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6.5 Waiver of Conditions. Without at any time waiving any of the Lender’s rights under this Agreement or any other Loan Document, the Lender shall always have the right to make an Advance hereunder without satisfaction of each and every, or any, condition to an Advance under this Agreement or the other Loan Documents. The making of an Advance by the Lender hereunder despite the failure of any or all such conditions shall not be deemed a waiver or a commitment by the Lender to waive any such condition at any future time or for any future Advance.
6.6 Interest and Carry Reserve. In the event that (a) available Loan proceeds in the Interest and Carry Holdback are equal to or less than $50,000 and (b) the Property has not achieved Stabilization, then Borrower shall, within five (5) days of written notice thereof, deposit, or cause to be deposited, into an account with Lender that is controlled by Lender (the “Debt Service and Carry Costs Account”), an amount that, when added to the amount remaining in the Interest and Carry Holdback, equals $100,000 (the “Debt Service and Carry Costs Escrow”) to pay for (i) debt service payments on the Loan that are due and payable (the “Debt Service Payments”) and (ii) all costs of owning, operating, leasing, maintaining, and repairing the Property, other than payment of the Debt Service Payments.
Borrower may request that Lender disburse funds from the Debt Service and Carry Costs Escrow (A) for payments of the Operating Expenses upon satisfaction of the requirements set forth in Section 6.2.1 and Section 6.2.2(a) above and (B) for Debt Service Payments upon written request therefor. The Borrower must draw down on all amounts in the Debt Service and Carry Costs Escrow prior to requesting any Additional Advances of the Loan from the Interest and Carry Holdback for such purposes. If, at any point after the Debt Service and Carry Costs Account is established but prior to Stabilization, the aggregate amount of (y) available Loan proceeds in the Interest and Carry Holdback plus (z) amounts in the Debt Service and Carry Costs Escrow is less than $50,000, then Borrower shall, within five (5) days of written notice thereof, deposit, or cause to be deposited, into the Debt Service and Carry Costs Account an amount that, when added to the amounts set forth in subsections (y) and (z) above, equals $50,000.
7. CONDITIONS PRECEDENT. It shall be a condition precedent to Lender’s obligation to close the Loan and fund the Initial Advance and each Additional Advance that each of the following conditions precedent be satisfied in full (as determined by Lender in its discretion which discretion shall be exercised in good faith) unless specifically waived in writing by Lender at or prior to closing and funding of the Loan:
7.1 Condominium Documents. Lender shall have received certified copies of the Condominium Documents, together with a certificate pursuant to the Condominium Law that all common area expenses have been paid with respect to such Condominium Unit.
7.2 Satisfactory Loan Documents. Each of the Loan Documents shall be satisfactory in form, content and manner of execution and delivery to Lender and its counsel.
members, (q) has established and maintains an office through which it conducts its business separate and apart from that of any of its Affiliates and has allocated and will allocate fairly and reasonably shared expenses, including, without limitation, shared office space and uses separate stationary, invoices and checks, (r) has not and will not pledge its assets for the benefit of any other person or entity in violation of the terms of this Agreement, (s) has held and identified itself and will hold itself out and identify itself as a separate and distinct entity under its own name and not as a division or part of any other person or entity, (t) has not made and will not make loans to any person or entity, (u) has not and will not identify its members or any Affiliates of any of them as a division or part of it, (v) has not entered and will not enter into or be a party to, any transaction with its members or its Affiliates except in the ordinary course of its business and on terms which are intrinsically fair and are not less favorable to it than would be obtained in a comparable arms-length transaction with an unrelated third party, and (w) has maintained and will maintain adequate capital in light of its contemplated business operation (provided that the foregoing shall not require any partners, members or other owners of Borrower to make any capital contributions to Borrower).
SNDA Agreement as defined in Section 9.16.
Stabilization shall occur when the Property achieves a Pro Forma DSCR of at least 1.25 to 1.0 based on Borrower’s reasonable projections and subject to the reasonable review of Lender.
Survey as defined in Section 1.3.
Surveyor as defined in Section 1.3.
Taxes. All present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any governmental authority, including any interest, additions to tax or penalties applicable thereto.
Term as defined in Section 2.2.
UCC means the Uniform Commercial Code in effect in the Commonwealth of Massachusetts.
Updated Appraisal as defined in Section 9.17.2.
Value of the Property as defined in Section 9.17.1.
Operating Expenses shall mean expenditures of all kinds made by Borrower for the immediately preceding twelve (12) month period with respect to the operation of the Property in the normal course of business, including, but not limited to, expenditures for Taxes, insurance, repairs, non-capital replacements, maintenance, management fees, salaries, wages and utility costs, but expressly excluding: (a) any interest expense, (b) amortization, and (c) depreciation, as determined by the Lender.
Original Appraisal as defined in Section 9.17.1.
Participant as defined in Section 15.15.
Payment Period Date shall mean the date designated in the Lien Waiver through which the General Contractor waives any and all lien rights for labor and materials, or rental equipment, appliances or tools, performed or furnished.
Permitted Additional Debt as defined in Section 9.6.4.
Permitted Title Exceptions shall mean the encumbrances listed on Schedule B-II to Lender’s title insurance policy delivered in connection with the closing of the Loan, together with any other exceptions to title approved by Lender in its reasonable discretion or being contested as permitted by the terms of the Loan Documents.
Permitted Transactions as defined in Section 9.6.2.
Permitted Transfers as defined in Section 9.6.3.
Pro Forma DSCR shall mean Pro Forma Net Operating Income from the Property divided by Debt Service on the Loan.
Pro Forma Net Operating Income shall mean the gross projected rental income from Approved Leases on the Property pursuant to which the tenants are in occupancy and paying rent plus any expense reimbursement income, for the twelve (12) month period immediately following such calculation date, less projected Operating Expenses for such period.
Project as defined in Section 1.4.
Project Budget as defined in Section 1.4.
6. LOAN DISBURSEMENTS.
6.1 Initial Advance. Lender shall make an initial advance of Loan proceeds not to exceed $55,000,000.00 (the “Initial Advance”) upon satisfaction of the terms and conditions hereof to fund the acquisition by the Borrower of the Property, and closing costs with respect to the Loan. An additional sum in the aggregate of $51,000,000.00 shall be retained by the Lender and shall be available to be requisitioned by the Borrower during the first twenty-four (24) months of the Term as costs are incurred and work completed of (i) up to $40,000,000.00 for capital expenditures, and (ii) up to $7,500,000.00 to pay interest on the Loan and Operating Expenses for the Property (the “Interest and Carry Holdback”). Any advance of proceeds of the Loan made hereunder after the Initial Advance may be referred to as an “Advance” or “Additional Advance”, and with the Initial Advance, collectively, a “Loan Advance”.
6.2 Additional Advances. In addition to the foregoing, a sum not to exceed the aggregate of up to $3,500,000.00 shall be made available to be requisitioned by Borrower on a monthly basis during the first thirty-six (36) months of the Term to fund tenant improvements and leasing commissions as the Property is leased under Approved Leases, in accordance with a budget approved by Lender in its commercially reasonable discretion, such approval not to be unreasonably withheld, conditioned or delayed. Lender shall not be required to make any Additional Advances hereunder for capital expenditures or for interest on the Loan or Operating Expenses for the Property later than twenty-four (24) months from the date hereof, and for tenant improvements or leasing commissions later than thirty-six (36) months from the date hereof.
6.2.1 Approved Construction Documents. With respect to Advances for capital improvements and tenant improvements, Borrower shall provide to Lender for review and approval those items reasonably requested by Lender pertaining to the work performed or to be performed, including, without limitation: (i) the Project Budget, for work to be performed which shall be reasonably satisfactory to Lender, said budget not to be materially amended without Lender’s consent, which consent shall not be unreasonably withheld, conditioned or delayed; (ii) if generated, plans and specifications related thereto; (iii) any applicable contracts which may include any applicable construction, architectural, or engineering services to be performed; (iv) if applicable, copies of all issued licenses and permits, including building permits (the foregoing items in clauses (i), (ii), (iii) and (iv), collectively, the “Approved Construction Documents”); and (v) in connection with the first requisition for tenant improvements and leasing commissions, a copy of the applicable Approved Lease signed by all parties thereto and invoices for any leasing commissions for which Advances are requested.
LOAN AGREEMENT
This Loan Agreement (the “Loan Agreement” or “Agreement”) is made and entered into as of the ___ day of June, 20__, by and between XYZ, LLC, a Massachusetts limited liability company (the “Borrower”, which term as used herein shall also include, wherever the context permits, its successors and assigns), having an address at ____________________, ___________________, __________________, ______ and ABC SAVINGS BANK, a Massachusetts chartered bank (the “Lender”, which term as used herein shall also include, wherever the context permits, its successors and assigns) having an address at ____________________, ___________________, __________________, _____.
WITNESSETH:
1. BACKGROUND.
1.1 Defined Terms. Capitalized terms used in this Agreement are defined either in Exhibit A, or in specific sections of this Agreement, or in another Loan Document, as referenced in Exhibit A.
1.2 Borrower. Borrower is a limited liability company organized under the laws of the Commonwealth of Massachusetts.
1.3 Land and Improvements; Property. Borrower is the owner of a fee simple interest in the real property known as Unit 2 (together with the undivided percentage interest appurtenant to such Unit 2 in the common areas and facilities of the Condominium, the “Condominium Unit”) of the LMN Condominium (the “Condominium”), established under Massachusetts General Laws Chapter 183A pursuant to (i) a Master Deed dated July 12, 1954, recorded with the Suffolk County Registry of Deeds (the “Registry”) in Book 0001, Page 001, as amended and restated by that certain Amended and Restated Master Deed dated December 30, 1964, recorded with the Registry in Book 0002, Page 001 (as the same has been and may be further amended, restated or modified from time to time, the “Master Deed”), and (ii) a Declaration of Trust of the LMN Condominium Trust dated as of January 15, 1975 and recorded with the Registry in Book 0003 at Page 001 (as the same has been and may be further amended of record from time to time, the “Condominium Trust”, and together with the Master Deed, individually and collectively, the “Condominium Documents”), having an address of 1 Maple Street, Anywhere, Suffolk County, Massachusetts, as more fully described on Exhibit A attached to the Mortgage (as defined below) and also shown on a Plan entitled “ALTA/NSPS Land Title Survey” dated May 5, 2002 (hereinafter, the “Survey”) prepared by Best Surveyors (hereinafter, the “Surveyor”), together with the buildings and improvements now or hereafter constructed thereon (collectively, the “Improvements”). The Condominium Unit and the Improvements, together with all other property and interests encumbered by the Mortgage, are referred to together as the “Property.”
1.4 Use of Loan Proceeds. Borrower has applied to Lender for a loan of up to $106,000,000.00 (“Loan”), the proceeds of which are to be used by Borrower to assist in financing Borrower’s acquisition of the Property, and to fund certain costs to be incurred by Borrower for capital improvements, interest and carry, and tenant improvements and leasing commissions with respect to the Property (collectively, the “Project”) in accordance with a budget approved by Lender (the “Project Budget”).
6.2.2 Draw Requests. Loan Advances for capital improvements to the Property for work completed shall be accompanied by such paid invoices and receipts, canceled checks, lien waivers (if applicable) and other supporting materials as the Lender shall reasonably request in writing. Loan Advances for tenant improvements and leasing commissions for Approved Leases shall be made in writing to Lender (a “Draw Request”) in a requisition form satisfactory to the Lender and accompanied by Approved Construction Documents for work to be performed, lien waivers (if applicable) and other supporting materials as the Lender shall reasonably request in writing, or by paid invoices and receipts and canceled checks for costs incurred. A Draw Request or other request for an Additional Advance shall be made not more frequently than once a month, and Lender shall use commercially reasonable efforts to act upon a Draw Request or such other request within ten (10) days (provided Borrower grants the Lender timely access to the Property for inspection purposes), following Lender’s receipt of such written request, accompanied by invoices and other materials reasonably requested by Lender with respect to the items to be funded. Lender shall either (i) fund (which may include, without limitation, funding all or a portion of the requested Advance, or specifying the basis for not funding all or a portion of any Advance) or (ii) request in writing additional information and/or supporting documentation, or (iii) notify Borrower in writing of Lender’s refusal to fund and the reasons therefor. Each Advance shall be accompanied by a title insurance endorsement as required pursuant to Section 7.7 below. Notwithstanding any provision herein to the contrary, Lender shall not be obligated to make any Advance which could, in Lender’s sole discretion, cause the Loan to be classified as an HVCRE exposure.
6.2.2(a) Advances for Operating Expenses. In connection with Loan Advances for interest payments and/or Operating Expenses (which shall be submitted not less than ten (10) days prior to the date on which Borrower desires such Advance), Borrower shall submit to Lender a Draw Request (together with copies of any invoices and receipts and other supporting materials as the Lender shall reasonably request) which shall specify the aggregate amount to be disbursed. Each Draw Request for interest payments and/or Operating Expenses shall be certified by Borrower, and Borrower’s submission of a Draw Request shall constitute Borrower’s representation and warranty to the Lender that, (a) each of the representations and warranties of Borrower and Guarantor contained in this Agreement and the other Loan Documents are true in all material respects as of the date of submission (except as otherwise set forth in the Draw Request), and (b) as of the date of submission of the Draw Request, no Event of Default has occurred nor has there occurred any event which, with the passage of time, the giving of notice, or both, would constitute an Event of Default.
Approved Construction Documents as defined in Section 6.2.1.
Approved Lease as defined in Section 9.15.2.
Authorized Representatives as defined in Section 4 and listed on Exhibit C.
Beneficial Ownership Certification means a certification regarding beneficial ownership as required by the Beneficial Ownership Regulation.
Beneficial Ownership Regulation means 31 C.F.R. §1010.230.
Borrower as defined in the Preamble.
Business Day shall mean: any day of the year on which offices of the Lender are not required or authorized by law to be closed for business in the Commonwealth of Massachusetts. If any day on which a payment is due or a time period hereunder expires is not a Business Day, then the payment shall be due or the applicable time period shall expire on the next day following which is a Business Day. Further, if there is no corresponding day for a payment in the given calendar month (i.e., there is no “February 30th”), the payment shall be due on the last Business Day of the calendar month.
Casualty as defined in Section 14.1.
Collateral Assignment of Contracts as defined in Section 3.1.3.
Collateral Assignment of Leases and Rents as defined in Section 3.1.2.
Condominium as defined in Section 1.3.
Condominium Law means Section 6(d) of Massachusetts General Laws Chapter 183A.
Condominium Trust as defined in Section 1.3.
Condominium Unit as defined in Section 1.3.
Condominium Unit Charges as defined in Section 9.23(c).
Construction Consultant as defined in Section 5.1.2.
Cost to Repair as defined in Section 14.4.
1.5 Guaranty. As an inducement to Lender to make the Loan, LMN Properties, Inc., a Delaware corporation (the “Guarantor”) shall guaranty certain repayment and limited recourse obligations in connection with the Loan, to the extent specified in the instrument of Guaranty.
1.6 Loan. Subject to all of the terms, conditions and provisions of this Agreement, and of the agreements and instruments referred to herein, Lender agrees to make the Loan and Borrower agrees to accept and repay the Loan.
2. LOAN PROVISIONS.
2.1 Amount of Loan. The amount of the Loan shall be up to the principal obligation of One Hundred Six Million and No/100 Dollars ($106,000,000.00).
2.2 Term of Loan; Extension Rights. The Loan shall be for a term (the “Term”) commencing on the date hereof and ending on June 30, 2051 (the “Maturity Date”) as provided in the Note. There are no rights of extension on the Loan.
2.3 Interest Rate and Payment Terms. The Loan shall be payable as to interest and principal in accordance with the provisions of the Note and this Agreement. The Note also provides for interest at a Default Rate, Late Charges and prepayment rights and fees.
2.4 Loan Fees. Borrower shall pay a loan fee in the amount of $180,000.00, which shall be due and payable at the closing of the Loan.
2.5 Acceleration. The Loan may be accelerated, at the option of Lender or automatically as set forth in Section 11.3 of this Agreement, at any time that an Event of Default continues beyond applicable cure periods. Upon such acceleration, all principal, accrued interest and costs and expenses and any applicable breakage costs and prepayment fees shall be due and payable together with interest on such principal at the Default Rate in the Note if then payable.
3. SECURITY FOR THE LOAN; LOAN AND SECURITY DOCUMENTS.
3.1 Security. The Loan, together with interest thereon and all other charges and amounts payable by, and all other obligations of, Borrower to Lender, with respect to the Property, whenever incurred, direct or indirect, absolute or contingent as set forth in the Loan Documents (“Obligations”) shall be secured by the following “Security” which Borrower and Guarantor, as applicable, agree to provide and maintain.
3.1.1 Mortgage and Security Agreement. A first priority Mortgage and Security Agreement (as may be amended, restated, replaced, modified, consolidated, increased, supplemented, renewed or extended from time to time, the “Mortgage”) on (i) the Property, (ii) the fixtures, equipment, and other assets (including, without limitation, contracts, contract rights, accounts, Licenses and Permits and general intangibles), thereon, including all after-acquired property, owned by Borrower or in which Borrower has or obtains an ownership interest located at the Property; (iii) all insurance proceeds and other proceeds therefrom, and (iv) all other assets of Borrower whether now owned or hereafter acquired and utilized solely with respect to or located at the Property.
3.1.2 Collateral Assignment of Leases and Rents. A first priority Collateral Assignment of Leases and Rents (as may be amended, restated, replaced, modified, consolidated, increased, supplemented, renewed or extended from time to time, the “Collateral Assignment of Leases and Rents”) with respect to all Leases of the Property and all income and profits to be derived from the operation and leasing of the Property.
3.1.3 Collateral Assignment of Contracts. A first priority Collateral Assignment and Security Agreement In Respect of Contracts, Licenses and Permits (as may be amended, restated, replaced, modified, consolidated, increased, supplemented, renewed or extended from time to time, the “Collateral Assignment of Contracts”) with respect to all contracts, Licenses and Permits, agreements and warranties now owned or hereafter acquired by Borrower and related to the Property to which Borrower is a party.
3.1.4 Guaranty. The Guaranty (as may be amended, restated, replaced, modified, consolidated, increased, supplemented, renewed or extended from time to time, the “Guaranty”) to be executed by Guarantor in favor of the Lender.
3.1.5 Environmental Indemnity Agreement. An Environmental Indemnity with respect to environmental matters (as may be amended, restated, replaced, modified, consolidated, increased, supplemented, renewed or extended from time to time, the “Environmental Indemnity”) from Borrower and Guarantor.
3.1.6 Collateral Assignment of Management Contract. A Collateral Assignment of Management Agreement (as may be amended, restated, replaced, modified, consolidated, increased, supplemented, renewed or extended from time to time, the “Management Assignment”) to be entered into with [______________________] for the Property.
3.2 Loan Documents and Security Documents. The Loan shall be made, evidenced, administered, secured and governed by all of the terms, conditions and provisions of the “Loan Documents”, consisting of: (i) this Loan Agreement; (ii) the $106,000,000.00 Commercial Mortgage Note (as may be amended, restated, replaced, modified, consolidated, increased, supplemented, renewed or extended from time to time, the “Note”); (iii) the Mortgage (and related UCC financing statements); (iv) the Collateral Assignment of Leases and Rents; (v) the Collateral Assignment of Contracts; (vi) the Guaranty from Guarantor; (vii) the Environmental Indemnity from Borrower and Guarantor; (viii) the Management Assignment; and (ix) any other documents, instruments, or agreements executed to further evidence or secure the Loan.
Each of the Loan Documents is dated of even date herewith. The Mortgage, Collateral Assignment of Leases and Rents, Collateral Assignment of Contracts, Environmental Indemnity, and Management Assignment are sometimes collectively referred to as the “Security Documents”.
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