7523 - Commitment Letter - Real Estate Project Specific

7523 - Commitment Letter - Real Estate Project Specific

______

______

Phone:

Fax:

______, 20___

Borrower Name

Address

Attn:

Dear Sirs:

Alberta Treasury Branches has approved and offers financial assistance on the terms and conditions in the attached Commitment Letter. [Include the following if this is a renewal – This agreement amends and restates in its entirety our letter dated ______, 20___. Any borrowings outstanding under that letter agreement are deemed to be Borrowings hereunder under the related facility referenced herein.]

You may accept our offer by returning the enclosed duplicate of this letter, signed as indicated below, by 4:00 p.m. on or before ______, 20___ [10 days from the date on letterhead] or our offer will automatically expire. We reserve the right to cancel our offer at any time prior to acceptance.

Thank you for your [continued] business.

Yours truly,

ALBERTA TREASURY BRANCHES

By:

[Name,] Director

By:

[Name,] Associate Director

Encl.

Accepted this ____ day of ______, 20___
Borrower Name
Per:
Per: /
Individual Guarantor Name (if applicable)
Guarantor Name (other than Individual) (if applicable)
Per:
Per:

Name of BorrowerDate
Page 1 of 18

LENDER:ALBERTA TREASURY BRANCHES

BORROWER:

GUARANTOR(S) (If applicable):

1.amounts and types of facilities (each referred to as a "Facility")

[Insert appropriate description as per AFC – examples follow]

Facility #1 –Non-Revolving Demand Loan Facility – Cdn. $______

(a)Facility #1 is available by way of Prime-based loans in Canadian dollars.

(b)Facility #1 is to finance [the land purchase/land refinancing/grading/hard development costs/soft development costs/development charges, etc.] of the land development involving the Project Lands.

The costs associated with the Project Lands based on Borrower's preliminary development budget and the agreed upon funding sources of those costs is summarized as follows:

Costs
List Major cost items
Total: $ / Source of Funds
List Major Source of Funds
Total: $

(c)Facility #1 is available by way of [one draw/multiple draws] on or before ______, 20___ subject to the notice periods provided hereunder. Any amount not drawn down at that date will be cancelled and no longer available to Borrower. [delete or modify as applicable]. Furthermore, Lender may cancel the availability of Facility #1 if the initial advance against this Facility is not funded by ______, 20___.

(d)The maximum amount (the "Maximum Facility #1 Loan Amount") available under Facility #1 will not exceed the lesser of:

i)[$______]; and

ii)____% of the Eligible Project Costs associated with the Project Lands.

(e)Any advance made under Facility #1 will equal the lesser of:

i)Eligible Project Costs associated with the Project Lands incurred to the date of the draw request less the Borrower's Equity Requirement for such Project, less any holdbacks not yet payable, less any other payables that will not be paid by the advance requested or have not been paid by a past advance under this Facility, [less Excess Purchaser Deposits,] and less the amount advanced under this Facility #1 to date; and

ii)The Loan Amount Remaining to Advance for Facility #1 (prior to each advance/draw requested by the Borrower) less the Eligible Project Costs associated with the Project Lands remaining to be completed, less any holdbacks not yet payable, less any other payables that will not be paid by the advance requested or have not been paid by a past advance under this Facility, [less Excess Purchaser Deposits].

All of the above amounts are to be exclusive of GST.

(f)Facility #1 is non-revolving.

[Note: if any additional credit facilities are offered for additional projects, use the template for Facility #1, but reference the Project #1 Lands, the Project #2 Lands, etc.]

Facility #2 – Revolving Demand Loan Facility [Note – only to be selected in addition to Facility #1]

(a)Facility #2 is available by way of [modify as necessary]:

i)Prime-based loans in Canadian dollars

ii)Letters of Credit (to an aggregate maximum of $______) in Canadian dollars

iii)Corporate MasterCard (to a maximum of $______)

(b)Facility #2 is to be used [for general operating purposes/to provide temporary funding of Eligible Development Costs pending completion of a formal draw request under Facility #1 - revise if necessary as per terms of AFC.]

(c)Facility #2 may revolve within the limits set out herein.

Facility #3 – Letter of Credit Facility – Cdn. $______

(a)Facility #3 is available by way of Letters of Credit in Canadian dollars.

(b)Facility #3 is to be used for the issuance of Letters of Credit in support of municipal, utility and other similar obligations of Borrower in respect of the Project Lands, including those to be posted with the relevant city, town or municipal district. [if facility is available only for specific purpose, specify in detail]

(c)To the extent undrawn, Facility #3 may be cancelled in whole or in part at any time (subject to the notice periods provided hereunder) without penalty.

2.NEXT REVIEW DATE:

All demand Facilities are subject to review by Lender at any time in its sole discretion, and at least annually. The next annual review date has been set for ______[Review date of Credit] but may be set at an earlier or later date at the sole discretion of Lender.

3.INTEREST RATES AND PREPAYMENT:

Facility #1:

(a)Pricing applicable to Facility #1 is as follows:

i)Prime-based loans: Interest is payable in Canadian dollars at Prime plus ___% per annum.

(b)Facility #1 may be prepaid in whole or in part at any time (subject to the notice periods provided hereunder) without penalty.

Facility #2:

(a)Pricing applicable to Facility #2 is as follows:

i)Prime-based loans: Interest is payable in Canadian dollars at Prime plus ___% per annum.

ii)Letters of Credit: Fee is ___% per annum with a minimum fee of $______, payable in Canadian dollars. [or Fee is to be quoted by Lender at time of issuance.]

iii)Corporate MasterCard: Fees are detailed in the Corporate MasterCard documentation.

(b)Facility #2 may be prepaid in whole or in part at any time (subject to the notice periods provided hereunder) without penalty.

Facility #3:

(a)Pricing applicable to Facility #3 is as follows:

i)Letters of Credit: Fee is ___% per annum with a minimum fee of $______. [or Fee is to be quoted by Lender at time of issuance.]

4.REPAYMENT:

[Insert appropriate description as per AFC – examples with various options follow]

Facility #1:

(a)Facility #1 is payable in full on demand by Lender, and Lender may terminate the availability thereof (including any undrawn portion) at any time without notice.

(b)[include if principal payments from lot sales] Without affecting Lender's right to demand payment at any time, upon each closing of a lot in the Project Lands, an amount equal to [___% of Lot List Price/Gross Lot Sale Proceeds/Net Lot Sale Proceeds] of such lot are to be applied as a principal repayment, with the balance of all amounts owing under Facility #1 being due and payable in any event by ______, 20___. [modify as applicable]

(c)[include if payments are principal only] Without affecting Lender's right to demand payment at any time, Borrower shall make principal payments of Cdn.$______per [month/quarter] on the last day of each [month/quarter] commencing ______, 20___, with the balance of all amounts owing under Facility #1 being due and payable in full in any event by ______, 20___.

(d)Interest on Prime-based loans is calculated on the daily outstanding principal balance, and is payable on the last day of each month. [delete if blended payments are to be made]

Facility #2:

(a)Facility #2 is payable in full on demand by Lender, and Lender may terminate the availability thereof (including any undrawn portion) at any time without notice. Upon demand, Borrower shall pay to Lender the face amount of all outstanding Letters of Credit, which amount shall be held by Lender as security for Borrower's obligations to Lender in respect thereof.

(b)[Without affecting Lender's right to demand payment at any time, Borrower shall reduce the outstanding balance of this Credit Facility to zero after each advance provided under Facility #1.]

(c)Facility #2 may revolve in multiples as permitted hereunder, and Borrower may borrow, repay, reborrow and convert between types of Borrowings, up to the amount and subject to the notice periods provided hereunder.

(d)Interest on Prime-based loans is calculated on the daily outstanding principal balance, and is payable on the last day of each month.

Facility #3:

(a)Facility #3 is payable in full on demand by Lender, and Lender may terminate the availability thereof (including any undrawn portion) at any time without notice. Upon demand, Borrower shall pay to Lender the face amount of all outstanding Letters of Credit, which amount shall be held by Lender as security for Borrower's obligations to Lender in respect thereof.

(b)[Without affecting Lender's right to demand payment at any time, Borrower shall pay to Lender the face amount of all outstanding Letters of Credit, which shall be held by Lender as security for Borrower's obligations to Lender in respect hereof upon Facility #1 being repaid in full and no further advances being permitted thereunder.]

(c)[Payments will be derived from the sale of the remaining lots in the Project Lands and will equal ___% of the [Lot List Price/Gross Lot Sales Proceeds/Net Lot Sales Proceeds] of such lots.]

5.FEES:

(a)Non-refundable application fee of $______is payable on acceptance of this offer[, of which $______has already been paid]. Lender is hereby authorized to debit Borrower’s current account for any unpaid portion of the fee.

(b)Non-refundable [commitment/renewal] fee of $______is payable on acceptance of this offer[, of which $______has already been paid]. Lender is hereby authorized to debit Borrower’s current account for any unpaid portion of the fee.

(c)Non-refundable facility fee is payable [monthly on the last day of each month, quarterly on the last day of each quarter, or on ____ of each year] [or other as the case may be], calculated on the monthly average balance of the unused portion of the authorized amount of Facility [#1/#2]. Such fee is ___% per annum.[delete if not applicable]

(d)A loan administration fee of $______is payable concurrently with the receipt of proceeds from the sale of each lot in the Project Lands.

(e)Any amount in excess of established credit facilities will be subject to a fee of 1% of such excess for each minimum 30 day period, where Lender in its sole discretion permits excess Borrowings, if any.

(f)For reports or statements not received within the stipulated periods (and without limiting Lender's rights by virtue of such default), Borrower will be subject to a fee of $50per month (per monthly or quarterly report or statement) and $250 per month (per annual report or statement) for each late reporting occurrence, which will be deducted from Borrower's account.

6.SECURITY DOCUMENTS:

All security documents (whether held or later delivered) (collectively referred to as the "Security Documents") shall secure all Facilities and shall secure all obligations of Borrower to Lender (whether present or future, direct or indirect, contingent or matured) unless and until otherwise agreed in writing by Lender. [The parties acknowledge that the following security documents are currently held:

(a)[insert as applicable – see below for examples]]

The [additional] security documents required at this time are as follows [delete or modify as necessary]:

(a)Mortgage from Borrower constituting a first fixed charge on the Project Lands [or if only one, specify the Project Lands];

(b)Assignment of Major Development Agreements, permits and approvals relating to the Project Lands [or if only one, specify the Project Lands];

(c)Assignment of Major Construction Contracts relating to the Project Lands [or if only one, specify the Project Lands];

(d)Assignment of Sales Agreements relating to the Project Lands [or if only one, specify the Project Lands];

(e)[Site Specific] General Security Agreement from Borrower providing a security interest over all present and after acquired personal property [located at or relating to the Project Lands [or if only one, specify the Project Lands]];

(f)Continuing Guarantee from ______- [unlimited/limited to $______], supported by the following:

-[insert as applicable, eg. a general security agreement];

(g)Postponement and Assignment of Claims from ______;

(h)Agreement to Fund Cost Overruns from ______.

7.REPRESENTATIONS AND WARRANTIES:

[Note: The definition of Loan Parties excludes individual guarantors. If you require representations and warranties in respect of individual guarantors, modify accordingly.]

Borrower represents and warrants to Lender that:

(a)if a Loan Party is a corporation, it is a corporation duly incorporated, validly existing and duly registered or qualified to carry on business in the Province of Alberta and in any jurisdiction(s) in which the Project Lands are located;

(b)if a Loan Party is a partnership, it is a partnership duly created, validly existing and duly registered or qualified to carry on business in the Province of Alberta and in any jurisdiction(s) in which the Project Lands are located;

(c)the execution, delivery and performance by each Loan Party of this agreement and each Security Document to which it is a party have been duly authorized by all necessary actions and do not violate its governing documents or any applicable laws or agreements to which it is subject or by which it is bound;

(d)no event has occurred which constitutes, or which, with notice, lapse of time, or both, would constitute, a breach of any provision of this agreement or any Security Document given in connection herewith;

(e)the most recent financial statements of Borrower and, if applicable, any Guarantor, provided to Lender fairly present its financial position as of the date thereof and its results of operations and cash flows for the fiscal period covered thereby, and since the date of such financial statements, there has occurred no material adverse change in its business or financial condition;

(f)Borrower is the registered and beneficial owner of the Project Assets [or will be after utilizing the proceeds of the initial advance under Facility #1 hereunder], and has good and marketable title thereto free and clear of any encumbrances, charges or liens other than as may be permitted herein, and the Security Documents, once granted, will constitute a first priority mortgage and security interest on the Project Assets; and

(g)each Loan Party is in compliance in all material respects with all applicable laws, rules and regulations, including, without limitation, all environmental laws and builders' lien legislation, and there is no existing material impairment to its properties and assets as a result of environmental damage, except to the extent disclosed in writing to Lender and acknowledged by Lender.

8.POSITIVE COVENANTS:

[Note: The definition of Loan Parties excludes individual guarantors. If you require covenants from individual guarantors, modify accordingly.]

Borrower (and, to the extent applicable, each other Loan Party) covenants with Lender that so long as it is indebted or otherwise obligated (contingently or otherwise) to Lender, it will do and perform the following covenants. If any such covenant is to be done or performed by a Guarantor, Borrower also covenants with Lender to cause Guarantor to do or perform such covenant.

(a)Borrower will pay to Lender when due all amounts (whether principal, interest or other sums) owing by it to Lender from time to time;

(b)Borrower will deliver to Lender the Security Documents, in all cases in form and substance satisfactory to Lender and Lender's solicitor;

(c)Borrower will use the proceeds of loans only for the purposes approved by Lender;

(d)Borrower will apply Excess Purchaser Deposits received either towards the Eligible Project Costs of the Project or as a permanent reduction in principal under Facility #______;

(e)Each Loan Party will maintain its valid existence as a corporation or partnership, as the case may be, and will maintain all licenses, permits and authorizations required from regulatory or governmental authorities or agencies to permit it to carry on its business, including, without limitation, any licenses, permits and authorizations in respect of the Project, and any licenses, certificates, permits and consents for the protection of the environment;

(f)[Each Loan Party will maintain appropriate books of account and records relative to the operation of its business and financial condition and relative to the Project, and will maintain a separate bank account with Lender for the Project into which all funds received from the Project will be deposited and from which all costs relating to the Project shall be paid;]

(g)Borrower will diligently and continuously proceed with the development of the Project in accordance with the project schedule and budget provided to Lender;

(h)Borrower will maintain appropriate types and amounts of insurance on the Project, including liability insurance, with Lender shown as first loss payee on any property insurance, will provide evidence of insurance to Lender on request, and will promptly advise Lender in writing of any significant loss or damage to its property;

(i)Borrower will each permit Lender, by its officers or authorized representatives (including any project inspector) at any reasonable time, to enter its premises and to inspect the Project Assets, and to examine and copy all relevant books of accounts, records, budgets and forecasts of Borrower and each Guarantor;

(j)Borrower will provide to Lender as soon as possible and in any event;

i)within [120] days after the end of each of its fiscal years:

(I)[consolidated/non-consolidated] financial statements of Borrower on an [audited basis/review engagement basis] prepared by a firm of qualified accountants. If audited financial statements are not currently required, Lender reserves the right to require audited financial statements [note – if a Guarantor is providing security, add any financial statements or personal statement of affairs required from Guarantor]; and

(II)[a compliance certificate executed by a senior officer of Borrower in the form attached hereto as Schedule "A";]

ii)within [60] days following the end of each of its fiscal quarters:

(I)[internally produced financial statements of Borrower [if a Guarantor is providing security, add – and of ______as Guarantor] for that quarter, and ]

(II)[a compliance certificate executed by a senior officer of Borrower in the form attached hereto as Schedule "A";]

iii)within [20] days following the end of each calendar month:

(I)an updated schedule of agreements for sale and unsold lots for each stage financed. The schedule of agreements for sale should indicate purchaser name, legal description, sale price, deposit amount and closing date;

iv)[add any additional reporting requirements as per AFC];

(k)Each Loan Party will provide to Lender on request any further information regarding its assets, operations and financial condition that Lender may from time to time reasonably require;