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EXHIBIT 10.11(a)
LOAN NO. ______________________
MASTER LOAN AGREEMENT
Date: August _______, 1997
This Master Loan Agreement (this "Loan Agreement") is made by and
between NEWMARK HOMES, L.P., a Texas limited partnership (hereinafter called
"Borrower" whether one or more), whose address is 0000 Xxxxxxxx Xxxxx Xxxxx,
Xxxxxxxxx, Xxxxx 00000, and GUARANTY FEDERAL BANK, F.S.B., a federal savings
bank, organized and existing under the laws of the United States (hereinafter
called "Lender"), whose address is 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000, in
connection with a revolving loan (hereinafter called the "Loan"), from Lender
to Borrower, for the acquisition and/or refinancing of residential lots (the
"Lots"), and the construction of single-family residences thereon (the
"Residences") (the Lots and the Residences thereon are sometimes collectively
called hereinafter the "Properties" and individually "Property"). The
Properties shall be in residential subdivisions approved by Lender, as set
forth in Exhibit A attached hereto, and incorporated herein by reference, and
in additional residential subdivisions, as may hereafter be approved by Lender
from time to time. The number of Residences to be constructed shall be limited
and the price range of the Residences shall be as stipulated on Exhibit A
attached hereto. The Loan shall be in the amount of $10,000,000.00 (the "Loan
Amount"). This Loan Agreement is a master agreement and shall govern all of
the advances made under a revolving promissory note (the "Note"), secured by
one or more deeds or trust, from time to time executed by Borrower, for the
benefit of Lender, covering certain Lots and Residences constructed or to be
constructed thereon.
In connection with the Loan, Borrower and Lender hereby agree as
follows:
1. NOTE, AUTHORITY, ETC. Simultaneously with the execution and
delivery of this Loan Agreement, Borrower shall execute and deliver to, procure
for and deposit with and pay to Lender the following, all in form and substance
satisfactory to Lender:
(a) The Note evidencing the Loan.
(b) Such documents and instruments as Lender may require
to evidence the status, organization or authority of Borrower and any
guarantor of the Loan.
(c) Continuing guaranty (the "Guaranty") of the Loan
executed by the guarantor(s) set forth on Exhibit A attached hereto
and incorporated herein by reference "Guarantor" whether one or more).
(d) An Approved Budget, in the form attached hereto as
Exhibit B and incorporated herein by reference.
(e) Financial statements of Borrower and any Guarantor of
the Loan (the "Financial Statements").
(f) Loans to One Borrower Affidavit.
2. REQUIREMENTS FOR FIRST ADVANCE. Prior to the first advance
secured by a Mortgage (as hereinafter defined), Borrower shall execute and
deliver to, procure for and deposit with and pay to Lender the following, all
in form and substance satisfactory to Lender, such requirements also being
applicable prior to the first advance secured by each additional Mortgage:
(a) Such documents as Lender may require to evidence,
govern or secure the payment or the Loan, including a deed of trust
(each individual deed trust hereinafter called a Mortgage and all
deeds of trust securing the Loan are hereinafter called the
MASTER LOAN AGREEMENT - Page 1
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"Mortgages"), securing the payment of the Note and Loan and evidencing
a first lien or charge on that portion of the Properties covered by
the Mortgage.
(b) Mortgagee Title Policy Binder on Interim Construction
Loan (the "Binder "), issued by a title insurance company or companies
acceptable to Lender (Lender hereby approving Pacific Title, L.P., as
agent, subject to Lender's approval of such title insurance company),
agreeing to insure Lender, in the aggregate amount of the Loan
Allocation (as hereinafter defined) for each Property covered by such
Mortgage (the "Aggregate Loan Allocation"), that such Mortgage and any
other liens securing the payment of the Note and Loan have the
priority required by Lender. If required by Lender, the Binder shall
be extended to cover each and every advance at the time such advance
is made; provided, however, the maximum title insurance for title
insurance underwriters must be acceptable to Lender, and if required
by Lender, from time to time, Borrower shall cause to be issued to
Lender an additional Binder or Binders, in such amounts and from such
title insurance underwriters, as are acceptable to Lender.
(c) Policies of all-risk builder's risk insurance on each
Property covered by such Mortgage, owner's liability insurance,
worker's compensation insurance, and such other insurance as Lender
may require, with standard mortgagee clauses attached naming Guaranty
Federal Bank, F.S.B., 0000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxx 00000,
Attention: Commercial Loan Insurance Administrator, as the insured
mortgagee thereunder, such policies to be issued by companies
satisfactory to Lender, with copies, or certificates thereof, being
delivered to Lender.
(d) A representative set of plans with respect to each
type or model of Residence to be constructed by Borrower on every Lot
covered by such Mortgage.
(e) Recorded Subdivision Plat pertaining to all Lots
covered by such Mortgage. approved by all applicable governmental
authorities having jurisdiction.
(f) Appraisal of the Lot(s) and the Residence(s) to be
constructed thereon (if applicable) covered by such Mortgage, which
shall be ordered directly by Lender, at Borrower's expense (not to
exceed $225.00 per Property), prepared by all appraiser satisfactory
to Lender.
(g) Such sums for insurance, taxes, expenses, charges and
fees customarily required by Lender.
(h) Loan Finance Charge in the amount set forth on
Exhibit A attached hereto.
(i) Evidence that each Lot covered by such Mortgage is
not located within any designated flood plain or special flood hazard
area.
(j) True, correct and complete copies of all executed
Contracts of Sale (the "Contracts"), for the sale of a Property,
covered by such Mortgage.
(k) Inspection fee as set forth on Exhibit A attached
hereto.
(1) Lender may require as a condition to each advance, a
bills-paid affidavit from each original contractor and subcontractor,
to be submitted with each draw request, together with responses to
requests for information as provided under Texas Property Code Section
53.159.
(m) If and as requested by Lender, (i) evidence that all
applicable zoning ordinances and restrictive covenants affecting the
Property covered by such Mortgage permit the use for which the
Residences to be constructed thereon are intended and have been or
will be complied with, (ii) evidence of the availability of all
Utilities to and for the Property covered by such Mortgage, (iii)
evidence that all streets providing access to the Property covered by
such Mortgage have been dedicated to public use and installed
MASTER LOAN AGREEMENT - Page 2
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and accepted by the applicable governmental authorities, (iv) an
environmental site assessment report with respect to the Property
covered by such Mortgage which is prepared by a qualified firm
acceptable to Lender and which certifies as follows: (A) there is no
evidence that any hazardous materials have been generated, treated,
stored, or disposed of on any of the Property covered by such Mortgage
and none exists, on under or at such Property; (B) there is no
publicly available information or records, or evidence at the Property
covered by such Mortgage, of environmental matters that could restrict
the development or use of such Property or of any high voltage
transmission lines, wetlands, or hazardous material, and (v) such
other information and evidence as Lender shall require relating to
Borrower or such Property.
(n) A detailed cost breakdown for the construction of
each Residence covered by such Mortgage.
This Loan Agreement, the Note, the Mortgage, the Guaranty and any
other documents evidencing or securing the Loan are collectively called
hereinafter the "Loan Instruments."
3. REQUIREMENTS FOR SUBSEQUENT ADVANCES. Prior to any subsequent
advances secured by a Mortgage, Borrower shall satisfy the following
requirements and, if required by Lender, deliver to Lender evidence of such
satisfaction, such requirements also being applicable prior to any subsequent
advances secured by each additional Mortgage:
(a) All conditions precedent to the First advance shall
have been satisfied.
(b) Such certificates, approvals and evidence of
completion, in whole or in part, of the applicable construction item
described on the Approved Budget, bills and invoices as Lender may
request prior to making any disbursement hereunder.
(c) Building permit(s) and all other permits required
with respect to the Residences covered by such Mortgage.
4. PROCEDURE FOR ADVANCES. Advances under the Loan shall be and
in accordance with the terms and provisions of Paragraph 4(b) below prior to
the giving of the notice described in Paragraph 4(f) below. Advances under the
Loan shall be made in accordance with the following:
(a) Upon Borrower's compliance with the provisions of
this Loan Agreement, provided that Borrower is not in default
hereunder, and subject to all other provisions of this Loan Agreement,
Lender will advance and disburse the Loan and Borrower's Deposit
(hereinafter defined) in installments to Borrower for the payment of
the acquisition or refinancing costs for any Lots and/or, after actual
commencement of construction hereunder, for the payment of costs of
labor, materials or services for the construction of the Residences
for work actually done. As to all advances, a residential draw
request therefor shall be executed and certified to by Borrower and
shall be accompanied by such information as Lender may request.
Advances under the Loan shall not exceed the amounts provided in the
Approved Budget. If requested by Lender following a default (and the
expiration of any applicable notice and/or cure period), Borrower
shall maintain a special account at a bank selected by Borrower,
satisfactory to Lender, into which all advances and other payments in
connection with the construction of the Residences shall be deposited
by Borrower, and against which checks shall be drawn only for costs
incident to the Loan and the Property.
(b) Borrower shall be entitled only to payment in the
amount approved by Lender, based upon the stage, as identified on
Exhibit B attached hereto (the "Stage") of the Properties for which
Lender has received appraisals and commitments for title insurance
acceptable to Lender and on which Lender has not released its lien of
record. On a monthly basis, Borrower shall submit to Lender a
borrowing base application for advance (in the form attached hereto as
Exhibit C) which identifies each Property, its address, lot and block,
plan type, sales price, and its Stage, according to the Approved
MASTER LOAN AGREEMENT - Page 3
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Budget. In addition, on a weekly basis, Borrower a work in progress
report (the "WIP Report") which also identifies each Property, its
address, lot and block, plan type, Sales price, and its Stage,
according to the Approved Budget. The aggregate amount, from time to
time, of the lot acquisition Stage and the actual work in progress
("WIP") Stage of the Properties is referred to herein as the
"Borrowing Base" and shall be determined by Lender in its sole
discretion. Notwithstanding any provision herein to the contrary,
Lender shall have no obligation to make any advance under this Loan
which exceeds the Borrowing Base, as it exists from time to time.
At any given time, the "Borrowing Base" will be determined by
the most recent WIP Report, as received and accepted by Lender.
However, if inspections by Lender reveal that the WIP Report
overstates the actual work in progress, the Borrowing Base for that
and subsequent WIP Reports will be reduced by the amount of
overstatement until another inspection has been performed by Lender.
If inspection by Lender reveals that more than one WIP Report by
Borrower overstates the actual WIP, or if Lender deems itself
insecure, Lender may restrict the Borrowing Base to that amount
determined by the last inspection by Lender; nevertheless, Lender will
conduct inspections at least once per month or waive this restriction.
(c) Any provision herein to the contrary notwithstanding,
the amount of the Loan allocated to be advanced for a Property (the
"Loan Allocation" or if applicable to more than one Property, the
"Loan Allocations") shall not exceed the lesser of (1) the percentage
set forth on Exhibit A attached hereto of the direct costs of such
Property, as determined by Lender (the "Loan to Cost Ratio"), or (2)
the percentage set forth on Exhibit A attached hereto of the lowest of
the following values which is applicable to such Property (the "Loan
to Value Ratio"):
(i) The value established by Lender or by an
appraisal prepared by all appraiser
satisfactory to Lender and otherwise in form
and substance satisfactory to Lender.
(ii) Borrower's purchase price for the Lot (to be
used only if the Loan is strictly for
acquisition of the Lot).
(iii) The sales price of the Property.
(d) Notwithstanding any other requirements contained
herein. if required by Lender, (i) credit for the final Stage (Stage
10 on Exhibit B) under the Loan for a Property will not be earned, or
(ii) the final advance under a Loan Allocation will not be made (as
appropriate) until Lender has received an affidavit or certificate
executed by Borrower stating that (1) all requirements of governmental
authorities having jurisdiction have been satisfied, (2) no mechanics'
or materialmen's liens or other encumbrances have been filed against
the Property, (3) a copy of the final certificate of occupancy or all
unconditional temporary certificate of occupancy issued by the
governing municipal authority, and (4) all invoices, bills, and other
payments have been paid in full to the appropriate parties with
respect to all of the Residences; however, Lender shall have the right
to require at any time the following evidence and documents: (1)
evidence that all requirements of governmental authorities having
jurisdiction have been satisfied, (2) evidence that no mechanics' or
materialmen's liens or other encumbrances have been filed and remain
in effect against such Lot and Residence thereon, (3) evidence that
either (i) the Property has been "completed," as that term is defined
in Section 53.106 of the Texas Property Code or (ii) an affidavit of
completion has been filed with the county clerk of the county in
which such Property is located, in compliance with Section 53.106 of
the Texas Property Code, and (4) final lien releases or waivers by all
parties who have supplied labor, materials, or services for the
construction of such Property, or who otherwise might he entitled to
claim a contractual. statutory, or constitutional lien against such
property.
(e) Anything herein or in any of the other Loan
Instruments to the contrary notwithstanding, at no time shall Lender
be obligated to make any advance hereunder if
MASTER LOAN AGREEMENT - Page 4
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the outstanding balance of the Loan equals or exceeds the Loan Amount,
or the loans-to-one-borrower limitation imposed upon Lender by any
applicable laws, rules, and regulations of entities having
jurisdiction over Lender in connection with indebtedness owing by
Borrower and its affiliates to Lender (the "Loans-to-One-Borrower
Limitation").
(f) Notwithstanding anything to the contrary in this Loan
Agreement or the other Loan Instruments, at any time (and from time to
time) Lender may (in its sole discretion) declare, pursuant to written
notice thereof given to Borrower, that any and all future advances
under the Loan shall be in accordance with the terms and provisions
of Paragraph 4(a) above. From and after the date of such written
notice, Paragraph 4(b) above shall be of no force and effect.
Thereafter, advances under Paragraph 4(a) shall be based upon work
actually done during the preceding period less retainage (if required
by Lender), and all draw requests executed and certified by Borrower
shall contain the information as set forth in Exhibit D attached
hereto, and such other information as may be requested by Lender from
time to time (including, without limitation, down date waivers from
those contractors and subcontractors to whose contract the advance is
allocable). Borrower agrees that Lender may make advances under the
Loan before receiving Borrower's executed residential draw request and
Borrower acknowledges that any such advance shall be deemed to be the
amount requested by Borrower in such residential draw request even
though the amount reflected in such executed residential draw request
may differ from the amount of the advance made by Lender.
5. BORROWER'S DEPOSIT. If there are insufficient funds remaining
in the Loan for the completion of the Residences and, in Lender's judgment,
Borrower does not have sufficient cash on hand to complete the Residences and
meet its other obligations, it shall constitute a default hereunder, if, in
such case, Borrower does not deposit with Lender, within ten (10) days after
demand by Lender, such sums, either in the form of cash or letter(s) of credit
acceptable to Lender (the "Borrower's Deposit"), as Lender may deem necessary,
in addition the Loan, for the completion of the Residences, the payment of all
costs in connection with the construction of the Residences, and the
performance of any obligation of Borrower to Lender. Borrower hereby agrees
that Lender (a) shall have a security interest in any Borrower's Deposit, and
(b) may apply any proceeds of any Borrower's Deposit for the purposes
contemplated herein without any further consent or action on Borrower's part.
Lender shall not be required to pay interest on the Borrower's Deposit. Lender
may advance all or a portion of the Borrower's Deposit prior to any advance of
any portion of the Loan proceeds. Borrower shall promptly notify Lender in
writing if and when the cost of the construction of the Residences exceeds, or
appears likely to exceed, the amount of the unadvanced portion of the Loan and
the unadvanced portion of the Borrower's Deposit.
6. WARRANTIES, REPRESENTATIONS, COVENANTS AND AGREEMENT Borrower
warrants, represents, covenants and agrees as follows:
(a) Prior to the recordation of any Mortgage, no work (as
that term is defined in Section 53.001 of the Texas Property Code) of
any kind (including the destruction or removal of any existing
improvements, site work, clearing, grubbing, draining, erection of
temporary utilities or fencing of the Property) pertaining to the
construction of any of the Residences, has been or will be commenced
or performed upon the Property and no material (as that term is
defined in Section 53.001[4] of the Texas Property Code) or equipment
has been or will be delivered to or upon the Property, and no
construction contract for the construction or erection of any of the
Residences has been or will be let.
(b) Borrower will commence actual construction of a
Residence within thirty (30) days from the date a Mortgage, covering
such Residence, is recorded in the Real Property Records (as
hereinafter defined), and will complete same, including all necessary
utility connections, in accordance with the plans and specifications
submitted to and approved by Lender, and in accordance with good
building practice and all applicable laws, ordinances, rules,
regulations and restrictions, within six (6) months from the date of
such commencement. After construction of a Residence has been
commenced, Borrower shall diligently proceed with said construction
and will not permit cessation of
MASTER LOAN AGREEMENT - Page 5
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the work of construction for a period in excess of fifteen (15)
consecutive days without the written consent of Lender except for
causes beyond the reasonable control of Borrower, and then not more
than thirty (30) days in any event without such consent provided that
Borrower is proceeding diligently in all other respects.
(c) Without the prior written consent of Lender, Borrower
will make no material change in the plans and specifications submitted
to Lender (as used in this sentence, "material change" shall mean any
change to such plans and specifications other than additions or
upgrades totaling less than ten percent [10%]of the sales price of the
applicable Residence).
(d) After a default hereunder or under any other Loan
Instrument (a "default") (and the expiration of any applicable notice
and/or cure period), Lender shall have the right, but not the
obligation, to disburse and directly apply the proceeds of any advance
under the Loan to the satisfaction of any of Borrower's obligations
hereunder. Any advance by Lender for such purpose shall be part of
the Loan and shall be secured by the Mortgages, except an advance of a
Borrower's Deposit. Borrower hereby authorizes Lender to hold, use,
disburse, and apply the Loan and the Borrower's Deposit for payment of
costs of construction of the Residences, expenses incident to the Loan
and the Property, costs of completion of all necessary off-site
development of the Property, and the payment or performance of any
obligation of Borrower hereunder. Borrower hereby assigns and pledges
the proceeds of the Loan and Borrower's Deposit to Lender for such
purposes. Lender may advance and incur such expenses as Lender deems
necessary for the completion of construction of the Residences and to
preserve the Property and any other security for the Loan, and such
expenses, even though in excess of the amount of the Loan, shall be
secured by the Mortgages, and payable to Lender upon demand. Lender
may disburse any portion of any advance at any time, and from time to
time, to persons other than Borrower for the purposes specified herein
irrespective of the provisions of Paragraph 4 hereof, and the amount
of advances to which Borrower shall thereafter be entitled shall be
correspondingly reduced.
(e) All advances and disbursements of the Loan and
Borrower's Deposit are subject to inspection of the Residences by
Lender's appraiser, and Lender at its election may require five (5)
business days after receipt of notice in writing before making any
advance or payment, for the purpose of making an inspection or other
determination.
(f) Borrower will accept advances and disbursements in
accordance with the provisions hereof and, if made to Borrower, will
use or cause each such disbursement to be used solely for the payment
of materials, labor, services, costs and expenses incurred in
connection with the construction of the Residences or for such
additional costs and expenses as may be approved in writing by Lender,
and in payment or performance of any obligation of Borrower to Lender,
and for no other purpose.
(g) Borrower will permit Lender and Lender's agents and
representatives (who may be a third-party designated from time to time
by Lender), at any and all times, during regular business hours, to
inspect said construction and the Residences and to examine and copy
all of Borrower's books and records and all contracts and bills
pertaining to said construction and the Residences. If applicable,
Borrower shall pay Lender at the time of each inspection of a
Residence, an inspection fee in the amount provided in Exhibit A
attached hereto, for having Lender's representative (who may be a
third-party designated from time to time by Lender) inspect the
Property. After a default hereunder, if Lender shall examine the
aforesaid books and records, Borrower shall pay on demand by Lender,
subject to Paragraph 12 hereof, reasonable expenses incurred by Lender
as a result of such examination.
(h) Lender has no liability or obligation whatsoever for
the Residences or the construction or completion thereof or work
performed thereon, and has no obligation except to advance the Loan as
herein agreed, and is not obligated to inspect the Residences, nor is
Lender liable for the performance or default of any contractor of
MASTER LOAN AGREEMENT - Page 6
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subcontractor, or for any failure to construct, complete, protect or
insure the Residences, or for the payment of any cost or expense
incurred in connection therewith, or for the performance or
nonperformance of any obligation of Borrower to Lender; and nothing,
including without limitation any disbursement hereunder or the deposit
or acceptance of any document or instrument, shall be construed as a
representation or warranty, express or implied, on Lender's part.
(i) In the event of any default by Borrower as defined in
Paragraph 10 hereof, Lender (in addition to any and all other remedies
permitted by law) may (i) exercise any of the rights provided in the
Mortgages in event of default; (ii) enter upon the Property: (iii)
employ watchmen to protect the Property (including personal property
located thereon) from damage, injury or loss; (iv) continue any or all
existing contracts for the completion of the Residences or enter into
any new, additional or substitute contracts for the completion of the
Residences, either in Lender's own name or in the name of Borrower;
(v) advance such of the undisbursed Loan proceeds and/or Lender's own
funds as may be necessary to remedy such default, including completion
of the Residences, and in such event, all such advances shall be
secured by the Mortgages and by all other security for the Loan, and
Borrower will pay the same, together with interest thereon at the
maximum lawful rate, to Lender upon demand; and (vi) elect not to make
any further advances of the undisbursed Loan proceeds, and in such
event Borrower shall not be entitled to any further advances under the
Loan.
(j) Without the prior written consent of Lender and
except for ordinary and customary purchases of appliances that are
timely paid (with Loan proceeds or from other sources of Borrower) in
accordance with the ordinary and customary financing terms for such
purchases, no materials, equipment, fixtures or any other part of the
Residences shall be purchased or installed under security agreements,
conditional sale contracts or lease agreements, or other arrangement
wherein a security interest or title to said property is retained or
the right is reserved or accrues to anyone to remove or repossess any
such items or to consider them as personal property.
(k) Lender may (but shall not be obligated to) commence,
appear in or defend any action or proceeding purporting to affect the
Property or the rights or duties of Lender or Borrower or the payment
of any funds hereunder, and in connection therewith may pay all
necessary expenses, including reasonable attorneys' fees, which
Borrower agrees to pay to Lender upon demand. Borrower hereby
irrevocably appoints and authorizes Lender, as Borrower's
attorney-in-fact under a power of attorney coupled with an interest,
to execute, file and record any notice of completion or cessation of
labor or any other notice which Lender deems necessary or advisable to
protect its interest hereunder or the security for the Loan.
(l) Borrower may not assign or otherwise transfer this
Loan Agreement or any right hereunder, and this Loan Agreement shall
be binding upon Borrower and the representatives and successors of
Borrower. In the event of the termination or dissolution of Borrower
prior to the completion of the Residences or prior to the use, release
or disbursement of all proceeds of the Loan and any Borrower's
Deposit, this Loan Agreement shall not, at the option of Lender, be
terminated or affected by such dissolution or termination.
(m) If Borrower is more than one person, firm or
corporation, all receipts, requests and instructions pertaining to the
Loan, or for any advance thereof, may be made by any one of the
undersigned Borrower with the same effect as if signed by all.
(n) Borrower shall promptly inform Lender of (i) any
litigation against Borrower or Guarantor or affecting the Property,
which, if determined adversely, might have a material adverse effect
upon the financial condition of Borrower of guarantor or upon the
Properties, or might cause a default, (ii) any material claim or
controversy which might become the subject of such litigation, and
(iii) any material adverse change in the financial condition of
Borrower or Guarantor. For purposes hereof, material adverse
MASTER LOAN AGREEMENT - Page 7
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change and/or material adverse effect shall mean a decline of fifteen
percent (15%) in the net worth of Borrower or Guarantor as shown on
the Financial Statements delivered to Lender from time to time in
connection with the Loan.
(o) Borrower shall promptly inform Lender if any
Contracts are canceled and/or materially modified or if any lending
institution cancels or materially modifies its commitment to finance a
prospective buyer's acquisition of a Residence.
(p) As required by Lender. Borrower shall provide Lender
with the following matters relating to Borrower: (1) (i) audited
Financial Statements within ninety (90) days, or (ii) unaudited
Financial Statements within sixty (60) days of Borrower's fiscal year
end; (2) unaudited Financial Statements within forty-five (45) days of
each calendar month end; and (4) sales, closings and inventory reports
of Residences, acceptable to Lender, within thirty (30) days of each
calendar month end, during the term of the Loan. Borrower shall also
cause any other party obligated for the Loan to provide Lender its
Financial Statement on or before April 15 of each calendar year, or
more frequently as required by Lender. All Financial Statements shall
be true, correct, and complete as of, the dates specified therein and
fully and accurately present the financial condition of Borrower and
any other party obligated for the Loan, as appropriate, as of the
dates specified. Borrower represents to Lender that on the date
hereof, no material adverse change has occurred in the financial
condition of Borrower or, to Borrower's knowledge, any other party
obligated for the Loan since the dates the initial Financial
Statements of Borrower and any other party obligated for the Loan
were delivered to Lender.
(q) The Mortgages additionally secure all other
indebtedness, of whatever kind or character, now owing or which may
hereinafter become owing to Lender by the entities listed on Exhibit A
attached hereto, whether such indebtedness is evidenced by note, open
account, overdraft, endorsement, surety agreement, guaranty, or
otherwise, it being reasonably contemplated that such additional
indebtedness owing to Lender may be incurred, from time to time,
subsequent to the date hereof (the "Additional Loans"). A default
under any Additional Loans shall constitute a default under the Loan
Instruments and a default under the Loan Instruments shall constitute
a default under the Additional Loans.
(r) From and after a default hereunder or an "Event of
Default" under any other of the Loan Instruments, at the request of
Lender, Borrower shall provide to Lender, within thirty (30) days
after such request, a Mortgagee Policy of Title Insurance (the
"Policy"), issued by the title company which issued the Binder,
insuring Lender, in the amount of the Aggregate Loan Allocation for
each Property covered by such Mortgage, that such Mortgage and any
other liens securing the payment of the Note and Loan have the
priority required by Lender. If further required by Lender, the Policy
shall be extended to cover each and every advance under such Aggregate
Loan Allocation at the time such advance is made.
(s) Subject to the provisions of Paragraph 16 hereof,
Borrower shall cause a Property to be released from a Mortgage at such
times as provided in Exhibit A attached hereto (the "Required Release
Date").
(t) Neither Borrower nor any other party shall occupy any
Residence which is covered by a Mortgage.
7. REQUIRED PRINCIPAL PAYMENTS. Borrower shall pay the principal
of the Note as therein provided and as provided in Exhibit A attached hereto.
Further, if, at any time, the outstanding balance of the Loan exceeds (1) the
Loan Amount, (2) the Loans-to-One-Borrower Limitation, or (3) the Borrowing
Base as determined by Lender, or if, at any time, the amount of the Loan
advanced by Lender for a particular Property exceeds the Loan to Value Ratio
for such Property, Borrower shall immediately pay in cash to Lender, following
demand therefor, the amount of such excess. Further, after nine (9) months
from the recording of a Mortgage in the Real Property Records, Lender shall
have the right to obtain an
MASTER LOAN AGREEMENT - Page 8
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appraisal of the Property covered by such Mortgage. from an appraiser
satisfactory to Lender, paid for by Borrower, and in the event such appraisal
determines that the portion of the Loan advanced by Lender for such Property
exceeds the Loan to Value Ratio for such Property, then Borrower shall also
immediately pay in cash to Lender, following demand therefor, the amount of
such excess.
8. REVOLVING LOAN. All or any portion of the principal of the
Loan in any he borrowed, paid, prepaid, repaid and be borrowed from time to
time prior to maturity in accordance with the provisions of the Loan
Instruments. The excess of borrowing (advances and re-advances) over
repayments shall evidence the principal balance of the Loan from time to time
and at any time. The aggregate amount of all advances under the Loan may exceed
the Loan Amount, but neither the outstanding principal balance of the Loan nor
the outstanding aggregate amount of the Loan Allocations shall ever exceed the
Loan Amount. The Loan shall not be governed by or be subject to Chapter 15 of
the Texas Credit Code Title 79, Revised Civil Statutes of Texas, 1925, as
amended.
9. MATURITY AND EXTENSION. Notwithstanding any provision in the
Note to the contrary, the Note and Loan shall mature and may be extended as
provided in Exhibit A attached hereto.
10. DEFAULT. The term "default" as used herein shall include a
breach by Borrower of any agreement, warranty, representation or covenant
contained in this Loan Agreement and as may be set forth on Exhibit A attached
hereto, and any default or "Event of Default" by Borrower under any of the Loan
Instruments; provided, however, notwithstanding anything to the contrary
contained herein or in the other Loan Instruments, as a condition to any such
default or Event of Default involving any covenant other than the payment of
money, Lender shall give Borrower thirty (30) days written notice to perform
such covenant. In the event of a default by Borrower, as aforesaid, Lender, at
its election, may declare all sums owing on account of the Loan to be
immediately due and payable, exercise any and all remedies provided in the Loan
Instruments or otherwise at law or in equity and/or make no additional advances
hereunder. No waiver of any default on the part of Borrower shall be
considered a waiver of any other or subsequent default, and no delay or
omission in exercising or enforcing the rights and powers of Lender shall be
construed as a waiver of such rights and powers, and likewise no exercise or
enforcement of any rights or powers hereunder by Lender shall be held to
exhaust such rights and powers, and every such right and power may be exercised
from time to time.
11. ADDITIONAL LOAN COVENANTS. If there are any additional loan
covenants (the "Additional Loan Covenants") listed on Exhibit A attached
hereto, and in the event Borrower or Guarantor (if applicable to Guarantor)
breaches any of the Additional Loan Covenants (and such breach continues for
thirty (30) days following written notice thereof to Borrower), or if Lender
elects (in Lender's sole and absolute discretion based upon market or economic
conditions, upon Borrower's or Guarantor's then Financial condition or upon
Lender's business judgment), after giving notice thereof to Borrower, to limit
future advances of the Loan, then in either event at Lender's election, no
additional Mortgages shall be recorded in the Real Property Records and
advances under the Loan shall be limited to the then existing Borrowing Base
(as determined by Lender); provided, however, in the event of any such breach
or election, if Lender shall have given Borrower the notice described in
Paragraph 4(f) above, then all future advances under the Loan shall be limited
to the unadvanced portion of the Loan Allocation for Properties covered by then
existing recorded Mortgages and no additional Mortgages shall be recorded in
the Real Property Records; provided, however, that a breach of any of the
Additional Loan Covenants shall not be considered a default under the Loan
Instruments.
12. LIMITATION ON INTEREST. All agreements between Borrower and
Lender, whether now existing or hereafter arising and whether written or oral,
are hereby limited so that in no contingency, whether by reason of acceleration
of the maturity of the Note or otherwise, shall the interest contracted for,
charged or received by Lender exceed the maximum amount permissible under
applicable law. If, from any circumstance Lender shall ever receive and thing
of value declined interest by applicable law in excess of the maximum lawful
amount, an amount equal to any excessive interest shall be applied to the
reduction of the principal of the Note and
MASTER LOAN AGREEMENT - Page 9
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not to the payment of interest, or if such excessive interest exceeds the
unpaid balance of principal of the Note such excess shall be refunded to
Borrower. All interest paid or agreed to be paid to the holder of the Note
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated, and spread throughout the full period from the date of the Note
until payment in full of the principal so that the interest thereon for such
full period shall not exceed tile maximum amount permitted by applicable law.
This paragraph shall control all agreements between Borrower and Lender.
13. CHOICE OF LAW. EXCEPT WHERE FEDERAL LAW IS APPLICABLE
(INCLUDING, WITHOUT LIMITATION, ANY FEDERAL USURY CEILING OR OF THE FEDERAL LAW
WHICH, FROM TIME TO TIME, IS APPLICABLE TO 111 INDEBTEDNESS HEREIN AND WHICH
PREEMPTS STATE USURY LAWS), THIS LOAN AGREEMENT, THE NOTE, THE MORTGAGES AND
THE OTHER LOAN INSTRUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TEXAS.
14. NOTICES. All notices, demands, requests, and other
communications required or permitted hereunder shall be in writing and shall be
deemed to have been given when presented personally or deposited in a regularly
maintained receptacle for the United States Postal Service, postage prepaid,
registered or certified, return receipt requested, addressed to Borrower or
Lender, as the case may be, at the respective addresses set forth on the first
page of this Loan Agreement, or such other address as Borrower or Lender may
from time to time designate by written notice to the other as herein required.
15. FEES AND EXPENSES. Borrower agrees to pay when due Lender's
fees, as set forth herein, the reasonable attorneys' fees and expenses of
Lender's counsel, title insurance and examination charges, survey costs, hazard
insurance premiums, filing and recording fees, and other reasonable expenses
payable to third parties incurred by Lender in connection with the consummation
of the transactions contemplated by this Loan Agreement, including all
renewals, extensions and modifications thereof. Further, Borrower agrees to
make each payment which it owes under the Loan Instruments not later than
twelve o'clock, noon, Dallas, Texas time, on the date such payment becomes due
and payable (or the date any voluntary prepayment is made), in immediately
available funds. Any payment received by Lender after such time will be deemed
to have been made on the next following business day.
16. PARTIAL RELEASES. Borrower shall have the right to any
partial releases of the Property subject to the following terms and conditions:
(a) Borrower shall not be in default hereunder or under
any other of the Instruments;
(b) Borrower shall submit a prepared partial release
instrument (the "Partial Release") in form and substance satisfactory
to Lender together with a lot and block description of the Residence
to be released. In addition, the Partial Release should be accompanied
with information necessary for Lender to process the Partial Release,
including the name and address of the title insurance company, if any,
to whose attention the Partial Release should be directed, numbers
that reference the Partial Release (i.e., order numbers, release
numbers, etc.) and the date when the Partial Release is to become
effective;
(c) If required by Lender, all accrued and unpaid
interest on the principal amount of the Loan being prepaid shall be
paid at the time such Partial Release is requested, provided that any
payment received by Lender after twelve o'clock, noon, Dallas, Texas
time, will be deemed to have been made on the next following business
day;
(d) Payment to Lender loan amount in cash as provided on
Exhibit A attached hereto;
MASTER LOAN AGREEMENT - Page 10
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(e) Payment to Lender of any applicable extension fee, as
provided in Exhibit A attached hereto; and
(f) Payment to Lender of all costs and expenses arising
in connection with any Partial Release.
Notwithstanding any provision herein to the contrary, at such time as Lender
provides to the title company (which is closing the sale of a Residence) a
"pay-off" quote for a Residence being released from a Mortgage, in accordance
with this Paragraph 16, Borrower shall not be entitled to any further advances
under the Loan with respect to such Residence.
17. WAIVER OF JUDICIAL PROCEDURAL MATTERS. BORROWER HEREBY
EXPRESSLY AND UNCONDITIONALLY WAIVES, IN CONNECTION WITH ANY SUIT, ACTION OR
PROCEEDING BROUGHT BY LENDER IN CONNECTION WITH ANY OF THE LOAN INSTRUMENTS,
ANY AND EVERY RIGHT IT MAY HAVE TO (I) INJUNCTIVE RELIEF, (II) A TRIAL BY JURY,
(III) INTERPOSE ANY COUNTERCLAIM THEREIN (OTHER THAN A COMPULSORY COUNTERCLAIM)
AND (IV) HAVE THE SAME CONSOLIDATED WITH ANY OTHER OR SEPARATE SUIT, ACTION OR
PROCEEDING. Nothing herein contained shall prevent or prohibit Borrower from
instituting or maintaining a separate action against Lender with respect to any
asserted claim.
18. HEADINGS. The Paragraph headings hereof and in the Exhibits
hereto are inserted for convenience of reference only and shall not alter,
define, or be used in construing the text of such Paragraphs.
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MASTER LOAN AGREEMENT - Page 11
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EXHIBIT 10.11(a)
19. FINAL AGREEMENT. THE LOAN INSTRUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN LENDER AND BORROWER CONCERNING THE LOAN, AND THE LOAN
INSTRUMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF LENDER AND BORROWER OR ANY AGENT, BROKER,
EMPLOYEE OR REPRESENTATIVE OF EITHER OF THEM. THERE ARE NO ORAL AGREEMENTS
BETWEEN LENDER AND BORROWER.
BORROWER:
NEWMARK HOMES, L.P.,
a Texas limited partnership
BY: NEWMARK HOME CORPORATION,
a Nevada corporation,
General Partner
By: /s/ XXXXX XXXXX
-----------------------------------
Name: Xxxxx Xxxxx
-------------------------
Title: Senior Vice President
------------------------
LENDER:
GUARANTY FEDERAL BANK, F.S.B,
a federal savings bank
By: /s/ XXXXXX XXXXXX
--------------------------------------------
Name: Xxxxxx XxXxxx
-----------------------------------
Title: Vice President
-----------------------------------
MASTER LOAN AGREEMENT - Page 12
