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HomeMy WebLinkAbout10-25-01 11. DISBURSING AGREEMENT /o- z ---01 DISBURSING AGREEMENT This DISBURSING AGREEMENT is made as of the 1st day of November,2001, by and between Orono Senior Housing,LLC, a Minnesota limited liability company(the"Borrower"), Wells Fargo U.S.Bank Minnesota,Trust National Association, a national association with trust powers,having its main office and place of business in Minneapolis,Minnesota, as trustee under the Indenture described below(the"Trustee"),and (the "Disbursing Agent"). Recitals WHEREAS,at the request of the Borrower,the City of Orono,Minnesota(the"City") is issuing$ in aggregate principal amount of its Senior Housing Revenue Bonds (Orono Woods Apartment Project), Series 2001 (collectively,the"Bonds"),pursuant to a Trust Indenture of even date herewith(the"Indenture")by and between the City and the Trustee; WHEREAS,pursuant to a Loan Agreement of even date herewith(the"Loan Agreement")entered into by and between the City,and the Borrower, and Wedum Foundation, a Minnesota nonprofit corporation and the Borrower's sole corporate member,the City has agreed to lend the proceeds of the Bonds to the Borrower to finance, among other things, a portion of the costs of developing, acquiring,constructing and equipping a 62-unit multifamily housing facility for seniors(the"Project"); and WHEREAS,the Indenture provides that a portion of the proceeds of the Bonds are to be deposited into a"Construction Account" in the Project Fund(as such accounts is created by the Indenture); WHEREAS,the purpose of this Agreement is to establish the terms and conditions on which amounts for Project Costs may be disbursed from the Construction Account, and Costs of Issuance may be disbursed from the Costs of Issuance Account;and NOW, THEREFORE, accordingly,the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.01 Defined Terms. For purposes of this Agreement,unless the context otherwise requires or unless specifically defined below or in the Recitals hereto, all words used herein which are defined in the Indenture shall have the same definition, scope or meaning as is given to them in the Indenture. "Architect"means ,the architects selected by the Borrower to prepare or cause to be prepared the Drawings and Specifications of the Project. "Architect's Contract"means the agreement by and between the Borrower and the Architect,pertaining to preparation of the Drawings and Specifications and supervision of construction. "Bond Proceeds"means the portion of the proceeds of the Bonds,together with all investment earnings thereon, on deposit from time to time in the Construction Account. "Completion Date"means the date of actual completion of the Project, as certified by the Borrower pursuant to Section 3.10 of the Loan Agreement, such date being anticipated by the Borrower to occur on or before November 1,2002. "Construction Contract"means the contract between the Borrower and the General Contractor for the construction of the Project. "Construction Account"means the fund created pursuant to 4.01 of the Indenture. "Contractor"means the General Contractor or any Subcontractor. "Costs of Issuance"means the Costs of Issuance defined in the Loan Agreement. "Disbursing Agent"means "Draw Request"means the form to be submitted to the Trustee and the Disbursing Agent when a disbursement is requested and which is referred to in Section 3.01 hereof and attached as Exhibit A hereto. "Drawings and Specifications"means the final drawings and specifications prepared by the Architect for construction and installation of the Project or any discrete portion thereof. "General Contractor"means "Indenture"means the Trust Indenture of even date herewith between the City and the Trustee. "Inspecting Architect"means "Land"means the land in the City upon which the Project is located. "Loan Agreement"means the Loan Agreement of even date herewith between the City and the Borrower. "Project Costs"means the Project Costs defined in the Indenture. "Manager"means Great Lakes Management Incorporated, a Minnesota corporation. "Mortgage"means the Combination Mortgage, Security Agreement, Fixture Financing Statement and Assignment of Leases and Rents of even date herewith from the Borrower to the City and assigned to the Trustee. "Management Contract"means the Management Agreement between the Borrower and the Manager delivered in connection with the issuance of the Bonds. "Subcontractor"means any person, including any subcontractor,who shall be engaged by the General Contractors or the Borrower to work on,or to furnish materials or supplies for the Project,the costs of which shall constitute Project Costs. "Working Capital Cost"means any cost that is not a Capital Expenditure(as defined in the Indenture). ARTICLE II Conditions of Disbursement Section 2.01 Conditions Precedent to Initial Disbursement. The obligation of the Trustee to make the initial disbursement from the Construction Account or the Costs of Issuance Account shall be subject to the condition precedent that the Borrower shall be in compliance with the conditions contained in Section 2.02 hereof and the further condition precedent that the Trustee shall have received on or before the date of such initial disbursement hereunder, in form and content acceptable to the Original Purchaser of the Bonds(which acceptance shall be conclusively presumed upon the purchase of the Bonds by the Original Purchaser),the following items: (a) A copy of the Drawings and Specifications, certified by the Architect and approved by the Inspecting Architect; (b) A copy of the executed Construction Contract; (c) A copy of the executed Architect's Contract; (d) Assignments of the Architect's Contract and Construction Contract by the Borrower to the Trustee(with consents to such assignments from the Architect and the General Contractor,respectively); (e) A copy of the executed Management Contract and Assignment of the Management Contract by the Borrower to the Trustee(with consent to such assignment from the Manager); (f) A current list of all Subcontractors; (g) A sworn construction cost statement duly executed by the Borrower and the General Contractors, showing estimates of all anticipated Subcontractors' contracts for specific portions of the work on the Project and the amounts anticipated to become due each such Subcontractor's contract, including all Projecty Costs of any kind incurred and to be incurred in constructing the Project; (h) A total project cost statement, incorporating estimates of the construction costs as shown on the sworn construction cost statement and setting forth all other costs and expenses of any kind anticipated to be incurred in completion and lease-up of the Project and sworn to by the Borrower to be a true, complete and accurate account of all costs actually incurred and a reasonably accurate estimate of all costs to be incurred in the future with respect to the Project; (i) Schedule evidencing the Borrower's and General Contractor's reasonable expectations as to the timing of the construction of the Project, signed by the Borrower and the General Contractor; (j) Copies of a building or any other permit required to commence construction of the Project, including any required foundation and grading permits; (k) Letters from utility companies establishing that all utilities necessary for the construction and operation of the Project are available at the boundaries of the Land, including without limitation,water, sewer, electricity, and gas,and that the Borrower has the right to connect to and use such utilities for the Project; (1) A financing statement,naming the Trustee as secured party, duly executed by the Borrower as debtor,describing the collateral as the personal property and fixtures covered by the Mortgage; (m) Copies of policies(or binders or commitments therefor)for all hazard, builders' risks, liability,and workers' compensation insurance required under the Mortgage or the Loan Agreement; (n) A policy of flood insurance showing the Trustee as a mortgagee payee and containing a thirty day cancellation clause, or evidence that the Project is not located within a flood plain; (o) An ALTA form of lender's extended coverage policy of title insurance (or a binding commitment therefor), as provided in Section 4.05 hereof, payable to the Trustee in an amount not less than the face amount of the Bonds(and the Subordinate Bonds,as described in the Indenture) stating that the Borrower is fee owner of has a leasehold interest in the Land and insuring that the mortgagee's interest under the Mortgage is a valid first lien on the Land, subject only to Permitted Encumbrances, as defined in the Mortgage(the"Title Insurance Policy"); and (p) A survey prepared by a registered land surveyor in accordance with "Minimum Standard Detail Requirements for ALTA/ASCM Land Title Surveys,"jointly established and adopted by ALTA and ASCM in 1992 certifying to the Trustee and Disbursing Agent the description of the Land and all structures, improvements, encroachments or within the boundaries of the Land. Section 2.02 Further Conditions Precedent to All Disbursements from Construction Account. The obligation of the Trustee to make the initial disbursement of amounts in the Construction Account for Project Costs, and each subsequent disbursement hereunder, shall be subject to the condition precedent that the Borrower shall be in compliance with all conditions set forth in Section 2.01 hereof, and the further condition precedent that on the date of such disbursement: (a) No Event of Default under the Indenture,the Loan Agreement, or the Mortgage,or any other event which would constitute such an Event of Default but for the requirement that notice be given or that a period of grace or time elapse, shall have occurred and be continuing; (b) The disbursement requirements set forth in Section 3.01 hereof have been satisfied; (d) If requested by the Trustee or the Disbursing Agent,the Trustee and the Disbursing Agent shall be furnished with a statement of the Borrower and of any Contractor, in form and substance satisfactory to the Disbursing Agent, setting forth the names, addresses and amounts due or to become due as well as the amounts previously paid to every Contractor,person, firm or corporation furnishing materials or performing labor for any part of the Project; (e) All necessary licenses,permits and building permits for work done shall have been obtained and no license or permit necessary for the construction of the Project shall have been revoked or the issuance thereof subjected to challenge before any court or other governmental authority having or asserting jurisdiction thereover; (f) Title to the Land shall be subject to no encumbrances other than Permitted Encumbrances,regardless of whether any lien, encumbrance or other question existed at the time of a prior disbursement; and (g) The Disbursing Agent shall have received a written approval of the Inspecting Architect for payment of any Project Costs based upon a written request by the Borrower and a certificate for payments that the persons to be paid out of the requested payment,or the persons paid by the Borrower and for which reimbursement is sought,have satisfactorily completed the work and/or furnished the materials for which payment is requested. Section 2.03 Conditions Precedent to the Final Disbursement from the Construction Account. The making of the final disbursement by the Trustee from the Construction Account for the payment of Project Costs(excluding the release of amounts remaining therein to the Seller as provided in Section 4.03 of the Indenture) shall be subject to the condition precedent that the Borrower shall be in compliance with all conditions set forth in Sections 2.01 and 2.02 hereof and, further,that the following conditions shall have been satisfied prior to the Completion Date: (a) The Project Facilities have been substantially completed in accordance with the Drawings and Specifications as certified by the Borrower and the Inspecting Architect and the Trustee and all conditions set forth in Sections 3.03, 3.05 and 3.10 of the Loan Agreement have been satisfied; (b) The Trustee and Disbursing Agent shall have received satisfactory evidence that all requisite certificates of occupancy and other approvals have been issued; and (c) The Disbursing Agent shall have received a lien waiver from each Contractor for all work done and for all materials furnished by it for the Project; and (d) The Trustee and Disbursing Agent shall have received an as-built survey of the Project Facilities prepared after completion of all permanent improvements; and (e) An update to the Title Insurance Policy issued pursuant to the Commitment as described below. Section 2.04 Waiver. The Disbursing Agent may, in its sole discretion,without notice to or consent from any other party,waive any or all conditions for disbursement set forth in Articles II or III hereof. However,the making of any disbursement prior to fulfillment of any condition therefor shall not be construed as a waiver of such condition,and the Disbursing Agent shall have the right to require fulfillment of any and all such conditions prior to authorizing any subsequent disbursement. ARTICLE III Disbursement Procedures Section 3.01 Requests for Disbursement. (a) Whenever the Borrower desires a disbursement to be made hereunder, which shall be no more often than monthly,the Borrower shall submit to the Trustee and the Disbursing Agent a Draw Request, duly executed on behalf of the Borrower, setting forth the information required therein. Each Draw Request shall be filed at least 3 days before the date the disbursement is desired. Each Draw Request shall be limited to amounts equal to(i)the total of such costs actually incurred and owing(or previously paid)by the Borrower to the date of such Draw Request for work performed on the Project, plus(ii)the cost of materials and equipment not incorporated in the Project,but delivered to and suitably stored at the Project site; less,(iii) any required holdbacks required under the Contracts,and less(iv)the amount of all prior disbursements for such costs from the Construction Account. Notwithstanding anything herein to the contrary,no disbursements for materials stored at the Project site will be authorized unless the Borrower shall advise the Disbursing Agent and the Trustee of its intention to so store materials prior to their delivery, and provide adequate security for such storage. Each Draw Request shall constitute a representation and warranty by the Borrower that all representations and warranties set forth in the Loan Agreement are true and correct as of the date of such Draw Request and that all conditions precedent to the disbursement requested thereby have been fulfilled. Project Costs shall be separately identified in each Draw Request. Costs of issuance shall be paid solely from the Costs of Issuance Account,and unless otherwise permitted in the Indenture, all all Project Costs shall be paid from the Construction Account. (b) At the time of submission of each Draw Request, the Borrower shall submit to the Disbursing Agent the following: (i) A written lien waiver from each Contractor for work done and materials supplied by it,which were paid for pursuant to the last preceding Draw Request, and a lien waiver from the General Contractor for the current Draw Request; and (ii) Such other supporting evidence as may be requested by the Disbursing Agent to substantiate all payments which are to be made out of the relevant Draw Request and/or to substantiate all payments then made with respect to the Project. (c) If on the date a disbursement is desired,the Borrower has performed all of its agreements and complied with all requirements theretofore to be performed or complied with hereunder, including satisfaction of all applicable conditions precedent contained in Article II hereof,the Trustee shall make a disbursement to the Disbursing Agent in the amount of the requested disbursement, or such lesser amount as shall be approved, and the Disbursing Agent will disburse such funds in accordance with the terms of Article IV hereof. Section 3.02 Deposit of Funds by Borrower. If the Trustee or the Disbursing Agent shall at any time in good faith determine that the amount of funds then on deposit in Construction Account is less than the amount required to pay all Project Costs of any kind which reasonably may be anticipated in connection with the completion of the Project,the Borrower agrees that it will,within 10 calendar days of receipt of any such notice, deposit with the Disbursing Agent or the Trustee the amount of funds specified in the notice and shall authorize the Trustee and the Disbursing Agent to disburse such funds prior to disbursement of any additional Bond proceeds. Section 3.03 Excess Funds in Project Fund;Release. Excess funds in the Construction Account or the Costs of Issuance Account will be applied as provided in the Indenture. ARTICLE IV Obligations of the Disbursing Agent Section 4.01 Approval of Documents; Delivery of Funds to Disbursing Agent. The Borrower shall deliver to the Trustee and the Disbursing Agent each Draw Request,together with all such supporting documents related thereto. Not later than five business days following receipt of a Draw Request complying with the requirements hereof,the Disbursing Agent will orally notify the Trustee whether it has received lien waivers from all Contractors who were to have been paid out of the proceeds of the disbursement made in response to the last previous Draw Request. If any such lien waivers are missing,the Disbursing Agent will promptly advise the Trustee and the Borrower of the missing lien waivers. If the missing lien waivers are furnished, or if the Trustee is initially notified by the Disbursing Agent that all required lien waivers have been delivered to it, and all conditions precedent set forth in Articles II and III hereof have been satisfied,the Trustee shall transmit to the Disbursing Agent the amount of the disbursement applied for in the relevant Draw Request,or so much thereof as shall be approved and the Disbursing Agent will disburse such funds in accordance with Section 4.02 hereof. Section 4.02 Disbursement of Funds by Disbursing Agent. Upon receiving the funds transmitted to it pursuant to Section 3.01(c)hereof and subject always to contrary instructions from Trustee,the Disbursing Agent will pay each Contractor and other person identified in the relevant Draw Request(or the Borrower if permitted Project Costs have been paid previously by the Borrower)the amount shown therein or, if less,the amount approved by the Trustee. The Disbursing Agent will make each such payment conditional on the payee's acceptance of the payment constituting a waiver of all payee's mechanics' lien claims against the Project for work and materials paid for by such payment. Notwithstanding the foregoing,the Disbursing Agent shall make no disbursement for a Project Cost unless the Title Insurance Policy, or any endorsement thereto shall insure the priority of the lien of the Mortgage over all mechanics liens arising theretofore arising in connection with the Project. If, for any reason,any of said funds on deposit in the Disbursing Agent's account are not disbursed by the Disbursing Agent by the close of business on the seventh business day following credit of funds to its account,the Disbursing Agent will forthwith remit to the Trustee for credit to the subaccount from which such amounts were withdrawn, in immediately available funds,the amount of funds that were not so disbursed. The Disbursing Agent shall not be liable to the Borrower or the Trustee for interest on funds deposited with it, except and to the extent that the Disbursing Agent fails to remit to the Trustee undisbursed funds deposited with it in accordance with this Section 4.02, in which event interest shall be payable on demand to the Trustee for credit to the applicable subaccount of Project Account at the rate provided in the Bonds from the date such funds were deposited with the Disbursing Agent. Section 4.03 Books and Records. The Disbursing Agent will keep and maintain, at all times, full,true and accurate books and records, in sufficient detail to reflect the disbursements made by it hereunder. The Trustee,acting by and through its officers,employees and agents, may, at any time and from time to time, during normal business hours, examine all books and records of the Disbursing Agent pertaining to disbursements made by it hereunder and make extracts therefrom and copies thereof. Section 4.04 Exculpation. Neither the Trustee nor the Disbursing Agent nor any of their respective directors, officers or employees shall be liable for any action taken or omitted by it or them,except for its or their own negligence,bad faith or willful misconduct; nor shall they be liable or responsible for the validity,enforceability or sufficiency of any document furnished to the Disbursing Agent pursuant to Article II or III hereof,nor shall they be responsible for any representations or statements made in any of those documents; provided,however,that if the Disbursing Agent shall obtain actual knowledge of any misrepresentation in any documents furnished to it under this Agreement, it shall promptly notify the Trustee and the Borrower in writing of such misrepresentation. The Disbursing Agent shall be entitled to rely upon advice of counsel concerning legal matters and upon any document or notice delivered to it hereunder which it believes to be genuine or to have been presented by a proper person. A disbursement by the Disbursing Agent shall not be deemed to be an approval by it or the Trustee of any work performed on the Project or any materials furnished with respect thereto or a representation by it that the unused Bond proceeds are sufficient to pay remaining construction costs. It is expressly understood that the provisions of this Section 4.04 are applicable only to the Disbursing Agent's actions or omissions in the performance of its duties under Sections 4.01,4.02 and 4.03 hereof, and that none of the provisions of this Section 4.04 shall relieve it from the obligation to issue its title insurance policy in accordance with the provisions of Section 4.05 hereof. Section 4.05 Title Insurance. Whether or not any work was commenced on the Land prior to the recording of the Mortgage,the Disbursing Agent acknowledges that it will issue its ALTA-1992 mortgagee's title insurance policy to the Trustee,pursuant to the Disbursing Agent's Commitment No. 45029C ,(the"Commitment")effective on the date of issuance of the Bonds and to be updated to the date of recording of the Mortgage,regardless of the period of time that has elapsed since the date of such Commitment, insuring the mortgage lien granted pursuant to the Mortgage to be a valid first lien,on the Land securing the full amount of all disbursements(i)paid out or to be paid out by the Disbursing Agent pursuant to Section 4.02 of this Agreement, or(ii)otherwise disbursed by the Trustee or the Disbursing Agent in any manner to or for the account of the Borrower under the Indenture or the Loan Agreement(but not in excess of the amount set forth in said Commitment). Such policy shall be issued without so- called"pending disbursements"clauses or endorsements,and the mortgage lien so insured shall not be subject to any claims or encumbrances except as contained in the Commitment. ARTICLE V Miscellaneous Section 5.01 Binding Effect; Governing Law. This Agreement shall be binding upon the parties hereto and their respective successors and assigns; provided,however,that the Disbursing Agent may not delegate its duties hereunder. This Agreement is made solely by the signatory parties hereto, and no other persons(except the successors and assigns of the signatory parties)shall have any right to rely on or enforce or have the benefit of any provision of this Agreement. This Agreement shall be governed by the laws of the State of Minnesota. Section 5.02 Amendments. This Agreement can be amended or modified only by a writing signed by the parties hereto. IN WITNESS WHEREOF,the parties hereto have each caused this Agreement to be duly executed as of the day and year first above written. WELLS FARGO U.S.BANK MINNESOTA,TRUST NATIONAL ASSOCIATION,as Trustee By Its [Signature page to Disbursing Agreement] ORONO SENIOR HOUSING,LLC as Borrower By Its [Signature page to Disbursing Agreement] ,as Disbursing Agent By Its [Signature page to Disbursing Agreement] EXHIBIT A TO DISBURSING AGREEMENT DRAW REQUEST Draw Request No._ CITY OF ORONO,MINNESOTA SENIOR HOUSING REVENUE BONDS (ORONO WOODS APARTMENTS PROJECT) SERIES 2001 Wells Fargo U.S.Bank Minnesota, Trust National Association Sixth&Marquette 180 East Fifth Street,2nd Floor Minneapolis, St. Paul,Minnesota 55479 55101 Ladies and Gentlemen: Pursuant to Section 4.03 of the Trust Indenture,dated as of November 1, 2001 (the "Indenture"), between the City of Orono,Minnesota and Wells Fargo U.S.Bank Minnesota, Trust National Association(the"Trustee"), Section 3.03 of the Loan Agreement dated as of November 1,2001, between the City,Orono Senior Housing,LLC(the"Borrower")and Wedum Foundation, and Section 3.01 of a Disbursing Agreement, dated as of November 1,2001, between the Borrower,the Trustee and the Disbursing Agent identified therein,the Borrower hereby requests that you remit$ to the payees identified on Exhibit A, for the payment of Project Costs from the Construction Account of the Project Fund created under the Indenture. All capitalized terms herein are used with the meanings ascribed to such terms in the Indenture. The Borrower certifies as follows that attached hereto on Exhibit A are: (a) The name and address of the person, firm or Borrower to whom payment is due or has been made; (b) The amount to be paid or which has been paid and evidence of the same whether by invoice, statement for services or otherwise; (c) The purpose for which the obligation to be paid was incurred (with Project Costs and Costs of Issuance separately identified); (d) Accompanying this Draw Request is a duly completed Form G702(and any necessary continuation sheets)setting forth by line item the Project Costs heretofore paid,those requested for payment, and those remaining to be incurred and paid, duly executed by an authorized representative of the Borrower and by the General Contractor; (e) Accompanying(or preceding)this Draw Request are lien waivers from each Contractor for lienable materials, supplies or labor provided with respect to the Project through the last preceding Draw Request; (f) Accompanying(or preceding)this Draw Request is a lien waiver from the general contract for all lienable materials, supplies or labor for which payment by this Draw Request is requested; and (g) Accompanying(or preceding)this Draw Request is a written approval of the Inspecting Architect stating in effect that the persons to be paid out of such requested payment, or the persons paid by the Borrower and for which reimbursement is sought, have satisfactorily completed the work and/or furnished the materials for which payment is requested. The Borrower also certifies as follows: (1) Each item for disbursement request constitutes a Project Cost or a Cost of Issuance as defined in the Loan Agreement,properly incurred for the Project in accordance with the Loan Agreement; (2) Each item is properly payable under the terms of the Indenture, the Loan Agreement and the Disbursing Agreement; (3) No item requested for payment hereby has been included in a former Draw Request; (4) Amounts in the Construction Account, and reasonably anticipated earnings to be deposited in the Construction Account, are not less than the amounts required to pay all Project Costs of any kind which reasonably may be anticipated in connection with the completion of the Project; and (5) No event of default by the Borrower has occurred under the Loan Agreement which has not been remedied. Dated: ,200 By Its