Construction Loan Agreement - Pioneer Citizens Bank of Nevada and Trex Co. LLC
CONSTRUCTION LOAN AGREEMENT
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Principal Loan Date Maturity Loan No Call Collateral Account Officer Initials
$4,570,000.00 02-05-1999 11-05-1999 860004167 110 0055 176436 055
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References in the shaded area are for Lender's use only and do not limit the applicability of this document to any particular
loan or item
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BORROWER: TREX COMPANY, LLC LENDER: PIONEER CITIZENS BANK OF NEVADA
20 S. CAMERON ST. STE. 300 REAL ESTATE DEPARTMENT
WINCHESTER, VA 22601 ONE WEST LIBERTY
BOX 2351
RENO, NY 89505
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THIS CONSTRUCTION LOAN AGREEMENT between TREX COMPANY, LLC ("Borrower") and
PIONEER CITIZENS BANK OF NEVADA ("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. $4,570,000.00 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 February 5, 1999, 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 TREX COMPANY, LLC.
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 February 5, 1999.
COMPLETION DATE. The words "Completion Date" mean November 5, 1999.
COMPLETION GUARANTY. The words "Completion Guaranty" mean the Guaranty of
Completion and Performance of the construction of the Project executed and
delivered by Q & D CONSTRUCTION BY: to and for the benefit of Lender.
CONSTRUCTION CONTRACT. The words "Construction Contract" mean and include
the contract between Borrower and Q & D CONSTRUCTION, the general
contractor for the Project, (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.
CONTRACTOR. The word "Contractor" means Q & D CONSTRUCTION, the General
Contractor for 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 and
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, including without
limitation all guarantors under the Completion Guaranty.
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 PIONEER CITIZENS BANK OF NEVADA, its
successors and assigns.
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
February 5, 1999, in the original principal amount of $4,570,000.00 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
initiated 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. The Project includes the
following work:
CONSTRUCTION OF MANUFACTURING/STORAGE FACILITY IN FERNLEY, NEVADA
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
LYON County, State of Nevada, and legally described as:
SEE ATTACHED EXHIBIT "A"
The Real Property or its address is commonly known as 1800 E. NEWLANDS
DRIVE, FERNLEY, NV 89408. The property tax identification number for the
Real Property is 021-241-08.
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.
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02-05-1999 CONSTRUCTION LOAN AGREEMENT Page 2
Loan No 860004157 (Continued)
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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.
$4,570,000.00 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.
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 limited liability company which is duly
organized, validly existing, and in good standing under the laws of the
State of Nevada and is validly existing and in good standing in all states
in which Borrower is dong business. Borrower has the full power and
authority to own its properties and to transact the business in which it is
presently engaged or presently proposes to engage. Borrower also is duly
qualified as a foreign limited liability company and is in good standing in
all states in which the failure to so qualify would have a material adverse
effect on its business 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
organization, operating agreement, or any other 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 acknowledge 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 fee and
clear of all defects, liens, and encumbrances, excepting only liens for
taxes, assessments, or governmental charges or levels 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 ("SARA"), 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. 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; and any such activity shall be conducted in
compliance with all applicable federal, state, and local laws, regulations,
and ordinances, including without limitation those laws, regulations and
ordinances described above. 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 of a hazardous waste or substance on the properties. 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 affect 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. All utility services appropriate to the use of the Project
after completion of construction are available at the boundaries of the
Property.
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 assessments, 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, that labor and materials to be supplied, the names of
materialmen, if known, and the appropriate dollar value of the labor, work,
or materials with respect to each contractor or materialmen. Lender shall
have the right to communicate with any person to verify the facts
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02-05-1999 CONSTRUCTION LOAN AGREEMENT Page
Loan No 860004157 (Continued) 3
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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 improvements for
the Project, and Borrower shall have furnished to Lender copies of all
permits and requisite approvals of any governmental bond 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.
SUPPORT DOCUMENTS. Borrower shall provide to Lender in form satisfactory to
Lender the following support documents for the Loan: Competition Guaranty.
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
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.
ENVIRONMENT 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 expenses, 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.
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 he 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:
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 coverage will not be cancelled or diminished without at
least ten (10) 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
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
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
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02-05-1999 CONSTRUCTION LOAN AGREEMENT Page 4
Loan No 860004157 (Continued)
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(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 (10) days after delivery of a written request, adequate security to
eliminate, reduce, or indemnity 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,
materialmen, 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.
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. Commence construction of the Project no later
than February 5, 1999, and 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. Borrower agrees to complete the
Project for purposes of final payment to the General Contractor on or
before November 5, 1999, regardless of the reason for any delay.
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 Nevada 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 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.
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.
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, or (c)
make any distribution with respect to any capital account, whether by
reduction of capital or otherwise.
<PAGE>
02-05-1999 CONSTRUCTION LOAN AGREEMENT PAGE
LOAN NO 860004157 (Continued) 5
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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 surely 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 it's
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 during 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
attorney's 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.
PUBLICITY. Lender may display a sign at the construction site informing
the public that Lender is the construction lender of 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 also 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 the right, Lender may incur
and pay reasonable costs and expenses, including, but not limited to,
attorney's 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.
CONSTRUCTION LOAN COMMITMENT. Lender has issued a construction loan commitment
letter for the Loan to Borrower.
RELATIONSHIP TO THIS AGREEMENT. The terms and provisions of this
Agreement, the Note and the Related Documents supersede any inconsistent
terms and conditions of Lender's construction loan commitment letter to
Borrower, provided that all obligations of Borrower under the commitment
to pay any fees to Lender or any costs and expenses relating to the Loan
or the commitment shall survive the execution and delivery of this
Agreement, the Note and the Related Documents. Any failure of Borrower to
perform any such obligation shall constitute a default under this
Agreement.
RIGHT OF SETOFF. Borrower grants to Lender a contractual 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 IRA and Keogh 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 continued 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.
DEATH OR INSOLVENCY. The dissolution (regardless of whether election to
continue is made), any member withdraws from Borrower, or any other
termination of Borrower's existence as a going business or the death of
any member, 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 or 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.
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.
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 (12)
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
thirty (30) days; or (b) if the cure requires more than thirty (30) 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.
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 (10) days for any reason, or the
improvements are not completed for purposes of final payment to the
General Contractor prior to November 5, 1999 regardless of the reason for
<PAGE>
02-05-1999 CONSTRUCTION LOAN AGREEMENT Page 6
Loan No 860004157 (Continued)
================================================================================
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 of Related Documents, or which is otherwise available at law or
in equity or by statute.
COMPLETION OF IMPROVEMENT 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 its 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 its 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 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 Nevada. If there is a lawsuit, Borrower agrees upon
Lender's request to submitt to the jurisdiction of the courts of WASHOE
County, the State of Nevada (initial Here /s/ AJC). This Agreement
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shall be governed by and construed accordance with the laws of the State
of Nevada.
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 heading is this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of 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
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 interest. Borrower further waives all rights of
offset or countercism 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 (unless otherwise required
by law), 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 its 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.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in willing 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.
ADDITIONAL PROVISION. X /s/ AJC BORROWER REPRESENTS AND WARRANTS THAT ITS
-------
OPERATIONS, PRODUCTS AND SERVICES SHALL ALL FUNCTION WITHOUT INTERRUPTION,
FAILURE OR MALFUNCTION, OF ANY NATURE OR OF ANY LENGTH OF TIME, RELATED TO
FAILURES OR MALFUNCTIONS OF COMPUTER HARDWARE, SOFTWARE OR PROGRAMMING RELATED
TO OR CAUSED BY CHANGES IN CALENDAR DATES OR RECOGNITION OF CALENDAR DATES, AND
THAT ITS COMPUTER HARDWARE, SOFTWARE, AND PROGRAMMING SHALL OPERATE THROUGH THE
YEAR 2000, AND BEYOND, WITHOUT INTERRUPTION OR FAILURE OR MALFUNCTION OF ANY
TYPE.
BORROWER FURTHER WARRANTS THAT IT HAS REQUIRED ALL OF ITS VENDORS AND SUPPLIERS
(INCLUDING ACCOUNTANTS,
<PAGE>
02-05-1999 CONSTRUCTION LOAN AGREEMENT Page 7
Loan No 860004157 (Continued)
================================================================================
ATTORNEYS AND OTHER PROFESSIONAL SERVICE PROVIDERS) TO CAUSE THAT THE COMPUTER
HARDWARE, SOFTWARE AND PROGRAMMING ON WHICH SUCH VENDOR OR SUPPLIER RELIES IN
PROVIDING ITS PRODUCTS AND/OR SERVICES ALL OPERATE THROUGH THE YEAR 2000, AND
BEYOND, WITHOUT INTERRUPTION OR FAILURE OR MALFUNCTION OF ANY TYPE.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS CONSTRUCTION LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF
FEBRUARY 5, 1999.
BORROWER:
TREX COMPANY, LLC
By: /s/ A.J. Cavanna
-----------------------------------------
ANTHONY J. CAVANNA, C.E.O./C.F.O.
LENDER:
PIONEER CITIZENS BANK OF NEVADA
By: /s/ Richard Deglman
-----------------------------------------
Authorized Officer
================================================================================
x /s/ A.J.C. The attached addendum to Construction Loan Agreement, consisting
------------ of one page, is hereby incorporated herein.
<PAGE>
ADDENDUM TO CONSTRUCTION
------------------------
LOAN AGREEMENT
--------------
In the event of any inconsistency between terms of the Addendum and the
terms of the Construction Loan Agreement to which this Addendum is attached and
hereby incorporated into, the terms of the Addendum shall control.
1. The subsection "Borrower" on page 1 is amended to insert the entity
"Trex Company, Inc., a Delaware Corporation"
2. The subsection "Collateral" on page 1 is amended to insert "located in
Fernley, Lyon County, Nevada" on the first line after the word "assets".
3. The subsection "Completion Guaranty" on page 1 is hereby deleted.
4. The subsection "Organization" on page 2 is amended to delete "Nevada" on
line two and add "Delaware".
5. The subsection "Bond" on page 2 is amended to insert "in the event of
default" on the first line after the word "Lender".
6. The subsection "Plans and Specifications" on page 2 is amended to insert
"in the event of default" on the first line after the word "Lender".
7. The subsection entitled "Indebtedness and Liens" on page 4 is amended to
insert "located in Fernley, Nevada" in paragraph (b), line three after
the word "assets".
8. The subsection entitled "Loans, Acquisitions and Guaranties" on page 5
is amended to include the additional provision:
(d) such actions are limited to the collateral defined herein.
9. The first line in the subsection entitled "Indemnity" on page 5 is
amended to provide as follows: "Each party shall indemnify and hold the
other party (the "Indemnified Party") harmless from any and all
claims..." and to delete the verbiage "in its sole discretion" on line
four and insert "in the event of default".
10. The fifth line in the subsection entitled "Completion of Improvements by
Lender" on page 6 is amended to insert the verbiage "In the event of
default" before the words "Borrower irrevocably appoints Lender...".
11. In all instances in which the Construction Loan Agreement requires
Lender's consent or approval, the same shall not be unreasonably
withheld or delayed. In all instances in which the Construction Loan
Agreement requires the payment of any costs, fees, and/or expenses,
including, without limitation, attorneys' fees and costs, the same shall
be prefaced by "reasonable". The Construction Loan Agreement shall be
construed to impart upon Borrower and Lender a duty to act reasonably at
all times.