The Parties to this Agreement, dated [date], are [construction lender] (Bank), [Borrower] (Borrower), and [permanent lender] (Purchaser).
On [date], Purchaser issued a Commitment (Purchaser's Commitment) to make a loan to Borrower to be secured by a
mortgage on the Premises (defined in Paragraph 1.3 of this Agreement). A copy of the Purchaser's Commitment is
attached to this Agreement as Exhibit A [omitted]. The purpose of this Agreement is to facilitate the construction and permanent financing of improvements to the Premises by Borrower.
ARTICLE 1
Definitions
The terms defined in this Article 1 shall have the meaning specified unless the context expressly or by necessary implication requires otherwise.
1.1 "Loan Documents" means the [$ amount] note and its respective mortgage, the assignment of rents executed as security for (or in connection with) the Loan made by Bank to Borrower, and all other documents (with the exception of any guarantees evidencing or securing the Loan) executed in support of the Loan.
1.2 "Closing Date" means the date designated in writing by Borrower. It shall be after the satisfaction of the conditions of the Purchaser's Commitment but before the expiration of the Commitment.
1.3 "Premises" means the Premises and Improvements referred to in the Purchaser's Commitment and described in detail by the title report, the survey, and the plans and specifications (attached to this Agreement as Exhibit B [omitted]). In the event of a conflict between the Purchaser's Commitment and the descriptions in Exhibit B, the latter shall govern.
ARTICLE 2
Closing Date
On the Closing Date, the following events shall take place in the following order:
2.1 Borrower shall pay Bank the accrued interest on the Loan Documents.
2.2 Bank shall sell, assign, and endorse, without recourse, the Loan Documents to Purchaser for [$ amount], and Bank and Borrower shall give Purchaser an affidavit executed by authorized officers of Bank. The affidavit shall state that no principal payment has been made on the note and specify the amount of principal owing under the note. If Purchaser so elects, however, new Loan Documents satisfactory to it may be used.
2.3 Borrower shall execute any documents required by Purchaser or its counsel to fulfill the terms of the Purchaser's Commitment, including any other evidence of debt and any other security instruments required by the Purchaser's Commitment.
ARTICLE 3
Purchaser's Acknowledgment
Purchaser acknowledges that the Purchaser's Commitment is in effect and that the following items have been obtained, approved, or waived.
3.1 The substitution of Borrower as Owner and Borrower in place of the borrower named in the Purchaser's Commitment.
3.2 The plans and specifications for the improvement of the Premises, prepared by [name], dated [date], and approved by Architect referred to in Paragraph 3.5.
3.3 Site plans, the survey by [name], dated [date], (subject to amendment and redating after the improvements), and a completion survey subject to additional, insubstantial exceptions for the Project.
3.4 Title insurance for the Premises by [name of title company], as shown in the title binder of [name], containing title insurance provisions, state of title, and survey exceptions (attached to this Agreement as Exhibit C [omitted]).
3.5 The designation of [name] as Architect with the duty to certify the final completion inspection.
3.6 The appraisals and feasibility studies required by the Purchaser's Commitment.
3.7 The receipt of all fees payable under the Purchaser's Commitment as of the date of this Agreement.
3.8 All credit information on Borrower and the shareholders of Borrower as required by the Purchaser's Commitment.
3.9 Physical inspection of the Premises as of the date of this Agreement.
3.10 Completion of the Loan Documents.
3.11 Legal opinions about zoning laws, all governmental regulations and ordinances, the requirements of doing business, corporate organization, the enforceability of the Loan Documents, litigation to which Borrower is or may become a party, tax liability (including interest equalization taxes), the applicability of usury laws and any additional legal opinions required by the Purchaser's Commitment. Copies of these opinions are attached to this Agreement as Exhibit D [omitted].
3.12 Insurance in the amounts and under terms and conditions required by the Purchaser's Commitment.
3.13 The soil report prepared by [name], dated [date].
3.14 All leasing and tenancy requirements specified in the Purchaser's Commitment.
3.15 The tax survey contract required by the Purchaser's Commitment.
3.16 Certified copies of the documents concerning Borrower's acquisition of the Premises.
3.17 Evidence of Borrower's cash equity of at least [$ amount] in the Premises.
ARTICLE 4
Subordinate Construction Loan
Purchaser consents to the making of a subordinate construction loan by Bank for the completion of the improvements to the Premises. In addition, Purchaser consents to a purchase of that loan by a permanent lender or, at the option of the owner of the Premises, permanent financing by sale-leaseback and leasehold mortgage with other investors or lenders, provided that any such financing and/or equity investment shall be subordinate to the lien of the Loan Documents as of the date [of Purchaser's purchase of them], or subordinate to any new Loan Documents elected by Purchaser pursuant to Paragraph 2.2.
ARTICLE 5
Disbursement of Funds
Purchaser agrees to disburse funds to Borrower in accordance with the Purchaser's Commitment when the improvements to the Premises are substantially completed.
ARTICLE 6
Assignment of Interest
Borrower assigns all of its right, title, and interest in and to the Purchaser's Commitment to Bank, and grants Bank a security interest in the Commitment. Purchaser agrees to the assignment and grant of the security interest. Purchaser also agrees to make the Loan provided for in the
Purchaser's Commitment to Bank or its designee if Borrower is not the owner of the Premises on the Closing Date and if Bank has complied with all of the requirements of the Purchaser's Commitment applicable to it.
ARTICLE 7
Extensions of Time
If there is an insured casualty to the Premises, Purchaser agrees that Borrower may (at his option) extend the dates of funding of the Purchaser's Commitment for the time necessary to restore the Premises, provided the restoration is commenced promptly and completed within a reasonable time. If a foreclosure proceeding is pending or has taken place on the date of funding of the Purchaser's Commitment, Bank may elect to adjourn that date for a reasonable time to permit completion of construction and completion of the foreclosure proceedings by Bank.
ARTICLE 8
Changes in Plans
Purchaser consents to any nonsubstantial changes in the plans and specifications approved by Bank.
ARTICLE 9
Closing Date
The Closing Date shall be designated with thirty days' notice on a date permitted by the Purchaser's Commitment. There shall be one joint closing at the office of Bank, and all payments made pursuant to this Agreement shall be in federal funds. Purchaser agrees that no "time is of the essence" requirement in the Purchaser's Commitment shall be exercised to the detriment of Bank or its designee.
ARTICLE 10
Miscellaneous Provisions
10.1 This Agreement shall inure to the benefit of, and be binding on, the Parties to it and their respective heirs and assigns.
10.2 The laws of the State of [state] shall govern this Agreement and the Purchaser's Commitment.
10.3 Approvals made by Purchaser pursuant to this Agreement shall include approvals of Purchaser's counsel referred to in the Purchaser's Commitment.
10.4 Borrower agrees to comply with all provisions of the Purchaser's Commitment.
10.5 This Agreement shall not change any right or remedy granted under the Loan Documents to Bank if Borrower defaults.
[Signatures,
dates]
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