LOAN PARTICIPATION AGREEMENT This Loan Participation Agreement entered into as of this _____ day of ___________, 20__, among _____________________________________________, a Massachusetts banking corporation with its principal office at ______________________________________ _______ (“Agent”), and ____________________________________________ (“Participating Lenders”). RECITALS Agent and Participating Lenders have agreed to make a loan in the amount of $__________ to the _____________________________________________ (“Borrower”) to finance the construction of _____________________________________________ (the “Project”) at _____________________________________________ (the “Premises”), as described in a loan application filed with Agent by Borrower. A copy of said loan application has been delivered to each Participating Lender, and its receipt is hereby acknowledged by each of them. This Agreement sets forth the relationships and understandings among Participating Lenders with respect to their participation in the Loan and between Participating Lenders collectively and Agent in relation to the administration and servicing of the Loan. SECTION 1. DEFINITIONS. As used in this Loan Participation Agreement, the following terms shall have the following meanings: (a) Agent: the person designated as Agent in the first paragraph of this Agreement and its successors and assigns; (b) Agreement: this Loan Participation Agreement;
(c) Borrower: _______________________________________________________ _______________; (d) Construction Loan Documents: the promissory note evidencing Borrower’s obligation to repay the Loan, the mortgage granted with respect to the Premises in order to secure repayment of the Loan, any guarantees given to secure the payment or performance of the liabilities and obligations of Borrower or others under any of the Construction Loan Documents, the construction loan agreement pursuant to which the Loan is being made to Borrower in order to finance the construction of the Project, any security agreements and Uniform Commercial Code financing statements made or issued in order to secure repayment of the Loan, any policies of insurance covering the Premises or the Project or the construction of the Project during the term of this Agreement insuring against loss or damage to the Premises or against public liability or against other risks relating to the Project, any contracts with architects, designers, engineers,
2
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm
builders or contractors relating to the design or construction of any portion or all of the Project, and any and all other documents or instruments required by or made or issued incident to or with respect to any of the foregoing; (e) Event of Default: any event occurring or state of facts existing which constitutes, or with the passage of time or giving of notice or both would constitute, a default or a breach of its obligations by Borrower, any Guarantor, or any architect, designer, engineer, builder or contractor under any of the Construction Loan Documents; (f) Guarantor or Guarantors: that person or those persons, if any, who have guaranteed in whole or in part the payment or performance of any of the liabilities or obligations of Borrower, any other Guarantor, or any architect, designer, engineer, builder or contractor under any one or more of the Construction Loan Documents; (g) Loan: the loan in the amount of $___________ which Agent and Participating Lenders are making to Borrower to finance the construction of the Project pursuant to the Construction Loan Documents; (h) Participating Lenders: the person or persons designated as Participating Lenders in the first paragraph of this Agreement and their respective successors and assigns, which term shall include the singular form thereof where the context so requires; (i) Participation Amount: the dollar amount of participation of each Participating Lender in the Loan as set forth in Schedule A hereto; (j) Premises: the land, together with any buildings or other improvements now existing or hereafter constructed thereon, located at _________________________________ ____________, as more particularly described in the mortgage granted in order to secure repayment of the Loan; (k) Project: the buildings and other improvements intended to be erected or installed on the Premises pursuant to one or more of the Construction Loan Documents; and (l) Proportionate Share: the percentage of participation of each of the several Participating Lenders in the Loan as set forth in Schedule A hereto. SECTION 2. PARTICIPATION IN THE LOAN. (m) Each Participating Lender agrees with each of the other Participating Lenders and with Agent to advance to Agent its proportionate Share of each advance required to be made to Borrower under the Construction Loan Documents, as and when such advances are thus required, up to its Participation Amount. Agent will give at least five (5) business days’ notice to each Participating Lender by telephone or telegram of the aggregate amount of the advance required to be made to Borrower under the Construction Loan Documents, the date when such advance is required to be made to Borrower, and the dollar amount of such Participating
3
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm
Lender’s Proportionate Share thereof; Agent may or may not confirm such telephone or telegram notice in a writing, but shall be under no obligation to do so. Each Participating Lender will deliver to Agent, in immediate collectible funds, the dollar amount of its Proportionate Share of such advance on or prior to the date when such advance is required to be made to Borrower under the Construction Loan Documents, as specified in such notice. (n) In addition, in the event that Agent, with the prior written consent of Participating Lenders whose Proportionate Shares total _____% or more in the aggregate, shall have determined to advance or expend additional funds with respect to the Project, each Participating Lenders will, upon receipt of five (5) business days’ notice from Agent by telephone or telegram, deliver to Agent the dollar amount of its Proportionate Share of such additional funds in immediately collectible funds, on or prior to the date specified by Agent in such notice; provided, however, that Participating Lenders shall be obligated to advance such additional funds only to the extent that, under the provisions of the Construction Loan Documents, the additional funds thus advanced or expended by Agent are required to be, or at the option of Agent may be, added to the principal amount of Borrower’s indebtedness on account of the Loan. (o) Notwithstanding the provisions of paragraph (a) of this Section 2, in the event that an Event of Default has occurred and has not been remedied, no Participating Lender shall be obligated to deliver funds pursuant to paragraph (a) of this Section 2 if Participating Lenders whose Proportionate Shares total _____% or more in the aggregate deliver their objections thereto in writing with Agent and all other Participating Lenders at least three (3) business days prior to the date specified in Agent’s notice as the date when the next advance to Borrower is required to be made under the Construction Loan Documents. In the event that such written objections by such number of Participating Lenders have been delivered within the period specified in the preceding sentence, Agent shall as soon as practicable return all funds (without interest thereon) which have been delivered by other Participating Lenders during that intervening period. SECTION 3. DUTIES AND AUTHORITIES OF THE AGENT. (p) The duties of Agent under this Agreement shall be: (1) to exercise reasonable efforts to see that the Construction Loan Documents are properly prepared, executed and delivered; (2) to retain custody and safekeeping of the Construction Loan Documents; (3) to receive, evaluate and pass upon requisitions from Borrower for advances pursuant to the Construction Loan Document; (4) to deliver to Participating Lenders notices of amounts to be delivered by them in accordance with the provisions of Section 2 of this Agreement; (5) to make advances of funds to Borrower and to exercise reasonable efforts to comply with all other obligations toward Borrower as required under the Construction Loan Documents; (6) to receive and to use reasonable efforts to review and evaluate reports concerning Borrower, Guarantors, the Premises, the Project and the Loan, and to furnish to Participating Lenders copies or summaries of so much of such reports as Participating Lenders may request or as Agent deems material in its sole and absolute discretion; (7) to receive payments of interest and principal and any other sums in repayment of the Loan or as otherwise required under the Construction Loan
4
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm
Documents, and, subject to the provisions of Section 4 of this Agreement (relating to compensation and expenses of Agent), to deliver to each Participating Lender the dollar amount of its Proportionate Share of such interest, principal and other funds as promptly as practicable after their receipt by Agent; (8) to keep accurate and detailed books, records and accounts with respect to all funds received, receivable, disbursed or disbursable by it pursuant to the Construction Loan Documents or this Agreement, to make all such books, records and accounts available for inspection to each Participating Lender at Agent’s business premises during normal working hours, and to furnish to Participating Lenders from time to time such copies thereof as they may reasonably request; (9) to review and inspect the progress of the construction of the Project and to report thereon to Participating Lenders at such times and with such frequency as Agent shall deem appropriate in its sole and absolute discretion; (10) to notify each Participating Lender of the occurrence or existence of any Event of Default which has not been remedied as promptly as practicable after Agent shall have received actual knowledge of its occurrence or existence, and in any event within thirty (30) days after Agent shall have received such actual knowledge; (11) to exercise reasonable efforts to cause Borrower and any Guarantors to comply with all of their obligations under the Construction Loan Documents; (12) in the event of a foreclosure sale of the Premises, unless otherwise agreed upon in writing by Participating Lenders whose proportionate shares total _____% or more in the aggregate, to bid upon such foreclosure sale up to an amount equal to the dollar amount of Borrower’s then indebtedness to Agent and Participating Lenders under the Construction Loan Documents; (13) in the event that Agent purchases the Premises at a foreclosure sale, to convey the Premises to Participating Lenders as tenants in common in proportion to their respective Proportionate Shares; and (14) upon the written request of Participating Lenders whose Proportionate Shares total _____% or more in the aggregate, to engage construction supervisors or other consultants or advisers to make studies of and to submit reports or recommendations with respect to any aspect of the Project or the Loan (and Agent may act in reliance upon the recommendations or advice of any such consultants or advisers). (q) Agent shall have the following powers and authorities, any or all of which it may exercise or not in its sole and absolute discretion (except as otherwise specifically provided in this Agreement): (1) in the event of the occurrence or existence of an Event of Default, to take possession of the Premises, to collect any rentals on the Premises, to conduct foreclosure proceedings and to bid for and sell or purchase the Premises in any foreclosure proceedings, to take such further action as it deems advisable in its sole and absolute discretion to collect any deficiency remaining after any foreclosure sale, and to exercise any and all other remedies permitted to mortgagees and secured parties under the laws of the jurisdiction wherein the Premises are located, including without limitation the Uniform Commercial Code, and all other applicable laws; (2) subject to the provisions of Section 2(b), to advance or expend such additional funds as it may be entitled to advance or expend under the provisions of the Construction Loan Documents to the extent that, under the provisions of the Construction Loan Documents, the additional funds thus advanced or expended by Agent are required to be, or at the option of Agent may be, added to the principal amount of Borrower’s indebtedness on account of the Loan; (3) to determine the application of any proceeds received by it on policies of insurance carried on the Premises or with respect to the Project, whether to the restoration or
5
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm
repair of loss or damage to the Premises, to the reduction of Borrower’s indebtedness, or as may otherwise be permitted under the provisions of the Construction Loan Documents; (4) to execute and deliver in its own name as agent for Participating Lenders the Construction Loan Documents and all other documents or instruments related to the Loan, the Premises or the Project; (5) to take all actions related to the Loan, the Premises or the Project, including the existence of an Event of Default, in its own name for the benefit of Participating Lenders in proportion to their Proportionate Shares; (6) to execute and deliver to Borrower or Guarantors consents, waivers or extensions of or in connection with the provisions of the Construction Loan Documents, provided, however, that without the prior written consent of all Participating Lenders, Agent shall not (but with such prior written consent may) execute and deliver any instrument or document which has the effect of (i) reducing the principal amount of Borrower’s indebtedness with respect to the Loan, (ii) decreasing the rate of interest payable by Borrower on its indebtedness with respect to the Loan, or (iii) releasing any mortgage on the Premises or any other collateral security for the Loan; (7) to engage construction supervisors, engineers, architects, property managers, brokers, attorneys or other consultants or advisers to make studies of and to submit reports or recommendations with respect to any aspect of the Project or the Loan, and to act in reliance upon the recommendations or advice of any such consultants or advisers; and (8) in general, to do any and all other things in relation to the Project or the Loan which it might do if it were the sole and exclusive lender and accordingly was not required to account to any Participating Lender for its actions. SECTION 4. COMPENSATION AND EXPENSES OF THE AGENT.* As compensation for Agent’s services under this Agreement, each Participating Lender hereby authorizes Agent to withhold from payments of interest on the Loan from time to time received from Borrower and to retain as its own funds an amount calculated at a per annum rate of _____% of the principal amount of the Loan from time to time outstanding, and to remit to Participating Lenders only the net amount of such interest received from Borrower after such withholding. In addition, each Participating Lender agrees to pay to Agent as promptly as practicable after Agent’s request therefor, or Agent may withhold and deduct from any funds it is otherwise obligated to disburse to such Participating Lender, such Participating Lender’s Proportionate Share of all costs and expenses, including attorneys’ fees and fees of other consultants or advisers, incurred by Agent in connection with the Loan (including in connection with the making, administration and servicing, and collection or attempted collection of the Loan) and its services as Agent hereunder, to the extent that such costs and expenses are not recovered from Borrower or Guarantors. SECTION 5. EXCULPATION AND INDEMNIFICATION OF THE AGENT.
*
Note: If Agent is to receive a one-time fee for its services, Section 3(a)(7) should be amended to remove reference to Section 4.
6
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm
(r) Each Participating Lender agrees that neither Agent nor any of its directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them hereunder or in connection herewith except for its or their own gross negligence or willful misconduct. Agent shall not be responsible to Participating Lenders for any recitals, statements, warranties or representations contained in the Construction Loan Documents or for its failure to ascertain or inquire as to the failure of performance or observance of any of the terms, conditions, covenants or agreements contained in the Construction Loan Documents by or on behalf of Borrower, any Guarantor or any architect, designer, engineer, builder or contractor under any of the Construction Loan Documents. Agent shall not be responsible to Participating Lenders for the due execution, genuineness, validity, enforceability or effectiveness of any of the Construction Loan Documents or for the description of, value of or title to the Premises or any other collateral for the Loan or for the creditworthiness of Borrower; and Agent shall be entitled to rely on any paper or document believed by it to be genuine and correct and to have been executed or sent by the proper person or persons. Except as otherwise specifically provided herein, Agent shall have no duty to take any affirmative steps to enforce any mortgage or security interest. Agent may execute any of its duties, powers or authorities hereunder by or through agents or employees, and shall be entitled to retain counsel and to act in reliance upon the advice of such counsel concerning all matters pertaining to its duties, powers and authorities hereunder and under the Construction Loan Documents. (s) Each Participating Lender hereby agrees to indemnify Agent and to hold Agent harmless from such Participating Lender’s Proportionate Share of any and all costs, expenses, damages or liabilities suffered or incurred by Agent by reason of its acting or having acted as Agent hereunder, except to the extent the same have resulted from gross negligence or willful misconduct of Agent or any of its directors, officers, agents or employees. SECTION 6. ASSIGNMENT OF PARTICIPATIONS. No Participating Lender shall at any time assign its interest in this Agreement or in any of the Construction Loan Documents except to another person with whom the remaining Participating Lenders may be legally entitled to participate in accordance with the terms of this Agreement. In the event any Participating Lender desires to assign its interest in this Agreement and in the Construction Loan Documents, it shall deliver a written notification to Agent and to all other Participating Lenders, which notification shall include and contain (a) the identity of the proposed assignee, (b) a complete and accurate description of the price, terms and conditions of such proposed assignment, and (c) an offer to the other Participating Lenders to make such assignment to them at the same price and upon the same terms and conditions as in the case of the proposed assignment to the proposed assignee. In the event that more than one of the remaining Participating Lenders elects to accept such offer, then the assigning Participating Lender shall assign or transfer its entire interest in this Agreement and the Construction Loan Documents to those remaining Participating Lenders who have accepted such offer in writing within fifteen (15) days after the date of delivery of the notification and offer, and the accepting Participating Lenders shall purchase such interest in proportion to the amounts of their respective Proportionate Shares within thirty (30) days after the date of such notification and offer. If such
7
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm
offer has not been accepted in writing by any of the remaining Participating Lenders within fifteen (15) days after the delivery of said notification and offer, the assigning Participating Lender may assign its interest to the proposed assignee at the price and upon the terms and conditions set forth in the notification and offer within thirty (30) days after the date of delivery of said notification and offer (but may not do so thereafter) if within said thirty (30) day period such assignee has delivered to Agent and to each remaining Participating Lender documentation in form and substance satisfactory to Agent and its counsel whereby the assignee has assumed all of the obligations and undertakings of the assigning Participating Lender under this Agreement, together with such opinions of counsel and other supporting documentation as Agent or its counsel may reasonably require. Provided, however, that notwithstanding the foregoing, no Participating Lender may assign or transfer all or any part of its interest in this Agreement or in the Construction Loan Documents if such assignment has been objected to in writing within fifteen (15) days after the date of such notification and offer by Participating Lenders whose Proportionate Shares total at least _____% in the aggregate; and provided further, that no Participating Lender may assign less than its entire right, title and interest in this Agreement and the Construction Loan Documents. Any assignment made or purported to be made in violation of this Section 7 shall be void ab initio and of no force and effect whatsoever. SECTION 7. TERM OF THIS AGREEMENT. The term of this Agreement shall commence on the date first above written and shall expire when Agent and each Participating Lender shall have fully performed and discharged all of their respective liabilities and obligations hereunder; except that this Agreement may be earlier terminated by a writing signed by Agent and all Participating Lenders. SECTION 8. AMENDMENT OF THIS AGREEMENT. This Agreement may be amended by a writing executed by Agent and Participating Lenders whose Proportionate Shares total _____% or more in the aggregate; except that without the written agreement of all Participating Lenders this Agreement may not be amended so as to empower or authorize Agent to execute and deliver any instrument or document which has the effect of (i) reducing the principal amount of Borrower’s indebtedness with respect to the Loan, (ii) decreasing the rate of interest payable by Borrower on its indebtedness with respect to the Loan, or (iii) releasing any mortgage on the Premises or any other collateral security for the Loan. SECTION 9. MISCELLANEOUS. (t) The interests of Participating Lenders under this Agreement may be (but need not be) evidenced by a Non-Negotiable Loan Participation Certificate issued by Agent. (u) Subject to the provisions of Section 6, this Agreement shall be binding upon and inure to the benefit of Agent and each Participating Lender and their respective successors and assigns.
8
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm
(v) This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed to be an original copy of this Agreement. (w) This Agreement shall be deemed to be a Massachusetts contract and shall accordingly be interpreted and performed in accordance with the laws of the Commonwealth of Massachusetts. (x) This Agreement shall have the effect of an instrument under seal.
IN WITNESS WHEREOF, Agent and each Participating Lender have caused the Agreement to be executed by their respective duly authorized officers as of the day and year first above written. Agent
Participating Lenders
9
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm
SCHEDULE A Participating Lender Participation Amount Proportionate Share
10
099998.000522 DEC LIBD/26673.2 12/06/01 04:36 pm