This Construction Loan Agreement involves
Title: CONSTRUCTION-TERM LOAN AGREEMENT
Governing Law: Washington Date: 8/29/2008
Industry: Recreational Activities Sector: Services
CONSTRUCTION-TERM LOAN AGREEMENT
by and among
MARSHALL FINANCIAL GROUP, LLC,
a Delaware limited liability company
WENATCHEE EVENTS CENTER, LLC,
a Washington limited liability company
TABLE OF CONTENTS
ARTICLE I DEFINITIONS...................................................... 1
Section 1.1 Defined Terms............................................. 1
ARTICLE II COMMITMENT TO MAKE ADVANCES, DISBURSEMENT PROCEDURES AND
DEPOSIT OF FUNDS................................................ 5
Section 2.1 The Advances.............................................. 5
Section 2.2 Advance Requirements...................................... 5
Section 2.3 Disbursement Procedures for Advances...................... 6
Section 2.4 Deposit of Funds by Borrower.............................. 7
Section 2.5 Disbursements Without Receipt of Draw Request............. 7
Section 2.6 Interest Reserve.......................................... 8
Section 2.7 Intentionally Omitted..................................... 8
Section 2.8 Project Contingency....................................... 8
ARTICLE III CONDITIONS OF LENDING.......................................... 8
Section 3.1 Conditions Precedent to Lending........................... 8
Section 3.2 Further Conditions Precedent to All Advances.............. 11
Section 3.3 Conditions Precedent to the Final Advance................. 12
Section 3.4 Insurance................................................. 13
Section 3.5 Casualty/Destruction...................................... 15
Section 3.6 No Waiver................................................. 15
ARTICLE IV WARRANTIES, REPRESENTATIONS AND COVENANTS OF BORROWER........... 15
Section 4.1 Representations and Warranties............................ 15
Section 4.2 Covenants................................................. 17
Section 4.3 Negative Covenants........................................ 19
Section 4.4 Environmental Representation, Warranties and Covenants,
and Indemnities........................................... 20
ARTICLE V EVENTS OF DEFAULT; RIGHTS AND REMEDIES........................... 21
Section 5.1 Event of Default Defined.................................. 21
Section 5.2 Rights and Remedies....................................... 24
ARTICLE VI MISCELLANEOUS................................................... 24
Section 6.1 Inspections............................................... 24
Section 6.2 Indemnification by Borrower............................... 25
Section 6.3 Fees...................................................... 25
Section 6.4 Addresses for Notices..................................... 25
Section 6.5 Amendments, Determinations by Lender, Consents, Etc....... 26
Section 6.6 Time of the Essence....................................... 26
Section 6.7 Waivers................................................... 26
Section 6.8 Remedies Cumulative....................................... 26
Section 6.9 Governing Law and Entire Agreement........................ 26
Section 6.10 Counterparts............................................. 26
Section 6.11 Term..................................................... 26
Section 6.12 Successors and Assigns................................... 26
Section 6.13 Offsets.................................................. 27
Section 6.14 Headings................................................. 27
Section 6.15 Accounting............................................... 27
Section 6.16 Not Joint Venturer....................................... 27
Section 6.17 Adequacy of Loan Proceeds................................ 27
Section 6.18 Participations........................................... 27
Section 6.19 Relationship to Other Documents.......................... 27
Section 6.20 Reappraisals............................................. 27
Section 6.21 Construction Signage..................................... 28
CONSTRUCTION-TERM LOAN AGREEMENT
THIS CONSTRUCTION-TERM LOAN AGREEMENT ("AGREEMENT") is made and entered
into this __ day of August 2007, by and among MARSHALL FINANCIAL GROUP, LLC, a
Delaware limited liability company ("LENDER"), and WENATCHEE EVENTS CENTER, LLC,
a Washington limited liability company ("BORROWER") and GLOBAL ENTERTAINMENT
CORPORATION, a Nevada corporation ("GUARANTOR").
W I T N E S S E T H:
WHEREAS, Borrower has requested that Lender extend to it a
construction-term loan as more fully described in this Agreement (the "LOAN");
WHEREAS, Lender has agreed to extend the Loan to Borrower upon the terms
and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1.1 DEFINED TERMS. As used in this Agreement the defined terms in
this ARTICLE I, and any other terms defined in this Agreement, i.e., those terms
beginning with a capital letter, will have the meanings ascribed to each such
term (such meanings to be equally applicable to both the singular and plural
forms of the terms defined):
(a) "ADVANCE" - An advance of the Commitment by Lender to Borrower
pursuant to ARTICLE II hereof.
(b) "AFFILIATE" - When used with reference to any Person, (a) each Person
that, directly or indirectly, controls, is controlled by or is under
common control with, the Person referred to, (b) each Person that
beneficially owns or holds, directly or indirectly, 5% or more of any
class of voting Equity Interests of the Person referred to, (c) each
Person, 5% or more of the voting Equity Interests of which is
beneficially owned or held, directly or indirectly, by the Person
referred to, and (d) each of such Person's officers, directors, joint
venturers and partners. For these purposes, the term "control"
(including the terms "controlled by" and "under common control with")
means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of the Person in
question, whether by contract, ownership of voting securities,
membership interests or otherwise.
(c) "AGREEMENT" - This Construction-Term Loan Agreement, including any
amendment hereof or supplement hereto.
(d) "ARCHITECT" - The project architect as may be retained by Borrower:
Sink Combs Dethlefs.
(e) "ARCHITECT'S CONTRACT" - The agreement between Borrower and the
Architect as to preparation of the Drawings and Specifications for the
Project and the supervision of the construction of the Project.
(f) "CERTIFICATE OF COMPLETION" - The certificate from General Contractor
and/or Architect certifying those items referred to in Section 3.3(a)
(g) "CITY" - City of Wenatchee, Washington.
(h) "COMMITMENT" - The commitment of Lender to make advances to Borrower
to construct the Project in an aggregate principal amount of up to and
including FIFTY TWO MILLION AND NO/100 DOLLARS ($52,000,000.00).
(i) "COMMITMENT TERMINATION DATE" - August __, 2009, or the date of the
termination of Lender's Commitment pursuant to SECTION 5.2 hereof,
whichever date occurs earlier.
(j) "CONSTRUCTION CONTRACT" - The agreement between Borrower and the
General Contractor for the construction of the Project.
(k) "CONTRACTOR" - Any General Contractor, who shall be engaged to work on
or to furnish materials, labor and supplies for the Project.
(l) "DISBURSING AGENT" - Stewart Title Guaranty Company.
(l) "DISBURSING AGREEMENT" - The Disbursing Agreement of even date
herewith, executed by and between Borrower, Lender and the Disbursing
Agent pertaining to the disbursement of the Advances to or on behalf
(m) "DRAW REQUEST" - The Draw Request form that is submitted to Lender
when Advances are requested in the form attached hereto as EXHIBIT A
and incorporated herein by reference.
(n) "DRAWINGS AND SPECIFICATIONS" - The drawings and specifications as may
be prepared by the Architect for the Project.
(o) "ENVIRONMENTAL INDEMNITY AGREEMENT" - The Environmental Indemnity
Agreement of even date herewith from Borrower and Guarantor in favor
(p) "ENVIRONMENTAL LAWS" - Any international, federal, state or local
statute, law, regulation, order, consent, decree, judgment, permit,
license, code, covenant, deed restriction, common law, treaty,
convention, ordinance or other requirement relating to public health,
safety or the environment, including, without limitation, those
relating to releases, discharges or emissions to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use and
handling of polychlorinated biphenyls or asbestos, to the disposal,
treatment, storage or management of hazardous or solid waste or
Hazardous Substances or crude oil, or any fraction thereof, or to
exposure to toxic or hazardous materials, to the handling,
transportation, discharge or release of gaseous or liquid Hazardous
Substances and any regulation, order, notice or demand issued pursuant
to such law, statute or ordinance, in each case applicable to the
Mortgaged Property of Borrower, including without limitation the
following: (i) the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Re-authorization Act of 1986; (ii) the Solid Waste Disposal Act, as
amended by the Resource Conservation and Recovery Act of 1976 and the
Hazardous and Solid Waste Amendments of 1984; (iii) the Hazardous
Materials Transportation Act, as amended; (iv) the Federal Water
Pollution Control Act, as amended by the Clean Water Act of 1976; (v)
the Safe Drinking Water Act; (vi) the Clean Air Act, as amended; (vii)
the Toxic Substances Control Act of 1976; (viii) the Occupational
Safety and Health Act of 1977, as amended; (ix) the Emergency Planning
and Community Right-to-Know Act of 1986; (x) the National
Environmental Policy Act of 1975; (xi) the Oil Pollution Act of 1990;
and any similar or implementing state law; and any other state or
federal statute and any further amendments to these laws providing for
financial responsibility for cleanup or other actions with respect to
the release or threatened release of Hazardous Substances or crude
oil, or any fraction thereof and all rules and regulations promulgated
(q) "EQUITY" - The difference between the Project Cost and the Commitment,
being the amount Borrower is required to invest in the Project in
accordance with the provisions of SECTION 3.1 of this Agreement.
(r) "EVENT OF DEFAULT" - One of the Events of Default specified in SECTION
(s) "GUARANTOR" - Global Entertainment Corporation, a Nevada corporation.
(t) "GUARANTY" - That certain Guaranty of Completion of even date herewith
executed and delivered by Guarantor.
(u) "GENERAL CONTRACTOR" - Hunt Construction Group, Inc.
(v) "HARD COSTS" - The costs of constructing the Project that are set
forth as Hard Costs on the Project Cost Statement.
(w) "HAZARDOUS SUBSTANCE" - Any hazardous or toxic material, substance or
waste, pollutant or contaminant that is regulated under any statute,
law, ordinance, rule or regulation of any local, state, regional or
federal authority having jurisdiction over the Mortgaged Property of
Borrower, or its use, including, but not limited to any material,
substance or waste, that is: (i) defined as a hazardous substance
under any Environmental Laws; (ii) a petroleum hydrocarbon, including
crude oil or any fraction thereof and all petroleum products; (iii)
polychlorinated biphenyls; (iv) lead; (v) urea formaldehyde; (vi)
asbestos or asbestos containing materials; (vii) flammable explosives;
(viii) infectious materials; (ix) radioactive materials; (x) mold; or
(xi) defined or regulated as a hazardous substance or hazardous waste
under any rules or regulations promulgated under any Environmental
(x) "INSPECTING ENGINEER" - The inspecting engineer retained by the
Lender: LM Consultants, Inc.
(y) "LEASE" - Amended and Restated Lease with the Purchase Option
Agreement dated May 30, 2007, made by Borrower as Lessor and WPFD, as
(z) "LOAN DOCUMENTS" - This Agreement, the Note, the Mortgage, the
Guaranty, the Environmental Indemnity Agreement and all other security
or collateral documents executed by Borrower and/or Guarantor in
connection herewith or therewith for the benefit of Lender.
(aa) "MORTGAGE" - The Deed of Trust of even date herewith, executed by
Borrower to Lender creating a first priority mortgage on the Mortgaged
Property and a security interest in all of the personal property
located thereon as security for payment of the Note.
(bb) "MORTGAGED PROPERTY" - The land and improvements (including the
Project) situated in Chelan County, Washington, and other personal
property located thereon, as more particularly described in the
(cc) "NOTE" - The promissory note from Borrower to Lender of even date
herewith in the original principal amount of FIFTY TWO MILLION AND
NO/100 DOLLARS ($52,000,000.00).
(dd) "PERSON" - Natural persons, corporations, limited liability companies,
limited liability partnerships, limited liability limited
partnerships, limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks,
trust companies, land trusts, business trusts or other organizations,
whether or not legal entities, and governments and agencies and
political subdivisions of those governments.
(ee) "PROJECT" - The construction of Greater Wenatchee Regional Events
Center on the Mortgaged Property as more fully described in the Lease,
the Construction Contract and the Drawings and Specifications.
(ff) "PROJECT BUDGET" - The total cost of completing the Project.
(gg) "PROJECT COST" - Approximately $54,000,000.00 being the estimated
amount necessary to complete the construction of the Project,
including hard and soft costs.
(hh) "PROJECT COST STATEMENT" - The certificate of Borrower in which
Borrower certifies to Lender the total of all Hard Costs and Soft
Costs necessary to complete the Project in accordance with the
Drawings and Specifications, and certifies to Lender the amount and
source of Borrower's Equity, all as verified by Inspecting Engineer.
(ii) "PROJECT DOCUMENTS" - Collectively the Construction Contract, the
Architect's Contract, the Drawings and Specifications, the Sworn
Construction Statement, the Project Cost Statement, and all other
contracts of Borrower or the General Contractor with respect to the
(jj) "SOFT COSTS" - The cost of constructing the Project that are set forth
as Soft Costs on the Project Cost Statement.
(kk) "SUBSTANTIAL COMPLETION" - The date on which General Contractor and
the Architect issue a Certificate of Substantial Completion of the
Project and Borrower demonstrates compliance with the conditions of
SECTION 3.3 of this Agreement.
(ll) "SWORN CONSTRUCTION STATEMENT" - The form of document attached hereto
as Exhibit C.
(mm) "TITLE COMPANY" - Stewart Title Guaranty Company.
(nn) "WPFD" - Greater Wenatchee Regional Events Center Public Facilities
District, a Washington municipal corporation.
COMMITMENT TO MAKE ADVANCES,
DISBURSEMENT PROCEDURES AND DEPOSIT OF FUNDS
Section 2.1 THE ADVANCES. Lender agrees, on the terms and subject to the
conditions hereinafter set forth, to make Advances to Borrower from time to time
during the period from the date hereof to the Commitment Termination Date in an
aggregate principal amount of up to and including the maximum amount of the
Commitment, to pay for or to reimburse Borrower or its Affiliates, for the
payment of the costs actually incurred in connection with the Project, that
shall include but not be limited to costs of permits, licenses, labor, supplies,
materials, services, equipment and insurance premiums, but shall not include any
profit to Borrower acting in the capacity as developer or general contractor.
The obligation of Borrower to repay the Advances shall be evidenced by the Note,
containing the terms relating to maturity, interest rate, and other matters as
set forth therein. All Advances shall be disbursed by the Disbursing Agent
pursuant to the terms and conditions hereof and the Disbursing Agreement. As
used herein, the term "Disburse" or "Disbursement" shall mean the disbursement
of Advances made or to be made by the Disbursing Agent as provided herein and in
the Disbursing Agreement.
Section 2.2 ADVANCE REQUIREMENTS. Subject to the requirements of SECTION
2.3 below, Advances shall be made as follows:
(a) INITIAL ADVANCE. Initial Advance shall be made in the total amount of
up to approximately $5,939,744.38 to be used for closing and other
costs and expenses of the Project.
(b) CONSTRUCTION ADVANCES. Construction Advances shall be made by Lender
in the total amount of up to approximately $46,060,255.62 as provided
in this Agreement. Construction Advances to be used for the
development of the Project and as otherwise set forth in the Project
Section 2.3 DISBURSEMENT PROCEDURES FOR ADVANCES.
(a) Whenever Borrower desires to obtain an Advance hereunder, such
requests to be made no more frequent than monthly, Borrower shall
submit to Lender and the Disbursing Agent a Draw Request, duly
executed on behalf of Borrower setting forth the information requested
therein. Each Draw Request shall be submitted at least ten (10)
business days before the date the Advance is desired. With respect to
Hard Costs, each Draw Request shall be limited to amounts equal to (i)
the total costs actually incurred and paid or owed by Borrower to the
date of such Draw Request for work on the Project acceptably
completed, as approved by Lender, plus (ii) the cost of materials and
equipment not incorporated in the Project, but delivered to and
suitably stored at the Project site, less (iii) 5 percent (5%) (or
such lesser hold back as is authorized by Lender), which hold back
shall be retained by Lender until Substantial Completion of the
Project (the "RETAINAGE"), and less prior Advances. Notwithstanding
anything herein to the contrary, no Advance for material stored at the
Project site will be made by Lender unless Borrower shall advise
Lender of its intention to so store materials prior to their delivery
and provides suitable security for such storage. With respect to all
Soft Costs, each Draw Request shall be limited to the total of such
costs actually incurred by Borrower to the date of such Draw Request,
less prior Advances for such costs. Each Draw Request shall be
accompanied by a certification by the General Contractor that (i) the
Project is being constructed in accordance with the Drawings and
Specifications in a good and workmanlike manner and that the work has
been completed and the materials are in place as indicated in the Draw
Request, (ii) the undisbursed amount of the Commitment is in an amount
sufficient to pay the remaining unpaid costs and expenses anticipated
to complete the Project, and (iii) such other and further
certificates, opinions, inspections, reports and other information as
may be requested by Lender from time to time at its sole discretion.
All Advances will be made in accordance with the amounts assigned to
the various items in the Sworn Construction Statement and the Project
Cost Statement (as amended from time to time to reflect authorized
change orders), and no Advance will be made for any amount in excess
of the values assigned such items in the Sworn Construction Statement
and the Project Cost Statement. Each Draw Request shall constitute an
affirmation by Borrower that, to its knowledge, all representations
and warranties set forth in ARTICLE IV are true and correct as of the
date of such Draw Request.
(b) At the time of submission of each Draw Request, Borrower shall submit
to Lender and the Disbursing Agent the following:
(i) A written lien waiver with respect to all Hard Costs from each
Contractor for work done and materials supplied by it that were
paid for pursuant to the preceding Draw Request.
(ii) Documentation reasonably acceptable to Lender (receipts, canceled
checks and the like) evidencing payment of all Soft Costs that
were paid in connection with the immediately preceding Draw
Request, excluding amounts drawn for payment of interest on the
Advances or fees due to Lender.
(iii)Such other supporting evidence as may be requested by Lender or
the Disbursing Agent to substantiate all payments that are to be
made out of the relevant Draw Request and/or to substantiate all
payments then made with respect to the Project.
(c) If on the date an Advance is desired Borrower has performed all of its
agreements and complied with all requirements therefor to be performed
or complied with hereunder including satisfaction of all applicable
conditions precedent contained in ARTICLE III hereof, Lender shall
transmit to the Disbursing Agent the amount of the requested Advance,
less amounts owing to Lender (which will be applied directly by
Lender), and the Disbursing Agent will disburse such funds pursuant to
and in accordance with the terms of the Disbursing Agreement. Each
Advance shall bear interest at the rate provided in the Note from the
date such Advance is transmitted by Lender to the Disbursing Agent.
Section 2.4 DEPOSIT OF FUNDS BY BORROWER. If Lender shall at any time
determine that the undisbursed amount of the Commitment is less than the amount
required to pay all costs and expenses of any kind that may be reasonably
anticipated in connection with the Project, and if Lender shall thereupon send
written notice thereof to Borrower specifying the amount required to be
deposited by Borrower with the Disbursing Agent to provide sufficient funds to
complete the Project, Borrower shall, within twenty (20) calendar days of
receipt of any such notice, deposit with the Disbursing Agent the amount of
funds specified in Lender's notice. Borrower shall also deposit with the
Disbursing Agent, without demand by Lender, funds equal to any increase in the
Project Cost resulting from an authorized change order. Borrower agrees that any
funds deposited with the Disbursing Agent shall be disbursed by the Disbursing
Agent before any further disbursements of the Commitment.
Section 2.5 DISBURSEMENTS WITHOUT RECEIPT OF DRAW REQUEST. Notwithstanding
anything herein to the contrary, so long as any Event of Default has occurred
and remains outstanding, Lender, upon written notice to Borrower, shall have the
irrevocable right at any time and from time to time to cause an advance of the
Commitment or a disbursement of funds that are on deposit with Lender or the
Disbursing Agent to pay principal or interest on the Note as and when said
payments become due and to pay any and all costs and expenses referred to in
SECTION 6.03 hereof, and following the occurrence of an uncured Event of Default
to pay any and all costs and expenses necessary to complete the Project, or to
satisfy any obligation of Borrower pursuant to the terms of this Agreement or
the other Loan Documents, all without receipt of a Draw Request from Borrower.
Section 2.6 INTEREST RESERVE. A sum in the amount of ($2,329,066.00) shall
be unfunded and reserved for the funding of interest owed on the Loan (the
"INTEREST RESERVE"). Funds shall be advanced for the payment of accrued interest
on Borrower's request, except as provided in SECTION2.05 above. It is the intent
of the parties hereto, that all Advances made pursuant to a Draw Request shall
include, but not be limited to, an Advance from the unfunded Interest Reserve to
pay interest then due under the Loan. It is the further intent of the parties
hereto that in the event an interest payment is due under the terms of the Note
but (i) no Draw Requests has been made; or (ii) a Draw Request has been
submitted such that the interest payment cannot be timely made as part of the
Draw Request, THEN Lender may draw from the Interest Reserve to pay such accrued
interest then due. If at any time the Interest Reserve is exhausted or Lender
determines, at its sole discretion, it is insufficient due to interest rate
adjustments, Borrower will, within 10 calendar days of Lender's request, deposit
with Lender an amount sufficient for the funding of interest payments over the
remaining term of the Loan.
Section 2.7 Intentionally Omitted.
Section 2.8 PROJECT CONTINGENCY. A sum in the amount of $1,252,035.00 shall
be unfunded and reserved for Project Cost overruns.
CONDITIONS OF LENDING
Section 3.1 CONDITIONS PRECEDENT TO LENDING. The obligation of Lender to
make the initial Advance hereunder shall be subject to the condition precedent
that Borrower shall be in compliance with the conditions contained in SECTION
3.2 and the further condition precedent that Lender shall have received the
(a) The Note, Mortgage, Guaranties, UCC Financing Statements,
Environmental Indemnity Agreement and other Loan Documents to which
Borrower and/or Guarantor as required hereunder are party duly
executed and delivered to Lender, all of which shall be reasonably
satisfactory to Lender and Lender's legal counsel in form and content.
(b) A current appraisal prepared by a state licensed appraiser approved by
Lender indicating an appraised value of the Mortgaged Property as
follows: minimum initial value of Land of at least $1,740,000.00, as
well as "as built" projected appraised value of the Project of at
least $53,100,000.00. The appraisal shall be addressed to Lender and
state that it has been prepared on Lender's behalf. The form of the
appraisal and the appraisal methods shall otherwise be reasonably
satisfactory to Lender and shall conform to all requirements of State
and Federal law. Upon completion of construction, at the expense of
Borrower, the appraiser shall reinspect and recertify the value of the
Mortgaged Property "as built."
(c) A "marked-up commitment" for a mortgagee's title insurance policy duly
endorsed by the Title Company that: (i) names Lender as primary
insured in the full principal amount of the Commitment; (ii) insures
the Mortgage to be a valid first lien on the Mortgaged Property; and
(iii) is free from exceptions for (1) matters that would be disclosed
by a survey or inspection, (2) mechanics', contractors' or
materialmen's liens and lien claims, (3) rights and claims of parties
in possession, (4) easements or claims of easements not shown by the
public records, and (5) other exceptions not specifically approved by
Lender and as set forth in EXHIBIT B to the Mortgage. All real estate
taxes are current and all levied and pending assessments not
delinquent as of the date of the Mortgage shall be paid in full. The
policy shall include a Form 3.0 zoning endorsement, an ALTA Form 9
comprehensive endorsement, and such other endorsements as Lender may
reasonably require under the circumstances.
(d) An ALTA survey of the Mortgaged Property, satisfactory to Lender and
the Title Company, prepared by a registered land surveyor, which will
include the legal description and area of the Mortgaged Property, show
and certify to the perimeter lot lines, dimensions and vectors, the
location of all existing footings, foundations and improvements,
utilities, easements, rights of way, building set back lines, curb
lines and encroachments, as may be applicable, and the intended
location of the Project according to the Drawings and Specifications
to be submitted and approved by Lender as provided herein. Said survey
shall be prepared for Lender's and the Title Company's benefit and
shall be certified by the surveyor in form reasonably acceptable to
Lender and Title Company. The survey shall be updated, as reasonably
necessary to show the footings or foundations of the Project when the
footings or foundation is completed, and shall be updated again to
show the location of the "AS-BUILT" Project prior to the final
disbursement of Loan proceeds.
(e) Copies of all building and other permits necessary for construction of
the Project. Lender shall also receive a certificate of the Architect
or engineer to the effect that all permits required by any
governmental authority for construction and operation of the Project
have been obtained.
(f) Evidence satisfactory to Lender that the Project complies with all
building codes and zoning and subdivision ordinances applicable
thereto, and that the Project and its use thereof are in compliance
with all other state, federal, and local laws and regulations.
(g) Copies of the contracts between Borrower and the Architect, and
between Borrower and the General Contractor, as well as the contracts
between the General Contractor and all major subcontractors as
identified on Exhibit B attached hereto. The Construction Contract
shall be a fixed-price or maximum-cost contract. All such contracts
shall be in form reasonably satisfactory to Lender and Lender's legal
counsel and shall, together with the Drawings and Specifications, be
assigned to Lender. The Architect, the General Contractor, and any
subcontractors or other contractors, if required by Lender, shall
consent to such assignments. Borrower shall also provide to Lender any
contract entered into by Borrower, or any proposed tenants or
franchisees doing business on the property of Borrower, directly with
any contractor, engineer, architect or professional concerning the
provision of materials and/or labor and/or services to the Project.
(h) Current financial statements, certified as true and correct by the
party giving the same. All such financial statements shall (i)
indicate all assets, liabilities, contingent liabilities and income,
and (ii) include separate financial statements for each significant
asset (e.g., if partnership interests are shown as an asset, the
financial statements of the partnership shall also be provided). All
financial and credit information must be satisfactory to Lender in
form and substance.
(i) Satisfactory soil test borings and soil reports that are acceptable to
(j) Written evidence from the proper municipal authorities and public
utility companies that all utilities, sewage and related services are
or will be available to the Mortgaged Property upon completion of the
(k) All reciprocal easement agreements, maintenance agreements, and other
easements relating to the Mortgaged Property as Lender or Lender's
legal counsel may require, if any, for parking, access, utility and
other purposes, all of which shall be reasonably satisfactory to
Lender and Lender's legal counsel in form and content.
(l) Evidence reasonably satisfactory to Lender that no petroleum product
or other Hazardous Substance is present on the Mortgaged Property, and
that no asbestos-containing products, urea-formaldehyde foams or PCB's
are being used in the construction of the Project. Such evidence shall
include a Phase I Environment Report and a Phase II Environmental
Report, prepared by a licensed engineer or other qualified
environmental consultant reasonably acceptable to Lender. The report
shall be addressed to Lender and state that it was prepared for
Lender. If the report indicates that petroleum products or other
Hazardous Substances are present, the report shall identify such
materials and shall analyze (including cost and time factors)
recommended methods of removal. Borrower warrants that no asbestos
containing-products, urea-formaldehyde foam insulation or PCB's will
be used in the construction or equipping of the Project.
(m) The Sworn Construction Statement, completed and executed by General
Contractor based on the current Drawings and Specifications as part of
the Contractor's Sworn Construction Statement of even date herewith.
(n) The Project Cost Statement.
(o) An Estoppel from WPFD in form acceptable to Lender.
(p) Intentionally Omitted.
(q) Assignment of that certain Amended and Restated Lease With Purchase
Option Agreement between Borrower and WPFD dated May 30, 2007.
(r) Evidence prepared by an independent accountant that Borrower has
injected $2,000,000.00 of cash Equity into the Project.
(s) Evidence of the financial and legal capacity of the City to perform
its commitment to guarantee shortfalls in rent payments due under the
Lease and to contribute $4,000,000 of the puchase price if WPFD
exercises its purchase option under the Lease, including (without
limiting the generality of the foregoing) current financial statements
in form acceptable to Lender, an acceptable analysis of the taxing
capacity of the City, and an opinion of the City's bond counsel as to
the enforceability of the Lease and such guarantee, the agreement to
make such contribution and all related City obligations with respect
to the Lease.
(t) Evidence that the developer fee payable to International Coliseum
Company in connection with the Project, in the amount of $250,000, has
(u) Evidence that Guarantor will subordinate to the Loan the payment of
$380,000 of its project management fee until Project completion, and
will convert an additional $200,000 of such fee to be used as
additional contingency which may be paid upon Borrower reaching
certain construction milestones, provided, however, that any project
management fee in excess of $580,000 shall be payable in the ordinary
course of business.
(v) Evidence that BBP Two LLC has agreed to defer payment of $971,000 of
Project costs that are to be reimbursed by Borrower until the Loan is
paid in full, and receipt of a subordination of such payment rights to
the repayment of the Loan.
(w) Evidence satisfactory to Lender that Borrower has expended or has
deposited with the Disbursing Agent not less than the amount of the
required Equity in payment of costs and expenses incurred in
connection with the Project that would be otherwise properly payable
from an Advance, together with satisfactory lien waivers for Hard
Costs paid with such funds.
(x) Evidence of stockholder equity of Guarantor in a total amount of not
less than $9,000,000.00 (excluding receivables from affiliates or
related entities). Evidence of such tangible net worth shall be
provided on an internally prepared financial statement prepared in
accordance with Generally Accepted Accounting Principles ("GAAP").
(y) Evidence of liquidity (in the form of cash or cash equivalents, time
deposits and marketable securities) of Guarantor in a total amount of
not less than $3,500,000.00. Evidence of such liquidity shall be
prepared by a third party acceptable to Lender (via bank statements or
statements provided by a broker-dealer).
(z) The Disbursing Agreement, duly executed by the Disbursing Agent,
Borrower and Lender in form and substance acceptable to Lender in its
(aa) Delivery of a payment and performance bond from General Contractor,
together with a dual oblige rider naming Lender, in form and substance
acceptable to Lender in its sole discretion.
(bb) Payment to Lender of a commitment fee of $780,000.00 to be disbursed
on closing from the loan proceeds.
(cc) Guarantor will deliver an irrevocable letter of credit from an
institution and in a form acceptable to Lender in the amount of
$1,250,000.00 to serve as additional collateral and which may be used
to cure an Event of Default.
Section 3.2 FURTHER CONDITIONS PRECEDENT TO ALL ADVANCES. The obligation of
Lender to make an Advance hereunder including each subsequent Advance shall be
subject to the condition precedent that Borrower shall be in compliance with all
conditions set forth in SECTION 3.1 and further conditions precedent that on the
date of each Advance:
(a) No Event of Default hereunder, or event that would constitute such an
Event of Default but for the requirement that notice be given or that
a period of grace or time elapse, shall have occurred and be
continuing and all representations and warranties made by Borrower in
ARTICLE IV shall continue to be true and correct as of the date of
(b) No determination shall have been made by Lender that the undisbursed
amount of the Commitment is less than the amount required to pay all
costs and expenses of any kind that may be anticipated in connection
with the Project; or if such a determination has been made and notice
thereof sent to Borrower, Borrower has deposited the necessary funds
with the Disbursing Agent or Lender in accordance with SECTION 2.3
(c) The disbursement requirements of SECTION 2.2 hereof and of the
Disbursing Agent set forth in the Disbursing Agreement have been
(d) If required by Lender or Disbursing Agent, Lender and the Disbursing
Agent shall be furnished with an updated Sworn Construction Statement
for the Project.
(e) Borrower shall have provided to Lender such evidence of compliance
with all applicable provisions of this Agreement as Lender may
(f) No license or permit necessary for the construction of the Project
shall have been revoked or the issuance thereof subjected to challenge
before any court or other governmental authority having or asserting
Section 3.3 CONDITIONS PRECEDENT TO THE FINAL ADVANCE. The obligation of
Lender to make the final Advance and to release the Retainage shall be subject
to the condition precedent that Borrower shall be in compliance with all
conditions set forth in SECTIONS3.1 and 3.2 and, further, that the following
conditions shall have been satisfied:
(a) The Project, including all landscape and parking requirements, has
been substantially completed in accordance with the Drawings and
Specifications and evidenced by a Certificate of Completion delivered
to Lender and Lender shall have received a Certificate of Completion
from the General Contractor and the Architect certifying that (i) the
construction of the Project has been substantially completed in
accordance with the Drawings and Specifications (with the exception of
any minor items ["PUNCH LIST ITEMS"]) (ii) all labor, services,
materials and supplies used in the Project have been paid for or will
be paid for from the proceeds of the final Advance and (iii) the
completed Project conforms with all applicable zoning, land use
planning, building and environmental laws and regulations of the
governmental authorities having jurisdiction over the Project and the
Mortgaged Property. The General Contractor shall also deliver to
Lender a list of Punch List Items acceptable to Lender, specifying
dates by which the Punch List Items shall be completed, together with
General Contractor's written contract to complete the Punch List Items
as specified. The amount of the final Advance and/or the Retainage to
be released shall be reduced by an amount equal to110% of the
scheduled value of the Punch List Items, which sum shall be held by
Lender pending the completion of the Punch List Items to the
satisfaction of Lender.
(b) Lender has received each of the following documents and approvals,
each of which shall be satisfactory to Lender and Lender's legal
(i) An as-built survey;
(ii) A final Sworn Construction Statement executed by the General
Contractor and Borrower;
(iii)A final Certificate of Occupancy or equivalent issued by the
appropriate municipal or governmental inspecting authority;
(iv) All necessary and appropriate Inspecting certifications;
(v) An approval for disbursement from the Inspecting Engineer after
its final inspection of the Project.
(vi) A title endorsement from the Title Company that reflects the
absence of any liens or other matters affecting title that are
objectionable to the Lender.
(vii)Final lien waivers executed by the General Contractor and all
Section 3.4 INSURANCE. Borrower shall obtain and shall continuously
maintain thereafter the following policies of insurance:
DURING CONSTRUCTION AND PRIOR TO COMPLETION
BUILDER'S RISK INSURANCE - Builder's Risk Insurance written on a completed
value basis in an amount equal to the full replacement cost of the building
and improvements at the date of completion with coverage available on the
so-called non-reporting "all risk" form of policy, including coverage
against collapse and water damage, with standard non-contributing mortgagee
clauses, such insurance to be in such amounts and form and written by such
companies as shall be approved by Lender which approval shall not be
unreasonably withheld, conditioned or delayed, and the insurance
certificates evidencing such policies (together with appropriate
endorsement thereto, evidence of payment of premiums thereon and written
agreements by the insurer or insurers therein to give Lender thirty (30)
days' prior written notice of any intention to cancel).
CONTRACTOR'S LIABILITY - Contractor's Comprehensive General Liability
Insurance [including operations, product liability, contingent