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EXHIBIT 10.15(a)
A M E N D E D A N D R E S T A T E D
C O N S T R U C T I O N
L O A N A G R E E M E N T
Between
NEWMARK HOMES, L.P.
and
MELLON BANK, N.A.
$20,000,000.00 Construction Facility January 10, 1997
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TABLE OF CONTENTS
ARTICLE 1
GENERAL TERMS
Section 1.01 Terms Defined Above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.03 Accounting Principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE 2
AMOUNT AND TERMS OF ADVANCES
Section 2.01 The Advances and Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.02 Loan Procedures and Amounts of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 2.03 Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.04 Computation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.05 Voluntary Prepayments; Partial Releases . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.06 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 2.07 Borrowing Base . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.08 Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.09 Business Days . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.10 Changes in Subdivision Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.11 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.12 Increased Costs for Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.13 Inability to Determine LIBOR Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 2.14 Confirmation of Assumption of Indebtedness Under Note . . . . . . . . . . . . . . . . . . . 18
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.01 Partnership Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.02 Power and Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.03 Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.04 No Legal Bar or Resultant Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 3.05 No Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.06 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.07 Investments and Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.08 Liabilities; Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.09 Taxes; Governmental Charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.10 Titles, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 3.11 Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.12 Casualties; Taking of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.13 Use of Proceeds; Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.14 Compliance with the Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.15 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 3.16 Location of the Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.17 Utility Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
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Section 3.18 No Material Misstatements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.19 Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.20 Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.21 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 3.22 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 3.23 Survey and Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.24 No Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.25 Wetlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.26 Flood Area; Filled Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.27 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.28 Deceptive Trade Practices Act Not Applicable . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.29 Geological Fault . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.30 No "Zero Lot Line" Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 3.31 Underground Storage Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4
AFFIRMATIVE COVENANTS
Section 4.01 Financial Statements and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.02 Annual Certificates of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.03 Quarterly Certificates of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.04 Taxes and Other Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.05 Maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.06 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.07 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.08 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.09 Right of Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.10 Notice of Certain Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.11 Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.12 Notices by Governmental Authority, Fire and Casualty Losses, Etc . . . . . . . . . . . . . 28
Section 4.13 Deposit Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.14 Application of Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.15 Required Deposit by Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.16 Payment of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.17 Appraisals; Inspections. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.18 Plans and Specifications; Change Orders . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.19 Model Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.20 Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.21 Commencement of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.22 Materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.23 Surveys and Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.24 Correction of Defects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.25 Environmental Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.26 Subcontractors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.27 Speculative Homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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ARTICLE 5
NEGATIVE COVENANTS
Section 5.01 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 5.02 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.03 Investments, Loans and Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.04 Acquisition of Property to Develop Into Lots . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.05 Distributions, Payments, Etc. by the Borrower . . . . . . . . . . . . . . . . . . . . . . . 32
Section 5.06 Sales and Leasebacks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.07 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.08 Construction Starts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.09 Restrictions and Annexation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.10 Limitation on Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.11 Mergers, Stock, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 5.12 Proceeds of Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.13 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.14 Sale or Discount of Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.15 Capital Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.16 Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 5.17 Leverage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.18 Cost of Sales as a Percentage of Home Sales Revenue . . . . . . . . . . . . . . . . . . . . 35
Section 5.19 Ratio of Advances to Fair Market Value . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.20 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 5.21 Flood Plain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.22 Geological Fault . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.23 Wetlands . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 5.24 Partnership Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 6.02 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 6.03 Right of Set-off . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE 7
CONDITIONS OF LENDING
Section 7.01 General Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.02 Advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE 8
MISCELLANEOUS
Section 8.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 8.02 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Section 8.03 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.04 Survival of Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.05 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.06 Renewal, Extension or Rearrangement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.07 Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.08 No Liability of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 8.09 Indemnities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.10 Approval of Plans and Specifications . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.11 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.12 Singular and Plural . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.13 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 8.14 Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 8.15 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.16 Taxes, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.17 Governmental Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.18 Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.19 Titles of Articles, Sections and Subsections . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.20 Satisfaction Requirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.21 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.22 Submission to Jurisdiction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 8.23 No Broker . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.25 Duration; Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 8.26 Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.27 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 8.28 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Exhibits and Schedules
Exhibit A 1/10/96 Promissory Note, together with First Modification Agreement and Form of Second Modification
Agreement
Exhibit B-1 Form of Borrowing Request (Initial Advance)
Exhibit B-2 Form of Borrowing Request (Other than Initial Advance)
Exhibit C Form of Compliance Certificate
Exhibit D Disclosures
Exhibit E Form of Construction Facility Status Report
Exhibit F Form of Sold/Unsold Homes Report
Exhibit G Initial Counties Where Master Deed of Trust Recorded
Exhibit H List of Acceptable Title Insurance Companies
Exhibit I Form of Borrower's Affidavit
Exhibit J Borrower's Financial Statement
Schedule 1 Percentage of Completion Report
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AMENDED AND RESTATED
CONSTRUCTION
LOAN AGREEMENT
THIS AMENDED AND RESTATED CONSTRUCTION LOAN AGREEMENT is made and
entered into as of the 10th day of January, 1997, between NEWMARK HOMES, L.P.,
a Texas limited partnership with principal offices at 00000 Xxxxxxxxxx, Xxxxx
000, Xxxxxxxx, Xxxxx 00000 (the "Borrower"), and MELLON BANK, N.A., a national
banking association with offices at Xxx Xxxxxx Xxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxx 00000-0000 (the "Bank").
W I T N E S S E T H:
WHEREAS, the Bank and Newmark Home Corporation, a Nevada corporation
("Newmark"), executed that certain Construction Loan Agreement dated January
10, 1996 (the "1996 Agreement"), pursuant to which the Bank agreed to extend a
$10,000,000 line of credit to Newmark on the terms and conditions set forth
therein and to evidence the indebtedness thereunder, Newmark executed an
delivered to the Bank a promissory note dated January 10, 1996, in the original
principal amount of $10,000,000 payable to the order of the Bank (such
promissory note as modified, assumed, renewed, rearranged and extended, being
the "Note"); and
WHEREAS, pursuant to Modification Agreement dated as of October 1,
1996 (the "First Modification Agreement"), Newmark conveyed the Mortgaged
Property subject to the Indebtedness under the 1996 Agreement to NHC Homes,
Inc., and NHC Homes, Inc. further conveyed the Mortgaged Property to the
Borrower and the Borrower assumed the Indebtedness under the 1996 Agreement and
the Note; and
WHEREAS, the Borrower has requested an increase in the Commitment, an
extension of the Initial Advance Period Termination Date and other amendments
to the 1996 Agreement; and
WHEREAS, the Borrower and the Bank have agreed to amend and restate in
its entirety the 1996 Agreement;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and of the Commitment and loans and Advances
hereinafter referred to, the Borrower and the Bank agree as follows:
ARTICLE 1
GENERAL TERMS
Section 1.01 Terms Defined Above. As used in this Agreement, the
terms "Bank," "Borrower," "Newmark," "1996 Agreement," "Note," and "First
Modification Agreement" shall have the meanings indicated above.
Section 1.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the context otherwise
requires:
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"Adjusted Base Rate" shall mean the lesser of (i) the sum of
the interest rate per annum announced by the Bank as its "prime rate,"
plus .5% per annum and (ii) the Highest Lawful Rate. The "prime rate"
may be greater or less than other interest rates charged by the Bank
to other Borrowers and is not solely based or dependent upon the
interest rate which the Bank may charge any particular borrower or
class of borrowers.
"Adjusted LIBOR Rate" shall mean at any time, the lesser of
(a) the rate which is equal to the sum of the then applicable LIBOR
Rate plus 3.25% per annum and (b) the Highest Lawful Rate.
"Adjusted Loan Value" shall mean at any time and for any Lot
and Home, Loan Value less Lot Value.
"Advance" shall mean an advance of loan proceeds pursuant to
Section 2.01(a) hereof, which Advance may be an Initial Advance, an
interim Advance or a Final Advance and any other Advances made by the
Bank to or on behalf of the Borrower pursuant to the terms of the
Security Instruments.
"Affiliate" shall mean, as to any Person, any other Person
which directly or indirectly controls, or is under common control
with, or is controlled by, such Person and, if such Person is an
individual, any member of the immediate family (including parents,
spouse and children) of such individual and any trust whose principal
beneficiary is such individual or one or more members of such
immediate family and any Person who is controlled by any such member
or trust. As used in this definition, "control" (including, with
correlative meanings, "controlled by" and "under common control with")
shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interest, by
contract or otherwise).
"Agreement" shall mean this Amended and Restated Construction
Loan Agreement, as the same may from time to time be amended or
supplemented.
"Applicable Percentage" shall mean:
(a) 75% for each Sold Home and Lot;
(b) 75% for each Speculative Home and Lot; and
(c) 75% for each Model Home and Lot.
"Appraisal" shall mean with respect to each Home, a current,
fair market value appraisal in form and substance satisfactory to the
Bank from an independent appraiser satisfactory to the Bank which
appraises on a "completed value" the Home to be constructed on a
specified Lot in an Approved Subdivision and also sets forth a fair
market value for the Lot, and shall be performed in accordance with
laws, rules and regulations of applicable Governmental Authority and
the policies and procedures established by and written instructions
from the Bank.
"Approved Subdivision" shall mean a Developed Subdivision in
which the Bank shall have approved in writing the acquisition of Lots
and the construction of Homes thereon.
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Factors to be considered by the Bank in determining whether or not to
approve such Developed Subdivision shall include, but shall not be
limited to, the following:
(a) the location of the subdivision;
(b) the price range of the Homes being sold in
the subdivision and the market concept of such Homes;
(c) the sales history of Homes in such
subdivision constructed by the Borrower;
(d) the sales history of Homes in such
subdivision constructed by a Person other than the Borrower;
and
(e) community demographic concentrations.
If the Bank determines in its sole discretion, reasonably exercised,
that factors have changed such that a subdivision no longer qualifies
as an Approved Subdivision, then upon written notice to the Borrower,
such subdivision shall no longer qualify as an Approved Subdivision.
Upon correction of such factors to the Bank's satisfaction, such
subdivision may again qualify as an Approved Subdivision.
"Authorized Borrower Representative" shall mean any one of the
individuals named as an Authorized Borrower Representative in the
Notice of Authorized Borrower Representatives dated the date hereof,
signed by the general partner of the Borrower and delivered to the
Bank, as such list of individuals may be modified from time to time by
the Borrower by delivery to the Bank of a notice of any such
modification signed by the general partner of the Borrower.
"Base Rate Advance" shall mean each Advance made hereunder by
the Bank to the Borrower for which the Borrower has elected to have
the Adjusted Base Rate applied for the calculation of interest or
which has otherwise become a Base Rate Advance pursuant to the terms
hereof.
"Borrower's Completion Deposit" shall have the meaning
assigned such term in Section 4.15.
"Borrowing Base" shall mean at any time an amount equal to the
amount established as the Borrowing Base from time to time pursuant to
Section 2.07.
"Borrowing Request" shall mean a request for an Advance
pursuant to Section 2.01(a) duly and properly executed by an
Authorized Borrower Representative which, (i) in the case of Initial
Advances, shall be substantially in the form attached as Exhibit B-1
and (ii) in the case of Advances other than Initial Advances, shall be
substantially in the form attached as Exhibit B-2.
"Business Day" shall mean a day other than a Saturday, Sunday
or legal holiday for commercial banks under the laws of the States of
Pennsylvania or Texas.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute.
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"Commitment" shall mean the obligation of the Bank to make
loans to the Borrower under Section 2.01(a), up to the maximum amount
therein stated.
"Completion Date" shall have the meaning set forth in Section
2.01(a).
"Compliance Certificate" shall mean a certificate duly and
properly executed by an Authorized Borrower Representative to be
substantially in the form attached as Exhibit C.
"Construction Costs" shall mean for each Home the estimated
cost of construction.
"Construction Costs Schedule" shall mean a schedule in form
and substance satisfactory to the Bank showing the Lot cost and
budgeted Construction Costs for each Type of Home being or to be
constructed in an Approved Subdivision. The cost for the Lot included
shall not exceed the lesser of (i) the actual cost of the Lot or (ii)
the Fair Market Value of the Lot as set forth in the Appraisal.
"Construction Facility" shall mean the loan facility provided
for in Subsection 2.01(a) hereof.
"Construction Facility Status Report" shall mean a monthly
report with respect to the Lots acquired and the completion status of
each Home under construction by the Borrower, and financed by Bank,
properly completed by the Borrower in the form of Exhibit E and in
substance reasonably satisfactory to the Bank.
"Debt" shall mean, for any Person, without duplication:
(a) all obligations on account of money borrowed
by, or credit extended to or on behalf of, or for or on
account of deposits with or advances to, such Person;
(b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments;
(c) all obligations of such Person for the
deferred purchase price of property or services;
(d) all obligations secured by a lien on the
property owned by such Person (whether or not assumed); and
all obligations of such Person under leases which are, or are
required under GAAP to be, capitalized on such Person's
balance sheet (without regard to any limitation of the rights
and remedies of the holder of such lien or the lessor under
such lease to repossession or sale of such property);
(e) the face amount of all letters of credit
issued for the account of such Person and, without
duplication, the unreimbursed amount of all drafts drawn
thereunder, and all other obligations of such Person
associated with such letters of credit or draws thereon;
(f) all obligations of such Person in respect of
acceptances or similar obligations issued for the account of
such Person;
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(g) all obligations of such Person under any
interest rate or currency protection agreement, interest rate
or currency future, interest rate or currency option, interest
rate or currency swap or cap or other interest rate or
currency hedge agreement; and
(h) all direct or contingent liabilities upon or
with respect to any obligation or liability of any other
Person (an "Obligor") resulting from such Person directly or
indirectly assuming, guaranteeing, becoming surety for or
otherwise agreeing, becoming or remaining directly or
contingently liable upon or with respect to such obligation or
liability of such Obligor, including without limitation any
guarantee of any of the Debt or other obligations or
liabilities of an obligor and any liability, (contingent or
otherwise), directly or indirectly: (i) to purchase or assume,
or to supply funds for the payment, purchase or satisfaction
of, any obligation or liability of an obligor, (ii) to make
any loan, advance, capital contribution or other investment
in, or to purchase or release any property or services from,
an Obligor in order to maintain the solvency of such Obligor
or to enable such obligor to meet any other financial
condition or obligation, (iii) to purchase or lease property
or services of an Obligor regardless of the nondelivery of or
failure to furnish such property or services or (iv) in
respect of any other transaction the effect of which is to
assure the payment or performance (or payment of damages or
other remedy in the event of nonpayment or nonperformance) of
any obligation or liability of an Obligor.
"Default" shall mean the occurrence of any of the events
specified in Section 6.01, whether or not any requirement for notice
or lapse of time or other condition precedent has been satisfied.
"Developed Subdivision" shall mean a residential subdivision
of real property located in one or more Valid Counties and which has
been developed to a stage acceptable to the Bank. In determining
whether such subdivision is developed to an acceptable stage, the Bank
will consider and may request evidence of, among other things, the
following:
(a) that such subdivision is a platted
subdivision pursuant to a recorded subdivision plat that has
been approved by all necessary Governmental Authorities;
(b) whether the improvements shown on the
subdivision plat for such subdivision are completed in
accordance with all requirements of all necessary Governmental
Authorities, including, but not limited to, all roads;
(c) whether the roads shown on the subdivision
plat for such subdivision are properly dedicated to the public
and accepted for public maintenance by the applicable
Governmental Authorities;
(d) whether the common area amenities for such
subdivision are completed;
(e) whether the improvements, facilities, and
systems necessary to provide adequate utility service and
drainage to all residential lots located within such
subdivision are completed in accordance with all requirements
of all applicable Governmental Authorities and extend utility
service and drainage to the boundaries of
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all residential lots in such subdivision, such utility service
to include water, electrical, gas, telephone, and sanitary and
storm sewer service;
(f) whether the providers of utility service to
such subdivision have adequate capacity and treatment
facilities to service the subdivision and have committed to
provide adequate service to such subdivision;
(g) whether any part of such subdivision is
contaminated with hazardous substances or solid wastes and
whether such subdivision is located near any Property which is
so contaminated (in order to allow the Bank to make such
determination, the Borrower will provide the Bank with an
inspection or audit of such subdivision from an engineering or
consulting firm approved by the Bank, indicating the presence
or absence of hazardous substances and solid wastes on such
Property and providing such other information as is typically
included in a Phase I environmental audit);
(h) whether the subdivision is restricted and, if
applicable, zoned to limit use to detached single family
residences, and whether there is in place a recorded set of
restrictive covenants acceptable to the Bank covering such
subdivision and pursuant to which adequate provisions are made
for a homeowners' association, architectural integrity, and
maintenance assessments;
(i) whether such subdivision is located within
the 100-year flood plain or any other area that is flood
prone;
(j) whether such subdivision is located upon or
within one-quarter mile of a geological fault;
(k) whether the status of the subsurface soils
conditions, including faulting propensity (as described in a
current report from a qualified engineer acceptable to the
Bank), is adequate for construction of Homes;
(l) the total of all tax rates imposed by all
applicable taxing authorities against Property located within
such subdivision;
(m) whether such subdivision is located on, over,
or within one mile of any underground storage facilities used
for injected natural or processed gas or other liquid
hydrocarbons or petroleum products; and
(n) the extent to which the subdivision contains
areas designated as "wetlands" by the U.S. Army Corps of
Engineers.
"Drawdown Termination Date" shall mean July 10, 1998.
"Environmental Laws" shall mean any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any
Governmental Authority pertaining to health or the environment
applicable to the Borrower, any Subsidiary, or any of their Properties
in effect in any and all jurisdictions in which the Borrower or the
Subsidiaries are conducting or at any time have conducted business, or
where any Property of the Borrower or the Subsidiaries is located, or
where any hazardous substances generated by or disposed of by the
Borrower or the Subsidiaries are located, including but not limited to
the Clean Air Act, as amended, the
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Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended by the Superfund Amendments and Reauthorization
Act of 1986 ("CERCLA"), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of
1970, as amended, the Resource Conservation and Recovery Act of 1976,
as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste
Amendments of 1984 ("RCRA"), as amended, the Safe Drinking Water Act,
as amended, the Toxic Substances Control Act, as amended, the
Hazardous Materials Transportation Act, as amended, the Texas Clean
Air Act, as amended, the Texas Water Code, as amended, the Texas Solid
Waste Disposal Act, as amended, and other environmental conservation
or protection laws. The terms "hazardous substance", "release" and
"threatened release" shall have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") shall have the
meanings specified in RCRA; provided, however, that (i) in the event
either CERCLA or RCRA is amended so as to broaden the meaning of any
term defined thereby, such broader meaning shall apply hereunder
subsequent to the effective date of such amendment, (ii) to the extent
the laws of the state in which any Property of the Borrower or any
Subsidiary is located establish a meaning for "hazardous substance",
"release", "threatened release", "solid waste" or "disposal" which is
broader than that specified in either CERCLA or RCRA, such broader
meaning shall apply, and (iii) the terms "hazardous substance" and
"solid waste" shall include all oil and gas exploration and production
wastes that may present an endangerment to public health or welfare or
the environment, even if such wastes are specifically exempt from
classification as hazardous substances or solid wastes pursuant to
CERCLA or RCRA or the state analogues to those statutes.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which together with the Borrower or a Subsidiary
would be deemed to be a "single employer" within the meaning of
Section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of
Section 414 of the Code.
"Event of Default" shall mean the occurrence of any of the
events specified in Section 6.01, provided that any requirement for
notice or lapse of time or any other condition precedent has been
satisfied.
"Excepted Liens" shall mean (i) Liens for ad valorem taxes,
assessments, or other governmental charges or levies not yet due or
which are being contested in good faith by appropriate action; (ii)
Liens in connection with workmen's compensation, unemployment
insurance or other social security, old age pension or public
liability obligations; (iii) vendors', carriers', warehousemen's,
repairmen's, mechanics', workmen's, materialmen's, construction or
other like Liens arising by operation of law in the ordinary course of
business or incident to the construction or improvement of any
Property in respect of obligations permitted under the terms of this
Agreement which are subordinate to the Liens created by the Security
Instruments and are not yet due or which are being contested in good
faith by appropriate proceedings by or on behalf of the Borrower or
any Subsidiary in accordance with the procedures and requirements set
forth in Section 4.16; (iv) customary Liens in any Approved
Subdivision, including customary restrictive covenants and utility
easements, which do not and will not unreasonably interfere with the
construction, operation, maintenance and sale of Lots or Homes; and
(v) Permitted Encumbrances as set forth in each Mortgage.
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"Excluded Unit" shall mean a Lot and Home with respect to
which its respective Percentage of Completion Value is excluded from
the Borrowing Base calculation because:
(a) it is a Speculative Home with respect to which the
Initial Advance was made more than nine (9) months before the
Borrowing Base calculation; or
(b) it is a Model Home with respect to which the Initial
Advance was made more than eighteen (18) months before the
Borrowing Base calculation; or
(c) it is a Speculative Home formerly used as a Model
Home but as of the date of the Borrowing Base calculation, at
least ninety (90) days has elapsed since such Home was used as
a Model Home.
"Fair Market Value" shall mean with respect to each Lot and
Home, the fair market value of the Home upon one hundred percent
(100%) completion of all construction thereof in accordance with the
Plans and Specifications for such Home and the fair market value for
such Lot all as determined by the Appraisal; provided that the fair
market value of Model Homes shall not include value attributable to
"options" or "extras" not considered "standard" based on the Plans and
Specifications for the Type of Home that is being used as a Model and
further provided that the Bank may adjust, in its reasonable
discretion, the fair market value reflected in any such Appraisal
obtained.
"Final Advance" shall mean, for each Lot and the Home
constructed thereon, the last Advance to be made in connection
therewith.
"Financial Statements" shall mean the consolidated and/or
consolidating financial statements of the Borrower and its
Subsidiaries described or referred to in Section 3.06.
"Financing Statement" shall mean a UCC-1 Financing Statement
naming the Borrower as debtor and the Bank as secured party in form
and substance satisfactory to the Bank, perfecting a first priority
security interest in any and all personal Property and general
intangibles now or hereafter located on, used in connection with, or
related to the Lot or Lots and Home or Homes covered thereby.
"GAAP" shall mean "generally accepted accounting principles"
in the United States, applied on a basis consistent with the
principles used in preparing the most recent annual financial
statements of the Borrower furnished to the Bank and referred to in
Section 3.06 hereof; provided that (a) in making determinations on a
consolidated basis with respect to a Person and its Subsidiaries, such
consolidation shall be a proportionate consolidation and shall include
all Subsidiaries, and (b) in making determinations of the aggregate
Debt of a Person and its Subsidiaries, any Debt of such Person or any
such Subsidiary described in clause (i) of the definition of Debt
herein shall be treated as if such Person or such Subsidiary were an
obligor with respect to such Debt.
"Governmental Authority" shall mean the United States of
America, the State of Texas, the state, county, city and political
subdivisions in which any Property of the Borrower or any Subsidiary
is located or which exercises jurisdiction over any such Property, and
any agency, department, commission, board, bureau, homeowners
association, utility district, flood control district, road district,
improvement district, or similar district, court, grand jury or
instrumentality or any of them which exercises jurisdiction over any
such Property.
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"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization, or other
direction or requirement (including but not limited to any of the
foregoing which relate to environmental standards or controls, energy
regulations and occupational, safety and health standards or controls)
of any Governmental Authority.
"Highest Lawful Rate" shall mean the maximum nonusurious
interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Note or on
other Debt, as the case may be, under the law of the State of Texas
(or the law of any other jurisdiction whose laws may be mandatorily
applicable notwithstanding other provisions of this Agreement), or law
of the United States of America applicable to the Bank and the
Transactions which would permit the Bank to contract for, charge,
take, reserve or receive a greater amount of interest than under Texas
(or such other jurisdiction's) law.
"Home" shall mean a detached single family residential
structure and related amenities and improvements.
"Indebtedness" shall mean any and all amounts owing or to be
owing by the Borrower to the Bank in connection with the Note, the
1996 Note, or any Security Instrument including this Agreement and all
other liabilities of the Borrower to the Bank from time to time
outstanding.
"Initial Advance" shall mean, for each Lot and the Home to be
constructed thereon and financed under the Construction Facility, the
first Advance made in connection therewith.
"Initial Advance Period Termination Date" shall mean one year
from the date hereof.
"Initial Counties" shall mean the counties in which the Master
Deed of Trust shall initially be recorded, which counties are listed
on Exhibit G.
"LIBOR Rate Advance" means each Advance made hereunder by the
Bank to the Borrower for which the Borrower has elected to have the
Adjusted LIBOR Rate applied for the calculation of interest, and which
has not been converted to a Base Rate Advance pursuant to the terms
hereof.
"LIBOR Rate" shall mean the rate for deposits in U.S. dollars
offered to major money center banks in the London interbank market for
one-month periods rounded upward to the nearest 1/100 of 1%, as
determined by the Bank two (2) Business Days before the first day of
each calendar month, with changes in such rate being effective on the
first day of each calendar month.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of
the Property, whether such interest is based on the common law,
statute or contract, and including but not limited to the lien or
security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall
include reservations, exceptions, encroachments, easements, rights of
way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purposes of
this Agreement, the Borrower or any Subsidiary shall be deemed to be
the owner of any Property which it has acquired or holds subject to a
conditional sale agreement,
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financing lease or other arrangement pursuant to which title to the
Property has been retained by or vested in some other Person for
security purposes.
"Loan Value" shall mean, as to each Sold Home and the Lot on
which it is to be constructed in an Approved Subdivision, the
Applicable Percentage multiplied by the lesser of (i) the Fair Market
Value of such Lot and Sold Home and (ii) the purchase price set out in
the executed xxxxxxx money contract relating to such Sold Home, a copy
of which has been delivered to the Bank; and as to each other Home and
the Lot on which it is to be constructed in an Approved Subdivision,
the Applicable Percentage multiplied by the Fair Market Value of such
Lot and Home, provided that the Loan Value for any Home and related
Lot shall not exceed $200,000.
"Lot" shall mean an unimproved (but fully developed) single
family residential lot located in an Approved Subdivision.
"Lot Value" shall mean the lesser of (i) the purchase price of
such Lot, including closing costs and (ii) an amount equal to 25% of
the Loan Value of the Lot and Home to be constructed thereon.
"Master Deed of Trust" shall mean the Master Form of Deed of
Trust, Security Agreement and Financing Statement Recorded by Mellon
Bank, N.A., a copy of which has been furnished to the Borrower.
"Material Adverse Effect" shall mean as to the Borrower, any
material and adverse effect on (i) the assets, liabilities, financial
condition, business or operations of the Borrower or its Subsidiaries
from those reflected in the Financial Statements or from the facts
represented or warranted in this Agreement or any other Security
Instrument, or (ii) the ability of the Borrower or its Subsidiaries to
carry out their business as at the date of this Agreement or as
proposed at the date of this Agreement to be conducted or meet the
Borrower's obligations under the Note, this Agreement, or the other
Security Instruments on a timely basis.
"Maturity Date" shall mean October 10, 1998.
"Model Home" as used herein shall mean any Home owned by the
Borrower or any Affiliate of the Borrower which has been fully
completed and decorated to be used as a model for display to
prospective purchasers of Homes built by the Borrower in the
particular Approved Subdivision in which such "Model Home" is located,
which Home shall be open at least six (6) days a week during normal
business hours, with Borrower's sales staff on- site.
"Model Home Inventory" shall mean the total number of Model
Homes owned by the Borrower.
"Mortgage" shall mean a Deed of Trust, Security Agreement and
Financing Statement, securing the payment of any and all Indebtedness
and creating in favor of the Bank a valid and enforceable first
priority Lien on and security interest in the Lot or Lots described
therein and any and all interests of the Borrower in any improvements,
personal Property, and general intangibles now or hereafter located
on, used in connection with, or related to such Lot or Lots and being
in form and substance satisfactory to the Bank.
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"Note" shall mean the promissory note dated January 10, 1996,
executed by Newmark and assumed by the Borrower, pursuant to
Modification Agreement dated as of October 1, 1996, executed by and
among Newmark, NHC Homes, Inc., and the Borrower, and as modified and
extended pursuant to the Second Modification and Extension Agreement
executed by and between the Borrower and the Bank as of the 10th day
of January, 1997, all of which are attached hereto and comprise
Exhibit A.
"Partners" shall mean Newmark and the limited partners under
the Partnership Agreement.
"Partnership Agreement" shall mean that certain Agreement of
Limited Partnership effective October 1, 1996 between the Partners, as
such agreement has been or may be amended or supplemented from time to
time.
"Percentage of Completion" shall mean, with respect to each
Lot and Home as of any time of determination (which determination
shall be made by the Bank in its sole discretion), the percentage of
completion determined in accordance with Schedule 1 attached hereto.
"Percentage of Completion Value" shall mean, for each Lot and
the Home to be constructed thereon and at any time and from time to
time, the sum of (i) Adjusted Loan Value (as of the date of
calculation) of such Lot and the Home to be constructed thereon
multiplied by the Percentage of Completion of such Lot and Home as of
such time plus (ii) the Lot Value for such Lot.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof, or any other form of entity.
"Plan" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA.
"Plans and Specifications" shall mean, for each Home, the
Borrower's construction plans detailing the plans and specifications,
and containing architectural drawings specifying the type and style of
such Home, prepared by an architect and initialed for identification
purposes on or prior to the date hereof by the Borrower and the Bank
and including all working drawings and shop drawings, as the same may
be amended, modified, or supplemented from time to time by change
orders executed in compliance with the provisions of the Security
Instruments.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Release Price" shall have the meaning assigned such term in
Subsection 2.05(b).
"Reserved Commitment" shall mean, for each Lot and Home being
financed under the Construction Facility, the difference at any time
and from time to time between (i) the Loan Value thereof less (ii) the
principal amount deemed advanced by the Bank, in its sole discretion,
for the acquisition and construction of such Lot and Home.
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"Security Instruments" shall mean this Agreement, the Master
Deed of Trust, each Mortgage, each Financing Statement, and any and
all other agreements or instruments now or hereafter executed and
delivered by the Borrower, any Subsidiary or any other Person (other
than participation or similar agreements between the Bank and any
other bank or creditor with respect to any Indebtedness pursuant to
this Agreement) in connection with, or as security for the payment or
performance of, the Note or this Agreement, as such agreements may be
amended or supplemented from time to time.
"Sold Home" shall mean a Home with respect to which a Person,
other than the Borrower or any Affiliate of the Borrower, has executed
a valid and enforceable contract for the purchase thereof, a copy of
which shall be furnished to the Bank upon request. Upon the recision
or cancellation of any such contract for any reason, the Home shall no
longer be a Sold Home.
"Sold/Unsold Homes Report" shall mean a report by subdivision
and by lender setting forth the sales status of each Home and Lot in
the Borrower's inventory or under agreement or option (whether or not
financed by the Bank), which is furnished to the Bank pursuant to
Subsection 4.01(c)(ii) and is substantially in the form of Exhibit F
hereto.
"Speculative Home" shall mean a Home other than a Sold Home or
a Model Home.
"Speculative Home Inventory" shall mean the total number of
Speculative Homes owned by the Borrower.
"Subsidiary" shall mean for any Person any corporation of
which more than fifty percent (50%) of the issued and outstanding
securities having ordinary voting power for the election of directors
is owned or controlled, directly or indirectly, by such Person and/or
one or more of its subsidiaries.
"Tangible Net Worth" of a Person at any time shall mean the
total amount of partners' equity of such Person and its Subsidiaries
at such time determined on a consolidated basis in accordance with
GAAP, except that there shall be deducted therefrom the book value of
all intangible assets and deferred charges and prepaid expenses of
such Person and its Subsidiaries at such time determined on a
consolidated basis in accordance with GAAP.
"Title Binder" shall mean a paid Mortgagee Title Policy Binder
on Interim Construction Loan issued by a Title Insurer in connection
with each Home on the form currently approved by the Texas State Board
of Insurance and otherwise satisfactory to the Bank.
"Title Insurer" shall mean any of the title insurance
companies listed on Exhibit H, or such other title insurance company
or companies satisfactory to the Bank.
"Title Policy" shall mean a paid Mortgagee Policy of Title
Insurance issued by a Title Insurer and otherwise satisfactory to the
Bank which is furnished by the Borrower pursuant to the terms hereof.
"Transactions" shall mean the transactions provided for in and
contemplated by this Agreement, the other Security Instruments and the
Note.
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"Type of Home" shall mean each of the various types or styles
of homes being constructed by the Borrower (and excluding "options" or
"extras" not included as "standard"), the standard Plans and
Specifications of which have been approved by the Bank and shall be
referenced as between the Bank and the Borrower by a name or number to
be agreed upon that describes each such Type of Home. Each such Type
of Home may be identified in Borrowing Requests (or schedules thereto)
by use of such name or number. When the Borrower desires to build
additional Types of Homes, it shall submit the Plans and
Specifications for such additional Type of Home and shall identify the
name or number by which such additional Type of Home shall be
identified, and upon approval by the Bank, such type or style of home
shall be a "Type of Home".
"Valid County" shall mean any of the Initial Counties or any
other county in the State of Texas in which the Master Deed of Trust
has been properly filed and recorded.
Section 1.03 Accounting Principles. Where the character or amount
of any asset or liability or item of income or expense is required to be
determined or any consolidation or other accounting computation is required to
be made for the purposes of this Agreement, it shall be done in accordance with
GAAP applied on a basis consistent with those reflected by the Financial
Statements, except where such principles are inconsistent with the requirements
of this Agreement.
ARTICLE 2
AMOUNT AND TERMS OF ADVANCES
Section 2.01 The Advances and Commitment. Subject to the terms
and conditions and relying on the representations and warranties contained in
this Agreement, the Bank agrees to make loans to the Borrower as hereinafter
set forth:
(a) Construction Facility Advances - From the date of
this Agreement through the close of business on the Business Day
preceding the Drawdown Termination Date, the Bank will, subject to the
terms and conditions hereof, make Advances to the Borrower from time
to time on any Business Day in such amounts as the Borrower may
request up to the maximum amount hereinafter stated, and the Borrower
may make borrowings, prepayments (as permitted or required in Sections
2.05 and 2.06) and reborrowings in respect thereof; provided, however,
that the sum of the aggregate principal amount of all such Advances at
any one time outstanding plus the aggregate amount, at such time, of
the Reserved Commitments shall not exceed $20,000,000 and further
provided that the sum of the aggregate principal amount of all
Advances at any time outstanding shall not exceed the Borrowing Base.
The Borrower has assumed the obligations of Newmark under the 1996
Agreement and the Note. To evidence the increase in the Commitment
and the amendment to certain provisions of the Note, the Borrower is
executing and delivering to the Bank the Second Modification and
Extension Agreement dated as of January 10, 1997. No Advance shall be
made to finance the construction of a particular Home after the date
which is six (6) months from the date of the Initial Advance relating
to such Home and the Lot upon which it is being constructed (the
"Completion Date"). No Initial Advance shall be made after the
Initial Advance Period Termination Date. No Advances shall be made to
finance construction of Homes after the Drawdown Termination Date. No
Advance shall be made with respect to any Lot and Home if such
Advance, when aggregated with all prior Advances with respect to such
Lot and Home,
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would cause the aggregate Advances for such Lot and Home to exceed the
Loan Value of such Lot and Home.
(b) Payment -
(1) Interest on the principal amounts from time
to time outstanding under the Note shall accrue at the rates
provided in Section 2.03. Interest shall be payable monthly,
commencing on the first day of the month following the Initial
Advance, and at maturity.
(2) All amounts outstanding hereunder, under the
Note and under the Security Instruments and not sooner due
hereunder or thereunder shall be due and payable in full on
the Maturity Date.
Section 2.02 Loan Procedures and Amounts of Advances. The
Borrower may request one (1) funding of Advances per week by submitting to the
Bank one or more Borrowing Requests at least ten (10) Business Days prior to
the date each Initial Advance is requested to be funded and at least three (3)
Business Days prior to the date each Advance other than an Initial Advance is
requested to be funded. Each such funding may include Initial Advances,
interim Advances and/or Final Advances. All conditions precedent for any
Advance shall have been satisfied prior to delivery of the Borrowing Request
for such Advance, and no Advance (whether initial, interim or final) shall be
made unless all conditions precedent to such Advance have been satisfied. Each
Advance shall not exceed the amount available pursuant to Subsection 2.01(a) at
the time such Advance is made. Each Advance shall be made at the office of the
Bank and shall be funded prior to 2:00 p.m., Pittsburgh time, on the day so
requested in immediately available funds in the amount so requested. Each
Borrowing Request shall designate whether the requested Advance shall be a
LIBOR Rate Advance or a Base Rate Advance. If an Initial Advance is to be made
at Closing, the Borrower shall designate whether such Advance is to be a LIBOR
Rate Advance or a Base Rate Advance at least two (2) Business Days prior to
Closing. All amounts outstanding during any calendar month shall be comprised
of only LIBOR Rate Advances or only Base Rate Advances. If an Advance is made
as a LIBOR Rate Advance, it will continue as a LIBOR Rate Advance, subject to
the provisions of Sections 2.11 and 2.13 hereof, unless the Borrower notifies
the Bank two (2) Business Days before the first day of a calendar month that
the Borrower wishes to convert such outstanding Advances to Base Rate Advances
effective as of the first day of the following calendar month, in which case
all outstanding Advances shall be converted to Base Rate Advances as of the
first day of the following calendar month and all Advances made thereafter
shall be Base Rate Advances until the first day of the calendar month following
notification by the Borrower (at least two (2) Business Days prior to the first
day of such calendar month in which the conversion is to occur) that it has
elected to make LIBOR Rate Advances in accordance with the terms and provisions
hereof. Any LIBOR Rate Advances converted to Base Rate Advances may likewise
be re-converted to LIBOR Rate Advances by notifying the Bank in writing two (2)
Business Days before the end of a calendar month that the Borrower wishes to
re-convert such Advances to LIBOR Rate Advances as of the first day of the
following calendar month. If an Advance is made as a Base Rate Advance, it
will continue as a Base Rate Advance unless the Borrower notifies the Bank two
(2) Business Days before the first day of a calendar month that the Borrower
wishes to convert outstanding Advances to LIBOR Rate Advances effective as of
the first day of the following calendar month, in which case such Advances
shall be converted to LIBOR Rate Advances as of the first day of the following
calendar month and all Advances made thereafter shall be LIBOR Rate Advances
until the first day of the calendar month following notification by the
Borrower (at least two (2) Business Days prior to the first day of such
calendar month in which the conversion is to occur) that it has again elected
to make Base Rate Advances in accordance with the terms and provisions hereof.
Any Base
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Rate Advances converted to LIBOR Rate Advances may likewise be re-converted to
Base Rate Advances by notifying the Bank in writing two (2) Business Days
before the end of a calendar month that the Borrower wishes to re-convert such
Advances to Base Rate Advances as of the first day of the following calendar
month.
Section 2.03 Interest Rate. The unpaid principal balance of the
Note from time to time outstanding shall accrue interest from the date of each
Advance until such principal amount has been paid in full, at the lesser of
(for Base Rate Advances) (i) the Adjusted Base Rate and (ii) the Highest Lawful
Rate and at the lesser of (for LIBOR Rate Advances) (x) the Adjusted LIBOR Rate
and (y) the Highest Lawful Rate and further provided that any amount of
principal which is not paid when due shall bear interest at 4% per annum above
the rate per annum required to be paid on such amount immediately prior to the
date on which such amount became due, but in no event to exceed the Highest
Lawful Rate. Adjustments in the varying interest rate shall be made with
respect to the Highest Lawful Rate, to the extent allowed by law, on the
effective date of any change in the Highest Lawful Rate. Adjustments in the
Adjusted LIBOR Rate shall be effective on the first day of each calendar month.
Adjustments in the Adjusted Base Rate shall become effective on the date of
changes in the Bank's prime rate. The Adjusted LIBOR Rate is additionally
subject to adjustment pursuant to the terms of Section 2.12 hereof.
Section 2.04 Computation. All payments of interest shall be
computed on the per annum basis of a year of 365 or 366 days, as the case may
be.
Section 2.05 Voluntary Prepayments; Partial Releases.
(a) Voluntary Prepayments - The Borrower may at its option prepay
the principal amount of the Note outstanding hereunder at any time in whole or
from time to time in part, together with accrued interest thereon to the date
of prepayment; provided, that a prepayment pursuant to Subsection 2.05(b) shall
not constitute a prepayment pursuant to this Subsection 2.05(a).
(b) Partial Releases - Provided that no Default or Event of
Default has occurred and is continuing, the Bank agrees to release from any
Lien the Bank may have thereon pursuant to a Mortgage, individual Lots and the
Homes being constructed thereon that are financed by Advances hereunder and are
being sold to a consumer purchaser simultaneously with the release of the Lien,
upon payment by the Borrower to the Bank in immediately available funds of one
hundred percent (100%) of the Loan Value for such Lot and Home plus all other
amounts advanced by the Bank in excess of the Loan Value (if any) with respect
to such Lot and Home hereunder or under the Mortgage (the "Release Price").
Upon payment by the Borrower of the appropriate Release Price as provided in
this Subsection, the Bank will execute a partial release of Lien. Upon the
payment of the Release Price, the Reserved Commitment attributable to the Lot
and Home being released shall no longer be reserved but shall again become part
of the available Commitment.
Section 2.06 Mandatory Prepayments.
(a) If at any time the outstanding principal balance under the Note
exceeds the Borrowing Base, then the Borrower shall forthwith prepay
the amount of such excess for application towards reduction of the
outstanding principal balance of the Note. The Borrower shall have
the right to terminate permanently the Commitment on at least five (5)
Business Days' prior notice. If the Borrower exercises its option to
terminate the Commitment, then the Borrower shall forthwith prepay the
outstanding principal balance under the Note, together with all
accrued interest and other amounts due hereunder.
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(b) In the event of an occurrence of any of the events described in
Subsection 6.01(l) or (s) hereof, but after giving effect to such
occurrence, there have been no more than 4 occurrences of such event
in any consecutive 12-month period, the Borrower shall promptly pay to
the Bank the Percentage of Completion Value of the affected Home as a
mandatory prepayment, the Percentage of Completion Value of the Home
shall be excluded from the Borrowing Base, and the Bank shall have no
further obligations to fund Advances with respect to the Lot and Home.
Section 2.07 Borrowing Base. The Borrower shall submit to the
Bank a Construction Facility Status Report on or before the tenth day of each
month showing the status as of the last day of the preceding month, and if the
Borrower wishes to obtain during a month, Advances which would exceed the
Borrowing Base then in effect after taking into account Advances, releases, and
other reductions in the Borrowing Base, the Borrower shall submit to the Bank a
current Construction Facility Status Report prior to obtaining Advances which
shall demonstrate availability under the Borrowing Base. The Bank will, at its
option, inspect some or all of the Homes listed in the Construction Facility
Status Report for purposes of evaluating the Percentage of Completion of each
such Home. Based upon such Construction Facility Status Report and/or the
Bank's inspection and evaluation, the Bank in its sole discretion shall
establish a borrowing base which shall be effective until the earlier of (i)
the date of delivery of a more current Construction Facility Status Report or
(ii) the date that a more current Construction Facility Status Report is due.
The "Borrowing Base" shall, at any given time, be equal to the aggregate
Percentage of Completion Value set forth on the Construction Facility Status
Report for all Lots and Homes financed under the Construction Facility at the
time of calculation and which have not become Excluded Units, less the
applicable Percentage of Completion Value of the Lots and Homes released by the
Bank since the date of the last Borrowing Base calculation. The Borrowing Base
may, at any time, be adjusted pursuant to the Bank's inspection and evaluation
of the Lots and Homes financed under the Construction Facility and, absent
manifest error, the Bank's determination of the Percentage of Completion of any
such Lot and Home shall be binding and conclusive. Furthermore, if the Bank
determines in its sole discretion, reasonably exercised, that the Fair Market
Value has declined, or that actual construction costs are less than the
Construction Costs for the Type of Home being built set forth in the most
current Construction Costs Schedule, then the Borrowing Base may be adjusted
and the Bank's redetermination of the Borrowing Base shall be binding and
conclusive.
Section 2.08 Payment Procedure. All payments and prepayments made
by the Borrower under the Note or this Agreement shall be made to the Bank at
its offices described above in immediately available funds before 2:00 p.m.,
Pittsburgh time, on the date that such payment is required to be made. Any
payment received and accepted by the Bank after such time shall be considered
for all purposes (including the calculation of interest, to the extent
permitted by law) as having been made on the Bank's next following Business
Day.
Section 2.09 Business Days. If the date for any loan payment or
prepayment payment hereunder falls on a day which is not a Business Day, then
for all purposes of the Note and this Agreement the same shall be deemed to
have fallen on the next following Business Day, and such extension of time
shall in such case be included in the computation of payments of interest.
Section 2.10 Changes in Subdivision Status. If the Bank
determines that any Approved Subdivision or Developed Subdivision no longer
qualifies as such, the Bank shall (subject to all other terms and conditions
hereof) continue to provide financing under the Construction Facility for Lots
and Homes located in such subdivision to the extent that such Lots and Homes
were included in the Borrowing Base prior to such change in status. The Bank
shall have no further obligation to make any
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further Initial Advances with respect to Lots and Homes in any subdivision
which the Bank determines no longer qualifies as an Approved Subdivision or a
Developed Subdivision.
Section 2.11 Illegality. If, after the date of this Agreement,
there is adopted any law, rule or regulation, or any change therein, or any
change in the interpretation or administration thereof by any Governmental
Authority or compliance by the Bank with any request or directive (whether or
not having the force of law) of any Governmental Authority and any of same
shall make it unlawful or impossible for the Bank to make, maintain or fund the
Advances, the Bank shall notify the Borrower. Upon receipt of such notice, the
Borrower may either (i) repay in full the then outstanding principal amount of
the affected Advances, together with accrued interest thereon, or (ii) continue
to pay amounts due under the Note, as then in effect, but the Bank shall not
have any further obligation hereunder to fund Advances. If, after the date of
this Agreement, there is adopted any law, rule or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority or compliance by the Bank with any request or directive
(whether or not having the force of law) of any Governmental Authority and any
of same shall make it unlawful or impossible for the Bank to make, maintain or
fund the LIBOR Rate Advances, the Bank shall notify the Borrower and such
Advances shall be converted to Base Rate Advances.
Section 2.12 Increased Costs for Advances. If any Governmental
Authority shall at any time impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by the Bank, or shall impose on the Bank any
other condition affecting the Advances or the Bank's obligation to make the
Advances; and, the result of any of the foregoing is to increase the cost to
the Bank of making or maintaining the Advances, or to reduce the amount of any
sum received or receivable by the Bank under this Agreement or under the Note
by an amount deemed by the Bank to be material then, within thirty (30) days
after demand by the Bank, the Borrower shall pay to the Bank such additional
amount or amounts as will compensate the Bank for such increased cost or
reduction. A certificate of the Bank claiming compensation under this Section
and setting forth the additional amount or amounts to be paid to the Bank
hereunder shall be conclusive in the absence of manifest error. If the Bank
demands compensation under this Section, then the Borrower may at any time
repay in full the then outstanding affected Advances, together with accrued
interest thereon to the date of prepayment. If either (i) the introduction of,
or any change in, or in the interpretation of, any law or regulation, or (ii)
compliance with any guideline or request from any central bank or Governmental
Authority (whether or not having the force of law) affects or would affect the
amount of capital required or expected to be maintained by the Bank or any
corporation controlling the Bank and the Bank reasonably determines that the
amount of such capital is increased by or based upon the existence of the
Advances hereunder or of the Bank's commitment to lend hereunder, then, upon
demand by the Bank, the Borrower shall pay to the Bank, from time to time, as
specified by the Bank, additional amounts sufficient to compensate the Bank in
the light of such circumstances, to the extent that the Bank reasonably
determines such increase in capital to be allocable to the existence of the
Advances hereunder or the Bank's commitment to lend hereunder. A certificate
as to such amounts submitted to the Borrower by the Bank shall be conclusive
and binding for all purposes, absent manifest error.
Section 2.13 Inability to Determine LIBOR Rate. If at any time
the Bank is unable to determine the rate for deposits in U.S. dollars offered
to major money center banks in the London interbank market, the Bank shall
forthwith notify the Borrower that the rate cannot be determined and the
Advances will automatically, on the first day of the next calendar month, be
converted to Base Rate Advances until the Bank shall notify the Borrower that
the circumstances causing such suspension no longer exist, at which time the
Advances may be re-converted to LIBOR Rate Advances on the first day of the
succeeding calendar month.
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Section 2.14 Confirmation of Assumption of Indebtedness Under
Note. The Borrower hereby ratifies and confirms the indebtedness and the
assumption of indebtedness and obligations assumed under the Note and the
indebtedness arising after the date of assumption and acknowledges its
obligation to repay the liabilities and indebtedness now existing or hereafter
arising under the Note.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Agreement, the Borrower
makes the representations and warranties to the Bank (which representations and
warranties will survive the delivery of the Note and the making of the Advances
thereunder) set forth below:
Section 3.01 Partnership Existence. The Borrower (i) is a Texas
limited partnership duly formed pursuant to The Texas Revised Limited
Partnership Act of the State of Texas and its sole general partner is Newmark;
(ii) the business which the Borrower carries on and which it proposes at the
date of this Agreement to carry on lawfully may be carried on by the Partners
in partnership; and (iii) the Borrower is duly authorized to do business as a
limited partnership wherever the nature of its Properties or its activities
requires such authorization. If any of the Partners is a corporation, such
Partner is a corporation duly organized, legally existing and in good standing
under the laws of the jurisdiction in which it is incorporated and is duly
qualified as a foreign corporation in all jurisdictions wherein the Property
owned or the business transacted by each such respective Partner makes such
qualification necessary. Each of the Borrower's Subsidiaries is a corporation
duly organized, legally existing and in good standing under the laws of the
jurisdiction in which it is incorporated and is duly qualified as a foreign
corporation in all jurisdictions wherein the Property owned or the business
transacted by each such respective Subsidiary makes such qualification
necessary.
Section 3.02 Power and Authorization. The general partner of the
Borrower (i) has full power and authority to create and issue the Note on
behalf of the Borrower and the Security Instruments, including this Agreement,
to which the Borrower is a party; (ii) the Borrower has full power and
authority to perform its obligations under the Security Instruments; (iii) each
Subsidiary is duly authorized and empowered to execute, deliver, and perform
the Security Instruments, including this Agreement, to which it respectively is
a party. All action on the respective part of the Borrower and its
Subsidiaries and any stockholder of or partner in any of such Persons requisite
for the due issuance and delivery of the Note and the due execution, delivery,
and performance of the Security Instruments, including this Agreement, to which
the Borrower, the Subsidiaries, or any stockholder of or partner in any of such
Persons is a party has been duly and effectively taken.
Section 3.03 Binding Obligations. This Agreement does, and the
Note and other Security Instruments to which the Borrower and each Subsidiary,
respectively, are parties upon their creation, issuance, execution and delivery
will, constitute valid and binding obligations of the Borrower and each
Subsidiary, respectively, enforceable in accordance with their terms, except as
such enforceability may be limited by bankruptcy laws.
Section 3.04 No Legal Bar or Resultant Lien. The Note and the
Security Instruments, including this Agreement, to which the Borrower or any
Subsidiary is a party and the compliance with and performance by the Borrower
or any Subsidiary of the terms thereof do not and will not violate any
provisions of the Partnership Agreement of the Borrower or the Articles of
Incorporation or the Bylaws of the general partner or any Subsidiary of the
Borrower, or any contract, agreement,
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instrument or Governmental Requirement presently in effect to which the
Borrower or any Subsidiary is subject, and will not result in the creation or
imposition of any Lien upon any Properties of the Borrower or any Subsidiary
other than those permitted by this Agreement, except where such violation does
not and will not have a Material Adverse Effect.
Section 3.05 No Consent. Except as disclosed in Exhibit D, the
Borrower's and each of Subsidiary's execution, delivery and performance of the
Note and the Security Instruments, including this Agreement, to which the
Borrower and each Subsidiary respectively are parties do not require the
consent or approval of any Partner, or of any stockholder of or partner in any
of the Partners of the Borrower, or of any other Person which has not been
obtained, including but not limited to any Governmental Authority.
Section 3.06 Financial Condition. The consolidated and
consolidating financial statements of the Borrower for the period ending
December 31, 1996 (including any related schedules or notes) which have been
delivered to the Bank have been prepared in accordance with GAAP, consistently
applied, and present fairly the financial condition and changes in financial
position of the Borrower as at the date or dates and for the period or periods
stated and that no change has since occurred in the condition, financial or
otherwise, of the Borrower which would have a Material Adverse Effect.
Section 3.07 Investments and Guaranties. At the date of this
Agreement, neither the Borrower nor any Subsidiary has made investments in,
advances to or guaranties of the obligations of any Person, except as reflected
in the Financial Statements or disclosed to the Bank in Exhibit D and except as
otherwise permitted by this Agreement.
Section 3.08 Liabilities; Litigation. Except for liabilities
incurred in the normal course of business, neither the Borrower nor any
Subsidiary has any material (individually or in the aggregate) liabilities,
direct or contingent, except as disclosed or referred to in the Financial
Statements or as disclosed to the Bank in Exhibit D, and at the date of this
Agreement there is no litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any Subsidiary which
(A) challenges the validity of this Agreement, the Note or any of the other
Security Instruments or (B) involves the possibility of any judgment or
liability not fully covered by insurance, and which would have a Material
Adverse Effect.
Section 3.09 Taxes; Governmental Charges. The Borrower and the
Subsidiaries have filed all tax returns and reports required to be filed and
have paid all taxes, assessments, fees, and other governmental charges levied
upon any of them or upon any of their respective Properties or income which are
due and payable, including interest and penalties, or have provided adequate
reserves for the payment thereof and are contesting the same in accordance with
the provisions of Section 4.04 hereof.
Section 3.10 Titles, Etc. The Borrower and the Subsidiaries have
good and indefeasible title in fee simple to all real property covered by a
Mortgage and good and indefeasible title to their other Properties, free and
clear of all Liens except (i) Liens referred to in the Financial Statements,
(ii) Liens disclosed to the Bank in Exhibit D, (iii) Liens and minor
irregularities in title which do not interfere with the occupation, use, or
enjoyment by the Borrower or any Subsidiary of any of their respective
Properties in the normal course of business as presently conducted or impair
the value thereof for such business, except where such interference or
impairment do not have a Material Adverse Effect, (iv) Liens otherwise
permitted or contemplated by this Agreement or the other Security Instruments,
or (v) Excepted Liens.
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Section 3.11 Defaults. Neither the Borrower nor any Subsidiary is
in default nor has any event or circumstance occurred which, but for the
passage of time or the giving of notice, or both, would constitute a default
under any material loan or credit agreement, indenture, mortgage, deed of
trust, security agreement or other agreement or instrument evidencing or
pertaining to any Debt of the Borrower or any Subsidiary, or under any material
agreement or other instrument to which the Borrower or any Subsidiary is a
party or by which the Borrower or any Subsidiary is bound, and no Default
hereunder has occurred and is continuing.
Section 3.12 Casualties; Taking of Properties. Since the date of
the Financial Statements, neither the business nor the Properties of the
Borrower and the Subsidiaries, taken as a whole, have been materially and
adversely affected by any cause or event. No Home for which Advances hereunder
have been made (and continue to be outstanding) has suffered any material fire
or other casualty loss.
Section 3.13 Use of Proceeds; Margin Stock. The proceeds of each
Advance will be used solely to pay for the cost of the acquisition of Lots (or
to refund the cost of Lots which were previously acquired) located in an
Approved Subdivision and the cost of new construction of Homes on each such
Lot; none of such proceeds will be used for the purpose of purchasing or
carrying any "margin stock" as defined in Regulation U of the Board of
Governors of the Federal Reserve System (12 C.F.R. Part 221), or for the
purpose of reducing or retiring any indebtedness which was originally incurred
to purchase or carry a margin stock or for any other purpose which might
constitute this transaction a "purpose credit" within the meaning of such
Regulation U. Neither the Borrower nor any Subsidiary is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying margin stocks and neither the Borrower
nor any Subsidiary, nor any Person acting on behalf of the Borrower or any
Subsidiary, has taken or will take any action which might cause the Note or any
of the Security Instruments, including this Agreement, to violate Regulation U
or any other regulation of the Board of Governors of the Federal Reserve System
or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereafter be in effect.
Section 3.14 Compliance with the Law. Neither the Borrower nor
any Subsidiary (i) is in violation of any Governmental Requirement concerning
its respective Properties or the conduct of its respective business to the
extent that any such violation or penalty arising therefrom would have a
Material Adverse Effect or (ii) has failed to obtain any license, permit,
franchise or other governmental authorization necessary to the ownership of any
of their respective Properties or the conduct of their respective business,
which violation or failure would have (in the event such violation or failure
were asserted by any Person through appropriate action) a Material Adverse
Effect or (iii) has been accused of being in violation of Title IX of the
Organized Crime Control Act of 1970, entitled "Racketeer Influenced and Corrupt
Organizations" (RICO), 18 U.S.C. Section 1961 et seq.
Section 3.15 ERISA.
(a) The Borrower, each Subsidiary, and each ERISA Affiliate have
complied in all material respects with ERISA and, where applicable, the Code
regarding each Plan.
(b) Each Plan is and has been maintained in substantial compliance
with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could
result in imposition on the Borrower, any Subsidiary or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil
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penalty assessed pursuant to subsections (c), (i) or (l) of Section 502 of
ERISA or tax imposed pursuant to Section 4975 of the Code or (ii) breach of
fiduciary duty liability damages under Section 409 of ERISA.
(d) Full payment has been made when due of all amounts which the
Borrower, the Subsidiaries, and any ERISA Affiliate is required under the terms
of each Plan or applicable law to have paid as contributions to such Plan as of
the date hereof.
(e) Neither the Borrower, any Subsidiary nor any ERISA Affiliate
sponsors, maintains or contributes to an employee welfare benefit plan, as
defined in Section 3(1) of ERISA, including but not limited to any such plan
maintained to provide benefits to former employees of such entities, that may
not be terminated by the Borrower, any Subsidiary or any ERISA Affiliate in its
sole discretion at any time without incurring liability in excess of $250,000.
(f) Neither the Borrower, the Subsidiaries, nor any ERISA
Affiliate sponsors, maintains, or contributes to, or has at any time in the
six-year period preceding the date of this Agreement sponsored, maintained or
contributed to, any employee pension benefit plan, as defined in Section 3(2)
of ERISA, that is subject to Title IV of ERISA (including, without limitation,
any multiemployer plan as defined in Section 3(37) or 4001(a)(3) of ERISA).
Section 3.16 Location of the Borrower. The Borrower's principal
place of business and chief executive offices are located at the address stated
in the first paragraph of this Agreement. The Borrower has not been known as
or used any other corporate, fictitious, assumed or trade names during the past
five (5) years, except as disclosed in Exhibit D.
Section 3.17 Utility Services. All utility services necessary for
the construction of the Homes on all Lots mortgaged to the Bank and the
operation thereof for their intended purpose are (or will be prior to the
Completion Date of the Home to be constructed thereon) available at the
boundaries of each such Lot, including water supply, storm and sanitary sewer
facilities, gas (if applicable), electric, and telephone facilities. All roads
necessary for the full utilization of such Homes for their intended purposes
have been completed substantially in accordance with all regulations and
specifications of applicable Governmental Authorities and accepted for
maintenance by the county or city in which they are located.
Section 3.18 No Material Misstatements. No information, exhibit
or report furnished to the Bank by the Borrower or any Subsidiary in connection
with the negotiation of this Agreement contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statement contained therein not misleading.
Section 3.19 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended.
Section 3.20 Public Utility Holding Company Act. Neither the
Borrower nor any Subsidiary is a "holding company", or a "subsidiary company"
of a "holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", or a "public utility" within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
Section 3.21 Subsidiaries. The Borrower has no Subsidiaries
except as disclosed in Exhibit D.
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Section 3.22 Environmental Matters.
(a) Neither any Property of the Borrower or the Subsidiaries nor
the operations conducted thereon violate any order or requirement of any court
or Governmental Authority or any Environmental Law;
(b) The Borrower has made due inquiry and none of the Property of
the Borrower subject to a Mortgage is listed or anticipated to be listed on the
CERCLA National Priorities List or a similar state priorities list for
properties requiring remediation that is maintained by a Governmental Authority
under any Environmental Law. The Borrower has made due inquiry and no other
Property of the Borrower or the Subsidiaries is listed, is anticipated to be
listed on the CERCLA National Priorities List or a similar state priorities
list for properties requiring remediation that is maintained by a Governmental
Authority under any Environmental Law. To the best of Borrower's knowledge, no
site immediately adjacent to any Property of the Borrower subject to a Mortgage
is listed on the CERCLA National Priorities List or a similar state priorities
list for properties requiring remediation that is maintained by a Governmental
Authority under any Environmental Law.
(c) Except as disclosed to the Bank in Exhibit D, without
limitation of clause (a) above, no Property of the Borrower or the Subsidiaries
which is subject to a Mortgage, nor the operations currently conducted thereon
or, to the best of Borrower's knowledge after obtaining and reviewing a Phase I
Environmental Assessment in accordance with the Standard Practice for
Environmental Site Assessments, E1527-93 or other report of environmental
conditions satisfactory to the Bank, nor the operations conducted by any prior
owner or operator of such Property or operation, are in violation of or subject
to any existing, pending action, suit, investigation, inquiry, or proceeding by
or before any court or Governmental Authority or to any remedial obligations
under Environmental Laws;
(d) All notices, permits, licenses or similar authorizations, if
any, required to be obtained or filed in connection with the operation or use
of any and all Property of the Borrower and the Subsidiaries, including but not
limited to treatment, storage, disposal, or release of a hazardous substance or
solid waste into the environment, have been duly obtained or filed, and the
Borrower and the Subsidiaries are in compliance with the terms and conditions
of any such notice, permit, license or similar authorization;
(e) All hazardous substances or solid waste generated at any
Property of the Borrower and the Subsidiaries have , during the period of
ownership or operation of such Property by the Borrower or any Subsidiary, been
transported, treated and disposed of only by carriers maintaining valid permits
under RCRA and any other Environmental Law and only at treatment, storage and
disposal facilities maintaining valid permits under RCRA and any other
Environmental Law, which carriers and facilities have been and are operating in
compliance with such permits and are not the subject of any existing, pending
or threatened action, investigation or inquiry by any Governmental Authority in
connection with any Environmental Law;
(f) The Borrower and the Subsidiaries have taken all reasonable
and prudent steps necessary to determine and have determined that no hazardous
substances or solid waste have been disposed of or otherwise released and there
has been no release of any hazardous substances on or to any Property of the
Borrower or the Subsidiaries except in compliance with Environmental Laws and
to the extent that any such release is not material and is remediable without
significant cost or any liability, and that there are no storage tanks or other
containers on or under the Property of the Borrower or the Subsidiaries from
which hazardous substances or other contaminants may be released into the
surrounding environment in reportable quantities;
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(g) The Borrower and the Subsidiaries have no material contingent
liability in connection with any release of any hazardous substance or solid
waste into the environment; and
(h) There are no conditions existing on any Property of the
Borrower or the Subsidiaries or resulting from operations conducted thereon
that could give rise to or result in the imposition of remedial obligations
under Environmental Laws other than conditions that customarily exist in the
homebuilding business that are not material and are remediable without
significant cost or any liability.
(i) To the best of the Borrower's knowledge, none of the Property
of the Borrower is located on a site used or formerly used as a landfill.
Section 3.23 Survey and Other Documents. Each survey of Lots
furnished to the Bank accurately depicts the state of facts it purports to
depict and each other document furnished to the Bank is a true and correct copy
thereof, has not been modified or amended and is in full force and effect on
the date hereof.
Section 3.24 No Control. The Borrower is not and no Person having
"control" (as defined in 12 U.S.C. Section 375(b)(5) or in regulations
promulgated pursuant thereto) of Borrower is an "executive officer,"
"director," or "principal shareholder" (as those terms are defined in 12 U.S.C.
Section 375(b) or in regulations promulgated pursuant thereto) of the Bank, of
a bank holding company of which the Bank is a subsidiary, or of any subsidiary
of a bank holding company of which Bank is a subsidiary, or of any bank at
which the Bank maintains a "correspondent account" (as such term is defined in
such statute or regulations) or of any bank which maintains a correspondent
account with the Bank.
Section 3.25 Wetlands. A wetlands survey of the Lots has been
conducted and no Lot financed by the Construction Facility contains any area
designated as "wetlands" by the U.S. Army Corps of Engineers.
Section 3.26 Flood Area; Filled Land. Unless otherwise agreed by
the Bank in writing, no part of any Lot mortgaged to the Bank is in an "area of
special flood hazard" as that term is defined in the National Flood Insurance
Act of 1968 (as amended and supplemented by the Flood Disaster Protection Act
of 1973). No Lot consists of and no Home will be located on filled in land,
except to the extent that the composition and compaction of any fill used
complies with applicable Governmental Requirements of the Department of Housing
and Urban Development.
Section 3.27 Solvency. The Borrower is solvent, is generally
paying its debts as they become due, and has no outstanding liens, suits,
garnishments, bankruptcies or court actions which could render it insolvent.
Section 3.28 Deceptive Trade Practices Act Not Applicable. The
Borrower has more than $25,000,000 in assets and is not a "consumer" within the
meaning of the Texas Deceptive Trade Practices Act. (Texas Business and
Commerce Code Section 17.41 et seq.). Attached hereto as Exhibit J is a true
and correct current financial statement showing assets in excess of
$25,000,000.
Section 3.29 Geological Fault. To the best of Borrower's
knowledge, except to the extent that the Borrower has notified the Bank to the
contrary, no Lot is located within one-quarter mile of any geological fault.
Section 3.30 No "Zero Lot Line" Construction. The Borrower does
not have and does not intend to have any "zero lot line" construction of Homes
on the Lots mortgaged to the Bank.
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Section 3.31 Underground Storage Facilities. To the best of
Borrower's knowledge, except as consented to by the Bank, no part of any Lot or
other real property upon which the Bank has been granted a Lien and no part of
any Approved Subdivision is situated on, over or within one mile of any
underground storage facilities used for injection of natural gas or processed
gas or other liquid hydrocarbons except for service stations or similar
facilities operated to dispense to consumers products utilized in the operation
of automotive vehicles.
ARTICLE 4
AFFIRMATIVE COVENANTS
The Borrower will at all times comply with the covenants contained in
this Article 4, from the date hereof and for so long as any part of the
Indebtedness or the Commitment is outstanding.
Section 4.01 Financial Statements and Reports. The Borrower will
promptly furnish to the Bank from time to time upon request such information
regarding the business and affairs and financial condition of the Borrower and
the Subsidiaries as the Bank may reasonably request, and the Borrower will
furnish to the Bank:
(a) Annual Reports - Promptly after becoming available
and in any event within one hundred twenty (120) days after the close
of each fiscal year of the Borrower, the audited consolidated (or,
where appropriate, combined) and consolidating balance sheets of the
Borrower and its Subsidiaries as at the end of such year, the audited
consolidated (or, where appropriate, combined) and consolidating
statements of profit and loss of the Borrower and its Subsidiaries,
respectively, for such year, and the audited consolidated (or, where
appropriate, combined) and consolidating statements of reconciliation
of capital accounts of the Borrower and its Subsidiaries,
respectively, for such year, including a statement of contingent
liabilities and accompanied by the related report of independent
public accountants of nationally recognized standing, which report
shall be to the effect that such statements have been prepared in
accordance with GAAP consistently followed throughout the period
indicated except for such changes in such principles with which the
independent public accountants shall have concurred;
(b) Quarterly Financial Reports - Promptly after becoming
available and in any event within thirty (30) days after the end of
each quarter in each fiscal year of the Borrower, the consolidated
(or, where appropriate, combined) and consolidating balance sheets of
the Borrower and its Subsidiaries as at the end of such quarter, and
the consolidated (or, where appropriate, combined) and consolidating
statements of profit and loss of the Borrower and its Subsidiaries for
such quarter and for the period from the beginning of the fiscal year
to the end of such quarter, certified by an Authorized Borrower
Representative to have been prepared in accordance with GAAP
consistently followed throughout the period indicated except to the
extent stated therein, subject to normal changes resulting from
year-end adjustment;
(c) Other Reports -
(i) As soon as available, but in any event by the
tenth (10th) of each calendar month, a Construction Facility
Status Report by Approved Subdivision with respect to all Lots
and Homes financed under the Construction Facility as of the
end of the prior month.
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(ii) As soon as available, and in any event by the
tenth (10th) day of each calendar month, a Sold/Unsold Homes
Report in form of Exhibit F hereto as of the end of the prior
month; and
(d) Audit Reports - Promptly upon receipt thereof, one
copy of each other report submitted to the Borrower or any Subsidiary
by independent accountants in connection with any annual, interim or
special audit made by them of the books of the Borrower or any
Subsidiary;
(e) Construction Costs Schedules - Prior to commencement
of construction of each Type of Home, and thereafter as changes occur
or upon request by the Bank, a current Construction Costs Schedule for
such Type of Home; and
(f) Satisfaction of Conditions Precedent - Promptly upon
request by the Bank, the Borrower shall provide the Bank with such
documents, reports or other evidence as the Bank may reasonably
request evidencing the satisfaction by the Borrower of the conditions
precedent set forth in Article 7.
Section 4.02 Annual Certificates of Compliance. Concurrently with
the furnishing of the annual financial statements pursuant to Subsection
4.01(a), the Borrower will furnish or cause to be furnished to the Bank a
certificate signed by an Authorized Borrower Representative (i) stating that a
review of the activities of the Borrower and the Subsidiaries has been made
under his supervision with a view to determining whether the Borrower and the
Subsidiaries have fulfilled all of their obligations under this Agreement, the
other Security Instruments and the Note; (ii) stating that the Borrower and the
Subsidiaries have fulfilled their obligations under such instruments and that
all representations made herein continue to be true and correct in all material
respects (or specifying the nature of any change), or if there shall be a
Default or Event of Default, specifying the nature and status thereof and the
Borrower's proposed response thereto; (iii) demonstrating in reasonable detail
compliance (including but not limited to showing all calculations) as at the
end of such fiscal year with Sections 5.16, 5.17, 5.18 and 5.19, and with such
other provisions hereof as the Bank may reasonably request; and (iv) containing
or accompanied by such financial or other details, information and material as
the Bank may reasonably request to evidence such compliance.
Section 4.03 Quarterly Certificates of Compliance. Concurrently
with the furnishing of the quarterly financial statements pursuant to
Subsection 4.01(b), the Borrower will furnish or cause to be furnished to the
Bank an Authorized Borrower Representative's certificate in the same form as
the certificate required by Section 4.02, including all the matters referred to
in clauses (i) through (iii), inclusive, thereof.
Section 4.04 Taxes and Other Liens. The Borrower will pay and
discharge promptly all material taxes, assessments and governmental charges or
levies imposed upon the Borrower or any Subsidiary or upon the income or any
Property of the Borrower or any Subsidiary which, if unpaid, might become a
Lien upon any or all of the Property of the Borrower or any Subsidiary;
provided, however, that neither the Borrower nor any Subsidiary shall be
required to pay any such tax, assessment, charge, levy or claim if the amount,
applicability or validity thereof shall currently be contested in good faith by
appropriate proceedings diligently conducted by or on behalf of the Borrower or
such Subsidiary, and if the Borrower or such Subsidiary shall have set up
reserves therefor adequate under GAAP. The Borrower shall promptly pay any
amounts finally adjudged by a court of competent jurisdiction to be due,
together with all costs, interest and penalties.
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Section 4.05 Maintenance. The Borrower will and will cause each
Subsidiary to (i) maintain its partnership or corporate existence (as the case
may be), rights and franchises and (ii) observe and comply with all
Governmental Requirements.
Section 4.06 Further Assurances. The Borrower will and will cause
each Subsidiary to cure promptly any defects in the creation and issuance of
the Note and the execution and delivery of the Security Instruments, including
this Agreement. The Borrower at its expense will promptly execute and deliver
to the Bank upon request all such other and further documents, agreements and
instruments (or cause any of the Subsidiaries to take such action) in
compliance with or accomplishment of the covenants and agreements of the
Borrower or any of the Subsidiaries in the Security Instruments, including this
Agreement, or to further evidence and more fully describe the collateral
intended as security for the Note, or to correct any omissions in the Security
Instruments, or more fully to state the security obligations set out herein or
in any of the Security Instruments, or to perfect, protect or preserve any
Liens created pursuant to any of the Security Instruments, or to make any
recordings, to file any notices, or obtain any consents, all as may be
reasonably necessary or appropriate in connection therewith.
Section 4.07 Costs and Expenses. The Borrower will pay all
reasonable legal fees and all reasonable out-of- pocket expenses incurred by
the Bank in connection with the negotiation, documentation and administration
of this Agreement and any and all other Security Instruments contemplated
hereby (including any amendments hereto or thereto or consents or waivers
hereunder or thereunder); provided, however, that the Bank will obtain at its
expense prior to the occurrence of an Event of Default, appraisals and
inspections of the Homes and Lots. The Borrower will, upon request, promptly
reimburse the Bank for all amounts reasonably expended, advanced or incurred by
the Bank to satisfy any obligation of the Borrower under this Agreement or any
other Security Instrument, or to collect the Note, or to enforce the rights of
the Bank under this Agreement or any other Security Instrument, which amounts
will include all court costs, attorneys' fees (including but not limited to
trial, appeal or other proceedings), fees of auditors and accountants, and
investigation expenses reasonably incurred by the Bank in connection with any
such matters, together with interest at the post-maturity rate specified in
Section 2.03 on each such amount from the date three (3) days after written
demand or request by the Bank for reimbursement until the date of reimbursement
to the Bank. The Borrower will pay at the time of execution of this Agreement,
or when due, or at the option of the Bank at any time or times hereafter
specified by the Bank, all costs and expenses required by the terms of this
Agreement, the Note, or the Security Instruments, and including but not limited
to:
(a) All survey and continuations of survey costs and
expenses, including the cost of a survey;
(b) All premiums for Title Binders, Title Policies and
other insurance policies; and
(c) All other reasonable costs and expenses payable to
third parties incurred by the Bank in connection with the consummation
of the Transactions contemplated by this Agreement, other than
appraisal and inspection fees incurred by the Bank prior to the
occurrence of an Event of Default, as set forth herein.
Section 4.08 Insurance. The Borrower and the Subsidiaries now
maintain and will continue to maintain, with financially sound and reputable
insurers, insurance with respect to their respective Properties and business
against such liabilities, casualties, risks and contingencies and in such types
and amounts as is customary in the case of Persons engaged in the same or
similar businesses and similarly situated, including but not limited to public
liability (including liability arising out of or in
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connection with the operation of autos and other vehicles) insurance in the
minimum amount of either $1,000,000, workmen's compensation insurance up to
the statutory limits, an umbrella policy in the minimum amount of $5,000,000,
completed value fire and extended coverage insurance, and, with respect to all
Property mortgaged to the Bank, flood insurance for each Lot if located within
an "area of special flood hazard", as that term is defined in the National
Flood Insurance Act of 1968 (as amended and supplemented by the Flood Disaster
Protection Act of 1973), provided, however, that inclusion of this provision
shall not constitute a waiver of the provisions of Section 5.22 hereof,
builder's risk insurance in the amount at any time of one hundred percent
(100%) of the Percentage of Completion Value for each of the Homes financed
under the Construction Facility, together with such other insurance as the Bank
may require covering the associated Lot and the Home to be constructed thereon,
all in amounts approved by the Bank, such insurance to be written in form and
with companies approved by the Bank with loss made payable to the Bank pursuant
to the Texas standard mortgagee clause, without contribution, and the Borrower
shall have delivered the corresponding certificates of insurance to the Bank
with evidence of payment of premiums thereon. Such policy shall provide, by
way of riders, endorsements or otherwise, that the insurance provided thereby
shall not be terminated, reduced or otherwise limited regardless of any breach
of the representations and agreements set forth therein and that no such policy
shall be canceled, endorsed or amended to any extent unless the issuer thereof
shall have first given the Bank at least thirty (30) days' prior written
notice. Annually and upon request of the Bank, the Borrower will furnish or
cause to be furnished to the Bank from time to time (i) a summary of the
insurance coverage of the Borrower and the Subsidiaries in form and substance
satisfactory to the Bank and if requested will furnish the Bank copies of the
applicable policies and (ii) a copy of any report provided by the Borrower to
any insurance company concerning the Homes. In the case of any fire, accident
or other casualty causing loss or damage to any Properties of the Borrower
securing the payment of the Indebtedness, the proceeds of such policies shall
be used either (i) to repair or replace such damaged Property, or (ii) to
prepay the Indebtedness, such election to be made by the Bank.
Section 4.09 Right of Inspection. The Borrower will permit and
will cause each Subsidiary to permit any officer, employee or agent of the Bank
to visit and inspect any of the Properties of the Borrower or any Subsidiary,
examine the Borrower's or any Subsidiary's books of record and accounts, take
copies and extracts therefrom, and discuss the affairs, finances and accounts
of the Borrower or any Subsidiary with the Borrower's or such Subsidiary's
officers, accountants and auditors, all at such reasonable times and as often
as the Bank may desire.
Section 4.10 Notice of Certain Events. The Borrower shall
promptly notify the Bank if the Borrower obtains knowledge of the occurrence of
(i) any event which constitutes a Default, together with a detailed statement
by an Authorized Borrower Representative of the steps being taken to cure the
effect of such Default; or (ii) the receipt of any notice from, or the taking
of any other action by, the holder of any promissory note, debenture, or other
evidence of indebtedness of the Borrower or any Subsidiary or of any security
(as defined in the Securities Act of 1933, as amended) of the Borrower or any
Subsidiary with respect to a claimed default, together with a detailed
statement by a responsible officer of the Borrower specifying the notice given
or other action taken by such holder and the nature of the claimed default and
what action the Borrower or such Subsidiary is taking or proposes to take with
respect thereto; or (iii) any legal, judicial or regulatory proceedings
affecting the Borrower or any Subsidiary or any of the Properties of the
Borrower or any Subsidiary and involving an amount in controversy equal to
$100,000 or more individually or $250,000 in the aggregate; or (iv) any dispute
between the Borrower or any Subsidiary and any governmental or regulatory body
or any other Person which, if adversely determined, would have a Material
Adverse Effect; or (v) any event or condition having a Material Adverse Effect;
or (vi) any material difficulty in obtaining labor or materials which would
have a material effect on the Borrower's ability to complete construction of
any
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Home in accordance with the Plans and Specifications before the Completion
Date; or (vii) the presence of any hazardous substance on any Lot or in any
Home.
Section 4.11 Affiliates. All transactions between the Borrower or
any Subsidiary and any Affiliate of the Borrower or any Subsidiary shall be
arms length transactions undertaken in good faith and in the ordinary course of
business, unless approved by the Bank in its reasonable discretion, but the
foregoing shall not limit or prohibit payments by the Subsidiaries to the
Borrower.
Section 4.12 Notices by Governmental Authority, Fire and Casualty
Losses, Etc. The Borrower will timely comply with and promptly furnish to the
Bank true and complete copies of any official notice or claim by any
Governmental Authority pertaining to any Lot mortgaged to the Bank or any Home
to be constructed thereon. The Borrower will promptly notify the Bank of any
fire or casualty or any notice of taking or eminent domain action or proceeding
affecting any such Lot or Home. In the event any such Lot or Home is taken in
an eminent domain action or proceeding, the condemnation proceeds resulting
from such action or proceeding shall be paid to the Bank to be applied as a
prepayment of the Indebtedness.
Section 4.13 Deposit Account. The Borrower maintains a depository
account with Bank One, account number 9310741418, styled Newmark Homes, L.P.
Disbursement Account. The Borrower hereby instructs the Bank to deposit the
proceeds of each Advance made pursuant to Section 2.02 of this Agreement
directly into such account; provided, however, that Initial Advances, to the
extent of Lot acquisition (or refunding of acquisition cost of Lots previously
acquired) and closing costs shall be funded directly to the title company
handling the closing.
Section 4.14 Application of Advances. The Borrower will use all
Advances hereunder solely for purposes set forth in Section 3.13 hereof.
Section 4.15 Required Deposit by Borrower. If the Bank reasonably
determines in its good faith judgment at any time that the Reserved Commitment
for any given Lot and Home mortgaged to the Bank will be insufficient for
payment in full of:
(a) The remaining unpaid cost of labor, materials and
services required for the completion of the Home being constructed
thereon; and
(b) Any other costs and expenses required to be paid in
connection with the completion of construction of such Home in
accordance with any Governmental Requirements;
then the Borrower will, on request of the Bank, promptly deposit with the Bank
any sum or sums over and above the Reserved Commitment allocated to such Lot
and Home necessary to complete such Home (the "Borrower's Completion Deposit").
The Bank may advance all or a portion of the Borrower's Completion Deposit
prior to making any additional Advance with respect to such Lot and Home.
Section 4.16 Payment of Claims. The Borrower shall promptly pay
or cause to be paid when due all costs and expenses incurred in connection with
all Lots mortgaged to the Bank and the construction of the Homes thereon, and
the Borrower shall keep such Lots free and clear of any mechanic's Liens, Liens
other than Excepted Liens, charges, or claims other than the Lien of the
Mortgage and other Liens approved in writing by the Bank, whether inferior or
superior to the Mortgage. A discharge of any Mortgage and taking of a new
Mortgage in substitution thereof shall not release or diminish this obligation.
Notwithstanding anything to the contrary contained in this Agreement, the
Borrower may contest (i) the validity or amount of any claim of any contractor,
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consultant, architect, or other Person providing labor, materials, or services
with respect to any Lot mortgaged to the Bank or the construction of the Home
thereon, (ii) any tax or special assessment levied by any Governmental
Authority, or (iii) the enforcement of or compliance with any Governmental
Requirements, and any such contest on the part of the Borrower shall not be a
Default hereunder provided that during the pendency of any such contest the
Borrower shall furnish to the Bank and the Title Insurer an indemnity bond with
a corporate surety satisfactory to the Bank and the Title Insurer or other
security acceptable to them in an amount equal to one hundred twenty-five
percent (125%) of such claim or tax, and provided further that the Borrower
shall pay any amount finally adjudged by a court of competent jurisdiction to
be due, with all costs, interest, and penalties thereon before such judgment
creates a Lien on such Lot or the Home to be constructed thereon.
Section 4.17 Appraisals; Inspections. The Bank may order and
obtain Appraisals at its expense; provided, that upon the occurrence of a
Default, Appraisals may be ordered by the Bank at the Borrower's expense. The
Borrower shall allow the Bank's appraiser access to its Properties and records
and shall cooperate in any other reasonable manner in allowing such Appraisal
to be prepared and completed on a timely basis. The Bank may order and obtain
periodic inspections of the Lots and Homes financed by the Bank. The Bank
shall bear the cost of such inspections prior to the occurrence of an Event of
Default; the Borrower shall bear the cost of any such inspections after the
occurrence of an Event of Default. The Borrower shall allow the Bank's
inspector access to the Lots and Homes and related construction records and
shall cooperate in any other reasonable manner in allowing inspections to be
conducted in a timely manner.
Section 4.18 Plans and Specifications; Change Orders. The
Borrower will construct each Home in a good and workmanlike manner, in
accordance with the Plans and Specifications and in accordance with all
Governmental Requirements and applicable private covenants. Prior to
commencement of construction (and upon request by the Bank hereafter), the
Borrower shall furnish the Bank with copies of the Plans and Specifications for
each Home to be constructed under the Construction Facility, together with a
Construction Costs Schedule. Any change or changes to the Plans and
Specifications for any Home resulting in a decrease in the Construction Costs
of such Home and which exceed in the aggregate ten percent (10%) of the total
Construction Costs of such Home shall be disclosed to the Bank by providing the
Bank with a revised Construction Costs Schedule including any change orders.
Section 4.19 Model Homes. The Borrower will maintain at least
one, but no more than three, Model Homes in each Approved Subdivision wherein
the Borrower is building one or more Homes financed by the Construction
Facility. No more than two (2) Model Homes in each Approved Subdivision
wherein the Borrower is building other Homes financed by the Construction
Facility shall be financed under the Construction Facility at any one time.
The Borrower's Model Home Inventory financed by the Construction Facility shall
not exceed twenty percent (20%) of the total number of Homes financed by the
Bank which are completed or under construction by the Borrower determined as of
the date of the Initial Advance for the respective Model Home. The Fair Market
Value of any Model Home shall not include value attributable to landscaping,
fencing, or any "options" or "extras" not typically included in the Type of
Home being built for use as a Model Home.
Section 4.20 Title Policies. If, for any reason and
notwithstanding any other provision of this Agreement to the contrary, a Title
Binder is within two (2) weeks of its expiration date or if a material defect
in title to the Property covered thereby becomes known and is not cured by the
earlier of (i) 30 days from the date of discovery by the Borrower and (ii) two
weeks prior to the expiration date of the Title Binder, the Borrower shall
cause the Title Insurer that issued such Title Binder to convert such Title
Binder to a Title Policy and shall pay all premiums therefor.
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Section 4.21 Commencement of Construction. Within ten (10) days
after the date of the Initial Advance with respect to a Home, the Borrower
shall commence construction and shall thereafter prosecute the same with
diligence and continuity to completion. Upon commencement of construction, if
requested by the Bank, the Borrower shall execute and deliver to the Bank an
Affidavit of Commencement of Construction in accordance with the provisions of
the Texas Property Code and in recordable form. The Borrower shall not cease
construction of any Home for more than five (5) days without the consent of the
Bank.
Section 4.22 Materials. The Borrower shall cause all materials
(a) to be purchased in a manner that will result in the ownership thereof
vesting unconditionally in the Borrower, free from all liens, charges,
encumbrances and security interests, on delivery of such materials to the Lots,
(b) to be stored at the Lots under adequate safeguards to minimize the
possibility of loss, theft, damage or commingling with other materials or
projects, (c) to be covered by the lien and security interest of the Mortgage,
and (d) to be covered by the "Builder's Risk" insurance policy required by the
Mortgage. The Borrower shall deliver to the Bank, on demand, copies of any
contracts, bills of sale, statements, receipted vouchers or agreements under
which the Borrower claims title to any materials used in the construction of,
or incorporated or to be incorporated into, the Homes.
Section 4.23 Surveys and Plans. Upon request by the Bank, the
Borrower shall furnish to the Bank, at the Borrower's cost and expense,
immediately after (or in no more than three (3) days after) installation of the
forms for the pouring of the foundation or slab on the Lot in question, a
certificate by a licensed engineer or surveyor satisfactory to the Bank, in
form and scope acceptable to the Bank, to the effect that the location of the
foundation or slab is entirely within the perimeter of the Lot and does not
encroach upon, breach, or violate any set back lines.
Section 4.24 Correction of Defects. The Borrower will correct any
structural defect in the Homes and, upon demand of the Bank, the Borrower will
correct any material departure from the Plans and Specifications not approved
by the Bank and of any encroachment by any part of the Home or related
improvements on or over any building lines, easements, property lines or other
restricted areas which the foundation survey or any other survey or inspection
reflects. No Advance made shall constitute a waiver of the Bank's right to
require compliance with this covenant with respect to any such defects or
departures from the Plans and Specifications not theretofore discovered by, or
called to the attention of, the Bank in writing.
Section 4.25 Environmental Assessment. The Borrower will cause,
at no cost or expense to the Bank, a Phase I environmental assessment of the
Lots prepared by a qualified engineer approved by the Bank and a copy of the
environmental assessment to be delivered to the Bank prior to the Initial
Advance to be made with respect to the Lots covered by the assessment. The
assessment must show that the Lots do not contain any hazardous substances and
otherwise be in form and substance satisfactory to the Bank. A copy of the
Phase I environmental assessment furnished to the Borrower by the developer of
the subdivision may satisfy this requirement, in the sole discretion of the
Bank.
Section 4.26 Subcontractors. The Borrower will, if requested,
make available to the Bank, or its representatives within a reasonable period
after such request is made, counterparts and/or conditional assignments of any
and all construction contracts, bills of sale, statements, conveyances,
receipted vouchers or agreements of any nature under which the Borrower claims
title to any materials or supplies used or to be used in the construction of
the Home, and any lien waivers by any subcontractor, laborer or materialman
furnishing materials for construction or performing work upon any Home.
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Section 4.27 Speculative Homes.
(a) At no time from the date hereof through June 30, 1997 will the
aggregate Loan Value with respect to Speculative Homes then financed by the
Bank exceed an amount equal to the lesser of (x) sixty-five percent (65%) of
the Commitment or (y) sixty-five percent (65%) of the aggregate Loan Value of
all Homes then being financed by the Bank under the Facility on the date of
calculation.
(b) From and after July 1, 1997, at no time during the remaining
term of the Facility will the aggregate Loan Value with respect to Speculative
Homes then financed by the Bank exceed an amount equal to the lesser of (x)
sixty percent (60%) of the Commitment or (y) sixty percent (60%) of the
aggregate Loan Value with respect to all Homes then being financed by the Bank
under the Facility on the date of calculation.
(c) At no time will the total number of Speculative Homes (whether
or not financed by the Bank), completed or under construction by the Borrower
or any Subsidiary or Affiliate exceed seventy percent (70%) of the total number
of Homes (whether or not financed by the Bank) completed or under construction
by the Borrower or any Subsidiary or Affiliate.
ARTICLE 5
NEGATIVE COVENANTS
The Borrower will at all times comply with the covenants contained in
this Article 5, from the date hereof and for so long as any part of the
Indebtedness or the Commitment is outstanding.
Section 5.01 Debt. Neither the Borrower nor any Subsidiary will
incur, create, assume or suffer to exist any Debt, or any Debt which would
arise under commitments to lend, except:
(a) the Note or other Indebtedness;
(b) Debt of or commitments to lend to the Borrower and
its Subsidiaries existing on the date of this Agreement and renewals
(but not increases) thereof and under the construction facilities of
which the Borrower shall have given the Bank notice;
(c) customary accounts payable of the Borrower and its
Subsidiaries (for the deferred purchase price of Property, other than
real estate, or services) from time to time incurred in the ordinary
course of the Borrower's or its Subsidiaries' home building business
and which are not in excess of sixty (60) days past the invoice or
billing date;
(d) Debt of the Borrower or the Subsidiaries in the
maximum aggregate amount of $1,500,000 incurred after the date hereof
for the purpose of acquiring real Property to develop into Lots (and
for such development) for the purpose of the construction (primarily
by the Borrower) of Homes thereon (provided, however, that the maximum
amount of Debt pursuant to this Subsection together with the amount of
investments outstanding at any time pursuant to Subsection 5.04 shall
not exceed $3,000,000); and
(e) Debt of the Borrower in the maximum aggregate amount
of $100,000 for the deferred purchase price of equipment used by the
Borrower or its Subsidiaries in the ordinary course of business.
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Section 5.02 Liens. Neither the Borrower nor any Subsidiary will
create, incur, assume or permit to exist any Lien on any of its Properties (now
owned or hereafter acquired), except:
(a) Liens securing the payment of any Indebtedness;
(b) Excepted Liens;
(c) Liens existing on Lots and Homes to be constructed
thereon, the acquisition and construction of which are being financed
pursuant to the credit facilities described in Section 5.01(b);
(d) Liens disclosed in Exhibit D;
(e) Liens securing Debt described in Subsection 5.01(d)
and (e); and
(f) Non-consensual statutory, administrative or judicial
Liens that are not material either individually or in the aggregate.
Section 5.03 Investments, Loans and Advances. Neither the
Borrower nor any Subsidiary will make or permit to remain outstanding any loans
or advances to or investments in any Person, except that the foregoing
restriction shall not apply to:
(a) Investments, loans or advances, the material details
of which have been set forth in the Financial Statements or are
disclosed to the Bank in Exhibit D;
(b) Investments in direct obligations of the United
States of America or any agency thereof;
(c) Investments in certificates of deposit of maturities
less than one year, issued by commercial banks in the United States of
America having capital and surplus in excess of $50,000,000;
(d) Investments in commercial paper of maturities less
than one year if at the time of purchase such paper is rated in either
of the two highest rating categories of Standard & Poors Corporation,
Xxxxx'x Investors Service, Inc., or any other rating agency
satisfactory to the Bank; and
(e) Routine loans or advances to employees made in the
ordinary course of business not to exceed the aggregate amount, for
the Borrower and all Subsidiaries combined, of $250,000 at any one
time outstanding.
Section 5.04 Acquisition of Property to Develop Into Lots.
Neither the Borrower nor any Subsidiary shall make investments for the purpose
of acquiring real Property to develop into Lots (and for such development) for
the purpose of the construction (primarily by the Borrower) of Homes thereon
exceeding the maximum amount of $1,500,000 (provided, however, that the maximum
amount of investments pursuant to this Subsection including the amount of Debt
outstanding at any time pursuant to Subsection 5.01(d) shall not exceed
$3,000,000).
Section 5.05 Distributions, Payments, Etc. by the Borrower . The
Borrower will not make any distributions, returns of capital, payments of fees
to Partners, shareholders or Venturers if any
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Default has occurred and is continuing hereunder or would occur after giving
effect thereto. The Borrower shall not sell and shall not permit any
Subsidiary to issue, sell, or otherwise dispose of any shares of its capital
stock or other securities or rights, warrants or options to purchase, or
acquire any shares or securities or issue any class of capital stock if the
effect thereof would be to cause the Borrower to breach any other covenant of
this Agreement.
Section 5.06 Sales and Leasebacks. Except for sales and
leasebacks of Model Homes, neither the Borrower nor any Subsidiary will enter
into any arrangement, directly or indirectly, with any Person whereby the
Borrower or any Subsidiary shall sell or transfer any Property, whether now
owned or hereafter acquired, and whereby the Borrower or any Subsidiary shall
then or thereafter rent or lease as lessee such Property or any part thereof or
other Property which the Borrower or any Subsidiary intends to use for
substantially the same purpose or purposes as the Property sold or transferred.
Sales and leasebacks of Model Homes shall be permitted to the extent that no
default occurs under Section 5.10 hereof on account of lease payments.
Section 5.07 Nature of Business. Neither the Borrower nor any
Subsidiary will engage in any business other than the lot development and home
building business.
Section 5.08 Construction Starts. The Borrower will not undertake
any construction start on any Home to be financed under the Construction
Facility unless it has first granted to the Bank a first lien Mortgage on all
of the Borrower's right, title, and interest in the Property associated with
such Home as security for any and all Indebtedness. No construction contract
shall have been executed or recorded with respect to each Lot to be covered by
such first lien Mortgage, no work of any kind (including but not limited to the
destruction or removal of any existing improvements, site work, clearing,
grubbing, draining, or fencing of each such Lot by the Borrower or its agents)
shall have commenced or shall have been performed on any such Lot, no equipment
or material shall have been delivered to or upon any such Lot for any purpose
whatsoever, no contract (or memorandum or affidavit thereof) for the supplying
of labor, materials or services for the construction of the improvements
thereto shall have been recorded by any Person in the mechanic's lien or other
appropriate records in the county where any such Lot is located, and no
specially fabricated materials or equipment shall have been ordered or received
prior to the recordation of such first lien Mortgage. The Borrower will not
undertake any construction start on any Home to be financed under the
Construction Facility for which the Bank has not approved Plans and
Specifications or for which the Bank has not obtained an Appraisal. The
Borrower will not undertake any construction start on any Home financed under
the Construction Facility that is not located in an Approved Subdivision.
Section 5.09 Restrictions and Annexation. Neither the Borrower
nor any Subsidiary will impose any restrictive covenants or encumbrances upon
any Lot mortgaged to the Bank or the Home to be constructed thereon, or execute
or file any subdivision plat or effect the annexation of all or part of any
such Lot to any city or other political unit without the prior written consent
of the Bank.
Section 5.10 Limitation on Leases. Neither the Borrower nor any
Subsidiary will create, incur, assume, or suffer to exist any obligation for
the payment of rent or hire of Property of any kind whatsoever (real or
personal) under leases or lease agreements (other than leases or lease
agreements which constitute Debt) which would cause the aggregate amount of all
payments made by the Borrower and the Subsidiaries (determined on a
consolidated basis) pursuant to such leases or lease agreements to exceed
$300,000 in any period of twelve consecutive calendar months.
Section 5.11 Mergers, Stock, Etc. The Borrower will not merge or
consolidate with or sell, assign, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or
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substantially all of its Properties (whether now owned or hereafter acquired)
to any Person, nor will the Borrower permit any Subsidiary to do so.
Section 5.12 Proceeds of Note. The Borrower will not permit the
proceeds of the Note to be used for any purpose other than those permitted by
Section 3.13.
Section 5.13 ERISA. The Borrower and the Subsidiaries will not at
any time:
(a) Engage in, or permit any ERISA Affiliate to engage
in, any transaction in connection with which the Borrower, any
Subsidiary or any ERISA Affiliate could be subjected to either a civil
penalty assessed pursuant to subsections (c), (i) or (l) of Section
502 of ERISA or a tax imposed by Section 4975 of the Code;
(b) Fail to make, permit any ERISA Affiliate to fail to
make, full payment when due, of all amounts which the Borrower or any
ERISA Affiliate is required to pay as contributions thereto, whether
pursuant to the provisions of the Plan, any agreement relating
thereto, or applicable law;
(c) Contribute to or assume an obligation to contribute
to, or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to, any employee pension benefit plan, as
defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan, as defined in
Section 3(37) of 4001(a)(3) of ERISA);
(d) Acquire, or permit any ERISA Affiliate to acquire, an
interest in any Person that causes such Person to become an ERISA
Affiliate with respect to the Borrower or any Subsidiary or with
respect to any ERISA Affiliate of the Borrower or any Subsidiary if
such Person sponsors, maintains or contributes to, or at any time in
the six-year period preceding such acquisition has sponsored,
maintained, or contributed to, any employee pension benefit plan, as
defined in Section 3(2) of ERISA, that is subject to Title IV of ERISA
(including, without limitation, any multiemployer plan, as defined in
Section 3(37) of 4001(a)(3) of ERISA); or
(e) Contribute to or assume an obligation to contribute
to, or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to, any employee welfare benefit plan, as
defined in section 3(1) of ERISA, including but not limited to any
such plan maintained to provide benefits to former employees of such
entities, that may not be terminated by such entities in their sole
discretion at any time without any material liability.
Section 5.14 Sale or Discount of Receivables. Neither the
Borrower nor any Subsidiary will discount or sell with recourse, or sell for
less than the greater of the face or market value thereof, any of its notes
receivable or accounts receivable.
Section 5.15 Capital Assets. Neither the Borrower nor any
Subsidiary will make expenditures for capital or fixed assets in any fiscal
year of the Borrower exceeding the aggregate amount, determined on a
consolidated basis, of $250,000, excluding Model Home furnishings.
Section 5.16 Net Worth. The Borrower will not permit its
consolidated Tangible Net Worth to be less than $9,000,000 at any time.
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Section 5.17 Leverage. The Borrower will not permit its ratio of
(i) consolidated total liabilities (including contingent liabilities) to (ii)
consolidated tangible net worth to be greater than 5.0 to 1 at any time.
Section 5.18 Cost of Sales as a Percentage of Home Sales Revenue.
The Borrower will not permit its ratio of (i) cost of sales (determined by
specific identification of land, direct construction and closing costs and
allocation of indirect construction costs, in accordance with GAAP) to (ii)
revenue from sales of Homes (whether or not financed by the Bank and recognized
when title, possession and other attributes of ownership have been transferred
to a buyer, the seller is no longer obligated to perform any significant
activities related to the sale and sufficient payment, in accordance with GAAP,
has been received) for any two (2) consecutive fiscal quarterly periods to
exceed 89%.
Section 5.19 Ratio of Advances to Fair Market Value. The Borrower
will not permit the ratio of the aggregate principal amount of all Advances at
any time outstanding to the aggregate Fair Market Values, at such time, of all
Homes being financed under the Construction Facility at the time of calculation
to be greater than .75 to 1.
Section 5.20 Environmental Matters. Neither the Borrower nor any
Subsidiary will cause or permit any Property of any such party to be in
violation of, or do anything or permit anything to be done which will subject
any such Property to, any remedial obligations under any Environmental Laws in
excess of $250,000 in the aggregate, assuming disclosure to the applicable
Governmental Authority of all relevant facts, conditions and circumstances, if
any, pertaining to such Property, and the Borrower and the Subsidiaries will
promptly notify the Bank in writing of any existing, pending or threatened
action or investigation by any Governmental Authority in connection with any
Environmental Laws. The Borrower and the Subsidiaries will establish and
implement such procedures as may be necessary to continuously determine and
assure that (i) there occurs no material violation of any order or requirement
of any court or Governmental Authority or of any Environmental Law, (ii) no
solid wastes are disposed of on any Property owned by any such party in
quantities or locations that would require remedial action under any
Environmental Laws, and (iii) no hazardous substance will be released on or to
any such Property. The Borrower and the Subsidiaries covenant and agree to
keep or cause all Property owned by them to be kept free of any hazardous waste
or contaminants and to remove the same (or if removal is prohibited by law, to
take whatever action is required by law) promptly upon discovery at its sole
expense. Without limitation of the Bank's rights to declare a default
hereunder and to exercise all remedies available by reason thereof, if the
Borrower fails to comply with or perform any of the foregoing covenants and
obligations, the Bank may (without any obligation, express or implied) remove
any hazardous substance or solid waste from such Property (or if removal is
prohibited by law, take whatever action is required by law) and the cost of the
removal or such other action shall be a demand obligation due and owing by the
Borrower to the Bank (which obligation the Borrower hereby promises to pay upon
demand) pursuant to this Agreement and shall be subject to and covered by the
provisions of Sections 4.16 and 8.09. The Borrower grants to the Bank and its
agents, employees, contractors and consultants access to such Property and the
license (which is coupled with an interest and irrevocable while this Agreement
is in effect) to remove the hazardous substance or solid waste (or if removal
is prohibited by law, to take whatever action is required by law) and agrees to
indemnify and save the Bank harmless from all costs and expenses involved
therewith to the extent that the same is caused by acts or omissions of the
Borrower. Upon the Bank's reasonable request, at any time and from time to
time during the existence of this Agreement, the Borrower will provide at the
Borrower's sole expense an inspection or audit of such Property from an
engineering or consulting firm approved by the Bank, indicating the presence or
absence of hazardous substances and solid wastes on such Property. If the
Borrower fails to provide same after twenty (20) days' notice, the Bank may
order same, and the Borrower grants to the Bank and its employees, agents,
contractors
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and consultants access to such Property and a license (which is coupled with an
interest and irrevocable while this Agreement is in effect) to perform
inspections and tests, including but not limited to the taking of soil borings
and groundwater samples. The cost of such inspections and tests shall be a
demand obligation owing by the Borrower (which the Borrower hereby promises to
pay) to the Bank pursuant to this Agreement and shall be subject to and covered
by the provisions of Sections 4.16 and 8.09.
Section 5.21 Flood Plain. Without the express written consent of
the Bank, no part of any Lot mortgaged to the Bank will lie below the 100-year
flood plain level or within any area that has been designated by the Federal
Emergency Management Agency as an area having special flood hazards or, if it
does, the community in which such Lot is located shall have been approved for
flood insurance under the National Flood Insurance Program and flood insurance
shall be available for such Lot under such program.
Section 5.22 Geological Fault. Except as consented to by the
Bank, no part of any Lot upon which the Bank shall be granted a Lien shall be
situated within one-quarter mile of any geological fault of which the Borrower
has knowledge.
Section 5.23 Wetlands. The Borrower will not acquire any Lot
under the Construction Facility which contains any area designated as
"wetlands" by the U.S. Army Corps of Engineers.
Section 5.24 Partnership Documents. The Borrower will not amend
its Agreement of Limited Partnership in any material manner without the prior
written consent of the Bank.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events. Any of the following events shall be
considered an "Event of Default" as that term is used herein:
(a) Payments - Default is made in the payment when due of
any installment of principal or interest on the Note or other
Indebtedness (other than payments due in connection with partial
releases) which remains unremedied for a period of fifteen (15) days
after the due date; or
(b) Representations and Warranties - Any representation
or warranty by the Borrower or any Subsidiary or other Person herein
or in any other Security Instrument, or in any certificate, request,
or other document furnished pursuant to or under this Agreement or any
other Security Instrument proves to have been incorrect in any
material respect as of the date when made or deemed made; or
(c) Affirmative Covenants - Default is made in the due
observance or performance by the Borrower of any of the covenants or
agreements contained in Article 4, and such Default continues
unremedied for a period of thirty (30) days after the earlier of (i)
notice thereof being given by the Bank to the Borrower, or (ii) such
Default otherwise becoming known to the Borrower; or
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(d) Negative Covenants - Default is made in the due
observance or performance by the Borrower of any of the covenants or
agreements contained in Article 5; or
(e) Other Security Instrument Obligations - Default is
made in the due observance or performance by the Borrower or any
Subsidiary or other Person of any of the other covenants or agreements
contained in any Security Instrument other than this Agreement, and
such default continues unremedied beyond the expiration of any
applicable grace period which may be expressly allowed under such
Security Instrument; or
(f) Involuntary Bankruptcy or Other Proceedings - An
involuntary case or other proceeding shall be commenced against the
Borrower which seeks liquidation, reorganization or other relief with
respect to it or its debts or other liabilities under any bankruptcy,
insolvency or other similar law now or hereafter in effect or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official of it or any substantial part of its Property, and
such involuntary case or other proceeding shall remain undismissed or
unstayed for a period of sixty (60) days, or an order for relief
against the Borrower shall be entered in any such case under the
Federal Bankruptcy Code; or
(g) Voluntary Petitions, Etc. - The Borrower shall
commence a voluntary case or other proceeding seeking liquidation,
reorganization or other relief with respect to itself or its debts or
other liabilities under any bankruptcy, insolvency or other similar
law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of
it or any substantial part of its Property, or shall consent to any
such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors,
or shall fail generally to, or shall admit in writing its inability to
pay its debts generally as they become due, or shall take any
corporate or partnership action to authorize or effect any of the
foregoing; or
(h) Discontinuance of Business - The Borrower
discontinues its homebuilding business or shall take any action to or
shall otherwise begin the process of winding up its business or
affairs, or dissolving, liquidating, or terminating; or
(i) Default on Other Debt - Any Debt of the Borrower
which exceeds the aggregate amount of $100,000 is not paid when due
(or within any grace period applicable thereto) or as a result of the
occurrence of any default or event of default (howsoever described and
whether or not involving culpability on the part of any Person), or
any Debt of Borrower is declared to be or otherwise becomes due and
payable prior to its specified maturity; or
(j) Undischarged Judgments - The Borrower shall fail
within thirty (30) days to pay, bond or otherwise discharge any
judgment or order for the payment of money in excess of $10,000 that
is not otherwise being satisfied in accordance with its terms and is
not stayed on appeal or otherwise being appropriately contested in
good faith; or
(k) Subsidiary - Any Subsidiary takes, suffers or permits
to exist as to such Person any of the events or conditions referred to
in Subsections 6.01(f), (g), (i) or (j); or
(l) Affidavit of Commencement of Construction - If any
Affidavit of Commencement of Construction is filed or requested by the
Bank, such Affidavit is delivered to the Bank or filed with respect to
any Lot or Home which specifies a date of commencement
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which is prior to the date the Mortgage covering such Lot or Home was
recorded, and there have been more than such four (4) such occurrences
in a consecutive twelve-month period.
(m) Security Instruments - Any Mortgage or Financing
Statement after delivery thereof shall for any reason, except to the
extent permitted by the terms thereof, cease to be in full force and
effect and valid, binding and enforceable in accordance with its
terms, or cease to create a valid and perfected Lien of the priority
required thereby on any of the collateral purported to be covered
thereby and the Borrower fails to fully remedy or cure the same within
fifteen (15) days after the Bank gives notice thereof to the Borrower,
or the Borrower shall so state in writing; or
(n) Title - The Borrower's title to any Lot mortgaged to
the Bank is not reasonably satisfactory to the Bank, regardless of
whether the Lien, encumbrance or question existed at the time of a
prior Advance, and such objection is not remedied or cured within
thirty (30) days after the Bank gives notice thereof to the Borrower;
or
(o) Failure to Complete - Any Home shall not have been
completed substantially in accordance with the Plans and
Specifications on or before the Completion Date; or
(p) Casualty Loss; Condemnation - Any Lot and Home or any
part thereof shall be condemned or damaged by fire or other casualty,
or any other event shall occur, in such manner as to preclude, in the
Bank's sole judgment, the completion of the Home by the Completion
Date; or
(q) Change in Control - There shall not have occurred any
change in "control" of the Borrower. "Control" shall mean possession
(whether direct or indirect) of power to direct or cause the direction
of management or other policies of the Borrower, whether through
ownership of stock or other ownership interest, by contract or
otherwise; or
(r) Key Officer - Xxxxxx Xxxxxxx or any replacement
officer of the general partner of the Borrower acceptable to the Bank
ceases to be in charge of the day-to-day operations of the Borrower,
or permits to exist as to such Person any of the events or conditions
referred to in Subsections 6.01(f) or (g); or
(s) Survey - A survey at any time shall show that any
Home encroaches upon any street, easement, right of way or adjoining
property or violates any set back requirement or that any adjoining
structure encroaches on any Lot to an extent deemed material by the
Bank and there have been more than four (4) such occurrences in a
consecutive twelve-month period; or
(t) Percentage of Completion - The stated Percentage of
Completion with respect to any Home included in a Construction
Facility Status Report shall be greater than the actual Percentage of
Completion of such Home; or
(u) Change of General Partner - Newmark shall cease to be
the general partner of the Borrower.
Section 6.02 Remedies. Upon the occurrence of any Event of
Default described in Subsection 6.01(f) or (g), or in Subsection 6.01(k) or (r)
to the extent that such Subsections refer to Subsection 6.01(f) or (g), the
Commitment and other lending obligations, if any, of the Bank hereunder
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shall immediately terminate, and the entire principal amount of all
Indebtedness then outstanding together with interest then accrued thereon shall
become immediately due and payable, all without written notice and without
presentment, demand, notice of intent to accelerate, notice of acceleration,
protest, notice of protest or dishonor or any other notice of default of any
kind, all of which are hereby expressly waived by the Borrower and its
Subsidiaries. Upon the occurrence and at any time during the continuance of
any other Event of Default specified in Section 6.01, the Bank may by ten (10)
days prior written notice to the Borrower with opportunity to cure (i) declare
the entire principal amount of all Indebtedness then outstanding together with
interest then accrued thereon to be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other notice of
default of any kind, all of which are hereby expressly waived by the Borrower
and its Subsidiaries, and/or (ii) terminate the Commitment and other lending
obligations, if any, of the Bank hereunder, unless and until the Bank shall
reinstate same in writing. In addition to the foregoing, upon the occurrence
and during the continuance of any Event of Default, the Bank shall have the
right, but not the obligation, in its own name or in the name of the Borrower,
to enter into possession of the Lots mortgaged to the Bank and the Homes being
constructed thereon, to perform all work and labor necessary to complete such
Homes, and to employ watchmen and other safeguards to protect such Lots and
Homes. Upon the occurrence and continuance of an Event of Default, the Bank
may take any one or more of the following actions and the Borrower hereby
constitutes and appoints the Bank as the true and lawful attorney-in-fact of
the Borrower, with full power of substitution, and in the name of the Borrower,
if the Bank elects to do so, and hereby empowers the Bank and/or said attorney
or attorneys to:
(a) Use such sums as are necessary, including any
proceeds of any Advance and the Borrower's Completion Deposits, and
employ such architects, engineers, contractors, subcontractors, agents
and inspectors, as may be required for the purpose of completing the
construction of the Homes financed under the Construction Facility
substantially in accordance with the Governmental Requirements and the
Plans and Specifications;
(b) Execute all applications and certificates in the name
of the Borrower which may be required for completion of construction
of the Homes financed under the Construction Facility;
(c) Pay, settle, or compromise all existing bills and
claims which may be Liens against the Homes financed under the
Construction Facility or as may be necessary for the completion of the
job, or clearance of title;
(d) Endorse the name of the Borrower on any checks or
drafts representing proceeds of the insurance policies, or other
checks or instruments payable to the Borrower with respect to such
Lots and Homes to be constructed thereon and financed under the
Construction Facility;
(e) Execute all applications and certificates in the name
of the Borrower which may be required by any of the contract
documents;
(f) Employ at the expense of the Borrower a watchman or
such other security agency as the Bank may choose to protect the Homes
financed under the Construction Facility, building materials and
equipment from depreciation or injury;
(g) Do any and every act with respect to the construction
of the Homes financed under the Construction Facility which the
Borrower may do;
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(h) Prosecute or defend any action or proceeding incident
to the construction of the Homes financed under the Construction
Facility as the Bank deems necessary; and
(i) Generally do any and every act with respect to the
construction, occupancy and use of the Lots and Homes as the Borrower
may do in its own behalf.
All sums so expended by the Bank hereunder shall be deemed to be advanced to
the Borrower hereunder and secured by the Mortgages even if in excess of the
amount of the Loan Value of the related Lots and Homes, and the total thereof
shall be due and payable from the Borrower to the Bank pursuant to the terms of
the Construction Facility. The power-of-attorney granted hereby is a power
coupled with an interest and is irrevocable. The Bank shall have no obligation
to undertake any of the foregoing actions, and if the Bank should do so, it
shall have no liability to the Borrower for the sufficiency or adequacy of any
such action.
Section 6.03 Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Bank is hereby authorized at any time
and from time to time, without notice to the Borrower (any such notice being
expressly waived by the Borrower), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other indebtedness at any time owing by the Bank to or for the credit or the
account of the Borrower against any and all of the Indebtedness of the
Borrower, irrespective of whether or not the Bank shall have made any demand
under this Agreement or the Note and although such obligations may be
unmatured. The Bank agrees promptly to notify the Borrower after any such
set-off and application, provided that the failure to give such notice shall
not affect the validity of such set-off and application. The rights of the
Bank under this Section are in addition to other rights and remedies (including
but not limited to other rights of set-off) which the Bank may have.
ARTICLE 7
CONDITIONS OF LENDING
The obligations of the Bank to make the Advances pursuant to this
Agreement are subject to the conditions precedent stated in this Article 7.
Section 7.01 General Conditions. The obligation of the Bank to
continue to make Advances under this Agreement is subject to the following
conditions precedent, wherein each document to be delivered to the Bank shall
be in form and substance satisfactory to it:
(a) Construction Loan Agreement - The Borrower shall have
executed and delivered to the Bank this Amended and Restated
Construction Loan Agreement.
(b) Note - The Borrower shall have executed and delivered
the Second Modification and Extension Agreement to the Bank.
(c) Certificates - The Bank shall have received a
certificate signed by the Secretary of the general partner of the
Borrower, certifying (i) the name, title, and true signature of the
Authorized Borrower Representative authorized to sign this Agreement,
the Note, the Security Instruments and the other documents or
certificates to be delivered pursuant thereto, and (ii) the resolution
of the Board of Directors of the general partner of the Borrower and
partnership consents, if applicable, authorizing, among other things,
(A) this Agreement and all transactions
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contemplated hereby, including but not limited to all Advances which
may be made from time to time hereunder, and (B) to execute and
deliver any and all instruments and documents relating to (A) above,
including but not limited to the Note, Security Instruments and the
other documents or certificates to be delivered pursuant thereto,
together with all affidavits and documents evidencing other necessary
partnership or corporate action with respect to any thereof.
(d) Partnership Documents - The Bank shall have received
a copy, certified as true by the Secretary of the general partner of
the Borrower of the complete Limited Partnership Agreement, and the
articles of incorporation and bylaws of the general partner of the
Borrower, and as of the date of execution hereof, the Authorized
Borrower Representative shall have confirmed that there have been no
further amendments thereto.
(e) Good Standing - The Bank shall have received a
certificate as of a date reasonably close to the date hereof from the
office of the Comptroller of the State of Texas certifying that the
general partner of the Borrower is in good standing and if the
Borrower is not a Texas corporation, a certificate of authority to do
business in Texas and a certificate of existence from the jurisdiction
in which the Borrower is incorporated.
(f) Recordings - The Master Deed of Trust shall have been
duly delivered to the appropriate offices of each Initial County for
filing or recording, and the Bank shall have received confirmations of
receipt thereof from the appropriate filing or recording offices, if
the Borrower is going to acquire Lots under this Facility in counties
in which the Bank has not yet filed the Master Deed of Trust.
(g) Loans to One Borrower - The Borrower shall have
executed and delivered to the Bank a Loans to One Borrower Affidavit
in form and substance satisfactory to the Bank.
(h) Environmental Site Assessment - The Bank shall have
received a Phase I environmental site assessment of the Lots or other
report of environmental conditions satisfactory to the Bank prior to
inclusion of the subdivision in which the Lots are located as an
Approved Subdivision.
(i) Other - The Bank shall have received such other
documents as it may reasonably have requested at any time at or prior
to the closing date referred to in Subsection 7.01. The documents to
be delivered pursuant to the terms hereof shall be satisfactory to the
Bank.
(j) Approved Subdivisions - The Bank shall have
designated "Approved Subdivisions."
(k) The Bank shall have executed this Agreement in
Pittsburgh, Pennsylvania.
Section 7.02 Advances.
(a) Each Advance - The obligation of the Bank to make each Advance
(whether initial, interim or final) is subject, in addition to the conditions
precedent set forth in Section 7.01, to the following further conditions
precedent:
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(i) Borrowing Request - The Bank shall have received the
appropriate Borrowing Request satisfactory to the Bank together with
all appropriate schedules thereto, which shall also be completed to
the Bank's satisfaction.
(ii) Work Completed - All work on each Lot and Home
financed under the Construction Facility that is required to have been
completed for such Lot and Home to satisfy the requirements for the
Percentage of Completion Value set forth for such Lot and Home in the
most current Construction Facility Status Report shall have been
completed and performed in a good and workmanlike manner, all
materials and fixtures usually installed and furnished at such stage
of construction shall have been furnished and installed, and all
construction materials and fixtures shall have been incorporated in
the Homes on such Lots, all substantially in accordance with the Plans
and Specifications and all Governmental Requirements.
(iii) Inspection - At the Bank's option, the Bank shall
have inspected the Lots and Homes financed under the Construction
Facility, through inspectors acceptable to the Bank, and shall have
made a determination that the Percentage of Completion of each of such
Home is as reflected in the most current Construction Facility Status
Report and shall have approved the progress of such construction.
(iv) No Default - The fact that immediately after giving
effect to such Advance, no Default shall have occurred and be
continuing.
(v) Representations and Warranties - The fact that the
representations and warranties of the Borrower contained in this
Agreement or any other Security Instrument (other than those
representations and warranties which are by their terms limited to the
date of the agreement in which they are initially made) are true and
correct in all material respects on and as of the date of such
Advance.
(vi) No Material Adverse Change - There shall have
occurred, in the sole opinion of the Bank, no change, either in any
case or in the aggregate, in the condition, financial or otherwise, of
the Borrower or any Subsidiary or with respect to the Borrower's or
any Subsidiary's Properties from the facts represented in any Security
Instrument, including this Agreement or in the Financial Statements,
which would have a Material Adverse Effect.
(vii) Title Update - Upon request by the Bank, the Borrower
shall obtain, at its expense, from the appropriate Title Insurer a
title report showing that since the date of issuance of the applicable
Title Binder, there are no liens affecting the Property covered by
such Title Binder other than those expressly listed in such Title
Binder.
(viii) Payment of Costs and Expenses - All costs and charges
incurred by the Borrower hereunder on or prior to the date of any
previous Advance shall have been paid.
(ix) Flood Insurance - If the Lot and Home are to be
situated in an area identified as having special flood hazards, the
Bank shall have received (as to each Advance with respect to such Lot
and Home after the Initial Advance) the flood insurance policy in form
and substance satisfactory to the Bank.
(x) Other - The Bank shall have received such other
documents as it may reasonably have requested at any time or prior to
funding such Loan.
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Each borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such borrowing as to the facts specified in
Subsections 7.02(a)(iv) and (v).
(b) Initial Advance - The obligation of the Bank to make each
Initial Advance is subject to the following further conditions precedent:
(i) Mortgage and Financing Statement - A Mortgage and
Financing Statement covering the Lots identified in the Borrowing
Request shall have been executed by the Borrower; the Mortgage shall
have been duly delivered to the appropriate offices of the appropriate
Valid County or Counties for filing or recording, and the Bank shall
have received confirmations of receipt thereof from the appropriate
filing or recording offices.
(ii) Title Binder - The Bank shall have received a paid
Title Binder, at the Borrower's expense, dated the date of the Initial
Advance in the amount of the Loan Value of the associated Lots and the
Homes to be constructed thereon. The Title Binder shall (x) show fee
simple title vested in the Borrower to the associated Lots, (y) bind
the Title Insurer to insure the Lien of the Mortgage on such Lots in
favor of the Bank to be a valid first and prior Lien free and clear of
all defects or encumbrances other than Excepted Liens and except as
the Bank shall approve in writing, and (z) contain no survey
exceptions not theretofore approved by the Bank in writing, and the
status of the title to the Lots shown therein shall otherwise be
satisfactory to the Bank. It is hereby expressly agreed and
understood that the recordation of a Mortgage subject to specific
title exceptions and the acceptance of a Title Binder shall not mean
or indicate that the Bank has approved the status of the title to the
Lots as shown in such Title Binder or otherwise. The Bank has the
right to require that the Borrower remove or cure any and all
impediments, whether of record or otherwise, which affect the
development, construction, leasing, sale or operation of such Lots or
the Homes to be constructed thereon.
(iii) Plat of Approved Subdivision, Etc. - The Bank shall
have received and approved (x) a copy of the plat of the Approved
Subdivision, which shall be entirely located in the State of Texas, in
which the associated Lots are located, identifying the location of
each such Lot, and (y) evidence satisfactory to the Bank that the
subdivision in which the associated Lots are located is a Developed
Subdivision as defined herein in all respects.
(iv) Plans and Specifications, Etc. - The Bank shall have
received and approved (x) Plans and Specifications for each Home to be
constructed on the associated Lots; and (y) Construction Costs
Schedule for each such Home, all in form satisfactory to the Bank.
(v) No Construction Started - The Borrower shall not have
commenced construction on or had materials delivered to any associated
Lot prior to the recording of the Mortgage granting the Bank a Lien on
such Lot, and shall provide the Bank with satisfactory evidence to
that effect.
(vi) Number of Lots - Each Loan Request for an Initial
Advance shall be associated with a minimum of five (5) Lots (unless
the Bank shall agree otherwise).
(vii) Appraisal - The Bank shall have obtained at its
expense a current Appraisal satisfactory to the Bank and in compliance
with its regulatory requirements which appraises each associated Lot
and the value of the Home to be constructed thereon and shows a loan
to value ratio of not more than 75% and which shall be dated not more
than thirty (30) days prior to the date of such Initial Advance for
such Home.
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(viii) Advance Delivery - Any document, instrument,
commitment, or other writing or written evidence required to be
furnished pursuant to the terms hereof to the Bank shall have been
furnished to the Bank at least ten (10) Business Days prior to the
date upon which the Bank is to fund the applicable Initial Advance.
The Borrower shall furnish to the Bank a legal description of the Lots
associated with the applicable Initial Advance at least ten (10)
Business Days prior to the date upon which the Bank is to fund such
Initial Advance.
(ix) Survey - A survey of the Lot prepared by, and
certified to the Bank by, a registered surveyor acceptable to the
Bank, such survey and certification to meet the Bank's standard survey
requirements and which is to be furnished at the Borrower's sole cost
and expense shall have been received by the Bank.
(x) Certificate of Receipt of Master Deed of Trust - The
Borrower shall execute and deliver to the Bank a certificate to the
effect that Borrower has received and reviewed a copy of the Master
Deed of Trust.
(xi) Site Plan - The Borrower shall have delivered to the
Bank a site plan showing the location of the Home on the Lot.
(xii) Architect's Consent - The Borrower shall have
furnished the Bank with the architect's written consent to use of the
Plans and Specifications by the Bank, to the extent that the Plans and
Specifications have not been developed by the Borrower.
(xiii) Insurance - Evidence satisfactory to Bank that the
insurance required by the Mortgage (including, without limitation,
casualty, liability, flood (if required), business interruption and
workmen's compensation insurance) is in full force and effect shall
have been received by the Bank.
(xiv) Borrower's Affidavit - The Borrower shall execute and
deliver to the Bank a Borrower's Affidavit in the form of Exhibit I
hereto.
(xv) Flood Plain and Insurance Matters - The Bank shall
have received evidence satisfactory to the Bank that the Lot and Home
will not lie below the level of the 100-year flood plain or any area
that has been designated by the Federal Emergency Management Agency as
an area having special flood hazards. If the Lot and Home are to be
situated in an area identified as having special flood hazards, the
Bank shall have received a copy of the flood insurance policy
application, indicating that the maximum limits of coverage have been
obtained and that the full premium therefor has been paid in full.
(xvi) Permits and Approvals - The Borrower shall have
obtained all governmental and non-governmental approvals or permits
required for the commencement of construction of Homes on the
associated Lots.
(xvii) Other - Upon request by the Bank, the Borrower shall
furnish to the Bank, each in form and substance satisfactory to the
Bank, waivers of liens or claims on the Lots and Homes being financed
by the Construction Facility as well as any construction contracts,
other documents or invoices related thereto.
(c) Final Advance - The obligation of the Bank to make each Final
Advance with respect to a Home is subject to the following further conditions
precedent:
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(i) Completion of Construction - All Homes subject to the
request for a Final Advance and located on Lots identified in the most
current Construction Facility Status Report shall have been completed
in accordance with the Plans and Specifications, as verified by the
Bank through inspection, and that all requirements for the Percentage
of Completion for any Home to be deemed to be one hundred percent
(100%) provided in the definition of "Percentage of Completion" shall
have been fully complied with to the satisfaction of the Bank.
(ii) Governmental Requirements - The Borrower shall have
obtained and the Bank shall have received upon request evidence
satisfactory to it that all Governmental Requirements and
non-governmental requirements regarding the construction and
completion of each such Home have been satisfied.
(iii) No Mechanic's Liens - Upon the Bank's request, the
Bank shall have received evidence satisfactory to it that all actual
construction costs for each such Home have been paid in full, or that
such payment has been adequately provided for, and that no mechanic's
or materialmen's liens or other encumbrances have been filed and
remain in effect against all or any part of such Lots or, at the
Bank's request, a complete release of Liens signed by the Borrower as
general contractor and all subcontractors.
(iv) Affidavit of Completion - If requested by the Bank,
the Bank shall have received an affidavit of completion which shall
comply with the provisions of the Texas Property Code, have been
executed in recordable form and shall state the respective dates of
completion of the Homes covered thereby.
ARTICLE 8
MISCELLANEOUS
Section 8.01 Notices. Any notice required or permitted to be
given under or in connection with this Agreement, the other Security
Instruments (except as may otherwise be expressly required therein) or the Note
shall be in writing and shall be mailed by first class or express mail, postage
prepaid, or sent by telex, telegram, telecopy or other similar form of rapid
transmission confirmed by mailing (by first class or express mail, postage
prepaid) written confirmation at substantially the same time as such rapid
transmission, or personally delivered to an officer of the receiving party.
All such communications shall be mailed, sent or delivered,
(a) if to the Borrower, to its address shown at the
beginning of this Agreement, or to such other address or to such
individual's or department's attention as it may have furnished the
Bank in writing;
(b) if to the Bank, to its address shown at the beginning
of this Agreement, or to such other address or to such individual's or
department's attention as it may have furnished the Borrower in
writing.
Any communication so addressed and mailed shall be deemed to be given within
two (2) Business Days of when so mailed, except that Loan Requests or
communications related to Loan Requests shall not be effective until actually
received by the Bank; any notice so sent by rapid transmission shall be deemed
to be given when receipt of such transmission is acknowledged; and any
communication so
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delivered in person shall be deemed to be given when receipted for by, or
actually received by, an authorized officer of the Borrower or the Bank, as the
case may be.
Section 8.02 Amendments and Waivers. Any provision of this
Agreement, the other Security Instruments or the Note may be amended or waived
if, but only if, such amendment or waiver is in writing and is signed by the
Borrower (and/or any other Person which is a party to any Security Instrument
being amended or with respect to which a waiver is being obtained) and the
Bank.
Section 8.03 Invalidity. In the event that any one or more of the
provisions contained in the Note, this Agreement or in any other Security
Instrument shall, for any reason, be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of the Note, this Agreement or any other Security
Instrument.
Section 8.04 Survival of Agreements. All representations and
warranties of the Borrower herein or in the other Security Instruments, and all
covenants and agreements herein not fully performed before the effective date
or dates of this Agreement and of the other Security Instruments, shall survive
such date or dates.
Section 8.05 Successors and Assigns. The Note, this Agreement and
any other Security Instrument shall be binding upon and inure to the benefit of
and be enforceable by the respective successors and assigns of the parties
hereto. The Borrower shall not, however, have the right to assign its rights
under this Agreement or any interest herein without the prior written consent
of the Bank. The Bank may sell participations in the Note or other
Indebtedness of the Borrower incurred or to be incurred pursuant to this
Agreement to other lenders without the consent of the Borrower. In the event
that the Bank sells participations in the Note or other Indebtedness of the
Borrower incurred or to be incurred pursuant to this Agreement to other
lenders, each of such other lenders shall have the rights of set off against
such Indebtedness and similar rights or Liens to the same extent as may be
available to the Bank.
Section 8.06 Renewal, Extension or Rearrangement. All provisions
of this Agreement and of any other Security Instruments relating to the Note or
other Indebtedness shall apply with equal force and effect to each and all
promissory notes hereinafter executed which in whole or in part represent a
renewal, extension for any period, increase or rearrangement of any part of the
Indebtedness originally represented by the Note or of any part of such other
Indebtedness.
Section 8.07 Waivers. No course of dealing on the part of the
Bank, its officers, employees, consultants or agents, including but not limited
to any course of dealing whereby the Bank does not require complete compliance
with the terms, provisions and conditions hereof, nor any failure or delay by
the Bank with respect to exercising any right, power or privilege of the Bank
under the Note, this Agreement or any other Security Instrument shall operate
as a waiver thereof, except as otherwise provided in Section 8.02 and, without
limiting the foregoing, the Bank may at any time require complete compliance
with any and all terms, provisions and conditions hereof.
Section 8.08 No Liability of Bank. The Bank shall have no
liability, obligation or responsibility whatsoever with respect to the
construction of any Home except to make any Advance hereunder upon the terms
and conditions herein stated in the Bank's sole function as lender, and the
only consideration passing from the Bank to the Borrower is the Loan proceeds
in accordance with and subject to the terms and conditions of this Agreement.
The Bank shall not be obligated to inspect any Lot mortgaged to the Bank or for
the construction of a Home thereon. The Bank shall have the right from time to
time to waive any of the terms of this Agreement without prejudice to its right
to require
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strict compliance in the future, and no Person shall be a third party
beneficiary of this Agreement or be entitled to require or rely upon the Bank's
enforcement of this Agreement. The Borrower has selected all architects,
engineers, contractors, sub-contractors, materialmen, as well as all others
furnishing services or materials to the construction of such Homes, and the
Bank has, and shall have, no responsibility whatsoever for them or any other
party or for their performance or default or for the quality of their materials
or workmanship or for any failure to construct, complete, protect, or insure
such Homes, or for the payment of costs of labor, materials, or services
supplied for the construction of such Homes, or for the performance of any
obligation of the Borrower whatsoever. Nothing, including but not limited to
any disbursement of loan proceeds or acceptance hereunder of any document or
instrument, shall be construed as a representation of warranty, express or
implied, to any party by the Bank.
Section 8.09 Indemnities. The Borrower hereby agrees to indemnify
the Bank, its officers, directors, employees, representatives, agents and
Affiliates from, hold each of them harmless against, and promptly upon demand
pay or reimburse each of them for, any and all claims, demands, and causes of
action, loss, damage, liabilities, costs and expenses (including attorneys'
fees and expenses, remediation costs, loss of value of the Property, and
incidental and consequential damages) of any and every kind or character, known
or unknown, fixed or contingent, incurred by the Bank or asserted by any
Person, including but not limited to employees of the Borrower, any contractor
constructing the Homes and the employees of any such contractor, any tenant of
or purchaser from the Borrower arising, (i) from or out of the construction,
occupancy or possession of the Homes by the Borrower, its agents, employees,
contractors, subcontractors, or employees of such contractors or
subcontractors, and (ii) out of or in any way related to (A) the breach of any
representation or warranty as set forth herein regarding environmental matters
to the extent that such matters are caused by the Borrower, (B) the failure of
the Borrower or any Subsidiary to perform any obligation herein required to be
performed by the Borrower pursuant to Environmental Laws, or (C) any act,
omission, event or circumstance pertaining to environmental matters that is
associated with the ownership, construction, occupancy, operation, use and/or
maintenance of any Property of the Borrower, regardless of whether the act,
omission, event or circumstance constituted a violation of any Environmental
Laws at the time of its existence or occurrence. The provisions of this
Section shall survive the final payment of all Indebtedness and the termination
of this Agreement and shall continue thereafter in full force and effect.
Section 8.10 Approval of Plans and Specifications. Approval by
the Bank of Plans and Specifications shall not be deemed to imply any warranty,
approval or representation by the Bank that the Home, if constructed in
accordance therewith, will be structurally sound, will comply with all
Governmental Requirements, will be fit for any particular purpose, or will have
a market value of any particular magnitude, but shall be limited solely to the
consent by the Bank to the Home to be constructed in accordance therewith.
Section 8.11 Cumulative Rights. All rights and remedies of the
Bank under the Note, this Agreement and each other Security Instrument shall be
cumulative, and the exercise or partial exercise of any such right or remedy
shall not preclude the exercise of any other right or remedy.
Section 8.12 Singular and Plural. Words used herein in the
singular, where the context so permits, shall be deemed to include the plural
and vice versa. The definitions of words in the singular herein shall apply to
such words when used in the plural where the context so permits and vice versa.
Section 8.13 Construction. This Agreement is, and each of the
Note will be, a contract made under and shall be construed in accordance with
and governed by the laws of the United States of
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America and the State of Texas, as such laws are now in effect and, with
respect to usury laws, if any, applicable to the Bank and to the extent allowed
thereby, as such laws may hereafter be in effect which allow a higher maximum
nonusurious interest rate than such laws now allow. Tex. Rev. Civ. Stat. Xxx.
art. 5069, ch. 15 (which regulates certain revolving credit loan accounts and
revolving triparty accounts) shall not apply to this Agreement or the Note.
Section 8.14 Interest. The real property covered by each Mortgage
is "residential real property", and the Advances are or will be secured by a
first lien on residential real property within the meaning of Part A, Title V
of the Depository Institutions Deregulation and Monetary Control Act of 1980,
as amended (the "Act"), and the regulations promulgated thereunder. If, for
any reason, the provisions of Part A, Title V of the Act shall be found not to
exempt any and all interest and other charges contracted for, charged, taken,
received or reserved in connection with the Advances from any limitations
otherwise applicable, then the provisions of the immediately following
paragraph shall apply, but otherwise the immediately following paragraph shall
be inapplicable.
It is the intention of the parties hereto to conform strictly to usury
laws applicable to the Bank and the Transactions. Accordingly, if the
Transactions would be usurious under applicable law, then, notwithstanding
anything to the contrary in the Note, this Agreement or in any other Security
Instrument or agreement entered into in connection with the Transactions or as
security for the Note, it is agreed as follows: (i) the aggregate of all
consideration which constitutes interest under applicable law that is
contracted for, taken, reserved, charged or received under the Note, this
Agreement or under any of such other Security Instruments or agreements or
otherwise in connection with the Transactions shall under no circumstances
exceed the maximum amount allowed by such applicable law, and any excess shall
be cancelled automatically and if theretofore paid shall be credited by the
Bank on the principal amount of the Indebtedness (or, to the extent that the
principal amount of the Indebtedness shall have been or would thereby be paid
in full, refunded by the Bank to the Borrower); (ii) in the event that the
maturity of the Note is accelerated for any reason, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under applicable law may never include more than the maximum amount
allowed by such applicable law; and (iii) excess interest, if any, provided for
in this Agreement or otherwise in connection with the Transactions shall be
cancelled automatically and, if theretofore paid, shall be credited by the Bank
on the principal amount of the Indebtedness (or, to the extent that the
principal amount of the Indebtedness shall have been or would thereby be paid
in full, refunded by the Bank to the Borrower). The right to accelerate the
maturity of the Note does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and the Bank
does not intend to collect any unearned interest in the event of acceleration.
All sums paid or agreed to be paid to the Bank for the use, forbearance or
detention of sums included in the Indebtedness shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of the Note until payment in full so that the rate or amount of
interest on account of the Indebtedness does not exceed the applicable usury
ceiling, if any. As used in this Section, the term "applicable law" shall mean
the law of the State of Texas (or the law of any other jurisdiction whose laws
may be mandatorily applicable notwithstanding other provisions of this
Agreement), or law of the United States of America applicable to the Bank and
the Transactions which would permit the Bank to contract for, charge, take,
reserve or receive a greater amount of interest than under Texas (or such other
jurisdiction's) law. To the extent that Article 5069-1.04 of the Texas Revised
Civil Statutes is relevant to the Bank for the purpose of determining the
Highest Lawful Rate, the Bank hereby elects to determine the applicable rate
ceiling under such Article by the indicated (weekly) rate ceiling from time to
time in effect, subject to the Bank's right subsequently to change such method
in accordance with applicable law. In no event shall the provisions of Tex.
Rev. Civ. Stat. art. 5069-2.01 through 5069-8.06 or 5069-15.01 through
5069-15.11 be applicable to this Agreement or the Note.
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Section 8.15 References. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this Agreement refer
to this Agreement as a whole, and not to any particular article, section or
subsection. Any reference herein to an Article, Section or Subsection shall be
deemed to refer to the applicable Article, Section or Subsection of this
Agreement unless otherwise stated herein. Any reference herein to an exhibit
shall be deemed to refer to the applicable exhibit attached hereto unless
otherwise stated herein.
Section 8.16 Taxes, etc. Any taxes (excluding income taxes)
payable or ruled payable by federal or state authority in respect of the Note,
this Agreement or the other Security Instruments shall be paid by the Borrower,
together with interest and penalties, if any.
Section 8.17 Governmental Regulation. Anything contained in this
Agreement to the contrary notwithstanding, the Bank shall not be obligated to
extend credit to the Borrower in an amount in violation of any limitation or
prohibition provided by any applicable statute or regulation.
Section 8.18 Exhibits. The exhibits attached to this Agreement
are incorporated herein and shall be considered a part of this Agreement for
the purposes stated herein, except that in the event of any conflict between
any of the provisions of such exhibits and the provisions of this Agreement,
the provisions of this Agreement shall prevail.
Section 8.19 Titles of Articles, Sections and Subsections. All
titles or headings to articles, sections, subsections or other divisions of
this Agreement or the exhibits hereto are only for the convenience of the
parties and shall not be construed to have any effect or meaning with respect
to the other content of such articles, sections, subsections or other
divisions, such other content being controlling as to the agreement between the
parties hereto.
Section 8.20 Satisfaction Requirement. If any agreement,
certificate, instrument or other writing, or any action taken or to be taken,
is by the terms of this Agreement required to be satisfactory to any party, the
determination of such satisfaction shall be made by such party in its sole and
exclusive judgment exercised in good faith.
Section 8.21 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND UNDER THE NOTE SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF) OF THE STATE OF TEXAS.
Section 8.22 Submission to Jurisdiction.
(a) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR THE NOTE OR ANY DOCUMENT RELATED THERETO MAY BE BROUGHT IN THE COURTS OF THE
STATE OF TEXAS, THE COMMONWEALTH OF PENNSYLVANIA OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS OR THE WESTERN DISTRICT OF
PENNSYLVANIA, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, THE BORROWER
HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING, WITHOUT LIMITATION, ANY OBJECTION
TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING
IN SUCH RESPECTIVE JURISDICTIONS.
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(b) Nothing herein shall affect the right of the Bank to serve
process in any other manner permitted by law or to commence legal proceedings
or otherwise proceed against the Borrower in any other jurisdiction.
(c) The parties hereto recognize that in matters related to the
Note, this Agreement and the other Security Instruments, they may be entitled
to a trial in which matters of fact are determined by a jury (as opposed to a
trial in which such matters are determined by a federal or state judge). The
parties hereto also recognize that one of the remedies available to them in any
trial may, under certain circumstances, be the right to receive damages in
excess of those actually sustained by it. In the past in some instances, such
damages have equalled or exceeded the amount of actual damages. By signing
below, the parties hereto will give up their rights to claim any damages other
than actual damages. Each Person who is asked to sign below should think
carefully about the consequences of signing and should consult their own
attorney.
WAIVER OF RIGHTS RELATED TO DAMAGES. TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, EACH OF THE UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR ANY
DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES.
CERTIFICATIONS. EACH OF THE UNDERSIGNED HEREBY CERTIFIES THAT NEITHER
ANY REPRESENTATIVE OR AGENT OR ANY PERSON NOR ANY PARTY'S COUNSEL HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT ANY PERSON WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH OF THE
UNDERSIGNED ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
TRANSACTION BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS
HEREIN. THE FOREGOING WAIVER OF RIGHTS RELATED TO DAMAGES SHALL NOT APPLY IN
ANY TRANSACTION SUBJECT TO THE TEXAS DECEPTIVE TRADE PRACTICES ACT OR GOVERNED
BY CHAPTER 6, 6A OR 7 OF THE TEXAS CONSUMER CREDIT CODE, IF APPLICABLE. The
parties hereto agree that if any of the foregoing provisions shall be invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions will not be affected or impaired.
The parties hereto by signing below certify that they have read and understood
the foregoing prior to signing; that they have had the opportunity to obtain
the advice and assistance of counsel with respect to the foregoing; that they
sign below with full knowledge and understanding of the consequences of their
act; and that they have received a counterpart original of this document signed
by all parties.
Section 8.23 No Broker. The Borrower represents and warrants to
the Bank that no broker was involved in procuring the Construction Loan
Facility or the commitment of the Bank to make Advances in connection with the
Transactions contemplated hereby and agrees to indemnify and save harmless the
Bank from and against any and all claims for any brokerage commission arising
out of the Construction Loan Facility, the making of the Advances or the
Transactions contemplated hereby.
Section 8.24 Amendment and Restatement. This Agreement amends and
restates in its entirety the Construction Loan Agreement dated January 10,
1996, between the Bank and Newmark with respect to which the Borrower hereunder
has, pursuant to the First Modification Agreement, assumed the obligations of
the borrower under that agreement.
Section 8.25 Duration; Survival. All representations and
warranties of the Borrower contained herein or made in connection herewith
shall survive the making of and shall not be waived by the execution and
delivery of this Agreement or the Note, any investigation by the Bank or the
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making of any Advance hereunder. All covenants and agreements of the Borrower
contained herein shall continue in full force and effect from and after the
date hereof so long as it may borrow hereunder and until payment in full of the
Note, interest thereon and all other obligations of the Borrower under this
Agreement, the Note and the other Security Instruments. Without limitation, it
is understood that all obligations of the Borrower to make payments to or
indemnify the Bank shall survive the payment in full of the principal of and
interest on the Note.
Section 8.26 Participations. With the prior written consent of
the Borrower, the Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time sell participations
to one or more commercial banks or other Persons (each a "Participant") in all
or a portion of its rights and obligations under this Agreement and the other
Security Instruments (including, without limitation, all or a portion of the
Loan and the Note), provided that
(i) the Bank's obligations under this Agreement and the
other Security Instruments shall remain unchanged,
(ii) the Bank shall remain solely responsible to the
Borrower for the performance of such obligations, and
(iii) the Borrower shall continue to deal solely and
directly with the Bank in connection with the Bank's rights and
obligations under this Agreement and each of the other Security
Instruments.
Section 8.27 Assignments. With the prior written consent of the
Borrower, the Bank may, in the ordinary course of its commercial banking
business and in accordance with applicable law, at any time assign the
Indebtedness, the Note and its rights and obligations under this Agreement and
the other Security Instruments to a commercial bank or other Person, and in
that event Borrower shall execute and deliver replacement notes to the extent
necessary to reflect the assignment.
Section 8.28 Entire Agreement. THIS WRITTEN AGREEMENT, THE NOTE,
AS MODIFIED, AND THE SECURITY INSTRUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.
BORROWER: NEWMARK HOMES, L.P., A TEXAS LIMITED
PARTNERSHIP
BY: NEWMARK HOME CORPORATION, A NEVADA
CORPORATION, ITS SOLE GENERAL PARTNER
By: /s/ XXXXX XXXXX
------------------------------------
Name: XXXXX XXXXX
----------------------------------
Title: SVP
---------------------------------
BANK: MELLON BANK, N.A.
By: /s/ XXXXX X. XXXXXXXXX
---------------------------------------------
Name: XXXXX X. XXXXXXXXX
-------------------------------------------
Title: Assistant Vice President
------------------------------------------
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