CONSTRUCTION AND SEMI-PERMANENT LOAN AGREEMENT

Exhibit 10.47

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:

ARTICLE I
DEFINITIONS

     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

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:

          (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;

          (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.

      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

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

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

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.

     2.03 Advances .

          (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

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 .

     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;

          (b) The Note;

          (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;

          (g) The Plans;

          (h) The Appraisal;

          (i) The Approved Budget (the Preliminary Budget);

          (j) A Compliance Letter;

          (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

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;

          (q) The Survey;

          (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

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