Construction Lease Agreement

EXHIBIT 10.34.1


THIS AGREEMENT IS SUBJECT TO ARBITRATION PURSUANT
TO THE FEDERAL ARBITRATION ACT AND/OR Section 15-48-10 OF
THE SOUTH CAROLINA CODE OF LAWS (1976), AS AMENDED ================================================================================


Construction Loan Agreement


among


Grande Palms, L.L.C., a single purpose, single asset limited liability company,


and


Bank of America, N.A.,
as Administrative Agent,


and


The Other Financial Institutions
Party Hereto,


and


Banc of America Securities LLC, as Lead Arranger


Dated as of April 27, 2005


[BANK OF AMERICA LOGO]


================================================================================


CONSTRUCTION LOAN AGREEMENT


(Syndication)


THIS CONSTRUCTION LOAN AGREEMENT ("Agreement") is made by and among each lender from time to time a party hereto (individually, a "Lender" and collectively, the "Lenders"), and Bank of America, N.A., a national banking association as Administrative Agent (the "Administrative Agent"); and Grande Palms, L.L.C., a Delaware single purpose, single asset limited liability company ("Borrower"), who agree as follows:


ARTICLE 1- THE LOAN


1.1 General Information and Exhibits. This Agreement includes the Exhibits listed below, all of which Exhibits are attached hereto and made a part hereof for all purposes. Borrower and Lenders agree that if any Exhibit to be attached to this Agreement contains blanks, the same shall be completed correctly and in accordance with this Agreement prior to or at the time of the execution and delivery thereof.


Exhibit "A" - Legal Description of the Land


Exhibit "B" - Basic Information


Exhibit "C" - Certain Conditions Precedent to the Loan Closing


Exhibit "C-1" - Certain Conditions Precedent to the Funding


Exhibit "D" - Budget


Exhibit "E" - Minimum Unit Release Prices


Exhibit "F" - Advances


Exhibit "F-I" - Draw Request


Exhibit "G" - Survey Requirements


Exhibit "H" - [Reserved]


Exhibit "I" - List of Required Bonds


Exhibit "J" - Assignment and Assumption


Exhibit "K" - Form of Promissory Note


Exhibit "L" - Schedule of Lenders


Exhibit "M" - Form of Guaranty


The Exhibits contain other terms, provisions and conditions applicable to the Loan. Capitalized terms used in this Agreement shall have the meanings assigned to them in the Basic Information set forth in Exhibit "B" (the "Basic Information"). This Agreement and the other Loan Documents, which must be in form, detail and substance satisfactory to Lenders, evidence the agreements of Borrower and Lenders with respect to the Loan. Borrower shall comply with all of the Loan Documents.


1.2 Purpose. The proceeds of the Loan shall be used by Borrower to pay (i) the cost of the construction of the Improvements on the Land and (ii) other fees, costs and expenses relating to the Property if and to the extent that such costs are specifically provided for in the Loan Allocation column in the Budget. The maximum principal Loan amount shall be $69,800,000.00 (the "Loan Amount"), the proceeds of which shall be used to develop the Project, which amount shall be evidenced by the Note. The Loan Amount shall be reduced, if the actual


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costs of construction are below the Loan allocations set forth in the Budget (as hereinafter defined), by an amount equal to the difference between the cost of construction set forth in the Budget and the actual cost of construction. The Note shall be in the maximum principal amount of $69,800,000.00.


1.3 Commitment to Lend. Borrower agrees to borrow the Loan from Lenders, and each Lender severally agrees to make advances of its Pro Rata Share of the Loan proceeds to Borrower in amounts at any one time outstanding not to exceed such Lender's Pro Rata Share of the Loan and (except for Administrative Agent with respect to Administrative Agent Advances), on the terms and subject to the conditions set forth in this Agreement and Exhibit "C", Exhibit "C-1" and Exhibit "F" attached to this Agreement. Lender's commitment to lend shall expire and terminate (a) automatically if the Loan is prepaid in full; and (b) automatically upon the occurrence of a Default. The Loan is not revolving. Any amount repaid may not be reborrowed.


1.4 Budget. Loan funds are allocated to payment of the costs of the Project shown in the "Loan Allocation" column of the Budget attached to this Agreement as Exhibit "D". Borrower shall not amend the Budget, or otherwise reallocate Loan funds from one Budget line item to another, in an amount in excess of $500,000.00 per occurrence subject to an aggregate total of $5,000,000.00 without the prior written approval of Administrative Agent, which approval shall not be unreasonably withheld or delayed. The Budget has been prepared by Borrower, and Borrower represents to Administrative Agent and Lenders that the Budget constitutes Borrower's good faith estimate of all costs incident to the Loan and the Project through the stated maturity date of the Loan (collectively, the "Aggregate Cost") after taking into account the requirements of this Agreement, including "hard" and "soft" costs, fees and expenses. Unless approved by Administrative Agent, which approval shall not be unreasonably withheld or delayed, no advance shall be made (a) for any cost not set forth in the Budget, (b) from any line item in the Budget that, when added to all prior advances from that line item, would exceed the lesser of (i) the actual cost incurred by Borrower for such line item, or (ii) the sum shown in the "Loan Allocation" column in the Budget for such line item (subject to Borrower's ability to reallocate such items as set forth in Section 1.4 herein), (c) from any contingency line item in excess of the amount of such line item, or (d) [Reserved]. Except for Borrower's ability to reallocate items as set forth in Section 1.4 herein, advances from any line item in the Budget for purposes other than those for which amounts are initially allocated to such line item, or changes in the relative amounts allocated to particular line items in the Budget may only be made with Administrative Agent's approval, which shall not be unreasonably withheld or delayed.


1.5 Borrower's Equity and Borrower's Deposit. Prior to the Closing Date and at all times during the term of the Loan, Administrative Agent must be satisfied that the actual Aggregate Cost does not exceed the total amount of the Loan plus the amounts of all equity investments in the Project made by Borrower for which funds are readily available. Administrative Agent reserves the right to require, at Borrower's expense, a construction cost takeoff by a consultant designated by Administrative Agent to assist in making such determination. If at any time Administrative Agent determines that the sum of: (1) any unadvanced portion of the Loan to which Borrower is entitled, plus (ii) the portions of the Aggregate Cost that are to be paid by Borrower from other funds that, to Administrative Agent's satisfaction, are available, set aside and committed, is or will be insufficient to pay the actual


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unpaid Aggregate Cost, Borrower shall, within seven (7) days after written notice from Administrative Agent, (i) cause Guarantor to sign an acknowledgment, in form satisfactory to Administrative Agent, that the Guaranty shall cover such shortages, or (ii) deposit with Agent equity funds in cash with Administrative Agent the amount of the deficiency ("Borrower's Deposit") in an interest-bearing account of Administrative Agent's selection with interest earned thereon to be part of Borrower's Deposit, or shall submit evidence to Administrative Agent of equity investments previously made, in amounts sufficient, in Administrative Agent's opinion, to equal any such shortage and Administrative Agent may refuse to make any additional advances under the Loan Documents until such Guarantor's acknowledgment or additional equity funds have been received. Any such Borrower's Deposit is hereby pledged to Administrative Agent and Lenders as additional security for the Loan, and Borrower hereby grants and conveys to Administrative Agent for the ratable benefit of Administrative Agent and Lenders a security interest in all funds so deposited with Administrative Agent, as additional security for the Loan. Administrative Agent may advance all or a portion of the Borrower's Deposit prior to the Loan proceeds. Administrative Agent may (but shall have no obligation to) apply all or any part of Borrower's Deposit against the unpaid Indebtedness in such order as Administrative Agent determines.


1.6 Evidence of Debt.


1.6.1 Amounts of the Loan made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loan made by the Lenders to the Borrower and the interest and payments thereon. Any failure to so record or any error in doing so shall not, however, limit or otherwise affect the obligation of the Borrower hereunder to pay any amount owing with respect to the Loans. In the event of any conflict between the accounts and records maintained by any Lender and the accounts and records of the Administrative Agent in respect of such matters, the accounts and records of Administrative Agent shall control in the absence of manifest error.


1.7 Interest Rate.


1.7.1 Initial Interest Rate. Initially, the Principal Debt from day to day outstanding which is not past due, shall bear interest at a fluctuating rate of interest equal to the Eurodollar Daily Rate plus two hundred twenty-five (225) basis points per annum.


1.7.2 Reduction of Interest Rate. Upon the achievement of all of the following, the unpaid principal balance of the Loan shall bear interest at a fluctuating rate of interest equal to the Eurodollar Daily Rate plus two hundred (200) basis points per annum:


(i) the Improvements shall be fifty-five percent (55%) complete, as
evidenced by AIA certification from the Project architect; and


(ii) no monetary Default has occurred and no Default has occurred
and is continuing under the Loan.


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1.7.3 General Interest Rate Provisions.


(a) The "Eurodollar Daily Rate" shall mean a fluctuating rate of interest equal to the one month rate of interest (rounded upwards, if necessary to the nearest 1/100 of 1%).appearing on Telerate Page 3750 ("Telerate Page 3750" means the British Bankers Association Libor Rates (determined at 11:00 a.m. London, England time) that are published by Bridge Information Systems, Inc.) or any successor page as the one month, two month or three month London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London time) on the second preceding Business Day, as adjusted from time to time in Administrative Agent's sole discretion for then applicable reserve requirements, deposit insurance assessment rates and other regulatory costs. If for any reason such rate is not available, the term "Eurodollar Daily Rate" shall mean the fluctuating rate of interest equal to the one month, two month or three month rate of interest (rounded upwards, if necessary to the nearest 1/100 of 1%) appearing on Reuters Screen LIBO Page as the one month, two month, or three month London interbank offered rate for deposits in U.S. Dollars at approximately 11:00 a.m. (London time) on the second preceding Business Day, as adjusted from time to time in Administrative Agent's sole discretion for then applicable reserve requirements, deposit insurance assessment rates and other regulatory costs; provided, however, if more than one rate is specified on Reuters Screen LIBO Page, the applicable rate shall be the arithmetic mean of all such rates.


(b) If Administrative Agent determines that no adequate basis exists for determining the Eurodollar Daily Rate or that any applicable law or regulation or compliance therewith by Administrative Agent prohibits or restricts or makes impossible the charging of interest based on the Eurodollar Daily Rate and Administrative Agent so notifies Borrower, then until Administrative Agent notifies Borrower that the circumstances giving rise to such suspension no longer exist, interest shall accrue and be payable on the unpaid principal balance of the Loan from the date Administrative Agent so notifies Borrower until the Maturity Date of the Loan (whether by acceleration, declaration, extension or otherwise) at a fluctuating rate of interest equal to the Prime Rate of Administrative Agent plus or minus such amount as may be necessary to approximate the rate per annum last assessed pursuant to this Section. The term "Prime Rate" means, on any day, the rate of interest per annum then most recently established by Administrative Agent as its "prime rate". Any such rate is a general reference rate of interest, may not be related to any other rate, and may not be the lowest or best rate actually charged by Administrative Agent to any customer or a favored rate and may not correspond with future increases or decreases in interest rates charged by other lenders or market rates in general, and that Administrative Agent may make various business or other loans at rates of interest having no relationship to such rate. Each time the Prime Rate changes, the per annum rate of interest on the Loan shall change immediately and contemporaneously with such change in the Prime Rate.


(c) Computations and Determinations. All interest shall be computed on the basis of a year of 360 days and paid for the actual number of days elapsed (including the first day but excluding the last day). Administrative Agent shall determine each interest rate applicable to the Principal Debt in accordance with this Agreement and its determination thereof shall be conclusive in the absence of manifest error. The books and records of Administrative Agent shall be prima facie evidence of all sums owing to Lenders from time to time under this Loan, but the failure to record any such information shall not limit or affect the obligations of Borrower under the Loan Documents.


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(d) [Reserved].


(e) Past Due Rate. Accrued and unpaid interest on past due amounts (including interest on past due interest) shall be due and payable on demand, at a rate per annum (the "Past Due Rate") equal to four percent (4%) per annum in excess of the interest rate in effect at the time of payment default. Provided, there is no Default and in accordance with the Budget, Lender shall pay itself interest from the Loan Proceeds when due and payable.


1.8 Prepayment. Borrower may prepay the principal balance of this Loan, in full at any time or in part from time to time without premium or penalty. Notwithstanding the foregoing, if Borrower at any time enters into an interest rate protection agreement whereby Borrower has purchased an interest protection product from Administrative Agent (an "Interest Rate Protection Agreement") and the Interest Rate Protection Agreement is in effect, Borrower shall pay to the Administrative Agent a prepayment fee calculated in accordance with the prepayment fee described in the Interest Rate Protection Agreement.


1.9 [Reserved].


1.10 Late Charge. If Borrower shall fail to make any payment due hereunder or under the terms of any Note (other than payments of interest to be funded by Lender to itself in accordance with the Budget as an Advance under the Loan) within fifteen (15) days after the date such payment is due, Borrower shall pay to the applicable Lender or Lenders on demand a late charge equal to four percent (4%) of such payment. Such fifteen (15) day period shall not be construed as in any way extending the due date of any payment. The "late charge" is imposed for the purpose of defraying the expenses of a Lender incident to handling such defaulting payment. This charge shall be in addition to, and not in lieu of, any other remedy Lenders may have and is in addition to any fees and charges of any agents or attorneys which Administrative Agent or Lenders may employ upon the occurrence of a Default, whether authorized herein or by law.


1.11 Taxes.


(a) Any and all payments by Borrower to or for the account of Administrative Agent or any Lender under any Loan Document shall be made free and clear of and without deduction for any and all present or future taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and all liabilities with respect thereto, excluding, in the case of Administrative Agent and any Lender, taxes imposed on or measured by its net income, and franchise taxes imposed on it (in lieu of net income taxes), by the jurisdiction (or any political subdivision thereof) under the Laws of which Administrative Agent or such Lender, as the case may be, is organized or maintains a lending office (all such non-excluded taxes, duties, levies, imposts, deductions, assessments, fees, withholdings or similar charges, and liabilities being hereinafter referred to as "Taxes"). If Borrower shall be required by any Laws to deduct any Taxes from or in respect of any sum payable under any Loan Document to Administrative Agent or any Lender, (i) the sum payable shall be increased as necessary so that after making all required deductions (including deductions applicable to additional sums payable under this Section), Administrative Agent and such Lender receives an amount equal to the sum it would have received had no such deductions been made, (ii) Borrower shall make such deductions, (iii)


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Borrower shall pay the full amount deducted to the relevant taxation authority or other authority in accordance with applicable Laws, and (iv) within 30 days after the date of such payment, Borrower shall furnish to Administrative Agent (which shall forward the same to such Lender) evidence of payment thereof.


(b) In addition, Borrower agrees to pay any and all present or future stamp, court or documentary taxes and any other excise or property taxes or charges or similar levies which arise from any payment made under any Loan Document or from the execution, delivery, performance, enforcement or registration of, or otherwise with respect to, any Loan Document (hereinafter referred to as "Other Taxes").


(c) [Reserved].


(d) Borrower agrees to indemnify Administrative Agent and each Lender for the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes imposed or asserted by any jurisdiction on amounts payable under this Section) paid by Administrative Agent and such Lender and any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, in each case whether or not such Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Tribunal. Payment under this subsection (d) shall be made within 30 days after the date the Lender or the Administrative Agent makes a demand therefor.


(e) Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained in this Section shall survive the termination of the Commitments and the payment in full of all the other Obligations.


1.12 Payment Schedule and Maturity Date.


(a) The principal of the Loan shall be due and payable in the form of Release Fees as described more particularly in paragraph (b) below. The entire principal balance of the Loan then unpaid and all accrued interest then unpaid shall be due and payable in full on the Maturity Date. Accrued unpaid interest shall be due and payable on the 15th day of the calendar month for the previous calendar month after the date of this Agreement, and Administrative Agent shall pay Lenders interest each month as an advance on the Loan, until all principal and accrued interest owing on this Loan shall have been fully paid and satisfied.


(b) Administrative Agent will release each condominium Unit from the lien of its mortgage upon (i) satisfaction of all requirements set forth in the Mortgage; (ii) payment, in each case, to Administrative Agent of a release fee ("Release Fee") equal to the greater of (a) 100% of the net sales proceeds of the applicable Unit, or (b) 92% of the gross sales price of the applicable Unit, subject to the minimum release price for each Unit set forth on Exhibit "E" attached hereto and incorporated herein by reference; (iii) receipt by Lender of fully executed copies of the sales contract and closing statement for each Unit to be so released; and (iv) receipt by Lender of appropriate releases to be executed. In all cases, such Release Fees shall be remitted to Administrative Agent at the closing of the sale of the Unit.


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1.13 Advances and Payments.


(a) Following receipt of a Draw Request, Administrative Agent shall promptly provide each Lender with a copy of the Draw Request Form in the form of Exhibit 7-l", the related AIA Document G-702 and G-703, with written certification by Borrower's Architect thereon and, if available, the related written certification of the Construction Consultant. Administrative Agent shall notify one designated person at each Lender telephonically (with confirmation by facsimile) or by facsimile (with confirmation by telephone) not later than 1:00 p.m. Administrative Agent's Time one (1) Business Day prior to the advance Funding Date for all advances of its Pro Rata Share of the Amount Administrative Agent has determined shall be advanced in connection therewith ("Advance Amount"). In the case of an advance of the Loan, each Lender shall make the funds for its Pro Rata Share of the Advance Amount available to Administrative Agent not later than 1:00 p.m. Administrative Agent's Time on the Funding Date thereof. After Administrative Agent's receipt of the Advance Amount from Lenders, Administrative Agent shall make proceeds of the Loan in an amount equal to the Advance Amount (or, if less, such portion of the Advance Amount that shall have been paid to Administrative Agent by Lenders in accordance with the terms hereof) available to Borrowers on the applicable Funding Date by advancing such funds to Borrowers in accordance with the provisions of Exhibit "F".


(b) All payments by Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment or setoff. Except as otherwise expressly provided herein, all payments by Borrower hereunder shall be made to Administrative Agent not later than 12:00 p.m. Administrative Agent's Time on the date specified herein. Administrative Agent shall promptly distribute to each Lender, such funds as it may be entitled to receive hereunder, (1) on or before 3:00 p.m. Administrative Agent's Time on the day Administrative Agent receives such funds, if Administrative Agent has received such funds on or before 12:00 p.m. (Administrative Agent's Time), or (ii) on or before 12:00 p.m. Administrative Agent's Time on the Business Day following the day Administrative Agent receives such funds, if Agent receives such funds after 12:00 p.m. Administrative Agent's Time.


(c) Except as otherwise provided herein, all payments by Borrower or any Lender shall be made to Administrative Agent at Administrative Agent's Office not later than the time for such type of payment specified in this Agreement. All payments received after such time shall be deemed received on the next succeeding Business Day. All payments shall be made in immediately available funds in lawful money of the United States of America.


(d) Upon satisfaction of any applicable terms and conditions set forth herein, Administrative Agent shall promptly make any amounts received in accordance with the prior subsection available in like funds received as follows: (1) if payable to Borrower, in accordance with Exhibit "F", except as otherwise specified herein, and (ii) if payable to any Lender, by wire transfer to such Lender at the address specified in the Schedule of Lenders.


(e) Unless Borrower or any Lender has notified Administrative Agent prior to the date any payment is required to be made by it to Administrative Agent, that Borrower or such Lender, as the case may be, will not make such payment, Administrative Agent may assume that Borrower or such Lender, as the case may be, has timely made such payment and may (but shall


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not be required to do so) in reliance thereon, make available a corresponding amount to the person or entity entitled thereto. If and to the extent that such payment was not in fact made to Administrative Agent in immediately available funds, then:


(i) if Borrower failed to make such payment, each Lender shall forthwith on demand repay to Administrative Agent the portion of such assumed payment that was made available to such Lender in immediately available funds, together with interest thereon in respect of each day from and including the date such amount was made available by Administrative Agent to such Lender to the date such amount is repaid to Administrative Agent in immediately available funds at the Federal Funds Rate from time to time in effect; and


(ii) if any Lender failed to make such payment, such Lender or, if applicable, Electing Lender or Lenders shall forthwith on demand pay to Administrative Agent the amount thereof in immediately available funds, together with interest thereon for the period from the date amount was made available by Administrative Agent to Borrower to the date such amount is recovered by Administrative Agent (the "Compensation Period") at a rate per annum equal to the interest rate applicable to such amount under the Loan. If such Lender pays such amount to Administrative Agent, then such amount shall constitute such Lender's Pro Rata Share, included in the applicable Loan advance. Nothing herein shall be deemed to relieve any Lender from its obligation to fulfill its Commitment or to prejudice any rights, which Administrative Agent or Borrower may have against any Lender as a result of any default by such Lender hereunder.


A notice of the Administrative Agent to any Lender with respect to any amount owing under this subsection shall be conclusive, absent manifest error.


(f) If any Lender makes available to the Administrative Agent funds for any Loan advance to be made by such Lender as provided in the foregoing provisions of this Section, and the funds are not advanced to Borrower or otherwise used to satisfy any Obligations of Lender hereunder, the Administrative Agent shall return such funds (in like funds as received from such Lender) to such Lender, with interest.


(g) Nothing herein shall be deemed to obligate any Lender to obtain the funds for any Loan advance in any particular place or manner or to constitute a representation by any Lender that it has obtained or will obtain the funds for any Loan advance in any particular place or manner.


(h) All Loan disbursements shall be made only in accordance with the Loan allocations in the Budget, the Cost Breakdown and the requirements for Loan disbursements contained in the Loan Documents. Furthermore, disbursements under the Note shall not commence until Borrower has met the pre-sales requirement described herein in Section 1.13(i) and the Loan has been syndicated in the manner described in Article 6 below. In addition, all construction-related disbursements shall be subject to the approval ...