CONSTRUCTION Loan AGREEMENT

 

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                                                                 EXHIBIT 10.34.1

 

                THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT

           TO THE FEDERAL ARBITRATION ACT AND/OR Section 15-48-10 OF

               THE SOUTH CAROLINA CODE OF LAWS (1976), AS AMENDED

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                           Construction Loan Agreement

 

                                      among

 

Grande Palms, L.L.C., a single purpose, single asset limited liability company,

 

                                       and

 

                             Bank of America, N.A.,

                            as Administrative Agent,

 

                                       and

 

                        The Other Financial Institutions

                                  Party Hereto,

 

                                      and

 

                Banc of America Securities LLC, as Lead Arranger

 

                           Dated as of April 27, 2005

 

                             [BANK OF AMERICA LOGO]

 

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                           CONSTRUCTION LOAN AGREEMENT

 

                                  (Syndication)

 

      THIS CONSTRUCTION LOAN AGREEMENT ("Agreement") is made by and among each

lender from time to time a party hereto (individually, a "Lender" and

collectively, the "Lenders"), and Bank of America, N.A., a national banking

association as Administrative Agent (the "Administrative Agent"); and Grande

Palms, L.L.C., a Delaware single purpose, single asset limited liability company

("Borrower"), who agree as follows:

 

                               ARTICLE 1- THE LOAN

 

      1.1 General Information and Exhibits. This Agreement includes the Exhibits

listed below, all of which Exhibits are attached hereto and made a part hereof

for all purposes. Borrower and Lenders agree that if any Exhibit to be attached

to this Agreement contains blanks, the same shall be completed correctly and in

accordance with this Agreement prior to or at the time of the execution and

delivery thereof.

 

      Exhibit "A" - Legal Description of the Land

 

      Exhibit "B" - Basic Information

 

      Exhibit "C" - Certain Conditions Precedent to the Loan Closing

 

      Exhibit "C-1" - Certain Conditions Precedent to the Funding

 

      Exhibit "D" - Budget

 

      Exhibit "E" - Minimum Unit Release Prices

 

      Exhibit "F" - Advances

 

      Exhibit "F-I" - Draw Request

 

      Exhibit "G" - Survey Requirements

 

      Exhibit "H" - [Reserved]

 

      Exhibit "I" - List of Required Bonds

 

      Exhibit "J" - Assignment and Assumption

 

      Exhibit "K" - Form of Promissory Note

 

      Exhibit "L" - Schedule of Lenders

 

      Exhibit "M" - Form of Guaranty

 

The Exhibits contain other terms, provisions and conditions applicable to the

Loan. Capitalized terms used in this Agreement shall have the meanings assigned

to them in the Basic Information set forth in Exhibit "B" (the "Basic

Information"). This Agreement and the other Loan Documents, which must be in

form, detail and substance satisfactory to Lenders, evidence the agreements of

Borrower and Lenders with respect to the Loan. Borrower shall comply with all of

the Loan Documents.

 

      1.2 Purpose. The proceeds of the Loan shall be used by Borrower to pay (i)

the cost of the construction of the Improvements on the Land and (ii) other

fees, costs and expenses relating to the Property if and to the extent that such

costs are specifically provided for in the Loan Allocation column in the Budget.

The maximum principal Loan amount shall be $69,800,000.00 (the "Loan Amount"),

the proceeds of which shall be used to develop the Project, which amount shall

be evidenced by the Note. The Loan Amount shall be reduced, if the actual

 

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 costs of construction are below the Loan allocations set forth in the Budget

 (as hereinafter defined), by an amount equal to the difference between the cost

 of construction set forth in the Budget and the actual cost of construction.

 The Note shall be in the maximum principal amount of $69,800,000.00.

 

      1.3 Commitment to Lend. Borrower agrees to borrow the Loan from Lenders,

and each Lender severally agrees to make advances of its Pro Rata Share of the

Loan proceeds to Borrower in amounts at any one time outstanding not to exceed

such Lender's Pro Rata Share of the Loan and (except for Administrative Agent

with respect to Administrative Agent Advances), on the terms and subject to the

conditions set forth in this Agreement and Exhibit "C", Exhibit "C-1" and

Exhibit "F" attached to this Agreement. Lender's commitment to lend shall expire

and terminate (a) automatically if the Loan is prepaid in full; and (b)

automatically upon the occurrence of a Default. The Loan is not revolving. Any

amount repaid may not be reborrowed.

 

      1.4 Budget. Loan funds are allocated to payment of the costs of the

Project shown in the "Loan Allocation" column of the Budget attached to this

Agreement as Exhibit "D". Borrower shall not amend the Budget, or otherwise

reallocate Loan funds from one Budget line item to another, in an amount in

excess of $500,000.00 per occurrence subject to an aggregate total of

$5,000,000.00 without the prior written approval of Administrative Agent, which

approval shall not be unreasonably withheld or delayed. The Budget has been

prepared by Borrower, and Borrower represents to Administrative Agent and

Lenders that the Budget constitutes Borrower's good faith estimate of all costs

incident to the Loan and the Project through the stated maturity date of the

Loan (collectively, the "Aggregate Cost") after taking into account the

requirements of this Agreement, including "hard" and "soft" costs, fees and

expenses. Unless approved by Administrative Agent, which approval shall not be

unreasonably withheld or delayed, no advance shall be made (a) for any cost not

set forth in the Budget, (b) from any line item in the Budget that, when added

to all prior advances from that line item, would exceed the lesser of (i) the

actual cost incurred by Borrower for such line item, or (ii) the sum shown in

the "Loan Allocation" column in the Budget for such line item (subject to

Borrower's ability to reallocate such items as set forth in Section 1.4 herein),

(c) from any contingency line item in excess of the amount of such line item, or

(d) [Reserved]. Except for Borrower's ability to reallocate items as set forth

in Section 1.4 herein, advances from any line item in the Budget for purposes

other than those for which amounts are initially allocated to such line item, or

changes in the relative amounts allocated to particular line items in the Budget

may only be made with Administrative Agent's approval, which shall not be

unreasonably withheld or delayed.

 

      1.5 Borrower's Equity and Borrower's Deposit. Prior to the Closing Date

and at all times during the term of the Loan, Administrative Agent must be

satisfied that the actual Aggregate Cost does not exceed the total amount of the

Loan plus the amounts of all equity investments in the Project made by Borrower

for which funds are readily available. Administrative Agent reserves the right

to require, at Borrower's expense, a construction cost takeoff by a consultant

designated by Administrative Agent to assist in making such determination. If at

any time Administrative Agent determines that the sum of: (1) any unadvanced

portion of the Loan to which Borrower is entitled, plus (ii) the portions of the

Aggregate Cost that are to be paid by Borrower from other funds that, to

Administrative Agent's satisfaction, are available, set aside and committed, is

or will be insufficient to pay the actual

 

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unpaid Aggregate Cost, Borrower shall, within seven (7) days after written

notice from Administrative Agent, (i) cause Guarantor to sign an acknowledgment,

in form satisfactory to Administrative Agent, that the Guaranty shall cover such

shortages, or (ii) deposit with Agent equity funds in cash with Administrative

Agent the amount of the deficiency ("Borrower's Deposit") in an interest-bearing

account of Administrative Agent's selection with interest earned thereon to be

part of Borrower's Deposit, or shall submit evidence to Administrative Agent of

equity investments previously made, in amounts sufficient, in Administrative

Agent's opinion, to equal any such shortage and Administrative Agent may refuse

to make any additional advances under the Loan Documents until such Guarantor's

acknowledgment or additional equity funds have been received. Any such

Borrower's Deposit is hereby pledged to Administrative Agent and Lenders as

additional security for the Loan, and Borrower hereby grants and conveys to

Administrative Agent for the ratable benefit of Administrative Agent and Lenders

a security interest in all funds so deposited with Administrative Agent, as

additional security for the Loan. Administrative Agent may advance all or a

portion of the Borrower's Deposit prior to the Loan proceeds. Administrative

Agent may (but shall have no obligation to) apply all or any part of Borrower's

Deposit against the unpaid Indebtedness in such order as Administrative Agent

determines.

 

      1.6 Evidence of Debt.

 

      1.6.1 Amounts of the Loan made by each Lender shall be evidenced by one or

more accounts or records maintained by such Lender and by the Administrative

Agent in the ordinary course of business The accounts or records maintained by

the Administrative Agent and each Lender shall be conclusive absent manifest

error of the amount of the Loan made by the Lenders to the Borrower and the

interest and payments thereon. Any failure to so record or any error in doing so

shall not, however, limit or otherwise affect the obligation of the Borrower

hereunder to pay any amount owing with respect to the Loans. In the event of any

conflict between the accounts and records maintained by any Lender and the

accounts and records of the Administrative Agent in respect of such matters, the

accounts and records of Administrative Agent shall control in the absence of

manifest error.

 

      1.7 Interest Rate.

 

      1.7.1 Initial Interest Rate. Initially, the Principal Debt from day to day

outstanding which is not past due, shall bear interest at a fluctuating rate of

interest equal to the Eurodollar Daily Rate plus two hundred twenty-five (225)

basis points per annum.

 

      1.7.2 Reduction of Interest Rate. Upon the achievement of all of the

following, the unpaid principal balance of the Loan shall bear interest at a

fluctuating rate of interest equal to the Eurodollar Daily Rate plus two hundred

(200) basis points per annum:

 

            (i) the Improvements shall be fifty-five percent (55%) complete, as

            evidenced by AIA certification from the Project architect; and

 

            (ii) no monetary Default has occurred and no Default has occurred

            and is continuing under the Loan.

 

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      1.7.3 General Interest Rate Provisions.

 

      (a) The "Eurodollar Daily Rate" shall mean a fluctuating rate of interest

equal to the one month rate of interest (rounded upwards, if necessary to the

nearest 1/100 of 1%).appearing on Telerate Page 3750 ("Telerate Page 3750" means

the British Bankers Association Libor Rates (determined at 11:00 a.m. London,

England time) that are published by Bridge Information Systems, Inc.) or any

successor page as the one month, two month or three month London interbank

offered rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London

time) on the second preceding Business Day, as adjusted from time to time in

Administrative Agent's sole discretion for then applicable reserve requirements,

deposit insurance assessment rates and other regulatory costs. If for any reason

such rate is not available, the term "Eurodollar Daily Rate" shall mean the

fluctuating rate of interest equal to the one month, two month or three month

rate of interest (rounded upwards, if necessary to the nearest 1/100 of 1%)

appearing on Reuters Screen LIBO Page as the one month, two month, or three

month London interbank offered rate for deposits in U.S. Dollars at

approximately 11:00 a.m. (London time) on the second preceding Business Day, as

adjusted from time to time in Administrative Agent's sole discretion for then

applicable reserve requirements, deposit insurance assessment rates and other

regulatory costs; provided, however, if more than one rate is specified on

Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of

all such rates.

 

      (b) If Administrative Agent determines that no adequate basis exists for

determining the Eurodollar Daily Rate or that any applicable law or regulation

or compliance therewith by Administrative Agent prohibits or restricts or makes

impossible the charging of interest based on the Eurodollar Daily Rate and

Administrative Agent so notifies Borrower, then until Administrative Agent

notifies Borrower that the circumstances giving rise to such suspension no

longer exist, interest shall accrue and be payable on the unpaid principal

balance of the Loan from the date Administrative Agent so notifies Borrower

until the Maturity Date of the Loan (whether by acceleration, declaration,

extension or otherwise) at a fluctuating rate of interest equal to the Prime

Rate of Administrative Agent plus or minus such amount as may be necessary to

approximate the rate per annum last assessed pursuant to this Section. The term

"Prime Rate" means, on any day, the rate of interest per annum then most

recently established by Administrative Agent as its "prime rate". Any such rate

is a general reference rate of interest, may not be related to any other rate,

and may not be the lowest or best rate actually charged by Administrative Agent

to any customer or a favored rate and may not correspond with future increases

or decreases in interest rates charged by other lenders or market rates in

general, and that Administrative Agent may make various business or other loans

at rates of interest having no relationship to such rate. Each time the Prime

Rate changes, the per annum rate of interest on the Loan shall change

immediately and contemporaneously with such change in the Prime Rate.

 

      (c) Computations and Determinations. All interest shall be computed on the

basis of a year of 360 days and paid for the actual number of days elapsed

(including the first day but excluding the last day). Administrative Agent shall

determine each interest rate applicable to the Principal Debt in accordance with

this Agreement and its determination thereof shall be conclusive in the absence

of manifest error. The books and records of Administrative Agent shall be prima

facie evidence of all sums owing to Lenders from time to time under this Loan,

but the failure to record any such information shall not limit or affect the

obligations of Borrower under the Loan Documents.

 

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      (d) [Reserved].

 

      (e) Past Due Rate. Accrued and unpaid interest on past due amounts

(including interest on past due interest) shall be due and payable on demand, at

a rate per annum (the "Past Due Rate") equal to four percent (4%) per annum in

excess of the interest rate in effect at the time of payment default. Provided,

there is no Default and in accordance with the Budget, Lender shall pay itself

interest from the Loan Proceeds when due and payable.

 

      1.8 Prepayment. Borrower may prepay the principal balance of this Loan, in

full at any time or in part from time to time without premium or penalty.

Notwithstanding the foregoing, if Borrower at any time enters into an interest

rate protection agreement whereby Borrower has purchased an interest protection

product from Administrative Agent (an "Interest Rate Protection Agreement") and

the Interest Rate Protection Agreement is in effect, Borrower shall pay to the

Administrative Agent a prepayment fee calculated in accordance with the

prepayment fee described in the Interest Rate Protection Agreement.

 

      1.9 [Reserved].

 

      1.10 Late Charge. If Borrower shall fail to make any payment due hereunder

or under the terms of any Note (other than payments of interest to be funded by

Lender to itself in accordance with the Budget as an Advance under the Loan)

within fifteen (15) days after the date such payment is due, Borrower shall pay

to the applicable Lender or Lenders on demand a late charge equal to four

percent (4%) of such payment. Such fifteen (15) day period shall not be

construed as in any way extending the due date of any payment. The "late charge"

is imposed for the purpose of defraying the expenses of a Lender incident to

handling such defaulting payment. This charge shall be in addition to, and not

in lieu of, any other remedy Lenders may have and is in addition to any fees and

charges of any agents or attorneys which Administrative Agent or Lenders may

employ upon the occurrence of a Default, whether authorized herein or by law.

 

      1.11 Taxes.

 

      (a) Any and all payments by Borrower to or for the account of

Administrative Agent or any Lender under any Loan Document shall be made free

and clear of and without deduction for any and all present or future taxes,

duties, levies, imposts, deductions, assessments, fees, withholdings or similar

charges, and all liabilities with respect thereto, excluding, in the case of

Administrative Agent and any Lender, taxes imposed on or measured by its net

income, and franchise taxes imposed on it (in lieu of net income taxes), by the

jurisdiction (or any political subdivision thereof) under the Laws of which

Administrative Agent or such Lender, as the case may be, is organized or

maintains a lending office (all such non-excluded taxes, duties, levies,

imposts, deductions, assessments, fees, withholdings or similar charges, and

liabilities being hereinafter referred to as "Taxes"). If Borrower shall be

required by any Laws to deduct any Taxes from or in respect of any sum payable

under any Loan Document to Administrative Agent or any Lender, (i) the sum

payable shall be increased as necessary so that after making all required

deductions (including deductions applicable to additional sums payable under

this Section), Administrative Agent and such Lender receives an amount equal to

the sum it would have received had no such deductions been made, (ii) Borrower

shall make such deductions, (iii)

 

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 Borrower shall pay the full amount deducted to the relevant taxation authority

 or other authority in accordance with applicable Laws, and (iv) within 30 days

 after the date of such payment, Borrower shall furnish to Administrative Agent

 (which shall forward the same to such Lender) evidence of payment thereof.

 

      (b) In addition, Borrower agrees to pay any and all present or future

stamp, court or documentary taxes and any other excise or property taxes or

charges or similar levies which arise from any payment made under any Loan

Document or from the execution, delivery, performance, enforcement or

registration of, or otherwise with respect to, any Loan Document (hereinafter

referred to as "Other Taxes").

 

      (c) [Reserved].

 

      (d) Borrower agrees to indemnify Administrative Agent and each Lender for

the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes

imposed or asserted by any jurisdiction on amounts payable under this Section)

paid by Administrative Agent and such Lender and any liability (including

penalties, interest and expenses) arising therefrom or with respect thereto, in

each case whether or not such Taxes or Other Taxes were correctly or legally

imposed or asserted by the relevant Tribunal. Payment under this subsection (d)

shall be made within 30 days after the date the Lender or the Administrative

Agent makes a demand therefor.

 

      (e) Without prejudice to the survival of any other agreement of Borrower

hereunder, the agreements and obligations of Borrower contained in this Section

shall survive the termination of the Commitments and the payment in full of all

the other Obligations.

 

      1.12 Payment Schedule and Maturity Date.

 

      (a) The principal of the Loan shall be due and payable in the form of

Release Fees as described more particularly in paragraph (b) below. The entire

principal balance of the Loan then unpaid and all accrued interest then unpaid

shall be due and payable in full on the Maturity Date. Accrued unpaid interest

shall be due and payable on the 15th day of the calendar month for the previous

calendar month after the date of this Agreement, and Administrative Agent shall

pay Lenders interest each month as an advance on the Loan, until all principal

and accrued interest owing on this Loan shall have been fully paid and

satisfied.

 

      (b) Administrative Agent will release each condominium Unit from the lien

of its mortgage upon (i) satisfaction of all requirements set forth in the

Mortgage; (ii) payment, in each case, to Administrative Agent of a release fee

("Release Fee") equal to the greater of (a) 100% of the net sales proceeds of

the applicable Unit, or (b) 92% of the gross sales price of the applicable Unit,

subject to the minimum release price for each Unit set forth on Exhibit "E"

attached hereto and incorporated herein by reference; (iii) receipt by Lender of

fully executed copies of the sales contract and closing statement for each Unit

to be so released; and (iv) receipt by Lender of appropriate releases to be

executed. In all cases, such Release Fees shall be remitted to Administrative

Agent at the closing of the sale of the Unit.

 

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      1.13 Advances and Payments.

 

      (a) Following receipt of a Draw Request, Administrative Agent shall

promptly provide each Lender with a copy of the Draw Request Form in the form of

Exhibit 7-l", the related AIA Document G-702 and G-703, with written

certification by Borrower's Architect thereon and, if available, the related

written certification of the Construction Consultant. Administrative Agent shall

notify one designated person at each Lender telephonically (with confirmation by

facsimile) or by facsimile (with confirmation by telephone) not later than 1:00

p.m. Administrative Agent's Time one (1) Business Day prior to the advance

Funding Date for all advances of its Pro Rata Share of the Amount Administrative

Agent has determined shall be advanced in connection therewith ("Advance

Amount"). In the case of an advance of the Loan, each Lender shall make the

funds for its Pro Rata Share of the Advance Amount available to Administrative

Agent not later than 1:00 p.m. Administrative Agent's Time on the Funding Date

thereof. After Administrative Agent's receipt of the Advance Amount from

Lenders, Administrative Agent shall make proceeds of the Loan in an amount equal

to the Advance Amount (or, if less, such portion of the Advance Amount that

shall have been paid to Administrative Agent by Lenders in accordance with the

terms hereof) available to Borrowers on the applicable Funding Date by advancing

such funds to Borrowers in accordance with the provisions of Exhibit "F".

 

      (b) All payments by Borrower shall be made without condition or deduction

for any counterclaim, defense, recoupment or setoff. Except as otherwise

expressly provided herein, all payments by Borrower hereunder shall be made to

Administrative Agent not later than 12:00 p.m. Administrative Agent's Time on

the date specified herein. Administrative Agent shall promptly distribute to

each Lender, such funds as it may be entitled to receive hereunder, (1) on or

before 3:00 p.m. Administrative Agent's Time on the day Administrative Agent

receives such funds, if Administrative Agent has received such funds on or

before 12:00 p.m. (Administrative Agent's Time), or (ii) on or before 12:00 p.m.

Administrative Agent's Time on the Business Day following the day Administrative

Agent receives such funds, if Agent receives such funds after 12:00 p.m.

Administrative Agent's Time.

 

      (c) Except as otherwise provided herein, all payments by Borrower or any

Lender shall be made to Administrative Agent at Administrative Agent's Office

not later than the time for such type of payment specified in this Agreement.

All payments received after such time shall be deemed received on the next

succeeding Business Day. All payments shall be made in immediately available

funds in lawful money of the United States of America.

 

      (d) Upon satisfaction of any applicable terms and conditions set forth

herein, Administrative Agent shall promptly make any amounts received in

accordance with the prior subsection available in like funds received as

follows: (1) if payable to Borrower, in accordance with Exhibit "F", except as

otherwise specified herein, and (ii) if payable to any Lender, by wire transfer

to such Lender at the address specified in the Schedule of Lenders.

 

      (e) Unless Borrower or any Lender has notified Administrative Agent prior

to the date any payment is required to be made by it to Administrative Agent,

that Borrower or such Lender, as the case may be, will not make such payment,

Administrative Agent may assume that Borrower or such Lender, as the case may

be, has timely made such payment and may (but shall

 

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not be required to do so) in reliance thereon, make available a corresponding

amount to the person or entity entitled thereto. If and to the extent that such

payment was not in fact made to Administrative Agent in immediately available

funds, then:

 

            (i) if Borrower failed to make such payment, each Lender shall

forthwith on demand repay to Administrative Agent the portion of such assumed

payment that was made available to such Lender in immediately available funds,

together with interest thereon in respect of each day from and including the

date such amount was made available by Administrative Agent to such Lender to

the date such amount is repaid to Administrative Agent in immediately available

funds at the Federal Funds Rate from time to time in effect; and

 

            (ii) if any Lender failed to make such payment, such Lender or, if

applicable, Electing Lender or Lenders shall forthwith on demand pay to

Administrative Agent the amount thereof in immediately available funds, together

with interest thereon for the period from the date amount was made available by

Administrative Agent to Borrower to the date such amount is recovered by

Administrative Agent (the "Compensation Period") at a rate per annum equal to

the interest rate applicable to such amount under the Loan. If such Lender pays

such amount to Administrative Agent, then such amount shall constitute such

Lender's Pro Rata Share, included in the applicable Loan advance. Nothing herein

shall be deemed to relieve any Lender from its obligation to fulfill its

Commitment or to prejudice any rights, which Administrative Agent or Borrower

may have against any Lender as a result of any default by such Lender hereunder.

 

      A notice of the Administrative Agent to any Lender with respect to any

amount owing under this subsection shall be conclusive, absent manifest error.

 

      (f) If any Lender makes available to the Administrative Agent funds for

any Loan advance to be made by such Lender as provided in the foregoing

provisions of this Section, and the funds are not advanced to Borrower or

otherwise used to satisfy any Obligations of Lender hereunder, the

Administrative Agent shall return such funds (in like funds as received from

such Lender) to such Lender, with interest.

 

      (g) Nothing herein shall be deemed to obligate any Lender to obtain the

funds for any Loan advance in any particular place or manner or to constitute a

representation by any Lender that it has obtained or will obtain the funds for

any Loan advance in any particular place or manner.

 

      (h) All Loan disbursements shall be made only in accordance with the Loan

allocations in the Budget, the Cost Breakdown and the requirements for Loan

disbursements contained in the Loan Documents. Furthermore, disbursements under

the Note shall not commence until Borrower has met the pre-sales requirement

described herein in Section 1.13(i) and the Loan has been syndicated in the

manner described in Article 6 below. In addition, all construction-related

disbursements shall be subject to the approval, which may not be unreasonably

withheld or delayed, of Administrative Agent's construction consultant. The

Administrative Agent shall not be obligated to disburse any undrawn interest or

any cost savings realized on any line item in the Budget under a different line

item in the Budget; subject, however, to Borrower's ability to reallocate such

amounts as permitted under Section 1.4.

 

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      (i) The form of contract for the purchase and sale of a Unit (a "Sales

Contract") has been received by and is acceptable to Administrative Agent. If a

Sales Contract materially differs from the form approved by Administrative

Agent, then such Sales Contract shall be subject to Administrative Agent's

approval in its sole discretion. All Sales Contracts shall require a

non-refundable deposit (a "Deposit") to be held by Administrative Agent in the

amount of 10% of the gross sales price for the applicable Unit. No Sales

Contract shall contain any contingencies (other than as approved by

Administrative Agent) which would make the contract non-binding on the

purchaser. Funding shall be limited to no more than fifty percent (50%) of the

Appraised Value of the Land ("Initial Funding"; and such funding shall be

initially advanced only by Administrative Agent) until such time as Borrower has

submitted to Administrative Agent copies of executed, valid and binding Sales

Contracts in form and substance acceptable to Administrative Agent in the

aggregate gross amount of $76,000,000.00 at which time Borrower may borrow up to

one hundred percent (100%) of the Loan proceeds in accordance with the terms of

the Loan Documents (and the Initial Funding shall then be shared pro rata among

the Lenders). Multiple Unit purchasers shall be allowed only with the specific

permission of the Administrative Agent.

 

      1.14 Administrative Agent Advances.

 

      (a) Administrative Agent is authorized, from time to time, in

Administrative Agent's sole discretion to make, authorize or determine advances

of the Loan, or otherwise expend funds, on behalf of Lenders ("Administrative

Agent Advances"), (1) to pay any costs, fees and expenses as described in

Section 6.10 herein, (ii) when the applicable conditions precedent set forth in

Exhibit "C," Exhibit "C-1" and Exhibit "F" have been satisfied to the extent

required by Administrative Agent, and (iii) when Administrative Agent deems

necessary or desirable to preserve or protect the Loan collateral or any portion

thereof (including those with respect to property taxes, insurance premiums,

completion of construction, operation, management, improvements, maintenance,

repair, sale and disposition) (A) subject to Section 5.5, after the occurrence

of a Default, and (B) subject to Section 5.10, after acquisition of all or a

portion of the Loan collateral by foreclosure or otherwise. Notwithstanding the

foregoing, Administrative Agent Advances after the Initial Funding which are

equal to or greater than $5,000,000.00 shall require the approval of the

Required Lenders, which shall not be unreasonably withheld.

 

      (b) Administrative Agent Advances shall constitute obligatory advances of

Lenders under this Agreement, shall be repayable on demand and secured by the

Loan collateral, and shall bear interest at the rate applicable to such amount

under the Loan. Administrative Agent shall notify each Lender in writing of each

Administrative Agent Advance. Upon receipt of notice from Administrative Agent

of its making of an Administrative Agent Advance, other than the Initial

Funding, each Lender shall make the amount of such Lender's Pro Rata Share of

the outstanding principal amount of the Administrative Agent Advance available

to Administrative Agent, in same day funds, to such account of Administrative

Agent as Administrative Agent may designate, (i) on or before 3:00 p.m.

(Administrative Agent's Time) on the day Administrative Agent provides Lenders

with notice of the making of such Administrative Agent Advance if Administrative

Agent provides such notice on or before 12:00 p.m. (Administrative Agent's

Time), or (ii) on or before 12:00 p.m. on the Business Day immediately following

the day Administrative Agent provides Lenders with notice of the making of such

advance if Administrative Agent provides notice after 12:00 p.m. (Administrative

Agent's Time).

 

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      1.15 Defaulting Lender.

 

      (a) Notice and Cure of Lender Default; Election Period; Electing Lenders.

Administrative Agent shall promptly notify (such notice being referred to as the

"Default Notice") Borrower (for Loan advances) and each non-Defaulting Lender if

any Lender is a Defaulting Lender. Each non-Defaulting Lender shall have the

right, but in no event or under any circumstance the obligation, to fund such

Defaulting Lender Amount, provided that, within five (5) Business Days after the

date of the Default Notice (the "Election Period"), such non- Defaulting Lender

or Lenders (each such Lender, an "Electing Lender") irrevocably commit(s) by

notice in writing (an "Election Notice") to Administrative Agent, the other

Lenders and Borrower to fund the Defaulting Lender Amount and to assume the

Defaulting Lender's obligations with respect to the advancing of the entire

undisbursed portion of the Defaulting Lender's principal obligations under this

Agreement (such entire undisbursed portion of the Defaulting Lender's principal

obligations under this Agreement, including its portion of the Payment Amount

that is the subject of the default, is hereinafter referred to as the

"Defaulting Lender Obligation"). If Administrative Agent receives more than one

Election Notice within the Election Period, then the commitment to fund the

Defaulting Lender Amount and the Defaulting Lender Obligation shall be

apportioned pro rata among the Electing Lenders in the proportion that the

amount of each such Electing Lender's Commitment bears to the total Commitments

of all Electing Lenders. If the Defaulting Lender fails to pay the Defaulting

Lender Payment Amount within the Election Period, the Electing Lender or

Lenders, as applicable, shall be automatically obligated to fund the Defaulting

Lender Amount and Defaulting Lender Obligation (and Defaulting Lender shall no

longer be entitled to fund such Defaulting Lender Amount and Defaulting Lender

Obligation) within three (3) Business Days after such notice to Administrative

Agent for reimbursement to Administrative Agent or payment to Borrower as

applicable. Notwithstanding anything to the contrary contained herein, if

Administrative Agent has funded the Defaulting Lender Amount, Administrative

Agent shall be entitled to reimbursement for its portion of the Defaulting

Lender Payment Amount pursuant to Section 5.11. Further, if no Electing Lender

commits in writing to fund timely the Defaulting Lender Obligation hereunder,

Borrower may fund any such amounts and request a refund of such amounts upon the

replacement of a Defaulting Lender as set forth in Section 1.17 hereinbelow.

 

      (b) Removal of Rights; Indemnity. Administrative Agent shall not be

obligated to transfer to a Defaulting Lender any payments made by or on behalf

of Borrower to Administrative Agent for the Defaulting Lender's benefit; nor

shall a Defaulting Lender be entitled to the sharing of any payments hereunder

or under any Note until all Defaulting Lender Payment Amounts are paid in full.

Administrative Agent shall hold all such payments received or retained by it for

the account of such Defaulting Lender; Amounts payable to a Defaulting Lender

shall be paid by Administrative Agent to reimburse Administrative Agent and any

Electing Lender pro rata for all Funds Defaulting Lender Payment Amounts. Solely

for the purposes of voting or consenting to matters with respect to the Loan

Documents, a Defaulting Lender shall be deemed not to be a "Lender" and such

Defaulting Lender's Commitment shall be deemed to be zero. A Defaulting Lender

shall have no right to participate in any discussions among and/or decisions by

Lenders hereunder and/or under the other Loan Documents. Further, any Defaulting

Lender shall be bound by any amendment to, or waiver of, any provision of, or

any action taken or omitted to be taken by Administrative Agent and/or the

non-Defaulting Lenders under, any Loan Document which is made subsequent to the

Defaulting Lender's

 

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becoming a Defaulting Lender. This Section shall remain effective with respect

to a Defaulting Lender until such time as the Defaulting Lender shall no longer

be in default of any of its obligations under this Agreement by curing such

default by payment of all Defaulting Lender Payment Amounts (i) within the

Election Period, or (ii) after the Election Period with the consent of the

non-Defaulting Lenders. Such Defaulting Lender nonetheless shall be bound by any

amendment to or waiver of any provision of, or any action taken or omitted to be

taken by Administrative Agent and/or the non-Defaulting Lenders under any Loan

Document which is made subsequent to that Lender's becoming a Defaulting Lender

and prior to such cure or waiver. The operation of this subsection or the

subsection above alone shall not be construed to increase or otherwise affect

the Commitment of any non-Defaulting Lender, or relieve or excuse the

performance by Borrower of their duties and obligations hereunder or under any

of the other Loan Documents. Furthermore, nothing contained in this Section

shall release or in any way limit a Defaulting Lender's obligations as a Lender

hereunder and/or under any other of the Loan Documents. Further, a Defaulting

Lender shall indemnify and hold harmless Administrative Agent and each of the

non-Defaulting Lenders from any claim, loss, or costs incurred by Administrative

Agent and/or the non-Defaulting Lenders as a result of a Defaulting Lender's

failure to comply with the requirements of this Agreement, including, without

limitation, any and all additional losses, damages, costs and expenses

(including, without limitation, attorneys' fees) incurred by Administrative

Agent and any non-Defaulting Lender as a result of and/or in connection with (i)

a non-Defaulting Lender's acting as an Electing Lender, (ii) any enforcement

action brought by Administrative Agent against a Defaulting Lender, and (iii)

any action brought against Administrative Agent and/or Lenders. The

indemnification provided above shall survive any termination of this Agreement.

 

      (c) Commitment Adjustments. In connection with the adjustment of the

amounts of the Loan Commitments of the Defaulting Lender and Electing Lender(s)

upon the expiration of the Election Period as aforesaid, Borrower,

Administrative Agent and Lenders shall execute such modifications to the Loan

Documents as shall, in the reasonable judgment of Administrative Agent, be

necessary or desirable in connection with the adjustment of the amounts of

Commitments in accordance with the foregoing provisions of this Section. For the

purpose of voting or consenting to matters with respect to the Loan Documents

such modifications shall also reflect the removal of voting rights of the

Defaulting Lender and increase in voting rights of Electing Lenders to the

extent an Electing Lender has funded the Defaulting Lender Amount and assumed

the Defaulting Lender Obligation. In connection with such adjustments,

Defaulting Lenders shall execute and deliver an Assignment and Assumption

covering that Lender's Commitment and otherwise comply with Section 6.5. If a

Defaulting Lender refuses to execute and deliver such Assignment and Assumption

or otherwise comply with Section 6.5, such Defaulting Lender hereby appoints

Administrative Agent to do so on such Lender's behalf. Administrative Agent

shall distribute an amended Schedule of Lenders, which shall thereafter be

incorporated into this Agreement, to reflect such adjustments. However, all such

Defaulting Lender Amounts and Defaulting Lender Obligation funded by

Administrative Agent or Electing Lenders shall continue to be Defaulting Lender

Amounts of the Defaulting Lender pursuant to its obligations under this

Agreement.

 

      (d) No Election. In the event that no Lender elects to commit to fund the

Defaulting Lender Amount and Defaulting Lender Obligations within the Election

Period, Administrative Agent shall, upon the expiration of the Election Period,

so notify Borrower and each Lender.

 

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      1.16 Several Obligations; No Liability, No Release. Notwithstanding that

certain of the Loan Documents now or hereafter may have been or will be executed

only by or in favor of Administrative Agent in its capacity as such, and not by

or in favor of Lenders, any and all obligations on the part of Administrative

Agent (if any) to make any advances of the Loan or reimbursements for other

Payment Amounts shall constitute the several (and not joint) obligations of the

respective Lenders on a ratable basis, according to their respective Pro Rata

Shares. Except as may be specifically provided in this Agreement, no Lenders

shall have any liability for the acts of any other Lenders. No Lenders shall be

responsible to Borrower or any other person for any failure by any other Lenders

to fulfill its obligations to make advances of the Loan or reimbursements for

other Payment Amounts, nor to take any other action on its behalf hereunder or

in connection with the financing contemplated herein. The failure of any Lender

to pay to Administrative Agent its Pro Rata Share of a Payment Amount shall not

relieve any other Lender of any obligation hereunder to pay to Administrative

Agent its Pro Rata Share of such Payment Amounts as and when required herein,

but no Lender shall be responsible for the failure of any other Lender to so

fund its Pro Rata Share of the Payment Amount. In furtherance of the foregoing,

Lenders shall comply with their obligation to pay Administrative Agent their Pro

Rata Share of such Payment Amounts regardless of (i) the occurrence of any

Default hereunder or under any Loan Document; (ii) [reserved]; (iii) any failure

of consideration, absence of consideration, misrepresentation, fraud, or any

other event, failure, deficiency, breach or irregularity of any nature

whatsoever in the Loan Documents; (iv) any bankruptcy, insolvency or other like

event with regard to any Borrower or Guarantor. The obligation of Lenders to pay

to such Payment Amounts are in all regards independent of any claims between

Administrative Agent and any Lender.

 

      1.17 Removal and/or Replacement of Lenders. If any Lender is a Defaulting

Lender or under any other circumstances set forth in the Loan Documents

providing that Borrower shall have the right to remove and/or replace a Lender

as a party to this Agreement, Borrower may, upon notice to such Lender and the

Administrative Agent, remove such Lender by causing such Lender to assign its

Commitment to one or more other lenders or Eligible Assignees acceptable to

Borrower and the Administrative Agent. Any removed or replaced Lender shall be

entitled to: (x) subject to the provisions of Section 1.14 through 1.15

providing for payment of all Defaulting Lender Payment Amounts to Administrative

Agent and/or Electing Lenders, as applicable, prior to payment of amounts due to

a Defaulting Lender, payment in full of all principal, interest and fees owing

to such Lender through the date of termination or assignment, (y) appropriate

assurances and indemnities (which may include letters of credit) as such Lender

may reasonably require with respect to its participation interest in any Letters

of Credit then outstanding and (z) a release of such Lender from its obligations

under the Loan Documents. Any Lender being replaced shall execute and deliver an

Assignment and Assumption covering that Lender's Commitment and otherwise comply

with Section 6.5. If a Lender being replaced refuses to execute and deliver such

Assignment and Assumption or otherwise comply with Section 6.5, such Lender

hereby appoints Administrative Agent to do so on such Lender's behalf.

Administrative Agent shall distribute an amended Schedule of Lenders, which

shall thereafter be incorporated into this Agreement, to reflect adjustments to

Lenders and their Commitments. Notwithstanding anything to the contrary in this

Agreement, Borrower shall retain all rights and remedies available at law or in

equity against any Defaulting Lender, whether or not such Defaulting Lender is

replaced with another Lender hereunder.

 

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                 ARTICLE 2- ADDITIONAL COVENANTS AND AGREEMENTS

 

      2.1 Construction of the Improvements. Borrower shall begin site work for

the Improvements no later than April 29, 2005 and must begin construction of the

Improvements no later than June 30, 2005. Thereafter, Borrower shall prosecute

the construction of the Improvements with diligence and continuity, in a good

and workmanlike manner, and in accordance with sound building and engineering

practices, all applicable laws and governmental requirements, the Plans and the

Loan Documents. Borrower shall not permit cessation of work for a period in

excess of thirty (30) days, except for Excusable Delays. Borrower shall achieve

substantial completion of construction of the Improvements free and clear of all

liens (except Permitted Encumbrances and liens created by the Loan Documents),

and shall obtain a certificate of occupancy and all other permits, licenses and

approvals from all applicable governmental authorities required for the

occupancy, use and operation of the Improvements, in each case reasonably

satisfactory to Administrative Agent, on or before the Completion Date. Borrower

shall promptly correct (a) any material defect in the Improvements, (b) any

material departure from the Plans not approved by Administrative Agent, or any

material departure from governmental requirements, or (c) any material

encroachment by any Improvements or structure on any building setback line,

easement, property line or restricted area. The Improvements shall be

substantially completed, as determined by the issuance of a certificate of

occupancy, on or before the Completion Date.

 

      2.2 Plans and Changes. No construction shall be undertaken on the Land

except as shown in the Plans. Borrower assumes full responsibility for the

compliance of the Plans and the Property with all laws, governmental

requirements and sound building and engineering practices. Except as otherwise

provided herein, no plans or specifications, or any changes thereto, shall be

included as part of the Plans until approved by Administrative Agent,

Construction Consultant, all applicable governmental authorities, and all other

parties required under the Loan Documents. Without Administrative Agent's prior

written consent, which shall not be unreasonably withheld or delayed, Borrower

shall not change or modify the Plans, agree to any change order, or allow any

extras to any contractor or any subcontractor, except that Borrower may make

Permitted Changes if: (a) Borrower notifies Administrative Agent in writing of

the change or extra with appropriate supporting documentation and information;

(b) Borrower obtains the approval of the applicable contractor, Borrower's

architect and all sureties, if required; (c) the structural integrity, quality

and standard of workmanship of the Improvements is not impaired by such change

or extra; (d) no substantial change in architectural appearance is effected by

such change or extra; (e) no default in any obligation to any person or

violation of any law or governmental requirement would result from such change

or extra; (f) if applicable, Borrower complies with Section 1.5 of this

Agreement to cover any excess cost resulting from the change or extra; (g)

completion of the Improvements by the Completion Date will not be affected; and

(h) [Reserved]. Administrative Agent shall not be obligated to review a proposed

change unless it has received all documents necessary to review such change,

including the change order, cost estimates, plans and specifications.

 

      2.3 Contracts. Without Administrative Agent's prior written approval

(which shall not be unreasonably withheld or delayed) as to parties, terms, and

all other matters, Borrower shall not (a) enter into any material contract

(hereinafter defined) for the performance of any work or the supplying of any

labor, materials or services for the design or construction of the

 

                                       14

 

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Improvements, (b) enter into any management, leasing, maintenance or other

similar contract pertaining to the Property not described in clause (a) that is

not unconditionally terminable by Borrower or any successor owner without

penalty or payment on not more than thirty (30) days notice to the other party

thereunder, or (c) materially modify or amend, or terminate (other than as a

result of default by the contractor) any material contracts. Borrower shall not

default in any material respect under any contract, Borrower shall not permit

any contract to terminate by reason of any failure of Borrower to perform

thereunder, and Borrower shall promptly notify Administrative Agent of any

default in any material respect thereunder. Borrower will deliver to

Administrative Agent, upon request of Administrative Agent, the names and

addresses of all persons or entities known to Borrower with whom each contractor

has contracted or intends to contract for the construction of the Improvements

or for the furnishing of labor or materials therefor. With respect to contracts

for the performance of any work or the supplying of any labor, materials or

services, a "material" contract is one which exceeds $500,000.00 in total price.

 

      2.4 Assignment of Contracts and Plans. As additional security for the

Obligations, Borrower hereby transfers and assigns to Administrative Agent for

the ratable benefit of Administrative Agent and Lenders all of Borrower's right,

title and interest, but not its liability, in, under, and to all construction,

architectural and design contracts, and the Plans, and agrees that all of the

same are covered by the security agreement provisions of the Mortgage. Borrower

agrees to deliver to Administrative Agent from time to time upon Administrative

Agent's request such consents to the foregoing assignment from parties

contracting with Borrower as Administrative Agent reasonably may require.

Neither this assignment nor any action by Administrative Agent or Lenders shall

constitute an assumption by Administrative Agent or Lenders of any obligation

under any contract or with respect to the Plans, Borrower hereby agrees to

perform all of its obligations under any contract, and Borrower shall continue

to be liable for all obligations of Borrower with respect thereto.

Administrative Agent shall have the right at any time following written notice

to Borrower (but shall have no obligation) to take in its name or in the name of

Borrower such action as Administrative Agent may determine to be necessary to

cure any default in any material respect of Borrower under any contract or with

respect to the Plans or to protect the rights of Borrower, Administrative Agent

or Lenders with respect thereto. Borrower irrevocably constitutes and appoints

Administrative Agent as Borrower's attorney-in-fact, which power of attorney is

coupled with an interest and irrevocable, to enforce in Borrower's name or in

Administrative Agent's and Lender's name, following written notice to Borrower

of the occurrence, and during the continuance, of a Default, all rights of

Borrower under any contract or with respect to the Plans. Administrative Agent

shall incur no liability if any action so taken by it or on its behalf shall

prove to be inadequate or invalid, absent gross negligence or reckless or

willful conduct on the part of Administrative Agent or any Lender. Borrower

indemnifies and holds Administrative Agent and Lenders harmless against and from

any loss, cost, liability or expense (including, but not limited to,

consultants' fees and expenses and attorneys' fees and expenses) incurred in

connection with Borrower's failure to perform such contracts or any action taken

by Administrative Agent or Lenders with respect to such contracts, absent gross

negligence or reckless or willful conduct on the part of Administrative Agent or

any Lender. Administrative Agent on behalf of the Lenders may use the Plans for

any purpose relating to the Improvements. Borrower represents and warrants to

Administrative Agent and Lenders that the copy of any contract furnished or to

be furnished to Administrative Agent is and shall be a true and complete copy

thereof, that the copies of the

 

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Plans delivered to Administrative Agent are and shall be true and complete

copies of the Plans, that there have been no material modifications thereof

which are not fully set forth in the copies delivered, and that Borrower's

interest therein is not subject to any claim, setoff, or encumbrance.

 

      2.5 Storage of Materials. Borrower shall cause all materials supplied for

the construction of the Improvements, but not yet affixed to or incorporated

into the Improvements or the Land, to be stored on the Land with adequate

safeguards to prevent loss, theft, damage or commingling with materials for

other projects. Without Administrative Agent's approval, which shall not be

unreasonably withheld or delayed, Borrower shall not purchase or order materials

for delivery more than ninety (90) days prior to the scheduled incorporation of

such materials into the Improvements.

 

      2.6 Construction Consultant. Borrower shall engage a licensed supervising

architect, reasonably acceptable to Administrative Agent, who shall make and

certify to Administrative Agent the results of regular periodic inspections of

the construction through completion of the Improvements, including, but not

limited to compliance with the Plans and the percentage of Loan funds requested

to be drawn in relation to the percentage of work completed as conditions to

Loan advances. In addition, Administrative Agent may retain the services of a

Construction Consultant, whose duties may include, among others, reviewing the

Plans and any proposed changes to the Plans, performing construction cost

analyses, observing work in place and reviewing Draw Requests. The duties of

Construction Consultant run solely to Administrative Agent for the ratable

benefit of Lenders, and Construction Consultant shall have no obligations or

responsibilities whatsoever to Borrower, Borrower's architect, engineer,

contractor or any of their agents or employees. Unless prohibited by applicable

law, all fees, costs, and expenses of Construction Consultant shall be paid by

Borrower. Borrower shall cooperate with Construction Consultant and will furnish

to Construction Consultant such information and other material as Construction

Consultant reasonably considers necessary or useful in performing its duties.

 

      2.7 Inspection. Administrative Agent and its agents, including

Construction Consultant, may enter upon the Property to inspect the Property,

the Project and any materials at any reasonable time, unless Administrative

Agent deems such inspection is of an emergency nature, in which event Borrower

shall provide Administrative Agent with immediate access to the Property.

Borrower will furnish to Administrative Agent and its agents, including

Construction Consultant, for inspection and copying, all Plans, shop drawings,

specifications, books and records, and other documents and information that

Administrative Agent reasonably may request from time to time.

 

      2.8 Notice to Lenders. Borrower shall promptly within five (5) days after

it obtains knowledge of the occurrence of any of the following events, notify

each Lender in writing thereof, specifying in each case the action Borrower has

taken or will take with respect thereto: (a) any violation in any material

respect of any law or governmental requirement; (b) any litigation, arbitration

or governmental investigation or proceeding instituted or threatened against

Borrower or the Property, and any material development therein; (c) any actual

or threatened condemnation of any portion of the Property, any negotiations with

respect to any such taking, or any loss of or substantial damage to the

Property; (d) any labor controversy pending or threatened in writing against

Borrower or any contractor, and any material development in any labor

controversy; (e) any notice received by Borrower with respect to the

cancellation, alteration

 

                                       16

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or non-renewal of any insurance coverage maintained with respect to the

Property; (f) any failure by Borrower or any contractor, subcontractor or

supplier to perform any material obligation under any construction contract, any

event or condition which would permit termination of a construction contract or

suspension of work thereunder, or any notice given by Borrower or any contractor

with respect to any of the foregoing; (g) any material lien filed against the

Property or any stop notice served on Borrower in connection with construction

of the Improvements; or (h) any material required permit, license, certificate

or approval with respect to the Project lapses or ceases to be in full force and

effect.

 

      2.9 Financial Statements. Borrower shall deliver to Administrative Agent

the Financial Statements and other statements and information at the times and

for the periods described in (a) the Basic Information and (b) any other Loan

Document, and Borrower shall deliver to Administrative Agent from time to time

such additional financial statements and information as Administrative Agent

reasonably may at any time request. Borrower will make all of its books, records

and accounts available to Administrative Agent and its representatives at all

reasonable times at the Property upon request and will permit them to review and

copy the same. Borrower shall promptly notify Administrative Agent of any event

or condition that could reasonably be expected to have a Material Adverse Effect

in the financial condition of Borrower or in the construction progress of the

Improvements. Administrative Agent shall provide a copy of such Financial

Statements to each Lender upon receipt.

 

      2.10 Other Information. Borrower shall furnish to Administrative Agent

from time to time upon Administrative Agent's request (i) copies of all

subcontracts entered into by contractors or subcontractors and the names and

addresses of all persons or entities with whom Borrower or any contractor has

contracted or intends to contract for the construction of the Improvements or

the furnishing of labor or materials in connection therewith; (ii) copies of all

contracts, bills of sale, statements, receipts or other documents under which

Borrower claims title to any materials, fixtures or articles of personal

property incorporated or to be incorporated into the improvements or subject to

the lien of the Mortgage; (iii) a list of all unpaid bills for labor and

materials with respect to construction of the Improvements and copies of all

invoices therefor; (iv) budgets of Borrower and revisions thereof showing the

estimated costs and expenses to be incurred in connection with the completion of

construction of the Improvements; (v) current or updated detailed Project

schedules or construction schedules; and (vi) such other information relating to

Borrower, Guarantor, the Improvements, the Property, or any indemnitor or other

person or part