LOAN AGREEMENT
for a loan in the amount of
$32,000,000.00
MADE BY AND BETWEEN
SILVER MESA AT PALOMINO PARK LLC 4600
South Ulster Street, Suite 350
Denver, Colorado 80237
AND
KEYBANK NATIONAL ASSOCIATION,
a national banking association
1675 Broadway, Suite 400
Denver, Colorado 80202
Dated as of December 20, 2000
TABLE OF CONTENTS
ARTICLE 1 INCORPORATION OF RECITALS AND EXHIBITS...............................1
1.1 Incorporation of Recitals.............................................1
1.2 Incorporation of Exhibits.............................................1
ARTICLE 2 DEFINITIONS..........................................................2
2.1 Defined Terms.........................................................2
2.2 Other Definitional Provisions.........................................7
ARTICLE 3 BORROWER'S REPRESENTATIONS AND WARRANTIES............................7
3.1 Representations and Warranties........................................7
3.2 Survival of Representations and Warranties...........................10
ARTICLE 4 LOAN AND LOAN DOCUMENTS.............................................11
4.1 Agreement to Borrow and Lend; Lender's Obligation to Disburse........11
4.2 Loan Documents.......................................................11
4.3 Term of the Loan.....................................................13
4.4 Prepayments..........................................................13
4.5 Required Principal Payments..........................................14
ARTICLE 5 INTEREST............................................................14
5.1 Interest Rate........................................................14
ARTICLE 6 COSTS OF MAINTAINING LOAN...........................................16
6.1 Increased Costs and Capital Adequacy.................................16
6.2 Borrower Withholding.................................................17
ARTICLE 7 LOAN EXPENSE AND ADVANCES...........................................17
7.1 Loan and Administration Expenses.....................................17
7.2 Commitment Fee.......................................................18
7.3 Lender's Attorneys' Fees and Disbursements...........................18
7.4 Time of Payment of Fees and Expenses.................................18
7.5 Expenses and Advances Secured by Loan Documents......................18
7.6 Right of Lender to Make Advances to Cure Borrower's Defaults.........18
ARTICLE 8 REQUIREMENTS PRECEDENT TO THE OPENING OF THE LOAN...................19
8.1 Conditions Precedent.................................................19
ARTICLE 9 BORROWER'S AGREEMENTS...............................................22
9.1 Borrower further covenants and agrees as follows:....................22
ARTICLE 10 CASUALTIES AND CONDEMNATION........................................26
10.1 Lender's Election to Apply Proceeds on Indebtedness..................26
10.2 Borrower's Obligation to Rebuild and Use of Proceeds Therefor........27
ARTICLE 11 ASSIGNMENTS BY LENDER AND BORROWER.................................28
11.1 Assignments and Participations.......................................28
11.2 Prohibition of Assignments and Transfers by Borrower.................28
11.3 Prohibition of Transfers in Violation of ERISA.......................28
11.4 Successors and Assigns...............................................29
ARTICLE 12 TIME OF THE ESSENCE................................................29
12.1 Time is of the Essence...............................................29
ARTICLE 13 EVENTS OF DEFAULT..................................................29
13.1 Events of Default....................................................29
ARTICLE 14 LENDER'S REMEDIES IN EVENT OF DEFAULT..............................31
14.1 Remedies Conferred Upon Lender.......................................31
ARTICLE 15 EVENTS OF DEFAULT..................................................32
15.1 Full Payment.........................................................32
15.2 Partial Releases.....................................................32
ARTICLE 16 GENERAL PROVISIONS.................................................32
16.1 Captions.............................................................32
16.2 .Modification; Waiver................................................33
16.3 Governing Law........................................................33
16.4 Acquiescence Not to Constitute Waiver of Lender's Requirements.......33
16.5 Disclaimer by Lender.................................................33
16.6 Partial Invalidity; Severability.....................................33
16.7 Definitions Include Amendments.......................................33
16.8 Entire Agreement.....................................................34
16.9 Waiver of Damages....................................................34
16.10 Claims Against Lender................................................34
16.11 Jurisdiction.........................................................34
16.12 Set-Offs.............................................................35
ARTICLE 17 NOTICES............................................................35
ARTICLE 18 WAIVER OF JURY TRIAL...............................................37
Exhibit A Legal Description of Land
Exhibit B Permitted Exceptions
Exhibit C Title Requirements
Exhibit D Form of Survey Certification
Exhibit E Insurance Requirements
Exhibit F Budget
Exhibit G LIBOR Notice
LOAN AGREEMENT
Project Commonly Known as
"Silver Mesa at Palomino Park"
THIS LOAN AGREEMENT ("Agreement") is made as of December 20, 2000, by and
between SILVER MESA AT PALOMINO PARK LLC, a Colorado limited liability company
("Borrower"), and KEYBANK NATIONAL ASSOCIATION, a national banking association,
its successors and assigns ("Lender").
W I T N E S S E T H:
RECITALS
A. Borrower is the owner in fee simple of a parcel of real property
situated in the County of Douglas, State of Colorado, which land is legally
described in Exhibit A attached hereto (the "Land"), upon which has been
constructed a residential townhouse project consisting of two hundred sixty-four
(264) residential units located in fifty-four (54) two story buildings with
attached garages and surface parking for six hundred seventy-nine (679) cars and
an amenity package which includes a clubhouse, pool and laundry facilities
commonly known as "Silver Mesa at Palomino Park." All improvements now located
or hereinafter constructed on the Land are hereinafter referred to as the
"Improvements," together with the Land being hereinafter referred to as the
"Project."
B. Borrower intends to submit the Project in phases to condominium
ownership pursuant to the provisions of the Colorado Common Interest Ownership
Act.
C. Borrower has requested and applied to Lender for a loan in the amount of
Thirty-Two Million Dollars ($32,000,000.00) (the "Loan") to refinance the
Project, and Lender is willing to make the Loan on the terms and conditions
hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, the parties hereto agree as follows:
ARTICLE 1
INCORPORATION OF RECITALS AND EXHIBITS
1.1 INCORPORATION OF RECITALS.
The foregoing preambles and all other recitals set forth herein are made a
part hereof by this reference.
1.2 INCORPORATION OF EXHIBITS.
Exhibits A through G, inclusive, attached hereto are incorporated herein
and expressly made a part hereof by this reference.
ARTICLE 2
DEFINITIONS
2.1 DEFINED TERMS.
The following terms as used herein shall have the following meanings:
Act: The Colorado Common Interest Ownership Act. C.R.S.ss.38-33.3-101, et
seq., as amended from time to time.
Adjusted LIBOR Rate: For any LIBOR Rate Interest Period, an interest rate
per annum equal to the sum of (A) the rate obtained by dividing (x) the LIBOR
Rate for such LIBOR Rate Interest Period by (y) a percentage equal to one
hundred percent (100%) minus the Reserve Percentage for the LIBOR Rate Interest
Period and (B) the LIBOR Rate Added Percentage.
Affiliate: With respect to a specified person or entity, any individual,
partnership, corporation, limited liability company, trust, unincorporated
organization, association or other entity which, directly or indirectly, through
one or more intermediaries, controls or is controlled by or is under common
control with such person or entity, including, without limitation, any general
or limited partnership in which such person or entity is a partner.
Agreement: This Loan Agreement.
Adjusted Prime Rate: A rate per annum equal to the sum of (a) the Prime
Rate Margin and (b) the greater of (i) the Prime Rate or (ii) one percent (1%)
in excess of the Federal Funds Effective Rate. Any change in the Adjusted Prime
Rate shall be effective immediately from and after such change in the Adjusted
Prime Rate.
Apartment Unit: Each of the two hundred sixty-four (264) residential units
contained within the Project.
Applicable Rate: As such term is defined in Section 5.1(a).
Appraisal: An MAI certified appraisal of the Project performed in
accordance with FIRREA and Lender's appraisal requirements by an appraiser
selected and retained by Lender.
Association: As said term is defined in the Act.
Bankruptcy Code: As such term is defined in Section 13.1(d).
Breakage Costs: (a) The cost to Lender of re-employing funds bearing
interest at an Adjusted LIBOR Rate, incurred (or expected to be incurred) in
connection with (i) any payment of any portion of the Loan bearing interest at
an Adjusted LIBOR Rate prior to the termination of any applicable LIBOR Rate
Interest Period; (ii) the conversion of an Adjusted LIBOR Rate to any other
applicable interest rate on a date other than the last day of the relevant
interest period; or (iii) the failure of Borrower to draw down, on the first day
of the applicable LIBOR Rate Interest Period, any amount as to which Borrower
has elected a LIBOR Rate Option, which Breakage Costs shall be computed in
accordance with the formula set forth in Section 4.4 hereof.
Budget: As such term is defined in Section 8.1(v).
Business Day: A day of the year on which banks are not required or
authorized to close in Denver, Colorado, or in New York, New York.
Common Elements: As said term is defined in the Act.
Condominium: As said term is defined in the Act.
Condominium Unit: Upon conversion of the Project or portion thereof to a
Condominium pursuant to the requirements of the Act, an individual Apartment
Unit, together with the undivided interest in Common Elements appurtenant
thereto and the right to use any Limited Common Element.
Control: As such term is used with respect to any person or entity,
including the correlative meanings of the terms "controlled by" and "under
common control with", shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management policies of such person
or entity, whether through the ownership of voting securities, by contract or
otherwise.
Declarant: As said term is defined in the Act.
Declaration: As said term is defined in the Act.
Default or default: Any event which, if it were to continue uncured, would,
with notice or lapse of time or both, constitute an Event of Default hereunder.
Default Rate: A rate per annum equal to three percentage points (300 basis
points) over the Adjusted Prime Rate.
Development Rights and Special Declarant Rights: As said terms are defined
in the Act.
Discounted Bulk Sales Value: The present value of all future net proceeds
from individual sales of Condominium Units, discounted for the passage of time
and assumption of risk, after an appropriate allowance for expenses necessary to
achieve these sales; i.e., marketing costs, sales expense, property holding
costs (non-financial) and entrepreneurial remuneration.
Environmental Proceedings: As such term is defined in Section 3.1(b).
Environmental Report: As such term is defined in Section 8.1(r).
ERISA: The Employee Retirement Income Security Act of 1974, as amended, and
the regulations promulgated thereunder from time to time.
Event of Default: As such term is defined in Article 13.
Federal Funds Effective Rate: Shall mean, for any day, the rate per annum
(rounded upward to the nearest on one-hundredth of one percent (1/100 of 1%))
announced by the Federal Reserve Bank of Cleveland on such day as being the
weighted average of the rates on overnight federal funds transactions arranged
by federal funds brokers on the previous trading day, as computed and announced
by such Federal Reserve Bank in substantially the same manner as such Federal
Reserve Bank computes and announces the weighted average it refers to as the
"Federal Funds Effective Rate."
Governmental Authority: Any federal, state, county or municipal government,
or political subdivision thereof, any governmental or quasi-governmental agency,
authority, board, bureau, commission, department, instrumentality, or public
body, or any court, administrative tribunal, or public utility.
Guarantor: Wellsford Capital, a Maryland real estate investment trust.
Guaranty: As such term is defined in Section 4.2(j).
Hazardous Material: Means and includes gasoline, petroleum, asbestos
containing materials, explosives, radioactive materials or any hazardous or
toxic material, substance or waste which is defined by those or similar terms or
is regulated as such under any Law of any Governmental Authority having
jurisdiction over the Project or any portion thereof or its use, including: (i)
any "hazardous substance" defined as such in (or for purposes of) the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C.A. ss. 9601(14) as may be amended from time to time, or any so-called
"superfund" or "superlien" Law, including the judicial interpretation thereof;
(ii) any "pollutant or contaminant" as defined in 42 U.S.C.A. ss. 9601(33);
(iii) any material now defined as "hazardous waste" pursuant to 40 C.F.R. Part
260; (iv) any petroleum, including crude oil or any fraction thereof; (v) any
"hazardous chemical" as defined pursuant to 29 C.F.R. Part 1910; and (vi) any
other toxic substance or contaminant that is subject to any other Law or other
past or present requirement of any Governmental Authority.
Improvements: The improvements described in Recital A hereto.
Including or including: Including but not limited to.
Indemnity: As such term is defined in Section 4.2(k).
Interest Reserve: The sum of One Million Nine Hundred Sixty Thousand Seven
Hundred Fifty-Two Dollars ($1,960,752.00).
Land: As such term is defined in Recital A.
Laws: Collectively, all federal, state and local laws, statutes, codes,
ordinances, orders, rules and regulations, including judicial opinions or
precedential authority in the applicable jurisdiction.
Leases: The collective reference to all leases, subleases and occupancy
agreements affecting the Project or any part thereof now existing or hereafter
executed and all amendments, modifications or supplements thereto.
LIBOR Business Day: A Business Day on which dealings in U.S. dollars are
carried on in the London Interbank Market.
LIBOR Rate: For any LIBOR Rate Interest Period, the average rate as shown
in Dow Jones Markets (formerly Telerate) (Page 3750) at which deposits in U.S.
dollars are offered by first class banks in the London Interbank Market at
approximately 11:00 a.m. (London time) two (2) LIBOR Business Days prior to the
first day of such LIBOR Rate Interest Period with a maturity approximately equal
to such LIBOR Rate Interest Period and in an amount approximately equal to the
amount to which such LIBOR Rate Interest Period relates, adjusted for reserves
and taxes if required by future regulations. If Dow Jones Markets no longer
reports such rate or Lender determines in good faith that the rate so reported
no longer accurately reflects the rate available to Lender in the London
Interbank Market, Lender may select a replacement index.
LIBOR Rate Added Percentage: Two percent (200 basis points) per annum.
LIBOR Rate Interest Period: With respect to each amount bearing interest at
a LIBOR based rate, a period of one month, to the extent deposits with such
maturity are available to Lender, commencing on a LIBOR Business Day, as
selected by Borrower provided, however, that (i) any LIBOR Rate Interest Period
which would otherwise end on a day which is not a LIBOR Business Day shall
continue to and end on the next succeeding LIBOR Business Day, unless the result
would be that such LIBOR Rate Interest Period would be extended to the next
succeeding calendar month, in which case such LIBOR Rate Interest Period shall
end on the next preceding LIBOR Business Day; and (ii) any LIBOR Rate Interest
Period which begins on a day for which there is no numerically corresponding
date in the calendar month in which such LIBOR Rate Interest Period would
otherwise end shall instead end on the last LIBOR Business Day of such calendar
month.
LIBOR Rate Option: As defined in Section 5.1(b).
Limited Common Elements: As said term is defined in the Act.
Loan: As defined in Recital B.
Loan Amount: The maximum amount of the Loan as set forth in Section 4.1(a)
as reduced by principal payments made from time to time.
Loan Documents: The collective reference to this Agreement, the documents
and instruments listed in Section 4.2, and all the other documents and
instruments entered into from time to time, evidencing or securing the Loan or
any obligation of payment thereof or performance of Borrower's obligations in
connection with the transaction contemplated hereunder, each as amended.
Loan Opening Date: December 20, 2000.
Map: As said term is defined in the Act.
Master Association: The Palomino Park Owners Association, a Colorado
non-profit corporation.
Master Declaration: The Master Declaration of Covenants, Conditions and
Restrictions of Palomino Park to be recorded in the office of the Clerk and
Recorder of the County of Douglas, State of Colorado.
Material Adverse Change or material adverse change: If, in Lender's
reasonable discretion, the business prospects, operations or financial condition
of a person, entity or property has changed in a manner which could impair the
value of Lender's security for the Loan, prevent timely repayment of the Loan or
otherwise prevent the applicable person or entity from timely performing any of
its material obligations under the Loan Documents.
Maturity Date: As such term is defined in Section 4.3.
Mortgage: As such term is defined in Section 4.2(b).
Note: As such term is defined in Section 4.2(a).
Opening of the Loan or Loan Opening: The first disbursement of Loan
proceeds.
Operating Expenses: For any monthly period, the actual costs and expenses
of owning, operating, managing and maintaining the Project during such period
incurred by Borrower, determined on a cash basis (except for real and personal
property taxes and insurance premiums, which shall be determined on an accrual
basis); excepting, however, interest or principal due on the Loan.
Permitted Exceptions: Those matters listed on Exhibit B hereto to which
title to the Project may be subject at the Loan Opening and thereafter such
other title exceptions as Lender may reasonably approve in writing.
Prime Rate: That interest rate established from time to time by Lender as
Lender's Prime Rate, whether or not such rate is publicly announced; the Prime
Rate may not be the lowest interest rate charged by Lender for commercial or
other extensions of credit.
Prime Rate Margin: Zero percent (0%) (0 basis points) per annum.
Project: The collective reference to (i) the Land, together with all
buildings, structures and improvements located or to be located thereon,
including the Improvements, as described in the Recitals; (ii) all rights,
privileges, easements and hereditaments relating or appertaining thereto; and
(iii) all personal property, fixtures and equipment required or beneficial for
the operation thereof.
Release Consideration: As said term is defined in Section 15.2.
Reserve Percentage: For any LIBOR Rate Interest Period, that percentage
which is specified three (3) Business Days before the first day of such LIBOR
Rate Interest Period by the Board of Governors of the Federal Reserve System (or
any successor) or any other governmental or quasi-governmental authority with
jurisdiction over Lender for determining the maximum reserve requirement
(including, but not limited to, any marginal reserve requirement) for Lender
with respect to liabilities constituting of or including (among other
liabilities) Eurocurrency liabilities in an amount equal to that portion of the
Loan affected by such LIBOR Rate Interest Period and with a maturity equal to
such LIBOR Rate Interest Period.
Sales and Marketing Report: As said term is defined in Section 9.1(l).
State: The State of Colorado.
Tenant: The tenant under a Lease.
Title Insurer: Land Title Guarantee Company, as agent for Chicago Title
Insurance Company, or such other title insurance company licensed in the State
as may be approved in writing by Lender.
Title Policy: As such term is defined in Section 8.1(a).
Transfer: As such term is defined in Section 11.2.
2.2 OTHER DEFINITIONAL PROVISIONS.
All terms defined in this Agreement shall have the same meanings when used
in the Note, Mortgage, any other Loan Documents or any certificate or other
document made or delivered pursuant hereto. The words "hereof", "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement.
ARTICLE 3
BORROWER'S REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES.
To induce Lender to execute this Agreement and perform its obligations
hereunder, Borrower hereby represents and warrants to Lender as follows:
(a) On the Loan Opening and thereafter, Borrower shall have good and
marketable fee simple title to the Project, subject only to the Permitted
Exceptions.
(b) No litigation or proceedings are pending, or to Borrower's actual
knowledge threatened, against Borrower or Guarantor, which could, if adversely
determined, cause a Material Adverse Change with respect to Borrower, Guarantor
or the Project. There are no pending environmental proceedings, whether civil
(including actions by private parties), criminal, or administrative proceedings,
relating to the Project (collectively, "Environmental Proceedings"), and
Borrower has no actual knowledge of any threatened Environmental Proceedings or
any facts or circumstances which may give rise to any future Environmental
Proceedings.
(c) Borrower is a duly organized and validly existing limited liability
company under the laws of the State of Colorado and has full power and authority
to execute, deliver and perform all Loan Documents to which Borrower is a party,
and such execution, delivery and performance have been duly authorized by all
requisite action on the part of Borrower.
(d) No consent, approval or authorization of or declaration, registration
or filing with any Governmental Authority or non-governmental person or entity,
including any creditor or partner of Borrower or Guarantor, is required in
connection with the execution, delivery and performance of this Agreement or any
of the Loan Documents other than the recordation of the Mortgage, Assignment of
Leases and Rents and UCC Financing Statements, except for such consents,
approvals or authorizations of or declarations or filings with any Governmental
Authority or non-governmental person or entity where the failure to so obtain
would not have an adverse effect on Borrower or such Guarantor or which have
been obtained as of any date on which this representation is made or remade.
(e) The execution, delivery and performance of this Agreement, the
execution and payment of the Note and the granting of the Mortgage and other
security interests under the other Loan Documents have not constituted and will
not constitute, upon the giving of notice or lapse of time or both, a breach or
default under any other agreement to which Borrower or Guarantor is a party or
may be bound or affected, or a violation of any law or court order which may
affect the Project, any part thereof, any interest therein, or the use thereof.
(f) There is no default under this Agreement or the other Loan Documents,
nor any condition which, given notice or the passage of time or both, would
constitute a default or an Event of Default under said documents.
(g) (i) No condemnation of any portion of the Project; (ii) no condemnation
or relocation of any roadways abutting the Project; and (iii) no proceeding to
deny access to the Project from any point or planned point of access to the
Project, has commenced or, to Borrower's actual knowledge, is contemplated by
any Governmental Authority.
(h) The amounts set forth in the Budget are all costs, expenses and fees
which Borrower reasonably expects to pay or reasonably anticipates becoming
obligated to pay in connection with the conversion of the Project to Condominium
ownership, the marketing and sale of the Condominium Units, retrofit cost with
respect to each Apartment Unit comprising a portion of a Condominium Unit and
cost to operate the Project during the sellout of the Project as a Condominium
(until the Project achieves breakeven operations) and anticipated income from
the collection of rents with respect to Apartment Units during the sellout of
the Project. Borrower is unaware of any other such costs, expenses or fees which
are material and are not covered by the Budget.
(i) To the best of Borrower's knowledge, neither the conversion of the
Project to a Condominium nor the use of the Project as a Condominium and the
contemplated accessory uses will violate (i) any Laws (including subdivision,
zoning, building, environmental protection and wetland protection Laws); or (ii)
any building permits, certificates of occupancy, subdivision regulations,
restrictions of record or agreements affecting the Project or any part thereof.
Neither the zoning authorizations, approvals or variances nor any other right to
convert the Project to a Condominium or to use the Project is to any extent
dependent upon or related to any real estate other than the Land. All consents,
licenses and permits and all other authorizations or approvals (collectively,
"Governmental Approvals") required for conversion of the Project to a
Condominium and the sale of Condominium Units have been obtained or will be
obtained prior to the Loan Opening, and all Laws relating to the conversion of
the Project to a Condominium and the sale of Condominium Units and operation of
the Improvements have been complied with and all permits and licenses required
for the operation of the Project have been obtained.
(j) The Project has adequate water, gas and electrical supply, storm and
sanitary sewerage facilities, other required public utilities, fire and police
protection, and means of access between the Project and public highways; none of
the foregoing will be foreseeably delayed or impeded by virtue of any
requirements under any applicable Laws.
(k) Except as otherwise disclosed to Lender in writing or as shown on the
Budget, no brokerage fees or commissions are payable by or to any person in
connection with this Agreement or the Loan to be disbursed hereunder.
(l) All financial statements and other information previously furnished by
Borrower or Guarantor to Lender in connection with the Loan are true, complete
and correct and fairly present the financial conditions of the subjects thereof
as of the respective dates thereof and do not fail to state any material fact
necessary to make such statements or information not misleading, and no Material
Adverse Change with respect to Borrower or Guarantor has occurred since the
respective dates of such statements and information. Neither Borrower nor
Guarantor has any material liability, contingent or otherwise, not disclosed in
such financial statements.
(m) Except as disclosed by Borrower to Lender in writing prior to the Loan
Opening Date or as disclosed by the Environmental Report, (i) the Project is in
a clean, safe and healthful condition, and, except for materials used in the
ordinary course of maintenance and operation of the Project, is free of all
Hazardous Material; (ii) neither Borrower nor, to the best knowledge of
Borrower, any other person or entity, has ever caused or permitted any Hazardous
Material to be placed, held, located or disposed of on, under, at or in a manner
to affect the Project, or any part thereof, and the Project has never been used
(whether by Borrower or, to the best knowledge of Borrower, by any other person
or entity) for any activities involving, directly or indirectly, the use,
generation, treatment, storage, transportation, or disposal of any Hazardous
Material; (iii) neither the Project nor Borrower is subject to any existing,
pending, or, to Borrower's actual knowledge, threatened investigation or inquiry
by any Governmental Authority, and the Project is not subject to any remedial
obligations under any applicable Laws pertaining to health or the environment;
and (iv) there are no underground tanks, vessels, or similar facilities for the
storage, containment or accumulation of Hazardous Materials of any sort on or
affecting the Project.
(n) The Project is taxed separately without regard to any other property
and for all purposes the Project may be mortgaged, conveyed and otherwise dealt
with as an independent parcel.
(o) Borrower and its agents have not entered into any Leases, subleases or
other arrangements for occupancy of space within the Project, other than
reflected on the rent roll which has been provided by Borrower to Lender. True,
correct and complete copies of all Leases, as amended, if requested by Lender
will be delivered to Lender. All Leases are in full force and effect. To
Borrower's actual knowledge, Borrower is not in default under any Lease and
Borrower has disclosed to Lender in writing any material default by the tenant
under any Lease.
(p) The Improvements do not encroach upon any property line, building line,
setback line, side yard line or any recorded or visible easement (or other
easement of which Borrower is aware or has reason to believe may exist) with
respect to the Project.
(q) The Loan is not being made for the purpose of purchasing or carrying
"margin stock" within the meaning of Regulation G, T, U or X issued by the Board
of Governors of the Federal Reserve System, and Borrower agrees to execute all
instruments necessary to comply with all the requirements of Regulation U of the
Federal Reserve System.
(r) Borrower is not a party in interest to any plan defined or regulated
under ERISA, and the assets of Borrower are not "plan assets" of any employee
benefit plan covered by ERISA or Section 4975 of the Internal Revenue Code.
(s) Borrower is not a "foreign person" within the meaning of Section 1445
or 7701 of the Internal Revenue Code.
(t) Borrower uses no trade name other than its actual name set forth
herein. The principal place of business of Borrower is as stated in Article 17.
(u) All statements set forth in the Recitals are true and correct.
3.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
Borrower agrees that all of the representations and warranties set forth in
Section 3.1 and elsewhere in this Agreement are true as of the date hereof, will
be true at the Loan Opening and, except for matters which have been disclosed by
Borrower and approved by Lender in writing, at all times thereafter. Each
request for a disbursement under the Loan Documents shall constitute a
reaffirmation of such representations and warranties, as deemed modified in
accordance with the disclosures made and approved as aforesaid, as of the date
of such request. It shall be a condition precedent to the Loan Opening and each
subsequent disbursement that each of said representations and warranties is true
and correct as of the date of such requested disbursement. At Lender's request,
Borrower shall reaffirm such representations and warranties in writing prior to
any disbursement hereunder.
ARTICLE 4
LOAN AND LOAN DOCUMENTS
4.1 AGREEMENT TO BORROW AND LEND; LENDER'S OBLIGATION TO DISBURSE.
Subject to the terms, provisions and conditions of this Agreement and the
other Loan Documents, Borrower agrees to borrow from Lender and Lender agrees to
lend to Borrower the Loan, for the purposes and subject to all of the terms,
provisions and conditions contained in this Agreement.
(a) The maximum aggregate amount of the Loan shall not exceed Thirty-Two
Million Dollars ($32,000,000.00).
(b) Lender agrees, upon Borrower's compliance with and satisfaction of all
conditions precedent to the Loan Opening and provided no Material Adverse Change
has occurred with respect to Borrower, Guarantor or the Project and no default
or Event of Default has occurred and is continuing hereunder, to open the Loan
to initially fund Thirty Million Thirty-Nine Thousand Two Hundred Forty-Eight
($30,039,248.00) and to fund to Borrower monthly such portion of the balance of
the Loan Proceeds, to the extent requested by Borrower, to fund interest due on
the Loan.
(c) To the extent that Lender may have acquiesced in noncompliance with any
requirements precedent to the Opening of the Loan or precedent to any subsequent
disbursement of Loan proceeds, such acquiescence shall not constitute a waiver
by Lender, and Lender may at any time after such acquiescence require Borrower
to comply with all such requirements.
4.2 LOAN DOCUMENTS.
Borrower agrees that it will, on or before the Loan Opening Date, execute
and deliver or cause to be executed and delivered to Lender the following
documents in form and substance acceptable to Lender:
(a) A promissory note ("Note"), in the maximum amount of the Loan, executed
by Borrower and payable to the order of Lender, evidencing the Loan.
(b) A deed of trust, security agreement and assignment of rents (the
"Mortgage"), executed by Borrower for the benefit of Lender securing this
Agreement, the Note and all obligations of Borrower in connection with the Loan,
granting a first priority lien on Borrower's fee interest in the Project,
subject only to the Permitted Exceptions.
(c) An assignment of leases and rents ("Assignment of Leases and Rents")
made by Borrower in favor of Lender assigning all leases, subleases and other
agreements relating to the use and occupancy of all or any portion of the
Project, and all present and future leases, rents, issues and profits therefrom.
(d) An assignment of purchase contract made by Borrower in favor of Lender
assigning all purchase contracts evidencing the sale of Condominium Units within
the Project.
(e) An assignment of all of Borrower's rights as Declarant under the
Declaration and Master Declaration, including but not limited to Development
Rights and Special Declarant Rights made by Borrower in favor of Lender.
(f) A collateral assignment of access and recreational use agreements made
by Borrower in favor of Lender assigning to Lender all access rights to the
Project over other portions of the Property commonly known as Palomino Park,
Douglas County, Colorado, and use rights with respect to any master recreational
facilities contained within Palomino Park made by Borrower in favor of Lender.
(g) General assignments made by Borrower in favor of Lender assigning to
Lender the non-exclusive right to use all plans and specifications for the
Project, as well as all of Borrower's rights under any license, permit,
certificate of occupancy, warranty and contract with respect to the use,
occupancy or condominium conversion of all of any portion of the Property.
(h) RESERVED
(i) A security agreement made by Borrower, as debtor, in favor of the
Lender.
(j) A guaranty of payment ("Guaranty") executed by Guarantor and pursuant
to which the Guarantor guarantees payment of principal, interest and other
amounts due under the Loan Documents, and the payment of any operating expenses
arising from the Property to the extent not paid by Borrower, to the extent
provided in such Guaranty.
(k) An environmental indemnity ("Indemnity") from the Borrower and
Guarantor, jointly and severally, indemnifying Lender with regard to all matters
related to Hazardous Material and other environmental matters.
(l) Such UCC financing statements ("UCC Financing Statements") as Lender's
counsel determines are advisable or necessary to perfect or notify third parties
of the security interests intended to be created by the Loan Documents.
(m) Such other documents, instruments or certificates as Lender and its
counsel may reasonably require, including such documents as Lender in its sole
discretion deems necessary or appropriate to effectuate the terms and conditions
of this Agreement and the Loan Documents, and to comply with the laws of the
State.
4.3 TERM OF THE LOAN.
All principal, interest and other sums due under the Loan Documents shall
be due and payable in full on the Maturity Date. All references herein to the
"Maturity Date " shall mean December 1, 2003; provided, however, that so long as
no Event of Default or Default has occurred and is continuing, Borrower shall
have the right, on Borrower's delivery of written notice to Lender not later
than November 1, 2003, to extend the Maturity Date hereof until June 1, 2004,
provided that Borrower tender to Lender, concurrently with delivery of such
notice, a sum equal to one quarter of one percent (.25%) of the outstanding
principal balance of the Note and Borrower has, on or before December 1, 2003,
paid on the principal of the Note since the Loan Opening Date the sum of
Twenty-Seven Million Dollars ($27,000,000.00). If the original principal balance
as of said date has not been reduced by Twenty-Seven Million Dollars
($27,000,000.00), the Borrower shall prepay on principal such difference on or
before December 1, 2003. Notwithstanding the fact that Borrower has timely
exercised its right to extend the Maturity Date and tendered to Lender payment
of the aforedescribed one quarter of one percent (.25%) extension fee, in the
event that between the date of Borrower's notice of extension and December 1,
2003, an Event of Default shall have occurred or a Default has occurred and is
continuing, the Maturity Date, notwithstanding Borrower's notice and payment of
extension fee, shall not be extended and the Maturity Date shall remain December
1, 2003.
4.4 PREPAYMENTS.
Borrower shall have the right to make prepayments of the Loan, in whole or
in part, without prepayment penalty, upon not less than seven (7) days' prior
written notice to Lender. No prepayment of all or part of the Loan shall be
permitted unless same is made together with the payment of all interest accrued
on the Loan through the date of prepayment and an amount equal to all Breakage
Costs and reasonable attorneys' fees and disbursements incurred by Lender as a
result of the prepayment. Breakage Costs shall be calculated as follows:
D x (A - B) x C
-------
360
A = the Adjusted LIBOR Rate applicable to the principal amount of the Loan
that is the subject of prepayment.
B = the Adjusted LIBOR Rate on the date of prepayment for a term equal to
the unexpired term of the applicable LIBOR Rate Interest Period.
C = the number of calendar days from the date of prepayment to the date on
which the applicable LIBOR Rate Interest Period would have expired but for the
prepayment.
D = the principal amount of the Loan that is being prepaid.
In no event shall the prepayment fee be less than $0.00.
4.5 REQUIRED PRINCIPAL PAYMENTS.
Borrower shall make, on or before the dates hereinafter set forth, the
required principal payments hereinafter set forth; provided, however, that any
prepayment of principal made pursuant to Section 4.4, including the payment of
any Release Consideration upon the release of a Condominium Unit pursuant to the
provisions of Section 15.2 , shall be credited against the next due and owing
principal payment described below.
Date Principal Payment
---- -----------------
December 1, 2001 $ 8,000,000.00
June 1, 2002 an additional $8,000,000.00
June 1, 2003 an additional $7,600,000.00
ARTICLE 5
INTEREST
5.1 INTEREST RATE.
(a) The Loan will bear interest at the Applicable Rate, unless the Default
Rate is applicable. The Adjusted Prime Rate shall be the "Applicable Rate",
except that the Adjusted LIBOR Rate shall be the "Applicable Rate" with respect
to portions of the Loan as to which a LIBOR Rate Option is then in effect.
Borrower shall pay interest in arrears on the first Business Day of every
calendar month in the amount of all interest accrued and unpaid.
(b) Provided that no Event of Default exists, Borrower shall have the
option (the "LIBOR Rate Option") to elect from time to time in the manner and
subject to the conditions hereinafter set forth an Adjusted LIBOR Rate as the
Applicable Rate for all or any portion of the Loan which would otherwise bear
interest at the Adjusted Prime Rate, pursuant to the LIBOR Election Notice
attached hereto as Exhibit G.
(c) The only manner in which Borrower may exercise the LIBOR Rate Option is
by giving Lender irrevocable notice (which may be verbal notice provided that
Borrower delivers to Lender facsimile confirmation within twenty-four (24)
hours) of such exercise not later than 11:00 a.m. Denver time on the second
LIBOR Business Day prior to the proposed commencement of the relevant LIBOR Rate
Interest Period, which written notice shall specify: (i) the portion of the Loan
with respect to which Borrower is electing the LIBOR Rate Option; and (ii) the
LIBOR Business Day upon which the applicable LIBOR Rate Interest Period is to
commence. The Applicable Rate for any portion of the Loan with respect to which
Borrower has elected the LIBOR Rate Option shall revert to the Adjusted Prime
Rate as of the last day of the LIBOR Rate Interest Period applicable thereto
(unless Borrower again exercises the LIBOR Rate Option for such portion of the
Loan). Lender shall be under no duty to notify Borrower that the Applicable Rate
on any portion of the Loan is about to revert from an Adjusted LIBOR Rate to the
Adjusted Prime Rate. The LIBOR Rate Option may be exercised by Borrower only
with respect to any portion of the Loan equal to or in excess of $500,000. At no
time may there be more than four (4) LIBOR Rate Interest Periods in effect with
respect to the Loan.
(d) If Lender determines (which determination shall be conclusive and
binding upon Borrower, absent manifest error) (i) that Dollar deposits in an
amount approximately equal to the portion of the Loan for which Borrower has
exercised the LIBOR Rate Option for the LIBOR Rate Interest Period are not
generally available at such time in the London interbank market for deposits in
Dollars; (ii) that the rate at which such deposits are being offered will not
adequately and fairly reflect the cost to Lender of maintaining a LIBOR Rate on
such portion of the Loan or of funding the same for the LIBOR Rate Interest
Period due to circumstances affecting the London interbank market generally;
(iii) that reasonable means do not exist for ascertaining a LIBOR Rate; or (iv)
that an Adjusted LIBOR Rate would be in excess of the maximum interest rate
which Borrower may by law pay, then, in any such event, Lender shall so notify
Borrower and all portions of the Loan bearing interest at an Adjusted LIBOR Rate
that are so affected shall, as of the date of such notification with respect to
an event described in clause (ii) or (iv) above, or as of the expiration of the
applicable LIBOR Rate Interest Period with respect to an event described in
clause (i) or (iii) above, bear interest at the Adjusted Prime Rate until such
time as the situations described above are no longer in effect or can be avoided
by Borrower exercising a LIBOR Rate Option for a different LIBOR Rate Interest
Period.
(e) Interest at the Applicable Rate (or Default Rate) shall be calculated
for the actual number of days elapsed on the basis of a 360-day year, including
the first date of the applicable period to, but not including, the date of
repayment.
(f) Borrower shall pay all Breakage Costs incurred from time to time by
Lender upon demand.
(g) Any change in any Law, regulation or treaty, or in the interpretation
thereof by any Governmental Authority charged with the administration or
interpretation thereof, shall make it unlawful for Lender to maintain the
Applicable Rate at an Adjusted LIBOR Rate with respect to the Loan or any
portion thereof, or to fund the Loan or any portion thereof in Dollars in the
London interbank market, or to give effect to its obligations regarding the
LIBOR Rate Option as contemplated by the Loan Documents, then (1) Lender shall
notify Borrower that Lender is no longer able to maintain the Applicable Rate at
an Adjusted LIBOR Rate, (2) the LIBOR Rate Option shall immediately terminate,
(3) the Applicable Rate for any portion of the Loan for which the Applicable
Rate is then an Adjusted LIBOR Rate shall automatically be converted to the
Adjusted Prime Rate, and (4) Borrower shall pay to Lender the amount of Breakage
Costs (if any) incurred in connection with such conversion. Thereafter, Borrower
shall not be entitled to exercise the LIBOR Rate Option until such time as the
situation described herein is no longer in effect or can be avoided by Borrower
exercising a LIBOR Rate Option for a different term.
ARTICLE 6
COSTS OF MAINTAINING LOAN
6.1 INCREASED COSTS AND CAPITAL ADEQUACY.
(a) Borrower recognizes that the cost to Lender of maintaining the Loan or
any portion thereof may fluctuate and, Borrower agrees to pay Lender additional
amounts to compensate Lender for any increase in its actual costs incurred in
maintaining the Loan or any portion thereof outstanding or for the reduction of
any amounts received or receivable from Borrower as a result of:
(i) any change after the date hereof in any applicable Law, regulation or
treaty, or in the interpretation or administration thereof, or by any domestic
or foreign court, (A) changing the basis of taxation of payments under this
Agreement to Lender (other than taxes imposed on all or any portion of the
overall net income or receipts of Lender), or (B) imposing, modifying or
applying any reserve, special deposit or similar requirement against assets of,
deposits with or for the account of, credit extended by, or any other
acquisition of funds for loans by Lender (which includes the Loan or any
applicable portion thereof), or (C) imposing on Lender, or the London interbank
market generally, any other condition affecting the Loan, provided that the
result of the foregoing is to increase the cost to Lender of maintaining the
Loan or any portion thereof or to reduce the amount of any sum received or
receivable from Borrower by Lender under the Loan Documents; or
(ii) the maintenance by Lender of reserves in accordance with reserve
requirements promulgated by the Board of Governors of the Federal Reserve System
of the United States with respect to "Eurocurrency Liabilities" of a similar
term to that of the applicable portion of the Loan (without duplication for
reserves already accounted for in the calculation of a LIBOR Rate pursuant to
the terms hereof).
(b) If the application of any Law, rule, regulation or guideline adopted or
arising out of the July, 1988 report of the Basle Committee on Banking
Regulations and Supervisory Practices entitled "International Convergence of
Capital Measurement and Capital Standards", or the adoption after the date
hereof of any other Law, rule, regulation or guideline regarding capital
adequacy, or any change after the date hereof in any of the foregoing, or in the
interpretation or administration thereof by any domestic or foreign Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by Lender, with any request or directive
regarding capital adequacy (whether or not having the force of law) of any such
authority, central bank or comparable agency, has the effect of reducing the
rate of return on Lender's capital to a level below that which Lender would have
achieved but for such application, adoption, change or compliance (taking into
consideration the policies of Lender with respect to capital adequacy), then,
from time to time Borrower shall pay to Lender such additional amounts as will
compensate Lender for such reduction with respect to any portion of the Loan
outstanding.
(c) Any amount payable by Borrower under subsection (a) or subsection (b)
of this Section 6.1 shall be paid within five (5) days of receipt by Borrower of
a certificate signed by an authorized officer of Lender setting forth the amount
due and the basis for the determination of such amount, which statement shall be
conclusive and binding upon Borrower, absent manifest error. Failure on the part
of Lender to demand payment from Borrower for any such amount attributable to
any particular period shall not constitute a waiver of Lender's right to demand
payment of such amount for any subsequent or prior period. Lender shall use
reasonable efforts to deliver to Borrower prompt notice of any event described
in subsection (a) or (b) above, of the amount of the reserve and capital
adequacy payments resulting therefrom and the reasons therefor and of the basis
of calculation of such amount; provided, however, that any failure by Lender to
so notify Borrower shall not affect Borrower's obligation to pay the reserve and
capital adequacy payment resulting therefrom.
6.2 BORROWER WITHHOLDING.
If by reason of a change in any applicable Laws occurring after the date
hereof, Borrower is required by Law to make any deduction or withholding in
respect of any taxes (other than taxes imposed on or measured by the net income
of Lender or any franchise tax imposed on Lender), duties or other charges from
any payment due under the Note, the sum due from Borrower in respect of such
payment shall be increased to the extent necessary to ensure that, after the
making of such deduction or withholding, Lender receives and retains a net sum
equal to the sum which it would have received had no such deduction or
withholding been required to be made.
ARTICLE 7
LOAN EXPENSE AND ADVANCES
7.1 LOAN AND ADMINISTRATION EXPENSES.
Borrower unconditionally agrees to pay all expenses of the Loan required
under this Agreement, including all amounts payable pursuant to Sections 7.2 and
7.3 and any and all other fees owing to Lender pursuant to the Loan Documents,
and also including, without limiting the generality of the foregoing, all
recording, filing and registration fees and charges, mortgage or documentary
taxes, all insurance premiums, title insurance premiums and other charges of the
Title Insurer, photocopying expenses, survey fees and charges, cost of certified
copies of instruments and the Title Policy, charges of the Title Insurer or
other escrowee for administering disbursements, all fees and costs of Lender's
Environmental Consultant, all appraisal fees, insurance consultant's fees and
all costs and expenses incurred by Lender in connection with the determination
of whether or not Borrower has performed the obligations undertaken by Borrower
hereunder or has satisfied any conditions precedent to the obligations of Lender
hereunder and, if any default or Event of Default occurs hereunder or under any
of the Loan Documents or if the Loan or Note or any portion thereof is not paid
in full when and as due, all costs and expenses of Lender (including, without
limitation, court costs and reasonable counsel's fees and disbursements)
incurred in attempting to enforce payment of the Loan and expenses of Lender
incurred (including court costs and reasonable counsel's fees and disbursements)
in attempting to realize, while a default or Event of Default exists, on any
security or incurred in connection with the sale or disposition (or preparation
for sale or disposition) of any security for the Loan. Borrower agrees to pay
all brokerage, finder or similar fees or commissions payable in connection with
the transactions contemplated hereby and shall indemnify and hold Lender
harmless against all claims, liabilities, costs and expenses (including
reasonable attorneys' fees and expenses) arising in relation to any claim by
broker, finder or similar person on behalf of Borrower.
7.2 COMMITMENT FEE.
Borrower shall pay to Lender on or before the Loan Opening Date a
commitment fee in the amount of One Hundred Twenty Thousand Dollars
($120,000.00). Such fee is fully earned and non-refundable as of Loan Opening.
7.3 LENDER'S ATTORNEYS' FEES AND DISBURSEMENTS.
Borrower agrees to pay Lender's reasonable attorneys' fees and
disbursements incurred in connection with this Loan, including (i) the
preparation of this Agreement and the other Loan Documents and the preparation
of the closing binders; (ii) the administration of the Loan; and (iii) the
enforcement of the terms of this Agreement and the other Loan Documents.
7.4 TIME OF PAYMENT OF FEES AND EXPENSES.
Borrower shall pay all expenses and fees incurred as of the Loan Opening on
the Loan Opening Date (unless sooner required herein). At the time of the
Opening of the Loan, Lender may pay from the proceeds of the initial
disbursement of the Loan all Loan expenses. Lender may require the payment of
outstanding fees and expenses as a condition to any disbursement of the Loan.
Lender is hereby authorized, without any specific request or direction by
Borrower, but after notice to Borrower, to make disbursements from time to time
in payment of or to reimburse Lender for all Loan expenses and fees which
Borrower fails to make within ten (10) days after receipt of notice from Lender.
7.5 EXPENSES AND ADVANCES SECURED BY LOAN DOCUMENTS.
Any and all advances or payments made by Lender under this Article 7 from
time to time, and any amounts expended by Lender pursuant to this Agreement or
any of the other Loan Documents, shall, as and when advanced or incurred,
constitute additional indebtedness evidenced by the Note and secured by the
Mortgage and the other Loan Documents.
7.6 RIGHT OF LENDER TO MAKE ADVANCES TO CURE BORROWER'S DEFAULTS.
In the event that Borrower fails to perform any of Borrower's covenants,
agreements or obligations contained in this Agreement or any of the other Loan
Documents (after the expiration of applicable grace or cure periods, except in
the event of an emergency or other exigent circumstances), Lender may (but shall
not be required to) perform any of such covenants, agreements and obligations,
and any amounts expended by Lender in so doing and shall constitute additional
indebtedness evidenced by the Note and secured by the Mortgage and the other
Loan Documents.
ARTICLE 8
REQUIREMENTS PRECEDENT
TO THE OPENING OF THE LOAN
8.1 CONDITIONS PRECEDENT.
Borrower agrees that Lender's obligation to open the Loan and thereafter to
make further disbursements of proceeds thereof is conditioned upon Borrower's
performance and satisfaction of the following conditions precedent in form and
substance satisfactory to Lender in its reasonable discretion and Lender's
approval of the documents and other information provided by Borrower or required
under this Section 8.1.
(a) Borrower shall have furnished to Lender an ALTA Loan Title Insurance
Policy, insuring the Loan, issued by the Title Insurer, insuring the lien of the
Mortgage as a valid first, prior and paramount lien upon the Project and all
appurtenant easements, and subject to no exceptions other than the Permitted
Exceptions (the "Title Policy"). The Title Policy shall satisfy the requirements
of Exhibit C attached hereto and made a part hereof.
(b) Borrower shall have furnished an ALTA plat of survey of the Project
prepared and certified by a surveyor licensed in the State in which the Land is
located and otherwise satisfactory to Lender, in triplicate, showing, through
the use of course bearings and distances (i) all of the Improvements in place;
(ii) the dimensions and locations of all easements and roads or rights of way
and setback lines, if any, affecting the Project, or required by subsection (j)
of this Section and that the same are unobstructed; (iii) the dimensions,
boundaries and square footage of the Improvements; (iv) that all foundations and
other structures are within the lot lines and in compliance with any
restrictions of record or ordinances relating to the location thereof; (v) the
dimensions of all buildings and improvements, if any, and distance of such
buildings and improvements from the lot lines; (vi) no encroachments by any
improvements located on adjoining property; (vii) whether or not the Project is
located within a flood plain or flood hazard area; (viii) the location of
adjoining streets and utilities and the distance and name of the nearest
intersecting streets; (ix) the dimensions and locations of all parking areas, if
any; and (x) such additional information which may be required by Lender. Said
survey shall be dated no earlier than ninety (90) days prior to the Loan
Opening, shall be made (and certified to have been made) as set forth in Exhibit
D attached hereto and made a part hereof. Such survey shall include the legal
description of the Land.
(c) Borrower shall have furnished to Lender not less than ten (10) days
prior to the Loan Opening Date satisfactory evidence that insurance coverages
are in effect with respect to the Project and Borrower, in accordance with the
Insurance Requirements attached hereto as Exhibit E, for which the premiums have
been fully prepaid with endorsements satisfactory to Lender.
(d) Borrower shall have furnished evidence that no litigation or
proceedings shall be pending or threatened which could or might cause a Material
Adverse Change with respect to Borrower, Guarantor or the Project.
(e) Borrower shall have furnished to Lender (by way of utility letters or
otherwise) evidence establishing to the satisfaction of Lender that the Project
has adequate water supply, storm and sanitary sewerage facilities, telephone,
gas, electricity, means of ingress and egress to and from the Project and public
highways and any other required public utilities and that the Project is
benefitted by insured easements as may be required for any of the foregoing.
(f) Borrower shall have furnished to Lender an opinion from counsel for
Borrower and Guarantor covering due authorization, execution and delivery and
enforceability of the Loan Documents and also containing such other legal
opinions as Lender shall require.
(g) Lender shall have obtained an Appraisal, which Appraisal is
satisfactory to Lender in all respects, and shall confirm that the principal
amount of the Loan does not exceed seventy-five percent (75%) of the Discounted
Bulk Sales Value of the Project.
(h) Borrower shall have furnished to Lender current bankruptcy, federal tax
lien and judgment searches and searches of all Uniform Commercial Code financing
statements filed in each place UCC Financing Statements are to be filed
hereunder, demonstrating the absence of adverse claims.
(i) Borrower shall have furnished to Lender current annual financial
statements of Borrower and the Guarantor, each in form and substance and
certified by such individual as acceptable to Lender. Borrower and the Guarantor
shall provide such other additional financial information Lender reasonably
requires.
(j) Borrower shall have furnished to Lender a pro forma statement of
projected income and expenses of the Project covering the succeeding two (2)
year period (the "Pro Forma Projection").
(k) Borrower shall have furnished to Lender legible copies of all title
exception documents cited in the Title Policy and all other legal documents
affecting the Project or the use thereof.
(l) Borrower shall have delivered to Lender executed copies of any leasing,
management and other agreements entered into by Borrower in connection with the
use and operation of the Project.
(m) Lender has received evidence that the Project is not located in an area
designated by the Secretary of Housing and Urban Development as a special flood
hazard area, or flood hazard insurance acceptable to Lender in its sole
discretion.
(n) If the Title Policy does not include a zoning endorsement, Borrower
shall have furnished to Lender a zoning letter or other evidence with respect to
the Project reasonably satisfactory to Lender.
(o) Borrower shall have furnished to Lender proof satisfactory to Lender of
authority, formation, organization and good standing in the State of its
incorporation or formation and, if applicable, qualification as a foreign entity
in good standing in the state of its incorporation or formation, of all
corporate, partnership, trust and limited liability company entities (including
Borrower and Guarantor) executing any Loan Documents, whether in their own name
or on behalf of another entity. Borrower shall also provide certified
resolutions in form and content satisfactory to Lender, authorizing execution,
delivery and performance of the Loan Documents, and such other documentation as
Lender may reasonably require to evidence the authority of the persons executing
the Loan Documents.
(p) Borrower shall have furnished to Lender a copy of the Declaration, Map
and Association's Articles of Incorporation and Bylaws, as well as a copy of the
Master Declaration and Master Association's Articles of Incorporation and
Bylaws, and a copy of the recorded deed conveying any real property and
improvements contemplated under the Master Declaration to be conveyed to the
Master Association.
(q) Borrower shall have furnished to Lender a copy of the Rec Center Use
Agreement between Borrower and Wellsford Park Highlands Corp.
(r) Borrower shall have furnished to Lender a satisfactory phase one
environmental report ("Environmental Report") prepared by an environmental
consultant acceptable to Lender.
(s) Borrower shall have furnished to Lender a payoff statement, proof of
payment and release of record with respect to that certain Public Improvement
Assessment Lien dated December 1, 1995 from Park at Highlands LLC, a Colorado
limited liability company, for the use of Palomino Park Public Improvement
Corporation, a Colorado non-profit corporation, which Lien was recorded December
27, 1995, in Book 1308 at Page 2298 of the Records of the Clerk and Recorder of
Douglas County, Colorado, burdening the Project.
(t) Borrower shall have furnished to Lender such other materials,
documents, papers or requirements regarding the Project, Borrower and Guarantor
as Lender shall reasonably request.
(u) Borrower shall have furnished to Lender a certificate of occupancy for
each building containing Apartment Units within the Project, as well as for any
building containing any recreational amenities.
(v) Borrower shall have furnished to Lender a copy of a budget ("Budget")
setting forth all costs contemplated by Borrower in connection with the
conversion of the Project to a Condominium.
(w) The conditions contained in this Section 8.1 are for th sole benefit of
Lender, and Lender may, in its sole discretion, waive Borrower's compliance with
any one or more conditions, provided that in no event shall the waiver of one
condition by Lender constitute a waiver of any other condition listed above.
ARTICLE 9
BORROWER'S AGREEMENTS
9.1 BORROWER FURTHER COVENANTS AND AGREES AS FOLLOWS:
(a) Opening of Loan on or Prior to Loan Opening Date. All conditions
precedent to the Opening of the Loan shall be complied with on or prior to the
Loan Opening Date. If such conditions are not complied with as of the Loan
Opening Date, Lender may at its sole option terminate Lender's obligation to
fund the Loan by written notice to Borrower.
(b) Mechanic's Liens and Contest Thereof. Borrower will not suffer or
permit any mechanic's lien claims to be filed or otherwise asserted against the
Project and will promptly discharge the same in case of the filing of any claims
for liens or proceedings for the enforcement thereof; provided, however, that
Borrower shall have the right to contest in good faith and with reasonable
diligence the validity of any such lien or claim upon furnishing to Lender cash
security in the amount of one hundred twenty-five percent (125%) of the Lien
Claim or other security or title insurance protection satisfactory to Lender in
its sole judgment.
(c) Settlement of Mechanics' Lien Claims. If Borrower shall fail promptly
either (i) to discharge; or (ii) to contest claims asserted and provide Lender
with the security in the manner provided in Subsection (b) of this Section, or
having commenced to contest the same, and having given such security, shall fail
to prosecute such contest with diligence, or upon adverse conclusion of any such
contest, to cause any judgment or decree to be satisfied and lien to be released
within ten (10) days thereof, and in any event prior to a sale of any portion of
the Project pursuant to such judgment or lien, then and in any such event,
Lender may, at its election (but shall not be required to), procure the release
and discharge of any such claim and any judgment or decree thereon using the
cash security posted with Lender, and further, may in its sole discretion effect
any discharge, settlement or compromise of the same. In settling, compromising
or discharging any claims for lien, Lender shall not be required to inquire into
the validity or amount of any such claim.
(d) Renewal of Insurance. Borrower shall timely pay all premiums on all
insurance policies required hereunder, and as and when any policies of insurance
expire, furnish to Lender, premiums prepaid, additional and renewal insurance
policies with companies, coverage and in amounts satisfactory to Lender in
accordance with Section 8.1(c).
(e) Payment of Taxes. Borrower shall pay all real estate taxes and
assessments and charges of every kind upon the Project before the same become
delinquent, provided, however, that Borrower shall have the right to pay such
tax under protest or to otherwise contest any such tax or assessment, but only
if (i) such contest has the effect of preventing the collection of such taxes so
contested and also of preventing the sale or forfeiture of the Project or any
part thereof or any interest therein; (ii) Borrower has notified Lender of its
intent to contest such taxes; and (iii) Borrower has deposited cash security in
an amount satisfactory to Lender, in its sole discretion, and has increased the
amount of such security so deposited promptly after Lender's request therefor.
If Borrower fails to commence such contest or, having commenced to contest the
same, and having deposited such security required by Lender for its full amount,
shall thereafter fail to prosecute such contest in good faith or with due
diligence, or, upon adverse conclusion of any such contest, shall fail to pay
such tax, assessment or charge within ten (10) days thereof, and in any event
prior to a sale of any portion of the Project pursuant to such judgment or lien,
Lender may, at its election (but shall not be required to), pay and discharge
any such tax, assessment or charge, and any interest or penalty thereon using
the cash security posted with Lender, and any additional amounts so expended by
Lender shall be deemed to constitute disbursements of the Loan proceeds
hereunder (even if the total amount of disbursements would exceed the face
amount of the Note).
(f) Escrow Accounts. Borrower shall, following the written request of
Lender subsequent to the occurrence of an Event of Default, make insurance and
tax escrow deposits, in amounts reasonably determined by Lender from time to
time as being needed to pay taxes and insurance premiums when due, in an
interest bearing escrow account held by Lender in Lender's name and under its
sole dominion and control. All payments deposited in the escrow account, and all
interest accruing thereon, are pledged as additional collateral for the Loan.
Notwithstanding Lender's holding of the escrow account, nothing herein shall
obligate Lender to pay any insurance premiums or real property taxes with
respect to any portion of the Project, provided that, so long as no Event of
Default exists, Lender shall make available to Borrower such funds as may be
deposited in the escrow account from time to time for Borrower's payment of
insurance premiums or real property taxes due with respect to the Project.
(g) Personal Property. All of Borrower's personal property, fixtures,
attachments and equipment delivered upon, attached to or used in connection with
the use, operation and sale of the Project shall always be located at the
Project and shall be kept free and clear of all liens, encumbrances and security
interests.
(h) Leasing Restrictions. Without the prior written consent of Lender,
Borrower and Borrower's agents shall not enter into any Lease, other than on a
form which has been approved by Lender, nor shall Borrower accept any rental
payment in advance of its due date.
(i) Defaults Under Leases. Borrower will not suffer or permit any breach or
default to occur in any of Borrower's obligations under any of the Leases nor
suffer or permit the same to terminate by reason of any failure of Borrower to
meet any requirement of any Lease.
(j) Lender's Attorneys' Fees for Enforcement of Agreement. In case of any
default or Event of Default hereunder, Borrower (in addition to Lender's
attorneys' fees, if any, to be paid pursuant to Section 7.3) will pay Lender's
attorneys' and paralegal fees (including, without limitation, any attorney and
paralegal fees and costs incurred in connection with any litigation or
bankruptcy or administrative hearing and any appeals therefrom) in connection
with the enforcement of this Agreement; without limiting the generality of the
foregoing, if at any time or times hereafter Lender employs counsel (whether or
not any suit has been or shall be filed and whether or not other legal
proceedings have been or shall be instituted) for representation with respect to
the Project, this Agreement, or any of the other Loan Documents, or to protect,
collect, lease, sell, take possession of, or liquidate any of the Project, or to
attempt to enforce any security interest or lien in any portion of the Project,
or to enforce any rights of Lender or Borrower's obligations hereunder, then in
any of such events all of the attorneys' fees arising from such services, and
any expenses, costs and charges relating thereto, shall constitute an additional
liability owing by Borrower to Lender, payable on demand.
(k) Appraisals. Lender shall have the right to obtain a new or updated
Appraisal of the Project from time to time, but in no event, so long as Borrower
is not in Default, more than once a year (at Borrower's expense). Borrower shall
cooperate with Bank in this regard. If the Appraisal is obtained to comply with
this Agreement or any applicable law or regulatory requirement, or bank policy
promulgated to comply therewith, or if an Event of Default exists, Borrower
shall pay for any such Appraisal upon Bank's request. In the event that any
subsequent Appraisal indicates that the outstanding principal balance of the
Loan to the discounted bulk sales value of the then unreleased Condominium Units
within the Project is greater than seventy-five percent (75%) ("Loan to Value
Ratio"), then Borrower agrees to prepay on principal, without the release of any
additional Condominium Units from the lien of the Mortgage, a sum sufficient to
reduce the outstanding principal balance so that the Loan to Value Ratio shall
not exceed seventy-five percent (75%).
(l) Furnishing Information. Borrower shall deliver or cause to be delivered
to Lender unaudited annual consolidated financial statements with respect to
Borrower and consolidated and consolidating financial statements with respect to
Guarantor not later than ninety (90) days after the end of each calendar year,
and unaudited quarterly consolidated financial statements in each case certified
by Borrower or Guarantor, as applicable, with respect to Borrower and Guarantor
not later than forty-five (45) days after the end of each of the first three (3)
calendar quarters. All such financial statements shall be in a format approved
in writing by Lender, prepared in accordance with generally accepted accounting
principles ("GAAP") consistently applied. Each financial statement shall be
certified as true, complete and correct by Borrower or, in the case of the
Guarantor's financial statements, by the Guarantor. Within fifteen (15) days
following the end of each month or calendar quarter, as applicable, Borrower
shall deliver to Lender: (i) quarterly unaudited operating income statements for
the Project, certified as true, complete and correct by Borrower showing actual
sources and uses of cash during the preceding quarter; and (ii) monthly a
current rent roll with respect to the Project during the preceding calendar
month; and (iii) monthly a sales and marketing report ("Sales and Marketing
Report") identifying each (x) Apartment Unit within the Project which is under
contract for sale as a Condominium Unit to a bonafide unaffiliated third party,
(y) each Apartment Unit in the Project which was previously under contract for
sale as a Condominium Unit to a bonafide third party purchaser but which
contract was terminated and the reason for such termination during the preceding
calendar month, and (z) each contract for sale of any Apartment Unit as a
Condominium Unit which was closed during the preceding calendar month. Borrower
and the Guarantor shall provide such additional financial information Lender
reasonably requires. Borrower shall during regular business hours permit Lender
or any of its agents or representatives to have access to and examine all of its
books and records regarding the operation and sale of Condominium Units within
the Property. Further, Borrower shall, during regular business hours, permit
Lender and any of its agents or representatives to have access to the Project to
inspect and examine the same.
(m) Lost Note. Upon Lender's furnishing to Borrower an affidavit to such
effect, Borrower shall, if the Note is mutilated, destroyed, lost or stolen,
deliver to Lender, in substitution therefor, a new note containing the same
terms and conditions as the Note.
(n) Indemnification. Borrower shall indemnify Lender, including each party
owning an interest in the Loan and their respective officers, directors,
employees and consultants (each, an "Indemnified Party") and defend and hold
each Indemnified Party harmless from and against all claims, injury, damage,
loss and liability, cost and expense (including reasonable attorneys' fees,
costs and expenses) of any and every kind to any persons or property by reason
of (i) the construction; (ii) the use, operation, maintenance, leasing and sale
of the Project or any portion thereof; (iii) any breach of representation or
warranty, default or Event of Default; or (iv) any other matter arising in
connection with the Loan, Borrower or the Project. No Indemnified Party shall be
entitled to be indemnified against its own gross negligence or willful
misconduct.
(o) No Additional Debt. Except for the Loan, Borrower shall not incur any
indebtedness (whether personal or nonrecourse, secured or unsecured) other than
customary trade payables paid within sixty (60) days after they are incurred.
(p) Sign and Publicity. Lender may, at its own expense, erect a sign
approved in advance by Borrower (as to location and design), not to be
unreasonably withheld or delayed, indicating that the financing for the Project
is provided by Lender. Lender reserves the right to publicize the making of the
Loan.
(q) Compliance With Laws. Borrower shall comply with all applicable
requirements (including applicable Laws) of any Governmental Authority having
jurisdiction over Borrower or the Project, the conversion of the Project to a
Condominium or the sale of Condominium Units within the Project.
(r) Organizational Documents. Borrower shall not, without the prior written
consent of Lender, permit or suffer (i) a material amendment or modification of
its organizational documents; (ii) the admission of any new member, partner or
shareholder; (iii) any dissolution or termination of its existence; (iv) change
in Manager of Borrower; or (v) transfer of any Membership Interest in Borrower.
(s) Furnishing Reports. Upon Lender's request, Borrower shall provide
Lender with copies of all inspections, reports, test results and other
information received by any Borrower, which in any way relate to the Project or
any part thereof.
(t) Management Contracts. Borrower shall not enter into, modify, amend,
terminate or cancel any management contracts for the Project or agreements with
agents or brokers, without the prior written approval of Lender, which approval
shall not be unreasonably withheld.
(u) Furnishing Notices. Borrower shall provide Lender with copies of all
material notices pertaining to the Project received by Borrower from any Tenant,
purchaser of a Condominium Unit, Governmental Authority or insurance company
within five (5) days after such notice is received.
(v) Alterations. Without the prior written consent of Lender, which consent
shall not be unreasonably withheld or delayed, Borrower shall not make any
material alterations to the Project, other than as contemplated under the Budget
approved by Lender.
(w) Cash Distributions. Borrower shall not make any distributions to
partners, members or shareholders to the extent needed by Borrower to pay
Operating Expenses or amounts, including debt service, payable under the Loan
Documents during the next ensuing one (1) calendar month period.
(x) Maintenance. Borrower shall maintain the Project and each portion
thereof in a good, safe, sanitary and healthy condition and shall make all
needed repairs and replacements to the Project or any portion thereof, whether
the same are of a capital nature or not. All such repairs, replacements and
maintenance shall be performed in a prompt and diligent manner and in compliance
with all applicable laws, rules, regulations and codes.
(y) Condominium Declaration. Borrower shall not record the Declaration, Map
or any of the association documents until the same have been approved by Lender,
and once approved by Lender, shall not amend or modify the same without Lender's
prior written consent, which consent shall not be unreasonably withheld or
delayed.
(z) Sale of Condominium Units. Borrower shall not commence the sale of
Condominium Units in the Project until such time as Borrower has registered as a
developer and has obtained a certificate of registration pursuant to the
requirements of C.R.S. ss.12-61-401, et seq., and Borrower shall at all times
prior to the Maturity Date, keep its registration and certification as a
developer in full force and effect. Further, all Condominium Units offered for
sale within the Project shall be located in those portions of the Project which
have been submitted to the terms of the Declaration pursuant to an annexation
agreement recorded with the Clerk and Recorder of Douglas County, Colorado.
(aa) Master Declaration. Borrower shall not record the Master Declaration
or any of the Master Association documents until the same have been approved by
Lender, and once approved by Lender, Borrower shall not amend or modify the same
without Lender's prior written consent, which shall not be unreasonably withheld
or delayed.
ARTICLE 10
CASUALTIES AND CONDEMNATION
10.1 LENDER'S ELECTION TO APPLY PROCEEDS ON INDEBTEDNESS.
(a) Subject to the provisions of Section 10.1(b) below, Lender may elect to
collect, retain and apply upon the indebtedness of Borrower under this Agreement
or any of the other Loan Documents all proceeds of insurance or condemnation
(individually and collectively referred to as "Proceeds") after deduction of all
expenses of collection and settlement, including attorneys' and adjusters' fees
and charges. Any proceeds remaining after repayment of the indebtedness under
the Loan Documents shall be paid by Lender to Borrower.
(b) Notwithstanding anything in Section 10.1(a) to the contrary, in the
event of any casualty to the Improvements or any condemnation of part of the
Project, Borrower shall have the option of applying the Proceeds to restoration
of the Improvements if (i) no Event of Default exists; (ii) all Proceeds are
deposited with Lender; (iii) in Lender's reasonable judgment, the amount of
Proceeds available for restoration of the Improvements (together with
undisbursed proceeds of the Loan, if any, allocated for the cost of the
Construction and any sums or other security acceptable to Lender deposited with
Lender by Borrower for such purpose) is sufficient to pay the full and complete
costs of such restoration; (iv) if the cost of restoration exceeds ten percent
(10%) of the Loan Amount, in Lender's sole determination after completion of
restoration the Loan Amount will not exceed seventy-five percent (75%) of the
Discounted Bulk Sale Value of the Project; (v) in Lender's reasonable
determination, the Project can be restored to an architecturally and
economically viable project in compliance with applicable Laws; and (vi) in
Lender's reasonable determination, such restoration is likely to be completed
not later than three months prior to the Maturity Date.
10.2 BORROWER'S OBLIGATION TO REBUILD AND USE OF PROCEEDS THEREFOR.
In case Lender does not elect to apply or does not have the right to apply
the Proceeds to the indebtedness, as provided in Section 10.1 above, Borrower
shall:
(a) Proceed with diligence to make settlement with insurers or the
appropriate governmental authorities and cause the Proceeds to be deposited with
Lender;
(b) In the event of any delay in making settlement with insurers or the
appropriate governmental authorities or effecting collection of the Proceeds,
deposit with Lender the full amount required to complete construction as
aforesaid;
(c) In the event the Proceeds and the available proceeds of the Loan are
insufficient to assure the Lender that the Loan will be in balance, promptly
deposit with Lender any amount necessary to place the Loan in balance; and
(d) Promptly proceed with the assumption of construction of the
Improvements, including the repair of all damage resulting from such fire,
condemnation or other cause and restoration to its former condition.
Any request by Borrower for a disbursement by Lender of Proceeds and funds
deposited by Borrower shall be treated by Lender as if such request were for an
advance of the Loan hereunder, and the disbursement thereof shall be conditioned
upon Borrower's compliance with and satisfaction of the same conditions
precedent as would be applicable under this Agreement for an advance of the
Loan, as well as all conditions precedent to the disbursement of Proceeds with
respect to a construction loan contained in a standard form of construction loan
agreement used by Lender with respect to the construction of apartments or
condominium projects.
ARTICLE 11
ASSIGNMENTS BY LENDER AND BORROWER
11.1 ASSIGNMENTS AND PARTICIPATIONS.
Lender may from time to time sell the Loan and the Loan Documents (or any
interest therein) and may grant participations in the Loan. Borrower agrees to
cooperate, at no additional expense to Borrower, with Lender's efforts to do any
of the foregoing and to execute all documents reasonably required by Lender in
connection therewith which do not materially adversely affect Borrower's rights
under the Loan Documents.
11.2 PROHIBITION OF ASSIGNMENTS AND TRANSFERS BY BORROWER.
Borrower shall not assign or attempt to assign its rights under this
Agreement and any purported assignment shall be void. Without the prior written
consent of Lender, in Lender's sole discretion, Borrower shall not suffer or
permit (i) any change in the management (whether direct or indirect) of the
Project; or (ii) the sale, transfer, lease (other than a Lease of an Apartment
Unit), conveyance, alienation, pledge, assignment, encumbrance, hypothecation or
other disposition (a "Transfer") of (1) all or any portion of the Project or any
portion of any other security for the Loan, (2) all or any portion of the
Borrower's right, title and interest in and to the Project or any portion of any
other security for the Loan (unless the Loan is simultaneously repaid in full),
or (3) any interest in Borrower. Notwithstanding the foregoing, Borrower shall
have the right to enter into contracts for sale of individual Condominium Units
within the Project; provided, however, that no conveyance of a Condominium Unit
under such contract for sale shall be consummated, unless such Condominium Unit
is released from the lien of the Mortgage for the benefit of the Lender in
accordance with and pursuant to the release provisions hereinafter set forth.
11.3 PROHIBITION OF TRANSFERS IN VIOLATION OF ERISA.
In addition to the prohibitions set forth in Section 11.2 above, Borrower
shall not assign, sell, pledge, encumber, transfer, hypothecate or otherwise
dispose of its interest or rights in this Agreement or in the Project, or
attempt to do any of the foregoing or suffer any of the foregoing, nor shall any
party owning a direct or indirect interest in Borrower assign, sell, pledge,
encumber, transfer, hypothecate or otherwise dispose of any of its rights or
interest (direct or indirect) in Borrower, attempt to do any of the foregoing or
suffer any of the foregoing, if such action would cause the Loan, or the
exercise of any of Lender's rights in connection therewith, to constitute a
prohibited transaction under ERISA or the Internal Revenue Code or otherwise
result in Lender being deemed in violation of any applicable provision of ERISA.
Borrower agrees to indemnify and hold Lender free and harmless from and against
all losses, costs (including attorneys' fees and expenses), taxes, damages
(including consequential damages) and expenses Lender may suffer by reason of
the investigation, defense and settlement of claims and in obtaining any
prohibited transaction exemption under ERISA necessary or desirable in Lender's
sole judgment or by reason of a breach of the foregoing prohibitions. The
foregoing indemnification shall be a recourse obligation of Borrower and shall
survive repayment of the Note, notwithstanding any limitations on recourse
contained herein or in any of the Loan Documents.
11.4 SUCCESSORS AND ASSIGNS.
Subject to the foregoing restrictions on transfer and assignment contained
in this Article 11, this Agreement shall inure to the benefit of and shall be
binding on the parties hereto and their respective successors and permitted
assigns.
ARTICLE 12
TIME OF THE ESSENCE
12.1 TIME IS OF THE ESSENCE.
Borrower agrees that time is of the essence under this Agreement.
ARTICLE 13
EVENTS OF DEFAULT
13.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following
shall constitute an "Event of Default" as said term is used herein:
(a) Failure of Borrower (i) (x) to make any principal or interest payment
within five (5) days after the date when due, or (y) to observe or perform any
of the other covenants or conditions by Borrower to be performed under the terms
of this Agreement or any other Loan Document concerning the payment of money,
for a period of ten (10) days after written notice from Lender that the same is
due and payable; or (ii) for a period of thirty (30) days after written notice
from Lender, to observe or perform any non-monetary covenant or condition
contained in this Agreement or any other Loan Documents; provided that if any
such failure concerning a non-monetary covenant or condition is susceptible to
cure and cannot reasonably be cured within said thirty (30) day period, then
Borrower shall have an additional thirty (30) day period to cure such failure
and no Event of Default shall be deemed to exist hereunder so long as (x)
Borrower commences such cure within the initial thirty (30) day period and
diligently and in good faith pursues such cure to completion within such
resulting sixty (60) day period from the date of Lender's notice, and (y) the
existence of such default will not result in any prospective purchaser of a
Condominium Unit having the right to terminate its purchase contract with any
tenant of an Apartment Unit having the right to terminate its Lease due to such
default; and provided further that if a different notice or grace period is
specified under any other subsection of this Article 13 with respect to a
particular breach, the specific provision shall control.
(b) Any Transfer or other disposition in violation of Sections 11.2 or
11.3.
(c) If any warranty, representation, statement, report or certificate made
now or hereafter by Borrower or Guarantor is untrue or incorrect in any material
respect at the time made or delivered, provided that if such breach is
reasonably susceptible of cure, then no Event of Default shall exist so long as
Borrower cures said breach (i) within the notice and cure period provided in
(a)(i) above for a breach that can be cured by the payment of money; or (ii)
within the notice and cure period provided in (a)(ii) above for any other
breach.
(d) Borrower or Guarantor shall commence a voluntary case concerning
Borrower or such Guarantor under Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto or any
other present or future bankruptcy or insolvency statute (the "Bankruptcy
Code"); or an involuntary proceeding is commenced against Borrower or Guarantor
under the Bankruptcy Code and relief is ordered against Borrower or such
Guarantor, or the petition is controverted but not dismissed or stayed within
sixty (60) days after the commencement of the case, or a custodian (as defined
in the Bankruptcy Code) is appointed for or takes charge of all or substantially
all of the property of Borrower or Guarantor; or the Borrower or Guarantor
commences any other proceedings under any reorganization, arrangement,
readjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar Law of any jurisdiction whether now or hereafter in effect relating
to the Borrower or Guarantor; or there is commenced against Borrower or
Guarantor any such proceeding which remains undismissed or unstayed for a period
of sixty (60) days; or the Borrower or Guarantor fails to controvert in a timely
manner any such case under the Bankruptcy Code or any such proceeding, or any
order of relief or other order approving any such case or proceeding is entered;
or the Borrower or Guarantor by any act or failure to act indicates its consent
to, approval of, or acquiescence in any such case or proceeding or the
appointment of any custodian or the like of or for it for any substantial part
of its property or suffers any such appointment to continue undischarged or
unstayed for a period of sixty (60) days.
(e) Borrower or Guarantor shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due, or shall consent to the appointment of a receiver or trustee or
liquidator of all of its property or the major part thereof or if all or a
substantial part of the assets of Borrower or Guarantor are attached, seized,
subjected to a writ or distress warrant, or are levied upon, or come into the
possession of any receiver, trustee, custodian or assignee for the benefit of
creditors.
(f) If Borrower is enjoined, restrained or in any way prevented by any
court order from operating the Project.
(g) One or more final, unappealable judgments are entered (i) against
Borrower in amounts aggregating in excess of One Hundred Thousand Dollars
($100,000.00); or (ii) against Guarantor in amounts aggregating in excess of Two
Hundred Fifty Thousand Dollars ($250,000.00), and said judgments are not stayed
or bonded over within thirty (30) days after entry.
(h) If Borrower or Guarantor shall fail to pay any debt owed by it or is in
default under any agreement with Lender or any other party (other than a failure
or default for which Borrower's maximum liability does not exceed $100,000.00
and Guarantor's maximum liability does not exceed $250,000.00) and such failure
or default continues after any applicable grace period specified in the
instrument or agreement relating thereto.
(i) As of the end of each calendar quarter, Guarantor's and its
consolidated wholly-owned subsidiary's liquid assets, as determined in
accordance with generally acceptable accounting principles, are less than Five
Million Dollars ($5,000,000.00).
(j) As of the end of each calendar quarter, Guarantor's tangible net worth
(i.e., Guarantor's and its consolidated wholly-owned subsidiary's total assets,
excluding intangible assets, such as good will, trademarks, patents, copyrights,
organizational expenses and similar intangible assets, less all liabilities of
Guarantor and its consolidated wholly-owned subsidiary, including subordinated
debt) does not equal or exceed Fifty Million Dollars ($50,000,000.00).
(k) If a Material Adverse Change occurs with respect to Borrower, the
Project or Guarantor.
(l) The occurrence of any other event or circumstance denominated as an
Event of Default herein or under any of the other Loan Documents and the
expiration of any applicable grace or cure periods, if any, specified for such
Event of Default herein or therein, as the case may be.
ARTICLE 14
LENDER'S REMEDIES IN EVENT OF DEFAULT
14.1 REMEDIES CONFERRED UPON LENDER.
Upon the occurrence of any Event of Default, Lender may pursue any one or
more of the following remedies concurrently or successively, it being the intent
hereof that none of such remedies shall be to the exclusion of any other:
(a) Withhold further disbursement of the proceeds of the Loan and/or
terminate Lender's obligations to make further disbursements hereunder;
(b) Declare the Note to be immediately due and payable;
(c) Use and apply any monies or letters of credit deposited by Borrower
with Lender, regardless of the purposes for which the same was deposited, to
cure any such default or to apply on account of any indebtedness under this
Agreement which is due and owing to Lender; and
(d) Exercise or pursue any other remedy or cause of action permitted under
this Agreement or any other Loan Documents, or conferred upon Lender by
operation of Law.
Notwithstanding the foregoing, upon the occurrence of any Event of Default
under Section 13.1, all amounts evidenced by the Note shall automatically become
due and payable, without any presentment, demand, protest or notice of any kind
to Borrower.
ARTICLE 15
RELEASE OF CONDOMINIUM UNITS
15.1 FULL PAYMENT.
Except as provided in Section 15.2 below, unless Lender otherwise consents
in writing, the Property or any part thereof encumbered by the Deed of Trust
shall not be released until all of the indebtedness secured by the Note and the
obligations of Borrower hereunder and under the other Loan Documents shall have
been paid and performed in full.
15.2 PARTIAL RELEASES.
Lender shall release a Condominium Unit from the lien of the Mortgage upon
satisfaction of the following conditions precedent with respect to each
Condominium Unit for which a release is requested. At the time of the release,
no Event of Default shall have occurred. Borrower shall have paid to Lender with
respect to each Condominium Unit to be released the greater of (i) ninety
percent (90%) of the net sales proceeds received by Borrower arising from the
sale of a Condominium Unit for which a release has been requested; or (ii) One
Hundred Sixty-One Thousand Two Hundred Twelve Dollars ($161,212.00); provided,
however, that with respect to ten (10) Units which are Star Mesa Models or
Dillon Mesa Models, the amount payable with respect to the release of such
Condominium Unit from the lien of the Mortgage shall be one hundred percent
(100%) of the net sales proceeds received by Borrower upon the sale of such
Condominium Unit ("Release Consideration"). The term net sales proceeds, as used
herein, shall mean the gross sales price of the Condominium Unit in question, as
set forth in the purchase and sale agreement for such Condominium Unit, less (i)
the amount of all closing costs, brokerage commissions and other customary fees
and charges incurred by a seller of a Condominium Unit in the Denver
Metropolitan Area; provided, however, that any and all of such amount shall not
in the aggregate exceed eight percent (8%)of the gross sales price of such
Condominium Unit; and/or (ii) the charge for all optional items and upgrades
which are identified in the purchase agreement for such Condominium Unit.
Borrower shall have provided Lender with a description of the Condominium Unit
to be released, which description shall be satisfactory to Lender and Title
Company.
ARTICLE 16
GENERAL PROVISIONS
16.1 CAPTIONS.
The captions and headings of various Articles, Sections and subsections of
this Agreement and Exhibits pertaining hereto are for convenience only and are
not to be considered as defining or limiting in any way the scope or intent of
the provisions hereof.
16.2 MODIFICATION; WAIVER.
No modification, waiver, amendment or discharge of this Agreement or any
other Loan Document shall be valid unless the same is in writing and signed by
the party against which the enforcement of such modification, waiver, amendment
or discharge is sought.
16.3 GOVERNING LAW.
Irrespective of the place of execution and/or delivery, this Agreement
shall be governed by, and shall be construed in accordance with, the laws of the
State of Colorado.
16.4 ACQUIESCENCE NOT TO CONSTITUTE WAIVER OF LENDER'S REQUIREMENTS.
Each and every covenant and condition for the benefit of Lender contained
in this Agreement may be waived by Lender, provided, however, that to the extent
that Lender may have acquiesced in any noncompliance with any conditions
precedent to the Opening of the Loan or to any subsequent disbursement of Loan
proceeds, such acquiescence shall not be deemed to constitute a waiver by Lender
of such requirements with respect to any future disbursements of Loan proceeds.
16.5 DISCLAIMER BY LENDER.
This Agreement is made for the sole benefit of Borrower and Lender, and no
other person or persons shall have any benefits, rights or remedies under or by
reason of this Agreement, or by reason of any actions taken by Lender pursuant
to this Agreement. Lender shall not be liable to any contractors,
subcontractors, supplier, architect, engineer, tenant, purchaser of a
Condominium Unit or other party for labor or services performed or materials
supplied in the use, operation, maintenance, lease, sale or ownership of the
Project. Lender shall not be liable for any debts or claims accruing in favor of
any such parties against Borrower or others or against the Project. Lender, by
making the Loan or taking any action pursuant to any of the Loan Documents,
shall not be deemed a partner or a joint venturer with Borrower or fiduciary of
Borrower.
16.6 PARTIAL INVALIDITY; SEVERABILITY.
If any of the provisions of this Agreement, or the application thereof to
any person, party or circumstances, shall, to any extent, be invalid or
unenforceable, the remainder of this Agreement, or the application of such
provision or provisions to persons, parties or circumstances other than those as
to whom or which it is held invalid or unenforceable, shall not be affected
thereby, and every provision of this Agreement shall be valid and enforceable to
the fullest extent permitted by law.
16.7 DEFINITIONS INCLUDE AMENDMENTS.
Definitions contained in this Agreement which identify documents,
including, but not limited to, the Loan Documents, shall be deemed to include
all amendments and supplements to such documents from the date hereof, and all
future amendments and supplements thereto entered into from time to time to
satisfy the requirements of this Agreement or otherwise with the consent of
Lender. Reference to this Agreement contained in any of the foregoing documents
shall be deemed to include all amendments and supplements to this Agreement.
16.8 ENTIRE AGREEMENT.
This Agreement, taken together with all of the other Loan Documents and all
certificates and other documents delivered by Borrower to Lender, embody the
entire agreement and supersede all prior agreements, written or oral, relating
to the subject matter hereof.
16.9 WAIVER OF DAMAGES.
In no event shall Lender be liable to Borrower for punitive, exemplary or
consequential damages, including, without limitation, lost profits, whatever the
nature of a breach by Lender of its obligations under this Agreement or any of
the Loan Documents, and Borrower for itself and its Guarantors waive all claims
for punitive, exemplary or consequential damages, including without limitation
lost profits.
16.10 CLAIMS AGAINST LENDER.
Lender shall not be in default under this Agreement, or under any other
Loan Documents, unless a written notice specifically setting forth the claim of
Borrower shall have been given to Lender within three (3) months after Borrower
first had knowledge of the occurrence of the event which Borrower alleges gave
rise to such claim and Lender does not remedy or cure the default, if any there
be, promptly thereafter. Borrower waives any claim, set-off or defense against
Lender arising by reason of any alleged default by Lender as to which Borrower
does not give such notice timely as aforesaid. Borrower acknowledges that such
waiver is or may be essential to Lender's ability to enforce its remedies
without delay and that such waiver therefore constitutes a substantial part of
the bargain between Lender and Borrower with regard to the Loan.
16.11 JURISDICTION.
TO THE GREATEST EXTENT PERMITTED BY LAW, BORROWER HEREBY WAIVES ANY AND ALL
RIGHTS TO REQUIRE MARSHALING OF ASSETS BY LENDER. WITH RESPECT TO ANY SUIT,
ACTION OR PROCEEDINGS RELATING TO THIS AGREEMENT (EACH, A "PROCEEDING"),
BORROWER IRREVOCABLY (A) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE
AND FEDERAL COURTS HAVING JURISDICTION IN THE CITY AND COUNTY OF DENVER OR
COUNTY OF DOUGLAS AND STATE OF COLORADO, AND (B) WAIVES ANY OBJECTION WHICH IT
MAY HAVE AT ANY TIME TO THE LAYING OF VENUE OF ANY PROCEEDING BROUGHT IN ANY
SUCH COURT, WAIVES ANY CLAIM THAT ANY PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM AND FURTHER WAIVES THE RIGHT TO OBJECT, WITH RESPECT TO SUCH
PROCEEDING, THAT SUCH COURT DOES NOT HAVE JURISDICTION OVER SUCH PARTY. NOTHING
IN THIS AGREEMENT SHALL PRECLUDE LENDER FROM BRINGING A PROCEEDING IN ANY OTHER
JURISDICTION NOR WILL THE BRINGING OF A PROCEEDING IN ANY ONE OR MORE
JURISDICTIONS PRECLUDE THE BRINGING OF A PROCEEDING IN ANY OTHER JURISDICTION.
BORROWER FURTHER AGREES AND CONSENTS THAT, IN ADDITION TO ANY METHODS OF SERVICE
OF PROCESS PROVIDED FOR UNDER APPLICABLE LAW, ALL SERVICE OF PROCESS IN ANY
PROCEEDING IN ANY COLORADO STATE OR UNITED STATES COURT SITTING IN THE CITY AND
COUNTY OF DENVER OR COUNTY OF DOUGLAS MAY BE MADE BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO BORROWER AT THE ADDRESS INDICATED
BELOW, AND SERVICE SO MADE SHALL BE COMPLETE UPON RECEIPT; EXCEPT THAT IF
BORROWER SHALL REFUSE TO ACCEPT DELIVERY, SERVICE SHALL BE DEEMED COMPLETE FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN SO MAILED.
16.12 SET-OFFS.
After the occurrence and during the continuance of an Event of Default,
Borrower hereby irrevocably authorizes and directs Lender from time to time to
charge Borrower's accounts and deposits with Lender (or its Affiliates), and to
pay over to Lender an amount equal to any amounts from time to time due and
payable to Lender hereunder, under the Note or under any other Loan Document.
Borrower hereby grants to Lender a security interest in and to all such accounts
and deposits maintained by the Borrower with Lender (or its Affiliates).
ARTICLE 17
NOTICES
Any notice, demand, request or other communication which any party hereto
may be required or may desire to give hereunder shall be in writing and shall be
deemed to have been properly given (a) if hand delivered, when delivered; (b) if
mailed by United States Certified Mail (postage prepaid, return receipt
requested), three Business Days after mailing (c) if by Federal Express or other
reliable overnight courier service, on the next Business Day after delivered to
such courier service or (d) if by telecopier on the day of transmission so long
as copy is sent on the same day by overnight courier as set forth below:
If to Borrower:
Silver Mesa at Palomino Park LLC
1600 Wynkoop Street, Suite 202
Denver, Colorado 80202
Telephone: (303) 534-4396
Facsimile: (303) 534-4398
With a copy to:
Wellsford Capital
535 Madison Avenue, 26th Floor
New York, New York 10022
Telephone: (212) 838-3400
Facsimile: (212) 421-7244
and with respect to notices of default only:
Brownstein Hyatt & Farber, P.C.
410 17th Street, 22nd Floor
Denver, Colorado 80202
Attn: Howard J. Pollack, Esq.
Telephone: (303) 534-6335
Facsimile: (303) 623-1956
If to Lender:
KeyBank National Association
Mailstop CO-02-WT-0401
1675 Broadway, Suite 400
Denver, Colorado 80202
Attn: Senior Vice President
Commercial Real Estate
Telephone: 720-904-4000
Facsimile: 720-904-4420
With a copy to:
KeyBank National Association
Mailstop CO-02-WT-0401
1675 Broadway, Suite 400
Denver, Colorado 80202
Attn: Vice President CRE Services
Telephone: 720-904-4000
Facsimile: 720-904-4420
or at such other address as the party to be served with notice may have
furnished in writing to the party seeking or desiring to serve notice as a place
for the service of notice.
ARTICLE 18
WAIVER OF JURY TRIAL
BORROWER AND LENDER EACH WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION
OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS OR RELATING THERETO OR ARISING FROM THE LENDING RELATIONSHIP
WHICH IS THE SUBJECT OF THIS AGREEMENT AND AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
EXECUTED as of the date first set forth above.
BORROWER: SILVER MESA AT PALOMINO PARK LLC,
a Colorado limited liability company
By: Wellsford Park Highlands Corp., a Colorado
corporation, its Manager
By: /s/ David M. Strong
-----------------------
Name: David M. Strong
Title: Vice President
Borrower's Tax ID No. 84-1461354
LENDER: KEYBANK NATIONAL ASSOCIATION
By: /s/ Patricia McLaghlin
--------------------------
Name: Patricia McLaghlin
Title: Assistant Vice President
EXHIBIT A
LEGAL DESCRIPTION OF LAND
EXHIBIT B
PERMITTED EXCEPTIONS
EXHIBIT C
TITLE REQUIREMENTS
1. Title Insurance Company Requirements. The maximum single risk (i.e., the
amount insured under any one policy) by a title insurer may not exceed 25% of
that insurer's surplus and statutory reserves. Reinsurance must be obtained by
closing for any policy exceeding such amount.
2. Loan Policy Forms. Standard 1992 American Land Title Association ("ALTA")
form of loan title insurance policy, or the 1987 or 1970 (amended October 17,
1970 and October 17, 1984) ALTA loan form policies must be used (the ALTA 1990
loan policy will not be accepted).
3. Insurance Amount. The amount insured must equal at least the original
principal amount of the Loan.
4. Named Insured. The named insured under the Title Policy must be substantially
the same as the following: "KeyBank National Association, and its respective
successors and assigns."
5. Creditors' Rights. Any "creditors' rights" exception or other exclusion from
coverage for voidable transactions under bankruptcy, fraudulent conveyance, or
other debtor protection laws or equitable principles must be removed by either
an endorsement or a written waiver.
6. Arbitration. In the event that the form policy which is utilized includes a
compulsory arbitration provision, the insurer must agree that such compulsory
arbitration provisions do not apply to any claims by or on behalf of the
insured. Please note that the 1987 and 1990 ALTA form loan policies include such
provisions.
7. Date of Policy. The effective date of the Title Policy must be as of the date
and time of the closing.
8. Legal Description. The legal description of the property contained in the
Title Policy must conform to (a) the legal description shown on the survey of
the property, and (b) the legal description contained in the Mortgage. In any
event, the Title Policy must be endorsed to provide that the insured legal
description is the same as that shown on the survey.
9. Easements. Each Title Policy shall insure, as separate parcels: (a) all
appurtenant easements and other estates benefitting the property, and (b) all
other rights, title, and interests of the borrower in real property under
reciprocal easement agreements, access agreements, operating agreements, and
agreements containing covenants, conditions, and restrictions relating to the
Property.
10. Exceptions to Coverage. With respect to the exceptions, the following
applies:
a) Each Title Policy shall afford the broadest coverage available in the
state in which the subject property is located.
b) The "standard" exceptions (such as for parties in possession or other
matters not shown on public records) must be deleted.
c) The "standard" exception regarding tenants in possession under
residential leases, should also be deleted. In the alternative, the exception
should read as follows: "Rights or claims of parties in possession under
residential leases or occupants of apartment units, as tenants only, without any
right of first refusal to purchase any portion of the property." For commercial
properties, a rent roll should be attached in lieu of the general exception.
d) The standard survey exception to the Title Policy must be deleted.
Instead, a survey reading reflecting the current survey should be incorporated.
e) Any exception for taxes, assessments, or other lienable items must
expressly insure that such taxes, assessments, or other items are not yet due
and payable.
f) Any lien, encumbrance, condition, restriction, or easement of record
must be listed in the Title Policy, and the Title Policy must affirmatively
insure that the improvements do not encroach upon the insured easements or
insure against all loss or damage due to such encroachment.
g) The Title Policy may not contain any exception for any filed or unfiled
mechanics' or materialmen's liens.
h) In the event that a comprehensive endorsement has been issued and any
Schedule B exceptions continue to be excluded from the coverage provided through
that endorsement, then a determination must be made whether such exceptions
would be acceptable to Bank. In the event that it is determined that such
exception is acceptable, a written explanation regarding the acceptability must
be submitted as part of the delivery of the Loan Documents.
If Schedule B indicates the presence of any easements that are not located on
the survey, the Title Policy must provide affirmative insurance against any loss
resulting from the exercise by the holder of such easement of its right to use
or maintain that easement. ALTA Form 103.1 or an equivalent endorsement is
required for this purpose.
11. Endorsements. With respect to endorsements, the following applies:
a) Each Title Policy must include an acceptable environmental protection
lien endorsement on ALTA Form 8.1. Please note that Form 8.1 may take exception
for an entire statute which contains one or more specific sections under which
environmental protection liens could take priority over the Mortgage; provided,
however, that such specific sections under which the lien could arise must also
be referenced.
b) Each Title Policy must contain an endorsement which provides that the
insured legal description is the same as shown on the survey.
c) Each Title Policy must contain a comprehensive endorsement (ALTA Form 9)
if a lien, encumbrance, condition, restriction, or easement is listed in
Schedule B to the title insurance policy.
d) Lender may require the following endorsements where reasonably
applicable and available:
- -access -due execution -single tax lot
- -address -first loss -subdivision
- -assessments -last dollar -tie in
- -assignment of leases and rents -leasehold -usury
- -assignment of loan documents -mineral rights -zoning (ALTA 3.1-
- -contiguity -mortgage tax with parking)
- -doing business -reverter
12. Other Coverages. Each Title Policy shall insure the following by
endorsement or affirmative insurance to the extent such coverage is not afforded
by the ALTA Form 9 or its equivalent in a particular jurisdiction:
a) that no conditions, covenants, or restrictions of record affecting the
property:
(i) have been violated,
(ii) create lien rights which prime the insured mortgage,
(iii) contain a right of reverter or forfeiture, a right of reentry, or
power of termination, or
(iv) if violated in the future would result in the lien created by the
insured mortgage or title to the property being lost, forfeited, or
subordinated; and
b) that except for temporary interference resulting solely from
maintenance, repair, replacement, or alteration of lines, facilities, or
equipment located in easements and rights of way taken as certain exceptions to
each Title Policy, such exceptions do not and shall not prevent the use and
operation of the Property or the improvements as used and operated on the
effective date of the Title Policy.
13. Informational Matters. The Policy must include, as an informational
note, the following:
a) The recorded plat number together with recording information; and
b) The property parcel number or the tax identification number, as
applicable.
14. Delivery of Copies. Legible copies of all easements, encumbrances, or
other restrictions shown as exceptions on the Title Policy must be delivered
with the first draft of the title commitment.
EXHIBIT D
FORM OF SURVEY CERTIFICATION
CERTIFICATION FOR SURVEYS (LONG-FORM)
I hereby certify to KeyBank National Association, its successors and assigns,
and _____________ (insert Borrower and Title Insurance Company) that the survey
prepared by me entitled " ________ " was actually made upon the ground and that
it and the information, courses and distances shown thereon are correct; that
the title lines and lines of actual possession are the same; that the size,
location and type of buildings and improvements are as shown and all are within
the boundary lines of the property; that there are no easements, encroachments
or use affecting this property appearing from a careful physical inspection of
the same, other than those shown and depicted thereon; that all utility services
required for the operations of the premises either enter the premises through
adjoining public streets, or the survey shows the point of entry and location of
any utilities which pass through or are located on adjoining private land; that
the survey shows the location and direction of all storm drainage systems for
the collection and disposal of all roof and surface drainage; that any discharge
into streams, rivers or other conveyance system is shown on the survey; and that
the parcels described heron do not lie within flood hazard areas in accordance
with the document entitled "Department of Housing and Urban Development, Federal
Insurance Administration - Special Flood Hazard Area Maps". This survey is made
in accordance with the "Minimum Standard Detail Requirements for Land Title
Surveys" jointly established and adopted by ALTA and ACSM" in 1997 for Class A
Urban Survey and includes items 1-4, 6-11 and 13 of Table A.
EXHIBIT E
INSURANCE REQUIREMENTS
Borrower shall obtain and keep in full force and effect permanent All Perils
insurance coverage as appropriate, satisfactory to Lender, on the Project. All
insurance policies shall be issued by carriers with a Best's Insurance Reports
policy holder's rating of A and a financial size category of Class X and shall
include a standard mortgage clause (without contribution) in favor of and
acceptable to Lender. The policies shall provide for the following, and any
other coverage that Lender may from time to time deem necessary:
a) Coverage Against All Peril in the amount of 100% of the replacement cost
of all Improvements located or to be located on the Land. If the policy is
written on a CO-INSURANCE basis, the policy shall contain an AGREED AMOUNT
ENDORSEMENT as evidence that the coverage is in an amount sufficient to insure
the full amount of the mortgage indebtedness. "KeyBank National Association and
its successors and assigns" shall be named as the "Mortgagee" and "Loss Payee".
b) Public liability coverage in a minimum amount of not less than
$1,000,000 per occurrence and $2,000,000 in the aggregate and excess liability
coverage of not less than $5,000,000. "KeyBank National Association and its
successors and assigns" shall be named as an "Additional Insured".
c) Rent loss or business interruption coverage in a minimum amount approved
by Lender.
d) Flood hazard coverage in a minimum amount available, if the premises are
located in a special flood hazard area ("Flood Hazard Area") as designated by
the Federal Emergency Management Agency on its Flood Hazard Boundary Map and
Flood Insurance Rate Maps, and the Department of Housing and Urban Development,
Federal Insurance Administration, Special Flood Hazard Area Maps.
e) Workers Compensation and Disability insurance as required by law.
f) Such other types and amounts of insurance with respect to the premises
and the operation thereof which are commonly maintained in the case of other
property and buildings similar to the premises in nature, use, location, height,
and type of construction, as may from time to time be required by the mortgagee.
Each policy shall provide that it may not be canceled, reduced or terminated
without at least thirty (30) days prior written notice to Lender.
EXHIBIT F
BUDGET
EXHIBIT G
LIBOR NOTICE ELECTION
NOTICE OF LIBOR FUNDING ELECTION
Date:
KeyBank National Association
1675 Broadway, Suite 400
Denver, Colorado 80202
Gentlemen:
Reference is made to the Promissory Note dated as of _______________, _____ (the
"Note"). The undersigned hereby gives notice pursuant to the Loan Agreement of
its desire for a LIBOR FUNDING ELECTION of a portion of the proceeds of the loan
evidenced by the Note. The following are the details of the LIBOR funding
election to be set up as of the commencement date specified below:
1. The LIBOR funding commencement date is: __________
2. The LIBOR funding period expires: __________
3. The LIBOR funding principal amount is: __________
4. The LIBOR funding rate is LIBOR plus 2% or: __________
The sources for the above LIBOR are as follows (choose as appropriate):
Prime Note Outstanding Balance
Interest Due
Current LIBOR Maturing
Current LIBOR Maturing
Total
The next LIBOR FUNDING ELECTION NOTIFICATION date is ___________________.
The undersigned represents and warrants that the LIBOR Funding Election
requested hereby complies with the requirements of the Loan Agreement.
BORROWER:
SILVER MESA AT PALOMINO PARK LLC, a
Colorado limited liability company
By:________________________________________
Its:__________________________________________