a trust for the benefit
of any one or more of such individual, spouse or lineal descendant,
so long as such Restricted Party is reconstituted, if required,
following such transfer and there is no change in Control of such
Restricted Party as a result of such transfer;
(d) transfers
permitted pursuant to Section 5.2.10(d) of this
Agreement;
(e) the
sale, transfer, or issuance of stock in Acadia Realty Trust, in the
ordinary course of business, provided such stock is listed on the
NYSE or other nationally recognized stock exchange; and
(f) a
Transfer by Slayton Properties Atlantic, LLC of 100% of its
membership interest in Borrower to Acadia 3319 Atlantic Avenue LLC
or an Affiliate of Acadia Strategic Opportunity Fund II, LLC
Controlled by Acadia Realty Trust.
“
Person ” shall mean any individual, corporation,
partnership, joint venture, limited liability company, estate,
trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof
and any fiduciary acting in such capacity on behalf of any of the
foregoing.
20
“
Personal Property ” shall have the meaning set forth
in the granting clause of the Mortgage.
“
Physical Conditions Report ” shall mean, a structural
engineering report prepared by a company satisfactory to Lender
regarding the physical condition of the Property, satisfactory in
form and substance to Lender in its sole discretion, which report
shall, among other things, confirm that the Property and its use
complies, in all material respects, with all applicable Legal
Requirements (including, without limitation, zoning, subdivision
and building laws).
“Plans and Specifications ” shall mean the final
plans and specifications for the performance of the Project
Improvements prepared by Borrower’s Architect and the Other
Design Professionals and approved by Lender, the Construction
Consultant, as the same may be amended and supplemented from time
to time in accordance with the terms of this Agreement. The
Preliminary Plans and Specifications submitted to Lender are listed
on Schedule III attached hereto
“
Policies ” shall have the meaning specified in
Section 6.1.1(e) hereof.
“
Policy ” shall have the meaning specified in
Section 6.1.1(e) hereof.
“
Prepayment Date ” shall have the meaning set forth in
Section 2.4.4 hereof.
“
Prepayment Rate ” shall mean the bond equivalent yield
(in the secondary market) on the United States Treasury Security
that as of the Prepayment Rate Determination Date has a remaining
term to maturity closest to, but not exceeding, the remaining term
to the Maturity Date as most recently published in the
“Treasury Bonds, Notes and Bills” section in The Wall
Street Journal as of such Prepayment Rate Determination Date. If
more than one issue of United States Treasury Securities has the
same remaining term to the Maturity Date, the “Prepayment
Rate” shall be the yield on such United States Treasury
Security most recently issued as of the Prepayment Rate
Determination Date. The rate so published shall control absent
manifest error. If the publication of the Prepayment Rate in The
Wall Street Journal is discontinued, Lender shall determine the
Prepayment Rate on the basis of “Statistical Release H.15
(519), Selected Interest Rates,” or any successor
publication, published by the Board of Governors of the Federal
Reserve System, or on the basis of such other publication or
statistical guide as Lender may reasonably select.
“
Prepayment Rate Determination Date ” shall mean the
date which is five (5) Business Days prior to the date that
such prepayment shall be applied in accordance with the terms and
provisions of Section 2.4.1 hereof.
“
Prescribed Laws ” shall mean, collectively,
(a) the Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001 (Public Law 107-56) (The USA PATRIOT Act),
(b) Executive Order No. 13224 on Terrorist Financing,
effective September 24, 2001, and relating to Blocking
Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism, (c) the
International Emergency Economic Power Act, 50 U.S.C. §1701
et. seq. and (d) all other Legal Requirements relating to
money laundering or terrorism.
21
“Principal” shall mean the Special Purpose
Entity that is the general partner of Borrower, if Borrower is a
limited partnership, or member of Borrower, if Borrower is a
limited liability company.
“
Proceeds ” shall mean Insurance Proceeds or
Condemnation Proceeds.
“
Project ” shall mean the development and construction
of Project Improvements, all in accordance with the Plans and
Specifications, all Legal Requirements, this Agreement and the
other Loan Documents.
“
Project Improvements ” shall mean the demolition of
all existing improvements located on the Land and the development
and construction thereon by Borrower of a modern self-storage
facility containing approximately 110,000 square feet of floor
area, substantially as depicted on the Plans and Specifications, as
the same will be developed, renovated and constructed in accordance
with the Plans and Specifications and all Legal Requirements.
“
Project Loan ” shall mean the loan being made by
Lender to Borrower pursuant to the Project Loan Agreement in the
principal amount of up to the Project Loan Amount.
“
Project Loan Advance ” shall mean
“Advance” as such term is defined in the Project Loan
Agreement.
“
Project Loan Agreement ” shall mean that certain
Project Loan Agreement dated the date hereof among, Lender and
Borrower.
“
Project Loan Amount ” shall mean Four Million, Nine
Hundred Twenty Thousand, Seven Hundred Thirty-Nine and 67/100
Dollars ($4,920,739.67).
“
Project Loan Assignment of Leases ” shall mean that
certain Project Loan Assignment of Leases and Rents, dated the date
hereof, from Borrower, as assignor, to Lender, as assignee.
“
Project Loan Budget ” shall have the meaning set forth
in Section 2.1.14 .
“
Project Loan Costs ” shall mean all Projected Related
Costs that are not Costs of the Improvements.
“
Project Loan Documents ” shall have the meaning as set
forth in the Project Loan Agreement.
“
Project Loan Earn Out Advance ” shall have the meaning
set forth in Section 2.12.1 hereof.
“
Project Loan Mortgage ” shall have the meaning as set
forth in the Project Loan Agreement.
“
Project Loan Note ” shall have the meaning as set
forth in the Project Loan Agreement.
22
“
Project-Related Costs” shall mean all direct and
indirect costs and expenses of acquiring the Property, demolishing
the existing improvements on the Property, designing, inspecting,
renovating, constructing and developing the Project Improvements,
including, without limitation, Hard Costs and Soft Costs, along
with all Carrying Costs, Debt Service, financing charges, Operating
Expense and other costs and expenses associated with the Property
during the Construction Term.
“
Property ” shall mean the Land, all Improvements now
or hereafter located thereon, the easements and other rights,
licenses and privileges and appurtenance to the Land, and all
personal property owned by Borrower and encumbered by the Mortgage,
together with all rights pertaining to such property and
Improvements, as more particularly described in the granting
clauses of the Mortgage and referred to therein as the
“Mortgaged Property”.
“
Provided Information ” shall mean any and all
financial and other information provided at any time prepared by,
or on behalf of, any Indemnifying Person with respect to the
Property, Borrower, Principal, Guarantor and/or Manager, including,
without limitation, any financial data or financial statements
required under Section 5.1.11.
“
Punch List and Deferred Maintenance Reserve Deposit ”
shall have the meaning set forth in
Section 7.4.1 .
“
Punch List and Deferred Maintenance Reserve Funds ”
shall have the meaning set forth in
Section 7.4.1 .
“
Punch List Items ” shall mean, collectively, any Punch
List items identified by the Construction Consultant and other
minor or insubstantial details of construction, decoration,
mechanical adjustment or installation, which do not hinder or
impede the use, operation, or maintenance of the Property or the
ability to obtain a permanent certificate of occupancy with respect
thereto.
“
Qualified Manager ” shall mean in the reasonable
judgment of Lender, a reputable and experienced management
organization (which may be an Affiliate of Borrower) possessing
experience in managing properties similar in size, scope, use and
value as the Property, provided , that Borrower shall have
obtained (i) prior written confirmation from the applicable
Rating Agencies that management of the Property by such Person will
not cause a downgrade, withdrawal or qualification of the then
current ratings of the Securities or any class thereof and
(ii) if such Person is an Affiliate of Borrower, an Additional
Insolvency Opinion.
“
Rate Lock Agreement ” shall mean that certain Extended
Rate Lock Agreement-Application Stage dated April 23, 2007
between Borrower and Lender, as amended by that certain First
Amendment to Extended Rate Lock Agreement-Application Stage dated
as of the date hereof.
“
Rating Agencies ” shall mean each of S&P,
Moody’s and Fitch, or any other nationally recognized
statistical rating agency which has been approved by Lender.
“
Related Entities ” shall have the meaning set forth in
Section 5.2.10(e) .
23
“
REMIC Trust ” shall mean a “real estate mortgage
investment conduit” within the meaning of Section 860D
of the Code that holds any portion of the Note.
“Rentable Space Percentage” shall have the
meaning set forth in Section 6.2.4(a) (B)(iii)
.
“
Rents ” shall mean, all rents (including percentage
rents), rent equivalents, moneys payable as damages or in lieu of
rent or rent equivalents, royalties (including, without limitation,
all oil and gas or other mineral royalties and bonuses), income,
receivables, receipts, revenues, deposits (including, without
limitation, security, utility and other deposits), accounts, cash,
issues, profits, charges for services rendered, all other amounts
payable as rent under any Lease or other agreement relating to the
Property, including, without limitation, charges for electricity,
oil, gas, water, steam, heat, ventilation, air-conditioning and any
other energy, telecommunication, telephone, utility or similar
items or time use charges, HVAC equipment charges, sprinkler
charges, escalation charges, license fees, maintenance fees,
charges for Taxes, Operating Expenses or other reimbursables
payable to Borrower (or to the Manager, for the account of
Borrower) under any Lease, and other consideration of whatever form
or nature received by or paid to or for the account of or benefit
of Borrower or its agents or employees from any and all sources
arising from or attributable to the Property, and proceeds, if any,
from business interruption or other loss of income or
insurance.
“
Replacements ” shall have the meaning set forth in
Section 7.3.1 .
“
Replacement Management Agreement ” shall mean,
collectively, (a) either (i) a management agreement with
a Qualified Manager substantially in the same form and substance as
the Management Agreement, or (ii) a management agreement with
a Qualified Manager, which management agreement shall be reasonably
acceptable to Lender in form and substance, provided , with
respect to this subclause (ii) , Lender, at its option, may
require that Borrower shall have obtained prior written
confirmation from the applicable Rating Agencies that such
management agreement will not cause a downgrade, withdrawal or
qualification of the then current rating of the Securities or any
class thereof and (b) an assignment of management agreement
and subordination of management fees substantially in the form then
used by Lender (or of such other form and substance reasonably
acceptable to Lender), executed and delivered to Lender by Borrower
and such Qualified Manager at Borrower’s expense.
“
Replacement Reserve Account ” shall have the meaning
set forth in Section 7.3.1 .
“
Replacement Reserve Fund ” shall have the meaning set
forth in Section 7.3.1 .
“
Replacement Reserve Monthly Deposit ” shall have the
meaning set forth in Section 7.3.1 .
“
Requested Advance Date ” shall have the meaning set
forth in Section 2.14.2(a) . hereof.
24
“
Required Completion Date ” shall mean June 1,
2009, provided, however, that the Required Completion Date may be
extended by Lender to December 1, 2009 in Lender’s sole
discretion.
“
Required Equity Funds ” shall have the meaning set
forth in Section 2.11.13 .
“
Required Initial Advance Date ” shall mean
March 21, 2008, provided that Lender shall have the right to
extend the Required Initial Advance Date in Lender’s sole
discretion.
“
Required Ratios at Completion” shall have the meaning
set forth in Section 2.12(j) hereof.
“
Reserve ” or “ Reserve Funds ”
shall mean, collectively, the Tax and Insurance Escrow Fund, the
Interest Reserve Funds, the Excess Cash Flow Reserve Funds, the
Replacement Reserve Fund, the Punch List and Deferred Maintenance
Fund, the Operating Reserve Fund and any other escrow fund
established by the Loan Documents.
“
Restoration ” shall mean the repair and restoration of
the Property after a Casualty or Condemnation to substantially the
condition the Property was in immediately prior to such Casualty or
Condemnation, with such alterations as may be reasonably approved
by Lender.
“
Restoration Threshold ” shall have the meaning set
forth in Section 6.2.3(a) hereof.
“
Restricted Party ” shall mean collectively,
(a) Borrower, any Guarantor, and any Affiliated Manager and
(b) any shareholder, partner, member, non-member manager, any
direct or indirect legal or beneficial owner of, Borrower, any
Guarantor, any Affiliated Manager or any non-member manager.
“
Retainage ” shall mean, for each Contract and
Subcontract, the greater of (a) ten percent (10%) of all costs
funded to the Contractor or Subcontractor under the Contract or
Subcontract, or (b) the actual retainage required under such
Contract or Subcontract.
“
S&P ” shall mean Standard & Poor’s
Ratings Group, a division of the McGraw-Hill Companies.
“
Sale or Pledge ” shall mean a voluntary or involuntary
sale, conveyance, assignment, transfer, encumbrance, pledge, grant
of option or other transfer or disposal of a legal or beneficial
interest, whether direct or indirect.
“Scheduled Defeasance Payments ” shall have the
meaning set forth in Section 2.5.1(b)
“
Second Tax and Insurance Escrow Deposit ” shall have
the meaning set forth in Section 7.1 hereof.
25
“
Securities ” shall have the meaning set forth in
Section 9.1 hereof.
“
Securities Act ” shall have the meaning set forth in
Section 9.2(a) hereof.
“
Securitization ” shall have the meaning set forth in
Section 9.1 hereof.
“
Servicer ” shall have the meaning set forth in
Section 9.5 hereof.
“
Servicing Agreement ” shall have the meaning set forth
in Section 9.5 hereof.
“
Severed Loan Documents ” shall have the meaning set
forth in Section 8.2(c) hereof.
“
Shortfall ” shall have the meaning set forth in
Section 2.1.10 .
“
Soft Costs ” shall mean those Building Loan Costs
which are not Hard Costs, including but not limited to,
architect’s, engineer’s and general contractor’s
fees, interest on the Building Loan, recording taxes and title
charges in respect of the Building Loan Mortgage and such other
non-construction costs as are part of the Cost of the
Improvements.
“
Special Purpose Entity ” shall mean a corporation,
limited partnership or limited liability company that, since the
date of its formation and at all times on and after the date
thereof, has complied with and shall at all times comply with the
following requirements unless it has received either prior consent
to do otherwise from Lender or a permitted administrative agent
thereof, or, while the Loan is securitized, confirmation from each
of the applicable Rating Agencies that such noncompliance would not
result in the requalification, withdrawal, or downgrade of the
ratings of any Securities or any class thereof:
(i) is and shall be organized solely
for the purpose of (A) in the case of Borrower, acquiring,
developing, owning, holding, selling, leasing, transferring,
exchanging, managing and operating the Property, entering into and
performing its obligations under the Loan Documents with Lender,
refinancing the Property in connection with a permitted repayment
of the Loan, and transacting lawful business that is incident,
necessary and appropriate to accomplish the foregoing; or
(B) in the case of a Principal, acting as a general partner of
the limited partnership that owns the Property or as member of the
limited liability company that owns the Property and transacting
lawful business that is incident, necessary and appropriate to
accomplish the foregoing;
(ii) has not engaged and shall not
engage in any business unrelated to (A) the acquisition,
development, ownership, management or operation of the Property, or
(B) in the case of a Principal, acting as general partner of
the limited partnership that owns the Property or acting as a
member of the limited liability company that owns the Property, as
applicable;
(iii) has not owned and shall not own
any real property other than, in the case of Borrower, the
Property;
26
(iv) does not have, shall not have
and at no time had any assets other than (A) in the case of
Borrower, the Property and personal property necessary or
incidental to its ownership and operation of the Property or
(B) in the case of a Principal, its partnership interest in
the limited partnership or the member interest in the limited
liability company that owns the Property and personal property
necessary or incidental to its ownership of such interests;
(v) has not engaged in, sought,
consented or permitted to and shall not engage in, seek, consent to
or permit (A) any dissolution, winding up, liquidation,
consolidation or merger, (B) any sale or other transfer of all
or substantially all of its assets or any sale of assets outside
the ordinary course of its business, except as permitted by the
Loan Documents, or (C) in the case of a Principal, any
transfer of its partnership or membership interests;
(vi) shall not cause, consent to or
permit any amendment of its limited partnership agreement, articles
of incorporation, articles of organization, certificate of
formation, operating agreement or other formation document or
organizational document (as applicable) with respect to the matters
set forth in this definition;
(vii) if such entity is a limited
partnership, has and shall have at least one general partner and
has and shall have, as its only general partners, Special Purpose
Entities each of which (A) is a corporation or single-member
Delaware limited liability company, (B) has two
(2) Independent Directors, and (C) holds a direct
interest as general partner in the limited partnership of not less
than 0.5% (or 0.1%, if the limited partnership is a Delaware
entity);
(viii) if such entity is a
corporation, has and shall have at least two (2) Independent
Director, and shall not cause or permit the board of directors of
such entity to take any Material Action either with respect to
itself or, if the corporation is a Principal, with respect to
Borrower or any action requiring the unanimous affirmative vote of
one hundred percent (100%) of the members of its board of directors
unless two Independent Directors shall have participated in such
vote and shall have voted in favor of such action;
(ix) if such entity is a limited
liability company (other than limited liability company meeting all
of the requirements applicable to a single-member limited liability
company set forth in this definition of “Special Purpose
Entity”), has and shall have at least one (1) member
that is a Special Purpose Entity, that is a corporation, that has
at least two (2) Independent Directors and that directly owns
at least one-half-of-one percent (0.5%) of the equity of the
limited liability company (or 0.1% if the limited liability company
is a Delaware entity);
(x) if such entity is a single-member
limited liability company, (A) is and shall be a Delaware
limited liability company, (B) has and shall have at least two
(2) Independent Directors serving as a manager of such
company, (C) shall not take any Material Action and shall not
cause or permit the members or managers of such entity to take any
Material Action, either with respect to itself or, if the company
is a Principal,
27
with respect to
Borrower, in each case unless one Independent Director then serving
as a manager of the company shall have participated and consented
in writing to such action, and (D) has and shall have either
(1) a member which owns no economic interest in the company,
has signed the company’s limited liability company agreement
and has no obligation to make capital contributions to the company,
or (2) two natural persons or one entity that is not a member
of the company, that has signed its limited liability company
agreement and that, under the terms of such limited liability
company agreement becomes a member of the company immediately prior
to the withdrawal or dissolution of the last remaining member of
the company;
(xi) has
not and shall not (and, if such entity is (a) a limited
liability company, has and shall have a limited liability agreement
or an operating agreement, as applicable, (b) a limited
partnership, has a limited partnership agreement, or (c) a
corporation, has a certificate of incorporation or articles that,
in each case, provide that such entity shall not)
(1) dissolve, merge, liquidate, consolidate; (2) sell all
or substantially all of its assets; (3) amend its
organizational documents with respect to the matters set forth in
this definition without the consent of Lender; or (4) without
the affirmative vote of two (2) Independent Directors or
Independent Managers of itself or the consent of a Principal that
is a member or general partner in it: (A) file or consent to
the filing of any bankruptcy, insolvency or reorganization case or
proceeding, institute any proceedings under any applicable
insolvency law or otherwise seek relief under any laws relating to
the relief from debts or the protection of debtors generally, file
a bankruptcy or insolvency petition or otherwise institute
insolvency proceedings; (B) seek or consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator,
custodian or any similar official for the entity or a substantial
portion of its property; (C) make an assignment for the
benefit of the creditors of the entity; or (D) take any action
in furtherance of any of the foregoing;
(xii) has
at all times been and shall at all times remain solvent and has
paid and shall pay its debts and liabilities (including, a
fairly-allocated portion of any personnel and overhead expenses
that it shares with any Affiliate) from its assets as the same
shall become due, and has maintained and shall maintain adequate
capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated
business operations;
(xiii) has
not failed and shall not fail to correct any known misunderstanding
regarding the separate identity of such entity and has not
identified and shall not identify itself as a division of any other
Person;
(xiv) has
maintained and shall maintain its bank accounts, books of account,
books and records separate from those of any other Person and, to
the extent that it is required to file tax returns under applicable
law, has filed and shall file its own tax returns, except to the
extent that it is required by law to file consolidated tax returns
and, if it is a corporation, has not filed and shall not file a
consolidated federal income tax return with any other corporation,
except to the extent that it is required by law to file
consolidated tax returns;
28
(xv) has
maintained and shall maintain its own records, books, resolutions
and agreements;
(xvi) has
not commingled and shall not commingle its funds or assets with
those of any other Person and has not participated and shall not
participate in any cash management system with any other
Person;
(xvii) has
held and shall hold its assets in its own name;
(xviii) has
conducted and shall conduct its business in its name or in a name
franchised or licensed to it by an entity other than an Affiliate
of itself or of Borrower, except for business conducted on behalf
of itself by another Person under a business management services
agreement that is on commercially-reasonable terms, so long as the
manager, or equivalent thereof, under such business management
services agreement holds itself out as an agent of Borrower;
(xix)
(A) has maintained and shall maintain its financial
statements, accounting records and other entity documents separate
from those of any other Person; (B) has shown and shall show,
in its financial statements, its asset and liabilities separate and
apart from those of any other Person; and (C) has not
permitted and shall not permit its assets to be listed as assets on
the financial statement of any of its Affiliates except as required
by GAAP; provided, however, that any such consolidated financial
statement contains a note indicating that the Special Purpose
Entity’s separate assets and credit are not available to pay
the debts of such Affiliate and that the Special Purpose
Entity’s liabilities do not constitute obligations of the
consolidated entity;
(xx) has
paid and shall pay its own liabilities and expenses, including the
salaries of its own employees, out of its own funds and assets, and
has maintained and shall maintain a sufficient number of employees
in light of its contemplated business operations;
(xxi) has
observed and shall observe all partnership, corporate or limited
liability company formalities, as applicable;
(xxii) has
not incurred any Indebtedness other than (i) acquisition
financing with respect to the Property; construction financing with
respect to the Improvements and certain off-site improvements
required by municipal and other authorities as conditions to the
construction of the Improvements; and first mortgage financings
secured by the Property; and Indebtedness pursuant to letters of
credit, guaranties, interest rate protection agreements and other
similar instruments executed and delivered in connection with such
financings, (ii) unsecured trade payables and operational debt
not evidenced by a note, and (iii) Indebtedness incurred in the
financing of equipment and other personal property used on the
Property;
(xxiii) shall have no Indebtedness
other than (i) the Loan, (ii) liabilities incurred in the
ordinary course of business relating to the ownership and operation
of the Property and the routine administration of Borrower, in
amounts not to exceed $323,000, which liabilities are not more than
sixty (60) days past the date incurred, are not evidenced by
a
29
note and are
paid when due, and which amounts are normal and reasonable under
the circumstances, and (iii) such other liabilities that are
permitted pursuant to this Agreement;
(xxiv) has not assumed, guaranteed or
become obligated and shall not assume or guarantee or become
obligated for the debts of any other Person, has not held out and
shall not hold out its credit as being available to satisfy the
obligations of any other Person or has not pledged and shall not
pledge its assets for the benefit of any other Person, in each case
except as permitted pursuant to this Agreement;
(xxv) has not acquired and shall not
acquire obligations or securities of its partners, members or
shareholders or any other owner or Affiliate;
(xxvi) has allocated and shall
allocate fairly and reasonably any overhead expenses that are
shared with any of its Affiliates, constituents, or owners, or any
guarantors of any of their respective obligations, or any Affiliate
of any of the foregoing (individually, a “Related
Party” and collectively, the “Related Parties”),
including, but not limited to, paying for shared office space and
for services performed by any employee of an Affiliate;
(xxvii) has maintained and used and
shall maintain and use separate stationery, invoices and checks
bearing its name and not bearing the name of any other entity
unless such entity is clearly designated as being the Special
Purpose Entity’s agent;
(xxviii) has not pledged and shall
not pledge its assets to or for the benefit of any other Person
other than with respect to loans secured by the Property and no
such pledge remains outstanding except to Lender to secure the
Loan;
(xxix) has held itself out and
identified itself and shall hold itself out and identify itself as
a separate and distinct entity under its own name or in a name
franchised or licensed to it by an entity other than an Affiliate
of Borrower and not as a division or part of any other
Person;
(xxx) has maintained and shall
maintain its assets in such a manner that it shall not be costly or
difficult to segregate, ascertain or identify its individual assets
from those of any other Person;
(xxxi) has not made and shall not
make loans to any Person and has not held and shall not hold
evidence of indebtedness issued by any other Person or entity
(other than cash and investment-grade securities issued by an
entity that is not an Affiliate of or subject to common ownership
with such entity);
(xxxii) has not identified and shall
not identify its partners, members or shareholders, or any
Affiliate of any of them, as a division or part of it, and has not
identified itself and shall not identify itself as a division of
any other Person;
(xxxiii) other than capital
contributions and distributions permitted under the terms of its
organizational documents, has not entered into or been a party to,
and shall not
30
enter into or
be a party to, any transaction with any of its partners, members,
shareholders or Affiliates except in the ordinary course of its
business and on terms which are commercially reasonable terms
comparable to those of an arm’s-length transaction with an
unrelated third party;
(xxxiv) has not had and shall not
have any obligation to, and has not indemnified and shall not
indemnify its partners, officers, directors or members, as the case
may be, in each case unless such an obligation or indemnification
is fully subordinated to the Debt and shall not constitute a claim
against it in the event that its cash flow is insufficient to pay
the Debt;
(xxxv) if such entity is a
corporation, has considered and shall consider the interests of its
creditors in connection with all corporate actions;
(xxxvi) has not had and shall not
have any of its obligations guaranteed by any Affiliate except as
provided by the Loan Documents;
(xxxvii) has not formed, acquired or
held and shall not form, acquire or hold any subsidiary, except
that a Principal may acquire and hold its interest in
Borrower;
(xxxviii) has complied and shall
comply with all of the terms and provisions contained in its
organizational documents.
(xxxix) has conducted and shall
conduct its business so that each of the assumptions made about it
and each of the facts stated about it in the Insolvency Opinion are
true;
(xl) has not permitted and shall not
permit any Affiliate or constituent party independent access to its
bank accounts;
(xli) is, has always been and shall
continue to be duly formed, validly existing, and in good standing
in the state of its incorporation or formation and in all other
jurisdictions where it is qualified to do business;
(xlii) has paid all taxes which it
owes and is not currently involved in any dispute with any taxing
authority;
(xliii) is not now, nor has ever
been, party to any lawsuit, arbitration, summons, or legal
proceeding that resulted in a judgment against it that has not been
paid in full;
(xliv) has no judgments or Liens of
any nature against it except for tax liens not yet due and the
Permitted Encumbrances;
(xlv) has provided Lender with
complete financial statements that reflect a fair and accurate view
of the entity’s financial condition; and
(xlvi) has no material contingent or
actual obligations not related to the Property.
31
“
Stabilized Net Cash Flow ” shall mean underwritten
Gross Income from Operations calculated using an vacancy rate equal
to the greater of five percent (5%), the actual vacancy rate for
the Property and the market vacancy rate (“ Effective
Gross Income ”), less (i) Operating Expenses
including a management fee of not less than six percent (6%) of
Effective Gross Income and (ii) an adjustment for Replacement
Reserves of $16,500.00 per annum.
“
Stabilized Value ” shall mean the value of the
Property, determined following the Completion of the Improvements.
The Stabilized Value shall be determined based upon an MAI
appraisal performed, at Borrower’s sole cost and expense, by
an appraiser approved by Lender and dated, or updated, to a date
within 30 days or the date of the Completion of the
Improvement occurs made in compliance with FIRREA and reasonably
satisfactory to Lender in all respects; the appraisal value shall
be subject to review and confirmation and updating as to valuation
by Lender’s internal appraisal staff, whose decision shall be
final absent manifest error.
“
Stabilized Loan-to-Value Ratio ” shall mean the ratio
of the Total Loan Amount to the Stabilized Value.
“
State ” shall mean, the State or Commonwealth in which
the Property or any part thereof is located.
“
Stored Materials ” shall have the meaning set forth in
Section 2.1.8 hereof.
“
Subcontract ” shall mean shall mean any agreement
(other than the Architect’s Contract and the General
Contractor’s Agreement) entered into by Borrower or by
General Contractor, in which the Subcontractor thereunder agrees to
provide services, labor and/or materials in connection with the
Project Improvements.
“
Subcontractor ” shall mean any subcontractor supplying
services, labor and/or materials in connection with the Project
Improvements.
“
Subordinate Financing ” shall have the meaning set
forth in Section 9.1.2(b) .
“
Successor Borrower ” shall have the meaning set forth
in Section 2.5.3 hereof.
“
Survey ” shall mean a survey of the Property prepared
by a Surveyor licensed in the State and satisfactory to Lender and
the company or companies issuing the Title Insurance Policy, and
containing a certification of such surveyor satisfactory to
Lender.
“
Surveyor ” shall mean Control Point Associates, Inc.,
or such other land surveyor registered as such in the State of New
York.
“
Tax and Insurance Escrow Fund ” shall have the meaning
set forth in Section 7.1 hereof.
“
Taxes ” shall mean all real estate and personal
property taxes, assessments, water rates or sewer rents, now or
hereafter levied or assessed or imposed against the Property or
part thereof.
32
“
Tenant ” shall mean the tenant under any Lease.
“
Threshold Amount ” shall have the meaning set forth in
Section 5.1.21(a) hereof.
“
Title Company ” shall have the meaning set forth in
Section 3.1.3(b) hereof.
“
Title Insurance Policy ” shall mean, an ALTA mortgagee
title insurance policy in the form acceptable to Lender (or, if the
Property is in a State which does not permit the issuance of such
ALTA policy, such form as shall be permitted in such State and
acceptable to Lender) issued with respect to the Property and
insuring the lien of the Mortgage.
“
Total Debt ” shall mean, collectively, the Debt and
Other Debt.
“
Total Debt Service ” shall mean, with respect to any
particular period of time, scheduled payments of principal, if any,
and interest under the Building Loan, the Project Loan and, if
applicable, the Subordinate Financing.
“
Total Loan Amount ” shall mean the sum of the Building
Loan Amount, the Project Loan Amount and the Subordinate Financing,
if applicable.
“
Transfer ” shall have the meaning set forth in
Section 5.2.10(b) hereof.
“
Transferee ” shall have the meaning set forth in
Section 5.2.10(e) .
“
Transferee’s Principals ” shall mean
collectively, (A) Transferee’s managing members, general
partners or principal shareholders and (B) such other members,
partners or shareholders which directly or indirectly shall own a
fifty-one percent (51%) or greater economic and voting interest in
Transferee.
“
UCC ” or “ Uniform Commercial Code
” shall mean the Uniform Commercial Code as in effect in the
State in which the Property is located.
“
Unsatisfied Initial Advance Conditions ” shall have
the meaning set forth in Section 2.1.20 .
“U.S. Obligations” shall mean non-redeemable
securities evidencing an obligation to timely pay principal and/or
interest in a full and timely manner that are (a) direct
obligations of the United States of America for the payment of
which its full faith and credit is pledged, or (b) to the
extent acceptable to the Rating Agencies, other
“government securities” within the meaning of
Section 2(a)(16) of the Investment Company Act of 1940, as
amended.
“
Yield Maintenance Default Premium ” shall mean an
amount equal to the greater of (a) five percent (5%) of the
outstanding principal balance of the Loan to be prepaid or
satisfied and (b) the Defeasance Payment Amount that would be
required if a Defeasance Event were to occur at such time (whether
or not then permitted) in an amount equal to the outstanding
principal amount of the Loan to be prepaid or satisfied.
33
Yield Maintenance Premium ” shall mean an amount equal
to the greater of (a) one percent (1%) of the outstanding
principal of the Loan to be prepaid or satisfied and (b) the
excess, if any, of (i) the sum of the present values of all
then-scheduled payments of principal and interest under the Note
assuming that all outstanding principal and interest on the Loan is
paid on the Open Period Date (with each such payment and assumed
payment discounted to its present value at the date of prepayment
at the rate which, when compounded monthly, is equivalent to the
Prepayment Rate when compounded semi-annually and deducting from
the sum of such present values any short-term interest paid from
the date of prepayment to the next succeeding Payment Date in the
event such payment is not made on a Payment Date), over
(ii) the principal amount being prepaid.
Section 1.2
Principles of Construction . All references to
sections and schedules are to sections and schedules in or to this
Agreement unless otherwise specified. All uses of the word
“including” shall mean “including, without
limitation” unless the context shall indicate otherwise. Any
reference in this Agreement or in any other Loan Document to any
Loan Document shall be deemed to include references to such
documents as the same may hereafter be amended, modified,
supplemented, extended, replaced and/or restated from time to time
(and, in the case of any note or other instrument, to any
instrument issued in substitution therefor). Unless otherwise
specified, the words “hereof,” “herein” and
“hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement. Unless otherwise
specified, all meanings attributed to defined terms herein shall be
equally applicable to both the singular and plural forms of the
terms so defined.
ARTICLE II.
GENERAL TERMS
Section 2.1 Loan
Commitment; Disbursement to Borrower .
2.1.1
Agreement to Lend and Borrow . Subject to and upon
the terms and conditions set forth herein, Lender hereby agrees to
make and Borrower hereby agrees to accept Advances in respect of
the Building Loan as more particularly set forth in
Section 2.10 .
2.1.2
No Reborrowings . Any amount borrowed and repaid
hereunder in respect of the Building Loan may not be
reborrowed.
2.1.3
The Note, Mortgage and Loan Documents . The Building
Loan shall be evidenced by the Building Loan Note and secured by
the Building Loan Mortgage, the Building Loan Assignment of Leases
and the other Building Loan Documents.
2.1.4
Use of Proceeds . Borrower hereby agrees that
Borrower shall use the proceeds of the Building Loan to pay or
reimburse itself for Building Loan Costs actually incurred in
connection with demolition and the construction of the Project
Improvements if and to the extent that such Building Loan Costs are
reflected in the Building Loan Budget, subject to reallocation
pursuant to Sections 2.1.6 , 2.1.7
and 5.1.33 (or other reallocations approved by Lender
in its sole discretion).
34
2.1.5
Advances . Lender shall not be required to Advance
funds hereunder for any category or line item of Building Loan
Costs in excess of the amount specified for such line item or
category in the Building Loan Budget, subject to
Sections 2.1.6 , 2.1.7 and
5.1.33 (or other reallocations approved by Lender in
its sole discretion). No Advances shall be made to pay for
Affiliate Fees.
2.1.6
Cost Overruns . If Borrower becomes aware of any
change in actual or projected Project-Related Costs which will
increase any one or more category or line item of costs reflected
in the Development Budget, Borrower shall immediately notify Lender
in writing and promptly submit to Lender for its approval a revised
Development Budget. Any reallocation of any category or line items
in the Development Budget in connection with cost overruns shall be
subject to Lender’s approval in Lender’s sole
discretion except as set forth in Sections 2.1.7
and 5.1.33 , provided, however, under no
circumstances shall Borrower be permitted, or Lender obligated to
approve, the reallocation of line items from the Building Loan
Budget to the Project Loan Budget. Lender shall have no obligation
to make any further Advances unless and until the revised
Development Budget so submitted by Borrower is approved by Lender
and Borrower has satisfied its obligations with respect to any
resulting Shortfall under Section 2.1.10 .
Lender reserves the right to approve or disapprove any revised
Development Budget in its sole and absolute discretion (except with
respect to reallocations in accordance with
Sections 2.1.7 and 5.1.33 ).
2.1.7
Contingency Reserve . Following the satisfaction of
the Initial Advance Conditions, and subject to the prior approval
of Lender in its sole discretion, Borrower may revise the Building
Loan Budget to move (i) amounts available under any Line Item for
Hard Costs that are designated to “Contingency” to
other Line Items for Hard Costs in the Building Loan Budget, or
(ii) amounts available under any Line Item for Soft Costs that
are designated “Contingency” to other Line Items for
Soft Costs in the Building Loan Budget. Any cost savings shall be
allocated in accordance with Section 5.1.33 hereof.
In no event may the Contingency Line Item of the Building Loan
Budget be reallocated to any Line Item in the Project Loan Budget.
The Contingency Line Item in the Building Loan Budget for Hard
Costs shall contain at least five percent (5%) of the total
projected Hard Costs, separate from the Contingency Line Items in
the Project Loan Budget.
2.1.8
Stored Materials . Lender shall not be required to
disburse any funds for any materials, machinery or other Personal
Property not yet incorporated into the Project Improvements (the
“ Stored Materials ”), unless the following
conditions are satisfied:
(a) Borrower
shall deliver to Lender bills of sale or other evidence reasonably
satisfactory to Lender of the cost of, and, subject to the payment
therefor, Borrower’s title in and to such Stored
Materials;
(b) The
Stored Materials are identified to the Property and Borrower, are
segregated so as to adequately give notice to all third parties of
Borrower’s title in and to such materials, and are components
in substantially final form ready for incorporation into the
Project Improvements;
35
(c) The
Stored Materials are stored at the Property or at such other
third-party owned and operated site as Lender shall reasonably
approve, and are protected against theft and damage in a manner
satisfactory to Lender, including, if requested by Lender, storage
in a bonded warehouse in the greater metropolitan area in which the
Property is located;
(d) The
Stored Materials will be paid for in full with the funds to be
disbursed, and all lien rights or claims of the supplier will be
released upon full payment;
(e) Lender
has or will have upon payment with disbursed funds a perfected,
first priority security interest in the Stored Materials;
(f) The
Stored Materials are insured for an amount equal to their
replacement costs in accordance with Section 6.1
of this Agreement;
(g) The
aggregate cost of Stored Materials stored at the Property is
approved by the Construction Consultant and, if required by Lender,
the Construction Consultant shall certify that it has inspected
such Stored Materials and they are in good condition and suitable
for use in connection with the Project Improvements; and
(h) The
aggregate cost of Stored Materials stored on the Property at any
one time shall not exceed ten percent (10%) of the maximum amount
of the Loan and the aggregate cost of Stored Materials stored off
the Property at any one time shall not exceed five percent (5%) of
the maximum amount of the Loan.
2.1.9
Amount of Advances . In no event shall any Advance
exceed the full amount of Building Loan Costs theretofore paid or
to be paid with the proceeds of such Advance plus any Building Loan
Costs incurred by Borrower through the date of the Draw Request for
such Advance minus (i) the applicable Retainage for
each Contract and Subcontract, and (ii) the aggregate amount
of any Advances previously made by Lender. It is further understood
that the Retainage described above is intended to provide a
contingency fund protecting Lender against failure of Borrower or
Guarantor to fulfill any obligations under the Loan Documents, and
that Lender may charge amounts to pay for Building Loan Costs
against such Retainage in the event Lender is required or elects to
expend funds to cure any Default or Event of Default, in either
instance, in accordance with the terms of this Agreement. No
Advance of the Loan by Lender shall be deemed to be an approval or
acceptance by the Lender of any work performed thereon or the
materials furnished with respect thereto.
2.1.10
Loan-In-Balance . As used herein, a “
Shortfall ” shall mean, as to any Line Item in the
Development Budget as of any date, the amount determined by Lender,
in Lender’s sole but reasonable judgment, by which
(A) the cost of completing or satisfying such Line Item,
exceeds (B) the remaining undisbursed portion of the Loan
allocated to such Line Item in the Development Budget plus any sums
deposited with Lender pursuant to this
Section 2.1.10 to pay for such Line Item and not
previously disbursed plus any Reserve Funds to the extent such
Reserve Funds are available hereunder for the payment of such Line
Item. From time to time and at any time during the Construction
Period, Lender shall have the right, but not the obligation, to
notify Borrower that it has determined a Shortfall exists as to any
one or more Line Items. If Lender at any time shall so notify
Borrower, Borrower shall, at its option within
36
five
(5) days of Lender’s notification as aforesaid, either:
(i) deposit with Lender an amount equal to such Shortfall,
which Lender disburse to Borrower to the satisfaction of the costs
of such Line Item prior to advancing any further Loan proceeds on
account of such costs; (ii) post an irrevocable standby Letter
of Credit in the amount of such Shortfall, in favor of Lender;
(iii) to the extent permitted under
Sections 2.1.7 and 5.1.33 , and
following the satisfaction of the Initial Advance Conditions
allocate the Contingency Reserve, with respect to the Line Item(s)
in question, to the Shortfall, and provided, further that the
amount of the remaining Contingency Reserve for such Line Item(s)
(following the allocation to the Shortfall) is sufficient for such
Line Item(s), as determined by Lender in its sole discretion; and
(iv) to the extent permitted under
Section 5.1.33 , and then only following the
satisfaction of the Initial Advance Conditions, reallocate cost
savings from the Development Budget in respect of the Loan (or
other reallocations which are approved by Lender, in its sole
discretion) in accordance with the terms of this Agreement, but
only to the extent such cost savings can be allocated to the
related Line Items. Borrower hereby agrees that Lender shall have a
lien on and security interest in, for the benefit of Lender, any
sums deposited pursuant to clause (i) above and that
Borrower shall have no right to withdraw any such sums except for
the payment of the aforesaid costs as approved by Lender. Lender
shall have no obligation to make any further Advances of proceeds
of the Loan as to any Line Item until the sums required to be
deposited pursuant to clause (i) above as to such Line Item
have been exhausted, or until Borrower has posted an irrevocable
standby Letter of Credit pursuant to clause (iii ) above, as
the case may be, and, in any such case, the Loan is back “in
balance”. Any such sums not used as provided in said
clause (i) shall be released to Borrower when and to the
extent that Lender reasonably determines that the amount thereof is
more than the excess, if any, of the remaining Project-Related
Costs over the undisbursed balance of the Loan, provided, however,
that should an Event of Default occur, Lender, in its sole
discretion, may apply such amounts either to the remaining
Project-Related Costs or to the immediate reduction of outstanding
principal and/or interest under the Note.
2.1.11
Quality of Work . No Advance or any portion thereof
shall be made with respect to defective work or to any contractor
that has performed work that is defective and that has not been
cured, as confirmed by the report of the Construction Consultant,
but Lender may disburse all or part of any Advance before the sum
shall become due if Lender believes it advisable to do so, and all
such Advances or parts thereof shall be deemed to have been made
pursuant to this Agreement.
2.1.12
Required Equity Funds . All Required Equity Funds
shall be contributed (i.e. , expended by Borrower and
invested by Borrower in the Property, for Project—Related
Costs set forth on the approved Development Budget) before the
Closing Date.
2.1.13
Trust Fund . Pursuant to Section 13 of the New
York Lien Law, Borrower shall receive the Advances hereunder and
shall hold the right to receive the Advances as a trust fund to be
applied first for the purpose of paying the Costs of the
Improvements and shall apply the Advances first to the payment of
the Cost of the Improvements on the Property before using any part
of the total of the same for any other purpose.
2.1.14
Final Project Report and Development Budget .
Attached hereto as Schedule II is
Borrower’s detailed and definitive budget of all
Project-Related Costs to be incurred by Borrower during the
Construction Term and that will be disbursed out of Loan
37
proceeds
subject to availability and satisfaction of all applicable
conditions to Advances hereunder and under the Project Loan
Agreement, being so indicated, delineated by each category of
Project-Related Costs (each a “ Line Item ” or
“ Budget Line ”) and further broken down to
segregate Building Loan Costs and Project Loan Costs, which budget
has been approved by Lender and Construction Consultant (the
“ Development Budget ”). The portion of the
Development Budget that includes only Building Loan Costs is
referred to herein as the “ Building Loan Budget
” and the portion of the Development Budget that includes
only Project Loan Costs is referred to herein as the “
Project Loan Budget .”
2.1.15
Miscellaneous .
(a) The
making of an Advance by Lender shall not constitute Lender’s
approval or acceptance of the construction theretofore completed.
Lender’s inspection and approval of the Plans and
Specifications, the construction of the Project Improvements, or
the workmanship and materials used therein, shall impose no
liability of any kind on Lender, the sole obligation of Lender as
the result of such inspection and approval being to make the
Advances if and to the extent, required by this Agreement.
(b) ALL
POTENTIAL LIENORS ARE HEREBY CAUTIONED TO EXERCISE SOUND BUSINESS
JUDGMENT IN THE EXTENSION OF CREDIT TO BORROWER. NO POTENTIAL
LIENOR SHOULD EXPECT LENDER TO MAKE ADVANCES OF THE LOAN IN AMOUNTS
AND AT TIMES SUCH THAT IT WILL NOT BE NECESSARY FOR EACH SUCH
POTENTIAL LIENOR TO EXERCISE SOUND BUSINESS JUDGMENT IN THE
EXTENSION OF CREDIT TO BORROWER. MOREOVER, ALL POTENTIAL LIENORS
ARE REMINDED THAT SUBDIVISION (3) OF SECTION 13 OF THE NEW
YORK LIEN LAW PROVIDES THAT “NOTHING IN THIS SUBDIVISION
SHALL BE CONSIDERED AS IMPOSING UPON THE LENDER ANY OBLIGATION TO
SEE THE PROPER APPLICATION OF SUCH ADVANCES BY THE OWNER,”
AND LENDER DOES NOT IMPOSE SUCH AN OBLIGATION ON ITSELF.
Section 2.2 Interest
Rate .
2.2.1
Interest Rate . Interest on the outstanding principal
balance of the Loan shall accrue from (and include) the Closing
Date to but excluding the Maturity Date at the Interest Rate
calculated as set forth in Section 2.2.2 below.
2.2.2
Interest Calculation . Interest on the outstanding
principal balance of the Loan shall be calculated by multiplying
(a) the actual number of days elapsed in the period for which
the calculation is being made by (b) a daily rate based on the
Interest Rate and a three hundred sixty (360) day year by
(c) the outstanding principal balance.
2.2.3
Default Rate . In the event that, and for so long as,
any Event of Default shall have occurred and be continuing, the
outstanding principal balance of the Loan and, to the extent
permitted by law, all accrued and unpaid interest in respect of the
Loan and any other amounts due pursuant to the Loan Documents,
shall accrue interest at the Default Rate, calculated from the date
such payment was due without regard to any grace or cure periods
contained herein.
38
2.2.4
Usury Savings . This Agreement, the Note and the
other Loan Documents are subject to the express condition that at
no time shall Borrower be obligated or required to pay interest on
the principal balance of the Loan at a rate which could subject
Lender to either civil or criminal liability as a result of being
in excess of the Maximum Legal Rate. If, by the terms of this
Agreement or the other Loan Documents, Borrower is at any time
required or obligated to pay interest on the principal balance due
hereunder at a rate in excess of the Maximum Legal Rate, the
Interest Rate or the Default Rate, as the case may be, shall be
deemed to be immediately reduced to the Maximum Legal Rate and all
previous payments in excess of the Maximum Legal Rate shall be
deemed to have been payments in reduction of principal and not on
account of the interest due hereunder. All sums paid or agreed to
be paid to Lender for the use, forbearance, or detention of the
sums due under the Loan, shall, to the extent permitted by
applicable law, be amortized, prorated, allocated, and spread
throughout the full stated term of the Loan until payment in full
so that the rate or amount of interest on account of the Loan does
not exceed the Maximum Legal Rate of interest from time to time in
effect and applicable to the Loan for so long as the Loan is
outstanding.
Section 2.3 Loan
Payment .
2.3.1
Monthly Debt Service Payments . Borrower shall pay to
Lender (a) on the Closing Date, an amount equal to interest
only on the outstanding principal balance of the Loan from and
including the Closing Date up to and including December 31,
2007, which interest shall be calculated in accordance with the
provisions of Section 2.2 hereof, and
(b) on each Payment Date commencing on the Payment Date
occurring in February, 2008 and thereafter up to and including the
Maturity Date, Borrower shall make a payment to Lender equal to the
Monthly Debt Service Payment Amount, which payments shall be
applied first to interest due for the related Interest Period at
the Interest Rate, for such related Interest Period and then to the
principal amount of the Loan due in accordance with this Agreement,
and lastly, to any other amounts due and unpaid pursuant to the
Loan Documents hereto. Borrower and Lender acknowledge and agree
that, on the 15 th calendar day of
the month preceding each Payment Date during the Construction Term:
(a) if and to the extent undrawn funds remain available for
Advance under the Project Loan from the Interest Reserve Line Item
of the Project Loan Budget, and provided that that no Event of
Default or monetary Default then exists under any of the Loan
Documents or would occur as a result of such Project Loan Advance,
the Monthly Debt Service Amount then due and owing shall be
advanced by Lender by a Project Loan Advance under Interest Reserve
Line Item of the Project Loan Budget; and (b) if no amount
remains available under the Interest Reserve Line Item but and to
the extent Interest Reserve Funds are on deposit in the Interest
Reserve Account, and no Event of Default or monetary Default then
exists under any of the Loan Documents, the Monthly Debt Service
Payment Amount then due and payable shall be paid by application of
funds from the Interest Reserve Account. Borrower and Lender
acknowledge and agree that Lender may automatically make a Project
Loan Advance or apply Interest Reserve Funds on deposit in the
Interest Reserve Account on each Payment Date occurring during the
Construction Term, in either instance, in accordance with this
Section 2.3.1 , without the need for Borrower to
submit a Draw Request or otherwise request such an Advance or
application.
2.3.2
Payments Generally . The first Interest Period
hereunder shall commence on and include the Closing Date and shall
end on and include December 31, 2007. Thereafter
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each
Interest Period shall commence on the first (1 st ) day of each
calendar month during the term of this Agreement and shall end on
and include the final calendar date of such calendar month. For
purposes of making payments hereunder, but not for purposes of
calculating Interest Periods, if the day on which such payment is
due is not a Business Day, then amounts due on such date shall be
due on the immediately preceding Business Day and with respect to
payments of principal due on the Maturity Date, interest shall be
payable at the Interest Rate or the Default Rate, as the case may
be, through and including the day immediately preceding such
Maturity Date. All amounts due under this Agreement and the other
Loan Documents shall be payable without setoff, counterclaim,
defense or any other deduction whatsoever.
2.3.3
Payment on Maturity Date . Borrower shall pay to
Lender on the Maturity Date the outstanding principal balance of
the Loan, all accrued and unpaid interest and all other amounts due
hereunder and under the Note, the Mortgage and the other Loan
Documents.
2.3.4
Late Payment Charge . If any principal, interest or
any other sums due under the Loan Documents (including the amounts
due on the Maturity Date) are not paid by Borrower on or prior to
the date on which it is due, Borrower shall pay to Lender upon
demand an amount equal to the lesser of five percent (5%) of such
unpaid sum or the Maximum Legal Rate in order to defray the expense
incurred by Lender in handling and processing such delinquent
payment and to compensate Lender for the loss of the use of such
delinquent payment. Any such amount shall be secured by the
Mortgage and the other Loan Documents to the extent permitted by
applicable law.
2.3.5
Method and Place of Payment . Except as otherwise
specifically provided herein, all payments and prepayments under
this Agreement and the Note shall be made to Lender not later than
11:00 A.M., New York City time, on the date when due and shall
be made in lawful money of the United States of America in
immediately available funds at Lender’s office or as
otherwise directed by Lender, and any funds received by Lender
after such time shall, for all purposes hereof, be deemed to have
been paid on the next succeeding Business Day.
Section 2.4
Prepayments .
2.4.1
Voluntary Prepayments . Except as otherwise provided
in this Section 2.4.1 and
Section 2.4.2 , Borrower shall not have the
right to prepay the Loan in whole or in part prior to the Maturity
Date. If for any reason Borrower prepays the Loan on a date other
than a Payment Date, Borrower shall pay Lender, in addition to the
Debt, all interest which would have accrued on the amount of the
Loan through and including the Payment Date next occurring
following the date of such prepayment. Notwithstanding anything to
the contrary contained herein, commencing after the Payment Date
three (3) months prior to the Maturity Date (the “
Open Period Date ”), or on any Payment Date thereafter
(or on any date thereafter, provided that interest is paid through
the next Payment Date), Borrower may, at its option, prepay the
Debt in whole, but not in part, without payment of the Yield
Maintenance Premium.
2.4.2
Mandatory Prepayments . On the next occurring Payment
Date following the date on which Lender actually receives any Net
Proceeds, if Lender is not
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obligated to make such Net Proceeds available to Borrower for the
Restoration of the Property or otherwise remit such Net Proceeds to
Borrower pursuant to Section 6.4 hereof,
Borrower shall prepay or authorize Lender to apply Net Proceeds as
a prepayment of all or a portion of the outstanding principal
balance of the Loan together with accrued interest through the end
of the related Interest Period and any other sums due hereunder in
an amount equal to one hundred percent (100%) of such Net Proceeds;
provided , however , if an Event of Default has
occurred and is continuing, Lender may apply such Net Proceeds to
the Debt (until paid in full) in any order or priority in its sole
discretion. Other than following an Event of Default, no Yield
Maintenance Premium shall be due in connection with any prepayment
made pursuant to this Section 2.4.2 .
2.4.3
Prepayments After Default . If following an Event of
Default, payment of all or any part of the Debt is tendered by
Borrower or otherwise recovered by Lender, such tender or recovery
shall be (a) made on the next occurring Payment Date together
with the Monthly Debt Service Payment and (b) deemed a
voluntary prepayment by Borrower in violation of the prohibition
against prepayment set forth in Section 2.4.1 hereof
and Borrower shall pay, in addition to the Debt, an amount equal to
the Yield Maintenance Default Premium.
2.4.4
Prepayment Prior to Defeasance Expiration Date
. If the Permitted Release Date has occurred but the
Defeasance Expiration Date has not occurred, the Debt may be
prepaid in whole (but not in part) prior to the date permitted
under Section 2.4.1 hereof upon not less than thirty
(30) days prior written notice to Lender specifying the
Payment Date on which prepayment is to be made (a “
Prepayment Date ”) provided no Event of Default exists
and upon payment of an amount equal to the Yield Maintenance
Premium. Lender shall notify Borrower of the amount and the basis
of determination of the required prepayment consideration. If any
notice of prepayment is given, the Debt shall be due and payable on
the Prepayment Date. Lender shall not be obligated to accept any
prepayment of the Debt unless it is accompanied by the prepayment
consideration due in connection therewith. If for any reason
Borrower prepays the Loan on a date other than a Payment Date,
Borrower shall pay Lender, in addition to the Debt, all interest
which would have accrued on the amount of the Loan through and
including the Payment Date next occurring following the date of
such prepayment.
2.4.5
Application of Prepayments to Components . Any
prepayment of the principal of the Loan, in whole or in part,
voluntary or involuntary, shall be applied (a) first, to the
reduction of the outstanding principal balance of the Project Loan
until reduced to zero, and (b) second, to the reduction of the
outstanding principal balance of the Building Loan until reduced to
zero. Subsequent to any Event of Default, any payment of principal
from whatever source may be applied by Lender between the various
components of the Loan in Lender’s sole discretion.
Section 2.5
Defeasance .
2.5.1
Voluntary Defeasance (a) Provided no Event of
Default shall then exist, Borrower shall have the right at any time
after the Defeasance Expiration Date and prior to the date
voluntary prepayments are permitted under Section 2.4.1 hereof
to voluntarily defease all, but not part, of the Loan by and upon
satisfaction of the following conditions (such event being a
“ Defeasance Event ”)
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(i) Borrower shall provide not less
than thirty (30) days prior written notice to Lender
specifying the Payment Date (the “ Defeasance Date
”) on which the Defeasance Event is to occur;
(ii) Borrower shall pay to Lender all
accrued and unpaid interest on the principal balance of the Loan to
and including the Defeasance Date. If for any reason the Defeasance
Date is not a Payment Date, the Borrower shall also pay interest
that would have accrued on the Note through and including the
Payment Date immediately preceding the next Payment Date,
provided , however , if the Defeasance Deposit shall
include short-term interest computed from the date of such
prepayment through to the next succeeding Payment Date, Borrower
shall not be required to pay such short term interest pursuant to
this sentence;
(iii) Borrower shall pay to Lender
all other sums, not including scheduled interest or principal
payments, then due under the Note, this Agreement, the Mortgage and
the other Loan Documents;
(iv) Borrower shall use the
Defeasance Deposit to purchase U.S. Obligations in accordance with
Section 2.5.1(b) below;
(v) Borrower shall execute and
deliver a pledge and security agreement, in form and substance that
would be reasonably satisfactory to a prudent lender creating a
first priority lien on the Defeasance Deposit and the U.S.
Obligations purchased with the Defeasance Deposit in accordance
with the provisions of this Section 2.5 (the
“ Security Agreement ”);
(vi) Borrower shall deliver an
opinion of counsel for Borrower that is standard in commercial
lending transactions and subject only to customary qualifications,
assumptions and exceptions opining, among other things, that
Borrower has legally and validly transferred and assigned the U.S.
Obligations and all obligations, rights and duties under and to the
Note to the Successor Borrower, that Lender has a perfected first
priority security interest in the Defeasance Deposit and the U.S.
Obligations delivered by Borrower and that any REMIC Trust formed
pursuant to a Securitization will not fail to maintain its status
as a “real estate mortgage investment conduit” within
the meaning of Section 860D of the Code as a result of such
Defeasance Event;
(vii) Borrower shall deliver
confirmation in writing from each of the applicable Rating Agencies
to the effect that such release will not result in a downgrade,
withdrawal or qualification of the respective ratings in effect
immediately prior to such Defeasance Event for the Securities
issued in connection with the Securitization which are then
outstanding. If required by the applicable Rating Agencies,
Borrower shall also deliver or cause to be delivered an Additional
Insolvency Opinion with respect to the Successor Borrower in form
and substance satisfactory to Lender and the applicable Rating
Agencies;
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(viii) Borrower shall deliver an
Officer’s Certificate certifying that the requirements set
forth in this Section 2.5.1(a) have been
satisfied;
(ix) Borrower shall deliver a
certificate of Borrower’s independent certified public
accountant certifying that the U.S. Obligations purchased with the
Defeasance Deposit generate monthly amounts equal to or greater
than the Scheduled Defeasance Payments;
(x) Borrower shall deliver such other
certificates, documents or instruments as Lender may reasonably
request; and
(xi) Borrower shall pay all costs and
expenses of Lender incurred in connection with the Defeasance
Event, including (A) any costs and expenses associated with a
release of the Lien of the Mortgage as provided in Section
2.6 hereof, (B) reasonable attorneys’ fees and
expenses incurred in connection with the Defeasance Event,
(C) the costs and expenses of the Rating Agencies, (D) any
revenue, documentary stamp or intangible taxes or any other tax or
charge due in connection with the transfer of the Note, or
otherwise required to accomplish the defeasance and (E) the
costs and expenses of Servicer and any trustee, including
reasonable attorneys’ fees.
(b) In
connection with the Defeasance Event, Borrower shall use the
Defeasance Deposit to purchase U.S. Obligations which provide
payments on or prior to, but as close as possible to, all
successive scheduled Payment Dates after the Defeasance Date upon
which interest and principal payments are required under this
Agreement and the Note, and in amounts equal to the scheduled
payments due on such Payment Dates under this Agreement and the
Note (including, without limitation, scheduled payments of
principal, interest, servicing fees (if any), and any other amounts
due under the Loan Documents on such Payment Dates) and assuming
the Note is prepaid in full on the Open Period Date (the “
Scheduled Defeasance Payments ”). Borrower, pursuant
to the Security Agreement or other appropriate document, shall
authorize and direct that the payments received from the U.S.
Obligations may be made directly to the Clearing Account (unless
otherwise directed by Lender) and applied to satisfy the Debt
Service obligations of Borrower under this Agreement and the Note.
Any portion of the Defeasance Deposit in excess of the amount
necessary to purchase the U.S. Obligations required by this
Section 2.5 and satisfy Borrower’s other
obligations under this Section 2.5 and
Section 2.6 shall be remitted to Borrower.
2.5.2
Collateral . Each of the U.S. Obligations that are
part of the defeasance collateral shall be duly endorsed by the
holder thereof as directed by Lender or accompanied by a written
instrument of transfer in form and substance that would be
satisfactory to a prudent lender (including, without limitation,
such instruments as may be required by the depository institution
holding such securities or by the issuer thereof, as the case may
be, to effectuate book-entry transfers and pledges through the
book-entry facilities of such institution) in order to perfect upon
the delivery of the defeasance collateral a first priority security
interest therein in favor of Lender in conformity with all
applicable state and federal laws governing the granting of such
security interests.
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2.5.3
Successor Borrower . In connection with any
Defeasance Event, Borrower shall establish a successor entity (the
“ Successor Borrower ”), which shall be a
Special Purpose Entity, which shall not own any other assets or
have any other liabilities or operate other property (except in
connection with other defeased loans held in the same securitized
loan pool with the Loan). Borrower shall transfer and assign all
obligations, rights and duties under and to the Note, together with
the pledged U.S. Obligations to such Successor Borrower. Such
Successor Borrower shall assume the obligations under the Note and
the Security Agreement and Borrower shall be relieved of its
obligations under such documents. Borrower shall pay One Thousand
and 00/100 Dollars ($1,000) to any such Successor Borrower as
consideration for assuming the obligations under the Note and the
Security Agreement. Notwithstanding anything in this Agreement to
the contrary, no other assumption fee shall be payable upon a
transfer of the Note in accordance with this
Section 2.5.3 , but Borrower shall pay all costs
and expenses incurred by Lender, including Lender’s
attorneys’ fees and expenses and any fees and expenses of any
Rating Agencies, incurred in connection therewith.
Section 2.6 Release of
Property . Except as set forth in this
Section 2.6 , no repayment, prepayment or
defeasance of all or any portion of the Loan shall cause, give rise
to a right to require, or otherwise result in, the release of the
Lien of the Mortgage on the Property.
2.6.1
Release of Property .
(a) If
Borrower has elected to defease the Loan and the requirements of
Section 2.5 and this
Section 2.6 have been satisfied, all of the
Property shall be released from the Lien of the Mortgage and the
U.S. Obligations, pledged pursuant to the Security Agreement, shall
be the sole source of collateral securing the Note.
(b) In
connection with the release of the Mortgage, Borrower shall submit
to Lender, not less than thirty (30) days prior to the
Defeasance Date, a release of Lien (and related Loan Documents) for
the Property for execution by Lender. Such release shall be in a
form appropriate in the jurisdiction in which the Property is
located and that would be satisfactory to a prudent lender and
contains standard provisions, if any, protecting the rights of the
releasing lender. In addition, Borrower shall provide all other
documentation Lender reasonably requires to be delivered by
Borrower in connection with such release, together with an
Officer’s Certificate certifying that such documentation
(i) is in compliance with all Legal Requirements, and
(ii) will effect such releases in accordance with the terms of
this Agreement.
2.6.2
Release on Payment in Full . Lender shall, upon the
written request and at the expense of Borrower, upon payment in
full of all principal and interest due on the Loan and all other
amounts due and payable under the Loan Documents in accordance with
the terms and provisions of the Note and this Agreement, release
the Lien of the Mortgage on the Property.
Section 2.7 Clearing
Account/Cash Management . On or prior to the Closing Date,
Borrower shall, at its sole cost and expense, cause each of the
following to occur to the satisfaction of Lender (collectively, the
“ Cash Management Conditions ”):
(a) Borrower shall establish an Eligible Account (the “
Clearing Account ”) with an Eligible Institution
selected by Borrower and approved by Lender (the “
Clearing Bank ”); (b) Borrower shall cause the
Clearing Bank to execute and deliver the Clearing Account Agreement
in accordance with Section
44
2.7.1(b) ; (c) Borrower shall establish an
Eligible Account (the “ Cash Management Account
”) with an the Cash Management Bank designated by Lender
pursuant to and in accordance with the Cash Management Agreement
and Section 2.7.2 hereof; (d) Borrower
shall deliver a Payment Direction Letter to the Tenant under any
Lease then or thereafter in effect and provide Lender with
reasonably satisfactory evidence that the Tenant under such Lease
has confirmed that it shall comply with the terms thereof;
(e) Borrower will take all actions necessary to establish and
maintain in favor of Lender a perfected first priority security
interest in the Clearing Account and Cash Management Account and
all deposits at any time contained in either such account and the
proceeds thereof, including, without limitation, executing and
filing UCC-1 Financing Statements; (f) Borrower shall deliver
to Lender an opinion of Borrower’s counsel with respect to
the due execution, authority, enforceability of the Cash Management
Agreement and Clearing Account Agreement and confirming that Lender
has first priority perfected security interest in the Cash
Management Account and Clearing Account and such other matters as
Lender may reasonably require, all such opinions in form, scope and
substance satisfactory to Lender and Lender’s counsel; and
(g) Borrower shall reimburse Lender for any and all cost and
expenses, including reasonable attorney’s fees and
disbursements, resulting form the foregoing.
2.7.1
Clearing Account .
(a) Borrower
shall establish and maintain the Clearing Account with the Clearing
Bank on or prior to the Closing Date, and thereafter Borrower shall
maintain the Clearing Account at all times during the remainder of
the term of the Loan. The Clearing Account shall be entitled
“Acadia Atlantic Avenue LLC, as Borrower and Bear Stearns
Commercial Mortgage, Inc., as Lender, pursuant to Loan Agreement
dated as of December 26, 2007 — Clearing Account”.
Borrower hereby grants to Lender a first-priority security interest
in the Clearing Account and all deposits at any time contained
therein and the proceeds thereof. All monies now or hereafter
deposited into the Clearing Account shall be deemed additional
security for the Debt.
(b) Borrower
shall obtain from the Clearing Bank and deliver to Lender an
agreement, in form and substance satisfactory to Lender (the
“ Clearing Account Agreement ”), pursuant to
which: (i) Borrower and Clearing Bank acknowledge and agree that
during a Cash Trap Period, Lender shall have the sole right to make
withdrawals from the Clearing Account and all costs and expenses
for establishing and maintaining the Clearing Account shall be paid
by Borrower; (ii) upon notice from Lender that a Cash Trap
Period exists, the Clearing Bank agrees to transfer to the Cash
Management Account in immediately available funds by federal wire
transfer all amounts on deposit in the Clearing Account once every
Business Day during the term of the Loan.
(c) Borrower
shall (i) deliver irrevocable written instructions to all
tenants under Leases to deliver all Rents (including additional
rent, payable thereunder directly to the Clearing Account, and
(ii) deliver irrevocable written instructions to each of the
credit card companies or credit card clearing banks with which
Borrower or Manager has entered into merchant’s agreements to
deliver all receipts payable with respect to the Property directly
to the Clearing Account (collectively, the “ Payment
Direction Letters .”). Borrower and Manager shall deposit
all amounts received by Borrower or Manager constituting Rents into
the Clearing Account within one (1) Business Day after receipt
thereof.
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(d) Upon
the occurrence of an Event of Default, Lender may, in addition to
any and all other rights and remedies available to Lender, apply
any sums then present in the Clearing Account to the payment of the
Debt in any order in its sole discretion.
(e) The
Clearing Account shall be an Eligible Account and shall not be
commingled with other monies held by Borrower or Clearing
Bank.
(f) Borrower
shall not further pledge, assign or grant any security interest in
the Clearing Account or the monies deposited therein or permit any
lien or encumbrance to attach thereto, or any levy to be made
thereon, or any UCC-1 Financing Statements, except those naming
Lender as the secured party, to be filed with respect
thereto.
(g) Borrower
shall indemnify Lender and hold Lender harmless from and against
any and all actions, suits, claims, demands, liabilities, losses,
damages, obligations and costs and expenses (including litigation
costs and reasonable attorneys fees and expenses) arising from or
in any way connected with the Clearing Account and/or the Clearing
Account Agreement (unless arising from the gross negligence or
willful misconduct of Lender) or the performance of the obligations
for which the Clearing Account was established.
2.7.2
Cash Management Account .
(a) Pursuant
to and in accordance with the Cash Management Agreement, Borrower
shall establish and maintain a segregated Eligible Account (the
“ Cash Management Account ”) to be held by an
Eligible Institution selected by Lender (the “ Cash
Management Bank ”) in trust and for the benefit of
Lender, which Cash Management Account shall be under the sole
dominion and control of Lender. The Cash Management Account shall
be entitled “Acadia Atlantic Avenue LLC as Borrower and Bear
Stearns Commercial Mortgage, Inc., as Lender, pursuant to Loan
Agreement dated as of December 26, 2007 — Cash
Management Account.” Borrower hereby grants to Lender a first
priority security interest in the Cash Management Account and all
deposits at any time contained therein and the proceeds thereof and
will take all actions necessary to maintain in favor of Lender a
perfected first priority security interest in the Cash Management
Account, including, without limitation, executing and filing UCC-1
Financing Statements and continuations thereof. Borrower will not
in any way alter or modify the Cash Management Account and will
notify Lender of the account number thereof. Lender and Servicer
shall have the sole right to make withdrawals from the Cash
Management Account and all costs and expenses for establishing and
maintaining the Cash Management Account shall be paid by
Borrower.
(b) During
a Cash Trap Period, and provided no Event of Default shall have
occurred, on each Payment Date (or, if such Payment Date is not a
Business Day, on the immediately preceding Business Day), all funds
on deposit in the Cash Management Account shall be applied as set
forth in the Cash Management Agreement
(c) The
insufficiency of funds on deposit in the Cash Management Account
shall not relieve Borrower from the obligation to make any
payments, as and when due pursuant to this Agreement and the other
Loan Documents, and such obligations shall be separate and
independent, and not conditioned on any event or circumstance
whatsoever.
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(d) Borrower
hereby agrees that Lender may modify the Cash Management Agreement
for the purpose of establishing additional sub-accounts in
connection with any payments otherwise required under this
Agreement and the other Loan Documents and Lender shall provide
notice thereof to Borrower.
(e) All
funds on deposit in the Cash Management Account following the
occurrence of an Event of Default may be applied by Lender in such
order and priority as Lender shall determine.
(f) Notwithstanding
anything to the contrary herein, all transfers of Borrower’s
funds from the Cash Management Account or other sources to or for
the benefit of any mezzanine lender under any Subordinate Financing
pursuant to this Agreement or any of the other Loan Documents shall
constitute distributions from Borrower to the Mezzanine Borrower
and must comply with the requirements as to distributions of the
Delaware Limited Liability Company Act. No provision of any of the
Loan Documents shall create a debtor-creditor relationship between
Borrower and any mezzanine or subordinate lender.
2.7.3
Payments Received Under the Cash Management Agreement
. Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents, and provided no Event of
Default has occurred and is continuing, Borrower’s
obligations with respect to the payment of the Monthly Debt Service
Payment Amount and amounts required to be deposited on a monthly
basis into the Reserve Funds, if any, shall be deemed satisfied to
the extent sufficient amounts are deposited in the Cash Management
Account to satisfy such obligations pursuant to the Cash Management
Agreement on the dates each such payment is required, regardless of
whether any of such amounts are so applied by Lender.
Section 2.8 Intentionally
Omitted .
Section 2.9 Payments Not
Conditional . All payments required to be made by Borrower
hereunder or under the Note or the other Loan Documents shall be
made irrespective of, and without deduction for, any setoff, claim
or counterclaim and shall be made irrespective of any defense
thereto.
Section 2.10 Initial
Advance . The obligation of Lender to make the initial
Advance of the Building Loan (the “ Initial Advance
”) shall be subject to the following conditions precedent
(collectively, the “ Initial Advance Conditions
”) on or prior to the Required Initial Advance Date, all of
which conditions precedent must be satisfied prior to Lender making
any such Initial Advance:
2.10.1
Prior Conditions Satisfied . All conditions precedent
to closing shall continue to be satisfied as of the date of the
Initial Advance (in the same manner in which they were satisfied
for the closing without reimposing any one-time condition).
2.10.2
Performance; No Default . Borrower shall have
performed and complied with all terms and conditions herein
required to be performed or complied with by it at or prior to the
date of such Initial Advance, and on the date of such Initial
Advance there shall exist no Default or Event of Default.
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2.10.3
Representations and Warranties . The representations
and warranties made by Borrower or Guarantor in the Loan Documents
or otherwise made by or on behalf of Borrower or Guarantor in
connection therewith after the date thereof shall have been true
and correct in all material respects on the date on which made and
shall also be true and correct in all material respects on the date
of the Initial Advance.
2.10.4
No Damage . The Project Improvements shall not have
been injured or damaged by fire, explosion, accident, flood or
other casualty, unless Lender shall be satisfied that sufficient
insurance proceeds will be available in the reasonable judgment of
Lender to effect the satisfactory restoration of the Project
Improvements and to permit the Completion of the Improvements prior
to the Required Completion Date.
2.10.5
Government Approvals . Borrower shall have delivered
to Lender evidence satisfactory to Lender that all Governmental
Approvals necessary for the demolition of the existing improvements
as contemplated by the Plans and Specifications, have been obtained
and are in full force and effect.
2.10.6
Final Project Report . The Final Project Report shall
have been delivered to Lender by the Construction Consultant.
2.10.7
Development Budget . Borrower shall have prepared and
Lender and Construction Consultant shall have approved the
Development Budget (including both the Building Loan Budget and the
Project Loan Budget) and the Disbursement Schedule.
2.10.8
Plans and Specifications . Two (2) complete sets
of the Plans and Specifications and any and all modifications and
amendments made thereto which have been reviewed and approved by
(A) Lender, and (B) the Construction Consultant. Borrower
shall deliver to Lender a list identifying the Plans and
Specifications and any and all modifications and amendments made
thereto.
2.10.9
General Contractor’s Agreement . Borrower and
an unaffiliated General Contractor have entered into a Standard
Form of Agreement between Owner and Contractor (Where the basis for
payment is a STIPULATED SUM), dated as of October 18, 2007,
that obligates the General Contractor to cause the Completion of
the Improvements to occur prior to the Required Completion Date at
a fixed price, reasonably acceptable to Lender and the Construction
Consultant in both form and substance (once approved, the “
General Contractor’s Agreement ”). The General
Contractor’s Agreement, shall have been duly executed and
delivered by the parties thereto, shall be in full force and effect
and Lender shall have received a certified copy or a fully executed
duplicate original thereof. The General Contractor shall have duly
executed and delivered to Lender a consent to the assignment of the
General Contractor’s Agreement, in form and substance
reasonably satisfactory to Lender, and Lender shall have received a
certified copy or a fully executed duplicate original thereof. If
General Contractor consist of more than one Person, then each such
Person shall deliver a consent to the assignment of the General
Contractor’s Agreement, in form and substance satisfactory to
Lender, and Lender shall have received a certified copy or a fully
executed duplicate original thereof.
48
2.10.10
Architect’s and General Contractor’s
Certificates . Certificates from the Borrower’s
Architect (the “ Architect’s Certificate
”) substantially in the form attached hereto as
Exhibit F and from the General Contractor (the
“ General Contractor’s Certificate ”)
substantially in the form attached hereto as
Exhibit G .
2.10.11
Contracts and Subcontracts . Borrower shall have
delivered to Lender, and Lender and Construction Consultant shall
have approved a list, certified by Borrower, of all Contractors and
Subcontractors who have been or, to the extent identified by
Borrower, will be supplying labor or materials for the Property.
The list of Contractors and Subcontractors may be amended from time
to time subject to the approval of Lender and Construction
Consultant, in accordance with the terms hereof. Borrower shall
have delivered to Lender all Contract and Major Contracts for all
of the work necessary for Completion of the Improvements, and
Lender and Construction Consultant shall have approved all such
Major Contracts. No Advance shall be made by Lender with regard to
work done by or on behalf of any Contractor or Subcontractor unless
Borrower shall have delivered to Lender and Construction Consultant
originals of the following documents as to such Contractor or
Subcontractor, each in form and substance reasonably satisfactory
to Lender:
(a)
Performance Letters . if requested by Lender, a performance
letter (“ Performance Letter ”) substantially in
the form attached hereto as Exhibit H from such
Contractors and/or Subcontractors as Lender shall designate.
(b)
Other Documents. Such other documents and certificates as
Lender or its counsel may reasonably require.
2.10.12
Contractors’ Consent to Assignment . Each
Contractor, Sub-Contractor and Other Design Professionals shall
have delivered a consent to the assignment of each of their
Contracts, in form and substance satisfactory to Lender, and Lender
shall have received a certified copy or a fully executed duplicate
original of each such Contract.
2.10.13
Cash Management . Lender has determined that the Cash
Management Conditions have been satisfied.
2.10.14
Notices . All notices required by any Governmental
Authority or by any applicable Legal Requirement to be filed prior
to commencement of construction of the Project Improvements shall
have been filed.
2.10.15
Deliveries . Lender shall have received:
(a)
Draw Request . A Draw Request complying with the
requirements hereof;
(b)
Affirmation of Payment . An Affirmation of Payment;
(c)
Title Insurance Policy . A Title Insurance Policy for the
full amount of the Loan, which includes a pending disbursement
clause to increase the coverage of the Title Insurance Policy by
the amount of the any Construction Advance, insuring the lien of
the Mortgage subject to no liens or encumbrances other than the
Permitted Encumbrances;
49
(d)
Lien Waivers . Duly executed lien waivers, which shall be
conditional lien waivers or unconditional lien waivers, as
determined by Lender in its sole discretion, and otherwise
substantially in the form set forth in Exhibit J
from the General Contractor and all Contractors and Subcontractors
who have performed work, for the work so performed, and/or who have
supplied labor and/or materials, for the labor and/or materials so
supplied, except for such work or labor and/or materials for which
payment thereof is requested, as to which duly executed lien
waivers shall be delivered to Lender with the next request for an
Advance;
(e)
Ratios . Evidence satisfactory to Lender that following the
Initial Advance, the Loan-to-Cost Ratio shall be no greater than
75%;
(f)
Evidence of Sufficiency of Funds . Evidence satisfactory to
Lender that the proceeds of the Loan plus the Required Equity Funds
will be sufficient to cover all Project-Related Costs reasonably
anticipated to be incurred and to satisfy the Obligations of
Borrower to Lender and under this Agreement and the other Loan
Documents;
(g)
Anticipated Costs Report . An Anticipated Costs Report;
and
(h)
Other Documents . Such other documents and certificates as
Lender or its counsel may reasonably require.
2.10.16
Building Loan Agreement Filed . This Building
Loan Agreement shall have been filed in the Kings County
Clerk’s Office.
2.10.17
Initial Project Loan Advance . All conditions to the
initial advance of the Project Loan set forth in Section 2.10
of the Project Loan Agreement shall have been satisfied.
2.10.18
Rate Lock Agreement . Simultaneously with the Initial
Advance, Lender shall return to Borrower, a pro-rata portion of the
deposit held by Lender pursuant to the Rate Lock Agreement in such
proportion as the amount of the Initial Advance bears to the Total
Loan Amount.
2.10.19
Initial Reserve Deposits Borrower shall have
deposited the Initial Tax and Insurance Escrow Deposit and the
Initial Interest Reserve Deposit with Lender. The Initial Tax and
Insurance Escrow Deposit and the Initial Interest Reserve Deposit
shall be funded on the date of the Initial Advance with a portion
of the Initial Advance under the Project Loan.
2.10.20
Satisfaction of Initial Advance Conditions .
Borrower acknowledge that certain Initial Advance Conditions,
including, without limitation, [SUBJECT TO REVIEW BY LENDER] [(i)
delivery to and approval by Lender of final Plans and
Specifications, (ii) delivery to and approval by Lender of the
final Development Budget, Building Loan Budget, and Project Loan
Budget, (iii) delivery to Lender of all permits required for
the demolition of the existing improvements on the Property,
(iv) delivery to Lender of evidence that Borrower maintains
the Policies required under this Agreement, and (v) delivery
to Lender of Borrower’s Requisition and all required
accompanying documents with respect to the Initial Advance in
accordance with Section 2.14.1 of this Agreement
(the “ Unsatisfied Initial Advance Conditions
”)]. Borrower covenants and agrees that, prior to the
Required Initial Advance Date, time being of the essence, it shall
cause all of the Initial Advance Conditions, including, without
limitation, the Unsatisfied
50
Initial
Advance Conditions, to be satisfied. Borrower shall not perform any
work at the Property, including, without limitation, any demolition
of the existing improvements, until all of the Initial Advance
Conditions including, without limitation, the Unsatisfied Initial
Advance Conditions, have been satisfied. Borrower’s failure
to satisfy, or cause the satisfaction of, any of the Initial
Advance Conditions on or prior to the Required Initial Advance Date
shall, at Lender’s election, constitute an Event of Default.
In addition to any and all other remedies that may be available to
Lender hereunder, under the other Loan Documents, at law or in
equity, upon the occurrence of an Event of Default resulting from
the failure of any Initial Advance Condition to have been
satisfied, Borrower hereby irrevocably empowers Lender, in the name
of Borrower as its true and lawful attorney-in-fact, with full
power of substitution to complete or undertake such steps as may be
necessary, in Lender’s sole determination, to satisfy the
Initial Advance Condition in the name of Borrower. Such power of
attorney shall be deemed to be a power coupled with an interest and
cannot be revoked. Borrower empowers said attorney-in-fact as
follows: (i) to employ such contractors, subcontractors,
agents, architects and inspectors as shall be required for such
purposes; (iii) to pay, settle or compromise all existing
bills and claims which are or may become Liens against the
Property, or as may be necessary or desirable for the completion of
such Initial Advance Conditions, or for clearance of title;
(v) to execute all applications and certificates in the name
of Borrower which may be required by any of the contract documents;
(vi) to prosecute and defend all actions or proceedings in
connection with the Property or the Project; and (vii) to do
any and every act which Borrower might do in its own behalf to
fulfill the terms of this Agreement and the other Loan Documents.
In addition, upon such Event of Default,. Lender shall have the
right to unwind any interest rate hedge entered into by Lender and
apply any deposits or other amounts held by Lender pursuant to the
Rate Lock Agreement to costs and expenses incurred by Lender under
this Agreement, the Rate Lock Agreement or any of the other Loan
Documents.
Section 2.11
Construction Advances . The obligation of Lender to
make the Advances of the Building Loan after the Initial Advance
shall be subject to the following conditions precedent
(collectively, the “ Construction Advance
Conditions”) , all of which conditions precedent must be
satisfied prior to Lender making any such Advance:
2.11.1
Prior Conditions Satisfied . All conditions precedent
to any prior Advance (in the same manner in which they were
satisfied for the Initial Advance or prior Advance, as applicable,
and without reimposing any one-time requirement) shall continue to
be satisfied as of the date of such subsequent Advance.
2.11.2
Performance; No Default . Borrower shall have
performed and complied with all terms and conditions herein
required to be performed or complied with by it at or prior to the
date of such Advance, and on the date of such Advance there shall
exist no Default or Event of Default or Shortfall.
2.11.3
Representations and Warranties . The representations
and warranties made by Borrower and Guarantor in the Loan Documents
or otherwise made by or on behalf of Borrower or Guarantor in
connection therewith after the date thereof shall have been true
and correct in all material respects on the date on which made and
shall also be true and correct in all material respects on the date
of such Advance.
51
2.11.4
No Damage . The Improvements shall not have been
injured or damaged by fire, explosion, accident, flood or other
casualty, unless Lender shall have received insurance proceeds
sufficient in the reasonable judgment of Lender to effect the
satisfactory restoration of the Improvements and to permit the
Completion of the Improvements prior to the Required Completion
Date.
2.11.5
Deliveries . The following items or documents shall
have been delivered to Lender:
(a)
Anticipated Costs Report . An anticipated cost report
(“ Anticipated Costs Report ”) in the form set
forth in Exhibit I executed by the General
Contractor which sets forth the anticipated costs to complete
construction of the Project Improvements, after giving effect to
costs incurred during the previous month and any anticipated change
orders;
(b)
Endorsement to Title Insurance Policy . A
“datedown” endorsement to Lender’s title
insurance policy as described in the form set forth in
Exhibit C hereto, which continuation or
endorsement shall increase the coverage of the Title Insurance
Policy by the amount of the Advance through the pending
disbursement clause (but not the overall policy amount which shall
be for the full amount of the Loan), amend the effective date of
the Title Insurance Policy to the date of such Advance, continue to
insure the lien of the Mortgage subject to no liens or encumbrances
other than the Permitted Encumbrances and which shall state that
since the last disbursement of the Loan there have been no changes
in the state of title to the Property (other than Permitted
Encumbrances) and that there are no additional survey exceptions
not previously approved by Lender;
(c)
Evidence of Sufficiency of Funds . Evidence satisfactory to
Lender that the proceeds of the Loan plus the Required Equity Funds
will be sufficient to cover all Project-Related Costs reasonably
anticipated to be incurred and to satisfy the Obligations of
Borrower to Lender and under this Agreement and the other Loan
Documents.
(d)
Draw Request . A Draw Request complying with the provisions
of this Agreement which shall constitute Borrower’s
representation and warranty to Lender that: (a) any completed
construction is substantially in accordance with the Plans and
Specifications, (b) all costs for the payment of which Lender
have previously advanced funds have in fact been paid, (c) all
the representations and warranties contained in
Article IV of this Agreement continue to be true
and correct in all material respects, (d) no Event of Default
shall have occurred and be continuing hereunder, and
(e) Borrower continues to be in compliance in all respects
with all of the other terms, covenants and conditions contained in
this Agreement.
(e)
Affirmation of Payment . General Contractor’s
Affirmation of Payment (“ Affirmation of Payment
”) (AIA Form G706) in the form attached hereto as
Exhibit E .
(f)
Other Documents . Such other documents and certificates as
Lender or its counsel may reasonably require.
2.11.6
Construction Consultant Certificate . Each draw
request relating to Hard Costs shall be accompanied by a
certificate or report of the Construction Consultant to Lender
based upon a site observation of the Property made by the
Construction Consultant not more than
52
thirty
(30) days prior to the date of such draw, in which the
Construction Consultant shall in substance: (i) verify that
the portion of the Project Improvements completed as of the date of
such site observation has been completed substantially in
accordance with the Plans and Specifications; and (ii) state
its estimate of (1) the percentages of the construction of the
Project Improvements completed as of the date of such site
observation on the basis of work in place as part of the Project
Improvements and the Building Loan Budget, (2) the Hard Costs
actually incurred for work in place as part of the Improvements as
of the date of such site observation, (3) the sum necessary to
complete construction of the Project Improvements in accordance
with the Plans and Specifications, and (4) the amount of time
from the date of such inspection that will be required to achieve
Completion of the Improvements.
2.11.7
Other Bids . If in the reasonable judgment of Lender
and the Construction Consultant all Contracts, Major Contracts, and
the General Contractor’s Agreement do not cover all of the
work necessary for Completion of the Improvements, Borrower shall
cause to be furnished firm bids from responsible parties, or
estimates and other information reasonably satisfactory to Lender,
for the work not so covered, to enable Lender to ascertain the
total estimated cost of all work done and to be done.
2.11.8
Certification Regarding Chattels . Lender shall have
received a certification from the Title Company or other service
satisfactory to Lender or counsel satisfactory to Lender (which
shall be updated from time to time at Borrower’s expense upon
request by Lender in connection with future Advances) that a search
of the public records disclosed no significant or material changes
since the Closing Date including no judgment or tax liens affecting
Borrower or Guarantor, the Property or the Personal Property, and
no conditional sales contracts, chattel mortgages, leases of
personalty, financing statements (other than those in favor of
Lender) or title retention agreements which affect the
Property.
2.11.9
Lien Waivers . Borrower shall have delivered duly
executed lien waivers, which shall be conditional lien waivers or
unconditional lien waivers, as applicable, and otherwise
substantially in the form set forth in Exhibit J
, from the General Contractor, all Major Contractors and Major
Subcontractors for all work performed, and all labor or material
supplied for which payment thereof has been made prior to the date
of the Advance.
2.11.10
Construction Consultant Approval . Lender has
received advice from the Construction Consultant, satisfactory to
Lender, as to Construction Consultant’s determination, acting
reasonably, based on on-site inspections of the Improvements and
the data submitted to and reviewed by it as part of
Borrower’s Requisition of the value of the labor and
materials in place, that the construction of the Project
Improvements is proceeding satisfactorily and according to schedule
and that the work on account of which the Advance is sought has
been completed in a good and workmanlike manner to such
Construction Consultant’s satisfaction and substantially in
accordance with the Plans and Specifications.
2.11.11
Ratios . Following such Advance (and any Project Loan
Advance being made on such date), the Loan-to-Cost Ratio shall be
no greater than 75%.
2.11.12
Administration Fee . Borrower shall have paid the
Administration Fee in accordance with the provisions of the
Administration Fee Agreement.
53
2.11.13
Required Equity Funds . Borrower shall furnish
Lender with evidence in form and content satisfactory to Lender
that, as of the date of each Advance, Borrower has invested Cash
equity in an amount equal to or greater than (a) $5,356,660.00 or
(b) 25% of the Total Project Costs or (c) the difference
between the Development Budget and the maximum Loan amount of
$16,150,000.00 for approved Project-Related Costs (the “
Required Equity Funds ”). Notwithstanding the
foregoing, if the Borrower realizes cost savings from the
development of the Project, either in the form of Hard Costs or
Soft Costs, Advances may be advanced to Borrower provided that
(i) the Borrower would not have less than $5,356,660.00 of
cash equity in the Project through such Advance, (ii) the Debt
Service Coverage Ratio shall be equal to or greater than 1.70 to
1.0 assuming a fully advanced Loan using a debt service constant of
7.50%, (iii) the Debt Service Coverage Ratio shall be equal to
or greater than 1.20 to 1.0 assuming a fully advanced Loan using a
debt service constant of 10.65%, and (iv) the loan-to-value
ratio for the Property is no greater than 75% assuming a fully
advanced Loan. If Borrower is in non-compliance solely with respect
to condition (i) above, at Borrower’s option, either
(A) any excess cost savings (funds in excess of the amount so
that the Required Equity Funds shall continue to be satisfied)
shall be deposited as follows: (1) 100% into the Replacement
Reserve Account, or (2) at Lender’s discretion, into any
other Reserves required by Lender pursuant to this Agreement, or
(B) Borrower shall release Lender from its obligation to fund
the remaining amounts of the Loan and Borrower and any guarantor
under the Rate Lock Agreement pays for the breakage costs, if any,
on the unfunded portion of the Loan payable pursuant to the Rate
Lock Agreement. If Borrower is in compliance with respect to
condition (i) above but is not in compliance with
conditions (ii) , (iii) and (iv) above, any
excess cost savings shall, at Borrower’s option, (A) be
held back by Lender as additional collateral for the Loan until
satisfaction of each of the requirements are satisfied, or
(B) be deposited as follows: (1) 100% into the
Replacement Reserve Account, or (2) at Lender’s
discretion, into any other Reserves required by Lender pursuant to
this Agreement, or (C) Borrower shall release Lender from its
obligation to fund the remaining amounts of the Loan and Borrower
and any guarantor under the Rate Lock Agreement pays for the
breakage costs, if any, on the unfunded portion of the Loan payable
pursuant to the Rate Lock Agreement.
2.11.14
Rate Lock Agreement . Simultaneously with each
Construction Advance, Lender shall return to Borrower, a pro-rata
portion of the deposit held by Lender pursuant to the Rate Lock
Agreement in such proportion as the amount of the Construction
Advance bears to the Total Loan Amount, provided, however, that in
the event that any of the conditions of
Section 2.11.13 are not satisfied, Lender shall
have the right to apply the portion of the deposit under the Rate
Lock Agreement to be returned to Borrower to satisfy the conditions
of Section 2.11.13 .
2.11.15
Government Approvals . Lender shall not be
required to make Construction Advances for any phase of the
construction of the Project Improvements unless and until Borrower
shall have delivered to Lender evidence satisfactory to Lender that
all Governmental Approvals necessary for the construction of the
phase of the Project Improvements to be constructed by Borrower as
contemplated by the Plans and Specifications have been obtained and
are in full force and effect, including, without limitation, the
final approval of the Plans and Specifications by the City of New
York for the Project Improvements and a building permit(s) covering
the entire scope of work contemplated by the Project Improvements
in accordance with the approved Plans and Specification
“lawfully issued” to
54
Borrower
within the meaning of Section 11-31(a) of the Zoning
Resolution of the City of New York (the “ Zoning
Resolution ).
Section 2.12 Final
Advance .
2.12.1
Conditions to Release of Final Advance . In addition
to the conditions set forth in Section 2.10 and
Section 2.11 , above, Lender’s obligation
to make the final Advance in the amount calculated pursuant to
Section 2.12.2 of this Agreement (the “
Final Advance ”) shall be subject to receipt by Lender
of the following:
(a)
Completion of Improvements . Evidence satisfactory to Lender
and the Construction Consultant that the Completion of the
Improvements has occurred.
(b)
Final Project Loan Advance . All conditions to the Final
Project Loan Advance have been satisfied and the Final Project Loan
Advance shall have been made or will be made simultaneously
therewith.
(c)
Lien Waivers . Duly executed final lien waivers, which shall
be conditional lien waivers or unconditional lien waivers, as
determined by Lender in its sole discretion, and otherwise
substantially in the form attached hereto as
Exhibit J from the General Contractor and Major
Contractors and Major Subcontractors who have performed work for
the work so performed, and/or who have supplied labor and/or
materials for the labor and/or materials so supplied.
(d)
“As-Built” Plans and Specifications . A full and
complete set of “as built” Plans and Specifications
certified to by Borrower’s Architect.
(e)
Administration Fee . Borrower shall have paid the
Administration Fee in accordance with the provisions of the
Administration Fee Agreement.
(f)
Certificates . Completed AIA Form G704 (Certificate of
Substantial Completion) and completed AIA Form G707 (Consent
of Surety to Final Payments) shall have been executed and delivered
by Borrower’s Architect and General Contractor.
(g)
Deposits to Reserves . If Lender determines that any Punch
List Work or Deferred Maintenance Condition exists, the Punch List
and Deferred Maintenance Deposit has been made, if Lender
determines that the deposits are required to the Operating Reserve
Account, the Operating Reserve Deposit has been made, and all other
deposits to the Reserve Funds required by this Agreement have been
made.
(h)
Other Documents . Such documents, letters, affidavits,
reports and assurances, as Lender, Lender’s counsel and the
Construction Consultant may reasonably require.
(i)
Required Ratios at Completion . Lender shall have determined
that, following the Final Advance (and taking into consideration
the Final Project Loan Advance under the Project Loan):
(i) the Loan-to-Cost Ratio shall be no more than 75%;
(ii) the Stabilized Loan-to-Value Ratio shall be no more than
75%; (iii) the Stabilized Net Cash Flow for the entire
55
Property
shall be not less than $2,064,000; (iv) the Debt Service
Coverage Ratio based on Lender’s underwritten Net Operating
Income and the greater of the actual debt service constant or
10.65% shall be 1.20 to 1.0 or greater; and (v) the Debt
Service Coverage Ratio based on the Stabilized Net Cash Flow and
the greater of the actual debt service constant or 7.50.% shall be
1.70 to 1.0 or greater (the “ Required Ratios at
Completion ”), or Borrower shall have deposited with
Lender Cash or a Letter of Credit to satisfy the Required Ratios at
Completion in accordance with Section 2.12.2
.
(j)
Tenant Estoppel Certificates . Borrower shall have delivered
to Lender estoppel certificates from all of the tenants at the
Property in form and substance satisfactory to Lender.
(k)
Required Equity Funds . Borrower shall furnish Lender
with evidence in form and content satisfactory to Lender that, as
of the date of the Final Advance, Borrower has invested Cash equity
in an amount equal to or greater than the Required Equity Funds or
has otherwise complied with the provisions of
Section 2.11.13 with respect thereto.
(l)
Insolvency Opinion . The issuance of and delivery to Lender
of six (6) original counterparty Insolvency Opinions in the
form attached hereto as Exhibit K from Wachtel
& Masyr, LLP or another law firm reasonably acceptable to
Lender.
(m)
ICIP Eligibility . Evidence satisfactory to Lender that
Borrower has obtained a Certificate of Eligibility under the
Industrial and Commercial Incentive Program.
2.12.2
Amount of Final Advance . Except as expressly
provided for below, the amount of the Final Advance shall be equal
to the sum of: (a) any Retainage not previously released and
advanced to Borrower; plus (b) the amount of any Punch List
and Deferred Maintenance Reserve Deposit; plus (c) the
positive difference, if any, between, (i) the Building Loan
Amount and (ii) all amounts previously Advanced under the Building
Loan (including the amounts described in clauses (a) and
(b) of the sentence). The portion of the Final Advance
described in clause (c) of the foregoing sentence is
referred to herein as the “ Building Loan Earn Out
Advance ” and the corresponding portion of the Final
Project Loan Advance is referred to herein as the “
Project Loan Earn Out Advance ” and together with the
Building Loan Earn Out Advance, the “ Earn Out
Advances ”. Notwithstanding anything to the contrary
provided for herein, the Earn Out Advances shall be reduced, pro
rata, but not below $0.00, if and to the extent necessary for the
Required Ratios at Completion to be achieved following the Final
Advances. In addition, if the Required Ratios at Completion cannot
be achieved even if the Earn Out Advances are reduced to $0.00,
Lender shall have the right, but not the obligation, to apply any
deposits held by Lender pursuant to the Rate Lock Agreement and any
Interest Reserve Funds to the payment of the Building Loan and the
Project Loan in such order and priority as Lender shall determine
in its sole discretion. If the Required Ratios at Completion cannot
be achieved even if the Earn Out Advances are reduced to $0.00 and
the deposits, if any under the Rate Lock Agreement and the Interest
Reserve Funds are applied to the payment of the Loan, Borrower
shall deposit with Lender Cash or a Letter of Credit satisfactory
to Lender in an amount equal to the amount which, if used to pay
down the Loan, would result in Stabilized Loan-to-Value Ratio of
75%, and a Debt Service Coverage Ratio of 1.70 to 1.0, calculated
based upon Lender’s determination on a pro-forma basis of
Lender’s Stabilized Net Cash Flow for the
56
12 months immediately following and assuming a thirty
(30) year amortization schedule based upon a debt service
constant equal to the greater of the actual debt service constant
and 7.50% and a Debt Service Coverage Ratio of 1.20 to 1.0,
calculated based upon Lender’s determination on a pro-forma
basis of Lender’s underwritten Net Operating Income for the
12 months immediately following and assuming a thirty
(30) year amortization schedule based upon a debt service
constant equal to the greater of the actual debt service constant
and 10.65%.
2.12.3
Rate Lock Agreement . Upon satisfaction of all of the
conditions to the Final Advance set forth in Section
2.12.1 , and subject to the provisions of
Section 2.12.2 , Lender shall return to
Borrower, the remaining deposits, if any, held by Lender under the
Rate Lock Agreement and not applied by Lender in accordance with
the provisions of the Rate Lock Agreement and any Interest Reserve
Funds held by Lender pursuant to this Agreement.
Section 2.13
No Reliance . All conditions and requirements of this
Agreement are for the sole benefit of Lender and no other person or
party (including, without limitation, the Construction Consultant,
the General Contractor and subcontractors (including, without
limitation, Major Contractors and Major Subcontractors) and
materialmen engaged in the construction of the Improvements) shall
have the right to rely on the satisfaction of such conditions and
requirements by Borrower. Lender shall have the right, in its sole
and absolute discretion, to waive any such condition or
requirement.
Section 2.14 Method of
Disbursement of Loan Proceeds .
2.14.1
Draw Request to Be Submitted to Lender . At such time
as Borrower shall desire to obtain an Advance, Borrower shall
complete, execute and deliver to Lender a Borrower’s
Requisition in the form attached hereto as Exhibit L
(“ Borrower’s Requisition ”).
(a) Borrower’s
Requisition shall be accompanied by a completed and itemized
Application and Certificate for Payment (AIA Document
No. G702) attached hereto as Exhibit M or
similar form approved by Lender, containing the certification of
the General Contractor or contractor or subcontractor to whom such
payment is made, as applicable, and Borrower’s Architect as
to the accuracy of same, together with invoices relating to all
items of Hard Costs covered thereby and accompanied by a cost
breakdown showing the cost of work on, and the cost of materials
incorporated into, the Improvements to the date of the requisition.
The cost breakdown shall also show the percentage of completion of
each line item on the Building Loan Budget, and the accuracy of the
cost breakdown shall be certified by Borrower and by
Borrower’s Architect. All such applications for payment shall
also show all contractors and subcontractors, including Major
Contractors and Major Subcontractors, by name and trade, the total
amount of each contract or subcontract, the amount theretofore paid
to each subcontractor as of the date of such application, and the
amount to be paid from the proceeds of the Advance to each
contractor and subcontractor;
(b) the
completed construction will be reviewed by the Construction
Consultant who will certify to Lender as to the value of completed
construction, percentage of completion and compliance with Plans
and Specifications;
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(c) lien
waivers from each other Major Contractor and Major Subcontractors
for work done and materials supplied by them which were paid for
pursuant to any prior Draw Request;
(d) a
written request of Borrower for any necessary changes in the Plans
and Specifications, the Building Loan Budget, the Disbursement
Schedule or the Construction Schedule;
(e) copies
of all executed change orders, contracts and subcontracts, and, to
the extent requested by Lender, of all inspection or test reports
and other documents relating to the construction of the Project
Improvements not previously delivered to Lender; and
(f) such
other information, documentation and certification as Lender shall
reasonably request.
2.14.2
Procedure of Advances .
(a) Each
Draw Request shall be submitted to Lender and Construction
Consultant at least ten (10) Business Days prior to the date
of the requested Advance (the “ Requested Advance Date
”), and no more frequently than monthly. Lender shall make
the requested Advance on the Requested Advance Date so long as all
conditions to such Advance are satisfied or waived.
(b) Not
later than 11:00 A.M. New York City time, on the Requested
Advance Date, Lender shall make such Advance available to Borrower
in accordance with the terms of this
Section 2.14 .
(c) Each
Advance (other than the Final Advance) shall be in an amount of not
less than $250,000.00.
(d) Each
Advance shall be made on a Payment Date.
2.14.3
Funds Advanced . Each Advance shall be made by
Lender by wire transfer to such checking account of Borrower as
specified to Lender in writing or as provided in
Section 2.14.4 below. All proceeds of all
Advances shall be used by Borrower only for the purposes for which
such Advances were made. Borrower shall not commingle such funds
with other funds of Borrower.
2.14.4
Direct Advances to Third Parties . Lender may make,
at Lender’s option, any or all Advances directly or through
the Title Company to (i) any Contractor, as applicable, for
construction expenses which shall theretofore have been approved by
Lender and for which Borrower shall have failed to make payment
after receipt by Borrower of such applicable Advance,
(ii) Borrower’s Architect to pay its fees to the extent
funds are allocated thereto in the Building Loan Budget if Borrower
shall have failed to do so, (iii) the Construction Consultant
to pay its fees, (iv) Lender’s counsel to pay its fees,
(v) to pay (x) any installment of interest due under the
Note, (y) any expenses incurred by Lender which are
reimbursable by Borrower under the Loan Documents (including,
without limiting the generality of the foregoing, reasonable
attorneys’ fees and expenses and other fees and expenses
incurred by Lender), provided that
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Borrower
shall theretofore have received notice from Lender that such
expenses have been incurred and Borrower shall have failed to
reimburse Lender for said expenses beyond any grace periods
provided for said reimbursement under the Note, this Agreement or
any of the other Loan Documents, or (z) following the
occurrence and continuation of an Event of Default, any other sums
due to Lender under the Note, this Agreement or any of the other
Loan Documents, all to the extent that the same are not paid by the
respective due dates thereof, and (vi) any other Person to
whom Lender in good faith determines payment is due and any portion
of the Loan so disbursed by Lender shall be deemed disbursed as of
the date on which the Person to whom payment is made receives the
same. The execution of this Agreement by Borrower shall, and hereby
does, constitute an irrevocable authorization so to advance the
proceeds of the Loan directly to any such Person or through the
Title Company to such Persons in accordance with this
Section 2.14.4 as amounts become due and payable
to them hereunder and any portion of the Loan so disbursed by
Lender shall be deemed disbursed as of the date on which the Person
to whom payment is made receives the same. No further authorization
from Borrower shall be necessary to warrant such direct Advances to
such relevant Person, and all such Advances shall satisfy pro
tanto the obligations of Lender hereunder and shall be secured
by the Mortgage and the other Loan Documents as fully as if made
directly to Borrower.
2.14.5
One Advance Per Month . Lender shall have no
obligation to make Advances of the Loan more often than once in
each calendar month except that Lender, in its sole discretion,
shall have the right but not the obligation, to make additional
advances per month for interest, fees and expenses due under the
Loan Documents.
2.14.6
Advances Do Not Constitute a Waiver . No
Advance shall constitute a waiver of any of the conditions of
Lender’s obligation to make further Advances nor, in the
event Borrower is unable to satisfy any such condition, shall any
Advance have the effect of precluding Lender from thereafter
declaring such inability to be an Event of Default hereunder.
2.14.7
Trust Fund Provisions . All proceeds advanced
hereunder shall be subject to the trust fund provisions of
Section 13 of the Lien Law. The affidavit
attached hereto as Exhibit D is made pursuant to
and in compliance with Section 22 of the Lien
Law, and, if so indicated in said affidavit, Building Loan proceeds
will be used, in part, for reimbursement for payments made by the
Borrower prior to the Initial Advance hereunder but subsequent to
the commencement of the construction and equipping of the
Improvements for items constituting Costs of the Improvement.
2.14.8
Advances and Disbursements Under Completion Guaranty
. Notwithstanding anything to the contrary contained in this
Agreement or in any other Loan Document, Borrower hereby
irrevocably and unconditionally authorizes Lender to make any
disbursements of proceeds of the Loan or of any Reserve Funds held
by Lender to Guarantor in accordance with the Guaranty of
Completion.
Section 2.15
Plan Review Process .
(a) Borrower
hereby acknowledges and agrees that neither Lender nor the
Construction Consultant’s approval of any Plans and
Specifications (or any revisions thereto), nor its inspection of
the performance of the construction, nor its right to inspect such
work, shall
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impose
upon Lender and/or Construction Consultant any obligation or
liability whatsoever with respect thereto, including, without
limitation, any obligation or liability that might arise as a
result of such work not being performed in accordance with
applicable laws and/or requirements of public authorities or with
the Plans and Specifications (and revisions thereto) approved by
Lender and Construction Consultant or otherwise. The review or
approval by Lender and Construction Consultant of any Plans and
Specifications or any revisions thereto is solely for
Lender’s benefit, and is without any representation or
warranty whatsoever with respect to the adequacy, correctness or
efficiency thereof or otherwise. The granting by Lender and/or
Construction Consultant of its approval of any Plans and
Specifications or any revisions thereto, shall not in any manner
constitute or be deemed to constitute a judgment or acknowledgment
by Lender as to their legality or compliance with laws and/or
requirements of public authorities.
ARTICLE III.
CONDITIONS PRECEDENT
Section 3.1 Conditions
Precedent to Closing . The obligation of Lender to make the
Loan hereunder is subject to the fulfillment by Borrower or waiver
by Lender of the following conditions precedent no later than the
Closing Date:
3.1.1
Representations and Warranties; Compliance with
Conditions . The representations and warranties of
Borrower contained in this Agreement and the other Loan Documents
shall be true and correct in all material respects on and as of the
Closing Date with the same effect as if made on and as of such
date, and no Default or an Event of Default shall have occurred and
be continuing; and Borrower shall be in compliance in all material
respects with all terms and conditions set forth in this Agreement
and in each other Loan Document on its part to be observed or
performed.
3.1.2
Loan Agreement and Note . Lender shall have
received a copy of this Agreement and the Note, in each case, duly
executed and delivered on behalf of Borrower.
3.1.3
Delivery of Loan Documents; Title Insurance; Reports;
Leases .
(a)
Mortgage, Assignment of Leases . Lender shall have received
from Borrower fully executed and acknowledged counterparts of the
Mortgage and the Assignment of Leases and evidence that
counterparts of the Mortgage and Assignment of Leases have been
delivered to the Title Company for recording, in the reasonable
judgment of Lender, so as to effectively create upon such recording
valid and enforceable Liens upon the Property, of the requisite
priority, in favor of Lender or Lender’s nominee (or such
other trustee as may be required or desired under local law),
subject only to the Permitted Encumbrances and such other Liens as
are permitted pursuant to the Loan Documents. Lender shall have
also received from Borrower fully executed counterparts of the
other Loan Documents.
(b)
Title Insurance . Lender shall have received the Title
Insurance Policy issued by a title company acceptable to Lender
(the “ Title Company ”) and dated as of the
Closing Date, with reinsurance and direct access agreements
acceptable to Lender. Such Title Insurance Policy shall
(i) provide coverage in amounts satisfactory to Lender,
(ii) insure Lender
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that the
Mortgage creates a valid lien on the Property of the requisite
priority, free and clear of all exceptions from coverage other than
Permitted Encumbrances and standard exceptions and exclusions from
coverage (as modified by the terms of any endorsements),
(iii) contain such endorsements and affirmative coverages as
Lender may reasonably request, and (iv) name Lender as the
insured. The Title Insurance Policy shall be assignable. Lender
also shall have received evidence that all premiums in respect of
such Title Insurance Policy have been paid.
(c)
Survey . Lender shall have received a title survey for the
Property, certified to the Title Company and Lender and their
successors and assigns, in form and content satisfactory to Lender
and prepared by a professional and properly licensed land surveyor
satisfactory to Lender in accordance with the Accuracy Standards
for ALTA/ACSM Land Title Surveys as adopted by American Land Title
Association, American Congress on Surveying & Mapping and
National Society of Professional Surveyors in 1999 or in such other
form as Lender shall approve (the “ Survey ”).
The Survey shall reflect the same legal description contained in
the Title Insurance Policy referred to in clause (b) above
and shall include, among other things, a metes and bounds
description of the real property comprising part of the P
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