1
EXHIBIT 10.29
CONSTRUCTION LOAN AGREEMENT
BORROWER: Consep, Inc. LENDER: WESTERN BANK, a division of Washington Mutual Bank
000 X.X. Xxxxxxxx Xxxxxx Pilot Butte Branch
Xxxx, XX 00000 000 X.X. Xxxxxxxxx Xxxxxx
X.X. Xxx 000
Xxxx, XX 00000-0000
THIS CONSTRUCTION LOAN AGREEMENT BETWEEN CONSEP, INC. ("BORROWER") AND WESTERN
BANK, A DIVISION OF WASHINGTON MUTUAL BANK ("LENDER") IS MADE AND EXECUTED ON
THE FOLLOWING TERMS AND CONDITIONS. BORROWER HAS APPLIED TO LENDER FOR LOANS IN
THE TOTAL PRINCIPAL AMOUNT OF U.S. $1,695,000.00 IN ORDER TO CONSTRUCT THE
IMPROVEMENTS ON THE REAL PROPERTY DESCRIBED BELOW. LENDER IS WILLING TO LEND THE
LOAN AMOUNT TO BORROWER SOLELY UNDER THE TERMS AND CONDITIONS SPECIFIED IN THIS
AGREEMENT AND IN THE RELATED DOCUMENTS, TO EACH OF WHICH BORROWER AGREES.
BORROWER UNDERSTANDS AND AGREES THAT: (A) IN GRANTING, RENEWING, OR EXTENDING
ANY LOAN, LENDER IS RELYING UPON BORROWER'S REPRESENTATIONS, WARRANTIES, AND
AGREEMENTS AS SET FORTH IN THIS AGREEMENT, AND (B) ALL SUCH LOANS SHALL BE AND
REMAIN SUBJECT TO THE TERMS AND CONDITIONS OF THIS AGREEMENT.
TERM. This Agreement shall be effective as of June 11, 1997 and shall continue
thereafter until all Indebtedness has been paid in full and all other
obligations of Borrower hereunder have been performed in full and the parties
terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
AGREEMENT. The word "Agreement" means this Construction Loan Agreement, as
this Construction Loan Agreement may be amended or modified from time to
time, together with all exhibits and schedules attached to this
Construction Loan Agreement from time to time.
ARCHITECTURE CONTRACT. The words "Architecture Contract" mean the
architect's contract relating to the Project, if any.
BORROWER. The word "Borrower" means each and every person or entity
signing the Note, including without limitation Consep, Inc.
COLLATERAL. The word "Collateral" means and includes without limitation
all property and assets granted as collateral security for a Loan, whether
real or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a
security interest, mortgage, deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust, conditional sale,
trust receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
COMMENCEMENT DATE. The words "Commencement Date" mean the date Borrower
begins work on the Project.
COMPLETION DATE. The words "Completion Date" mean such date as Lender
shall have established as the date by which Borrower is to have completed
the Project as required in this Agreement.
CONSTRUCTION CONTRACT. The words "Construction Contract" mean and include
the contract between Borrower and the general contractor for the Project,
if any, (General Contractor), and any subcontracts with subcontractors,
materialmen, laborers, or any other person or entity for performance of
work on the Project or the delivery of materials to the Project.
EVENT OF DEFAULT. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "Events of Default."
GRANTOR. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all
Borrowers granting such a Security Interest.
GUARANTOR. The word "Guarantor" means and includes without limitation all
guarantors, sureties, and accommodation parties.
IMPROVEMENTS. The word "Improvements" means and includes without
limitation all existing and future buildings, structures, facilities,
fixtures, additions, and similar construction on the Property.
INDEBTEDNESS. The word "Indebtedness" means and includes without
limitation all Loans, together with all other obligations, debts and
liabilities of Borrower to Lender, or any one or more of them, as well as
all claims by Lender against Borrower, or any one or more of them; whether
now or hereafter existing, voluntary or involuntary, due or not due,
absolute or contingent, liquidated or unliquidated; whether Borrower may
be liable individually or jointly with others; whether Borrower may be
obligated as a guarantor, surety, or otherwise; whether recovery upon such
Indebtedness may be or hereafter may become barred by any statute of
limitations; and whether such Indebtedness may be or hereafter may become
otherwise unenforceable.
LENDER. The word "Lender" means WESTERN BANK, a division of Washington
Mutual Bank, its successors and assigns.
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CONSTRUCTION LOAN AGREEMENT
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LOAN. The word "Loan" means the loan made to Borrower under this Agreement
and the Related Documents as described below.
LOAN FUND. The words "Loan Fund" mean the undisbursed proceeds of the Loan
under this Agreement together with any equity funds or other deposits
required from Borrower under this Agreement.
NOTE. The word "Note" means the promissory note or credit agreement dated
June 11, 1997, IN THE ORIGINAL PRINCIPAL AMOUNT OF $1,695,000.00 from
Borrower to Lender, together with all renewals of, extensions of,
modifications of, refinancings of, consolidations of, and substitutions
for the promissory note or agreement.
PLANS AND SPECIFICATIONS. The words "Plans and Specifications" mean the
plans and specifications for the Project which have been submitted to and
initialed by Lender, together with such changes and additions as may be
approved by Lender in writing.
PROJECT. The word "Project" means the construction and completion of all
Improvements contemplated by this Agreement, including without limitation
the erection of the building or structure, installation of equipment and
fixtures, landscaping, and all other work necessary to make the Property
usable and complete for the intended purposes.
PROJECT DOCUMENTS. The words "Project Documents" mean the Plans and
Specifications, all studies, data and drawings relating to the Project,
whether prepared by or for Borrower, the Construction Contract, the
Architecture Contract, and all other contracts and agreements relating to
the Project or the construction of the Improvements.
PROPERTY. The word "Property" means the Real Property together with all
Improvements, all equipment, fixtures, and other articles of personal
property now or subsequently attached or affixed to the real property,
together with all accessions, parts, and additions to, all replacements
of, and all substitutions for any of such property, and all proceeds
(including insurance proceeds and refunds of premiums) from any sale or
other disposition of such property.
REAL PROPERTY. The words "Real Property" mean the real property located in
DESCHUTES COUNTY, STATE OF OREGON, and legally described as:
XXX XXX (0), XXXXX XXXX (0) XX XXXXXXX XXXXXX, XXXX OF BEND, DESCHUTES
COUNTY, OREGON
The Real Property or its address is commonly known as 000 X. X. Xxxxxxxx
Xxxxxx, Xxxx, XX 00000.
RELATED DOCUMENTS. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages,
deeds of trust, and all other instruments, agreements and documents,
whether now or hereafter existing, executed in connection with the
Indebtedness.
SECURITY AGREEMENT. The words "Security Agreement" mean and include
without limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
SECURITY INTEREST. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended
as a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
VALUE. The word "Value" means such amount or worth as defined and
determined by Lender in its sole discretion unless agreed to the contrary
by Lender in writing.
LOAN. The Loan shall be in an amount not to exceed the principal sum of U.S.
$1,695,000.00 and shall bear interest on so much of the principal sum as shall
be advanced pursuant to the terms of this Agreement and the Related Documents.
The Loan shall bear interest on each Advance from the date of the Advance in
accordance with the terms of the Note. Borrower shall use the Loan Funds solely
for the payment of (a) the costs of constructing the Improvements and equipping
the Project in accordance with the Construction Contract; (b) other costs and
expenses incurred or to be incurred in connection with the construction of the
Improvements as Lender in its sole discretion shall approve; and (c) if
permitted by Lender, interest due under the Note, including all expenses and all
loan and commitment fees described in this Agreement. The Loan amount shall be
subject at all times to all maximum limits and conditions set forth in this
Agreement or in any of the Related Documents, including without limitation, any
limits relating to loan to value ratios and acquisition and Project costs.
FEES AND EXPENSES. Whether or not the Project shall be consummated, Borrower
shall assume and pay upon demand all out-of-pocket expenses incurred by Lender
in connection with the preparation of loan documents and the making of the Loan,
including without limitation the following: (a) all closing costs, fees, and
disbursements; (b) all expenses of Lender's legal counsel; and (c) all title
examination fees, title insurance premiums, appraisal fees, survey costs,
required fees, and filing and recording fees.
NO CONSTRUCTION PRIOR TO RECORDING OF SECURITY DOCUMENT. Borrower will not
permit any work or materials to be furnished in connection with the Project
until (a) Borrower has signed the Related Documents; (b) Lender's mortgage or
deed of trust and other Security Interests in the Property have been duly
recorded and perfected; and (c) Lender has been provided evidence, satisfactory
to Lender, that Borrower has obtained all insurance required under this
Agreement or any Related Agreement and that Lender's liens on the Property and
Improvements are valid perfected first liens, subject only to such exceptions,
if any, acceptable to Lender.
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CONSTRUCTION LOAN AGREEMENT
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REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Oregon and
is validly existing and in good standing in all states in which Borrower
is doing business. Borrower has the full power and authority to own its
properties and to transact the businesses in which it is presently engaged
or presently proposes to engage. Borrower also is duly qualified as a
foreign corporation and is in good standing in all states in which the
failure to so qualify would have a material adverse effect on its
businesses or financial condition.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
by Borrower, to the extent to be executed, delivered or performed by
Borrower, have been duly authorized by all necessary action by Borrower;
do not require the consent or approval of any other person, regulatory
authority or governmental body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of its
articles of incorporation or organization, or bylaws, or any agreement or
other instrument binding upon Borrower or (b) any law, governmental
regulation, court decree, or order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change
in Borrower's financial condition subsequent to the date of the most
recent financial statement supplied to Lender. Borrower has no material
contingent obligations except as disclosed in such financial statements.
LITIGATION AND CLAIMS. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
TITLE TO PROPERTY. Borrower has, or on the date of first disbursement of
Loan proceeds will have, good and marketable title to the Property free
and clear of all defects, liens, and encumbrances, excepting only liens
for taxes, assessments, or governmental charges or levies not yet
delinquent or payable without penalty or interest, and such liens and
encumbrances as may be approved in writing by the Lender.
HAZARDOUS SUBSTANCES. The terms "hazardous waste," "hazardous substance,"
"disposal" "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended, 42 U.S.C. Section 9601, et seq. ("CERCLA"), the Superfund
Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499 ("XXXX"),
the Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901,
et seq., or other applicable state or Federal laws, rules, or regulations
adopted pursuant to any of the foregoing or intended to protect human
health or the environment ("Environmental Laws"). Except as disclosed to
and acknowledged by Lender in writing, Borrower represents and warrants
that: (a) During the period of Borrower's ownership of the properties,
there has been no use, generation, manufacture, storage, treatment,
disposal, release or threatened release of any hazardous waste or
substance by any person on, under, about or from any of the properties.
(b) Borrower has no knowledge of, or reason to believe that there has been
(i) any use, generation, manufacture, storage, treatment, disposal,
release, or threatened release of any hazardous waste or substance on,
under, about or from the properties by any prior owners or occupants of
any of the properties, or (ii) any actual or threatened litigation or
claims of any kind by any person relating to such matters. (c) Neither
Borrower nor any tenant, contractor, agent or other authorized user of any
of the properties shall use, generate, manufacture, store, treat, dispose
of, or release any hazardous waste or substance on, under, about or from
any of the properties; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws,
regulations, and ordinances, including without limitation Environmental
Laws. Borrower authorizes Lender and its agents to enter upon the
properties to make such inspections and tests as Lender may deem
appropriate to determine compliance of the properties with this section of
the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and warranties
contained herein are based on Borrower's due diligence in investigating
the properties for hazardous waste and hazardous substances. Borrower
hereby (a) releases and waives any future claims against Lender for
indemnity or contribution in the event Borrower becomes liable for cleanup
or other costs under any such laws, and (b) agrees to indemnify and hold
harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal,
release or threatened release occurring prior to Borrower's ownership or
interest in the properties, whether or not the same was or should have
been known to Borrower, or as a result of a violation of any Environmental
Laws. The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the Indebtedness and
the satisfaction of this Agreement and shall not be affected by Lender's
acquisition of any interest in any of the properties, whether by
foreclosure or otherwise.
PROJECT COSTS. The Project costs are true and accurate estimates of the
costs necessary to complete the Improvements in a good and workmanlike
manner according to the Plans and Specifications presented by Borrower to
Lender, and Borrower shall take all steps necessary to prevent the actual
cost of the Improvements from exceeding the Project costs.
UTILITY SERVICES. AII utility services appropriate to the use of the
Project after completion of construction are available at the boundaries
of the Property.
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CONSTRUCTION LOAN AGREEMENT
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ACCESS. The Property is contiguous to publicly dedicated streets, roads,
or highways providing access to the Property.
ASSESSMENT OF PROPERTY. The Property is and will continue to be assessed
and taxed as an independent parcel by all governmental authorities.
COMPLIANCE WITH GOVERNING AUTHORITIES. Borrower has examined and is
familiar with all the easements, covenants, conditions, restrictions,
reservations, building laws, regulations, zoning ordinances, and federal,
state, and local requirements affecting the Project. The Project will at
all times and in all respects conform to and comply with the requirements
of such easements, covenants, conditions, restrictions, reservations,
building laws, regulations, zoning ordinances, and federal, state, and
local requirements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
BINDING EFFECT. This Agreement, the Note and all Security Agreements
directly or indirectly securing repayment of Borrower's Loan and Note are
binding upon Borrower as well as upon Borrower's successors,
representatives and assigns, and are legally enforceable in accordance
with their respective terms.
SURVIVAL OF REPRESENTATION AND WARRANTIES. Borrower understands and agrees
that Lender is relying upon the above representations and warranties in
extending Loan Advances to Borrower. Borrower further agrees that the
foregoing representations and warranties shall be continuing in nature and
shall remain in full force and effect until such time as Borrower's Loan
and Note shall be paid in full, or until this Agreement shall be
terminated in the manner provided above, whichever is the last to occur.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Advance and each subsequent Advance under this Agreement shall be subject to the
fulfillment to Lender's satisfaction of all of the conditions set forth in this
Agreement.
APPROVAL OF CONTRACTORS, SUBCONTRACTORS, AND MATERIALMEN. Lender shall
have approved a list of all contractors employed in connection with the
construction of the Improvements, showing the name, address, and telephone
number of each contractor, a general description of the nature of the work
to be done, the labor and materials to be supplied, the names of
materialmen, if known, and the approximate dollar value of the labor,
work, or materials with respect to each contractor or materialman. Lender
shall have the right to communicate with any person to verify the facts
disclosed by the list or by any application for any Advance, or for any
other purpose.
PLANS, SPECIFICATIONS, AND PERMITS. Lender shall have received and accepted a
complete set of Plans and Specifications setting forth all Improvements for the
Project, and Borrower shall have furnished to Lender copies of all permits and
requisite approvals of any governmental body necessary for the construction and
use of the Project.
ARCHITECTURE AND CONSTRUCTION CONTRACTS. Borrower shall have furnished in
form and substance satisfactory to Lender an executed copy of the
Architecture Contract and an executed copy of the Construction Contract.
BUDGET AND SCHEDULE OF ESTIMATED ADVANCES. Lender shall have approved
detailed budget and cash flow projections of total Project costs and a
schedule of the estimated amount and time of disbursements of each
Advance.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of the Loan documents, and the
consummation of the Project, and such other authorizations and other
documents as Lender in its sole discretion may require.
BOND. If requested by Lender, Borrower shall have furnished a performance
and payment bond in an amount equal to 100% of the amount of the
Construction Contract, as well as a materialmen's and mechanics' payment
bond, with such riders and supplements as Lender may require, each in form
and substance satisfactory to Lender, naming the General Contractor as
principal and Lender as an additional obligee.
APPRAISAL. If required by Lender, an appraisal shall be prepared for the
Property, at Borrower's expense, which in form and substance shall be
satisfactory to Lender, in its sole discretion, including applicable
regulatory requirements.
PLANS AND SPECIFICATIONS. If requested by Lender, Borrower shall have
assigned to Lender on Lender's forms the Plans and Specifications for the
Project.
ENVIRONMENTAL REPORT. If requested by Lender, Borrower shall have
furnished to Lender, at Borrower's expense, an environmental report and
certificate on the Property in form and substance satisfactory to Lender,
prepared by an engineer or other expert satisfactory to Lender stating
that the Property complies with all applicable provisions and requirements
of the "Hazardous Substances" paragraph set forth below.
SOIL REPORT. If requested by Lender, Borrower shall have furnished to
Lender, at Borrower's expense, a soil report for the Property in form and
substance satisfactory to Lender, prepared by a registered engineer
satisfactory to Lender stating that the Property is free from soil or
other geological conditions that would preclude its use or development as
contemplated without extra expense for precautionary, corrective or
remedial measures .
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CONSTRUCTION LOAN AGREEMENT
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SURVEY. If requested by Lender, Borrower shall have furnished to Lender a
survey of recent date, prepared and certified by a qualified surveyor and
providing that the Improvements, if constructed in accordance with the
Plans and Specifications, shall lie wholly within the boundaries of the
Property without encroachment or violation of any zoning ordinances,
building codes or regulations, or setback requirements, together with such
other information as Lender in its sole discretion may require.
ZONING. Borrower shall have furnished evidence satisfactory to Lender that
the Property is duly and validly zoned for the construction, maintenance,
and operation of the Project.
TITLE INSURANCE. Borrower shall have provided to Lender an ALTA Lender's
extended coverage policy of title insurance with such endorsements as
Lender may require, issued by a title insurance company acceptable to
Lender and in a form, amount, and content satisfactory to Lender, insuring
or agreeing to insure that Lender's Mortgage or Deed of Trust on the
Property is or will be upon recordation a valid first lien on the Property
free and clear of all defects, liens, encumbrances, and exceptions except
those as specifically accepted by Lender in writing. If requested by
Lender, Borrower shall provide to Lender, at Borrower's expense, a
foundation endorsement to the title policy upon the completion of each
foundation for the Improvements, showing no encroachments, and upon
completion an endorsement which insures the lien-free completion of the
Improvements.
INSURANCE. Unless waived by Lender in writing, Borrower shall have
delivered to Lender the following insurance policies or evidence thereof:
(a) an all risks course of construction insurance policy (builder's risk),
with extended coverage covering the Improvements issued in an amount and
by a company acceptable to Lender, containing a loss payable or other
endorsement satisfactory to Lender insuring Lender as mortgagee, together
with such other endorsements as may be required by Lender, including
stipulations that coverages will not be cancelled or diminished without at
least ten (l0) days' prior written notice to Lender; (b) owners and
General Contractor general liability insurance, public liability and
workmen's compensation insurance; (c) flood insurance if required by
Lender or applicable law; and (d) all other insurance required by this
Agreement or by the Related Documents.
WORKERS' COMPENSATION COVERAGE. Provide to Lender proof of the General
Contractor's compliance with all applicable workers' compensation laws and
regulations with regard to all work performed on the Project.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all
expenses specified in this Agreement as are then due and payable.
SATISFACTORY CONSTRUCTION. All work usually done at the stage of
construction for which disbursement is requested shall have been done in a
good and workmanlike manner and all materials and fixtures usually
furnished and installed at that stage of construction shall have been
furnished and installed, all in compliance with the Plans and
Specifications. Borrower shall also have furnished to Lender such proofs
as Lender may require to establish the progress of the work, compliance
with applicable laws, freedom of the Property from liens, and the basis
for the requested disbursement.
CERTIFICATION. Borrower shall have furnished to Lender a certification by
an engineer, architect, or other qualified inspector acceptable to Lender
that the construction of the Improvements has complied and will continue
to comply with all applicable statutes, ordinances, codes, regulations,
and similar requirements.
LIEN WAIVERS. Borrower shall have obtained and attached to each
application for an Advance, including the Advance to cover final payment
to the General Contractor, executed acknowledgments of payments of all
sums due and releases of mechanic's and materialmen's liens, satisfactory
to Lender, from any party having lien rights, which acknowledgments of
payment and releases of liens shall cover all work, labor, equipment,
materials done, supplied, performed, or furnished prior to such
application for an Advance.
LACK OF DEFAULT. There shall not exist at the time of any Advance a
condition which would constitute an Event of Default under this Agreement.
DISBURSEMENT OF LOAN PROCEEDS. The following provisions relate to the
disbursement of funds from the Loan Fund.
APPLICATION FOR ADVANCES. Each application shall be stated on a standard
AIA payment request form or other form approved by Lender, executed by
Borrower, and supported by such evidence as Lender shall reasonably
require. Borrower shall apply only for disbursement with respect to work
actually done by the General Contractor and for materials and equipment
actually incorporated into the Project. Each application for an Advance
shall be deemed a certification of Borrower that as of the date of such
application, all representations and warranties contained in the Agreement
are true and correct, and that Borrower is in compliance with all of the
provisions of this Agreement.
PAYMENTS. At the sole option of Lender, Advances may be paid in the joint
names of Borrower and the General Contractor, subcontractor(s), or
supplier(s) in payment of sums due under the Construction Contract. At its
sole option, Lender may directly pay the General Contractor and any
subcontractors or other parties the sums due under the Construction
Contract. Borrower appoints Lender as its attorney-in-fact to make such
payments. This power shall be deemed to be coupled with an interest, shall
be irrevocable, and shall survive an Event of Default under this
Agreement.
PROJECTED COST OVERRUNS. If Lender at any time determines in its sole
discretion that the amount in the Loan Fund is insufficient, or will be
insufficient, to complete fully and to pay for the Project, then within
ten (10) days after receipt of a written request from Lender, Borrower
shall deposit in the Loan Fund an amount equal to the deficiency as
determined by
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Lender. The judgment and determination of Lender under this section shall
be final and conclusive. Any such amounts deposited by Borrower shall be
disbursed prior to any Loan proceeds.
FINAL PAYMENT TO GENERAL CONTRACTOR. Upon completion of the Project and
fulfillment of the Construction Contract to the satisfaction of Lender and
provided sufficient Loan Funds are available, Lender shall make an Advance
to cover the final payment due to the General Contractor upon delivery to
Lender of endorsements to the ALTA title insurance policy following the
posting of the completion notice, as provided under applicable law.
Construction shall not be deemed complete for purposes of final
disbursement unless and until Lender shall have received all of the
following:
(a) Evidence satisfactory to Lender that all work under the
Construction Contract requiring inspection by any governmental
authority with jurisdiction has been duly inspected and approved by
such authority, that a certificate of occupancy has been Issued, and
that all parties performing work have been paid, or will be paid,
for such work;
(b) A certification by an engineer, architect, or other qualified
inspector acceptable to Lender that the Improvements have been
completed substantially in accordance with the Plans and
Specifications and the Construction Contract, that direct connection
has been made to all utilities set forth in the Plans and
Specifications, and that the Project is ready for occupancy; and
(c) Acceptance of the completed Improvements by Lender and Borrower.
CONSTRUCTION DEFAULT. If Borrower fails in any respect to comply with the
provisions of this Agreement or if construction ceases before completion
regardless of the reason, Lender, at its option, may refuse to make further
Advances, may accelerate the indebtedness under the terms of the Note, and
without thereby impairing any of its rights, powers, or privileges, may enter
into possession of the construction site and perform or cause to be performed
any and all work and labor necessary to complete the improvements, substantially
in accordance with the Plans and Specifications.
DAMAGE OR DESTRUCTION. If any of the Property or Improvements is
damaged or destroyed by casualty of any nature, within sixty (60)
days thereafter Borrower shall restore the Property and Improvements
to the condition in which they were before such damage or
destruction with funds other than those in the Loan Fund. Lender
shall not be obligated to make disbursements under this Agreement
until such restoration has been accomplished.
RIGHT TO ADVANCE FUNDS. When any event occurs that Lender determines
may endanger completion of the Project or the fulfillment of any
condition or covenant in this Agreement, Lender may require Borrower
to furnish, within ten (l0) days after delivery of a written
request, adequate security to eliminate, reduce, or indemnify Lender
against, such danger. In addition, upon such occurrence, Lender in
its sole discretion may advance funds or agree to undertake to
advance funds to any party to eliminate, reduce, or indemnify Lender
against, such danger or to complete the Project. All sums paid by
Lender pursuant to such agreements or undertakings shall be for
Borrower's account and shall be without prejudice to Borrower's
rights, if any, to receive such funds from the party to whom paid.
All sums expended by Lender in the exercise of its option to
complete the Project or protect Lender's interests shall be payable
to Lender on demand together with interest from the date of the
Advance at the rate applicable to the Loan. In addition, any Advance
of funds under this Agreement, including without limitation direct
disbursements to the General Contractor or other parties in payment
of sums due under the Construction Contract, shall be deemed to have
been expended by or on behalf of Borrower and to have been secured
by Lender's Mortgage or Deed of Trust, if any, on the Property.
LIMITATION OF RESPONSIBILITY. The making of any Advance by Lender shall not
constitute or be interpreted as either (a) an approval or acceptance by Lender
of the work done through the date of the Advance, or (b) a representation or
indemnity by Lender to any party against any deficiency or defect in the work or
against any breach of any contract. Inspections and approvals of the Plans and
Specifications, the Improvements, the workmanship and materials used in the
Improvements, and the exercise of any other right of inspection, approval, or
inquiry granted to Lender in this Agreement are acknowledged to be solely for
the protection of Lender's interests, and under no circumstances shall they be
construed to impose any responsibility or liability of any nature whatsoever on
Lender to any party. Neither Borrower nor any contractor, subcontractor,
materialman, laborer, or any other person shall rely, or have any right to rely,
upon Lender's determination of the appropriateness of any Advance. No
disbursement or approval by Lender shall constitute a representation by Lender
as to the nature of the Project, its construction, or its intended use for
Borrower or for any other person, nor shall it constitute an indemnity by Lender
to Borrower or to any other person against any deficiency or defects in the
Project or against any breach of any contract.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings or
similar actions affecting Borrower or any Guarantor which could materially
affect the financial condition of Borrower or the financial condition of any
Guarantor.
FINANCIAL RECORDS. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis, and
permit Lender to examine and audit Borrower's books and records at all
reasonable times.
ADDITIONAL INFORMATION. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports with
respect to Borrower's financial condition and business operations as Lender
may request from time to time.
7
CONSTRUCTION LOAN AGREEMENT
(CONTINUED)
Page 7
FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants and ratios:
TANGIBLE NET WORTH. Maintain a minimum Tangible Net Worth of not
less than $12,300,000.00.
NET WORTH RATIO. Maintain a ratio of Total Liabilities to Tangible
Net Worth of less than 1.25 TO 1.00.
QUICK RATIO. Maintain a ratio of Liquid Assets to Current
Liabilities in excess of 0.90 TO 1.00.
The following provisions shall apply for purposes of determining
compliance with the foregoing financial covenants and ratios: ALL
FINANCIAL COVENANTS WILL BE TESTED ON AN ANNUAL BASIS. Except as provided
above, all computations made to determine compliance with the requirements
contained in this paragraph shall be made in accordance with generally
accepted accounting principles, applied on a consistent basis, and
certified by Borrower as being true and correct.
COMPLIANCE WITH GOVERNMENTAL REQUIREMENTS. Comply with all laws,
ordinances, and regulations, now or hereafter in effect, of all
governmental authorities applicable to the use or occupancy of the
Property, including without limitation, the Americans With Disabilities
Act. Borrower may contest in good faith any such law, ordinance, or
regulation and withhold compliance during any proceeding, including
appropriate appeals, so long as Borrower has notified Lender in writing
prior to doing so and so long as, in Lender's sole opinion, Lender's
interests in the Property are not jeopardized. Lender may require Borrower
to post adequate security or a surety bond, reasonably satisfactory to
Lender, to protect Lender's interest.
CONSTRUCTION OF THE PROJECT. Cause the Improvements to be constructed and
equipped in a diligent and orderly manner and in strict accordance with
the Plans and Specifications approved by Lender, the Construction
Contract, and all applicable laws, ordinances, codes, regulations, and
rights of adjoining or concurrent property owners.
LOAN PROCEEDS. Use the Loan Funds solely for payment of bills and expenses
directly related to the Project.
DEFECTS. Upon demand of Lender, promptly correct any defect in the
Improvements or any departure from the Plans and Specifications not
approved by Lender before further work shall be done upon the portion of
the Improvements affected.
PROJECT CLAIMS AND LITIGATION. Promptly inform Lender of (a) all material
adverse changes in the financial condition of the General Contractor; (b)
any litigation and claims, actual or threatened, affecting the Project or
the General Contractor, which could materially affect the successful
completion of the Project or the ability of the General Contractor to
complete the Project as agreed; and (c) any condition or event which
constitutes a breach or default under any of the Related Documents or any
contract related to the Project.
PAYMENT OF CLAIMS AND REMOVAL OF LIENS. (a) Cause all claims for labor
done and materials and services furnished in connection with the
Improvements to be fully paid and discharged in a timely manner, (b)
diligently file or procure the filing of a valid notice of completion of
the Improvements, or such comparable document as may be permitted under
applicable lien laws, (c) diligently file or procure the filing of a
notice of cessation, or such comparable document as may be permitted under
applicable lien laws, upon the happening of cessation of labor on the
Improvements for a continuous period of thirty (30) days or more, and (d)
take all reasonable steps necessary to remove all claims of liens against
the Property, the Improvements or any part of the Property or
Improvements, or any rights or interests appurtenant to the Property or
Improvements . Upon Lender's request, Borrower shall make such demands or
claims upon or against laborers, materialmen, subcontractors, or other
persons who have furnished or claim to have furnished labor, services, or
materials in connection with the Improvements, which demands or claims
shall under the laws of the State of Oregon require diligent assertions of
lien claims upon penalty of loss or waiver thereof. Borrower shall, within
ten (10) days after the filing of any claim of lien that is disputed or
contested by Borrower, provide Lender with a surety bond issued by a
surety acceptable to Lender sufficient to release the claim of lien or
deposit with Lender an amount satisfactory to Lender for the possibility
that the contest will be unsuccessful. If Borrower fails to remove any
lien on the Property or Improvements or provide a bond or deposit pursuant
to this provision, Lender may pay such lien, or may contest the validity
of the lien, and Borrower shall pay all costs and expenses of such
contest, including Lender's reasonable attorneys' fees.
TAXES AND CLAIMS. Pay and discharge when due all of Borrower's
indebtedness, obligations, and claims that, if unpaid, might become a lien
or charge upon the Property or Improvements; provided, however, that
Borrower shall not be required to pay and discharge any such indebtedness,
obligation, or claim so long as (a) its legality shall be contested in
good faith by appropriate proceedings, (b) the indebtedness, obligation,
or claim does not become a lien or charge upon the Property or
Improvements, and (c) Borrower shall have established on its books
adequate reserves with respect to the amount contested in accordance with
generally accepted accounting practices. If the indebtedness, obligation,
or claim does become a lien or charge upon the Property or Improvements,
Borrower shall remove the lien or charge as provided in the preceding
paragraph .
PERFORMANCE. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in all other instruments and agreements
between Borrower and Lender, and in all other loan agreements now or
hereafter existing between Borrower and any other party. Borrower shall
notify Lender immediately in writing of any default in connection with any
agreement.
ADDITIONAL ASSURANCES. Make, execute, and deliver to Lender such Security
Agreements, instruments, documents, and other agreements reasonably
necessary to document and secure the Loan and to perfect Lender's Security
Interests in the Property and Improvements.
8
CONSTRUCTION LOAN AGREEMENT
(CONTINUED)
Page 8
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, (b) sell, transfer, mortgage, assign, pledge,
lease, grant a security interest in, or encumber any of Borrower's assets,
or (c) sell with recourse any of Borrower's accounts, except to Lender.
CAPITAL EXPENDITURES. Make or contract to make capital expenditures,
including leasehold improvements, in any fiscal year in excess of
$200,000.00 or incur liability for rentals of property (including both
real and personal property) in an amount which, together with capital
expenditures, shall in any fiscal year exceed such sum.
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (c)
pay any dividends on Borrower's stock (other than dividends payable in its
stock), provided, however that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and is continuing or would result
from the payment of dividends, if Borrower is a "Subchapter S Corporation"
(as defined in the Internal Revenue Code of 1986, as amended), Borrower
may pay cash dividends on its stock to its shareholders from time to time
in amounts necessary to enable the shareholders to pay income taxes and
make estimated income tax payments to satisfy their liabilities under
federal and state law which arise solely from their status as Shareholders
of a Subchapter S Corporation because of their ownership of shares of
stock of Borrower, or (d) purchase or retire any of Borrower's outstanding
shares or alter or amend Borrower's capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money
or assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.
MODIFICATION OF CONTRACT. Make or permit to be made any modification of
the Construction Contract.
LIENS. Create or allow to be created any lien or charge upon the Property
or the Improvements.
GENERAL PROJECT PROVISIONS. The following provisions relate to the construction
and completion of the Project:
CHANGE ORDERS. All requests for changes in the Plans and Specifications,
other than minor changes involving no extra cost, must be in writing,
signed by Borrower and the architect, and delivered to Lender for its
approval. Borrower will not permit the performance of any work pursuant to
any change order or modification of the Construction Contract or any
subcontract without the written approval of Lender. Borrower will obtain
any required permits or authorizations from governmental authorities
having jurisdiction before approving or requesting a new change order.
PURCHASE OF MATERIALS; CONDITIONAL SALES CONTRACTS. No materials,
equipment, fixtures, or articles of personal property placed in or
incorporated into the Project shall be purchased or installed under any
Security Agreement or other agreement whereby the seller reserves or
purports to reserve title or the right of removal or repossession, or the
right to consider such items as personal property after their
incorporation into the Project, unless otherwise authorized by Lender in
writing.
LENDER'S RIGHT OF ENTRY AND INSPECTION. Lender and its agents shall have
at all times the right of entry and free access to the Property and the
right to inspect all work done, labor performed, and materials furnished
with respect to the Project. Lender shall have unrestricted access to and
the right to copy all records, accounting books, contracts, subcontracts,
bills, statements, vouchers, and supporting documents of Borrower relating
in any way to the Project.
LENDER'S RIGHT TO STOP WORK. If Lender in good faith determines that any
work or materials do not conform to the approved Plans and Specifications
or sound building practices, or otherwise depart from any of the
requirements of this Agreement, Lender may require the work to be stopped
and withhold disbursements until the matter is corrected. In such event,
Borrower will promptly correct the work to Lender's satisfaction. No such
action by Lender will affect Borrower's obligation to complete the
Improvements on or before the Completion Date. Lender is under no duty to
supervise or inspect the construction or examine any books and records.
Any inspection or examination by Lender is for the sole purpose of
protecting Lender's security and preserving Lender's rights under this
Agreement. No default of Borrower will be waived by any inspection by
Lender. In no event will any inspection by Lender be a representation that
there has been or will be compliance with the Plans and Specifications or
that the construction is free from defective materials or workmanship.
INDEMNITY. Borrower shall indemnify and hold Lender harmless from any and
all claims asserted against Lender or the Property by any person, entity,
or governmental body, or arising out of or in connection with the
Property, Improvements, or Project. Lender shall be entitled to appear in
any action or proceeding to defend itself against such claims, and all
costs incurred by Lender in connection with such defense, including
attorneys' fees, shall be paid by Borrower to Lender. Lender shall, in its
sole discretion, be entitled to settle or compromise any asserted claims
against it, and such settlement shall be binding upon Borrower for
purposes of this indemnification. All amounts paid by Lender under this
paragraph shall be secured by Lender's Mortgage or Deed of Trust, if any,
on the Property, shall be deemed an additional principal Advance under the
Loan, payable upon demand, and shall bear interest at the rate applicable
to the Loan.
9
CONSTRUCTION LOAN AGREEMENT
(CONTINUED)
Page 9
PUBLICITY. Lender may display a sign at the construction site informing the
public that Lender is the construction lender for the Project. Lender may
obtain other publicity in connection with the Project through press releases
and participation in ground-breaking and opening ceremonies and similar
events.
ACTIONS. Lender shall have the right to commence, appear in, or defend any
action or proceeding purporting to affect the rights, duties, or liabilities
of the parties to this Agreement, or the disbursement of funds from the Loan
Fund. In connection with this right, Lender may incur and pay reasonable
costs and expenses, including, but not limited to, attorneys' fees, for both
trial and appellate proceedings. Borrower covenants to pay to Lender on
demand all such expenses, together with interest from the date Lender incurs
the expense at the rate specified in the Note, and Lender is authorized to
disburse funds from the Loan Fund for such purposes.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all XXX and Xxxxx accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
on the Loans.
OTHER DEFAULTS. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
ENVIRONMENTAL DEFAULT. Failure of any party to comply with or perform when
due any term, obligation, covenant or condition contained in any
environmental agreement executed in connection with any Loan.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at
any time thereafter.
DEFECTIVE COLLATERALIZATION. This Agreement or any of the Related
Documents ceases to be in full force and effect (including failure of any
collateral document to create a valid and perfected security interest or
lien) at any time and for any reason.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any
creditor of any Grantor against any collateral securing the Indebtedness,
or by any governmental agency. This includes a garnishment, attachment, or
levy on or of any of Borrower's deposit accounts with Lender. However,
this Event of Default shall not apply if there is a good faith dispute by
Borrower or Grantor, as the case may be, as to the validity or
reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding, and if Borrower or Grantor gives Lender written
notice of the creditor or forfeiture proceeding and furnishes reserves or
a surety bond for the creditor or forfeiture proceeding satisfactory to
Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with
respect to any Guarantor of any of the Indebtedness or any Guarantor dies
or becomes incompetent, or revokes or disputes the validity of, or
liability under, any Guaranty of the Indebtedness. Lender, at its option,
may, but shall not be required to, permit the Guarantor's estate to assume
unconditionally the obligations arising under the guaranty in a manner
satisfactory to Lender, and, in doing so, cure the Event of Default.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of
the Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
RIGHT TO CURE. If any default, other than a Default on Indebtedness, is
curable and if Borrower or Grantor, as the case may be, has not been given
a notice of a similar default within the preceding twelve (l2) months, it
may be cured (and no Event of Default will have occurred) if Borrower or
Grantor, as the case may be, after receiving written notice from Lender
demanding cure of such default: (a) cures the default within fifteen (l 5)
days; or (b) if the cure requires more than fifteen (15) days, immediately
initiates steps which Lender deems in Lender's sole discretion to be
sufficient to cure the default and thereafter continues and completes all
reasonable and necessary steps sufficient to produce compliance as soon as
reasonably practical.
BREACH OF CONSTRUCTION CONTRACT. The Improvements are not constructed in
accordance with the Plans and Specifications or in accordance with the
terms of the Construction Contract.
10
CONSTRUCTION LOAN AGREEMENT
(CONTINUED)
Page 10
CESSATION OF CONSTRUCTION. Prior to the completion of construction of the
Improvements and equipping of the Project, the construction of the
Improvements or the equipping of the Project is abandoned or work thereon
ceases for a period of more than ten (l0) days for any reason, or the
Improvements are not completed for purposes of final payment to the
General Contractor prior to the completion date represented by Borrower to
Lender, regardless of the reason for the delay.
TRANSFER OF PROPERTY. Sale, transfer, hypothecation, assignment, or
conveyance of the Property or the Improvements or any portion thereof or
interest therein by Borrower or any Grantor without Lender's prior written
consent.
CONDEMNATION. All or any material portion of the Property is condemned,
seized, or appropriated without compensation, and Borrower does not within
thirty (30) days after such condemnation, seizure, or appropriation,
initiate and diligently prosecute appropriate action to contest in good
faith the validity of such condemnation, seizure, or appropriation.
EFFECT OF AN EVENT OF DEFAULT; REMEDIES. Upon the occurrence of any Event of
Default and at any time thereafter, Lender may, at its option, but without any
obligation to do so, and in addition to any other right Lender may have, do any
one or more of the following without notice to Borrower: (a) Cancel this
Agreement; (b) Institute appropriate proceedings to enforce the performance of
this Agreement; (c) Withhold further disbursement of Loan Funds; (d) Expend
funds necessary to remedy the default; (e) Take possession of the Property and
continue construction of the Project; (f) Accelerate maturity of the Note and/or
Indebtedness and demand payment of all sums due under the Note and/or
Indebtedness; (g) Bring an action on the Note and/or Indebtedness; (h) Foreclose
Lender's Mortgage or Deed of Trust, if any, on the Property in any manner
available under law; and (i) Exercise any other right or remedy which it has
under the Note or Related Documents, or which is otherwise available at law or
in equity or by statute.
COMPLETION OF IMPROVEMENTS BY LENDER. If Lender takes possession of the
Property, it may take any and all actions necessary in its judgment to complete
construction of the Improvements, including but not limited to making changes in
the Plans and Specifications, work, or materials and entering into, modifying or
terminating any contractual arrangements, subject to Lender's right at any time
to discontinue any work without liability. If Lender elects to complete the
Improvements, it will not assume any liability to Borrower or to any other
person for completing the Improvements or for the manner or quality of
construction of the Improvements, and Borrower expressly waives any such
liability. Borrower irrevocably appoints Lender as its attorney-in-fact, with
full power of substitution, to complete the Improvements, at Lender's option,
either in Borrower's name or in its own name. In any event, all sums expended by
Lender in completing the construction of the Improvements will be considered to
have been disbursed to Borrower and will be secured by the collateral for the
Loan. Any such sums that cause the principal amount of the Loan to exceed the
face amount of the Note will be considered to be an additional Loan to Borrower,
bearing interest at the Note rate and being secured by the collateral. For these
purposes, Borrower assigns to Lender all of its right, title and interest in and
to the Project Documents; however Lender will not have any obligation under the
Project Documents unless Lender expressly hereafter agrees to assume such
obligations in writing. Lender will have the right to exercise any rights of
Borrower under the Project Documents upon the occurrence of an Event of Default.
All rights, powers, and remedies of Lender under this Agreement are cumulative
and alternative, and are in addition to all rights which Lender may have under
applicable law.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
AGENCY. Nothing in this Agreement shall be construed to constitute the
creation of a partnership or joint venture between Lender and Borrower or
any contractor. Lender is not an agent or representative of Borrower. This
Agreement does not create a contractual relationship with and shall not be
construed to benefit or bind Lender in any way with or create any
contractual duties by Lender to any contractor, subcontractor,
materialman, laborer, or any other person.
AMENDMENTS. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to
the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by
the party or parties sought to be charged or bound by the alteration or
amendment.
APPLICABLE LAW. THIS AGREEMENT HAS BEEN DELIVERED TO LENDER AND ACCEPTED
BY LENDER IN THE STATE OF OREGON. IF THERE IS A LAWSUIT, BORROWER AGREES
UPON LENDER'S REQUEST TO SUBMIT TO THE JURISDICTION OF THE COURTS OF
XXXXXXX COUNTY, THE STATE OF OREGON. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OREGON.
AUTHORITY TO FILE NOTICES. Borrower appoints and designates Lender as its
attorney-in-fact to file for record any notice that Lender deems necessary
to protect its interest under this Agreement. This power shall be deemed
coupled with an interest and shall be irrevocable while any sum or
performance remains due and owing under any of the Related Documents.
CAPTION HEADINGS. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
MULTIPLE PARTIES; CORPORATE AUTHORITY. All obligations of Borrower under
this Agreement shall be joint and several, and all references to Borrower
shall mean each and every Borrower. This means that each of the persons
signing below is responsible for ALL obligations in this Agreement.
CONSENT TO LOAN PARTICIPATION. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to
privacy it may have with respect to such matters. Borrower additionally
waives any and all notices of sale of participation interests, as well as
all notices of any repurchase of such participation interests. Borrower
also agrees that the
11
CONSTRUCTION LOAN AGREEMENT
(CONTINUED)
Page 11
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loans and will have all the
rights granted under the participation agreement or agreements governing
the sale of such participation interests. Borrower further waives all
rights of offset or counterclaim that it may have now or later against
Lender or against any purchaser of such a participation interest and
unconditionally agrees that either Lender or such purchaser may enforce
Borrower's obligation under the Loans irrespective of the failure or
insolvency of any holder of any interest in the Loans. Borrower further
agrees that the purchaser of any such participation interests may enforce
its interests irrespective of any personal claims or defenses that
Borrower may have against Lender.
COSTS AND EXPENSES. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation attorneys' fees, incurred in
connection with the preparation, execution, enforcement, modification and
collection of this Agreement or in connection with the Loans made pursuant
to this Agreement. Lender may pay someone else to help collect the Loans
and to enforce this Agreement, and Borrower will pay that amount. This
includes, subject to any limits under applicable law, Lender's attorneys'
fees and Lender's legal expenses, whether or not there is a lawsuit,
including attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any
anticipated post-judgment collection services. Borrower also will pay any
court costs, in addition to all other sums provided by law.
ENTIRE AGREEMENT. This Agreement and the Related Documents constitute all
of the agreements between the parties relating to the Project and
supersede all other prior or concurrent oral or written agreements or
understandings relating to the Project.
NOTICES. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile, and shall be effective
when actually delivered or when deposited with a nationally recognized
overnight courier or deposited in the United States mail, first class,
postage prepaid, addressed to the party to whom the notice is to be given
at the address shown above. Any party may change its address for notices
under this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's
address. To the extent permitted by applicable law, if there is more than
one Borrower, notice to any Borrower will constitute notice to all
Borrowers. For notice purposes, Borrower will keep Lender informed at all
times of Borrower's current address(es).
SUCCESSORS AND ASSIGNS. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure
to the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
SEVERABILITY. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
SURVIVAL. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made
by Lender or on Lender's behalf.
WAIVER. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's
rights or of any obligations of Borrower or of any Grantor as to any
future transactions. Whenever the consent of Lender is required under this
Agreement, the granting of such consent by Lender in any instance shall
not constitute continuing consent in subsequent instances where such
consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
FINANCIAL STATEMENTS (INCLUDING Q10 AND K10'S). Borrower will furnish lender
with, Q10 and K10 reports within 5 days of filing and as soon as available, but
in no event later than ninety (90) days after the end of each fiscal year,
Borrower's balance sheet and income statement for the year ended, audited by a
certified public accountant satisfactory to Lender. All financial reports
required to be provided under this Agreement shall be prepared in accordance
with generally accepted accounting principles, applied on a consistent basis and
certified by Borrower as being true and correct.
DEBT SERVICE COVERAGE RATIO. Borrower agrees to maintain a Debt Service Coverage
Ratio of 1.00 to 1.00 on the subject property. Debt Service Coverage Ratio is
defined as Net Operating Income less "reoccurring" non-operating expenses such
as real estate commissions and capital improvements divided by annual debt
service requirements (principal and interest) of all debt secured by subject
property. Net Operating Income is defined as rental income remaining after the
deduction of standard operating expenses including reserves for vacancies and
capital improvement reserve.
ACQUISITIONS. Borrower agrees with Lender that while this agreement is in
effice, Borrower will not make any acquisitions without concurrence by Lender.
DRAW PERIOD. No disbursement of Loan proceeds shall be made after December 31,
1997.
12
CONSTRUCTION LOAN AGREEMENT
(CONTINUED)
Page 12
UNDER OREGON LAW, MOST AGREEMENTS, PROMISES AND COMMITMENTS MADE BY US (LENDER)
AFTER OCTOBER 3, 1989 CONCERNING LOANS AND OTHER CREDIT EXTENSIONS WHICH ARE NOT
FOR PERSONAL FAMILY OR HOUSEHOLD PURPOSES OR SECURED SOLELY BY THE BORROWER'S
RESIDENCE MUST BE IN WRITING, EXPRESS CONSIDERATION AND BE SIGNED BY US TO BE
ENFORCEABLE.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS CONSTRUCTION LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF JUNE
11, 1997.
BORROWER :
CONSEP, INC.
BY:/S/ XXXXX XXXX
-----------------------------------------------
XXXXX XXXX, VICE PRESIDENT, FINANCE/CFO
LENDER:
WESTERN BANK, A DIVISION OF WASHINGTON MUTUAL BANK
BY:/S/ XXXX XXXXXX
-----------------------------------------------
AUTHORIZED OFFICER
