Exhibit 10.1
CONSTRUCTION LOAN
AGREEMENT
This Construction Loan Agreement
(“Agreement”) is made and entered into as of
February 6, 2009, by First Credit Bank, a California banking
corporation (“Lender”), and Fox Properties LLC, a
Delaware limited liability company (“Borrower”), with
reference to the following facts:
A. Borrower is in the process of
completing construction of Phase I of a 360,000 square foot
data center and office building (the “Project”) located
on a 30.44 acre parcel of real property commonly known as 44521
Hastings Drive, Ashburn, Virginia (the “Property”) more
particularly described on Exhibit A which is attached
hereto and incorporated herein by this reference.
B. Lender has agreed to provide
Borrower with construction financing in the amount of Twenty Five
Million Dollars ($25,000,000.00) (the “Loan”). Borrower
shall use proceeds of the Loan to finance in part the construction
and development of the Project and other costs and expenses
approved by Lender.
C. The Project shall be renovated
and constructed by Holder Construction Group, LLC (the
“Contractor”) approved by Lender and in accordance with
plans and specifications submitted to and approved by Lender and
identified on Schedule 1 hereof (the “Plans and
Specifications”), which Borrower represents constitutes the
complete set of plans and specifications for the
Project.
D. The Loan shall be evidenced by a
Note of even date herewith (the “Note”) in the amount
of the Loan, executed by Borrower and payable to Lender. Repayment
of the Loan and performance of all other monetary and nonmonetary
obligations of Borrower to Lender in connection with the Loan shall
be secured by a Construction Deed of Trust, Assignment of Rents,
Security Agreement and Fixture Filing of even date herewith (the
“Deed of Trust”) covering the Property; by the pledge
of a cash collateral account in the amount of $4,000,000.00 funded
concurrently with the execution and delivery of the Note and
maintained at Lender (the “Pledge Agreement”); by an
Assignment of Architect’s Contract and Plans and
Specifications of even date herewith (the “Assignment of
Architect’s Contract and Plans and Specifications”); by
an Assignment of Building Contracts of even date herewith (the
“Assignment of Building Contracts”); and by a financing
statement of even date herewith (the “Financing
Statement”) covering personal property of Borrower. In
addition, Borrower’s monthly installments of interest and
principal (to the extent installments of principal become due under
the terms of the Loan Documents) that are scheduled to be paid
prior to maturity shall be guaranteed by DuPont Fabros Technology,
L.P. (“Guarantor”) pursuant to a guaranty of even date
herewith (the “Guaranty”). This Agreement, the Note,
the Deed of Trust, the Pledge Agreement, the Assignment of
Architect’s Contract and Plans and Specifications, the
Assignment of Building Contracts, the Financing Statement, the
Guaranty and all other instruments evidencing and/or securing the
Loan are referred to collectively herein as the “Loan
Documents”).
E. The parties now desire to set
forth their agreement regarding disbursement of the proceeds of the
Loan as hereinafter set forth.
NOW, THEREFORE, the parties hereto
agree as follows:
1 Disbursement of Loan
Proceeds . Provided that Borrower has fulfilled all conditions
set forth in that certain Construction Loan Commitment (the
“Loan Commitment”) executed by Lender and Borrower and
dated December 31, 2008 and all of the loan closing conditions
set forth in this Agreement, Lender shall disburse proceeds of the
Loan into an account (the “Construction Loan Account”)
to be controlled by Lender subject to the provisions of this
Agreement. Lender’s loan closing conditions shall include,
but shall not be limited to, the following:
1.1 Loan Documents . Lender
must receive all Loan Documents duly executed, in form approved by
Lender (including, without limitation, duly executed consents to
the Assignment of Architect’s Contract and Plans and
Specifications and the Assignment of Building Contracts), and the
Deed of Trust must be duly recorded.
1
1.2 Other Instruments and
Documents . Lender must receive all other instruments and
documents reasonably required by Lender in connection with the
Loan, duly executed and in form approved by Lender, including but
not limited to the following:
(i) a subordination, nondisturbance
and attornment agreement and estoppel certificate executed by each
entity, if any, having a leasehold interest in the
Property;
(ii) true and correct copies of the
AIA Standard Form of Agreement dated June ,
2008 between Borrower and the Contractor (the “Construction
Contract”), the Professional Services Agreement dated
November 12, 2007 (the “Architect Contract”)
between Borrower and Donnally Vujcic Associates LLC (the
“Architect”), the Professional Services Agreement dated
December 20, 2007 (the “Engineering Contract”)
between Borrower and CCG Facilities Integration Incorporated (the
“Engineer”) and the mechanical and electrical
subcontracts;
(iii) true and correct copies of all
operating agreements, utility agreements, access rights, easements
and other agreements deemed necessary, in the sole discretion of
Lender, for the uninterrupted and orderly operation of the
Project;
(iv) an opinion or opinions of
counsel to Borrower and/or Guarantor respecting such matters as
Lender may reasonably request, including without limitation
counsel’s opinion that Borrower and/or Guarantor has the
necessary power to enter into the Loan transaction; that all
documents executed by Borrower and/or Guarantor pertaining to the
Loan are valid and binding obligations of Borrower and/or
Guarantor, enforceable according to their terms, except as limited
by applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws now or hereafter in effect and affecting the
rights of creditors generally; and that there is no known
litigation pending or threatened affecting the Project.
1.3 Title Insurance .
Fidelity National Title Insurance Company (the “Title
Company”) has issued to Lender its ALTA lender’s policy
of title insurance with a liability limit of not less than the
amount of the Note, insuring the lien of Lender’s Deed of
Trust to be a first lien on the Property, subject only to such
exceptions as previously approved by Lender in writing, together
with any endorsements reasonably required by Lender.
2
1.4 Security Interest .
Lender’s security interest in all personal property described
in the Deed of Trust and this Agreement must be duly perfected and
in a first lien position.
1.5 Plans and Specifications
. The Plans and Specifications for the Project have not been
modified, amended or revised.
1.6 Construction Contracts .
The Construction Contract, Architect Contract and Engineering
Contract shall be in full force and effect.
1.7 Approvals; Permits .
Lender must receive certified copies of all approvals, consents,
permits and licenses required for construction of the Project duly
issued by any public entity having jurisdiction over Borrower, the
Project or the Property.
1.8 Credit Reports; Financial
Statements . Lender must receive copies of the current credit
reports, most recently filed federal income tax returns of
Guarantor, financial statements of Borrower and financial
statements of Guarantor, if any, prepared in the ordinary course of
Guarantor’s business. All financial reports must be current,
complete and signed and prepared in accordance with generally
accepted accounting practices consistently applied.
1.9 Insurance . Lender must
receive original certificates of insurance evidencing the policies
of insurance required hereunder including Builder’s Risk
Insurance, which shall be set forth on Schedule 2 attached hereto,
which policies shall be in full force and effect. All such
insurance policies shall contain endorsements naming Lender as a
mortgagee or loss payee, the form and substance of which shall be
satisfactory to Lender.
2. Disbursements from
Construction Loan Account . Subject to satisfaction of the
requirements enumerated in Sections 3 and 4, below, Lender shall
make disbursements from the Construction Loan Account in accordance
with the following:
2.1 Initial Disbursement .
When all conditions set forth in Section 1 have been
satisfied, Lender shall make an initial disbursement to Borrower in
the amount of $5,000,000.00 (the “Initial
Disbursement”).
2.2 Second Disbursement .
When Borrower has provided to Lender Evidence of Payment (as that
term is defined below) that Borrower has paid from its own funds an
amount equal to at least $2,079,931.00 for labor, services and/or
materials incorporated into the Project subsequent to the Initial
Disbursement and that the entire amount of the Initial Disbursement
has been expended for labor, services and/or materials incorporated
into the Project subsequent to the Initial Disbursement, Lender
shall make a disbursement to Borrower in the amount of
$5,000,000.00 (the “Second Disbursement”).
2.3 Third Disbursement . When
Borrower has provided to Lender Evidence of Payment (as that term
is defined below) that Borrower has paid from its own funds an
amount equal to at least an additional $2,762,647.00 for labor,
services and/or materials incorporated into the Project subsequent
to the Initial Disbursement and that the entire amount of the
Second Disbursement has been expended for labor, services and/or
materials incorporated into the Project subsequent to the Initial
Disbursement, Lender shall make a disbursement to Borrower in the
amount of $5,000,000.00 (the “Third
Disbursement”).
3
2.4 Fourth Disbursement .
When Borrower has provided to Lender Evidence of Payment (as that
term is defined below) that Borrower has paid from its own funds an
amount equal to at least an additional $3,493,246.00 for labor,
services and/or materials incorporated into the Project subsequent
to the Initial Disbursement and that the entire amount of the Third
Disbursement has been expended for labor, services and/or materials
incorporated into the Project subsequent to the Initial
Disbursement, Lender shall make a disbursement to Borrower in the
amount of $5,000,000.00 (the “Fourth
Disbursement”).
2.5 Fifth Disbursement . When
Borrower has provided to Lender Evidence of Payment (as that term
is defined below) that Borrower has paid from its own funds an
amount equal to at least an additional $2,038,892.00 for labor,
services and/or materials incorporated into the Project subsequent
to the Initial Disbursement and that the entire amount of the
Fourth Disbursement has been expended for labor, services and/or
materials incorporated into the Project subsequent to the Initial
Disbursement, Lender shall make a disbursement to Borrower in the
amount of $2,500,000.00 (the “Fifth
Disbursement”).
2.6 Final Disbursement . When
Borrower has provided to Lender Evidence of Payment (as that term
is defined below) that Borrower has paid from its own funds an
amount equal to at least an additional $2,840,418.00 for labor,
services and/or materials incorporated into the Project subsequent
to the Initial Disbursement and that the entire amount of the Fifth
Disbursement has been expended for labor, services and/or materials
incorporated into the Project subsequent to the Initial
Disbursement, Lender shall make a disbursement to Borrower in the
amount of $2,500,000.00 (the “Final
Disbursement”).
2.7 Evidence of Payment . As
used herein, the term “Evidence of Payment” shall mean
written evidence reasonably satisfactory to Lender that Borrower
has made payment to independent third parties to reimburse such
persons for incorporation into the Project subsequent to the
Initial Disbursement of labor and/or materials, which evidence
shall include copies of paid invoices, lien waivers and releases
from the persons providing such labor and/or materials and such
other items as Lender may reasonably request from time to time.
Borrower acknowledges that the sums identified in paragraphs 2.2
through 2.6 as payments by Borrower are intended to be cumulative.
By way of example only, for Borrower to qualify for the Final
Disbursement, Borrower will need to have provided to Lender
Evidence of Payment equal to $13,215,134.00
3. Conditions to Construction
Disbursements . Disbursement of proceeds from the Construction
Loan Account shall be contingent upon satisfaction of the following
conditions:
3.1 In the event the Project is
materially damaged by fire or other casualty and not repaired,
Lender shall not make any further disbursements unless Lender
actually receives insurance proceeds or a cash deposit from
Borrower sufficient in Lender’s reasonable judgment to pay
for the repair of the Project in a timely manner.
4
3.2 Lender shall have no reasonable
basis for the belief that withholding a disbursement in whole or in
part is required by applicable lien or stop notice laws to the
extent of such requirement.
3.3 Borrower shall deliver to Lender
any assignments, agreements, permits or licenses required to be
furnished to Lender hereunder, or any certificates or subordination
agreements which Lender requires from tenants or proposed occupants
of preleased space.
3.4 No default shall exist under
this Agreement, the Note or any other of the Loan Documents after
giving effect to any applicable notice and cure period.
3.5 Borrower shall, at
Borrower’s expense, obtain the title endorsement identified
in Section 14, below as a condition to any disbursement after
the Initial Disbursement.
4. Intentionally Deleted
.
5. No Waiver . Any waiver by
Lender of any condition of disbursement hereunder must be expressly
made in writing. The making of a disbursement prior to the
fulfillment of one or more conditions thereof shall not be
construed as a waiver of such conditions, and Lender reserves the
right to require their fulfillment prior to making any subsequent
disbursements.
6. Intentionally deleted
.
7. Additional Security .
Borrower irrevocably assigns to Lender, and grants to Lender a
security interest in, its interest in the Construction Loan
Account, all governmental permits obtained for the lawful
construction of the Project, and all reserves, deferred payments,
deposits, refunds, cost savings and payments of any kind relating
to the construction of the Project. Upon any default of Borrower
(after expiration of any applicable cure period) and
notwithstanding any other provision of this Agreement, Lender may
use any of the security described in this Section for any purpose
for which Borrower could have used them under this Agreement or
with respect to the construction or financing of the Project.
Lender will also have all other rights and remedies as to any of
the foregoing which are provided under applicable law or in
equity.
8. Diligent Prosecution of
Construction . Borrower will diligently prosecute construction
of the Project in a workmanlike manner in accordance with the Plans
and Specifications and all requirements of all governmental
authorities having or asserting jurisdiction over the Property or
the Project. If there is any difference between any such
governmental requirements and the Plans and Specifications
furnished Lender pursuant hereto, then the requirements of
whichever thereof are the higher shall be met in construction of
the Project.
9. Changes . Borrower shall
obtain Lender’s prior written approval of any change in the
Plans and Specifications for the Project, and also of any change in
any work or materials required for the Project. Amounts or items of
expense not listed on the cost breakdown shall not be expended or
incurred by Borrower without Lender’s prior express written
consent. In addition, if construction of the Project is being
accomplished under one or more general contracts, Borrower must
obtain Lender’s prior
5
written approval of such contracts and of all
changes in the terms or conditions of any such contracts. Borrower
must also obtain all approvals of any changes in plans,
specifications, work, materials or contracts that are required by
law, or under the terms of any recorded instrument affecting the
Property or under any lease, the Loan Documents or any other
agreement relating to the Property. Lender will have a reasonable
time to evaluate any requests for its approval of any changes
referred to in this paragraph and will not be required to consider
approving any changes unless all other approvals that are required
from other parties have been obtained. Lender may approve or
disapprove changes in its sole discretion.
10. Permits and Legal
Requirements . Borrower will comply with and keep in effect all
permits and approvals obtained from any governmental bodies that
relate to the lawful construction of the Project. Borrower will
comply with all existing and future laws, regulations, orders and
requirements of all governmental, judicial or legal authorities
having jurisdiction over the Property or Project, and with all
recorded restrictions affecting the Property.
11. Lists of Contractors and
Subcontractors . Borrower will furnish to Lender monthly in a
form acceptable to Lender, correct lists of all mechanical and
electrical contractors employed since the date of the last
disbursement in connection with construction of the Project and
true and correct copies of all such executed contracts and
subcontracts. Lender may contact any contractor or subcontractor to
verify any facts disclosed in the lists, and all contracts and
subcontracts relating to construction of the Project entered into
subsequent to the date of this Agreement must require the
disclosure of the listed information to Lender.
12. Purchase of Materials;
Conditional Sales Contracts; Use of Loan . No materials,
equipment, fixtures or articles of personal property of Borrower
placed in the Project shall be purchased or installed under any
security agreement or other agreement where the seller reserves or
purports to reserve title or the right of removal or repossession
or the right to consider them personal property after their
incorporation in the work of construction, unless authorized by
Lender in writing. Borrower shall use proceeds of the Loan only for
Project-related expenses in accordance with the cost breakdown
approved by Lender and the disbursement procedures set forth in
Article I of this Agreement.
13. Inspection; Right to Stop
Work .
13.1 Lender and its agents and
representatives shall have the right at any reasonable time to
enter the Property and inspect the work of construction and all
materials, plans, specifications and other matters relating to the
construction. Lender will also have the right, upon 48 hours prior
notice to Borrower, to examine, copy and audit the books, records,
accounting data and other documents of Borrower and its contractors
and, to the extent permitted by the terms of the subcontracts,
subcontractors relating to the Property or construction of the
Project. Borrower agrees to pay the reasonable costs and expenses
of Lender actually incurred in such inspections and examinations,
including without limitation Lender’s reasonable
attorneys’ fees related thereto.
13.2 If Lender in good faith
determines that any work or material does not conform to the
approved Plans and Specifications or sound building practice, or
otherwise departs from any of the requirements of this Agreement,
Lender may require the work to be stopped and withhold
disbursements
6
until the matter is corrected. In such event,
Borrower will promptly correct the work to Lender’s
reasonable satisfaction. If the work is not made satisfactory to
Lender within fifteen (15) calendar days from the date of
stoppage by Lender (or such longer period of time as may be
reasonably necessary), such failure to do so shall constitute a
default by Borrower under the terms of this Agreement.
13.3 Lender is under no duty to
supervise or inspect construction or examine any books and records.
Any inspection or examination by Lender is for the sole purpose of
protecting Lender’s security and preserving Lender’s
rights under this Agreement. No default of Borrower will be
waive
