CONSTRUCTION/PERMANENT LOAN AGREEMENT

Exhibit 10.9

CONSTRUCTION/PERMANENT LOAN AGREEMENT

 

THIS LOAN AGREEMENT is made as of the __17__ day of December 1999, by and among CUL (SINT MAARTEN) N.V., a Netherlands Antilles limited liability company, whose mailing address is 12410 SE 32^nd Street, Bellevue, Washington 98005 (the “Borrower”), COST-U-LESS, INC., a Washington corporation whose mailing address is 12410 SE 32 Street, Bellevue, Washington 98005 Street, Bellevue, Washington 98005 (“CULUSVP”, and, together with Cost-U-Less, the “Guarantors”), and BAN Street, Bellevue, Washington 98005 (“CULUSVP”, and, together with Cost-U-Less, the “Guarantors”), and BANCO POPULAR DE PUERTO RICO, a commercial banking institution whose mailing address is P.O. Box 8580, St. Thomas, U.S. Virgin Islands 00801 (the “Bank”).

WHEREAS, the Bank has agreed to make, the Borrower has accepted and the Guarantors have agreed to guarantee, a loan upon the terms and conditions hereinafter described (the “Loan”), to be used by the Borrower for the construction of a retail building and related facilities (the "Project") on the real property herein described and in accordance with plans and specifications submitted to and approved by the Bank (the “Plans and Specifications”);

 

NOW, THEREFORE, in consideration of the premises and the mutual agreements contained herein, the parties hereto agree as follows:

1.                 REPRESENTATIONS. The Borrower and the Guarantors. respectively, represent, covenant and warrant that:

1.1              Corporate / Company Existence and Power. The Borrower is a limited liability company, duly organized, validly existing and in good standing under the laws of St. Maarten, Netherlands Antilles, and has the power to make this Agreement and to borrow hereunder. Each of the Guarantors is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington and the U.S. Virgin Islands, respectively, and has the corporate power to make this Agreement and to guarantee the Loan.

1.2              Corporate Authority. The making and performance by the Borrower and Guarantors of this Agreement has been duly authorized by all necessary corporate action and will not violate any provision of law or of their Articles of Incorporation, Bylaws or other organizational documents or result in the breach of, or constitute a default under, or, except as hereinafter provided, result in the creation of any lien, charge or encumbrance upon any property or assets of the Borrower or

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 2 of 35

Guarantors pursuant to any indenture or bank loan or credit agreement, or other agreement or instrument to which any of the Borrower or Guarantors is a party or by which any of the Borrower, Guarantors or the property or any of them may be bound or affected.

1.3             Financial Condition. The most recent financial statements of the Borrower and Guarantors, and other related information, heretofore furnished to the Bank, are complete and correct and fairly present the financial condition of the Borrower and Guarantors and the results of operations for the period(s) specified therein. To the best of the Borrower’s and each Guarantor’s knowledge and belief, neither the Borrower nor any Guarantor has contingent obligations, liabilities for taxes, or unusual forward or long term commitments, except as herein specifically mentioned, not disclosed by, or reserved against, in said financial statements, and, at the present time, there are no material unrealized or anticipated losses from any unfavorable commitments of the Borrower or Guarantors. Said financial statements have been prepared in accordance with generally accepted accounting principles and practices consistently maintained by the Borrower and Guarantors throughout the period involved. Since the dates of such financial statements, and since the date of the other financial information provided to the Bank, there have been no material adverse changes in the financial condition of the Borrowers or Guarantors from that set forth in said financial statements or in said other financial information as of the date thereof.

1.4          Litigation. Except as the Bank has been advised in writing, there are no suits or proceedings pending, or, to the knowledge of the Borrower or Guarantors, threatened, against or affecting the Borrower or Guarantors which, if adversely determined, would have a material adverse effect on the financial condition or business of the Borrower or Guarantors. There are no proceedings by or before any governmental commission, bureau or other administrative agency pending, or to the knowledge of the Borrower or Guarantors threatened, against any of the Borrower or Guarantors.

1.5          Titles; Liens. The Borrower and Guarantors have exclusive good and marketable title to each of the fixed properties and assets reflected in their financial statements free and clear of all mortgages, liens and encumbrances, except (a) liens, if any, for current taxes, assessments and governmental charges not delinquent or whose validity is being contested at the time in good faith

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 3 of 35

 

and by appropriate proceedings, and covenants, restrictions, rights, easements, liens, encumbrances and minor irregularities in title which, in their opinion, do not and will not interfere with the occupation, use and enjoyment of such properties and assets in the normal course of business as presently conducted or planned or materially impair the value of such properties and assets for the purpose of such business, (b) mortgages, liens and encumbrances disclosed in the financial statements provided in Subsection 1.3 above, and (c) mortgages, liens and encumbrances in favor of the Bank.

1.6            Environmental Compliance. To the best of the Borrower’s knowledge and belief the Borrower has duly complied with, and the Property (as hereinafter defined) and Borrower’s business operations, assets, equipment, property, leaseholds or other facilities are in compliance with the provisions of all Netherlands Antilles environmental, health, and safety laws, codes and ordinances, and all rules and regulations promulgated thereunder and the Borrower has been issued and will maintain all required Netherlands Antilles permits, licenses, certificates, and approvals relating to (1) air emissions, (2) discharges to surface water or groundwater, (3) noise emissions, (4) solid or liquid waste disposal, (5) the use, generation, storage, transportation or disposal of toxic or hazardous substances or wastes (intended hereby and hereafter to include any and all such materials listed in any federal or territorial law, code or ordinance, and all rules and regulations promulgated thereunder, as hazardous or potentially hazardous), or (6) other environmental, health, or safety matters, and the Borrower has received no notice of, and neither knows of nor suspects, facts which might constitute any violations of any Netherlands Antilles environmental, health, or safety laws, codes or ordinances, and any rules or regulations promulgated thereunder with respect to the Property or Borrower’s business, operations, assets, equipment, property, leaseholds, or other facilities and except in accordance with a valid governmental permit, license, certificate or approval, there has been no emission, spill, release, or discharge into or upon (1) the air, (2) soils or any improvements located thereon, (3) surface water or groundwater, or (4) the sewer, septic system or waste treatment, storage or disposal system servicing the Property, of any toxic or hazardous substances or wastes at or from the Property; and accordingly, except for inventory of raw materials, supplies, work in progress and finished, that are to be used or sold in the ordinary course of business,

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 4 of 35

the Property is free of all such toxic or hazardous substances or wastes and there has been no complaint, order, directive, claim, citation, or notice by any governmental authority or any person or entity with respect to (1) air emissions, (2) spills, releases, or discharges to soils or improvements located thereon, surface water, groundwater or the sewer, septic system or waste treatment, storage or disposal systems servicing the Property, (3) noise emissions, (4) solid or liquid waste disposal, (5) the use, generation, storage, transportation, or disposal of toxic or hazardous substances or waste, or (6) other environmental, health, or safety matters affecting the Borrower, the Property or Borrower’s business, operations, assets, equipment, property, leaseholds, or other facilities. The Borrower has received no notice of indebtedness, obligation or liability, absolute or contingent, matured or not matured, with respect to the storage, treatment, cleanup, or disposal of any solid wastes, hazardous wastes, or other toxic or hazardous substances (including without limitation any such indebtedness, obligation or liability with respect to any current regulation, law or statute regarding such storage, treatment, cleanup, or disposal) which has not been previously disclosed to the Bank in writing.

1.7          Contract Obligations. The Borrower is not a party to any contractor agreement which materially and adversely affects Borrower’s business, properties, or assets, or Borrower’s condition, financial or otherwise, except as hereinafter identified; and neither the execution and delivery of this Agreement, the consummation of the transactions contemplated herein, nor compliance with the terms, conditions and provisions of this Agreement, the Security Instruments referred to herein and the Note issued hereunder will conflict with or result in a breach of the terms, conditions, or provisions of any indenture or other agreement or instrument to which the Borrower is a party or by which the Borrower is bound or will result in the creation or imposition of any lien, charge or encumbrance of any nature whatsoever upon any of the properties or assets of the Borrower, except as permitted by the provisions hereof. To the best of Borrower’s knowledge and belief, the Borrower has no contingent obligations except those arising in the ordinary course of the Borrower’s business.

1.8              The Property. The Borrower has a leasehold interest in the Property (hereinafter defined) and there are no encumbrances, restrictions or covenants of record which would prevent or otherwise affect the development of the Project or which would prevent the Bank from obtaining or

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 5 of 35

 

maintaining a first priority interest pursuant to the Assignment (as defined below), except as has been disclosed to and approved by the Bank in writing.

1.9            Business Licenses and Governmental Permits. The Borrower possesses or will obtain all licenses, franchises, and permits necessary for the conduct of Borrower’s business as now, or proposed to be, conducted, and for the development and construction of the Project without substantial known conflict with the rights of others.

1.10           Use of Loan Proceeds. The proceeds of the Loan shall be solely for the purposes herein stated in connection with the Project in accordance with the provisions hereof.

1.11           Enforceability. This Agreement, the Note (as defined in Subsection 2.4), the Security Instruments (as defined in Section 3) and other documents to be delivered and executed simultaneously herewith (collectively, the “Loan Documents”) are the legal, valid and binding obligations of the Borrower and Guarantors, enforceable against the Borrower and Guarantors in accordance with their respective terms.

2.                 THE AGREEMENT TO LEND

2.1              Type. The Loan shall be in the form of a fifteen year installment loan in the maximum principal amount of TWO MILLION AND 00/100 UNITED STATES DOLLARS (U.S. $2,000,000.00) payable in one hundred eighty (180) consecutive monthly installments of principal and interest after an initial period of interest only payments as set forth below.

2.2              Principal and Interest Payments. The Borrower shall repay the principal amount of the Loan to the Bank in one hundred eighty (180) consecutive monthly installments of principal as follows: (a) one hundred seventy nine (179) consecutive monthly installments consisting of principal in the amount of ELEVEN THOUSAND ONE HUNDRED ELEVEN, AND 00/100 DOLLARS (U.S. $11,111.00) each, commencing on the first day of the seventh full month from the date hereof and continuing on the first day of each consecutive month, and (b) a one hundred eightieth (180th), final installment of principal then outstanding, together with all accrued and unpaid interest. Interest accrued on the principal sum from time to time outstanding at the rate set forth in Subsection 2.3 below shall be due and payable monthly together with each monthly payment of principal as set forth above, provided however, that interest accrued from the date hereof until the

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 6 of 35

 

date that monthly payments of principal commence as provided above shall be due and payable on the first day of each month commencing on the first day of the first month following the date hereof and continuing on the first day of each subsequent month. The Loan may be prepaid at any time, and from time to time, in whole or in part, without any premium or penalty therefor. All payments and prepayments shall be applied first to late charges (including any interest charged at the Default Rate, as defined below), if any, second to other accrued interest and the remainder to the outstanding principal balance.

2.3            Interest. The Loan shall bear interest on the principal sum advanced and outstanding at a per annum rate equal to one percent (1%) above the prime rate as it varies (any change in interest resulting from the change in the prime rate to be effective at the beginning of the day on which such change in the prime rate is announced). The term “prime rate” as used herein means that rate of interest from time to time announced by The Chase Manhattan Bank (“Chase”) at its principal offices in New York, New York as its floating prime rate, which is not necessarily the lowest rate charged by Chase or the Bank. Interest shall be calculated daily on a three hundred sixty (360) day basis at the rate hereinabove set forth and shall be due and payable monthly commencing on the first day of the first full month following the date hereof as set forth in Subsection 2.2 above.

Notwithstanding the foregoing, at any time that an Event of Default, as defined in Section 10 hereof, shall have occurred and be continuing, the Loan shall bear interest at a rate per annum equal to two percent (2.0%) above the prime rate as it varies (the “Default Rate”) (any change in interest resulting from the change in the prime rate to be effective at the beginning of the day on which such change in the prime rate is announced). Interest at the Default Rate shall be calculated daily on a three hundred sixty (360) day basis and shall be due and payable monthly on the first day of each month as provided in the preceding paragraphs.

2.4             The Note. The Loan shall be evidenced by a promissory note of the Borrower (the “Note”), in the amount of the Loan, dated the date hereof, due and payable to the order of the Bank as hereinabove and therein set forth.

3.                SECURITY. The Loan shall be secured by this Agreement and the following agreements, pledges, and assignments of the Borrower (collectively, the “Security Instruments”):

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 7 of 35

 

3.1 Assignment of Lease. An Assignment of Lease Rights (the “Assignment”) from the Borrower to the Bank, which shall create a first priority lien over the Borrower’s leasehold interest in the real property described below pursuant to a lease agreement dated February 19, 1999 and amended November _____, 1999 (the “Lease”), between Caribe Lumber & Trading N.V. (St.Maarten), as landlord (the “Landlord”), and Borrower, as lessee, pursuant to which the Borrower possesses the real property and improvements located or to be constructed thereon as follows:

the property located at The Bush Raod, Cul-de-Sac, St. Maarten, N.A., consisting of 6,295M2 of the land described in Meetbrief #13/1966, 532M2 of the land described in Meetbrief #67/1967, 17M2 of the road described in Meetbrief #100/1974, and 5,956M2 of the land described in Meetbrief #78/1967, all as shown on the drawings and descriptions attached hereto and made a part hereof as EXHIBIT A, and consisting in the aggregate of 12,800M2.

(collectively, the “Property”).

3.2 Fiduciary Transfer of Ownership and Deed of Assignment. A Fiduciary Transfer of Ownership in favor of the Bank (the “Security Agreement”), granting to the Bank a first priority security interest in the following assets of the Borrower: all inventory, whether on the Property, as stored, or in transit, accounts receivable, machinery, apparatus, equipment, fittings, fixtures, and all other articles of personal property used or procured for use in connection with the construction, maintenance or operation of the Property. The lien of said Security Agreement shall be evidenced and perfected by the filing of the executed originals of the Security Agreement and such other documentation as may be required in St. Maarten, Netherlands Antilles, with such governmental offices as shall be necessary to perfect such lien.

3.3 Assignment of Plans and Specifications. An Assignment of Plans and Specifications, assigning to the Bank the Borrower’s interest in the Plans and Specifications, together with the consent of the Architect to such assignment.

3.4 Assignment of Construction Contract. An Assignment of Construction Contract assigning to the Bank the Borrower’s interest in the contract(s) with the general contractor and/or construction manager for the Project (collectively, the “Construction Contract”), together with the consent of the general contractor to such assignment.

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 8 of 35

 

3.5          Unlimited Guaranty. The unlimited and unconditional guaranty (the “Guaranty”) of the Guarantors, jointly and severally guaranteeing repayment of the Loan, and the Borrower’s obligations under this Agreement and the Security Instruments securing the Note.

4.            CONDITIONS TO CLOSING. The Bank shall close the Loan (but shall not be obligated to make any advance for construction costs unless and until the Borrower and Guarantors have complied with all other provisions of this Agreement), subject to the fulfillment to the satisfaction of the Bank of the following conditions and all other applicable terms of this Agreement and the Loan Documents:

4.1          Title. The Bank shall have received such evidence as may be required by the Bank or its counsel showing that (a) the leasehold title to the Property is vested in the Borrower, and (b) the interest of the Bank under the Assignment will be a first priority lien over the Borrower’s leasehold interest in the Property with no exceptions other than (i) liens for real estate taxes not yet due and payable, and (ii) such other exceptions acceptable to the Bank and its counsel.

4.2         Survey. The Bank shall have received two (2) copies of a survey and legal description (including a metes and bounds description) of the Property together with such certification(s) and related documents as may be necessary or advisable under Netherlands Antilles law or pursuant to general real estate practices in Netherlands Antilles, satisfactory in substance and form to the Bank and its counsel, showing all easements, encroachments, rights-of-way, roads, alleyways, paths, and set-backs and such other matters as revealed by inspection and survey of the Property, and shall clearly indicate all monuments and other controls relied upon by the surveyor (the “Survey”).

4.3          Plans and Specifications. The Bank shall have received the Plans and Specifications together with any and all changes made to the date of the advance, together with such evidence as the Bank may require showing that such Plans and Specifications have been approved by all governmental authorities having or claiming jurisdiction thereover, which Plans and Specifications shall be satisfactory and have the written approval of the Borrower and the Bank. No material modification of said Plans and Specifications shall be effective unless the Bank shall consent in writing thereto.

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 9 of 35

 

4.4          Supervisory Inspector’s Review and Report. The Supervisory Inspector appointed by the Bank as provided in Section 12 hereof shall review all Plans and Specifications, and any other relevant material related to the Project, prior to the making of the first advance. The Bank shall have received the written opinion of the Supervisory Inspector satisfactory to the Bank with regard to: (i) general completeness of the Plans and Specifications, (ii) sufficiency of the design criteria, (iii) compliance with all applicable building and zoning laws and regulations and other laws requiring governmental permits for the development or construction of the Project, (iv) adequacy of the structural, electrical and mechanical systems for the Project, (v) adequacy of the construction schedule, the Construction Contract, major subcontracts and any agreements with the architect(s) and engineer(s) of record for the Project, (vi) adequacy of the final construction hard costs budget and proposed trade payments schedule for the Project submitted by or on behalf of the Borrower, (vii) adequacy of the survey, plot plan, and soil report provided by or on behalf of Borrower along with the Plans and Specifications and (viii) the Supervisory Inspector’s satisfaction that the projected construction costs are in line with market conditions.

4.5          Security Instruments. The Bank shall have received the fully executed Security Instruments described in Section 3 hereof.

4.6          Proof of Corporate and Company Action and Organization. The Bank shall have received for the Borrower and each of the Guarantors certified copies of all corporate and company action taken to authorize the execution and delivery of this Agreement and the borrowing and guaranties hereunder, current Certificates of Good Standing, certified Articles of Organization, Articles of Incorporation. Bylaws, and other organizational documents, Certificates of Incumbency, Certificates of Corporate Ownership, current business licenses and such other papers and documents as the Bank shall reasonably request.

4.7         Subordination of Shareholders’ Loans. All shareholders for Borrower shall have executed and delivered to the Bank a subordination agreement, satisfactory in form and substance to the Bank and its counsel, subordinating its shareholder loans, if any, to the Loan.

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 10 of 35

 

4.8           Insurance. The Bank shall have received from the Borrower the following policies of insurance procured through agencies licensed to do business in the Netherlands Antilles, from insurance companies which shall be financially sound, reputable and satisfactory to the Bank:

(a)           Until Completion of the Project (as defined in Section 7 hereof), insurance coverage providing for payment to the Bank as mortgagee/loss payee against the risk of fire, flood, windstorm, earthquake with extended coverage endorsements in Builder’s Risk Completed Value Non-reporting form (or the equivalent thereto under Netherlands Antilles law and practice) with limits of not less than the full insurable value of the improvements being built on the Property.

(b)         Upon Completion of the Project (as defined in Section 7 hereof), insurance coverage with respect to the improvements comprising the Property and the other assets of Borrower pledged to the Bank as security for the Loan providing for payment to the Bank as mortgagee/loss payee against loss or damage by fire, flood, earthquake, windstorm and other risks now embraced by the so-called broad form extended coverage endorsement (or the equivalent thereto under Netherlands Antilles law and practice), in amounts not less than the full insurable value of the improvements and such assets.

(c)           Comprehensive General and Excess Liability Insurance coverage, including employer’s liability “stop-gap”, personal injury, hired and no-owned automobiles, products/completed operations, independent contractors (if any), blanket liability broad form, property damage and personal injury (or the equivalent thereto under Netherlands Antilles law and practice), in form, amount and coverage satisfactory to the Bank and its counsel.

(d)          Appropriate workers’ compensation insurance in respect of any work on or about the Property in accordance with Netherlands Antilles law.

(e)           Such other insurance with respect to the Property and the Borrowers’ other assets pledged to the Bank as security for the Loan in such amounts and against such insurable hazards as the Bank from time to time may reasonably require.

(f)           The foregoing insurance policies shall provide that they may not be canceled, or the amount(s) of coverage provided reduced, for any reason until not less than thirty (30) days written notice shall have been given to the Bank of the insurance company’s intention to cancel or

 

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 11 of 35

 

reduce the amount(s) of coverage provided under such policy or policies during which time the Borrower shall replace said policy or policies with new, substitute or successor policies to comply with the requirements of this Subsection 4.8.

4.9           Loan Fees. The Bank shall have received from the Borrower the Commitment Fee in the amount of TWENTY THOUSAND UNITED STATES DOLLARS (U.S. $20,000.00) and the Application Fee in the amount of ONE HUNDRED FIFTY UNITED STATES DOLLARS (U.S. $150.00).

4.10         Taxes and Permits. The Bank shall have received copies of all site development, construction and similar permits required in connection with the current stage of construction of the Project together with evidence that all fees for such permits have been paid. The Bank shall have received such written evidence as it or its counsel may require that all applicable property taxes, due or past due have been paid.

4.11         Cost Breakdown — Construction Schedule. The Bank shall have received from Borrower a projected development and construction cost breakdown, satisfactory to the Bank in form and substance, specifying in reasonable detail projected amounts to be payable for each category of work to be performed and materials to be supplied in connection with the development and construction of the Project, along with a projected schedule for the progress of such construction (the Construction Cost Breakdown and Schedule").

4.12         Draw Schedule. The Bank shall have received from Borrower a draw schedule satisfactory to the Bank.

4.13         List of Contractors and Materialsmen. The Bank shall have received from Borrower a list of contractors and materialsmen intended by the Borrower to perform work or supply materials in connection with the development and construction of the Project, together with conformed copies of the fully executed Construction Contract and subcontracts for such work and materials in form and substance satisfactory to the Bank.

4.14         Landlord’s Consent and Estoppel Certificate. The Bank shall have received a validly executed Consent and Estoppel Certificate from the Landlord, satisfactory in form and substance to the Bank and its counsel, consenting to the Borrower’s execution and the recording of the

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 12 of 35

 

Assignment, stating that the Borrower is not in default under the terms of the Lease and establishing certain rights and obligations of the Landlord, the Borrower and the Bank, and/or such other documents executed by the Landlord or any other party having an interest in the Property as may be necessary or desirable under the Lease or under Netherlands Antilles law to create, perfect or enforce the Bank’s lien, rights and remedies under the Assignment.

4.15        Lease Memorandum or Other Evidence of Leasehold Interest. If and to the extent necessary for the creation, perfection or enforcement of the Bank’s interest and rights under the Assignment, the Bank shall have been provided with a lease memorandum or other evidence of the Borrower’s leasehold interest in the Property, in such form as may be necessary under Netherland Antilles law, describing the provisions of the Lease.

4.16       Approval of Bank Counsel. All legal matters incident to the transactions hereby contemplated shall be satisfactory to counsel for the Bank, including both U.S. Virgin Islands and St. Maarten, Netherlands Antilles counsel.

4.17       Opinion of Counsel for Borrower and Guarantors. The Bank shall have received from counsel for the Borrower and Guarantors favorable opinions dated the date hereof addressed to the Bank and satisfactory in scope, form and substance to the Bank and its counsel, covering the following matters:

(a)          Borrower. The Borrower is a limited liability company, duly organized, validly existing and in good standing under the laws of St. Maarten, Netherlands Antilles, and has the legal capacity and authority to borrow the Loan, pledge the collateral under the Security Instruments, lease the Property, complete the Project thereon and to own and otherwise possess other property to the extent required to properly and adequately conduct its business and that no part of this transaction violates any restriction, term, condition or provision of the Borrower’s Articles of Incorporation, Bylaws or other organizational documents.

(b)         Cost-U-Less. Cost-U-Less is a corporation duly organized, validly existing and in good standing under the laws of the State of Washington and has the legal capacity and authority required to properly and adequately conduct its business, to provide its Guaranty under the terms of

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 13 of 35

 

this Agreement and that no part of this transaction violates any restriction, term, condition or provision of its Articles of Incorporation or Bylaws.

(c)           CULUSVI. CULUSVI is a corporation duly organized, validly existing and in good standing under the laws of the U.S. Virgin Islands and has the legal capacity and authority required to properly and adequately conduct its business, to provide its Guaranty under the terms of this Agreement and that no part of this transaction violates any restriction, term, condition or provision of its Articles of Incorporation or Bylaws.

(d)          Loan Agreement. This Agreement has been duly executed and delivered by the Borrower and Guarantors and constitutes a legal, valid and binding instrument except as may be limited by bankruptcy, insolvency, moratorium, reorganization and similar laws generally affecting the rights of creditors.

(e)           Note. The Note has been duly executed and delivered by the Borrower and constitutes a legal, valid and binding instrument, enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, moratorium, reorganization and other laws generally affecting the rights of creditors.

(f)           Security Instruments. The Security Instruments have been duly executed and delivered by the Borrower and Guarantors and constitute legal, valid and binding instruments, enforceable in accordance with their terms, except as may be limited by bankruptcy, insolvency, moratorium, reorganization and other laws generally affecting the rights of creditors.      

(g)           Remedies. The remedies contained within all the Loan Documents are effective under the laws of the State of Washington, U.S. Virgin Islands and St. Maarten, Netherlands Antilles in order to effectuate and expedite the collection of the Loan and/or foreclosure and realization upon the collateral upon default under the terms of the Loan Documents.

(h)           Other Matters. Such other matters as may be reasonably required by the Bank or its counsel.

4.18        Lease. The Bank shall have received from the Borrower a copy of the Lease, the term of which, including any options to extend, shall be for a period of not less than the repayment period of the Loan.

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 14 of 35

 

4.19       Other Documentation. The Bank shall have received from the Borrower such other items and documents required to be provided by the Borrower as may be set forth on the Closing Agenda utilized by the Bank and the Borrower to close the Loan, but not otherwise specifically referred to herein.

5.          ADDITIONAL CONDITIONS OF LOAN ADVANCES. The Bank shall make advances on the Loan and under the Note, subject to the fulfillment to the satisfaction of the Bank of the following conditions and all other applicable terms of this Agreement and the other Loan Documents:

5.1        In General. Subject to the Borrower’s compliance to the Bank’s satisfaction with the terms and conditions set forth in Section 5 and any and all other applicable terms and conditions in this Agreement and the Loan Documents and provided that no Event of Default (as defined in Section 10 hereof) shall have occurred and be continuing, the Bank shall make advances on the Loan for construction costs upon not less than three (3) business days prior written notice from the Borrower to the Bank, on standard A.I.A. Application for Payment G-702 and G-703 forms, not more frequently than monthly, and in amounts not less than Twenty Five Thousand Dollars ($25,000.00) each, in accordance with the draw schedule approved by the Bank. All advances shall be made at the principal office of the Bank or at such other place as the Bank may from time to time designate. The Bank shall have no obligation to make a requested advance unless and until the Borrower has complied to the satisfaction of the Bank and its counsel with all applicable terms and conditions of this Agreement.

(a)       Amount of Advances. In the case of advances under the Loan with respect to construction items, said advances shall be comprised as the total sum of:

(i)        the aggregate value of the class of work completed to the reasonable satisfaction of the Bank; plus  

(ii)      reimbursement for non-construction expenditures as categorized in the budget; plus  

 

 

 

 

 

Construction/Permanent Loan Agreement

Page 15 of 35