Exhibit 99.1
CONSTRUCTION LOAN AGREEMENT
THIS CONSTRUCTION LOAN AGREEMENT dated April ___, 2005, is made by
THE
FROST NATIONAL BANK, a national banking
association ("LENDER"), whose address is
P.O. Box 1600, San Antonio, Texas 78296,
and BEHRINGER HARVARD NORTHWEST HIGHWAY
LP, a Texas limited partnership
("BORROWER"), whose address is 100 Main Street,
Dallas, Texas 75208.
ARTICLE I
DEFINITIONS AND USE OF TERMS
1.01
CERTAIN DEFINITIONS. As used herein, the following terms have
the meanings indicated, unless the context
otherwise requires:
"ADVANCE" means a disbursement by Lender of any of the proceeds
of the Loan or Borrower's Deposit.
"AFFIDAVIT OF BORROWEr" means a sworn affidavit of Borrower
(and
such other parties as Lender may require)
to the effect that all statements,
invoices, bills, and other expenses
incident to the acquisition of the Property
and the construction of the Improvements
incurred to a specified date, whether
or not specified in the Approved Budget,
have been paid in full, except for (a)
acquisition of the Land; (b) amounts
retained pursuant to a Construction
Contract, and (c) items to be paid from the
proceeds of an Advance then being
requested or in another manner satisfactory
to Lender.
"AGREEMENT" means this Construction Loan Agreement, as the same
may from time to time be amended or
supplemented.
"APPLICATION FOR ADVANCE" means a written application by
Borrower (and such other parties as Lender
may require) to Lender, on a form
approved by Lender, specifying by name,
current address, and amount all parties
to whom Borrower is obligated for labor,
materials, or services supplied for the
construction of the Improvements and all
other expenses incident to the Loan,
the Property, and the construction of the
Improvements, whether or not specified
in the Approved Budget, requesting an
Advance for the payment of such items,
containing, if requested by Lender, an
Affidavit of Borrower, accompanied by
such documents as Lender may reasonably
request.
"APPROVED BUDGET" means a budget and cost itemization prepared
by Borrower, and approved in writing by
Lender, specifying the cost by item of
(a) all labor, materials, and services
necessary for the construction of the
Improvements in accordance with the Plans,
and all Governmental Requirements;
and (b) all other expenses anticipated by
Borrower incident to the Loan, the
Property, and the construction of the
Improvements. The Approved Budget is
attached hereto as EXHIBIT D.
"BORROWER" means all parties named Borrower in the first
paragraph of this Agreement.
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
"BORROWER'S DEPOSIT" means such cash sums as Lender may
reasonably deem necessary in accordance
with SECTION 4.12 hereof.
"BUSINESS DAY" means a day other than a Saturday, Sunday or a
day on which commercial banks in San
Antonio, Texas, are authorized to be
closed.
"CLOSING DATE" means the Closing Date specified in EXHIBIT C.
"CODE" means the Uniform Commercial Code of the State of Texas
or of any other state having jurisdiction
with respect to any of the Rights of
Lender under the Loan Documents.
"COMMITMENT FEE" means the Commitment Fee specified in EXHIBIT
B, to be paid to Lender in consideration of
the commitment of Lender to make the
proceeds of the Loan available to Borrower
from time to time during the term of,
and as provided in, this Agreement. Unless
otherwise provided in EXHIBIT B, the
Commitment Fee shall be paid to Lender on
the date hereof.
"COMPLETION DATE" means the Completion Date specified in
EXHIBIT
C.
"CONSTRUCTION CONTRACT" means each agreement made by Borrower
for construction of the Improvements.
"CONTRACTOR" means each Person with whom Borrower makes a
Construction Contract.
"CONTRACTOR'S AGREEMENT" means a written agreement (if
expressly
required to be delivered by Borrower on
EXHIBIT B to this Agreement) duly
executed by Contractor in favor of Lender
(a) consenting to the assignment and
encumbrance hereunder of the Construction
Contract; (b) agreeing to continue
performance under the Construction Contract
at the request and for the benefit
of Lender or its designee; (c)
subordinating all liens, security interests and
claims of Contractor against the Property
or Borrower, to those of Lender under
the Loan Documents; and (d) respecting such
other matters as Lender may require.
"CURRENT DATE" means a date within thirty (30) days prior to
the
Closing Date.
"DEBTOR RELIEF LAWS" means any applicable liquidation,
conservatorship, bankruptcy, moratorium,
arrangement, insolvency,
reorganization, or other similar laws,
domestic or foreign, including but not
limited to those in Title 11 of the United
States Code, as amended from time to
time, affecting the rights or remedies of
creditors generally, as in effect from
time to time.
"DEED OF TRUST" means the Deed of Trust, Security Agreement and
Financing Statement covering the Land and
Improvements to secure payment and
performance of the Obligation.
"DEFAULT" has the meaning set forth in ARTICLE V and in any
other provision hereof using the term.
"ENGINEER" means Borrower's engineer licensed in the State of
Texas, acceptable to Lender, and named in
EXHIBIT C.
"ENGINEER'S AGREEMENT" means a written agreement duly executed
by Engineer in favor of Lender (a)
consenting to the assignment and encumbrance
hereunder of the Plans and of
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
Borrower's Rights in the Engineering
Contract, if any; (b) agreeing to continue
performance under the Engineering Contract,
if any, at the request and for the
benefit of Lender or its designee; (c)
certifying that the Plans comply with all
applicable Governmental Requirements (and
have been approved, if required), and
that the Improvements if constructed
substantially in accordance with the Plans
will have direct and free access (adequate
for the intended uses of the Land and
Improvements) to and connection with one or
more dedicated public streets and
thoroughfares and water, storm and sanitary
sewer, drainage, gas, electric and
telephone lines, pipes, facilities and
services; (d) subordinating all liens,
security interests and claims of Engineer
against the Property, Borrower and the
Plans, to those of Lender under the Loan
Documents; and (e) respecting such
other matters as Lender may require.
"ENGINEERING CONTRACT" means a written agreement between
Borrower and Engineer for engineering
services pertaining to construction of the
Improvements.
"FINANCIAL STATEMENTS" means financial information of Borrower
and of Guarantor, as set forth in SECTION
4.16 hereof, as, at the time in
question, have been most recently furnished
to Lender.
"GOVERNMENTAL AUTHORITY" means the United States, the state,
the
county, the city or any other political
subdivision in which the Property is
located, and any court or political
subdivision, agency, or instrumentality
having jurisdiction over Borrower,
Guarantor or the Property.
"GOVERNMENTAL REQUIREMENTS" means all statutes, laws,
ordinances, rules, regulations, orders,
writs, injunctions or decrees of any
Governmental Authority applicable to
Borrower, Guarantor or the Property.
"GUARANTOR" means, jointly and severally, the guarantors
(whether one or more) named in EXHIBIT
C.
"GUARANTY" means a continuing guaranty (whether one or more) of
the Obligation executed by Guarantor.
"IMPROVEMENTS" means the Improvements identified in EXHIBIT C
and more particularly described in the
Plans, and any items, related to the
construction, installation, equipping or
decoration of the Improvements,
required by any lease but not covered by
the Plans.
"INSPECTING ARCHITECTS/ENGINEERS" means Inspecting
Architects/Engineers, if any, specified by
Lender from time to time.
"LAND" means the real estate described in EXHIBIT A.
"LENDER" means Lender named in the first paragraph of this
Agreement and its successors and assigns,
in whole or in part.
"LOAN" means the Loan by Lender to Borrower pursuant to this
Agreement.
"LOAN DOCUMENTS" means this Agreement, the Note, the Guaranty,
the Deed of Trust, and such other documents
evidencing, securing or pertaining
to the Loan as shall from time to time be
executed and delivered to Lender by
Borrower, Guarantor or any other party
pursuant to this Agreement, including,
without limitation, each Affidavit of
Borrower, each Application for
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
Advance, and the Approved Budget, and any
future amendments or supplements
hereto or thereto.
"MARGIN STOCK" has the meaning given thereto in Section
221.3(v)
of Regulation U, promulgated by the Board
of Governors of the Federal Reserve
System, F.R.S. Reg. U., 12 C.F.R. part 221
(January 1, 1983 revision), as
amended from time to time.
"MATERIAL ADVERSE CHANGE" means any occurrence or combination
of
occurrences which could reasonably be
expected to be material and adverse to the
financial condition or business operation
of Borrower or Guarantor or which
could reasonably be expected to cause a
Default.
"NOTE" means the Promissory Note made by Borrower payable to
the
order of Lender in the maximum amount of
and evidencing the Loan.
"OBLIGATION" means all present and future indebtedness,
obligations and liabilities of Borrower to
Lender arising pursuant to this
Agreement or any of the other Loan
Documents or otherwise, and any renewals,
extensions or amendments thereof, or any
part thereof, regardless of whether
such indebtedness, obligations and
liabilities are direct, indirect, fixed,
contingent, liquidated, unliquidated,
joint, several or joint and several.
"PERSON" means any individual, firm, corporation, association,
partnership, joint venture, trust, other
entity, unincorporated organization or
Governmental Authority.
"PLANS" means the final working drawings and specifications for
the construction of the Improvements
(including soil reports and engineering
calculations) prepared by Engineer and as
modified or supplemented from time to
time and approved by Lender, Borrower, any
lessee of the Property, if
applicable, and, to the extent necessary,
by each Governmental Authority.
"PRINCIPAL DEBT" means the aggregate unpaid balance of all
Advances of the Loan and all other
principal indebtedness, if any, under the
Note at the time in question.
"PROPERTY" means the Land, the Improvements and all other
property, real and personal, now or
hereafter subject to a right, lien or
security interest to secure the Loan as
described herein, in the Deed of Trust
or in any of the other Loan Documents.
"RIGHTS" means rights, remedies, powers and privileges.
"SECURITY AGREEMENT" means the security agreement contained in
the Deed of Trust securing the payment and
performance of the Obligation,
covering as collateral the personal
property (including money), tangible and
intangible, used or useful in connection
with, or arising out of any part of,
the Property and any additional collateral
specified in EXHIBIT B and the
proceeds of the collateral.
"SURVEY" means a survey of the Land consisting of a plat and
field notes, prepared by a licensed
surveyor acceptable to Lender and the Title
Company which survey shall: (a) reflect the
actual dimensions of the Land, the
gross and net area of the Land, the
location of any easements, rights-of-way,
setback lines, encroachments or overlaps
thereof or thereover and the outside
boundary lines of any improvements located
thereon; (b) identify by recording
reference any easements, setback lines or
other matters referred to in the Title
Commitment; (c) include the surveyor's
registration number and seal and the date
of the Survey; (d) include a surveyor's
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
certificate acceptable to Lender; (e)
reflect that the Land has access to and
from a publicly dedicated street, roadway
or highway; (f) be sufficient to cause
the Title Company to delete the "survey
exception" in Schedule B of the Title
Policy to the extent permitted by the rules
of the State Board of Insurance; and
(g) reflect the area within the Land that
has been designated by the Federal
Insurance Administration, the Army Corps of
Engineers or any other governmental
agency or body as being subject to special
or increased flood hazards.
"TITLE COMPANY" means the title company or title companies
named
in EXHIBIT C.
"TITLE POLICY" means a mortgagee title insurance policy (or
policies), and any reinsurance agreement
(or agreements) issued by the Title
Company in accordance with EXHIBIT E.
1.02
HEADINGS. The headings, captions, and arrangements used in any
of the Loan Documents are, unless specified
otherwise, for convenience only and
shall not be deemed to limit, amplify, or
modify the terms of the Loan Documents
nor to affect the meaning thereof.
1.03
NUMBER AND
GENDER OF WORDS. Whenever herein the singular number
is used, the same shall include the plural
where appropriate, and words of any
gender shall include each other gender
where appropriate. Reference herein to
Borrower or to Guarantor shall mean,
jointly and severally, each Person
comprising same.
1.04
MONEY. Unless stipulated otherwise, all references herein or in
any of the Loan Documents to "Dollars,"
"money," "payments," or other similar
financial or monetary terms are references
to currency of the United States of
America.
1.05
ARTICLES, SECTIONS AND EXHIBITS. All references herein to
Articles and Sections are, unless specified
otherwise, references to articles
and sections of this Agreement. All
references herein to an "Exhibit," "Annex"
or "Schedule" are references to exhibits,
annexes or schedules attached hereto,
all of which are made a part hereof for all
purposes, the same as if set forth
herein verbatim, it being understood that
if any exhibit, annex or schedule
attached hereto, which is to be executed
and delivered, contains blanks, the
same shall be completed correctly and in
accordance with the terms and
provisions contained and as contemplated
herein prior to or at the time of the
execution and delivery thereof. The words
"herein," "hereof," "hereunder" and
other similar compounds of the word "here"
when used in this Agreement shall
refer to the entire Agreement and not to
any particular provision or section.
ARTICLE II
COMMITMENT TO LEND; ADVANCES
2.01
COMMITMENT TO LEND. Subject to and upon the terms, covenants,
and conditions hereof, Lender hereby agrees
to lend to Borrower an aggregate sum
not in excess of FOUR MILLION FIVE HUNDRED
FIFTY THOUSAND AND NO/100 DOLLARS
($4,550,000.00), in Advances, from time to
time prior to 2:00 p.m., San Antonio,
Texas, time on the Completion Date. An
amount repaid may not be reborrowed.
2.02
INTEREST. Interest at the rate specified in the Note shall be
computed on the Principal Debt which exists
from time to time and shall be
computed with respect to each Advance only
from the date of the Advance.
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
2.03
PROCEDURE FOR BORROWING. Lender shall not be required to make
Advances more frequently than specified in
EXHIBIT C. Each Application for
Advance shall be submitted by Borrower to
Lender a reasonable time (but not less
than five Business Days) prior to the
requested date (which must be a Business
Day) of the Advance. Except as Lender may
otherwise determine from time to time,
each Advance will be made at Lender's
principal office.
2.04
ADVANCES. Advances shall be made only for costs and expenses
specified in the Approved Budget, and then
only for work performed, services
rendered or materials furnished; no Advance
shall be made for advance or
unearned payments. Advances for payment of
costs of construction of the
Improvements shall be made only after
actual commencement of construction of the
Improvements and shall not exceed the
aggregate of (a) the costs of labor,
materials and services incorporated into
the Improvements in a manner acceptable
to Lender, plus (b) if approved by Lender,
the purchase price of all uninstalled
materials to be utilized in the
construction of the Improvements stored on the
Property, or elsewhere with the written
consent of and in a manner acceptable to
Lender, less (c) retainage, if any,
specified in EXHIBIT C, and less (d) all
prior Advances for payment of costs of
labor, materials and services for the
construction of the Improvements. Without
limitation of other conditions
applicable thereto, the final Advance,
including all retainage, if applicable,
will not be made until Lender has received
the following: (1) an Affidavit of
Completion complying with ss.53.106 of the
Texas Property Code and a completion
certificate from Engineer and from
Inspecting Architects/Engineers, if any, (2)
evidence that all Governmental Requirements
have been satisfied, (3) evidence
that no mechanic's or materialmen's liens
or other encumbrances have been filed
and remain in effect against the Property,
and (4) final lien releases or
waivers by Engineer, Contractor and all
subcontractors, materialmen and other
parties who have supplied labor, materials
or services for the construction of
the Improvements, or who otherwise might be
entitled to claim a contractual,
statutory or constitutional lien against
the Property, and (5) evidence
reasonably acceptable to Lender verifying
that the Improvements as completed do
not encroach on any boundary line,
easement, building setback line or other
restricted area. To the extent that the
Improvements are divided into phases or
identifiable segments, references in the
preceding sentence to a final Advance
shall include each final Advance with
respect to such a phase or segment.
2.05
CONDITIONS TO THE FIRST ADVANCE. As conditions precedent to the
first Advance, Borrower must satisfy the
conditions required hereby and execute
and deliver to, procure for and deposit
with, and pay to Lender, and if
appropriate record in the proper records
with all filing and recording fees
paid, the documents, certificates, and
other items referred to in EXHIBIT B,
together with such other documents,
certificates and items as Lender may
reasonably require from time to time.
Except as otherwise specifically provided
herein or agreed in writing by Lender, all
such documents, certificates and
other items shall bear a Current Date.
2.06
CONDITIONS TO EACH ADVANCE. As conditions precedent to each
Advance, including the first Advance, in
addition to all other requirements
herein, Borrower must satisfy the following
requirements and, if required by
Lender, deliver to Lender evidence of such
satisfaction:
(a)
All conditions precedent to the first Advance or stated
elsewhere herein shall have been
satisfied.
(b)
There shall then exist no Default nor shall there have
occurred any event which with the giving of
notice or the lapse of time, or
both, could become a Default.
(c)
The representations and warranties made in this
Agreement shall be true and correct on and
as of the date of each Advance, and
the request for an Advance shall
constitute
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
the representation and warranty by Borrower
that such representations and
warranties are true and correct at such
time.
(d)
The
Title Policy shall be endorsed and extended, if
required by Lender, to cover each Advance
with no additional title exceptions
objectionable to Lender.
(e)
Borrower shall procure and deliver to Lender, if
required by Lender, releases or waivers of
mechanic's liens and receipted bills
showing payment of all amounts due to all
parties who have furnished materials
or services or performed labor of any kind
in connection with the construction
of any of the Improvements or otherwise
with respect to the Property.
(f)
An inspection of and acceptable report on the
Improvements by Inspecting
Architects/Engineers, at Borrower's sole cost and
expense.
(g)
The sum of the Principal Debt plus the amount of the
requested Advance shall not be in excess of
the amount then available under
SECTION 2.01.
2.07
APPROVED BUDGET ALLOCATIONS. Lender shall not be obligated to
make an Advance of an item allocated in the
Approved Budget to the extent that
the amount of the Advance of such item when
added to the amount of prior
Advances of such item would exceed the
amount allocated to such item in the
Approved Budget. Lender reserves the right
to make Advances which are allocated
to any of the items in the Approved Budget
for such other items therein or in
such different proportions as Lender may,
in its sole discretion, deem necessary
or advisable. Borrower may not reallocate
items of cost in or change the
Approved Budget without the prior written
consent of Lender which will not be
unreasonably conditioned, delayed or
withheld.
2.08 NO
WAIVER. No Advance shall constitute a waiver of any condition
precedent to the obligation of Lender to
make any further Advance or preclude
Lender from thereafter declaring the
failure of Borrower to satisfy such
condition precedent to be a Default.
2.09
CONDITIONS PRECEDENT FOR THE BENEFIT OF LENDER. All conditions
precedent to the obligation of Lender to
make any Advance are imposed hereby
solely for the benefit of Lender, and no
other party may require satisfaction of
any such condition precedent or be entitled
to assume that Lender will refuse to
make any Advance in the absence of strict
compliance with such conditions
precedent. Any requirement of this
Agreement may be waived by Lender, in whole
or in part, at any time. Any requirement
herein of submission of evidence of the
existence or nonexistence of a fact means
that the fact shall exist or not
exist, as the case may be, and without
waiving any condition or any obligation
of Borrower, Lender may at all times
independently establish to its satisfaction
such existence or nonexistence.
2.10
SUBORDINATION. Lender shall not be obligated to make, and
Borrower shall not be entitled to, any
Advance until such time as Lender shall
have received, to the extent requested by
Lender, subordination agreements from
Engineer, Contractor and all other Persons
furnishing labor, materials or
services for the design or construction of
the Improvements, subordinating to
the lien of the Deed of Trust and the
Rights of Lender thereunder any lien,
claim or charge they may have against
Borrower or the Property.
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower hereby represents and warrants as follows:
3.01
FINANCIAL STATEMENTS. The Financial Statements are true,
correct
and complete as of the dates specified
therein and fully and accurately present
the financial condition of Borrower and of
Guarantor as of the dates specified.
Since the date of the Financial Statements,
no Material Adverse Change has
occurred in the financial condition of
Borrower or Guarantor nor, except as
heretofore disclosed in writing to Lender,
has Borrower or Guarantor incurred
any material liability, direct or indirect,
fixed or contingent. Borrower is
solvent.
3.02
SUITS, ACTIONS, ETC. There are no actions, suits or proceedings
pending or to the knowledge of Borrower
threatened before or by any Governmental
Authority against or affecting Borrower,
Guarantor or the Property, or involving
the validity, enforceability or priority of
any of the Loan Documents. Neither
Borrower nor Guarantor is, and the
consummation of the transactions contemplated
hereby and the performance or satisfaction
of any of the terms or conditions
hereof and of the other Loan Documents will
not cause Borrower or Guarantor to
be, in violation of or in default with
respect to any Governmental Requirement
or in default (or provide cause for
acceleration of indebtedness) under any
mortgage, deed of trust, lease, promissory
note, loan agreement, credit
agreement, partnership agreement or other
agreement or restriction to which
Borrower or Guarantor is a party or by
which Borrower or Guarantor or the
Property may be bound or affected.
Borrower's development of the Land and
Improvements and any sale or lease thereof
by Borrower are and shall be exempt
from the registration and reporting
requirements of the Interstate Land Sales
Full Disclosure Act and regulations
thereunder as amended from time to time.
3.03
STATUS OF BORROWER; VALID AND BINDING OBLIGATION. If Borrower
is
a corporation, partnership or other entity,
Borrower is and shall until the
Obligation is fully discharged continue to
be (a) duly organized and validly
existing and in good standing under the
laws of the state of its organization,
and in good standing under Texas law; (b)
in compliance with all conditions
prerequisite to its lawfully doing business
in Texas; and (c) possessed of all
power and authority necessary to own the
Property, to construct and operate the
Improvements, to enter into and perform
Borrower's obligations under the Loan
Documents and to make the borrowings
contemplated hereby. All of the Loan
Documents, and all other documents referred
to herein to which Borrower or
Guarantor is a party, upon execution and
delivery will constitute valid and
binding obligations of Borrower or
Guarantor, as the case may be, enforceable in
accordance with their terms except as the
enforcement thereof may be limited by
Debtor Relief Laws.
3.04 TITLE
TO THE PROPERTY. Borrower is the legal and equitable fee
simple absolute owner of the Land and all
improvements thereon subject only to
title exceptions (specified in the Title
Policy) which are hereafter accepted by
Lender.
3.05
COMMENCEMENT OF CONSTRUCTION. Prior to the recordation of the
Deed of Trust, no work of any kind
(including the destruction or removal of any
existing improvements, site work, clearing,
grubbing, draining or fencing of the
Land) shall have commenced or shall have
been performed on the Land, no
equipment or material shall have been
delivered to or upon the Land for any
purpose whatsoever, and no contract (or
memorandum or affidavit thereof) for the
supplying of labor, materials, or services
for the construction of the
Improvements shall have been executed or
recorded in any mechanic's lien or
other public records.
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
3.06
PURPOSE OF LOAN. The proceeds of the Loan will be used for the
purposes specified in the Approved Budget.
Such proceeds are not and will not be
used directly or indirectly for personal,
family, household or agricultural
purposes or for the purpose of purchasing
or carrying any Margin Stock or for
the purpose of extending credit to others
for the purpose of purchasing or
carrying any Margin Stock.
3.07 NO
FAILURE TO DISCLOSE. No representation or warranty made by
Borrower under this Agreement and no
document, instrument or certificate
furnished, to be furnished or caused or to
be caused to be furnished by Borrower
or Guarantor to Lender in anticipation of
or pursuant to this Agreement contains
or will contain any untrue statement of a
material fact or omits or will omit to
state a material fact necessary to make the
statements contained therein not
misleading.
ARTICLE IV
COVENANTS AND AGREEMENTS OF BORROWER
Borrower hereby covenants and agrees as follows:
4.01
HAZARD AND OTHER INSURANCE. (a) Borrower shall obtain and
maintain the insurance coverage required by
EXHIBIT F and any other Loan
Documents and shall furnish to Lender
promptly upon request a certificate or
certificates from the respective insurer(s)
setting forth the nature and extent
of all such insurance maintained by
Borrower and the originals of each insurance
policy (or to the extent permitted by
Lender, a certified copy of the original
policy and a satisfactory certificate of
insurance) with premiums fully paid.
Any such insurance may be evidenced by
blanket insurance policies covering the
Property and other property and assets,
provided that each policy otherwise
complies with the requirements of the Loan
Documents and specifies the amount
(if less than all) of the total coverage
that is allocated to the Property.
Borrower shall not take out separate
insurance concurrent in form or
contributing in the event of loss with that
required to be maintained hereunder
unless Lender is included thereon under a
standard mortgagee clause (without
contribution) acceptable to Lender, with
loss payable as provided herein. All
insurance shall be primary without right of
contribution from any other
insurance that may be carried by Borrower
or Lender and that all of the
provisions thereof shall operate in the
manner as if there were a separate
policy covering each insured. Borrower
shall immediately notify Lender whenever
any such separate insurance is taken out
and shall promptly deliver to Lender
any policy or certificate of such separate
insurance. Such insurance shall be in
the form of an all-risk insurance policy
meeting the requirements of EXHIBIT F,
which policy is satisfactory to Lender.
(b)
Not later than ten (10) days before the expiration date of any
such insurance policy, Borrower shall
deliver to Lender a binder or certificate
of the insurer evidencing the renewal or
replacement of that policy, with
premiums fully paid together with (in the
case of a renewal) a copy of all
endorsements to the policy affecting the
Property and not previously delivered
to Lender, or (in the case of a
replacement) an original or certified copy of
the replacement policy. Borrower shall pay
all premiums on policies required
hereunder as they become due and payable
and promptly deliver to Lender evidence
satisfactory to Lender of the timely
payment thereof. Borrower shall at all
times comply with the requirements of the
insurance policies required hereunder
and of the issuers of such policies and of
any board of fire underwriters or
similar body as applicable to or affecting
the Property.
(c)
If Borrower fails to obtain and/or maintain the insurance
required under the Loan Documents, (i)
Borrower will indemnify and hold Lender
harmless from and against any damage, loss,
liability or expense resulting from
all risks that would have been covered by
the required
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
insurance if so maintained; (ii) if any
loss occurs, Lender shall nevertheless
be entitled to the benefit of all insurance
covering the loss and held by or for
Borrower, to the same extent as if it had
been made payable to Lender; and (iii)
Lender has the right (but not the
obligation) to obtain such insurance at
Borrower's expense, which may at Lender's
election be coverage for Lender's
interest only, the costs and expenses so
expended by Lender shall be due and
payable by Borrower on demand, a part of
the Obligation, even if in excess of
the amount set forth in SECTION 2.01, and
secured by the Loan Documents. If any
hazard, title, or other insurer becomes
insolvent or subject to any bankruptcy,
receivership or similar proceeding or if,
in Lender's reasonable opinion the
financial responsibility of such insurer is
or becomes inadequate, Borrower
shall promptly obtain and deliver to Lender
a like policy (or, if and to the
extent permitted by Lender, a certified
copy of the policy or a satisfactory
certificate of insurance) issued by another
insurer, which insurer and policy
meet the requirements of the Loan
Documents.
(d)
Upon any foreclosure of the Deed of Trust or transfer of title
to the Property in lieu of foreclosure, all
of Borrower's right, title and
interest in and to the insurance policies
referred to in this Section (including
unearned premiums) and all proceeds payable
thereunder shall thereupon vest in
the purchaser at foreclosure or other such
transferee to the extent permissible
under such policies.
(e)
Lender has the right (but not the obligation) to make proof of
loss for, settle and adjust any claim
under, and receive the proceeds of, all
insurance for loss of or damage to the
Property, and the costs and expenses
(including reasonable attorneys' fees),
appraisal costs, and consultant fees
incurred by Lender in the adjustment and
collection of insurance proceeds shall
be due and payable by Borrower on demand, a
part of the Obligation, even if in
excess of the amount set forth in SECTION
2.01, and secured by the Loan
Documents. Lender shall not be, under any
circumstances, liable or responsible
for failure to collect or exercise
diligence in the collection of any of such
proceeds or for the obtaining, maintaining
or adequacy of any insurance or for
failure to see to the proper application of
any amount paid over to Borrower.
(f)
Borrower shall take all necessary action, with Lender's
consent,
to obtain the benefit of any insurance
proceeds lawfully or equitably payable to
Borrower or Lender in connection with any
loss of or damage to the Property, all
of which shall be paid directly to Lender,
whether or not the security for the
Loan has been impaired or otherwise
affected, and applied first to reimburse
Lender and the Trustee for all unreimbursed
costs and expenses, including
attorney's fees, incurred in connection
with the collection of such proceeds and
the balance of such proceeds shall, at
Lender's option in its sole discretion,
be (i) released to Borrower, (ii) applied
to repair or restoration, either
partly or entirely, of the Property so
damaged, on conditions required by
Lender, or (iii) applied to the payment of
the Obligation, whether or not due,
in such order and manner as Lender may
elect in its sole discretion. In any
event, the unpaid portion of the Obligation
shall remain in full force and
effect and the payment thereof shall not be
excused.
4.02
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. All Governmental
Requirements shall be timely complied with
and evidence thereof delivered to
Lender. Borrower assumes full
responsibility for the compliance of the Plans and
the Property with all Governmental
Requirements and with sound building and
engineering practices, and notwithstanding
any approvals by Lender, Lender shall
have no obligation or responsibility for
the Plans or any other matter incident
to the Property or the construction of the
Improvements.
4.03
CONSTRUCTION CONTRACTS. Borrower shall become party to no
contract, including any Construction
Contract, for the performance of any work
on the Property or for the supplying of any
labor, materials, or services for
the construction of the Improvements except
upon such terms and
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
with such parties as shall be approved in
writing by Lender. Each Construction
Contract shall provide that all liens,
claims and charges of Contractor are
subordinate to the Deed of Trust and the
Rights of Lender thereunder and shall
require all subcontracts to contain a
provision subordinating the
subcontractors' liens, claims and charges
to the Deed of Trust and the Rights of
Lender thereunder. Each Construction
Contract shall also provide that no change
orders shall be effective without the prior
written approval of Lender. No
approval by Lender of any Construction
Contract or change order shall make
Lender responsible for the adequacy, form
or content of any Construction
Contract or change order.
4.04
UTILITIES; ACCESS. Borrower shall take all steps necessary to
provide that (a) all utility services
necessary for the construction of the
Improvements and the operation thereof for
their intended purposes are available
for connection to the Improvements,
including water supply, storm and sanitary
sewer, drainage facilities, and gas,
electric and telephone facilities; and (b)
either all roads necessary for access to
and from the Property have been
completed or the necessary rights-of-way
therefor have been acquired by the
appropriate Governmental Authority or
dedicated to the public use and accepted
by such Governmental Authority, and all
necessary steps have been taken by
Borrower and such Governmental Authority to
assure the complete construction and
installation thereof prior to the
Completion Date.
4.05
CONSTRUCTION OF THE IMPROVEMENTS. The construction of the
Improvements shall be prosecuted with
diligence and continuity in a good and
workmanlike manner and in accordance with
sound building and engineering
practices, all applicable Governmental
Requirements, and the Plans. Borrower
shall commence construction of the
Improvements within sixty (60) days from the
date of this Agreement and shall not permit
cessation of work for a period in
excess of ten (10) days, except cessation
for not more than thirty (30) days in
the aggregate caused by acts of God or
other causes not within the control of
Borrower, without the prior written consent
of Lender and shall complete
construction of the Improvements on or
before the Completion Date, free and
clear of all liens except the lien of the
Deed of Trust.
4.06
CORRECTION OF DEFECTS. Borrower shall correct or cause to be
corrected (a) any defect in the
Improvements; (b) any material departure in the
construction of the Improvements from the
Plans on the Governmental Requirements
or the requirements of any lease, if
applicable; or (c) any encroachment by any
part of the Improvements or any structure
located on the Land on any building
line, easement, property line, or
restricted area.
4.07
STORAGE OF MATERIALS. Borrower shall cause all materials
supplied for, or intended to be utilized
in, the construction of the
Improvements, but not affixed to or
incorporated into the Improvements or the
Property, to be stored on the Land or at
such other location as may be approved
by Lender in writing, with adequate
safeguards, as required by Lender, to
prevent and insure against loss, theft,
damage, or commingling with other
materials or projects. With respect to
materials not stored on the Land,
Borrower shall execute and deliver such
financing statements and security
agreements as Lender shall require to
evidence and perfect Lender's security
interest therein.
4.08
INSPECTION OF THE PROPERTY. Borrower shall permit Lender,
Inspecting Architects/Engineers, any
Governmental Authority and their agents and
representatives to enter upon the Property
and any location where materials
intended to be utilized in the construction
of the Improvements are stored for
the purpose of inspection of the Property
and such materials at all reasonable
times.
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
4.09
NOTICES BY GOVERNMENTAL AUTHORITY; FIRE AND CASUALTY LOSSES,
ETC. Borrower shall timely comply with and
promptly furnish to Lender true and
complete copies of any notice or claim by
any Governmental Authority pertaining
to the Property. Borrower shall promptly
notify Lender of any fire or other
casualty or any notice of taking or eminent
domain action or proceeding
affecting the Property. Borrower shall
maintain the insurance policies required
hereunder in full force and effect until
the Obligation is fully paid and
performed.
4.10
SPECIAL ACCOUNT. Borrower shall maintain a special account with
Lender (with a minimum balance of
$1,000.00) into which all Advances (but no
other funds) and excluding direct
disbursements made by Lender pursuant to this
Agreement shall be deposited by Borrower
and against which checks shall be drawn
only for the payment of (a) costs of labor,
materials and services supplied for
the construction of the Improvements
specified in the Approved Budget; and (b)
other costs and expenses incident to the
Loan, the Property, and the
construction of the Improvements specified
in the Approved Budget.
4.11
APPLICATION OF ADVANCES. Borrower shall disburse all Advances
for payment of costs and expenses specified
in the Approved Budget and for no
other purpose.
4.12
BORROWER'S DEPOSIT. If from time to time Lender reasonably
determines that the unadvanced portion of
the Loan will be insufficient for
payment in full of (a) costs of labor,
materials and services required for the
construction of the Improvements; (b) other
costs and expenses specified in the
Approved Budget; and (c) other costs and
expenses required to be paid in
connection with the construction of the
Improvements in accordance with the
Plans, or any Governmental Requirements,
then Borrower shall, on request of
Lender, make a Borrower's Deposit with
Lender. Lender may advance all or a
portion of Borrower's Deposit prior to any
portion of the Loan proceeds.
Borrower shall promptly notify Lender in
writing if and when the cost of the
construction of the Improvements exceeds,
or appears likely to exceed, the
amount of the unadvanced portion of the
Loan and the unadvanced portion of any
then existing Borrower's Deposit.
4.13
DIRECT DISBURSEMENT AND APPLICATION BY LENDER. Lender shall
have
the right, but not the obligation, to
disburse and apply directly the proceeds
of any Advance to the satisfaction of any
of Borrower's obligations hereunder.
Any Advance by Lender for such purpose,
except Borrower's Deposit, shall be part
of the Loan and shall be secured by the
Loan Documents. Borrower hereby
authorizes Lender to hold, use, disburse
and apply the Loan and Borrower's
Deposit for payment of costs of
construction of the Improvements, expenses
incident to the Loan and the Property and
the payment or performance of any
obligation of Borrower hereunder. Borrower
hereby assigns and pledges the
proceeds of the Loan and Borrower's Deposit
and grants therein a security
interest to Lender for such purposes.
Lender may advance and incur such expenses
as Lender reasonably deems necessary to
preserve the Property, and any other
security for the Loan, and such expenses
shall be secured by the Loan Documents
and payable to Lender upon demand. Lender
may disburse any portion of any
Advance at any time, and from time to time,
to persons other than Borrower for
the purposes specified in this Section
irrespective of any other provision
hereof, and the amount of Advances to which
Borrower shall thereafter be
entitled shall be correspondingly
reduced.
4.14 COSTS
AND EXPENSES. Borrower shall pay when due all costs and
expenses required by this Agreement,
including, without limitation (a) all taxes
and assessments applicable to the Property;
(b) all fees for filing or recording
any Loan Documents; (c) all fees and
commissions lawfully due to brokers,
salesmen and agents in connection with the
Loan, or the Property; (d) all
reasonable fees and expenses of counsel to
Lender in connection with the
negotiation,
CONSTRUCTION LOAN AGREEMENT
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Exhibit 99.1
preparation, interpretation, amendment or
enforcement of any of the Loan
Documents, the making of any Advance, or
any suit to which Lender is a party
involving this Agreement or the Property;
(e) all title insurance and title
examination charges, including premiums for
the Title Policy; (f) all survey
costs and expenses, including the cost of
the Survey; (g) all premiums for the
insurance policies as required hereunder;
and (h) all other reasonable costs and
expenses payable to third parties incurred
by Lender in connection with the
consummation of the transactions
contemplated by this Agreement.
4.15
ADDITIONAL DOCUMENTS. Borrower
