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EXHIBIT 10.12(a)
REVOLVING LINE OF CREDIT LOAN AGREEMENT
BETWEEN
FIRST AMERICAN BANK TEXAS, SSB
AND
NEWMARK HOMES, L.P.
DATED
DECEMBER 17, 1996
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REVOLVING LINE OF CREDIT LOAN AGREEMENT
THIS REVOLVING LINE OF CREDIT LOAN AGREEMENT (the "Agreement") dated
December 17, 1996 is made by and between First American Bank Texan, SSB,
("Lender"), whose legal address in 00000 Xxxxxx Xxxxxxx, Xxxxx 000, Xxxxxx,
Xxxxx 00000; and Newmark Homes, L.P., a Texas limited partnership ("Borrower")
with its principal offices at 00000 Xxxxxxxxxx, Xxxxxxxx, Xxxxx 00000.
ARTICLE I.
DEFINITIONS
For purposes of this Agreement, the following terms shall have the
respective meanings assigned to them.
1.1 Advance. The term "Advance" shall mean a disbursement of money
from Lender to or for the benefit of Borrower of any of the proceeds of the
Loans or the Master Note.
1.2 Approved Purchase Agreement. The term "Approved Purchase
Agreement" shall mean a legally binding purchase agreement with requirement for
xxxxxxx money deposit by purchaser covering a House and Lot entered into by
Borrower with a non-related bona fide purchaser, for which Lender has received
(a) a copy of such executed contract satisfactory in form and content to
Lender, with no conditions to purchase except as are approved by Lender, and
specifically without a condition or contingency for sale of purchaser's
existing residence, and (b) satisfactory evidence that ouch prospective
purchaser is expected to qualify for any financing required to consummate such
purchase agreement.
1.3 Build to Suit House- The term "Build to Suit House" shall mean
a House which is subject to an Approved Purchase Agreement.
1.4 Code. The term "Code" shall mean the Uniform Commercial
Code of the State of Texas.
1.5 Committed Loan Amount. The term "Committed Loan Amount" shall
mean with respect to a particular Loan the amount requested by Borrower and
approved by Lender pursuant to the provisions of this Agreement and the other
Loan Documents.
1.6 Constituent Party. Any signatory to this Revolving Line
of Credit Loan Agreement or any other Loan Document that signs on Borrower's
behalf that is a corporation (whether in its corporate capacity or in its
capacity as a shareholder of any entity comprising Borrower), general
partnership, limited partnership, joint venture, trust, or other type of
business organization.
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1.7 Debtor Relief Laws. The term "Debtor Relief Laws" shall
mean any applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, insolvency, reorganization, or similar laws affecting the rights
or remedies of creditors generally, as in effect from time to time.
1.8 Deed of Trust. The term "Deed of Trust" shall mean the Master
Deed of Trust, and each individual Deed of Trust conveying each Property, House
or Lot to a Trustee for the benefit of Lender as security for the payment of
the Master Note and any Loan, and the payment and performance of all
obligations specified in the Master Deed of Trust, such Individual Deeds of
Trust, or this Agreement.
1.9 Default Rate. The rate of interest specified in the Master
Note to be paid by the maker of the Master Note from and after the occurrence
of a default in payment under the provisions of the Master Note and the other
Loan Documents, but not in excess of the Maximum Lawful Rate.
1.10 FHA. The term "FHA"shall mean the Federal Housing
Administration and any successors or assigns thereof.
1.11 FNMA. The term "FNMA" shall mean the Federal National Mortgage
Association and any successor or assigns thereof.
1.12 Financial Statements. The term "Financial Statements" shall
mean the balance sheets, profit and loss statements, reconciliations of capital
and surplus, changes in financial condition, schedules of sources and
applications of funds, Federal Income Tax returns, and other financial
information of Borrower and any Guarantor.
1.13 Financing Statements. The term "Financing Statements" shall
mean the Master Deed of Trust, the Individual Deeds of Trust, the Form UCC-1 or
other Code financing statements perfecting the security interest on any
personal property and fixtures securing the Master Note or any Loan, to be
filed with the appropriate offices for the perfection of a security interest in
such property.
1.14 Fixtures. All materials, supplies, equipment, systems,
apparatus, and other items now owned or hereafter acquired by Borrower, and now
or hereafter attached to, installed in, or used in connection with (temporarily
or permanently) any of the improvements or the Land, which are now owned or
hereafter acquired by Borrower and are now or hereafter attached to the Land or
the Improvements, and including but not limited to any and all partitions,
dynamos, window screens and shades, draperies, rugs and other floor coverings,
awnings, motors, engines, boilers, furnaces, pipes, cleaning, wall and
sprinkler systems, fire extinguishing apparatus and equipment, water tanks,
swimming pools, heating, ventilating, refrigeration, plumbing, laundry,
lighting, generating, cleaning, waste disposal, transportation (of people or
things, including but not limited to, stairways, elevators, escalators, and
conveyors), incinerating, air conditioning and air cooling equipment and
systems, gas and electric machinery, appurtenances and equipment, disposals,
dishwashers, refrigerators and ranges, recreational equipment and facilities of
all kinds, and water, gas, electrical, storm and sanitary sewer facilities, and
all other utilities whether or not situated in easements, together with all
accessions, appurtenances, replacements, betterments, and substitutions for any
of the foregoing and the proceeds thereof.
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1.15. Governmental Authority. The term "'Governmental Authority "
shall mean the United States, the State, the County, the city, and/or any other
political subdivision in which the Property is located, and any other political
subdivision, authority, agency, court, department, or instrumentality
exercising jurisdiction over Borrower, the Property or the improvements.
1.16 Governmental Requirements. The term "Governmental
Requirements" shall mean all laws, ordinances, rules, orders, writs and
regulations of any Governmental Authority applicable to Borrower or the
Property.
1.17 Guarantor. There are no guarantors.
1.18 House. The term "House" shall mean a detached single family
residential structure and related structures, fixtures, and personal property,
and the Lot on which such House will be constructed, for which Borrower has, or
desires to obtain a Loan from Lender pursuant to this Agreement. As used
herein, the term House shall be inclusive of Build to Suit Houses, Speculative
Houses, and Model Houses.
1.19 Improvements. The term "Improvements" shall mean Houses along
with all related structures, fixtures, and personal property to be or which
have been constructed on Lots including all utility hookups, routes of ingress
and egress, landscaping and finish work required by the Plans.
1.20 Indebtedness. (i) The principal of, interest on, or other
sums evidenced by the Master Note or the other Loan Documents; (ii) any other
amounts, payments, or premiums payable under the Loan Documents; and (iii) any
and all other indebtedness, obligations, and liabilities of any kind or
character of the Borrower to Lender, now or hereafter existing, absolute or
contingent, due or not due, arising by operation of law or otherwise, or direct
or indirect, primary or secondary, joint, several, joint and several, fixed or
contingent, secured or unsecured by additional or different security or
securities, including indebtedness, obligations, and liabilities to Lender of
the Borrower as a member of any partnership, joint venture, trust or other type
of business association, or other group, and whether incurred by Borrower as
principal, surety, endorser, guarantor, accommodation party or otherwise, it
being contemplated by Borrower and Lender that Borrower may hereafter become
indebted to Lender in further sum or sums.
1.21 Individual Deed of Trust. The term "Individual Deed of Trust"
shall mean any "Deed of Trust, Security Agreement and Financing Statement"
executed by Borrower prior to or at the closing of each Loan for the purpose of
the purchase of a Lot and the Construction of a House. For purposes of this
Agreement, it is agreed that each Individual Deed of Trust shall incorporate by
reference all of the applicable provisions of the Master Deed of Trust.
1.22 Initial Interest Rate. The term "Initial Interest Rate, shall
mean the interest rate applicable to a Loan on the date that the Individual
Deed of Trust securing such Loan is executed.
1.23 Land. Any real estate, or other interest therein attached as
Exhibit "A" to each Individual Deed of Trust, together with all right, title,
interest, and privileges of Borrower in and to
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(a) all streets, ways, roads, alleys, easements. rights-of-way, licenses,
rights of ingress and egress, vehicle parking rights and public places,
existing or proposed, abutting, adjacent, used in connection with or pertaining
to such real property or the improvements thereon; (b) any strips of real
property between such real property and abutting or adjacent properties; (c)
all water and water rights, timber, crops, pertaining to such real estate; and
(d) all appurtenances and all reversions and remainders in or to such real
property.
1.24 Line. The term "Line" shall mean the Revolving Line of
Credit being extended to Borrower by Lender pursuant to this Agreement, the
Master Note, the Master Deed of Trust, and the Loan Documents. For purposes of
this Agreement, the term Line shall be inclusive of all funds advanced on all
of the Loans.
1.25 Loan. The term "Loan" shall mean the funds advanced under the
Line by Lender to borrower for the construction of a House or the purchase of a
Lot pursuant to the terms of this Agreement, the Master Note, the Master Deed
of Trust, individual Deeds of Trust, and the other Loan Documents. Each Loan
must be separately approved by the Lender prior to being funded. Although all
Loans will be funded pursuant to the Master Note and the other Loan Documents,
each Loan shall be separately accounted for by Lender.
1.26 Loan Documents. The term "Loan Documents" shall mean the
documents evidencing and securing the Line, any Loan or Loans made by Lender to
Borrower pursuant to the Master Note, and any documents related thereto,
including specifically but not limited to, this Loan Agreement, the Master Deed
of Trust, each Individual Deed of Trust, each Loan, the Financing Statements,
and such other instruments evidencing, securing, or pertaining to any Loan as
shall, from time to time, be executed and delivered by Borrower to Lender.
1.27 Lot. The term "Lot" shall mean a subdivided lot or similar
parcel in a Subdivision, on which one House along with related Improvements is
or is to be located, and which is encumbered by a Deed of Trust.
1.28 Master Deed of Trust. The term "Master Deed of Trust" shall
mean the "Deed of Trust, Security Agreement and Financing Statement" to be
executed and/or recorded at closing of this Agreement. For purposes of this
Agreement, it is agreed that the Borrower shall execute the Master Deed of
Trust at closing, and shall subsequently execute an Individual Deed of Trust
(which shall incorporate all of the applicable provisions of the Master Deed of
Trust) prior to or at the closing of each Loan for the purpose of the purchase
of a Lot and the construction of a House.
1.29 Master Note. The term "Master Note" shall mean the Revolving
Line of Credit Promissory Note made payable by Borrower on the same date
herewith to the order of Lender for the purchase of Late and the construction
of Houses.
1.30 Material Adverse Effect. Any material and adverse effect on
(i) the business condition (financial or otherwise) , operations, prospects,
results of operations, capitalization, liquidity or any properties of the
Borrower, taken as a whole, (ii) the value of the Mortgaged Property, (iii) the
ability of Borrower (or if the Borrower is a partnership, joint venture, trust
or other
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type of business association, of any of the parties comprising Borrower or of
the ground lessor if the estate held by Borrower in the Land is a leasehold
estate) to pay and perform the Indebtedness and the Obligations, respectively,
or (iv) the validity, enforceability or binding effect of any of the Loan
Documents.
1.31 Maximum Lawful Rate. The term "Maximum Lawful Rate" shall
mean the maximum permissible amount which may be paid or agreed to be paid to
Lender or the holder of the Master Note, or collected by Lender or such holder,
for the use, forbearance, or detention of amounts funded under the Master Note
or for the payment of or performance of any covenant or obligation contained in
any of the Loan Documents under applicable federal or Texas usury laws.
1.32 Minerals. All substances in, on, or under the Land which are
now, or may become in the future, intrinsically valuable, that is, valuable
in themselves, and which now or may be in the future enjoyed through extraction
or removal from the property, including without limitation, oil, gas, and all
other hydrocarbons, coal, lignite, carbon dioxide and all other nonhydrocarbon
gases, uranium and all other radioactive substances, and gold, silver, copper,
iron and all other metallic substances or ores.
1.33 Model House. The term "Model House" shall mean a House held by
Borrower for exhibiting a representative House to the public and not at that
time being held or offered for sale, which shall not be subject to an Approved
Purchase Agreement.
1.34 Mortgaged Property. The Land, Minerals, Fixtures,
Improvements, and Personalty, and any interest of Borrower now owned or
hereafter acquired in and to the Land, Minerals, Fixtures, and Personalty,
together with any and all other security and collateral of any nature
whatsoever, now or hereafter given under this Loan Agreement or any other Loan
Document including the Master Deed of Trust and any Individual Deed of Trust
for the repayment of the Indebtedness or the performance and discharge of the
Obligations. As used in this Loan Agreement or any other Loan Document
including the Master Deed of Trust, the term "Mortgaged Property" shall be
expressly defined as meaning all or, where the context permits or requires, any
portion of the above and all or, where the context permits or requires, any
interest therein.
1.35 Obligations. Any and all of the covenants, conditions,
warranties, representations, and other obligations made or undertaken by
Borrower, any Guarantor, or any Constituent Party to Lender, Trustee, or others
as set forth in the Loan Documents, and in any deed, lease, sublease, or ocher
form of conveyance, or any other agreement pursuant to which Borrower is
granted a possessory interest in the Land.
1.36 Original Line. Borrower and Lender entered into a Revolving
Line of Credit Loan Agreement, Master Revolving Line of Credit Promissory Note
and Master Deed of Trust, Security Agreement and Financing Statement on
September 27, 1994, whereby Lender committed a Fifteen Million and No/100
dollars ($15.000,000.00) Revolving Line of Credit (the "Original Line") to
Borrower. (The original Borrower was Newmark Home Corporation, a Texas
corporation which was subsequently known as Newmark Home Corp., a Nevada
corporation which was subsequently known as Newmark Home Corporation, a Nevada
Corporation which is now known as Newmark
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Homes, L.P., a Texas limited partnership). Lender has made loans to Borrower
under the Original Line, with each loan being documented by an Individual Deed
of Trust. This Agreement is intended to amend and replace the original
relationship between Borrower and Lender, and the Line granted by Lender
hereunder is intended to be a modification, renewal and extension of the
original Line. After the execution of this Agreement by Lender and Borrower,
the original relationship will no longer be effective; however, each loan made
under the Original Line will continue to be governed by the Master Revolving
Line of Credit Loan Agreement. Master Revolving Line of Credit Promissory Note
and Master Deed of Trust, Security Agreement and Financing Statement and
Individual Deed of Trust executed in connection therewith. For purposes of
applying the lending limitations, property ratios, loan-to-value ratios, and
other limitations set forth in this Agreement, the individual loans made under
the Original Line will be counted in the calculation of such limitations and
ratios. Specifically, but without limitation, such individual loans shall be
considered in applying the provisions set forth in Article Il. The individual
loans made under the original Line are listed on Exhibit "I", attached hereto
and incorporated herein by reference.
1.37 Permitted Exceptions. The outstanding liens, easements,
building lines, restrictions, security interests and other matters (if any)
listed in a mortgagee title policy binder or a mortgagee policy at title
insurance, to the extent same are valid and subsisting, in full force and
effect and do, in fact, cover or affect the Land described in Exhibit "A"
attached to each individual Deed of Trust.
1.38. Personalty. All of the right, title, and interest of
Borrower in and to (i) furniture, furnishings, equipment, machinery, goods
(including, but not limited to, crops, farm products, timber and timber to be
cut, and extracted minerals); (ii) general intangibles, notes, chattel paper,
money, insurance proceeds, accounts, contract and subcontract rights,
trademarks, tradenames, inventory; (iii) all refundable, returnable, or
reimbursable fees, deposits or other funds or evidences of credit or
indebtedness deposited by or on behalf of Borrower with any governmental
agencies, boards, corporations, providers of utility services, public or
private, including specifically, but without limitation, all refundable,
returnable, or reimbursable tap fees, utility deposits, origination fees and
development costs, any awards, remunerations, reimbursements, settlements, or
compensation heretofore made or hereafter to be made by any Governmental
Authority pertaining to the Land, Improvements, Fixtures, Contracts, or
Personalty, including but not limited to those for any vacation of, or change
of grade in, any streets affecting the Land or the Improvements and those for
municipal utility district or other utility costs incurred or deposits made in
connection With the Land; and (iv) all other personal property of any kind or
character as defined in and subject to the provisions of the Code (Article 9 -
Secured Transactions); any and all of which are now owned or hereafter acquired
by Borrower, and which are now or hereafter situated in, on, or about the Land
or the Improvements, or used in or necessary to the complete and proper
planning, development, construction, financing, use, occupancy, or operation
thereof, or acquired (whether delivered to the Land or stored elsewhere) for
use in or on the Land or the Improvements, together with all accessions,
replacements, and substitutions thereto or therefor and the proceeds thereof.
1.39 Plans. The term "Plaza" shall mean the representative
drawings and specifications, together with any amendments or modifications
thereto, for the construction of the improvements.
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1.40 Prime Rate. The term "Prime Rate- shall mean the rate of
interest announced or published from time to Lime by Nations Bank of Texas,
N.A. ("Bank") or any successor institution designated in writing by Lender and
designated as its Prime Rate, which may not necessarily be the lowest interest
rate charged by Bank. If such Prime Rate shall cease cc be published or is
published infrequently or sporadically, then the Prime Rate shall be determined
by reference to another Prime Rate or similar lending rate index, generally
accepted an a national basis, as selected by Lender in Its sale and absolute
discretion. Fluctuations in the Prime Rate shall become effective on the date
such changes in Bank's Prime Rate are effective.
1.41 Property. The term "Property" shall be inclusive of Lots,
Houses, and Improvements.
1.42 Residential Draw Request. The term "Residential Draw Request"
shall mean a writ application on Lender's prescribed form or other form
acceptable to Lender, certified by Borrower, requesting an advance of funds on
a particular Loan for the payment of costs and expenses of acquisition of a Lot
or the construction of a House, accompanied by such schedules, affidavits,
releases, waivers, statements, invoices, bills, and other documents am Lender
may reasonably request.
1.43 Speculative House. The term "Speculative House" shall mean a
House which is not subject to an Approved Purchase Agreement, and is not a
Model House.
1.44 Subdivision. The term "Subdivision" shall mean a subdivision
which has been finally approved by the applicable Governmental Authority, the
plat of which has been filed and recorded with the County Clerk of the county
in which the property is located, and which has received the approval of
Lender, in writing.
1.45 Term of the Loan. The term "Term of the Loan" shall have the
following meaning: twelve (12) months on Loans for the construction of Build to
Suit Houses; twelve (12) months an Loans for the construction of speculative
Houses; and eighteen (18) months on Loans for the construction of Model houses.
1.46 Trustee. The individual described as Trustee in the initial
paragraph of the Master Deed of Trust.
1.47 VA. The term "VA" shall mean the United States Veterans
Administration and any successors or assigns thereof.
ARTICLE II.
LOAN COMMITMENT
2.1 Revolving Line of Credit. Lender agrees to make and disburse
the Line in the manner and upon the terms and conditions herein provided. The
Line is an agreement under which a Loan or a series of Loans may be made by
Lender to Borrower for the construction of Houses, and for the purchase of the
related Lots. Lender and Borrower agree that for each House constructed,
Borrower
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will be required to obtain from Lender an approved Loan for such purpose.
Each Loan will be separately accounted for by Lender and Borrower, but all such
Loans will be made in accordance with, and subject to this Agreement, the
Master Deed of Trust, the Master Note, and the other Loan Documents. Lender
shall have no obligation to fund or make advances on the Line prior to
fulfillment of any and all conditions and prior performances herein required to
be kept or performed by Borrower as a condition of such Advances.
2.2 Maximum Loan Amount. The maximum aggregate outstanding
principal balance, along with amounts committed but unfunded, on the Line shall
not exceed Fifteen Million and No/100 Dollars ($15,000,000.00) at any time.
Lender and Borrower agree, however, that should the aggregate outstanding
principal balance, along with amounts committed but unfunded, on the Line
exceed Fifteen Million and No/100th Dollars ($15.000,000.00) at any time, then
no new Loans will be processed or approved by Lender until such time that the
outstanding principal balance, along with amounts committed but unfunded, falls
below Fifteen Million and No/100th Dollars ($15,000,000.00). During any period
of time that no new Loans are being processed or approved pursuant to this
paragraph, the Lender will continue to disburse funds under the Line which have
been committed but not yet funded.
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2.3 Term of the Line. Lender's obligation to accept requests for
Loans, or process Loans for approval shall terminate on April 30, 1997. Each
Loan shall be subject to its identified maturity date as provided for in this
Agreement. Each request by Borrower for a Loan must be approved in advance by
Lender in accordance with the terms of this Agreement. Lender may in its sole
discretion renew and extend this Agreement, but Borrower agrees that Lender has
made no commitment, promise, or assurance to renew or extend this Agreement.
Should Lender, in its sole discretion, determine to renew and extend this
Agreement, such renewal and extension may be conditioned upon the execution and
delivery of documents required by Lender, the payment of an extension and
renewal fee to Lender, the provision by Borrower of additional financial
information or collateral to secure this Agreement and the Master Note, or
other conditions or stipulations as required by Lender in its sole discretion.
Any extension of a Loan will require a fee of One Quarter of One percent
(0.25%) of the then current outstanding principal balance of such Loan, plus
any amount committed but unfunded, for each three (3) months of the extension
period. Any extension of a Loan for a period of time less than three (3)
months will require payment of an extension fee based on the number of months,
divided by three (3), multiplied by One Quarter of One percent (0.25%).
Further, the extension of the maturity date on a Loan may be conditioned on the
reduction of the principal balance so as to comply with the Lender's then
current loan policy.
2.4 Subdivisions. Loans shall be made by Lender for the
construction of Houses and the purchase of the related Lots only in
Subdivisions which have been approved in advance by the Lender's Construction
Loan Committee Lender's approval of Subdivisions hereunder shall be at Lender's
sole discretion, and Lender makes no assurance to Borrower that any particular
Subdivision shall be approved, or that any particular guidelines shall be used
in approving Subdivisions.
2.5 Loan-to-Value Ratio on Houses. The amount advanced on any
individual Loan for the construction of a House shall not exceed the following:
A. For Build to Suit Houses, the lesser of (i) seventy-five
Percent (75%) of the appraised value of the house and Lot or (ii)
seventy-five Percent (75%) of the sales price of the House and Lot,
but never more than one hundred Percent (100%) of the cost of the
House and Lot.
B. For Speculative Houses, the lesser of (i) seventy-five Percent
(75%) of the appraised value of the House and Lot or (ii) seventy-five
Percent (75%) of the sales price of the House and Lot, but never more
than one hundred Percent (100%) of the cost of the House and Lot.
C. For Model Houses, the lesser of (i) seventy-five Percent (75%)
of the appraised value of the House and Lot or (ii) seventy-five
Percent (75%) of the sales price of the House and Lot, but never more
than one hundred Percent (100%) of the cost of the House and Lot.
However, notwithstanding these loan-to-value limitations, Lender may
with respect to a specific Loan make an Advance under Article III below for the
purchase of a Lot by Borrower, where the ratio of the amount of the Advance to
the appraised value of the Lot may be as high as one hundred fifteen percent
(115%).
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2.6 Right to Loan Funds. Borrower acknowledges that it has no
right to the funds to be loaned by Lender pursuant to this Agreement other than
to have the same disbursed by Lender in accordance with the provisions of this
Agreement. Borrower agrees that any assignment or transfer, voluntary or
involuntary, of this Agreement, or any rights hereunder, shall not be binding
upon, or in any way affect Lender, without Lender's written consent.
2.7 Release of Houses. So long as Borrower is not in default on
any of the obligations under this Agreement, the Master Note, the Master Deed
of Trust, or the other Loan Documents, and the guarantee of each Guarantor is
in full force and effect, and so long as there does not exist any act, omission
or event, which with notice or the passage of time would constitute an Event of
Default as defined herein, the release of a House and related Lot encumbered by
the Master Deed of Trust or an Individual Deed of Trust, and the release from
the lien created thereby shall be granted to Borrower upon application to
Lender and upon satisfaction of the terms and conditions net forth for a
release in this Agreement, the Master Deed of Trust, the applicable Individual
Deed of Trust, or the other Loan Documents. The requirement for a release
pursuant to this paragraph shall include, but not be limited to, payment by
Borrower of all principal and accrued interest on the Loan applicable to the
House for which Borrower has requested a release.
2.8 Payment of Principal and Maturity. The outstanding principal
balance on any and every Loan shall be due and payable at the earlier of (a)
the maturity of the Loan as defined in this paragraph, or (b) the release of
any Property securing such Loan. The maturity of each Loan for the construction
of Speculative Houses shall be twelve (12) months from the date of the
execution of the Individual Deed of Trust. The maturity of each Loan for the
construction of Build to Suit Houses shall be twelve (12) months from the date
of the execution of the Individual Deed of Trust. The maturity of each Loan for
the construction of Model Houses shall be eighteen (18) months from the date of
the execution of the Individual Deed of Trust.
2.9 Interest. The interest rate applicable to the Line shall be
calculated, accrued, and paid separately and independently for each Loan on the
basin of a 365 day year or 366 day year as in applicable, and shall accrue on
the actual number of days any principal and interest balance hereof in
outstanding. All accrued and unpaid interest on each Loan shall be paid
monthly. Interest accrued but not owing shall be paid in full at the earlier
of the payoff or the maturity of each Loan. The interest rate on each Loan
shall be a floating rate calculated on a daily basin equal to the Prime Rate
plus One Half of One Percent (0.50%).
2.10 Loan Origination Fees. The Borrower agrees to pay an
origination fee in connection with each Loan for the construction of a House,
such origination fee to be calculated as a percentage of the Committed Loan
Amount. The origination fee shall he paid by Borrower upon execution of the
Individual Deed of Trust applicable to such Loan. The amount of the
origination fee shall be calculated as follows:
A. One Quarter of One Percent (0.25%) for Build to suit houses.
B. One Quarter of One Percent (0.25%) for Speculative Houses.
C. One Quarter of One Percent (0.25%) for Model Houses.
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2.11 Inspection Fees. The Borrower agrees to pay an inspection fee
of Twenty-five and No/l00 Dollars ($25.00) per advance, such inspection fee to
be paid to Lender out of the amounts advanced to Borrower on the Loan.
2.12 Appraisal Fees. The Borrower agrees to pay any appraisal fees
reasonably incurred by Lender with respect to each Loan, such appraisal fees to
be paid to Lender out of the amounts advanced to Borrower on the Loan.
2.13 Legal and Other Fees. Borrower will reimburse Lender for all
expenses of Lender, including reasonable attorneys' fees incurred an hourly
basis, not to exceed ten percent (lot) of the principal and interest
outstanding under the Line, incurred in connection with the preparation,
execution, delivery, administration, and performance of the Loan Documents, as
well as all expenses of Lender, including attorneys' fees, incurred in
connection with the preparation of the Loan Documents applicable to each Loan,
or in connection with any renewal, modification, or amendment of this Agreement
or the Loan Documents.
2.14 Sale of Houses. Borrower covenants not to rent, sell, or
contract to sell any House terms which do not include the payment of amounts
due to Lender pursuant to this Agreement, including the assumption of the Loan
Documents by the purchaser, Without first obtaining the prior written consent
of the Lender. A violation of this provision shall constitute on an Event of
Default hereunder, and under the Loan Documents.
2.15 Application of Sale Proceeds. Borrower shall pay to Lender
the proceeds from the sale of each House to be applied to the repayment of
amounts due under the Loan applicable to such House in accordance with the
terms of the Loan Documents; provided, however, that the foregoing shall not be
construed to imply that such proceeds shall be the only source of payment for
amounts due under a particular Loan or the Line, and it is understood that
Borrower shall use any and all funds available to Borrower for the purpose of
such repayment.
2.16 Model and Speculative Houses. Notwithstanding the number of
Subdivisions in which Borrower is constructing Houses, Borrower shall not have
more than twelve (12) Loans outstanding at any time for the construction of
model Houses. Further, the total outstanding committed balance of the Loans
outstanding under the Line Speculative and Model Houses shall not exceed Ten
Million and No/100 Dollars ($10,000,000.00) from the date of this Agreement
until April 30, 1997 or Seven Million Five Hundred Thousand and No/100th
Dollars ($7,500,000.00) from May 1, 1997 until the termination date as set out
in Section 2.3 under this Agreement.
ARTICLE III.
ADVANCES ON LOANS
3.1 Advances. Subject to the provisions of this Agreement, and
provided that (a) neither on an Event of Default, nor on an event or condition
which with the giving of notice or the passage of time, or both, as prescribed
herein, would constitute on an Event of Default, has occurred and is
continuing, and (b) Lender has not made demand for payment of the applicable
Loan, Lender will make advances to Borrower from or out of the Committed Loan
Amount relating to a particular Loan
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for the construction of a House as construction progresses, in accordance with
the Residential Draw Request indicating the stage of completion requested for
disbursement. Notwithstanding any limitations or other provisions hereof to the
contrary, with respect to the initial Residential Draw Request a specific Loan
for the purchase of a Lot, Lender may fund the lesser of (i) one hundred
fifteen percent (115%) of the appraised value of the Lot; or (ii) one hundred
percent (100%) of the cost of the Lot plus all related costs to include but not
be limited to, attorneys' fees, loan origination fees, appraisal fees,
inspection fees, title insurance costs, and related fees. The total advances
made under all Residential Draw Requests with respect to a specific Loan should
not exceed the loan-to-value ratios set forth in Section 2.5 above.
Prior to Lender making any advance on a Loan, Borrower shall submit to
Lender a request in writing for each advance, along with a Borrower's Affidavit
in the form attached hereto as Exhibit "F". After receipt of the request for
an advance, along with Borrower's Affidavit, and following inspection of the
Property, Lender will make advances as determined to be appropriate for the
then current stage of completion.
Lender may require evidence that no laborer's or materialmen's liens
have been filed prior to advancing funds. Borrower further agrees that, upon
receipt of any advance on a Loan hereinbefore mentioned, said funds shall be
immediately disbursed to pay in full all contractors and/or materialmen and/or
laborers (other than the Borrower) then or theretofore engaged in said
construction, to the end that all funds disbursed hereunder shall be used to
pay all charges incurred for material and/or labor used in said construction.
Lender, at its option, but without obligation to do so, upon on an
Event of Default or the occurrence of on an event which with the passage of
time or giving of notice, or both, would constitute on an Event of Default, may
apply amounts advanced to any Loan or any portion thereof relating to a House in
payment of insurance premiums, taxes, assessments, liens or exceptions existing
against the applicable House, interest accrued and payable upon the Loan and
any charges or matters necessary to preserve or protect the Property or to cure
any default by Borrower under this Agreement or any other of the Loan
Documents.
Advances for the payment of costs of labor, materials or services for
the construction of Houses shall be made by Lender to Borrower or, upon on an
Event of Default which has not been cured, directly to third parties at
Lender's option, upon compliance by Borrower with this Agreement after actual
commencement of construction hereunder, for work actually done during the
preceding period. Advances shall be made no more frequently than weekly for
each Loan, with a maximum of five (5) advances for each Loan.
3.2 Advances to Borrower. Lender shall have no obligation to see
that the payments made by it to Borrower or to any designee of Borrower are
actually used by said party to pay for labor and materials furnished and used
in the construction of the Improvements. Borrower understands its
responsibility under the prior sentence and assumes all risks in connection
with any disbursement to such designee. Disbursements by Lender pursuant to
any disbursement request executed by Borrower shall be conclusively presumed to
be a proper disbursement under this Agreement.
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3.3 Lien Waivers. Lender is expressly authorized to withhold in
its discretion any payment or portion thereof until releases of lien, waivers,
liens or paid bills in form satisfactory to it are furnished. Lender shall
have no obligation to require and/or obtain lien waivers or receipts, and
although Lender requires presentation to it of lien waivers and/or receipts,
Lender shall have no responsibility for the validity thereof nor for the
correctness of the amounts indicated thereon. No disbursement by Lender shall
constitute approval of any certification or relieve any person making such
certification or responsibility therefor.
3.4 Charges. Upon on an Event of Default which has not been cured,
all charges and expenses relating to the Loan which are the obligation of
Borrower under this Agreement or any of the other Loan Documents may, from time
to time, be paid by Lender and charged against undisbursed Loan funds. Each
advance of Loan funds for the purpose of paying any charge or expense shall be
treated as on an advance of principal under the Master Note or Loan Documents.
3.5 Use of Loan Funds. Upon on an Event of Default which has not
been cured, the Loan funds may be used, in Lender's discretion, for payment
first, of accrued interest or late charges, second, of dischargeable exceptions
against the Property related thereto, third, of any expenses of title
insurance, legal fees, or other costs in connection with such Property, and
fourth, of the costs of the acquisition of such Lot and the costs of
construction of Improvements such Lot. However, no portion of the Loan funds
shall be used to pay accrued interest.
3.6 Borrower's Deposit. If at any time, or from time to time,
Lender, in the exercise of its reasonable discretion, determines that the total
of the previously disbursed Loan funds and the remaining undisbursed Loan funds
as to any Property are less than one hundred percent (100%) of the then total
costs of the Improvements contemplated for such Property, and payment of all
fees, charges, costs and contingencies which are the obligation of Borrower
pursuant to the terms hereof for such Property, then Lender may demand in
writing that the amount which, when added to the then undisbursed Loan funds,
will be sufficient to complete the Improvements and make such payments with
respect to such Property, shall be deposited with Lender to insure such
completion and payment. Such deposit shall be defined herein as the "Borrower's
Deposit." Borrower shall, within ten (10) days after demand, deposit with
Lender the amount of such deficiency as determined by Lender, which may be held
in on an interest bearing account (and if held by Lender in its general
accounts or separate interest bearing account any earnings thereon shall be
payable to or accrue to the benefit of Borrower). Until such funds have been
deposited with Lender, Lender shall have no duty to make any further advances
of Loan funds. All funds so deposited by Borrower pursuant to this paragraph
shall be disbursed by Lender in the manner provided herein for disbursement of
the Loan funds and in such order as Lender may select. All such funds are
hereby assigned to Lender as additional security for the indebtedness of
Borrower arising hereunder, and may be applied in satisfaction of Borrower's
obligations to Lender the occurrence of on an Event of Default.
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ARTICLE IV
CONDITIONS OF LENDING
The obligations of the Lender to fund the Line, and make the Loans
pursuant to this Agreement are subject to the conditions precedent stated in
this Article IV.
4.1 Revolving Line of Credit Closing. In addition to the
requirements and conditions stated elsewhere in this Agreement, the obligation
of Lender to fund the Line, and make the first Advance thereunder in subject to
the satisfaction, occurrence and/or existence of each of the conditions set
forth in Exhibit "A" attached hereto or prior to the Cloning Date. Lender may
make the initial Advance under the Line notwithstanding the fact that one or
more of such conditions have not been satisfied, have not occurred or do not
exist, but such action by Lender shall not be deemed to be a waiver of the
requirement that any such condition be satisfied, have occurred and/or exist as
a condition precedent to any subsequent Advance.
4.2 Conditions to Approval of Loans. Prior to Lender approving a
Loan, or making any advance of funds to a Loan for the purchase of a Lot and the
construction of a House, Borrower shall satisfy, with respect to each
Property, the following express conditions precedent:
A. Borrower shall have executed and delivered to Lender the
following:
1. On an appropriate Loan request satisfactory to the
Lender.
2. On an Individual Deed of Trust granting to Lender a
valid and enforceable first lien security interest in the
Property to be purchased and improved with the proceeds of the
Loan, such Individual Deed of Trust to be in the form attached
hereto as Exhibit "D".
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3. Any other security documents, including UCC-1
financing statements, that may be reasonably required by
Lender with respect to the Property.
B. Plans and Budgets. Plans and construction budgets for each
House to be constructed for any Lot shall have been approved by Lender.
No material changes, modifications or supplements shall be made in the
plans or budgets without obtaining Lender's consent. Borrower shall
have also provided to Lender a current schedule of sales prices for
each House or Lot.
C. Public Utilities. Borrower shall, at its expense, provide
evidence satisfactory to Lender that water, sewer, gas, electric,
telephone, and other public utilities are available without impediment
or delay and are provided to the Property in amounts which are
adequate to service the Property. Borrower represents that all roads,
curbs, gutters and other off-site and on-site development improvements
have been completed and are sufficient to permit the construction of
the Houses in accordance with the plans and applicable Governmental
Requirements and will provide to Lender acceptance letters of such
improvements from the applicable Governmental Authorities, as
required.
D. Insurance. Borrower will obtain and maintain insurance upon
and relating to the Property with such insurers, in such amounts and
covering such risks as shall be satisfactory to Lender, from time to
time, including but not limited to: (i) owner's and contractors'
policies of comprehensive general public liability insurance
(including automobile coverage); (ii) hazard insurance against all
risks of loss, including collapse, in on an amount not less than the
full replacement coat of all Improvements, including the cost of
debris removal, with annual agreed amount endorsement and sufficient
at all times to prevent Borrower from becoming a coinsurer; (iii) if
the Property is in a "Flood Hazard Area," a flood insurance policy, or
binder therefore, in on an amount equal to the principal amount of the
Line or the maximum amount available under the Flood Disaster
Protection Act of 1973, and regulations issued pursuant thereto, as
amended from time to time, whichever is less, in form complying with
the "insurance purchase requirement" of that act; and (iv) such other
insurance, if any, as Lender may require from time to time. Each
insurance policy issued in connection herewith shall provide by way of
endorsements, riders or otherwise that (a) with respect to liability
insurance, it shall name Lender as on an additional insured, with
respect to the other insurance, it shall be payable to Lender as a
mortgagee and not as a coinsured; (b) the coverage of Lender shall not
be terminated, reduced, or affected in any manner regardless of any
breach or violation by Lender of any warranties, declarations, or
conditions in such policy; (c) no such insurance policy shall be
canceled, endorsed, altered, or reissued to effect a change in
coverage for any reason and to any extent whatsoever unless such
insurer shall have first given Lender thirty (30) days' prior written
notice thereof; and (d) Lender may, but shall not be obligated to,
make premium payments to prevent any cancellations, endorsement,
alteration, or reissuance, and such payments shall be accepted by the
insurer to prevent same. Lender shall be furnished with the original
of each such initial policy coincident with the execution of the
Individual Deed of Trust listing the relevant portion of the Property,
and the original of each renewal policy not less than ten (10) days'
prior to the expiration of the initial, or each immediately preceding
renewal policy, together with receipts
17
or other evidence that the premiums thereon have been paid for a
period acceptable to the Lender.
E. Insurance Reporting. Borrower shall furnish to Lender, or
before thirty (30) days after the close of each of Borrower's fiscal
years, a statement certified by Borrower or a duly authorized officer
of Borrower of the amounts of insurance maintained in compliance
herewith, of the risks covered by such insurance and of the insurance
company or companies which carry such insurance.
F. Foundation Survey. Borrower shall, at its expense, furnish to
Lender a foundation survey, showing that the Improvements are located
within all applicable building and set-back lines and that the
Improvements otherwise conform to all applicable Governmental
Requirements.
G. Mortgagee Title Policy Binder and Interim Construction Loan.
Borrower shall, at its expense, have provided Lender with a Mortgagee
Title Policy Binder Interim Construction Loan providing for the
issuance of a Mortgagee Policy of Title insurance insuring the lien of
the Master Deed of Trust to be a first lien upon the Property subject
only to such other exceptions as Lender may expressly approve in
writing contingent only payment of the premium coat for the policy.
Such binders and any policies shall be issued by a title insurance
company and underwriter satisfactory to Lender. Lender shall have the
right, at Borrower's expense, to receive endorsements to such binders
at the time of each disbursement, insuring such matters as Lender may
require, including that no liens or other exceptions have been placed
against the Property, adjacent property or easement as well as upon
extension of the Loan. Any endorsement required to extend ouch
coverage or otherwise protect Lender's interests shall be obtained at
Borrower's expense.
H. Taxes. Borrower shall, at its expense, have provided evidence
satisfactory to Lender that all taxes and assessments levied against
or affecting the Property have been paid and are current. Borrower
shall not be required to supply tax receipts unless specifically
requested by Lender.
I. Flood Hazard. Borrower shall, at its expense, have provided a
certificate from the project engineer certifying as to the existence
of any "special flood hazard area" affecting the Property. If the
Property, or any part thereof, lies within a "special flood hazard
area" as designated maps prepared by the Department of Housing and
Urban Development, and if National Flood Insurance is available,
Borrower shall, at its expense, provide Lender with a National Flood
insurance Association Standard Flood Insurance Policy of the Property
for the duration of the Loan in on an amount acceptable to Lender. If
such coverage is not available, or if no part of the Property falls
within a special flood hazard area, then Borrower shall, at its
expense, provide Lender with a statement to that effect from
Borrower's insurance agent or engineer.
J. Building Permits. If requested by Lender, Borrower shall, at
its expense, provide Lender with copies of all building permits and
approvals required to be issued under all
18
applicable Governmental Requirements (including zoning, subdivision and tract
map requirements) or restrictive covenants affecting the construction of the
Improvements, and shall furnish Lender with evidence of compliance with all
applicable "environmental protection" laws, rules and regulations, whether
federal, state or municipal. To this end, if requested by Lender, Borrower
shall provide to Lender: (i) a copy of the zoning ordinance for the Property
(or if none a letter from the applicable municipal or county authority so
stating addressed to Lender, (ii) FHA/VA/FNMA subdivision approval letters
(forms 92258 and 92051), if applicable, (iii) a copy of any Subdivision
restrictive covenants or other deed restrictions affecting the Property, and
(iv) three (3) full size blueline copies of the final recorded plat of each
Subdivision.
K. Warranty Program. If Borrower is a member of the Home
Warranty Council or any similar warranty program, if Lender so
requests, Borrower shall deliver evidence of such membership to
Lender.
L. Contractors. If requested by Lender, Borrower shall furnish
Lender correct lists of all contractors and subcontractors employed in
connection with the construction of Houses. The list shall show the
name, address, and telephone number of each such contractor and
subcontractor, a general statement of the nature of the work to be
done, the labor and material to be supplied, the names of materialmen,
if known, and the approximate dollar value of such labor or work with
respect to each. Lender shall have the right to make direct contact
with each contractor, subcontractor, and materialman to verify the
facts disclosed by said list or for any other purpose as well as to
require a collateral assignment of such contracts to Lender (with the
contractor's or materialman's consent thereto) as additional security
for the Loan. All contracts let by Borrower or its contractors
relating to construction of a House shall require them to disclose to
Lender information sufficient to make said verification.
M. Damage or Lose of Property. No portion of the Property, which
portion would materially and adversely affect any Property for which
on an advance has been requested the Property as a whole, shall (i)
have been damaged by fire or other casualty and not restored to the
satisfaction of Lender; (ii) have been taken by condemnation, eminent
domain or similar proceeding; or (iii) be subject to any actual or
threatened action or proceeding in condemnation, eminent domain or
similar proceeding before any court, administrative agency or other
Governmental Authority, unless Lender shall have
19
received insurance proceeds or additional Borrower's funds sufficient
in the judgment of Lender to effect the satisfactory restoration of
the Property and to permit completion thereof.
N. Inspection. A satisfactory inspection of the Property by a
representative of Lender shall have been completed and such
representative shall have certified to Lender that the construction to
date is in accordance with the plans.
0. Appraisals. At Borrower's expense, Lender shall order and
obtain appraisals from a licensed appraiser acceptable to Lender,
valuing proposed Houses as if they were completed based upon the plans
for the Houses, such appraisals to be satisfactory to FHA, VA or FNMA,
as applicable.
P. Property Reports. Borrower shall have furnished to Lender
such Property reports as Lender may from time to time request, either
with respect to each Subdivision as a whole or to individual
Properties, which may be requested prior to funding the Loan with
respect to any Property and prior to any subsequent advance with
respect to any Property. The Property reports will include, but not
be limited to, any one or more of the following: (i) a soils report,
acceptable in form and content to Lender, from a licensed soils
engineer accompanied by a letter from the engineer stating that the
soil conditions are satisfactory to support the Improvements and
recommending the appropriate foundation design for the Houses _?_ such
Property and other recommendations for construction of the
improvements, all of which recommendations shall be reflected in t lie
plans; and (ii) on an environmental engineering report, the form and
content of which and the individual or firm preparing the report must
be acceptable to Lender, presenting the results of on an investigation
of the Property and such contiguous property as may be appropriate in
light of the environmental laws and regulations relating to toxic or
hazardous wastes, waste products or other hazardous substances and
emissions affecting the Property.
Q. Architect. If Lender requests, Borrower shall furnish to
Lender a certification by the architect or engineer for any approved
Subdivision, who must be satisfactory to Lender, or other evidence
satisfactory to Lender, that the improvements to be constructed and
the intended use of the Lot and Property comply with all applicable
zoning, subdivision, building, health, traffic, environmental, safety
and other laws, regulations and rules applicable to the Property, and
with other fire, safety and health standards deemed to be reasonable
and applicable to the Property by Lender or Lender's engineer.
R. Purchase Agreement. Borrower shall have furnished to Lender a
copy of (i) the purchase agreement for each Property, (ii) the
purchaser's closing statement from the title company closing the
purchase identifying the Property, (iii) the deed of such Property
into Borrower, and (iv) a current price list for each House to be
built.
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ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower hereby represents and warrants the following to Lender, as
material inducements to Lender entering into this Agreement and making Advances
hereunder:
5.1 Accuracy of Financial Statements and Other information. All
information, financial statements, reports, papers, and data given or to be
given to Lender with respect to Borrower, each Constituent Party, each
Guarantor, others obligated under the terms Of the Loan Documents, or the
Property are, or at the time of delivery will be, accurate, complete, and
correct in all material respects and do not, or will not, omit any fact, the
inclusion of which is necessary to prevent the facts contained therein from
being materially misleading. Since the date of the financial statements
of Borrower, any Constituent Party, or of any Guarantor or other party liable
for payment of the Indebtedness or performance of the obligations or any part
thereof heretofore furnished to Lender, no Material Adverse Effect has
occurred, and except as heretofore disclosed in writing to Lender, Borrower,
each Constituent Party, each Guarantor, or any other such party has not
incurred any material liability, direct or indirect, fixed or contingent.
5.2 Taxes. Borrower, each Constituent Party, and each Guarantor
have filed all federal, state, county, municipal, and city income and other tax
returns required to have been filed by them and have paid all taxes and related
liabilities which have become due pursuant to such returns or pursuant to any
assessments received by them. Neither Borrower, any Constituent Party, nor any
Guarantor knows of any basis for any additional assessment in respect of any
such taxes and related liabilities.
5.3 Suits, Actions. Etc. There are no (i) material actions,
suits, or proceedings at law or in equity pending or, to the best of Borrower's
knowledge and belief, after due inquiry, threatened in any court or before or
by any Governmental Authority or arbitrator against or affecting Borrower, any
Guarantor or any Constituent Party or involving the Property, or involving the
validity, enforceability, or priority of any of the Loan Documents,
(ii)outstanding or unpaid judgments against the Borrower, any Guarantor, any
Constituent Party, or the Property; or (iii) defaults by Borrower, any
Guarantor, or any Constituent Party with respect to any order, writ,
injunction, decree, or demand of any Governmental Authority or arbitrator. The
consummation of the transactions contemplated hereby, and the performance of
any of the terms and conditions hereof and of the other Loan Documents, will
not result in a breach of, or constitute a default in, any mortgage, deed of
trust, deed to secure debt, lease, promissory note, loan agreement, credit
agreement, partnership agreement, or other agreement to which Borrower, any
Guarantor, or any Constituent Party is a party or by which Borrower, any
Guarantor, or any Constituent Party may be bound or affected.
5.4 Valid and Binding Obligation. The execution, delivery, and
performance by Borrower of the Loan Documents (other than the Guaranty), (a)
if Borrower, or any signatory who signs its behalf, is a corporation, general
partnership, limited partnership, joint venture, trust, or other type of
business association, as the case may be, are within Borrower's and each
Constituent Party's powers and have been duly authorized by Borrower's and
each Constituent Party's a board of
21
directors, shareholders, partners, venturers, trustees, or other necessary
parties, and all other requisite action for such authorization has been taken,
(b) have received any and all requisite prior governmental approvals in order
to be legally binding and enforceable in accordance with the terms thereof, and
(c) will not violate, be in conflict with, result in a breach of, or constitute
(with due notice or lapse of time, or both) a default under or violation of any
Legal Requirement or result in the creation or imposition of any lien, charge,
or exception of any nature whatsoever upon any of Borrower's and any
Constituent Party's or Guarantor's property or assets, except as contemplated
by the provisions of the Loan Documents. The Loan Documents constitute the
legal, valid, and binding obligations of Borrower, each Guarantor, and others
obligated under the terms of the Loan Documents, enforceable in accordance with
their respective terms.
5.5 Title to the Borrower. Borrower has good and indefeasible
title to the Land (in fee simple, if the lien created hereunder be the fee, or
a first and prior leasehold estate, if it be created the leasehold estate) and
Improvements, and good and marketable title to the Fixtures and Personalty,
free and clear of any liens, charges, exceptions, security interests, claims,
easements, restrictions, options, leases, covenants, and other rights, titles,
interests, or estates of any nature whatsoever, except the Permitted
Exceptions. The Master Deed of Trust constitutes a valid, subsisting first
lien the Land, the Improvements, and the Fixtures, and a valid, subsisting
first priority security interest in and to the Personalty.
5.6 Commencement of Construction. Prior to the recordation of any
Individual Deed of Trust, no work of any kind (including the destruction or
removal of any existing improvements, site work, clearing, grubbing, draining,
or fencing of the Property) commenced or was performed the Property by
Borrower, no equipment or material shall have been delivered to or upon the
Property for any purpose whatsoever, and no contract (or memorandum or
affidavit thereof) for the supplying of labor, materials, or services for the
construction of the improvements shall have been recorded in the mechanic's
lien or other, appropriate recorda iii the county where the Property is
located.
5.7 Continuing Effect. All representations and warranties made by
Borrower in this Agreement and the Master Deed of Trust shall be true and
correct on an the date hereof, and the date of execution of each Loan and
Individual Deed of Trust and related documents each Property, and shall
continue to be true and correct for the term of this Agreement.
22
ARTICLE VI.
COVENANTS AND AGREEMENTS OF BORROWER
6.1 Payment and Performance. Borrower will pay the Indebtedness
as and when specified in the Loan Documents, and will perform and discharge all
of the obligations, in full and or before the dates same are required to be
performed.
6.2 Compliance with Governmental Requirements. Borrower shall
timely comply with all Governmental Requirements and deliver to Lender and to
Lender's legal counsel ouch evidence thereof as shall be acceptable to such
legal counsel. Borrower assumes full responsibility for the compliance of the
plans and, from and after the date of acquisition of the Property with respect
to all actions Borrower is required to take to perform hereunder, of the
Property with all Governmental Requirements and with sound building and
engineering practices and, notwithstanding any approvals by Lender, Lender
shall have no obligation or responsibility whatsoever for the Plans or any
other matter incident to the Property or the construction of the Improvements.
6.3 No Security Interests. Borrower will protect the first lien
and security interest status of the Master Deed of Trust, each Individual
Deed of Trust and the other Loan Documents and will not permit to be created or
to exist in respect of the Mortgaged Property, or any part thereof, any lien or
security interest in party with, superior to, or inferior to any of the liens
or security interests hereof, except for the Permitted Exceptions and UCC
Financing statements covering the fixtures to be included in each House.
Without the prior written consent of Lender, no materials, equipment, fixtures
or any other part of the Improvements shall be purchased or installed under
security agreements, conditional sale contracts or lease agreements, or other
arrangement wherein a security interest or title to said property is retained
or the right is reserved or accrues to anyone to remove or repossess any such
items or to consider them as personal property.
6.4 Construction Quality. The Improvements shall be constructed
in a good and workmanlike manner, with new materials of good quality, in
keeping with current construction standards, and shall comply with all
applicable ordinances and statutes, zoning laws, all covenants and restrictions
running with the land, and all regulations and environmental protection, use
and building codes, laws, ordinances and regulations of any Governmental
Authority. All Improvements shall be constructed entirely their respective
Lots, and shall not encroach upon or overhang any easement or right of way.
6.5 Commencement of Construction. Unless otherwise agreed in
writing by Lender, Borrower covenants that work the Improvements to any Lot
and House shall commence within fourteen (14) days after execution of the
Individual Deed of Trust relating to the construction of Improvements with
respect to such Lot and House, subject to forces of nature beyond the control
of Borrower, and that upon commencement, construction shall proceed without
interruption. Construction of Houses shall be completed or before eight (8)
months from the date of the Individual Deed of Trust relating to such Lot and
House. The Improvements shall be completed according to the plans, and be free
and clear of all liens, claims of or right to liens, and other
23
exceptions of all kinds whatsoever other than current tax or assessment liens
or any other liens or exceptions approved by Lender.
6.6 Use of Materials. Borrower represents and warrants to Lender
that all materials contracted or purchased for delivery to the Property or for
use in construction, and all labor contracted or hired for or in connection
with construction of the Improvements, shall be used and employed solely the
Property or for construction of Improvements the Property and for no other
purpose. Borrower will promptly pay all bills for labor, materials, and
specifically fabricated materials incurred in connection with the Mortgaged
Property and no materials, equipment, fixtures or any other part of the
Improvements, or articles of personal property placed the Lots, shall be
purchased or installed under any conditional sales contract, security agreement
or other arrangement wherein the seller reserves or purports to reserve title
to or the right to remove or to repossess any such items or to consider them
personal property after their incorporation in the work of construction, unless
specifically authorized by Lender in writing.
6.7 Additional Documents. Borrower shall execute and deliver to
Lender, from time to time as requested by Lender, such other documents as shall
be reasonably necessary to provide the rights and remedies to Lender granted or
provided for by the Loan Documents. From time to time, at the request of
Lender, Borrower will (i) promptly correct any defect, error, or omission which
may be discovered in the contents of the Loan Documents or in the execution or
acknowledgment thereof; (ii) execute, acknowledge, deliver, record and/or file
such further instruments (including, without limitation, further deeds of
trust, security agreements, financing statements, continuation statements and
assignments of rents or leases) and perform such further acts and provide such
further assurances as may be necessary, desirable, or proper, in Lender's
opinion, to carry out more effectively the purposes of this Loan Agreement and
the Loan Documents and to subject to the liens and security interests hereof
and thereof any property intended by the terms hereof or thereof to be covered
hereby or thereby, including without limitation, any renewals, additions,
substitutions. replacements, or appurtenances to the Mortgaged Property; (iii)
execute, acknowledge, deliver, procure, file, and/or record any document or
instrument (including without limitation, any financing statement) deemed
advisable by Lender to protect the liens and the security interests herein
granted against the rights or interests of third persons; and (iv) pay all
costs connected with any of the foregoing.
6.8 No Liability of Lender. Lender shall have no liability,
obligation, or responsibility whatsoever with respect to the construction of
the Improvements except to fund the Line pursuant to this Agreement. Lender
shall not be obligated to inspect the Property or the construction of the
Improvements, nor be liable for the performance or default of Borrower or any
other party, or for any failure to construct, complete, protect, or insure the
Improvements, or for the payment of costs of labor, materials, or services
supplied for the construction of the Improvements, or for the performance of
any obligation of Borrower whatsoever. Nothing, including without limitation
any Loan or acceptance of any document or instrument, shall be construed as a
representation or warranty, express or implied, to any party by Lender.
24
6.9 Financial Statements and Reports. The Borrower will promptly
furnish to the Lender from time to time upon request such information regarding
the business and affairs and financial condition of the Borrower as Lender may
reasonably request, and the Borrower will furnish to the Lender.
A. Annual Reports. Promptly after becoming available and in any
event within ninety (90) days after the close of each fiscal year of
the Borrower a balance sheet of the Borrower, as at the end of such
year; the statements of profit and loss of the Borrower for such year;
and the statements of reconciliation of capital accounts of the
Borrower for such year, 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 generally accepted accounting principles
consistently followed throughout the period indicated except for such
changes and 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 calendar quarter and each fiscal year of the Borrower, the
consolidated balance sheet of the Borrower as of the end of such
calendar quarter, and the consolidated statements of profit and lose
of the Borrower for such quarter and for the period from the beginning
of the fiscal year to the end of such quarter;
C. Inventory Status Report. Promptly after becoming available
and in any event within ninety (90) days after the end of each
calendar quarterly, the Borrower shall provide to Lender on an
Inventory Status Report and a Sales Report with respect to all Lots
and Houses financed under this Agreement indicating (i) sales of Lots
or Houses, (ii) as to completed Houses, whether or not they are
subject to a contract for Sale, (iii) as to Houses under construction,
whether or not they are Build to Suit Houses, Speculative Houses, or
Model Houses, and (iv) such other information as the Lender may
reasonably request;
D. Contingent Liabilities. As soon as available, and in any
event, within ninety (90) days after the end of each fiscal year of
the Borrower, a statement of contingent liabilities of the Borrower;
E. Reviewed Reports. Promptly upon receipt thereof, one copy of
each other report submitted to the Borrower by independent accountants
in connection with any annual, interim, or special audit made by them
of the books of the Borrower.
6.10 Mergers; Ownership. Borrower will and will cause each
Constituent Party to preserve and keep in full force and effect its existence
(separate and apart from its affiliates), rights, franchises and trade names.
The Borrower will not merge or consolidate with or sell, assign, lease or
otherwise dispose of all or substantially all of its assets (whether now owned
or hereafter acquired) to any person; nor will the Borrower permit any
amendment, alteration, dissolution, or other substantial change to the limited
partnership agreement evidencing the existence of Borrower nor will Borrower
transfer or assign any partnership interest. Further, during the term of the
Loan,
25
Newmark Home Corporation and NHC Homes, the greater of the face or market value
thereof, any of its Inc. shall remain the only equity interest owner(s) of
Borrower.
6.11 Sale or Discount of Receivables. The Borrower will not
discount or sell with recourse, or sell for less than notes receivable or
accounts receivable.
6.12 Ratio of Total Liabilities to Tangible Net Worth. The
Borrower will not permit its ratio of (i) total liabilities, including
contingent liabilities, to (ii) tangible net worth to be greater than five to
one at any time. As used in this section, "tangible net worth" shall mean the
sum of the partner's capital accounts. The ratio shall be calculated monthly,
and in the event that Borrower's total liabilities to tangible net worth ratio
shall exceed 5 to 1 the calculation date, Borrower shall have ninety (90) days
to reestablish the proper ratio. If the ratio is not properly reestablished
within such ninety (90) day period, Lender shall not approve any new Loans
pursuant to this Agreement until such time that Borrower provides. Financial
Statements demonstrating a total liabilities to tangible net worth ratio no
greater than 5 to 1. Lender may in its sole discretion waive the requirements
of this paragraph, but any such waiver shall not be, nor be construed as a
continuing waiver, and Lender can enforce the provision of this paragraph at
anytime following such waiver.
6.13 Costs and Expenses. Borrower will pay demand all reasonable
and bona fide out-of-pocket costs, fees, and expenses and other expenditures,
including, but not limited to, reasonable attorneys' fees and expenses, paid or
incurred by Lender or Trustee to third parties incident to these Loan Documents
(including without limitation, reasonable attorneys' fees and expenses in
connection with the negotiation, preparation, and execution hereof and of any
other Loan Document and any amendment hereto or thereto, any release hereof,
any consent, approval or waiver hereunder or under any other Loan Document, the
making of any advance under the Note, and any suit to which Lender or Trustee
is a party involving these Loan Documents or the Mortgaged Property, third
party inspection fees paid by Lender, closing costs, title insurance premiums
and survey costs) or incident to the enforcement of the indebtedness or the
exercise of any right or remedy of Lender under any Loan Document.
6.14 Reporting Requirements. Within thirty (30) days after the end
of each quarter, Borrower shall furnish to Lender, in a form acceptable to
Lender, a report containing, but not limited to the following information: (1)
quarterly inventory report covering Lots and Houses; (2) quarterly sales report
covering Houses; (3) quarterly starts Houses; (4) quarterly closings Houses;
(5) new subdivisions in which Borrower intends to purchase Lots and construct
Houses; (6) any new lenders from whom Borrower has or will be obtaining
financing or loans of any kind; (7) if requested by Lender, current list of all
subcontractor being used by Borrower; and (8) if requested by Lender, current
list of all suppliers being used by Borrower.
6.15 Tangible Net Worth. Borrowers tangible net worth shall not be
less than Nine Million and No/100th Dollars ($9,000,000.00) at any time during
the period that amounts are outstanding under the Line. As used in this
section, "tangible net worth" shall have the same meaning as set out in
Section 6.12 above. The tangible net worth shall be calculated quarterly, and
in the event that Borrower's tangible net worth shall be less than Nine Million
and No/100 Dollars ($9,000,000.00) any calculation date, Borrower shall have
ninety (90) days to reestablish the proper
26
tangible net worth. If the tangible net worth is not properly reestablished
within such ninety (90) day period, Lender shall not approve any new Loans
pursuant to this Agreement Until such time that Borrower provides Financial
Statements demonstrating a tangible net worth of at least Nine Million and
No/100th Dollars ($9,000,000.00). Lender may in its sole discretion waive the
requirements of this paragraph, but any such waiver shall not be, nor be
construed as a continuing waiver, and Lender can enforce the provisions of this
paragraph at anytime following such waiver.
6.16 Books and Records. Borrower will maintain full and
accurate books of account and records reflecting the results of its ownership
of the Mortgaged Property. At any time and from time to time Borrower shall
deliver to Lender such financial data as Lender shall reasonably request with
respect to the ownership, maintenance, use and operation of the Mortgaged
Property, and Lender shall have the right, at reasonable times and upon
reasonable notice, to audit, examine, and make copies or extracts of Borrower's
books of account and records relating to the Mortgaged Property, all of which
shall be maintained and made available to Lender and Lender's representatives
for ouch purpose at the address specified herein for Borrower or at such other
location as Lender may approve. Upon Lender's request, Borrower shall also
furnish Lender with convenient facilities and all books and records necessary
for on an audit of such statements.
6.17 Statement of Unpaid Balance. At any time and from time to
time, Borrower will furnish promptly, upon the request of Lender, a written
statement or affidavit, in form satisfactory to Lender, stating the unpaid
balance of the indebtedness and that there are no offsets or defenses against
full payment of the Indebtedness and the terms hereof, or if there are any such
offsets or defenses, specifying them.
6.18 Indemnity. Borrower agrees to exonerate, protect, indemnify
defend and hold harmless Lender from and against any and all liability,
expense, loss or damage of any kind or nature, including reasonable legal fees
and expenses, and from any actions, suits, claims or demands, account of any
matter or thing, whether in suit or not, arising out of this Agreement or in
connection with the Line, including without limitation thereto claims of
brokers, disputes between Borrower and any contractor, subcontractor,
materialman or supplier, or between Borrower and any municipal or public
authority, and any claims of any brokers which may be asserted by reason of the
execution of this Agreement or the consummation of the transaction contemplated
hereby arising out of Borrower's actions.
27
ARTICLE VII.
INSPECTIONS
7.1 Inspection of the Property. With respect to each Loan, Lender
and its agents, at all times, shall have the right, but not the obligation, to
enter upon the applicable Property and if the work being done is unsatisfactory
to Lender, or in the event on an inspector disapproves (a) the quality of
construction, (b) the conformity of construction with the Plans and applicable
Governmental Requirements, (c) a requested disbursement, or (d) the status of
construction; it shall be a default hereunder and Lender shall have the right
to stop said work and order that the unsatisfactory work be replaced or
repaired whether said unsatisfactory work has theretofore been incorporated
into the Improvements or not, and to withhold all advances such Loan until
said work is satisfactory to Lender. All such work shall be made satisfactory
to Lender within fifteen (15) days from the date of stoppage by Lender.
Borrower shall pay for (or reimburse Lender for) the cost of each and every
inspection made by a third party inspector at the time of each advance, but
Lender shall first notify Borrower and give Borrower a reasonable time within
which to supply the information.
Borrower agrees that any inspection by Lender or its agents is for the
purpose of protecting the security of Lender, and that no such inspection shall
be a representation by Lender that there has been compliance the part of the
general contractor or any subcontractor with the Plans or that the construction
is free from faulty material or workmanship, nor shall any inspection by Lender
constitute approval of any certification given to Lender or relieve any person
making such certification of responsibility therefor. Lender may obtain
information from any subcontractor or supplier directly as it may deem helpful
in making any such determinations, but Lender shall first notify Borrower and
give Borrower a reasonable time within which to supply the information.
7.2 Inspection of Books and Records. Borrower shall permit
Lender, at all reasonable times, to examine and copy the books and records of
Borrower pertaining to the Line and the Property, and all contracts,
statements, invoices, bills, and claims for labor, materials, and services
supplied for the construction of the Improvements. Such books and records of
Borrower shall be kept in accordance with generally accepted accounting
principles.
ARTICLE VIII.
EVENTS OF DEFAULT
8.1 Default. The term "Event of Default," as used herein and in
the Loan Documents, shall mean the occurrence or happening, at any time and
from time to time, of any one or more of the following:
A. A failure by Borrower to deposit the Borrower's Deposit with
Lender within ten (10) days of written request from Lender to do so.
28
B. If work shall cease the construction of any House for ten
(10) days after the commencement thereof, provided that it shall not
be on an Event of Default if (i) the work stoppage is due to causes
beyond the reasonable control of Borrower, and (ii) the House can be
completed by the maturity date of the Loan notwithstanding such
stoppage.
C. If Borrower commits any act or omission, breaches any
representation, agreement, covenant or condition, the effect of which
would be to impair or impede the qualification of the Houses for FHA,
VA or FNMA permanent financing.
D. If Lender determines from its own inspection that (i) the
Improvements have not been or are not being constructed in substantial
accordance with the Plans, or requirements of applicable Governmental
Authorities; or (ii) construction is not in conformance with the cost
estimates approved by Lender, or (iii) requisite standards of
workmanship are not being met or (iv) the construction in not
proceeding to completion in a timely manner; then, in any such event,
Lender may at its option regard the same as a breach of the conditions
and covenants of this Agreement, the Master Deed of Trust and any
other Loan Documents, and the whole of the Line or any Loan shall, if
the Maker refuses or neglects to cure the default within thirty (30)
days after written notice from Lender to Borrower, at the option of
Lender, be immediately due and payable, without further notice or
demand, and Lender may cease disbursements hereunder (if it has not
already done so) and shall be entitled to the immediate foreclosure of
or sale under the Loan Documents and may, additionally or
alternatively, avail itself of any other relief to which Lender may be
legally or equitably entitled.
E. It Borrower is unable to satisfy any condition specified
herein on an a condition precedent to the obligation of Lender to make
on an advance within thirty (30) days after a Residential Draw Request
has been submitted by Borrower to Lender.
F. If Borrower, any Constituent Party, or any Guarantor, shall
die, dissolve, terminate or liquidate, or merge with or be
consolidated into any other entity.
G. If Lender determines, in its sole and absolute discretion the
basis of on an independent party's inspection report, that any House
cannot be completed within the Term of the Loan for that House,
Borrower shall be in default of the specific Loan for that House. For
purposes of this subparagraph, prior to exercising its remedies upon
default, Lender shall give Borrower five (5) days notice and right to
cure.
H. The occurrence of on an Event of Default as defined in any of
the other Loan Documents.
ARTICLE IX.
RIGHTS AND REMEDIES OF LENDER
9.1 Lender's Rights. In addition to Lender's other remedies
whether hereunder or in any other Loan Document, Lender shall have the right,
but not the obligation to: (i) apply all of
29
Borrower's proceeds from the sale of any House to the payment of amounts due
under any Loan or the Line, in such order as Lender may determine in its sole
discretion, (ii) take over and complete construction of the Improvements by or
through any agent, contractor, or subcontractor of its selection, and may
disburse any part or all of the then balance of the Loan funds, any funds
deposited with Lender by Borrower in payment of the costs, expenses, fees,
attorneys' fees, and other charges incurred in, or in connection with, such
taking over and completion, together with reasonable allowances for
supervision, and in the event other Loan funds and amounts deposited by
Borrower are insufficient to pay all of the same, any unpaid amounts thereof
shall be on an indebtedness of Borrower to Lender, payable immediately without
demand or notice, shall bear interest at the default rate stated in the Master
Note, and shall be secured by the lien of the Master Deed of Trust or any
Individual Deed of Trust; or (iii) order that unsatisfactory work be replaced
and withhold all advances until said work is satisfactory.
9.2 Cessation of Advances. Upon the occurrence of on an Event of
Default or on an eve which with the passage of time, the giving of notice, or
both, would be on an Event of Default, the obligation of Lender to make any
advance and to make disbursements from the Borrower's Deposit and all other
obligations of Lender hereunder and under the Loan Documents shall, at Lender's
option, immediately terminate; provided, however, that nothing in this
paragraph shall be deemed to limit the other provisions of this Agreement
setting forth the conditions precedent to Lender's obligation to make any
advance or the conditions under which Lender may refuse to make further
advances or to limit Lender's option to make further advances at Lender's sole
option notwithstanding the occurrence of one or more Events of Default.
9.3 No-Waiver or Exhaustion. No waiver by Lender of any of its
rights or remedies hereunder, in the other Loan Documents, or otherwise, shall
be considered a waiver of any other or subsequent right or remedy of Lender; no
delay or omission in the exercise or enforcement by Lender of any rights or
remedies shall ever be construed as a waiver of any right or remedy of Lender;
and, no exercise or enforcement of any such rights or remedies shall ever be
held to exhaust any right or remedy of Lender. Lender may, at its sole
discretion, make advances prior to the time all conditions precedent to such
advances have been satisfied without waiving or releasing any of the
requirements or conditions of this Agreement, and, notwithstanding the making
of any such advances, Lender may, at its discretion, discontinue any further
disbursements at any time until all of the conditions, prior performances and
other requirements of this Agreement have been strictly fulfilled, performed
and complied with.
9.4 Legal Fees. In the event it becomes necessary for Lender to
employ legal counsel or to bring on an action at law or any other proceeding to
enforce any of the terms, covenants or conditions of this Agreement or the Loan
Documents, Lender shall be entitled to recover costs and reasonable attorneys,
fees incurred on an hourly basis, not to exceed ten percent (10%) of the
principal and interest outstanding under the Line, or shall be placed in the
hands of on an attorney for collection after maturity, whether matured by the
expiration of time or by on an option given to the Lender to mature same, or if
Lender becomes a party to any suit where the Master Deed of Trust or the
Mortgaged Property or any part thereof is involved, Borrower agrees to pay
Lender's attorneys' fees and expenses incurred, and such fees shall be and
become a part of the Indebtedness and shall bear interest from the date such
costs are incurred at the Default Rate.
30
9.5 Limitation Remedy for Death/Disability of a Guarantor. In the
event that a Guarantor dies or becomes totally and permanently disabled,
thereby causing on an Event of Default to occur, Lender shall have the right to
refuse to make any advance with regard to any Property which would initiate a
Loan that is not then evidenced by on an Individual Deed of Trust and secured
by same, but Lender shall continue to make advances under any Loan then in
effect, unless and until the occurrence of any other Event of Default.
9.6 Funds of Lender. Any funds of Lender used for any purpose
referred to in the Article shall constitute advances secured by the Master Deed
of Trust and the other Loan Documents, and shall bear interest at the Default
Rate.
9.7 Miscellaneous. In addition to the remedies Bet forth herein,
any other remedies as set forth in any other Loan Documents.
ARTICLE X.
GENERAL TERMS AND CONDITIONS
10.1 Tax Assessment/Prepayment Option. If any law, ordinance or
regulation is enacted or issued by a Governmental Authority imposing any tax
upon Lender with respect to any Property or changing the manner of taxation of
mortgages or debts secured by any Property, Borrower shall reimburse Lender for
the amount of any such taxes paid by Lender within ten (10) days of Lender's
demand therefor. If Lender pays any such taxes and chooses to demand
reimbursement rather than waiving such right to reimbursement, Borrower shall
have the right to repay the then outstanding principal balance of the Loan,
plus accrued interest and any other costs, fees or expenses due to Lender,
without penalty or premium, within ten (10) days of Lender's demand for
reimbursement and thereby avoid liability to Lender for such Lax reimbursement
amount.
10.2 Modifications. No provision of this Agreement or the other
Loan Documents maybe modified, waived, or terminated except by instrument in
writing executed by the Party against whom a modification, waiver or
termination is sought to be enforced.
31
10.3 Severability. In case any of the provisions of this Agreement
shall for any reason be held to be invalid, illegal, or unenforceable, such
invalidity, illegality, or unenforceability shall not affect any other
provision hereof, and this Agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein; provided,
however, if the disregard of such provision would frustrate the intent and
purposes of this Agreement, Lender may petition any court having jurisdiction
in equity to render a judgment modifying the disregarded provision(s) of this
Agreement so as to carry out such intent and purposes.
10.4 Election of Remedies. Lender shall have all of the rights and
remedies granted in the Loan Documents in addition to such rights and remedies
that may be available to Lender at law or in equity, and these same rights and
remedies shall be cumulative and may be pursued separately, successively, or
concurrently against Borrower or any Property covered under the Loan Documents
at the sole discretion of Lender. The exercise or failure to exercise any of
the same shall not constitute a waiver or release thereof or of any other right
or remedy, and such exercise or failure to exercise shall be nonexclusive.
10.5 Form and Substance. All documents, certificates, insurance
policies, and other items required under this Agreement to be executed and/or
delivered to Lender shall be in form and substance satisfactory to Lender and
its legal counsel.
1. 10.6 Savings Clause. It is the intention of the parties
hereto to comply with all applicable federal and state laws relating
to usury; that is, laws limiting changes for the use, detention or
forbearance of money and governing contracts relating thereto;
accordingly, all agreements between Borrower and Lender, whether now
existing or hereafter arising and whether written or oral, are
expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of the maturity hereof, or
otherwise, shall the amount paid or agreed to be paid to Lender for
the use, forbearance or detention of the money to be loaned hereunder
or otherwise, or for the performance or payment of any covenant or
obligation contained herein or in any other document evidencing
securing or pertaining to any Loan or the Line, exceed the Maximum
Lawful Rate. If from any circumstance Lender shall ever receive
anything of value deemed interest by applicable law which would exceed
the maximum Lawful Rate, on an amount equal to any excessive interest
shall be applied to the reduction of the principal amount owing under
the Master Note or account of any other principal indebtedness of
Borrower to Lender, and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of such principal and
such other indebtedness, such excess shall be refunded to Borrower.
All sums paid or agreed to be paid to Lender for the use, forbearance
or detention of the indebtedness of Borrower to Lender shall, to the
extent permitted by applicable law, be amortized, prorated, allocated
and spread throughout the full term of such indebtedness until payment
in full, in such manner as permitted by law so as to avoid any portion
of the interest the Master Note becoming usurious. To the extent
that Texas law governs the determination of the Maximum Lawful Rate,
Borrower and Lender agree to rely Article 5069-1.04, of the Revised
Civil Statutes of Texas, as the same may from time to time be amended,
supplemented or revised, to determine the Maximum Lawful Rate, and
that Lender will utilize the indicated (weekly) rate ceiling from time
to time in effect t as provided in Article 5069-1.04. In no event
shall the provision of Ch. 15 of
32
Article 5069 of the Revised Civil Statutes of Texas (which regulates
certain revolving credit loan accounts and revolving tri-party
accounts) apply to the Loan.
10.7 Rights of Third Parties. All conditions of the obligations of
Lender hereunder, including the obligation to make advances to any Loan, are
imposed solely and exclusively for the benefit of Lender and its successors and
assigns and no other person or entity shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled
to assume that Lender will refuse to make advances in the absence of strict
compliance with any or all thereof, and no other person or entity shall, under
any circumstances, be deemed to be a beneficiary of this Agreement; any and all
of the terms and conditions of which may be freely waived in whole or in part
by Lender at any time if in its sole discretion it deems it desirable to do so,
and Lender reserves the right to enter into modifications or amendments of this
Agreement with Borrower without notification to or the consent of any other
party. In particular, Lender makes no representations and assumes no
obligations as to third parties concerning the quality of the construction of
the Improvements by Borrower or the absence therefrom of defects. In this
connection Borrower agrees to and shall indemnify Lender from any liability,
claims or losses resulting from the disbursement of the proceeds of the Loan or
from the condition of the Property whether related to the quality of
construction or otherwise and whether arising during or after the term of the
Loan arising out of Borrower's actions. This provision shall survive the
repayment of the Loan and shall continue in full force and effect so long am
the possibility of much liabilities, claims or losses exists.
10.8 Evidence of Satisfaction of Conditions. Any condition of this
Agreement which requires the submission of evidence with respect to the
existence or non-existence of a specified fact or facts implied as a condition
of the existence or non-existence, as the case may be, of such fact or facts
and Lender shall, at all times, be free independently to establish to its
satisfaction and in its sole reasonable discretion such existence or
non-existence.
10.9 All Matters Satisfactory to Lender. All proceedings taken in
connection with the transactions provided for herein, all surveys, appraisals
and documents required or contemplated by this Agreement or the other Loan
Documents, and the person responsible for the execution and preparation
thereof, contractor and all subcontractors, all sureties, insurers, the form of
the construction contract and all subcontractors, all leases, bonds, guaranties
and policies of insurance shall be satisfactory to Lender and to Lender's
counsel which shall receive copies (or certified copies where appropriate in
Lender's counsel's judgment) of all documents which it may request in
connection therewith.
10.10 No Agency. Lender is not the agent or representative of
Borrower, and Borrower is not the agent or representative of Lender, and
nothing in this Agreement shall be construed to make Lender liable to anyone
for goods delivered or services performed upon the Property or for debts or
claims accruing against Borrower. Nothing herein shall be construed to create
a relationship ex-contract or ex-delicto between Lender and anyone supplying
labor or materials to the Property.
10.11 No Partnership or Joint Venture. Nothing herein nor the acts
of the parties hereto shall be construed to create a partnership or joint
venture between Borrower and Lender. The relationship of Borrower and Lender
is debtor and creditor, respectively.
33
10.12 Number and Gender. Whenever used herein, the singular number
shall include the plural and the singular, and the use of any gender shall be
applicable to all genders. The duties, covenants, obligations, and warranties
of Borrower in this Agreement shall be joint and several obligations of
Borrower, and of each Borrower if more than one.
10.13 Time of Essence. Time is of the essence in performance of
this Agreement by Borrower.
10.14 Participation. Lender shall have the right, at its sole
discretion, to invite participants to participate in or to purchase allow
portions of the Line, and Borrower agrees to execute any documents reasonably
requested by Lender in connection with any such participation or purchase.
10.15 Further Assurances. Borrower shall do, execute, acknowledge
and deliver, at the sole cost and expense of Borrower, all and every such
further acts, deeds, conveyances, mortgages, assignments, estoppel
certificates, notices of assignment, transfers and assurances as Lender may
reasonably require from time to time in order to better assure, convey, assign,
transfer and confirm unto the Lender, the rights now or hereafter intended to
be granted to the Lender under the Loan Documents for carrying out the
intention of facilitating the performance of the terms of this Agreement.
10.16 Captions. The captions, headings, and arrangements used in
this Agreement are for convenience only and do not in any way affect, limit,
amplify, or modify the terms and provisions hereof.
10.17 Applicable Law. This Agreement and the other Loan Documents
shall be governed by and construed in accordance with the laws of the State of
Texas and the laws of the United States of America applicable to transactions
within such state.
10.18 Notices. All notices by Lender to Borrower pursuant to any
provisions of this Agreement or of the other Loan Documents which require the
giving of notice as a condition to creating or effectuating on an obligation of
Borrower to Lender or a right the part of Lender to exercise rights or
remedies against Borrower or any collateral, and any notice by Borrower to
Lender to the effect that Lender has not fulfilled one or more of any
obligations to Borrower under this Agreement or under any other Loan Document,
must be in writing. Such notice shall be given by messenger, telegram or mail
(registered or certified, return receipt requested) to such address, and shall
be addressed to the parties at the addresses given below. Rejection or other
refusal to accept or the inability to deliver because of changed address of
which no notice was given shall be deemed to be receipt of the notice, demand
or request sent. By giving at least thirty (30) days written notice thereof,
Borrower or Lender shall have the right from time to time, and at any time,
during the term of this Agreement to change their respective addresses and each
shall have the right to specify as its address any other address within the
United States of America.
34
If to Lender: First American Bank Texan, SSB
00000 Xxxxxx Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxx
FAX: 972/000-0000
with a copy to: Xxxxxxx X. Xxxxxx
West, Webb, Xxxxxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxx 00000
FAX: 000-000-0000
If to Borrower: Newmark Homes, L.P.
00000 Xxxxxxxxxx
Xxxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxx
FAX: 713/000-0000
with a copy to: Xxxxx Xxxxxxx Xxxxxx,
Lendais, Xxxxxxx & Xxxxxxx
0000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
FAX: 000-000-0000
10.19 Counterparts. This Agreement may be executed in counterparts,
all of which taken together shall constitute one agreement.
10.20 Survival. This Agreement and the terms, covenants and
conditions hereof shall survive the completion of the Improvements and the
disbursement of the Line to Borrower and shall continue in full force and
effect until the entire indebtedness evidenced by the Master Note, and any
renewal, extension, replacement, or consolidation thereof, or by any other Wan
Document, is paid in full.
10.21 Indemnification. Borrower agrees to, and does indemnify and
hold harmless Lender against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, claims, costs, expenses and
disbursements of any kind or nature whatsoever which may be imposed, incurred
by, or asserted against Lender in any way relating to, or &rising out of, any
of the Loan Documents or any other transaction contemplated therein, including
claims arising out of Borrower-9 actions. The obligation of Borrower under
this Section shall survive any termination of this Agreement.
10.22 Non-Assignability. Neither the Line nor any Loan made under
the Line shall be assignable by Borrower without the advance written consent of
Lender, such consent to be given at Lender's sole discretion.
35
EXECUTED AND DELIVERED the date first above recited.
LENDER:
FIRST AMERICAN BANK TEXAS, SSB
By: /s/ XXXXX XXXXXX
-------------------------------------
Xxxxx Xxxxxx, Vice President
BORROWER:
NEWMARK HOMES, L.P.,
a Texas limited partnership
By: Newmark Home Corporation
its General Partner
By: /s/ XXXXX XXXXX
-------------------------------------
Xxxxx Xxxxx, Chief Financial Officer
STATE OF TEXAS )
)
COUNTY OF )
THIS INSTRUMENT WAS ACKNOWLEDGED before me this ____ day of
_____________, 1996, by Xxxxx Xxxxxx, Vice President of First American Bank
Texas, SSB.
/s/
-------------------------------------
Notary Public, State of Texas
STATE OF TEXAS )
)
COUNTY OF ________ )
THIS INSTRUMENT WAS ACKNOWLEDGED before me this _________ day of
______________________, 1996, by Xxxxx Xxxxx, Chief Financial Officer of
Newmark (Home Corporation, as the general partner of Newmark Homes, L.P., a
Texas limited partnership, on behalf of said entity.
/s/
-------------------------------------
Notary Public, State of Texas
