CONSTRUCTION/PERMANENT LOAN AGREEMENT
THIS LOAN AGREEMENT is dated the 6th day of November, 1997, by and among
CULUSVI, INC., a U.S. Virgin Islands corporation whose mailing address is 00000
XX 00xx Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (the "Borrower"), COST-U-LESS,
INC., a Washington corporation whose mailing address is 00000 XX 00xx
Xxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000 (the "Guarantor"), and BANCO POPULAR DE
PUERTO RICO, a commercial banking institution whose mailing address is X.X. Xxx
0000, Xx. Xxxxxx, X.X. Xxxxxx Xxxxxxx 00000 (the "Bank").
WHEREAS, the Bank has agreed to make, and the Borrower has accepted, a loan
upon the terms and conditions hereinafter described (the "Loan"), to be used by
the Borrower for (a) 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") and (b) closing costs associated with the Loan;
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 Guarantor, respectively,
represent, covenant and warrant that:
1.1 Corporate Existence and Power. The Borrower is a corporation duly
organized, validly existing and in good standing under the laws of the U.S.
Virgin Islands and has the corporate power to make this Agreement and to borrow
hereunder. The Guarantor is a corporation duly organized, validly existing and
in good standing under the laws of the State of Washington and has the corporate
power to make this Agreement and to guaranty the Loan.
1.2 Corporate Authority. The making and performance by the Borrower and
Guarantor 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 or Bylaws
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 Guarantor pursuant to any
indenture or bank loan or credit agreement, or other agreement or instrument to
which the Borrower or Guarantor is a party or by which the Borrower, Guarantor
or the property or either may be bound or affected.
1.3 Financial Condition. The most recent financial statements of the
Borrower and Guarantor, and other related information, heretofore furnished to
the Bank, are complete and correct and fairly present the financial condition of
the Borrower and Guarantor and the results of operations for the period(s)
specified therein. To the best of the Borrower's and Guarantor's knowledge and
belief, the Borrower and Guarantor have no 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
Guarantor. Said financial statements have been prepared in accordance with
generally accepted accounting principles and practices consistently maintained
by the Borrower and Guarantor 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 Borrower or Guarantor from that set forth in said
financial statements or in said other financial information as of the date
thereof.
1.4 Litigation. Except as Bank has been advised in writing, there are no
suits or proceedings pending, or, to the knowledge of the Borrower or Guarantor,
threatened, against or
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affecting the Borrower or Guarantor which, if adversely determined, would have a
material adverse effect on the financial condition or business of the Borrower
or Guarantor. There are no proceedings by or before any governmental commission,
bureau or other administrative agency pending, or to the knowledge of the
Borrower or Guarantor threatened, against the Borrower or Guarantor.
1.5 Titles; Liens. The Borrower and Guarantor 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 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 Mortgaged Property (as
hereinafter defined) and Borrower's business operations, assets, equipment,
property, leaseholds or other facilities are in compliance with the provisions
of all federal and territorial 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 federal and territorial
permits, licenses,
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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 federal or territorial
environmental, health, or safety laws, codes or ordinances, and any rules or
regulations promulgated thereunder with respect to the Mortgaged 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 Mortgaged Property, of
any toxic or hazardous substances or wastes at or from the Mortgaged 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, the Mortgaged 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 Mortgaged
Property, (3) noise emissions, (4) solid or liquid waste disposal, (5) the use,
generation, storage,
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transportation, or disposal of toxic or hazardous substances or waste, or (6)
other environmental, health, or safety matters affecting the Borrower, the
Mortgaged 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 contract or
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.
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1.8 The Property. The Borrower has a leasehold interest in the Mortgaged
Property (hereinafter defined) and there are no encumbrances, restrictions or
covenants of record which would prevent or otherwise affect the development of
the Project, 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), Security Instruments (as defined in Section 3) and other documents to be
delivered and executed simultaneously herewith (collectively referred to herein
as the "Loan Documents") are the legal, valid and binding obligations of the
Borrower and Guarantor, enforceable against the Borrower and Guarantor 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 DOLLARS
($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
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principal as follows: (a) one hundred seventy nine (179) consecutive monthly
installments of ELEVEN THOUSAND ONE HUNDRED ELEVEN AND /100 DOLLARS ($11,111.00)
each, commencing on the first day of the seventh full month from the date
hereof and continuing 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
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 Chase Manhattan Bank, N.A. ("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
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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"):
3.1 First Priority Leasehold Mortgage - Construction Security Interest. A
First Priority Leasehold Mortgage - Construction Security Interest of even date
herewith (the "Mortgage") 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 Ground Lease dated October 20, 1997, between
Market Square East, Inc., as Lessor, and Borrower, as Lessee (the "Lease"),
pursuant to which the Borrower possesses the real property and improvements
located or to be constructed thereon described as follows:
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a 46,538 square foot portion (known as "Lease Area 'A'"), the
survey plan and metes and bounds legal description of which are
attached hereto and made a part hereof as Exhibit A, of Parcel
Xx.0-0 Xxxxxx Xxxxx Xx. 0X Xxx Xxxxxxx Xx. Xxxxxx, U.S. Virgin
Islands, as shown on P.W.D. Drawing No. A9-369-T89
(the "Mortgaged Property").
3.2 Security Agreement and UCC-l Financing Statement. A Security Agreement
in favor of the Bank (the "Security Agreement"), granting to the Bank a first
priority security interest in all assets of the Borrower excluding inventory and
accounts receivable. The lien of said Security Agreement shall be perfected by a
UCC-l Financing Statement(s) to be executed of even date herewith by the
Borrower and the Bank and filed with the Corporate Division of the Office of the
Lieutenant Governor of the U.S. Virgin Islands.
3.3 Assignment of Lease. An Assignment of Lease, assigning to the Bank the
Borrower's leasehold interest in the Mortgaged Property.
3.4 Assignment of Subleases and Rents. An Assignment of Subleases and
Rents, which shall assign to the Bank all existing and future subleases to all
or any part of the Mortgaged Property and all rental income derived or to be
derived from the Mortgaged Property.
3.5 Assignment of Plans and Specifications. An Assignment of Plans and
Specifications, assigning to the Bank the Borrower's interest in the Plans and
Specifications.
3.6 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").
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3.7 Assignment of Project Permits. An Assignment of Project Permits
assigning to the Bank the Borrower's interest in the governmental permits issued
for the Project.
3.8 Unlimited Guaranty. The unlimited and unconditional guaranty (the
"Guaranty") of the Guarantor, 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 has 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 Insurance. The Bank shall have received a commitment for title
insurance policy issued by a title company satisfactory to the Bank, dated the
date of this Agreement and satisfactory in substance and form to the Bank and
its counsel, stating that (a) the leasehold title to the Mortgaged Property is
vested in the Borrower, and (b) insuring the interest of the Bank under the
Mortgage as a holder of first priority leasehold mortgage on the Mortgaged
Property with no exceptions other than (i) a lien 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 Mortgaged
Property together with an A.L.T.A. certification and a Surveyor's Report,
satisfactory in substance and form to the Bank and the title insurer, 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
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Mortgaged Property, and shall clearly indicate all monuments and other controls
relied upon by the surveyor (the "Survey"). All of the foregoing shall be
sufficient to delete the standard survey exception in the commitment for title
insurance provided for in Subsection 4.1 hereof.
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.
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 Codes, Zoning 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) or 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
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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 Action. The Bank shall have received certified
copies of all corporate organizational documents and all corporate action taken
by the Borrower and Guarantor to authorize the execution and delivery of this
Agreement, the Note and the borrowing and guaranteeing hereunder, and such other
papers as the Bank shall reasonably request.
4.7 Subordination of Shareholders' Loans. All shareholders shall have
executed and delivered to the Bank a subordination agreement, satisfactory in
form and substance to the Bank and its counsel, subordinating their shareholder
loans, if any, to the Loan.
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 U.S. Virgin Islands, from insurance companies which shall be
financially sound, reputable and satisfactory to the Bank:
(a) Upon Completion of the Project (as defined in Section 7 hereof),
insurance coverage with respect to the improvements comprising the Mortgaged
Property providing for payment to the Bank as mortgagee/loss payee against loss
or damage by fire, earthquake, windstorm and other risks now embraced by the so-
called broad form extended coverage endorsement, in amounts not less than the
full insurable value of the improvements.
(b) 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,
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windstorm, earthquake with extended coverage endorsements in Builder's Risk
Completed Value Non-reporting form with limits of not less than the full
insurable value of the improvements being built on the Mortgaged Property.
(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, 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 U.S. Virgin Islands law.
(e) If it is determined from the National Flood Insurance Report that
the Mortgaged Property is located in a designated flood prone area, Federal
Flood Insurance naming the Bank as mortgagee/loss payee up to the maximum amount
available covering such premises.
(f) Such other insurance with respect to the Mortgaged Property in
such amounts and against such insurable hazards as the Bank from time to time
may reasonably require.
(g) 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 give to the Bank
of the insurance company's intention to cancel or 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.
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4.9 Loan Fees. The Bank shall have received from the Borrower the
Commitment Fee in the amount of TWENTY THOUSAND DOLLARS ($20,000.00) and the
Application Fee in the amount of ONE HUNDRED FIFTY DOLLARS ($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
initial 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 may require that all applicable taxes, due or past due have been paid. The
Bank shall have received a Certificate of Real Property Tax Status from the
Treasury Division, Department of Finance, showing that there are no taxes owed
on the Mortgaged Property, together with copies of the paid receipts for the
1992, 1993, 1994 and 1995 real property taxes.
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 Materialmen. The Bank shall have received
from Borrower a list of contractors and materialmen intended by the Borrower to
perform work or supply materials in connection with the development and
construction of the Project, together
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with conformed copies of the fully executed Construction Contract and
subcontracts for such work and material in form and substance satisfactory to
the Bank.
4.14 Landlord's Consent to Assignment of Lease. The Bank shall have
received a validly executed Consent to Assignment of Lease from the Lessor,
satisfactory in form and substance to the Bank and its counsel, consenting to
the Borrower's execution and recording of the Assignment of the Lease.
4.15 Landlord's Consent to Mortgage, Assignment of Subleases and Rents and
Estoppel Certificate. The Bank shall have received a validly executed Consent to
Mortgage, Assignment of Subleases and Rents and Estoppel Certificate from the
Lessor, satisfactory in form and substance to the Bank and its counsel,
consenting to the Borrower's execution and the recording of the Mortgage and the
Assignment of Subleases and Rents and stating that the Borrower is not in
default under the terms of the Lease.
4.16 Lease Memorandum. The Bank shall have been provided with a lease
memorandum, in recordable form, describing the provisions of the Lease, which
provisions shall include the term of the Lease, which, including any options to
extend, shall be for a period of not less than the life of the Loan.
4.17 Approval of Bank Counsel. All legal matters incident to the
transactions hereby contemplated shall be satisfactory to counsel for the Bank.
4.18 Opinion of Counsel for Borrower and Guarantor. The Bank shall have
received from counsel for the Borrower and Guarantor a favorable opinion dated
the same date hereof addressed to the Bank and satisfactory in scope, form and
substance to the Bank and its counsel, covering the following matters:
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(a) Borrower. The Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the U.S. Virgin Islands, has the
legal capacity and authority to own real property and 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 or its Bylaws.
(b) Guarantor. The Guarantor 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 to own real property and 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 Guarantor's Articles of Incorporation or Bylaws.
(c) Loan Agreement. This Agreement has been duly executed and
delivered by the Borrower and Guarantor 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.
(d) 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.
(e) Security Instruments. The Security Instruments have been duly
executed and delivered by the Borrower and Guarantor 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.
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(f) Remedies. The remedies contained within all the Loan Documents are
effective under the laws of the U.S. Virgin Islands in order to expedite the
collection of the Loan and/or foreclosure upon default under the terms of the
Loan Documents.
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 FOR CONSTRUCTION COSTS. The Bank
shall make advances on the Loan and under the Note for construction costs,
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:
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
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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 (including labor)
projected for the ensuing month, to the reasonable satisfaction
of the Bank; plus
(ii) reimbursement for non-construction expenditures as categorized
in the budget; plus
(iii) the aggregate value of the materials and equipment incorporated
into the work to the reasonable satisfaction of the Bank, or
ordered, with deposits placed, or stored on the Mortgaged
Property and insured; less
(iv) the amount of prior advances;
for purposes of Subparagraphs (i) and (iii) above, "value" shall be computed
substantially in accordance with the amounts assigned thereto in the
Construction Cost Breakdown and Schedule or other schedule of payments as shall
have been approved by the Borrower and the Bank, provided however, that if there
has not been a Construction Cost Breakdown and Schedule or other schedule of
payments agreed upon and approved by the Borrower and the Bank, said values
shall be determined by the Bank in its discretion.
(b) Non-Construction Expenses. Reimbursement for non-construction
expenditures ("soft costs") shall not exceed the sums allocated to such purpose
in the draw schedule approved by the Bank and shall be based upon requisitions
for expenditures as approved by the Bank's Supervisory Inspector.
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5.2 Draw Fee and Wire Transfer Fee. The Bank shall have received a draw
fee equal to one-eighth of one percent (1/8%) of the amount advanced, which
shall be due and payable at the time of the advance by debit from the amount
advanced. The Borrower shall pay one-half of any Bank wire transfer fees
associated with each advance.
5.3 Permits. The Bank shall have received copies of all building and
similar permits required in connection with the then current stage of
construction of the Project together with evidence that all fees for such
permits have been paid.
5.4 Work in Place. The Bank shall have received a report from its
Supervisory Inspector as to the value of the work in place (including the fair
market value of the Mortgaged Property).
5.5 Certificate From Supervisory Inspector. Once each week during the term
of the Project, the Bank shall have received a written report from its
Supervisory Inspector that the work completed as of such date complies with the
Plans and Specifications, as they may have been amended in compliance with this
Agreement, and that such work has been performed in a good and workmanlike
manner, and that all materials, supplies and fixtures usually furnished and
installed at such stage of the Project have been furnished or installed and are
of appropriate quality and that the Construction Cost Breakdown and Schedule has
been adhered to, and any other pertinent aspects of the Project which, in his
opinion, should be known to the Bank. Borrower shall reimburse the Bank for all
fees paid for each inspection trip performed by the Supervisory Inspector.
5.6 Title Insurance. The Bank shall have received an endorsement to the
title insurance policy referred to in Subsection 4.1, which endorsement shall
indicate that the title
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company has continued its title examination to the date of the contemplated
advance and that such examination has disclosed no lien, encumbrance or other
exception to the title other than those previously reported to and approved by
the Bank, shall insure to the extent of all previous advances and shall insure
the contemplated advance.
5.7 Surveyor's Certificate. The Bank shall have been furnished with two
copies of a certificate prepared by a licensed land surveyor (satisfactory to
the Bank and the title company and authorized to exercise his profession in St.
Xxxxxx, U.S. Virgin Islands), certifying that the location of the improvements
to date are within the boundaries of the Mortgaged Property and established
building setback lines, if any, as shown on the Survey provided in connection
with the first advance, and disclosing no other state of facts which, in the
opinion of the Bank, would render title to the Mortgaged Property unmarketable;
provided, however, that after the construction of the foundations of all
buildings to be erected on the Mortgaged Property have been completed, an
updated survey shall have been furnished showing the "as built" location of the
foundations of the buildings, and thereafter the condition set forth in this
Subsection shall be satisfied if the Bank shall have been furnished with a
certificate of the licensed surveyor who shall have prepared such survey or such
other licensed surveyor satisfactory to the Bank and the title company, stating
that there have been no changes in the exterior lines of the improvements as
shown on the survey furnished in connection with the first advance and that
there is no encroachment over the Mortgaged Property or by any part of the
improvements over the boundary lines or any established building setback line of
the Mortgaged Property.
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5.8 Borrower's Contribution to Project. The Borrower shall have provided
the Bank with satisfactory proof of Borrower's contribution of a minimum of
$1,000,000.00 towards the hard costs of construction associated with the
Project.
6. INSPECTION. The Borrower shall permit any authorized representative
designated by the Bank to inspect the Borrower's books and records pertaining to
the Mortgaged Property or the Project, and to make extracts therefrom and to
discuss the affairs, finances and accounts of the Borrower, all at such
reasonable times and as often as may reasonably be requested and at the
Borrower's expense. The Bank or its representative shall be permitted, at all
reasonable times, to enter upon the Mortgaged Property, inspect the Project and
the construction thereof and all materials, fixtures and articles used or to be
used and to examine all detailed plans, shop drawings, specifications,
construction agreements and documents. The Borrower shall furnish to the Bank,
or its authorized representative, when requested, copies of such plans,
drawings, specifications, construction agreements and documents.
7. FINAL ADVANCE. When the Bank has determined to its satisfaction that
the Project has been substantially completed in accordance with the Plans and
Specifications (including all amendments and modifications thereof which have
been approved by the Bank) in a good and workmanlike manner and in conformity
with good construction and engineering practice, and the Bank shall have
received (a) a certificate to that effect from its Supervisory Inspector, (b)
evidence satisfactory to the Bank that all work requiring inspection by
governmental or regulatory authorities having or claiming jurisdiction has been
duly inspected and approved by such authorities and by any rating or inspection
organization, bureau, association or office having or claiming jurisdiction, (c)
to the extent any such certificate is a
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condition of the lawful use and occupancy of the improvements, a copy of the
Certificate of Occupancy validly issued by the appropriate governmental
authority, (d) two copies of a final survey showing the "as built" conditions of
the completed Project which survey shall be made in a manner and scope similar
to that described in Subsection 4.2 above, (e) a current and updated appraisal
showing an estimated value satisfactory to the Bank as set forth in Subsection
8.9, and (e) a final release of liens from the Contractors and all
subcontractors and materials suppliers (all of the foregoing being defined
herein as "Completion of the Project"), and so long as the Borrower is not in
default hereunder, the Bank shall advance to the Borrower the proceeds of the
Note which have not theretofore been disbursed. If the conditions of this
Section have not been fully satisfied, the Bank shall have no obligation to make
the final advance under the Loan.
8. AFFIRMATIVE COVENANTS. The Borrower agrees that so long as credit shall
remain available hereunder and until payment in full of the Note, and
performance of all of the Borrower's covenants and other obligations under this
Agreement are satisfied, unless the Bank shall otherwise consent in writing, the
Borrower will:
8.1 Payment of Taxes. Pay and discharge, or cause to be paid and
discharged, all taxes, assessments and governmental charges or liens imposed
upon the Borrower or upon the income or profits of the Borrower, or upon any
property belonging to the Borrower prior to the date on which penalties attach
thereto, and all lawful claims which, if unpaid, might become a lien or charge
upon the property of the Borrower; provided that the Borrower shall not be
required to pay any such tax, assessment, charge, levy or claim the payment of
which is being contested in good faith and by proper proceedings and so long as
Borrower furnishes the Bank,
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immediately upon such tax, assessment, charge, levy or claim becoming overdue,
notice of that which Borrower intends to contest.
8.2 Real Property Taxes. Pay or cause to be paid all real property taxes
on the Mortgaged Property and submit to the Bank evidence of such payments.
8.3 Insurance. Maintain, or cause to be maintained, the insurance coverage
specified in Subsection 4.8 above.
8.4 Notice of Litigation. Promptly give notice in writing to the Bank of
any material contingent liability of the Borrower and of all litigation and of
all proceedings by or before any governmental regulatory agency, against or
affecting the Borrower, where the amount in controversy exceeds $100,000.00 or
which, if adversely determined, would otherwise have a material adverse effect
on the financial condition or business of the Borrower.
8.5 Loan Proceeds. Apply proceeds of the Loan for the specific purposes
provided for herein.
8.6 Subordination of Loans. Subordinate all existing and future
shareholders' loans and/or advances to the Loan; provided that the Borrower may
make routine installment payments under such shareholders' loans so long as (a)
the Borrower is not in default hereunder, and (b) interest on any such
shareholders' loans does not exceed the interest rate charged on the Note,
provided, however, that any shareholders' loans existing as of the date hereof
may exceed the interest rate charged on the Note up to their current interest
rate of 9.18%.
8.7 Financial Statements. Furnish the Bank (1) within ninety (90) days
after the end of each fiscal year of the Borrower and Guarantor, (a) audited
financial statements of the Guarantor and its subsidiaries as of the close of
such fiscal year, and (b) financial statements of
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the Borrower as of the close of such fiscal year, prepared in such manner as is
acceptable to the Bank, which financial statements may be unaudited and prepared
internally by the Borrower, and (c) the income tax returns of Borrower and
Guarantor, and (2) such other information regarding the business affairs and
financial condition of the Borrower and Guarantor as may be requested by the
Bank, at such times, and prepared in such manner and by such persons as are
acceptable to the Bank.
8.8 Deposits. Maintain all direct and indirect depository accounts of the
Borrower with the Bank.
8.9 Appraisal. Upon Completion of the Project, provide the Bank with an
appraisal report, in form and substance satisfactory to the Bank, indicating
that the Mortgaged Property with improvements has a value of not less that
$3,000,000.00.
8.10 Debt Service Ratio. Maintain a debt service coverage ratio of 1.5,
which ratio shall be the sum of operating income and depreciation less
royalties, divided by the sum of the current portion of long term debt and
interest expense.
8.11 Environmental Compliance. Be and remain in compliance with the
provisions of all federal, territorial, and local environmental, health, and
safety laws, codes and ordinances, and all rules and regulations issued
thereunder; notify the Bank immediately of any notice of a hazardous discharge
or environmental complaint received from any governmental agency or any other
party; notify the Bank immediately of any hazardous discharge from or affecting
the Mortgaged Property; immediately contain and remove the same, in compliance
with all applicable laws; promptly pay any fine or penalty assessed in
connection therewith; and at the Bank's request, and at the Borrower's expense,
provide a report of a qualified environmental
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engineer, satisfactory in scope, form, and content to the Bank, and such other
and further assurances reasonably satisfactory to the Bank that the condition
has been corrected.
8.12 Inspection and Maintenance. Allow the Bank or its duly authorized
representatives to inspect the books, records, assets, property, and operations
of the Borrower at any reasonable time on reasonable notice and maintain said
books, records, assets, property and operations of the Borrower to the
satisfaction of the Bank.
8.13 Licenses. Obtain and promptly renew from time to time all consents,
licenses, approvals and authorizations as may be required under any applicable
law or regulation for the Project and the Borrower's business operations and for
the making, performance, validity and enforceability of the Security
Instruments.
8.14 Workers' Compensation. Pay or cause to be paid to the Commissioner of
Finance workers' compensation premiums for all employees of the Borrower, and
submit to the Bank upon payment evidence of said payments and insurance
coverage.
8.15 Vouchers and Receipts. Provide the Bank promptly on demand any
contracts, bills of sale, statements, receipts, vouchers or agreements pursuant
to which the Borrower has any claim of title to any materials, furniture,
fixtures or other articles delivered or to be delivered to the Mortgaged
Property or incorporated or to be incorporated into the Project.
8.16 Payments for Labor and Materials. Pay when due all bills for
materials supplied (including without limitation furniture and fixtures) for,
and for services of labor performed in connection with, the Project, and provide
the Bank promptly on demand a verified written statement, in such form and with
such detail as the Bank may require, showing all amounts paid
-25-
and unpaid for labor and materials and all items of labor and materials to be
furnished for the Project for which payment has not been made and the amount to
be paid therefor.
8.17 Loan to Value Ratio. Maintain a loan-to-value-ratio of not more than
70% of the value of the Mortgaged Property.
8.18 Publicity. Allow the Bank to announce and publicize the source of the
financing of the Project in such manner as the Bank may elect and at the Bank's
expense, including without limitation the placement of a sign for display on the
Property, and the Borrower shall provide a prominent and suitable location for
the display of such sign for the duration of the Project or until the Loan has
been repaid in full, whichever shall first occur.
9. NEGATIVE COVENANTS. The Borrower hereby agrees that so long as credit
shall remain available hereunder and until payment in full of the Note, and all
other credit advanced by the Bank to the Borrower, without the prior written
consent of the Bank, Borrower will not:
9.1 Limitation of Liens to Secure Indebtedness. Sell, mortgage, pledge,
hypothecate, assign, transfer, suffer to exist, or voluntarily subject to any
lien or encumbrance to secure any indebtedness, the Mortgaged Property or the
assets used or useful in connection with the Project or the Borrower's business
located or to be located on the Mortgaged Property (the "Borrower's Business"),
now owned or hereafter acquired, excluding, however, from the operation of this
covenant, the Loan hereunder, other loans made by the Bank, insurance premium
financings and the liens of NCR Credit Corp. under UCC-l Financing Statement
C-2054 filed July 19, 1997, and any continuation of such UCC-l Financing
Statement.
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9.2 Limitation of Construction and Other Liens. Allow to exist any
mechanics lien or similar encumbrance in respect to work performed by any
contractor, subcontractor or xxxxxxx of any sort or any other lien as would
preclude the Bank from obtaining recognition by the title insurance company of
its valid first priority leasehold mortgage on the Property.
9.3 Limitation on Indebtedness. Create or incur any indebtedness or
obligation for borrowed money or issue or sell any obligations of the Borrower,
excluding, however, from the operation of this covenant, the Loan hereunder,
other loans made by the Bank and subordinated shareholders' loans.
9.4 Contingent Liabilities. Assume, guarantee, endorse or otherwise become
liable upon the obligations of any person, firm, partnership, corporation or any
other entity except by endorsement of negotiable instruments for deposit or
collection or similar transactions in the ordinary course of business.
9.5 Consolidation or Merger. Merge into or consolidate with or into any
other corporation, partnership or business entity. For the purposes of this
Subsection 9.5, the acquisition by the Borrower of all or substantially all of
the assets, together with the assumption of all or substantially all of the
obligations and liabilities, of any other corporation or entity shall be deemed
to be a consolidation of such corporation or entity with the Borrower.
9.6 Disposition of Assets. Lend, sell, lease, transfer or otherwise
dispose of any of the assets of the Borrower (other than obsolete or worn-out
property not used or useful in its business), whether now owned or hereafter
acquired, except in the ordinary and regular course of the Borrower's Business.
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9.7 Capital Expenditures. Incur capital expenditures in excess of
$50,000.00 annually, without the prior written approval of the Bank.
9.8 Dividends and Distributions. Declare or pay any dividends or authorize
or make any other distribution of any profits or other revenues of the Borrower
to any shareholder or third person in excess of $360,000.00 per annum, except as
may be required to service approved shareholder loans or to fund such payments
as are made out of surplus revenues, provided that such excess distributions
shall not be allowed at any time that Borrower is in default hereunder.
9.9 Capital Stock/Treasury Stock. Purchase, acquire, redeem or retire any
capital stock of the Borrower, or issue any further capital stock or permit the
sale of any treasury stock of the Borrower.
9.10 Change in Borrower's Business. Effect, cause or permit any change in
the Borrower's Business.
9.11 Change in Stock Ownership. Effect, cause or permit any change in the
ownership of Borrower or in the beneficiary or legal ownership of any shares in
Borrower, except by descent or demise or through an approved dividend
reinvestment plan.
9.12 Amendment to Articles or Bylaws. Amend the Borrower's Articles of
Incorporation or Bylaws.
10. DEFAULT. The occurrence of any of the following events shall
constitute a default under this Agreement:
(a) if the Borrower or Guarantor is in default under any of the terms
of this Agreement, the Note, the Mortgage, or any of the Security Instruments;
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(b) if the Borrower shall default in the due payment of the principal
of or interest on the Note, or of any other indebtedness, which term shall mean
any obligation or liability for borrowed money, owing by the Borrower to the
Bank now existing or hereafter incurred, when the same shall be due;
(c) if the Bank shall not approve of any requested payment because of
any lien or encumbrance (other than a construction lien, notice of which has
been filed and which is being contested pursuant to the Mortgage) which might
have priority over any advances made or to be made hereunder or because of any
structural or other defect with respect to the Project which materially impairs
the value of the security for the advances made or to be made hereunder;
(d) if the Borrower does not construct the Project in a good and
workmanlike manner in accordance with the Plans and Specifications as they may
have been modified or changed in compliance with this Agreement; or fails to
comply promptly with, or diligently proceed with compliance with, any
requirement, note or notice of violation of law issued by or filed in any
department of any governmental authority having jurisdiction, against the
Mortgaged Property or against the Borrower by reason of any material matter in
or about such construction, or fails to furnish to the Bank, when requested,
copies of official inquiries made by governmental authorities having
jurisdiction;
(e) if the Project be at any time discontinued for a period of more
than 30 consecutive days, or not carried on with reasonable dispatch, except for
Enforced Delays (the term "Enforced Delays" meaning delays in the performance of
Borrower's obligations due to unforeseeable causes beyond its control and
without its fault or negligence, including, without limitation, Acts of God,
acts of the public enemy, acts of the federal, territorial, or local
-29-
government, fires, floods, strikes and unusually severe weather or delays of
Trade Contractors due to such causes, but excluding delays caused by the
Borrower's lack of funds to continue or complete the Project);
(f) if the Borrower executes any conditional xxxx of sale, chattel
mortgage, or other security agreement, except the Security Instruments, covering
any materials, fixtures or articles used in the Project, or articles of personal
property placed therein, or if any of such materials, fixtures or articles be
not purchased so that the ownership thereof will vest unconditionally in the
Borrower, free from encumbrance, on delivery at the premises, or if the Borrower
does not produce to the Bank promptly after demand the contracts, bills of sale,
statements, receipt vouchers or agreements, or any of them, under which the
Borrower claims title to such materials, fixtures and articles;
(g) if the Borrower assigns this Agreement or any of the advances or
any interest therein, or Borrower's right to receive any advance or portion
thereof; or if the Mortgaged Property be transferred or encumbered in any way
without the consent of the Bank, or if the Borrower by operation of law shall be
deprived of Borrower's rights hereunder or in the Mortgaged Property;
(h) if any improvements or any portion thereof shall encroach over the
boundary lines or any established building setback lines of the Mortgaged
Property or violate the requirement of any governmental authority having
jurisdiction, or if any structure on adjoining property shall encroach upon the
Mortgaged Property;
(i) if the improvements, in the judgment of the Bank, be materially
injured or destroyed by fire or other cause and not have been promptly repaired
or restored;
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(j) any representation or warranty made by the Borrower or Guarantor
in connection with the Loan proves to have been incorrect in any material
respect as of the date of this Agreement or as of the date on which it is made,
or any statement, certificate or data furnished by the Borrower or Guarantor
proves to have been incorrect in any material respect as of the date when the
facts therein set forth were stated or certified;
(k) a judgment for the payment of money shall be rendered against the
Borrower or Guarantor and any such judgment shall remain unsatisfied and in
effect for any period of sixty (60) consecutive days without a stay of
execution;
(1) the Borrower or Guarantor shall (i) apply for or consent to the
appointment of a receiver, trustee or liquidator of the Borrower or Guarantor or
of all or a substantial part of the assets of the Borrower or Guarantor, (ii) be
unable, or admit in writing, the inability to pay debts as they mature, (iii)
make a general assignment for the benefit of creditors; (iv) be adjudicated a
bankrupt or insolvent, or (v) file a voluntary petition in bankruptcy or a
petition or an answer seeking reorganization or an arrangement with creditors or
to take advantage of any insolvency law or an answer admitting the material
allegations of a petition filed against the Borrower or Guarantor in any
bankruptcy, reorganization or insolvency law or an answer admitting the material
allegations of a petition filed against the Borrower or Guarantor in any
bankruptcy proceeding, reorganization or insolvency proceeding, or corporate
action shall be taken by the Borrower or Guarantor for the purpose of effecting
any of the foregoing;
(m) if an order, judgment or decree shall be entered, without the
application, approval or consent of the Borrower or Guarantor, by any court of
competent jurisdiction, appointing a receiver, trustee or liquidator of all or a
substantial part of the assets of the Borrower
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or Guarantor, and such order, judgment or decree shall continue unstayed and in
effect for any period of sixty (60) consecutive days;
(n) if the Bank or the Bank's representative be not permitted, at all
reasonable times, to enter upon the Mortgaged Property, to inspect the
improvements and the construction thereof and all materials, supplies, chattels,
fixtures, machinery and equipment used or to be used in the construction and to
examine all detailed plans, shop drawings and specifications which are or may be
kept at the site of the improvements, or if the Borrower shall fail to furnish
to the Bank or the Bank's authorized representative, when requested, copies of
such detailed plans, shop drawings and specifications;
(o) if any of the materials, supplies, chattels, fixtures, machinery
or equipment used in the construction of the improvement or appurtenances
thereto or to be used in the operation thereof be not in accordance with the
Plans and Specifications as approved by the Supervisory Inspector and the Bank,
unless any substitutions therefor or variations therein have been waived or
approved in writing by said parties;
(p) the financial condition of the Borrower or Guarantor, or the
physical condition of the Mortgaged Property, shall adversely change in any
material respect from the condition of any of the foregoing represented in the
information and documentation submitted by the Borrower in support of its
application for the Loan; or
(q) the Borrower shall default under the Lease.
11. REMEDIES
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11.1 Remedies Without Period of Grace. Upon the occurrence of an event
specified in Section 11, the Bank shall have, in addition to the rights
otherwise existing, the following rights and remedies:
(a) Refusal of Advances. All obligation on the Bank's part to make the
Loan or to make any advances shall be suspended, if the Bank so elects.
(b) Payment of Advances. The Bank may make any advance, if it deems it
advisable so to do, or may postpone or defer any advance or parts thereof. All
such advances or postponements or deferrals thereof shall be deemed to have been
made in pursuance of this Agreement and not in modification hereof. The Bank may
make any such advance, notwithstanding that the Borrower shall have refused to
request the same, such advance to be based upon work completed and costs
incurred since the time of the last previous advance. The making of any advance
or part thereof shall not be deemed an approval or an acceptance by the Bank of
the work theretofore done, and election to make any such advance shall not be
deemed a waiver of the right to demand payment of the Note, or an obligation to
make any other advance. The Bank may, at its option, upon written notice to
Borrower pay all or any part of any advance directly to any person, firm or
corporation whom the Borrower would otherwise be obligated to pay out of the
proceeds of such advance.
(c) Default Rate. For so long as such event of default shall continue,
the Loan shall accrue, and the Borrower shall pay to the Bank, interest at the
Default Rate.
11.2 Remedies After Period of Grace. Upon the occurrence of an event
specified in Section 10, and after the ten (10) days written notice thereof from
the Bank to the Borrower, the Bank shall have, in addition to the rights
specified in Subsection 11.1 hereof and any rights
-33-
otherwise existing, the following rights and remedies: all sums theretofore
advanced with all accrued interest thereon shall at the option of the Bank
become immediately due and payable, or, without waiving the Bank's rights at any
time thereafter to elect to declare all sums advanced with all accrued interest
to be due and payable, the Bank may undertake to perform any and all work and
labor necessary to complete the Project in accordance with the Plans and
Specifications as they may have been amended in compliance with this Agreement
and make such payments as may be required by this Agreement, the Mortgage or
other Security Instruments. All sums so expended by the Bank, including any
amount in excess of the principal amount of the Note, shall be deemed to have
been paid to the Borrower and deemed to be secured by the Mortgage and the other
Security Instruments. For this purpose, the Borrower hereby constitutes and
appoints the Bank its true and lawful attorney-in-fact with full power of
substitution to complete the work in the name of the Borrower, and hereby
empowers such attorney (i) to use any funds of the Borrower, including any funds
which may remain unadvanced under the Note and hereunder for the purpose of
continuing the Project in the manner called for by the Plans and Specifications,
as they may have been amended in compliance with this Agreement, or paying,
settling or compromising all existing bills and claims which are or may be liens
against the Mortgaged Property, or as may be necessary or desirable for the
continuation of the work, or for the clearance of title, or paying, for the
account of the Borrower, any amounts payable by the Borrower under this
Agreement, the Mortgage or other Security Instruments; (ii) to make such
additions and changes and corrections in the Plans and Specifications as may be
necessary or desirable to complete the Project; (iii) to employ such
contractors, subcontractors, agents, architects and inspectors as shall be
required for such purpose; and (iv) to execute all applications
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and certificates in the name of the Borrower which may be required by any of the
contract documents and to do any and every act which the Borrower might do in
its own behalf. Such appointment shall be deemed to be coupled with an interest
which cannot be revoked. Such attorney-in-fact shall also have power to
prosecute and defend all actions or proceedings in connection with the Mortgaged
Property and to take such action and require such performance as it deems
necessary. The Borrower hereby assigns and quitclaims to the Bank all sums to be
advanced under the Note and hereunder (together with any interest in respect
thereof), conditioned upon the use of such sums as provided in this Section,
such assignment to become effective, however, only in case of the Borrower's
default.
11.3 Forbearance of Remedies Upon Default. The Bank will not exercise any
right, power or remedy with respect to any default hereunder until the
expiration of any grace period provided with respect thereto. The Bank will not
exercise any right, power or remedy described in Subsection 11.2 hereof, with
respect to the defaults, if the Bank shall have been provided with information
or evidence satisfactory to the Bank (i) that the default has been cured and
adequate compensation has been made for all damages occasioned by the default;
or (ii) that the Borrower intends to cure the default, so that the same can be
and will be cured expeditiously and in no event more than 30 days after the date
of such default (or such shorter time period as may be provided for herein, in
the Note or in the Security Instruments) or the date of the occurrence which
ripened into a default by passage of time, whichever shall first occur, and that
adequate provision has been made for any damage which might be occasioned by the
default. (Borrower's undertaking of a "Permitted Contest" as defined in and
pursuant to the terms of the Mortgage
-35-
shall be deemed by the Bank as satisfactory evidence that the Borrower intends
to cure any such default).
12. SUPERVISORY INSPECTOR. The Borrower agrees to the appointment by the
Bank of XXXXXX XXXXXXX as the Bank's Supervisory Inspector and, in order to
enable the Supervisory Inspector and its representatives conveniently to perform
the Supervisory Inspector's duties to the Bank, agrees to cooperate with the
Supervisory Inspector and to cause the Borrower's architect and general
contractor, and the employees or subcontractors of each of them, to cooperate
with the Supervisory Inspector, and, upon its request, to furnish it whatever it
may consider necessary or useful in connection with the performance of its
duties aforesaid including, without limiting the generality of the foregoing,
true copies of working details, shop drawings and the Plans and Specifications
and details thereof, samples of materials, licenses, permits, relevant
certificates of public authorities, applicable zoning ordinances and building
codes. If the Supervisory Inspector shall be, or for any reason become,
disqualified or unable to continue to act as such, or if its services are
terminated, the Bank may appoint a successor Supervisory Inspector and any such
successor shall have the same duties to the Bank and shall be entitled to the
same cooperation as if it had originally been named herein as Supervisory
Inspector. The Borrower acknowledges that the duties of the Supervisory
Inspector run solely to the Bank, and that in such capacity the Supervisory
Inspector shall have no obligations or responsibilities whatsoever to the
Borrower or to any of the Borrower's agents, employees or contractors.
13. RELATIONSHIP OF PARTIES, INDEMNIFICATION. It is agreed between the
parties hereto that Borrower has selected or will select all architects,
engineers, contractors,
-36-
materialmen, as well as all others furnishing services or materials for the
construction of the Project and the Bank has, and shall have, no responsibility
whatsoever for them or for the quality of their materials or workmanship, it
being understood that the Bank's sole function is that of lender and the only
consideration passing from the Bank to Borrower is the loan proceeds in
accordance with and subject to the terms of this Agreement. It is also agreed
that Borrower shall have no right to rely on any procedures required by the Bank
herein, such procedures being for the sole protection of the Bank as lender and
no one else. Borrower hereby agrees to hold and save the Bank harmless and
indemnify it against and from claims of any kind of any persons, including, but
without limiting the generality of the foregoing, employees of Borrower and
contractors constructing the Project and any of their respective employees, any
tenant of Borrower, any subtenant or concessionaire of any such tenant, and the
employees and business invitees of any such tenant, subtenant or concessionaire,
arising from or out of the construction, use, occupancy, or possession of the
Project in accordance with the Plans and Specifications so long as Borrower
shall remain in possession of the premises.
14. CHANGE OF PARTIES. The Borrower will not assign this Agreement or the
monies due hereunder or convey or further encumber the Mortgaged Property
without the prior written consent of the Bank; and in the event of any such
approved assignment, conveyance or encumbrance the Bank shall continue to make
advances hereunder to the Borrower or to the Borrower's successor or assignee,
and all sums so advanced shall be deemed advances under this Agreement and not
in modification hereof. In the event the Borrower shall part with or in any
manner be deprived of its leasehold interest to the Mortgaged Property in
violation of this Section, the Bank may, at its option, continue to make
advances under this Agreement and not in
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modification hereof. If the Borrower is in default under this Agreement, or as a
part of the sale, consolidation, liquidation or merger of the Bank, the Bank may
assign this Agreement and the Note and cause the assignee to make any advances
not made at the time of the assignment, in which event all of the terms hereof
shall continue to apply to the Loan, the Note, the Mortgage and the Security
Instruments. All sums so advanced shall be deemed advances under this Agreement
and not in modification hereof.
15. LOAN EXPENSES. The Borrower agrees to pay all reasonable expenses
(including legal expenses and attorneys' fees) payable in connection with the
execution and delivery of this Agreement and of the Note, and the Security
Instruments herein referred to, as well as all expenses (including legal
expenses and attorneys' fees) of every kind incidental to the collection or
enforcement of this Agreement, the Note and the other said Security Instruments;
and the Borrower shall indemnify the Bank against all reasonable claims for such
fees, charges and commissions arising in connection with the transaction
contemplated by this Agreement.
16. NO WAIVER; REMEDIES CUMULATIVE. No failure to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and are not exclusive of any remedies provided by law.
17. ENTIRE AGREEMENT. The Borrower understands and agrees that this
Agreement, along with Security Instruments executed simultaneously herewith,
constitute the entire agreement of the parties with respect to the subject
matter hereof, and supersede any and all prior agreements, written or oral,
among the parties concerning the subject matter hereof
-38-
(except that Commitment Letter dated August 25, 1997, and accepted August 28,
1997, as amended by an Addendum to Commitment Letter, accepted September 29,
1997, the terms and provisions of which are incorporated herein by this
reference and shall survive the closing of the Loan as set forth in Paragraph 16
of said Commitment Letter).
18. AMENDMENT TO LOAN AGREEMENT. This Agreement may not be changed orally,
but only by an agreement in writing signed by both parties to this Agreement.
19. WAIVER OF RIGHT TO TRIAL BY JURY. THE BORROWER AND GUARANTOR HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES THE RIGHT EITHER OF THEM MAY
HAVE TO A TRIAL BY JURY WITH RESPECT OF ANY LITIGATION BASED ON, ARISING OUT OF,
UNDER OR IN CONNECTION WITH THIS AGREEMENT AND THE LOAN DOCUMENTS, AND/OR ANY
AGREEMENT CONTEMPLATED TO BE EXECUTED IN CONJUNCTION THEREWITH, OR ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS BY
ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE BANK'S PERFORMANCE
UNDER THIS AGREEMENT. FURTHER, THE BORROWER AND GUARANTOR HEREBY CERTIFY THAT NO
REPRESENTATIVE OR AGENT OF THE BANK, NOR THE BANK'S COUNSEL, HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT THE BANK WOULD NOT, IN THE EVENT OF SUCH
LITIGATION, SEEK TO ENFORCE THIS WAIVER OF RIGHT TO JURY TRIAL PROVISION. NO
REPRESENTATIVE OR AGENT OF THE BANK, NOR THE
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BANK'S COUNSEL HAS THE AUTHORITY TO WAIVE, CONDITION, OR MODIFY THIS PROVISION.
20. MISCELLANEOUS.
20.1 Definitions. Any accounting term used herein shall, unless the
context otherwise specifies, be defined as most commonly defined in accordance
with generally accepted accounting principles.
20.2 Notice. Any notice required herein shall be deemed to have been
properly served if hand delivered or telecopied or if sent by United States
first class registered or certified mail, postage prepaid, return receipt
requested, addressed as follows (or at such other address as such party shall
have furnished to the other party in writing) if to the Borrower:
CULUSVI, Inc.
Attn: Xxxxx X. Xxxxxxxxx, Vice President
00000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
Telecopier No. 000-000-0000
and if to the Bank:
(BY U.S. MAIL)
Banco Popular de Puerto Rico
Attn: J. Xxxxxx Xxxxxxx,
Vice President
X.X. Xxx 0000
Xx. Xxxxxx, X.X. Xxxxxx Xxxxxxx 00000
Telecopier No. 340-693-2782
(BY HAND DELIVERY)
Banco Popular de Puerto Rico
Attn: J. Xxxxxx Xxxxxxx,
Vice President
Xxxxxxxx Xxxxx
Xx. Xxxxxx, X.X. Xxxxxx Xxxxxxx 00000
20.3 Construction. This Agreement is being executed in and shall be
construed in accordance with the laws of the United States Virgin Islands.
IN WITNESS WHEREOF, the parties have caused these presents to be executed
as of the date first above written.
CULUSVI, INC., Borrower
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx, President
(SEAL)
Attest: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxx, Secretary
COST-U-LESS, INC., Guarantor
By: /s/ Xxxxxxx X. Xxxx
-------------------------------------
Xxxxxxx X. Xxxx, President
(SEAL)
Attest: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Xxxxx X. Xxxxxxxxx, Secretary
BANCO POPULAR DE PUERTO RICO
By: /s/ J. Xxxxxx Xxxxxxx
-------------------------------------
J. Xxxxxx Xxxxxxx, Vice President
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EXHIBIT A
SURVEY PLAN AND METES AND BOUNDS DESCRIPTION
[GRAPHIC APPEARS HERE]
[SEAL OF REGISTERED LAND SURVEYOR * U.S. VIRGIN ISLANDS]
PROPERTY . TITLE . TOPOGRAPHIC. SUBDIVISIONS . LAND CONSULTANTS
XXXXX XXXXXXX AND ASSOCIATES, INC.
DWG. NO. 3267-3A
August 27, 1997
Lease Area A of Parcel 1-2
Estate Donoe
No. 2 New Quarter
St. Xxxxxx, US Virgin Islands
BOUNDARY DESCRIPTION:
Beginning at a point identified as N 185399.56 E 1030407.07, based on Puerto
Rico/US Virgin Islands Xxxxxxx Grid projection and common to parcel 1-2, the
line runs;
90 00' W a distance of 182.0' on parcel 1-2 to a point, thence
00 00' E a distance of 162.7' on parcel 1-2 to a point, thence
90 00' W a distance of 17.0' on parcel 1-2 to a point, thence
00 00' E a distance of 52.3' on parcel 1-2 to a point, thence
Northerly an arc distance of 24.8' on a right curve whose radius is 40.0' on
parcel 1-2 to a point, thence
Easterly an arc distance of 100.0' on a right curve whose radius is 492.6' on
parcel 1-2 to a point, thence
85 22' E a distance of 78.6' on parcel 1-2 to a point, thence
00 00' E a distance of 75.5' on parcel 1-2 to a point, thence
90 00' E a distance of 15.0' on parcel 1-2 to a point, thence
00 00' E a distance of 187.2' on parcel 1-2 to the point of origin.
Bearings are correlated to Xxxxxxx Grid.
The area is 46,538 sq. ft. / 1.068 acre.
Xxxxx Xxxxxx and Associates, Inc.
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx, RLS #502
P.O. BOX 301710, XX. XXXXXX, X.X. XXXXXX XXXXXXX 00000-0000
(000) 000-0000
