[EXECUTION COPY]
CONSTRUCTION AGENCY AGREEMENT
dated as of May 10, 1996
between
HANCOCK BANK,
not in its individual capacity,
except as expressly provided herein,
but solely as Trustee
and
BL DEVELOPMENT CORP., as Construction Agent.
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS
1.1. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . .2
ARTICLE II
APPOINTMENT OF CONSTRUCTION AGENT; AUTHORITY; TERM
2.1. Appointment of Construction Agent . . . . . . . . . . . . . .2
2.2. Acceptance of Appointment . . . . . . . . . . . . . . . . . .2
2.3. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
2.4. Scope of Authority. . . . . . . . . . . . . . . . . . . . . .3
2.5. No Construction Agency Fee. . . . . . . . . . . . . . . . . .5
2.6. Delegation; Construction Documents. . . . . . . . . . . . . .5
ARTICLE III
COVENANTS OF CONSTRUCTION AGENT
3.1. Completion of Construction. . . . . . . . . . . . . . . . . .6
3.2. Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
3.3. Casualty; Non-Casualty Loss . . . . . . . . . . . . . . . . .6
3.4. Construction Documents. . . . . . . . . . . . . . . . . . . .8
3.5. Construction Documents; Security Agreement and Collateral
Assignment of Primary Construction Contract . . . . . . . .8
3.6. Environmental Matters . . . . . . . . . . . . . . . . . . . .9
3.7. Other Covenants of Construction Agent . . . . . . . . . . . .9
ARTICLE IV
PAYMENT OF FUNDS
4.1. Funding of Hotel Costs. . . . . . . . . . . . . . . . . . . 10
ARTICLE V
CONSTRUCTION AGENCY EVENTS OF DEFAULT
5.1. Construction Agency Events of Default . . . . . . . . . . . 10
5.2. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3. Remedies; Remedies Cumulative . . . . . . . . . . . . . . . 12
ARTICLE VI
MISCELLANEOUS
6.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2. Successors and Assigns. . . . . . . . . . . . . . . . . . . 12
6.3. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 13
6.4. Amendments and Waivers. . . . . . . . . . . . . . . . . . . 13
6.5. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 13
6.6. Severability. . . . . . . . . . . . . . . . . . . . . . . . 13
6.7. Headings and Table of Contents. . . . . . . . . . . . . . . 13
6.8. Limitations of Recourse . . . . . . . . . . . . . . . . . . 13
6.9. Knowledge of Trustee and Bank . . . . . . . . . . . . . . . 14
EXHIBIT A Form of Security Agreement and Collateral
Assignment of Construction Documents
EXHIBIT B Form of Acknowledgment of and Consent to Security Agreement
and Collateral Assignment of Primary
Construction Contract
CONSTRUCTION AGENCY AGREEMENT
THIS CONSTRUCTION AGENCY AGREEMENT (as amended and supplemented from time
to time, this "Construction Agency Agreement"), dated as of May 10, 1996, is
entered into by and between HANCOCK BANK, not in its individual capacity except
as expressly set forth herein but solely as Trustee ("Trustee"), and BL
DEVELOPMENT CORP., a Minnesota corporation (in its capacity as construction
agent, "Construction Agent").
W I T N E S S E T H:
WHEREAS, Construction Agent, as lessee ("Lessee") and Trustee, as lessor,
are parties to (i) that certain Lease Agreement and Deed of Trust dated as of
even date herewith (as amended, supplemented or otherwise modified from time to
time pursuant thereto, "Lease") pursuant to which, among other things, Lessee
has agreed to lease from Trustee, and Trustee has agreed to lease to Lessee,
Trustee's interest in the Hotel and (ii) that certain Participation Agreement
pursuant to which Trustee and the Lenders will fund Hotel Costs; and
WHEREAS, subject to the terms and conditions hereof, (i) Trustee and Agent
desire that Construction Agent act as Construction Agent for the benefit of
Trustee and each Lender for the design, engineering, identification,
acquisition, construction, installation, testing and placement into service of
the Hotel in accordance with the Construction Documents and the Plans and
Specifications and pursuant to the Lease, and (ii) Construction Agent desires,
for the benefit of Trustee and each Lender, to cause the Hotel to be designed,
engineered, identified, acquired, constructed, installed, tested and placed into
service in accordance with the Construction Documents, the Plans and
Specifications and this Construction Agency Agreement and pursuant to the Lease,
in each case in accordance with the terms herein set forth;
NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto covenant and agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. Capitalized terms used but not otherwise
defined in this Construction Agency Agreement shall have the meanings set forth
in Appendix 1 to the Participation Agreement (as defined in the Lease).
ARTICLE II
APPOINTMENT OF CONSTRUCTION AGENT; AUTHORITY; TERM
SECTION 2.1. Appointment of Construction Agent. Pursuant and subject to the
terms and conditions set forth herein and in the Participation Agreement and the
other Operative Documents, Trustee hereby irrevocably designates and appoints
Construction Agent as its exclusive agent to act on Trustee's behalf for the
design, engineering, identification, acquisition, construction, installation,
testing and placement into service of the Hotel.
SECTION 2.2. Acceptance of Appointment. Construction Agent hereby
unconditionally and irrevocably accepts the designation and appointment as
Construction Agent for the purposes set forth in Section 2.1. Construction Agent
agrees to perform its duties and obligations as set forth in this Construction
Agency Agreement.
SECTION 2.3. Term. This Construction Agency Agreement shall commence on the
date hereof and shall terminate upon the first to occur of:
(a) payment by Lessee of the Lease Balance together with all other
amounts due and owing under the Operative Documents and termination of the
Lease in accordance with Article V of the Lease;
(b) termination of this Construction Agency Agreement pursuant to
Article V;
(c) the occurrence of the Completion Date; or
(d) by mutual agreement of Construction Agent and Trustee; provided,
Trustee's agreement shall be subject to the requirements of Section 9.5 of
the Participation Agreement.
SECTION 2.4. Scope of Authority.
(a) Subject to the terms, conditions, restrictions and limitations set
forth in the Operative Documents, Trustee hereby expressly authorizes
Construction Agent, or any agent or contractor of Construction Agent, and
Construction Agent unconditionally agrees, for the benefit of Trustee, to
take or cause to be taken all action necessary or desirable for the
performance and satisfaction of all of Construction Agent's obligations
hereunder relating to the construction and placement into service of the
Hotel, such actions to include, without limitation:
(i) identifying and assisting with the acquisition of the Hotel;
(ii) performing all design and supervisory functions relating to
the construction, design, engineering, installation, testing and/or
placement into service of the Hotel, including determining feasible
construction methods, available materials and labor, and time
requirements for procurement, installation and construction of
materials, supplies for the Hotel;
(iii) negotiating and entering into all contracts or arrangements
(including any amendments or modifications thereto) to procure the
equipment and materials necessary to construct, install, test and/or
place into service the Hotel on such terms and conditions as are
customary and reasonable in light of local standards and practices;
(iv) paying, or causing to be paid, in accordance with the
Construction Documents, all Hotel Costs and performing all obligations
under the Construction Documents and otherwise in connection with the
construction and installation of the Hotel in the manner contemplated
by the Construction Documents;
(v) determining, evaluating, accepting and validating completion
of construction of the Hotel in accordance with the Construction
Documents and the Operative Documents;
(vi) enforcing performance by the Prime Contractor and of each
party to each Construction Document of their respective warranties and
other construction obligations with respect to the design,
engineering, construction and installation of the Hotel or pursuing
remedies with respect to the breach of these obligations;
(vii) to the extent permitted under the Operative Documents,
using the proceeds of any insurance maintained by Lessee to complete
construction of or rebuild any portion of the Hotel suffering a
Casualty;
(viii) entering into financing arrangements to construct and
install the Hotel subject to the terms and conditions set forth in the
Operative Documents;
(ix) obtaining all necessary permits, licenses, consents,
approvals and other authorizations, including those required under
Applicable Law, from all Governmental Authorities in connection with
the development, construction, installation, testing and placement
into service of the Hotel in accordance with the Plans and
Specifications;
(x) handling any Hazardous Materials in compliance with all
Environmental Laws;
(xi) functioning as the on-site representative of Lessee and, in
such capacity, monitoring, testing and inspecting the progress of the
construction and installation of the Hotel, reviewing all invoices and
all costs and expenses relating to the Hotel;
(xii) giving all notices and providing all certificates and other
information required to be given by Lessee under the Lease;
(xiii) maintaining all books and records with respect to the
design, engineering, identification, acquisition, construction,
installation, testing, placement into service, operation and
management of the Hotel; and
(xiv) performing any other acts necessary in connection with the
design, engineering, identification, acquisition, construction,
installation, testing, placement into service and development of the
Hotel.
(b) Subject to the terms and conditions of this Construction Agency
Agreement and the other Operative Documents, Construction Agent shall have
sole management and control over the construction means, methods, sequences
and procedures with respect to the construction and installation of the
Hotel.
(c) Construction Agent may, subject to the conditions, restrictions
and limitations set forth herein and in the other Operative Documents, at
any time during the term hereof revise, amend or modify the Plans and
Specifications without the consent of Trustee; provided, however, that
Trustee's prior written consent will be required if the aggregate effect of
such revision, amendment or modification, when taken together with any
previous or contemporaneous revisions, amendment or modification to any of
the Plans and Specifications, would be to reduce the Fair Market Sales
Value of the Hotel in any material respect when completed, or to have a
material adverse effect on the economic life and utility of the Hotel as
built and installed in accordance with the original Plans and
Specifications.
SECTION 2.5. No Construction Agency Fee. All obligations, duties and
requirements imposed upon or allocated to Construction Agent shall be performed
by Construction Agent at Construction Agent's sole cost and expense, and
Construction Agent will not be entitled to, and Trustee shall have no obligation
to pay, any agency fee or other fee or compensation, and Construction Agent
shall not be entitled to, and neither Trustee nor any other Person shall have
any obligation to make or pay, any reimbursement therefor, it being understood
that this Construction Agency Agreement is being entered into as consideration
for and as an inducement to Trustee to enter into the Lease and the other
Operative Documents.
SECTION 2.6. Delegation; Construction Documents. Trustee acknowledges that
Construction Agent has previously entered into the Construction Documents and
that Construction Agent will cause substantially all of its obligations
hereunder to be performed by the Prime Contractor pursuant to the Construction
Documents. Construction Agent may from time to time also enter into other
agreements with third parties as Construction Agent deems necessary or desirable
in order to cause the Hotel to be constructed and installed pursuant to this
Construction Agency Agreement. If for any reason the Prime Contractor under the
Construction Documents or any other third party under any other such agreement
defaults or fails to perform or otherwise complete construction of the Hotel in
accordance with the time schedule set forth in the Construction Documents and in
conformance with the Plans and Specifications, Construction Agent shall remain
liable hereunder and shall be fully responsible for completion and installation
of the Hotel in accordance with the Plans and Specifications by not later than
the Construction Termination Date. The Primary Construction Contract and the
Architect's Agreement shall provide that the Primary Contractor and the
Architect will look solely to Construction Agent for performance under such
agreements, and in the event of default or failure to perform by Construction
Agent, none of Trustee, Agent or any Lender will have any liability under any
such agreements.
ARTICLE III
COVENANTS OF CONSTRUCTION AGENT
SECTION 3.1. Completion of Construction. Construction Agent shall,
unconditionally and for the benefit of Trustee and the Lenders, cause the
Completion Date to occur on or before the Construction Termination Date.
Construction Agent's obligations shall not be limited or reduced by virtue of
any failure of Trustee to provide any funds (or any lack of funds of
Construction Agent), except if such failure constitutes (or such lack of funds
is caused by the failure of Trustee to provide any funds to Construction Agent,
or of the Lenders to provide any funds to Trustee, which failure in either case
constitutes) a breach of Trustee's or any Lender's obligations under the
Participation Agreement after all conditions to such funding are duly and timely
satisfied.
SECTION 3.2. Costs. If, for any reason, the aggregate cost to complete the
design, engineering, identification, acquisition, construction, installation,
testing and placement into service of the Hotel exceeds the Fair Market Sales
Value determined pursuant to the Appraisal delivered pursuant to Section 3.3(i)
of the Participation Agreement, then all such costs in excess of such amount
shall be borne by Construction Agent from its own funds. Construction Agent's
obligation under this Section 3.2 shall be absolute and unconditional,
notwithstanding any excess of the cost of construction of the Hotel over the
Fair Market Sales Value thereof, the payment of which excess shall be the
recourse obligation of Construction Agent.
SECTION 3.3. Casualty; Non-Casualty Loss.
(a) If, at any time before the Completion Date, there occurs a
Casualty in respect of the Hotel, then, Construction Agent shall give
prompt notice thereof (including the date of such occurrence) to Trustee
and the Lenders and will either (i) purchase the Hotel as is existing at
the time of such Casualty or (ii) promptly repair or replace the portions
of the Hotel suffering the Casualty, and promptly and diligently continue
to complete the design, engineering, identification, acquisition,
construction, installation, testing and placement into service of the Hotel
in accordance with the Construction Documents, the Plans and Specifications
and the terms hereof, and shall cause the Completion Date to occur on or
before the Construction Termination Date. If Construction Agent does not
notify Trustee within 30 days of the Casualty that it elects to purchase
the Hotel, then it will be deemed to have elected to repair or replace the
portions of the Hotel suffering the Casualty. If Construction Agent elects
to purchase the Hotel, it must pay the purchase price thereof to Trustee
not later than 45 days after the Casualty. The purchase price for the Hotel
shall be the amount of the then outstanding applicable Lease Supplement
Balance relating to the Hotel, plus an amount equal to the accrued but
unpaid interest on the Notes and all other amounts then due and payable
under the Lease and the Notes. If Construction Agent elects to repair or
replace the Hotel, Construction Agent shall be entitled to reimbursement
for amounts expended in connection therewith from the Casualty Recoveries,
which proceeds shall be paid to Construction Agent (x) first by Lessee in
accordance with Section 9.1(f) of the Lease and (y) after the proceeds
received pursuant to clause (x) have been used in accordance with this
Section 3.3(a), by Trustee, which shall promptly remit Casualty Recoveries
held by it to Construction Agent upon delivery by Construction Agent to
Trustee of written request for such reimbursement; provided, however, that
(1) if Construction Agent elects to purchase the Hotel, all Casualty
Recoveries received by Trustee shall be immediately applied by Trustee in
reduction of the purchase price payable hereunder upon written notice of
such election and (2) if not already received by Trustee and an Event of
Default has occurred and is continuing, Trustee may retain such proceeds as
cash collateral (without releasing Construction Agent from its obligation
under this Section 3.3(a) to purchase, or to repair or replace, the Hotel).
(b) If at any time before the Completion Date the Hotel or individual
component thereof suffers any Non-Casualty Loss, Construction Agent shall
(i) give prompt written notice of such occurrence and the date thereof to
Trustee and (ii) repair or replace the Hotel or component, as the case may
be. Construction Agent shall be entitled to reimbursement for amounts
expended to repair or replace the Hotel or component, as the case may be,
from Non-Casualty Recoveries, which proceeds shall be paid to Construction
Agent (x) first by Lessee in accordance with Section 9.2(c) of the Lease
and (y) after the proceeds received pursuant to clause (x) have been used
in accordance with this Section 3.3(b), by Trustee, which shall promptly
remit Non-Casualty Recoveries held by it to Construction Agent upon
delivery by Construction Agent to Trustee of written request for such
reimbursement; provided, however, that if an Event of Default has occurred
and is continuing, Trustee may retain such proceeds as cash collateral
(without releasing Construction Agent from its obligation under this
Section 3.3(b) to repair or replace the Hotel or individual component
thereof).
SECTION 3.4. Construction Documents. Construction Agent has entered into
the Construction Documents before the date hereof. Construction Agent shall
deliver to Trustee certified copies of the Construction Documents in which it
has a total payment obligation in excess of $1,000,000 ("Primary Construction
Contracts") promptly upon execution thereof. Without limiting Construction
Agent's obligations under Sections 3.1 and Section 3.7(a), Construction Agent
may, without the consent of Trustee, enter into any amendment, modification or
supplement to any such Primary Construction Contract.
SECTION 3.5. Construction Documents; Security Agreement and Collateral
Assignment of Primary Construction Contract. Subject to Section 3.4,
Construction Agent may perform any of its duties under this Construction Agency
Agreement by or through agents, contractors, employees or attorneys-in-fact, and
Construction Agent shall enter into such Construction Documents as Construction
Agent deems necessary or desirable; provided, however, that no such delegation
shall limit or reduce in any way Construction Agent's duties and obligations
under this Construction Agency Agreement. Contemporaneously with the execution
and delivery of this Construction Agency Agreement, Construction Agent will
execute and deliver to Trustee the Security Agreement and Collateral Assignment
of Primary Construction Contracts in the form of Exhibit A, pursuant to which
Construction Agent shall assign to Trustee, among other things, all of
Construction Agent's rights under and interest in the Primary Construction
Contracts. Construction Agent agrees that each of the Prime Construction
Contract and the Architect's Agreement contains an Acknowledgment of and Consent
to Security Agreement and Assignment, executed by the contractor party to such
agreement. Such acknowledgment and consent shall be in substantially the form of
Exhibit B or otherwise acceptable to Trustee.
SECTION 3.6. Environmental Matters. During the Construction Period,
Construction Agent shall (i) conduct its activities hereunder in compliance with
all Environmental Laws, keep all necessary permits, approvals, certificates,
licenses and other authorizations relating to environmental matters in effect
and remain in material compliance therewith, and handle all Hazardous Material
in compliance with all applicable Environmental Laws, except where such
noncompliance or failure to obtain authorizations is not reasonably likely to
have a Material Adverse Effect with respect to Trustee; (ii) as soon as possible
and in any event within ten days after the occurrence of any violation or
alleged violation of an Environmental Law the violation or alleged violation of
which could result in (x) Trustee or any Lender being exposed to criminal
sanctions or civil penalties, (y) remedial costs in excess of $2,000,000 or (z)
loss of perfected first priority security status of the Lien granted to Trustee
for the benefit of the Lenders by Lessee pursuant to the Lease, provide to
Trustee and each Lender a statement of an authorized officer setting forth the
details of such violation or alleged violation and the action which Construction
Agent proposes to take with respect thereto; (iii) promptly cure and have
dismissed with prejudice to the satisfaction of the Required Lenders any actions
and proceedings described in clause (ii) above; provided, however, that
Construction Agent may contest any such actions and proceedings pursuant to a
Permitted Contest; and (iv) provide such information and certifications which
Trustee or any Lender may reasonably request from time to time to evidence
compliance with this Section 3.6.
SECTION 3.7. Other Covenants of Construction Agent. Construction Agent
hereby covenants and agrees that it will:
(a) cause the design, engineering, identification, acquisition,
construction, installation, testing and placement into service of the Hotel
to be prosecuted diligently in accordance in all material respects with the
Plans and Specifications, all Applicable Laws, the terms and conditions of
any insurance policy required by the Lease to be maintained by Lessee and
good engineering, construction and other applicable industry standards, and
perform all of the duties and obligations of the owner or purchaser, as
appropriate, under the Construction Documents;
(b) cause all Liens on the Hotel or the Hotel Site, other than
Permitted Liens, to be promptly discharged;
(c) at all times during the construction, installation, testing and
placement into service of the Hotel, cause all record title to the Hotel to
be and remain vested in Trustee as collateral security; and
(d) furnish, upon request of Trustee, copies of any invoices relating
to the Hotel.
ARTICLE IV
PAYMENT OF FUNDS
SECTION 4.1. Funding of Hotel Costs. Any Advance made to Trustee to pay
Hotel Costs shall be made available to Construction Agent in accordance with the
Advance Request relating thereto and the terms of the Participation Agreement,
and Construction Agent will cause all such proceeds to be used only to pay Hotel
Costs. If, for any reason, the aggregate cost to complete construction of the
Hotel, including any amounts payable to Prime Contractor under the Construction
Documents, exceeds the sum of the then available Commitments allocable to the
Hotel under Section 2.2 of the Participation Agreement, then all such costs in
excess of such available Commitments including any value added tax, sales tax,
purchase tax or other similar taxes or duties, if any, shall be borne by
Construction Agent from its own funds. Any accrued interest that is due and
payable during the Construction Period and which is not paid by Lessee pursuant
to Section 3.1(a) of the Lease shall be paid by Construction Agent on behalf of
Trustee to the Agent for distribution pursuant to the terms of the Loan
Agreement.
ARTICLE V
CONSTRUCTION AGENCY EVENTS OF DEFAULT
SECTION 5.1. Construction Agency Events of Default. If any one or more of
the following events (each a "Construction Agency Event of Default") shall
occur:
(a) Construction Agent uses funds advanced by Trustee to Construction
Agent for Hotel Costs for purposes not permitted by this Construction
Agency Agreement;
(b) the Completion Date shall fail to occur for any reason on or prior
to the Construction Termination Date;
(c) Construction Agent shall fail to observe or perform in any
material respect any term, covenant or condition of this Construction
Agency Agreement (except those specified in clauses (a) and (b) above), and
such failure shall remain unremedied for a period of thirty (30) days after
receipt of written notice thereof;
(d) an Event of Default exists; or
(e) a material breach by Construction Agent shall have occurred under
the Construction Contracts and such failure or breach shall remain
unremedied for a period of thirty (30) days after receipt of written notice
thereof;
then, in any such event, and at any time thereafter so long as the same shall be
continuing, Trustee may at its option, in addition to the other rights and
remedies provided for in this Article, declare this Construction Agency
Agreement to be in default and, with written notice thereof to Construction
Agent, immediately terminate this Construction Agency Agreement, and upon the
giving of such notice, this Construction Agency Agreement shall terminate and
all obligations of Trustee under this Construction Agency Agreement shall cease;
provided, further, such termination shall be automatic and without notice to
Construction Agent upon the occurrence of a Lease Event of Default described in
Section 10.1(g) of the Lease. Construction Agent shall pay upon demand to
Trustee all costs, expenses, losses, expenditures and damages (including
attorneys' fees and the fees and expenses of any construction agent thereafter
appointed by Trustee from time to time) incurred by or on behalf of Trustee in
connection with any Construction Agency Event of Default, and the obligations of
Construction Agent under this sentence shall survive any termination of this
Construction Agency Agreement. Notwithstanding the foregoing, if a Construction
Agency Event of Default shall have occurred and be continuing, Trustee shall
have the right to require Construction Agent to purchase the Hotel for the then
outstanding applicable Lease Supplement Balance relating to the Hotel, plus an
amount equal to the accrued but unpaid interest on the Notes and all other
amounts then due and payable under the Lease and Notes (whereupon Trustee shall
convey title to the Hotel to Lessee in accordance with Section 5.3 of the
Lease). Payment by Construction Agent shall be in immediately available funds
and paid to Trustee on the date of purchase.
SECTION 5.2. Survival. The termination of this Construction Agency
Agreement pursuant to Section 5.1 shall in no event relieve Construction Agent
of (i) its liability and obligations hereunder which accrued prior to such
termination, all of which shall survive any such termination, or (ii) its
liability under Section 5.1, including, upon request, its obligation to purchase
the Hotel pursuant to Section 5.1.
SECTION 5.3. Remedies; Remedies Cumulative. No failure to exercise and no
delay in exercising, on the part of Trustee, any right, remedy, power or
privilege under this Construction Agency Agreement or under the other Operative
Documents shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under this Construction Agency
Agreement preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges provided in this Construction Agency Agreement are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law or any
other rights, remedies, powers or privileges which the Trustee, the Agent or the
Lenders may have under any other Operative Document.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Notices. All notices, consents, directions, approvals,
instructions, requests, demands and other communications required or permitted
by the terms hereof to be given to any Person shall be given in writing in the
manner provided in, shall be sent to the respective addresses set forth in, and
the effectiveness thereof shall be governed by the provisions of, Section 9.3 of
the Participation Agreement.
SECTION 6.2. Successors and Assigns. The terms and provisions of this
Construction Agency Agreement, and the respective rights and obligations
hereunder of Trustee, Construction Agent, Agent and the Lenders shall be binding
upon them and their respective successors, legal representatives and assigns
(including, in the case of Trustee, any Person to whom Trustee may transfer the
Hotel or any interest therein in accordance with the provisions of the Operative
Documents), and inure to their benefit and the benefit of their respective
permitted successors, legal representatives and assigns. Construction Agent
shall not assign any of its rights or, except as permitted by Section 2.6,
delegate any of its duties or obligations under this Construction Agency
Agreement without the prior written consent of Trustee, which consent may be
granted or withheld in Trustee's reasonable discretion.
SECTION 6.3. GOVERNING LAW. THIS CONSTRUCTION AGENCY AGREEMENT HAS BEEN
DELIVERED IN NEW YORK, AND SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED
AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF NEW YORK, INCLUDING ARTICLE
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW BUT EXCLUDING ALL OTHER CHOICE OF
LAWS AND CONFLICTS OF LAWS RULES OF SUCH STATE, EXCEPT TO THE EXTENT THAT THE
EXERCISE OF CERTAIN RIGHTS OR REMEDIES HEREUNDER OR UNDER THE OTHER OPERATIVE
DOCUMENTS MAY REQUIRE COMPLIANCE WITH GAMING LAWS.
SECTION 6.4. Amendments and Waivers. Subject to the restrictions set forth
in the Participation Agreement, Trustee and Construction Agent may from time to
time enter into written amendments, supplements or modifications hereto.
SECTION 6.5. Counterparts. This Construction Agency Agreement may be
executed on any number of separate counterparts, and by different parties on
different counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
SECTION 6.6. Severability. Any provision of this Construction Agency
Agreement prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 6.7. Headings and Table of Contents. The headings and table of
contents contained in this Construction Agency Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
SECTION 6.8. Limitations of Recourse. In addition to the limitations on
liability, indemnities and other rights provided to the Bank and Trustee under
the Operative Documents, the parties hereto agree that the Bank shall have no
personal liability whatsoever to Construction Agent or its successors and
assigns for any claim based on or in respect of this Construction Agency
Agreement or any of the other Operative Documents or arising in any way from the
transactions contemplated hereby or thereby; provided, however, that the Bank
shall be liable in its individual capacity (a) for its own willful misconduct or
gross negligence (or negligence in the handling of funds), (b) for liabilities
that may result from the incorrectness of any representation or warranty
expressly made by it in its individual capacity in Section 4.3 of the
Participation Agreement or from the failure of the Bank to perform its covenants
and agreements set forth in Section 6.1(a) of the Participation Agreement, or
(c) for any Tax based on or measured by any fees, commission or compensation
received by it for acting as Trustee as contemplated by the Operative Documents.
It is understood and agreed that, except as provided in the preceding proviso:
(i) the Bank shall have no personal liability under any of the Operative
Documents as a result of acting pursuant to and consistent with any of the
Operative Documents; (ii) all obligations of the Bank to Construction Agent are
solely nonrecourse obligations (with liability payable solely out of the Trust
Estate) except to the extent that it has received payment from others; (iii) all
such personal liability of the Bank is expressly waived and released as a
condition of, and as consideration for, the execution and delivery of the
Operative Documents by the Bank; and (iv) this Construction Agency Agreement is
executed and delivered by the Bank solely in the exercise of the powers
expressly conferred upon it as Trustee under the Trust Agreement.
SECTION 6.9. Knowledge of Trustee and Bank. For all purposes of this
Construction Agency Agreement and the other Operative Documents, in the absence
of actual knowledge of an officer in the Corporate Trust Department of Bank,
Trustee and the Bank shall not be deemed to have knowledge of any Construction
Agency Event of Default unless Trustee or the Bank receives written notice
thereof given by or on behalf of a Lender, Construction Agent or Lessee.
[Signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Construction Agency
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the day and year first above written.
BL DEVELOPMENT CORP.
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
HANCOCK BANK,
not in its individual capacity,
except as expressly set forth
herein, but solely as Trustee
By: /s/ C. H. GIBBONS
Name: C. H. Gibbons
Title: Vice President & Trust Officer
[EXHIBIT A
TO
CONSTRUCTION AGENCY AGREEMENT]
[Form of]
Security Agreement and
Collateral Assignment of Construction Documents
FOR VALUE RECEIVED, and to secure the performance by BL DEVELOPMENT
CORP., a Minnesota corporation (hereinafter referred to as "Assignor"), of all
of its obligations under that certain Construction Agency Agreement dated as of
May 10, 1996 (as the same may be amended, modified or restated from time to
time, and together with all substitutions therefor and replacements thereof, the
"Agreement") between Construction Agent and Hancock Bank, not in its individual
capacity but solely as Trustee ("Secured Party"), and under the other Operative
Documents, Assignor does hereby assign and grant a security interest in and Lien
upon, to Secured Party and its successors and assigns, all of Assignor's right,
title and interest in and to the following, now or hereafter existing (referred
to collectively herein as the "Construction Agency Collateral"):
(i) all engineering, procurement and construction contracts
relating to the design, engineering, identification, acquisition,
construction, installation, testing and placement into service of the
Hotel, as each such agreement may heretofore or hereafter be entered
into, supplemented, modified or amended from time to time
(collectively, the "Construction Contracts");
(ii) all plans, specifications and drawings of any and every kind
heretofore or hereafter prepared for use in connection with the
design, engineering, identification, acquisition, construction,
installation, testing and/or placement into service of the Hotel, and
any supplements, amendments or modifications thereto (collectively,
the "Plans");
(iii) all building and other permits, licenses and government
approvals which are necessary or useful to the commencement and
completion of the design, engineering, identification, acquisition,
construction, installation, testing and/or placement into service of
the Hotel, or otherwise relate thereto, heretofore or hereafter
obtained or applied for by or on behalf of Assignor or any architects,
engineers or contractors working on any aspect thereof, and any
deposits made in connection therewith (collectively, the "Permits");
and
(iv) all proceeds of any of the foregoing;
provided, however, that Secured Party shall have no obligation or liability of
any kind under or with respect to the Construction Contracts, the Permits, the
Plans or the other Construction Agency Collateral, either before or after its
exercise of any rights hereby granted to it, and Assignor agrees to save and
hold Secured Party harmless of and from, and to indemnify it against, any and
all such obligations and liabilities, contingent or otherwise.
All capitalized but undefined terms used herein shall have the same
respective meanings as in Appendix 1 to the Participation Agreement (as defined
in the Construction Agency Agreement).
This Security Agreement and Collateral Assignment of Construction
Documents shall inure to the benefit of the Secured Party and its successors and
assigns, and shall be binding upon the Assignor and its successors and assigns,
and shall continue in full force and effect until all obligations, liabilities
and indebtedness of any kind now or hereafter due the Secured Party from the
Assignor under or with respect to the Construction Agency Agreement or any of
the other Operative Documents, or which are otherwise secured hereby, whether
now existing or hereafter arising or incurred (collectively, the "Liabilities"),
have been fully paid, performed and satisfied, at which time this Security
Agreement and Collateral Assignment of Construction Documents will terminate.
Secured Party will not exercise any of its rights hereunder until a Construction
Agency Event of Default occurs.
For purposes of completing the design, engineering, identification,
acquisition, construction, installation, testing and/or placement into service
of the Hotel after a Construction Agency Event of Default shall have occurred,
the Secured Party may, at its option, further assign its right, title and
interest in the Construction Agency Collateral without the consent of Assignor,
any contractor or any other Person.
This Security Agreement and Collateral Assignment of Construction
Documents is a present security interest and collateral assignment; provided,
however, that the Secured Party shall not have the right to undertake completion
of the design, engineering, identification, acquisition, construction,
installation, testing and/or placement into service of the Hotel or directly to
enforce the provisions of any Construction Contract until a Construction Agency
Event of Default has occurred and is continuing; provided, further, that in such
event, the Secured Party shall have the right, but not the obligation, to
undertake the same. During the continuance of any such Construction Agency Event
of Default, the Secured Party may (but shall not be required to), without
affecting any other right or remedy available to it, exercise its rights under
this Security Agreement and Collateral Assignment of Construction Documents as
provided herein in any manner permitted by law. If any notice to Assignor is
required by law, such notice shall be deemed commercially reasonable if given at
least 10 days prior to the date of intended action.
Assignor represents and warrants that its principal place of business
and chief executive office, as such terms are used in Section 9-103(3) of the
UCC, are each located at 13705 First Avenue North; Plymouth, Minnesota 55441.
Assignor represents and warrants that upon the filing of an
appropriate UCC financing statement with the Secretary of State of Mississippi
and Minnesota, in the office of the Chancery Clerk of Tunica County,
Mississippi, the Secured Party will have an enforceable, perfected first
priority security interest of record in the Construction Agency Collateral as
against all Persons, including Assignor and its creditors.
Assignor, at its own cost and expense, will cause all financing
statements (including precautionary financing statements), fixture filings and
other documents, to be recorded or filed at such places and times in such
manner, and will take all such other actions or cause such actions to be taken,
as may be reasonably requested by the Secured Party in order to establish,
preserve, protect and perfect the first and prior Lien of the Secured Party to
the Construction Agency Collateral.
This Security Agreement and Collateral Assignment of Construction
Documents may be effectively waived, modified, amended or terminated only by a
written instrument executed by the Secured Party. Any waiver by the Secured
Party shall be effective only with respect to the specific instance described
therein. Delay or course of conduct shall not constitute a waiver of any right
or remedy of the Secured Party.
THIS SECURITY AGREEMENT AND COLLATERAL ASSIGNMENT OF CONSTRUCTION
DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAWS OF NEW YORK, WITHOUT REGARD TO THE CONFLICTS OF LAWS PRINCIPLES
OF SUCH STATE PROVIDED THAT MATTERS RELATING TO PERFECTION AND THE EFFECT OF
PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST GRANTED HEREUNDER SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH ARTICLE 9-103-(1)(b) OF THE UCC.
IN WITNESS WHEREOF, Assignor has caused this Security Agreement and
Collateral Assignment of Construction Documents to be executed by its duly
authorized officer as of this _____ day of __________________, 1996.
BL DEVELOPMENT CORP.,
as Assignor
By: /s/ TIMOTHY J. COPE
Name: Timothy J. Cope
Title: Chief Financial Officer
[EXHIBIT B
TO
CONSTRUCTION AGENCY AGREEMENT]
[Form of]
Acknowledgment of and Consent to
Security Agreement and
Collateral Assignment of Primary Construction Contract
____________________________ (the "Company") hereby:
(a) acknowledges and consents to the assignment by BL Development
Corp. ("Assignor") to [Name of Trust] ("Assignee") of all of
Assignor's right, title and interest in, to and under the
_____________ Agreement dated ________, 19__ (the "Assigned
Agreement") between Assignor and Company pursuant to the Security
Agreement and Collateral Assignment of Construction Documents dated as
of ___, ____________1996 (as amended or otherwise modified from time
to time, the "Security Agreement") from Assignor to Assignee;
(b) confirms that the Company has reviewed the Security
Agreement and this instrument and does not object to the terms
thereof;
(c) agrees that Assignee may, without affecting any other right
or remedy available to it, exercise its rights under the Security
Agreement and the Assigned Agreement as provided in the Security
Agreement or in any manner permitted by law and further agrees that it
will not exercise any right it may have under the Assigned Agreement
to cancel, suspend or terminate the Assigned Agreement without first
giving the Secured Party notice of any default of Assignor thereunder
and the opportunity to cure any such monetary default (which cure
period shall be the cure period in the Assigned Agreement, but in any
event at least 60 days), or if such default is non-monetary, to
rectify to the Company's reasonable satisfaction the effect upon the
Company of any such non-monetary default by Assignor;
(d) agrees not to place any Lien on the Hotel; and
(e) agrees to look solely to Construction Agent and that it shall
have no recourse to Assignee with respect to any claims arising under
the Construction Contract, except to the extent that Assignee has
assumed in writing any obligations under the Construction Contract.
Dated: ______________, 19___
[NAME OF COMPANY]
By:_______________________________
Name:_____________________________
Title:____________________________