EXHIBIT 10.13
CONSTRUCTION LOAN AGREEMENT
DATE: December __, 1998
THIS CONSTRUCTION LOAN AGREEMENT ("Agreement"), made by and between ORIOLE
HOMES CORP., a Florida corporation (hereinafter called the "Borrower"), whose
address is 0000 Xxxxx Xxxxxxxx Xxxxxx, Xxxxx 000, Xxxxxx Xxxxx, Xxxxxxx 00000,
and FIRST UNION NATIONAL BANK, a national banking association organized and
existing under the laws of the United States of America, (hereinafter called the
"Lender"), whose address is: 0000 Xxxx Xxxxxxx Xxxx Xxxxxxxxx, 0xx Xxxxx,
Xxxxxxxxxx, Xxxxxxx 00000.
WITNESSETH:
WHEREAS, Borrower is the fee simple owner of certain real property located
in Palm Beach County, Florida, more particularly described on Exhibit "A"
attached hereto and made a part hereof (the "Land"); and
WHEREAS, Borrower intends to construct One Hundred Thirty (130) single
family residential homes on the Land which is part of the development project to
be known as Addison Green of the Aberdeen PUD in Xxxxxxx Xxxxx, Xxxx Xxxxx
Xxxxxx, Xxxxxxx 00000 (the "Project"); and
WHEREAS, Borrower has requested of Lender and Lender is willing to lend to
Borrower, upon the terms and conditions contained in the Loan Documents
(hereinafter defined) and as hereinafter set forth, the total aggregate sum of
SIX MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100 U.S. DOLLARS ($6,750,000.00)
(the "Loan") evidenced by an Acquisition Real Estate Promissory Note of even
date herewith (the "Acquisition Note") in the original principal sum THREE
MILLION SEVEN HUNDRED FIFTY THOUSAND AND 00/100 U.S. DOLLARS ($3,750,000.00) and
a Construction Revolver Real Estate Promissory Note ("Construction Note") of
even date herewith in the original principal amount of THREE MILLION AND 00/100
U.S. DOLLARS ($3,000,000.00) (the Acquisition Note and Construction Note are
sometimes hereinafter collectively
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referred to as the "Note") and by a Letter of Credit Facility in the amount of
Two Hundred Thousand and 00/100 U.S. Dollars ($200,000.00); and
WHEREAS, the Loan will be secured by that certain Mortgage and Security
Agreement of even date herewith (the "Mortgage") encumbering inter-alia the Land
and the Houses (hereinafter defined) to be constructed thereon, and by all the
Loan Documents associated with this Loan transaction (the "Loan Documents"); and
WHEREAS, the Lender has agreed to make the Loan only upon the terms and
conditions hereinafter stated and not otherwise.
IT IS THEREFORE AGREED between the parties hereto as follows:
ARTICLE I
DISBURSEMENT OF FUNDS
(A) Purpose. The proceeds of the Loan shall be utilized for the acquisition of
the Project, and for hard and soft construction costs and related interest
carry relating to the construction of 130 single family residential homes
("Houses" or "Units") all to be located within the Project. The terms
"Houses" and "Project" shall include any and all buildings, structures,
and improvements now or hereafter erected on or in the Project, including,
but not limited to, fixtures, attachments, appliances, equipment,
machinery, and other articles attached to said buildings, structures, and
improvements and shall sometimes hereinafter collectively be referred to
as the "Improvements".
(B) Use of Proceeds. The Borrower shall use the Loan Proceeds as follows:
(a) The proceeds from the Acquisition Note shall be used to acquire the
Land. Borrower shall pay and deliver to Lender upon execution hereof its
own equity totaling at least One Million Seven Hundred Seventy-One
Thousand Eighty-Three and 32/100 U.S. Dollars ($1,771,083.32) to pay for
that portion of the Project Costs as shown on the "Loan Budget" and
defined as "Borrower's Equity," all defined and described in Xxxxxxx "X"
xxxxxx; xxx
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(x) The Proceeds of the Construction Note shall only be utilized to fund
the Lender approved vertical hard and soft construction costs. Except as
set forth hereinbelow, all Houses must be "Pre-Sold" as hereinafter
defined. Pre-Sold Houses shall mean Houses for which a fully executed
arms-length contract ("Contract") has been executed between Borrower and a
third party purchaser which contain no unsatisfied contingencies,
including end-loan financing evidenced by a pre-qualification letter, and
which meet full conformity with Lender's standards, and for which at least
a five percent (5%) non-refundable deposit has been given to Borrower or
its escrow agent by a third party purchaser. All Contract deposits must be
escrowed with Lender, unless Buyer waives it rights to have its deposit
escrowed. All contracts must be fully subordinated to the Loan and the
Mortgage. Notwithstanding the foregoing, and upon the execution hereof ,
Borrower shall have the right to construct five (5) types of model Houses
approved in advance by Lender (the "Models") and one speculative house
("Speculative House"). After the Speculative House is Pre-Sold, the
Borrower shall only be permitted to have one (1) Speculative House under
construction and/or unsold at any one time. A Speculative House is defined
as a House which is not Pre-Sold. The five (5) Models and Speculative
House which may be constructed by Borrower with the use of proceeds from
the Construction Note shall be referred to herein as the "Spec/Model
Allowance." Upon the execution hereof, Borrower may construct two (2) more
Houses in addition to the Spec/Model Allowance (the "Additional Spec
Houses"). The Additional Spec Houses will be funded by Lender using the
same formula as if each was a Speculative House. However, the Additional
Spec Houses must be converted to Pre-Sold Houses within ninety (90) days
of the date hereof. In the event the Additional Spec Houses are not
converted to Pre-Sold Houses within said ninety (90) days, then any
amounts funded under the Construction Note for the Additional Spec Houses
shall be immediately due and payable and failure to pay said amount within
said ninety (90) days shall constitute an Event of Default under the Note,
the Mortgage and the terms herein. In addition to construction of
individual Houses which will be funded from the proceeds of the
Construction Note, portions of the Loan proceeds shall be utilized for
amounts which may be set forth on the Loan Budget which must be acceptable
to Lender's Inspector and will be funded from the proceeds of the
Construction Note.
(C) Request for Disbursement. No sums shall be due and payable until Borrower
shall deliver a signed requisition to the Lender for payment, in form and
content previously approved by the Lender, and until and unless:
(1) Payroll and material invoices and/or contracts shall have been
confirmed by the Borrower to the satisfaction of the Lender.
(2) Labor and materials shall have been delivered to and used upon or
incorporated in the Improvements in a manner satisfactory to the
Lender and in compliance with the plans, specifications and
addenda aforesaid.
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(3) Such payment shall be in accordance with any applicable laws of
Florida, subject to any rights of the Lender reserved to it
herein.
(4) Payment shall be subject to and contingent upon receipt of such
additional documents and/or information as the title insurance
company which is insuring the lien of the Mortgage may reasonably
require.
Notwithstanding anything herein to the contrary in this Paragraph (C),
funds shall only be disbursed by Lender to Borrower for work actually in
place.
(D) Conditions to each Advance. The proceeds of the Construction Note shall
be disbursed for the Models and the Speculative House on the basis of a
draw schedule to be approved by Lender prior to the execution hereof, up
to certain maximum amounts per model type on a standard (non-premium) lot
to be established by Lender prior to the execution hereof upon its review
of plans and budgets submitted to Lender by Borrower. Funding under the
Construction Note on a per House basis for a Speculative House and/or one
of the five (5) Models shall, in no event, exceed the lesser of : (a) 65%
of the appraised value of a completed House less the Acquisition Note
basis per lot of $28,846.00; or (b) 65% of the sales price for the House,
less the Acquisition Note basis per lot of $28,846.00; or (c) 100% of the
approved vertical hard and soft costs per House. For "Pre-Sold" Houses,
funding under the Construction Note on a per House basis shall in no
event exceed the lesser of: (a) 75% of the appraised value of the House,
less the Acquisition Note basis per lot of $28,846.00; (b) 75% of the
sales price for the House, less the Acquisition Note basis of $28,846.00;
or (c) 100% of the approved vertical hard and soft costs per House. All
draw requests shall be subject to the review and approval of Lender, and
all draw requests shall be funded, if possible, within five (5) working
days of receipt of all required information. All requests shall be
limited to one (1) draw per month. Lender shall make disbursements
through a disbursement agent, such as a title company, at the expense of
Borrower, which disbursement agent shall monitor project notices to owner
and partial releases. No funds shall be disbursed by Lender to Borrower
under the Construction Note for the construction of a House, unless such
House is the subject of a Contract, except with respect to Models and the
Speculative Houses as set forth herein. The maximum number of Units which
may be funded under the Construction Note at any one time (which includes
the Models and Speculative Houses) shall be based upon the combined cost
of completion of such Houses then under construction, such that the
combined cost of completion thereof shall be equal to or less than the
remaining availability under the Construction Note. Should any Contract
be canceled, Borrower shall have ninety (90) days to replace such
canceled Contract with a new Contract or pay off the amount disbursed by
Lender related to such Contract, unless considered one of the Models or a
permitted Speculative House. Should a Contract allow for a purchaser's
funds to be used in construction, funding available under the
Construction Note for the particular House shall be correspondingly
reduced. All advances shall be contingent upon compliance with the
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following conditions precedent which shall be in form and substance
satisfactory to Lender, in its sole discretion:
(a) Building Permit: Borrower must have obtained
and delivered to Lender and its Inspector an
unconditional, irrevocable building permit
fully approved by all governmental authorities
covering the Improvements for which Lender is
advancing funds.
(b) No Default: The warranties and representations
contained in this Agreement shall be correct
and true, all the covenants, terms and
conditions of this Agreement shall remain
satisfied, and no Event of Default (after all
grace periods have expire), or circumstances or
events which, upon the lapse of time, the
giving of notice, or both, could become an
Event of Default, shall have occurred as of the
date of the Advance.
(c) Borrower's Request and Evidence of Construction
and Payment: Within five (5) business days
prior to each Advance, Borrower shall supply
Lender with a written request for an Advance,
which request shall set forth the amounts
sought, and shall be accompanied by the
application form required by Lender, fully
executed, and a certificate signed by Borrower,
the Lender's Inspector (the "Inspector") and
the Contractor ("Borrower's Certificate")
certifying that (1) the work for which payment
is requested has been completed in accordance
with the final plans and specifications for the
Project and the Houses to be constructed
thereon submitted to Lender by Borrower prior
to the execution hereof and approved by Lender
("Final Plans and Specifications"), (2) the
said work has been fully paid or will be fully
paid for with the proceeds of the Advance, (3)
the work completed to date is in conformity
with the schedule of completion of the
Improvements previously provided to Lender, and
(4) states the anticipated completion date of
the
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Improvements, and discloses all known or
anticipated change orders in the Contract or
the Final Plans and Specifications. Each
Borrower's Certificate shall constitute a
representation by Borrower that it reaffirms as
true all representations made to Lender herein
or herewith; that all conditions to such
disbursement have been fulfilled; that any
materials to be paid for have been physically
incorporated into the Improvements, free of
liens and encumbrances; and that the work
conforms to the approved Final Plans and
Specifications. Each request for an Advance
shall be accompanied by such other evidence as
may, from time to time, be requested by Lender,
including, but not limited to, applications,
certificates, and affidavits of Borrower,
Inspector, Architect, Contractor, Disbursing
Agent and Title Company, showing:
(i) the percentage of completion of the Improvements and the value of
that portion of the Improvements completed at that time;
(ii) that all outstanding claims for labor, materials, and fixtures
through the date of the last Advance have been paid, and liens
therefore waived in writing, except for non-paid claims approved
in writing by Lender;
(iii) that there are no liens outstanding against the premises, except
for Lender's lien and security interest, liens for property taxes
not yet payable and other liens approved in writing by Lender;
(iv) that Borrower has complied with all of Borrower's obligations
under the Loan Documents as of the date of the request for an
Advance;
(v) that all work prior to the date of the request for an Advance has
been done in a workmanlike manner by the Contractor and all
Subcontractors, and in accordance with the Final Plans and
Specifications;
(vi) copies of all bills or statements for expenses for which the
Advance is required (paid bills are required only for the last
Advance);
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(vii) that all change orders and extras in any amount whatsoever have
been approved in writing by Lender, except as otherwise provided
for in this Agreement;
(viii) that the undisbursed portion of the construction fund is
sufficient to pay the cost of completing the Improvements in
accordance with the Final Plans and Specifications; and
(ix) that each Advance is to be used for the specific account for which
the disbursement is made.
(x) any other conditions precedent to loan disbursements that may be
required by Lender, including, but not limited to, items set forth
in the Loan Commitment executed by Lender and Borrower and dated
December 11, 1998 (the "Loan Commitment").
The request for an Advance shall contain claims for labor and materials to
the date of the last inspection by the Inspector, and not for labor and
materials rendered thereafter. Upon Lender's receipt for request for Advance,
the Inspector will inspect the premises to determine the percentage of
completion as well as the workmanship of the contractors and compliance with the
approved final Plans and Specifications for the Houses. The Inspector will
review all progress draw requests based on the percentage of work completed and
the cost-to-complete. Each draw will be contingent upon the Lender's receipt of
the Inspector's approval thereof.
(d) Subcontractors. If requested by Lender, and if
reasonably available, Borrower shall furnish
copies, certified by Borrower to be true and
correct, of all major subcontracts and purchase
orders for the provision of labor and materials
for the construction of the Improvements, and a
statement from each Subcontractor and supplier:
(i) stating the amount of its contract and the
amount paid to date; and
(ii) acknowledging full payment (less retainage) for
all work done and/or materials supplied.
(e) Title Insurance. Lender shall receive an
endorsement to the policy of title insurance
updating the policy to the date of the current
Advance, and increasing the insurance coverage
to an amount equal to the sum of all prior
Advances and the current Advance, without
additional exceptions or objections.
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(f) Survey. Upon the foundation of each House being
completed, a sketch of survey of the premises
shall be furnished to Lender showing each House
foundation to be within property lines and
building set back lines, and also showing
easements, roads, etc.
(g) Materials. If requested by Lender, Borrower
shall furnish to Lender evidence reasonably
satisfactory to Lender that Borrower and
Contractor have obtained or can obtain all
necessary materials as and when required for
the completion of the Improvements in
accordance with the Final Plans and
Specifications. Lender shall be the sole, but
reasonable judge of the sufficiency of such
evidence. Lender, at its option, may, but shall
not be required to, disburse funds from
materials stored on the Land or off-site;
provided, however, in each instance, said
materials will not be purchased on a retained
title basis, and title to the materials shall
be in Borrower, and shall be free of any and
all claims of lien. With regard to materials
stored on the Land, any Advances therefore are
solely at the discretion of Lender, and said
materials shall be stored in a secure manner,
and protected from damage or theft. Materials
stored off-site shall be either in a bonded
warehouse, or, if in a supplier's warehouse,
the supplier shall supply evidence of adequate
insurance. Borrower shall also provide to
Lender evidence of insurance in transit. Lender
further reserves the right to have its
Inspector verify the quantity and location of
said materials.
(h) Photographs. If requested by Lender, monthly
photographs of the progress of construction of
each Residence.
(i) Inspector's Report. The Lender shall have
reviewed and approved from the Lender's
inspector, an acceptable "Front End" analytical
report, satisfactory to Lender, approving the
Plans
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and Specifications, cost budget for the
project, any construction contracts, and such
other construction documentation and all other
information required by Lender.
Lender need not make any requested Advance unless Lender shall approve the
Borrower's Certificate and all other required documentation. The approval of
such Borrower's Certificate and required documentation by Lender shall not
constitute an acceptance of the work and materials, nor be binding upon Lender,
except to the extent that the facts are as represented when so approved. With
respect to all disbursements under the Loan, Lender shall have the right to make
payment by check or joint check to Borrower, the Contractor, Subcontractors and
Suppliers and any combination or by credit directly to Borrower or the
Contractor's account, all of which shall be separately or in any combination,
constitute proper disbursement.
(E) Final Advance. When the Improvements have been completed, Borrower shall
supply Lender with the following documents in addition to satisfying all
of the conditions and supply all of the documents required under paragraph
(D) hereof, prior to payment of the final Advance and retainage held by
Lender:
(a) Certificates from the Architect and Engineers,
if applicable, and the Inspector that the
Improvements have been completed in accordance
with the Final Plans and Specifications, in
good and workmanlike manner, and in accordance
with the requirements of all governmental
authorities having or purporting to have
jurisdiction over the premises.
(b) A certificate from Borrower stating the total
construction for costs of the Improvements for
which the final Advance is requested.
(c) A photographic copy of a final Certificate of
Occupancy for each House which the final
Advance is requested issued by the appropriate
official of the jurisdiction in which the
premises is located, and any other governmental
certificates necessary to evidence that the
completed House complies with all zoning
ordinances and building regulations.
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(d) Two (2) originals of an "As-Built" survey for
each House for which the final Advance is
requested prepared by a registered surveyor
satisfactory to Lender, and containing a
certification to Lender in such form as Lender
may require, showing each House as completed to
be within the property lines and building set
back lines, and also showing easements, roads,
etc.
(e) Contractor's and Borrower's Final Affidavit in
form and substance satisfactory to Lender and
the Title Company, stating that all bills and
expenses in connection with the construction of
each House for which the final Advance is
requested have been paid, and complete releases
of liens signed by the Contractor and all
Subcontractors and persons furnishing
materials, services or labor to or on the
premises.
(f) A policy of title insurance containing no
exceptions unacceptable to Lender and issued by
the Title Company in the name of the Lender and
the amount of the Note.
(g) Policies of fire, lightening and extended
coverage insurance and such other types of
insurance as may be required by Lender in such
amounts and containing such terms as required
in the Mortgage or as otherwise required by
Lender, endorsed to show the interest of Lender
and in form and substance and written by
company satisfactory to Lender.
(h) All other instruments and documents reasonably
required by Lender.
(F) Right to Withhold Funds. In addition to the right to require Equity Funds
(hereinafter defined), Lender may elect to withhold any Advance,
notwithstanding the substance of any report of any Inspector or Architect,
or any documentation submitted to Lender in connection with a request for
an Advance, if Lender determines, at any time, that the actual cost,
budget or progress of construction differs materially from that as shown
on the breakdown of costs or that the
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percentage of progress of construction of the Improvements differs
materially from that as shown on the request for an Advance for the period
in question. Furthermore, if any instrument or document submitted by
Borrower in connection with any request for an Advance shall not, in the
reasonable exercise of Lender's reasonable discretion, comply in all
respects with the conditions and requirements of this Agreement, then
Lender may amend, reduce or withhold funding of a request for an Advance,
as Lender, in its reasonable discretion, shall deem proper under the
circumstances.
(G) Equity Funds. Borrower shall supply a minimum equity contribution of not
less than $1,771,083.32 as set forth within the Loan Commitment. Also, at
any time, and from time to time, Lender may require a construction cost
breakdown of the Project in progress by the Borrower or Inspector, or by
an expert in the construction cost field to be designated by Lender. If,
in the judgment of Lender, the balance of the total estimated construction
costs of the Improvements, including all soft costs and interest carry,
exceeds the amount of the total construction fund remaining to be
disbursed, Lender must be provided with evidence to show where the funds
necessary to complete the Improvements are to be derived. Lender shall
have the right to demand that Borrower, within five (5) days of being
notified, deposit equity funds in an amount equivalent to the deficiency
with Lender to be disbursed during the course of construction of the
Improvements ("Equity Funds"). Failure to provide the required Equity
Funds within said five (5) days shall be an Event of Default under the
Note, Mortgage, and hereunder.
Any Equity Funds deposited by Borrower with Lender shall be held in a
separate account to be disbursed by Lender or the Disbursing Agent to fund
all subsequent requests for Advances and in a manner so as to comply with
the Florida Construction Lien Law, it being agreed that no Advances of
Loan proceeds shall be made until the Equity Funds have been exhausted
unless Lender otherwise agrees in writing. Lender may, at any time, and
from time to time, require Borrower to deposit additional Equity Funds
within five (5) days of notification whenever it shall appear to Lender
that the remaining proceeds of the Loan to be disbursed and remaining
Equity Funds will be insufficient to pay the remaining portion of the
construction cost not already paid and to otherwise complete construction
of each House in accordance with the Final Plans and Specifications. If
Lender does not require a deposit of Equity Funds, Borrower shall pay and
deliver to Lender satisfactory evidence of the payment of any portion of
the construction cost in excess of the amount of the construction fund
which remains to be disbursed, together with a lien waiver satisfactory to
Lender and Title Company.
(H) Disbursement Schedule. Said payments shall be made in accordance with the
schedule approved by Lender, and Contractor (hereinafter defined) subject
to the provisions of the Florida Construction Lien Law, and the other
provisions hereof. Lender may, in its sole discretion, establish a ten
percent (10%) "hold-back" requirement for the disbursements of the funds
hereunder which will be released upon the completion of any particular
subcontract or line item.
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(I) Revolving Nature of Loan. The Borrower shall be permitted to borrow, repay
and reborrow under the Loan, from time to time, subject to the terms and
conditions of the Construction Note governed by this Construction Note
Agreement, provided, however, that the aggregate principal amount
outstanding under the Construction Note may increase or decrease, but
shall never exceed the sum of THREE MILLION and 00/100 DOLLARS
($3,000,000.00). The proceeds of the Construction Note shall only be
utilized to fund the acquisition cost of the individual lots to be
mortgaged hereunder, and to fund Lender approved vertical hard and soft
construction costs. Additionally, Borrower shall not be entitled to
receive any advances under the Construction Note if the total outstanding
principal balance of the Construction Note, plus all sums yet to be
disbursed to complete construction of Houses for which disbursement has
already commenced, exceeds the sum of THREE MILLION and 001/00 DOLLARS
($3,000,00.00).
(J) Default. Upon any default to comply with any of the terms hereunder or an
Event of Default, as such term is defined in the Note, Mortgage or in the
other Loan Documents, Lender shall not be obligated to make disbursements.
(K) Correction of Defects. The Lender has the right to reject defective work
and materials and shall withhold payments until defects are corrected.
(L) Lender's Inspection Rights. The Lender shall have the unrestricted right
of making inspections of the Property encumbered by the Mortgage from time
to time and each Residence by its duly authorized agent from time to time,
at Borrower's sole cost and expense, during the period of construction but
same is solely for the benefit of Lender. Furthermore, Lender has the
right to select any Inspector of its choice to make any of the inspections
and/or inspection reports that may be referenced herein. The cost of any
such inspector(s), inspections, or inspection reports shall be paid for by
Borrower.
(M) Payments to Lienors. The Lender, upon an Event of Default, may make
payments for labor and materials and services due under the terms of the
contract directly to the lienor who has furnished or performed same.
(N) Inspection Fees. A Construction Plan and Budget Review Fee shall be paid
by Borrower to Lender in the amount of $625.00. Additionally, a Draw
Inspection Fee in the amount of $150.00 per House, shall be collected at
the time of the first draw for construction of a particular House. Also,
all costs incurred by Lender in connection with the Lender's use of an
Inspector, including, but not limited to, any architect or engineer costs,
shall be paid by Borrower.
(O) Disbursing Agent. The Loan proceeds of the Construction Note shall be
disbursed by Lender through its Project Administrator ("Disbursing
Agent"). All costs associated with disbursing the Loan and the costs of
the Disbursing Agent shall be borne by the Borrower.
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ARTICLE II
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MISCELLANEOUS
(A) Drawings, Specifications and Addenda. The drawings, specifications and
addenda form a part of this Agreement and any work shown on the drawings
but not mentioned in the specifications and addenda, or vice versa, is to
be executed the same as though particularly specified or set forth in the
drawings to the true meaning and intent of said drawings and
specifications.
(B) Property of Lender. All drawings, specifications and addenda filed with
the Lender are and remain the Property of the Lender.
(C) Change Request. No change in said plans, drawings and specifications,
exclusive of buyer options, the cost of which exceeds $10,000.00 per
House, shall be made without the express prior written approval of Lender,
which approval shall not be unreasonably withheld or delayed. Lender's
approval may be unreasonably withheld or delayed for change orders which
exceed, in the aggregate, $250,000.00.
(D) Itemized Breakdown. The Borrower, when requested by the Lender, shall
promptly furnish the Lender and/or Inspector with an itemized breakdown of
the hard and soft construction costs of the Improvements which are to be
or have been made subject to the terms of this Agreement. Loan proceeds
for items not associated with the construction of project Improvements
(e.g., architect's and engineer's fees, impact fees, equipment, reserved
interest and other soft cost reserves) will be advanced no more frequently
than twice a month, in accordance with the approved budget for the project
and upon presentation of a proper, fully documented request satisfactory
to and approved by Lender. Lender may require the submission of
corresponding invoices, paid receipts, canceled checks, lien waivers,
and/or bills-of-sale, as it may determine, from time to time, in its sole
discretion.
(E) Survey. A foundation survey, in form and scope satisfactory to Lender,
shall be required when the foundation of each House is completed.
(F) Final Survey. A final survey, in form and scope satisfactory to Lender,
shall be required when each House is completed.
(G) Title Insurance. An endorsement to Lender's mortgagee title insurance
policy ("Title Policy"), satisfactory to Lender, shall be provided to
Lender at the time of each disbursement of funds under the Loan. Each
endorsement shall show all matters of record since the last endorsement
and increase its coverage to include the amount of the disbursement.
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(H) Financial Covenants.
(i) Annually, during the term of the Loan, Borrower shall provide
Lender with fiscal year end audited income statements, balance
sheets, cash flow analysis, projections, tax returns, contingent
liability statements and a Quarterly Financial Presentation which
shall be certified, true and correct in all material respects by
an officer of the Borrower. The Quarterly Financial Presentation
shall include the following schedules for Borrower and its
subsidiaries:
(1) Consolidated Balance Sheets;
(2) Consolidated Statement of Operations;
(3) Consolidated Statement of Cash Flows;
(4) Interest, Rental and Other Income Schedule;
(5) Net Inventories Schedule;
(6) Consolidated Statement of Operations By Quarters- one page
schedule for applicable period;
(7) Cost of Houses and Condominiums Sold;
(8) Selling, General and Administrative Expenses;
(9) Operations Earnings Analysis - Current Period;
(10) Operations Earnings Analysis - Prior Year;
(11) Report of New Contracts, Closings and Backlog of Houses and
Condominiums;
(12) Estimated Cost of Completion Included in Inventories; and
(13) Houses/Condominiums Completed or Under Construction.
(ii) During the term of the Loan, Borrower shall provide Lender with
income and expense statements (quarterly), cash flow analysis
(annually), projections (annually) and sales reports (quarterly)
relating to the Project which shall be certified, true and correct
in all material respects by an officer of the Borrower.
(I) Conformance with Law. Borrower agrees to comply with all federal, state
and local laws, rules and regulations of any nature whatsoever, including,
without limitation, all applicable zoning ordinances and building codes,
throughout the term of the Loan. The Borrower certifies that all
Improvements, when completed, will comply with all applicable law.
Borrower represents that it has obtained all licenses, building permits
and approvals for the construction of all Improvements according to the
terms hereof and the Loan Documents and has furnished Lender with copies
of such items.
- - 188 - -
(J) Insurance. Borrower shall, at its sole expense, comply with all of the
insurance requirements set forth in the Mortgage and the other Loan
Documents throughout the term of the Loan.
(K) Florida Law. In the event of enforcement of this Agreement or any dispute
as to the interpretation or construction hereof, the laws of the State of
Florida shall apply. In the event either party deems it necessary to cause
litigation to enforce, interpret or construe the terms of this Agreement,
court costs and attorneys' fees, including those incurred in appellate
proceedings, shall be awarded to the prevailing party. Venue shall be in
State Court in and for Broward or Palm Beach County, Florida, the
jurisdiction of which court the parties hereby consent to.
(L) Commitment Letter Incorporated. All of the terms, covenants and conditions
set forth in the Loan Commitment are hereby incorporated herein by
reference and made a part hereof. In the event of a conflict between the
Loan Documents and the Commitment, the Loan Documents shall prevail.
(M) Appraisal. Prior to closing, Lender must receive a satisfactory current
MAI appraisal of the Project (consisting of the Land and the proposed
Improvements) expressing an opinion of Market Value ((i) as is, (ii) upon
completion, and (iii) upon sell out). The Lender must arrange for the
appraisal and engage the appraiser. The appraisal must be ordered directly
by the Lender and must conform to the Financial Institutions Reform
Recovery and Enforcement Act of 1989 (FIRREA) and the related rules and
regulations of the Office of the Comptroller of the Currency (the OCC), 12
CFR Part 34, effective August 24, 1990, as amended. The appraisal,
including, without limitation, the appraisal methodology and the
conclusion(s) of Market Value, shall be subject to Lender's review and
approval. All appraisal costs and fees shall be paid by Borrower, and
Borrower hereby agrees to immediately pay or prepay such appraisal costs
or fees upon the request of Lender. Lender acknowledges receipt of a
satisfactory MAI appraisal sufficient for the closing of the Loan.
If at any time, but no more than once per year, Lender has reasonable
belief that the value of the Mortgaged Premises may have declined or
diminished in value from the value stated in the appraisal previously
submitted to Lender, or at any time in the event the Loan is in default,
then in that event, within seventy-five (75) days from Lender's written
request to Borrower therefor, Borrower shall provide to Lender, at
Borrower's sole cost and expense, a current appraisal of the Mortgaged
Premises to be ordered by Lender from an appraiser designated by Lender
and in form and content as required by Lender. Borrower shall cooperate
fully with any such appraiser and provide all such documents and
information as such appraiser may request in connection with such
appraiser's performance and preparation of such appraisal. Borrower's
failure to promptly and fully comply with Lender's requirements shall,
without further notice, constitute an Event of Default under the Mortgage
and the other Loan documents.
- - 189 - -
(N) Partial Releases. The Borrower shall be required to repay principal
amounts outstanding under the Acquisition Note and Construction Note from
the proceeds of the sale of Houses. If, upon the execution hereof, the
outstanding principal balance of the Acquisition Note is Three Million
Seven Hundred Fifty Thousand and 00/100 U. S. Dollars ($3,750,000.00),
then the Lender shall release each House from the lien operation and
effect of the Mortgage upon Lender's receipt of $42,000.00, which sum will
be allocated against the amounts outstanding under the Acquisition Note,
together with 100% for all monies funded by Lender towards all hard and
soft construction costs and interest carry for the particular House for
which a release is requested, which sum shall be allocated against the
amounts funded under the Construction Note (hereinafter referred to as the
"Release Price"). If Borrower pays down the principal of the Acquisition
Note by Six Hundred Eighty-Eight Thousand Four Hundred and 00/100 U.S.
Dollars ($688,400.00) within ninety (90) days after the date the
Acquisition Note is funded, then the Release Price shall be reduced from
Forty-Two Thousand and 00/100 U.S. Dollars ($42,000.00) to Thirty-Three
Thousand and 00/100 U.S. Dollars ($33,000.00) after the principal
reduction under the Acquisition Note is made. If, upon the execution
hereof, the principal balance of the Acquisition Note is Three Million
Sixty-One Thousand Six Hundred and 00/100 U.S. Dollars ($3,061,600.00),
then the Release Price shall be $33,000.00. The Release Price shall be
utilized to repay the principal amount outstanding under the Note. In
addition, Borrower shall pay accrued but unpaid interest. The Borrower
shall be responsible for paying all of Lender's expenses and costs
incurred in connection with the release of Residences from the lien
operation and effect of the Mortgage.
(O) Lender's Cooperation. Lender shall provide reasonable assistance to
Borrower, at no cost or unreasonable inconvenience to Lender, in
Borrower's efforts to secure from Palm Beach County the return of Lender's
check number 528652794 in the amount of $688,400.00 reflecting the amount
funded to Palm Beach County under that certain Letter of Credit dated
November 12, 1996, Letter of Credit Number S538620, or obtain Palm Beach
County's check in the amount of $688,400.00 payable to Lender.
ARTICLE III
CONSTRUCTION LIEN LAW AND NOTICE OF COMMENCEMENT
------------------------------------------------
(A) Proper Payments. The right of the Borrower to make proper payments under
its construction contract will be limited by any Notice to Borrower or
Claims of Lien which may be served by any person supplying labor or
materials to the project.
(B) Lender Notification. The Borrower shall furnish the Lender a copy of all
Notices or Claims of Lien filed against the Land immediately upon receipt
of same.
- - 190 - -
(C) Lender's Right to Disburse. Upon an Event of Default, the Lender may
disburse as directed by this Agreement without regard to the provisions of
Florida's Construction Lien Law, and without responsibility or liability
to the Borrower, Contractor, subcontractors, laborers or materialmen.
(D) Release of Lien. Borrower further agrees to furnish releases of lien for
all persons or entities who have filed a Claim of Lien against any
property encumbered by the Mortgage or transfer the lien to bond within
ten (10) days after its receipt of notice of the filing of same as set
forth in paragraph (J) hereof provided same must be released or
transferred to bond no more than thirty (30) days after the filing thereof
and provided that a Notice of Commencement must be filed for each House.
(E) Contractor's Final Affidavit. Borrower shall furnish the Contractor's
Final Affidavit as required by the Florida Construction Lien Law.
(F) Lender's Right to Make Payments to Lienors. Nothing in this article shall
in any way restrict the Lender's prerogative for protection of its
security interests, to make payments directly to lienors, as authorized by
the Florida Construction Lien Law upon an Event of Default.
(G) Notice of Commencement. Borrower agrees not to permit recordation of any
Notice of Commencement prior to recording the Mortgage of the Lender. In
the event a Notice of Commencement should be recorded prior to the
recording of the Lender's Mortgage, the Lender shall have the right to
cancel this Agreement and be reimbursed for its costs and expenses
incurred to date.
(H) Commencement and Completion of the Project. The construction of the
Improvements shall commence on or before thirty (30) days after the date
hereof. Borrower shall take all necessary steps to assure that such
construction shall proceed continuously and diligently, without
interruption, and Borrower shall complete each House, as evidenced by a
certificate of completion and certificate of occupancy from the
appropriate governmental agencies having jurisdiction, not later than
eight (8) months from the date Lender funds proceeds toward the
construction of each House, subject to force majeure events not to exceed
a period of ninety (90) days which are beyond the reasonable control of
Borrower.
(I) Post Copy. Borrower is required to post a certified copy of the Notice of
Commencement for each lot which is encumbered by the Mortgage in
accordance with Florida's Construction Lien Law.
(J) Transfer of Lien. Borrower is required, at Lender's request, to transfer
any lien to other security (cash deposit or transfer bond) within 10 days
after receipt of notice that a Claim of Lien is
- - 191 - -
recorded and no more than thirty (30) days of the recording of the same,
provided a Notice of Commencement must be filed for each House.
(K) Contested Lien. Lender has the right to contest any lien filed or to
transfer said lien to other security if Borrower fails to do so in a
timely manner.
(L) General Contractor. Borrower will be acting as the General Contractor
(sometimes referenced to herein as "Contractor") for the construction of
the Improvements.
ARTICLE IV
LENDER'S LIABILITY
------------------
(A) Disbursement Obligation of Lender. The Borrower agrees that the holding,
application and disbursement of the Loan funds shall be for the account of
the Borrower, however, it is expressly understood by the parties that the
holding, application and disbursement of the Loan funds is for the
protection of the Lender.
(B) Protection of Lender. Lender's activities concerning Florida's
Construction Lien Law are for the protection of the Lender not the
protection of the Borrower or potential lienors.
(C) Liability To Third Persons. This Agreement shall not be construed to make
the Lender liable to materialmen, contractors, craftsmen, laborers, or
others for goods or services delivered by them upon any property
encumbered by the Mortgage, or for debts or claims accruing to any such
parties against the Borrower.
(D) Inspection/Service. It is expressly agreed that all inspections and other
services rendered by the Lender's officers or agents shall be rendered
solely for the protection and benefit of the Lender and the Borrower shall
not be entitled to claim any loss or damage against the Lender, or its
officers, employees or agents. Lender shall not be liable for the failure
of any dealer, contractor, craftsmen or laborer to deliver the goods or
perform the services to be delivered or performed by them.
(E) Indemnification. Borrower hereby agrees to indemnify and hold harmless
Lender, its directors, officers, employees, agents, successors and
assigns, of and from any and all loss or damage, of whatever kind, and
defend Lender and such other indemnified parties of, from and against any
suits, claims or demands, including, without limitation, Lender's
reasonable legal fees, paralegal fees, costs and expenses at the trial and
appellate levels, on account of any matters or anything arising out of
this Agreement or in connection with the Loan. Such obligations shall
survive completion of the Improvements and repayment of the Loan. The
foregoing indemnification
- - 192 - -
shall not apply to any acts or claims which result solely from the gross
negligence or willful misconduct of Lender. The foregoing indemnification
shall not apply to occurrences taking place after Borrower is no longer
the owner of the Land with regard to claims not attributable in any manner
to Borrower. Borrower shall also indemnify Lender with respect to any and
all damages and/or liability arising out of any development work existing
and previously completed on the Land, whether or not inspected by Lender
or Palm Beach County, and any requirements that Palm Beach County may
impose subject to the Closing, including, but not limited to, correcting
any defects which Palm Beach County may require upon inspection of the
project.
ARTICLE V
LENDER'S REMEDIES
-----------------
(A) Failure to Perform. Upon the failure of the Borrower or its contractors or
agents to perform according to the terms of this Agreement, or in the
event they should prevent the Lender from so performing, or if they should
cause or permit conditions to arise so that performance would be rendered
impossible or hazardous for the Lender or in the event of the breach of
any material condition by the Borrower under this Agreement or the Loan
Documents, the Lender is authorized to withhold further disbursements of
funds until all objections are removed.
(B) Breach Or Default. Borrower shall have a ten (10) day grace period from
each respective due date in which to make any periodic installment of
interest required under the terms of the Note. Additionally, in the event
of any non-monetary breach or default hereunder (expressly excluding
voluntary or involuntary bankruptcy proceedings filed by or against the
Borrower and/or judgments rendered against the Borrower which in the
aggregate exceed $200,000.00), the Lender shall give the Borrower 30 days
written notice to correct such breach or default, and upon failure of the
Borrower to comply with such written notice, within said 30 day period and
such reasonable extensions thereof as may be granted by the Lender, solely
at its option, the Lender may either credit all Loan funds then in its
control upon the mortgage debt, and declare the Mortgage to be forthwith
due and payable, and proceed to foreclose the Mortgage for the balance
then remaining unpaid under the Note; or the Lender may assume full charge
of the construction of the Improvements as agent of the Borrower and
Borrower's Contractor, and proceed to enter into a contract for the
completion of the Improvements.
(C) Payment to Lender. In the event Lender completes the Improvements, the
Borrower expressly agrees to pay to the Lender, upon demand, all amounts
that may be disbursed in completing the Improvements, together with
reasonable compensation to the Lender for extra services rendered by it in
completing the Improvements in excess of the aggregate Loan amount, and
agrees that such excess sum shall be secured by the lien of the Lender's
Mortgage if said excess sum shall not be paid immediately upon demand or
arrangements satisfactory to the Lender made for the payment thereof, the
Lender may declare the Mortgage immediately due and payable and may
- - 193 - -
proceed to foreclose the same, for said excess sum and for the principal
sum then remaining unpaid under the Note.
(D) Reimbursement of Lender. Borrower agrees to reimburse Lender for all costs
and expenses incurred by Lender in connection with any controversy, claim,
demand or suit filed in connection with the construction of the
Improvements, the performance by either party under this Agreement,
including all court costs and Lender's reasonable attorneys' fees incurred
in connection with any matter relating hereto.
ARTICLE VI
BORROWER'S COVENANTS
--------------------
(A) Selection of Contractors and Subcontractors. The Borrower has accepted,
and hereby accepts, the full responsibility for the selection of its
Contractor and subcontractors and all materials, supplies and equipment to
be used in the construction of the Improvements, and the Lender assumes no
responsibility for the completion of the Improvements, according to the
plans and specifications and for the contract price.
(B) Borrower's Compliance With Florida's Construction Lien Law. Borrower has
further accepted, and hereby accepts, full responsibility for compliance
with Florida's Construction Lien Law and hereby relieves the Lender from
any and all liability thereunder of any nature whatsoever.
(C) Non-Commencement of Work. Borrower certifies that there has been no
commencement of construction on the Land incident to the date hereof which
could result in any Construction Lien or similar lien being filed against
the Land which would be superior to the lien of the Lender's Mortgage.
(D) Default and Non-Performance. Anything herein contained to the contrary
notwithstanding, there shall be no obligation upon the Lender to make any
additional disbursements hereunder, if at the time of the request for such
disbursements the Borrower is in default or has failed to perform any
provision of this Agreement or of the Note and Mortgage.
(E) Liability for Claims, Demands, Losses or Damages. It is understood and
agreed that the Lender shall not be liable for any claims, demands, losses
or damages made, claimed or suffered by the Borrower excepting such as may
arise through or could be caused by the Lender's willful or gross
negligence.
- - 194 - -
(F) Power of Completion. In the event of the bankruptcy of the Borrower or
Contractor, or in the event of the general assignment to creditors by the
Borrower or Contractor during the period of construction of each Residence
and before completion thereof, or upon any other occasion which might
result in cessation of work, the Lender shall have full power to take
charge of and complete the construction and make disbursements of the Loan
funds.
(G) Cross Default. In the event that Borrower shall be in default with respect
to the Mortgage and the Loan evidenced by the Note, then Borrower shall be
deemed in default with respect to all loans from Lender to Borrower. In
the event that Borrower shall be in default with respect to any loan
whatsoever from Lender, then Borrower shall be deemed to be in default
with respect to the Mortgage and the Loan evidenced by the Note.
(H) Palm Beach Inspectors. Within ninety (90) days hereof, Borrower shall
secure Palm Beach County inspection of all existing Improvements made on
the Land.
(I) Principal Reduction Payment. Within three hundred sixty (360) days of the
date that the Acquisition Note is funded, Borrower shall make a principal
reduction payment under the Acquisition Note in the amount of $688,400.00.
Failure to make such payment within said time shall be deemed an Event of
Default hereunder and under the Note, Mortgage, and all other Loan
Documents.
ARTICLE VII
NOTICES OR COPIES
-----------------
All notices or copies referred to herein shall be sent certified or return
receipt requested mail to the Lender at the address specified in this Agreement
with a copy to Lender's Counsel, Xxxxxxx X. Xxxx, Esq., Greenspoon, Marder,
Hirschfeld, Rafkin, Xxxx & Xxxxxx, P.A., Trade Centre South, Suite #700, 100
West Cypress Creek Road, Ft. Xxxxxxxxxx, Xxxxxxx 00000.
ARTICLE VIII
SEVERABILITY
------------
If any one or more of the provisions of this Agreement shall, for any
reason, be held to be invalid, illegal or unenforceable in any respect, then
such invalidity, illegality or unenfoceability shall not affect any other
provision hereof.
- - 195 - -
ARTICLE IX
WAIVER OF JURY TRIAL
--------------------
LENDER AND BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING
OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE LOAN
DOCUMENTS, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN), OR ACTIONS OF ANY PARTIES HERETO. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR LENDER ENTERING INTO THIS AGREEMENT.
- - 196 - -
IN WITNESS WHEREOF, the Borrower and Lender have caused these presents to
be signed, the day and year first above written.
WITNESSES:
BORROWER:
-------------------------
ORIOLE HOMES CORP., a Florida
-------------------------
corporation
(Printed Name of Witness)
By:_________________________________
-------------------------
Xxxx X. Xxxx, President
-------------------------
(Printed Name of Witness)
[Corporate Seal]
LENDER:
-------------------------
FIRST UNION NATIONAL BANK, a
-------------------------
national banking association
(Printed Name of Witness)
By:__________________________ _________________________
Name: ______________________
-------------------------
Title: ______________________
(Printed Name of Witness)
- - 197 - -
STATE OF FLORIDA )
) SS.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ___ day of
December, 1998, by Xxxx X. Xxxx, as President of ORIOLE HOMES CORP., a Florida
corporation, on behalf of the corporation. He is personally known to me or has
produced _____________________ (type of identification) as identification. .
----------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
Printed Name:____________________________
My Commission Expires:___________________
[Notary Seal]
My Commission No.:______________________
- - 198 - -
STATE OF FLORIDA )
) SS.
COUNTY OF ___________ )
The foregoing instrument was acknowledged before me this ___ day of
December, 1998, by _________________, as ____________ of FIRST UNION NATIONAL
BANK, a national banking association, on behalf of the banking association. He
is personally known to me or has produced _____________________ (type of
identification) as identification.
----------------------------------------
NOTARY PUBLIC, STATE OF FLORIDA
Printed Name:____________________________
My Commission Expires:___________________
[Notary Seal]
My Commission No.:______________________
- - 199 - -
