Department of Finance city of chicago
.2021
Anna M. Valencia Office of the City Clerk 121 North LaSalle Street Room 107
Chicago, Illinois 60602
RE: Multi-Family Housing Revenue Note in an aggregate principal amount not to exceed $12,000,000, for the Paseo Boricua Project, Series 2021.
Dear Ms. Valencia:
Attached is the Funding Loan Notification which is required to be filed with your office pursuant to Section 6 of the Original Ordinance authorizing the issuance of the Multi-Family Housing Revenue Note, which was passed by the City Council on June 12, 2019. On December 16, 2020, the Original Ordinance was amended authorizing the issuance of the Multi-Family Housing Revenue Note in an aggregate principal amount not to exceed $12,000,000, Series 2021, for the Paseo Boricua Project.
Please direct this filing to the City Council.
Very Truly Yours,
Jennie Huang Bennett Chief Financial Officer
1.21. NORTH LASALLE STREET. SUITE 700, CHICAGO, ILLINOIS 60602
Funding Loan Notification of
$8,100,000 City of Chicago
Multi-Family Housing Revenue Note (Paseo Boricua Project), Series 2021
To: The City Council of the City of Chicago
Please be advised that responsive to authority contained in the Ordinance adopted by the City Council (the "Cily Council") of the City of Chicago (the "Cily") on June 12, 2019. as amended by an Ordinance adopted on December 16, 2020 (as so amended, the "Ordinance"). providing for the execution and delivery of the Funding Loan Agreement (as defined below) and the sale of the $8,100,000 principal amount: Multi-Family Housing Revenue Note (Paseo Boricua Project), Series 2021 (the "Note"), the Funding Loan Agreement dated as of April 1, 2021 (the "Funding Loan Agreement"), providing for the making of a loan (the "Funding Loan'') to the City by .1.P.Morgan Chase Bank. N.A., a national banking association (the "Funding Lender"):, the proceeds of which will be loaned (the ''Borrower Loan"') by the City to Paseo Boricua Arts. LLC, an Illinois limited liability corporation (the "Borrower "), was entered into by me, as the Chief Financial Officer, on behalf of the City with and to the Funding Lender. Capitalized terms defined in the Ordinance are used with the same meanings herein.
The Ordinance provided that the Notes may be incurred in such aggregate principal amount not to exceed $12,000,000, the maximum term of the Funding Loan shall not exceed twenty and one-half (20.5) years from the date of execution and delivery of the Note, which shall bear interest at a rate or rates equal to the rate of interest on the Borrower Loan (as provided in the Borrower Loan Agreement by and between the City and the Borrower dated as of April 1. 2021 (the "Borrower Loan Agreement")), which shall not exceed the lesser of 10% or the maximum rate ol" interest allowable under slate law, shall be payable at the place and on the payment dates as set forth in the Funding Loan Agreement and Note and containing prepayment provisions as set forth in Appendix A. The aggregate costs of origination of the Funding Loan paid from the proceeds of the Funding Loan shall not exceed one and one half percent (1.5%) of the aggregate principal amount of the Note. The compensation (including all fees) being paid to the Funding Lender in connection with the incurrence of ihe Note is $73,250.
Attached hereto as Exhibits A, B, C, D and F respectively, are executed copies of the Funding Loan Agreement, the Note, the Borrower Loan Agreement, the Borrower Note (as defined in the Borrower Loan Agreement), and the Land Use Restriction Agreement by and between the City and ihe Borrower dated as of April 1, 2021.
Chicago City Clerk-Council Bit1,
2021MAY5am9:
Respectfully submitted this 27th day of April, 2021.
Chief Financial Officer
[Signature page to Funding Loan Notification]
Acknowledgement of Filing
The Funding Loan Notification of the $8,100,000 principal amount Multi-Family Housing Revenue Note (Paseo Boricua Project), Series 2021, vya$ filed in the office of the City Clerk of the City of Chicago, this 27th day of April. 2021.
By:.
Andrea M. Valencia City Clerk
[Seal
Chicago City Clerk -Council Biv.
2021 MfiV 5 am9:45
Appe ndix a
Terms of Note
Re: $8,100,000 principal amount City of Chicago Multi-Family Mousing Revenue Note (Paseo Boricua Project), Series 2021
The Note is dated April 29, 2021, matures on October 29. 2041, is in the principal amount of $8,100,000, and is payable on and in such places and in such manner, is subject to prepayment, and bears interest as described in the Funding Loan Agreement.
Exhibit A Funding Loan Agreement
FUNDING LOAN AGREEMENT Between
JPMORGAN CHASE BANK, N. A., As Funding Lender and
CITY OF CHICAGO, As Governmental Lender, Dated as of: April 1,2021
TABLE OF CONTENTS
ARTICLE I DEFINITIONS: PRINCIPLES OF CONSTRUCTION|910|Section LL Definitions|910|Section 1.2. Effect of Fleadings and Table of Contents 1.3
Section 1.3. Date of Funding Loan Agreement 13
Section 1.4. Designation of Time for Performance 13
Section 1.5. Interpretation 13
ARTICLE Ii TERMS; GOVERNMEN TAL LENDER NOTE 13
Section 2.1. Terms 13
Section 2.2. Form of Governmental Lender Note 15
Section 2.3. Execution and Delivery of Governmental Lender Note 15
Section 2.4. Required Transferee Representations; Participations; Sale and
Assignment 16
ARTICLE III PREPAYME NT 16
Section 3.1. Prepayment of the Governmental Lender Note from Prepayment
under the Borrower Note 16
Section 3.2. Notice of Prepayment 17
ARTICLE IV SECURITY 17
Section 4.1. Security for the Funding Loan 17
Section 4.2. Delivery of Security 18
ARTICLE V LIMI TED LIABILITY , 19
Section 5.1. Source of Payment of Governmental Lender Note and Other
Obligations; Disclaimer of General Liability 19
Section 5.2. Exempt from Individual Liability 19
AR TICLE VI CLOSING CONDITIONS; APPLICATION OF FUNDS 20
Section 6.1. Conditions Precedent to Closing 20
ARTICLE VII FUNDS AND ACCOUNTS 21
Section 7.1. Authorization to Create Funds and Accounts 21
Section 7.2. Investment of Funds 21
ARTICLE VIII REPRESENTATIONS AND COVENANTS 21
Section 8.1. General Representations 21
Section 8.2. Further Assurances 22
Section 8.3. Payment ot'Funding Loan Obligations 22
Section 8.4. Funding Loan Agreement Performance 22
Section 8.5. Servicer 22
Section 8.6. Tax Covenants 22
Section 8.7. Performance by the Borrower 243
Section 8.8. Repayment of Funding Loan 23
Section 8.9. Borrower Loan Agreement Performance 24
Section 8.10. Maintenance of Records; Inspection of Records 24
Section 8.11. Representation and Warranties of the Funding Lender 24
Section 8.12. Funding Lender Limitations 24
ARTICLE IX DEFAULT; REMEDIES 25
Section 9.1. Events of Default 25
Section 9.2. Acceleration of Maturity; Rescission and Annulment 25
Section 9.3. Additional Remedies; Funding Lender Enforcement 26
Section 9.4. Application of Money Collected 28
Section 9.5. Remedies Vested in Funding Lender 28
Section 9.6. Restoration of Positions 28
Section 9.7. Rights and Remedies Cumulative 28
Section 9.8. Delay or Omission Not Waiver 28
Section 9.9. Wai ver of Past Defaults 28
Section 9.10. Remedies under Borrower Loan Agreement or Borrower Note 28
Section 9.11. Waiver of Appraisement and Other Laws 29
Section 9.12. Suits to Protect the Security 29
Section 9.13. Remedies Subject to Applicable Law 29
Section 9.14. Assumption of Obligations 29
Section 9.15. Remedies upon unremedied Material Funding Lender Event 30
ARTICLE X AMENDMENT; AMENDMENT OF BORROWER LOAN AGREEMENT
AND OTHER DOCUMENTS 30
Section 10.1. Amendment of Funding Loan Agreement 30
Section 10.2. Consent Required for Amendment of Funding Loan Agreement 30
Section 10.3. Consents and Opinions .31
ARTICLE XI MISCELLANEOUS 31
Section ILL Notices 3 1
Section 1 1.2. Term of Funding Loan Agreement 33
Section J 1.3. Successors and Assigns 33
Section 11.4. Legal Holidays 33
Section 11.5. Governing Law 33
Section 11.6. Severability 33
Section 11.7. Execution in Several Counterparts 34
Section 11.8. Nonrecourse Obligation of the Borrower 34
Section 11.9. Reserved 34
Section 11.10. Electronic Transactions 34
Exhibit A: Form of Governmental Lender Note
Exhibit B: Form of Required Transferee Representations
Funding Loan Agreement with
JPMorgan Chase Bank, N. A.
This Funding Loan Agreement, dated as of April 1, 2021 (this "Funding Loan Agreement"), is entered into by JPMorgan Chase Bank, N. A., a national banking association (together with any successor hereunder, the "Funding Lender") and the City of Chicago, a municipality and home rule unit of local government duly organized -and validly existing under the constitution and laws of the State of Illinois (together with its successors and assigns, the "Governmental Lender").
RECITALS
WHEREAS, the Governmental Lender has been duly created and organized pursuant to and in accordance with the provisions of Article VII, Section 6(a) of the 1970 Constitution of the State of Illinois, is a home rule unit of local government and as such may provide a means of financing the costs of residential ownership and development that will provide decent, safe and sanitary housing for persons of low and moderate income at prices or rentals they can afford; and
WHEREAS, the Governmental Lender is authorized: (a) to make loans to any person to provide financing for rental residential developments located within the jurisdiction of the Governmental Lender and intended to be occupied in part by persons of low and moderate income, as determined by the Governmental Lender; (b) to incur indebtedness for the purpose of obtaining moneys to make such loans and provide such financing, to establish any required reserve funds and to pay administrative costs and other, costs incurred in connection with the incurrence of such indebtedness of the Governmental Lender: and (c) to pledge all or any part of the revenues, receipts or resources of the Governmental Lender, including the revenues and receipts to be received by the Governmental Lender from or in connection with such loans, and to mortgage, pledge or grant security interests in such loans or other property of the Governmental Lender in order to secure the payment of the principal of, prepayment premium, if any, on and interest on such indebtedness of the Governmental Lender; and
WHEREAS, Paseo Boricua Arts. LLC. an Illinois limited liability company (the '"Borrower'), The Puerto Rican Cultural Center, an Illinois not-for-profit corporation (the "Cultural Center"), and Brinshore Development, L.L.C., nn Illinois limited liability corporation ("Rrinshore"), have proposed a certain mixed use development project consisting of the acquisition of real property located at 2709-15 West Division Street in the City and the construction thereon of a five-story mixed use building that will include on floors two through five affordable housing consisting of 24 apartments comprised of eight studio apartments, eight one bedroom apartments and eight two bedroom apartments (the "Project") and with a first floor comprised of office, community, commercial and retail spaces (including the Project, the "Facility"); and
WHEREAS, the managing member of Paseo Boricua is Paseo Boricua Arts Manager. LLC. an Illinois limited liability company, with a 0.01% interest (the "Managing Member") and the investor member is USA Institutional Paseo. LLC. a Delaware limited liability company, or its designee (the "Investment Member"), with a 99.99% interest; and
|1010|
WHEREAS, the members of the Managing Member are PRCC Paseo Boricua, LLC!, an Illinois limited liability company ("PRCC"), with a 50% interest and Brinshore with a 50% interest: the members of Brinshore are RJS Real Estate Services, Inc., an Illinois corporation, with Richard J. Sciortino as its sole shareholder, and Brint Development, lnc.; an Illinois corporation, with David B. Brint as its sole shareholder; and
WHEREAS, the Borrower has requested the Governmental Lender to enter into this Funding Loan Agreement under which (i) the Funding Lender will advance funds (the "Funding Loan") to or for the account of the Governmental Lender, and (ii) the Governmental Lender will apply the proceeds of the Funding Loan to make a loan (the "Borrower Loan") to the Borrower to finance a portion of the cost of the Project; and
WHEREAS, simultaneously with the delivery of this Funding Loan Agreement, the Governmental Lender and the Borrower will enter into a Borrower Loan Agreement of even date herewith (as it may be supplemented or amended, tlie "Borrower Loan Agreement"), whereby the Borrower agrees to make loan payments to the Governmental Lender in an amount which, when added to other funds available under this Funding Loan Agreement, will be sufficient to enable the Governmental Lender to repay the Funding Loan and to pay all costs and expenses related thereto when due; and
WHEREAS,, to evidence its payment obligations under the Borrower Loan Agreement, the Borrower will execute and deliver to the Governmental Lender its Borrower Note as defined in the Borrower Loan Agreement (the "Borrower Note") and the obligations of the Borrower under the Borrower Note will be secured by a lien on and security interest in the Facility pursuant to a Construction, Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing of even date herewith (the "Security Instrument"), made by the Borrower in favor of the Governmental Lender, as assigned to the Funding Lender to secure the performance by the Governmental Lender of ils obligations under the Funding Loan; and
WHEREAS, the Governmental Lender has executed and delivered to the Funding Lender its $8,100,000 City of Chicago Multifamily Housing Revenue Note, (Paseo Boricua Project), Series 2021 (the "Governmental Lender Note"), dated as of the Closing Dale (defined below) evidencing its obligation to make the payments due to the Funding Lender under the Funding Loan as provided in this Funding Loan Agreement. All things necessary to make the Funding Loan Agreement the valid, binding and legal limited obligation of the Governmental Lender have been done and performed and the execution and delivery of this Funding Loan Agreement and the execution and delivery of the Governmental Lender Note, subjeel to the terms hereof, have in all respects been duly authorized;
NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and agreements herein contained, the parties hereto do hereby agree as follows:
Article I
Definitions; Principles of Construction
Section 1.1 Definitions. For all purposes of this Funding Loan Agreement except as otherwise expressly provided or unless the context otherwise clearly requires:
All capitalized terms shall have the meanings ascribed thereto in the Borrower Loan Agreement or in the above Recitals unless specifically defined herein.
The terms "herein," "hereof and "hereunder" and other words of similar import refer to this Funding Loan Agreement as a whole and not to any particular Article, Section or other subdivision. 'ITie terms "agree" and "agreements" contained herein are intended to include and mean "covenant" and "covenants."
All references made (i) in the neuter, masculine or feminine gender shall be deemed to have been made in all such genders, and (ii) in the singular or plural number shall be deemed to have been made, respectively, in the plural or singular number as well. Singular terms shall include tlie plural as well as the singular, and vice versa.
All accounting terms not otherwise defined herein shall have the meanings assigned lo them, and all compulations herein provided for shall be made, in accordance with the Approved Accounting Method. All references herein to "Approved Accounting Method" refer to such principles as they exist at the date of application thereof
All references in this instrument to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and subdivisions of this instrument as originally executed.
All references in this instrument to a separate instrument are to such separate instrument as the same may be amended or supplemented from time-to-time, pursuant to the applicable provisions thereof.
References to the Governmental Lender Note as "tax-exempt" or to the "tax-exempt status" of the Governmental Lender Note are to the exclusion of interest payable on the Governmental Lender Note (other than any portion of the Governmental Lender Note held by a "substantial user" of the Project or a "related person" (within the meaning of Section 147 of the Code) thereto) from gross income for federal income tax purposes pursuant to Section 103(a) of the Code.
The following terms have the meanings set forth below:
"Additional Borrower Payments" shall have the meaning given such term in the Borrower Loan Agreement.
"Affiliate" shall mean, as to any Person, any other Person that, directly or indirectly, is in Control of, is controlled by or is under common Control with such Person.
"Approved Transferee" means (1) a "qualified institutional buyer" ("Q1B") as defined in Rule 144A promulgated under the Securities Act of 1933, as in effect on the date hereof (the "Securities Act") that is a financial institution or commercial bank having capital and surplus uf
$5,000,000,000 or more, (2) an affiliate of the Funding Lender, or (3) a trust or custodial arrangement established by the Funding Lender or one of its affiliates the beneficial interests in which will be owned only by QIBs.
"Authorized Amount" shall mean an amount of up to $8,100,000, the maximum aggregate principal amount of the Funding Loan under this Funding Loan Agreement.
"Authorized City Representative" shall have the meaning as set forth for the term "Authorized Officer1' in the Ordinance.
"Borrower Controlling Entity" shall mean, if the Borrower is a partnership, any general partner or managing partner of the Borrower, or if the Borrower is a limited liability company, the manager or managing member of the Borrower.
"Borrower Loan" shall mean the mortgage loan made by the Governmental Lender to the Borrower pursuant to the Borrower Loan Agreement in the aggregate principal amount of the Borrower Loan Amount, as evidenced by the Borrower Note.
"Borrower Loan Agreement Default" shall mean any event of default set forth in Section 8.1 of the Borrower Loan Agreement. A. Borrower Loan Agreement Default shall "exist" if a Borrower Loan Agreement Default shall have occurred and be continuing beyond any applicable notice and cure period.
"Borrower Loan Amount" shall mean $8,100,000.
"Borrower Loan Documents" shall have the meaning given such term in the Borrower Loan Agreement.
"Business Day" shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or the state in which the principal corporate office of the trustee for the registration and payment functions is located, are authorized or required by law to remain closed; and when used in connection with determining the LIBO Rate (as defined in the Borrower Note), the term Business Day shall also exclude any day on which banks are not open for general business in London.
"Bond Counsel" shall mean Hardwick Law Firm LLC, or any other attorney or linn of attorneys designated by the Governmental Lender and approved by the Funding Lender having a national reputation for skill in connection with the authorization and issuance of municipal obligations under Sections 103 and 141 through 150 (or any successor provisions) of the Code.
"Bond Counsel Approving Opinion" shall mean an opinion of Bond Counsel substantially to the effect that the Governmental Lender Note constitutes a valid and binding obligation of the Governmental Lender and that, under existing statutes, regulations published rulings and judicial decisions, interest on the Governmental Lender Note is excluded from gross income for federal income tax purposes (subject to the inclusion of such customary exceptions as are acceptable to the recipient thereot).
|1010|
"Bond Counsel No Adverse Effect Opinion" shall mean an opinion of Bond Counsel to the effect that the taking of the action specified therein will not impair the exclusion of interest on the Governmental Lender Note from gross income for purposes of federal income taxation (subject to the inclusion of such customary exceptions as arc acceptable to the recipient thereof).
"Closing Date" shall mean April 29, 2021, the date that initial Funding Loan proceeds are disbursed hereunder.
"Code" shall mean the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
"Construction Funding Agreement" shall mean that certain Construction and Permanent Loan Agreement dated as of April 29,2021 by and between the Borrower and the Funding Lender.
"Control" shall mean, with respect to any Person, either (i) ownership directly or through other Persons of more than 50% of all beneficial equity interest in such Person, or (ii) the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, through the ownership of voting securities, by contract or otherwise.
"Event of Default" shall have the meaning ascribed thereto in Section 9.1 hereof.
"Fitch" shall mean Fitch Group, Inc.
"Funding Loan Documents" shall mean (i) this Funding Loan Agreement, (ii) the Borrower Loan Agreement, (iii) the Regulatory Agreement, (iv) the Tax Compliance Agreement, (v) the Borrower Loan Documents, (vi) all other documents evidencing, securing, governing or otherwise pertaining to the Funding Loan, and (vii) all amendments, modi fications, renewals and substitutions of any of the foregoing.
"Government Obligations" shall mean non-callable, non-prepayable (i) direct, general obligations of the United States of America, or (ii) any obligations unconditionally guaranteed as to the full and timely payment of all amounts due thereunder by the full faith and credit of the United States of America (including obligations held in book-entry form), but specifically excluding any mutual funds or unit investment trusts invested in such obligations.
"Governmental Lender Note" shall mean the Governmental Lender Note described in the Recitals of this Funding Loan Agreement.
"Highest Rating Category" shall mean, with respect to a Permitted Investment, that the Permitted Investment is rated by each Rating Agency in the highest rating category given by that Rating Agency for that general category of security. If at any time the Governmental Lender Note is not rated (and, consequently, there is no Rating Agency), then the term "Highest Rating Category" means, with respect to a Permitted Investment, that the Permitted Investment is rated by S&P or Moody's in the highest rating given by that rating agency for that general category of security. By way of example, the Highest Rating Category for tax-exempt municipal debt established by S&P is "A l+" for debt with a term of one year or less and 'AAA' for a term greater
lhan one year, with corresponding ratings by Moody's of "M1G 1" (lor fixed rate) or "VM1G 1" (for variable rale) for three months or less and "Aaa" for greater than three months. If al any time (i) the Government fender Note is not rated, (ii) both S&P and Moody's rate a Permitted Investment and (iii) one of those ratings is below the Highest Rating Category, then such Permitted Investment will, nevertheless, be deemed to be rated in the Highest Rating Category if the lower rating is no more than one rating category below the Highest Rating Category of that Rating Agency. For example, a Permitted Investment rated "AAA" by S&P and "Aa3" by Moody's is rated in the Highest Rating Category. If however, the lower rating is more than one full rating category below the Highest Rating Category of that Rating Agency, then the Permitted Investment will be deemed to be rated below the Highest Rating Category. For example, a Permitted Investment rated "AAA" by S&P and "Al" by Moody's is not rated in the Highest Rating Category.
"Kroll" shall mean Kroll Bond Rating Agency, Inc. or its successor.
"Material Funding Lender Event" shall mean the occurrence and continuation of one or more of the following:
Prior to the advancement by the Funding Lender of the entire amount of the Funding Loan, the Funding Lender fails to advance funds requisitioned by the Borrower pursuant to tlie Borrower Loan Agreement and the Construction Funding Agreement, this Funding Loan Agreement (other than by reason of non-conformance of such requisition with the requirement of the Borrower Loan Agreement, the Construction Funding Agreement or this Funding Loan Agreement), or other failure of any condition to the funding of a requisition set forth in Section 6.3 of the Construction Funding Agreement, AMD (i) a petition has been filed and is pending against tlie Funding Lender under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect, and has not been dismissed within 60 days after such filing; (ii) the Funding Lender has filed a petition, which is pending, under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or liquidation taw of any jurisdiction, whether now or hereafter in effect, or has consented to the filing of any petition against it under such law; or (iii) the Funding Lender shall have a receiver, liquidator or trustee appointed for it or for the whole or substantially all of its property. The occurrence of a Material Funding Lender Event under this subsection (a) and the exercise of remedies upon any such declaration shall be subject to any applicable limitations of federal bankruptcy law affecting or precluding such declaration or exercise during the pendency of or immediately following any bankruptcy, liquidation or reorganization proceedings;
Prior to the advancement by the Funding Lender of the entire amount of the Funding Loan (i) this Funding Loan Agreement for any reason ceases lo be valid and binding on the Funding Lender or is declared to be null and void, or the validity or enforceability of any provision of this Funding Loan Agreement material to the performance by the Funding Lender of its obligations hereunder is denied by the Funding Lender or any court of applicable jurisdiction, or the Funding Lender is denying further liability or obligation under this Funding Loan Agreement, in all of the above cases contrary to the terms of this Funding Loan Agreement in any case, in a final non-appealable judgment: (ii) the Funding Lender has rescinded, repudiated or terminated this f unding
|1010|
Loan Agreement; or (iii) the Funding Lender is dissolved or confiscated by action of government due lo war or peace time emergency or the United States Government declares a moratorium on the Funding Lender's activities; or
(c) Failure by the Funding Lender (i) io respond to a complete and compliant funding requisition properly presented by the .Borrower to the Funding Lender for advancement of proceeds of the Funding Loan pursuant to the Borrower Loan Agreement and this Funding Loan Agreement within seven (7) days of the receipt of such funding requisition, or (ii) to fully fund within 10 Business Days after the Funding Lender approves a funding requisition from the Borrower to the Founding Lender and has confirmed such requisition for payment pursuant to the terms of the Borrower Loan Agreement and this Funding Loan Agreement.
"Maturity Date" shall mean, with respect to the Governmental Lender Note, October 29.
2041.
"Maximum Rate" shall mean the lesser of (i) 10% per annum and (ii) the maximum interest rate that may be paid on the Funding Loan under State law.
"Minimum Beneficial Ownership Amount" shall mean an amount no less than fifteen percent (15%) of the outstanding principal amount of the Funding Loan.
"Moody's" shall mean Moody's Investors Service, Inc., or its successor.
"Noteowner" or, "owner of the Governmental Lender Note" mean the owner, or as applicable, collectively the owners, of the Governmental Lender Note as shown on the registration books maintained by the Funding Lender pursuant to Section 2.4(d).
"Ongoing Governmental Lender Fee" shall mean: (i) a bond administrative fee in an amount equal to 0.15 percent of the outstanding principal of the Note, accruing monthly but payable to the City on a semi-annual basis, and (ii) a monitoring fee in the amount of $25 per unit, paid annually, submitted with the annual owner's certification.
"Opinion of Counsel" shall mean a written opinion from an attorney or firm of attorneys, acceptable to the Funding Lender and the Governmental Lender with experience in the matters to be covered in the opinion; provided that whenever an Opinion of Counsel is required to address the exclusion of interest on the Governmental Lender Note from gross income for purposes of federal income taxation, such opinion shall be provided by Bond Counsel.
"Ordinance" shall mean the Ordinance adopted by the Governmental Lender on June 12, 2019, as amended by an Ordinance adopted on December 16, 2020 authorizing the Funding Loan and the execution and delivery of the Funding Loan Documents to which Governmental Lender is a party.
"Permitted Investments" shall mean, to the extent authorized by law for investment of any moneys held under this Funding Loan Agreement:
(a) Government Obligations.
|1010|
Direct obligations of. and obligations on which the full and timely payment of principal and interest is unconditionally guaranteed by. any agency or instrumentality of the United States of America (other than the Federal Home Loan Mortgage Corporation) or direct obligations of the World Bank, which obligations are rated in the Highest Rating Category.
Obligations, in each case rated in the Highest Rating Category, of (i) any-state, district or territory of the United States of America, (ii) any agency, instrumentality, authority or political subdivision of a state or territory or (iii) any public benefit or municipal corporation the principal of and interest on which are guaranteed by such stale or political subdivision.
Any written repurchase agreement entered into with a Qualified Financial Institution whose unsecured short-term obligations are rated in the Highest Rating Category.
Commercial paper rated in the Highest Rating Category.
Interest bearing negotiable certificates of deposit, interest bearing time deposits, interest bearing savings accounts and bankers' acceptances, issued by a Qualified Financial Institution if either (i) the Qualified Financial Institution's unsecured short-term obligations arc rated in the Highest Rating Category or (ii) such deposits, accounts or acceptances are fully collateralized by investments described in clauses (a) or (b) of this definition or fully insured by the Federal Deposit Insurance Corporation.
An agreement held by the Funding Lender for the investment of moneys at a guaranteed rate with a Qualified Financial Institution whose unsecured long-term obligations arc rated in the Flighest Rating Category or the Second Flighest Rating Category, or whose obligations are unconditionally guaranteed or insured by a Qualified Financial Institution whose unsecured long-term obligations are rated in the Highest Rating Category or Second Highest Rating Category; provided that such agreement is in a form acceptable to the Funding Lender and, provided further that such agreement includes the following restrictions:
the invested lunds will be available for withdrawal without penalty or premium, at any time that (A) the Funding Lender is required to pay moneys from the fund(s) established under this Funding Loan Agreement to which the agreement is applicable, or (B) any Rating Agency indicates that it will lower or actually lowers, suspends or withdraws the rating on the Funding Loan on account of the rating of the Qualified Financial Institution providing, guaranteeing or insuring, as applicable, the agreement;
the agreement, and if applicable the guarantee or insurance, is an unconditional and general obligation of the provider and, if applicable, the guarantor or insurer of the agreement, and ranks pari passu with all other unsecured unsubordinated obligations of the provider, and if applicable, the guarantor or insurer of the agreement;
S
the Funding Lender receives an Opinion of Counsel, which may be subject to customary qualifications, that such agreement is legal, valid, binding and enforceable upon the provider in accordance with its terms and, if applicable, an Opinion of Counsel that any guaranty or insurance policy provided by a guarantor or insurer is legal, valid, binding and enforceable upon the guarantor or insurer in accordance with its terms; and
the agreement provides that if during its term the rating of the Qualified Financial Institution providing, guaranteeing or insuring, as applicable, the agreement, is withdrawn, suspended by any Rating Agency or falls below the Second Flighest Rating Category, the provider must, within 10 days, either: (A) collateralize the agreement (if tlie agreement is not already collateralized) with Permitted Investments described in paragraph (a) or (b) by depositing collateral with the Funding Lender or a third party custodian, such collateralization to be effected in a mariner and in an amount reasonably satisfactory lo the Funding Lender, or, if the agreement is already collateralized, increase the collateral with Permitted Investments described in paragraph (a) or (b) by depositing collateral with the Funding Lender or a third-party custodian, in an amount reasonably satisfactory to the Funding Lender, (B) at the request of the Funding Lender, repay the principal of and accrued but unpaid interest oh the investment, in either case with no penalty or premium unless required by law or (C) transfer the agreement, guarantee or insurance, as applicable, to a replacement provider, guarantor or insurer, as applicable, then meeting the requirements of a Qualified Financial Institution and whose unsecured long term-obligations are then rated in the Flighest Rating Category or the Second Highest Rating Category. The agreement may provide that the downgraded provider may elect which of the remedies to the downgrade (other than the remedy set out in (B)) to perform.
(h) Subject to the ratings requirements set forth in this definition, shares in any money market mutual, fund (including those of the Funding Lender or any of its affiliates) registered under the Investment Company Act of 1940, as amended, that have been rated "AAAm-G" or "AAAm" by S&P or "Aaa" by Moody's so long as the portfolio of such money market mutual fund is limited to Government Obligations and agreements to repurchase Government Obligations. If approved in writing by the Funding Lender, a money market mutual fund portfolio may also contain obligations and agreements to repurchase obligations described in paragraphs (b) or (c). If the Governmental Lender Note is rated by a Rating Agency, the money market mutual fund must be rated "AAAm-G" or "AAAm" by S&P, if S&P is a Rating Agency, or "Aaa" by Moody's, if Moody's is a Rating Agency. If at any time the Governmental Lender Note is not rated (and, consequently, there is no Rating Agency), then the money market mutual fund must be rated "AAAm-G" or "AAAm" by S&P or "Aaa" by Moody's. If at any time (i) the Governmental Lender Note-is not rated, (ii) both S&P and Moody's rale a money market mutual fund and (iii) one of those ratings is below the level required by this paragraph, then such money market mutual fund will, nevertheless, be deemed to be rated in the Highest Rating Category if the lower rating is no more than one rating category below the highest rating category of that rating agency.
|10 10|
(i) Any other investment authorized by tlie laws of the Slate, if such investment is approved in writing by the Funding Lender.
Permitted Investments shall not include any of the following:
Except for any investment described in the next sentence, any investment with a final maturity or any agreement with a term greater than one year from the date of the investment. This exception (1) shall not apply to Permitted Investments listed in paragraphs (g) and (i).
Except for any obligation described in paragraph (a) or (b), any obligation with a purchase price greater or less than the par value of such obligation.
Any asset backed security, including mortgage-backed securities, real estate mortgage investment conduits, collateralized mortgage obligations, credit card receivable asset backed securities and auto loan asset backed securities.
Any interest only or principal only stripped security.
Any obligation bearing interest at art inverse floating rate.
Any investment which may be prepaid or called at a price less than its purchase price prior to stated maturity.
Any investment the interest rate on which is variable and is established other than by reference to a single index plus a fixed spread, if any and which interest rate moves proportionately with that index.
Any investment described in paragraph (d) or (g) with, or guaranteed or insured by, a Qualified Financial Institution described in clause (iv) of the definition of Qualified Financial Institution if such institution does not agree to submit to jurisdiction, venue and service of process in the United Slates of America in the agreement relating to the investment.
Any investment to which S&P has added an "r" or "t" highlighter.
"Person" shall mean any natural person, corporation, limited liability company, partnership, joint venture, estate, trust, unincorporated association, any federal, state, county or municipal government or any bureau, department or agency thereof and any fiduciary acting in such capacity on behalf of any of the foregoing.
"Pledged Revenues" shall mean the amounts pledged under this Funding Loan Agreement to the payment of the principal of, prepayment premium, if any, and interest on the Funding Loan and the Governmental Lender Note, consisting of the following: (i) ail income, revenues, proceeds and other amounts to which the Governmental Lender is entitled (other than amounts received by the Governmental Lender with respect to the Unassigned Rights) derived from or in connection with the Project and the Funding Loan Documents, including all Borrower Loan Payments due under the Borrower Loan Agreement and the Borrower Note, payments with respect to the
10
Borrower Loan Payments and all amounts obtained through the exercise of the remedies provided in the Funding 1 ,oan Documents and all receipts credited under the provisions of this Funding Loan Agreement against said amounts payable; and (ii) moneys held in the funds and accounts established under this Funding Loan Agreement, together with investment earnings thereon.
"Prepayment Premium" shalt mean (i) any premium payable by the Borrower pursuant to the Borrower Loan Documents in connection with a prepayment of the Borrower Note (including any Prepayment Premium as set forth in the Borrower Note) and (ii) any premium payable on the Governmental Lender Note pursuant lo this Funding Loan Agreement.
"Qualified Financial Institution" shall mean any (i) bank or trust company organized under the laws of any state of the United States of America, (ii) national banking association, savings bank, savings and loan association, or insurance company or association chartered or organized under the laws of any state of the United States of America, (iii) federal branch or agency pursuant to the International Banking Act of 1978 or any successor provisions of law or a domestic branch or agency of a foreign bank which branch or agency is duly licensed or authorized lo do business under the laws of any state or territory of the United States of America, (iv) government bond dealer reporting to, trading with, and recognized as a primary dealer by the Federal Reserve Bank of New York, (v) securities dealer approved in writing by the Funding Lender the liquidation of which is subject to the Securities Investors Protection Corporation or other similar corporation and (vi) other entity which is acceptable to the Funding Lender. With respect to an entity which provides an agreement held by the Funding Lender for the investment of moneys at a guaranteed rale as set out in paragraph (g) of the definition of the term "Permitted Investments or an entity which guarantees or insures, as, applicable, the agreement, a "Qualified Financial Institution" may also be a corporation or limited liability company organized under the laws of any state of the United States of America.
"Rating Agency" shall mean any one and each of S&P, Moody's, Kroll, and Fitch then rating the Permitted Investments or any other nationally recognized statistical rating agency then rating the Permitted Investments, which has been approved by the Funding Lender.
"Regulations" shall mean with respect to the Code, the relevant U.S. Treasury regulations and proposed regulations thereunder or any relevant successor provision to such regulations and proposed regulations.
"Regulatory Agreement" shall mean that certain Land Use Restriction Agreement, dated as of the Closing Date, by and between the Governmental Lender and the Borrower, as hereafter amended or modified.
"Required Transferee Representations" shall mean the representations in substantially the form attached to this Funding Loan Agreement as "Exhibit Ii."
"Second Highest Rating Category" shall mean, with respect to a Permitted Investment, that the Permitted Investment is rated by each Rating Agency in the second highest rating category given by that Rating Agency for that general category of security. If at any time the Governmental Lender Note is not rated (and, consequently, there is no Rating Agency), then the term "Second Highest Rating Category" means, with respect to a Permitted Investment, that the Permitted
I 1
fnvestment is rated by S&P or Moody's in the second highest rating category given by that rating agency for that general category of security. By way of example, the Second Highest Rating Category for tax-exempt municipal debt established by S&P is "AA" for a term greater than one year, with corresponding ratings by Moody's of "Aa." If at any time (i) the Governmental Lender Note is not rated, (ii) both S&P and Moody's rale a Permitted Investment and (iii) one of those ratings is below the Second Highest Rating Category, then such Permitted Investment will not be deemed to be rated in the Second Highest Rating Category. For example, a Permitted Investment rated "AA" by S&P and "A" by Moody's is not rated in the Second Highest Rating Category.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security" shall mean the security for the performance by the Governmental Lender of its obligations under the. Governmental Lender Note and this Funding Loan Agreement as more fully set forth in Article IV hereof
"Security Instrument" shall mean the Constaiction, Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing (as amended, restated and/or supplemented from time-to-time) of even date herewith, made by the Borrower in favor of the Governmental Lender, as assigned to the Funding Lender to secure the performance by the Governmental'Lender of its obligations under the Funding Loan.
"Servicer" shall mean any servicer appointed by the Funding Lender to perform certain servicing functions with respect to the Funding Loan and on the Borrower Loan. Initially, the Servicer shall be the Funding Lender pursuant to this Funding Loan Agreement.
"Servicing Agreement" shall mean any servicing agreement entered into between the Funding Lender and a Servicer with respect to the servicing of the Funding Loan and/or the Borrower Loan.
"S&P" shall mean S&P Global Ratings, a division of S&P Global Inc., and its successors. "State" shall mean the State of Illinois.
"Tax Compliance Agreement" shall mean, collectively, the Arbitrage Agreement and Certificate, dated the Closing Date, executed and delivered by the Governmental Lender and the Borrower and the Project Agreement and Certificate, dated the Closing Date, executed and delivered by the Borrower
"UCC" shall mean the Uniform Commercial Code as in effect in the Slate.
"Unassigned Rights" shall mean the Governmental Lender's rights to reimbursement and payment of its fees, costs and expenses and the Rebate Amount under Section 2.5 of the Borrower Loan Agreement, its right to payment of the Governmental Lender's Closing Fee, the Ongoing Governmental Lender Fee and any other fees payable to the Governmental Lender under Section 2.5 thereof, its rights to attorneys' fees under Section 5.14 thereof, its rights to indemnification under Section 5.15 thereof its rights of access under Section 5.1 7 thereof ils rights to enforce the terms of the Regulatory Agreement, including Borrower's covenants to comply with applicable laws, its rights to give and receive notices, reports and other statements and to enforce notice and
reporting requirements and restrictions on transfers of ownership of the Project, and, its rights lo consent to certain matters, as provided in this Funding Loan Agreement and the Borrower Loan Agreement.
"Written Certificate," "Written Certification," "Written Consent," "Written Direction," "Written Notice," "Written Order," "Written Registration," "Written Request," and "Written Requisition" shall mean a written certificate, direction, notice, order or requisition signed by an Authorized Borrower Representative, an Authorized City Representative or an authorized representative of the Funding Lender and delivered to the Funding Lender, the Servicer or such other Person as required under the Funding Loan Documents.
"Yield" shall mean yield as defined in Section 148(h) of the Code and any regulations promulgated thereunder.
Section 1.2. Effect of Headings and Table of Contents. The Article and Section headings herein and in the fable of Contents are for convenience only and shall not affect the construction hereof.
Section 1.3. Date of Funding Loan Agreement. The date of this Funding Loan Agreement is intended as and for a date for the convenient identification of this Funding Loan Agreement and is not intended to indicate that this Funding Loan Agreement was executed and delivered on said date.
Section 1.4. Designation of Time for Performance. Except as otherwise expressly provided herein, any reference in this Funding Loan Agreement to the time Of day shall mean the time of day in the city where the Funding Lender maintains its place of business for the performance of its obligations under this Funding Loan Agreement.
Section 1.5. Interpretation. The parties hereto acknowledge that each of them and their respective counsel have participated in the drafting and revision of this Funding Loan Agreement. Accordingly, the parties agree that any rule of construction that disfavors the drafting party shall not apply in the interpretation of this Funding Loan Agreement or any amendment or supplement or exhibit hereto.
ARTICLE II TERMS; GOVERNMENTAL LENDER NOTE
Section 2.1. Terms
Principal Amount. The total aggregate principal amount of the Funding Loan is hereby expressly limited to the Authorized Amount.
Draw-Down Funding. The Funding Loan is originated on a draw-down basis. The proceeds of the Funding Loan shall be advanced by the Funding Lender directly to the Borrower for the account of the Governmental Lender as and when needed to make each advance in accordance with the disbursement provisions of the Borrower Loan Agreement, the Construction Funding Agreement and this Funding L oan Agreement. Upon each advance of principal under the
Construction Funding Agreement and this Funding Loan Agreement, a like amount of the Borrower Loan shall be deemed concurrently and simultaneously advanced under the Borrower Loan Agreement, including the initial advance of $2,105,174.90. Notwithstanding anything in this Funding Loan Agreement to the contrary, no additional amounts of the Funding I ,oan may be drawn down and funded hereunder after April 29, 2024; provided, however, that upon the delivery of a Bond Counsel No Adverse Effect Opinion lo the Governmental Lender and the Funding Lender such date may be changed to a later date as specified in such Bond Counsel No Adverse Effect Opinion.
Origination Date: Maturity. '1 Tie Funding Loan shall be originated, and the Governmental Lender Note shall be issued, on the Closing Date and shall mature on the Maturity Date al which time the entire principal amount, to the extent not previously paid, and all accrued arid unpaid interest, shall be due and payable.
Principal. The outstanding principal amount of the Governmental Lender Note and of the Funding Loan as of any given date shall be the total amount advanced by the Funding Lender to or for the account of the Governmental Lender to fund corresponding advances under the Borrower Loan Agreement and this Funding Loan Agreement as proceeds of the Borrower Loan, less any payments of principal of the Governmental Lender Note previously received upon payment of corresponding principal amounts under the Borrower Note, including regularly-scheduled principal payments and voluntary and mandatory prepayments. The principal amount of the Governmental Lender Note and interest thereon shall be payable on the basis specified in this paragraph (d) and in paragraphs (e) and (f) of this Section 2.1.
The Funding Lender shall keep a record of all principal advances and principal repayments made under the Governmental Lender Note and shall upon written request provide the Governmental Lender with a statement of the outstanding principal balance of the Governmental Lender Note and the Funding Loan.
Interest. Interest shall be paid on the outstanding principal amount of the Governmental Lender Note at the rate or rates set forth in the Borrower Note and otherwise as set forth in the Borrower Loan Agreement.
Corresponding Payments. The payment or prepayment of principal, interest and Prepayment Premium, if any, due on the Governmental Lender Note shall be identical with and shall be made on the same dates, terms and conditions, as the principal, interest, premiums, late payment fees and other amounts due on the Borrower Note. Any payment or prepayment made by the Borrower of principal, interest, and Prepayment Premium, if any, due on the Borrower Note shall be deemed to be like payments or prepayments of principal, interest and Prepayment Premium, if any, due on the Governmental Lender Note.
Usury. The Governmental Lender intends to conform strictly to the usury laws applicable to this Funding Loan Agreement and the Governmental Lender Note, and all agreements made in the Governmental Lender Note, this Funding Loan Agreement and the Funding Loan Documents are expressly limited so that in no event whatsoever shall the amount paid or agreed to be paid as interest or the amounts paid for the use of money advanced or to be advanced hereunder exceed the highest lawful rate prescribed under any law winch a court of
14
competent jurisdiction may deem applicable hereto. If, from any circumstances whatsoever, the fulfillment of any provision of the Governmental Lender Note, this Funding Loan Agreement or the other Funding Loan Documents shall involve the payment of interest in excess of the limit prescribed by any law which a court of competent jurisdiction may deem applicable hereto, then the obligation to pay interest hereunder shall be reduced to the maximum limit prescribed by law. Tf from any circumstances whatsoever, the Funding Lender shall ever receive anything of value deemed interest, the amount of which would exceed the highest lawful rate, such amount as would be excessive interest shall be deemed to have been applied, as of the date of receipt by the Funding Lender, to the reduction of the principal remaining unpaid hereunder and not to the payment of interest, or if such excessive interest exceeds the unpaid principal balance, such excess shall be refunded to the Borrower. This paragraph shall control every other provision of the Governmental Lender Note, this Funding Loan Agreement and all other Funding Loan Documents.
In determining whether the amount of interest charged and paid might otherwise exceed the limit prescribed by law, the Governmental Lender intends and agrees that (i) interest shall be computed upon the assumption that payments under the Borrower Loan Agreement and other Funding Loan Documents will be paid according to the agreed terms, and (ii) any sums of money that are taken into account in the calculation of interest, even though paid at one time, shall be spread over the actual term of the Funding Loan.
Section 2.2. Form of Governmental Lender Note. As evidence of ils obligation to repay the Funding Loan, simultaneously with the delivery of this Funding Loan Agreement to the Funding Lender, the Governmental Lender hereby agrees to execute and deliver the Governmental Lender Note. The Governmental Lender Note shall be substantially in the form set forth in Exhibit A attached hereto, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Funding Loan Agreement and the Ordinance.
Section 2.3. Execution and Delivery of Governmental Lender Note. I he
Governmental Lender Note shall be executed on behalf of the Governmental Lender by the manual or facsimile signature of its Authorized Officer, and its corporate seal (or a facsimile thereof) shall be thereunto affixed, imprinted, engraved or otherwise reproduced, and attested by the manual or facsimile signature of its City Clerk or Deputy City Clerk. In case any officer of the Governmental Lender whose signature or facsimile signature shall appear on the Governmental Lender Note shall cease to be such officer before the Governmental Lender Note so signed and sealed shall have been actually delivered, such Governmental Lender Note may, nevertheless, be delivered as herein provided, and may be executed and delivered as if the persons who signed or sealed such Governmental Lender Note had not ceased to hold such offices or be so employed. The Governmental Lender Note may be signed and sealed on behalf of the Governmental Lender by such persons as, at the actual time of the execution of the Governmental Lender Note, shall be duly authorized or hold the proper office in or employment by the Governmental Lender, although at the date of the Governmental Lender Note such persons may not have been so authorized nor have held such office or employment.
15
Section 2.4. Required Transferee Representations; Participations; Sale and Assignment
The Funding Lender shall deliver to the Governmental Lender the Required Transferee Representations in substantially the form attached hereto as Exhibit B on the Closing Date.
The Funding Lender shall have the right to sell (i) the Governmental Lender Note and the Funding Loan or (ii) any portion of or a participation interest in the Governmental Lender Note and the Funding Loan to the extent permitted by Section 2.4(c) below, provided that (A) such sale shall be only to Approved Transferees that execute and deliver to the Funding Lender, with a copy to the Governmental Lender, the Required Transferee Representations and (B) if any amendment is to be made to this Funding Loan Agreement or any other Funding Loan Document in conjunction with such transfer, a Bond Counsel No Adverse Effect Opinion.
Notwithstanding the other provisions of this Section 2.4, no beneficial ownership interest in the Governmental Lender Note and Funding Loan shall be sold in an amount that is less than the Minimum Beneficial Ownership Amount.
The Governmental Lender Note or any interest therein, shall be in fully registered form transferable to subsequent holders only on the registration books which shall be maintained by the Funding Lender for such purpose and which shall be open to inspection by the Governmental Lender. The Governmental Lender Note shall not be transferred through the services of the Depository Trust Company or any other third party registrar.
The parties agree that no rating shall be sought from a Rating Agency or any other rating agency with respect to the Funding Loan or the Governmental Lender Note.
No service charge shall be made for any sale or assignment of the Governmental Lender Note or a participation therein, but the Governmental Lender may require payment of a sum sufficient to cover any tax or other charge that may be imposed in connection with any such sale or assignment and payment of any fees and expenses incurred by the Governmental Lender in connection therewith. Such sums shall be paid in every instance by the purchaser or assignee of the Governmental Lender Note or a participation therein.
ARTICLE III PREPAYMENT
Section 3.1. Prepayment of the Governmental Lender Note from Prepayment under the Borrower Note
The Governmental Lender Note is subject to voluntary and mandatory prepayment as follows:
(a) T he Governmental Lender Note shall be subject to voluntary prepayment in full or in part by the Governmental Lender, from funds of the Governmental Lender received by the Governmental Lender to the extent and in the manner and on any date that the Borrower Note is subject to voluntary prepayment as set forth therein, at a prepayment price equal to the principal
16
balance of the Borrower Note to be prepaid, plus interest thereon to the dale of prepayment and the amount of any Prepayment Premium payable under the Borrower Note, plus any Additional Borrower Payments due and payable under the Borrower Loan Agreement through the date of prepayment.
The Borrower shall not have the right to voluntarily prepay all or any portion of the Borrower Note, thereby causing the Governmental Lender Note to be prepaid, except as specifically permitted in the Borrower Note, without the prior Written Consent of the Funding Lender, which may be withheld in Funding Lender's sole and absolute discretion.
(b) The Governmental Lender Note shall be subject to mandatory prepayment in whole or in part upon prepayment of the Borrower Note at the direction of the Funding Lender in accordance with the terms of the Borrower Note al a prepayment price equal to the outstanding principal balance of the Borrower Note prepaid, plus accrued interest plus any other amounts payable under the Borrower Note, the Borrower Loan Agreement or the Construction Funding Agreement.
Section 3.2. Notice of Prepayment. Notice of prepayment of the Governmental Lender Note shall be deemed given to the extent that notice of prepayment of the Borrower Note is timely and properly given to Funding Lender in accordance with the terms of the Borrower Note and the Borrower Loan Agreement, and no separate notice of prepayment of the Governmental Lender Note is required to be given.
ARTICLE IV SECURITY
Section 4.1. Security for the Funding Loan. To secure the payment of the Funding Loan and the Governmental Lender Note, to declare the terms and conditions on which the Funding Loan and the Governmental Lender Note are secured, and in consideration of the premises and of the funding of the Funding Loan by the Funding Lender, the Governmental Lender by these presents does grant, bargain, sell, remise, release, convey, assign, transfer, mortgage, hypothecate, pledge, set over and confirm to the Funding Lender (except as limited herein), a lien on and security interest in the following described property (excepting, however, in each case, the Unassigned Rights) (said property, rights and privileges being herein collectively called, the "Security").
All right, title and interest of the Governmental Lender in, to and under the Borrower Loan Agreement, the Borrower Note, and the Security Instrument including, without limitation, all rents, revenues and receipts derived by the Governmental Lender from the Borrower relating to the Project and including, without limitation, all Pledged Revenues, Borrower Loan Payments and Additional Borrower Payments derived by the Governmental Lender under and pursuant to, and subject to the provisions of, the Borrower Loan Agreement; provided, that the pledge and assignment made under this Funding Loan Agreement shall not impair or diminish the obligations of the Governmental Lender under the provisions of the Borrower Loan Agreement:
All right, title and interest of the Governmental Lender in, to and under, together with all rights, remedies, privileges and options pertaining to, the Funding Loan Documents, and
17
all other payments, revenues and receipts derived by the Governmental Lender under and pursuant to, and subject to the provisions of, the Funding Loan Documents;
Any and all moneys and investments from time to time on deposit in, or forming a part of, all funds and accounts created and held under this Funding Loan Agreement subject to the provisions of this Funding Loan Agreement permitting the application thereof for the purposes and on the terms and conditions set forth herein; and
Any and all other real or personal property of every kind and nature or description, which may from time to time hereafter, by delivery or by writing of any kind, be subjected to the lien of this Funding Loan Agreement as additional security by the Governmental Lender or anyone on its part or with its consent, or which pursuant to any of the provisions hereof or of the Borrower Loan Agreement may come into the possession or control of the Funding Lender or a receiver appointed pursuant to this Funding Loan Agreement; and the Funding Lender is hereby authorized lo receive any and all such property as and for additional security for the Funding Loan and the Governmental Lender Note and to hold and apply all such property subject to the terms hereof.
The pledge and assignment of and the security interest granted in the Security pursuant to this Section 4.1 for the payment of the principal of, premium, if any, and interest on the Governmental Lender Note, in accordance with its terms and provisions, and for the payment of all other amounts due hereunder, shall attach and be valid and binding from and after the time of the delivery of the Governmental Lender Note by the Governmental Lender. The Security so pledged and then or thereafter received by the Funding Lender shall immediately be subject to the lien Of such pledge and security interest without any physical delivery or recording thereof or further act, and the lien of such pledge and security interest shall be valid and binding and prior to the claims of any and all parties having claims of any kind in tort, contract Or otherwise against the Governmental Lender irrespective of whether such parties have notice thereof.
Section 4.2. Delivery of Security. To provide security for the payment of the Funding Loan and the Governmental Lender Note, the Governmental Lender has pledged and assigned to secure payment of the Funding Loan and the Governmental Lender Note its right, title and interest in the Security to the Funding Lender. In connection with such pledge, assignment, transfer and conveyance, the Governmental Lender shall deliver lo the Funding Lender the following documents or instruments promptly following their execution and, to the extent applicable, their recording or tiling:
The Borrower Note endorsed without recourse lo the Funding Lender by the Governmental Lender:
The originally executed Borrower Loan Agreement and Regulatory Agreement:
The originally executed Security Instrument and all other Borrower Loan Documents existing at the time of delivery of the Borrower Note and an assignment for security of the Security Instrument from the Governmental Lender to the Funding Lender, in recordable form;
Uniform Commercial Code financing statements or other chattel security documents giving notice of the Funding Lender's status as an assignee of the Governmental
18
Lender's security interest in any personal property lorming part of the Project, in form suitable for filing; and
(e) Uniform Commercial Code financing statements giving notice of the pledge by the Governmental Lender of the Security pledged under this funding Loan Agreement.
The Governmental Lender shall deliver and deposit with the Funding Lender such additional documents, financing statements, and instruments as the Funding Lender may reasonably require from time to time for the better perfecting and assuring to the Funding Lender of its lien and security interest in and to the Security.
ARTICLE V LIMITED LIABILITY
Section 5.1. Source of Payment of Governmental Lender Note and Other Obligations; Disclaimer of General Liability. Trie Governmental Lender Note, together with Prepayment Premium, if any, and interest thereon, are special, limited obligations of the Governmental Lender, payable solely from the security pledged hereunder. The Governmental Lender Note is not a general obligation of the Governmental Lender or a charge against its general credit or the general credit taxing powers of the State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability of the Governmental Lender, and neither the Governmental Lender, the State nor any other political subdivision thereof shall be liable for the payments of principal of and, Prepayment Premium, if any, and interest on the Governmental Lender Note, and the Governmental Lender Note is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the security pledged hereunder and receipts of the Governmental Lender derived pursuant to this Funding Loan Agreement. No holder of the Governmental Lender Note or any interest therein has the right to compel any exercise of the taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Governmental Lender Note or the interest or Prepayment Premium, if any. thereon.
Section 5.2. Exempt from Individual Liability. No recourse shall be had for the
payment of the principal of, Prepayment Premium, if any, or the interest on the Governmental Lender Note or for any claim based thereon or any obligation, covenant or agreement in this Funding Loan Agreement against any official, officer, agent, employee, or independent contractor of the Governmental Lender or any person executing the Governmental Lender Note in his or her personal capacity. No covenant, stipulation, promise, agreement or obligation contained in the Governmental Lender Note or this Funding Loan Agreement shall be deemed to be the covenant, stipulation, promise, agreement or obligation of any present or future official, officer, agent or employee of the Governmental Lender in his or her individual capacity and neither any official of the Governmental Lender nor any officers executing the Governmental Lender Note shall be liable personally on the Governmental Lender Note or under this Funding Loan Agreement or be subject to any personal liability or accountability by reason of the execution and deliver}' of the Governmental Lender Note or the execution of this Funding Loan Agreement or any other document executed in connection herewith.
19
ARTICLE VI
CLOSING CONDITIONS; APPLICATION OF FUNDS
Section 6.1. Conditions Precedent to Closing. Closing of the Funding Loan on the Closing Date shall be conditioned upon satisfaction or waiver by the Funding Lender, in its sole discretion of each of the conditions precedent to closing set forth in this Funding Loan Agreement, including but not limited to the following:
Receipt by the Funding Lender of the original Governmental Lender Note;
Receipt by the Funding Lender of the original executed Borrower Note, endorsed to the Funding Lender by the Governmental Lender; '
Receipt by the Funding Lender of executed counterpart copies of this Funding Loan Agreement, the Borrower Loan Agreement, the Regulator}' Agreement, the Tax Compliance Agreement, the Security Instrument, and all of the other Borrower Loan Documents;
A certified copy of the Ordinance;
Executed Required Transferee Representations from the Funding Lender;
Delivery into escrow of all amounts required to be paid in connection with the origination of the Borrower Loan and the Funding Loan and any underlying real estate transfers or transactions, including the Costs of Funding Deposit, in accordance with Section 2.3(c)(ii) of the Borrower Loan Agreement;
Receipt by the Funding Lender of a Bond Counsel Approving Opinion from Bond Counsel;
Receipt by the Funding Lender of an Opinion of Counsel from Bond Counsel to the effect that the Governmental Lender Note is exempt from registration under the Securities Act, and this Funding Loan Agreement is exempt from qualification under the Trust Indenture Act of 1939, as amended;
(i) Delivery of an opinion of counsel to the Borrower addressed to die Governmental
Lender and the Funding Lender to the effect that the Borrower Loan Documents and the
Regulatory Agreement are valid and binding obligations of the Borrower, enforceable against the
Borrower in accordance with their terms, subject to such exceptions and qualifications as are
acceptable to the Governmental Lender and the Funding Lender;
(j) Receipt by the Funding Lender of any other documents or opinions that the Funding Lender or Bond Counsel may reasonably require; and
(k) Any other items required pursuant to the terms of the Construction Funding Agreement.
20
ARTICLE VTI FUNDS AND ACCOUNTS
Section 7.1. Authorization to Create Funds and Accounts. The Funding Lender and the third-party Servicer, if any. are authorized to establish and create from time to time such other funds and accounts or subaccounts as may be necessary for the deposit of moneys (including, without limitation, insurance proceeds and/or condemnation awards), if any, received by the Governmental Lender, the Funding Lender or the Servicer pursuant to the terms hereof or any of the other Funding Loan Documents and not immediately transferred or disbursed pursuant to the terms of the Funding Loan Documents and/or the Borrower Loan Documents.
Section 7.2. Investment of Funds. Amounts held in any funds or accounts created under this Funding Loan Agreement shall be invested in Permitted Investments at the direction of the Borrower, subject in all cases to the restrictions of Section 8.6 hereof and of the Tax Compliance Agreement.
ARTICLE VIH REPRESENTATIONS AND COVENANTS
Section 8.1. General Representations. The Governmental Lender makes the following representations as the basis for the undertakings on its part herein contained:
The Governmental Lender is a municipality and home rule unit oJTocal government duly organized and validly existing under the Constitution and laws of the State. The Governmental Lender has power and lawful authority to adopt the Ordinance, to execute and deliver the Funding Loan Documents to which it is a party (the "Governmental Lender Documents"), to execute and deliver the Governmental Lender Note and receive the proceeds of the Funding Loan, to apply the proceeds of the Funding Loan to make the Borrower Loan, to assign the revenues derived and to be derived by the Governmental Lender from the Borrower Loan to the Funding Lender, and to perform and observe the provisions of the Governmental Lender Documents and the Governmental Lender Note on its part to be performed and observed.
The City Council of the Governmental Lender has approved tire Ordinance and the Ordinance has not been amended, modified or rescinded and is in full force and effect as of the date hereof.
The Governmental Lender has duly authorized the execution and delivery of each of the Funding Loan Agreement and the Governmental Lender Note and the performance of the obligations of the Governmental Lender thereunder.
The Governmental Lender makes no representation or warranty, express or implied, that the proceeds of the Funding Loan will be sufficient to finance the acquisition, construction and equipping of the Project or that the Project will be adequate or sufficient for the Borrower's intended purposes.
The revenues and receipts to be derived from the Borrower Loan Agreement, the Borrower Note and this Funding Loan Agreement have not been pledged previously by the
21
Governmental Lender to secure any of its notes or bonds other than the repayment of the Funding Loan.
THE GOVERNMENTAL LENDER MAKES NO REPRESENTATION, COVENANT OR AGREEMENT AS TO THE FINANCIAL POSITION OR BUSINESS CONDITION OF THE BORROWER OR THE FACILITY AND DOES NOT REPRESENT OR WARRANT AS TO ANY STATEMENTS, MATERIALS, REPRESENTATIONS, CERTIFICATIONS OR AGREEMENTS FURNISHED BY THE BORROWER IN CONNECTION WITH THE FUNDING LOAN OR THE BORROWER LOAN OR AS TO THE CORRECTNESS. COMPLETENESS OR ACCURACY THEREOF.
Section 8.2. Further Assurances. The Governmental Lender will do, execute, acknowledge, when appropriate, and deliver from time to time at the request of the Funding Lender, to the extent permitted by the Ordinance, such further acts, instruments, financing statements and other documents as are necessary or desirable to better assure, transfer, pledge or assign to the Funding Lender or holders of interest in the Funding Loan, and grant a security interest unto the Funding Lender or holders of interests in the Funding Loan in and to the Security and otherwise to carry out the intent and purpose of the Funding Loan Documents and the Funding Loan.
Section 8.3. Payment of Funding Loan Obligations. The Governmental Lender will pay or cause to be paid the principal of, prepayment premium, if any, and the interest on the Funding Loan as the same become due, but solely from the Security, as described in Section 5.1 of this Funding Loan Agreement.
Section 8.4. Funding Loan Agreement Performance. The Funding Lender, on behalf of the Governmental Lender and with the Written Consent of the Governmental Lender, may (but shall not be required or obligated) perform and observe any such agreement or covenant of the Governmental Lender under this Funding Loan Agreement, all to the end that the Governmental Lender's rights under the Borrower Loan Agreement may be unimpaired and free from default.
Section 8.5. Servicer. The Funding Lender may appoint a third-party Servicer to service and administer the Funding Loan and the Borrower Loan on behalf of the Funding Lender, including without limitation the fulfillment of rights and responsibilities granted by Governmental Lender to Funding Lender pursuant to Section 2.1 of the Borrower Loan Agreement; provided, however, that no appointment of a Servicer shall release the Funding Lender from ultimate responsibility for any obligation hereunder.
Section 8.6. Tax Covenants. The Governmental Lender covenants to and for the benefit of the Funding Lender and any other holders of an interest in the Governmental Lender Note that, notwithstanding any other provisions of this Funding Loan Agreement or of any other instrument, it will:
(i) al all times do and perform all acts and things permitted by law and this Funding Loan Agreement which are necessary or desirable in order to assure, and will not knowingly take any action which will adversely affect, the tax-exempt status of interest on the Governmental Lender Note: and
22
(ii) not use or knowingly permit the use of any proceeds of the Funding Loan or other funds of the Governmental Lender, directly or indirectly, in any manner, and will not take or permit to be taken any other action or actions, which would result in any of the Governmental Lender Note being treated as an obligation not described in Section 142(a)(7) of the Code by reason of the Governmental Lender Note or interest thereon not meeting the requirements of Section 142(d) of the Code.
In furtherance of the covenants in this Section 8.6, the Governmental Lender and the Borrower shall execute, deliver and comply with the provisions of the Tax Compliance Agreement, which are by this reference incorporated into this Funding Loan Agreement and made a part of this Funding Loan Agreement as if set forth in this Funding Loan Agreement in full, and by its acceptance of litis Funding Loan Agreement the Funding Lender acknowledges receipt of the Tax Compliance Agreement and acknowledges its incorporation in this Funding Loan Agreement by this reference. In the event the Borrower directs the Funding Lender to invest funds held under this Funding Loan Agreement, the Funding Lender agrees it will invest funds held under this Funding Loan Agreement in Permitted Investments in accordance with the direction of the Borrower and the terms of this Funding Loan Agreement and the Tax Compliance Agreement (this covenant shall extend throughout the term of the Funding Loan, to all funds and accounts created under or in connection with this Funding Loan Agreement and all moneys on deposit to the credit of any fund or account); provided that the Funding Lender shall be deemed to have complied with such requirements and shall have no liability to the extent it reasonably follows directions of the Borrower not inconsistent with the terms of this Funding Loan Agreement and the Tax Compliance Agreement or otherwise complies with the provisions of the Funding Loan Agreement relating to funds and accounts.
For purposes of this Section 8.6, tlie Governmental Lender's compliance shall be based solely on matters within the Governmental Lender's control and no acts, omissions or directions of the Borrower, the Funding Lender or any other Persons shall be attributed to the Governmental Lender.
In complying with the foregoing covenants, the Governmental Lender may rely from time to time on a Bond Counsel No Adverse Effect Opinion or other appropriate opinion of Bond Counsel.
Section 8.7. Performance by the Borrower. Without relieving the Governmental Lender from the responsibility for performance and observance of the agreements and covenants required lo be performed and observed by it hereunder, the Borrower, on behalf of the Governmental Lender and with the Written Consent of the Governmental Lender, may perform any such agreement or covenant if no Borrower Loan Agreement Default or Potential Default under ihe Borrower Loan Agreement exists.
Section 8.8. Repayment of Funding Loan. Subject lo the provisions of Article V hereof, the Governmental Lender will duly and punctually repay, or, cause to be repaid, but solely from the Security set forth in Article IV hereof, the Funding Loan, as evidenced by the Governmental Lender Note, as and when the same shall become due, all in accordance with the terms of the Governmental Lender Note and this Funding Loan Agreement.
23
Section 8.9. Borrower Loan Agreement Performance.
The third-party Servicer, if any, and the Funding Lender, on behalf of the Governmental Lender and with Written Notice lo the Governmental Lender, may (but shall not be required or obligated to) perform and observe any such agreement or covenant of the Governmental Lender under the Borrower Loan Agreement, all to the end that the Governmental Lender's rights under the Borrower Loan Agreement may be unimpaired and free from default.
The Governmental Lender will promptly notify the Borrower, the Servicer and the Funding Lender in writing of the occurrence of any Borrower Loan Agreement Default, provided that the Governmental Lender has received Written Notice or otherwise has actual knowledge of such event; and further provided that the Governmental Lender shall have no liability to any Person for its failure lo provide any such notice so long as it has made a good faith effort to comply with such provisions.
The Funding Lender will promptly notify the Borrower, the Servicer, if any, and the Governmental Lender in writing of the occurrence of any Event of Default or any Borrower Loan Agreement Default known to the Funding Lender.
Section 8.10. Maintenance of Records; Inspection of Records.
The Funding Lender shall keep and maintain adequate records pertaining to the funds and accounts, if any, established hereunder, including all deposits to and disbursements from said funds and accounts and shall keep and maintain the registration books for the Governmental Lender Note and interests therein. The Funding Lender shall retain in its possession all certifications and other documents presented to it, all such records and all records of principal, interest and Prepayment Premium, if any, paid on the Funding Loan, subject,to the inspection of the Borrower, the Governmental Lender, the Servicer and their representatives at all reasonable times and upon reasonable prior notice.
The Governmental Lender will at any and all times, upon the reasonable request of the Servicer, the Borrower or the Funding Lender, afford and procure a reasonable opportunity by their respective representatives to inspect the books, records, reports and other papers of the Governmental Lender relating to the Project and the Funding Loan, if any, and to make copies thereof.
Section 8.11. Representations and Warranties of the Funding Lender. The Funding Lender hereby represents to the Governmental Lender and the Borrower that it is duly authorized to enter into and perform this Funding Loan Agreement, and has full authority to take such action as it may deem advisable with respect to all matters pertaining to this Funding Loan Agreement.
Section 8.12. Funding Lender Limitations. Notwithstanding anything herein or in the Borrower Loan Agreement to the contrary, prior to the advancement by the Funding Lender of all advances of loan funds hereunder (and, by virtue hereof under the Borrower Loan Agreement and the Construction Funding Agreement), and only prior to such final advancement of all loan funds hereunder, no notice to or consent of the Funding Lender shall be required under any provision of this Funding Loan Agreement or the Borrower Loan Agreement nor shall the Funding fouler have any right lo receive notice of, consent to, direct or control any actions, restrictions, rights, remedies.
waivers or acceleration pursuant to any provision of this Funding Loan Agreement or the Borrower Loan Agreement during any lime that (a) any Material Funding Lender Event shall have occurred and be continuing; or (b) the Funding Loan Agreement and the Construction Funding Agreement arc not in effect and all obligations of the Governmental Lender and the Borrower, including payment obligations, pursuant to the Funding Loan Agreement, Governmental Lender Note, Borrower Loan Agreement and Borrower Note have been fully satisfied.
ARTICLE JX DEFAULT; REMEDIES
Section 9.1. Events of Default. Any one or more of the following shall constitute an event of default (an "Event of Default") under this Funding Loan Agreement (whatever the reason for such event and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body):
A default in the payment of any interest upon the Governmental Lender Note when such interest becomes due and payable; or
A default in the payment of principal of, or premium, if any, on, the Governmental Lender Note when such principal or premium becomes due and payable, whether at its stated maturity, by declaration of acceleration or call for mandatory prepayment or otherwise; or
Subject to Section 8.7 hereof, default in the performance or breach of.any material covenant or warranty of the Governmental Lender in this Funding Loan Agreement (other than a covenant or warranty or default in the performance or breach of which is elsewhere in this Section specifically dealt with), and continuance of such default or breach for a period of 30 days after there has been given Written Notice, as provided in Section 11.1 hereof, to the Governmental Lender and the Borrower by the Funding Lender or the third-party Servicer, if any, specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" under this Funding Loan Agreement; provided that, so long as the Governmental Lender has commenced to cure such failure to observe or perform within the 30-day cure period and the subject matter of the default is not capable of cure within said 30-day period and the Governmental Lender is diligently pursuing such cure to the Funding Lender's satisfaction, with the Funding Lender's Written Direction or Written Consent, then the Governmental Lender shall have an additional period of time as reasonably necessary (not to exceed 30 days unless extended in writing by the Funding Lender) within which to cure such default; or
A default in the payment of any Additional Borrower Payments; or
Any other "Default" or "Event of Default" under any of the other Funding Loan Documents (taking into account any applicable grace periods therein).
Section 9.2. Acceleration of Maturity ; Rescission and Annulment.
(a) Subject to the provisions of Section 9.9 hereof upon the occurrence of an I -vent of Default under Section 9.1 hereof, then and in every such case, the Funding Lender may declare the principal of the Funding Loan and the Governmental Lender Note and the interest accrued to
25
be immediately due and payable, by notice to the Governmental Lender and the Borrower and upon any such declaration, all principal of and Prepayment Premium, if any, and interest on the Funding Loan and the Governmental Lender Note shall become immediately due and payable.
(b) At any time after a declaration of acceleration has been made pursuant to subsection (a) of this Section, the Funding Lender may by Written Notice to the Governmental Lender, rescind and annul such declaration and its consequences if:
There has been deposited with die Funding Lender a sum sufficient to pay (1) all overdue installments of interest on the Governmental Lender Note, (2) the principal of and Prepayment Premium on the Governmental Lender Note that has become due otherwise than by such declaration of acceleration and interest thereon at the rate or rates prescribed therefor in the Governmental Lender Note, (3) to the extent that payment of such interest is lawful, interest upon overdue installments of interest at the rate or rates prescribed therefor in the Governmental Lender Note, and (4) all sums paid or advanced by the Funding Lender and the reasonable compensation, expenses, disbursements and advances of the Funding Lender, its agents and counsel (but only to the extent not duplicative with subclauses (1) and (3) above); and
All Events of Default, other than the nonpayment of the principal of the Government Lender Note which have become due solely by such declaration of acceleration, have been cured or have been waived in writing as provided in Section 9.9 hereof.
No such rescission and annulment shall affect any subsequent default or impair any right consequent thereon.
Section 9.3. Additional Remedies; Funding Lender Enforcement.
Upon the occurrence of an Event of Default, the Funding Lender may, subject to the provisions of this Section 9.3 and Section 9.9 hereof, proceed to protect and enforce its rights by mandamus or other suit, action or. proceeding at law or in equity. No remedy conferred by this Funding Loan Agreement upon or remedy, reserved to the Funding Lender is intended to be exclusive of any other remedy, but each such remedy shall be cumulative and shall be in addition to any other remedy given to the Funding Lender hereunder or now or hereafter existing at law or in equity or by statute.
Upon the occurrence of any Event of Default by the Borrower or its affiliate, the Funding Lender may proceed forthwith to protect and enforce its rights and this Funding Loan Agreement by such suits, actions or proceedings as the Funding Lender, in its sole discretion, shall deem expedient. Funding Lender shall have upon the occurrence of any Event of Default by the Borrower or its affiliate (which has not been waived in writing by the Funding Lender), all rights, powers, and remedies with respect to the Security as are available under the Uniform Commercial Code applicable thereto or as are available under any other applicable law at the time in effect and. without limiting the generality of the foregoing, the Funding Lender may proceed at law or in equity or otherwise, to the extent permitted by applicable law:
26
to take possession of the Security or any part thereof, with or without legal process, and to hold, service, administer and enforce any rights thereunder or thereto, and otherwise exercise all rights of ownership thereof, including (but not limited to) the sale of all or part of Ihe Security;
to become mortgagee of record for the Borrower Loan including, without limitation, completing the assignment of the Security Instrument by the Governmental Lender to the Funding Lender as anticipated by this Funding Loan Agreement, and recording the same in the real estate records of the jurisdiction in which the Project is located, without further act or consent of the Governmental Lender, and to service and administer the same for its own account;
to service and administer the Funding Loan as agent and on behalf of the Governmental Lender or otherwise, and, if applicable, to take such actions necessary to enforce the Borrower Loan Documents and the Funding Loan Documents on its own behalf, and to take such alternative courses of action, as it may deem appropriate; or
to take such steps to protect and enforce its rights whether by action, suit or proceeding in equity or at law for the specific performance of any covenant, condition ot agreement in the Governmental Lender Note, this Funding Loan Agreement or the other Funding Loan Documents, or the Borrower Loan Documents, or in and of the execution of any power herein granted, or for foreclosure hereunder, or for enforcement of any other appropriate legal or equitable remedy or otherwise as the Funding Lender may elect.
Whether or not an Event of Default has occurred, and except as provided in Section 9.15, the Funding Lender, in its sole discretion, shall have the sole right to waive or forbear any term, condition, covenant or agreement of the Security Instrument, the Borrower Loan Agreement, the Borrower Note or any other Borrower Loan Document or Funding Loan Document applicable to the Borrower, or any breach thereof, other than a covenant that would adversely impact the tax-exempt status of the interest on the Governmental Lender Note, and provided that the Governmental Lender may enforce specific performance with respect to the Unassigncd Rights.
If the Borrower defaults in the performance or observance of any covenant, agreement or obligation of the Borrower set forth in the Regulatory Agreement, and if such default remains uncured for a period of 60 days after the Borrower and the Funding Lender receive Written Notice stating that a default under the Regulatory Agreement has occurred and specifying the nature of the default, the Funding Lender shall have the right to seek specific performance of the provisions of the Regulatory Agreement or to exercise its other rights or remedies thereunder.
If the Borrower defaults in the performance of its obligations under the Borrower Loan Agreement to make rebate payments, to comply with any applicable continuing disclosure requirements, or to make payments owed pursuant to Sections 2.5. 5.14 or 5.15 of the Borrower Loan Agreement for fees, expenses or indemnification, the Funding Lender shall have the right to exercise all its rights and remedies thereunder (subject to the last paragraph of Section 9.14 hereof).
Section 9.4. Application of Money Collected. Any money collected by, the Funding Lender pursuant to this Article and any other sums then held by the Funding Lender as part of the Security, shall be applied as set forth in the Borrower Note.
Section 9.5. Remedies Vested in Funding Lender. All rights of action and claims under this Funding Loan Agreement or the Governmental Lender Note, unless specifically excluded via agreement, may be prosecuted and enforced by the Funding Lender without the possession of the Governmental Lender Note or the production thereof in any proceeding relating thereto.
Section 9.6. Restoration of Positions. If Funding Lender shall have instituted any proceeding to enforce any right or remedy under this Funding Loan Agreement and such proceeding shall have been discontinued or abandoned for any reason or shall have been determined adversely to the Funding Lender, then and in every such case the Governmental Lender and the Funding Lender shall, subject to any determination in such proceeding, be restored to their former positions hereunder, and thereafter all rights and remedies of the Governmental Lender and the Funding Lender shall continue as though no such proceeding had been instituted.
Section 9.7. Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Funding Lender is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment Of any other appropriate right or remedy.
Section 9.8. Delay or Omission Not Waiver. No delay or omission of the Funding Lender to exercise any right or remedy accruing upon an Event of Default shall impair any such right Or remedy or constitute a waiver of any such Event of Default or acquiescence therein. Every right and remedy given by this Article or by law to the Funding Lender may be exercised from time to time, and as often as may be deemed expedient, by Funding Lender. No waiver of any default or Event of Default pursuant to Section 9.9 hereof shall extend to, shall affect any-subsequent default or Event of Default hereunder, or shall impair any rights or remedies consequent thereon.
Section 9.9. Waiver of Past Defaults. Before any judgment or decree for payment of money due has been obtained by the Funding Lender, the Funding Lender may, subject to Section 9.6 hereof, by Written Notice to the Governmental Lender and the Borrower, waive any past default hereunder or under the Borrower Loan Agreement and its consequences except for default in obligations due (he Governmental Lender pursuant to or under the Unassigncd Rights. Upon any such waiver, such default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Funding Loan Agreement and the Borrower Loan Agreement; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon.
Section 9.10. Remedies under Borrower Loan Agreement or Borrower Note. As set
forth in this Section 9.10 but subject to Section 9.9 hereof, the Funding Lender shall have the right,
in its own name or on behalf of the Governmental Lender, to declare any default and exercise any remedies under the Borrower Loan Agreement or the Borrower Note, whether or not the Governmental Lender Note has been accelerated or declared due and payable by reason of an Event of Default.
Section 9.11. Waiver of Appraisement and Other Laws.
To the extent permitted by law, the Governmental Lender will not at any time insist upon, plead, claim or take the benefit or advantage of, any appraisement, valuation, stay, extension or redemption law now or hereafter in force, in order to prevent or hinder the enforcement of this Funding Loan Agreement; and the Governmental Lender, for itself and all who may claim under it, so far as it they now or hereafter may lawfully do so, hereby waives the benefit of all such laws. The Governmental Lender, for itself and all who may claim under it, waives, to the extent that it may lawfully do so, all right to have the property in the Security marshaled upon any enforcement hereof.
If any law now in effect prohibiting the waiver referred to in Section 9.11 (a) shall hereafter be repealed or cease to be in force, such law shall not thereafter be deemed to constitute any part of the contract herein contained or to preclude the application of this Section 9.11.
Section 9.12. Suits to Protect the Security. The Funding Lender shall have power to institute and to maintain such proceedings as it may deem expedient to prevent any impairment of the Security by any acts that may be unlawful or in violation of this Funding Loan Agreement and to protect its. interests in the Security and in the rents, issues, profits, revenues and other income arising therefrom, including power to institute and maintain proceedings to restrain the enforcement of or compliance with any Governmental enactment, rule or order that may be unconstitutional or otherwise invalid, if the enforcement of or compliance with such enactment, rule or order would impair the security hereunder or be prejudicial to the interests of the Funding Lender.
Section 9.13. Remedies Subject to Applicable Law. All rights, remedies and powers provided by this Article may be exercised only to the extent that the exercise thereof does not violate any applicable provision of law in the premises, and all the provisions of this Article
Section 9.14. Assumption of Obligations. In the event that the Funding Lender or its permitted assignee or designee in accordance with Section 2.4 hereof shall become the legal or beneficial owner of the Project by foreclosure or deed in lieu of foreclosure, such party shall succeed to the rights and the obligations of the Borrower under the Borrower Loan Agreement, the Borrower Note, the Regulatory Agreement and any other Funding Loan Documents to which the Borrower is a party. Such assumption shall be effective from and after the effective date of such acquisition and shall be made with the benefit of the limitations of liability set forth therein and without any liability for the prior acts of the Borrower.
29
It is the intention of the parties hereto that upon the occurrence and continuance of an Event of Default hereunder, rights and remedies may he pursued pursuant to the terms of the Funding Loan Documents, subject to the last paragraph of Section 9.2.
Section 9.15. Remedies upon unremedied Material Funding Lender Event. Upon the occurrence of a Material Funding Lender Event which shall continue unremedied for a period of 60 days (a "Funding Lender Event of Default"), (i) the Governmental Lender may direct that the Governmental Lender Note be transferred to and obligations and liabilities thereunder be assumed by another lender approved to act as Funding Lender by the Governmental Lender pursuant to Section 2.4(b) hereof and acceptable to the Borrower; provided, however, that no such transfer shall become effective until the Funding Lender has been fully reimbursed for all advances made and all expenses incurred and all other amounts owed to Funding Lender with respect to the Governmental Lender Note through the date of transfer, and shall be fully released in writing by the Governmental Lender, the Borrower and the successor Funding Lender from any and all continuing obligations and liabilities with respect to the Funding Loan and, unless the loss has not-in any material respect been caused by the action or inaction of the Borrower, be indemnified by the Borrower for any losses incurred by Funding Lender with respect thereto (except for losses resulting from remedies awarded at law or equity pursuant to clause (ii) below, as to which no indemnity shall be provided), and (ii) the Governmental Lender (or the Borrower pursuant to the Borrower Loan Agreement or this Funding Loan Agreement) may pursue any other remedy available at law or in equity.
ARTICLE X
AMENDMENT; AMENDMENT OF BORROWER LOAN AGREEMENT
AND OTHER DOCUMENTS
Section 10.1. Amendment of Funding Loan Agreement. Any of the terms of this Funding Loan Agreement and the Governmental Lender Note may be amended or waived only by an instrument signed by the Funding Lender and die Governmental Lender, provided, however, no such amendment which materially affects the rights, duties, obligations or other interests of the Borrower shall be made without the consent of the Borrower, and, provided further, that if the Borrower is in default under any Funding Loan Document, no Borrower consent shall be required unless such amendment has a material adverse effect on the rights, duties, obligations or other interests of the Borrower. All of the terms of this Funding Loan Agreement shall be binding upon the successors and assigns of and all Persons claiming under or through the Governmental Lender or any such successor or assign, and shall inure to the benefit of and be enforceable by the successors and assigns of the Funding Lender.
Section 10.2 Consent Required for Amendment of Funding Loan Agreement. I he
Governmental Lender shall not consent to any amendment, change or modification of the Borrower Loan Agreement or any other Borrower Loan Document or Funding Loan Document without the prior Written Consent of the Funding Lender; provided, however, that such prior Written Consent shall not be required with respect to any such amendment, change or modification undertaken by the Governmental Lender in order to preserve one or more of its Unassigned Rights. Governmental Lender agrees to provide the Funding Lender with prompt notification of any such amendments, modifications or changes not requiring the prior Written Consent of the Funding Lender.
30
Section 10.3. Consents and Opinions. No amendment to this Funding Loan Agreement or any other Funding Loan Document entered into under this Article X or any amendment, change or modification otherwise permitted under this Article X shall become effective unless and until (i) the Funding Lender shall have approved the same in writing in its sole discretion and (ii) the Funding Lender and the Governmental Lender shall have received, at the expense of the Borrower, a Bond Counsel No Adverse Effect Opinion and a Bond Counsel Opinion of Counsel to the effect that any such proposed amendment is authorized under and complies with the provisions of this Funding Loan Agreement and is a legal, valid and binding obligation of the parties thereto, subject to normal exceptions relating to bankruptcy, insolvency and equitable principles limitations. No modification or amendment of the terms of the Borrower Loan Agreement or the Borrower Note may be undertaken without the prior Written Consent of the Governmental Lender and the Funding Lender and the delivery to the Funding Lender and the Governmental Lender, at the expense of the Borrower, of a Bond Counsel No Adverse Effect Opinion with regard to such proposed modification.
Any consent required pursuant to this Article X from, or on behalf of, the Governmental Lender.may be executed by an Authorized City Representative.
ARTICLE XI MISCELLANEOUS
Section 11.1. Notices
(a) AH notices, demands, requests and other communications required or permitted to be given by any provision of this Funding Loan Agreement shall be in writing and sent by first class, regular, registered or certified mail, commercial delivery service, overnight courier, telegraph, telex, telecopier or facsimile transmission, air or other courier, or hand delivery to the party to be notified addressed as follows:
If to the Governmental Lender: City of Chicago
Department of Planning and Development 121 North LaSalle Street, I0,h Floor Chicago, IL 60602 Attention: Commissioner Telephone: (312)744-4190 Facsimile: (312) 742-2271
and a copy to: City of Chicago
Office of Corporation Counsel
121 North LaSalle Street, Room 600
Chicago, IL 60602
Attention: Finance and Economic Development Division
Telephone: (312) 744-0200 Facsimile: (312) 744-8538
31
and a copy to: City of Chicago
Office of the City Comptroller 121 North LaSalle Street, Suite 700 Chicago. IL 60602 Telephone: (312) 744-2202 Facsimile: (312)742-6544
If to Borrower: Paseo Boricua Arts, LLC
666 Dundee Road, Suite 1102 Northbrook, Illinois 60062 Attention: Richard Sciortino
With a copy to: Applegate & Thom-Tomscn, P.C.
425 S. Financial Place, Suite 1900 Chicago, Illinois 60605 Attention: Bennett Applegate
With a copy to: USA Institutional Paseo LLC
777 West Putnam Avenue Greenwich, Connecticut 06830 Attention: Joanne D. Flangan, Esq.
If to the Funding Lender: JPMorgan Chase Bank, N. A.
Community Development Real Estate Group Chase l ower/Mail Code IL-1-0953 10 South Dearborn Street Chicago, Illinois 60603 Attn: John D. Bernhard
And
JPMorgan Chase Bank, N. A.
Legal Department
237 Park Avenue, 6th Floor
Mail Code NY 1-R602
New York, New York 10017-3140
Attn: Michael R. Zients, Executive Director and
Assistant General Counsel
And to: Kutak Rock LLP
8601 N. Scottsdale Road. Suite 300 Scottsdale, Arizona 85253 Attn: I leather Aeschleman
Any such notice, demand, request or communication shall be deemed to have been given and received for all purposes under this Funding Loan Agreement: (i) three Business Days after the same is deposited in any official depository or receptacle of the United States Postal Service first class, or, if applicable, certified mail, return receipt requested, postage prepaid; (ii) on the next Business Day after the same is deposited with a nationally recognized overnight delivery service that guarantees overnight delivery; and (iii) on the date of actual delivery to such party by any other means (as evidenced by written receipt thereof); provided, however, if the day such notice,-demand, request or communication shall be deemed to have been given and received as aforesaid is not a Business Day, such notice, demand, request or communication shall be deemed to have been given and received on the next Business Day; and provided further that notice to the Governmental Lender shall not be deemed to have been given until actually received by the Governmental Lender. Any facsimile signature by a Person on a document, notice, demand, request or communication required or permitted by this Funding Loan Agreement shall constitute a legal, valid and binding execution thereof by such Person.
Any party to this Funding Loan Agreement may change such party's address for the purpose of notice, demands, requests and communications required or permitted under this Funding Loan Agreement by providing written notice of such change of address to all of the parties by written notice as provided herein.
Section 11.2. Term of Funding Loan Agreement. This Funding Loan Agreement shall be in full force and effect until ail payment obligations of the Governmental Lender hereunder have been paid in full and the Funding Loan has been retired or the payment thereof has been provided for (such payment or provision to be solely from the Security set forth in Article IV hereof as fiirther provided in Section 8.8 hereof); except that on and after payment in full of tlie Governmental Lender Note, this Funding Loan Agreement shall be terminated, without further action by the parties hereto.
Section 11.3. Successors and Assigns. All covenants and agreements in this Funding Loan Agreement by the Governmental Lender shall bind its successors and assigns, whether so expressed or not.
Section 1.1.4. Legal Holidays. In any case in which the date of payment of any amount due hereunder or the date on which any other act is to be performed pursuant to this Funding Loan Agreement shall be a day that is not a Business Day, then payment of such amount or such act need not be made on such date but may be made on the next succeeding Business Day, and such later payment or such act shall have the same force and effect as if made on the date of payment or the date fixed for prepayment or the date fixed for such act, and no additional interest shall accrue for the period after such date and prior to the date of payment.
Section 11.5. Governing Law. This Funding Loan Agreement shall be governed by and shall be enforceable in accordance with the laws of the State, without reference to an application of its conflict of law principles.
Section 11.6. Severability. If any provision of this Funding Loan Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining portions shall not in any way be affected or impaired. In case any covenant, stipulation, obligation or
n -»
agreement contained in the Governmental Lender Note or in this Funding Loan Agreement shall for any reason be held to be usurious or in violation of law. then such covenant, stipulation, obligation or agreement shall be deemed to be the covenant, stipulation, obligation or agreement of the Governmental Lender or the Funding Lender only to the full extent permitted by law.
Section 11.7. Execution in Several Counterparts. This Funding Loan Agreement may be contemporaneously executed in several counterparts, all of which shall constitute one and the same instrument and each of which shall be, and shall be deemed to be, an original.
Section 11.8. Nonrecourse Obligation of the Borrower. Except as otherwise provided in the Borrower Loan Agreement, any obligations of the Borrower under this Funding Loan Agreement are without recourse to the Borrower or to the Borrower's partners or members, as the case may be.
Section 11.9. [Reserved]
Section 11.10. Electronic Transactions. The transactions described in this Funding Loan Agreement may be conducted, and related documents may be stored, by electronic means. Copies, telecopies, facsimiles, electronic files and other reproductions of original executed documents shall be deemed to be authentic and valid counterparts of such original documents for all purposes, including tlie filing of any claim, action or suit in the appropriate court of law.
[Signature Pages Follow]
IN WITNESS WHEREOF, the Funding Lender and the Governmental Lender have caused this Funding Loan Agreement to be duly executed as of the date first written above.
JPMORGAN CHASE BANK, N. A.
Name: R. Scott Schmid Title: Authorized Officer
[Signature page to Funding Loan Agreement]
CITY OF CHICAGO
'U\±<11 >.vi yu/-c <
Name: Jennie ! luang Bennett Title: Chief Financial Officer
Name: Andrea M. Valencia Title: City Clerk
(Signature page to Funding Loan Agreement]
Exhibit "A"
(To Funding Loan Agreement with JPMorgan Chase Bank, N. A.)
Form of Governmental Lender Note
This Note may be owned only by a Permitted Transferee in accordance with the terms of the Funding Loan Agreement referred to herein, and the holder hereof, by the acceptance of this Note (A) represents that it is a Permitted Transferee and (B) acknowledges that it can only transfer this Note to another Permitted Transferee in accordance with the terms of the Funding Loan Agreement.
City of Chicago $8,100,000 Multi-Family Housing Revenue Note (Pasco Boricua Project), Series 2021
Dated April 29, 2021 not to exceed $8,100,000
For Value Received, the undersigned City Of Chicago ("Obligor") promises to pay to the order of JPMorgan .Chase. Bank, N. A., ("Holder"), the maximum principal sum of Eight Million One Hundred Thousand Dollars ($8,100,000), on October 29, 2041, or earlier as provided herein, together with interest thereon at the rates, at the times and in the amounts provided.below.
Obligor shall pay to the Holder on or before each date on which payment is due under that certain Funding Loan Agreement, dated as of April 1, 2021 (the "Funding Loan Agreement"), between Obligor and Holder, an amount in immediately available funds sufficient to pay the principal amount of and Prepayment Premium, if any, on the Funding Loan then due and payable, whether by maturity, acceleration, prepayment or otherwise. In the event that amounts held derived from proceeds of the Borrower Loan, condemnation awards or insurance proceeds or investment earnings thereon are applied to the payment of principal due on the Funding Loan in accordance with the Funding Loan Agreement, the principal amount due hereunder shall be reduced to the extent of the principal amount of the Funding Loan so paid. Capitalized terms not otherwise defined herein shall have the meaning assigned in the Funding Loan Agreement or the. Borrower Loan Agreement.
Obligor shall pay to the Holder on or before each date on which interest on the Funding Loan is payable interest on the unpaid balance hereof in an amount in immediately available funds sufficient to pay the interest on the Funding Loan then due and payable in the amounts and at the rate or rates set forth in the Funding Loan Agreement.
The Funding Loan and this Governmental Lender Note are pass-through obligations relating to a construction loan (the "Borrower Loan") made by Obligor from proceeds of the Funding Loan to Paseo Boricua Arts, LLC, an Illinois limited liability company (the "Borrower'"), under that certain Borrower Loan Agreement, dated as of April 1, 2021 (as the same may be modified, amended or supplemented from time to time (the "Borrower Loan Agreement"), between the Obligor and the Borrower, evidenced by the Borrower Note (as defined in the Borrower Loan Agreement). Reference is made to the Borrower Loan Agreement and to the Borrower Note for
37
complete payment and prepayment terms of the Borrower Note, payments on which are passed-through under the Governmental Lender Note.
This Governmental Lender Note is a special, limited obligation of the Obligor, payable solely from the Pledged Revenues and other funds and moneys and Security pledged and assigned under the funding Loan Agreement. This Governmental Lender Note is not a general obligation of the Governmental Lender or a charge against its general credit or the general credit taxing powers of the State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability of the Governmental Lender, and neither the Governmental Lender, the State nor any other political subdivision thereof shall be liable for the payments of principal of and, Prepayment Premium, if any, and interest on this Governmental Lender Note, and the Governmental Lender Note is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the Security pledged hereunder and receipts of the Governmental Lender derived pursuant to this Funding Loan Agreement. No holder of this Governmental Lender Note or any interest therein has the right to compel any exercise of the taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Governmental Lender Note or the interest or premium, if any, thereon.
This Governmental Lender Note is subject to the express condition that at no time shall interest be payable on this Governmental Lender Note or the Funding Loan at a rate in excess of the Maximum Rate provided in the Funding Loan Agreement; and Obligor shall not be obligated or required to pay, nor shall the Flolder be permitted to charge or collect, interest at a rate in excess of such Maximum Rate. If by'the terms of this Governmental Lender Note or of the Funding Loan Agreement, Obligor is required to pay interest at a rate in excess of such Maximum Rate, the rate of interest hereunder or thereunder shall be deemed to be reduced immediately and automatically to such Maximum Rate, and any such excess payment previously made shall be immediately and automatically applied to the unpaid balance of the principal sum hereof and not to the payment of interest.
Amounts payable hereunder representing late payments, penalty payments or the like shall be payable to the extent allowed by law.
This Governmental Lender Note is subject to all of the terms, conditions, and provisions of the Funding Loan Agreement and the Borrower Loan Agreement, including those respecting prepayment and the acceleration of maturity.
If there is an Event of Default under the Funding Loan Documents, then in any such event and subject to the requirements set forth in the Funding Loan Agreement, the Holder may declare the entire unpaid principal balance of this Governmental Lender Note and accrued interest, if any. due and payable at once. All of the covenants, conditions and agreements contained in the Funding Loan Documents are hereby made part of this Governmental Lender Note.
No delay or omission on the part of the Holder in exercising any remedy, right or option under this Governmental Lender Note or the Funding Loan Documents shall operate as a waiver of such remedy, right or option. In any event, a waiver on any one occasion shall not be construed as a waiver or bar to any such remedy, right or option on a future occasion. The rights, remedies
and options of the I Iolder under this Governmental Lender Note and the funding Loan Documents are and shall be cumulative and are in addition to all of the rights, remedies and options of the Holder at law or in equity or under any other agreement.
Obligor shall pay all costs of collection on demand by the Holder, including without limitation, reasonable attorneys' fees and disbursements, which costs may be added to the indebtedness hereunder, togeUier with interest thereon, to the extent allowed by law, as set forth in the Funding Loan Agreement.
This Governmental Lender Note may not be changed orally. Presentment for payment, notice of dishonor, protest and notice of protest are hereby wai ved. The acceptance by the Holder of any amount after the same is due shall not constitute a waiver of the right to require prompt payment, when due, of all other amounts due hereunder. The acceptance by the I Iolder of any sum in an amount less than the amount then due shall be deemed an acceptance on account only and upon condition that such acceptance shall not constitute a waiver of the obligation of Obligor to pay the entire sum then due, and Obligor's failure to pay such amount then due shall be and continue to be adefault notwithstanding such acceptance of such amount on account, as aforesaid. Consent by the Flolder to any action of Obligor, which is subject to consent or approval of the Holder hereunder, shall not be deemed a waiver of the right to require such consent or approval to future or successive actions.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
In Witness Whereof, the undersigned has fully executed and delivered this Governmental Lender Note or caused this Governmental Lender Note to be duly executed and delivered by its authorized representative as of the date first set forth above. The undersigned intends that this instrument shall be deemed to be signed and delivered as a sealed instrument.
Obligor:
City of Chicago
By:
Name: Jennie Huang Bennett Title: Chief Financial Officer
[SEAL] Attest:
Name: Andrea M. Valencia Title: City Clerk
40
Exhibit "B" (To Funding Loan Agreement)
Form of Required Transferee Representations
,201_
The undersigned, as holder (the "Holder" or the "Funding Lender") of $8,100,000 Multi-Family Housing Revenue Note (Paseo Boricua Project), Series 2021, dated as of the Closing Date (the "Governmental Lender Note") issued pursuant to an ordinance adopted on June 12, 2019, as amended by an ordinance adopted on December 16, 2020 (the "Ordinance") by the City Council of the City of Chicago (the "Governmental Lender") and under a Funding Loan Agreement dated as of April 1, 2021 (the "Funding Loan Agreement") between the Governmental Lender and the Funding Lender, hereby represents as the Holder and Funding Lender that:
The Funding Lender hereby acknowledges the execution and delivery of the Governmental Lender Note by the Governmental Lender in the original maximum principal amount of $8,100,000.
The Funding Lender has authority to make the Funding Loan and to execute and deliver these representations arid any other instrument and documents required to be executed by the Funding Lender in connection with the execution and delivery of the Governmental Lender Note.
The Flolder has sufficient knowledge and experience in financial and business matters with respect to the evaluation of residential real estate developments such as the Project to be able to evaluate the risk and merits of the investment represented by the Governmental Lender Note. We are able to bear the economic risks Of such investment.
The Holder acknowledges that it has either been supplied with or been given access to information, including financial statements and other financial information, to which a reasonable investor would attach significance in making investment decisions, and the Holder has had the opportunity to ask questions and receive answers from knowledgeable individuals concerning the Governmental Lender, the Project, the use of proceeds of the Governmental Lender Note, the Funding Loan Agreement and the Funding Loan and the security therefor so the Funding Lender has been able to make its decision to extend the Funding Loan or ah interest therein and, as Holder, purchase the Governmental Lender Note or an interest therein. The Flolder understands that the Governmental Lender Note and the Borrower Loan Agreement are not registered under the Securities Act of 1933, as amended, and that such registration is not legally required as of the date hereof: and further understands that the Governmental Lender Note and the Borrower Loan Agreement (i) are not being registered or otherwise qualified for sale under the "Blue Sky" laws and regulations of any state, (ii) will not be listed in any stock or other securities exchange, (iii) will not carry a rating from any rating service and (iv) will be delivered in a form which is not readily marketable. The Holder acknowledges that it has not relied upon the Governmental Lender for any information in connection with the Holder's purchase of the Governmental Lender Note.
B-l
As of the date hereof, the Holder is an Approved Transferee (as defined in the Funding Loan Agreement).
The Flolder acknowledges that it is purchasing the Governmental Lender Note for investment for its own account and not with a present view toward resale or the distribution thereof, in that we do not now intend to resell or otherwise dispose of all or any part of our interests in the Governmental Lender Note. Subject to paragraph 7 below, the Funding Lender acknowledges and agrees that the Governmental Lender Note, or interests therein, can be sold and subsequently transferred only to purchasers that execute and deliver to the Governmental Lender representations from the transferee to substantially the same effect as these required transferee representations or in such other form authorized under the Funding Loan Agreement with no revisions except as may be approved in writing by the Governmental Lender.
In the event any offering document to be provided to any subsequent buyer or beneficial owner of the Governmental Lender Note will disclose information with respect to the Governmental Lender other than its name, location and type of political subdivision and general information with respect to the Funding Loan and Borrower Loan and related documents, the Holder will provide the Governmental Lender with a draft of such placement memorandum and the Governmental Lender shall have the right to approve any description of the Governmental Lender therein (which approval shall not be unreasonably withheld).
The Funding Lender understands that the Governmental Lender Note is a special, limited obligation of the Governmental Lender; payable solely from funds and moneys pledged and.assigned under the Funding Loan Agreement, and that the liabilities and obligations of the Governmental Lender with respect, to the Governmental Lender Note are expressly limited as set forth in the Funding Loan Agreement and related documents. The Funding Lender acknowledges that the Governmental Lender Note is not an indebtedness of the Governmental Lender or a charge against its general credit or the general credit taxing powers of the State, the Governmental Lender, or any other political subdi vision thereof, and shall never give rise to any pecuniary liability of the Governmental Lender, and neither the Governmental Lender, the State nor any other political subdivision thereof shall be liable for the payments of principal of and, Prepayment Premium, if any, and interest on the Governmental Lender Note, and the Governmental Lender Note is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the Security and receipts of the Governmental Lender derived pursuant to the Funding Loan Agreement and the Borrower Loan Agreement. The Funding Lender acknowledges that no holder of the Governmental Lender Note or any interest therein, has the right to compel any exercise of the taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Governmental Lender Note or the interest or Prepayment Premium, if any, thereon.
Capitalized terms used herein and not otherwise defined have the meanings given such terms in the Funding Loan Agreement.
B-2
JPMorgan Chase Bank, N. A.
By:
Name: Title:
Exhibit B
Note
This Note may be owned only by a Permitted Transferee in accordance with the terms of the Funding Loan Agreement referred to herein, and the holder hereof, by the acceptance of this Note (A) represents that it is a Permitted Transferee and (B) acknowledges that it can only transfer this Note to another Permitted T ransferee in accordance with the terms of the Funding Loan Agreement.
City of Chicago $8,100,000 Multi-Family Housing Revenue Note (Paseo Boricua Project), Series 2021
Dated April 29, 2021 not lo exceed $8,100,000
For Value Received, the undersigned City Of Chicago ("Obligor") promises to pay lo the order of JPMorgan Chase Bank, N. A., ("Holder"), the maximum principal sum of Eight Million One Hundred Thousand Dollars ($8,100,000), on October 29,2041, or earlier as provided herein, together with interest thereon at the rates, at the times and in the amounts provided below.
Obligor shall pay to the Holder on or before each date on which payment is due under that certain Funding Loan Agreement, dated as of April 1, 2021 (the "Funding Loan Agreement"), between Obligor and Holder, an amount in immediately available funds sufficient to pay the principal amount of and Prepayment Premium, if any, on the Funding Loan then due and payable, whether by maturity, acceleration, prepayment or otherwise. In tlie event that amounts held derived from proceeds of die Borrower Loan, condemnation awards or insurance proceeds or investment earnings thereon are applied to the payment of principal due on the Funding Loan in accordance with the Funding Loan Agreement, the principal amount due hereunder shall be reduced to the extent of the principal amount of the Funding Loan so paid. Capitalized terms not otherwise defined herein shall have the meaning assigned in the Funding Loan Agreement or the Borrower Loan Agreement.
Obligor shall pay to the Holder on or before each date on which interest on Ihe Funding Loan is payable interest on the unpaid balance hereof in an amount in immediately available funds sufficient to pay the interest on the Funding Loan then due and payable in the amounts and at the rate or rates set forth in the Funding Loan Agreement.
The Funding Loan and this Governmental Lender Note are pass-through obligations relating to a construction loan (the "Borrower Loan") made by Obligor from proceeds of the Funding Loan to Paseo Boricua Arts, LLC. an Illinois limited liability company (the "Borrower'), under that certain Borrower Loan Agreement, dated as of April 1, 2021 (as the same may be modified, amended or supplemented from time to time (the "Borrower Loan Agreement"), between the Obligor and the Borrower, evidenced by the Borrower Note (as defined in the Borrower Loan Agreement). Reference is made to the Borrower Loan Agreement and to the Borrower Note for complete payment and prepayment terms of the Borrower Note, payments on which are passcd-through under the Governmental Lender Note.
This Governmental Lender Note is a special, limited obligation of the Obligor, payable solely from the Pledged Revenues and other funds and moneys and Security pledged and assigned
under the Funding Loan Agreement. T his Governmental Lender Note is not a general obligation of the Governmental Lender or a charge against its general credit or the general credit taxing powers of the State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability of the Governmental Lender, and neither the Governmental Lender, the State nor any other political subdivision thereof shall be liable for the payments of principal of and, Prepayment Premium, if any, and interest on this Governmental Lender Note, and the Governmental Lender Note is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the Security pledged hereunder and receipts of the Governmental Lender derived pursuant to this Funding Loan Agreement. No holder of this Governmental Lender Note or any interest therein has the right to compel any exercise of the taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Governmental Lender Note or the interest or premium, if any, thereon.
This Governmental Lender Note is subject to the express condition that at no time shall interest be payable on this Governmental Lender Note or the Funding Loan at a rate in excess of the Maximum Rate provided in the Funding Loan Agreement; and Obligor shall not be obligated or required to pay, nor shall the Flolder be permitted to charge or collect, interest at a rate in excess of such Maximum Rate. If by the terms of this Governmental Lender Note or of the Funding Loan Agreement, Obligor is required to pay interest at a rate in excess of such Maximum Rate, the rate of interest hereunder or thereunder shall be deemed to be reduced immediately and automatically to such Maximum Rate, and any such excess payment previously made shall be immediately and automatically applied to the unpaid balance of the principal stun hereof and not to the payment of interest.
Amounts payable hereunder representing late payments, penalty payments or the like shall be payable to the extent allowed by law.
This Governmental Lender Note is subject to all of the terms, conditions, and provisions of the Funding Loan Agreement and the Borrower Loan Agreement, including those respecting prepayment and the acceleration of maturity.
If there is an Event of Default under the Funding Loan Documents, then in any such event and subject to the requirements set forth in the Funding Loan Agreement, the Holder may declare the entire unpaid principal balance of this Governmental Lender Note and accrued interest, if any, due and payable at once. All of the covenants, conditions and agreements contained in the Funding Loan Documents are hereby made part of this Governmental Lender Note.
No delay or omission on the part of the Holder in exercising any remedy, right or option under this Governmental Lender Note or the Funding Loan Documents shall operate as a waiver of such remedy, right or option. In any event, a waiver on any one occasion shall not be construed as a waiver or bar to any such remedy, right or option on a future occasion. T he rights, remedies and options of the Holder under this Governmental Lender Note and the Funding Loan Documents are and shall be cumulative and are in addition to all of the rights, remedies and options of the Flolder at law or in equity or under any other agreement.
Obligor shall pay all costs of collection on demand by the Holder, including without limitation, reasonable attorneys' fees and disbursements, which costs may be added to the indebtedness hereunder, together with interest thereon, to the extent allowed by law, as set forth in the Funding Loan Agreement.
This Governmental Lender Note may not be changed orally. Presentment for payment, notice of dishonor, protest and notice of protest arc hereby waived. The acceptance by the Flolder of any amount after the same is due shall not constitute a waiver of the right to require prompt payment, when due, of all other amounts due hereunder. The acceptance by the Holder of any sum in an amount less than the amount then due shall be deemed an acceptance on account only and upon condition that such acceptance shall not constitute a waiver of the obligation of Obligor to pay the entire sum then due, and Obligor's failure to pay such amount then due shall be and continue to be a default notwithstanding, such acceptance of such amount on account, as aforesaid. Consent by the Flolder to any action of Obligor, which is subject to consent or approval of the Holder hereunder, shall not be deemed a waiver of the right to require, such consent or approval to future or successive actions.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
in Witness Whereof, the undersigned has fully executed and delivered this Governmental Lender Note or caused this Governmental Lender Note to be duly executed and delivered by its authorized representative as of the date first set forth above. The undersigned intends that this instrument shall be deemed to be signed and delivered as a sealed instrument.
Obligor:
City of Chicago
By: A^^yjMKJljA
Nairre
Name: Andrea M. Valencia Title: .City-Clerk
Exhibit C Borrower Loan Agreement
Hxccution Copy
BORROWER LOAN AGREEMENT Between CITY OF CHICAGO, as Governmental Lender and
PASEO BORICUA ARTS, LLC, an Illinois limited liability company, as Borrower
Dated as of April 1,2021
The interest of the City of Chicago (the "Governmental Lender") in this Borrower Loan Agreement (except for certain rights described herein) has been pledged and assigned to JPMorgan Chase Bank, N. A., as funding lender (the ''Funding Lender"), under that certain Funding Loan Agreement, of even date herewith, between the Governmental Lender and the Funding Lender, under which the Funding Lender is originating a loan to the Governmental Lender the proceeds of which are to be used to fund the Borrower Loan made under this Borrower Loan Agreement.
Table of Contenls
RECITALS|910|ARTICLE I|910|DEFINITIONS; PRINCIPLES OF CONSTRUCTION|910|Section 1.1. Specific Definitions|910|Section 1.2. Definitions|910|ARTICLE II GENERAL 18
Section 2.1. Origination of Borrower Loan 18
Section 2.2. Security for tlie Funding Loan 18
Section 2.3. Loan; Borrower Note; Conditions to Closing 19
Section 2.4. Borrower Loan Payments 20
Section 2.5. Additional Borrower Payments 20
Section 2.6. Overdue Payments; Payments if Default 21
Section 2.7. Calculation of Interest Payments and Deposits to Real Estate Related
Reserve Funds . 21
Section 2.8. Grant of Security Interest; Application of Funds 22
Section 2.9. Marshalling; Payments Set Aside. . 22
Section 2.10. Borrower Loan Disbursements 22
ARTICLE III [RESERVED] 23
ARTICLE I V REPRESENTATIONS AND WARRANTIES 23
Section 4.1. Borrower Representations 23
Section 4.1.1 Organization; Special Purpose 23
Section 4.1.2 Proceedings; Enforceability 23
Section 4.1,3 No Conflicts 23
Section 4.1.4 Litigation; Adverse Facts 24
Section 4.1.5 Agreements; Consents; Approvals 25
¦ Section 4.1.6 Title .' 25
Section 4.1.7 Survey 26
Section 4.1.8 No Bankruptcy Filing 26
Section 4.1.9 Full and Accurate Disclosure 26
TABLE OF CONTENTS
(continued)
Page
Section 4.1.10 No Plan Assets 26
Section 4.1.11 Compliance 26
Section 4.1.12 Contracts 26
Section 4.1.13 Financial Information 27
Section 4.1.14 Condemnation 27
Section 4.1.15 Federal Reserve Regulations 27
Section 4.1.16 Utilities and Public Access 27
Section 4.1.17 Not a Foreign Person 28
Section 4.1.18 Separate Lots 28
Section 4.1.19 Assessments 28
Section 4.1.20 Enforceability ! ., 28
Section 4.1.21 Insurance 28
Section 4.1.22 Use of Property; Licenses .- , 28
Section 4.L23 Flood Zone 29
Section 4.L24 Physical Condition. 29
Section 4.1.25 Encroachments. 29
Section 4.1.26 State Law Requirements. 29
Section 4.1.27 Filing and Recording Taxes 29
Section 4.1.28 Investment Company Act 30
Section 4.1.29 Fraudulent Transfer 30
Section 4.1,30 Ownership of the Borrower 30
Section 4.1.31 Environmental Matters 30
Section 4.1.32 Name; Principal Place of Business 31
Section 4.1.33 Subordinated Debt 31
Section 4.1.34 Filing of Taxes 31
Section 4.1.35 General Tax 31
Section 4.1.36 Approval of the Borrower Loan Documents and Funding Loan
Documents 31
Section 4.1.37 Funding Loan Agreement 3^
32
Section 4.1.38 Americans with Disabilities Act 32
Section 4.1.39 Requirements of Code and Regulations
-ii-
TABLE OF CONTENTS
(continued)
Page
Section 4.1.40 Regulatory Agreement 32
Section 4.1.41 Intention to Hold Project 32
Section 4.1.42 Concerning General Partner 32
Section 4.1.43 Government and Private Approvals 33
Section 4.1.44 Concerning Guarantor .; 3.3
Section 4.1.45 No Material Defaults 34
Section 4.1.46 Payment of Taxes. 34
Section 4.1.47 Rights to Project Agreements and Licenses 34
Section 4.1.48 Patriot Act Compliance 35
Section 4.1.49 Rent Schedule 3^
Section 4.1.50 Other Documents , 35
Section 4.1.51 Subordinate Loan Documents. ; 36
Section 4.1.52 [Reserved] , 36
Section 4.2. Survival of Representations and Covenants........ 36
ARTICLE V AFFIRMATIVE COVENANTS 36
Section 5.1. Existence 36
Section 5.2. Taxes and Other Charges. 36
Section 5.3. Repairs; Maintenance and Compliance; Physical Condition 37
Section 5-4. Litigation 37
Section 5.5. Performance of Other Agreements 3 7
Section 5.6. Notices 37
Section 5.7. Cooperate in Legal Proceedings 38
Section 5.8. Further Assurances 38
Section 5.9. Delivery of Financial Information 38
Section 5.10. Environmental Matters 3h
Section 5.11. Governmental Lenders and Funding Lender's Fees 3$
Section 5.12. Estoppel Statement 3C.
Section 5.13. Defense of Actions 3?
Section 5.14. Expenses 41
Section 5.15. Indemnity 41
TABLE OF CONTENTS
(continued)
Page
Section 5.16. No Warranty of Condition or Suitability by the Governmental Funding
Lender 44
Section 5.17. Right of Access to the Project 44
Section 5.18. Notice of Default 44
Section 5.19. Covenant with Governmental Lender and Funding Lender 44
Section 5.20. Obligation of the Borrower to Construct or Rehabilitate the Project 44
Section 5.21. Maintenance of Insurance. 45
Section 5.22. Information; Statements and Reports 45
Section 5.23. Additional Notices 46
Section 5.24. Compliance with Other Agreements; Legal Requirements 47
Section 5.25. Completion and Maintenance of Project 47
Section 5.26. Fixtures 48
Section 5.27. Income from Project 48
Section 5.28.Leases and Occupancy Agreements 48
Section 5.29. Project Agreements and Licenses 49
Section 5.30. Payment of Debt Payments 49
Section 5.31. ERISA •. 50
Section 5.32. Patriot Act Compliance 50
Section 5.33. Funds from Equity Investor 50
Section 5.34. Tax Covenants 50
Section 5.35. Payment of Rebate 55
Section 5.36. Covenants under Funding Loan Agreement : 57
Section 5.37. Notice of Default 58
ARTICLE VI NEGATIVE COVENANTS 58
Section 6.1. Management Agreements 58
Section 6.2. Dissolution 58
Section 6.3. Change in Business or Operation of Property 58
Section 6.4. Debt Cancellation 59
Section 6.5. Assets 5()
Section 6.6. Prohibited Transfers 59
Section 6.7. Debt 59
-iv-
TABLE OP CONTENTS
(continued)
Page
Section 6.8. Assignment of Rights 59
Section 6.9. Principal Place of Business 59
Section 6.10. Partnership Agreement 59
Section 6.11. ERISA 60
Section 6.12. No Hedging Arrangements. 60
Section 6.13. Loans and Investments; Distributions; Related Party Payments 60
Section 6.14. Amendment of Related Documents or CC&R's 60
Section 6.15. Personal Property 61
Section 6.16. Fiscal Year 61
Section 6.17. Publicity 61
Section 6.18. Subordinate Loan Documents 61
Section 6.19. [Reserved] , 61
ARTICLE VII RESERVED , 6t
ARTICLE VIII DEFAULTS 61
Section 8.1. Events of Default 62
Section 8.2. Remedies 66
Section 8.2.1. Acceleration 66
Section 8.2.2 Remedies Cumulative 66
Section 8.2.3. Delay 67
Section 8.2.4 Set Off; Waiver of Set Off. 67
Section 8.2.5 Assumption of Obligations 68
Section 8.2.6 Accounts Receivable 68
Section 8.2.7 Defaults under Other Documents 68
Section 8.2.8 Abatement of Disbursements 68
Section 8.2.9 Completion of Improvements .'. 68
Section 8.2.10 Right to Directly Enforce 69
Section 8.2.11 Power of Attorney 69
ARTICLE IX SPECIAL PROVISIONS 70
Section 9.1. Sale of Note and Secondary Market Transaction 70
Section 9.1.1 Cooperation 70
-v-
TABLE OF CONTENTS
(continued)
Page
Section 9.1.2 Use of Information 71
Section 9.1.3 Borrower Obligations Regarding Secondary Market Disclosure
Documents 72
Section 9.1.4 Borrower Indemnity Regarding Filings 72
Section 9.1.5 Indemnification Procedure 72
Section 9.1.6 Contribution 73
ARTICLE X MISCELLANEOUS.... 73
Section 10.1. Notices 73
Section 10.2. Brokers and Financial Advisors 75
Section 10.3. Survival 75
Section 10.4. Preferences 75
Section 10.5. Waiver of Notice ; 75
Section 10.6. Offsets, Counterclaims and Defenses 76
Section 10.7. Publicity 76
Section 10.8. Construction of Documents 76
Section 10.9. No Third-Party Beneficiaries. .-¦ 76,
Section 10.10. Assignment 77
Section 10.11. [Reserved] 77
Section 10.12. Governmental Lender, Funding Lender and Servicer Not in Control; No
Partnership 77
Section 10.13. Release ; 78
Section 10.14. Term of Borrower Loan Agreement. 78
Section 10.15. Reimbursement of Expenses 78
Section 10.16. Permitted Contests : 78
Section 10.17. Funding Lender Approval of Instruments and Parties. 79,
Section 10. i 8. Funding Lender Determination of Facts 79
Section 10.19. Calendar Months 80
Section 10.20. Determinations by Lender 80
Section 10.21. Governing Law 80
Section 10.22. Consent to Jurisdiction and Venue 80
Section 10.23. Successors and Assigns 80
-vi-
TABLE OF CONTENTS
(continued)
Page
Section 10.24. Severability 80
Section 10.25. Entire Agreement; Amendment and Waiver 80
Section 10.26. Counterparts 81
Section 10.27. Captions 81
Section 10.28. Servicer 81
Section 10.29. Beneficiary Parties as Third-Party Beneficiary 81
Section 10.30. Waiver of Trial by Jury, 81
Section 10.31. Time of the Essence 82
ARTICLE XI LIMITATIONS ON LIABILITY , 82
Section 11.1. Intentionally Deleted 82
Section 11.2. Limitation on Liability of Governmental Lender 82
Section 11.3. Waiver of Personal Liability 82
Section 11.4. Limitation on Liability of Funding Lender's Officers, Employees, Etc.. 83
Section 11.5. Delivery of Reports, Etc 84
-VII-
BORROWER LOAN AGREEMENT
THIS BORROWER LOAN AGREEMENT (this 'Borrower Loan Agreement ") is
entered into as of the 1st day of April, 2021, between the CITY OF CHICAGO, a municipality and home rule unit of local government duly organized and validly existing, under the constitution and laws of the State of Illinois (together with its successors and assigns, the "Governmental Lender'"), and PASEO BORICUA ARTS, LLC, an Illinois limited liability company (together with its successors and assigns, the "Borrower").
WITNESSETH:
RECITALS
WHEREAS, the Governmental Lender has been duly created and organized pursuant to and in accordance with the provisions of Article VII, Section 6 of the 1970 Constitution of the State of Illinois, for the purpose of providing a means of financing the costs of residential ownership and development that will provide decent, safe and sanitary housing for persons of low and moderate income at prices or rentals they can afford; and
WHEREAS, the Governmental Lender is authorized: (a) to make loans to any person to provide financing for rental residential developments located within the jurisdiction of the Governmental Lender and intended to be occupied in part by persons oflow and moderate income, as determined by the Governmental Lender; (b) to incur indebtedness for the purpose of obtaining moneys to make such loans and provide such financing, to establish necessary reserve funds and to pay administrative costs and other costs incurred in connection with the incurrence of such indebtedness of the Governmental Lender; and (c) to pledge all or any part of the revenues, receipts or resources of the Governmental Lender, including the revenues and receipts to be received by the Governmental 1 .ender from or in connection with such loans, and to mortgage, pledge or grant security interests in such loans Or other property of the Governmental Lender in order to secure the payment of the principal or redemption price of arid interest on such indebtedness of the Governmental Lender; and
WHEREAS, the Borrower, The Puerto Rican Cultural Center, and Illinois not-for-profit corporation (the "Cultural Center"), and Brinshore Development, L.L.C., an Illinois limited liability corporation ("Brinshore"), have proposed a certain mixed use development project consisting of the acquisition of real property located at 2709-15 West Division Street in the City and the construction thereon of a five-story mixed use building that will include on floors two through five affordable housing consisting of 24 apartments comprised of eight studio apartments, eight one bedroom apartments and eight two bedroom apartments (the "Project") and with a first floor comprised of office, community, commercial and retail spaces (including the Project, the "Facility"); and
WHEREAS, the managing member of the Borrower is Paseo Boricua Arts Manager. LLC, an Illinois limited liability company, with a 0.01% interest (the "Managing Member") and an investor member USA Institutional Paseo LLC, a Delaware limited liability company, or its designee (the "Investment Member"), with a 99.99% interest; and
WHEREAS, the members of the Managing Member are PRCC Paseo Boricua, LLC ("PRCC"), with a 50% interest and Brinshore with a 50% interest; the members of Brinshore are R.IS Real (Estate Services. Inc., an Illinois corporation, with Richard .1. Sciortino as its sole shareholder, and Brint
Development. Inc an Illinois corporation, with David B. Brint as its sole shareholder; and
WHEREAS, the Borrower has applied to the Governmental Lender for a loan (the "Borrower Loan") for the construction and equipping of the Project; and
WHEREAS, the Borrower's repayment obligations under this Borrower Loan Agreement are evidenced by the Borrower Note, as defined herein; and
WHEREAS, the Borrower has requested the Governmental Lender to enter into that certain Funding Loan Agreement, of even date herewith (the "Funding Loan Agreement"), between the Governmental Lender and JPMorgan Chase Bank, N. A. (the "Funding Lender"), under which the Funding Lender will make a loan (the "Funding Loan") to the Governmental Lender, the proceeds of which will be loaned under this Borrower Loan Agreement to the Borrower to finance the construction, development, and equipping of the Project; and
WHEREAS, the Borrower Loan is secured by, among other things, that certain Construction Mortgage, Security Agreement, Assignment of Leases and Rents, and Fixture Filing fas amended, restated and/or supplemented from time to time, the "Security Instrument"), of even date herewith and assigned to the Funding Lender to secure the Funding Loan, encumbering the Project, and will be advanced to Borrower pursuant to this Borrower Loan Agreement, the Funding Loan Agreement and the Construction and Permanent Loan Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual representations, covenants and agreements herein contained, the parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS; PRINCIPLES OF CONSTRUCT ION Section 1.1. Specific Definitions
For all purposes of this Borrower Loan Agreement, except as otherwise expressly provided or unless the context otherwise requires: Unless specifically defined herein, all capitalized terms shall have the meanings ascribed thereto in the Security Instrument or, if not defined in the Security Instrument, in the Funding Loan Agreement.
All accounting terms not otherwise defined herein shall have the meanings assigned to them, and all computations herein provided for shall be made, in accordance with GAAP.
All references in this instrument to designated "Articles," "Sections" and other subdivisions are to the designated Articles, Sections and subdivisions of this instalment as originally executed.
All references in this instrument to a separate instrument are to such separate instrument as the same may be amended or supplemented from time to time pursuant to the applicable provisions thereof.
Unless otherwise specified, (i) all references to sections and schedules are to those in this
Borrower Loan Agreement, (ii) the words "hereof," "herein" and "hereunder" and words of similar import refer to this Borrower Loan Agreement as a whole and not to any particular provision, (iii) all definitions are equally applicable to the singular and plural forms of the terms defined and (iv) the word "including" means "including but not limited to."
Section 1.2. Definitions
The following terms, when used in this Borrower Loan Agreement (including when used in the above recitals), shall have the following meanings:
"Act of Bankruptcy" shall mean the filing of a petition in bankruptcy (or any other commencement of a bankruptcy or similar proceeding) under any applicable bankruptcy, insolvency, reorganization, or similar law, now or hereafter in effect; provided that, in the case of an involuntary proceeding, such proceeding is not dismissed within ninety (90) days after the commencement thereof.
"ADA" shall have the meaning set forth in Section 4.1.38 hereof.
"Additional Borrower Payments" shall mean the payments payable pursuant to Section 2.5 (Additional Borrower Payments), Section 2.6 (Overdue Payments; Payments in Default), Section 5.14 (Expenses), Section 10 of the Borrower Note (Voluntary and Involuntary Payments) and similar kinds of provisions set forth in the Construction arid Permanent Loan Agreement.
"Appraisal" shall mean an appraisal of the Facility, which appraisal shall be (i) performed by a qualified appraiser licensed in the State selected by Funding Lender, and (ii) satisfactory to Funding Lender (including, without limitation, as adjusted pursuant to any internal review thereof by Funding Lender) in all respects in accordance with the Construction and Permanent Loan Agreement.
"Architect" shall mean any licensed architect, space planner or design professional that Borrower may engage from time to time, with the approval of Funding Lender, to design any portion of the Improvements, including the preparation of the Plans and Specifications.
"Architect's Agreement" means any agreement that Borrower and any Architect from time to time may execute pursuant to which Borrower engages such Architect to design any portion of the Improvements, including the preparation of the Plans and Specifications, as approved by Funding Lender.
"Authorized Borrower Representative" shall mean a person at the time designated and authorized to act on behalf of the Borrower by a written certificate furnished to the Governmental Lender, the Funding Lender and the Servicer and containing the spec imen signature of such person and signed on behalf of the Borrower by ils Borrower Controlling Entity which certificate may designate one or more alternates.
"Bankruptcy Code" shall mean the United States Bankruptcy Reform Act of 1978, as amended from time to time, or any substitute or replacement legislation.
"Bankruptcy Event" means any of the following: (A) the commencement of a voluntary case under one or more of the Insolvency Laws by the Borrower; (B) the acknowledgment in writing by the Borrower that it is unable to pay its debts generally as they mature; (C) the making of a general assignment for the benefit of creditors by the Borrower; (D) the commencement of an involuntary case under one or more Insolvency Laws against the Borrower; or (E) the appointment of a receiver, liquidator, custodian, sequestrator, trustee or other similar officer who exercises control over the Borrower or any substantial part of the assets of the Borrower provided that any proceeding or case under (D) or (E) above is not dismissed within 60 days after filing.
"Bankruptcy Proceeding" shall have the meaning set forth in Section 4.1.8 hereof.
"Beneficiary Parties" shall mean, collectively, the Funding Lender and the Governmental
Lender.
"Bond Counsel" shall have the meaning set forth in the Funding Loan Agreement.
"Borrower Controlling Entity" shall mean, if the Borrower is a partnership, any general partner or managing partner of the Borrower, or if the Borrower is a.limited liability company, the manager or managing member of the Borrower, or if the Borrower is-a not-for-profit corporation, the shareholders thereof.
"Borrower Deferred Equity" shall mean the Equity Contributions, if any to be made by the Equity Investor to Borrower pursuant to the Operating Agreement, other than Borrower Initial Equity, in accordance with the schedule set forth in Section 5.01(c) of the Operating Agreement.
"Borrower Initial Equity" shall mean an initial installment of the Equity Contributions made to Borrower by the Equity Investor in an amount of $737,962.00 to be made on or prior to the Closing Date.
"Borrower Loan" shall mean the mortgage loan made by the Governmental Lender to the Borrower pursuant to this Borrower Loan Agreement, in the maximum principal amount of the Borrower Loan Amount, as evidenced by the Borrower Note.
"Borrower Loan Amount" shall mean $8,100,000, the original maximum aggregate principal amount of the Borrower Note.
"Borrower Loan Documents" shall mean this Borrower Loan Agreement, the Construction and Permanent Loan Agreement, the Borrower Note, the Security Instrument, the of Environmental Indemnification Agreement, the Replacement Reserve Agreement, the Assignments required by the terms of the Construction and Permanent Loan Agreement and all other documents or agreements evidencing or relating to the Borrower Loan.
"Borrower Loan Payment Date" shall mean (i) the date upon which regularly scheduled Borrower Loan Payments are due pursuant to the Borrower Note, or (ii) any other date on which the Borrower Note is prepaid or paid, whether at the scheduled maturity or upon the acceleration of the maturity thereof.
"Borrower Loan Payments" shall mean the monthly loan payments payable pursuant to|1010|
the Borrower Note.
"Borrower Loan Proceeds" shall mean proceeds of the Borrower Loan, (o be disbursed in accordance with Section 2.10 of this Borrower Loan Agreement and the Funding Loan Agreement.
"Borrower Note" shall mean that certain Multifamily Note dated as of the Closing Date in the original maximum principal amount of $8,100,000 made by Borrower and payable to Governmental Lender, as endorsed and assigned to the Funding Lender, as it may be amended, supplemented or replaced from time to time.
"Borrower Payment Obligations" shall mean all payment obligations of the Borrower under the Borrower Loan Documents, including, but not limited to, the Borrower Loan Payments and the Additional Borrower Payments.
"Business Day" shall mean any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or the state in which the principal corporate office of the trustee for the registration and payment functions is located, are authorized or required by law to remain closed; and when used in connection with determining the LIBO Rate (as defined in the Borrower Note), the term Business Day shall also exclude any day on which banks are not open for general business in London.
"Calendar Month" shall mean each of the twelve (12) calendar months of the year.
"CC&R's" shall mean any covenants, conditions, restrictions, maintenance agreements or reciprocal easement agreements affecting the Facility or the Mortgaged.Property.
"City" shall mean the City of Chicago, Illinois.
"Closing Date" shall mean April 29,2021, the date that the initial Borrower Loan Proceeds are disbursed hereunder.
"Code" shall mean the Internal Revenue Code of 1986 as in effect on the Closing Date or (except as otherwise referenced herein) as it may be amended to apply to obligations issued on the Closing Date, together with applicable proposed, temporary and final regulations promulgated, and applicable official public guidance published, under the Code.
"Collateral" shall mean all collateral described in (i) this Borrower Loan Agreement (including, without limitation, all property in which the Funding Lender is granted a security interest pursuant to any provision of this Borrower Loan Agreement), (ii) the Security Instrument, or (iii) any other Security Document, which Collateral shall include the Facility, all of which collateral is pledged and assigned to Funding Lender under the Funding Loan Agreement to secure the Funding Loan.
"Completion" shall have the meaning set forth in Section 5.25.
"Completion Date" shall mean November 30, 2023, as such date may be extended pursuant to the Construction and Permanent Loan Agreement.|1010|
"Computation Date" shall have the meaning ascribed thereto in Section 1.148-3(e) of the Regulations.
"Condemnation" shall mean any action or proceeding or notice relating to any proposed or actual condemnation or other taking, or conveyance in lieu thereof, of all or any part of the Project, whether direct or indirect.
"Construction Consultant" shall mean a third-party architect or engineer selected and retained by funding Lender, at the cost and expense of Borrower, to monitor the progress of construction and/or rehabilitation of the Project and to inspect the: Improvements to confirm compliance with this Borrower Loan Agreement.
"Construction Contract" shall mean any agreement that Borrower and any Contractor from time to time may execute pursuant to which Borrower engages the Contractor to construct any portion of the Improvements, as approved by Funding Lender.
"Construction Escrow Agreement" shall mean that certain Escrow Agreement, dated as of April 29, 2021, among the T itle Company named therein, in its capacity as escrow agent, Governmental Lender, Funding Lender, any subordinate lenders named therein, Borrower and General Contractor (as defined in the Construction and Permanent Loan Agreement), as such agreement may be amended, modified, supplemented and replaced from time to time.
"Construction and Permanent Loan Agreement" means that certain Construction and Permanent Loan Agreement dated as of April 29, 2021, by and between the Funding Lender and the Borrower, pursuant to which the Borrower Loan will be advanced by the Funding Lender (or the Servicer on its behalf) to die Borrower as such agreement may be amended, modified, supplemented and replaced from time to time.
"Construction Schedule" shall mean a schedule Of construction or rehabilitation progress with the anticipated commencement and completion dates of each phase of construction or rehabilitation, as the case may be, and the anticipated date and amounts of each Disbursement for the same, as approved by Funding Lender.
"Contractor" shall mean any licensed general contractor or subcontractor that Borrower may directly engage from time to time, with the approval of Funding Lender, to construct and/or rehabilitate any portion of the Improvements.
"Contractual Obligation" shall mean, for any Person, any debt or equity security issued by that Person, and any indenture, mortgage, deed of trust, contract, undertaking, instrument or agreement (written or oral) to which such Person is a party or by which it is bound, or to which it or any of its assets is subject.
"Cost Breakdown" shall mean the budget for the Project attached as an exhibit to the Construction and Permanent Loan Agreement and as the same may be amended from time to time with Funding Lender's consent.
"Costs of Funding" shall mean the Governmental Lender's Closing Fee and the fees, costs, expenses and other charges incurred in connection with the funding of the Borrower Loan|1010|
and the Funding Loan, the negotiation and preparation of"this Borrower Loan Agreement and each of the other Borrower Loan Documents and Funding Loan Documents and shall include, but shall not be limited to, the following: (i) counsel fees (including but not limited to Bond Counsel, counsel to the Governmental Lender, Borrower's counsel, and Funding Lender's counsel); (ii) financial advisor fees incurred in connection with the closing of the Borrower Loan and the Funding Loan; (iii) certifying and authenticating agent fees and expenses related to funding of the Funding Loan; (iv) printing costs (for any preliminary and final offering materials relating to the Funding Loan); (v) any recording fees; (vi) any additional fees charged by the Governmental Lender; and (vii) costs incurred in connection with the required public notices generally and costs of the public hearing.
"Costs of Funding Deposit" shall mean the amount required to be deposited by the Borrower with the Title Company (or a separate escrow company, if applicable) to pay Costs of Funding in connection with the closing of the Borrower Loan and the Funding Loan on the Closing Date.
"Cost of Improvements" shall mean the costs for the Improvements, as set forth on the Cost Breakdown.
"County" shall mean Cook County, Illinois.
"Date of Disbursement" shall mean the date of a Disbursement,
"Day" or "Days" shall mean calendar days unless expressly stated to be Business Days.
"Debt" shall mean, as to any Person, any of such Person's liabilities, including all indebtedness (whether recourse and nonrecourse, short-term and long-term, direct and contingent), all committed and unfunded liabilities, and all unfunded liabilities, that would appear upon a balance sheet of such Person prepared in accordance with GAAP.
"Default Rate" shall have the meaning given to that term in the Borrower Note.
"Determination of Taxability" shall mean (i) a determination by the Commissioner or any District Director of the Internal Revenue Service, (ii) a private ruling or Technical Advice Memorandum concerning the Governmental Lender Note issued by the National Office of the Internal Revenue Service in which Governmental Lender and Borrower were afforded the opportunity" to participate, (iii) a determination by any court of competent jurisdiction, (iv) the enactment of legislation or (v) receipt by the Funding Lender, at the request ol"the Governmental Lender, the Borrower or the Funding Lender, of an opinion of Bond Counsel, in each case to the effect that the interest on the Governmental Lender Note is includable in gross income for federal income tax purposes of any holder or any former holder of all or a portion of the Governmental Lender Note, other than a holder who is a "substantial user" of the Project or a "related person" (as such terms are defined in Section 147(a) of the Code) to a "substantial user"; provided, however, that no such Determination of Taxability under clause (i) or (iii) shall be deemed to have occurred if the Governmental Lender (at the sole expense of the Borrower), the Funding Lender (at the sole expense of the Borrower) or the Borrower is contesting such determination, has elected to contest such determination in good faith and is proceeding with all applicable dispatch to prosecute such contest until the earliest of (a) a final determination from which no appeal may be|1010|
taken with respect to such determination, (b) abandonment of such appeal by the Governmental Lender or the Borrower, as the case may be, or (c) one year from the date of initial determination.
"Developer Fee" shall mean the fees and/or compensation payable lo Brinshore Development, LLC, as developer, pursuant to the Development Services Agreement between Borrower and such developer, which fees and/or compensation shall not be paid except as otherwise permitted pursuant to Section 6.13(b).
"Disbursement" means a disbursement of Borrower Loan Proceeds and Other Borrower Moneys pursuant to this Borrower Loan Agreement.
"Engineer" shall mean any licensed civic, structural, mechanical, electrical, soils, environmental or other engineer that Borrower may engage from time to time, with the approval of Funding Lender, to perform any engineering services with respect to any portion of the Improvements.
"Engineer's Contract" shall mean any agreement that Borrower and any Engineer from time to time may execute pursuant to which Borrower engages such Engineer to perform any engineering services with respect to any portion of the Improvements, as approved by Funding Lender.
"Environmental Indemnification Agreement" shall mean the Environmental Indemnity Agreement, of even date herewith, executed by the Borrower and the Guarantor for the benefit of the Funding Lender and any lawful holder, owner or pledgee of the Borrower Note from time to time.
"Equipment" shall have the meaning given to the term-in the UCC.
"Equity Contributions" shall mean the equity to be contributed by, or on behalf of, the Equity Investor to Borrower, in accordance with and subject to the terms of the Operating Agreement.
"Equity Investor" shall mean USA Institutional Paseo LLC, a Delaware limited liability company, or its designee, and its beneficiaries, successors, and/or assigns.
"ERISA" shall mean the Employment Retirement Income Security Act of 1974, as amended from time to time, and the rules and regulations promulgated thereunder.
"ERISA Affiliate" shall mean all members of a controlled group of corporations and all trades and business (whether or not incorporated) under cornnion control and all other entities which, together with the Borrower, are treated as a single employer under any or all of Section 414(b), (c), (m) or (o) ofthe Code.
"Event of Default" shall mean any Event of Default set forth in Section 8.1 of this Borrower Loan Agreement. An Event of Default shall "exist" if a Potential Default shall have occurred and be continuing beyond any applicable cure period.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.|1010|
"Expenses of the Facility'" shall mean, for any period, the current expenses, paid or accrued, for tlie operation, maintenance and current repair of the Facility, (including the funding of any replacement reserve) as calculated in accordance with GAAP, and shall include, without limiting the generality of the foregoing, salaries, wages, employee benefits, cost of materials and supplies, costs of routine repairs, renewals, replacements and alterations occurring in the usual course of business, costs and expenses properly designated as capital expenditures (e.g., repairs which would not be payable from amounts on deposit in a repair and replacement fund held pursuant to the Borrower Loan Documents), a management fee (however characterized) not to exceed 7.0% of Gross income, costs of billings and collections, costs of insurance, and costs of audits. Expenses of the Facility shall not include any payments, however characterized, on account of any subordinate financing in respect of the Facility or other indebtedness, allowance for depreciation, amortization or other non-cash items, gains and losses or prepaid expenses not customarily prepaid.
"Facility" shall mean the Mortgaged Property (as defined in the Security Instrument) and Improvements thereon owned by the Borrower and encumbered by the Security Instrument, together with all rights pertaining to such real property and Improvements, as more particularly-described in the Granting Clauses of the Security Instrument and referred to therein as the ''Mortgaged Property."
"Facility Agreements and Licenses" shall mean any and all Construction Contracts, Engineer's Contracts and Management Agreements, arid all other rights, licenses, permits, easements, franchises, authorizations, approvals and agreements relating to use, occupancy, operation or leasing of the Facility or the Mortgaged Property.
"Fair Market Value" shall mean the price at which a willing buyer would purchase the investment from a willing seller in a bona fide, aim's length transaction (determined as of the date the contract to purchase or sell the investment becomes binding) if the investment is traded on an established securities market (within the meaning of Section 1273 of the Code) and, otherwise, the term "Fair Market Value" means the acquisition price in a bona fide arm's length transaction (as referenced above) if (i) the investment is a certificate of deposit that is acquired in accordance with applicable regulations under the Code, (ii) the investment is an agreement with specifically negotiated withdrawal or reinvestment provisions and a specifically negotiated interest rate (for example, a guaranteed investment contract, a forward supply contract or other investment agreement) that is acquired in accordance with applicable regulations under the Code, (iii) the investment is a United States Treasury Security State and Local Government Series that is acquired in accordance with applicable regulations of the United States Bureau of Public Debt, or (iv) the investment is an interest in any commingled investment fund in which the Governmental Lender and related parlies do not own more than a ten percent (10%) beneficial interest therein if the return paid by the fund is without regard to the source of investment.
"Funding Lender" shall mean JPMorgan Chase Bank, N.A., a national banking association, in its capacity as lender of the Funding Loan.
"Funding Loan" means the Funding Loan in the original maximum principal amount of $8.100,000 made by Funding Lender to Governmental Lender under the Funding Loan Agreement, the proceeds of which are used by the Governmental Lender to make the Borrower Loan.
"Funding Loan Agreement'' means the Funding Loan Agreement, of even date herewith, between the Governmental Lender and the Funding Lender, as it may from time to time be supplemented, modified or amended by one or more amendments or other instruments supplemental thereto pursuant to the applicable provisions thereof.
"Funding Loan Documents" shall have the meaning given to that term in the Funding Loan Agreement.
"GAAP" shall mean generally accepted accounting principles as in effect on the date of the application thereof and consistently applied throughout the periods covered by the applicable financial statements.
"Governmental Authority" shall mean (i) any governmental municipality or political subdivision thereof, (ii) any governmental or quasi-governmental agency, authority, board, bureau, commission, department, instrumentality or public body, or (iii) any court, administrative tribunal or public utility, agency, commission, office or authority of any nature whatsoever for any governmental unit (federal, state, county, district, municipal, city or otherwise), now or hereafter in existence.
"Governmental Lender Note" shall mean that certain City of Chicago Multi-Family Housing Revenue Note (Paseo Boricua Project), Series 2021, dated the Closing Date in the original maximum principal amount of $8,100,000, made by the Governmental Lender and payable to Funding Lender, as it may be amended, supplemented or replaced from time to time.
"Governmental Lender's Closing Fee" shall mean an amount equal to 1.5% of the original principal amount of the Governmental Lender Note. The Governmental Lender's Closing Fee is payable to the Governmental Lender on the Closing Date, pursuant to Section 2.3(c)(iii) hereof
"Gross Income" shall mean all receipts, revenues, income and other moneys received or collected by or on behalf of Borrower and derived from the ownership or operation of the Facility, if any, and all rights to receive the same, whether in the form of accounts, accounts receivable, contract rights or other rights, and the proceeds of such rights, and whether now owned or held or hereafter corning into existence and proceeds received upon the foreclosure sale of the Project. Gross Income shall not include loan proceeds, equity or capital contributions, or tenant security deposits being held by Borrower in accordance with applicable law.
"Gross Proceeds" shall mean, without duplication, the aggregate of:
the net amount (after payment of all expenses of originating the Funding Loan) of Funding Loan proceeds received by the Governmental Lender as a result of the origination of the Funding Loan;
all amounts received by the Governmental Lender as a result of the investment of the Funding Loan proceeds:
any amounts held in any fund or account to the extent that the Governmental Lender reasonably expects to use the amounts in such fund to pay any portion of the Funding Loan; and
10
(d) any securities or obligations pledged by the Governmental Lender or by the Borrower as security lor the payment of any portion of the Funding Loan.
"Housing Act" shall mean the United States Housing Act of 1937 (42 USC § 1437, et seq.), as amended from time to time, any successor legislation and all implementing regulations issued thereunder or in furtherance thereof.
"Indemnified Party" shall have the meaning set forth in Section 5.15 hereof.
"Insolvency Laws" means the United States Bankruptcy Code, 11 U.S.C. §101, et seq., together with any other federal or state law affecting debtor and creditor rights or relating to the bankruptcy, insolvency, reorganization, arrangement, readjustment of debt, dissolution, liquidation or similar proceeding, as amended from time to time, to the extent applicable to Borrower.
"Installment Computation Date" shall mean any Computation Date other than the first Computation Date or the final Computation Date.
"Interest Rate" shall mean the rate of interest accruing on the Borrower Loan pursuant to the Borrower Note.
"Land" means the real property described on Exhibit A to the Security Instrument.
"Late Charge" shall mean the amount due and payable as a late charge on overdue payments under the Borrower Note, as provided in Section 3(f) of the Borrower Note and Section 2.5 hereof.
"Legal Action" shall mean an action, suit, investigation, inquiry, proceeding or arbitration at law or in equity or before or by any foreign or domestic court, arbitrator or other Governmental Authority.
"Legal Requirements" shall mean statutes, laws, rules, orders, regulations, ordinances, judgments, decrees and injunctions of Governmental Authorities affecting all or part of the Project or any property (including the Project) or the construction, rehabilitation, use, alteration or operation thereof, whether now or hereafter enacted and in force, and all permits, licenses and authorizations and regulations relating thereto, and all covenants, agreements, restrictions and encumbrances contained in any instrument, either of record or known to the Borrower, at any time in force affecting all or part of the Project, including any that may (i) require repairs, modifications or alterations in or to all or part of the Project, or (ii) in any way limit the use and enjoyment thereof.
"Liabilities" shall have the meaning set forth in Section 5.15 hereof.
"Licenses'" shall have Ihe meaning set forth in Section 4.1.22 hereof.
"Lien" shall mean any interest, or claim thereof, in the Project securing an obligation owed to, or a claim by. any Person other than the owner of the Project, whether such interest is based on common law, statute or contract, including the lien or security interest arising from a deed of trust.
11
mortgage, deed to secure debt, assignment, encumbrance, pledge, security agreement, conditional sale or trust receipt or a lease, consignment or bailment for security purposes. The term "Lien" shall include reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases and other title exceptions and encumbrances affecting the Project.
"Management Agreement" shall mean the Management Agreement (and a supplement thereto) between the Borrower and the Manager, pursuant to which the Manager is to manage the Project, as same may be amended, restated, replaced, supplemented or otherwise modified from time to time.
"Manager" shall mean the management company to be employed by the Borrower and approved by the Funding Lender in accordance with the terms of any of the Borrower Loan Documents.
"Material Adverse Change" means any set of circumstances or events which (a) has or could reasonably be expected to have any material adverse effect whatsoever upon the validity or enforceability of this Borrower Loan Agreement or any other Borrower Loan Document; (b) is or could reasonably be expected to be material and adverse to the business, properties, assets, financial condition, results of operations or prospects of the Borrower or the Mortgaged Property; (c) could reasonably be expected to impair materially the ability of the Borrower to duly and punctually pay or perform any of their respective obligations under any of the Borrower Loan Documents to which it is a party; or (d) impairs materially or could reasonably be expected to impair materially any rights of or benefits available to the Governmental Lender under this Borrower Loan Agreement or any other Borrower Loan Document, including, without limitation, the ability of Governmental Lender or, upon the assignment of the Borrower Loan to.it , of the Funding Lender, to the extent permitted, to enforce its legal remedies pursuant: to this Borrower Loan Agreement or any other Borrower Loan Document.
"Mortgaged Property" shall have the meaning given to that term in the Security Instrument.
"Net Operating Income" shall mean: (i) the Gross Income, less (ii) the Expenses of the Facility.
"Nonpurpose Investment" shall mean any investment property (as defined in Section 148(b) of the Code) that is acquired with the Gross Proceeds of the Funding Loan and which is not acquired to carry out the governmental purpose of the Funding Loan.
"Other Borrower Moneys" shall mean monies of Borrower other than Borrower Loan Proceeds and includes, but is not limited to, the Subordinate Debt, Net Operating Income, the Borrower's Equity Contributions and any other funds contributed by or loaned to the Borrower for application to the Cost of Improvements or other costs associated with the Facility.
"Other Charges" shall mean all maintenance charges, impositions other than faxes, insurance premiums, and any other charges, including vault charges and license lees for the use of vaults, chutes and similar areas adjoining the Facility, now or hereafter levied or assessed or imposed against the Project or any part thereof.
12
"Operating Agreement" shall mean that certain Amended and Restated Operating Agreement of the Borrower dated as of April 1. 2021, as the same may be amended, restated or modified in accordance with its terms.
"Patriot Act" shall mean the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT ACT) of 2001, as the same may be amended from time to time, and corresponding provisions of future laws.
"Patriot Act Offense" shall have the meaning set forth in Section 4.1.48 hereof.
"Payment Obligations" shall mean all obligations of Borrower for the payment of money to the Governmental Lender or to any other person under the Borrower Note, this Borrower Loan Agreement or under any other Borrower Loan Document.
"Permitted Encumbrances" shall have the meaning given to that term in the Security Instrument.
"Permitted Lease" shall mean a lease and occupancy agreement pursuant to the form approved by Funding Lender, to a residential tenant in compliance With the Legal.Requirements, providing for an initial term of not less than six (6) months nor more than two (2) years.
"Person" shall mean a natural person, a partnership, a joint venture, an unincorporated association, a limited liability company, a corporation, a trust, any other legal entity, or any Governmental Authority.
"Plan" shall mean (i) an employee benefit or other plan established or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any ERISA Affiliate makes or is obligated to make contributions and (ii) which is covered by Title IV of ERISA Or Section 302 of ERISA or Section 412 of the Code.
"Plans and Specifications" shall mean the plans and specifications for the construction and/or rehabilitation, as the case may be, of the Facility approved by Funding Lender.
"Potential Default" shall mean the occurrence of an event which,, under this Borrower Loan Agreement or any other Borrower Loan Document, would, but for the giving of notice or passage of time, be an Event of Default.
"Prepayment Premium" shall mean any premium payable by the Borrower pursuant to the Borrower Loan Document s in connection with a prepayment of the Borrower Note (including any prepayment premium as set forth in the Borrower Note).
"Prohibited Transfer" shall have the meaning given to that term in the Security Instrument.
"Pro ject" means that portion of the Facility comprised of 24 apartments comprised of eight studio apartments, eight one bedroom apartments and eight two bedroom apartments and related facilities.
"Provided Information" shall have the meaning set forth in Section 9.1.1 (a) hereof.
13
"Qualified Project Costs" shall mean costs paid with respect to the Project that meet each of the following requirements: (i) the costs are properly chargeable to capital account (or would be so chargeable with a proper election by the Borrower or but for a proper election by the Borrower to deduct such costs) in accordance with general federal income tax principles and in accordance with Section 1.103-8(a)( 1) of the Regulations, provided, however, that only such portion of the interest accrued during rehabilitation or construction of the Project (in tlie case of rehabilitation, with respect to vacated units only) shall be eligible to be a Qualified Project Cost as bears tlie same ratio to all such interest as the Qualified Project Costs bear to all costs of the acquisition and construction or rehabilitation of the Project; and provided further that interest accruing after the date of completion of the Project shall not be a Qualified Project Cost; and provided still further that if any portion of the Project is being constructed or rehabilitated by an Affiliate (whether as general contractor or a subcontractor), Qualified Project Costs shall include only (A) the actual out of pocket costs incurred by such affiliate in constructing or rehabilitating the Project (or any portion thereof), (B) any reasonable fees for supervisory services actually rendered by such affiliate, and (C) any overhead expenses incurred by such affiliate which are directly attributable to the work performed on the Project, and shall not include, for example, intercompany profits resulting from members of an "affiliated group" (within the meaning of Section 1504 of the Code) participating in the rehabilitation or construction of the Project or payments received by such affiliate due to early completion of the Project (or any portion thereof); (ii) the costs are paid with respect to a qualified residential rental project or projects within the meaning of Section 142(d) of the Code, (iii) the costs are paid after the earlier of 60 days prior to October 30, 2018, being the date on which the Governmental Lender first declared its "official intent" to reimburse costs paid with respect to the Project (within the meaning of Section 1.150-2 of the Regulations) or the date of issue of the Funding Loan, and (iy) if the costs Of the acquisition and construction or rehabilitation of the Project were previously paid and are to be reimbursed with proceeds of the Funding Loan such costs were (A) "preliminary expenditures" (within the meaning of Section 1.150-2(f)(2) of the Regulations) with respect to the Project (such as architectural, engineering and soil testing services) incurred before commencement of acquisition and construction or rehabilitation of the Project that do not exceed twenty percent (20%) of the issue price of the Governmental Lender Note (as defined in Section 1.148-1 of the Regulations), or (B) were capital expenditures with respect to the Project that are reimbursed no later than 18 months after the later of the date the expenditure was paid or the date the Project is placed in service (but no later than three years after the expenditures is paid); provided, however, that (w) Costs of Funding shall not be deemed to be Qualified Project Costs; (x) fees, charges or profits (including, without limitation, developer fees) payable to the Borrower or a "related person" (within the meaning of Section 144(a)(3) of the Code) shall not be deemed to be Qualified Project Costs; (y) letter of credit fees and municipal bond insurance premiums which represent a transfer of credit risk shall be allocated between Qualified Project Costs and other costs and expenses to be paid from the proceeds of the Funding Loan; and (z) letter of credit fees and municipal bond insurance premiums which do not represent a transfer of credit risk (including, without limitation, letter of credit fees payable to a "related person" to the Borrower) shall not constitute Qualified Project Costs.
"Rebate Amount" shall mean, for any given period, the amount determined by the Rebate Analyst as required to be rebated or paid as a yield reduction payment to the United States of America with respect to the Funding Loan.
14
"Rebate Analyst" shall mean the rebate analyst selected by the Borrower and acceptable to the Governmental Lender and the Funding Lender.
"Rebate Analyst's Fee" shall mean the fee of the Rebate Analyst as established from time to time. T he Rebate Analyst's Fee is payable by the Borrower to the Rebate Analyst as invoiced.
"Rebate Fund" shall mean the Rebate Fund created pursuant to Section 5.35 hereof.
"Redevelopment Agreement" means that certain Redevelopment Agreement, dated as of even date herewith, [among the City, the Cultural Center and the Borrower] relating to the 1 IF Grant and the TIF Loan.
"Related Documents" shall mean, collectively, any agreement or other document (other than the Borrower Loan Documents) granting a security interest (including each agreement that is the subject of any Borrower Loan Document), the Operating Agreement, and any other agreement, instrument or other document (not constituting a Borrower Loan Document) relating to or executed in connection with the transactions contemplated by this Borrower Loan Agreement.
"Replacement Reserve Agreement" shall mean any replacement reserve agreement between the Borrower and the Funding Lender, as the same may be amended, restated or supplemented from time to time.
"Replacement Reserve Fund Requirement" means Borrower's funding obligations from time to time under the Replacement Reserve Agreement.
"Retainage" shall mean, for each Construction Contract, the actual retainage required under such Construction Contract, which shall be released upon satisfaction of the conditions set forth in Section 6.9 of the Construction and Permanent Loan Agreement.
"Secondary Market Disclosure Document" shall have the meaning set forth in Section 9.1.2 hereof.
"Secondary Market Transaction" shall have the meaning set forth in Section 9.1.1
hereof.
"Securities" shall have the meaning set forth in Section 9.1.1 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Security" shall have the meaning set forth in Article IV of the Funding Loan Agreement.
"Security Documents" shall mean the Security Instrument, the Replacement Reserve Agreement, (as such terms are defined in the Construction and Permanent Loan Agreement), this Borrower Loan Agreement, the Agreement of Environmental Indemnification, the collateral assignment of the Managing Member's interests of the Borrower, an Assignment of the Equity Investor's capital contributions lo the Borrower, an assignment of the Developer Fee. and such other security instruments that Funding Lender may reasonably request.
15
"Security Instrument" shall have the meaning set forth in the recitals to this Borrower Loan Agreement.
"Servicer" shall mean the Servicer contracting with or appointed by the Funding Lender to service the Borrower Loan. The initial Servicer shall be JPMorgan Chase Bank, N. A.
"Servicing Agreement" shall mean any servicing agreement or master servicing agreement, if any, between the Servicer and the Funding Lender relating to the servicing of the Borrower Loan and any amendments thereto or any replacement thereof.
"State" shall mean the State in which the Project is located.
"Subordinate Debt" shall mean the subordinate loans to Borrower by the Subordinate Lenders.
"Subordinate Lenders" shall mean the Illinois Housing Development Authority, the City of Chicago (with respect to the $4,245,304 Multi-Family Loan Program) and the Puerto Rican Cultural Center.
"Subordinate Loan Documents" shall mean, collectively, all instruments, agreements and other documents evidencing, securing or otherwise relating to the Subordinate Debt or executed and delivered by Borrower and/or a Subordinate Lender in connection with the Subordinate Debt.
"Substantial Completion Date" means the date that is one (1) month prior to the Completion Date.
"Substantially Complete" or "Substantially Completed" means the Funding Lender has determined that construction or rehabilitation, as the case may be, of the Improvements is sufficiently complete such that the Improvements can be occupied by tenants as a multifamily residential rental project.
"Taxes" shall mean all real estate and personal property taxes, assessments, water rates or sewer rents, now or hereafter levied or assessed or imposed against all or part of the Project.
"Term" shall mean the term of this Borrower Loan Agreement pursuant to Section 10.14.
"TIF Grant" means the grant by the City to the Puerto Rican Cultural Center of certain amounts on deposit in the Humboldt Park Commercial Tax Increment Financing Redevelopment Project Area Special Tax Allocation Fund for the Area of the City pursuant to the Redevelopment Agreement.
"TIF Loan" means the loan of the proceeds of the TIF Grant from the Puerto Rican Cultural Center lo the Borrower evidenced by a Promissory Note made by the Borrower to the Puerto Rican Cultural Center in accordance with the Redevelopment Agreement.
"TIF Mortgage" means the Junior Mortgage, Assignments of Rents and Security Agreement (TIF Loan), of even dale herewith, securing the TIP loan.
"Title Company" means Greater Illinois Title Company
16
"Title Insurance Policy" shall mean the mortgagee title insurance policy, in form acceptable to the Funding Lender, issued with respect to the Mortgaged Property and insuring the lien of the Security Instrument.
"MCC" shall mean the Uniform Commercial Code as in effect in the State. "Unit" shall mean a residential apartment unit within the Improvements.
"Unassigncd Rights" shall have the meaning given such term in the Funding Loan Agreement.
"Written Consent" and "Written Notice" shall mean a wTitten consent or notice signed by an Authorized Borrower Representative or an authorized representative of the Governmental Lender or the Funding Lender, as appropriate.
ARTICLE II GENERAL
Section 2.1. Origination of Borrower Loan
In order to provide funds for the purposes provided herein, die Governmental Lender agrees that it will, in accordance with the Ordinance, enter into the Funding Loan Agreement and accept the Funding Loan from the Funding Lender. The proceeds of the Funding"'Loan .shall be advanced by the Funding Lender to the Borrower in accordance with the terms of the Construction and Permanent Loan Agreement, the Funding Loan Agreement and this Borrower Loan Agreement.
The Governmental Lender hereby appoints the Funding Lender as its agent with full authority and power to act on its behalf to disburse the Borrower Loan for the account of the Governmental Lender, lo take certain actions and exercise certain remedies with respect to the Borrower Loan, and for the other purposes set forth in this Borrower Loan Agreement and to do all other acts necessary or incidental to the performance and execution thereof, except as provided in Section 2.2(b) hereof. This appointment is coupled with an interest and is irrevocable except as expressly set forth herein. Accordingly, references to the rights of the Funding Lender to take actions under this Borrower Loan Agreement shall refer to Funding Lender in.its role as agent of the Governmental Lender. Tlie Funding Lender may designate Servicer to fulfill the rights and responsibilities granted by Governmental Lender to Funding Lender pursuant to this Section 2.1; provided, however, that such designation shall not release or absolve Funding Lender from ultimate responsibility for fulfillment of such rights or responsibilities.
Section 2.2. Security for the Funding Loan
(a) As security for the Funding Loan, the Governmental Lender has pledged and assigned the Security to the Funding Lender under and pursuant to the Funding Loan Agreement. All revenues and assets pledged and assigned thereby shall immediately be subject to the lien of such pledge without any physical delivery thereof or any further act. except in the case of the Borrower Note, which shall be delivered to the Funding Lender. The Borrower hereby acknowledges and consents to such assignment to the Funding Lender.
17
With respect to the Unassigned Rights, subject to the limitations set forth in this Section 2.2, the Governmental Lender may:
(ij Tax Covenants. Seek specific performance of, and enforce, the tax covenants of the Funding Loan Agreement, and the other Funding Loan Documents, seek injunctive relief against acts which may be in violation of any of the tax covenants, and enforce the Borrower's obligation to pay amounts for credit lo Ihe Rebate Fund;
(i i) Reserved Rights. Take whatever action at law or in equity appears necessary or desirable to enforce the other Unassigned Rights.
The Governmental Lender shall provide written notice to the Funding Lender and the Servicer immediately upon taking any action at law or in equity to exercise any remedy or direct any proceeding under the Borrower Loan Documents or the Funding Loan Documents.
Section 2.3. Loan; Borrower Note; Conditions to Closing
The Funding Loan shall be funded directly to the Borrower by the Funding Lender pursuant to the Construction and Permanent Loan Agreement and the Funding Loan Agreement, in one or more installments not to exceed the Borrower Loan Amount in accordance with the disbursement procedures set forth in the Construction and Permanent Loan Agreement. Upon funding of each installment of the Funding Loan, the Governmental Lender shall be deemed to have made the Borrower Loan to the Borrower in a like principal amount. The Borrower Loan shall mature and be payable at the times and in the amounts required under the terms hereof and of the Borrower Note. The proceeds of the Borrower Loan shall be used by the Borrower to pay or reimburse costs of the acquisition, construction, rehabilitation, development, equipping and/or operation of the Project. The Borrower hereby accepts the Borrower Loan arid acknowledges that the Governmental Lender shall cause the Funding Lender to fund the Borrower Loan in the manner set forth herein and in the Funding Loan Agreement. The Governmental Lender acknowledges that the Borrower Loan shall be funded by the Funding Lender for the account of the Governmental Lender.
The Borrower hereby accepts the Borrower Loan. As evidence of its obligation to repay the Borrower Loan, simultaneously with the deliver}' of this Borrower Loan Agreement to the Governmental Lender, the Borrower hereby agrees to execute and deliver the Borrower Note. T he Borrower Loan shall mature and be payable at the times and in the amounts required under the terms hereof and of the Borrower Note.
Closing of the Borrower Loan on the Closing Date shall be conditioned upon satisfaction or waiver by the Governmental Lender and the Funding Lender, in their sole discretion of each of the conditions precedent lo closing set forth in the Funding Loan Agreement and this Borrower Loan Agreement, including but not limited to the following:
(i) evidence of proper recordation of the Security Instrument, an assignment of the Security Instrument from the Governmental Lender to the Funding Lender, the Regulator}' Agreement, and each of the other documents specified for recording in instructions delivered to the Title Company by counsel to the Funding Lender (or that such documents have been delivered to an authorized agent of the Title Company for recordation
18
under binding recording instructions from Funding Lender's counsel or such other counsel as may be acceptable to the Funding Lender); and
(ii) delivery into escrow with the Title Company (or separate escrow company, if applicable) or directly to the Funding Lender (pursuant to a Disbursement Statement listing all amounts to be disbursed approved by the Governmental Lender) of all amounts required to be paid in connection with the origination of the Borrower Loan and the Funding Loan and any underlying real estate transfers or transactions, including the Costs of Funding Deposit and the Borrower Initial Equity, all as specified in written instructions delivered to the Title Company by counsel to the Funding Lender (or such other counsel as may be acceptable to the Funding Lender); and
(iii) payment of all fees payable in connection with the closing of the Borrower Loan and the Funding Loan, including the Governmental Lender's Closing Fee.
Section 2.4. Borrower Loan Payments
The Borrower shall make Borrower Loan Payments in accordance with the Borrower Note. Each Borrower Loan Payment made by the Borrower shall be made in funds immediately available to the Funding Lender or the Servicer by 2:00 p.m., Chicago time, on the Borrower Loan Payment Date. Each such payment shall be made to the Funding Lender or the Servicer by deposit to such account as the Funding Lender or Servicer, as applicable, may designate by Written Notice to the Borrower. Whenever any Borrower Loan Payment shall be stated to be due on a day that is not a Business Day, such payment shall be due on the first Business Day immediately thereafter. In addition, the Borrower shall make Borrower Loan Payments in accordance with the Borrower Note in the amounts and at the times necessary to make all payments due and payable on the Funding Loan. All payments made by the Borrower hereunder or by the Borrower under the other Borrower Loan Documents, shall be made irrespective of, and without any deduction for, any set-offs or counterclaims, but such payment shall not constitute a waiver of any such set-offs or counterclaims.
Unless there is no Servicer, payments of principal and interest on the Borrower Note shall be paid to the Servicer. If there is no Servicer, payments of principal and interest on the Borrower Note shall be paid directly to Funding Lender.
Section 2.5. Additional Borrower Payments
(a) The Borrower shall pay on demand the following amounts:
to the Servicer or the Funding fender, the Rebate Amount then due, if any, to be deposited in the Rebate Fund as specified in Section 5.35 hereof and the Rebate Analyst's Fee and any other costs incurred to calculate such Rebate Amount (to the extent such costs are not included in the Borrower Loan Payment);
to the Governmental Lender, all fees, charges, costs, advances, indemnities and expenses, including agent and counsel fees, of the Governmental Lender incurred under the Borrower Loan Documents or the funding Loan
19
Documents, and any taxes and assessments with respect to the Project, as and when the same become due:
[Reserved]
all Costs of Funding and fees, charges and expenses, including agent and counsel fees incurred in connection with the origination of the Borrower Loan and the Funding Loan, as and when the same become due;
to the Funding Lender, all charges, costs, advances, indemnities and expenses, including agent and counsel fees, of the Funding Lender incurred by the Funding Lender at any time in connection with the Borrower Loan, the Funding Loan or the Project, including, without limitation, reasonable counsel fees and expenses incurred in connection with the interpretation, performance, or amendment and all counsel fees and expenses relating to the enforcement of the Borrower Loan Documents or the Funding Loan Documents or any other documents relating to the Project or the Borrower Loan or in connection with questions or other matters arising under such documents or in connection with any federal or state tax audit; and
any Late Charge due and payable under the terms of the Borrower Note and Section 2.6 hereof; provided, however, that all payments made pursuant to this subsection (vi) shall be made to the Servicer, and if there is no Servicer, such payments shall be made to the Funding Lender.
(b) The Borrower shall pay to the party entitled thereto as expressly set forth in this Borrower Loan Agreement or the other Borrower Loan Documents or Funding Loan Documents:
all expenses incurred in connection with the enforcement of any rights under this Borrower Loan Agreement or any other Borrower Loan Document, the Regulatory Agreement, or any Funding Loan Document by the Governmental Lender, Funding Lender or the Servicer;
all other payments of whatever nature that the Borrower has agreed to pay or assume under the provisions of this Borrower Loan Agreement or any other Borrower 1 ,oa.n Document or Funding Loan Document; and
all expenses, costs and fees relating to inspections of the Project required by the Governmental Lender, the Funding Lender, the Servicer or the Construction Consultant, in accordance with the Borrower Loan Documents or the Funding Loan Documents or to reimburse such parties for such expenses, costs and lees.
Section 2.6. Overdue Payments; Payments if Default
If any Borrower Payment Obligation is not paid by or on behalf of the Borrower when due, the Borrower shall pay to the Servicer, a Late Charge in the amount and to the extent set forth in the Borrower Note, if any.
20
Section 2.7. Calculation of Interest Payments and Deposits to Real Estate Related Reserv e Funds
The Borrower acknowledges as follows: (a) calculation of all interest payments shall be made by the Funding Lender; (b) deposits with respect to the Taxes and Other Charges shall be calculated by the Servicer or if there is no Servicer, the Funding Lender in accordance with the Security Instalment; and (c) deposits with respect to any replacement reserve funds required by the Funding Lender shall be calculated by the Servicer in accordance with the Replacement Reserve Agreement. In the event and to the extent that the Servicer or the Funding Lender, pursuant to the terms hereof, shall determine at any time that there exists a deficiency'in amounts previously owed but not paid with respect to deposits to such replacement reserve fund, such deficiency shall be immediately due and payable hereunder following Written Notice to the Borrower.
Section 2.8. Grant of Security Interest; Application of Funds
To the extent not inconsistent with the Security Instrument and as security for payment of the Borrower Payment Obligations and the performance by the Borrower of all other terms, conditions and provisions of the Borrower Loan Documents, the Borrower hereby pledges and assigns to the Funding Lender, and grants to the Funding Lender, a security interest in, all the Borrower's right, title and interest in and to all payments to or moneys held in the funds and accounts created and held by the Funding Lender or the Servicer for the Project. This Borrower Loan Agreement is, among other things, intended by the parties to be a security agreement for purposes of the UCC. Upon the occurrence and during the continuance of an Event of Default hereunder, the Funding Lender and/or the Servicer shall apply Or cause to be applied any sums held by the Funding Lender and/or the Servicer-with respect to the Project in any manner and in any order determined by Funding Lender, in Funding Lender's sole and absolute discretion.
Section 2.9. Marshalling; Payments Set Aside
The Governmental Lender and Funding Lender shall be under no obligation to marshal any assets in favor of Borrower or any other Person or against or in payment of any or all of the proceeds. To the extent that Borrower makes a payment or payments or transfers any assets to the Governmental Lender or Funding Lender, or the Governmental Lender or Funding Lender enforces its liens, and such payment or payments or transfers, or the proceeds of such enforcement or any part thereof are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other party in connection with any insolvency proceeding, or otherwise, then: (i) any and all obligations owed to the Governmental Lender or Funding Lender and any. and all remedies available to the Governmental Lender or Funding Lender under the terms of the Borrower Loan Documents and the Funding Loan Documents or in law or equity against Borrower and/or any of its properties shall be automatically revived and reinstated to the extent (and only to the extent) of any recovery permitted under clause (ii) below; and (ii) the Governmental Lender and Funding f ender shall be entitled to recover (and shall be entitled to file a proof of claim to obtain such recovery in any applicable bankruptcy, insolvency, receivership or fraudulent conveyance or fraudulent transfer proceeding) either: (x) the amount of payments or the value of the transfer or (yj if the transfer has been undone and the assets returned in whole or in part, the value of Ihe consideration paid to or received by Borrower for the initial asset transfer, plus in each case any deferred interest from the date of the disgorgement to the date of distribution
21
to the Governmental Lender or Funding Lender in any bankruptcy, insolvency, receivership or fraudulent conveyance or fraudulent transfer proceeding, and any costs and expenses due and owing, including, without limitation, any reasonable attorneys' fees incurred by the Governmental Lender or Funding Lender in connection with the exercise by the Governmental Lender or Funding Lender of its rights under this Section 2.9.
Section 2.10. Borrower Loan Disbursements
The Borrower Loan shall be disbursed by the Funding Lender, as agent for the Governmental Lender, pursuant to the Construction and Permanent Loan Agreement and the Funding Loan Agreement.
ARTICLE III [RESERVED]
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.1. Borrower Representations
To induce the Governmental Lender to execute this Borrower Loan Agreement and to induce Funding Lender to make Disbursements, Borrower represents and warrants for the benefit of the Governmental Lender, Funding Lender and the Servicer, that the representations and warranties set forth in this Section 4.1 are complete and accurate as of the Closing Date and will be complete and accurate, and deemed remade,, as of the date of each Disbursement and as of the Maturity Date in accordance with the terms and conditions of the Borrower Note. Subject to Section 4.2 hereof, the representations, warranties and agreements set forth in this Section 4.1 shall survive the making of the Borrower Loan, and shall remain in effect and true and correct in all material respects until the Borrower Loan and all other Payment Obligations have been repaid in full.
Section 4.1.1 Organization; Special Purpose
The Borrower is in good standing under the laws of the State (and under the laws of the stale in which the Borrower was formed if the Borrower was not formed under the laws of the State), has full legal right, power and authority to enter into the Borrower Loan Documents to which it is a party, and to cany out and consummate all transactions contemplated by the Borrower Loan Documents to which it is a party, and by proper corporate, limited partnership or limited liability company action, as appropriate has duly authorized the execution, delivery and performance of the Borrower Loan Documents to which it is a party. The Pcrson(s) of the Borrower executing the Borrower Loan Documents and the Funding Loan Documents to which the Borrower is a party are fully authorized to execute the same. The Borrower Loan Documents and the Funding Loan Documents, to which the Borrower is a party, have been duly authorized, executed and delivered by the Borrower. The sole business of the Borrower is the ownership, management and operation of the Project.
22
Section 4.1.2 Proceedings; Enforceability
Assuming due execution and delivery by the other parties thereto, the Borrower Loan Documents and the Funding Loan Documents to which the Borrower is a party will constitute the legal, valid and binding agreements of the Borrower enforceable against the Borrower in accordance with their terms; except in each case as enforcement may be limited by bankruptcy, insolvency or other laws affecting the enforcement of creditors' rights generally, by the application of equitable principles regardless of whether enforcement is sought in a proceeding at law or in equity and by public policy.
Section 4.1.3 No Conflicts
The execution and delivery of the Borrower Loan Documents and the Funding Loan Documents to which the Borrower is a party, the consummation of the transactions herein and therein contemplated and the fulfillment of or compliance with the terms and conditions hereof and thereof, will not conflict with or constitute a violation or breach of or default (with due notice or the passage of time or both) under the Operating Agreement of the Borrower, or to the best knowledge of the Borrower and with respect to the Borrower, any applicable law or administrative rule or regulation, or any applicable court or administrative decree or order, or any mortgage, deed of trust, loan agreement, lease, contract or other agreement or instrument to which the Borrower is a parly or by which it or its properties are otherwise subject or bound, or result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the property or assets of the Borrower, which conflict, violation, breach, default, lien, charge or encumbrance might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Borrower Loan Documents and the. Funding Loan Documents, or the financial condition, assets, properties or operations of tlie Borrower.
Section 4.1.4 Litigation; Adverse Facts
'.there is no Legal Action, nor is there a basis known to Borrower for any Legal Action, before or by any court or federal, state, municipal or other governmental authority, pending, or to the knowledge of the Borrower, after reasonable investigation, threatened, against or affecting the Borrower, or its assets, properties or operations which, if determined adversely to the Borrower or its interests, would have a material adverse effect upon the consummation of the transactions contemplated by, or the validity of the Borrower Loan Documents or the Funding Loan Documents, upon the ability of the Borrower to perform its obligations under the Borrower Loan Documents, the Funding Loan Documents and the Related Documents to which it is a party, or upon the financial condition, assets (including the Project), properties or operations of the Borrower, the Borrower is not in default (and no event has occurred and is continuing which with the giving of notice or the passage of time or both could constitute a default) with respect lo any order or decree of any court or any order, regulation or demand of any federal, state, municipal or other governmental authority, which default might have consequences that would materially and adversely affect the consummation of the transactions contemplated by the Borrower Loan Documents and the Funding l oan Documents, the ability of the Borrower to perform its obligations under the Borrower Loan Documents, the Funding Loan Documents and the Related Documents to which it is a parly, or the financial condition, assets, properties or operations of the Borrower. The Borrower is not (a) in violation of any applicable law, which violation materially
and adversely affects or may materially and adversely affect the business, operations, assets (including the Facility), condition (financial or otherwise) or prospects of the Borrower; (b) subject to, or in default with respect to, any other Legal Requirement that would have a material adverse effect on the business, operations, assets (including the Facility), condition (financial or otherwise) or prospects of the Borrower; or (c) in default with respect to any agreement to which the Borrower is a party or by which it is bound, which default would have a material adverse effect on the business, operations, assets (including the Project), condition (financial or otherwise) or prospects of the Borrower; and (d) there is no Legal Action pending or, to the knowledge of Borrower, threatened against or affecting the Borrower questioning the validity or the enforceability of this Borrower Loan Agreement or any of the other Borrower Loan Documents or the Funding Loan Documents or of any of the Related Documents. All tax returns (federal, state and local) required to be filed by or on behalf of the Borrower have been filed, and all taxes shown thereon to be due, including interest and penalties, except such, if any, as are being actively contested by the Borrower in good faith, have been paid or adequate reserves have been made for the payment thereof which reserves, if any, are reflected in the audited financial statements described therein. The Borrower enjoys the peaceful and undisturbed possession of all of the premises upon which il is operating its facilities.
Section 4.1.5 Agreements; Consents; Approvals
Except as contemplated by the Borrower Loan Documents and the Funding Loan Documents, the Borrower is not a party to any agreement or instrument or subject to any restriction that, would materially adversely affect the Borrower, the Facility, or the Borrower's business, properties, operations or financial condition or business prospects, except the Permitted Encumbrances. The Borrower is not in default in any material respect in the performance, observance or fulfillment of any of the obligations, covenants or conditions contained in any Permitted Encumbrance or any other agreement or instrument to which it is a party or by which it or the Facility is bound.
No consent or approval of any trustee or holder of any indebtedness of the Borrower, and to the best knowledge of the Borrower and only with respect to the Borrower, no consent, permission, authorization, order or license of, or filing or registration with, any governmental authority (except no representation is made with respect to any state securities or "blue sky" laws) is necessary in connection with the execution and delivery of the Borrower Loan Documents or the Funding Loan Documents, or the consummation of any transaction herein or therein contemplated, or the fulfillment of or compliance with the terms and conditions hereof or thereof, except as have been obtained or made and as are in full force and effect.
Section 4.1.6 Title
Ihe Borrower has marketable title to the Facility, free and clear of all Liens except the Permitted Encumbrances. The Security Instrument, when properly recorded in the appropriate records, together with any UCC financing statements required to be filed in connection therewith, will create (i) a valid, perfected first priority lien on the fee (or leasehold, if applicable) interest in the Facility and (ii) perfected security interests in and to, and perfected collateral assignments of. all personalty included in the Facility (including the Leases), all in accordance with the terms thereof, in each case subject only io any applicable Permitted Encumbrances. To the Borrower's
24
knowledge, there are no delinquent real property taxes or assessments, including water and sewer charges, with respect to the Facility, nor are there any claims tor payment for work, labor or materials affecting the Facility which are or may become a Lien prior to, or of equal priority with, the Liens created by the Borrower Loan Documents and the Funding Loan Documents.
Section 4.1.7 Survey
The survey for the Facility delivered to the Governmental Lender and the Funding Lender does not fail to reflect any material matter affecting the Facility or the title thereto.
Section 4.1.8 No Bankruptcy Filing
The Borrower is not contemplating either the tiling of a petition by it under any state or federal bankruptcy or insolvency law or the liquidation of all or a major portion of its property (a "Bankruptcy Proceeding'"), and the Borrower has no knowledge of any Person contemplating the filing of any such petition against it. As of the Closing Date, the Borrower has the ability to pay its.debts as they become due.
Section 4.1.9 Full and Accurate Disclosure
No statement of fact made by die Borrower in any Borrower Loan Document or any Funding Loan Document contains any untrue statement of a material, fact or omits to state any material fact necessary to make statements contained therein in light of the circumstances in which they were made, not misleading. There is no material fact or circumstance presently known to the Borrower that has not been disclosed to the Governmental Lender and the Funding Lender which materially and adversely affects the Facility or the business, operations or financial condition or business prospects of the Borrower or the Borrower's ability to meet its obligations under this Borrower Loan Agreement and the other Borrower Loan Documents and Funding Loan Documents to which it is a party in a timely manner.
Section 4.1.10 No Plan Assets
The Borrower is not an "employee benefit plan," as defined in Section 3(3) of ERISA, subject to Title 1 of ERISA, and none of the assets of the Borrower constitutes or will constitute "plan assets" of one or more such plans within the meaning of 29 C.F.R. Section 2510.3 101.
Section 4.1.11 Compliance
The Borrower, the Facility and the use thereof will comply, to the extent required, in all material respects with all applicable Legal Requirements. Ihe Borrower is not in default or violation of any order, writ, injunction, decree or demand of any Governmental Authority, the violation of which would materially adversely affect the financial condition or business prospects or the business of the Borrower. There has not been committed by the Borrower or any Affiliate involved with the operation or use of the Facility any act or omission affording any Governmental Authority the right of forfeiture as against the Facility or any part thereof or any moneys paid in performance of the Borrower's obligations under any Borrower Loan Document or any Funding Loan Documents.
25
Section 4.1.12 Contracts
All service, maintenance or repair contracts affecting the Facility have been entered into at arm's length (except for such contracts between the Borrower and its affiliates or the affiliates of the Borrower Controlling Entity of the Borrower) in the ordinary course of the Borrower's business and provide for the payment of lees in amounts and upon terms comparable to existing market rates.
Section 4.1.13 Financial Information
All financial data, including any statements of cash flow and income and operating expense, that have been delivered to the Governmental fender or the Funding Lender in respect of the Facility by or on behalf of the Borrower, to the best knowledge of the Borrower, (i) are accurate and complete in all material respects, (ii) accurately represent the financial condition of the Facility as of the date of such reports, and (iii) to the extent prepared by an independent certified public accounting firm, have been prepared in accordance with GAAP consistently applied throughout the periods covered, except as disclosed therein. Other than pursuant to or permitted by the Borrower Loan Documents or the Funding Loan Documents or the Borrower organizational documents, the Borrower has no contingent liabilities, unusual forward or long-term commitments or unrealized or anticipated losses from any unfavorable commitments. Since the date of such financial statements, there has been no materially adverse change in the financial condition, operations or business of the Borrower from that set forth in said financial statements.
Section 4.1.14 Condemnation
No Condemnation or other proceeding has been commenced pr, to the Borrower's knowledge, is contemplated, threatened or pending with respect to all or part of the Facility or for the relocation of roadways providing access to the Facility.
Section 4.1.15 Federal Reserv e Regulations
No part of the proceeds of the Borrower Loan will be used for the purpose of purchasing or acquiring any "margin stock" within the meaning of Regulation U of the Board of Governors of the Federal Reserve System or for any other purpose that would be inconsistent with such Regulation U or any other regulation of such Board of Governors, or for any purpose prohibited by Legal Requirements or any Borrower Loan Document or Funding Loan Document. Proceeds of the Borrower Loan will only be used (i) to pay costs of the Project or (ii) to make those investments specifically authorized under the Borrower Loan Documents.
Section 4.L16 Utilities and Public Access
The Facility is or will be served by water, sewer, sanitary sewer and storm drain facilities adequate to service it for its intended uses. All public utilities necessary or convenient to the full use and enjoyment of the Facility arc or will be located in the public right-of-way abutting the Facility, and all such utilities are or will be connected so as to serve the Facility without passing over other property absent a valid easement. All roads necessary for the use of the Facility for its current purpose have been or will be completed and dedicated to public use and accepted by all Governmental Authorities. Except for Permitted Encumbrances, the Facility does not share ingress
26
and egress through an casement or private road or share on-site or off-site recreational facilities and amenities that are not located on the Facility and under the exclusive control of the Borrower, or where there is shared ingress and egress or amenities, there exists an easement or joint use and maintenance agreement under which (i) access to and use and enjoyment of the easement or private road and/or recreational facilities and amenities is perpetual, (ii) the number of parties sharing such easement and/or recreational facilities and amenities must be specified, (iii) the Borrower's responsibilities and share of expenses are specified, and (iv) the failure to pay any maintenance fee with respect to an easement will not result in a loss of usage of the easement.
Section 4.1.17 Not a Foreign Person
The Borrower is not a "foreign person" within the meaning of §1445(f)(3) of the Code. Section 4.1.18 Separate Lots
Each parcel comprising the Land is a separate tax lot and is not a portion of any other tax lot that is not a part of the Land.
Section 4.1.19 Assessments
There are no pending or, to the Borrower's best knowledge, proposed special or other assessments for public improvements or otherwise affecting the Facility, or any contemplated improvements to the Facility that may result in such special or other assessments.
Section 4.1.20 Enforceability
The Borrower Loan Documents and the Funding Loan Documents are not subject to, and the Borrower has not asserted, any right of rescission, set-off, counterclaim or defense, including the defense of usury.
Section 4.1.21 Insurance
The Borrower has obtained the insurance required by this Borrower Loan Agreement, if applicable, and the Security Instrument and Construction and Permanent Loan Agreement and has delivered to the Servicer or Funding I .ender copies of insurance policies or certificates of insurance reflecting the insurance coverages, amounts and other requirements set forth in this Borrower Loan Agreement, if applicable, and the Security Instrument.
Section 4.1.22 Use of Property; Licenses
The Project will be used as a multifamily residential rental project and other appurtenant and related uses, which use is consistent with the zoning classification for the Project. All certi fications, permits, licenses and approvals, including certificates of completion and occupancy permits required for the legal use or legal, nonconforming use, as applicable, occupancy and operation of the Project (collectively, the "Licenses") required at this time for the construction or rehabilitation, as appropriate, and equipping of the Project have been obtained. All Licenses obtained by the Borrower have been validly issued and are in full force and effect. The Borrower has no reason to believe that any of the Licenses required for the future use and occupancy of the
27
Project and not heretofore obtained by the Borrower will not be obtained by the Borrower in the ordinary course following the Completion Date. No Licenses will terminate, or become void or voidable or terminable, upon any sale, transfer or other disposition of the Project, including any transfer pursuant to foreclosure sale under the Security Instrument or deed in lieu of foreclosure thereunder. The Project does not violate any density or building setback requirements of the applicable zoning law except to the extent, if any, shown on the survey. No proceedings are, to the best of the Borrower's knowledge, pending or threatened that would result in a change of the zoning of the Project.
Section 4.1.23 Flood Zone
Hither all Improvements are or will be constructed above the flood grade or the Borrower will obtain appropriate flood insurance as directed by the Servicer.
Section 4.1.24 Physical Condition
T he Facility, including parking facilities, systems, fixtures, Equipment and landscaping, are or, after completion of the construction, rehabilitation and/or repairs, as appropriate, will be in good and habitable condition in all material respects and in good order and repair in all material, respects (reasonable wear and tear excepted). The Borrower has not received notice from any insurance company or bonding company of any defect or inadequacy in the Facility, or any part thereof, which would adversely affect its insurability or cause the imposition of extraordinary premiums or charges thereon or any termination of any policy of insurance or bond. The physical, configuration of the Facility is not in material violation of the ADA, if required under applicable law.
Section 4.1.25 Encroachments
All of the Improvements included in determining the appraised value of the Facility will lie wholly within the boundaries and building restriction lines of the Facility, and no improvement on an adjoining property encroaches upon the Facility, and no easement or other encumbrance upon the Facility encroaches upon any of the Improvements, so as to affect the value or marketability of the Facility, except those insured against by the Title Insurance Policy or disclosed in the survey of the Facility as approved by the Funding Lender and the Governmental Lender.
Section 4.1.26 State Law Requirements
The Borrower hereby represents, covenants and agrees to comply with the provisions of all applicable State laws relating to the Borrower Loan, the Funding Loan and the Facility.
Section 4.1.27 Filing and Recording Taxes
All transfer taxes, deed stamps, intangible taxes or other amounts in the nature of transfer taxes required to be paid by any Person under applicable Legal Requirements have been paid. All mortgage, mortgage recording, stamp, intangible or other similar taxes required to be paid by any Person under applicable Legal Requirements in connection with the execution, delivery, recordation, filing, registration, perfection or enforcement of any of the Borrower Loan Documents and the Funding Loan Documents have been or will be paid.
Section 4.1.28 Investment Company Act
The Borrower is not (i) an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended; or (ii) a "holding company" or a "subsidiary company" of a "holding company" or an "affiliate" of either a "holding company" or a "subsidiary company" within the meaning of the Public Utility Holding Company Act of 1935. as amended.
Section 4.1.29 Fraudulent Transfer
The Borrower has not accepted the Borrower Loan or entered into any Borrower Loan Document or Funding Loan Document with the actual intent to hinder, delay or defraud any creditor, and the Borrower has received reasonably equivalent value in exchange for its obligations under the Borrower Loan Documents and the Funding Loan Documents. Giving effect to the transactions contemplated by the Borrower Loan Documents and the Funding Loan Documents, the fair saleable value of the Borrower's assets exceeds and will, immediately following the execution and delivery of the Borrower Loan Documents and the Funding Loan Documents, exceed the Borrower's total liabilities, including subordinated, unliquidated, disputed or contingent liabilities. The fair saleable value of the Borrower's assets is and will, immediately following the execution and delivery of the Borrower Loan Documents and the Funding Loan Documents, be greater than the Borrower's probable liabilities, including the maximum amount of its contingent liabilities of its debts as such debts become absolute and matured. The Borrower's assets do not and, immediately following the execution and delivery of the Borrower Loan Documents and the Funding Loan Documents will not, constitute unreasonably small capital to carry out its business as conducted or as proposed to be conducted. The Borrower does not intend to, and does not believe that it will, incur debts and liabilities (including contingent liabilities and other commitments) beyond its ability to pay such debts as they mature (taking into account the timing and amounts to be payable on or in respect of obligations of the Borrower).
Section 4.1.30 Ownership of the Borrower
Except as set forth in the Operating Agreement of the Borrower, the Borrower has no obligation to any Person to purchase, repurchase or issue any ownership interest in it.
Section 4.1.31 Environmental Matters
To the best of Borrower's knowledge and except as disclosed in environmental reports previously delivered to the Funding Lender and the Governmental Lender (the "Prior Environmental Disclosures"), the Facility is not in violation of any Legal Requirement pertaining to or imposing liability or standards of conduct concerning environmental regulation, contamination or clean-up, and will comply with covenants and requirements relating to environmental hazards as set forth in the Agreement of Environmental Indemnification. The Borrower and the Guarantor will execute and deliver the Agreement of Environmental Indemnification.
29
Section 4.1.32 Name; Principal Place of Business
Unless prior Written Notice is given to the Funding Lender, the Borrower does not use and will not use any trade name, and has not done and will not do business under any name other than its actual name set forth herein. The principal place of business of the Borrower is its primary address for notices as set forth in Section 10.1 hereof, and the Borrower has no other place of business, other than the Facility and such principal place of business.
Section 4.1.33 Subordinated Debt
There is no secured or unsecured indebtedness with respect to the Facility or any residual interest therein, other than Permitted Encumbrances and the permitted secured indebtedness described in Section 6.7 hereof except an unsecured deferred developer fee not to exceed the amount permitted by Funding Lender as determined on the Closing Date.
Section 4.1.34 Filing of Taxes
The Borrower has tiled (or has obtained effective extensions for filing) all federal, state and local tax returns required to be fded and has paid or made adequate provision for the payment of all federal, state and local taxes, charges and assessments, if any, payable by the Borrower.
Section 4.1.35 General Tax
All representations, warranties and certifications of the Borrower set forth in the Regulatory Agreement and the 'fax Compliance Agreement are incorporated by reference herein and the Borrower will comply with such as if set forth herein.
Section 4.1.36 Approval of the Borrower Loan Documents and Funding Loan Documents
By its execution and delivery of this Borrower Loan Agreement, the Borrower represents that it approves the form and substance of the Borrower Loan Documents and the Funding Loan Documents, and agrees to carry out the responsibilities and duties specified in the Borrower Loan Documents and the Funding Loan Documents to be carried out by the Borrower. The Borrower acknowledges that (a) it understands the nature and structure of the transactions relating to the financing of the Project, (b) it is familiar with the provisions of all of the Borrower Loan Documents and the Funding Loan Documents and other documents and instruments relating to the financing, (c) it understands the risks inherent in such transactions, including without limitation the risk of loss of the Facility, and (d) it has its own legal counsel and financial advisor and has not relied on the Governmental Lender, the Funding Lender or the Servicer for any guidance or expertise in analyzing the financial or other consequences of the transactions contemplated by the Borrower Loan Documents and the Funding L.oan Documents or otherwise relied on the Governmental Lender, the Funding Lender or the Servicer in any manner.
Section 4.1.37 Funding Loan Agreement
The Borrower has read and understands, accepts and agrees that it is bound by the Funding Loan Agreement and the Funding Loan Documents.
30
Section 4.1.38 Americans with Disabilities Act
The Facility, as designed, will conform in all material respects with all applicable zoning, planning, building and environmental laws, ordinances and regulations of governmental authorities having jurisdiction over the Facility, including, but not limited to, the Americans with Disabilities Act of 1990 ("ADA"), to the extent required (as evidenced by an architect's certificate to such effect).
Section 4.1.39 Requirements of Code and Regulations
The Project satisfies all requirements of the Code and the Regulations applicable to the
Project.
Section 4.1.40 Regulatory Agreement
The Project is, as of the date of origination of the Funding Loan, in compliance with all requirements of the Regulatory Agreement to the extent such requirements are applicable; and the Borrower intends to cause the residential units in the Project to be rented or available for rental on a basis which satisfies the requirements of the Regulatory Agreement, including all applicable requirements of the Code and the Regulations, and pursuant to leases which comply with all applicable laws.
Section 4.1.41 Intention to Hold Project
The Borrower intends to hold the Project for its own account and has no current plans, and has not entered into any agreement, to sell the Project or any part of it; and the Borrower intends to occupy tlie Project or cause the Project to be occupied and to operate it or cause it to be operated at all times during the term of this Borrower Loan Agreement in compliance with the terms Of this Borrower Loan Agreement and the Regulatory Agreement and does not know of any reason why the Project will not be so used by it in the absence of circumstances not now anticipated by it or totally beyond its control.
Section 4.1.42 Government and Private Approvals
All governmental or regulatory orders, consents, permits, authorizations and approvals required for the construction, rehabilitation, use, occupancy and operation of the Improvements, that may be granted or denied in the discretion of any Governmental Authority, have been obtained and are in full force and effect (or, in the case of any of the foregoing that Borrower is not required to have as of the Closing Date, will be obtained), and will be maintained in full force and effect at all times during the construction or rehabilitation of the Improvements. All such orders, consents, permits, authorizations and approvals that may not be denied in the discretion of any Governmental Authority shall be obtained prior to the commencement of any work for which such orders, consents, permits, authorizations ot approvals are required, and, once obtained, such orders, consents, permits, authorizations and approvals will be maintained in full force and effect at all times during the construction or rehabilitation of the Improvements. Except as set forth in the preceding two sentences, no additional governmental or regulatory actions, filings or registrations with respect to the Improvements, and no approvals, authorizations or consents of any trustee or holder of any indebtedness or obligation of Borrower, are required for the due execution, delivery
31
and performance by the Borrower of any of the Borrower Loan Documents or the Funding Loan Documents or the Related Documents executed by Borrower. All required zoning approvals have been obtained, and the zoning of the Land for the Facility is not conditional upon the happening of any further event.
Section 4.1.43 No Material Defaults
Except as previously disclosed to Funding Lender in writing, there exists no material violation of or material default by Borrower under, and, to the best knowledge of Borrower, no event has occurred which, upon the giving of notice or the passage of time, or both, would constitute a material default with respect lo: (i) the terms of any instrument evidencing, securing or guaranteeing any indebtedness secured by the Facility or any portion or interest thereof or therein; (ii) any lease or other agreement affecting the Facility or to which Borrower is a party; (iii) any license, permit, statute, ordinance, law, judgment, order, writ, injunction, decree, rule or regulation of any Governmental Authority, or any determination or award of any arbitrator to which Borrower or the Facility may be bound; or (iv) any mortgage:, instrument, agreement or document by which Borrower or any of its respective properties is bound; in the case of any of the foregoing: (1) which involves any Borrower Loan Document or Funding Loan Document; (2) which involves the Facility and is not adequately covered by insurance; (3) that might materially and adversely affect the ability of the Borrower or to perform any of its respective obligations under any of the Borrower Loan Documents or the Funding Loan Documents or any other material instrument, agreement or document to which it is a party; or (4) which might adversely affect the priority of the Liens created by this Borrower Loan Agreement or any of the. Borrower Loan Documents or the Funding Loan Documents.
Section 4.1.46 Payment of Taxes
Except as previously disclosed to Funding Lender in writing: (i) all tax returns arid reports of the Borrower required to be filed have been timely filed, and all taxes, assessments, fees and other governmental charges upon the Borrower, and upon its properties, assets, income and franchises, which are due and payable have been paid when due and payable; and (ii) Borrower knows of no proposed tax assessment against it that would be material to the condition (financial or otherwise) of Borrower and the Borrower has not contracted with any Government Authority in connection with such taxes.
Section 4.1.47 Rights to Facility Agreements and Licenses
Borrower is the legal and beneficial owner of all rights in and to the Plans and Specifications and all existing Facility Agreements and Licenses, and will be the legal and beneficial owner of all rights in and to all future Facility Agreements and Licenses. Borrower's interest in the Plans and Specifications and all Facility Agreements and Licenses is not subject to any present claim (other lhan under the Borrower Loan Documents and the Funding Loan Documents or as otherwise approved by Funding Lender in its sole discretion), set-off or deduction other than in the ordinary course of business.
Section 4.1.48 Patriot Act Compliance
Borrower is not now, nor has ever been (i) listed on any Government Lists (as defined below), (ii) a person who has been determined by a Governmental Authority to be subject to the prohibitions contained in Presidential Executive Order No. 13224 (Sept. 23, 2001) or any other similar prohibitions contained in the rules and regulations of the Office of Foreign Assets Control ("OFAC") or in any enabling legislation or other Presidential Executive Orders in respect thereof, (iii) indicted for or convicted of any felony involving a crime or crimes of moral turpitude or for any Patriot Act Offense, or (iv) under investigation by any Governmental Authority for alleged criminal activity. For purposes hereof, the term "Patriot Act Offense" shall mean any violation of the criminal laws of the United States of America or of any of the several states, or that would be a criminal violation if committed within the jurisdiction of the United States of America or any of the several states, relating to terrorism or the laundering of monetary instruments, including any offense undeT (A) the criminal laws against terrorism; (B) the criminal laws against money laundering, (C) Bank Representative Secrecy Act, as amended, (D) the Money Laundering Control Act of 1986, as amended, or (E) the Patriot Act. "Patriot Act Offense" also includes the crimes of conspiracy to commit, or aiding and abetting another to commit, a Patriot Act Offense. For purposes hereof, the term "Government Lists" shall mean (1) the Specially Designated Nationals and Blocked Persons Lists maintained by OF AC, (2) any other list of terrorists, terrorist organizations or narcotics traffickers maintained pursuant to any of the Rules and Regulations of OFAC that Funding Lender notified Borrower in writing is now included in "Government Lists", or (3) any similar lists maintained by the United States Department of State, the United States Department of Commerce or any other Government Authority or pursuant to any Executive Order of the President of the United States of America that Funding Lender notified Borrower in writing is now included in "Government Lists".
Section 4.1.49 Rent Schedule
Borrower has prepared, or has had prepared on its behalf, a prospective Unit absorption and rent collection schedule with respect to the Project, which schedule takes into account, among other relevant factors (i) a schedule of minimum monthly rentals for the Units, and (ii) any and all concessions including free rent periods.
Section 4.1.50 Other Documents
Each of the representations and warranties of the Borrower contained in any of the other Borrower Loan Documents or the Funding Loan Documents or Related Documents is true and correct in all material respects (or, in the case of representations or warranties contained in any of the other Borrower Loan Documents or Funding Loan Documents or Related Documents that speak as of a particular date, were true and correct in all material respects as of such date). All of such representations and warranties arc incorporated herein for the benefit of Funding Lender.
Section 4.1.51 Subordinate Loan Documents
I he Subordinate Loan Documents are in full force and effect and the Borrower has paid all commitment fees and other amounts due and payable to the Subordinate Lender(s) thereunder. There exists no material violation of or material default by the Borrower under, and no event has
occurred which, upon the giving of notice or the passage of time, or both, would constitute a material default under the Subordinate Loan Documents.
Section 4.1.52 [Reserved |
Section 4.2. Survival of Representations and Covenants
All of the representations and warranties in Section 4.1 hereof and elsewhere in the Borrower Loan Documents (i) shall survive for so long as any portion of the Borrower Payment Obligations remains due and owing and (ii) shall be deemed to have been relied upon by the Governmental Lender, the Funding Lender and the Servicer notwithstanding any investigation heretofore or hereafter made by the Governmental Lender, the Funding Lender or the Servicer or on its or their behalf, provided, however, that the representations, warranties and covenants set forth in Section 4.1.31 hereof shall survive in perpetuity, subject to the exculpation provisions, if any, of Section 11.2 hereof.
ARTICLE V AFFIRMATIVE COVENANTS
During the term of this Borrower Loan Agreement, the Borrower hereby covenants and agrees with the Governmental Lender, the Funding Lender and the Servicer that:
Section 5.1. Existence
The Borrower shall (i) do or cause lo be done all things necessary to preserve, renew and keep in full force and effect its existence and its material rights, and franchises, (ii) continue to engage in the business presently conducted by it. (iii) obtain and maintain all material Licenses, and (iv) qualify to do business and remain in good standing under the laws of the State.
Section 5.2. Taxes and Other Charges
The Borrower shall pay all T axes and Other Charges as the same become due and payable and prior to their becoming delinquent in accordance with the Borrower Loan Documents, except to the extent that the amount, validity or application thereof is being contested in good faith as permitted by the Borrower Loan Documents.
The Borrower covenants to pay all taxes and Other Charges of any type or character charged to the Funding Lender affecting the amount available to the Funding Lender from payments to be received hereunder or in any way arising due to the transactions contemplated hereby (including taxes and Other Charges assessed or levied by any public agency or governmental authority of whatsoever character having power to levy taxes or assessments) but excluding franchise taxes based upon the capital and/or income of the Funding Lender and taxes based upon or measured by the net income of the Funding Lender; provided, however, that the Borrower shall have the right to protest any such taxes or Other Charges and to require the Funding Lender, at the Borrowers expense, to protest and contest any such taxes or Other Charges levied upon them and that the Borrower shall have the right to withhold payment of any such taxes or Other Charges pending disposition of any such protest or contest unless such withholding, protest or contest would adversely affect the rights or interests of the Funding Lender. This obligation
34
shall remain valid and in effect notwithstanding repayment of the Borrower Loan hereunder or termination of this Borrower Loan Agreement.
Section 5.3. Repairs; Maintenance and Compliance; Physical Condition
The Borrower shall cause the Facility to be maintained in a good, habitable and safe (so as to not threaten the health or safety of the Project's tenants or their invited guests) condition and repair (reasonable wear and tear excepted) as set forth in the Security Instrument and the Construction and Permanent Loan Agreement and shall not remove, demolish or materially alter the Improvements or Equipment (except for removal of aging or obsolete equipment or furnishings in the normal course of business), except as provided in the Security Instrument and the Construction and Permanent Loan Agreement.
Section 5.4. Litigation
The Borrower shall give prompt Written Notice to the Governmental Lender, the Funding Lender and the Servicer of any litigation, governmental proceedings or claims or investigations regarding an alleged actual violation of a Legal Requirement pending or, to the Borrower's knowledge, threatened against the Borrower which might materially adversely affect the Borrower's condition (financial or otherwise) or business or the Facility.
Section 5.5. Performance of Other Agreements
The Borrower shall observe and perform in all material respects each and every term to be observed or performed by it pursuant to the terms of any agreement or instrument materially affecting or pertaining to the Facility.
Section 5.6. Notices
The Borrower shall promptly advise the Governmental Lender, the Funding Lender and the Servicer of (i) any Material Adverse Change in the Borrower's financial condition, assets, properties or operations other than general changes in the real estate market, (ii) any fact or circumstance affecting the Borrower or the Facility that materially and adversely affects the Borrower's ability to meet its obligations hereunder or under any of the other Borrower Loan Document to which it is a party in a timely manner, or (iii) the occurrence of any Potential Default or Event of Default of which the Borrower has knowledge. If the Borrower becomes subject to federal or state securities law filing requirements, the Borrower shall cause to be delivered to the Governmental Lender, the Funding fender and the Servicer any Securities and Exchange Commission or other public filings, if any, of the Borrower within two (2) Business Days of such tiling.
Section 5.7. Cooperate in Legal Proceedings
The Borrower shall cooperate fully with the Governmental Lender, the Funding Lender and the Servicer with respect to, and permit the Governmental Lender, the Funding Lender and the Servicer at their option, to participate in, any proceedings before any Governmental Authority that may in any way affect the rights of the Governmental Lender, the Funding Lender and/or the Servicer under any Borrower Loan Document or Funding Loan Document.
Section 5.8. Further Assurances
The Borrower shall, at the Borrower's sole cost and expense (except as provided in Section 9.1 hereot), (i) furnish to the Servicer and the Funding Fender all instruments, documents, boundary surveys, footing or foundation surveys (to the extent that Borrower's construction or renovation of the Facility alters any existing building foundations or footprints), certificates, plans and specifications, appraisals, title and other insurance reports and agreements, reasonably requested by the Servicer or the Funding Lender for the better and more efficient carrying out of the intents and purposes of the Borrower Loan Documents and the Funding Loan Documents; (ii) execute and deliver to the Servicer and the Funding Lender such documents, instruments, certificates, assignments and other writings, and do such other acts necessary or desirable, to evidence, preserve and/or protect the collateral at any time securing or intended to secure the Borrower Loan, as the Servicer and the Funding Lender may reasonably require from time to time; (iii) do and execute all cind such further lawful and reasonable acts, conveyances and assurances for the better and more effective carrying out of the intents and purposes of the Borrower Loan Documents and the Funding Loan Documents, as the Servicer or the Funding Lender shall reasonably require from time to time; provided, however, with respect to clauses (i)-(iii) above,, the Borrower shall not be required to do anything that has the effect of (A) changing the essential economic terms of the Borrower Loan or (B) imposing upon the Borrower greater personal liability under the Borrower Loan Documents and the Funding Loan Documents; and (iv) upon the Servicer's or the Funding Lender's request therefor given from time to time after the occurrence of any Potential Default or Event of Default for so long as such Potential Default or Event of Default, as applicable, is continuing pay for (a) reports of UCC, federal tax lien, state tax lien, judgment and pending litigation searches with respect to the Borrower and (b) searches of title to the Project, each such search to be conducted by search firms reasonably designated by,the:Servicer or the Funding Lender in each of the locations reasonably designated by the Servicer or the Funding Lender.
Section 5.9. Delivery of Financial Information
After notice to the Borrower of a Secondary Market Disclosure Document, the Borrower shall, concurrently with any delivery to the Funding Lender or the Servicer, deliver copies of all financial information required under Article IX.
Section 5.10. Environmental Matters
So long as the Borrower owns or is in possession of the Project, the Borrower shall (a) keep the Facility in compliance with all Environmental Laws (as defined in the Agreement of Environmental Indemnification), (b) promptly notify the Funding Lender and the Servicer if the Borrower shall become aware that any Hazardous Substances (as defined in the Agreement of Environmental Indemnification) are on or near the Facility in violation of Environmental Laws, and (c) commence and thereafter diligently prosecute to completion all remedial work necessary with respect to the Facility required under any Environmental Laws, in each case as set forth in the Sccuritv Instrument or the Agreement of Environmental Indemnification.
Section 5.11. Governmental Lender's and Funding Lender's Fees
The Borrower covenants to pay the reasonable fees and expenses of the Governmental Lender and the Funding Lender or any agents, attorneys, accountants, consultants selected by the Governmental Lender or the Funding Lender to act on its behalf in connection with this Borrower Loan Agreement and the other Borrower Loan Documents, the Regulatory Agreement and the Funding Loan Documents, including, without limitation, any and all reasonable expenses incurred; in connection with the making of the Borrower Loan or in connection with any litigation which-may at any time be instituted involving the Borrower Loan, this Borrower Loan Agreement, the other Borrower Loan Documents, the Regulatory Agreement and the Funding Loan Documents or any of the other documents contemplated thereby, or in connection with the reasonable supervision or inspection of the Borrower, its properties, assets or operations or otherwise in connection with the administration of the foregoing. This obligation shall remain valid and in effect notwithstanding repayment of the Borrower Loan hereunder or termination of this Borrower Loan Agreement.
Section 5.12. Estoppel Statement
The Borrower shall furnish to the Funding Lender or the Servicer for the benefit of the Funding Lender or the Servicer within ten (10) days after request by the Funding Lender and the Servicer, with a statement, duly acknowledged and certified, setting forth, as applicable, with respect to the Borrower Note, (i) the unpaid principal of the Borrower Note, (ii) the applicable Interest Rate, (iii) the date installments of interest and/or principal were last paid, (iv) any offsets or defenses to the payment of the Borrower Payment Obligations, and (v) that the Borrower Loan Documents and the Funding Loan Documents to which the Borrower is a party are valid, legal and binding obligations of the Borrower and have not been modified or, if modified, giving particulars of such modification, and no Event of Default exists thereunder or specify any Event of Default that does exist thereunder. The Borrower shall use commercially reasonable efforts to furnish to the Funding Lender or the Servicer, within 30 days of a request by the Funding Lender or Servicer, tenant estoppel certificates from each commercial tenant at the Facility, if any, in form and substance reasonably satisfactory to the Funding Lender and the Servicer; provided that the Funding Lender and the Servicer shall not make such requests more frequently than twice in any year. Copies of any notices provided in this Section 5.12 will be sent by the Borrower to the Governmental Lender.
Section 5.13. Defense of Actions
The Borrower shall appear in and defend any action or proceeding purporting to affect the security for this Borrower Loan Agreement hereunder or under the Borrower Loan Documents and the Funding Loan Documents, and shall pay, in the manner required by Section 2.4 hereof, all costs and expenses, including the cost of evidence of title and attorneys' fees, in any such action or proceeding in which Funding Lender may appear. If the Borrower fails to perform any of the covenants or agreements contained in this Borrower Loan Agreement or any other Borrower Loan Document, or if any action or proceeding is commenced that is not diligently defended by the Borrower which affects the Funding Lender's interest in the Facility or any part thereof, including eminent domain, code enforcement or proceedings of any nature whatsoever under any Federal or state law, whether now existing or hereafter enacted or amended, then the Funding Lender may
37
make such appearances, disburse such sums and take such action as the Funding Lender deems necessary or appropriate to protect its interests. Such actions include disbursement of attorneys7 fees, entry upon the Facility to make repairs or take other action to protect the security of the Project, and payment, purchase, contest or compromise of any encumbrance, charge or lien which in the judgment of Funding Lender appears to be prior or superior lo the Borrower Loan Documents or the Funding Loan Documents. The Funding Lender shall have no obligation to do any of the above. The Funding Lender may take any such action without notice to or demand upon the Borrower. No such action shall release the Borrower from any obligation under this Borrower Loan Agreement or any of the other Borrower Loan Documents or Funding Loan Documents. In the event (i) that the Security Instrument is foreclosed in whole or in part or that any Borrower Loan Document is put into the hands of an attorney for collection, suit, action or foreclosure, or (ii) of the foreclosure of any mortgage, deed of trust or deed to secure debt prior to or subsequent to the Security Instrument or any Borrower Loan Document in which proceeding the Funding Lender is made a party or (iii) of the bankruptcy of the Borrower or an assignment by the Borrower for the benefit of its creditors, the Borrower shall be chargeable with and agrees to pay all costs of collection and defense, including actual attorneys'1 fees in connection therewith and in connection with any appellate proceeding or post-judgment action involved therein, which shall be due and payable together with all required service or use taxes.
Section 5.14. Expenses
The Borrower shall pay all reasonable expenses incurred by the Governmental Lender, the Funding Lender and the Servicer (except as provided in Section 9.1 hereof) in connection with the Borrower Loan and the Funding Loan, including reasonable fees and expenses of the Governmental Lender's, the Funding Lender's and the Servicer's attorneys, environmental, engineering and other consultants, and fees, charges or taxes for the recording or filing of Borrower Loan Documents and the Funding Loan Documents. The Borrower shall pay or cause to be paid all reasonable expenses of the Governmental Lender, the Funding Lender and the Servicer (except as provided in Section 9.1 hereof) in connection with the issuance or administration of the Borrower Loan and the Funding Loan, including audit costs, inspection fees, settlement of condemnation and casualty awards, and premiums for title insurance and endorsements thereto. The Borrower shall, upon request, promptly reimburse the Governmental Lender, the Funding Lender and the Servicer for all reasonable amounts expended, advanced or incurred by the Governmental Lender, the Funding Lender and the Servicer to collect the Borrower Notes, or to enforce the rights of the Governmental Lender, the Funding Lender and the Servicer under this Borrower Loan Agreement or any other Borrower Loan Document, or to defend or assert the rights and claims of the Governmental Lender, the Funding Lender and the Servicer under the Borrower Loan Documents and the Funding Loan Documents arising out of an Event of Default or with respect to the Project (by litigation or other proceedings) arising out of an Event of Default, which amounts will include all court costs, attorneys" fees and expenses, fees of auditors and accountants, and investigation expenses as may be reasonably incurred by the Governmental Lender, the Funding I .ender and the Servicer in connection with any such matters (whether or not litigation is instituted), together with interest at the Default Kate on each such amount from the Date of Disbursement until the date of reimbursement to the Governmental Lender, the Funding Lender and the Servicer, all of which shall constitute part of the Borrower Loan and the Funding Loan and shall be secured by the Borrower Loan Documents and the Funding Loan Documents. The obligations and liabilities of the Borrower under this Section 5.14 shall survive the Term of this
38
Borrower Loan Agreement and the exercise by the Governmental Lender, the Funding Lender or the Servicer, as the case may be, of any of its rights or remedies under the Borrower Loan Documents and the Funding Loan Documents, including the acquisition of the Project by foreclosure or a conveyance in lieu of foreclosure. Notwithstanding the foregoing, the Borrower shall not be obligated to pay amounts incurred as a result of the gross negligence or willful misconduct of the Governmental Lender, the Funding Lender, or the Servicer, and any obligations of the Borrower to pay for environmental inspections or audits will be governed by the Borrower Loan Documents.
Section 5.15. Indemnity
In addition to its other obligations hereunder, and in addition to any and all rights of reimbursement, indemnification, subrogation and other rights of Governmental Lender or Funding Lender pursuant hereto and under law or equity, to the fullest extent permitted by law, the Borrower agrees to indemnify, hold harmless and defend the Governmental Lender, the Funding Lender and its parent, the Servicer, the Beneficiary' Parties, and each of their respective officers, directors, employees, attorneys and agents (each an "Indemnified Party"), against any and all losses, damages, claims, actions, liabilities, reasonable costs and expenses of any nature, kind or character (including, without limitation, reasonable attorneys' fees, litigation and court costs, amounts paid in settlement (to the extent that the Borrower has consented to such settlement) and amounts paid to discharge judgments) (hereinafter, the "Liabilities") to which tlie Indemnified Parties, or any of them, may become subject under federal or state securities laws or any other statutory law or at common law or otherwise, to the extent arising out of or based upon.or in any way relating to:
The Borrower Loan Documents and the Funding Loan Documents or the execution or amendment thereof or in connection with transactions contemplated thereby, including the sale, transfer or resale of the Borrower Loan or the Funding Loan, except with respect to any Secondary Market Disclosure Document (other than any Borrower's obligations under Article IX);
Any act or omission of the Borrower or any of its agents, contractors, servants, employees or licensees in connection with the Borrower Loan, the Funding Loan or the Facility, the operation of the Facility, or the condition, environmental or otherwise, occupancy, use, possession, conduct or management of work done in or about, or from the construction and equipping of the Facility or any part thereof;
Any lien (other than a Permitted Encumbrance) or charge upon payments by the Borrower to the Governmental Lender or the Funding Lender hereunder, or any taxes (including, without limitation, all ad valorem taxes ami sales taxes), assessments, impositions and Other Charges imposed on the Governmental Lender or the Funding Lender in respect of any portion of the Facility;
Any violation of any environmental law, rule or regulation with respect to, or the release of any toxic substance from, the Project or any part thereof during the period in which the Borrower is in possession or control of the Project, except as disclosed in the Prior Environmental Disclosures;
39
(e) The enforcement of. or any action taken by the Governmental Lender or the funding Lender related to remedies under, this Borrower Loan Agreement and the other J3orrower Loan Documents and the Funding Loan Documents;
(() [Reserved];
Any untrue statement or misleading statement or alleged untrue statement or alleged misleading statement of a material fact by the Borrower made in the course of Borrower applying for the Borrower Loan or the Funding Loan or contained in any of the Borrower Loan Documents or Funding Loan Documents to which the Borrower is a party;
Any Determination of Taxability;
(i) Any breach (or alleged breach) by Borrower of any representation, warranty or
covenant made in or pursuant to this Borrower Loan Agreement or in connection with any written
or oral representation, presentation, report, appraisal or other information given or delivered by
Borrower to Governmental Lender, the Funding Lender, Servicer or any other Person in
connection with Borrower's application for the Borrower Loan and the Funding Loan (including,
without limitation, any breach or alleged breach by Borrower of any agreement with respect to the
provision of any substitute credit enhancement);
(j) any failure (or alleged failure) by Borrower or the Governmental Lender to comply with applicable federal and state laws and regulations pertaining to the making of the Borrower Loan and the Funding Loan;
(k) the Facility, or the condition, occupancy, use, possession, conduct or management of, or work done in or about, or from the planning, design, acquisition, installation, or construction of, the Facility or any part "thereof; or
(1) the use of the proceeds of the Borrower Loan and the Funding Loan, except in the case of the foregoing indemnification of the Governmental'Lender, the Funding Lender or the Servicer or any related Indemnified Party (provided that such indemnification shall not apply to the extent such damages are caused by the gross negligence or willful misconduct of such Indemnified Party).
Without limiting the foregoing, to the fullest extent permitted by law, the Borrower agrees to indemnify, hold harmless and defend the Governmental Lender, and each of its officers, officials, directors, employees, attorneys and agents ("City Indemnified Parties") against any Liability to which the City Indemnified Parties, or any of them, may become subject under federal or state securities laws or any other statutory law or at common law or otherwise, to the extent arising out of or based upon or in any way relating to any declaration of taxability of interest on the Funding Loan or allegations (or regulatory inquiry) that interest on the Funding Loan is taxable for federal income tax purposes, except to the extent such damages are caused by the gross negligence or willful misconduct of a City Indemnified Party.
Notwithstanding anything herein to the contrary, the Borrower's indemnification obligations to the parties specified in Section 9.1.4 hereof with respect lo any securitization or Secondary Market' transaction described in Article IX hereof shall be limited to the indemnity set
40
forth in Section 9.1.4 hereof. In the event that any action or proceeding is brought against any Indemnified Party with respect lo which indemnity may be sought hereunder, the Borrower, upon written notice from the Indemnified Party (which notice shall be timely given so as not to materially impair the Borrower's right to defend), shall assume the investigation and defense thereof, including the employment of counsel reasonably approved by the Indemnified Party, and shall assume the payment of all expenses related thereto, with full power to litigate, compromise or settle the same in its sole discretion; provided that the Indemnified Party shall have the right to review and approve or disapprove any such compromise or settlement, which approval shall not be unreasonably withheld. Each Indemnified Party shall have the right to employ separate counsel in any such action or proceeding and to participate in the investigation and defense thereof; provided, however, the Governmental Lender shall have the absolute right to employ separate counsel at the expense of the Borrower. The Borrower shall pay the reasonable fees and expenses of such separate counsel; provided, however, that such Indemnified Party may only employ separate counsel at the expense of the Borrower if and only if in such Indemnified Party's good faith judgment (based on the advice of counsel) a conflict of interest exists or could arise by reason of common representation, except that the Borrower shall always pay the reasonable fees and expenses of the Governmental Lender's separate counsel.
Notwithstanding any transfer of the Project to another owner in accordance with the provisions of this Borrower Loan Agreement or the Regulatory Agreement, the Borrower shall remain obligated to indemnify each Indemnified Party pursuant to this Section 5.15 if such subsequent owner fails to indemnify any party entitled to be indemnified hereunder, unless the Governmental Lender and the Funding Lender have consented to such transfer and to the; assignment of the rights and obligations of the Borrower hereunder.
The rights of any persons to indemnity and the right to payment of fees and reimbursement of expenses hereunder shall survive the final payment or defeasance of the Borrower Loan and the Funding Loan and in the case of the Servicer, any resignation or removal. The provisions of this Section 5.15 shall survive the termination of this Borrower Loan Agreement.
Nothing in this Section 5.15 shall in any way limit the Borrower's indemnification and other payment obligations set forth in the Regulatory Agreement.
Section 5.16. No Warranty of Condition or Suitability by the Governmental Funding Lender
Neither the Governmental Lender nor the Funding Lender makes any warranty, either express or implied, as to the condition of the Project or that it will be suitable for the Borrower's purposes or needs.
Section 5.17. Right of Access to the Facility
The Borrower agrees that the Governmental Lender, the Funding Lender, the Servicer and the Construction Consultant, and their duly authorized agents, attorneys, experts, engineers, accountants and representatives shall have the right, but no obligation at all reasonable times during business hours and upon reasonable notice, to enter onto the Land (a) to examine, test and inspect the Facility without material interference or prejudice to the Borrower's operations and (b)
41
to perform such work in and about the Facility made necessary by reason of the Borrower's default under any of the provisions of this Borrower Loan Agreement. The Governmental Lender, the Funding Lender, the Servicer, and their duly authorized agents, attorneys, accountants and representatives shall also be permitted, without any obligation to do so, at all reasonable times and upon reasonable notice during business hours, to examine the books and records of the Borrower with respect to the Facility.
Section 5.18. Notice of Default
The Borrower will advise the Governmental Lender, the Funding Lender, and the Servicer promptly in writing of the occurrence of any Potential Default or Event of Default hereunder, specifying the nature and period of existence of such event and the actions being taken or proposed to be taken with respect thereto.
Section 5.19. Covenant with Governmental Lender and Funding Lender
The Borrower agrees that this Borrower Loan Agreement is executed and delivered in part to induce the purchase by others of the Governmental Lender Note and, accordingly, all covenants and agreements of the Borrower contained in this Borrower Loan Agreement are hereby declared to be for the benefit of the Governmental Lender, the Funding Lender and any lawful owner, holder or pledgee oflhe Borrower Note or the Governmental Lender Note from time to time.
Section 5.20. Obligation of the Borrower to Construct or Rehabilitate the Facility
The Borrower shall proceed with reasonable dispatch to construct or rehabilitate, as appropriate, and equip the Facility. If the proceeds of the Borrower Loan, together with the Other Borrower Moneys, available to be disbursed to the Borrower are not sufficient to pay the costs of such construction or rehabilitation, as appropriate, and equipping, the Borrower shall pay such additional costs from its own funds. The Borrower shall not be entitled to any reimbursement from the Governmental Lender, the Funding Lender or the Servicer in respect of any such costs or to any diminution or abatement in the repayment of the Borrower Loan. The Governmental Lender and the Funding Lender shall not be liable to the Borrower or any other person if for any reason the Project is not completed or if the proceeds of the Borrower Loan are insufficient to pay all costs of the Project. The Governmental Lender and the Funding Lender do not make any representation or warranty, either express or implied, that moneys, if any, which will be made available to the Borrower will be sufficient to complete the Project, and the Governmental Lender and the Funding Lender shall not be liable to the Borrower or any other person if for any reason the Project is not completed.
Section 5.21. Maintenance of Insurance
Borrower will maintain the insurance required by the Borrower Loan Documents. Section 5.22. Information; Statements and Reports
Borrower shall furnish or cause to be furnished to Governmental Lender and Funding
Lender:
42
Notice of Default. As soon as possible, and in any event not later than five (5) Business Days after the occurrence of any Event of Default or Potential Default, a statement of a Borrower Authorized Representative describing the details of such Event of Default or Potential Default and any curative action Borrower proposes to take;
Financial Statements; Rent Rolls. In the manner and to the extent required under the Construction and Permanent Loan Agreement, such financial statements, expenses statements, rent rolls, reports and other financial documents and information as required by the Construction and Permanent Loan Agreement and the other Borrower Loan Documents and Funding Loan Documents, in the form and within the time periods required therein;
Leasing Reports. On a monthly basis (and in any event within fifteen (15) days after the end of each Calendar Month), a report of all efforts made by Borrower, if any, to lease all or any portion of the Facility during such Calendar Month and on a cumulative basis since Facility inception, which report shall be prepared and delivered by Borrower, shall be in form and substance satisfactory to Funding Lender, .and shall, if requested by Funding Lender, be supported by copies of letters of intent, leases or occupancy agreements, as applicable;
Audit Reports. Promptly upon receipt thereof, copies of all reports, if any, submitted to Borrower by independent public accountants in connection with each annual, interim or special audit of the financial statements of Borrower made by such accountants, including the comment letter submitted by such accountants to management in connection with their annual audit;
Notices; Certificates or Communications. Immediately upon giving or receipt thereof, copies of any notices, certificates or other communications delivered at the Facility or to Borrower naming Governmental Lender or Funding Lender as addressee or which could reasonably be deemed to affect the structural integrity of the Facility or the ability of Borrower to perform its obligations under the Borrower Loan Documents and the Funding Loan Documents;
Certification of Non-Foreign Status. Promptly upon request of Funding Lender from time lo lime, a Certification of Non-Foreign Status, executed on or after the date of such request by Funding Lender;
Compliance Certificates. If requested by the Funding Lender, within 120 days after the end of each calendar year, a statement, in form and substance satisfactory to Funding Lender and certified by an Authorized Borrower Representative, to the effect that Borrower is in compliance with all covenants, terms and conditions applicable to Borrower, under or pursuant to the Borrower Loan Documents and the Funding Loan Documents and under or pursuant to any other Debt owing by Borrower to any Person, and disclosing any noncompliance therewith, and any Event of Default or Potential Default, and describing the status of Borrower's actions to correct such noncompliance. Event of Default or Potential Default, as applicable: and
(i) Other Items and Information. Such other information concerning the assets, business, financial condition, operations, property, prospects and results of operations of Borrower or the Facility, as Funding Lender or Governmental fender reasonably requests from time to time.
Section 5.23. Additional Notices
Borrower will, promptly after becoming aware thereof, give notice lo funding Lender and the Governmental Lender of:
any Lien affecting the Project, or any pari thereof, other than Liens expressly permitted under this Borrower Loan Agreement;
any Legal Action which is instituted by or against the Borrower or any Legal Action which is threatened against the Borrower which, in any case, if adversely determined, could have a material adverse effect upon the business, operations, properties, prospects, assets, management, ownership or condition (financial or otherwise) of the Borrower or the Facility;
any .Legal Action which constitutes an Event of Default or a Potential Default or a default under any other Contractual Obligation to which the Borrower is a party or by or to which tlie Borrower, or any of its properties or assets, may be bound or subject, which default would have a material adverse effect on the business, operations, assets (including the Project), condition (financial or otherwise) or prospects of Borrower;
any default, alleged default or potential default on the pari of Borrower under any of the CC&R's (together with a copy of each notice of default, alleged default or potential default received from any other party thereto);
any notice of default, alleged default or potential default on the part of Borrower received from any tenant or occupant of the Project under or relating to its lease or occupancy agreement (together with a copy of any such notice), if, in the aggregate, notices from at least fifteen percent (15%) of the tenants at the Project have been received by Borrower with respect to, or alleging, the same default, alleged default or potential default;
any change or contemplated change in (i) the location of the Borrower's executive headquarters or principal place of business; (ii) the legal, trade, or fictitious business names used by the Borrower; or (iii) the nature of the trade or business of Borrower: and
any default, alleged default or potential default on the part of any member under the Operating Agreement.
Section 5.24. Compliance with Other Agreements; Legal Requirements
Borrower shall timely perform and comply with, and shall cause the Managing Member lo timely perform and comply with the covenants, agreements, obligations and restrictions imposed on them under the Operating Agreement, and Borrower shall not do or permit to be done anything to impair any such party's rights or interests under any of the foregoing.
Borrower will comply and, to the extent it is able, will require others lo comply with, all Legal Requirements of all Governmental Authorities having jurisdiction over the Project or construction and/or rehabilitation of the Improvements, and will furnish Funding Lender with reports of any official searches for or notices of violation of any requirements established by such Governmental Authorities. Borrower will comply and. to the extent it is able, will require others
44
to comply, with applicable CC&R's and all restrictive covenants and all obligations created by private contracts and leases which affect ownership, construction, rehabilitation, equipping, fixturing, use or operation of the Project, and all other agreements requiring a certain percentage of the Units to be rented to persons of low or moderate income. The Improvements, when completed, shall comply with all applicable building, zoning and other Legal Requirements, and will not violate any restrictions of record against the Project or the terms of any other lease of all or any portion of the Project. Funding Lender shall at all limes have the right to audit, at Borrower's expense, Borrower's compliance with any agreement requiring a certain percentage of the Units to be rented to persons of low or moderate income, and Borrower shall supply all such information with respect thereto as Funding Lender may request and otherwise cooperate with Funding Lender in any such audit. Without limiting the generality of the foregoing, Borrower shall properly obtain, comply with and keep in effect (and promptly deliver copies to Funding Lender of) all permits, licenses and approvals which are required to be obtained from Governmental Authorities in order to construct, occupy, operate, market and lease the Project.
Section 5.25. Completion and Maintenance of Project
Borrower shall cause the construction or rehabilitation, as the case may be, of the Improvements, to be prosecuted with diligence and continuity and completed substantially in accordance with the Plans and Specifications, and in accordance with the Construction and Permanent Loan Agreement, free and clear of any liens or claims for liens (but without prejudice to Borrower's rights of contest under Section 10.16 hereof) ("Completion") on or before the Completion Date as may be amended through any changer order approved as provided in the Construction Contract or any Borrower Loan Documents. Borrower shall thereafter maintain the Project and the related and appurtenant uses as a residential apartment complex in good order and condition, ordinary wear and tear excepted. A maintenance program shall be in place at all times to assure the continuation of first class maintenance, which shall mean and be no less than the highest quality of maintenance provided by t he Manager for similarly situated properties managed by the Manager.
Section 5.26. Fixtures
Borrower shall deliver to Funding Lender, on demand, any contracts, bills of sale, statements, receipted vouchers or agreements under which Borrower or any other Person claims title to any materials, fixtures or articles incorporated into the Improvements.
Section 5.27. Income from Project
Borrower shall first apply all Gross Income to Expenses of the Facility, including all amounts then required to be paid under the Borrower Loan Documents and the Funding Loan Documents and the funding of all sums necessary to meet the Replacement Reserve Fund Requirement before using or applying such Gross Income for any other purpose. Borrower shall not make or permit any distributions or other payments of Net Operating Income to its members other than as described in the Operating Agreement (but subject to the terms of the Construction and Permanent Loan Agreement), shareholders or members, as applicable, in each case, without the prior Written Consent of Funding Lender.
45
Section 5.28. Leases and Occupancy Agreements
Lease Approval
Borrower has submitted to Funding Lender, and Funding Lender in addition to the Governmental Lender has approved Borrower's standard form of tenant lease (the 'Tenant Lease Form") for use in the Project. Borrower shall not materially modify the Tenant Lease Form without Funding Lender's prior Written Consent in each instance, which consent shall not be unreasonably withheld or delayed. Borrower may enter into leases of space within the Improvements (and amendments to such leases) in the ordinary course of business with bona fide third-party tenants without Funding Lender's prior Written Consent if:
The Tenant Lease Form is a Permitted Lease without material modification;
Borrower, acting in good faith following the exercise of due diligence, has determined-that the tenant meets requirements imposed under any applicable CC&R and is financially capable of performing all of its obligations under the Tenant Lease Form; and
The Tenant Lease Form conforms to the rent schedule described in Section 4.1.49 hereof and reflects an arm's-length transaction, subject to the requirement that the Borrower comply with any applicable CC&R.
If any Event of Default has occurred and is continuing. Funding Lender may make written demand on Borrower to submit all future leases for Funding Lender's approval prior to execution. Borrower shall comply with any such demand by Funding Lender.
No approval of any lease by Funding Lender shall be for any purpose other than to protect Funding Lender's security for the Borrower Loan and to preserve Funding Lender's rights under the Borrower Loan Documents and the Funding Loan Documents. No approval by Funding Lender shall result in a waiver of any default of Borrower. In no event shall any approval by Funding Lender of a lease be a representation of any kind with regard to the lease or its enforceability, or the financial capacity of any tenant or Guarantor.
Obligations. Borrower shall perform all obligations required to be performed by it as landlord under any lease affecting any part of the Project or any space within the Improvements.
Leasing and Marketing Agreements. Except as may be contemplated in the Management Agreement with Borrower's Manager. Borrower shall not without the approval of Funding fender enter into any leasing or marketing agreement and Funding fender reserves the right to approve the qualifications of any marketing or leasing agent.
46
Section 5.29- Project Agreements and Licenses
To the extent not heretofore delivered to Funding I .ender. Borrower will furnish to Funding Lender, as soon as available, true and correct copies of all Project Agreements and Licenses and the Plans and Specifications, together with assignments thereof to Funding Lender and consents to such assignments where required by Funding Lender, all in form and substance acceptable to Funding Lender. The Borrower has not assigned or granted, or will assign or grant, a security interest in any of the Project Agreements and Licenses, other than to Funding Lender.
Section 5.30. Payment of Debt Payments
In addition to its obligations under the Borrower Note. Borrower will (i) duly and punctually pay or cause to be paid all principal of and interest on any Debt of Borrower as and when the same become due on or before the due date; (ii) comply with and perform all conditions, terms and obligations of other instruments or agreements evidencing or securing such Debt; (iii) promptly inform Funding Lender of any default, or anticipated default, under any such note, agreement, instrument; and (iv) forward to Funding Lender a copy of any notice of default or notice of any event that might result in default under any such note, agreement, instrument, including Liens encumbering the Project, or any portion thereof, which have been subordinated to the Security Instrument (regardless of whether or not permitted under this Borrower Loan Agreement).
Section 5.31. ERISA
Borrower will comply, and will cause each of its ERISA Affiliates to comply, in all respects with the provisions of ERISA.
Section 5.32. Patriot Act Compliance
Borrower shall use its good faith and commercially reasonable efforts lo comply with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Project, including Ihose relating to money laundering and terrorism. Funding Lender shall have the right to audit Borrower's compliance with the Patriot Act and all applicable requirements of Governmental Authorities having jurisdiction over Borrower and/or the Project, including those relating to money laundering and terrorism. In the event that Borrower fails to comply with the Patriot Act or any such requirements of Governmental Authorities, then Funding Lender may, at its option, cause Borrower to comply therewith and any and all costs and expenses incurred by Funding Lender in connection therewith shall be secured by the Security Instrument and shall be immediately due and payable.
Section 5.33. Funds from Equity Investor
Borrower shall cause the Equity Investor to fund all installments of the Equity Contributions in the amounts and at the times subject and according to the terms of the Operating Agreement.
Section 5.34. Tax Covenants
The Borrower further represents, warrants and covenants as follows:
General. The Borrower shall not take any action or omit to take any action which, if taken or omitted, respectively, would adversely affect the exclusion of interest on the Governmental Lender Note from gross income (as defined in Section 61 of the Code), for federal income tax purposes and, if it should take or permit any such action, the Borrower will take all lawful actions that it can take to rescind such action promptly upon having knowledge thereof and that the Borrower will take such action or actions, including amendment of this Borrower Loan Agreement, the Security Instrument, the Regulatory Agreement, or any odier Borrower Loan Documents or Funding Loan Document as may be necessary, in the opinion of Tax Counsel, to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department of the Treasury or the Internal Revenue Service applicable to the Governmental Lender Note, the Funding Loan or affecting the Project. Capitalized terms used in this Section 5.34 shall have the respective meanings assigned to them in the Regulatory Agreement or, if not defined therein, in the Funding Loan Agreement. With the intent not to limit the generality of the foregoing, the Borrower covenants and agrees that, prior to the final maturity of the Governmental Lender Note, unless it has received and filed with the Governmental Lender and the Funding Lender a Tax Counsel No Adverse Effect Opinion (other than with respect to interest on any portion of the Governmental Lender Note for a period during which such portion of the Governmental Lender Note is held by a "substantial user'" of any facility financed with the proceeds of the Governmental Lender Note or a "related person," as such terms are used in Section 147(a) of the Code), the Borrower will comply with this Section 5.34.
Use of Proceeds. The use of the net proceeds of the Funding Loan at all times will satisfy the following requirements:
Limitation on Net Proceeds. At least 95% of the net proceeds of the Funding Loan (within the meaning of the Code) actually expended shall be used to pay Qualified Project Costs that are costs of a "qualified residential rental project" (within the meaning of Sections 142(a)(7) and 142(d) of the Code) and property that is "functionally related and subordinate" thereto (within the meaning of Sections LI03-8(a)(3) and 1.103-8(b)(4)(iii) of the Regulations).
Limit on Costs of Funding. The proceeds of the Funding Loan will be expended for the purposes set forth in this Borrower Loan Agreement and in the Funding Loan Agreement and no portion thereof in excess of two percent of the proceeds of the Funding Loan, within the meaning of Section 147(g) of the Code, will be expended to pay-Costs of Funding of the Funding Loan.
Prohibited Facilities. The Borrower shall not use or permit the use of any proceeds of the Funding Loan or any income from the investment thereof to provide any airplane, skybox, or other private luxury box, health club facility, any facility primarily used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises.
48
Limitation on Land. Less than 25 percent of the net proceeds of the Funding Loan actually expended will be used, directly or indirectly, for the acquisition of land or an interest therein, nor will any portion of the net proceeds of the Funding Loan be used, directly or indirectly, for the acquisition of land or an interest therein to be used for farming purposes.
Limitation on Existing Facilities. No portion of the net proceeds of the Funding Loan will be used for the acquisition of any existing property or an interest therein unless (A) the first use of such property is pursuant to such acquisition or (B) the rehabilitation expenditures with respect to any building and the equipment therefor equal or exceed 15 percent of the cost of acquiring such building financed with the proceeds of the Funding Loan (with respect to structures other than buildings, this clause shall be applied by substituting 100 percent for 15 percent). For purposes of the preceding sentence, the term "rehabilitation expenditures" shall have the meaning set forth in Section 147(d)(3) of the Code.
Accuracy of Information. The information furnished by the Borrower and used by the Governmental Lender in preparing ils certifications with respect to Section 148 of the Code and the Borrower's information statement pursuant to Section 149(e) of the Code is accurate and complete as of the date of origination of the Funding Loan.
Limitation of Project Expenditures. The acquisition, construction and equipping of the Project were not commenced (within the meaning of Section 144(a) of the Code) prior to the 60th day preceding the adoption of the resolution of the Governmental Lender with respect to the Project on January 25, 2017, and no obligation for which reimbursement will be sought from proceeds of the Funding Loan relating to the acquisition, construction or equipping of the Project was paid or incurred prior to 60 days prior to such date, except for permissible, "preliminary expenditures", which include architectural, engineering surveying, soil testing, reimbursement bond issuance and similar costs incurred prior to the commencement of construction, rehabilitation or acquisition of the Project, and which do not exceed 20% of the aggregate issue price of the Governmental Lender Note.
Qualified Costs. The Borrower hereby represents, covenants and warrants that the proceeds of the Funding Loan shall be used or deemed used exclusively to pay costs which are (A) capital expenditures (as defined in Section 1.150-1 (b) of the Code's regulations) and (B) not made for the acquisition of existing property, to the extent prohibited in Section 147(d) of the Code and that for the greatest number of buildings the proceeds of the Governmental Lender Note shall be deemed allocated on a pro rata basis to each building in the Project and the land on which it is located so that each building and the land on which it is located will have been financed fifty percent (50%) or more by the proceeds of the Governmental Lender Note for the purpose of complying with Section 42(h)(4)(B) of the Code; provided however, the foregoing representation, covenant and warranty is made for the benefit of the Borrow er and its partners and neither the Funding Lender nor the Governmental Lender shall have any obligation to enforce this statement nor shall they incur any liability to any person, including without limitation, the Borrower, the partners of the Borrower, any other affiliate of the Borrower or the holders or payees
49
of the Governmental Lender Note and the Borrower Note for any failure to meet the intent expressed in the foregoing representation, covenant and warranty: and provided further, failure to comply with this representation, covenant and warranty shall not constitute a default or event of default under this Borrower Loan Agreement or the Funding Loan Agreement.
Limitation on Maturity. The average maturity of the Governmental Lender Note does not exceed 120 percent of the average reasonably expected economic life of the Project to be financed by the Funding Loan, weighted in proportion to the respective cost of each item comprising the property the cost of which has been or will be financed, directly or indirectly, with the net proceeds of the Funding Loan. For purposes of the preceding sentence, the reasonably expected economic life of property shall be determined as of the later of (A) the Closing Date for the Funding Loan or (B) the date on which such property is placed in service (or expected to be placed in service). In addition, land shall not be taken into account in determining the reasonably expected economic life of property.
No Arbitrage. The Borrower shall not take any action or omit to take any action with respect to the Gross Proceeds of the Governmental Lender Note or of any amounts expected to be used to pay the principal thereof or the interest thereon which, if taken or omitted, respectively, would cause the Governmental Lender Note to be classified as an "arbitrage bond" within the meaning of Section 148 of the Code. Except as provided in the Funding Loan Agreement, the Construction and Permanent Loan Agreement, and this Borrower Loan Agreement, the Borrower shall not pledge or otherwise encumber, or permit the pledge or encumbrance of, any money, investment, or investment property as security for payment of any amounts due under this Borrower Loan Agreement or the Borrower Note relating to the Governmental Lender Note, shall not establish any segregated reserve or similar fund for such purpose and shall not prepay any such amounts in advance of the redemption date of an equal principal amount of the Governmental Lender Note, unless the Borrower has obtained in each case a Tax Counsel No Adverse Effect Opinion with respect to such action, a copy of which shall be provided to the Governmental Lender and the Funding Lender. The Borrower shall not, at any time prior to the final maturity of the Governmental Lender Note, invest or cause any Gross Proceeds to be invested in any investment (or to use Gross Proceeds to replace money so invested), if, as a result of such investment the Yield of all investments acquired with Gross Proceeds (or with money replaced thereby) on or prior to the date of such investment exceeds the Yield of the Governmental Lender Note to the Maturity Date, except as permitted by Section 148 of the Code and Regulations thereunder or as provided in the Regulatory Agreement. The Borrower further covenants and agrees that it will comply with all applicable requirements of said Section 148 and the rules and Regulations thereunder relating to the Governmental Lender Note and the interest thereon, including the employment of a Rebate Analyst acceptable to the Governmental Lender and Funding Lender at all times from and after the Closing Date for the calculation of rebatable amounts to the United States Treasury Department. Unless the proceeds of the Loan have been redeemed, the Borrower agrees that it will cause the Rebate Analyst to calculate the rebatable amounts not later than forty-five days after the fifth anniversary of the Closing Date and each five years thereafter and not later than forty-five days after the final Compulation Date and agrees that the Borrower will pay all costs associated therewith. The Borrower agrees to provide evidence of the employment of the Rebate Analyst satisfactory to the Governmental f ender and Funding Lender.
No Federal Guarantee. Except to the extent permitted by Section 149(b) of the Code and the Regulations and rulings thereunder, the Borrower shall not take or omit to take any action which would cause the Governmental Lender Note to be "federally guaranteed" within the meaning of Section 149(b) of the Code and the Regulations and rulings thereunder.
Representations. The Borrower has supplied or caused to be supplied to Tax Counsel all documents, instruments and written information requested by Tax Counsel, and all such documents, instruments and written information supplied by or on behalf of the Borrower at the request of Tax Counsel, which have been reasonably relied upon by Tax Counsel in rendering its opinion with respect to the exclusion from gross income of the interest on the Governmental Lender Note for federal income tax purposes, are true and correct in all material respects, do not contain any untrue statement of a material fact and do not omit to state any material fact necessary to be stated therein in order to make the information provided therein, in light of the circumstances under which such information was provided, not misleading, and the Borrower is not aware of any-other pertinent information which Tax Counsel has not requested.
Qualified Residential Rental Project. The Borrower hereby covenants and agrees that the Project will be operated as a "qualified residential rental project" within the meaning of Section 142(d) of the Code, on a continuous basis during the longer of the Qualified Project Period (as defined in the Regulatory Agreement) or any period during which any portion of the Governmental Lender Note remains outstanding, to the end that the interest on the Governmental Lender Note shall be excluded from gross income for federal income tax purposes. The Borrower hereby covenants and agrees, continuously during the Qualified Project Period, to comply with all the provisions of the Regulatory Agreement.
Information Reporting Requirements. The Borrower will comply with the information reporting requirements of Section 149(e)(2) of the Code requiring certain information regarding the Governmental Lender Note to, be filed with the Internal Revenue Service within prescribed time limits.
(i) Governmental Lender Note Not a Fledge Bond. The Borrower covenants and agrees
that not more than 50% of the proceeds of the Governmental Lender Note will be invested in
Nonpurpose Investments having a substantially guaranteed Yield for four years or more within the
meaning of Section 149(f)(3)(A)(ii) of the Code, and the Borrower reasonably expects that at least
85% of the spendable proceeds of the Governmental Lender Note will be used to carry out the
governmental purposes of the Governmental Lender Note within the three-year period beginning
on the Closing Date.
(j) Termination of Restrictions. Although the parties hereto recognize that, subject to the provisions of the Regulatory Agreement, the provisions of this Borrower Loan Agreement shall terminate in accordance with Section 10.14 hereof, the parties hereto recognize that pursuant to the Regulatory Agreement, certain requirements, including the requirements incorporated by-reference in this Section, may continue in effect beyond the term hereof".
(k) Public Approval. The Borrower covenants and agrees that the proceeds of the Governmental Lender Note will not be used in a manner that deviates in any substantial degree
51
from the Project described in the written notice of a public hearing regarding the Governmental Lender Note.
(1) 40/60 Test Election. The Borrower and the Governmental Lender hereby elect to apply the requirements of Section 142(d)(1)(B) to the Project. The Borrower hereby represents, covenants and agrees, continuously during the Qualified Project Period, to comply with all the provisions of the Regulatory Agreement.
(in) Modif ication of Tax Covenants. Subsequent to the origination of the Funding Loan and prior to its payment in full (or provision for the payment thereof having been made in accordance with the provisions of the Funding Loan Agreement), this Section 5.34 hereof may not be amended, changed, modified, altered or terminated except as permitted herein and by the Funding Loan Agreement and with the Written Consent of the Governmental Lender and the Funding Lender. Anything contained in this Borrower Loan Agreement or the Funding Loan Agreement to the contrary notwithstanding, the Governmental Lender, the Funding Lender and the Borrower hereby agree to amend this Borrower Loan Agreement and, if appropriate, the Funding Loan Agreement and the Regulatory Agreement, to the extent required, in the opinion of Tax Counsel, in order for interest on the Governmental Lender Note to remain excluded from gross income for federal income tax purposes. The party requesting such amendment, which may include the Funding Lender, shall notify the other parties to this Borrower Loan Agreement of the proposed amendment and send a copy of such requested amendment to Tax Counsel. After review of such proposed amendment, Tax Counsel shall render to the Funding Lender and the Governmental Lender an opinion as to the effect of such proposed amendment upon the inclusion of interest on the Governmental Lender Note in the gross income of the recipient thereof for federal income tax puiposes. The Borrower shall pay all.necessary fees and expenses incurred with respect to such amendment. T he Borrower, the Governmental Lender and, where applicable, the Funding Lender per written instructions from the Governmental Lender shall execute, deliver and, if applicable, the Borrower shall tile of record, any and all documents and instruments, including without limitation, an amendment to the Regulatory Agreement, with a file-stamped copy to the Funding Lender, necessary to effectuate the intent of this Section 5.34, and the Borrower and the Governmental Lender hereby appoint the Funding Lender as their true and lawful attorney-in-fact to execute, deliver and, if applicable, file of record on behalf of the Borrower or the Governmental Lender, as is applicable, any such document or instrument (in such form as may be approved by and upon instruction of Tax Counsel) if either the Borrower or the Governmental Lender defaults in the performance of its obligation under this Section 5.34; provided, however, that the Funding Lender shall take no action under this Section 5.34 without first notifying the Borrower or the Governmental Lender, as is applicable, of its intention to take such action and providing the Borrower or the Governmental Lender, as is applicable, a reasonable opportunity to comply with the requirements of this Section 5.34.
The Borrower irrevocably authorizes and directs the Funding Lender and any other agent designated by the Governmental Lender to make payment of such amounts from funds of the Borrower, if any, held by the Funding Lender, or any agent of the Governmental Lender or the Funding Lender. The Borrower further covenants and agrees that, pursuant to the requirements of Treasury- Regulation Section 1.148-Kb), it (or any related person contemplated by such regulations) will not purchase interests in the Governmental Lender Note in an amount related to the amount of the Borrower Loan.
52
Section 5.35. Payment of Rebate
(a) Arbitrage Rebate. The Borrower agrees to take all steps necessary to compute and pay any rebatable arbitrage relating to the Funding Loan or the Governmental Lender Note in accordance with Section 1.48(f) of the Code including:
Deliver}' of Documents and Money on Computation Dates. The Borrower will deliver to the Servicer, within 55 days after each Computation Date:
a statement, signed by the Borrower, stating the Rebate Amount as of such Computation Date;
if such Computation Date is an Installment Computation Date, an amount that, together with any amount then held for the credit of the Rebate Fund, is equal to at least 90% of the Rebate Amount as of such Installment Computation Date, less any "previous rebate payments" made to the United States (as that term is used in Section 1.148-3(f)(l) of the Regulations), or (2) if such Computation Date is the final Computation Date, an amount that, together with any amount then held for the credit of the Rebate Fund, is equal to the Rebate Amount as of such final Computation Date, less any "previous rebate payments" made to the United States (as that term is used in Section 1.148-3(f)(T) of the Regulations); and
an Internal Revenue Service Form 8038-T properly signed and completed as of such Computation Date.
Correction of Underpayments. If the Borrower shall discover or be notified as of any date that any payment paid to the United States Treasury pursuant to this Section 5.35 of an amount described in Section 5.35(a)(i)(A) or (B) above shall have failed to satisfy any requirement of Section 1.148-3 of the Regulations (whether or not such failure shall be due to any default by the Borrower, the Governmental Lender or the Funding Lender), the Borrower shall (I) pay to the Servicer (for deposit to the Rebate Fund) and cause the Servicer to pay to the United States Treasury from the Rebate Fund the underpayment of the Rebate Amount, together with any penalty and/or interest due, as specified in Section 1.148-3(h) of the Regulations, within 175 days after any discovery or notice and (2) deliver to the Servicer an Internal Revenue Service Form 8038-T completed as of such date. If such underpayment of the Rebate Amount, together with any penalty and/or interest due, is not paid to the United States Treasury in the amount and manner and by the time specified in the Regulations, the Borrower shall take such steps as are necessary to prevent the Governmental Lender Note from becoming an arbitrage bond within the meaning of Section 148 of the Code.
Records. The Borrower shall retain all of its accounting records relating to the funds established under this Borrower Loan Agreement and all calculations made in preparing the statements described in this Section 5.35 for at least six years after the later of the final maturity of the Governmental Lender Note or the dale the Funding Loan is retired in full.
Costs. The Borrower agrees to pay all of Ihe fees and expenses of a nationally recognized T ax Counsel, the Rebate Analyst, a certified public accountant and any other necessary consultant employed by the Borrower or the funding Lender in connection with computing the Rebate Amount.
No Diversion of Rebatable Arbitrage. The Borrower will not indirectly pay-any amount otherwise payable lo the federal government pursuant to the foregoing requirements to any person other than the federal government by entering into any investment arrangement with respect to the Gross Proceeds of the Funding Loan which is not purchased at Fair Market Value or includes terms that the Borrower would not have included if the Funding Loan were not subject to Section 148(f) of the Code.
Modification of Requirements. If at any time during the term of this Borrower Loan Agreement, tlie Governmental Lender, the Funding Lender or the Borrower desires to take any action which would otherwise be prohibited by the terms of this Section 5.35, such Person shall be permitted to take such action if it shall first obtain and provide to the other Persons named herein a Tax Counsel No Adverse Effect Opinion with respect to such action.
Rebate Fund. If required, the Servicer shall establish and hold a separate fund designated as the "Rebate Fund." The Servicer shall deposit or transfer to the credit of the Rebate Fund each amount delivered to the Servicer by the Borrower for deposit thereto and each amount directed by the Borrower to be transferred thereto.
Within 15 days after each receipt or transfer of funds to the Rebate Fund, the Servicer shall withdraw from the Rebate Fund and pay to the Uniled States of America the entire balance of the Rebate Fund.
All payments to the United Stales of America pursuant to this Section 5.35 shall be made by the Servicer for the account and in the name of the Governmental Lender and shall be paid through the United States Mail (return receipt requested or overnight delivery), addressed to the appropriate Internal Revenue Service Center and accompanied by the appropriate Internal Revenue Service forms (such forms to be provided to the Servicer by the Borrower or the Rebate Analyst as set forth in this Section 5.35).
The Borrower shall preserve all statements, forms and explanations received delivered pursuant this Section 5.35 and all records of transactions in the Rebate Fund until six years after the retirement of the Funding Loan.
(t) Moneys and securities held in the Rebate Fund shall not be deemed funds of the Funding Lender or of the Governmental Lender and arc not pledged or otherwise subject to any security interest in favor of the Funding Lender to secure the Funding Loan or any other obligations.
(g) Notwithstanding anything to the contrary in this Borrower Loan Agreement, no payment shall be made to the United States if the Borrower shall furnish to the Governmental Lender and the funding fender an opinion of Tax Counsel to the effect that such payment is not required under Section 148(d) and (f) of the Code in order to maintain the exclusion from gross
54
income for federal income tax purposes of interest on the Governmental Lender Note. In such event, the Borrower shall be entitled to withdraw funds from the Rebate Fund to the extent the Borrower shall provide a Tax Counsel No Adverse Effect Opinion to the Governmental Lender and the Funding Lender with respect to such withdrawal.
(h) Notwithstanding the foregoing, the computations and payments of rebate amounts referred to in this Section 5.35 need not be made to the extent that neither the Governmental Lender nor the Borrower will thereby fail to comply with any requirements of Section 148(f) of the Code based on a Tax Counsel No Adverse Effect Opinion, a copy of which shall be provided to the Funding Lender.
Section 5.36. Covenants under Funding Loan Agreement
The Borrower will fully and faithfully perform all the duties and obligations which the Governmental Lender has covenanted and agreed in the Funding Loan Agreement to cause the Borrower to perform and any duties and obligations which the Borrower is required in the Funding Loan Agreement to perform. The foregoing will not apply to any duty or undertaking of the Governmental Lender which by its nature cannot be delegated or assigned.
Section 5.37. Notice of Default
The Borrower will advise the Governmental Lender, the Funding Lender, the Servicer and the Investor Member promptly in writing of the occurrence of any Potential Default or Event of Default hereunder, specifying the nature and period of existence of such event and the actions being taken.or proposed to be taken with respect thereto.
ARTICLE VI NEGATIVE COVENANTS
Borrower hereby covenants and agrees as follows, which covenants shall remain in effect so long as any Payment Obligation or other obligation of Borrower under any of the other Borrower Loan Documents or the Funding Loan Documents remains outstanding or unperformed. Borrower covenants and agrees that it will not, directly or indirectly:
Section 6.1. Management Agreements
Without first obtaining the Funding Lender's prior Written Consent, enter into any Management Agreements, and thereafter the Borrower shall not, without the Funding Lender's prior Written Consent (which consent shall not be unreasonably withheld) and subject to the Regulatory Agreement: (i) surrender, terminate or cancel any such Management Agreements or otherwise replace the Manager or enter into any other management agreement; (ii) reduce or consent to the reduction of the term of such Management Agreements; (iii) increase or consent to the increase of the amount of any charges under such Management Agreements: (iv) otherwise modify, change, supplement, alter or amend in any material respect, or waive or release in any material respect any of its rights and remedies under, any Management Agreement: or (v) suffer or permit the occurrence and continuance of a default beyond any applicable cure period under
55
such Management Agreements (or any successor management agreement) it" such default permits the Manager to terminate the Management Agreements (or such successor management agreement).
Section 6.2. Dissolution
Dissolve or liquidate, in whole or in part, merge with or consolidate into another Person. Section 6.3. Change in Business or Operation of Property
Enter into any line of business other than the ownership and operation of tlie Project, or make any material change in the scope or nature of its business objectives, purposes or operations, or undertake or participate in activities other than the continuance of its present business and activities incidental or related thereto or otherwise cease to operate the Project as a multi-family property or terminate such business for any reason whatsoever (other than temporary cessation in connection with construction or rehabilitation, as appropriate, of the Project).
Section 6.4. Debt Cancellation
Cancel or otherwise forgive or release any claim or debt owed to the Borrower by a Person, except for adequate consideration or in the ordinary course of the Borrower's business in its reasonable judgment.
Section 6.5. Assets
Purchase or own any real property or personal property incidental thereto other than the
Project.
Section 6.6. Prohibited Transfers
Make, suffer or permit the occurrence of any Prohibited Transfer other than a transfer permitted under the Security Instrument, nor transfer any material License required for the operation of the Project.
Section 6.7. Debt
Other than as expressly approved in writing by the Funding Lender, create, incur or assume any indebtedness for borrowed money (including subordinate debt) whether unsecured or secured by all or any portion of the Project or interest therein or in the Borrower or any partner thereof (including subordinate debt) other than (i) the Borrower Payment Obligations, (ii) the Subordinate Debt, (iii) secured indebtedness incurred pursuant to or permitted by the Borrower Loan Documents and the Funding Loan Documents, and (iv) trade payables incurred in the ordinary course of business.
Section 6.8. Assignment of Rights
Without the Funding Lender's prior Written Consent, attempt to assign the Borrower's rights or interest under any Borrower Loan Document or Funding Loan Document in contravention of any Borrower Loan Document or Funding Loan Document.
Section 6.9. Principal Place of Business
Change its principal place of business without providing 30 days' prior Written Notice of the change to the Funding Lender and the Servicer.
Section 6.10. Operating Agreement
Without the Funding Lender's prior Written Consent (which consent shall not be unreasonably withheld) surrender, terminate, cancel, modify, change, supplement, alter or amend in any material respect, or waive or release in any material respect, any of its rights or remedies under the Operating Agreement; provided, however, the consent of Funding Lender is not required for an amendment of the Operating Agreement resulting solely from the "Permitted Transfer" of member interests of Borrower as defined in and permitted by the Security Instrument.
Section 6.11. ERISA
Maintain, sponsor, contribute to or become obligated to contribute to, or suffer or permit any ERISA Affiliate of the Borrower to, maintain, sponsor, contribute to or become obligated to contribute to, any Plan, or permit the assets of the. Borrower to become "plan assets," whether by operation of law or under regulations promulgated under ERIS A.
Section 6.12. No Hedging Arrangements
Without the prior Written Consent of the Funding Lender or unless otherwise required by this Borrower Loan Agreement, the Borrower will not enter into or guarantee, provide security for or otherwise undertake any form of contractual obligation with respect to any interest rate swap, interest rate cap or other arrangement that has the effect of an interest rate swap or interest rate cap or that otherwise (directly or indirectly, derivatively or synthetically) hedges interest rate risk associated with being a debtor of variable rate debt or any agreement or other arrangement to enter into any of the above on a future date or after the occurrence of one or more events in the future.
Section 6.13. Loans and Investments; Distributions; Related Party Payments
(a) Without the prior Written Consent of Funding Lender in each instance, Borrower shall not (i) lend money, make investments, or extend credit, other than in the ordinary course of its business as presently conducted; or (ii) repurchase, redeem or otherwise acquire any interest in Borrower, any Affiliate or any other Person owning an interest, directly or indirectly, in Borrower, or make any distribution, in cash or in kind, in respect of interests in Borrower, any Affiliate or any other Person owning an interest, directly or indirectly, in Borrower (except to the extent permitted by the Security Instrument or the Construction and Permanent Loan Agreement and subject to the limitations set forth in Section 5.27 hereof).
57
(b) Disbursements for fees and expenses of any Affiliate of Borrower and developer fees (however characterized) will only be paid to the extent that such fee or expense bears a proportionate relationship to the percentage of completion of the construction or rehabilitation, as the case may be, of the Improvements, as determined by the Construction Consultant, and only after deducting the applicable Retainage, if applicable. Except as otherwise permitted under the Operating Partnership Agreement and approved by the Funding Lender, no Disbursements for the Developer Fee or any "deferred developer fees"' shall be made.
Section 6.14. Amendment of Related Documents or CC&R's
Without the prior Written Consent of Funding Lender in each instance, except as provided herein, Borrower shall not enter into or consent to any amendment, termination, modification, or other alteration of any of the Related Documents or any of the CC&R's (including, without limitation, those contained in the Borrower- Loan Agreement, any Architect's Agreement or Engineer's Contract, any Construction Contract, and any Management Agreement, but excluding the Operating Agreement, which is covered by Section 6.10), or any assignment, transfer, pledge or hypothecation of any of its rights thereunder, if any.
Section 6.15. Personal Property
Borrower shall not install materials, personal property, equipment or fixtures subject to any security agreement or other agreement or contract wherein the right is reserved to any Person other than Borrower to remove or repossess any such materials, equipment or fixtures, or whereby title to any of the same is not completely vested in Borrower at the time of installation, without Funding Lender's prior Written Consent; provided, however, that this Section 6.15 shall not apply to laundry equipment or other equipment that is owned by a third-party vendor and commercial tenants.
Section 6.16. Fiscal Year
Without Funding Lender's Written Consent, which shall not be unreasonably withheld, the Borrower shall not change the times of commencement or termination of its fiscal year or other accounting periods, or change its methods of accounting, other than to conform to GAAP.
Section 6.17. Publicity
The Borrower shall not issue any publicity release or other communication to any print, broadcast or on-line media, post any sign or in any other way identify Funding Lender or any of its Affiliates as the source of the financing provided for herein, without the prior written approval of Funding Lender in each instance (provided that nothing herein shall prevent the Borrower from identifying Funding Lender or its Affiliates as the source of such financing to the extent that the Borrower is required to do so by disclosure requirements applicable to publicly held companies). The Borrower agrees that no sign shall be posted on the Project in connection with the construction or rehabilitation of the Improvements unless such sign identifies JPMorgan Chase Bank, N. A., and ils affiliates as the source of the financing provided for herein or Funding Lender consents to not being identified on any such sign.
58
Section 6.18. Subordinate Loan Documents
Without Funding Lender's prior written consent. Borrower will not surrender, terminate, cancel, modify, change, supplement, alter, amend, waive, release, assign, transfer, pledge or hypothecate any of its rights or remedies under the Subordinate Loan Documents.
Section 6.19. [Reserved]
ARTICLE VII RESERVED
ARTICLE VIII DEFAULTS
Section 8.1. Events of Default
Each of the following events shall constitute an "Event of Default" under the Borrower Loan Agreement:
failure by the Borrower to pay any Borrower Loan Payment in the manner and on the date such payment is due in accordance with the terms and provisions of the Borrower Note, or the failure by the Borrower to pay any Additional Borrower Payment on the date such payment is due in accordance with the terms and provisions of the Borrower Note, the Security Instrument, this Borrower Loan Agreement or any other Borrower 1 ,oan Document;
failure by Or on behalf of the Borrower to pay when due any amount (other than as provided in subsection (a) above or elsewhere in this Section 8.1.) required to be paid by the Borrower under this Borrower Loan Agreement, the Borrower Note, the Security Instrument or any of the other Borrower Loan Documents or Funding Loan Documents, including a failure to repay any amounts that have been previously paid but are recovered, attached or enjoined pursuant to any insolvency, receivership, liquidation or similar proceedings, which default remains uncured for a period of five (5) days after Written Notice thereof shall have been given to the Borrower;
an Event of Default, as defined by the Borrower Note, the Construction and Permanent Loan Agreement, the Security Instrument or any other Borrower Loan Document, occurs (or to the extent an "Event of Default" is not defined in any other Borrower Loan Document, any default or breach by the Borrower of its obligations, covenants, representations or warranties under such Borrower Loan Document occurs and any applicable notice and/or cure period has expired):
any representation or warranty made by any of the Borrower in any Borrower Loan Document or Funding Loan Document to which it is a party, or in any report, certificate, financial statement or other instrument, agreement or document furnished by the Borrower in connection with any Borrower Loan Document or Funding Loan Document, shall be false or misleading in any material respect as of the Closing Date;
the Borrower shall make a general assignment for the benefit of creditors, or shall generally not be paying its debts as they become due;
59
(I) the Borrower Controlling Entity shall make a general assignment for the benefit of creditors, shall generally not be paying its debts as they become due;
any portion of Borrower Deferred Equity to be made by the Equity Investor and required for (i) completion of the construction or rehabilitation, as the case may be, of the Improvements, or (ii) the operation of the Improvements, is not received in accordance with the terms of the Operat ing Agreement after the expiration of all applicable notice and cure periods;
the failure by Borrower or any ERISA Affiliate of Borrower to comply in all respects with ERISA, or the occurrence of any other event (with respect to the failure of Borrower or any ERISA Affiliate to pay any amount required to be paid under ERISA or with respect to the termination of, or withdrawal of Borrower or any ERISA Affiliate from, any employee benefit or welfare plan subject to ERISA) the effect of which is to impose upon Borrower (after giving effect to the tax consequences thereof) for the payment of any amount in excess of fifty Thousand Dollars ($50,000);
(i) a Bankruptcy Event shall occur with respect to Borrower, or there shall be a change
in the assets, liabilities or financial position of the Borrower which has a material adverse effect
upon the ability of the Borrower to perform its obligations under this Borrower Loan Agreement,
any other Borrower Loan Document or any Related Document;
(j) all or any part of the property of Borrower is attached, levied upon or otherwise seized by legal process, and such attachment, levy or seizure is not quashed, stayed or released: (i) prior to completion of the construction or rehabilitation, as the case may be, of the Improvements, within ten (10) days of the date thereof or (ii) after completion of the construction or rehabilitation, as the case may be, of the Improvements, within thirty (30) days of the date thereof;
(k) subject to Section 10.16 hereof. Borrower fails to pay when due any monetary obligation (other than pursuant to this Borrower Loan Agreement) to any Person in excess of $ 100,000, and such failure continues beyond the expiration of any applicable cure or grace periods;
(1) any material litigation or proceeding is commenced before any Governmental Authority against or affecting the Borrower, or property of Borrower, or any part thereof, and such litigation or proceeding is not defended diligently and in good faith by Borrower;
(m) a final judgment or decree for monetary damages in excess of $50,000 or a monetary line or penalty (not subject to appeal or as to which the lime for appeal has expired) is entered against Borrower by any Governmental Authority, and such judgment, decree, fine or penally is not paid and discharged or stayed (i) prior to completion of the construction or rehabilitation, as the case may be, of the Improvements, within ten (10) days after entry thereof or (ii) after completion of the construction or rehabilitation, as the case may be, of the Improvements, within thirty (30) days after entry thereof (or such longer period as may be permitted for payment by the terms of such judgment, fine or penalty);
(n) a final, un-appcalable and uninsured money judgment or judgments, in favor of any Person other than a Governmental Authority, in the aggregate sum of $50,000 or more shall be rendered against Borrower, or against any of its assets, that is not paid, superseded or stayed (i) prior to completion of the construction or rehabilitation, as the case may be, of the Improvements,
60
within ten (10) days after entry thereof or (ii) after completion of the construction or rehabilitation, as the case may be, of the Improvements, within thirty (30) days after entry thereof (or such longer period as may be permitted for payment by the terms of such judgment); or any levy of execution, writ or warrant of attachment, or similar process, is entered or filed against Borrower, or against any of its assets (that is likely to have a material adverse effect upon the ability of Borrower to perform its obligations under this Borrower Loan Agreement, any other Borrower Loan Document or any Related Document), and such judgment, writ, warrant or process shall remain unsatisfied, unsettled, unvacated, unhanded and unstayed (i) prior to completion of the construction or rehabilitation, as the case may be, of the Improvements, for a period often (TO) days or (ii) after completion of the construction or rehabilitation, as the case may be, of the Improvements, for a period of thirty (30) days, or in any event later than five (5) Business Days prior to the date of any proposed sale thereunder;
(o) the inability of Borrower to satisfy any condition for the receipt of a Disbursement hereunder (other than an Event of Default specifically addressed in this Section 8.1) and failure to resolve the situation to the satisfaction of Funding Lender for a period in excess of thirty (30) days after Written Notice from Funding Lender unless (i) such inability shall have been caused by conditions beyond the control of Borrower, including, without limitation, acts of God or the elements, fire, strikes and disruption of shipping; (ii) Borrower shall have made adequate provision, acceptable to Funding Lender, for the protection of materials stored on-site or off-site and for the protection of the Improvements to the extent then constructed against deterioration and against other loss or damage or theft; (iii) Borrower shall furnish to Funding Lender satisfactory-evidence that such cessation of construction or rehabilitation will not adversely affect or interfere with the rights of Borrower under labor and materials contracts or subcontracts relating to the construction or operation of the Improvements; and (iv) Borrower shall furnish to Funding Lender satisfactory evidence that the completion of the construction or rehabilitation of the Improvements can be accomplished by the Completion Date;
(p) the construction or rehabilitation of the Improvements is abandoned or halted prior to completion for any period of thirty (30) consecutive days;
(q) Borrower shall fail to keep in force and effect any material permit, license, consent or approval required under this Borrower Loan Agreement, or any Governmental Authority with jurisdiction over the Mortgaged Property or the Project orders or requires that construction or rehabilitation of the Improvements be stopped, in whole or in part, or that any required approval, license or permit be withdrawn or suspended, and the order, requirement, withdrawal or suspension remains in effect for a period of thirty (30) days;
(r) failure by the Borrower to Substantially Complete the construction of the Improvements in accordance with this Borrower Loan Agreement;
(s) failure by Borrower to complete the construction of the Improvements in accordance with this Borrower Loan Agreement;
(t) [Reserved"!;
61
(u) failure by the Borrower to use the proceeds of the Subordinate Loan for costs of the Project in approximately such amounts as set forth in the Project Budget attached to the Construction and Permanent Loan Agreement and in the Subordinate Loan Documents;
(v) an "Event of Default" or "Default" (as defined in the applicable agreement) shall occur under any of the Subordinate Loan Documents or the Redevelopment Agreement, after the expiration of all applicable notice and cure periods; or
(w) any failure by the Borrower to perform or comply with any of its obligations under this Borrower Loan Agreement (Other than those specified in this Section 8.1). as and when required, which continues for a period of thirty (30) days after written notice of such failure by Funding Lender or the Servicer on its behalf to the Borrower; provided, however, if such failure is susceptible of cure but cannot reasonably be cured within such thirty (30) day period, and the Borrower shall have commenced to cure such failure within such thirty (30) day period and thereafter diligently and expeditiously proceeds to cure the same, such thirty (30) day period shall be extended for an additional period of time as is reasonably necessary for the Borrower in the exercise of due diligence to cure such failure, such additional period not to exceed ninety (90) days. However, no such notice or grace period shall apply to the extent such failure could, in the Funding Lender's judgment, absent immediate exercise by the Funding Lender of a right or remedy under this Borrower Loan Agreement, result in impairment of the Borrower Note or this Borrower Loan Agreement or any real property security given under any other Borrower Loan Document.
In the event that any cure period provided herein with respect to a particular default is inconsistent with th cure period (if any) relating to a similar default set forth in the Construction and Permanent Loan Agreement, the terms of the Construction and Permanent Loan Agreement shall control.
Section 8.2. Remedies
Section 8.2.1. Acceleration
Upon the occurrence of an Event of Default (other than an Event of Default described in paragraph (e), (f) or (i) of Section 8.1) and at any time and from time to time thereafter, as long as such Event of Default continues to exist, in addition to any other rights or remedies available to the Governmental Lender pursuant to the Borrower Loan Documents or at law or in equity, the Funding Lender may, take such action, without notice or demand, as the Funding Lender deems ad visable to protect and enforce its rights against the Borrower and in and to the Project, including declaring the Borrower Payment Obligations to be immediately due and payable (including, without limitation, the principal of, Prepayment Premium, if any, and interest on and all other amounts due on the Borrower Note to be immediately due and payable), without notice or demand, and apply such payment of the Borrower Payment Obligations in any manner and in any order determined by Funding Lender, in Funding Lender's sole and absolute discretion: and upon any Event of Default described in paragraph (c), (!) or (i) of Section 8.1. the Borrower Payment Obligations shall become immediately due and payable, without notice or demand, and the Borrower hereby expressly waives any such notice or demand, anything contained in any Borrower Loan Document to the contrary notwithstanding. Notwithstanding anything herein to the contrary,
enforcement of remedies hereunder and under the Funding Loan Agreement shall be controlled by the Funding Lender.
Section 8.2.2 Remedies Cumulative
Upon the occurrence of an Event of Default, all or any one or more of the rights, powers, privileges and other remedies available to the Funding Lender against the Borrower under the Borrower Loan Documents or at law or in equity may be exercised by the Funding Lender, at any time and from time to time, whether or not all or any of the Borrower Payment Obligations shall be declared due and payable, and whether or not the Funding Lender shall have commenced any foreclosure proceeding or other action for the enforcement of its rights and remedies under any of the Borrower Loan Documents. Any such actions taken by the Funding Lender shall be cumulative and concurrent and may be pursued independently, singly, successively, together or otherwise, at such time and in such order as the Funding Lender may determine in its sole discretion, to the fullest extent permitted by law, without impairing or otherwise affecting the other rights and remedies of the Funding Lender permitted by law, equity or contract or as set forth in the Borrower Loan Documents. Without limiting the generality of the foregoing, the Borrower agrees that if an Event of Default is continuing, all Liens and other rights, remedies or privileges provided to the Funding Lender shall remain in full force and effect until they have exhausted all of its remedies, the Security Instrument has been foreclosed, the Facility has been sold and/or otherwise realized upon satisfaction of the Borrower Payment Obligations or the Borrower Payment Obligations has been paid in full. To the extent permitted by applicable law, nothing contained in any Borrower Loan Document shall be construed as requiring the Funding Lender to resort to any portion of the Project for the satisfaction of any of the Borrower Payment Obligations in preference or priority to any other portion, and the Funding Lender may seek satisfaction out of the en tire Facility or any part thereof, in its absolute discretion.
Notwithstanding any provision herein to the contrary, the Governmental Lender and the Funding Lender agree that any cure of any default made or tendered by the Equity Investor shall be deemed to be a cure by the Borrower and shall be accepted or rejected on the same basis as if made or tendered by the Borrower.
Section 8.2.3 Delay
No delay or omission to exercise any remedy, right, power accruing upon an Event of Default, or the granting of any indulgence or compromise by the Funding Lender shall impair any such remedy, right or power hereunder or be construed as a waiver thereof, but any such remedy, right or power may be exercised from time to time and as often as may be deemed expedient. A waiver of one Potential Default or Event of Default shall not be construed to be a waiver of any subsequent Potential Default or Event of Default or to impair any remedy, right or power consequent thereon. Notwithstanding any other provision of this Borrower Loan Agreement, the f unding Lender reserves the right to seek a deficiency judgment or preserve a deficiency claim, in connection with the foreclosure of the Security Instrument to the extent necessary to foreclose on the Project, the Rents, the funds or any other collateral.
Section 8.2.4 Set Off; Waiver of Set Off
Upon the occurrence of an Event of Default, Funding Lender may, at any time and from time to time, without notice to Borrower or any other Person (any such notice being expressly waived), set off and appropriate and apply (against and on account of any obligations and liabilities of Borrower to Funding Lender arising under or connected with this Borrower Loan Agreement and the other Borrower Loan Documents and the Funding Loan Documents, irrespective of whether or not Funding Lender shall have made any demand therefor, and although such obligations and liabilities may be contingent or unmatured), and Borrower hereby grants to Funding Lender, as security for the Payment Obligations, a security interest in, any and all deposits (general or special, including but not limited to Debt evidenced by certificates of deposit, whether matured or unmatured, but not including trust accounts) and any other Debt al any time held or owing by Funding Lender to or for the credit or the account of Borrower.
Section 8.2.5 Assumption of Obligations
In the event that the Funding Lender or its assignee or designee shall become the legal or beneficial owner of the Facility by foreclosure or deed in lieu of foreclosure, such party shall succeed lo the rights and the obligations of the Borrower under this Borrower Loan Agreement, the Borrower Note, the Regulatory Agreement, and any other Borrower Loan Documents and Funding Loan Documents to which the Borrower is a party. Such assumption shall be effective from and after the effective date of such acquisition and shall be made with the benefit of the limitations of liability set forth therein and without any liability for the prior acts of the Borrower.
Section 8.2.6 Accounts Receivable
Upon tlie occurrence of an Event of Default, Funding Lender shall have the right, to the extent permitted by law, lo impound and take possession of books, records, notes and other documents evidencing Borrower's accounts, accounts receivable and other claims for payment of money, arising in connection with the Project, and to make direct collections on such accounts, accounts receivable and claims for the benefit of Funding Lender.
Section 8.2.7 Defaults under Other Documents
Funding Lender shall have the right to cure any default under any of the Related Documents and the Subordinate Loan Documents, but shall have no obligation to do so.
Section 8.2.8 Abatement of Disbursements
Notwithstanding any provision to the contrary herein or any of the other Borrower Loan Documents or the Funding Loan Documents, Funding Lender's obligation to make further Disbursements shall abate (i) during the continuance of any Potential Default, (ii) after any disclosure to Funding Lender of any fact or circumstance that, absent such disclosure, would cause any representation or warranty of Borrower to fail to be true and correct in all material respects, unless and until Funding Lender elects to permit further Disbursements notwithstanding such event or circumstance; (iii) upon the occurrence of any Event of Default: and (iv) upon any event expressly provided for in the Construction and Permanent Loan Agreement which permits the Funding Lender to discontinue disbursement.
64
Section 8.2.9 Completion of Improvements
Upon the occurrence of any Event of Default, funding Lender shall have the right to cause an independent contractor selected by Funding Lender to enter into possession of the Project and to perform any and all work and labor necessary for the completion of the Project substantially in accordance with the Plans and Specifications, if any, and to perform Borrower's obligations under this Borrower Loan Agreement. All sums expended by Funding Lender for such purposes shall be deemed to have been disbursed to and borrowed by Borrower and shall be secured by the Security Documents.
Section 8.2.10 Right to Directly Enforce
Notwithstanding any other provision hereof to the contrary, the Funding Lender shall have the right to directly enforce all rights and remedies hereunder with or without involvement of the Governmental Lender, provided that only the Governmental Lender may enforce the Unassigned Rights and Funding Lender shall not impair Governmental Lender's enforcement of Unassigned Rights. In the event that any of the provisions set forth in this Section 8.2.10 are inconsistent with the covenants, terms and conditions of the Security Instrument, the covenants, terms and conditions of the Security Instrument shall prevail.
Section 8.2.11 Power of Attorney
Effective upon the occurrence of an Event of Default, and continuing until and unless such Event of Default is cured or waived, Borrower hereby constitutes and appoints Funding Lender, or an independent contractor selected by Funding Lender, as its true and lawful attorney-in-fact with full power of substitution, for the purposes of completion of the Project and performance of Borrower's obligations under this Borrower Loan Agreement in the name of Borrower, and hereby empowers said attorney-in-fact to do any or all of the following upon the occurrence and continuation of an Event of Default (it being understood and agreed that said power of attorney shall be deemed to be a power coupled with an interest which cannot be revoked until full payment and performance of all obligations under this Borrower Loan Agreement and the other Borrower Loan Documents and the Funding Loan Documents):
(a) to use any of the funds of Borrower or General Partner, including any balance of the Borrower Loan, as applicable, and any funds which may be held by Funding Lender for Borrower (including all funds in all deposit accounts in which Borrower has granted to Funding Lender a security interest), for the purpose of effecting completion of the construction or rehabilitation, as the case may be, of the Improvements, in the manner called for by the Plans and Specifications;
(h) to make such additions, changes and corrections in the Plans and Specifications as shall be necessary or desirable to complete the Project in substantially the manner contemplated by the Plans and Specifications;
(c) to employ any contractors, subcontractors, agents, architects and inspectors required for said purposes;
65
to employ attorneys to defend against attempts to interfere with the exercise of power granted hereby;
to pay, settle or compromise all existing bills and claims which arc or may be liens against the Facility, the Improvements or the Project, or may be necessary or desirable for the completion of the construction or rehabilitation, as the case may be, of the Improvements, or clearance of objections to or encumbrances on title;
(1) lo execute all applications and certificates in the name of Borrower, which may be required by any other construction contract;
to prosecute and defend all actions or proceedings in connection with the Project and to take such action, require such performance and do any and every other act as is deemed necessary with respect to the completion of the construction or rehabilitation, as the case may be, of the Improvements, which Borrower might do on its own behalf;
to let new or additional contracts to the extent, not prohibited by their existing contracts;
(i) to employ watchmen and erect security fences to protect the Facility from injury;
and to take such action and require such performance as it deems necessary under any of the bonds
or insurance policies to be furnished hereunder, to make settlements and compromises with the
sureties or insurers thereunder, and in connection therewith to .execute instruments of release and
satisfaction.
It is the intention of the parties hereto that upon the occurrence and continuance of an Event of Default, rights and remedies may be pursued pursuant to the terms of the Borrower Loan Documents and the Funding Loan Documents. The parties hereto acknowledge that, among the possible outcomes to the pursuit of such remedies, is the situation where the Funding Lender assignees or designees become the owner of the Project and assume the obligations identified above, and the Borrower Note, the Borrower Loan and the other Borrower Loan Documents and Funding Loan Documents remain outstanding.
ARTICLE IX SPECIAL PROVISIONS
Section 9.1. Sale of Note and Secondary Market Transaction
Section 9.1.1 Cooperation
Subject to the restrictions of Section 2.4(b) of the Funding Loan Agreement, at the Funding Lender's or the Servicer's request (to the extent not already required to be provided by the Borrower under this Borrower Loan Agreement), the Borrower shall use reasonable efforts to satisfy the market standards to which the Funding Lender or the Servicer customarily adheres or which may be reasonably required in the marketplace or by the Funding Lender or the Servicer in connection with one or more sales or assignments of all or a portion of the Governmental Lender Note and the Funding Loan or participations therein or securitizations of single or multi-class securities (the "Securities'") secured by or evidencing ownership interests in.all or a portion of the
66
Governmental Lender Note and the Funding Loan (each such sale, assignment and/or securitization, a "Secondary Market Transaction"): provided that neither the Borrower nor the Governmental Lender shall incur any third party or other out-of-pocket costs and expenses in connection with a Secondary Market Transaction, including the costs associated with the delivery of any Provided Information or any opinion required in connection therewith, and all such costs shall be paid by the Funding Lender or the Servicer, and shall not materially modify Borrower's rights or obligations. Without limiting the generality of the foregoing, the Borrower shall, so long as the Borrower Loan is still outstanding:
(i) provide such financial and other information with respect to the Borrower Loan, and with respect to the Facility, the Borrower, the Manager, the contractor of the Facility or the Borrower Controlling Entity, (ii) provide financial statements, audited, if available, relating to the Facility with customary disclaimers for any forward looking statements or lack of audit; and (iii) at the expense of the Funding Lender or the Serv icer, perform or permit or cause to be performed or permitted such site inspection, appraisals, surveys, market studies, environmental reviews and reports (Phase Fs and, if appropriate. Phase IPs), engineering reports and other due diligence investigations of the Facility, as may be reasonably requested from time to time by the Funding Lender or the Servicer or as may be necessary or appropriate in connection with a Secondary Market Transaction or Exchange Act requirements (the items provided to the Funding Lender or the Servicer pursuant to this paragraph (a) being called the "Provided Information"), together, if customary, with appropriate verification of and/or consents to the Provided Information through letters of auditors or opinions of counsel of independent attorneys acceptable to the Funding Lender or the Servicer;
make such representations and warranties as of the closing date of any Secondary Market Transaction with respect to the Facility, the Borrower, the Borrower Loan Documents and tlie Funding Loan Documents reasonably acceptable to the Funding Lender or the Servicer, consistent with the facts covered by such representations and warranties as they exist on the date thereof: and
execute such amendments to the Borrower Loan Documents and the Funding Loan Documents to accommodate such Secondary Market Transaction so long as such amendment does not affect the material economic terms of the Borrower Loan Documents and the Funding Loan Documents and is not otherwise adverse to the Borrower in its reasonable discretion; and
(d) comply with applicable federal and State securities laws.
Section 9.1.2 Use of Information
The Borrower understands that certain of the Provided Information and the required records may be included in disclosure documents in connection with a Secondary Market Transaction, including a prospectus or private placement memorandum (each, a "Secondary Market Disclosure Document"), or provided or made available to investors or prospective investors in the Securities and service providers or other parties relating to the Secondary Market Transaction. In the event that the Secondary Market Disclosure Document is required to be revised, the Borrower shall cooperate, subject to Section 9.1.1(c) hereof, with the Funding Lender and the Servicer in updating the Provided Information or required records for inclusion or summary in the
67
Secondary Market Disclosure Document or for other use reasonably required in connection with a Secondary Market Transaction by providing all reasonably requested current information pertaining to the Borrower and the Facility necessary to keep the Secondary Market Disclosure Document accurate and complete in all material respects with respect to such matters. The Borrower hereby consents to any and all such disclosures of such information.
Section 9.1.3 Borrower Obligations Regarding Secondary Market Disclosure Documents
In connection with a Secondary Market Disclosure Document, the Borrower shall provide, or in the case of a Borrower-engaged third party such as the Manager, cause it. to provide, information reasonably requested by the Funding Lender pertaining to the Borrower, the Facility or such third party (and portions of any other sections reasonably requested by the Funding Lender pertaining to the Borrower, the Facility or the third party). The Borrower shall, if requested by the Funding Lender and the Servicer, certify in writing that the Borrower has carefully examined those portions of such Secondary Market Disclosure Document, pertaining to the Borrower, the Facility or the Manager, and such portions (and portions of any other sections reasonably requested and pertaining to the Borrower, the Facility or the Manager) do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading; provided that the Borrower shall not be required to make any representations or warranties regarding any Provided Information obtained from a third party except with respect to information it provided to such parties. Furthermore, the Borrower hereby indemnifies the Funding Lender, the Governmental Lender and the Servicer for any Liabilities to which any such parties may become subject to the extent such Liabilities arise out of or are based upon the use of the Provided Information in a Secondary Market Disclosure Document; provided that the Borrower shall not provide any indemnification regarding any Provided Information obtained from unrelated third parties except with respect to information it provided to such parties.
Section 9.1.4 Borrower Indemnity Regarding Filings
In connection with filings under the Exchange Act or tlie Securities Act, the Borrower shall (i) indemnify Funding Lender, the Governmental Lender and the underwriter group for any securities (the "Underwriter Group") and all officials, employees and agents of any of them for any Liabilities to which Funding Lender, the Servicer or the Underwriter Group may become subject insofar as the Liabilities arise out of or are based upon the omission or alleged omission to state in the Provided Information of a material fact required to be stated in the Provided Information in order to make the statements in the Provided Information, in the light of the circumstances under which they were made not misleading and (ii) reimburse the Funding Lender, the Servicer, the Underwriter Group and other indemnified parlies listed above for any legal or other expenses reasonably inclined by the Funding Lender, the Servicer or the Underwriter Group in connection with defending or investigating such Liabilities; provided that the Borrower shall not provide any indemnification regarding any Provided Information obtained from unrelated third parties except with respect lo information it provided to such parties.
68
Section 9.1.5 Indemnification Procedure
Promptly after receipt by an indemnified party under Sections 9.1.3 and 9.1.4 hereof of notice of the commencement of any action for which a claim for indemnification is to be made against the Borrower, such indemnified party shall notify the Borrower in writing of such commencement, but the omission to so notify the Borrower will not relieve the Borrower from any liability that it may have to any indemnified party hereunder except to the extent that failure to notify causes prejudice to the Borrower. In the event that any action is brought against any indemnified parly, and it notifies the Borrower of the commencement thereof, the Borrower will be entitled, jointly with any other indemnifying party, to participate therein and, to the extent that it (or they) may elect by Written Notice delivered to the indemnified party promptly after receiving the aforesaid notice of commencement, to assume the defense thereof with counsel selected by the Borrower and reasonably satisfactory to such indemnified party in its sole discretion. After notice from the Borrower to such indemnified party under this Section 9.1.5, the Borrower shall not be responsible for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation. No indemnified party shall settle or compromise any claim for which the Borrower may be liable hereunder without the prior Written Consent of the Borrower.
Section 9;1.6 Contribution
In order to provide for just and equitable contribution in circumstances in which the indemnity agreement provided, for in Section 9.1.4 hereof is for any reason held to be unenforceable by an indemnified party in respect of any Liabilities (or action in respect thereof) referred to therein which would otherwise be indemnifiable under Section 9.1.4 hereof, the Borrower shall contribute to the amount paid or payable by the indemnified party as a result of such Liabilities (or action in respect thereof); provided, however, that no Person guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Securities Act) shall be entitled to contribution from any Person not guilty of such fraudulent misrepresentation. In determining the amount of contribution to which the respective parties are entitled, the following factors shall be considered: (i) the indemnified parties and the Borrower's relative knowledge and access to information concerning the matter with respect to which the claim was asserted; (ii) the opportunity to correct and prevent any statement or omission; and (iii) any other equitable considerations appropriate in the circumstances. The parties hereto hereby agree that it may not be equitable if the amount of such contribution were determined by pro rata or per capita allocation.
ARTICLE X MISCELLANEOUS
Section 10.1. Notices
All notices, consents, approvals and requests required or permitted hereunder or under any other Borrower Loan Document or Funding Loan Document (a "Notice'") shall be deemed to be given and made when delivered by hand, by recognized overnight delivery service, confirmed facsimile transmission (provided any telecopy or other electronic transmission received by any party after 4:00 p.m., local time, as evidenced by the time shown on such transmission, shall be deemed to have been received the following Business Day), further provided that any transmission
69
by facsimile shall also be sent by U.S. Postal Service first class mail; or five (5) calendar days after deposited in the United States mail, registered or certified, postage prepaid, with return receipt requested, addressed as follows:
If to Borrower: Paseo Boricua Arts. LLC
666 Dundee Road. Suite 1102 Northbrook, Illinois 60062 Attn: Richard J. Sciortino
Applegate & Thornc-Thomsen, P.C. 425 S. Financial Place, Suite 1900 Chicago, IL 60605 Attn: Bennett Applegate
USA Institutional Paseo LLC 777 West Putnam Avenue Greenwich, Connecticut 06830 Attention: Joanne Flanagan, Esq.
City of Chicago
Department of Planning
121 North LaSalle Street, 10th Floor
Chicago, IL 60602
Attention: Commissioner
Telephone: (312)744-4190
Facsimile: (312)742-2271
With copies to: City of Chicago
Office of Corporation Counsel
121 North LaSalle Street, Room 600
Chicago, IL 60602
Attention: Finance and Economic Development Division Telephone: (312) 744-0200 Facsimile: (312) 744-5185
City of Chicago
Office of the City Comptroller's Office 121 North LaSalle Street, Suite 700 Chicago. IL 60602 Telephone: (312) 744-2202 Facsimile: (312) 742-6544
If to the Funding Lender: JPMorgan Chase Bank. N. A.
Community Development Real Estate Group Chase Tower/Mail Code II. 1-0953 70
10 South Dearborn Street Chicago, Illinois 60603 Attn: Dell McCoy
With a copy to: Kutak Rock LLP
8601 N. Scottsdale Road, Suite 300 Scottsdale, Arizona 85253 Attn: Heather Aeschleman
Any party may change such party's address for the notice or demands required under this Borrower Loan Agreement by providing written notice of such change of address to the other parties by written notice as provided herein.
Section 10.2. Brokers and Financial Advisors
The Borrower hereby represents that it has dealt with no financial advisors, brokers, underwriters, placement agents, agents or finders in connection with the Borrower Loan, other than those disclosed to the Funding Lender and whose fees shall be paid by tlie Borrower pursuant to separate agreements. The Borrower and the Funding Lender shall indemnify and hold the other harmless from and against any and all claims, liabilities, costs and expenses of any kind in any way relating to or arising from a claim by any Person that such Person acted on behalf of the indemnifying party in connection with the transactions contemplated herein. The provisions of this Section 10.2 shall survive the expiration and termination of this Borrower Loan Agreement and the repayment of the Borrower Payment Obligations.
Section 10.3. Survival
This Borrower Loan Agreement and all covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by the Governmental Lender of the Borrower Loan and the execution and delivery to the Governmental Lender of the Borrower Note and the assignment of the Borrower Note to the Funding Lender, and shall continue in full force and effect so long as all or any of the Borrower Payment Obligations is unpaid. All the Borrower's covenants and agreements in this Borrower Loan Agreement shall inure to the benefit of the respective legal representatives, successors and assigns of the Governmental Lender, the Funding Lender and the Servicer.
Section 10.4. Preferences
The Governmental Lender shall have the continuing and exclusive right to apply or reverse and reapply any and all payments by the Borrower lo any portion of the Borrower Payment Obligations. To the extent the Borrower makes a payment to the Governmental Lender or the Servicer, or the Governmental Lender or the Servicer receives proceeds of any collateral, which is in whole or part subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, receiver or any other parly under any bankruptcy law. state or federal law, common law or equitable cause, then, to the extent of such payment or proceeds
71
received, the Borrower Payment Obligations or part thereof intended to be satisfied shall be revived and continue in full force and effect, as if such payment or proceeds had not been received by the Governmental Lender or the Servicer.
Section 10.5. Waiver of Notice
The Borrower shall not be entitled to any notices of any nature whatsoever from the Funding Lender or the Servicer except with respect to matters for which this Borrower Loan Agreement or any other Borrower Loan Document specifically and expressly provides for the giving of notice by the Funding Lender or the Servicer, as the case may be, to the Borrower and except with respect to matters for which the Borrower is not, pursuant to applicable Legal Requirements, permitted to waive the giving of notice. The Borrower hereby expressly waives the right to receive any notice from the Funding Lender or the Servicer, as the case may be, with respect to any matter for which no Borrower Loan Document specifically and expressly provides for the giving of notice by the Funding Lender or the Servicer to the Borrower.
Section 10.6. Offsets, Counterclaims and Defenses
The Borrower hereby waives the right to assert a counterclaim, other than a compulsory counterclaim, in any action or proceeding brought against it by the Funding Lender or the Servicer with respect to a Borrower Loan Payment. Any assignee of Funding Lender's interest in and to the Borrower Loan Documents or the Funding Loan Documents shall take the same free and clear of all offsets, counterclaims or defenses that are unrelated to the Borrower Loan Documents or the Funding Loan Documents which the Borrower may otherwise have against any assignor of such documents, and no such unrelated offset, counterclaim or defense shall be interposed or asserted by the Borrower in any action or proceeding brought by any such assignee upon such documents, and any such right to interpose or assert any such unrelated offset, counterclaim or defense in any-such action or proceeding is hereby expressly waived by the Borrower.
Section 10.7. Publicity
The Funding Lender and the Servicer (and any Affiliates of either party) shall have the right to issue press releases, advertisements and other promotional materials describing the Funding Lender's or the Servicer's participation in the making of the Borrower Loan or the Borrower Loan's inclusion in any Secondary Market Transaction effectuated by the Funding Lender or the Servicer or one of its or their Affiliates. All news releases, publicity or advertising by the Borrower or its Affiliates through any media intended to reach the general public, which refers to the Borrower Loan Documents or the Funding Loan Documents, the Borrower Loan, the Funding Lender or the Servicer in a Secondary Market Transaction, shall be subject to the prior Written Consent of the Funding Lender or the Servicer, as applicable.
Section 10.8. Construction of Documents
The parties hereto acknowledge that they were represented by counsel in connection with the negotiation and drafting of the Borrower Loan Documents and the Funding Loan Documents and that the Borrower Loan Documents and the Funding Loan Documents shall not be subject to the principle of construing their meaning against the party that drafted them.
72
Section 10.9. No Third-Party Beneficiaries
The Borrower Loan Documents and the Funding Loan Documents are solely for the benefit of the Governmental Lender, the Funding Lender, the Servicer and the Borrower and, with respect to Sections 9.1.3 and 9.1.4 hereof, the Underwriter Group, and nothing contained in any Borrower Loan Document shall be deemed to confer upon anyone other than the Governmental Lender, the Funding Lender, the Servicer, and the Borrower any right to insist upon or to enforce the performance or observance of any of the obligations contained therein.
Section 10.10. Assignment
The Borrower Loan, the Security Instrument, the Borrower Loan Documents and the Funding Loan Documents and all Funding Lender's rights, title, obligations and interests therein may be assigned by the Funding Lender, at any time in ils sole discretion, whether by operation of law (pursuant to a merger or other successor in interest) or otherwise. Upon such assignment, all references to Funding Lender in this Borrower Loan Agreement and in any Borrower Loan Document shall be deemed to refer to such assignee or successor in interest and such assignee or successor in interest shall thereafter stand in the place of the Funding Lender. Borrower shall accord full recognition to any such assignment, and all rights and remedies of Funding Lender in connection with the interest so assigned shall be as fully enforceable by such assignee as they were by Funding Lender before such assignment. In connection with any proposed assignment, Funding Lender may disclose to the proposed assignee any information that Borrower has delivered, or caused to be delivered, to Funding Lender with reference to Borrower, General Partner, Guarantor or any Affiliate, or the Facility, including information that Borrower is required to deliver to Funding Lender pursuant to this Borrower Loan Agreement, provided that such proposed assignee agrees to treat such information as confidential. The Borrower may not assign its rights, interests or obligations under this Borrower Loan Agreement or under any of the Borrower Loan Documents or Funding Loan Documents, or Borrower's interest in any moneys to be disbursed or advanced hereunder, except only as may be expressly permitted hereby.
Section 10.1.1. [Reserved |
Section 10.12. Governmental Lender, Funding Lender and Servicer Not in Control; No Partnership
None of the covenants or other provisions contained in this Borrower Loan Agreement shall, or shall be deemed to give the Governmental Lender, the Funding Lender or the Servicer the right or power to exercise control over the affairs or management of the Borrower, the power of the Governmental Lender, the Funding Lender and the Servicer being limited to the rights to exercise the remedies referred to in the Borrower Loan Documents and the Funding Loan Documents. The relationship between the Borrower and the Governmental Lender, the Funding Lender and the Servicer is, and at all times shall remain, solely that of debtor and creditor. No covenant or provision of the Borrower Loan Documents or the Funding Loan Documents is intended, nor shall it be deemed or construed, to create a partnership, joint venture, agency or common interest in profits or income between the Borrower and the Governmental Lender, the Funding Lender or the Servicer or to create an equity in the Facility in the Governmental Lender, the Funding Lender or the Servicer. Neither the Governmental Lender, the Funding Lender nor the
73
Servicer undertakes or assumes any responsibility or duty to the Borrower or to any other person with respect to the Facility or the Borrower Loan, except as expressly provided in the Borrower Loan Documents or the Funding Loan Documents; and notwithstanding any other provision of the Borrower Loan Documents and the Funding Loan Documents: (1) the Governmental Lender, the Funding Lender and the Servicer are not, and shall not be construed as, a partner, joint venturer, alter ego, manager, controlling person or other business associate or participant of any kind of the Borrower or its stockholders, members, or partners and the Governmental Lender, the Funding Lender and the Servicer do not intend to ever assume such status; (2) the Governmental Lender, the Funding Lender and the Servicer shall in no event be liable for any the Borrower Payment Obligations, expenses or losses incurred or sustained by the Borrower; and (3) the Governmental Lender, the Funding Lender and the Servicer shall not be deemed responsible for or a participant in any acts, omissions or decisions of the Borrower, the Borrower Controlling Entities or its stockholders, members, or partners. The Governmental Lender, the Funding Lender and the Servicer and the Borrower disclaim any intention to create any partnership, joint venture, agency or common interest in profits or income between the Governmental Lender, the Funding Lender, the Servicer and the Borrower, or to create an equity in the Facility in the Funding Lender or the Servicer, or any sharing of liabilities, losses, costs or expenses.
Section 10.13. Release
The Borrower hereby acknowledges that it is executing this Borrower Loan Agreement and each of the Borrower Loan Documents and the Funding Loan Documents to which it is a party as its own voluntary act free from duress and undue influence.
Section 10.14. Term of Borrower Loan Agreemen t
This Borrower Loan Agreement shall be in full force and effect until all Payment Obligations of the Borrower hereunder and under the Borrower Loan Documents have been paid in full and the Borrower Loan and the Funding Loan have been retired or the payment thereof has been provided for; except that on and after payment in full of tlie Borrower Note, this Borrower Loan Agreement shall be terminated, without further action by the parties hereto; provided, however, that the obligations of the Borrower under Sections 5.11 (Governmental Lender's Fees), 5,14 (Expenses), 5.15 (Indemnity), 9.1.3, 9.1.4, 9.1.5, 9.1.6 and 10.15 (Reimbursement of Expenses) hereof, as well as under Section 13.6 of the Construction and Permanent Loan Agreement, shall survive the termination of this Borrower Loan Agreement.
Section 10.15. Reimbursement of Expenses
If. upon or after the occurrence of any Event of Default or Potential Default, the Governmental Lender, the Funding Lender or the Servicer shall employ attorneys or incur other expenses for the enforcement of performance or observance of any obligation or agreement on the part of the Borrower contained herein, the Borrower will on demand therefor reimburse the Governmental Lender, the Funding Lender and the Servicer for fees of such attorneys and such other expenses so incurred.
The Borrowers obligation to pay the amounts required to be paid under this Section 10.15 shall be subordinate to its obligations to make payments under the Borrower Note.
74
Section 10.16. Permitted Contests
Notwithstanding anything to the contrary contained in this Borrower Loan Agreement, Borrower shall have the right to contest or object in good faith to any claim, demand, levy or assessment (other than in respect of Debt or Contractual Obligations of Borrower under any Borrower Loan Document or Related Document) by appropriate legal proceedings that are not prejudicial to Funding Lender's rights, but this shall not be deemed or construed as in any way relieving, modifying or providing any extension of lime with respect to Borrower's covenant to pay and comply with any such claim, demand, levy or assessment, unless Borrower shall have given prior Written Notice to the Governmental Lender and the Funding Lender of Borrowers intent to so contest or object thereto, and unless (i) Borrower has, in the Governmental Lender's and the Funding Lender's judgment, a reasonable basis for such contest, (ii) Borrower pays when due any portion of the claim, demand, levy or assessment to which Borrower does not object, (iii) Borrower demonstrates to Funding Lender's satisfaction that such legal proceedings shall conclusively operate to prevent enforcement prior to final determination of such proceedings, (iv) Borrower furnishes such bond, surety, undertaking or other security in connection therewith as required by law, or as requested by and satisfactory to Funding Lender, to stay such proceeding, which bond, surety, undertaking or other security shall be issued by a bonding, company, insurer or surety company reasonably satisfactory to Funding Lender and shall be sufficient to cause the claim, demand, levy or assessment to be insured against by the Title Company or removed as a lien against the Facility, (v) Borrower at all times prosecutes the contest with due diligence, and (vi) Borrower pays, promptly following a determination of the amount, of such claim, demand, levy or assessment due and owing by Borrower, tlie amount so determined to be due and owing by Borrower. In the event that Borrower does not make, promptly following a determination of the amount of such claim, demand, levy or assessment due and owing by Borrower, any payment required to be made pursuant to clause (vi) of the preceding sentence, an Event Of Default shall have occurred, and Funding Lender may draw or realize upon any bond or other security delivered to Funding Lender in connection with the contest by Borrower, in order to make such payment. In the event of any inconsistency between this Section 10.16 and Article 28 of the Security Instrument, the Security Instrument shall control.
Section 10.17. Funding Lender Approval of Instruments and Parties
All proceedings taken in accordance with transactions provided for herein, and all surveys, appraisals and documents required or contemplated by this Borrower Loan Agreement and the persons responsible for the execution and preparation thereof, shall be satisfactory to and subject to approval by Funding Lender. Funding Lender's approval of any matter in connection with the Facility shall be for the sole purpose of protecting the security and rights of Funding Lender. No such approval shall result in a waiver of any default of Borrower. In no event shall Funding Lender's approval be a representation of any kind with regard to the matter being approved.
Section 10.18. Funding Lender Determination of Facts
Funding Lender shall at all times be free to establish independently, to its reasonable satisfaction, the existence or nonexistence of any fact or facts, the existence or nonexistence of which is a condition of this Borrower Loan Agreement.
75
Section 10.19. Calendar Months
With respect to any payment or obligation that is due or required to be performed within a specified number of Calendar Months after a specified date, such payment or obligation shall become due on the day in the last of such specified number of Calendar Months that corresponds numerically to the date so specified; provided, however, that with respect to any obligation as to which such specified dale is the 29lh, 30th or 3 lsl day of any Calendar Month if the Calendar Month in which such payment or obligation would otherwise become due does not have a numerically corresponding date, such obligation shall become due on the first day of the next succeeding Calendar Month.
Section 10.20. Determinations by Lender
[Except to the extent expressly set forth in this Borrower Loan Agreement to the contrary, in any instance where the consent or approval of the Governmental Lender and the Funding Lender may be given or is required, or where any determination, judgment or decision is to be rendered by the Governmental Lender and the Funding.Lender under this Borrower Loan Agreement, the granting, withholding or denial of such consent or approval and the rendering of such determination, judgment or decision shall be made or exercised by the Governmental Lender and the Funding Lender, as applicable (or its designated representative) at ils sole and exclusive option and in its sole and absolute discretion.]
Section 10.21. Governing Law
This Borrower Loan Agreement shall be governed by and enforced in accordance with the laws of the State, without giving effect to the choice of law principles of the State that would require the application of the laws of a jurisdiction other than the State.
Section 10.22. Consent to Jurisdiction and Venue
Borrower agrees that any controversy arising under or in relation to this Borrower Loan Agreement shall be litigated exclusively in the Stale. The state and federal courts and authorities with jurisdiction in the State shall have exclusive jurisdiction over all controversies which shall arise under or in relation to this Borrower Loan Agreement. Borrower irrevocably consents to service, jurisdiction, and venue of such courts for any such litigation and waives any other venue to which it might be entitled by virtue of domicile, habitual residence or otherwise. However, nothing herein is intended to limit Beneficiary Parties' right to bring any suit, action or proceeding relating to matters arising under this Borrower Loan Agreement against Borrower or any of Borrower's assets in any court of any other jurisdiction.
Section 10.23. Successors and Assigns
This Borrower Loan Agreement shall be binding upon and shall inure lo the benefit of the parties hereto and their respective heirs, legal representatives, successors, succcssors-in-interest and assigns, as appropriate. The terms used to designate any of the parties herein shall be deemed to include the heirs, legal representatives, successors, successors-in-interest and assigns, as appropriate, of such parties.
76
Section 10.24. Severability
The invalidity, illegality or unenforceability of any provision of this Borrower Loan Agreement shall not affect the validity, legality or enforceability of any other provision and all other provisions shall remain in full force and effect.
Section 10.25. Entire Agreement; Amendment and Waiver
This Borrower Loan Agreement contains the complete and entire understanding of the parties with respect to the matters covered. TTiis Borrower Loan Agreement may not be amended, modified or changed, nor shall any waiver of any provision hereof be effective, except by a written instrument signed by the party against whom enforcement of the waiver, amendment, change, or modification is sought, and then only to the extent set forth in that instrument. No specific waiver of any of the terms of this Borrower Loan Agreement shall be considered as a general waiver. Without limiting tlie generality of the foregoing, no Disbursement shall constitute a waiver of any conditions to the Governmental Lender's or the Funding Lender's obligation to make further Disbursements nor, in the event Borrower is unable to satisfy any such conditions, shall any such waiver have the effect of precluding the Governmental Lender or the Funding Lender from thereafter declaring such inability to constitute a Potential'Default or Event of Default under this BoiTower Loan Agreement.
Section 10.26. Counterparts
This Borrower Loan Agreement may be executed in multiple counterparts, each of which shall constitute an original document and all of which together shall constitute one agreement.
Section 10.27. Captions
The captions of the sections of this Borrower Loan Agreement are for convenience only and shall be disregarded in construing this Borrower Loan Agreement.
Section 10.28. Servicer
Borrower hereby acknowledges and agrees that (a) from time to time, the Governmental Lender or the Funding Lender may appoint a servicer to collect payments, escrows and deposits, to give and to receive notices under the Borrower Note, this Borrower Loan Agreement or the other Borrower Loan Documents, and to otherwise service the Borrower Loan and (b) unless Borrower receives Written Notice from the Governmental Lender or the Funding Lender to the contrary, any action or right which shall or may be taken or exercised by the Governmental Lender or the Funding Lender may be taken or exercised by such servicer with the same force and effect.
Section 10.29. Beneficiary Parties as Third-Party Beneficiary
Each of the Beneficiary Parties shall be a third-party beneficiary of this Borrower Loan Agreement for all purposes.
77
Section 10.30. Waiver of Trial by Jury
TO THE MAXIMUM EXTENT PERMUTED UNDER APPLICABLE LAW, EACH OF BORROWER AND THE BENEFICIARY PAR TIES (A) COVENANTS AND AGREES NOT TO ELECT A TRIAL BY JURY WITH RESPECT TO ANY ISSUE ARISING OUT OF THIS BORROWER LOAN AGREEMENT OR THE RELATIONSHIP BETWEEN THE PARTIES THAT IS TRIABLE OF RIGHT BY A JURY AND (B) WAIVES ANY RIGHT TO TRIAL BY JURY WITH RESPECT TO SUCH ISSUE TO THE EXTENT THAT ANY SUCH RIGHT EXISTS NOW OR IN THE FUTURE. THIS WAIVER OF RIGHT TO TRIAL BY JURY IS SEPARATELY GIVEN BY EACH PARTY, KNOWINGLY AND VOLUNTARILY WITH THE BENEFIT OF COMPETENT LEGAL COUNSEL.
Section 10.31. Time of the Essence
Time is of the essence with respect to this Borrower Loan Agreement.
ARTICLE XI LIMITATIONS ON LIABILITY
Section 11.1. Intentionally Deleted
Section 11.2. Limitation oh Liability of Governmental Lender
'The Funding Loan, and interest thereon, are special, limited obligations of the Governmental Lender, payable solely from the Security pledged under the Funding Loan Agreement. The Funding Loan is not a general indebtedness of the Governmental Lender or a charge against its general credit or the general credit taxing powers Of the State, the Governmental Lender, or any other political subdivision thereof, and shall never give rise to any pecuniary liability of the Governmental Lender, and neither the Governmental Lender, the State nor any other political subdivision thereof shall be liable for the payments of principal and interest on the Funding Loan, and the Funding Loan is payable from no other source, but are special, limited obligations of the Governmental Lender, payable solely out of the security pledged hereunder and receipts of the Governmental Lender derived pursuant to this Funding Loan Agreement (and not against any money due or to become due lo the Governmental Lender pursuant to Unassigned Rights). No holder of the Funding Loan or any interest therein has the right to compel any exercise of the taxing power of the State, the Governmental Lender or any other political subdivision thereof to pay the Funding Loan or the interest thereon.
No recourse shall be had for the payment of the principal of premium, if any, or the interest on the Funding Loan or for any claim based thereon or any obligation, covenant or agreement in this Funding Loan Agreement against any official of the Governmental Lender, or any official, officer, agent, employee or independent contractor of the Governmental Lender or any person executing this Borrower Loan Agreement. No covenant, stipulation, promise, agreement or obligation contained in this Borrower Loan Agreement or any other document executed in connection herewith shall be deemed to be the covenant, stipulation, promise, agreement or obligation of any present or future official, officer, agent or employee of the Governmental Lender in his or her individual capacity and neither any official of the Governmental Lender nor any officers executing this Borrower Loan Agreement shall be liable personally or be subject to any
78
personal liability or accountability by reason oiThis Borrower Loan Agreement. Section 11.3. Waiver of Personal Liability
No member, officer, agent or employee of the Governmental Lender or any director, officer, agent or employee of the Governmental Lender shall be individually or personally liable for the payment of any principal (or prepayment price) of or interest on tlie Governmental Lender Note or any other sum hereunder or be subject to any personal liability or accountability by reason of the execution and delivery of this Borrower Loan Agreement; but nothing herein contained shall relieve any such member, director, officer, agent or employee from the performance of any official duty provided by law or by this Borrower Loan Agreement.
Section 11.4. Limitation on Liability of Funding Lender's Officers, Employees, Etc.
Borrower assumes all risks of the acts or omissions of the Governmental Lender and the Funding Lender (except to the extent that such acts or omissions constitute gross negligence or willful misconduct), provided, however, this assumption is not intended to, and shall not, preclude Borrower from pursuing such rights and remedies as it may have against the Governmental Lender and the Funding Lender at law or under any other agreement. None of Governmental Lender and the Funding.Lender, nor the other Beneficiary Parties or their respective officers, directors, employees or agents shall be liable or responsible for (i) any acts or omissions of the Governmental Lender and the Funding Lender; or (ii) the validity, sufficiency or genuineness of any documents, or endorsements, even if. such documents should in fact prove to be in any or all respects invalid, insufficient, fraudulent or forged. In furtherance and not in limitation of the foregoing, the Governmental Lender and the Funding Lender may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary, unless acceptance in light of such notice or information constitutes gross negligence or willful misconduct on the part of the Governmental Lender and the Funding Lender.
None of the Governmental Lender, the Funding Lender, the other Beneficiary-Parties or any of their respective officers, directors, employees or agents shall be liable to any contractor, subcontractor, supplier, laborer, architect, engineer or any other party for services performed or materials supplied in connection with the Facility. The Governmental Lender and the Funding Lender shall not be liable for any debts or claims accruing in favor of any such panics against Borrower or others or against the Facility. Borrower is not and shall not be an agent of the Governmental Lender and the Funding Lender for any purpose. Neither the Governmental Lender nor the Funding Lender is a joint venture partner with Borrower in any manner whatsoever. Prior to default by Borrower under this Borrower Loan Agreement and the exercise of remedies granted herein, the Governmental Lender and the Funding Lender shall not be deemed to be in privity of contract with any contractor or provider of services to the Facility, nor shall any payment of funds directly lo a contractor, subcontractor or provider of services be deemed to create any third-party beneficiary status or recognition of same by the Governmental Lender and the Funding Lender. Approvals granted by the Governmental Lender and the Funding Lender for any matters covered under this Borrower Loan Agreement shall be narrowly construed to cover only the parties and facts identified in any written approval or, it not in writing, such approvals shall be solely for the benefit of Borrower.
79
(c) Any obligation or liability whatsoever of the Governmental Lender and the funding Lender that may arise at any time under this Borrower Loan Agreement or any other Borrower Loan Document shall be satisfied, if at all, out of the Funding Lender's assets only. No such obligation or liability shall be personally binding upon, nor shall resort for the en forcement thereof be had to, the Facility or any of the Governmental Lenders or the Funding Lender's shareholders (if any), directors, officers, employees or agents, regardless of whether such obligation or liability is in the nature of contract, tort or otherwise.
Section 11.5. Delivery of Reports, Etc.
The delivery of reports, information and documents to the Governmental Lender and the Funding Lender as provided herein is for informational purposes only and the Governmental Lender's and the Funding Lender's receipt of such shall not constitute constructive knowledge of any information contained therein or determinable from information contained therein. The Governmental Lender and the Funding Lender shall have no duties or responsibilities except those that are specifically set forth herein, and no other duties or obligations shall be implied in this Borrower Loan Agreement against the Governmental Lender and the Funding Lender.
(Signatures follow on subsequent pages) [Remainder of Page Intentionally Left Blank]
80
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Borrower Loan Agreement or caused this Borrower Loan Agreement to be duly executed and delivered by its authorized representative as of the date first set forth above. The undersigned intends that this instrument shall be deemed to be signed and delivered as a sealed instrument.
BORROWER:
PASEO BORICUA ARTS, LLC, an Illinois limited liability company
Name: Richard J. Sciortino
Title: Manager
By: Paseo Boricua Arts Manager. LLC, an Illinois limited liabilityxompahy, its Mjilftaging Member
GOVERNMENTAL LENDER:
CITY OF CHICAGO
By: i !-U "(XU-O -C W--*-v t
.-'1'
Name: Jennie I luang Bennett Title: Chief Financial Officer
Name: Andrea M. Valencia Title: City Clerk
[Signature page to Borrower Loan Agreement]
Agreed to and Acknowledged by: FUNDING LENDER:
JPMORGAN CHASE BANK, N. A. a national banking association
By:
Name: Its:
[Agreement and Acknowledgement to Borrower Loan Agreement]
S-3
FUNDING LENDER
JPMORGAN CHASE BANK, N. A., a national banking association
Bv:\j
Name: R. Scott Schmid Its: Authorized Officer
[Agreement and Acknowledgement to Borrower Loan Agreement]
Exhibit D Borrower Note
MUL IT FAMILY NOTE
$8,100,000.00
April 29,2021
FOR VALUE RECEIVED, PASEO BORICUA ARTS, LLC, an Illinois limited liability company (the "Borrower"), promises to pay to promises to pay to the order of the CITY OF CFIICAGO, a municipality and home rule unit of local government duly organized and validly existing under the constitution and laws of the State of Illinois ("Issuer" and each subsequent transferee and/or owner of this Note, whether taking by endorsement or otherwise, are herein successively called "Holder/Agent"), or order, at such place as may be designated in writing by the Holder/Agent, the principal sum of Eight Million One Hundred Thousand and No/100 Dollars ($8,100,000.00), or so much as may be advanced by Holder/Agent, which sum shall be payable in lawful money of the United States of America, together with interest on the unpaid Principal Balance computed from the date of each Advance until paid, calculated and paid in the manner set forth below:
1. Definitions. The following terms as used in this Note shall have the following meanings:
"Advance" means a disbursement by Holder/Agent of any principal of the Loan.
"Applicable Margin" means (a) 1.65 % with respect to the LIBO Rate and minus 1.10% with respect to the CB Floating Rate, and (b) on and after a Determination of Taxability 2.49% with respect to the LIBO Rate and minus 0.26% with respect to the CB Floating Rate.
"Benchmark Replacement Adjustment" means, with respect to any replacement pursuant to Section 2(e)(ii) of the LIBO Rate with Term SOFR or Daily Simple SOFR (such rate, an "Unadjusted SOFR Based Rate"), as applicable, for any applicable interest period and available tenor, (1) the spread adjustment, or method for calculating or determining such spread adjustment (which may be a positive or negative value or zero) when such Unadjusted SOFR Based Rate is first set for such interest period that has been selected or recommended by the Relevant Governmental Body for the replacement of the LIBO Rate with the applicable Unadjusted SOFR Based Rate for the applicable corresponding tenor; provided that such spread adjustment is displayed on a screen or other information service that publishes such Benchmark Replacement Adjustment from time to time as selected by Holder/Agent in its reasonable discretion; or, if the foregoing is not then determinable (2) the spread adjustment (which may be a positive or negative value or zero) when such rate replacement is first set for such interest period that would apply to the fallback rate for a derivative transaction as defined or referenced in the ISDA Definitions to be effective upon an index cessation event with respect to the LIBO Rate for the applicable corresponding tenor.
"Bondholder" means JPMorgan Chase Bank, N.A a national banking association, as the initial purchaser of the Bonds, together with its successors and assigns.
4S3S-27(IN-WK5 5
"Bonds'" means the $8,100,000 City of Chicago Multifamily Housing Revenue Note, (Paseo Boricua Project), Series 2021, as the same may be modified, amended or replaced from time to time.
"Borrower Loan Agreement" means that certain Borrower Loan Agreement dated as of April 1, 2021 by and between Issuer and Borrower.
"Break Funding Premium" means the charge calculated under Section 6(a) of this
Note.
"Business Day" means any day that is not a Saturday, Sunday or other day on which commercial banks in New York City or the state in which the principal corporate office of the trustee for the registration and payment functions is located, are authorized or required by law to remain closed; and when used in connection with determining the LIBO Rate, the term "Business Day" shall also exclude any day on which banks are not open for general business in London.
"CB Floating Rate" means, for any day, the Prime Rate on such day; provided, that the CB Floating Rate for any day shall never be less than the LIBO Rate plus 2.50% on such day (or if such day is not a Business Day, the immediately preceding Business Day). For purposes of this definition, the LIBO Rate shall never be less than zero. Any change in the CB Floating Rate shall be effective from and including the effective date of such change.
"Collateral" has the meaning given to such term in Section 10 of this Note.
"Construction Interest Rate" has the meaning giving to such term in Section 2(a)
of this Note.
"Construction Term" has the meaning set forth in the Loan Agreement.
"Construction Term Maturity Date" means the earlier to occur of (i) April 29,2023 (subject to Borrower's right to exercise one (1) option to extend the Construction Term Maturity Date by six (6) months pursuant to Section 3.5 of the Loan Agreement), or (ii) any earlier date on which the unpaid principal balance of this Note becomes due and payable, by acceleration or otherwise.
"Conversion Date" has the meaning set forth in the Loan Agreement.
"Daily Simple SOFR" means, for any day, SOFR, with the conventions for this rate (which may include a lookback to determine an average of overnight rates through the period) being established by Holder/Agent in accordance with the conventions for this rate selected or recommended by the Relevant Governmental Body for determining "Daily Simple SOFR" for business loans; provided that if Holder/Agent decides that any such convention is not administratively feasible for Holder/Agent, then Holder/Agent may establish another convention in its reasonable discretion.
¦4N3N-270N-WK5 5
"Debt" means all principal, interest, additional interest and other sums which may or shall become due to the Holder/Agent in accordance with the provisions of the Facility Documents.
"Debtor Relief Laws" means any applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, insolvency, fraudulent conveyance, reorganization, or similar laws affecting the rights, remedies or recourse of creditors generally, including without limitation the United States Bankruptcy Code and all amendments thereto, as are in effect from time to time during the term of the Loan.
"Default" means any default or events of default described in Section 14 of this Note.
"Default Rate" has the meaning giving such term in Section 2(c) of this Note.
"Determination of Taxability" has the meaning given to such term in the Borrower Loan Agreement.
"Facility Documents" means this Note, the Security Instrument, the Funding Loan Agreement, the Project Loan Agreement, the Loan Agreement and the Other Facility Documents, as the same may be amended, modified or replaced from time to time.
"Final Reference Swap Rate" has the meaning given to such term in Section 6(b) of
this Note.
"Funding Loan Agreement" means the Funding Loan Agreement dated as of April 1, 2021 by and among the Issuer and the Bondholder
"Governmental Authority" means the Government of the United States of America, any other nation or any other political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government.
"Initial Reference Swap Rate" has the meaning given such term in Section 6(b) of
this Note.
"Interest Adjustment Date" means the day in each calendar month commencing after the initial Advance which numerically corresponds to the date of the initial Advance, provided, however, that (a) if any Interest Adjustment Dale would be on a day other than a Business Day, such Interest Adjustment Date shall be the next succeeding Business Day unless the next succeeding Business Day would fall in the next calendar month, in which case such Interest Adjustment Date shall be the next preceding Business Day and (b) if, for any calendar month, there is no day numerically corresponding to the date of the initial Advance, the Interest Adjustment Date for such calendar month shall be the last Business Day of such month.
4N'K-27()S-'JHK5 5
TSDA Definitions" means the 2006 ISDA Definitions published by the International Swaps and Derivatives Association. Inc. or any successor thereto, as amended or supplemented from time to time, or any successor definitional booklet for interest rate derivatives published from time to time by the International Swaps and Derivatives Association, Inc. or such successor thereto.
"Liabilities" means all liabilities and obligations now or hereafter owed by the Borrower to the Holder/Agent in connection with the Loan, including principal, interest and fees contracted with or acquired by the Holder/Agent, whether joint, several, direct, indirect, absolute, contingent, secured, matured or unmatured.
"LIBO Rate" means for any day the rate for borrowed funds in the interbank market in London in United States dollars for maturities of one month, rounded upwards if necessary to the next 1/16 of 1%, as determined at approximately 1 1:00 a.m. London time two (2) Business Days prior to such dale. Such rate shall be determined by Bondholder on behalf of the Holder/Agent based upon ihe London Interbank Offered Rate as administered by the ICE Benchmark Administration (or any other entity that takes over administration of such rate for United States dollars). Any LIBO Rate less than 0.50% shall be deemed to be 0.50% for purposes of this Note, provided, however, the foregoing floor shall not be applied to determine the LIBO Rate as used in the definition of "CB Floating Rate".
"LIBOR Cessation Event" means the occurrence of one or more of the following events with respect to the LIBO Rate: (1) a public statement or publication of information by or on behalf of the administrator of the LIBO Rate announcing that such administrator has ceased or will cease to provide the LIBO Rate for all available interest periods, permanently or indefinitely, with no successor administrator having been appointed lo provide such LIBO Rate at such time; (2) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Rate, the Board of Governors of the Federal Reserve System, the NYFRB, an insolvency official with jurisdiction over the administrator for the LI BO Rate, a resolution authority with jurisdiction over the administrator for the LIBO Rate or a court or an entity with similar insolvency or resolution authority over the administrator for the LIBO Rate, in each case which states that the administrator of the LIBO Rate has ceased or will cease to provide the LIBO Rate for all available interest periods permanently or indefinitely, with no successor administrator having been appointed to provide such LIBO Rate at such time; and/or (3) a public statement or publication of information by the regulatory supervisor for the administrator of the LIBO Rate announcing that the LIBO Rate for all available interest periods is no longer representative.
"Loan" means the loan made by the Issuer to the Borrower in the principal amount of up to Eight Million One Hundred Thousand and No/100 Dollars (58,100,000.00) to be advanced in accordance with the provisions of the Funding Loan Agreement and the Loan Agreement, which loan is evidenced by this Note and which is secured by the Security Instrument and the Other Facility Documents.
"Loan Agreement" means the Construction and Permanent Loan Agreement dated as of even date herewith entered into between the Bondholder and the Borrower.
-4-
"Lockout Period" has the meaning given to such term in Section 5 of this Note. "Note" means this Promissory Note.
"NYFRB" means the Federal Reserve Bank of New York.
"Other Facility Documents" means all and any of the documents other than this Note, the Security Instrument, the Funding Loan Agreement, the Project Loan Agreement, or the Loan Agreement now or later executed by the Borrower or others, and by or in favor of the Holder/Agent, which wholly or partially secure or guarantee payment of this Note, or which otherwise pertain to the Loan.
"Outside Conversion Date" means April 29, 2023, subject to a six (6) extension option pursuant to Section 3.5 of the Loan Agreement.
"Payment Date" means the tenth (10th) day of each month.
"Permanent Fixed Rate" means (a) 4.38% per annum and (b) on and after a Determination of Taxability 4.96% per annum.
"Permanent Loan" means the Permanent Loan Commitment Amount reduced by any required Resizing Payment.
"Permanent Loan Commitment Amount" means Seven Hundred Fifty Thousand Dollars ($750,000).
"Permanent Term" has the meaning set forth in the Loan Agreement.
"Permanent Term Maturity Date" means October 29, 2041.
"Premises" has the meaning set forth in the Loan Agreement.
"Prepayment Premium" has the meaning given to such term in Section 7(a) of this
Note.
"Prime Rate" means the rate of interest last quoted by The Wall Street Journal as the "Prime Rate" in the U.S. or, if The Wall Street Journal ceases to quote such rate, the highest per annum interest rate published by the Federal Reserve Board in Federal Reserve Statistical Release H.15 (519) (Selected Interest Rates) as the "bank prime loan" rate or, if such rate is no longer quoted therein, any similar rate quoted therein (as determined by Bondholder on behalf of the Holder/Agent) or any similar release by the Federal Reserve Board (as determined by Bondholder on behalf of the Holder/Agent). Each change in the Prime Rate shall be effective from and including the dale such change is publicly announced as being effective or quoted as being effective.
4N.iK-270N-'>NK5 5
"Principal Balance" moans the outstanding principal balance of this Note from time
to time.
"Reference Swap" has the meaning given to such term in Section 6(b) of this Note. "Reference Swap Rate" has the meaning given to such term in Section 6(b) of this
Note.
"Relevant Governmental Body" means the Board of Governors of the Federal Reserve System or the NYFRB, or a committee officially endorsed or convened by the Board of Governors of the Federal Reserve System or the NYFRB, or any successor thereto.
"Resizing Fee" has the meaning given to such term in Section 6(b) of this Note.
"Resizing Payment" has the meaning given to such term in the Loan Agreement.
"Security Instrument" means that Mortgage (as defined in the Loan Agreement).
"Shortfall Amount" means the amount, if a positive number, that $675,000 will exceed the Principal Balance following the Resizing Payment.
"SOFR" means, with respect to any Business Day, a rate per annum equal to the secured overnight financing rate for such Business Day published by the NYFRB (or a successor administrator of the secured overnight financing rate) on its website on the immediately succeeding Business Day.
"State" means the State of Illinois.
"Term SOFR" means, for the applicable corresponding tenor, the forward-looking term rate based on SOFR that has been selected or recommended by the Relevant Governmental Body, as displayed on a screen or other information service that publishes such rate from time to time as selected by and as of the time determined by Holder/Agent in its reasonable discretion.
"Term SOFR Transition Conditions" means the occurrence of all of the following events (as determined by Holder/Agent in its sole discretion): (i) a LIBOR Cessation Event has occurred, (ii) Term SOFR has been recommended for use by the Relevant Governmental Body, and (iii) the administration of Term SOFR is administratively feasible for Holder/Agent.
"Treasury Rate" has the meaning given to such term in Section 6(a) of this Note.
"Yield Maintenance Period" means the period of time commencing on the Conversion Date and ending on October 29, 2038.
Any capitalized term not otherwise defined in this Note shall have the meaning ascribed to such term in the Loan Agreement.
-6-
¦ 1S.W-27()S-')SS5 5
2. Interest.
Construction Rate. During the Construction Term the Principal Balance shall bear interest at a per annum interest rate equal to the LIBO Rate plus the Applicable Margin (the "Construction Interest Rate"). Any Advance on a day other than an Interest Adjustment Date shall bear interest at the then applicable Construction Interest Rate. The Construction Interest Rate shall be determined for the date of the initial Advance of the Loan and shall be reset monthly on each Interest Adjustment Date thereafter.
Permanent Rate. During the Permanent Term interest shall accrue hereunder at the Permanent Fixed Rale.
Default Rate. To the extent permitted under applicable law, at the direction of the Bondholder upon the occurrence of a Default, and after maturity, the Principal Balance shall bear interest, after and before judgment, at a rate per annum equal to three percent (3.0%) in excess of the rate otherwise applicable to the Principal Balance or. at the direction of the Bondholder, three percent (3.0%) in excess of the CB Floating Rate plus the Applicable Margin (as applicable, the "Default Rate").
Computation of Interest. All interest hereunder shall be computed on the basis of a year of 360 days, and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable interest rate shall be determined by Bondholder on behalf of Holder/Agent.
Alternate Rate of Interest.
If (A) Bondholder determines that adequate and reasonable means do not exist for ascertaining the LIBO Rate (including because the LIBO Rate is not available or published on a current basis), or (B) Bondholder determines that the LIBO Rate will not adequately and fairly reflect the cost of making or maintaining the Loan, then Bondholder shall give notice to Borrower and Holder/Agent by electronic communication as provided in Section 8 as promptly as practicable and, until Bondholder notifies Borrower and Holder/Agent that the circumstances giving rise to such notice no longer exist, the Construction Interest Rate shall be a rate per annum equal to the CB Floating Rate plus the Applicable Margin.
Notwithstanding anything to the contrary herein or in any other Loan Document, if a LIBOR Cessation Event has occurred, then upon written notice by Holder/Agent to Borrower at a time selected by Holder/Agent, but not later than the actual date of permanent cessation of the LIBO Rate (i) the LIBO Rate shall be replaced, for all purposes hereunder and under any other Loan Document, without any amendment to, or further action or consent of, any other parly to this Note or any other Loan Document, by the sum of Term SOFR and the related Benchmark Replacement Adjustment (such sum, the "Adjusted Term SOFR") if the Term SOFR Transition Conditions are satisfied at such time, or (ii) if the Term SOFR Transition Conditions are not satisfied at such time, then the LIBO Rate shall be replaced by the sum of Daily Simple SOfR and the related Benchmark Replacement Adjustment (such sum, the
- 7 -
-1S3S-27()X-<>SX5 5
"Adjusted Daily Simple SOFR"); provided that if the Term SOFR Transition Conditions are satisfied after the LIBO Rate is replaced by the Adjusted Daily Simple SOFR, Holder/Agent may by at least ten (10) days' prior written notice to Borrower, replace such rate with the Adjusted Term SOFR. In the event that either the Adjusted Term SOFR or the Adjusted Daily Simple SOFR shall be less than 0.50%, such rate will be deemed to be 0.50% for the purposes of this Note. If a LIBOR Cessation Event shall have occurred and neither Term SOFR nor Daily Simple SOFR is available, then until such rates are available, the Loan shall accrue interest at the CB Floating Rate plus the Applicable Margin, unless Holder/Agent and Borrower agree on a different rate.
In connection with the implementation of a rate replacement described in clause (ii) above, Holder/Agent may from time to lime, upon written notice to Borrower, make any technical, administrative or operational changes to this Note or any other Loan Document (including changes to the definition of "CB Floating Rate," the definition of "Business Day", the timing and frequency of determining rates and making payments of interest, the timing of prepayment or conversion notices, the length of lookback periods, the applicability of breakage provisions and other technical, administrative or operational matters) that Holder/Agent decides in its reasonable discretion may be appropriate to reflect the adoption and implementation of such rate replacement and to permit the administration thereof by Holder/Agent.
All determinations by Bondholder under this Section 2(e) shall be conclusive and binding absent manifest error.
LIBOR Notification. The interest rale on the Loan is determined by reference to the LIBO Rate, which is derived from the London interbank offered rate ("LIBOR"). LIBOR is intended to represent the rate at which contributing banks may obtain short-term borrowings from each other in the London interbank market. LIBOR is currently the subject of regulatory reform and regulators have signaled the need to use alternative benchmark reference rates for LIBOR. On March 5, 2021, the U.K. Financial Conduct Authority ("FCA") publicly announced that:
•immediately after December 31, 2021, publication of the 1-week and 2-month U.S. Dollar LIBOR settings will permanently cease;
'immediately after June 30, 2023, publication of the overnight and 12-month U.S. Dollar LIBOR settings will permanently cease; and
(i) •immediately after June 30, 2023, the I-month, 3-month and 6-month U.S.
Dollar LIBOR settings will cease to be provided or, subject to the FCA*s consideration of the case,
be provided on a synthetic basis and no longer be representative of the underlying market and
economic reality they are intended to measure and that representativeness will not be restored.
There is no assurance that dates announced by the FCA will not change or that the administrator of LIBOR and/or regulators will not take further action that could impact the availability, composition, or characteristics of LIBOR or the currencies and/or tenors for which LIBOR is published, and Borrower should consult its own advisors to stay informed of any such developments. Public and private sector industry initiatives are currently underway to implement
- 8 -
4S3S-27IIX-ySS5.5
now or alternative reference rates to be used in place of LIBOR. In the event LIBOR is no longer available (or in certain other circumstances). Section 2(e) of this Note provides a mechanism for determining an alternative rate of interest. The Holder/Agent will inform the Borrower of any change to the reference rate upon which the interest rate of the Loan is based. However, the Holder/Agent does not warrant or accept any responsibility for, and shall not have any liability with respect to, the administration, submission, performance or any other matter related to LIBOR or any other rates in the definition of LIBO Rate or with respect to any alternative, successor or replacement reference rates, including without limitation, whether the composition or characteristics of any such alternative, successor or replacement reference rates will be similar to or produce the same value or economic equivalence as LIBOR and/or the LIBO Rate or have the same volume or liquidity as did LIBOR prior to its discontinuance or unavailability.
3. Payment and Repayment of Loan.
Payments Generally. Borrower shall make each payment required to be made by it under this Note prior to 11:00 a.m., Dallas time, on the date when due, in immediately available funds, without setoff or counterclaim. Any amounts received after such time on any date may, in the discretion of Holder/Agent, be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Holder/Agent at 700 North Pearl Street, Floor 13, Dallas, Texas 75201-7424. If any payment under this Note shall be due on a day that is not a Business Day, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest shall be payable for the period of such extension. All payments shall be made in U.S. dollars.
Payment of Accrued Interest. Borrower hereby unconditionally promises to pay to Holder/Agent accrued interest on the Principal Balance calculated through the last day of the prior month, payable in arrears on each Payment Date commencing on June 10, 2021 and continuing on each Payment Date until the Principal Balance shall be paid in full; provided (i) interest accrued pursuant to paragraph 2(c) shall be payable on demand, and (ii) in the event of any repayment or prepayment of any principal of the Loan, accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment. Pursuant to the Funding Loan Agreement, in no event shall the interest rate hereunder (except in cases where the Default Rate is applicable) exceed ten percent (10%) per annum.
Payments Durinu Construction Term. Borrower shall make mandatory payments of principal during the Construction Term as provided in Section 3.2 of the Loan Agreement.
Payments Durinu Permanent Term. Borrower hereby unconditionally promises to pay to Holder/Agent as follows:
(i) in the event the Conversion Date is on or before the 10th day of the month, (x) interest shall be paid on the Conversion Date to the 10th day of that month, and (y) commencing on the Payment Date following the month in which the Conversion Date occurs and continuing on each Payment Date thereafter, the Borrower shall make constant monthly payments
- 9 -
-IH.iS-27()S-»SS5 5
of principal and interest in an amount required to amortize the unpaid Principal Balance of this Note over a term of thirty-five (35) years at the Permanent Fixed Rate; and
(ii) in the event the Conversion Date is on a day after the 10th day of the month, (x) interest shall be paid on the Conversion Date to the 10th day of the month following the month in which the Conversion Date occurs, and (y) commencing on the Payment Date following the first full month after the Conversion Date and continuing on each Payment Date thereafter, the Borrower shall make constant monthly payments of principal and interest in an amount required to amortize the unpaid Principal Balance of this Note over a term of thirty-five (35) years at the Permanent Fixed Rate.
Repayment at Maturity. Borrower hereby unconditionally promises to pay to Holder/Agent the then entire Principal Balance and all unpaid accrued interest thereon and all other sums due under this Note on the Construction Term Maturity Date or if the Loan has been extended to the Permanent Term, the Permanent Term Maturity Date.
Late Fee. If any payment required under this Note is not paid within ten (10) days after such payment is due, then, at the direction of Bondholder, Borrower shall pay a late charge equal to five percent (5.0%) of the amount of such payment, to compensate Holder/Agent for administrative expenses and other costs of delinquent payments, except for the unpaid principal amount of the Loan on the Construction Term Maturity Date or the Permanent Term Maturity Date, as applicable. This late charge may be assessed without notice, shall be immediately due and payable and shall be in addition to all other rights and remedies available to FIolder/Agent.
Application of Funds. Bondholder shall have the right to direct the application of payments, repayments and proceeds of Collateral to the Liabilities in any order, in its sole discretion. The amount of the Principal Balance as shown on the records of the Holder/Agent shall be conclusive absent manifest error as to such amount.
Statements. Bondholder may from time to time provide Borrower with account statements or invoices with respect to any of the Debt, which if provided, will be solely for Borrower's convenience (the "Statements'"). Statements may contain estimates of the amounts owed during the relevant billing period, whether of principal, interest, fees or other debts. If Borrower pays the full amount indicated on a Statement on or before the due date indicated on such Statement, Borrower shall not be in default of payment with respect to the billing period indicated on such Statement; provided, acceptance by Holder/Agent of any payment that is less than the total amount actually due at that time (including any past due amounts) shall not constitute a waiver of Bondholder's or Holder's/Agent's right to receive payment in full as provided by the terms of this Note and the other Facility Documents.
Extension Option(s). Borrower shall have the option to extend the Construction Term Maturity Date as provided in Section 3.5 of the Loan Agreement.
Prepayment Purine the Construction Term. During the Construction Term, no prepayment of the Loan shall be made without the prior express written consent of the Bondholder until such time as the Principal Balance exceeds the Permanent Loan Commitment Amount (the
- 10 -
4N3N-27(IX-ySK5 5
"Lockout Period'"). Following the end of the Lockout Period, the Borrower shall have the right at any time and from time to time during the remainder of the Construction Term to prepay all or any portion of the Principal Balance in excess of the Permanent Loan Commitment Amount, subject to prior notice and in accordance with this Section 5. The Borrower shall notify the Holder/Agent and Bondholder by electronic communication as provided in Section 8 of any prepayment not later than 1 1:00 a.m. Dallas time, three (3) Business Days before the date of prepayment. Each such notice shall specify the prepayment date in the principal amount of the Loan to be prepaid. No amounts prepaid may be readvanced or reborrowed.
6. Failure to Convert to the Permanent Term or Prepayment on the Conversion Date.
In the event the Permanent Term does not commence for any reason or does not commence on or before the Outside Conversion Date, the Borrower shall pay the Holder/Agent a break funding charge (the "Break Funding Premium") within ten (10) days of the date of demand equal to the greater of:
one percent (1.0%) of the total amount of the Permanent Loan Commitment Amount; or
the loss (if any) incurred calculated by discounting to present value, over a period equal to the number of months from the date of the calculation to the Permanent Term Maturity Date, a series of constant monthly amounts, each amount equal to the "Monthly Loss". The Monthly Loss shall be calculated by multiplying by one-twelfth (1/12) the product of (A) the amount of the Permanent Loan Commitment Amount and (B) the result, if positive, of (x) the Permanent Fixed Rate, minus (y) the annual yield to maturity (reflecting both stated interest rate and discount) of United States Treasury obligations purchased at the time of the calculation and maturing at the Permanent Term Maturity Date, or as close thereto as possible (the "Treasury Rate"). The applicable discount rate for the present value calculation is the Treasury Rate. The Bondholder's determination of the Treasury Rate on behalf of the Holder/Agent and the amount of any break funding charge shall be conclusive, in the absence of manifest error.
If on the Conversion Date, the unpaid Principal Balance is not at least ninety percent (90%) of the Permanent Loan Commitment Amount, including a prepayment required to meet the Debt Service Coverage Ratio and/or the Total Debt Service Coverage Ratio requirements (as each are defined in the Loan Agreement), the Borrower shall pay the Holder/Agent on the Conversion Date a premium (as liquidated damages and not as a penalty) (the "Resizing Fee") equal to (i) the ratio of the Shortfall Amount to the amount of the Permanent Loan Commitment Amount, multiplied by (ii) the sum of the present values as of the date of the Resizing Payment of the differences between each fixed rate interest payment which would be paid on the Reference Swap at the Initial Reference Swap Rate, and the corresponding fixed rate interest payment which would be paid on the Reference Swap at the Final Reference Swap Rale. The applicable discount rate for the present value calculation is the Final Reference Swap Rate. The term "Reference Swap Rate" shall mean as of a specified date the fixed rate on an interest rate swap (the "Reference Swap") whose market value is zero, with a term corresponding to the term of the Permanent Loan, a notional principal schedule corresponding lo the scheduled outstanding
¦1S.1S-270S-'IXX5 5
balances of the Permanent Loan, and monthly payments wherein one party pays said fixed rate of interest and the other party pays a rate equal to the LIBO Rate. The "Initial Reference Swap Rate" shall be the Reference Swap Rate as of the date of this Note. The "Final Reference Swap Rate" shall be the Reference Swap Rate as of the date of the Resizing Payment. Notwithstanding the foregoing computation, the Resizing Fee shall in no event be less than zero. The Borrower acknowledges that the Holder/Agent might not fund or hedge its fixed-rate loan portfolio or any prepayment thereof, on a loan-by-loan basis at all times and agrees that the foregoing is a reasonable and appropriate method of calculating the Holder's/Agent's liquidated damages for any such Resizing Payment irrespective of whether any of the foregoing hedging transactions shall have in fact occurred or occurred precisely as staled with respect to the Permanent Loan. All calculations and determinations by the Bondholder on behalf of the FIolder/Agent and the amount payable pursuant to the preceding provisions or any clement thereof, if made in accordance with its then standard procedure for so calculating or determining such amounts, shall be conclusive absent manifest arithmetic error.
(c) The Borrower acknowledges that any statement made by the Bondholder on behalf of the FIolder/Agent setting forth the amount of the Break Funding Premium or Resizing Fee shall be only binding upon the Holder/Agent if the statement is made in writing, that the amount of the Break Funding Premium or Resizing Fee set forth in such statement is subject to change and is valid only for the date of such statement.
7. Prepayment During the Permanent Term.
During the Permanent Term the Borrower may, upon 30 days prior written notice to the Holder/Agent and Bondholder, pay the full amount or any part of this Note; provided, however, if prepayment of all or any portion of the principal of the Loan is otherwise made during the Yield Maintenance Period, the Borrower shall concurrently pay a prepayment charge (the "Prepayment Premium") equal to the greater of: 1.0% of the total amount of principal of the Permanent Loan being prepaid; or the loss (if any) incurred calculated by discounting to present value, over a period equal to the number of months from the date of the prepayment to the Permanent Term Maturity Date, a series of constant monthly amounts, each such amount equal to the "Monthly Loss". The Monthly Loss shall be calculated by multiplying by one-twelfth (1/12) the product of (A) the amount of the Permanent Loan prepaid and (B) the result, if positive, of (x) the Permanent Fixed Rate, minus (y) the Bondholder's tax exempt factor multiplied by the Treasury Rate. The applicable discount rate for the present value calculation is the Treasury Rate. The Bondholder's determination of the Treasury Rate and the amount of any prepayment charge on behalf of the Holder/Agent will be conclusive, in the absence of manifest error. No partial prepayment of this Note shall change the date or amount of any subsequent monthly payment required under the terms of this Note prior to payment in full of all amounts owing under this Note unless otherwise agreed in writing by the Bondholder.
Borrower expressly waives any right to prepay this Note except as herein provided. If the maturity of this Note is accelerated for any reason except with respect to a casualty or condemnation, including, without limitation, the occurrence of any Default, then any subsequent tender of payment of this Note, including any redemption following foreclosure of the Security Instrument, shall constitute an evasion of the restrictions on prepayment set forth herein and shall
- 12 -
4S."S-27()S-')SX5 5
be deemed a voluntary prepayment. Accordingly, the Holder/Agent may impose as a condition to accepting any such tender, and may bid al any sheriffs or trustee's sale under the Security Instrument, and/or include in any complaint for judicial foreclosure or any claim in bankruptcy, as part of the indebtedness evidenced by this Note and secured by the Security Instrument, the Prepayment Premium that would have otherwise been payable hereunder for prepayment of this Note occurring on the date of such acceleration. T he Prepayment Premium shall be payable with respect to any other prepayment made from any collateral for this Note.
Acceptance by the Holder/Agent of any one or more prepayments without concurrent payment of any applicable Prepayment Premium or other amount provided for above will not constitute a waiver of Holder's/Agent's right to require payment of any Prepayment Premium or other amount provided for above.
The Borrower acknowledges that any statement made by the Bondholder setting forth the amount of the Prepayment Premium shall only be binding upon the Holder/Agent if the statement is made in writing and that the amount of the Prepayment Premium set forth in such statement is subject to change and is valid only for the dale of such statement.
Electronic Notices. Holder/Agent, Bondholder or Borrower may, in its discretion, agree to accept notices and other communications to it under this Note by electronic communications pursuant to procedures approved by it; provided approval of such procedures may be limited to particular notices or communications. Notices of prepayments under this Note may be made by electronic communication (including email and internet or intranet websites) pursuant to procedures approved by Bondholder. Unless Holder/Agent and Bondholder otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the "return receipt requested" function, as available, return e-mail or other written acknowledgement), and (ii) notices or communications posted to an internet or intranet website shall be deemed received upon the "receipt" by the intended recipient, at its e-mail address as described in clause (i), of notification that such notice or communication is available and identifying the website address, provided, for both clauses (i) and (ii) above, if such notice, email or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day.
The Borrower, Holder/Agent and Bondholder may change its address or email address for notices and other communications under this Note by notice to the other parties. All notices and other communications given to any party in accordance with the provisions of this Note shall be deemed to have been given on the date of receipt.
Indemnity. Anything in the other Facility Documents to the contrary notwithstanding, the Borrower shall indemnify and hold the Holder/Agent and Bondholder harmless and defend the Holder/Agent and Bondholder at the Borrower's sole cost and expense against any loss or liability, cost or expense (including, reasonable attorneys' fees and disbursements of the Holder's/Agent's and Bondholder's counsel, whether in-house staff, retained firms or otherwise), and all claims, actions, procedures and suits arising out of or in connection with:
- 13 -
¦4N3N-2"08-,>XS5 5
any ongoing matters arising out of the Facility Documents or the transaction contemplated hereby or thereby, including all costs of appraisal or reappraisal of all or any portion of any collateral for the Debt or of the granting by the Holder/Agent in its sole and absolute discretion, of any lease non-disturbance agreements,
any amendment to, or restructuring of, the Debt, or any of the Facility
Documents,
any and all lawful action that may be taken by the FIolder/Agent in connection with the enforcement of the provisions of the Facility Documents, whether or not suit is filed in connection with the same, or in connection with the Borrower, any Guarantor (as defined in the Loan Agreement) of all or any portion of the Debt and/or any partner, joint venturer or shareholder thereof becoming a subject of a voluntary or involuntary federal or state bankruptcy, insolvency or similar proceeding, and
any liability to brokers, finders or similar persons and/or under any applicable securities or blue sky laws.
All sums expended by the FIolder/Agent and/or Bondholder on account of any of the foregoing shall be reimbursable on demand, and until reimbursed by the Borrower shall be deemed additional principal evidenced hereby and shall bear interest at the Default Rate. The obligations of the Borrower under this Section shall, notwithstanding any exculpatory or other provisions of any nature in the Facility Documents, constitute the personal recourse undertakings, obligations and liabilities of the Borrower and shall be secured by the Security Instrument. The foregoing indemnification shall exclude claims, actions, procedures and suits arising out of or in connection with the gross negligence or willful misconduct of the foregoing indemnitees.
Secured Note. This Note is secured by the Security Instrument and the Other Facility Documents and the collateral mortgaged, pledged, encumbered or assigned pursuant thereto (the "Collateral"). The Borrower agrees to perform and comply with each of the terms, covenants and provisions contained in the Facility Documents on the part of the Borrower to be observed or performed and which are made part of this Note to the same extent and with the same force and effect as if they were fully set forth herein. All sums which shall or may become payable by the Borrower in accordance with the provisions of this Note shall under all circumstances be deemed to constitute additional interest on, and shall be evidenced by this Note, shall be secured by the Security Instrument and the Other Facility Documents and shall constitute part of the Debt.
Transfer. Upon the transfer of this Note, the Holder/Agent may deliver all the Collateral, or any part thereof, to the transferee who shall thereupon become vested with all the rights in this Note or under applicable law given to the Holder/Agent and the Holder/Agent shall after that forever be relieved and fully discharged from any liability or responsibility in the matter; but the Holder/Agent shall retain all rights given to it with respect to any Liabilities and such collateral not so transferred. The Holder/Agent will provide the Borrower with notice of any such transfer.
- 14 -
4K.>S-27()X-')SN5.5
Maximum Permissible Rate. This Note is subject to the express condition that at no time shall the Borrower be obligated or be required to pay interest on the Principal Balance at a rate which could subject the Holder/Agent to liability as a result of being in excess of the maximum rate which the Borrower is permitted by law to contract or agree to pay. If by the terms of this Note the Borrower is at any time required or obligated to pay interest on the Principal Balance at a rate in excess of such maximum rate, then the rate of interest under this Note shall be deemed to be immediately reduced to such maximum rate, interest payable under this Note shall be computed at such maximum rate and any prior interest payments made in excess of such maximum rate shall be applied and shall be deemed to have been payments made in reduction of the Principal Balance.
Set Off. If a Default shall have occurred and be continuing, the Holder/Agent is authorized at any time and from time to time, to the full extent permitted by law, to set off and apply any deposits (general or special, time or demand, provisional or final) at any time held and other obligations at any time owing by the Holder/Agent to or for the credit or account of the Borrower against any of the Liabilities, irrespective of whether or not Holder/Agent shall have made any demand under the Facility Documents and although such obligations may be unmatured. The rights of the Holder/Agent under this Section are in addition to other rights and remedies (including other rights of setoff) which the Holder/Agent may have.
Default. It is hereby expressly agreed that the entire Debt shall become immediately due and payable at the direction of the Bondholder in the event any portion of the Debt is not paid within ten (10) days after the same is due and payable or on the happening of any Event of Default, the Debt may or shall become due and payable and that all of the terms, covenants and provisions contained in the Security Instrument, the Borrower Loan Agreement, and the Other Facility Documents which are to be kept and performed by the Borrower are hereby made part of this Note to the same extent with the same force and effect as if they were fully set forth in this Note.
Authority. The Borrower (and the undersigned reprcsentative(s) of the Borrower, if any) represents that the Borrower has full power, authority and legal right to execute and deliver this Note and that this Note constitutes a valid and binding obligation of the Borrower.
Joint and Several Obligations. If the Borrower consists of more than one party, the obligations and liabilities of each such party hereunder shall be joint and several.
Defined Terms. Whenever used, the singular number shall include the plural, the plural the singular, and the words "Holder/Agent" and "Borrower" shall include their respective successors and assigns, provided, however, that the Borrower shall not have the right, without obtaining the prior written consent of the Holder/Agent, to assign or transfer its obligations under any of the Facility Documents, in whole or in part, to any other person, party or entity.
Headings. The headings and captions of the numbered paragraphs of this Note are for convenience of reference only and are'not to be construed as defining or limiting the scope or intent of this Note.
- 15 -
4S?S-27(>X-'JSS5S
Enforceability. Each Facility Document executed by the Borrower constitutes a legal and binding obligation of, and is valid and enforceable against, the Borrower, in accordance with the terms of such Facility Document (subject to Debtor Relief Laws and general equitable principles) and is not subject to any right of rescission, set-off, counterclaim or defense.
Waiver. The Borrower waives presentment, demand for payment, notice of dishonor and any or all notices or demands in connection with the delivery, acceptance, performance, default or enforcement of this Note and consents to any or all delays, extensions of time, renewals, release of any party to any of the Facility Documents and of any available security therefor, to any party to the Facility Documents or to the actual FIolder/Agent thereof and any and all waivers or modifications that may be granted or consented to by the Holder/Agent with regard to the time of payment or with respect to any other provisions of the Facility Documents and agrees that no such action, delay or failure to act on the part of the Holder/Agent shall be construed as a waiver by the Holder/Agent of, or otherwise affect, in whole or in part, its right to avail itself of any remedy. No notice to or demand on the Borrower shall be deemed to be a waiver of the obligation of the Borrower or of the right of the Holder/Agent to take further action without further notice or demand as provided in any of the Facility Documents. If the Borrower is a partnership, the agreements contained in this Note shall remain in force and applicable, notwithstanding any changes in the individuals comprising the partnership, and the term "Borrower", as used herein, shall include any alternate or successor partnerships, but any predecessor partnership and their partners shall not thereby be released from any liability. (Nothing in the foregoing sentence shall be construed as a consent to, or a waiver of, any prohibition or restriction on transfers of interests in such partnership which may be set forth in the Facility Documents.)
Amendments. This Note may not be modified, amended, changed or terminated except by an agreement in writing signed by the Borrower and the Holder/Agent. No waiver of any term, covenant or provision of this Note shall be effective unless given in writing by the Holder/Agent and, if so given by the Holder/Agent, shall only be effective in the specific instance in which given.
Governing Law. This Note is and shall be deemed entered into in the State and shall be governed by and construed in accordance with the laws of the State without regard to principles of conflicts of laws, and no defense given or allowed by the laws of any state or country shall be interposed in any action or proceeding hereon unless such defense is either given or allowed by the laws of the State.
Jurisdiction and Venue.
(a) Consent to Jurisdiction. Borrower hereby submits, for itself and its property, to the nonexclusive jurisdiction of any United States Federal or State court sitting in Cook County, and any appellate court in such jurisdiction, in any action or proceeding arising out of or relating to this Note, or for recognition or enforcement of any judgment, and each of the parties agrees that all claims in respect of any such action or proceeding may be heard and determined in such State or. to the extent permitted by law, in such Federal court. Borrower agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Nothing in this Note shall affect any
- 16-
4S.iN-27(]S->>NN5 5
right that Holder/Agent may otherwise have to bring any action or proceeding relating to this Note against Borrower or its properties in the courts of any jurisdiction.
Waiver of Objection to Venue. Borrower waives, to the full extent- it may legally and effectively do so, any objection which it may now or hereafter have to the venue of any suit, action or proceeding arising out of or relating to this Note in any court referred to in Section 23(a). Borrower hereby waives, to the full extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such court.
Service of Process. Borrower consents to service of process in the manner provided for notices in the Loan Agreement. Nothing in this Note will affect the right of Holder/Agent to serve process in any other manner permitted by law.
24. Recourse/Non-Recourse Provisions.
Except as otherwise provided in this Section 24, the Holder/Agent agrees that, commencing with the Conversion Date, neither the Borrower nor any of its members shall have any personal liability under the Facility Documents for the repayment of the Debt or for the performance of other obligations of the Borrower thereunder, and the Holder's/Agent's recourse for the satisfaction of the Debt and the performance of such obligation shall be the Holder's/Agent's exercise of its rights and remedies under the Security Instrument and other Collateral held by the Holder/Agent as security for the Debt.
Notwithstanding the above limitations, the Holder/Agent shall have full recourse against the Borrower for the full payment of (i) the amount of any rent or other income from the Premises that the Borrower has failed to apply first, to the payment of reasonable operating expenses (other than property management fees that are not currently payable pursuant to the terms of the Assignment of Management Agreement (as defined in the Loan Agreement) or other agreement with Holder/Agent executed in connection with the Loan) and then to the payment of amounts that are due and payable under this Note, except that the Borrower will not be personally liable (x) to the extent that the Borrower lacks the legal right to direct the disbursement of such sums because of bankruptcy, receivership or similar judicial proceeding, or (y) with respect to rents and other income from the Premises that are distributed in any calendar year if the Borrower has paid all operating expenses and amounts then due and payable under this Note for that calendar year; (ii) any condemnation or insurance proceeds, or similar funds or payments attributable to the Premises, that under the terms of the Security Instrument, Loan Agreement or Other Facility Documents should have been paid to the Holder/Agent but have not been so paid to the Holder/Agent; (iii) any tenant security deposits, advances or prepaid rents, or similar sums that have been paid to the Borrower or held for the account of the Borrower by any other person or entity in connection with the operation of the Premises and that have not either been applied or refunded in accordance with the relevant lease or have been paid over to the Holder/Agent; (iv) the amount of any loss suffered by the Holder/Agent as a result of fraud or misrepresentation by or on behalf of the Borrower in connection with the Loan; (v) the amount of any loss suffered by the Holder/Agent as a result of waste or gross mismanagement by or permitted by the Borrower; (vi) the amount of any loss suffered by the Holder/Agent as a result of violations of any governmental statute, rule or regulation applicable to the Premises including and not by way of limitation any
- 17 -
-4SS-27(IS-')SS? 5
loss suffered by the Holder/Agent arising directly or indirectly from the presence or release of any hazardous or toxic substance, material or waste on or about the Premises; (vii) the Debt in the event of the Borrower's acquisition of any property or operation of any business not permitted by the Loan Agreement; (viii) the Debt in the event of any transfer of any interest in the Borrower or the managing member of the Borrower that is not a Permitted Transfer as defined in the Loan Agreement; and (ix) reasonable attorney's fees and other costs incurred by the Holder/Agent in collecting any of the foregoing.
Nothing contained in this Section 24 shall (i) limit the right of the Holder/Agent to name the Borrower as a party defendant in any action or suit for judicial foreclosure and sale under the Security Instrument so long as no judgment in a nature of deficiency judgment shall be enforced against the Borrower; (ii) be deemed to be a release or impairment in any part of the Debt evidenced by this Note or the lien created by the Security Instrument or any other Collateral; or (iii) limit or otherwise prejudice in anyway the rights of the Holder/Agent to enforce any of its rights and other remedies under the Facility Documents or any guaranty of the Debt.
The provisions of this Section 24 are personal to the Borrower and permitted transferees of the Premises under the Security Instrument only, and are not transferable or assignable to any other person or entity, and are inapplicable to any other successor or transferee of the Borrower which is not a permitted transferee under the Loan Agreement, as vested or beneficial owner of the Premises, whether such other successor or transferee assumes or takes title subject to the Security Instrument. As to any such other successor or transferee, this Note shall be full recourse.
Waiver of Special Damages. To the extent permitted by applicable law, the Borrower shall not assert, and hereby waives, any claim against the Holder/Agent or Bondholder, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Note or any agreement or instrument contemplated hereby, the transactions, the Loan or the use of the proceeds thereof.
WAIVER OF JURY TRIAL. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULL EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING, DIRECTLY OR INDIRECTLY, ARISING OUT OF OR RELATING TO THIS NOTE OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). THE BORROWER HEREBY (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF THE HOLDER/AGENT HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE HOLDER/AGENT WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE HOLDER/AGENT HAVE BEEN INDUCED TO ENTER INTO THE LOAN TRANSACTION BY, AMONG OTHER THINGS, THE WAIVER AND CERTIFICATIONS IN THIS SECTION.
- 18 -
4S.^S-270X-i;}sS5 5
IN WITNESS WHEREOF, the Borrower has duly executed this Note the day and year at the beginning of the Note.
BORROWER:
PASEO BORICUA ARTS, LLC, an Illinois limited liability company
By: Paseo Boricua Arts Manager, LLC, an Illinois
limited liability company
Its: Managing Member
By
Name: Richard J. Sciortine'' Title: Manager
ALLONGE
This Allonge is attached here and made a part of that certain Promissory Note made by PASEO BORICUA ARTS, LLC, an Illinois limited liability company, to the CITY OF CHICAGO, a municipality and home rule unit of local government duly organized and validly existing under the constitution and laws of the State of Illinois, for purposes of annexing thereto the following endorsement:
Pay to the order of JPMorgan Chase Bank, N.A., without recourse.
[Signature Page Follows]
CITY OF CHICAGO
Name: Jennie Fluang Bennett
Title: Chief Financial Officer
Name: Andrea M. Valencia Title: City Clerk
[Signature page to Allonge to Borrower Note]
Exhibit E Land Use Restriction Agreement
Recording Requested By and When Recorded Send to:
Hard wick Law Finn, LLC
77 West Washington Street - Suite 1704
Chicago, Illinois 60602
Attention: Scolt A. Bremer
LAND USE RESTRICTION AGREEMENT between CITY OF CHICAGO and
PASEO BORICUA ARTS, LLC an Illinois limited liability company Dated as of April 1.2021
TABLE OF CONTENTS
Page
SECTION 1. TERM OF RESTRICTIONS|910|SECTION 2. PROJECT RESTRICTIONS|910|SECTION 3. OCCUPANCY RESTRICTIONS|910|SECTION 4. RENT AL RESTRICTIONS|910|SECTION 5. TRANSFER RESTRICTIONS|910|SECTION 6. ENFORCEMENT'|910|SECTION 7. COVENANTS TO RUN WITH THE LAND ,|910|SECTION 8. RECORDING|910|SECTION 9. AGENTS OF THE ISSUER|910|SECTION 10. NO CONFLICT WITH OTHER DOCUMENTS...,|910|SECTION 11. INTERPRETATION .•|910|SECTION 12. AMENDMENT r|910|SECTION 13. SEVERABILITY|910|SECTION 14. NOTICES : 9
SECTION 15. GOVERNING LAW 9
SECTION 16. LIMITED LIABILITY OF BORROWER 9
EXHIBIT A Property- Legal Description EXHIBIT B Income Computation and Certification EXHIBIT C Certificate of Continuing Program Compliance
LAM) USE RESTRICTION AGREEMENT
THIS LAND USE RESTRICTION AGREEMENT (this Agreement"), entered into as of April 1, 2021 between the CITY OF CHICAGO, a municipal eorporation and home rule unit of local government duly organized and validly existing under the Constitution and laws of the State of Illinois (the "Issuer"), and PASEO BORICUA ARTS, LLC, an Illinois limited liability company (the "Borrower"),
WITNESSETH:
WHEREAS, pursuant to a Funding Loan Agreement, dated as of April 1, 2021 (the "Funding Loan Agreement") between the Issuer and JPMorgan Chase Bank, N.A. (the "Funding Lender"), and an ordinance adopted by the Issuer on June 12, 2019, as amended by an Ordinance adopted on November 16, 2020 (the "Ordinance"), the Funding Lender will advance funds (the "Funding Loan") in an aggregate principal amount not exceeding Eight Million One Hundred Thousand and 00/100 Dollars ($8,100,000.00) and the Issuer will issue, sell and deliver its $8,100,000 Multi-Family Housing Revenue Note (Paseo Boricua Project), Series 2021 (the "Note"), evidencing the obligation to repay the Funding Loan; and
WHEREAS, the proceeds derived from the issuance and sale of the Note have been lent by the Issuer to the Borrower pursuant to a loan agreement of even date herewith (the "Borrower Loan Agreement"), between the Issuer and the Borrower for the purpose of financing a portion of the costs of acquisition and construction of a low-income multi-family housing development project consisting of the acquisition of real property located at 2709-15 West Division Street in the City and the construction thereon of a five-story mixed use building that will include on floors two through five affordable housing consisting of 24 apartments comprised of eight studio apartments, eight one bedroom apartments and eight two bedroom apartments together with appurtenant facilities located on the first floor (the "Project") and with a first floor comprised of office, community, commercial and retail spaces (including the Project, the "Facility"); and
WHEREAS, in order to assure the Issuer and the Funding Lender that interest on the Note will be excluded from gross income for federal income tax purposes under the Internal Revenue Code of 1986, as amended (the "Code"), and to further the publie purposes of the. Issuer, certain restrictions on the use and occupancy of the Project under the Code must be established:
NOW, THEREFORE, in consideration of the mutual promises and covenants hereinafter set forth, and of other good and valuable consideration, the receipt, sufficiency and adequacy of which are hereby acknowledged, the Borrower and the Issuer agree as follows:
Section 1. Term of Restrictions
(a) Occupancy Restrictions. T he term of the Occupancy Restrictions set forth in Section 3 hereof shall commence on the first day on which at least 10% of the Units are first occupied following completion of such Units and shall end on the latest of (i) the date which is 15 years after the date on which at least 50% of the Units in the Project are first occupied; or (ii) the first date on which no tax-exempt note or bond (including any refunding note or bond) issued with
respect to the Project is outstanding (treating, for such purpose, the Project as being financed in part by the Note) (which period is hereinafter referred with respect to the Project as the "Qualified Project Period").
Rental Restrictions. The Rental Restrictions with respect to the Project set forth in Section 4 hereof shall remain in effect during the Qualified Project Period.
Involuntary Loss or Substantial Destruction. The Occupancy Restrictions set forth in Section 3 hereof, and the Rental Restrictions set forth in Section 4 hereof, shall cease to apply to the Project in the event of involuntary noncompliance caused by fire, seizure, requisition, foreclosure, transfer of title by deed in lieu of foreclosure, change in federal law or an action of a federal agency (with respect to the Project) after the date of delivery of the Note, which prevents the Issuer from enforcing the Occupancy Restrictions and the Rental Restrictions (with respect to the Project), or condemnation or similar event (with respect to the Project), but only if, within a reasonable time, (i) the Note is promptly repaid, or amounts received as a consequence of such event are used to provide a new project which meets all of the requirements of this Agreement, which new project is subject to new restrictions substantially equivalent to those contained in this Agreement, and which is substituted in place of the Project by amendment of this Agreement; and (ii) an opinion from nationally recognized bond counsel (selected by the Issuer) is received to the effect that noncompliance with the Occupancy Restrictions and the Rental Restrictions applicable to the Project as a result of such involuntary loss or substantial destruction resulting from an unforeseen event with respect to the Project will not adversely affect the exclusion of the interest on the Note from the gross income of the owner thereof for purposes of federal income taxation; provided, however, that the preceding provisions of this paragraph shall cease to apply in the case of such involuntary noncompliance caused by foreclosure, transfer of title by deed in lieu of foreclosure or similar event if at any time during the Qualified Project Period with respect to the Project subsequent to such event the Borrower or any Affiliated Party (as hereinafter defined) obtains an ownership interest in the Project for federal income tax purposes. "Affiliated Party" means a person whose relationship to another person is such that (i) the relationship between such persons would result in a disallowance of losses under Section 267 or 707(b) of the Code; or (ii) such persons are members of the same controlled group of corporations (as defined in Section 1563(a) of the Code, except that "more than 50%" shall be substituted for "at least 80%" each place it appears therein).
Termination. This Agreement shall terminate with respect to the Project upon the earliest of (i) termination of the Occupancy Restrictions and the Rental Restrictions with respect to the Project, as provided in paragraphs (a) and (b) of this Section 1; or (ii) delivery to the Issuer and the Borrower of an opinion of nationally recognized bond counsel (selected by the Issuer) to the effect that continued compliance of the Project with the Rental Restrictions and the Occupancy Restrictions applicable to the Project is not required in order for interest on the Note to remain excluded from gross income for federal income tax purposes.
(c) Certification. Upon termination of this Agreement, the Borrower and the Issuer shall execute and cause to be recorded (at the Borrower's expense), in all offices in which this Agreement was recorded, a certificate of termination, specifying which of the restrictions contained herein has terminated.
ft) Encumbrance of Fee. In furtherance of enforcing compliance with the provisions of Section 142(d) of the Code and Section 1.103-8(b) of the Regulations applicable to this Agreement, unless the provisions of paragraph (c) or (d) above apply to the Project resulting in a termination of the restrictions set forth herein, such restrictions shall continue to apply to the Project following the termination of the Borrower's or any other party's interest, whether or not the lien of the mortgage with respect to the Project is thereafter released by the Issuer.
Section 2. Project Restrictions
The Borrower represents, warrants and covenants that:
The Borrower has reviewed the provisions of the Code and the Treasury Regulations thereunder (the "Regulations") applicable to this Agreement (including, without limitation, Section 142(d) of the Code and Section 1.103-8(b) of the Regulations) with its counsel and understands said provisions.
Ihe Project is being acquired, constructed and equipped for the purpose of providing a "qualified residential rental project" (as such phrase is used in. Section 142(d) of the Code) and will, during the term of the Rental Restrictions and Occupancy Restrictions hereunder applicable to the Project, continue to constitute a "qualified residential rental project" under Section 142(d) of the Code and any Regulations heretofore or hereafter promulgated thereunder and applicable thereto.
Substantially all (not less than 95%). of the Project will consist of a "building or structure" (as defined in Section 1.103-8(b)(8)(iv) of the Regulations), or several proximate buildings or structures, of similar construction, each containing one or more similarly constructed residential units (as defined in Section 1.103-8(b)(8)(i) of the Regulations) located on a single tract of land or contiguous tracts of land (as defined in Section 1.103-8(b)(4.)(ii)-(B) of the Regulations), which will be owned, for federal tax purposes, at all times by the same person, and financed pursuant to a common plan (within the meaning of Section 1.103-8(b)(4)(ii) of the Regulations), together with functionally related and subordinate facilities (within the meaning of Section 1.103-8(b)(4)(iii) of the Regulations). If any such building or structure contains fewer than five (5) units, no unit in such building or structure shall be occupied by the Borrower or an agent or employee of the Borrower.
None of the Units in the Project will at any time be used on a transient basis, and no portion of the Project will be used as a hotel, motel, dormitory, fraternity or sorority house, rooming house, hospital, nursing home, sanitarium, rest home or trailer park or court for use on a transient basis; further, no portion of the Project shall be operated as an assisted living facility which provides continual or frequent nursing, medical or psychiatric services; provided, however that nothing herein shall be understood to prohibit single-room-occupancy units occupied under mouth-to-month leases.
(c) Ail of the Units in the Project will be leased or rented, or available for lease or rental, on a continuous basis to members of the general public (other than (i) Units for resident managers or maintenance personnel, (ii ) Units for Qualifying Tenants as provided for in Section 3 hereof, and (iii) ( nils which may be rented under the Section 8 assistance program, which units
(subject to the Section 8 assistance program) shall be leased to eligible tenants in accordance with Section requirements), subject, however, to the requirements of Section 3(a) hereof. Each Qualifying Tenant (as hereinafter defined) occupying a Unit in the Project shall be required to execute a written lease with a stated term of not less than 30 days nor more than one year.
Any functionally related and subordinate facilities (e.g., parking areas, swimming pools, tennis courts, etc.) which are included as part of the Project will be of a character and size commensurate with the character and size of the Project, and will be made available to all tenants in the Project on an equal basis; fees will only be charged with respect to the use thereof if" the charging of fees is customary for the use of such facilities at similar residential rental properties in the surrounding area (i.e., within a one-mile radius), or, if none, then within comparable urban settings in the City of Chicago, and then only in amounts commensurate with the fees being charged at similar residential rental properties within such area. In any event, any fees charged will not be discriminatory or exclusionary as to the Qualifying Tenants (as defined in Section 3 hereof). No functionally related and subordinate facilities will be made available to persons other than tenants or their guests.
Each residential unit in the Project will contain separate and complete facilities for living, sleeping, eating, cooking and sanitation for a single person or family.
No portion of the Project will be used to provide-any health club facility (except as provided in (f) above), any facility primarily used for gambling, or any store, the principal business of which is the sale of alcoholic beverages for consumption off premises, in violation of Section 147(e) of the Code.
Section 3. Occupancy Restrictions
The Borrower represents, warrants and covenants with respect to the Project that:
Pursuant to the election of the Issuer in accordance with the provisions of Section 142(d)(1)(A) of the Code, at all times during the Qualified Project Period with respect to the Project at least 40% of the completed Units in the Project shall be continuously occupied (or treated as occupied as provided herein) or held available for occupancy by Qualifying Tenants as herein defined. For purposes of this Agreement, "Qualifying Tenants" means individuals or families whose aggregate adjusted incomes do not exceed 60% of the applicable median gross income (adjusted for family size) for the area in which the Project is located, as such income and area median gross income are determined by the Secretary of the United States Treasury in a manner consistent with determinations of income and area median gross income under Section 8 of the United States Housing Act of 1937. as amended (or, if such program is terminated, under such program as in effect immediately before such determination).
Prior to the commencement of occupancy of any unit to be occupied by a Qualifying Tenant, the prospective tenant's eligibility shall be established by execution and delivery by such prospective tenant of an Income Computation and Certification in the form attached hereto as Exhibit B (the "Income Certification") evidencing that the aggregate adjusted income of such prospective tenant does not exceed the applicable income limit. In addition, such prospective tenant shall be required to provide whatever other information, documents or
|1010|
certifications are reasonably deemed necessary by the Borrower or the Issuer to substantiate the Income Certification.
Not less frequently than annually, the Borrower shall determine whether the current aggregate adjusted income of each tenant occupying any unit being treated by the Borrower as occupied by a Qualifying Tenant exceeds the applicable income limit. For such purpose the Borrower shall require each such tenant to execute and deliver the Income Certification: provided, however, that for any calendar year during which no unit in the Project is occupied by a new resident who is not a qualifying tenant, no Income Computation and Certification for existing tenants shall be required.
Any unit vacated by a Qualifying Tenant shall be treated as continuing to be occupied by such tenant until reoccupied, other than for a temporary period not to exceed 31 days, at which time the character of such unit as a unit occupied by a Qualifying Tenant shall be redetermined.
If an individual's or family's income exceeds the applicable income limit as of any date of determination, the income of such individual or family shall be treated as continuing not to exceed the applicable limit, provided that the income of an individual or family did not exceed the applicable income limit upon commencement of such tenant's occupancy or as of any prior income determination, and provided, further, that if any individual's or family's income as of the most recent income determination exceeds 140% of the applicable income limit, such individual or family shall cease to qualify as a Qualifying Tenant if, prior to the next income determination of such individual or family, any unit in the Project of comparable or smaller size to such individual's or family's unit is occupied by any tenant other than a Qualifying Tenant.
The lease to be utilized by the Borrower in renting any Unit in the Project to a prospective Qualifying Tenant shall provide for termination of the lease and consent by such person to eviction following 30 days' written notice, subject to applicable provisions of Illinois law (including for such purpose all applicable home rule ordinances), for any material misrepresentation made by such person with respect to the Income Certification with the effect that such tenant is not a Qualified Tenant.
All Income Certifications will be maintained on file at the Project as long as the Note is outstanding and for five years thereafter with respect to each Qualifying Tenant who occupied a Unit in the Project during the period the restrictions hereunder are applicable, and the Borrower will, promptly upon receipt, file a copy thereof with the Issuer.
On the first day of the Qualified Project Period with respect to the Project, on the fifteenth days of January, April, July and October of each year during the Qualified Project Period with respect to the Project, and within 30 days after the final day of each month in which there occurs any change in the occupancy of a Unit in the Project, the Borrower will submit to the Issuer a "Certificate of Continuing Program Compliance," in the form attached hereto as Exhibit C executed by the Borrower with respect to the Project.
(i) The Borrower shall submit to the Secretary of the United States Treasury (at such
time and in such manner as the Secretary shall prescribe) with respect to the Project an annual
certification on form 8703 as to whether the Project continues lo meet the requirements of Section 142(d) of the Code. Failure to comply with such requirement may subject the Borrower to the penalty provided in Section 6652(j) of the Code.
Section 4. Rental Restrictions
The Borrower represents, warrants and covenants with respect to the Project that once available for occupancy, each Unit in the Project will be rented or available for rental on a continuous basis to members of the general public (other than (a) Units for resident managers or maintenance personnel, (b) Units for Qualifying Tenants as provided for in Section 3 hereof, and (c) Units which may be rented under the Section 8 assistance program, which Units (subject to the Section 8 assistance program) shall be leased to eligible tenants in accordance with Section 8 requirements). If a Mousing Assistance Payments Contract is subsequently entered into with respect to the Project under the Section 8 assistance program, in administering the restrictions hereunder with respect lo the Project the Borrower will comply with all Section 8 requirements.
Section 5. Transfer Restrictions
The Borrower covenants and agrees that no conveyance, transfer, assignment or any other disposition of title to any portion of the Project (a "Transfer") shall be made prior to the termination of the Rental Restrictions and Occupancy Restrictions hereunder with respect to the Project, unless the transferee pursuant to the Transfer assumes in writing (the "Assumption Agreement"), in a form reasonably acceptable to the Issuer, all of the executory duties and obligations hereunder of the Borrower with respect to such portion of the Project, including those contained in this Section 5, and agrees to cause any subsequent transferee to assume such duties and obligations in the event of a subsequent Transfer by the transferee prior to the termination of the Rental Restrictions and Occupancy Restrictions hereunder with respect to the Project. 'Ihe Borrower shah deliver the Assumption Agreement to the Issuer at least 30 days prior to a proposed Transfer. This Section 5 shall not apply lo any involuntary transfer pursuant to Section 1(c) hereof. This Section shall not be deemed to restrict the transfer of any partnership interest in the Borrower or a transfer by foreclosure or deed in lieu of foreclosure.
Section 6. Enforcement
The Borrower shall permit all duly authorized representatives of the Issuer to inspect any books and records of the Borrower regarding the Project and the incomes of Qualifying Tenants which pertain to compliance with the provisions of this Agreement and Section 142(d) of the Code and the regulations heretofore or hereafter promulgated thereunder.
In addition to the information provided for in Section 3(1) hereof, the Borrower shall submit any other information, documents or certifications reasonably requested by the Issuer, which the Issuer deems reasonably necessary to substantiate continuing compliance with the provisions of this Agreement and Section 142(d) of the Code and the regulations heretofore or hereafter promulgated thereunder.
The Issuer and the Borrower each covenants that it will not take or permit to be taken any action within its control that it knows would adversely affect the exclusion of interest on the Note from Ihe gross income of the owners thereof for purposes of federal income taxation
|1010|
pursuant to Section 103 of the Code. Moreover, each covenants to take any lawful action within its control (including amendment of this Agreement as may be necessary in the opinion of nationally recognized bond counsel selected by the Issuer) to comply fully with all applicable rules, rulings, policies, procedures, regulations or other official statements promulgated or proposed by the Department of the Treasury or the Internal Revenue Service from time to time pertaining to obligations issued under Section 142(d) of the Code and affecting the Project.
T he Borrower covenants and agrees to inform the Issuer by written notice of any violation of its obligations hereunder within five days of first discovering any such violation. If any such violation is not corrected to the satisfaction of the Issuer within the period of time specified by the Issuer, which shall be (i) the lesser of (A) 60 days after the effective date of any notice to or from the Borrower, or (B) 75 days from the date such violation would have been discovered by the Borrower by the exercise of reasonable diligence, or (ii) such longer period as may be necessary to cure such violation, provided bond counsel (selected by the Issuer) of nationally recognized standing in matters pertaining to the exclusion of interest on municipal bonds from gross income for purposes of federal income taxation issues an opinion that such extension will not result in the loss of such exclusion of interest on the Note, without further notice, the Issuer shall declare a default under this Agreement effective on the date of such declaration of default, and the Issuer shall apply to any, court, state or federal, for specific performance ofthis Agreement or an injunction against any violation ofthis Agreement, or any other remedies at law or in equity or any such other actions as shall be necessary or desirable so as to correct noncompliance with this Agreement.
The Borrower and the Issuer each acknowledges that the primary purposes for requiring compliance with the restrictions provided in this Agreement are to preserve the exclusion of interest on the Note from gross income for purposes of federal income taxation, and that the Issuer,-on behalf of the owners of the Note, who are declared to be third-party beneficiaries ofthis Agreement, shall be entitled for any breach of the provisions hereof, to all remedies both at law and in equity in the event of any default hereunder.
(1) Tn the enforcement of this Agreement, the Issuer may rely on any certificate delivered by or on behalf of the Borrower or any tenant with respect to the Project.
Nothing in this Section shall preclude the Issuer from exercising any remedies it might otherwise have, by contract, statute or otherwise, upon the occurrence of any violation hereunder.
Notwithstanding anything to the contrary contained herein, the Issuer hereby agrees that any cure of any default made or tendered by one or more of the Borrower's partners shall be deemed to be a cure by the Borrower and shall be accepted or rejected on the same basis as if made or tendered by the Borrower.
.Section 7. Covenants to Run with the Land
The Borrower herebv subjects the Project, the Site and the Units to the covenants, reservations and restrictions set forth in this Agreement. The Issuer and the Borrower hereby declare their express intent that the covenants, reservations and restrictions set forth herein shall
|1010|
be deemed covenants, reservations and restrictions running with the land to the extent permitted by law and shall pass to and be binding upon the Borrower's successors in title to the Project, the Units, and the Site, throughout the term of this Agreement. Each and every contract, deed, mortgage, lease or other instrument hereafter executed covering or conveying the Project, the Units or the Site, or any portion thereof or interest therein (excluding any transferee of a partnership interest in the Borrower), shall conclusively be held to have been executed, delivered and accepted subject to such covenants, reservations and restrictions, regardless of whether such covenants, reservations and restrictions are set forth in such contract, deed, mortgage, lease or other instrument.
Section 8. Recording
The Borrower shall cause this Agreement and all amendments and supplements hereto to be recorded in the conveyance and real property records of Cook County, Illinois, and in such other places as the Issuer may reasonably request. The Borrower shall pay all fees and charges incurred in connection with any such recording.
Section 9. Agents of the Issuer
The Issuer shall have the right to appoint agents to carry out any of its duties and obligations hereunder, and shall, upon written request, certify in writing to the other party hereto any such agency appointment.
Section 10. No Conflict with Other Documents
The Borrower warrants and covenants that it has not and will not execute any other agreement with provisions inconsistent or in conflict with the provisions hereof (except documents that are subordinate to the provisions hereol), and the Borrower agrees that the requirements of this Agreement are paramount and controlling as to the rights and obligations herein set forth, which supersede any other requirements in conflict herewith.
Section 11. Interpretation
Any capitalized terms not defined in this Agreement shall liaVe the same meaning as terms defined in the Funding Loan Agreement, the Borrower Loan Agreement or Section 142(d) of the Code and the regulations heretofore or hereafter promulgated thereunder.
Section 12. Amendment
Subject to any restrictions set forth in the Funding Loan Agreement, this Agreement may be amended by the parties hereto to reflect changes in Section 142(d) of the Code, the regulations hereafter promulgated thereunder and revenue rulings promulgated thereunder, or in the interpretalion thereof.
Section 13. Severability
The invalidity of any clause, part or provision ofthis Agreement shall not affect the validity of the remaining portions thereof.
x
Section 14. Notices
Any notice, demand or other communication required or permitted hereunder shall be in writing and shall be deemed to have been given if and when personally delivered and receipted for, or, if sent by private courier service or sent by overnight mail service, shall be deemed to have been given if and when received (unless the addressee refuses to accept delivery, in which case it shall be deemed to have been given when first presented to the addressee for acceptance), or on the first day after being sent by telegram, or on tlie third day after being deposited in United Slates registered or certified mail, postage prepaid. Any such notice, demand or other communication shall be given as provided for in Section 11.1 of the Funding Loan Agreement.
Section 15. Governing Law
This Agreement shall be construed in accordance with and governed by the laws of the State of Illinois, and where applicable, the laws of the United States of America.
Section 16. Limited Liability of Borrower
Notwithstanding any other provision or obligation stated in or implied by this Agreement to the contrary, any and all undertakings and agreements of the Borrower contained herein shall not (other than as expressly provided hereinafter in this paragraph) be deemed, interpreted or construed as the personal undertaking or agreement of, or as creating any personal liability upon, any past, present or future partner of the Borrower, and no recourse (other than as expressly provided hereinafter in this paragraph) shall be had against the property of the Borrower or any past, present or future partner of the Borrower, personally or individually for the performance of any undertaking, agreement or obligation, or the payment of any money, under this Agreement or any document executed or delivered by or on behalf of the Borrower pursuant hereto or in connection herewith, or for any claim based thereon. It is expressly understood and agreed that the Issuer and the registered Borrower of the Note, and its respective successors and assigns, shall have the right to sue for specific performance of this Agreement and to otherwise seek equitable relief for the enforcement of the obligations and undertakings of the Borrower hereunder, including, without limitation, obtaining an injunction against any violation ofthis Agreement or the appointment of a receiver to lake over and operate all or any portion of the Project in accordance with the terms of this Agreement. This Section shall survive termination of this Agreement.
[Signatures Appear on Following Page]
|10 10|
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed and sealed by their respective, duly authorized representatives, as of Ihe day and year first above written.
CITY OF CHICAGO
- rH TJ £ :
Jeffinc Huhng Bennett, Chief Financial Officer
Andrea M. Valencia, Citv Clerk
[Signature page to l and Use Restriction Agreement]
Acknowledged and agreed to:
PASEO BORICUA ARTS. LLC, an Illinois limited liability company
By: Paseo Borjciia Arts MaTiagor, LLC. an Illinois limited^lirtbility company, its^arjagirjg Member
1^' V ^''-^
Name: Richard J. Sciortino Title: Manager
( Acknowledgement and Agreement to Land Use Restriction Agreement]
STATE OF ILLINOIS COUNTY OF COOK
)
)ss )
I, the undersigned,^ Notary Public in and tor the county and. Slate aforesaid, do herebv^t^\VCl'\-^f>r^\ a of PASEO BORICUA ARTSrlLC,~~an Illinois limited
iTabihiy company (the "Company"), and personally known to me to be the same person whose name is subscribed to the foregoing instrument, appeared before me this day in person and severally acknowledged that as such officer, he signed and delivered the sajdiinstrument, pursuant
to authority given by thc/vy-y^a/ S to thc^^ac. -a^^k the free and voluntary v (__
act of such person, and as the frceand voluntary act and Acd o f thefiAs<^ri?->r> r\i ~> ^ ^and the' Company, for the uses and purposes therein set forth.
GIVEN UNDER MY HA
2021.
SALLY IEWINSKI OFFICIAL SEAL
\ Notery Public, State of Illinois My Commission Expiras January 27, 2024
My cdhTfml
N'D and seal of office, thi^^3ay of D^rA Notajy\Public
EXHIBIT A
PROPERTY LEGAL DESCRIPT ION
LOTS 4, 5, 6 AND 7 IN BLOCK 2 IN WETHERBEE AND GREGORY'S SUBDIVISION OF
THE NORTH 1/2 OF T HE NORTHWEST' 1/4 OF THE SOUTHEAST' 1/4 OF SECTION 1. TOWNSHIP 39 NORTH, RANGE 13, (EXCEPT THE EAST 100 FEET THEROF), EAST OF THE THIRD PRINCIPAL MERIDIAN. IN COOK COUNTY, ILLINOIS.
Commonly known as: 2709-2715 West Division Street, Chicago, IL 60622
Permanent Index Numbers: 16-01-400-014-0000
16-01-400-015-0000 16-01-400-016-0000 16-01-400-017-0000
EXHIBIT B
INCOME COMPUTATION AND CERTIFICATION*
NOTE TO APARTMENT OWNER: This form is designed to assist you in computing Annual Income in accordance with the method set forth in the Department of Housing and Urban Development ("HUD") Regulations (24 CFR Part 5). You should make certain that this form is at all limes up to date with HUD Regulations. All capitalized terms used herein shall have the meanings set forth in the Land Use Restriction Agreement, dated as of April 1, 2021, between the City of Chicago and Paseo Boricua Arts, LLC, an Illinois limited liability company (the "Borrower").
Re: _
Chicago, IL
I/We, die undersigned, being first duly sworn, state that I/we have read and answered fully and truthfully each of the following questions for all persons who are to occupy the unit in the above apartment project for which application is made. Listed below are the names of all persons who intend to reside in the unit:
Name of Members Relationship to Head Age Social Security Place of
of the Household of Household Number Employment
HEAD _
SPOUSE
1. Total Anticipated Income. The total anticipated income, calculated in accordance with this paragraph 6, of all persons listed above for the 12-month period beginning the
date that I/we plan to move into a unit (i.e., ) is $
Included in the total anticipated income listed above are:
the full amount, before payroll deductions, of wages and salaries, overtime pay, commissions, fees, tips and bonuses, and other compensation for personal services;
the net income from operation of a business or profession or net income from real or personal property (without deducting expenditures for business expansion or amortization or capital indebtedness); an allowance for depreciation of capital assets used in a business or profession may be deducted, based on straight-line depreciation, as provided in Internal Revenue Service regulation; include any withdrawal of cash or assets from the operation of a business or profession, except to the extent the withdrawal is reimbursement of cash or assets invested in the operation by the above persons;
(c) interest and dividends (see below);
* The form oflncome Computation and Certification shall be conformed to any amendments made to 24 CFR Par 5. or any regulatory provisions promulgated in substitution therefor.
the Mill amount of periodic payments received from social security, annuities, insurance policies, retirement funds, pensions, disability or death benefits, and other similar types of periodic receipts, including a lump sum payment for the delayed start of a periodic payment;
payments in lieu of earnings, such as unemployment and disability compensation, workmen's compensation and severance pay;
the amount of any public welfare assistance payment; if the welfare assistance payment includes any amount specifically designated for shelter and utilities that is subject to adjustment by the welfare assistance agency in accordance with the actual cost of shelter and utilities, the amount of welfare assistance income to be included as income shall consist of:
the amount of the allowance or grant exclusive of the amount specifically designated for shelter or utilities, plus
the maximum amount that the welfare assistance agency could in fact allow the family for shelter and utilities (if the family's welfare assistance is ratably reduced from the standard of need by applying a percentage, the amount calculated imder this paragraph (f) shall be the amount resulting from one application of the percentage);
periodic and determinable allowances, such as alimony and child support payments and regular contributions or gifts received from persons not residing in the dwelling; and
(h) all regular pay, special pay and allowances of a member of the Armed Forces.
Excluded from such anticipated total income are:
income from employment ol'children (including foster children) under the age of 18 years;
payment received for the care of foster children or foster adults;
lump-sum additions to family assets, such as inheritances, insurance payments (including payments under health and accident insurance and worker's compensation), capital gains and settlement for personal or property losses;
amounts received by the family that arc specifically for, or in reimbursement of, the cost of medical expenses for any family member:
income of a live-in aide:
(I) the full amount of student financial assistance paid directly lo the student or to the educational institution:
special pay to a family member serving in the Armed Forces who is exposed to hostile lire-amounts received under training programs funded by the Department of Housing and Urban Development ("HUD");
amounts received by a disabled person that are disregarded for a limited time for purposes of Supplemental Security Income eligibility and benefits because they are set aside for use under a Plan to Attain Self-Sufficiency (PASS);
amounts received by a participant in other publicly assisted programs which are specifically for or in reimbursement of out-of-pocket expenses incurred (special equipment, clothing, transportation, child care, etc.) and which are made solely to allow participation in a specific program;
a resident service stipend in a modest amount (not to exceed $200 per month) received by a resident for performing a service for the Owner, on a part-time basis, that enhances the quality of life in the Project, including, but not limited to, fire patrol, hall monitoring, lawn maintenance and resident initiatives coordination (no resident may receive more than one stipend during the. same period of time);
compensation from state or local employment training programs in training of a family member as resident management staff, which compensation is received under employment training programs (including training programs not affiliated with a local government) with clearly defined goals and objectives, and which compensation is excluded only for the period during which the family member participates in the employment training program;
reparations payment paid by a foreign government pursuant to claims filed under the laws of that government for persons who were persecuted during the Nazi era;
earnings in excess of $480 for each full-time student, 18 years or older, but excluding the head of household and spouse;
adoption assistance payments in excess of $480 per adopted child;
deferred periodic, payments of supplemental security income and social security benefits that are received in a lump sum payment;
amounts received by the family in the form of refunds or rebates under state or local law for property taxes paid on the dwelling unit;
amounts paid by a stale agency to a family with a developmental!}' disabled family member living at home to offset the cost of services and equipment needed to keep the developmentally disabled family member at home;
temporary, nonrecurring or sporadic income (including gifts); and
(t) amounts specifically excluded by any other federal statute from consideration as income for purposes of determining eligibility or benefits under a category of assistance programs that includes assistance under any program to which the exclusions set forth in 24 CFR 5.609(c) apply.
Assets.
(a) Do the persons whose income or contributions are included in Item above:
have savings, stocks, bonds, equity in real property or other form of capital
investment (excluding the values of necessary items of personal property such as
furniture and automobiles, equity in a housing cooperative unit or in a
manufactured home in which such family resides, and interests in Indian trust
land)? Yes _ _No.
have they disposed of any assets (other than at a foreclosure or bankruptcy
sale) during the last two years at less than fair market value'? Yes
No.
(b) If the answer to (i) or (ii) above is yes, does the combined total value of all such assets
owned or disposed of by -all such persons total more than $5,0,00? Yes
No.
(c) If the answer to (b) above is yes, stale:
the total value of all such assets:
the amount of income expected to be derived from such assets in the 12-
month period beginning on the date of initial occupancy of the unit that you propose
lo rent: $ and
(iii) the amount of such income, if any, that was included in Item 6 above: $
Full-time Students.
(a) Are all of the individuals who propose to reside in the unit full-time students?
Yes No.
A full-time student is an individual enrolled as a full-time student (carrying a subject load thai is considered full-time for day students under the standards and practices of the educational institution attended) during each of live calendar months during the calendar year in which occupancy of the unit begins at an educational organization which normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance or an individual pursuing a full-time course of institutional or farm training under the supervision of an accredited agent of such an educational organization or of a state or political subdivision thereof.
(b) If the answer to 8(a) is yes. arc at least two of the proposed occupants of the unit a
husband and wife entitled to lile a joint federal income tax return'.1 Yes No.
Relationship to Project Owner. Neither myself nor any other occupant of the unit I/we propose to rent is the Owner, has any family relationship to the Owner, or owns directly or indirectly any interest in the Owner. For purposes ofthis paragraph, indirect ownership by an individual shall mean ownership by a family member; ownership by a corporation, partnership, estate or trust in proportion to the ownership or beneficial interest in such corporation, partnership, estate or trust held by the individual or a family member; and ownership, director indirect, by a partner of the individual.
Reliance. This certificate is made with the knowledge that it will be relied upon by the Owner to determine maximum income for eligibility to occupy the unit and is relevant to the status under federal income tax law of the interest on obligations issued to provide financing for the apartment development for which application is being made. I/We consent to the disclosure of such information to the issuer of such obligations, the holders of such obligations, any fiduciary acting on their behalf and any authorized agent of the Treasury Department or the Internal Revenue Service. I/We declare that all information set forth herein is true, correct and complete and based upon information I/we deem reliable, and that the statement of total anticipated income contained in paragraph 6 is reasonable and based upon such investigation as the undersigned deemed necessary .
Further Assistance. I/We will assist the Owner in obtaining any information or documents required to verify the statements made herein, including, but not limited to, either an income verification from my/Our present employcrfs) Or copies of federal tax returns for the immediately preceding two calendar years.
Misrepresentation. I/We acknowledge that I/we have been advised that the making of any misrepresentation or misstatement in this declaration will constitute a material breach of my/our agreement with the Owner to lease the unit, and may entitle the Owner to prevent or terminate my/our occupancy of the unit by institution of an action for ejection or other appropriate proceedings.
[Signatures Appear on Following Page]
I/We declare under penalty of perjury that the foregoing is true and correct. Executed this
day of in _. Illinois
Applicant Applicant
Applicant Applicant
[Signature of all persons over the age of 18 years listed in 2 above required.]
SUBSCRIBED AND SWORN to before me this day of .
(NOTARY SEAL)
Notary Public in and for the State of ,
My Commission Expires:
FOR COMPLETION BY APARTMENT OWNER ONLY:
Calculation of eligible income:
Enter amount entered for entire household in 6 above: $
(T) if the amount entered in 7(c)(i) above is greater than $5,000, enter the total
amount entered in 7(c)(ii), subtract from that figure the amount entered in
7(c)(iii) and enter the remaining balance ($ _);
(2) multiply the amount entered in 7(c)(i) times the current passbook savings rate as determined by MUD to determine what the total annual earnings on the amount in 7(c)(ii) would be if invested in passbook savings
($ ), subtract from that figure the amount entered in 7(c)(iii)
and enter the remaining balance ($ ); and enter at right the
greater of the amount calculated under (I) or (2) above:
TOTAL ELIGIBLE INCOME (Line I .a plus line 1 .b(3)): $ _ .
T he amount entered in 1 .c is:
Less than 60% of Median Gross Income for Area.*'
More lhan 60% of+Median Gross Income for the Area***
3. Number of apartment unit assigned: _
Bedroom Size: Rent: $
The last tenants ofthis apartment unit for a period of 31 consecutive days [had/did not have] aggregate anticipated annual income, as certified in the above manner upon their initial occupancy of the apartment unit, of less than 60% of Median Gross Income for the Area.
Method used to verify applicant(s) income:
Employer income verification.
Copies of tax returns.
Other (_ . )
Borrower or Manager
'* Median Gross Income for the Area" means the median income for the area where the Project is located as determined by the Secretary of Mousing and Urban Development under Section 8(0(3) of the United States Housing Act of 1937. as amended, or if programs under Section 8(f) are terminated, median income determined under the method used by the Secretary prior to the termination. "Median Gross Income for the Area" shall be adjusted for family size.
?¦•See footnote 2.
INCOME VERIFICATION
(for employed persons)
The undersigned employee has applied for a rental unit loeated in a project financed by the City of Chicago. Every income statement of a prospective tenant must be stringently verified. Please indicate below the employee's current annual income from wages, overtime, bonuses, commissions or any other form of compensation received on a regular basis.
Annual wages
Overtime
Bonuses
Commissions
Total current income
1 hereby certify that the statements above are true and complete to the best of my knowledge.
Signature Date Title
I hereby grant you permission to disclose my income to MC Blue, LP, an Illinois limited partnership, or its related entity, in order that it may determine my income eligibility for rental of an apartment located in one of its projects which has been financed by the City of Chicago.
Signature Please send to:
1 INCOME VERIFICATION (for self-employed persons)
1 hereby attach copies of my individual federal and state income tax returns for the immediately preceding two calendar years and certify that the information shown in such income lax returns is true and complete to the best of my knowledge.
Signature Date
EXHIBIT C
CERTIFICATE OF CONTINUING PROGRAM COMPLIANCE
The undersigned, on behalf of Paseo Boricua Arts, LLC,, an Illinois limited liability company (the "Owner"), hereby certifies as follows:
The undersigned has read and is thoroughly familiar with the provisions of the Land Use Restriction Agreement, dated as of April 1, 2021 (the "Land Use Restriction Agreement"), between the City of Chicago and the Owner. All capitalized terms used herein shall have the meanings given in the Land Use Restriction Agreement.
Based on Certificates of Tenant Eligibility on file with the Owner, as of the date of this Certificate the following number of completed Units in the Project (i) are occupied by Qualifying Tenants (as such term is defined in the Land Use Restriction Agreement), or (ii) were previously occupied by Lower-Jncomc Tenants and have been vacant and not reoccupied except for a temporary period of no more than 31 days:
Occupied by Qualifying Tenants**** No of Units
Previously occupied by Qualifying Tenants (vacant and not reoccupied except for a
temporary period of no more than 31 days): _No of Units
Tlie total number of completed Units in the Project is .
The Total number in 2 is at least 40% of the total number in 3 above.
No Event of Default (as defined in the Land Use Restriction Agreement) has occurred and is subsisting under the Land Use Restriction Agreement, except as set forth in Schedule A attached hereto.
[Signature Appears on following Page]
* A unit all of the occupants of which are full-time students does not qualify as a unit occupied by Oualifving Tenants, unless one or more of the occupants was entitled to file a joint lax return.
C-l
PASEO BORICUA ARTS, LLC, an Illinois limited liability company
By: Paseo Boricua Arts Manager, LLC, an Illinois limited liability company, its Managing Member
By:
Name: Richard J. Sciortino Title: Manager
(.'-2