CONSTRUCTION AND
SEMI-PERMANENT
LOAN AGREEMENT
THIS
CONSTRUCTION AND SEMI-PERMANENT LOAN AGREEMENT, dated as of the
28 th
day of September, 2005 (the “
Loan Agreement ”), is made by and among
LIBERTY BANK OF ARKANSAS , an Arkansas state chartered bank
whose local mailing address is 4706 South Thompson, Suite 101,
Springdale, Arkansas 72764, attention P. Douglas Lynch, President
Fayetteville/Springdale, Arkansas markets (“
Lender ”) and ADVANCED ENVIRONMENTAL
RECYCLING TECHNOLOGIES, INC. , a Delaware corporation whose
local mailing address is Post Office Box 1237, Springdale, Arkansas
72765 (“ Borrower ”).
WHEREAS ,
Borrower is the owner of certain land consisting of nine and 99/100
(9.99) acres, more or less, located in Washington County, Arkansas
(the “ Mortgaged Property ”);
and
WHEREAS ,
Borrower desires to refinance existing indebtedness on the
Mortgaged Property to construct and develop an extension of
Borrower’s manufacturing facility currently existing on the
Mortgaged Property (collectively, the “ Loan
Purposes ”); and
WHEREAS ,
for the purpose of financing the Loan Purposes, Borrower has made
application to borrow from Lender an amount not to exceed the
lesser of (i) One Million Nine Hundred Thirty Two Thousand and
No/100 Dollars ($1,932,000) or (ii) so much thereof as may be
advanced by Lender to Borrower (the “ Loan
”).
NOW,
THEREFORE , in consideration of the premises recited above and
other good and valuable consideration, the receipt and legal
sufficiency of which are hereby acknowledged, each of the parties,
intending to be legally bound by the provisions hereof, agrees as
follows:
For purposes of
this Loan Agreement, the following terms shall have the respective
meanings assigned to them.
Advance .
The term “ Advance ” shall mean a
disbursement by Lender of any unused and available proceeds of the
Loan and/or Borrower’s Deposit. Each Advance of Loan proceeds
shall be conclusively deemed and considered to have been made
against the Note.
Affidavit of
Borrower . The term “ Affidavit of Borrower
” shall mean a sworn affidavit of Borrower (and such other
parties as Lender or the Title Company may require) to the effect
that all statements, invoices, bills, and other expenses incident
to the construction of the Improvements incurred to a specified
date, whether or not specified in the Approved Budget, have been
paid in full, except for (a) amounts retained pursuant to the
Construction Contract, and (b) items to be paid from the
proceeds of an Advance then being requested or in another manner
satisfactory to Lender.
Application
for Advance . The term “ Application for
Advance ” shall mean a written application by
Borrower (and such other parties as Lender may require) on the
Standard Application and Certificate for Payment Form, ALA Document
G702, or such other form acceptable to Lender, specifying by name,
current address, and amount all parties to whom Borrower is
obligated for labor, materials, or services supplied or rendered
for the construction of the Improvements and all other expenses
incident to the Loan and the Land, whether or not specified in the
Approved Budget, requesting an Advance under the Loan for the
payment of such items, and containing, if requested by Lender, an
Affidavit of Borrower, and such schedules, affidavits, releases,
waivers, statements, invoices, bills, and other documents as Lender
may reasonably request; provided, however, that if lien waivers are
requested, such lien claimants shall be required to waive lien
rights only with respect to all amounts paid by Lender through the
immediately preceding Advance, although lien claimants may be
required to state the amount then due them and agree to waive lien
rights upon receipt of said sum. Borrower shall certify in the
Application for Advance as to all such Applications (other than for
final payment of retainage after completion of the Improvements),
that retainage of at least ten percent (10%) of the amount of the
total work completed and materials stored to date has been deducted
in calculating the “current payment due.”
Appraisal
. The term “ Appraisal ” shall mean an
appraisal of the Land and Improvements prepared by an independent
appraiser who shall be a member of the American Institute of Real
Estate Appraisers selected by or satisfactory to Lender, which
shows that the value of the Land and Improvements, when completed,
will be not less than one hundred twenty five percent (125%) of the
principal amount of the Note.
Approved
Budget . The term “ Approved Budget ”
shall mean a budget or cost itemization prepared by Borrower
specifying the cost by item of (a) all labor, materials, and
services necessary for the construction of the Improvements in
accordance with the Plans and all Governmental Requirements, and
(b) all other expenses anticipated by Borrower incident to the
Loan, the Land, and the construction of the Improvements. Borrower
may not reallocate items of cost or change the Approved Budget
without the prior written consent of Lender; provided, however,
that Borrower shall have the right to reallocate items of cost if
it can demonstrate, to the satisfaction of Lender, that it has
achieved a cost saving in a particular designated item in the
Approved Budget.
Assignment of
Leases and Rents . The term “ Assignment of Leases
and Rents ” shall mean the Assignment of Leases and
Rents dated of even date herewith securing the payment of the Note
and the payment and performance of all obligations specified in the
Assignment of Leases and Rents and this Loan Agreement, and
evidencing a valid and enforceable lien on the Land.
Borrower .
The term “ Borrower ” shall mean the
party named Borrower in the introductory paragraph of this Loan
Agreement.
Borrower’s Deposit . The term “
Borrower’s Deposit ” shall mean such cash
sums as Lender may deem necessary, from time to time until the Loan
is paid in full, in addition to the Loan, for the payment of the
costs of labor, materials, and services required for the
construction of the
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Improvements,
other costs and expenses specified in the Approved Budget, and such
other costs and expenses as may be required to be paid in
connection with the construction of the Improvements in accordance
with the Plans, any Governmental Requirements, and the requirements
of any lessee, if applicable.
Certificate of
Occupancy . The term “ Certificate of
Occupancy ” shall mean an unconditional and unlimited
certificate of occupancy issued by the City of Springdale,
Arkansas, stating that the Improvements are suitable for human
occupancy as commercial office space and parking facilities, as
planned.
Completion
Deadline . The term “ Completion Deadline
” shall mean twelve (12) months after the date hereof, which
is the date by which all construction, landscaping and other work
financed with the proceeds of the Note must be complete and the
Certificate of Occupancy must be issued.
Contractor
. The term “ Contractor ” shall mean the
contractor, whether one or more, approved by Lender, named in
Exhibit A attached hereto.
Conversion
Date . The term “ Conversion Date ”
shall mean the date which is the earlier of (i) twelve
(12) months after the date hereof or (ii) the date on
which Borrower elects to commence making monthly payments of
principal and interest based upon a twenty five (25) year
amortization period.
Debtor Relief
Laws . The term “ Debtor Relief Laws
” shall mean any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization,
fraudulent conveyance or similar laws affecting the rights or
remedies of creditors generally, as in effect from time to
time.
Default
Rate . The term “ Default Rate ”
shall mean the highest rate of interest permitted under Arkansas
law at the time of the occurrence of the Event of
Default.
Environmental
Laws . The term “ Environmental Laws
” shall mean any and all federal, state and local statutes,
ordinances, laws, common law, regulations, rules, orders, decrees
or codes relating to any Hazardous Substance, or otherwise relating
to pollution or protection of the environment including but not
limited to the Federal Environmental Pesticide Control Act, the
Resource Conservation Recovery Act of 1976 as amended, the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980 as amended, the Clean Air Act as amended, the
Endangered Species Act, the Clean Water Act, the Toxic Substances
Control Act, any “Superlien” laws, and the Safe
Drinking Water Act, as now or any time hereafter in effect,
provided that none of the specific statutes cited herein shall be
construed to limit the broad scope of this definition.
Event of
Default . The term “ Event of Default
” shall mean:
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(a) A
failure by Borrower to make any payment of principal or interest on
the Note within ten (10) days after such payment is
due;
(b) A
failure by Borrower to comply with any of the other terms or
conditions specified herein or in any other Loan
Instrument;
(c) A
failure by Borrower to perform, observe or comply with any of the
terms, covenants, conditions, or provisions of the Construction
Contract subject to the applicable cure periods as may be set forth
in such contract;
(d) The
incorrectness in any material respect of any representation or
warranty made by Borrower to Lender in any of the Loan
Instruments;
(e) The
cessation of the construction of the Improvements, other than for
Force Majeure Events (as defined in Section 4.03
), for more than fifteen (15) consecutive days without the
written consent of Lender;
(f) A
failure of any of the materials incorporated into the Improvements
to substantially comply with the Plans, any Governmental
Requirements, or the requirements of any lessee, if
applicable;
(g) A
survey or plat shall show that (i) any Improvement is not
entirely within the boundary lines of the Land and any setback
lines pertaining thereto, (ii) any Improvement encroaches upon
any public road or waterway (except as authorized by permit or
competent Governmental Authority), easement (except as approved by
the owner of such easement and any Governmental Authority having
jurisdiction), right-of-way, street or any adjoining property,
(iii) any Governmental Requirement has been
breached;
(h) An
inability of Borrower to satisfy any condition specified herein as
precedent to the obligation of Lender to make an Advance after an
Application for Advance has been submitted by Borrower to Lender,
except for such unsatisfied conditions which the making of the
Advance would allow Borrower to satisfy;
(i) The
Inspecting Architect/Engineer if any, shall at any time certify to
Lender in writing that the Improvements are not, at the date of
such certificate, being constructed with reasonable diligence in a
good and workmanlike manner in accordance with the
Plans;
(j) Any
Governmental Authority shall commence proceedings to condemn all or
any material part of the Premises;
(k) Borrower
shall generally not pay its debts as they become due or shall admit
in writing its inability to pay its debts, or shall make a general
assignment for the benefit of creditors;
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(l) Borrower
shall commence any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation, dissolution
or composition of Borrower or its debts under any Debtor Relief
Laws;
(m) Any
case, proceeding or other action is commenced against Borrower
seeking to have an order for relief entered against Borrower, as
debtor, or seeking a reorganization, arrangement, adjustment,
liquidation, dissolution or composition of Borrower or its debts
under Debtor Relief Laws, or seeking an appointment of a receiver,
trustee, custodian, conservator, or liquidator or other similar
official for Borrower or for all or any of the Premises, or any
other property of Borrower, and such case, proceeding or other
action (i) results in the entry of an order for relief against
Borrower or (ii) is not dismissed within sixty
(60) days;
(n) Borrower
shall have concealed, removed, or permitted to be concealed or
removed, any part of its property, with intent to hinder, delay or
defraud its creditors or any of them, or made or suffered a
transfer of any of its property which may be fraudulent under any
bankruptcy, fraudulent conveyance or similar law; or shall have
made any transfer of any part of its property to or for the benefit
of a creditor at a time when other creditors similarly situated
have not been paid; or shall have suffered or permitted, while
insolvent, any creditor to obtain a lien upon any of its property
through legal proceedings or distraint which is not vacated within
sixty (60) days from the date thereof;
(o) The
liquidation, termination, or dissolution of Borrower; or
(p) Borrower
shall maintain operating accounts or other depository relationships
with a financial institution other than Lender.
Notwithstanding
the foregoing, none of the events listed above except those listed
in subsections (a), (e), (h), (i), (j), (k), (1), (m), (n),
(o) or (p), or the failure of Borrower to insure the Premises,
shall constitute an Event of Default until Lender shall have given
Borrower written notice of the occurrence of such event, and
Borrower shall have failed to cure same to Lender’s
satisfaction within thirty (30) days after the date of such
notice; provided, if the event is not reasonably susceptible to
cure within such thirty (30) day period and Borrower
diligently pursues the cure of such event, Lender shall extend the
cure period as is reasonably necessary for the completion of the
cure.
Financial
Statements . The term “ Financial
Statements ” shall mean such balance sheets, profit
and loss statements, statements of cash flows, reconciliations of
capital and surplus, changes in financial condition, schedules of
sources and applications of funds, operating statements with
respect to the Premises, rent rolls, statements of changes in
equity, tax returns, and other financial information of Borrower,
as shall be reasonably required by Lender, from time to time, which
statements, if required by Lender, shall be certified to and/or
audited by an independent certified public accountant.
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Financing
Statements . The term “ Financing
Statements ” shall mean and include all such Uniform
Commercial Code financing statements and continuation statements as
Lender shall require, duly executed by Borrower or others, to give
notice of and perfect or to continue perfection of Lender’s
security interest in all personal property and fixtures
constituting a part of the Premises or otherwise constituting
security for the Loan.
Governmental
Authority . The term “ Governmental
Authority ” shall mean the United States, the State
of Arkansas, Washington County, the City of Springdale, or any
other political subdivision in which the Land is located, and any
other political subdivision, agency, department, commission, board,
court or instrumentality which now or hereafter has jurisdiction
over Lender, Borrower, or the Premises.
Governmental
Permits . The term “ Governmental Permits
” shall mean all certificates, licenses, permits, approvals
and no-action letters from any Governmental Authority acquired to
evidence full compliance by Borrower and conformance of the
Premises with all Governmental Requirements applicable to the
Premises, construction of the Improvements and the promotion,
management, operation, occupancy and use of the Premises as a
warehouse facility or otherwise in furtherance of the business
purposes of Borrower.
Governmental
Requirements . The term “ Governmental
Requirements ” shall mean all laws, ordinances,
rules, regulations, orders and decrees of any Governmental
Authority applicable to Borrower, or the Premises, including but
not limited to, those related to zoning, building restrictions,
safety, environmental protection, and accessibility to the
disabled.
Hazardous
Substance . The term “ Hazardous Substance
” shall mean any toxic substance or waste pollutant,
hazardous substance or waste, contaminant, special waste,
industrial substance or waste, petroleum or petroleum derived
substance or waste, or any toxic or hazardous constituent of any
such substance or waste, including without limitation any such
substance regulated under or defined by Environmental Laws (as
defined herein) and including but not limited to: (i) any
“hazardous waste” as defined by the Resource
Conservation Recovery Act of 1976 (42 U.S.C. Section 6901
et seq ., as amended from time to time, and regulations
promulgated thereunder; (ii) any “hazardous
substance” as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980 (42 U.S.C.
Section 9601 et seq ., (“CERCLA” or
“Superfund”), as amended from time to time, and
regulations promulgated thereunder; (iii) asbestos;
(iv) polychlorinated biphenyls; (v) any petroleum-derived
products; (vi) underground storage tanks, whether empty,
filled or partially filled with any substance; (vi) materials
to be reclaimed, recycled, and reconditioned; and (vii) any
other materials which would be considered detrimental to the value,
safety or usefulness of the Mortgaged Property if spilled,
released, leaked, or disposed of thereon.
Improvements . The term “ Improvements
” shall mean all structural components and permanent
enhancements of the Land, including but not limited to warehouse
and warehouses, buildings, additions, parking facilities, equipment
to be installed in or on the Land or buildings so as
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to become a
fixture, all finish-out, paving, landscaping, fencing and other
enhancements of whatever nature situated, placed or constructed on
the Land, the construction of which is required to properly develop
the Land as contemplated in the Plans, and any other improvements
the parties determine to erect.
Indemnification Agreement . The term “
Indemnification Agreement ” shall mean the
Indemnification Agreement (Environmental, ADA and Other
Governmental Requirements) dated of even date herewith, executed
and delivered by Borrower for the benefit of Lender.
Inspecting
Architect/Engineer . The term “ Inspecting
Architect/Engineer ” shall mean the Inspecting
Architect/Engineer named on Exhibit A attached
hereto. If an Inspecting Architect/Engineer is not named in
Exhibit A , the designation of such Inspecting
Architect, and its (his) approval by Lender, shall be an
additional condition precedent to any Advance after the initial
Advance, whether initial or subsequent.
Land . The
term “ Land ” shall mean the real
property described in Exhibit B attached hereto and
incorporated herein by reference.
Lender .
The term “ Lender ” shall mean the Lender
named in the introductory paragraph of this Loan
Agreement.
Loan . The
term “ Loan ” shall mean the loan
contemplated by this Agreement in the maximum principal amount of
the lesser of (i) One Million Nine Hundred Thirty Two Thousand
and No/100 Dollars ($1,932,000) or (ii) so much thereof as may
be advanced by Lender to Borrower as evidenced by the
Note.
Loan
Instruments . The term “ Loan Instruments
” shall include this Agreement, the Note including all
renewals, extensions and modifications thereof), the Mortgage, each
Application for Advance, the Assignment of Leases and Rents, the
Financing Statements, and all other documents and security
instruments executed pursuant hereto or in connection herewith, or
as evidence of or security for payment of the Loan or of
performance of Borrower’s obligations under this Loan
Agreement or other Loan Instruments.
Loan/Value
Ratio . The term “ Loan/Value Ratio ”
shall mean the ratio of the amount of the Loan to the value of the
Land and Improvements which is shown on the Appraisal, which ratio
will not exceed the percentage set forth on
Exhibit A hereto; at no time shall Lender be
required to make any Advance which would cause the Loan to exceed
such percentage times the value of the Land and Improvements shown
on the Appraisal or cause Lender to violate any law, rule or
regulation to which Lender is subject, limiting the amount that may
be advanced by Lender as contemplated by this Agreement.
Mortgage .
The term “ Mortgage ” shall mean the
Construction Mortgage, Security Agreement and Fixture Filing
(Secures Future Advances) dated of even date herewith covering and
encumbering the Premises and securing the payment of the Note and
the payment and performance
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of all
obligations specified in the Mortgage and this Loan Agreement, and
evidencing a valid and enforceable lien on the Land.
Note . The
term “ Note ” shall mean the Promissory
Note from Borrower to Lender dated of even date herewith, in the
amount of and evidencing the Loan, bearing interest as therein set
forth.
Plans .
The term “ Plans ” shall mean the final
drawings and specifications for the construction of the
Improvements, approved in writing by Lender and
Borrower.
Preliminary
Budget . The term “ Preliminary Budget
” shall mean a schedule prepared by Borrower and approved by
Lender (once approved, the “ Approved Budget
”) reflecting the estimated cost of each item of work or
material required to complete the Improvements, together with all
related costs and expenses, including interest and professional
fees, and together with any and all amendments or supplements to
such budget approved in writing by Lender. If not attached hereto,
approval of the Preliminary Budget by Lender shall be an additional
condition precedent to an Advance, whether first or
subsequent.
Premises.
The term “ Premises ” shall mean the
Land, the Improvements, and all fixtures, equipment and other
associated personal property, tangible or intangible, including all
property defined as “Mortgaged Property” as that term
is defined in the Mortgage.
Survey .
The term “ Survey ” shall mean a current
on the ground ALTA certified survey of the Land performed by a
surveyor duly licensed as such in the State of Arkansas, acceptable
to Lender, with such requirements as may be requested by Lender,
and/or a recorded plat or map of the Land, as required by Lender,
which such plat or map shall be approved and accepted by the Title
Company and all Governmental Authorities having jurisdiction of the
Land.
Title
Company . The term “ Title Company ”
shall mean the Title Company named on Exhibit A
attached hereto.
Title
Insurance . The term “ Title Insurance
” shall mean a title insurance commitment, binder, or policy
and any endorsements thereto as Lender may require, in the amount
of the Loan, insuring that the Mortgage constitutes a valid first
priority lien covering the Land and the Improvements, subject only
to those exceptions and encumbrances which Lender may approve,
issued by the Title Company.
Title
Insurance Policy . The term “ Title Insurance
Policy ” shall mean an ALTA Loan Policy in the amount
of the Loan insuring that the Mortgage constitutes a valid first
and prior lien covering the Land and the Improvements and is
subject to only those exceptions and encumbrances which Lender may
approve in writing, issued by the Title Company, such Title
Insurance Policy to provide Lender with gap, survey and lien
coverage, and include such endorsements and additional coverage as
Lender shall reasonably request.
UCC . The
term “ UCC ” shall mean the Uniform
Commercial Code as currently in force in
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the State of
Arkansas, as it may be subsequently amended or
superseded.
The following
terms shall have the respective meanings ascribed to them in the
Uniform Commercial Code as enacted and in force in the State of
Arkansas: accessions, accounts, continuation statement, equipment,
financing statement, fixtures, general intangibles, personal
property, proceeds, security interest and security
agreement.
ARTICLE II
ADVANCES OF THE LOAN
2.01 Commitment
of Lender . In reliance upon and induced by the
representations, warranties and covenants of Borrower contained in
the Loan Instruments and subject to the conditions hereof, in
accordance with this Agreement and provided that an Event of
Default has not occurred, Lender will make Advances to Borrower in
accordance with the terms of this Loan Agreement. Borrower will not
under any circumstances be entitled to request, and Lender will not
under any circumstances be obligated to advance funds in excess of
the principal amount of the Loan.
2.02 Interest
on the Loan . Interest on the Loan, at the rate(s) specified in
the Note, shall be computed on the unpaid principal balance which
exists from time to time and shall be computed with respect to each
Advance only from the date of such Advance and only as to the
portion of each Advance which does not constitute any portion of
Borrower’s Deposit.
(a) Advances
for the payment of costs of labor, materials, and services supplied
for the construction of the Improvements and the other items shown
in the Approved Budget for the Loan shall be made by Lender to
Borrower from time to time as construction of the Improvements
progresses, but in no event more frequently than specified on
Exhibit A attached hereto. It is hereby
specifically provided and Lender hereby reserves the right to make
Advances which are allocated to any of the designated items in such
Preliminary Budget or Approved Budget for such other purposes or in
such other proportions as Lender may, in its reasonable discretion
and in accordance with the approved Plans and Specifications, deem
necessary or desirable. Borrower may not reallocate items of cost
or change the Approved Budget without the prior written consent of
Lender; provided, however, that Borrower shall have the right to
reallocate items of cost if it can demonstrate, to the satisfaction
of Lender, that it has achieved a cost saving in a particular
designated item in the Approved Budget. In no event shall Lender be
required to make any Advance for payment of any item not included
in the Preliminary Budget or the Approved Budget.
(b) Each
time Borrower shall desire to receive an Advance, Borrower shall
deliver to Lender an Application for Advance in respect thereto.
Each item to be paid from such Advance shall be fully described,
itemized and categorized in such Application for Advance, or in the
explanation or documents attached thereto. If Lender requires
disbursement and Advances under the
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Loan through
the Title Company, the Application for Advance with accompanying
Certificate for Payment, shall be directed to the Title Company at
the address shown on Exhibit A hereto, with a
copy to Lender. If Lender makes disbursements directly to Borrower,
each such Application for Advance shall be submitted directly to
Lender at the address appearing in the introductory paragraph of
this Loan Agreement.
(c) The
Advances which Lender is obligated to make under the Loan shall not
at any time exceed ninety percent (90%) of the gross aggregate
amount theretofore payable to the Contractor as shown on the latest
application for payment for work done and materials furnished by
the Contractor (as provided under the Construction Contract) and
only to the extent that payment has been approved as due and
payable to the Contractor by the Architect.
(d) Lender
shall have ten (10) business days after receipt of an
Application for Advance within which to conduct inspections to
satisfy itself that the work covered by the Application for Advance
has been or is being accomplished in a satisfactory manner;
provided, Lender shall not be obligated to make any Advance until
such time as the Inspecting Architect/Engineer has inspected and
approved the work covered by an Application for Advance.
If all conditions
precedent to the requested Advance have been complied with to the
satisfaction of Lender and the Title Company, Lender shall advance
the amount set forth in such Application for Advance either
directly to Borrower or through the Title Company, at its
discretion, within said ten (10) day period. Each Advance made
pursuant to an Application for Advance for payment of any other
items set forth in the Approved Budget shall be advanced to
Borrower (or through the Title Company, at Lender’s
discretion) unless an Event of Default has occurred and is
continuing hereunder, in which event Advances may be paid to
Borrower (or through the Title Company, at Lender’s
discretion) or expended for Borrower’s account, as Lender
shall elect.
(e) The
payment of an Advance by Lender and/or the Title Company pursuant
to any Application for Advance shall not constitute an approval or
acceptance of the work or materials, nor be binding upon Lender,
except to the extent that the facts actually are as represented in
such Application for Advance when so approved, nor shall such
approval give rise to, and Borrower hereby agrees that Lender shall
be relieved from, any liability or responsibility relating to:
(1) the quality of the work, the quantity of the work, the
rate of progress in completion of the work, or the sufficiency of
materials or labor being supplied in connection therewith; and
(2) any errors, omissions, inconsistences or other defects of
any nature in the Plans or the Improvements.
(f) Any
and each Advance of the proceeds of the Loan shall be made only in
accordance with the terms and conditions of the Construction
Contract and the Approved Budget, and subject to the terms and
conditions of this Loan Agreement. All expenses of making any
Advance through the Title Company shall be borne by
Borrower.
2.04
Intentionally Deleted .
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2.05 Conditions
Precedent to the First Advance . As a condition precedent to
the first Advance hereunder, Borrower must have confirmed and
agreed to and executed and/or delivered (or cause to have been
delivered) all of the following to Lender:
(a) A
copy of Borrower’s Articles of Incorporation, along with a
copy of Borrower’s Bylaws and any other company governance
agreements of Borrower, and a certified copy of a resolution of
Borrower authorizing the Loan, the transactions in furtherance of
the Loan and the execution and delivery of the Loan Instruments,
and stating the names of the persons authorized to execute the Loan
Instruments;
(c) The
Mortgage, the Assignment of Leases and Rents, the Financing
Statements and the Indemnification Agreement;
(d) The
Mortgage and the Assignment of Leases and Rents have been recorded
in the office of the Circuit Clerk and Ex-Officio Recorder for
Washington County, Arkansas, with all filing fees therefor paid,
all prior to the commencement of any construction or site
development on any part of the Land or the placing of any
equipment, supplies or material on the Land, and appropriate
Financing Statements have also been filed in the office of the
Arkansas Secretary of State;
(e) A
paid Title Insurance Policy;
(f) Insurance
Policies covering builder’s risk, fire and extended coverage
risks, and general comprehensive public liability, with loss
payable certificates in favor of Lender, in accordance with the
terms of this Agreement and the Mortgage;
(i) The
Approved Budget (the Preliminary Budget);
(k) A
flood hazard letter, in form satisfactory to Lender, completed by
Borrower’s surveyor or Architect, certifying that no part of
the Premises lies within a flood hazard or flood prone area or,
alternatively, a certificate of flood insurance in accordance with
Section 4.26 hereof;
(l) Application
for Advance;
(m) Affidavits
for indemnity agreements and any and all affidavits required by
the
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Title Company
to issue the Title Insurance Policy;
(n) Evidence
that all necessary action on the part of Borrower has been taken
with respect to the execution and delivery of Loan Instruments and
the consummation of the transactions contemplated thereby so that
the Loan Instruments provide binding and enforceable obligations
upon Borrower and all other persons or entities executing and
delivering the Loan Instruments;
(o) A
copy of all leases or letters of intent of the Improvements, if
any, certified by Borrower as being true and correct, and in all
respects acceptable to Lender in form and substance;
(p) Borrower
shall transfer to Lender and continuously maintain thereafter a
depository relationship with Lender;
(r) A
copy of the most recently prepared Phase I Environmental Site
Assessment with respect to the Land and existing Improvements
thereon;
(s) Evidence
of approval by the City of Springdale, Arkansas of the large scale
development plans with respect to the Land, the Improvements and
the Loan Purposes;
(t) All
documents in connection with this Loan shall be in a form and
context acceptable to Lender’s counsel, including without
limitation, an opinion of Borrower’s counsel. All legal fees
for document preparation are at Borrower’s
expense.
(u) Borrower
shall furnish to Lender annual operating statements and a rent
roll, if any, on the Premises. Furthermore, Borrower shall also
furnish annual financial statements and Federal income tax returns;
and
(v) Prior
to the Completion Date, Lender shall be allowed to display and
place on site a construction sign with cost of said sign being paid
by Lender.
2.06 Conditions
to Subsequent Advances After the First Advance . As a condition
precedent to each Advance under the Loan other than the first
Advance, in addition to all other requirements herein, Borrower
must satisfy the following requirements and, if required by Lender,
deliver to Lender evidence of such satisfaction:
(a) All
conditions precedent to the first Advance shall have been
satisfied;
(b) There
shall then exist no Event of Default;
(c) The
representations and warranties made in this Loan Agreement shall be
true
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and correct in
all material respects on and as of the date of each Advance, with
the same effect as if made on that date;
(d) Borrower
will procure and deliver to Lender, if required by Lender, releases
or waivers of mechanic’s liens and receipted bills with
respect to the preceding month’s disbursement showing payment
of all parties who have furnished materials or services or
performed labor of any kind in connection with the construction of
any of the Improvements;
(e) The
Title Insurance shall be endorsed and extended, if available under
local rules, to cover each Advance with no additional title
exceptions objectionable to Lender;
(f) There
shall have been delivered to Lender evidence satisfactory to Lender
that the Loan proceeds not yet advanced will be sufficient to pay
for completion of all the Improvements by the Completion Deadline
in accordance with the Plans, or if such proceeds are not adequate,
arrangements currently satisfactory to Lender, by the making of a
Borrower’s Deposit or otherwise, shall have been made to
provide sufficient funds necessary to complete the Improvements by
the Completion Deadline in accordance with the Plans. It is
expressly understood and agreed that the Loan shall at all times be
“in balance.” The Loan shall be deemed in balance only
when the total amount of the Loan not yet advanced, plus the
retainage and any Borrower’s Deposit or other agreed
reserves, shall equal or exceed the estimated cost to complete the
Improvements, and it is estimated that upon completion of the
Improvements, the Land and the Improvements will together have a
value that satisfies the Loan/Value Ratio;
(g) The
work covered by each Application for Advance and all work
preliminary thereto, shall have been accomplished or be in the
process of accomplishment to the satisfaction of Lender, and the
Inspecting Architect/Engineer, if any; and
(h) All
Improvements are constructed in compliance with Title III of the
Americans with Disabilities Act (ADA). environmental laws and all
local building and zoning ordinances.
2.07 Final
Advance . The ten percent (10%) of the Loan proceeds not
advanced during the course of construction ( i.e. , the
retainage) shall not be paid to Borrower until Lender has
determined that the provisions of
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