Exhibit 10.22


 


LOAN AGREEMENT


 


BY AND BETWEEN


 


BTS MONTERREY HOLDINGS LLC


 


and


 


CORUS BANK, N.A.


 


 


DATED AS OF: MARCH 21, 2006


 


[This Loan Agreement should be
read together with the Subordination and Intercreditor Agreement between Lender
and MTRY Funding, LLC, a Delaware limited liability company, dated of even date
and the Subordination and Intercreditor Agreement (Subordinate Lender) between
Benchmark Monterrey Associates, LLC, a Delaware limited liability company.]


 

















 


LOAN AGREEMENT


 


THIS LOAN AGREEMENT is made as of March 21 2006
(this “Agreement”)  between BTS MONTERREY HOLDINGS LLC, a Delaware limited liability
company, having a mailing address of 17080 Safety Street, Suite 109, Fort
Myers, Florida 33908 (herein “Borrower”)  and CORUS BANK, N.A., having a mailing address of
3959 N. Lincoln Avenue, Chicago, Illinois 60613 and its successors and assigns
(herein, “Lender”).


 


RECITALS


 


A.            Borrower has
entered into a purchase agreement to acquire the actual, beneficial and fee
simple interest in that certain parcel of improved land located at 15250 Sonoma
Drive, Fort Myers, Florida, as more particularly described on Exhibit A
attached to and made a part of this Agreement. The land is currently improved
with, among other things, a 408-unit apartment complex. Borrower intends to
convert the land and the described improvements into a condominium regime which
will consist of 408 residential condominium units totaling approximately
483,000 net sellable, interior square feet of residential space, 78 Garage
Spaces, 60 Carport Spaces, 639 surface parking spaces, clubhouse, swimming
pools, indoor racquetball court and fitness center, as more particularly
described in this Agreement.


 


B.            Borrower has applied to Lender for a loan in the aggregate principal amount of up to
SIXTY NINE MILLION AND NO/100 DOLLARS ($69,000,000), the proceeds of which will
be used for the purposes of, among other things, acquiring fee title interest
in and to the above described land and improvements and for paying closing
costs and expenses in connection therewith, establishing the condominium regime
for the above described land and improvements, rehabilitating the Project and
closing of the loan described herein.


 


C.            Lender is
willing to make the loan to
Borrower, upon and subject to the terms and conditions contained in this
Agreement and the other Loan Documents.


 


NOW, THEREFORE, in consideration of the
premises and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree as
follows:


 


ARTICLE 1


 


INCORPORATION OF RECITALS AND EXHIBITS


 


Section 1.1 Incorporation of Recitals. The foregoing
Recitals are incorporated herein and expressly made a part hereof.


 


Section 1.2 Incorporation of Exhibits. All Exhibits
hereto are incorporated herein and expressly made a part hereof.


 

















 


ARTICLE 2


 


PARTICULAR TERMS; DEFINITIONS


 


Section 2.1 Definitions. For all
purposes of this Agreement, the following terms, except as otherwise expressly
provided or unless the context requires otherwise, shall have the respective
meanings hereinafter specified:


 


Accounts and Intangibles: All accounts, amounts
receivable, deposits, deposit accounts, payments, all right to payment, all the
records and books of account now or hereafter maintained by Borrower in
connection with the ownership or operation of the Project or otherwise; all
contract rights, rights to the payment of money including tax refund claims,
insurance proceeds and tort claims, chattel paper, documents, instruments,
general intangibles, securities, together with all income therefrom, increases
thereunder and proceeds thereof; and all judgments, awards of damages and
settlements hereafter made resulting from condemnation proceedings or the
taking of any of the Real Estate or any portion thereof under the power of eminent domain,
any proceeds of any policies of insurance maintained with respect to any of the
Project and proceeds of any sale, option or contract to sell the Project or any
portion thereof.


 


Additional Equity Contribution: As defined in Section 3.2.


 


ADA: The Americans with
Disabilities Act of 1990, 42 U.S.C. 12101, as from time to
time amended, together with any and all comparable Florida Laws.


 


ADA Plan: All plans, studies and
reports prepared in connection with the Project’s compliance or plan for
compliance with the ADA, if any.


 


Additional Units: As defined in Section 9.3(f).


 


Affiliate Debt: As defined in Section 5.1(jj).


 


Affiliate(s): With respect to an
individual, any relative of such individual, and with respect to any Person,
any other Person: (i) directly or indirectly controlling, controlled by or
under direct or indirect common control with, such Person or (ii) that
directly or indirectly owns any of the voting securities or capital stock of
such Person. A Person shall be deemed to control another Person, if such Person
possesses, directly or indirectly, the power to direct or cause the direction
of the management and policies of such other Person, whether through the
ownership of voting securities, by contract or otherwise.


 


ALTA: American Land Title
Association.


 


Application Fee: As defined in Section 4.4.


 


Approved Closing Costs: With respect to the sale of
any Condominium Unit, Garage Space or Carport Space (which in all events must
be an Approved Sale), all reasonable and customary closing costs and
adjustments actually incurred and paid by Borrower (without contribution by the
purchaser), documented to Lender’s satisfaction, and approved by Lender (which
approval shall not be unreasonably withheld), including, without limitation,
title


 


2

















 


insurance
premiums, title company charges, Permitted Commissions (but not other broker’s
commissions or finder’s fees), a one percent (1%) developer’s fee to be paid by
Borrower, reasonable and customary attorneys’ fees, customary recordation
charges, transfer taxes and the Exit Fee (but expressly excluding amounts
Borrower is required to pay, deduct or place into escrow on account of
unfinished work in a Condominium Unit or at the Project or on account of
common charges or real estate taxes).


 


Approved Plans: The plans for the Work, as
the same have been approved by Lender.


 


Approved Sale: A bona fide, arms-length
sale, transfer or conveyance of any Condominium Unit comprising a portion of
the Project pursuant to a Valid Sale Contract, to any third party not related
to or affiliated with Borrower, the members of Borrower, or Guarantors or any
Affiliate of either Borrower, the members of Borrower, or Guarantors.


 


Architectural and Engineering Documents: As defined in
the Assignment of Agreements, Plans and Permits.


 


Assignment of Accounts: The Assignment of Accounts,
dated as of the date hereof, made by Borrower to Lender, which grants to Lender
a security interest in all accounts of Borrower.


 


Assignment of Agreements, Plans and Permits: The Assignment
of Agreements, Plans and Permits, dated as of the date hereof, made by Borrower
to Lender.


 


Assignment of Condominium Documents: The Collateral
Assignment of Developer’s Rights and Agreement With Respect to Condominium
Documents made by Borrower to Lender.


 


Assignment of Leases and Rents: The Assignment
of Leases and Rents, dated as of the date hereof, made by Borrower to Lender.


 


Assignment of Operating Account: The Assignment
of Operating Account, dated as of the date hereof, made by Borrower to Lender.


 


Assignment of Purchase Agreements: The Collateral
Assignment of Purchase Agreements, dated as of the date hereof, made by
Borrower to Lender, pursuant to which, Borrower assigns all of its right, title
and interest in each and every Valid Sale Contract (and all other Contracts
related to the sale of a Condominium Unit, including, without limitation, all
of Borrower’s interest in the Earnest Money Deposits and all rights to receive
payment thereunder (but with respect to the Earnest Money Deposits, subject to
the rights, if any, of the Purchaser).


 


Bankruptcy Code: The United States Bankruptcy
Code, 11 U.S.C. §§ 101 et seq., as amended from time to time, and all regulations
promulgated thereunder and rules of practice and procedure applicable
thereto.


 


Borrower: BTS Monterrey Holdings LLC,
a Delaware limited liability company.


 


Building Repairs Reserve: As defined in Section 3.1.


 


3

















 


Business Day: Any day (other than a
Saturday or Sunday or a day when commercial banks are required by law to close
in Chicago, Illinois) and on which Lender is open for Business.


 


By-Laws: The condominium by-laws in
accordance with the Condominium Act and otherwise in form reasonably approved
by Lender.


 


Carport Space(s): Any one of the sixty (60)
carport spaces located at the Project.


 


Carveout Guaranty: That certain Carveout
Guaranty, of even date herewith, executed and delivered by Guarantors to
Lender.


 


Closing Date: March 21, 2006.


 


Closing
Expenses: As defined in Section 4.1


 


Closing
Fee: As defined in Section 4.4.


 


Collateral: The Project, including the
Land, the Improvements (prior to, during and after conversion of the Project to
a condominium regime), the Accounts and Intangibles, the Permits, the
Agreements, the Plans, if any, the Construction Documents, if any, the
Condominium Documents, the Leases, the Intellectual Property, the Rents and all
other property of every kind and
description owned by Borrower or in which Borrower has an interest (to the
extent of such interest), used or useful in the construction, ownership,
occupancy, operation, conversion of the Real Estate to a condominium regime,
and maintenance of the Project, together with any and all proceeds of the
foregoing, including, without limitation, any and all cash and non-cash consideration
received from the sale, exchange, lease, collection or other disposition of any
of the foregoing, any value received as a consequence of the possession of any
of the foregoing, any payment received from any insurer or other person or
entity as a result of the destruction, loss, theft, damage or other involuntary
conversion of whatever nature of any of the foregoing, and all equipment,
machinery, furniture, inventory, other goods, fixtures, general intangibles,
instruments, chattel paper, documents, accounts and all other property of any
kind or nature which are acquired with any proceeds of any of the foregoing.


 


Commitment: That certain letter of
commitment dated March 7, 2006,
from Lender to Borrower, and accepted by Borrower on March 20, 2006.


 


Commitment Fee: As defined in Section 4.4.


 


Completion Guaranty: That certain Completion
Guaranty, of even date herewith, executed and delivered by Guarantors to Lender


 


Condominium Act: Chapter 718, Florida
Statutes, as amended, modified and replaced from time to time, and all other
applicable governmental statutes, ordinances, rules and regulations
related to common interest developments.


 


4

















 


Condominium Documents: The Declaration, the
By-Laws, the Offering Materials and all others documents and instruments
related to the creation, conversion and maintenance of the Project as
condominium property under the Condominium Act and other applicable Laws.


 


Condominium Unit or Condominium Units: A residential
condominium unit within the Project, as depicted in the Condominium Documents.


 


Construction Documents: As defined in
the Assignment of Agreements, Plans and Permits.


 


Contracts: All contracts, agreements,
warranties, representations, service agreements, maintenance contracts and
agreements relating to the use, occupancy, operation, management, repair and
service of the Project or any part thereof, whether presently existing or
entered into after the date hereof, including without limitation, all sales and
brokerage agreements and any agreement with respect to the sale or sales of any
Condominium Unit, Carport Space or Garage Space.


 


Conversion Holdback: As defined in Section 3.1.


 


Declaration: The declaration of
condominium, covenants, restrictions, easements, charges and liens, in form and
substance reasonably satisfactory to Lender, subjecting the Project to a
condominium form of ownership, all in conformance with applicable Laws,
including without limitation, the Condominium Act.


 


Default: Any event which, if it were
to continue uncured, would, with notice or lapse of time or both, constitute an
Event of Default (as such term is defined in Article 15  of this
Agreement) and shall also mean any event or circumstance which immediately upon
occurrence of the same constitutes an Event of Default.


 


Default Rate: A rate of interest equal to
the Interest Rate (as defined in the Note) in effect, plus five percent (5%). In no event
shall the Default Rate exceed the maximum interest rate permitted under
applicable Laws. The Default Rate shall be adjusted on each Adjustment Date (as
defined in the Note) to reflect any change in the Interest Rate made on such
Adjustment Date. After an Event of Default, the Default Rate shall be
applicable to any fees, costs, or advances, including any protective advances,
made by Lender in accordance with the provisions of the Loan Documents or as
provided by applicable Laws.


 


Deficiency Deposit: As defined in Section 7.1.


 


Deposit Account Security and Control Agreement
(Operating Account): The Deposit Account Security and Control
Agreement, dated as of the date hereof, between Borrower, Lender, Property
Manager and Depositary Bank.


 


Depositary Bank: SunTrust Bank.


 


Distribution: The declaration or payment
of any dividend or distribution on or in respect of any
shares of any class of capital stock of any Person or any distribution of cash
or cash flow in respect of any partnership, membership or other ownership
interest in any Person, other than


 


5

















 


dividends payable solely in
shares of common stock of such Person; or the purchase, redemption, or other
retirement of any shares of any class of capital stock or ownership interest of
any Person or ownership interests in such Person, directly or indirectly
through a subsidiary (of any tier) or otherwise; the making of any loans to any
shareholder, member, constituent partner or Affiliate; the return of capital by
any Person to its shareholders, members or partners as such; or any other
distribution on or in respect of any shares of any class of capital stock or
ownership interest of any Person or any partnership, membership or other
ownership interest in any Person.


 


Earnest Money Account: As defined in Section 6.1(g).


 


Earnest Money Deposit Account Security and Control Agreement:
The Earnest Money Deposit Account Security and Control Agreement, dated
as of the date hereof, between Borrower, Lender, Escrow Agent and Earnest Money
Depositary Bank.


 


Earnest Money Depositary Bank: Bank of
America.


 


Earnest Money Deposits or Earnest Money Deposit: The earnest
money deposits paid by any purchaser under the Purchase Agreements.


 


Environmental Indemnity Agreement: The Environmental
Remediation and Indemnity Agreement, dated as of the date hereof, made by
Borrower and Guarantors, jointly and severally, for the benefit of Lender.


 


Environmental Laws: Any federal, state or local
law, statute, ordinance, code, rule, regulation, license, authorization,
decision, order, injunction, decree, or rule of common law, and any
judicial interpretation of any of the foregoing, which pertains to health,
safety any Hazardous Material, or the environment (including but not limited to
ground or air or water or noise pollution or contamination, and underground or
above ground tanks) and shall include without limitation, the Solid Waste
Disposal Act, 42 U.S.C. § 6091 et seq.; the Comprehensive Environmental
Response, Compensation Liability Act of 1980, 42 U.S.C. § 9601 et seq., as
amended (“CERCLA”), and as amended by the Superfund Amendments and
Reauthorization Act of 1986 (“SARA”); the Hazardous Materials Transportation
Act, 49 U.S.C. § 1801 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. § 1251 et seq.; the Clean Air Act, 42 U.S.C. § 7401 et seq.; the Toxic
Substances Control Act, 15 U.S.C. § 2601 et seq.; and any other state or
federal environmental statues, and all rules, regulations, orders and decrees
now or hereafter promulgated under any of the foregoing, as any of the
foregoing now exist or may be changed or amended or come into effect in the future.


 


Environmental Proceedings: As defined in Section 5.l(g).


 


Environmental Report: Phase I Environmental Site Assessment prepared by Universal Engineering
Sciences, dated March 3, 2006.


 


Equity Contribution: As defined in Section 3.2.


 


Escrow
Agent: R.A.S. Settlement & Title Company, L.L.C.


 


Event
of Default: As defined in Section 15.1.


 


6

















 


Excess NOI Account: As  defined in Section 3.16.


 


Existing Leases: All Leases of or with
respect to all or any portion of the Land and/or the Improvements existing as
of the Closing Date.


 


Exit Fee: As defined in Section 3.21.


 


Extension: As defined in Section 3.10.


 


Extension Fee: As defined in Section 3.10.


 


Extension Notice: As  defined in Section 3.10.


 


Force Majeure: A delay in the development,
construction or equipping of the Project caused by or attributable to fire,
earthquake, flood, wind, landslide, tsunami or other acts of God, unusual
weather conditions, strikes, lockouts or labor disputes, acts of public enemy,
riots, insurrection, war, governmental regulation of the sale of transportation
materials, supplies, or other governmental action, accidents, breakage or
repairs which are not within the control of Borrower, Guarantors or Member and
not attributable to the bad faith of Borrower, Guarantor or Member, provided (i) Borrower
notifies Lender within ten (10) days of the occurrence of the event which
has or will result in Force Majeure and the length of the anticipated delay,
but in no event shall said relief exceed ninety (90) days in the aggregate and (ii) such
delay shall not cause or result in a default or violation by Borrower under any
contracts, agreements, licenses or Permits affecting the Project or the
development, construction or equipping thereof, or under any applicable Laws.


 


Garage Space(s): Any one of the seventy-eight
(78) garage spaces located at the Project.


 


GAAP: Generally accepted accounting principles,
consistently applied.


 


Governmental Approvals: As  defined in Section 5.l(n).


 


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 or administrative tribunal.


 


Gross Sale Proceeds: The gross proceeds of any sale or
other transfer of any Condominium Unit, Garage Space or Carport Space, including
Upgrade Profits, it being nonetheless understood that (a) no sale of a
Condominium Unit may be made, except on an all-cash basis unless Lender in its
sole discretion otherwise agrees in writing and (b) no sale or other
transfer of any Condominium Unit, Garage Space or Carport Space may be
accomplished other than as an Approved Sale.


 


Guarantors: John Naumann, a Florida
resident, Jeffrey J. Milton, a Maryland resident, and Frederick William Caple,
a Florida resident.


 


7

















 


Hazardous Material: Any (a) crude oil,
petroleum or any fraction thereof, flammable substances, explosives,
radioactive materials, hazardous wastes or substances, toxic wastes or
substances or any other wastes, materials or pollutants which cause the Land or
any part thereof to be in violation of any Environmental Laws; (b) friable
or potentially friable asbestos or asbestos-containing material (as those terms
are defined in any Environmental Laws now in effect or hereafter enacted or amended),
urea formaldehyde foam insulation, transformers or other equipment which
contain dielectric fluid containing levels of polychlorinated biphenyls, or
radon gas; (c) chemical, material or substance defined as or included in
the definition of “hazardous substances”, “hazardous wastes”, “hazardous
materials”, “extremely hazardous waste”, “restricted hazardous waste”, or
“toxic substances” or words of similar import under any applicable local, state
or federal Laws now in effect or hereafter enacted or amended or under
regulations now or hereafter promulgated pursuant thereto, including, but not
limited to, the CERCLA, particularly as amended by the SARA; the Federal Water
Pollution Control Act, as amended, 33 U.S.C.
Section 1251, et seq.; 40 C.F.R. §§  261.20-261.24, inclusive; and the Resource Conservation and
Recovery Act, as amended (42 U.S.C. §§  6901, et. seq.); (d) other chemical, material or
substance, exposure to which is now or hereafter prohibited, limited or
regulated by any Governmental Authority or is likely to pose a material hazard
to the health and safety of the occupants of the Land or the owners and/or
occupants of property adjacent to or surrounding the Land, or any other Person
coming upon the Land or adjacent property, including without limiting the
generality of the foregoing, mold, mildew and other moisture related organic
substances; and (e) other chemical, materials or substance which is likely
to pose a material hazard to the environment or the removal of which is
required or the use, production, storage, handling, transfer, refinement,
manufacturing, maintenance, ownership, presence, treatment, processing,
transport, generation, removal, remediation, manufacture, discharge, release or
disposal of which is restricted, prohibited, regulated or penalized by any
Environmental Laws (including, without limitation, the Occupational Safety and
Health Act and 29 C.F.R. Part 1910 subpart z).


 


Hospital: County Memorial Medical
Center.


 


Improvements: All buildings, structures,
and improvements located in, on or under the Land, including, without
limitation, a 408-unit apartment complex. Borrower intends to convert the land
and the described improvements into a condominium regime which will consist of 408 residential
condominium units totaling approximately 483,000 net sellable,
interior square feet of residential space, the 78 Garage Spaces,
the 60 Carport Spaces, 639 surface parking spaces,
clubhouse, swimming pool, indoor racquetball court and fitness center, and all
other common elements.


 


Initial Units: As defined in Section 9.3(f).


 


Insurance Requirements: With respect to
the Project, all requirements of each and every insurer covering any of the
risks against which the Project is to be insured pursuant to Exhibit I  hereto.


 


Intangibles: All the records and books of
account now or hereafter maintained by Borrower in connection with
the operation of the Project or otherwise; from and after the Closing Date all
accounts receivable, all contract rights, all rights to the payment of money
including tax


 


8

















 


refund claims, insurance
proceeds and tort claims, chattel paper, documents, instruments, general
intangibles, securities, together with all income therefrom, increases
thereunder and proceeds thereof; and all judgments, awards of damages and
settlements hereafter made resulting from condemnation proceedings or the
taking of any of the Real Estate, Improvements or fixtures, furnishings &  equipment or
any portion thereof under the power of eminent domain, any proceeds of any
policies of insurance maintained with respect to any portion of the Project and
proceeds of any sale, option or contract to sell the Project or any portion
thereof.


 


Intellectual Property: All of Borrower’s rights, if
any, to any patents and copyrights, trade names, trademarks and service marks,
including all state registrations or applications for registration pertaining
thereto and all common law rights pertaining thereto and all goodwill of the
Borrower’s business symbolized by, associated with or appurtenant to any of
such trade names, trademarks, and service marks, including, without limitation,
the trade names, trademarks and service marks that are set forth on Exhibit K
hereto.


 


Interest Reserve: As defined in Section 3.1.


 


Internal Revenue Code: The United States Internal Revenue Code of 1986, as amended,
and the regulations promulgated thereunder from time to time.


 


Interstate Land Sales Full Disclosure Act: The Interstate
Land Sales Full Disclosure Act codified at 15 C.F.R. §  1701 et seq.


 


Investor: As defined in Section 14.3.


 


Land: Fee simple interest in the
land legally described in Exhibit A hereto, commonly
known as 15250 Sonoma Drive, Fort Myers, Florida, together with all easements,
air rights, servitudes, rights of way, gores of land, streets, ways, alleys,
passages, sewer rights, waters, water courses, water rights and powers, and all
estates, rights, titles, interests, privileges, liberties, tenements,
hereditaments and appurtenances whatsoever, in any way now or hereafter
belonging.


 


Laws: Collectively, all federal, state and local
laws, statutes, codes, ordinances, orders, rules and regulations which
have been duly authorized and are currently in effect and/or hereinafter
enacted, including judicial opinions or precedential authority in the
applicable jurisdiction, and including, without limitation, all Environmental
Laws, all zoning Laws, all rules and regulations relating to life safety
and the ADA, and including all further modifications, amendments, supplements
or revisions thereof.


 


Leases: As defined in Section 5.l(ee).


 


Lender: CORUS Bank, N.A., its
participants, successors and assigns.


 


Loan: As defined in Section 3.1.


 


Loan Documents: This Agreement, the Carveout
Guaranty, the Completion Guaranty, the Environmental Indemnity Agreement, the
Note, the Mortgage, the Assignment of Leases and Rents, the Assignment of
Agreements, Plans and Permits, the Assignment of Condominium


 


9

















 


Documents,
the Assignment of Purchase Agreements, the Assignment of Accounts, the
Assignment of Operating Account, the Deposit Account Security and Control
Agreement (Operating Agreement), the Earnest Money Deposit Account Security and
Control Agreement, the Subordination and Intercreditor Agreement, the
Subordination and Intercreditor Agreement (Subordinate Lender), the
Subordination of Management Agreement and the UCC Financing Statements and any
other document evidencing, pertaining to or securing the Loan.


 


Loan Expenses: As defined in Section 4.1.


 


Loan Term: As defined in Section 3.10.


 


Management Agreement: That certain Management
Agreement dated March 1, 2006 between
Borrower and Property Manager.


 


Mass Closing: The unconditional closings
of the sale, transfer and conveyance of (i) not less thirty (30) Condominium
Units within twenty-five (25) days of the first
Condominium Unit closing and (ii) an additional fifty (50) Condominium
Units within ninety (90) days of the first
Condominium Unit closing, as more completely described in Section 9.3(f).


 


Mass Closing Principal Reduction: As defined in Section 9.3(f).


 


Mass Closing
Requirement: As defined in Section 9.3(f).


 


Maturity Date or Loan Maturity: The date on
which all of the Obligations are to be performed and paid in full, whether
as a result of the expiration of the Loan Term or the acceleration of the Loan.


 


Member: BTS Monterrey LLC, a
Delaware limited liability company.


 


Mezzanine Interest Reserve: Any interest
reserve established by the Mezzanine Lender to cover the current pay interest
on the Mezzanine Loan.


 


Mezzanine Lender: MTRY Funding, LLC, a
Delaware limited liability company.


 


Mezzanine Loan: That certain mezzanine loan
from the Mezzanine Lender in an amount no greater than $8,700,000, maturing not
earlier than the Loan Maturity, secured only by a collateral assignment of the
constituent membership interest(s) in Borrower, and subordinate to the
Loan pursuant to the Subordination and Intercreditor Agreement.


 


Mezzanine Loan Documents: The documents or
instruments, which evidence, secure or otherwise relate to the Mezzanine Loan.


 


Minimum Equity Investment: As defined in Section 3.2.


 


Minimum List Price or Minimum List Prices: Those prices
set forth on Exhibit D of this Agreement providing for an average
price of at least $230 per sellable, interior,
air-conditioned square foot (excluding parking and Upgrades).


 


10

















 


Mortgage: That certain Mortgage,
Security Agreement, Assignment of Leases and Rents and Fixture Filing of even
date by Borrower in favor of Lender.


 


Net Sale Proceeds: The amount, if any, by which
the Gross Sale Proceeds from any sale of a Condominium Unit, Garage Space
and/or Carport Space in the Project exceeds the Approved Closing Costs for such
sale.


 


NOI: Monthly gross income from
the Project less a prorated management fee (not to exceed four percent (4%) of annual gross revenues), which management fee may be paid to Borrower
in the event Borrower or an Affiliate of Borrower is
managing the Project, customary monthly operating expenses and reasonable
prorated tax and insurance reserves.


 


Note: The Promissory Note, dated
of even date herewith, made by Borrower and payable to the order of Lender in
the original principal amount of the Loan.


 


Obligations: All obligations of Borrower
to Lender under or in connection with this Agreement, the Note, the other Loan
Documents or any related instrument or document, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, or now or
hereafter existing, or due or to become due, and including, without limitation,
all fees, expenses, costs, and other amounts due and payable under or pursuant
to any or all of the Loan Documents.


 


Offering Materials: The condominium offering
plan and any other disclosure materials required by applicable Laws, including
without limitation, the Condominium Act, to be made available to prospective
purchasers of a Condominium Unit.


 


Operating Account: As defined in Section 3.16.


 


Outside Sources: A source or sources of funds
other  than: (i) the proceeds of the Loan, (ii) Rent or
other revenues or funds generated by or in respect of the Project, including,
without limitation, insurance proceeds and condemnation awards or (iii) proceeds
of indebtedness secured by any of the Collateral or any interest therein, or
the Project or any interest in Borrower or the Collateral, including without
limitation, the Project.


 


Permits: All building permits,
certificates of occupancy and other assignable governmental permits, licenses
and authorizations, including, without limitation, all state, county and local
occupancy certificates, and other licenses and utility deposits, in any way
applicable to the Project or any part thereof or to the ownership, use,
occupancy, operation, maintenance and leasing of all or any portion of the
Project.


 


Permitted Commission: In the case of an Approved
Sale, a sales or brokerage
commission paid in connection with the consummation of an Approved Sale,
which commission shall not exceed in the aggregate
six percent (6%) of the actual Gross Sale Proceeds of the applicable
Condominium Unit, Garage Space and/or Carport Space and which may be paid to an Affiliate of
Borrower.


 


11
















 


Permitted Exceptions: Those matters listed in Exhibit B  hereto to which
the interest of Borrower in the Land may be subject as of the Closing Date and
thereafter and any such other title exceptions or objections, if any, as Lender may approve in advance in
writing.


 


Permitted Transfer: Lender shall allow the
following transfers of interest in Borrower: (i) transfers for estate
planning purposes, (ii) inter member transfers and (iii) other
transfers of investor member interests so long as Guarantors retain management
and decision making control of Borrower.


 


Person: Any individual, sole
proprietorship, partnership, limited liability company, joint venture, trust,
unincorporated organization, association, corporation, institution, entity,
party or government (whether territorial, national, federal, state, county,
city, municipal or otherwise, including, without limitation, any
instrumentality, division, agency, body or department thereof).


 


Plans: All warranties and operating
manuals of any kind with respect to the Collateral or Improvements, and all
preliminary and final site and as-built plans, surveys, soil and substrata
studies, environmental studies, environmental site assessments, architectural
renderings, plans and specifications, engineering plans and specifications,
floor plans, landscape plans, and other plans, diagrams or studies of any kind
with regard to the Real Estate.


 


Project: The Land, the Improvements,
and all other on-site and off-site improvements related thereto, including,
without limitation, all utility services and fixtures and equipment required
for access to and operation of the same as a multi-family residential facility
(prior to conversion to a condominium regime, as residential rental units, and
following conversion to a condominium regime, as residential condominium units
for sale), and all walkways and connections between any of the foregoing, all
of which shall be more particularly described in and completed in accordance with
the Work.


 


Project Budget: A detailed full cost budget
for the acquisition, condominium conversion, equipping and the conduct and
completion of the Work which has been approved in writing by Lender, setting
forth a breakdown and current itemization of construction and non-construction
costs, showing all costs required by Lender, containing such reserves and
contingencies as may be required by Lender as the same may be modified or
amended after the date hereof pursuant to the terms of this Agreement, with
Lender’s prior written consent thereto or approval thereof. The Project Budget
shall not contain any line items payable to Borrower, any Guarantor or the
Affiliates of Borrower or any Guarantor and neither Borrower, Guarantors, nor
any Affiliates have received any payments, distributions or other consideration,
directly or indirectly relating to the acquisition of any portion of the
Project or any other consideration arising out of the Project, except as
specifically provided herein. A copy of the Project Budget approved by Lender
in the total amount of $92,000,000 is attached hereto as Exhibit K.


 


Property Manager: Benchmark Management of
Florida, Inc.


 


Protective Advances: Any disbursements and
advances pursuant to any of the Loan Documents (which disbursements and
advances shall be deemed to be part of the Loan made hereunder) which Lender
deems necessary or desirable to preserve or protect the Collateral or


 


12

















 


any
portion thereof or to enhance the likelihood or maximize the amount of
repayment of the advances of the Loan and other Obligations.


 


Purchase Agreement(s): A written agreement between
Borrower and any Person for the sale of a Condominium Unit.


 


Real Estate: The Land and the
Improvements.


 


Release Price: As defined in Section 9.4(b).


 


Remaining Units Value: The total value of all
remaining unclosed Condominium Units based on the Minimum List Price for each
Condominium Unit.


 


Remediation Plan: As defined in Section 6.l(g).


 


Renovation Budget: As defined within the
definition of Scope of Renovation.


 


Rents: All avails, rents, issues, cash collateral
and profits arising from or accruing at anytime hereafter by virtue of any
lease, whether written or verbal, or any letting of, or of any agreement for
the use or occupancy of the Project or any portion thereof, including, and to
the extent not deemed personal property under applicable Laws, all revenues now
or hereafter accruing to the benefit of Borrower.


 


Request for Disbursement: A statement
prepared and signed by Borrower in a form approved by Lender, setting forth the
amount of the proceeds of the Loan requested by Borrower under this Agreement,
which shall constitute an affirmation by Borrower that the representations and
warranties in this Agreement and in the other Loan Documents remain true and
correct in all material respects as of the date thereof and will be so on the
date of disbursement of the requested advance.


 


Scope of Renovation: The scope of cosmetic
renovation to be performed at the Project which has been approved in writing by
Lender in conjunction with Lender’s approval of the Project Budget. The Scope
of Renovation must include, among other things, a detailed line item budget for
the cosmetic renovation of the Project and any and all mold remediation in
accordance with the Remediation Plan (the “Renovation
Budget”) (e.g. items such a painting
and carpeting, as opposed to structural items, unless additional work is
required after review of the due diligence), including detailed information on
which items of the Project will be upgraded and/or replaced in conjunction with
such cosmetic renovation. Lender’s approval of the Scope of Renovation will be
predicated upon, among other things, the quality level being consistent with
other condominium developments in the Project’s price range. Prior to the
Closing Date, Lender must be satisfied, in its reasonable discretion, that the
hard cost line items of the Project Budget are sufficient to complete all items
set forth in the Renovation Budget. No material changes to the Renovation
Budget will be allowed without prior written approval by Lender, to be
determined in its reasonable discretion.


 


Subordinate Lender: Benchmark Monterrey
Associates, LLC, a Delaware limited.


 


13

















 


Subordinate Loan: That certain subordinate
loan from the Subordinate Lender in an amount no greater than $3,300,000,
maturing not earlier than the Loan Maturity and subordinate to the Loan
pursuant to the Subordination and Intercreditor Agreement (Subordinate Lender).


 


Subordinate Loan Documents: The documents
or instruments, which evidence, secure or otherwise relate to the Subordinate
Loan.


 


Subordination and Intercreditor Agreement: The
Subordination and Intercreditor Agreement, dated as of the date hereof, between
Lender and Mezzanine Lender.


 


Subordination and Intercreditor Agreement (Subordinate
Lender): The Subordination and Intercreditor Agreement, dated
as of the date hereof, between Lender and Subordinate Lender.


 


Subordination of Management Agreement: The
Subordination of Management Agreement, dated as of the date hereof, between
Borrower, Property Manager and Lender.


 


Tax Escrow Account: As defined in Section 10.1.


 


Taxes: All sales, use, ad valorem,
license, withholding, payroll, employment, excise, occupation, or property taxes,
arising from or relating to the ownership, use, operation, or maintenance of
the Project, including without limitation, all real estate taxes, general and
special assessments, business improvement district charges, water and sewer
rents, rates, charges, impositions and liens, together with any interest and
any penalties, additions to tax or additional amounts in lieu of such taxes
imposed by any Governmental Authority.


 


Title Insurer: The issuer of the title
insurance policies required by Section 6.1(b)(i), which issuer
shall be Stewart Title Guaranty Company.


 


Total Exposure: The outstanding principal
balance of the Loan together with any and all unfunded Loan commitment.


 


Transfer: As defined in Section 14.l(b).


 


UCC Financing Statements: The UCC-1 Financing
Statements naming Borrower, as debtor, in favor of Lender, as secured party, to
be filed in: (a) the financing records of the Delaware Secretary of State,
(b) the Land Records of Lee County, Florida and (c) in such other
jurisdictions as Lender may determine, as
the case may be, in connection with the personal property described in
the Mortgage and other Loan Documents.


 


Upgrade Deposits: As defined in Section 9.7.


 


Upgrades: Any additional or extra work
or change in or to the so-called “base” or
standard construction of the applicable Condominium Unit, including changes to
fixtures, equipment, hardware or other base construction standard of Borrower
with respect to the applicable Condominium Unit.


 


14

















 


Upgrade Profits: The positive difference, if
any, between the price charged to a contract Purchaser for any Upgrades and the
costs of such Upgrades.


 


Valid Sale Contract: A written agreement for the
bona fide, arms-length, sale, transfer or conveyance of any Condominium Unit
comprising a portion of the Project with a third party and which meets all of
the following conditions:


 


(a)            The Purchase
Agreement is made pursuant to a form of purchase agreement approved in writing
by Lender in its reasonable judgment and included in the Offering Materials
(subject to individual negotiation of terms and provisions and consistent with
applicable Laws; provided that if such negotiated changes consist of material
changes to the Purchase Agreement, then such negotiated changes must be
approved in advance by Lender, which approval shall not be unreasonably
withheld);


 


(b)           Unless
disclosed to and approved by Lender, the contract purchaser must not be related
to or affiliated with Borrower, members of Borrower, or Guarantors or any
Affiliate of Borrower, or members of Borrower, or Guarantors and shall have no
agreements regarding the purchase with the Borrower or Guarantors other than
the Purchase Agreement;


 


(c)            The Purchase Agreement
provides for an Earnest Money Deposit equal to the greater of: (i) three
percent (3%) of the contract price or (ii) the
current market amount for earnest money deposits from the contract purchaser,
payable at the signing of the Purchase Agreement and deposited with Earnest
Money Depositary Bank into the Earnest Money Account;


 


(d)           The contract purchaser shall
not be entitled pursuant to the terms of
the Purchase Agreement to receive a refund or rebate of all or any part
of the Earnest Money Deposit made by purchaser on account of delays or postponements
of the closing date, except as required by applicable Laws or as then may be
customary and in the ordinary course of the business of marketing and selling
comparable condominium units in the Lee County, Florida market;


 


(e)           All mortgage
contingencies have been waived by the contract purchaser or have expired and no
other contingencies exist in such Purchase Agreement, except for contingencies
contained in the contract form pre-approved by Lender in its sole and absolute
discretion;


 


(f)            The contract sale price in
such Purchase Agreement is not less than ninety-five percent (95%) of the Minimum
List Price (exclusive of Upgrades and extras) for the Condominium Unit being
sold pursuant to such Purchase Agreement; provided  however that
the contract sale price in such Purchase Agreement after the Mass Closing has
been achieved must be greater than or equal to ninety percent (90%) of the Minimum
List Price (exclusive of Upgrades and extras) for the Condominium Unit being
sold pursuant to such Purchase Agreement;


 


(g)           The Purchase Agreement
complies with all applicable provisions of the Interstate Land Sales Full
Disclosure Act; and


 


(h)           The Purchase
Agreement provides for the purchase by the contract purchaser of no more than
three (3) Condominium Units and such
contract purchaser or any Affiliate thereof


 


15

















 


has not and will not
purchase more than three (3) Condominium Units, except with regard to
Purchase Agreements having the Hospital as the contract purchaser or to the
extent waived by Lender in its reasonable discretion.


 


Work: The hard and soft costs related to the
renovation, redevelopment and mold remediation work pursuant to the Approved
Plans, the Project Budget and the Scope of Renovation, the Remediation Plan and
the terms and conditions of this Agreement, together with all renovation work
required by a Purchase Agreement.


 


Section 2.2 Singular and Plural.  Words used herein in the
singular, where the context so permits, shall be deemed to
include the plural and vice versa.


 


ARTICLE 3


 


LOAN FACILITY


 


Section 3.1 Agreement to Borrow and Lend. Subject to the
terms, provisions and conditions set forth in this Agreement, including without
limitation, receipt of evidence satisfactory to Lender that the Equity
Contribution has been paid in full by Borrower as provided in Section 3.2,
and subject to the satisfaction of all other requirements of this Agreement,
Lender hereby agrees to make a loan to Borrower on the Closing Date in an
aggregate principal amount of up to SIXTY-NINE MILLION AND NO/100 DOLLARS ($69,000,000) (the “Loan”) through an advance to, or for the benefit of,
Borrower, on the Closing Date to pay a portion of the cost to acquire the Project.
Lender will retain a portion of the Loan in the approximate amount of $10,259,000 (the “Conversion Holdback”), with
approximately $3,500,000 of  such amount being held by
Lender as an interest reserve for payment of interest due on the Loan (the “Interest Reserve”) and the remaining amount for
disbursement to pay hard and soft costs in accordance with the Project Budget,
including the costs to perform the Work. Disbursements from the Conversion
Holdback for soft costs line items will be paid to Borrower as incurred, based
on the submission of bona fide third party invoices and/or contracts, and
verification of such expenses in Lender’s reasonable discretion. Upon Borrower’s
Request for Disbursement of the Conversion Holdback, for payment of costs of
hard costs line items, Borrower shall provide to Lender such documentation as
Lender shall request, including, construction contracts, purchase orders,
invoices, receipts, contractor’s and Borrower’s draw request, Borrower’s and
contractor’s sworn statements, endorsements to the Lender’s title insurance,
mechanics’ lien waivers and any other reasonable documentation Lender shall
request (and in the forms requested by Lender) evidencing payment to all
contractors and materialmen completing the Work, and for the payment of certain
soft costs and hard costs of the Project as set forth in the approved Project
Budget. Prior to any disbursement by Lender for a Request for Disbursement,
Lender may also require a site visit by Lender or someone on Lender’s behalf
for verification of the status of the Work and any costs related to such site
visits shall be paid by Borrower. Such inspections and confirmations are solely
for the benefit of Lender and may not be relied upon by Borrower. Amounts
borrowed and repaid or prepaid under the Loan may not be reborrowed. Borrower
acknowledges and agrees that if the total costs for completion of the Project
(including the Work in accordance with the Approved Plans) shall be less than
the total Project Budget, then the positive difference between the Project
Budget and the actual total costs for the completion of the Project (including
the Work in accordance with the Approved Plans) shall be


 


16

















 


referred to herein as the “Total Budget Savings,” and the principal amount of
the Loan available for disbursement hereunder and under the Note shall
automatically be reduced by an amount equal to the Total Budget Savings.


 


Section 3.2 Equity Contribution, Mezzanine Loan and Subordinate Loan. Prior to any advance of any Loan proceeds, and as a condition precedent to any such advance:


 


(a)           On or prior to
the Closing Date, Borrower shall have invested at least $11,000,000 towards the
costs of the Project, including (i) Borrower’s prior expenditures in
anticipation of closing and (ii) cash on the Closing Date toward the
acquisition and closing of the Land, the Improvements and the Loan (the “Minimum Equity Investment”). The Minimum Equity Investment shall be subject to such verification as
requested by Lender in its sole discretion. It is understood that Lender shall
not be required to disburse any proceeds of the Loan which shall be used to
reimburse Borrower for the Minimum Equity Investment. In order to qualify as
the Minimum Equity Investment, Borrower shall have received at least $1,000,000
of the funds (which funds may include prior expenditures as provided in (a)(i) above)
as a contribution to capital from Guarantors, with the remainder coming from
various investors thereof (collectively, the “Contributor”). Borrower may not be indebted to any Contributor or any other entity for
the contribution to capital. Any Contributor of equity to the Project,
including, without limitation, the Minimum Equity Investment, shall be fully
subordinate to Lender and to general unsecured creditors of Borrower. Borrower
shall deliver to Lender such written substantiation and evidence as Lender
shall reasonably request in order to document, support and verify all costs and
expenses and other sums paid by Borrower which
Borrower claims to comprise its Minimum Equity Investment in the Project. In addition,
Borrower shall also be required to contribute additional equity (the “Additional Equity Contribution”) in an amount
equal to the amount required to keep the Loan In-Balance as provided in Article 7 of this Agreement. (The Minimum Equity Investment and the
Additional Equity Contribution may be referred to collectively in this
Agreement as the “Equity Contribution”). Borrower’s satisfaction of the foregoing Equity Contribution investment
shall be subject to the review, verification and approval of Lender, and to
that end, Borrower shall deliver to Lender such written substantiation and
evidence as Lender shall reasonably request in order to document, support and
verify all costs and expenses and other sums paid by Borrower which Borrower
claims to comprise its Equity Contribution in the Project. In the event
Borrower or Contributor invests more than the Minimum Equity Investment
(excluding Additional Equity Contributions required hereunder), the Loan amount
shall be permanently reduced by such invested amount, unless the Borrower
delivers to the Lender a written request for a refund of such invested amount
within thirty (30) days of such excess investment, but in no event shall
such a request be required sooner than thirty (30) days after the
Closing Date.


 


(b)           All funds under
the Mezzanine Loan (except for the Mezzanine Interest Reserve, if any) and the
Subordinate Loan shall have been fully disbursed.


 


Section 3.3 Note.  The Loan will be evidenced
by the Note.


 


Section 3.4 Interest Rate; Interest Rate
Adjustment.  Interest on the Loan shall
accrue and be due and payable by Borrower at the applicable Interest Rate set
forth in the Note.


 


17

















 


Section 3.5 Default Rate. After the Loan
Maturity (by acceleration, the expiration of the Loan Term or otherwise), and
following the occurrence and during the continuance of an Event of Default
hereunder, the outstanding balance of the Loan and all amounts due hereunder or
under any other Loan Documents, including, without limitation, late fees,
prepayment fees, advances made by Lender pursuant to the Loan Documents, and
any other fees, charges or amounts that are not paid when due (subject to any
grace or cure period applicable thereto) shall accrue interest thereon at the
Default Rate from the date the same were due (subject to any grace or cure
period applicable thereto) and not paid until the date the same are paid in
full. The Default Rate, when operative, shall be adjusted on each Adjustment
Date (as defined in the Note).
Nothing contained in this Section 3.5 or in this Agreement or in
any other Loan Document shall grant or be deemed or construed to grant Borrower
the right to cure any Event of Default.


 


Section 3.6 Computations of Interest. All computations
of interest shall be made by Lender on the basis of a year of 360 days, in each case for the actual number of days (including the first
day but excluding the last day) occurring in the period for which such interest
is payable. Each determination in good faith by Lender of the Interest Rate (as
defined in the Note) shall be conclusive and binding for all purposes, absent
manifest error.


 


Section 3.7 Payment of Interest and Principal. Interest and
principal of the Loan shall be paid as provided in the Note.


 


Section 3.8 Voluntary Prepayment. The Loan may be
prepaid to the extent, and upon the terms, provided in the Note.


 


Section 3.9 Procedure for Payment. All payments
required to be made pursuant to the Note shall be made as provided in the Note.


 


Section 3.10 Loan Term.


 


(a)          Unless Borrower shall
exercise its option to extend in accordance with the provisions of Section 3.10(b) below,
the term of the Loan (the “Loan Term”)  shall be for a
period of twenty-four (24) months,
commencing on the date of the Note and expiring on March 19, 2008.


 


(b)           Borrower shall
have the right and option to extend the Loan Term for two (2) additional
periods of six (6) months (each an
“Extension,” together the “Extensions”),  subject to Borrower’s timely
satisfaction of each of the following conditions:


 


(i)             Lender has not
given notice to Borrower that the Loan has been accelerated during the Loan
Term;


 


(ii)            Borrower shall
have delivered written notice (“Extension Notice”)  to Lender of Borrower’s
election to extend the Loan Term for an Extension, and Lender shall have
received an Extension Notice not
later than thirty (30) days prior to
the expiration of the Loan Term;


 


18

















 


(iii)           Borrower shall have
delivered to Lender no later than the date of each
Extension Notice, an extension fee equal to one-half percent (0.5%) of the then
outstanding principal amount of the Loan and the unfunded commitment (“Extension Fee”);


 


(iv)           No Default or
Event of Default has occurred and is continuing hereunder, under this Agreement
or under any other Loan Documents;


 


(v)            The completion
of the Work has occurred in accordance with the terms of this Agreement;


 


(vi)           Lender has
received at least $40,000,000 in principal paydowns pursuant to Valid Sale Contracts
and the requirements of Article 9; and


 


(vii)          Borrower shall
have delivered to Lender evidence in a form acceptable to Lender in its sole
discretion that the maturity of the Mezzanine Loan or the Subordinate Loan
shall not occur during an Extension.


 


(c)            In the event that
Borrower shall fail to timely exercise an option under Section 3.10(b),
or shall otherwise fail to satisfy the conditions precedent thereto as
described in Section 3.10(b) above, the right to exercise any
such option shall be void and of no further force and effect. Further, with
respect to each Extension:


 


(i)             if Borrower
does not request an Extension, or


 


(ii)            if Borrower
does request an Extension and Lender gives timely written notice to Borrower
that Borrower has not satisfied one or more of the conditions to such
Extension,


 


then
unless the Obligations, including without limitation all accrued interest, all
principal, all late fees, the Exit Fee, and all other sums and amounts due and
owing to Lender under the provisions of the Note, this Agreement and any and
all other Loan Documents, are paid in full not later than March 19, 2008
(subject to acceleration of the Loan at an earlier date) then: (A) the
full Extension Fee shall be due and payable in addition to all of the Obligations,
including without limitation all accrued interest, all principal, all late
fees, the Exit Fee, and all other sums and amounts due and owing to Lender
under the provisions of this Agreement, the Note and any and all other Loan
Documents and (B) the Loan Term shall be extended for a period of thirty
(30) days. If the Loan Term is extended for the thirty (30) day period
described above, the Mortgage shall not be released until the applicable
Extension Fee and all of the Obligations, including without limitation all
accrued interest, all principal, all late fees, the Exit Fee, and all other
sums and amounts due and owing to Lender under the provisions of this
Agreement, the Note and any and all other Loan Documents have been paid in
full. In the event that Lender has given notice to Borrower that the Loan has
been accelerated, the thirty (30) day extension of the Loan Term described in
this Section 3.10(c) shall not apply. In the event
Lender provides notice to Borrower that the Loan has been accelerated and such
acceleration occurs after March 19, 2008, then the applicable Extension
Fee shall continue to be due and payable upon such acceleration.


 


19

















 


Section 3.11 Taxes; Withholding, Etc. If any treaty,
law or any governmental rule, regulation, policy, guideline or directive, or
any interpretation thereof, or compliance of Lender with such,


 


(a)            subjects Lender
to any tax, duty, charge or withholding on or from payments due from Borrower
(excluding United States, state, local and city taxation of the net income of
Lender or any taxes imposed by the State of Illinois or the City of Chicago),
or changes the basis of taxation of payments to Lender in respect of the Loan
or other amounts due Lender hereunder (other than a mere increase in the rates
of taxation) or any taxation imposed by the State of Illinois or the City of
Chicago; or


 


(b)           imposes or
increases or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against the non-physical assets of,
deposits with or for the account of, or credit extended by, Lender under this
Agreement; or


 


(c)            imposes any other condition
directly related to this Loan transaction or the process or manner or making or
funding the Loan under this Agreement or obtaining the
sources of funds for such Loan, the result of which is to increase the cost to
Lender of making, funding or maintaining loans or reduces any amount receivable
by Lender in connection with U.S. Dollar
loans, or requires Lender to make any payment calculated by reference to the
amount of loans held or interest
received by it; or


 


(d)           affects the
amount of capital required or expected to be maintained by Lender or any
corporation controlling Lender and Lender determines the amount of such capital
required is increased by or based upon the existence of this Agreement;


 


then,
within thirty (30) days of
written demand by Lender, Borrower shall pay Lender that portion of such
increased expense incurred or reduction in an amount received which Lender
determines is attributable to making, funding and maintaining the Loan and this
Agreement.


 


Section 3.12 Acceleration of Maturity. Upon the
occurrence of an Event of Default hereunder or under the Note or the other Loan
Documents, the unpaid principal amount of
the Loan with interest and all other sums secured by the Mortgage shall
become immediately due and payable at the option of Lender. In the event of
such acceleration, Borrower shall discharge its Obligations to Lender by paying
all sums due under the Note, the Mortgage, and the other Loan Documents,
together with interest at the Default Rate accruing from the date of such Event
of Default. Lender’s failure to exercise its option to accelerate the Loan as
aforesaid upon the occurrence of an Event of
Default shall not constitute a waiver of Lender’s right to exercise such option
at any later time with respect to such Event of Default or with respect to any
other subsequently occurring Event of Default.


 


Section 3.13 Costs of Collection. If, following
the Closing Date, Lender: (a) employs counsel which Lender reasonably
believes is necessary for advice or other representation (i) to represent
Lender in any litigation, contest, dispute, suit, or proceeding or to commence,
defend, or intervene or to take any other action in or with respect to any
litigation, contest, dispute or proceeding (whether instituted by Lender,
Borrower or any other person) in any way or respect relating to the Note, any
other Loan Document, any collateral securing the Note or the


 


20

















 


Obligations, or (ii) to
enforce any rights of Lender against Borrower; (b) takes any
action to protect, collect, sell, liquidate, or otherwise dispose of any
Collateral; and/or (c) attempts to enforce or enforces any of Lender’s
rights and remedies against Borrower or Guarantors, then in such event, the
reasonable fees, costs and expenses incurred by Lender in any manner or way
with respect to the foregoing shall be part of the indebtedness evidenced by
the Note, payable by Borrower to Lender upon demand. Without limiting the
generality of the foregoing, such fees, costs and expenses, shall include
reasonable fees, costs and expenses of attorneys, accountants and consultants;
court costs and expenses; court reporter fees, costs and expenses; long
distance telephone charges, telegram and telecopier charges; and expenses for
travel, lodging and food. For purposes of this paragraph,
the term “attorneys” includes attorneys who are employees of Lender acting as
counsel for Lender, and the terms “fees, costs and expenses” shall include,
without limitation, the fees charged by Lender for its in-house counsel
provided such fees are within the range of fees charged by attorneys of similar
experience at medium to large sized law firms located in the City of Chicago, Illinois.


 


Section 3.14 Late Charges. If any monthly
installment of interest or any other payment due under the Note or any other
Loan Document is received fifteen (15) or more days after the due date of such
payment, Borrower shall pay to Lender a late charge equal to seven percent (7%)
of the monthly installment or such other payment due under the Note and/or the
applicable Loan Document, as the case may be, for the purpose of defraying the expenses
incident to handling such delinquent payments, which “late charge” shall be
payable on the same day of the month as payments of interest, provided, however, in no event shall Borrower be required to pay
a late fee greater than the maximum amount permitted under applicable Laws.
Such charge shall be in addition to, and not in lieu of, any other remedy
Lender may have and is in addition to any reasonable fees and charges of
attorneys that Lender is entitled to employ upon any Default by Borrower hereunder
or under any other Loan Document, whether authorized herein or by law.


 


Section 3.15 Loan Documents. In consideration
of Lender’s entry into this Agreement and Lender’s agreement to fund the Loan,
Borrower agrees that, in addition to the Note, and in order to secure the due
and prompt payment and performance of all of the Obligations, Borrower shall
execute and deliver, or cause to be executed and delivered by Guarantors, the
following documents or instruments, all in scope, form, substance and legal sufficiency
acceptable to Lender:


 


(a)           a valid and
subsisting first priority Mortgage securing the Obligations, including the
indebtedness evidenced by the Note, subject only to the Permitted Exceptions;


 


(b)           first priority
security agreement(s), collateral assignment(s) and such financing
statements and other documents and instruments as Lender deems desirable to
perfect in Lender first priority security interests in all of the Collateral
which is not Real Estate;


 


(c)           a first
priority Assignment of Leases and Rents;


 


(d)           a first
priority Assignment of Agreements, Plans and Permits;


 


(e)           the Assignment
of Condominium Documents;


 


(f)            the Assignment
of Accounts;


 


21

















 


(g)           the
Environmental Indemnity Agreement;


 


(h)           the Carveout
Guaranty;


 


(i)            the Completion
Guaranty;


 


(j)            the Assignment
of Operating Account;


 


(k)           the Assignment
of Purchase Agreements;


 


(l)            the Earnest
Money Deposit Account Security and Control Agreement;


 


(m)          the Deposit
Account Security and Control Agreement (Operating Account);


 


(n)           the
Subordination and Intercreditor Agreement;


 


(o)           the
Subordination and Intercreditor Agreement (Subordinate Lender);


 


(p)           the
Subordination of Management Agreement;


 


(q)           a perfected
collateral assignment of any letter of credit given by a tenant to Borrower;
and


 


(r)            such other
documents as Lender or Lender’s counsel may reasonably require.


 


Section 3.16 Operating Account; Excess NOI Account; Interest Reserve. Borrower and/or Property Manager shall open, and
thereafter shall maintain with Depositary Bank (until such time as the
Obligations have been paid in full), a non-interest bearing operating account
(the “Operating Account”)  into which all income,
revenues and profits generated by the Project or any part thereof shall be
deposited and from which Borrower shall timely pay the reasonable and customary
operating and maintenance expenses of the Project and debt service on this
Loan. Borrower shall collaterally assign to Lender a security interest in such
Operating Account and the funds therein from time to time as additional
security for the Loan pursuant to the Assignment of Operating Account. Failure
of Borrower to deposit any and all NOI into the Operating Account shall
constitute an Event of Default under this Agreement. Borrower shall deliver to
Lender a written and signed acknowledgement from Property Manager and the
Depositary Bank of the assignment by Borrower to Lender of Borrower’s interest
therein and an agreement by such Property Manager and Depository Bank, that
until the Loan is paid in full, any and all of such deposits which are payable
to Borrower shall be paid directly to Lender. Additionally, unless waived by
Lender, Borrower shall open, and thereafter shall maintain with Lender (until
such time as the Obligations have been paid in full), a non-interest bearing
account (the “Excess NOI Account”)  into which
monthly NOI in excess of the interest payment payable under the Loan shall be
deposited and from which Borrower shall timely pay debt service on this Loan.
Borrower shall collaterally assign to Lender a security interest in such Excess
NOI Account and the funds therein from time to time as  additional security for the
Loan pursuant to the Assignment of Accounts. Failure of Borrower to deposit any
and all excess NOI into the Excess NOI Account shall constitute an Event of
Default under this Agreement. Interest payments shall be made under the Loan
from the following sources in the following order, as


 


22

















 


available:
first, from the current month’s NOI; then, from the Excess NOI Account; then,
from the Interest Reserve line item in the Project Budget; and finally,
directly from the Borrower from Outside Sources. Lender is authorized to charge
the interest on the Loan payable under the Note against the funds in the Excess
NOI Account. In the event the NOI (as
described above) is insufficient or otherwise unavailable for disbursement (as
the result of an Event of Default), Lender shall be authorized to charge the
interest on the Loan payable under the Note monthly against the Interest
Reserve until such time that the funds provided for in the Interest Reserve are
fully disbursed. In the event that the funds provided for in the Interest
Reserve are fully disbursed or are insufficient or are otherwise unavailable
for disbursement (as the result of an Event of Default), then Borrower shall
pay or cause to be paid directly to Lender the interest then due and payable on
the Loan in the amount set forth in a written notice to Borrower from Outside
Sources. Nothing contained in this Section 3.16 shall relieve
Borrower of the absolute and unconditional obligation to pay accrued interest
on the Obligations as provided herein and in the Note and other Loan Documents.
Homeowner or condominium association dues may be drawn from the Excess NOI
Account only if the Loan is not in default and all payments owed the Lender,
including monthly interest and escrow deposits, are current.


 


Section 3.17 Place of Advance. All Loan
advances shall be made at Lender’s office in Chicago, Illinois.


 


Section 3.18 Delivery of Requests for
Disbursement. All Requests for Disbursement and all required
supporting documentation shall be submitted by Borrower simultaneously with any
Request for Disbursement made by Borrower under this Agreement and must be
received by Lender no less than ten (10) Business Days prior to the date
of the requested disbursement. In the event that
Borrower has satisfied all conditions to a disbursement of Loan proceeds and
there is no Default or Event of Default, Lender shall make commercially
reasonable efforts to fund the disbursement requested within seven (7) Business
Days of receipt of the Request for Disbursement. Disbursements shall not be
made more often than once per month.


 


Section 3.19 Expenses and Advances Secured by Loan Documents. Lender may, at Lender’s sole option, at any time and
from time to time make Protective Advances. The execution of this Agreement by
Borrower constitutes an irrevocable direction to make such Protective Advances
and no further authorization from Borrower shall be necessary to warrant such
Protective Advances and all such Protective Advances shall be secured by the
lien of the Mortgage as fully as if made to Borrower, regardless of the disposition
of any such Protective Advance.


 


Section 3.20 Other Limitations and
Requirements. The making of any advance by Lender shall not be
deemed an acceptance or approval by Lender (for the benefit of Borrower or any
third party) of the work done or actions taken in regard to the Project.


 


Section 3.21 Exit Fee. Borrower shall
pay an exit fee in the amount of $690,000 (the “Exit Fee”). The Exit Fee shall be payable in increments of
$3,000 upon the closing of the sale of each Condominium Unit until such time as
an aggregate of $690,000 has been paid. If:  (a) Loan Maturity
shall occur prior to the payment in full of the Exit Fee or (b) Borrower
shall pay the Obligations in full prior to the payment in full of the Exit Fee,
then the Exit Fee shall be due and payable upon Loan Maturity and or upon the
payment in full by Borrower of the


 


23

















 


Obligations, in each event
in an amount equal to the Exit Fee less any portion of the Exit Fee theretofore
paid at the closing of the sale of Condominium Units.


 


ARTICLE 4


 


LOAN EXPENSES AND ADVANCES;


SECURITY OF MORTGAGE FOR SAME


 


Section 4.1 Loan Expenses. Borrower agrees
to pay when due all reasonable expenses of the Loan (the “Loan Expenses”), whether incurred before or
after the Closing Date, including all recording charges, title insurance
charges, escrow charges, transfer taxes, if any, mortgage taxes, if any, costs
of surveys, costs for certified copies of instruments, reasonable fees and
expenses of Lender’s attorneys (including without limitation, its
in-house-counsel), and all costs and expenses incurred by Lender, including all
appraisal fees (for appraisals undertaken by or on behalf of the Lender before
and after the Closing Date), environmental report fees, structural report fees,
insurance consultant fees, credit searches, out-of-pocket expenses, inspection
fees incurred by Lender and all travel, lodging and food expenses in connection
with the determination of whether Borrower has performed the obligations
undertaken by Borrower under this Agreement or has satisfied any conditions
precedent to the obligations of Lender under this Agreement. The amount charged
for airfare will be the lesser of (a) the actual cost incurred or (b) $1,200
per person per visit. Notwithstanding the foregoing, a flat $5,000 will be
charged for the initial site visit. All of the foregoing expenses that are
incurred in connection with the closing of the Loan and the satisfaction of all
conditions precedent thereto may be hereinafter referred to collectively as the
“Closing Expenses”. All expenses,
charges, costs and fees described herein (including the Closing Expenses) shall
be the Borrower’s obligation regardless of whether the Loan is disbursed in
whole or in part.


 


Section 4.2 Time of Payment of Fees. On the Closing
Date Borrower shall pay all Closing Expenses then due and payable on the Closing
Date and, with respect to other Loan Expenses, upon and on demand at such
subsequent times as Lender may determine in its sole discretion. Lender may
require the payment of such fees and expenses as a condition to any
disbursement of the Loan. Borrower hereby authorizes Lender to make an advance
to itself to pay all Loan Expenses and Closing Expenses on or after the date on
which such expenses shall be due and payable if Borrower fails to timely remit
such funds. If the actual amount of Closing Expenses is not ascertainable on the Closing
Date, then the Lender may charge the same to the contingency line item or other
applicable line item of the Project Budget, and Borrower shall pay upon demand
any excess monies due.


 


Section 4.3 Expenses and Advances Secured by
Loan Documents. Any and all advances, payments, amounts expended or
made by Lender under this Agreement from time to time for reasonable attorneys’
fees (based upon services rendered at hourly rates) and reasonable expenses, if
any, and all other Loan Expenses shall, as and when advanced or incurred by
Lender, be paid by Borrower and shall constitute additional indebtedness
evidenced by the Note and secured by the Mortgage and the other Loan Documents
to the same extent and effect as if the terms and provisions of this Agreement
were set forth therein, whether or not the aggregate of such indebtedness shall
exceed the aggregate face amount of the Note.


 


24
















 


Section 4.4 Lender Fees. In
consideration of Lender’s making the Loan to Borrower (and in addition to other
amounts payable under this Agreement and the other Loan Documents), Borrower
shall pay to Lender a fee in an aggregate amount equal to Six Hundred Ninety
Thousand and No/100 Dollars ($690,000.00), of which: (a) $150,000 (the “Application Fee”) was paid (and Lender hereby acknowledges
receipt) upon Borrower’s acceptance of the letter of application (b) $150,000
(the “Commitment Fee”)  was paid upon Borrower’s
acceptance of the Commitment Letter (and Lender hereby acknowledges receipt),
and (b) $390,000 (the “Closing
Fee”) which shall be due and
payable on the Closing Date.


 


ARTICLE 5


 


REPRESENTATIONS AND  WARRANTIES


 


Section 5.1 Representations and Warranties of Borrower.  To induce
Lender to make the Loan and perform its obligations under the Loan Documents,
Borrower hereby represents and warrants to Lender as follows:


 


(a)            Borrower has good,
marketable and indefeasible fee simple title to the Real Estate free and clear
of all liens, charges and encumbrances, except for the Permitted Exceptions.


 


(b)           Borrower is the
sole owner of, and has good title to, all of the Collateral that constitutes
personal property free and clear of all liens, charges and encumbrances, other
than the Permitted Exceptions.


 


(c)            Borrower is (i) a
limited liability company duly formed validly existing and in good standing
under the Laws of Delaware, (ii) is duly qualified to conduct business
under the Laws of the State of Florida, and (iii) has the power, authority
and legal right to carry on the business now being conducted by it and to
engage in the transactions contemplated by this Agreement. The execution and
delivery of the Loan Documents and the performance and observance of the
provisions thereof have been duly authorized by all necessary actions as
required by Borrower’s Organizational Documents and by applicable Laws.


 


(d)           This Agreement,
the Note, the Mortgage, the other Loan Documents and any other documents and
instruments required to be executed and delivered by Borrower in connection
with this Loan, when executed and delivered, will constitute the duly
authorized, valid and legally binding obligations of the party required to
execute the same and will be enforceable strictly in accordance with their
respective terms; the Loan Documents grant to Lender a direct, valid and
enforceable first lien on the Project and on all of the other Collateral.


 


(e)           The execution,
delivery and performance of the Loan Documents and any other documents or
instruments to be executed and delivered by Borrower pursuant to this Agreement
or in connection with the Loan, and the use, occupancy, conversion to
condominium regime, and operation of the Project, will not: (i) violate
any Laws or (ii) conflict with, be inconsistent with, or result in any
breach or default of any of the terms, covenants, conditions, or provisions of
any indenture, mortgage, corporate charter or bylaws, articles of organization,
partnership agreement, instrument, document, agreement or contract of any kind
to which Borrower is a party or by which it may be bound. Borrower is not in
default (without regard to grace or cure periods)


 


25

















 


under any Contracts or other
contract or agreement to which it is a party, the effect of which default will
adversely affect the performance by Borrower of its obligations pursuant to and
as contemplated by the terms and provisions of this Agreement and the other
Loan Documents.


 


(f)            No litigation or proceedings
are pending, or, to Borrower’s knowledge, are threatened, against Borrower or
Guarantors or any constituent member of Borrower: (i) which has or will
affect the validity or priority of the liens and security interests granted to
Lender under the Loan Documents, (ii) which now has or will affect the
ability of Borrower to perform its obligations pursuant to and as contemplated
by the terms and provisions of this Agreement
and the other Loan Documents, or any of the Construction Documents,
(iii) which could materially adversely affect the occupancy, use or
operation of the Project or the
conversion of the Project to a condominium regime in accordance with the Scope
of Renovation and the Approved Plans, or the sale of Condominium Units at the
Project, or (iv) which could materially adversely affect the operations or
financial condition of Borrower, Guarantors or the Project. Without limitation
of the foregoing, there are no pending or, to Borrower’s knowledge, threatened
proceedings or actions to revoke, attack, invalidate, rescind, or modify the
zoning of the Project or any part
thereof, or any building or other permits heretofore issued with respect
thereto, including the Permits, or asserting that such zoning or permits do not
permit the conversion of the Project to a condominium regime or the occupancy,
use or operation of the Project.


 


(g)           There are no pending civil
(including actions by private parties), criminal, or administrative proceedings
against Borrower, or to Borrower’s best knowledge, affecting the Land relating
to environmental, health or safety matters (“Environmental Proceedings”),  and to Borrower’s best
knowledge no Environmental Proceedings are being threatened nor do any facts or
circumstances exist which may give rise to any future Environmental
Proceedings.


 


(h)           To the best of
Borrower’s knowledge, the Land and all uses thereof as of the date of this
Agreement, are in compliance with all Environmental Laws, and Borrower has not
received any notice of any violation issued pursuant to any Environmental Laws
with respect to the Real Estate or any use or condition thereof. Except as
specifically disclosed in the Environmental Report, and to the best of
Borrower’s knowledge, there are no Hazardous Materials on, in, or under, or stored
at the Land, and Borrower has not used, handled, generated, produced,
manufactured, treated, stored, transported, released, discharged or disposed of
any Hazardous Materials on, under or from the Land (other than Hazardous
Materials of a kind and in such quantities as are commonly used in the
operation and maintenance of a residential condominium community and in any
case, in compliance with applicable Environmental Laws). To the best of
Borrower’s knowledge, no release, spilling, leaking, pumping, pouring,
emitting, discharging, injecting, escaping, leaching, dumping or disposing into
the environment of any Hazardous
Material (including the abandonment or discarding of barrels, containers, and
other receptacles containing any Hazardous Material) has occurred on, beneath
or from the Land or in the surface or ground water associated with the Land.
All Permits, required to be held by Borrower or issued to Borrower pursuant to
any Environmental Laws for the conversion to a condominium regime, ownership, use,
occupancy or operation of the Land, have been obtained or will be obtained, as
and when required by Environmental Laws, by Borrower, and are presently
maintained in full force and effect by Borrower and the Land and the operations
conducted by Borrower at the Land, is in compliance with such Permits. The Land
is not subject to any use restrictions arising out of any Environmental Laws.
There are no writs, injunctions,


 


26

















 


decrees, orders or judgments
against Borrower or any lawsuit, claim, proceeding, citation, directive,
summons or investigation pending or, to the best of Borrower’s knowledge,
threatened against Borrower, pursuant to any Environmental Laws relating to (1) the conversion
to a condominium regime, ownership, leasing, occupancy or use of any portion of
the Land by Borrower or, to the best of Borrower’s knowledge, any current or
former owner or tenant of any portion of the Land, (2) any alleged
violation of any Environmental Laws by Borrower or (3) a release of
any Hazardous Material under, in or from any portion of the Land. There are no
above-ground or, to the best of Borrower’s knowledge, underground storage tanks
located on the Land. There are no written reports, surveys or environmental assessments
of the Land or any part thereof in the possession or control of Borrower or its
contractors or consultants concerning the environmental condition of the Land
or the presence of Hazardous Materials on or under the
Land or in the ambient air at the Land, complete copies of which have not been
delivered to Lender.


 


(i)            The factual
matters relating to the opinions of Borrower’s counsel, as set forth in Section 6.1(b)(iv)
hereof, are true and accurate.


 


(j)            (i) No
condemnation of any portion of the Land, or relocation or condemnation of any
roadways abutting the Land has commenced or, to the best of Borrower’s
knowledge, is threatened by any Governmental Authority, and (ii) no denial of
access to the Land from any point of access to the Land has commenced or, to
the best of Borrower’s knowledge, is contemplated by any Governmental
Authority.


 


(k)            To the best of Borrower’s
knowledge, the survey of the Real Estate prepared by Bean, Whitaker, Lutz &  Kareh, Inc.,
dated March 9, 2006 (the “Survey’’), is true, accurate
and complete in all respects as of the date hereof, including with respect to: (i) the
outline of the Land, and the outline of
all buildings, structures and other improvements thereon, if any, and
all paving, driveways and fences, if any, in place, (ii) the square
footage of the Land, (iii) the existence of all buildings, improvements,
foundations and other structures on the Land, if
any, (iv) encroachments by improvements located on adjoining property onto
the Land or of buildings, improvements, foundations or other structures on the Land, if
any, onto adjoining property, (v) means of ingress and egress to and from
the Land, (vi) the flood area designation of the Real Estate shown on the official
maps of the Secretary of Housing and Urban Development, (vii) the
identification of any portion of the Real Estate which lies within a federally
designated wetlands protection area as determined by the maps of the Army Corps of Engineers, (viii) the identification,
location, size and use of all plottable easements affecting the Real Estate,
and (ix) all other matters shown, indicated or noted thereon.


 


(l)             All financial statements,
reports or other financial information of any kind or description of Borrower,
Guarantors and/or any partner or member, as
the case may be, heretofore and hereafter delivered to Lender are true
and correct in all material respects, have been prepared in accordance with
sound accounting principles consistently applied, and fairly present the
representative financial conditions of the subject thereof as of the respective
dates thereof. All financial statements, reports or other financial information
of any kind or description heretofore or hereafter delivered to Lender by or on
behalf of Borrower or Guarantors are true, complete and accurate in all
material respects and fairly present the financial condition of the Project as
of the date thereof. No material adverse change has occurred in the


 


27

















 


financial conditions
reflected therein since the respective dates thereof, and no additional
borrowings have been made by Borrower or Guarantors since the date thereof
other than the borrowing contemplated hereby or otherwise expressly approved in
writing by Lender.


 


(m)           No information,
certification, report or financial information submitted to Lender by or, to
the best of Borrower’s knowledge, on behalf of Borrower or Guarantors pursuant
to this Agreement or otherwise in connection with the Loan or Borrower’s
request or application therefor contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the information
not misleading in any material respect.


 


(n)           The Project
does not violate (i) any existing Laws applicable thereto, (ii) any
of the Permits, including any building or occupancy permits, any restrictions
or conditions of record, or any of the Agreements, or (iii) the
requirements of each and every insurer covering any of the risks against which
the Project is or is to be insured pursuant to Exhibit I  hereof. Neither the zoning,
nor any other right to convert the Project to a condominium regime or to
occupy, use or operate the Project is to any extent dependent upon or related
to any real estate other than the Land, except as provided in the Permitted
Exceptions. Without limiting the generality of the foregoing, all consents,
licenses, certificates and permits and all other authorizations or approvals,
including without limitation, temporary and/or permanent certificate(s) of
occupancy, and also, including the requirements of each and every insurer
covering any of the risks against which the Project is to be insured pursuant
to Exhibit I  hereof (collectively, “Governmental
Approvals”) required for
the ownership, occupancy, use and operation of the Project as a condominium
project and rental community have been or will be timely obtained, and all
Governmental Approvals required for the ownership, occupancy, use marketing and
sale of the Condominium Units have been obtained or will be timely obtained,
and all Laws relating to the conversion of the Project to a condominium regime
have been, or will timely be, complied with.


 


(o)            All utility services
necessary for the operation of the Project as  a rental community and as a
condominium project are presently available to the Land through dedicated
public rights-of-way or through perpetual private easements with respect to
which the Loan Documents, to the extent of Borrower’s interest therein, create
a valid, binding and enforceable first lien or security title, as the case may
be. No such utility services are subject to any moratorium, or would be subject
to any presently threatened moratorium, imposed by  any Governmental Authority
having jurisdiction.


 


(p)           The rights-of-way for all
roads necessary for the full utilization of the Project for its intended
purposes as required by this Agreement, the other Loan Documents or any
covenant, condition, restriction, easement or other matter affecting Borrower
or the Land have been dedicated to public use and accepted by the appropriate
Governmental Authority, or are covered by private easements with respect to
which the Loan Documents create a valid, binding and enforceable first lien or
first security title.


 


(q)           No brokerage
commission or similar compensation is due to any Person in connection with
the loan transaction contemplated by this Agreement except for the commission
payable to Meridian Capital. Borrower shall indemnify Lender from any
liability, claims or losses, including reasonable and actual attorneys’ fees
incurred by Lender and arising by reason


 


28

















 


of any claim for such
brokerage commissions, including, without limitation, any brokerage commission,
fee or other remuneration to or claimed by any Person, except that Borrower
shall have no obligation to indemnify Lender for any brokerage commission to
the extent arising solely from an express written agreement by Lender with a
broker or finder. This provision shall survive the repayment of the Obligations
and shall continue in full force and effect so long as the possibility of such
liability, claims or losses exists.


 


(r)            The Land and
the site conditions thereof are such that Laws relating to the filling,
dredging, excavation or other usage of lands classified as wetlands or lands
which are subject to periodic flooding or have thereon standing or moving
bodies of water are not applicable to the Project or the use thereof as a
residential rental community or a residential condominium community. No portion
of the Project is located in an area having special flood hazards according to
the flood hazard boundary maps used by the United States Department of Housing
and Urban Development in connection with the National Flood Insurance Program.


 


(s)            The Real Estate is taxed
separately without regard to any other property and, for all purposes, may be
mortgaged, conveyed, and otherwise dealt with as an independent parcel.


 


(t)            The Loan is not being made
for the purpose of purchasing or carrying “margin stock” within the meaning of
Regulation T, U or X issued by the
Board of Governors of the Federal Reserve System, as at any time amended, and
the Borrower agrees to execute all instruments necessary to comply with all the
requirements of Regulation U of
the Federal Reserve System, as at any time amended.


 


(u)           Borrower does
not have a defined benefit pension plan under ERISA.


 


(v)           Except as
described on Exhibit E, there are no union contracts, labor
agreements, or employment agreements relating to any employees of Borrower currently
working at the Project.


 


(w)           No Default or
Event of Default by Borrower exists under this Agreement or any of the other
Loan Documents, and, to Borrower’s knowledge, no event has occurred and is
continuing which with notice or the passage of time or both would constitute a
Default or Event of Default under any of the Loan Documents.


 


(x)            The Mortgage is
a good and valid first lien on the Project, and Lender has a perfected, good
and valid first security interest in all items of personal property described
in the granting clause of the Mortgage.


 


(y)           Borrower and
Guarantors have filed or caused to be filed all federal, state and local tax
returns required to be filed, have remitted all trust fund taxes, and have paid
all taxes shown to be due and payable by it on said returns or on any
assessments made against it or the Project, except those which are being
contested in good faith by appropriate proceedings and for which reasonable
reserves as may be required by GAAP are being maintained on its books.


 


(z)            After giving
effect to the execution and delivery of the Loan Documents and the making of
any disbursements under the Note, Borrower will not be “insolvent,” within the


 


29

















 


meaning of such term as defined
in §  101 of the Bankruptcy Code,
or be unable to pay its debts generally as such debts become due, or have an
unreasonably small capitalization.


 


(aa)          Borrower has
not received any notice from any insurance company of any defects or
inadequacies in the Project that would adversely affect the insurability of the
Project or materially increase the cost of insuring the Project beyond that
which is customarily charged for similar property in the vicinity of the
Project used for a similar purpose.


 


(bb)         Borrower shall
operate the Project as a residential apartment facility and, upon conversion,
condominium facility under the name of Borrower (or such other name as may be
approved by Lender), and Borrower does not conduct or otherwise do business
with respect to the Project under any other trade name. The principal place of
business and chief executive office of Borrower is as stated in the preamble
and Section 17.3 hereof.


 


(cc)         Borrower is not
a “foreign person” within the meaning of Sections 1445 or 7701 of the Internal
Revenue Code.


 


(dd)        Borrower has
furnished to Lender true, correct and complete copies of all documents,
instruments and other papers constituting the entire organizational documents
of Borrower and any and all amendments thereto including without limitation,
Borrower’s articles of organization and operating agreement (the “Organizational Documents”),
such Organizational Documents are in full force and effect and have not
been modified, amended or terminated and there exists no violation of the
Organizational Documents, or circumstances which given notice or the passage of
time or both would constitute a violation of
the Organizational Documents.


 


(ee)          Exhibit C contains a
true, complete and accurate list of all leases, occupancy agreements, and
concession agreements with respect to all or any portion of the Project (the “Leases”) as of the date
hereof, including all amendments, modifications and supplements thereto, and (i) there
exist no defaults by Borrower, as landlord thereunder, or by the tenant
thereunder, nor, to the best of Borrower’s knowledge, do any circumstances
exist which, with the passage of time or the giving of notice or both, would
constitute a default thereunder by either Borrower or any tenant and (ii) there
have been no amendments, supplements, modifications or other changes thereto
except as described on such Exhibit C.


 


(ff)           Exhibit F  contains a true, complete
and accurate list of all Contracts as of the date hereof, including all
amendments, modifications and supplements thereto, and, (i) there exists
no defaults by Borrower thereunder or by any other party thereto, nor, to the
best of Borrower’s knowledge, do any circumstances exist which, with the
passage of time or the giving of notice or both, would constitute a default
thereunder by either Borrower or any other party thereto; (ii) there have
been no amendments, supplements, modifications or other changes thereto except as described on such Exhibit F or otherwise as approved by
Lender to the extent such approval is required hereunder; (iii) except as
set forth on Exhibit F, no other
material contract, agreement or arrangements of any kind exist with respect to
the ownership, use, occupancy, operation, maintenance, repair or servicing of
the Project or any part thereof and (iv) except as specifically set forth
on Exhibit F, all of the
Contracts may be terminated on no more than ninety (90) days’ notice
without termination penalty or other cost.


 


30

















 


(gg)         Exhibit G contains a true,
complete and accurate list of all Permits obtained as of the date hereof,
including all amendments, modifications and supplements thereto, and (i) the
Permits have been acquired by Borrower and are in full force and effect, (ii) there
have been no amendments, supplements, modifications or other changes thereto
except as described on such Exhibit G, (iii) Borrower has not
received any notice of a revocation, termination or violation of any Permit, (iv) the
Permits listed on Exhibit G are all licenses, approvals, and
permits which are necessary to own, use, occupy,
operate, maintain, market and sell the Project under all applicable Laws, and (v) except
as set forth in Exhibit G, all of the Permits are assignable and
transferable.


 


(hh)         Borrower is a single-purpose
entity whose sole asset is the Project and whose sole business and purpose is
to own, operate, convert to condominium ownership, market and sell the
Condominium Units, all as more fully set forth in the Organizational Documents.


 


(ii)           The proceeds of Loan will be used only for the purposes described and approved in this
Agreement.


 


(jj)           Except as specifically
described on Exhibit H attached hereto (the “Affiliate Debt”),  Borrower is not indebted to
any Affiliate, nor has Borrower assumed or guaranteed any indebtedness of any
Affiliate. As  of the Closing Date, and throughout the Loan Term, all
Affiliate Debt shall be subject and subordinate in all respects to the Loan and
the Obligations, and Borrower hereby covenants and agrees to cause each holder
of Affiliate Debt to execute and deliver to Lender on the Closing Date a
subordination agreement in scope, form, substance and legal sufficiency
satisfactory to Lender.


 


(kk)         Guarantors have not
established a trust or other estate planning vehicle in which their assets are
held.


 


(ll)           Borrower
further warrants that except as disclosed to Lender in writing, neither
Borrower, Member, any Guarantor, nor any manager/director of Borrower, nor, to
Borrower’s knowledge, any other direct or indirect equity owner of the
Borrower, or any Affiliate of any of the foregoing: (i) has ever been the
subject of any criminal proceedings, other than minor traffic violations; (ii) has
ever been the owner, whether directly or indirectly, of a parcel which was the
subject of foreclosure proceedings (whether judicial or nonjudicial); (iii) has
ever been a party directly or indirectly, to a deed in lieu of foreclosure; and
(iv) is currently a party to any material pending litigation or
administrative proceedings, or subject to any judicial or non judicial orders
or consent agreements.


 


(mm)       Neither Borrower, Member, or
any other member of Borrower, nor any Guarantor is a Person with whom Lender is
restricted from doing business with under regulations of the Office of Foreign Asset Control
(“OFAC”) of the Department of the Treasury of the United States of America
(including, those Persons named on OFAC’s Specially Designated and Blocked
Persons list) or under any statute, executive order (including, the September 24,  2001
Executive Order Blocking Property and Prohibiting Transactions With Persons Who
Commit, Threaten to Commit, or Support Terrorism), or other governmental action
and is not engaged in any dealings or transactions or otherwise associated with
such Persons.


 


31

















 


Section 5.2 Effect of Delivery of Financial Information.  Each time
Borrower shall deliver any financial information required by the provisions of Section 11.31
hereunder, Borrower shall be deemed to have reaffirmed and remade Borrower’s
representations and warranties set forth in this Article 5 and
elsewhere in this Agreement, unless Lender is notified in writing (with
specificity) to the contrary prior to or contemporaneously with the delivery of
such financial information.


 


ARTICLE 6


 


CONDITIONS PRECEDENT TO CLOSING


 


Section 6.1 Conditions Precedent to Closing.  Borrower agrees that Borrower will perform
and satisfy all of the following conditions precedent, and Borrower agrees that
Lender’s obligation to close the Loan and to fund the Loan, is conditioned,
among other things, upon Borrower’s performance or satisfaction of all these
conditions precedent:


 


(a)            No Default or
Event of Default shall have occurred and be continuing under this Agreement
(including, without limitation, with respect to the representations and
warranties contained herein) or any of the Loan Documents.


 


(b)           Borrower shall
have furnished to Lender the following, all in form and substance satisfactory
to Lender:


 


(i)            a paid
Mortgagee’s Title Insurance Policy (ALTA Form B-1992) (the “Title Policy”);  issued by the Title Insurer
in the face amount of the Mortgage, establishing that the
Title Insurer insures the lien of the Mortgage to be a prior and paramount lien
against Borrower’s fee simple interest in the Land and the Improvements located
thereon subject only to the Permitted Exceptions. The Title Policy shall
contain (A) an ALTA 9 endorsement (or equivalent title protection
reasonably acceptable to Lender), (B) a survey endorsement specifically insuring
Lender that the survey described in Section 6.l(b)(ii) below is
accurate and accurately depicts the same Real Estate covered by the Title
Policy, (C) an endorsement
specifically insuring the priority of the lien of the Mortgage as it applies to
the Loan; and (D) any other endorsements Lender may require in its
reasonable discretion. Such policy shall provide extended coverage over (1) standard exceptions, (2) matters
which would be shown by an inspection or an accurate survey of the Land, (3) rights
of parties in possession, (4) easements not of record, and (5) real estate
taxes and assessments, both general and special, other than unpaid but not yet
due installments of real estate taxes and assessments;


 


(ii)           plat of survey
of the Real Estate, made by a Florida registered or certified land surveyor
satisfactory to the Lender, in triplicate, showing the outline of the Land, all
other structures and improvements thereon, if any, and all paving, driveways
and fences, if any, in place. Said survey shall be currently dated (or redated)
and shall contain a proper certificate by the surveyor, which certificate shall
include the legal description of the Land and shall be made in favor of
Borrower, Title Insurer and Lender. The survey shall be made according to the
current “2005 Minimum Standard Detail Requirements for ALTA/ACSM Land Title
Surveys” and shall also show (A) the square footage of the


 


32

















 


Land;
(B) the dimensions and locations of all buildings, fences and improvements
and that all buildings, improvements, foundations, and other structures, if
any, are within the lot lines and in compliance with any restrictions of record
or ordinances relating to the location thereof; (C) no encroachments by
improvements located on adjoining property onto the Land or of buildings,
improvements, foundations or other structures on the Land, if any, onto
adjoining property, except Permitted Exceptions; (D) adequate means
of ingress and egress to and from the Land; (E) locations of all visible or
recorded easements (and recording numbers), setback lines, rights of way, water
courses, drains, sewers, utility lines, public and private roads (including the
names and widths thereof and recording numbers for dedications) and (F) such additional
information as may be required by Lender or the Title Insurer in order to
permit Title Insurer to issue the Title Policy without any standard or general
exception for survey matters. In addition, Borrower will provide Lender with a
certification from the surveyor that the Land is not in an area designated by
the Secretary of Housing and Urban Development as having special flood hazards;


 


(iii)          certificates
demonstrating required insurance coverage as set forth in Exhibit I
to this Agreement at least ten (10) Business Days prior to the
disbursement of any proceeds under the Loan together with all policies of
insurance required by Lender in accordance with Exhibit I to this
Agreement or certified copies or binders thereof, together with all required
endorsements and proof that the premiums therefor have been paid;


 


(iv)          one or more
opinions of independent counsel to Borrower and Guarantors acceptable to
Lender, dated as of the Closing Date and containing only such qualifications
and assumptions as Lender and its counsel may approve, stating the following: (A) that
Borrower is duly formed, validly existing and in good standing under the Laws
of the State of Delaware and is qualified to do business in the State of
Florida; (B) that the execution and delivery by Borrower and performance
of its obligations under all of the Loan Documents (1) have been duly
authorized by all necessary organizational action; (2) constitute legal,
valid, binding and enforceable obligations of Borrower; (3) do not conflict with any of Borrower’s Organizational
Documents; (4) that the Borrower has all the power and authority to own
its properties and to enter into, execute, deliver this Agreement and each of
the Loan Documents and Borrower has the power and authority to perform all of
its obligations under this Agreement and each of the Loan Documents; (5) that
the rate of interest payable in respect to the Loan is not usurious under
Florida Laws; and (6) that
there is no action, proceeding or investigation pending, or threatened, against
Borrower, against or in respect of the Loan, the Loan Documents or this
Agreement, or against or in respect of the Project or the use, occupancy and
operation or contemplated use, occupancy and operation thereof, which would or
could have a material, adverse affect on any of the following: (x) the
operation of the Project for the purposes contemplated by this Agreement;
(y) the repayment of the Loan; or (z) the ability of Borrower to
observe, perform and comply with its obligations under any of the Loan
Documents to which it is a party; (C) the Project is in compliance and the
intended conversion of the Project and use as resident condominium units is in
compliance with all applicable zoning regulations and land use Laws; and
(D) such other opinions as Lender or its counsel shall request;


 


33

















 


(v)           a zoning
opinion from Borrower’s special zoning counsel (together with such other
evidence as Lender may reasonably require) describing all zoning approvals,
special permits, variances, building permits and other approvals necessary to
construct, use and occupy the Project for its intended use as residential
condominiums as contemplated by the Approved Plans, which zoning opinion and
other evidence must provide Lender with reasonable assurance that all such
approvals, permits and variances can and will be obtained as required pursuant
to the progress of construction of the Project;


 


(vi)          a certified
copy of each of Borrower’s Organizational Documents, together with evidence
satisfactory to Lender that Borrower has complied with all Laws necessary to
conduct its business in its State of organization;


 


(vii)         evidence
satisfactory to Lender that the persons executing this Agreement and the other
Loan Documents on behalf of Borrower, have been duly authorized by all
appropriate action to execute and deliver this Agreement and the Loan Documents
on behalf of the Borrower;


 


(viii)        evidence
satisfactory to Lender that the Land is benefited by such easements or other
rights as may be necessary for the vehicular and pedestrian ingress and egress,
the installation and maintenance of utilities, parking and other site
improvements, and the operation of the Project;


 


(ix)           evidence
satisfactory to Lender that the Project is in compliance with all applicable
Laws, including a copy of the final tract map or other governmental approval by
each planning commission or other governmental agency with jurisdiction over
the lawful development of the Project, that all necessary Governmental
Approvals have been obtained, and there has been no material
adverse change in the condition of the Project nor any condition existing
currently or likely to exist during the Loan Term that would require clean-up,
removal or other remedial action pursuant to any Environmental Laws;


 


(x)            current
searches (which will be updated from time to time, but no more frequently than
annually unless Borrower shall be in Default hereunder, at Borrower’s expense
upon the request of Lender) of all Uniform Commercial Code financing statements
filed with the: (A) Secretary of State of the state of formation or
organization of Borrower and the state of residence of each Guarantor, as the
case may be, (B) the Florida State Corporation Commission, and (C) the Land Records
of Lee County, Florida, against Borrower and Guarantors, as
debtor, showing that no Uniform Commercial Code financing statements are filed
or recorded against Borrower or Guarantors in which the collateral is described
as any of all of the Collateral;


 


(xi)           true, correct
and complete copies of all Leases, if any and a rent roll through the Closing
Date;


 


(xii)          judgment and
state and federal tax lien search reports on Borrower and Guarantors;


 


34
















 


(xiii)         current
financial statements of Borrower and Guarantors reflecting no material adverse
change in their respective financial conditions;


 


(xiv)        all
requirements set forth in the Commitment shall have been satisfied and Lender
shall have received all reports and audits required by the Commitment to be
delivered to and approved by Lender, including without limitation, the
structural and engineering report and an environmental audit;


 


(xv)         all documents
and other assurances reasonably required by Lender to evidence and secure the
Loan and otherwise required in connection with the Loan pursuant to this
Agreement;


 


(xvi)        evidence
satisfactory to Lender that Borrower has contributed the Minimum Equity
Investment set forth in Section 3.2;


 


(xvii)       a standard form
of residential sales contract;


 


(xviii)      a Project
schedule;


 


(xix)         the
applications for permits and the appropriate building permits issued by the
appropriate agencies; and


 


(xx)          the Scope of
Renovation and the Renovation Budget.


 


(c)           Borrower shall have taken
all action and done all things which may be necessary (as reasonably determined
by Lender and its counsel) to ensure that the Loan, the lien of the Mortgage
and the security interests and liens created by the other Loan Documents, are, as of the
Closing Date, senior and superior in all respects to the rights and claims
(including without limitation any lien rights or claims) of any Contractor,
subcontractor, materialman, supplier or other person or entity who has
performed or supplied, is performing or supplying, or will perform or supply in
the future any work or materials on or with respect to the Project.


 


(d)           The Project
shall not have suffered any material casualty or be subject to any existing or
threatened condemnation or taking by eminent domain proceedings or otherwise.


 


(e)            There shall be
no pending or threatened litigation known to the Borrower, or its counsel,
against the Borrower, Guarantors or the Project.


 


(f)            There shall have been full
compliance by Borrower with all of the terms and conditions of the Commitment.


 


(g)           Lender shall have received
and approved, in its sole discretion, Borrower’s plan to address any
environmental issues related to the Project, including, a mold remediation
plan, satisfactory to Lender, regarding the twelve (12) Condominium Units
currently containing mold and the fifty-two (52) Condominium Units contains
stains and/or moisture (the “Remediation
Plan”).


 


35

















 


(h)           Borrower and Escrow Agent
shall have established, an escrow account with Earnest Money Depositary Bank
into which Borrower shall cause to be deposited, upon receipt, all Earnest
Money Deposits (the “Earnest Money Account”), and with respect to which, Lender shall be designated as Borrower’s
lender and the holder of a security interest in and to Borrower’s right, title
and interest in the Earnest Money Deposits held in the Earnest Money Account
and Lender shall have received a fully executed Earnest Money Deposit Account
Security and Control Agreement.


 


(i)            The Mezzanine
Loan and the Subordinate Loan shall have been closed simultaneously with the
closing of the Loan and will be fully funded (with the exception of the
Mezzanine Interest Reserve, if any), and no default, breach, violation or event
of default shall have occurred or then be existing under the Mezzanine Loan
Documents or the Subordinate Loan Documents. Borrower shall have given Lender
true, correct and complete copies of the Mezzanine Loan Documents and the
Subordinate Loan Documents. Mezzanine Lender shall have executed and delivered
to Lender the Subordination and Intercreditor Agreement and Subordinate Lender
shall have executed and delivered to Lender, the Subordination and
Intercreditor Agreement (Subordinate Lender).


 


ARTICLE 7


 


LOAN OUT OF BALANCE


 


Section 7.1 Loan “In Balance.”


 


(a)           The Loan is
required to be In Balance at all times. The Loan shall be “In  Balance” only when the
Available Sources of Funds equal or exceed Lender’s Estimate of Remaining Costs
(as defined below), all as determined by Lender from time to time in its reasonable
discretion in accordance with the provisions of this Article 7. The
determination by Lender at any time that the Loan is In Balance shall not
preclude Lender from determining at a later time that the Loan is not In
Balance. Lender shall not be obligated to make any disbursements unless the
Loan is In Balance.


 


(b)           Borrower agrees that if
Lender determines in its reasonable discretion that the Loan is not In Balance, regardless of how such condition may have been caused,
Borrower shall within ten (10) Business Days after written
request by Lender (and in any event prior to any further disbursement of the
Loan) deposit the deficiency with Lender (“Deficiencv Deposit”). The Deficiency
Deposit shall be first exhausted for costs of the Work before any further
disbursements of the Loan shall be made. Disbursement of a Deficiency Deposit
shall be subject to the same conditions precedent and the same requirements as
applicable to a disbursement of the Loan pursuant to this Agreement. If a
Deficiency Deposit is not to be immediately expended, Lender shall deposit the
Deficiency Deposit in a non-interest bearing account. Borrower pledges to
Lender any Deficiency Deposit as security for the Loan.


 


(c)           (i) The “Available
Sources of Funds” shall mean the unfunded Loan commitment. 


 


(ii) The following specific adjustments shall be made to the
Available Sources of Funds for this transaction: Upgrade Deposits may be
counted as an Available Source of Funds


 


36

















 


but only up to the amount of
costs of Upgrades included in Lender’s Estimate of Remaining Costs and amounts
on deposit with Lender in tax escrow accounts and in other reserve accounts
established to pay costs of the Work may be counted as an Available Source of
Funds but only to the extent the costs such accounts were established to pay
for are included in Lender’s Estimate of Remaining Costs.


 


(d)           “Lender’s
Estimate of Remaining Costs” shall mean the amount which Lender estimates
in its reasonable discretion is necessary to pay for all hard costs and soft
costs of the Work which have not yet been paid, including, without limitation,
the following: (i) all costs of the renovation; (ii) all costs
required to complete the preparation of the Condominium Units in accordance
with the approved finish standards and the Scope of Renovation, including,
without limitation, all finishes of Condominium Units required to be paid for
by Borrower under Purchase Agreements or reasonably anticipated for unsold
Condominium Units; (iii) marketing and sales costs; (iv) the amount
required to pay interest on the Loan through the Maturity Date; (v) all
expenses payable or reimbursable to Lender under the terms of this Agreement; (vi) all
real estate taxes, insurance premiums and operating costs of the Work,
including the Remediation Plan; and (vii) all other amounts of any type or
nature incurred or expected to be incurred in connection with the acquisition,
conversion, renovation, marketing and sale of the Project or in order for
Borrower to comply with the Loan Documents or the requirements of Governmental
Authorities.


 


(e)           In determining
Lender’s Estimate of Remaining Costs, Lender shall be entitled to take into
account all conditions, facts and circumstances related to the Project or the
Loan then existing, and all other considerations which Lender, in its
reasonable discretion, determines are relevant to, or reasonable likely to have
an impact upon, any of the amounts included in Lender’s Estimate of Remaining
Costs. By way of example and not limitation, Lender shall have the right, in
making Lender’s Estimate of Remaining Costs, to consider in such manner and to
such extent as Lender determines is appropriate in its reasonable discretion: (i) all
existing and proposed modifications to the description of the Work (whether or
not Lender has the right to approve the same), whether the same are proposed by
Borrower or by a contractor, (ii) all existing construction contracts and
purchase orders or, in those instances where construction contracts or purchase
orders have not yet been let, written bids from responsible contractors,
tradesmen and material suppliers acceptable to Lender in its reasonable
discretion, or Lender’s estimate of such costs, (iii) all change orders
and pending or anticipated change orders (whether or not Lender has the right
to approve the same), (iv) all disputes between Borrower and any supplier
or contractor, and (v) the effect of actual or anticipated delays, whether
or not permitted by the terms of this Agreement.


 


ARTICLE 8


 


INSURANCE


 


Section 8.1 Insurance.  Borrower shall obtain, and shall maintain, or
shall cause to be obtained and maintained, as the case may be, the insurance
described on Exhibit I. Borrower shall
provide Lender, at least ten (10) Business Days prior to the disbursement
of any proceeds under the Loan, a certificate(s) demonstrating appropriate
insurance coverage, as set forth on Exhibit I, followed by
the actual policy within thirty (30) days
of the Closing Date. Failure to


 


37

















 


provide a conforming policy
within ninety (90) days after the Closing Date
shall constitute a Default under the Loan Documents.


 


ARTICLE 9


 


CREATION, SALE AND RELEASE OF CONDOMINIUM UNITS


 


Section 9.1 Establishing Condominium Regime.  Borrower has caused or will
cause to be prepared the Declaration and By-Laws, and all other documents and
instruments required to convert the Real Estate to a condominium regime under
the Laws of Florida and to prepare the offering of the Condominium Units to the
public in conformance with the requirements of applicable Laws, including
without limitation, the Condominium Act. All of the Condominium Documents are
subject to the approval of Lender and once approved by Lender, the Declaration
and the other Condominium Documents shall not be revised or amended without
Lender’s prior approval. Borrower shall collaterally assign to Lender (i) Borrower’s
interest as developer/sponsor under the Declaration and other Condominium
Documents and (ii) all agreements then or thereafter existing for sale of
Condominium Units pursuant to the Loan Documents. Borrower shall cause: (y) the
Declaration and (z) By-Laws, and all other
documents and instruments required by applicable Laws to be duly recorded in
the Lee County, Florida Recorder’s Office only after satisfaction of the
following conditions: (i) Borrower shall have obtained Lender’s written
consent and approval to record the Declaration and By-Laws and (ii) Lender
shall have received evidence satisfactory to Lender, in its sole and absolute
discretion, which evidence shall include but may not be limited to, signed
copies of Valid Sale Contracts that indicate that the Mass Closing is imminent.
Borrower hereby covenants to include in the Offering Materials all disclosures
regarding the Project required by applicable Laws. Borrower shall comply with
the requirements of the Interstate Land Sales Full Disclosure Act to the extent
that the same is applicable to the Project. Borrower hereby
covenants to include in the Offering Materials all disclosures regarding the
Project required by applicable Laws.


 


Section 9.2 Sales Contracts.  All Purchase Agreements for
the sale of Condominium Units at the Project shall be Valid Sale Contracts. To the extent
permitted by law, Borrower shall place the Earnest Money Deposits made under
the Valid Sale Contracts into a segregated escrow account to be held with
Earnest Money Depositary Bank. Borrower shall comply with all applicable Laws, rules and
regulations governing the retention and disposition of the Earnest Money
Deposits. Borrower shall assign to Lender all of Borrower’s right, title and
interest in and to the Earnest Money Deposits, but Lender shall have no
responsibility or liability for the security or safety of such deposits or
investments. Borrower shall deliver to Lender a written and signed
acknowledgement from Escrow Agent, and from the Earnest Money Depositary Bank,
of the assignment by Borrower to Lender of Borrower’s interest therein and an
agreement by such Escrow Agent, and Earnest Money Depository Bank, that until
the Loan is paid in full, any and all of such deposits which are payable to
Borrower as a result of the contract purchaser’s default or forfeiture thereof
shall be paid directly to Lender.


 


Section 9.3 Sales of Units.  Prior to the transfer of
title of any Condominium Unit, Borrower shall, in addition to and not in
limitation of any other requirements set forth herein, satisfy each of the
following conditions:


 


38

















 


(a)            Borrower shall have provided
Lender with not less than ten (10) days’ prior written notice of the
intended transfer of title, which written notice shall be accompanied by (i) a
copy of the applicable Valid Sale Contract, (ii) a copy of the draft
closing statement for the proposed transfer, and (iii) the partial
releases in form and substance satisfactory to Lender in its sole discretion,
to be executed by Lender in order to release the Mortgage, the Assignments of
Leases and Rents and the UCC Financing Statements from the Condominium Unit to
be sold and containing a description of the Condominium Unit to be released,
which partial releases shall be prepared by Borrower at Borrower’s expense,
subject to Lender’s approval in its reasonable discretion in accordance with
this Agreement. If Borrower has not received written objections or approval
from Lender within ten (10) days of Lender’s receipt of Borrower’s notice,
together with all support documentation reasonably requested by Lender,
Borrower shall provide Lender with a second written notice, with a copy of such
notice being sent to the attention of Peter Freund, Esq. at Corus Bank,
N.A., together with the initial Lender addressees set forth in Section 17.3
hereof. If Borrower has not received written objections, approval or a request
for additional information from Lender within ten (10) days of such second
written notice, such documents shall be deemed approved by Lender.


 


(b)           At least thirty
(30) days prior to the date of the Mass Closing, Borrower shall have provided
to Lender and Lender shall have approved the Offering Materials which Offering
Materials shall contain all documents and instruments by which Condominium
Units will be transferred to purchasers, including, without limitation, the
Declaration pursuant to which the Land shall be converted to the Condominium
Units; the By-Laws and other governing instruments pursuant to which the
association of owners of such Condominium Units shall be created and governed;
and the forms of the purchase agreement and deed by which the Condominium Units
shall be conveyed to Condominium Unit purchasers. If Borrower has not received
written objections or approval from Lender within ten (10) days of
Lender’s receipt of the Offering Materials, together with all support
documentation reasonably requested by Lender, Borrower shall provide Lender
with a written notice requesting approval, with a copy of such notice being
sent to the attention of Peter Freund, Esq. at Corus Bank, N.A., together
with the initial Lender addressees set forth in Section 17.3
hereof. If Borrower has not received written objections, approval or a request
for additional information from Lender within ten (10) days of such
written notice, the Offering Materials shall be deemed approved by Lender.


 


(c)           Borrower shall
have filed and recorded the Declaration in accordance with
the provisions of Section 9.1, and contemporaneously therewith,
Lender shall have executed a document or documents, prepared by Borrower at
Borrower’s expense but subject to Lender’s approval in its reasonable
discretion, subordinating the lien of the Mortgage,
the Assignment of Leases and Rents and the UCC Financing Statements to the
Declaration and the By-Laws and floor plans filed in connection with the
Declaration.


 


(d)           No Event of
Default shall have occurred and be continuing under the Loan Documents.


 


(e)           Borrower shall
have satisfied any other conditions required to be satisfied prior to such
transfer of title pursuant to the Loan Documents, the Offering Materials or
applicable Laws.


 


39

















 


(f)            No later than fifteen (15)
days prior to the date of the first Condominium Unit closing, Borrower shall
have provided Lender with evidence acceptable to Lender in its sole discretion
evidence that (i) Borrower has signed copies of at least eighty (80) Valid
Sale Contracts that indicate that Borrower will be in a position to perform the
Mass Closing; (ii) Borrower shall be able to close on at least thirty (30) Condominium Units within
twenty-five (25) days of the first Condominium Unit closing (“Initial Units”)  and (iii) Borrower
shall be able to close on an additional fifty (50) Condominium Units (“Additional Units”) within ninety
(90) days of the first Condominium Unit closing with each and every Condominium
Unit sale involved in the Mass Closing (A) having a gross sales price of
at least ninety-five percent (95%) of the Minimum List Price (exclusive of any
Upgrades) and (B) generating proceeds meeting the requirements of Section 9.4.
Such proof shall include, without limitation, executed Valid Sale Contracts, a
supporting sales schedule and a schedule of closing dates. The satisfaction and
consummation of each of the foregoing items (i), (ii) and (iii) (including
the closing and conveyance of the Initial Units and the Additional Units within
the time periods set forth above and the payment of the Release Price or
Reduced Release Price to Lender with respect to such Initial Units and
Additional Units as set forth below in Section 9.4) shall
constitute the “Mass Closing Requirement.” Borrower shall
satisfy the Mass Closing Requirement on or before the date which is
eight (8) months after the
Closing Date, subject to Force Majeure, provided, however, during any such
extension as a result of Force Majeure, the Loan will be kept In Balance as
required under Section 7.1 hereof. Borrower shall make a principal
reduction (without any Prepayment Fee (as defined in the Note)) of $7,000,000
(the “Mass Closing Principal Reduction”) within ten (10) Business Days of the date which is eight (8) months after the Closing
Date, unless Borrower has satisfied the Mass Closing Requirement. Such Mass
Closing Principal Reduction shall be from Outside Sources. The failure of
Borrower to make the Mass Closing Principal Reduction shall constitute an Event
of Default under this Agreement, and shall allow Lender to invoke one or more
of its remedies under the Loan Documents, including, without limitation,
accelerating the Loan and/or charging interest at the Default Rate.
Notwithstanding the foregoing Event of Default, Lender may at its sole and
absolute discretion allow closings to occur and principal reductions from the
release of Condominium Units in accordance with this Agreement without
prejudice to its right to pursue any or all of its remedies under the Loan
Documents at any time.


 


Section 9.4 Release of Units.


 


(a)           In the event of
the consummation of a sale of a Condominium Unit (which shall be permitted only
upon and after the events described in Section 9.3 shall have
occurred) and so long as the Mass Closing shall have occurred or shall be
occurring in connection with such Condominium Unit sale or the Mass Closing
Requirement shall have been satisfied, as the case may be, Lender shall release
the Condominium Unit and its appurtenant undivided
interest in the common elements of the Condominium, from the lien of the
Mortgage, the Assignment of Leases
and Rents and the UCC Financing Statements provided that Lender shall have
received an amount equal to the Release Price (as defined in Section 9.4(b) below).
In order that the matter be free from doubt, Borrower acknowledges and agrees
that Lender shall have no obligation to release any individual Condominium
Units from the lien of the Mortgage and the security interest of any of the
other Loan Documents unless Lender has received evidence that the release is
part of a group of sales which will accomplish the Mass Closing as described in


 


40

















 


Section 9.3(f) or the
Mass Closing shall have occurred or the Mass Closing Requirement shall have
been satisfied, as the case may be.


 


(b)           As
used herein, the term “Release
Price” shall mean the following: (A) for
individual Garage Spaces, the greater of (i) 100% of the Net Sale Proceeds
or (ii) $13,000; (B) for individual
Carport Spaces, the greater of (i) 100% of the Net Sale Proceeds or (ii) $3,000;
and (C) for Condominium Units, the greatest of: (i) 100% of the Net
Sale Proceeds, or (ii) 91% of the Gross
Sale Proceeds plus 100% of any Upgrade Profit associated with such Condominium
Unit or (iii) 90% of the Minimum List Price plus any Upgrade Profit
associated with such Condominium Unit. Notwithstanding the foregoing, provided
the Mass Closing Requirement shall have been satisfied and so long as no Event of
Default has occurred and is continuing under the Loan, the Release Price for
each remaining Condominium Unit shall be reduced (the “Reduced Release Price”)
in accordance with the table set forth below when the Total Remaining
Exposure Percentage is reduced. For purposes of this subsection “Total Remaining Exposure Percentage” shall mean the Total
Remaining Exposure as a percentage
of the Remaining Units Value.


 




	
  Total
  Remaining Exposure

  	
   

  	
   

  
	
  Percentage

  	
   

  	
  Reduced
  Release Price

  
	
  55%

  	
   

  	
  85%
  of Minimum List Price

  
	
  50%

  	
   

  	
  80%
  of Minimum List Price

  
	
  45%

  	
   

  	
  75%
  of Minimum List Price

  
	
  25%

  	
   

  	
  50%
  of Minimum List Price

  






 


(c)            In the event that at any
time during Loan Term: (i) the Obligations are reduced to zero
and (ii) any portion of the Loan remains unfunded, the Release Price or
Reduced Release Price, as the case may be, shall continue to be remitted to
Lender but such amounts shall be placed in an interest-bearing account (with
interest at Lender’s “ultimate money market” interest rate) established with
Lender (the “Release Escrow”)  as additional
security for the Loan, and the proceeds therein shall be applied to reduce the
Obligations as subsequent Advances of the Loan are disbursed. In the event that
at any time the Lender’s unfunded commitment is terminated for any reason and
all of the Obligations have been irrevocably paid in full, the proceeds held in
the Release Escrow shall be released to Borrower and/or Mezzanine Lender.


 


Section 9.5 Application of Release Prices.


 


(a)           Immediately
upon the closing of any sale of a Condominium Unit, Borrower shall remit to
Lender the Release Price or Reduced Release Price, as the case may be, and
Lender shall release the Condominium Unit from the lien of the Mortgage.


 


(b)           Provided no
Event of Default shall have occurred and be continuing hereunder or under any
other Loan Document, the Release Price or Reduced Release Price, as the case
may be, payments received by Lender pursuant to Section 9.5(a) shall
be applied or paid on the date such funds are immediately available to Lender,
as follows:


 


(i)            First to repayment of the
principal amount of the Loan until such principal shall have been fully paid;


 


41

















 


(ii)           Then, to pay any other
Obligations.


 


Upon
the occurrence of an Event of Default, and in addition to all other rights,
powers and remedies of Lender hereunder or under any other Loan Document,
Lender may, at its option, apply all amounts paid to Lender under this
Agreement, the Note or any other Loan Document in such order and manner as
Lender may elect in its sole discretion.


 


Section 9.6 Prohibition on Sale or Refinance.  Neither the Project nor any
component thereof (including any appurtenant unit thereof), nor any interest
therein, may be transferred, conveyed, sold or refinanced, except in accordance
with the express provisions of this Agreement, and no subordinate financing or
replacement financing (except as permitted in the Note) of the Project may be
effected unless Lender in its sole discretion consents thereto in writing.
Except as otherwise expressly provided in this Agreement (including Section 14.1(b)),
any sale, transfer or assignment of a membership interest in Borrower without
the prior written approval of Lender shall, at the option of Lender, constitute
an Event of Default under the Loan, in which event, Lender may declare the
entire indebtedness to be immediately due and payable and foreclose immediately
or at any time after such Event of Default occurs. In addition, once
approved by Lender (which shall be deemed effective as of the Closing Date),
there shall be no material modification of the ownership, management or
economic interest of the parties constituting the Borrower, whether direct or
indirect, without Lender’s prior written consent, except for a Permitted
Transfer.


 


Section 9.7 Upgrades.  In the event a
Valid Sale Contract contains Upgrades and the deposit (“Upgrade Deposits”) for the cost of
such Upgrades made by the Condominium Unit purchaser is insufficient to cover
the costs of such Upgrades, the Loan will be considered “out of balance” (as
more particularly described in Section 7.1 hereof) in the amount of
the shortfall and shall require a deposit of an
Additional Equity Contribution. Such Additional Equity Contribution
shall be made no later than forty-five (45) days after the
date of the execution of the Valid Sale Contract containing the Upgrade.


 


ARTICLE 10


 


TAX ESCROW


 


Section 10.1 Deposits for Taxes.  Beginning on the thirteenth
(13th) month
anniversary of the Closing Date and on the first (lst) day of each and every month thereafter, Borrower
shall, in order to assure that there are sufficient funds to pay Taxes as  and when the
same shall become due and payable, deposit with Lender in a non-interest
bearing account (the “Tax Escrow Account”) an amount equal to one-twelfth (1/12) of 100% of the annual
Taxes next to become due upon the Real Estate; provided that in the case of the
first such deposit, there shall be deposited, in addition, an amount which,
when added to the aggregate amount of monthly sums next payable under this Section 10.1,
will result in a sufficient reserve to pay the Taxes next becoming due one
month prior to the date when such Taxes are, in fact, due and payable pursuant
to applicable Laws. The amount of such deposits (herein generally called “Tax  Deposits”) shall be based upon Lender’s reasonable estimate as to the amount of
Taxes next to be payable. Failure of the Borrower to make such Tax Deposits
shall constitute an Event of Default under the Loan.


 


42

















 


Section 10.2 Application of Tax Deposit.


 


(a)            The monthly Tax Deposit
shall be paid in a payment each month, to be applied, so long as no Event of
Default has occurred hereunder and is continuing, to payment of Taxes.


 


(b)           It shall be the
responsibility of Borrower to furnish Lender with the bills for the Taxes not
later than thirty (30) days
prior to the date on which the same are due and payable in order for such bills
to be timely paid when due and payable. If the total Tax Deposit on hand shall
not be sufficient to pay all of the Taxes when the same shall become due, then
Borrower shall deliver to Lender at the time of the submission of the bills to
Lender as above an amount equal to the deficiency. If the total of such Tax
Deposit exceeds the amount required to pay the Taxes, such excess shall be
credited against subsequent payments to be made for such deposits.


 


(c)            Upon the
occurrence and continuance of an Event of Default hereunder, and in addition to
all other rights, powers and remedies of Lender hereunder or under any other
Loan Document, Lender may, at its option, without being required do to so and to the
extent permitted by law, apply any Tax Deposits on hand to any of the
Obligations, in such order and manner as
Lender may elect in its discretion. When the Obligations have been
fully paid and performed, as the case may
be, any remaining Tax Deposits shall be paid to Borrower. All Tax Deposits are
hereby pledged as additional security for the Obligations, and shall be held by
Lender to be irrevocably applied for the purposes for which made as herein
provided, and shall not be subject to the direction or control of Borrower.


 


(d)           Provided that
Borrower shall furnish the bills for the Taxes and the amount of any deficiency
on or before the time required for such delivery as provided in Section 10.2(b) hereof,
and so long as no Event of Default has occurred and be continuing, Lender
shall use its reasonable efforts to cause such bills to be paid on or before
the dates on which the bills are due and payable in order to take advantage of
the maximum allowable discount without premium or penalty, and if Lender fails
to timely pay the Taxes under those circumstances, Lender shall be responsible
for penalties and interest assessed for late payments.


 


ARTICLE 11


 


BORROWER’S ADDITIONAL COVENANTS


 


Borrower
further covenants and agrees as follows:


 


Section 11.1 Construction Documents.  Borrower will not (i) default
under the terms of the Construction Documents, if any, in any manner which
would permit the Contractor party to any such Construction Documents to
terminate such Construction Documents, (ii) waive any of the material
obligations of any contractor thereunder, (iii) do any act which would
relieve any contractor from its material obligations under its applicable
Construction Documents, or (iv) make any amendments to any Construction
Documents, without the prior written consent of Lender which consent shall not
be unreasonably withheld.


 


Section 11.2 Inspection by Lender.  Borrower will cooperate (and
will cause its agents and independent contractors to cooperate) with Lender in
arranging the inspections of the Project or any part thereof or any of the
other Collateral by Lender and its agents and representatives at


 


43

















 


such reasonable times as
Lender shall determine in its reasonable discretion upon prior notice to
Borrower.


 


Section 11.3 Mechanics’ Liens Contest Thereof; Other Liens.  Borrower will
not suffer or permit any mechanics’ lien claims to be filed or otherwise
asserted against the Project or the Land, and will promptly discharge the same
if any claims for lien or any proceedings for the enforcement thereof are filed
or commenced; provided, however, that Borrower shall have the right to contest
in good faith and with due diligence the validity of any such lien or claim
upon furnishing to Lender a bond covering such contested mechanics lien in
form, scope and substance reasonably satisfactory to Lender (and from a bonding
company approved by Lender in its reasonable judgment) or by furnishing the
Title Insurer such security or indemnity as it may require to induce the Title
Insurer to issue an endorsement to the Title Policy insuring against all such
claims, liens or proceedings. Except for the Permitted Exceptions and as
expressly permitted by this Agreement or the other Loan Documents, Borrower
shall not cause, create, suffer or otherwise permit to exist, any lien, security
interest, or other encumbrance against the Project, the Land or any other
Collateral.


 


Section 11.4 Settlement of Mechanics’ Lien Claims.  If Borrower
shall fail promptly to discharge any mechanics’ lien claim filed or otherwise
asserted or to contest any such claims and give security or indemnity in the
manner provided in Section 11.3 hereof, or, having commenced to
contest the same, and having given such security or indemnity, shall thereafter
fail to prosecute such contest in good faith or with due diligence, or fail to
maintain such indemnity or security so required by the Title Insurer for its
full amount, or, upon adverse conclusion of any such contest, shall fail to
cause any judgment or decree to be satisfied and lien to be promptly released,
then, and in any such event, Lender may at its election (but shall not be
required to), with prior written notice to Borrower (i) procure the
release and discharge of any such claim and any judgment or
decree thereon, without inquiring into or investigating the amount, validity or
enforceability of such lien or claim and (ii) effect any settlement or
compromise of the same, or may furnish such security or indemnity to the Title
Insurer, and any amounts so expended by Lender, including premiums paid or
security furnished in connection with the issuance of any surety company bonds,
shall be deemed to constitute advances under the Note.


 


Section 11.5 Commencement and Completion of Construction.  During the Loan
Term, Borrower shall meet the following deadlines with respect to the Project: (i) Borrower
shall commence the Work within thirty (30) days of the Closing Date; (ii) Borrower
shall file any and all forms and applications that are required to receive the
necessary Governmental Approvals to sell the Condominium Units within sixty (60) days of the Closing Date; and
(iii) Borrower shall complete the Project according to the Scope of
Renovation and Approved Plans no later than the twelve (12) month anniversary
of the Closing Date, subject to Force Majeure. Borrower shall proceed diligently
and make regular progress toward completion of the Project, which progress
shall be reviewed and approved by Lender in its sole discretion. The failure of
Borrower to comply with this Section 11.5 shall constitute an
immediate Event of Default under the Loan and Lender shall have the right to
terminate any obligations to fund additional Loan proceeds.


 


Section 11.6 Renewal of Insurance. Borrower shall
timely pay premiums on all insurance policies required under this Agreement or
under any other Loan Document from time


 


44
















 


to time; and when and as
additional insurance is required from time to time during the Loan Term and
when and as any policies of insurance may expire, (i) prior to the
expiration of any such policies furnish to Lender evidence of their renewal and
(ii) not later than thirty (30) days
following the renewal of such policies furnish to Lender, additional and
renewal insurance policies (or certified copies thereof) issued by companies,
and with coverage and amounts, reasonably satisfactory to Lender. In the event
of Borrower’s Default under this Section 11.6 or Article 8  hereof, or if an Event of
Default shall occur and be continuing under this Agreement or under any of the
Loan Documents, Lender shall have the right (but not the obligation) to place
and maintain insurance required to be placed and maintained by Borrower
hereunder and treat the amounts expended therefor as additional indebtedness
hereunder and under the Note.


 


Section 11.7  Payment of
Taxes. 
If at any time the monthly Tax Deposit is insufficient to pay all of
the Taxes when the same shall become due, then Borrower shall pay such amount as required by Lender to pay all Taxes upon or with respect to the Project
or any part thereof when same are due and payable, but subject to any right to
contest such Taxes as expressly permitted by the Mortgage and in the manner
expressly permitted by the Mortgage.


 


Section 11.8  Personal
Property. 
(i) All of Borrower’s personal property, attachments and equipment
located on or used in connection with the Project shall always be located at
the Project, except as expressly permitted by the terms of this Agreement, and
shall also be kept free and clear of all chattel mortgages, conditional vendor’s
liens and all other liens, encumbrances and security interests of any kind
whatever (other than as expressly permitted hereunder or as otherwise approved
by Lender in writing), and (ii) Borrower shall, from time to time upon request
by Lender, furnish Lender with evidence of such ownership satisfactory to
Lender, including searches of applicable public records. Borrower shall have
the right to sell obsolete or damaged and unusable tangible personal property,
so long as all of the proceeds thereof shall be used to replace such tangible
personal property or to pay the Obligations.


 


Section 11.9  Proceedings.  If any
Proceedings are filed seeking to enjoin or otherwise prevent or declare
unlawful the conversion to a condominium regime, use, occupancy, operation or
maintenance of the Project or any portion thereof, or any other proceedings of
the nature described in Section 5.1(g) of this Agreement are
filed, Borrower shall give immediate notice thereof to Lender and, to the
extent permitted by law and at its sole expense (i) cause such proceedings
to be vigorously contested in good faith and (ii) in the event of an
adverse ruling or decision, prosecute all good faith and allowable appeals
therefrom. Without limiting the generality of the foregoing, Borrower shall
resist the entry or seek the stay of any temporary or permanent injunction that
may be entered and use its best efforts to bring about a favorable and speedy
disposition of all such proceedings, as well as any other proceedings of the
nature described in Section 5.1(g) of this
Agreement.


 


Section 11.10  Post-Construction
Alterations. 
Other than the Work, Borrower shall not make any material alterations
to the Project without the prior written consent of Lender.


 


Section 11.11  Lender’s
Action for its Own Protection Only.  The authority herein
conferred upon Lender, and any action taken by Lender, to inspect the Project,
to approve contracts, and all other documents and instruments submitted to
Lender, will be exercised and taken by Lender and any of Lender’s agents or
independent contractors retained by Lender for


 


45

















 


such
purposes as aforesaid for their own protection only and may not be relied upon
by Borrower or any other party for any purposes whatever; and neither Lender
nor any of Lender’s agents or independent contractors shall be deemed to have
assumed any responsibility to Borrower or any other party with respect to any
such action herein authorized or taken by Lender or such agents or independent
contractors. Any review, investigation or inspection conducted by Lender or any
agent or representative of Lender in order to verify independently Borrower’s
satisfaction of any conditions precedent to the closing of the Loan under this
Agreement, Borrower’s performance of any of the covenants, agreements and
obligations of Borrower under this Agreement or under any of the other Loan
Documents, or the truth of any representations and warranties made by Borrower
hereunder or under any of the other Loan Documents (regardless of whether or
not the party conducting such review, investigation or inspection should have
discovered that any of such conditions precedent were not satisfied or that any
such covenants, agreements or obligations were not performed or that any such
representations or warranties were not true), shall not affect (or constitute a
waiver by Lender of)
(i) any of Borrower’s representations and warranties under this
Agreement or Lender’s reliance thereon, or (ii) Lender’s reliance upon any
certifications of Borrower or any other person or entity required under this
Agreement or any other facts, information or reports furnished to Lender by
Borrower or other parties hereunder.


 


Section 11.12  Furnishing
Information. Borrower will:


 


(a)            promptly supply Lender with such
information concerning its affairs and properties relating to the ownership,
conversion to a condominium regime, use, occupancy, operation and maintenance
of the Project and the Land as Lender may hereafter request from time to time,
including, without limiting the generality of the foregoing, copies of such
utility bills, real estate tax bills and insurance bills as Lender may request;


 


(b)            promptly notify Lender of any
condition or event which constitutes a Default or an Event of Default of any
term, condition, warranty, representation or provision of this Agreement or of
any of the other Loan Documents; and


 


(c)            promptly notify Lender of any
material adverse financial change with respect to Borrower or Guarantors or in
connection with the operation of the Project.


 


Section 11.13  Documents
of Further Assurance.  Borrower shall,
from time to time, upon Lender’s reasonable request, execute, deliver, record
and furnish such documents as Lender may reasonably deem necessary or desirable
to (i) perfect and maintain perfected as valid liens upon the Project, the Land and the
other Collateral, the liens granted by Borrower to Lender under the Mortgage
and the other Loan Documents as contemplated by this Agreement, (ii) correct
any errors of a typographical nature or inconsistencies which may be contained
in any of the other Loan Documents, and (iii) consummate fully the
transaction contemplated under this Agreement.


 


Section 11.14  Furnishing
Reports.  Borrower shall,
upon request by Lender, provide Lender promptly after receipt with copies of
all material written inspections, reports, test results, and management reports
received by Borrower from time to time from its employees, agents,
representatives, architects, engineers, contractors and any other parties
involved in the operation, maintenance and conversion to a condominium regime
of the Project, which in any way relate to


 


46

















 


the
Project, the operation of the Project, or any part thereof, including, without
limitation, the ADA Plan and the budget for same.


 


Section 11.15  Leases and
Lease Reports.


 


(a)            Borrower shall not enter into any
Leases without Lender’s prior written consent. Borrower shall not modify,
amend, supplement, waive any material provision of, terminate or cancel any
Leases of space in the Project: (a) except for a termination or
cancellation of any Lease under which the tenant thereof is in default
thereunder, (b) except for a modification, amendment, supplement,
termination or cancellation which is, in Borrower’s commercially reasonable judgment,
in furtherance of the conversion of the Project to a condominium regime and (c) except
for Leases of the Condominium Units for a period of time and upon such terms as
comport with the schedule for the conversion and sale of such Condominium
Units. In addition, any new Leases or modifications to existing leases shall be
pursuant to the standard form of Lease approved by Lender. All Leases shall
have terms of no more than twelve (12) months. All space tenants shall
be required at Lender’s election to execute estoppel certificates and
subordination, non-disturbance and attornment agreements in the scope, form,
substance and legal sufficiency as Lender shall determine.


 


(b)            In the event there
is a letter of credit given by a tenant to  Borrower, such letter of
credit shall be assigned and delivered to, and held by, Lender, subject to the
applicable restrictions on the use or liquidation of such instruments as are
set forth in the applicable Lease. The security interest in the letter of
credit must be perfected by the issuing bank (and any intermediaty bank)
acknowledging that the proceeds of any draw shall be paid to Lender. The form
of such assignment shall be satisfactory to Lender in its reasonable
discretion. In the event of a default under
a Lease secured by a letter of credit or other security, Borrower shall be
allowed by the Lease and required by this provision of the Loan Agreement to
draw upon the letter of credit or the other security, as the case may be, to
the extent permitted by the Lease and deposit the proceeds into a pledged
account with Lender, disbursements from which will be made only for Project
expenditures such as debt service, operating expenses, tenant improvements and
leasing commissions for new/placement tenants.


 


Section 11.16  Furnishing
Notices.  Borrower shall deliver to
Lender copies of all default notices received or given by Borrower (or its
agents or representatives) under any of the Leases, Permits, and Agreements,
within three (3) Business Days after such
notice is given or received, as the case may be. Borrower shall also provide
Lender with copies of all notices pertaining to the Project or any part thereof
received by Borrower or any of Borrower’s agents or employees from any
Governmental Authority or from any insurance company providing insurance on any
of the Project and all other material notices, within three (3) Business Days after such
notices are received.


 


Section 11.17  Correction
of Defects.  Within five (5) days after Borrower acquires
knowledge of or is given notice of a material defect in the Project or any
departure from other requirements of this Agreement, Borrower will proceed with
diligence to correct all such defects and departures. Borrower shall complete
such corrections within thirty (30) days after Borrower acquires such knowledge
or is given such notice, or, if such corrections cannot reasonably be completed
within thirty (30) days, such additional period
of time as it shall take with diligence to


 


47

















 


complete such corrections.
Upon Borrower acquiring knowledge of such defect (other than as a result of
written notice to Borrower from Lender), Borrower shall promptly advise Lender
in writing of such matter and the measures being taken to make such corrections
along with an estimate of the time of completion.


 


Section 11.18  No
Additional Debt.  Borrower
shall not, without the prior written consent of Lender, create, incur, assume,
guarantee or be or remain liable for any indebtedness (whether personal or nonrecourse,
secured or unsecured, and whether owed to a third party or to an Affiliate)
other than:


 


(a)            Indebtedness to
Lender arising under this Agreement, the Note or any of the other Loan
Documents;


 


(b)            Customary and necessary trade
payables in respect of the Project reasonably incurred in the ordinary course
of business, but not incurred through (i) the borrowing of money, or (ii) the obtaining of
credit except for credit on an open account basis customarily extended and in
fact extended in connection with normal purchases of goods and services;


 


(c)            Indebtedness in respect of Taxes to
the extent that payment therefore shall not, at the time, be required to be
made in accordance with the provisions of Section 11.7 hereof (but
nothing contained in this paragraph shall be construed to permit Borrower to
borrow funds or incur other indebtedness to pay such Taxes); and


 


(d)            The Mezzanine Loan; and


 


(e)            The Subordinate Loan.


 


Section 11.19  Permits.  Borrower shall keep all
Permits which are necessary under applicable Laws in order to commence, perform
and complete the conversion of the Project to a condominium regime in full
force and effect, shall promptly comply with all conditions thereof, and shall
promptly deliver to Lender copies of all material notices sent or received by
Borrower or Borrower’s agents in connection with the Permits or matters
pertaining thereto. Borrower shall timely apply for and shall obtain all
Permits which are necessary to use, occupy, operate and maintain the Project as
a residential condominium facility under all applicable Laws. Once issued,
Borrower shall keep all Permits in full force and effect, shall promptly comply
with all conditions thereof, and shall promptly deliver to Lender copies of all
material notices sent or received by Borrower or Borrower’s agents in
connection with the Permits or matters pertaining thereto.


 


Section 11.20  Indemnification.  Borrower shall indemnify, defend and hold
Lender harmless from and against all claims, injury, damage, loss, costs,
including reasonable attorneys’ fees (based upon services rendered at hourly
rates) and costs, and liability of any and every kind to any persons or
property by reason of (i) the ownership, use, operation, maintenance or
conversion to a condominium regime of the Project; (ii) any other action
or inaction by, or matter which is the responsibility of, Borrower; and (iii) the
breach of any representation or warranty or failure to fulfill any of Borrower’s
obligations under this Agreement or any other Loan
Document unless caused solely by Lender’s gross negligence or willful
misconduct.


 


48

















 


Section 11.21  Prohibition
Against Distributions.  Borrower shall
make no Distributions until after the Obligations are paid in full.
Notwithstanding the foregoing, once the Total Remaining Exposure Percentage has
been met in accordance with Section 9.4(b) hereof, Borrower shall
be entitled to make Distributions in the amount of
proceeds from the sale of any Condominium Unit in excess of the applicable
Reduced Release Price.


 


Section 11.22  Insurance
Reporting Requirements.  Borrower shall
promptly notify the insurance carrier or agent therefor (with a copy of such
notification being provided to Lender) if there is any increase in hazard
relating to the Project, or transfer of title to the Project or any part
thereof.


 


Section 11.23  Compliance
With Laws; ADA.  Borrower shall
promptly comply with all applicable Laws, including, without limitation, the
ADA (to the extent applicable to the Project), together with all notices to
correct all violations thereof from any Governmental Authority having
jurisdiction over Borrower or the Project.


 


Section 11.24  Organizational
Documents.  Without the
prior written consent of Lender (which consent shall not be unreasonably
withheld), Borrower shall not permit or suffer any amendment or modification of
its Organizational Documents (except when solely related to a Permitted
Transfer) in any material respect or which has any adverse impact on Lender or the
security provided to Lender pursuant to this Agreement and the other Loan
Documents and shall not permit or suffer the issuance of any new interests in
Borrower or the transfer of any of the interests in Borrower. Borrower shall
provide to Lender copies of all amendments to its Organizational Documents that
do not require the consent of Lender within five (5) days after execution.
Lender shall notify Borrower of its approval or disapproval of any changes to
Borrower’s Organizational Documents requiring Lender’s approval within fifteen (15) Business Days
following Lender’s receipt of any proposed amendment, together with sufficient
information to enable Lender to evaluate such proposed amendments.


 


Section 11.25  Lost Note.  Borrower shall, if the Note
is mutilated, destroyed, lost, or stolen, promptly deliver to Lender, in substitution
therefor, a new promissory note containing the same terms and conditions as the
Note mutilated, destroyed, lost, or stolen, and with a notation thereon of the
unpaid principal and accrued and unpaid interest. Borrower shall provide
fifteen (15) days’ prior notice to Lender before making any
duplicate payments to any third parties claiming payments under the lost Note.


 


Section 11.26  Hazardous Material.  Borrower shall keep the Land
free of any Hazardous Material contamination except (i) for such Hazardous
Material used in the ordinary course of operations of the Project and in
compliance with all Environmental Laws and (ii) with respect to the
existence of mold specifically disclosed to Lender, which shall be promptly
remediated in accordance with the Remediation Plan. Borrower shall comply with
any and all Laws with respect to the discharge and removal of Hazardous
Material, shall pay immediately when due the costs of removal of any such
Hazardous Material, and shall keep the Project and Land free of any lien
imposed pursuant to such Laws. In the event Borrower fails to do so within
twenty (20) days, after written notice to Borrower, Lender may declare an Event
of Default under this Agreement and/or cause the Land to be freed from the
Hazardous Material with the cost of the removal added to the indebtedness
evidenced by the Note and secured by the


 


49

















 


Mortgage (regardless of whether
such indebtedness then increases the outstanding balance of the Note to an
amount in excess of the face amount thereof). Borrower further agrees not to
release or dispose, or allow the release or disposal, of any Hazardous Material
at the Land in violation of any applicable Laws. Lender shall have the right at
any time during the Loan Term (but not more often than once per annum unless an Event of Default has occurred or
Lender has, in Lender’s reasonable judgment, reasonable cause to believe that
either a release of Hazardous Materials or a violation of Environmental Laws
has occurred on or with respect to the Land), following notice to Borrower, to
conduct an environmental audit of the Land and Borrower shall cooperate in the
conduct of such environmental audit. Borrower shall give Lender and its agents
and its employees access to the Land to remove Hazardous Material and Borrower
agrees to indemnify and hold Lender free and harmless from and against all
loss, costs, including reasonable attorneys’ fees (based upon services rendered
at hourly rates) and costs, damage (including consequential damages), and
expenses Lender may sustain by reason of the assertion against Lender by any
party of any claim in connection with such Hazardous Material. The foregoing
indemnification shall survive repayment of the Note, and shall be in addition
to the separate indemnity and other agreements contained in the environmental
remediation and indemnification agreement executed and delivered by Borrower on the Closing
Date.


 


Section 11.27  Asbestos.  Borrower shall not install
nor permit to be installed in the Project any product or material containing
more than 0.1 percent asbestos by weight that when dry, may be crumbled,
pulverized or reduced to powder by hand pressure or any substance containing
asbestos and deemed hazardous by Laws respecting such material, and with
respect to any such material currently present in the Project shall promptly
either (a) remove any material which such Laws deem hazardous and require
to be removed or (b) otherwise comply with such federal and state Laws, at
Borrower’s expense and sole risk. If Borrower shall fail to so remove or
otherwise comply, Lender may declare an Event of Default under this Agreement
and/or do whatever is necessary to eliminate said substances from the Project
or otherwise comply with applicable Laws, and the costs thereof shall be added
to the indebtedness evidenced by the Note and secured by the Mortgage
(regardless of whether such indebtedness then increases the outstanding balance
of the Note to an amount in excess of the face amount thereof). Borrower shall
give Lender and its agents and employees access to the Project to remove such
asbestos or substances. Borrower shall defend, indemnify, and save Lender
harmless from all loss, costs, including attorneys’ fees (based upon services
rendered at hourly rates) and costs, damages (including consequential damages)
and expenses asserted or proven against Lender by any party, as a result of the
presence of such substances, and any removal or compliance with Laws. The
foregoing indemnification shall survive repayment of the Note.


 


Section 11.28  Transactions
with Affiliates.  Borrower shall not enter
into, or be a party to, any transaction with respect to the Project with any
Affiliate, except in the ordinary course of business and except upon fair and
reasonable terms which are fully disclosed to Lender and consented to in
writing by Lender in its sole discretion, and such terms are no less favorable
to Borrower than would be obtained in a comparable arm’s length
transaction with a Person which is not an Affiliate. In seeking
approval of any transaction with an Affiliate, Borrower shall disclose to
Lender and identify such proposed transaction as an Affiliate transaction. Notwithstanding
the foregoing, Lender acknowledges that the sales agent for the Condominium
Units and the Property Manager may be Affiliates of Borrower.


 


50

















 


Section 11.29  Single
Purpose Entitv.  So  long as the Obligations are
outstanding, Borrower hereby covenants and agrees that it shall:


 


(a)            not own any asset or property other
than (i) the Project, and (ii) incidental personal property relating to the ownership
or operation of the Project;


 


(b)            not enter into any contract,
agreement or other undertaking to provide services to any Person (other than
the lessees under the Leases);


 


(c)            in its operating agreement, limit
its purpose to the acquiring, converting to a condominium regime, owning,
operating, maintaining and leasing the Project and selling the Condominium
Units, and other lawful activities incidental thereto;


 


(d)            not engage in any business other
than the acquisition, conversion to a condominium
regime, ownership, operation, maintenance and leasing of the Project and
selling the Condominium Units, and other lawful activities incidental thereto;


 


(e)            not make any loans
or advances to any Person;


 


(f)             shall not own a
subsidiary and shall not acquire obligations or securities of its Affiliates or
any other Person;


 


(g)            pay its debts
and liabilities (including, as applicable, shared personnel and overhead
expenses) only from its own assets as the same shall become due;


 


(h)            do all things necessary to observe
organizational formalities and preserve its existence, and shall not amend,
modify or otherwise change any of its Organizational Documents of Borrower in
any manner not permitted by the provisions of Section 11.24  hereof without the prior written consent of Lender;


 


(i)             maintain all of its books, records,
financial statements and bank accounts separate from those of any other Person
and shall file its own tax returns;


 


(j)             be, and at all times shall
hold itself out to the public as, a legal entity separate and distinct from any
other entity, shall conduct business in its own name, shall not identify itself
as a division or part of any other Person and shall maintain and utilize a
separate telephone number and separate stationery, invoices and checks;


 


(k)            maintain adequate capital for the
normal obligations reasonably foreseeable in a business of its size and
character and in light of its contemplated business operations;


 


(l)             not seek the dissolution, winding
up, liquidation, consolidation or merger in whole or in part, of Borrower, nor
transfer or otherwise dispose of all or substantially
all of its assets other than in connection with the sale of Condominium Units
as provided herein;


 


(m)           not commingle the funds and other
assets of Borrower with those of any other Person;


 


51

















 


(n)           maintain its assets in such a manner
that it shall not be costly or difficult to segregate, ascertain or identify
its individual assets from those of any other Person;


 


(o)           not hold itself out to be
responsible for the debts or obligations of any other Person and shall not
assume, guarantee or pay the debts or obligations of any other
Person;


 


(p)           prepare separate tax returns and
financial statements, or if part of a consolidated group, then Borrower shall
be shown as a separate member of such group;


 


(q)           allocate and charge fairly and
reasonably any common employee or overhead shared with any other Person; and


 


(r)            transact all business with
Affiliates on an arm’s length basis as required by Section 11.28.


 


The members of the Borrower
have not and will not: (1) advance or contribute property to Borrower
other than by way of a capital contribution or a loan permitted by Borrower’s
Organizational Documents, or (2) accept or cause to be made any transfer
or distribution of Borrower’s assets to any of Borrower’s constituent members
in respect of their ownership of Borrower (other than in cash or
cash-equivalents, permitted by the terms of this Agreement, and pursuant to
duly authorized actions of Borrower taken in accordance with applicable Laws).


 


Section 11.30  Contracts.  Borrower shall not enter
into any leasing, service, parking, maintenance, management, leases or purchase
agreements of equipment (whether as an installment sale or otherwise), or other
contract or agreement relating to the Project or the operation and maintenance
thereof which requires expenditures in excess of $50,000 in the aggregate in
any one year period, or, with respect to purchase agreements for equipment,
which are for a purchase price in excess of $50,000 in the aggregate, without
the prior written consent of Lender (which consent shall not be unreasonably
withheld). All such contracts, leases and agreements (other than equipment
purchase agreements) shall provide, or Borrower will
deliver a letter, in form and substance satisfactory to Lender (which approval
shall not be unreasonably withheld), executed by the other party to said
agreement to the effect, that upon the occurrence of an Event of Default
hereunder, or under the Loan, or any of the other Loan Documents, and Lender’s
acquisition and/or obtaining control of the Project, through foreclosure, sale
or other means, such agreement either shall not be binding upon Lender or the
Project or any part thereof or shall terminate upon Lender’s
request at no cost to Lender, upon prior notice of not more than ninety (90) days.


 


Section 11.31  Financial
Reporting. 
Borrower shall keep and maintain at Borrower’s sole cost and expense
complete and accurate books and records on a cash basis and Borrower shall
report its operations for tax purposes on accrual basis method. The fiscal year
of Borrower shall end on December 31 of each year, unless a
different fiscal year shall be required by the Internal Revenue Code. Borrower
shall permit Lender and any authorized representatives of Lender to have
reasonable access to and to inspect, examine and make copies of the books and
records, any and all accounts, data and other documents of Borrower at all
reasonable times upon the giving of reasonable notice of such intent. In addition, in
the event that any Default, adverse


 


52

















 


litigation or material
adverse change occurs in the financial condition of Borrower, then Borrower
shall promptly notify Lender of such occurrence.


 


(a)            Borrower will prepare, at Borrower’s
sole cost and expense, and furnish to Lender all financial information related
to the Project as Lender shall determine in its reasonable judgment, including,
without limitation:


 


(i)             within thirty (30)
calendar days after the end of each calendar month, (A) an unaudited
income statement of Borrower for the prior calendar month on an accrual basis
setting forth all Gross Sale Proceeds and Rents received during such month, and
an unaudited expense statement, (B) a current rent roll as of the first
day of such calendar month (if there are any tenants of the Land or any part
thereof), (C) a current list of all agreements
relating to or pertaining to services to the Project or the conversion,
management, operation, sale, and leasing, of the Project, including, without
limitation, any Purchase Agreements, together with complete copies of all such
Purchase Agreements, and (D) a summary of all activities undertaken in
regard to the Project, including a summary of all conversion expenses paid
during such month, together with copies of any permits obtained by Borrower, (E) a
summary of any sale of Condominium Units at the Project during such month,
including a description of the Gross Sale Proceeds and the Approved Closing
Costs, and (F) a statement of the current balance of the tenant security
account, if any, together with a list of all tenants whose deposits are held
thereunder and the current balance for each such tenant.


 


(ii)            within thirty (30)
calendar days after the end of each fiscal quarter of Borrower (A) unless
such fiscal quarter is the last fiscal quarter of any fiscal year of Borrower, (1) an
unaudited balance sheet of Borrower dated as of the end of  such fiscal
quarter on a GAAP basis, (2) an unaudited related income statement of
Borrower for such fiscal quarter on a GAAP basis, (3) an unaudited
statement of cash flows for such fiscal quarter on a GAAP basis, and (4) an
unaudited statement of member’s capital on a GAAP basis and (B) a status
report of Borrower’s activities during such fiscal quarter reflecting summary
descriptions of material additions to, material dispositions of the Premises
during such fiscal quarter, all of which shall be certified by Guarantors as
being, to the best of Guarantors’ knowledge, true and correct as of such date.


 


(iii)           by no later than February 15
after the end of each fiscal year (A) an unaudited cumulative income
statement of Borrower for the prior fiscal year on an accrual basis setting
forth all Gross Sale Proceeds and Rents received during such period, and an
unaudited expense statement, (b) a summary of all activities undertaken in
regard to the conversion to a condominium regime of the Improvements during
such previous fiscal year, including a summary of all conversion expenses paid
during such period, together with copies of any permits obtained by Borrower,
and (c) a summary of any sales of Condominium Units at the Project during
such period, including a description of the Gross Sale Proceeds and the
Approved Closing Costs.


 


(iv)           within sixty (60)
days of the end of each fiscal year, annual unaudited financial statements for
the Borrower and the Guarantors, certified as accurate by an officer of
Borrower. The annual financial statements shall include (a) an annual
balance


 


53

















 


sheet
of Borrower dated as of the end of such fiscal year, (b) an annual income
statement of Borrower for such fiscal year, (c) an annual statement of
cash flows for such fiscal year and (d) previously prepared supporting
schedules and backup information as reasonably requested by Lender, all of
which shall be certified by Guarantors as being, to the best of such Guarantor’s
knowledge, true and correct.


 


(v)            for Borrower,
Guarantors and each entity reporting income and expense of the Project, by not
later than each April 15, all tax returns and any related tax schedules
reasonably requested by Lender (except that if an extension is requested Lender
shall be supplied with a copy of the extension request and a copy of the returns
as soon as they are filed).


 


(vi)           Promptly after the
end of each fiscal year, but by no later than each
February 15, Borrower will cause its accountant to prepare and deliver to
Lender a report setting forth in sufficient detail all such additional information
and data with respect to business transactions effected by or involving
Borrower, including, without limitation, all Approved Sales, during the fiscal
year as will enable Lender to timely comply with applicable Laws, rules and
regulations. Borrower shall prepare such additional financial reports and other
information as Lender may reasonably determine are appropriate. Borrower shall
supply such additional information and detail as to any time or items contained
on any such statement that Lender may reasonably require.


 


(vii)          Throughout
the Loan Term, (i) prior to the closing of any Approved Sale, a draft
settlement statement with respect to such Approved Sale, setting forth all
amounts to be paid with respect thereto, which draft shall substantially
conform to the settlement statement delivered to Lender on the closing date of
such Approved Sale; and (ii) any financial information or other
information bearing on the financial status of the Loan which is reasonably
requested by Lender.


 


(b)            Borrower shall provide to Lender a
monthly verification that the Borrower’s portion of the condominium homeowner’s
association dues have been paid.


 


(c)            Lender may retain an investigator to
research the public records and reputation of any principal of Borrower or any
Guarantor. Borrower also agrees to make the books and records of the Project
available for inspection by Lender. Throughout the Loan Term, Borrower and each
Guarantor shall provide any additional financial information or verifications
reasonably requested by Lender.


 


Section 11.32  Use
of Proceeds.  Borrower will
apply all proceeds of the Loan advanced hereunder solely in accordance with the
provisions of this Agreement.


 


Section 11.33  USA
Patriot Act.  Neither
Borrower, nor any member of Borrower, nor any Guarantor are (or will be) a
Person with whom Lender is restricted from doing business with under
regulations of the OFAC of the Department of the Treasury of the United States
of America (including, those Persons named on OFAC’s
Specially Designated and Blocked Persons list) or under any statute, executive
order (including, the September 24,
2001 Executive Order Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to


 


54
















 


Commit, or Support
Terrorism), or other governmental action and is not and shall not engage in any dealings or
transactions or otherwise be associated with such Persons. In addition, Borrower
hereby agrees to provide the Lender with any additional information that the
Lender deems necessary from time to time in order to ensure compliance with all
applicable Laws concerning money laundering and similar activities.


 


Section 11.34  Homeowner’s
Association Dues. Borrower shall pay its portion of homeowner’s
association dues on a timely basis.


 


Section 11.35  Covenant
Regarding Remediation Plan.  Borrower shall promptly
comply with the terms and conditions of the Remediation Plan and shall meet all
deadlines set forth in the Remediation Plan. Failure to comply with the terms
and conditions of the Remediation Plan or failure to meet all deadlines set
forth in the Remediation Plan shall constitute an Event of Default. Borrower
shall cooperate (and will cause its agents and independent contractors to
cooperate) with Lender and its consultants in arranging the inspections of the
Project or any part thereof by Lender and/or its agents and representatives in
order to review Borrower’s progress with regards to the Remediation Plan. Such
inspections shall be for Lender’s benefit only and may not be relied upon by
Borrower or any other party. Borrower shall, upon request by Lender, provide
Lender promptly after receipt with copies of all written inspections, reports, test
results and other information received by Borrower or its agents, representatives,
employees and any other parties involved in the operation or maintenance of the
Project concerning the implementation of the Remediation Plan.


 


ARTICLE 12


 


CASUALTY


 


Section 12.1  Casualty.  Borrower shall give Lender
prompt written notice of the occurrence of any casualty affecting the entire
Project, or any portion thereof. All insurance proceeds on the Project and all
causes of action, claims, compensation, awards and recoveries for any damage to
any part of the Project or for any damage or injury to the Project, for any loss or diminution in value of the
same or any part thereof, are hereby assigned to and shall be paid to Lender. Lender
may participate in any suits or proceedings relating to any such proceeds, causes
of action, claims, compensation, awards or recoveries and Lender is hereby
authorized, in its own name or in Borrower’s name, to adjust any loss covered
by insurance claim or cause of action, and to
settle or compromise any claim or cause of action in connection therewith, and
Borrower shall from time to time deliver to Lender any instruments required to
permit such participation. Lender shall apply any sums received by it under
this Section 12.1 first to the payment of all of its out-of-pocket
costs and expenses (including, but not limited to, reasonable legal fees and
disbursements) incurred in obtaining those sums, and then, Lender may elect, in
Lender’s absolute discretion and without regard to the adequacy of Lender’s
security, apply the remainder of such sums
received pursuant to this Section 12.1 to the payment of the
Obligations in whatever order Lender directs in its sole and absolute
discretion.


 


Section 12.2  Pre-Condominium
Conversion.  (a) If the damage to
the Project (1) occurs prior to the conversion of the Project into a
condominium regime pursuant to the Declaration in accordance with all
applicable Laws, and (2) occurs prior to the closing of the sale


 


55

















 


of the first Condominium
Unit pursuant to a Valid Sale Contract in accordance with each of terms hereof,
including, without limitation, Article 9 hereof, and (3) the
cost and expenses to repair such damage to a condition at least equal to the
condition existing prior to the casualty causing the loss or damage, as
reasonably determined by Lender, is equal to or less than $2,000,000 in the
aggregate, and (4) if:


 


(i)            The insurance claim
for the damage is adjusted within ninety (90) days after the occurrence of such
damage; and


 


(ii)           No
Event of Default shall have occurred hereunder and be continuing; and


 


(iii)          the
Project can, in Lender’s reasonable judgment, with diligent restoration or
repair, be returned to a condition at least equal to the condition thereof that
existed prior to the casualty causing the loss or damage within nine (9) months
after the receipt of insurance proceeds by either Borrower or Lender and at
least nine (9) months prior to  the Maturity Date or the
current Extension; and


 


(iv)          all necessary
Governmental Approvals can be obtained to allow the rebuilding and reoccupancy
of the Project; and


 


(v)           there are sufficient
sums available (through insurance proceeds and contributions by Borrower, the
full amount of which shall, at Lender’s option, have been deposited with Lender
to be held by Lender in an interest-bearing account) for such restoration or
repair (including, without limitation, for any out-of-pocket costs and
reasonable expenses of Lender to be incurred in administering payments on
account of said restoration or repair) and for payment of all debt service on
the Loan to become due and payable during such restoration or repair, and


 


(vi)          Borrower shall have
delivered to Lender, at Borrower’s sole cost and expense, an appraisal report
in form and substance satisfactory to Lender appraising the value of the
Project as so restored or repaired to be not less than the appraised value of the
same considered by Lender in its determination to make the Loan; and


 


(vii)         the economic
feasibility of the Project after such restoration or repair will be such that
income from its operation is reasonably anticipated to be sufficient to pay
operating expenses of the same and the proportionate share of scheduled debt
service on the Loan in full; and


 


(viii)        Borrower so elects
to rebuild or restore by written notice delivered to Lender within sixty (60) days after the occurrence of the
casualty,


 


then Lender shall, solely
for the purposes of such restoration or repair, advance so much of the
insurance claim proceeds which have been received, and any funds deposited by
Borrower therefor, to Borrower for restoration and repair in the manner and
upon such terms and conditions as are acceptable to Lender in its reasonable
discretion in accordance with Lender’s standard practices regarding construction
advances, including, but not limited to, the prior approval by Lender of plans
and specifications, contractors and form of construction
contracts and the furnishing to Lender of permits, bonds, lien waivers, invoices,
receipts and affidavits


 


56

















 


from contractors and
subcontractors in form and substance satisfactory to Lender in its reasonable
discretion, with any remainder proportionately allocated for either return to
Borrower or for application to a prepayment of the principal of the Loan, as
the case may be. The determination of the portion of the remainder allocated
for refund to Borrower and the portion of the remainder allocated to prepayment
of the Loan shall be based upon the proportion of Borrower contributed funds
and insurance proceeds used in restoration and repair of the Project.


 


(b)           In all other cases,
namely, in the event that the damage, as reasonably determined by Lender, involves
a cost to repair which is greater than $2,000,000, or if Borrower does not
elect to restore or repair the Project pursuant to Section 12.2(a) above,
or if Borrower otherwise fails to meet the requirements of Section 12.2(a) above,
as applicable, then, in any of such events, Lender shall have the right to
elect, in Lender’s absolute discretion and without regard to the adequacy of
Lender’s security, to accelerate the Obligations and declare the Obligations (without
Prepayment Fee, as defined in the Note) to be immediately due and payable and
promptly apply such sums received pursuant to this Section 12.2 to
the payment of the Obligations (without Prepayment Fee, as defined in the Note)
in whatever order Lender directs in its absolute discretion, with any remainder
being paid to Borrower.


 


(c)           Any reduction in the Obligations
resulting from Lender’s application of any sums received by it hereunder shall
take effect only when Lender actually receives such sums and applies
such sums to the Obligations and, in any event, the unpaid portion of the
Obligations shall remain in full force and effect and Borrower shall not be
excused in the payment thereof. If Borrower has the right to, and Borrower
elects to, restore or repair the Project after the occurrence of a casualty as
provided above, Borrower shall promptly and diligently, at Borrower’s sole cost
and expense and regardless of whether the insurance proceeds shall be
sufficient for the purpose, restore, repair, replace and rebuild the Project as
nearly as possible to its value, condition and character immediately prior to such
casualty in accordance with the foregoing provisions and Borrower shall pay to
Lender all reasonable out-of-pocket costs and expenses of Lender incurred in administering
payments on account of said rebuilding, restoration or repair, provided that
Lender makes such proceeds or award available for such purpose. Borrower agrees
to execute and deliver from time to time such further instruments as may be
requested by Lender to confirm the foregoing assignment to Lender of any award,
damage, insurance proceeds, payment or other compensation. Lender is hereby
irrevocably constituted and appointed the attorney-in-fact of Borrower (which
power of attorney shall be irrevocable so long as any
indebtedness secured hereby is outstanding, shall be deemed coupled with an
interest, shall survive the voluntary or involuntary dissolution of Borrower
and shall not be affected by any disability or incapacity suffered by Borrower
subsequent to the date hereof), with full power of substitution, subject to the
terms of this Section, to collect and receive any such awards, damages, insurance
proceeds, payments or other compensation from the parties or authorities making
the same, to appear in any proceedings therefor and to give receipts therefor.


 


Section 12.3  Post
Condominium Conversion.


 


(a)           If the damage to the Project
(1) occurs after the conversion of the Project into a condominium regime
pursuant to the Declaration in accordance with all applicable Laws, and
(2) occurs after the closing of the sale of the first Condominium Unit
pursuant to a Valid Sale Contract in accordance with each of terms hereof, including,
without limitation, Article 9  hereof,


 


57

















 


then the Declaration shall govern the
disposition of any insurance proceeds and restoration obligations; provided, however,
Borrower hereby acknowledges that pursuant to the Assignment of Condominium
Documents, Borrower has assigned to Lender all rights it may have to any
insurance proceeds as the owner of any Condominium Units and has nominated and
appointed Lender to exercise all voting rights accruing to Borrower under the
Condominium Documents (as defined in the Assignment of Condominium Documents).


 


(b)           Any reduction in the Obligations
resulting from Lender’s application of any sums received by it hereunder shall
take effect only when Lender actually receives such sums and applies such sums
to the Obligations and, in any event, the unpaid portion of the Obligations
shall remain in full force and effect and Borrower shall not be excused in the
payment thereof.


 


ARTICLE 13


 


CONDEMNATION


 


Section 13.1  Condemnation.  In the event any of the
Project or any portion thereof is taken or damaged by eminent domain powers of
any Governmental Authority, the award shall be paid to Lender (and all awards
and proceeds on the Project and all causes of action, claims, compensation, awards
and recoveries for any such taking, or for any damage or injury to the Project
for any loss or diminution in value of the same or any part thereof, is hereby
assigned to Lender) and applied to the payment of the Obligations, after
deducting any reasonable costs incurred by Lender in connection therewith, in
whatever order Lender directs in its sole and absolute discretion, provided, however,
that in the event of total condemnation of the Project, no Prepayment Fee, as
defined in the Note, will be required.


 


ARTICLE 14


 


ASSIGNMENTS


 


Section 14.1 Prohibition of Assignments by Borrower
or of Interests in Borrower.


 


(a)           Borrower shall not assign or attempt
to assign its rights under this Agreement or under any other Loan Document, and,
except for the sale of Condominium Units in the Project contemplated by and in
accordance with the terms of this Agreement, Borrower will not suffer or permit
any of its interest or rights in the Project and the other Collateral to be
assigned, sold, pledged, encumbered, transferred, hypothecated or otherwise
disposed of until the provisions of this Agreement and the other Loan Documents
have been fully complied with and the Obligations have been repaid in full, except
for a Permitted Transfer.


 


(b)           Except for the assignment of all
membership interests in the Borrower to the Mezzanine Lender, none of Member, Guarantors
or any of the shareholders, partners or members of Member, shall sell, assign, transfer,
convey, pledge, encumber or otherwise hypothecate (collectively, “Transfer”)  any or all of its interest in Borrower, or Member, as the case may be, without the prior
written consent of Lender, except for a Permitted Transfer.


 


58

















 


Section 14.2 Successors and Assigns.  Subject to the foregoing
restrictions on transfer and assignment
contained in this Article 14, this Agreement shall inure to the
benefit of and shall be binding on the parties
hereto and their respective successors and assigns.


 


Section 14.3 Transfer, Assignment and/or
Participation by Lender. 
Lender may, at any time and from time to time, sell, transfer or assign
the Note, the Mortgage and the other Loan Documents, or grant participation
therein, or issue certificates or securities evidencing a beneficial interest
therein in a rated or unrated public offering or private placement, and Lender
may forward to any purchaser, transferee, assignee, service, participant, investor
or credit rating agency rating such securities (collectively, an  “Investor”) or prospective
Investor all documents and information in Lender’s possession with respect to
Borrower, the Project and the Loan Documents as such Investor or prospective
Investor may request. Upon any such sale, transfer or assignment, Lender shall
be automatically released from any liability hereunder, provided that such
assignee or transferee agrees to assume Lender’s obligations to fund the Loan.


 


ARTICLE 15


 


EVENTS OF DEFAULT


 


Section 15.1 Events of Default. The occurrence
of any one or more of the following shall constitute an “Event of Default,” as such term is used herein:


 


(a)           Borrower shall fail to pay when the
same shall be due and payable, any principal of the Loan, whether at the stated
date of maturity or any accelerated date of maturity or at any other date fixed
for payment;


 


(b)           Borrower shall fail to pay when the
same shall be due and payable, any interest on the Loan or any other sums due
hereunder or under any of the other Loan Documents, whether at the stated date
of maturity or  any accelerated date of maturity or
at any other date fixed for payment and such failure shall continue for a
period of five (5) days after notice;


 


(c)           Borrower shall fail to comply with any
of its covenants contained in Sections 11.2, 11.3, 11.4,
11.6, 11.7, 11.9, 11.12, 11.14, 11.15,
11.16, 11.17, 11.18, 11.19, 11.20, 11.22,  11.23, 11.24,
11.26,
11.27, 11.28, 11.29, 11.30,
11.31 hereof for five (5) days after written notice of such failure
has been given to the Borrower by Lender;


 


(d)           Borrower shall fail to comply with
any of its covenants contained in Sections  11.1, 11.8, 11.10,
11.13, 11.25 hereof for thirty (30) days after written notice of
such failure has been given to the Borrower by Lender;


 


(e)           Borrower shall fail to comply with
any of its covenants contained in Articles 12, 13 and 14 or any of the
comparable covenants contained in any of the other Loan Documents;


 


(f)            Borrower shall fail to
perform any other term, covenant or agreement contained herein or in any of the other Loan Documents
(except as specified elsewhere in this Article 15 or in the
specific sections dealing with such covenants in this Agreement; it being
understood that the cure periods or specific immediate Events of Default
provided in each such Section shall govern; for purposes of illustration
the failure of Borrower to meet any deadlines in Section 11.5


 


59

















 


shall be an immediate Event
of Default and this Section 15.l(f) shall not apply)
for thirty (30) days after
written notice of such failure has been given to the Borrower by Lender; provided,
however, that if such default is of a nature that it cannot be cured within
thirty (30) days and the
Borrower commences and diligently proceeds to cure such default, such cure
period shall be extended for such period of time as required to cure such
default but in no event more than thirty (30) additional
days;


 


(g)           Any
representation or warranty of Borrower, any of the Guarantors, or of Member in
this Agreement or any of the other Loan Documents or in any other document or
instrument delivered pursuant to or in connection with this Agreement shall
prove to have been false in any material respect upon the date when made or deemed
to have been made or repeated;


 


(h)           Borrower, Member or any of the
Guarantors shall fail to pay when due, or within any applicable period of grace,
any indebtedness in excess of $10,000, or fail to observe or perform any
material term, covenant or agreement contained in any agreement by which it or
he, as the case may be, is bound, evidencing or securing indebtedness in excess
of $10,000 for such period of time as would permit (assuming the giving of
appropriate notice if required) the holder or holders thereof or of any
obligations issued thereunder to accelerate the maturity thereof, and as to
which the holder or holders thereof have commenced legal action with respect
thereto; provided, however, that with respect to a Guarantor, the foregoing
shall not be an Event of Default hereunder if the legal action is the result of
a good faith dispute between any of the Guarantors and such Guarantor’s
creditor and if such legal action, if determined
adversely to such Guarantor, would not result in an adverse change in the
financial condition of such Guarantor from the financial condition of such
Guarantor as set forth in the financial statements with respect to Guarantors, as
previously approved by Lender;


 


(i)            Borrower, Member or any of the
Guarantors shall make a general assignment for the benefit of creditors, or
admit in writing its inability to pay or generally fail to pay its debts as
they mature or become due, or shall petition or apply for the appointment of a
trustee or other custodian, liquidator or receiver or of any substantial part
of their assets or shall commence any case or other proceeding under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution
or liquidation or similar Laws of any jurisdiction, now or hereafter in effect, or
shall take any action to authorize or in furtherance of any of the foregoing, or
if any such petition or application shall be filed or any such case of other
proceeding shall be commenced against Borrower, Member or any of the Guarantors,
or Borrower, Member or any of the Guarantors or their respective authorized
representative shall indicate its approval thereof, consent thereto or
acquiescence therein;


 


(j)            A decree or order
is entered appointing any such trustee, custodian, liquidator or receiver or
adjudicating Borrower, Member or any of the Guarantors bankrupt or insolvent, or
approving a petition in any such case or other proceeding; or a decree or order
for relief is entered in respect of Borrower, Member or any of the
Guarantors in an involuntary case under federal bankruptcy Laws as now or
hereafter constituted and such decree or order for relief entered in an
involuntary case under federal bankruptcy Laws remains undischarged for more
than sixty (60) days;


 


60

















 


(k)           There shall remain in force, undischarged,
unsatisfied and unstated, for more than sixty (60) days, whether or not
consecutive, any uninsured final judgment against Borrower, Member or any of
the Guarantors in the amount of $10,000 or that, with all other outstanding, uninsured,
final judgments undischarged against Borrower, Member or any of the Guarantors,
as the case may be, exceeds in the aggregate $10,000;


 


(l)            If any of the Loan Documents shall
be canceled, terminated, revoked or rescinded otherwise than in accordance with
the terms thereof or with the express prior written agreement, consent or
approval of Lender, or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall be
commenced by or on behalf of Borrower, Member or any of the Guarantors, or any
court or any other governmental or regulatory authority or agency of competent
jurisdiction shall make a determination that, or issue a judgment, order, decree
or ruling to the effect that, any one or more of the Loan Documents is illegal,
invalid or unenforceable in accordance with the terms thereof;


 


(m)          Borrower, Member or any of the
Guarantors shall be indicted for a federal crime, a punishment for which could
include the forfeiture of any assets of Borrower, Member or any of the
Guarantors;


 


(n)           Borrower shall be in default or in
breach of any term of any contract (after any requisite notice or cure periods
contained in such contract) and such default would have a materially adverse
effect on the use, occupancy, operation, maintenance or conversion to a
condominium regime of the Project for its intended purpose as described in this Agreement;


 


(o)           If Borrower shall commence
dissolution or reorganization or shall cease to maintain its existence as a
Delaware limited liability company, or if Member or any of the Guarantors shall
commence dissolution or reorganization or shall cease to maintain its existence
as a limited liability company;


 


(p)           If a default occurs under any of the other Loan Documents and
continues beyond the applicable grace period, if any, contained therein; or


 


(q)           A material adverse change shall occur in the financial condition
of either Borrower, Member, any of the Guarantors or the Project;


 


(r)            Either Guarantor shall create a
trust with any or all of such Guarantor’s assets without the prior written
consent of the Lender.


 


(s)           The death of any Guarantor unless
Lender is provided with a substitute guarantor within sixty (60) days of any such
Guarantor’s death acceptable to Lender in its sole
discretion which substitute guarantor shall have, at Lender sole election, either:
(i) assumed in a writing satisfactory to Lender the deceased Guarantor’s
obligations or (ii) executed a new guaranty.


 


(t)            Borrower shall, without the prior
written consent of Lender, enter into any contract for the sale of Condominium
Units which is not a Valid Sale Contract.


 


(u)           Borrower shall fail to satisfy the
Mass Closing Requirement and make the Mass Closing Principal Reduction as
provided in Section 9.3 (f)  hereof.


 


61

















 


	
  (v)

  	
   

  	
  The abandonment of the
  Project.

  
	
   

  	
   

  	
   

  
	
  (w)

  	
   

  	
  Borrower shall fail to pay
  its portion of the condominium homeowner’s association dues.

  
	
   

  	
   

  	
   

  
	
  (x)

  	
   

  	
  Borrower shall fail to
  make Tax Deposits as required in Section 10.1 hereof.

  
	
   

  	
   

  	
   

  
	
  (y)

  	
   

  	
  Borrower shall fail to
  make a Deficiency Deposit as required in Article 7 hereof.

  
	
   

  	
   

  	
   

  
	
  (z)

  	
   

  	
  Borrower shall fail to
  comply with the Remediation Plan as required in Section 11.35 hereof.

  



 


ARTICLE 16


 


LENDER’S REMEDIES IN EVENT OF
DEFAULT


 


Section 16.1 Remedies Conferred Upon Lender.  Upon the occurrence of any
Event of Default, Lender shall, in addition to all remedies conferred upon
Lender by law and by the terms of the Note, Mortgage and the other Loan
Documents, have the right but not the obligation to pursue any one or more of
the following remedies concurrently or successively, it being the intent hereof
that all such remedies shall be cumulative and that no such remedy shall be to
the exclusion of any other:


 


(a)           Take possession of and operate the
Project, collect all Rent and other revenues from the Project, whether or not
Lender shall take possession, make entry or engage in any other activity with
respect to the Project, and do any and every act which Borrower might do in its
own behalf, and, Borrower hereby irrevocably appoints and constitutes Lender
its lawful attorney-in-fact, with full power of substitution for the purposes
aforesaid, it being understood and agreed that the foregoing power of attorney
shall be a power coupled with an interest and cannot be revoked.


 


(b)           Withhold further
disbursement, if any, of the proceeds of the Loan;


 


(c)           Declare the Note to
be immediately due and payable;


 


(d)           Use and apply any monies
deposited by Borrower with Lender, regardless of  the purpose for which the
same was deposited, to cure any such Event of Default or to apply on account of
any Obligations which is due and owing to Lender;


 


(e)           Accrue and/or collect interest at the
Default Rate on the outstanding balance of the Loan and all amounts due or
payable under this Agreement or under the Loan Documents without the
responsibility to accelerate the Loan, such interest to accrue and be adjusted
in accordance with Section 3.5  hereof; and


 


(f)            Exercise or
pursue any other right or remedy permitted under this Agreement or any of the
other Loan Documents or conferred upon Lender by operation of law.


 


62

















 


Section 16.2 Waiver of Automatic Stay.  IN THE EVENT BORROWER OR ANY GUARANTOR SHALL
(I) FILE A PETITION WITH ANY COURT OF COMPETENT JURISDICTION OR BE THE
SUBJECT OF ANY PETITION UNDER THE BANKRUPTCY CODE, AS AMENDED (THE “CODE”), (II)
BE THE SUBJECT OF ANY ORDER FOR RELIEF ISSUED UNDER THE CODE, (III) FILE OR BE
THE SUBJECT OF ANY PETITION SEEKING ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR
FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR OTHER
RELIEF, (IV) HAVE SOUGHT OR CONSENTED TO OR ACQUIESCED IN THE APPOINTMENT
OF ANY TRUSTEE, RECEIVER, CONSERVATOR, OR LIQUIDATOR FOR ALL OR SUBSTANTIALLY
ALL OF ITS ASSETS, OR (V) BE THE SUBJECT OF ANY ORDER, JUDGMENT, OR DECREE
ENTERED BY ANY COURT OF COMPETENT JURISDICTION APPROVING A PETITION FILED
AGAINST BORROWER OR ANY GUARANTOR FOR ANY REORGANIZATION, ARRANGEMENT, COMPOSITION,
READJUSTMENT, LIQUIDATION, DISSOLUTION, OR SIMILAR RELIEF UNDER ANY PRESENT OR
FUTURE FEDERAL OR STATE ACT OR LAW RELATING TO BANKRUPTCY, INSOLVENCY, OR
RELIEF FOR BORROWER, THEN, LENDER SHALL THEREUPON BE ENTITLED TO OBTAIN AND
BORROWER AND GUARANTORS, AS THE CASE MAY BE, TO THE FULLEST EXTENT
PERMITTED BY LAW, IRREVOCABLY AND UNCONDITIONALLY CONSENT TO GRANT LENDER IMMEDIATE
RELIEF FROM ANY AUTOMATIC STAY IMPOSED BY 362 OF THE CODE, OR OTHERWISE, ON OR AGAINST THE EXERCISE OF THE
RIGHTS AND REMEDIES WHICH WOULD OTHERWISE BE AVAILABLE TO LENDER AS PROVIDED IN
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENTS AND AS OTHERWISE PROVIDED BY LAW, AND
BORROWER AND EACH GUARANTOR, AS THE CASE MAY BE, TO THE
EXTENT PERMITTED BY LAW, HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ITS
RIGHT TO OBJECT TO SUCH RELIEF.


 


Section 16.3 Non-Waiver of Remedies.  No waiver of any breach or
default hereunder shall constitute or be construed as a waiver by Lender of any
subsequent breach or default or of any breach or default of any
other provision of this Agreement.


 


Section 16.4 Limitation On Liability; Waiver Of
Punitive Damages. BORROWER AGREES THAT IN ANY JUDICIAL, MEDIATION
OR ARBITRATION PROCEEDING OR ANY CLAIM OR CONTROVERSY ARISING UNDER OR RELATING
TO THIS AGREEMENT, THE LOAN DOCUMENTS OR THE OBLIGATIONS EVIDENCED HEREBY OR
RELATED HERETO, IN NO EVENT SHALL BORROWER HAVE A REMEDY OF (1) INDIRECT, SPECIAL
OR CONSEQUENTIAL DAMAGES OR (2) PUNITIVE OR EXEMPLARY DAMAGES. BORROWER
HEREBY EXPRESSLY WAIVES ANY RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES IT MAY HAVE
OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH ANY DISPUTE, WHETHER
THE DISPUTE IS RESOLVED BY ARBITRATION, MEDIATION, JUDICIALLY OR OTHERWISE.


 


63
















 


ARTICLE 17


 


GENERAL PROVISIONS


 


Section 17.1 Captions.  The captions and headings of
various Articles and Sections 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.


 


Section 17.2 Entire Agreement.  This Agreement and the other
Loan Documents and instruments delivered in connection herewith, as may be
amended from time to time in writing, constitute the entire agreement of the
parties with respect to the Project and the Loan, and all prior discussions, negotiations
and document drafts are merged herein and therein. Neither Lender nor any
employee of Lender has made or is authorized to make any representation or
agreement upon which Borrower may rely unless such matter is made for the
benefit of Borrower and is in writing signed by an authorized officer of Lender. Borrower agrees that it has not
and will not rely on any custom or practice of Lender, or on any course of
dealing with Lender, in connection with the Loan unless such matters are set
forth in this Agreement or the other Loan Documents or in an instrument made
for the benefit of Borrower and in a writing signed by an authorized officer of
Lender.


 


Section 17.3 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, addressed as follows and shall be deemed to
have been properly given if hand delivered, if sent by reputable overnight
courier (effective the Business Day following delivery to such courier), or if
mailed (effective two business days after mailing or, in the event of a
national emergency affecting the U.S. Postal Service, when received) by United
States registered or certified mail, postage prepaid, return receipt requested:


 


If
to the Borrower:


 


BTS
Monterrey Holdings LLC


17080
Safety Street, Suite 109


Fort
Myers, Florida 33908


Attention:
Jeffrey J. Milton


Telecopy
Number: (239) 472-2640


Confirmation
Number: (239) 579-1126


 


with
a copy to:


 


Bingham
McCutchen LLP


3000
K Street, N.W., Suite 300


Washington,
D.C., 20007-5116


Attention:
Erik T. Hoffman, Esq.


Telecopy
Number: (202) 424-7645


Confirmation
Number: (202) 373-6134


 


If
to the Lender:


 


64

















 


CORUS
Bank, N.A.


3959
N. Lincoln Avenue 


Chicago,
Illinois 60613


Attention:
Chris Barkidjija, Vice President


Telecopy
Number: (773) 832-3540 


Confirmation
Number: (773) 832-3555


 


with
a copy to:


 


CORUS
Bank, N.A.


3959
N. Lincoln Avenue


Chicago,
Illinois 60613-2433


Attention:
Joel C. Solomon, Esq.,


General
Counsel - Commercial Lending


Telecopy
Number: (773) 832-3626


Confirmation
Number: (773) 832-3526


 


Refusal to accept delivery
of any notice shall be deemed to constitute receipt of such notice.


 


Section 17.4 Modification, Waiver.  No modification, waiver, amendment,
discharge or change of this Agreement is valid unless the same is in writing
and signed by the party against which the enforcement of such modification, waiver,
amendment, discharge or change is sought.


 


Section 17.5 Governing Law.  Borrower hereby acknowledges,
consents and agrees this Agreement and the rights of all parties mentioned
herein shall be governed by the Laws (as opposed to the conflict of Laws) of
the State of Illinois. Notwithstanding the foregoing, the parties agree that:


 


(a)           The procedures governing the
enforcement by Lender of the provisional remedies against the Project or the
Borrower, including by way of illustration but not limitation, actions for
replevin or claim and delivery of the Project or Collateral, for injunctive
relief or for the appointment of a receiver, or for the enforcement of the
power of sale with respect to the Project or the Collateral shall be governed
by the Laws of the State of Florida;


 


(b)           Lender shall comply with applicable
State of Florida Laws to the extent required in connection with the foreclosure
of the security interests and liens created thereby and the enforcement of
any power of sale, as the case may be; provided, however, that this
subparagraph shall in no event be construed to provide that the substantive
Laws of the State of Florida shall apply to this Agreement or any of the other
Loan Documents, all of which are and shall continue to be governed by the
substantive Laws of the State of Illinois. The parties further agree that
Lender may enforce its rights under this Agreement and the other Loan Documents,
including but not limited to, its rights to sue Borrower to collect any
outstanding Obligations or to obtain a judgment for any deficiency in
accordance with Illinois Laws following foreclosure or enforcement of any of
the liens and security interests against any of the Collateral and/or the
enforcement of the power of sale, as the case may be.


 


65

















 


(c)           The Illinois Credit Agreements Act, 815
ILCS 160/1 et seq.  shall apply to any
action or claim arising out of or relating to this Agreement.


 


Section 17.6 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 closing of the Loan, such
acquiescence shall not be deemed to constitute a waiver by Lender of such
requirements.


 


Section 17.7 Disclaimer bv Lender.  This Agreement is made for
the sole benefit of Borrower and Lender (and Lender’s successors and assigns
and participants, if any,) and no other person or persons shall have any
benefits, rights or remedies under or by reason of this Agreement. Lender shall
not be liable to any contractors, subcontractors, supplier, laborer, architect,
engineer, tenant, or other party for labor or services performed or materials
supplied in connection any work done on or about or in respect 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. Borrower is not and
shall not be an agent of Lender for any purposes. Except as expressly set forth
in the Loan Documents, Lender is not and shall not be an agent of Borrower for
any purposes. Lender, by making the Loan or any action taken pursuant to any of
the Loan Documents, shall not be deemed a partner or a joint venturer with
Borrower. Lender shall not be deemed to be in privity of contract with any
contractor or provider of services to the Project, nor shall any payment of
funds directly to a contractor or subcontractor or provider of services be
deemed to create any third-party beneficiary status or recognition of same by
Lender.


 


Section 17.8 Right of Lender to Make Advances to Cure
Borrower’s Defaults.  If Borrower shall
fail to perform in a timely fashion any of Borrower’s covenants, agreements or
obligations contained in this Agreement, the Note or the other Loan Documents, Lender
may upon prior notice to Borrower (but shall not be required to) perform any of
such covenants, agreements and obligations. Loan proceeds advanced by Lender in
the exercise of its reasonable judgment in accordance with this Agreement to
the extent that the same are needed to protect
its security for the Loan are deemed to be obligatory advances hereunder and
any amounts expended (whether by disbursement of undisbursed Loan proceeds or
otherwise) by Lender in so doing shall constitute additional indebtedness
evidenced and secured by the Mortgage and the other Loan Documents.


 


Section 17.9 Definitions Included in Amendment.  Definitions contained in this Agreement
which identify documents, including 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 the Lender. Reference to this Agreement contained in any of the
foregoing documents shall be deemed to include all amendments and supplements
to this Agreement.


 


Section 17.10 Time Is of the Essence.  Time is hereby declared to
be of the essence of this Agreement and of every part hereof.


 


66

















 


Section 17.11 Execution in Counterparts.  This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.


 


Section 17.12 Waiver of Jury Trial.  BORROWER AND LENDER EACH
HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR RELATING THERETO OR
ARISING FROM THE LENDING RELATIONSHIP WHICH IS THE SUBJECT OF THIS AGREEMENT. BORROWER
AND LENDER EACH ACKNOWLEDGE THAT THIS IS A WAIVER OF A LEGAL RIGHT AND
REPRESENT TO THE OTHER THAT THIS WAIVER IS MADE KNOWINGLY AND
VOLUNTARILY. BORROWER AND LENDER AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL
BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.


 


Section 17.13 Conflicts.  In the event of any
inconsistency between the terms of this Agreement and any of the other Loan
Documents (other than the Note), the terms of this Agreement shall control.


 


Section 17.14 Submission to Jurisdiction; Certain
Waivers.  Borrower and
each Guarantor irrevocably (a) submit to the non-exclusive personal
jurisdiction of any state or federal court in the State of Illinois in any suit,
action or other legal proceeding relating to this Agreement; (b) agree
that all claims in respect of any such suit, action or other legal proceeding
may be heard and determined in, and enforced in and by, any such court;
(c) waive any objection that they may now or hereafter have to venue in
any such court sitting in Cook County, Illinois or that such court sitting in
Cook County, Illinois is an inconvenient forum; (d) agree to service of
process in any such proceeding by registered or certified mail, postage prepaid,
or in any other manner permitted by law, to any then active agent for service
of process at any specified address or to Borrower at its address set forth
above or to such other address of which Lender shall have been notified in
writing (such service to be effective on the earlier of receipt thereof or, in
the case of service by mail, the fifth day after deposit of such service in the
mails as aforesaid or, in the event of a national emergency affecting the U.S. Postal
Service, when received), and hereby waive any claim of error arising out of
service of process by any method provided for herein or any claim that such
service was not effectively made; (e) agrees that the failure of their
agent to give any notice of any such service of process to them shall not
impair or affect the validity of such service or any judgment based thereon;
(f) to the extent that Borrower or any Guarantor has acquired, or
hereafter may acquire, any immunity from jurisdiction of any such court or from
legal process therein, waives, to the fullest extent permitted by applicable Laws,
such immunity; (g) to the fullest extent permitted by applicable Laws, in
connection with, or with respect to, any suit, action or other legal proceeding
relating to this Agreement: (i) WAIVE any claim that
they are immune from any legal process (whether through service or notice, attachment
prior to judgment, attachment in aid of execution, execution or otherwise) with
respect to it or any of their property, (ii) WAIVE any claim that they are not personally subject to
the jurisdiction of any such court, and (iii) WAIVE any right to assert any counterclaim therein; and
(h) agrees that Lender shall have the right to bring any legal proceedings
(including a proceeding for enforcement of a judgment entered by any of the
aforementioned courts) against Borrower or either Guarantor in any other court
or jurisdiction in accordance with applicable Laws.


 


67

















 


Notwithstanding the
foregoing, nothing in this Section shall affect the right of Lender to
bring any action or proceeding relating to this Agreement in the courts of any
jurisdiction or the right, in connection with any legal action or proceeding
whatsoever, to serve legal process in any other manner permitted by law.


 


Section 17.15 Set-Offs.  (i) From time to time in
connection with the payment of interest due and payable under the Note, and
(ii) in all other instances, after the occurrence and during the
continuance of an Event of Default, Borrower hereby irrevocably authorizes and
directs Lender, to charge Borrower’s accounts and deposits, if any, with Lender
(general or special, time or demand, provisional or final), other than tenant
security accounts and earnest money, and to pay over to Lender an amount equal
to any amounts from time to time due and payable to the Lender hereunder, under
the Note or under any other Loan Document. Borrower hereby grants to the Lender
a security interest in and to all such accounts and deposits, if any, maintained
by the Borrower with Lender.


 


Section 17.16 Advertising.  Borrower hereby agrees that
Lender shall have the right, following the Closing Date, to publicly announce
in print or otherwise that Lender has made and closed the Loan to Borrower. In
connection therewith, Lender shall have the right to describe the Loan, including
the Borrower’s name, the type of the Loan (i.e., construction, bridge, mini-perm,
etc.), and the Loan amount; and identify the Project and the location thereof, by
way of description and/or
photographs of the Project. Borrower shall cooperate with Lender in the
erection of appropriate signage at the Project advertising the financing of the
Project by Lender.


 


Section 17.17 Non-recourse.  Notwithstanding any
provision of this Agreement, the Note and the other Loan Documents to the
contrary, other than with respect to Borrower, its successors, assigns and all
of Borrower’s assets as a sole purpose entity, the Loan shall be non-recourse
with respect to each Guarantor, any direct and indirect constituent members, partners
and shareholders of Borrower, and any of their respective officers, directors
and principals. The foregoing shall not, and shall not be construed to, relieve,
reduce, discharge or exculpate any Guarantor from his obligations under the
Completion Guaranty, the Carveout Guaranty or the Environmental Indemnification
Agreement, all of which shall be fully recourse, jointly and severally, to each
such Guarantor, as provided in such Completion Guaranty, such Carveout Guaranty
and such Environmental Remediation and Indemnification Agreement, as the case
may be.


 


 


SIGNATURE BLOCKS ON FOLLOWING PAGE


 


68
















 


Borrower and Lender have executed this Agreement as of the day and year
first set forth above.


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BTS
  MONTERREY HOLDINGS LLC, a Delaware 

  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BTS Monterrey LLC, a
  Delaware limited liability

  
	
   

  	
   

  	
  company, its Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BTS Development Monterrey
  LLC, a

  Delaware limited liability company, its

  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
  /s/ Jeffrey J. Milton

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Jeffrey J. Milton

  
	
   

  	
   

  	
   

  	
  Title:

  	
  Authorised Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  CORUS
  BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:  John Barkidjija

  
	
   

  	
   

  	
  Title:  Senior Vice President

  
						



 


70

















 


Borrower and Lender have executed this Agreement as of the day and year
first set forth above.


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  BTS
  MONTERREY HOLDINGS LLC, a Delaware 

  limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  BTS Monterrey LLC, a
  Delaware limited liability

  
	
   

  	
   

  	
  company, its Sole Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  BTS Development Monterrey
  LLC, a

  Delaware limited liability company, its

  Manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
  Name:

  	
   

  
	
   

  	
   

  	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  CORUS
  BANK, N.A.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John Barkidjija

  
	
   

  	
   

  	
  Name:  John Barkidjija

  
	
   

  	
   

  	
  Title:  Senior Vice President

  
						



 


70

















 


Each
Guarantor executes this Agreement for the sole purpose of acknowledging:
(a) that such Guarantor has reviewed the foregoing Loan Agreement and the
various covenants and conditions pertaining to the Guarantors, and (b) that
the representations and warranties made about or in respect of each Guarantor
and the various facts and circumstances relating to Guarantors are true and
accurate.


 


 


	
   

  	
   

  	
  /s/ John
  Naumann

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  JOHN
  NAUMANN, a Florida resident

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  JEFFREY
  J. MILTON, a Maryland resident

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  FREDERICK
  WILLIAM CAPLE, a Florida 

  resident

  



 


71

















 


Each
Guarantor executes this Agreement for the sole purpose of acknowledging:
(a) that such Guarantor has reviewed the foregoing Loan Agreement and the
various covenants and conditions pertaining to the Guarantors, and (b) that
the representations and warranties made about or in respect of each Guarantor
and the various facts and circumstances relating to Guarantors are true and
accurate.


 


 


	
   

  	
   

  	
   

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  JOHN
  NAUMANN, a Florida resident

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Jeffrey
  J. Milton

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  JEFFREY
  J. MILTON, a Maryland resident

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  FREDERICK
  WILLIAM CAPLE, a Florida 

  resident

  



 


71

















 


Each
Guarantor executes this Agreement for the sole purpose of acknowledging:
(a) that such Guarantor has reviewed the foregoing Loan Agreement and the
various covenants and conditions pertaining to the Guarantors, and (b) that
the representations and warranties made about or in respect of each Guarantor
and the various facts and circumstances relating to Guarantors are true and
accurate.


 


 


	
   

  	
   

  	
   

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  JOHN
  NAUMANN, a Florida resident

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  JEFFREY
  J. MILTON, a Maryland resident

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/ Frederick William Caple

  	
  (L.S.)

  	
   

  
	
   

  	
   

  	
  FREDERICK
  WILLIAM CAPLE, a Florida 

  resident

  



 


71