Exhibit 10.18
RESTATED
WORKING CAPITAL LINE OF CREDIT AGREEMENT
among
▇.▇. ▇▇▇▇▇▇, INC., as Borrower
and
▇▇▇▇▇▇▇ BANK, N.A., as Lender
RESTATED
WORKING CAPITAL LINE OF CREDIT AGREEMENT
THIS RESTATED WORKING CAPITAL LINE OF CREDIT AGREEMENT dated as of the 15th
day of July, 1997, by and between ▇. ▇. ▇▇▇▇▇▇, INC., a Delaware corporation,
whose address is ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
and ▇▇▇▇▇▇▇ BANK, N.A., a national banking association, whose address is ▇.▇.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Closing Department Manager
restates that certain Working Capital Line of Credit Agreement dated March 1,
1997, between the Borrower and the Lender.
R E C I T A L S
A. The Borrower has requested the Lender to lend to the Borrower up to the
sum of TWENTY FIVE MILLION DOLLARS ($25,000,000.00) under a revolving line of
credit; and
B. The Lender is willing to make such loan upon the terms and conditions set
forth in the Loan Documents (as that term is hereinafter defined).
NOW, THEREFORE, in consideration of the mutual promises, conditions,
represen tations and warranties hereinafter set forth and for other good and
valuable consideration, the receipt and sufficiency whereof is hereby
acknowledged, the parties covenant and agree as follows:
ARTICLE I
DEFINITIONS
In addition to the terms as may be defined throughout this Agreement, or in
any Loan Document, the following terms shall be defined for use throughout this
Agreement as follows:
Section 1.1. Acquisition.
Whether by purchase, lease, exchange, issuance of stock or other equity or
debt securities, merger, reorganization or any other method, (a) any acquisition
by the Borrower or any of its Restricted Subsidiaries of Inventory, (b) any
acquisition by the Borrower or any of its Restricted Subsidiaries of any other
Person, which Person shall then become a Subsidiary of the Borrower or any such
Restricted Subsidiary or (c) any acquisition by the Borrower or any of its
Restricted Subsidiaries of all or any substantial part of the assets of any
other Person.
Section 1.2. Acquisition Carve Out Notice.
The written notice by the Borrower delivered to the Lender not later than
the end of the fiscal quarter following the fiscal quarter in which an
Acquisition is consummated notifying such Persons of the election by the
Borrower to initiate a Financial Covenant Carve Out as a result of such
Acquisition. Contemporaneously with the delivery of an Acquisition Carve Out
Notice, the Borrower shall deliver to the Lender a plan of action reflecting
that the Borrower will be in compliance with the covenants set forth in Sections
6.9(1), 6.10(1), 6.10(2) and 6.10(3) hereof on or prior to the last day of the
applicable Financial Covenant Carve Out and failure to deliver such plan of
action shall render such Acquisition Carve Out Notice ineffective.
Section 1.3. Acquisition Cost.
1.3(1) Developed Lots. If the subject is a Developed Lot(s), costs shall
include the purchase price plus the amount paid for any impact fees paid by the
Borrower and its Restricted Subsidiaries with respect to such Developed Lot(s).
If the Developed Lot(s) was developed by the Borrower or its Restricted
Subsidiaries, costs shall also include land costs, site development and soft
costs (engineering, interest, etc.) paid by Borrower and its Restricted
Subsidiaries, associated with the development of such lots.
1.3(2) Lots Under Development. Costs in connection with Lots Under
Development shall include land costs, site development and soft costs
(engineering, interest, etc.) paid by Borrower and its Restricted Subsidiaries,
associated with the development of such lots.
Administrative Costs shall be excluded from Acquisition Costs of both
Developed Lots or Lots Under Development.
Section 1.4. Acquisition Suspension Period.
An Acquisition Suspension Period shall occur upon delivery by the Borrower
to the Lender of an Acquisition Carve Out Notice and shall continue until the
earlier to occur of (a) the last day of the third fiscal quarter immediately
following the fiscal quarter in which the Acquisition giving rise to such
Acquisition Carve Out Notice was consummated, or (b) the last day of the
Borrower's fiscal quarter in which the Leverage Ratio (determined in accordance
with Section 6.9(1) hereof) exceeds 2.6 to 1.0. Notwithstanding the foregoing,
the maximum Leverage Ratio as of the last day of each fiscal quarter during an
Acquisition Suspension Period shall be 2.6 to 1.0, and failure to comply with
such Leverage Ratio shall be an Event of Default.
Section 1.5. Adjusted LIBOR Rate.
The interest rate established on the Interest Rate Adjustment Date for any
Interest Period.
Section 1.6. Administrative Costs.
Costs and expenses incurred by the Borrower or its Restricted Subsidiaries
in connection with (a) the marketing and selling of Inventory which is part of
the Loan Inventory and (b) the administration, management and operation of the
Borrower's and its Restricted Subsidiaries' businesses (excluding, without
limitation, Interest Expense and fees payable hereunder).
Section 1.7. Advance or Advances.
Amounts advanced by the Lender to the Borrower pursuant to this Agreement.
Section 1.8. Agreement.
This Restated Working Capital Line of Credit Agreement.
Section 1.9. Agreement Date.
The date as of which the Borrower and the Lender execute this Agreement.
Section 1.10. Applicable Law.
In respect of any Person, all provisions of constitutions, statutes, rules,
regulations, and orders of governmental bodies or regulatory agencies applicable
to such Persons including, without limitation, all orders and decrees of all
courts and arbitrators in proceedings or actions to which the Person in question
is a party or by which it is bound.
Section 1.11. Applicable Margin.
The interest rate margins set forth on Exhibit E attached hereto applicable
to the Note Rate determined based upon the Leverage Ratio for the fiscal quarter
end being tested or the most recently completed fiscal quarter for which
financial statements have been delivered or the Borrower's S&P/▇▇▇▇▇'▇ Rating,
as applicable. The Applicable Margin shall be adjusted on the Interest Rate
Adjustment Date. At all times during an Event of Default hereunder, the
Applicable Margin shall be the Applicable Margin set forth at Level VI of
Exhibit E. In the event that the Borrower qualifies for more than one level of
pricing, the Applicable Margin shall be based upon the lowest level (with Level
I being the lowest level) for which the Borrower is qualified. The Applicable
Margin from the Agreement Date until the first adjustment date as provided above
will be based upon the Leverage Ratio for the most recently completed fiscal
quarter of the Borrower prior to the Agreement Date.
Section 1.12. Authorized Signatory.
With respect to the Borrower, such personnel of the Borrower as set forth in
an incumbency certificate of the Borrower delivered to the Lender on the
Agreement Date (or any duly executed incumbency certificate delivered after the
Agreement Date) and certified therein as being duly authorized by the Borrower
to execute documents, agreements, and instruments on behalf of the Borrower.
Section 1.13. Bank Group Line.
The credit accommodations described in and evidenced by that certain Master
Loan and Inter-Creditor Agreement among ▇. ▇. ▇▇▇▇▇▇, Inc., as "Borrower",
NationsBank, N.A., Bank of America National Trust and Savings Association; Fleet
National Bank, Bank United, Comerica Bank, The First National Bank of Chicago,
Credit Lyonnais New York Branch, PNC Bank, National Association, AmSouth Bank of
Alabama, Bank One, Arizona, NA, Societe Generale, Southwest Agency, First
American Bank Texas, SSB, ▇▇▇▇▇▇ Trust and Savings Bank and Sanwa Bank
California, as "Banks"; and Bank United, Comerica Bank, Credit Lyonnais New York
Branch, The First National Bank of Chicago, and PNC Bank, National Association,
as "Co-Agents"; and Fleet National Bank, as "Documentation Agent; and Bank of
America National Trust and Savings Association, as "Syndication Agent"; and
NationsBank, N.A., as "Administrative Agent dated as of June 12, 1997.
Section 1.14. Borrower.
▇.▇. ▇▇▇▇▇▇, INC., a Delaware corporation
Section 1.15. Borrowing Base Report.
Consists of the Summary Borrowing Base Report and Detailed Borrowing Base
Report which reflect inventory that the Borrower desires to have designated as
Loan Inventory.
Section 1.16. Business Banking Day.
Each day other than a Saturday, a Sunday or any holiday on which commercial
banks in Jacksonville, Florida are closed for business.
Section 1.17. Change of Control.
Either (i) any sale, lease or other transfer (in one transaction or a series
of transactions) of all or substantially all of the consolidated assets of the
Borrower and its Restricted Subsidiaries to any Person (other than a Restricted
Subsidiary of the Borrower), provided that a transaction where the holders of
all classes of Common Equity of the Borrower immediately prior to such
transaction own, directly or indirectly, 50% or more of all classes of Common
Equity of such Person immediately after such transaction shall not be a Change
of Control; (ii) a "person" or "group" within the meaning of Section 13(d) of
the Exchange Act (other than the Borrower or ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, his wife,
children or grandchildren, or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, or any trust or other entity
formed or controlled by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, his wife, children or grandchildren,
or ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇)) becomes the "beneficial owner" (as defined in Rule 13d-8
under the Exchange Act) of Common Equity of the Borrower representing more than
50% of the voting power of the Common Equity of the Borrower; (iii) Continuing
Directors cease to constitute at least a majority of the Board of Directors of
the Borrower; or (iv) the stockholders of the Borrower approve any plan or
proposal for the liquidation or dissolution of the Borrower, provided that a
liquidation or dissolution of the Borrower which is part of a transaction that
does not constitute a Change of Control under the proviso contained in clause
(i) above shall not constitute a Change of Control.
Section 1.18. Closing Date.
The date contained in the first paragraph of this Agreement.
Section 1.19. Closed Sales.
For any calculation period, sales of Developed Lots containing Dwellings
which have been closed by the Borrower and all Restricted Subsidiaries. Closed
Sales shall include Developed Lots containing Dwellings owned by any Person
which became a Restricted Subsidiary after February 14, 1997 for which sales
have closed during the applicable calculation period. Closed Sales shall include
closings attributable to acquisitions by the Borrower and/or by its Restricted
Subsidiaries or when substantially all assets owned by any Person were acquired
by the Borrower and/or Restricted Subsidiaries after February 14, 1997.
Section 1.20. Code.
The Internal Revenue Code of 1986, as amended.
Section 1.21. Common Equity.
With respect to any Person, capital stock of such Person that is generally
entitled to (i) vote in the election of directors of such Person, or (ii) if
such Person is not a corporation, vote or otherwise participate in the selection
of the governing body, partners, managers or others that will control the
management or policies of such Person.
Section 1.22. Construction Costs.
All costs accepted by the Lender actually incurred by the Borrower or its
Restricted Subsidiaries with respect to the construction of a Dwelling as of the
date of determination by the Lender, which shall include direct costs associated
with a given Dwelling's construction (including Lot) plus indirect costs such as
real estate taxes and interest costs allocated to the Dwelling during the
construction phase. Direct cost is defined as costs for which a "hard" charge
has been allocated (to the Dwelling being constructed) without consideration for
any allocable soft costs (promotional materials, sales effort costs, overhead,
supervision, etc.). Excluded from Construction Costs are (a) projected costs and
costs for materials or labor not yet delivered to, provided to or incorporated
into such Dwelling and (b) Administrative Costs.
Section 1.23. Continuing Director.
A director who either was a member of the board of directors of the Borrower
on the Agreement Date or who became a director of the Borrower subsequent to
such date and whose election, or nomination for election by the Borrower's
stockholders, was duly approved by a majority of the Continuing Directors on the
board of directors of the Borrower at the time of such approval, either by a
specific vote or by approval of the proxy statement issued by the Borrower on
behalf of the entire board of directors of the Borrower in which such individual
is named as nominee for a director.
Section 1.24. Default.
Any of the events specified in Article VII hereof, provided that any
requirement for notice or lapse of time, or both, has been satisfied.
Section 1.25. Default Rate.
The Default Rate as defined in the Note.
Section 1.26. Detailed Borrowing Base Report.
A unit-by-unit inventory summary of the Loan Inventory in form acceptable to
Lender and certified as true and correct by an Executive Officer of the Borrower
containing, at a minimum, the cost funded to date for each Dwelling Lot, each
Development Lot and each Lot Under Development including, but not limited to
those elements of cost set forth in Sections 1.1, 1.6 and 1.22 hereof.
Section 1.27. Developed Lots.
Subdivision lots owned by the Borrower or its Restricted Subsidiaries ,
subject to a recorded plat, which the Borrower has designated and Lender has
accepted to be included and are included as "Developed Lots" in the calculation
of the Loan Funding Availability (exclusive of any Dwelling Lot). An individual
Developed Lot is sometimes referred to herein as a "Developed Lot."
Section 1.28. Dwelling.
A house which the Borrower or any Restricted Subsidiary has constructed or
is constructing on a Developed Lot which has been designated as a Dwelling Lot.
Section 1.29. Dwelling Lots.
Lots with Dwellings which the Borrower or any Restricted Subsidiary has
designated and Lender has accepted to be included and are included as "Dwelling
Lots" in the calculation of the Loan Funding Availability. The term "Dwelling
Lot" includes the Dwelling located thereon. An individual Dwelling Lot is
sometimes referred to herein as a "Dwelling Lot."
Section 1.30. EBITDA.
With respect to the Borrower and all Restricted Subsidiaries, earnings for
the preceding twelve (12) months (including, without limitation, dividends from
Unrestricted Subsidiaries including, without limitation, net income (or loss) of
any Person that accrued prior to the date that such Person becomes a Restricted
Subsidiary or is merged with or into or consolidated with the Borrower or any of
its Restricted Subsidiaries) before interest incurred, state and federal income
taxes paid, franchise taxes paid and depreciation and amortization, all in
accordance with GAAP.
Section 1.31. ERISA.
The Employee Retirement Income Security Act of 1974, as in effect on the
Agreement Date and as such Act may be amended thereafter from time to time.
Section 1.32. ERISA Affiliate.
(a) Any corporation which is a member of the same controlled group of
corporations (within the meaning of Code Section 414(b)) as is the Borrower, (b)
any other trade or business (whether or not incorporated) under common control
(within the meaning of Code Section 414(c)) with the Borrower, (c) any other
corporation, partnership or other organization which is a member of an
affiliated service group (within the meaning of Code Section 414(m)) with the
Borrower, or (d) any other entity required to be aggregated with the Borrower
pursuant to regulations under Code Section 414(o).
Section 1.33. Event of Default.
Any event specified in Article VI hereof and any other event which with any
passage of time or giving of notice (or both) would constitute such event a
Default.
Section 1.34. Exchange Act.
The Securities Exchange Act of 1934, as amended.
Section 1.35. Executive Officer.
The President, any Executive Vice President, Vice President, Assistant Vice
President, Secretary, Assistant Secretary or Treasurer of the Borrower.
Section 1.36. Financial Covenant Carve Out.
The Borrower's compliance with either Sections 6.9(1), 6.10(1), 6.10(2) and
6.10(3) hereof during any Acquisition Suspension Period or with Section 6.9(1)
hereof during any Operational Suspension Period shall be suspended; provided,
however, that there shall be no more than one Financial Covenant Carve Out in
any period of twelve (12) consecutive calendar months beginning with the month
in which the Financial Covenant Carve Out was elected, and provided, further,
however, that no Financial Covenant Carve Out shall commence unless the Borrower
was in compliance with all covenants for not less than one full fiscal quarter
immediately preceding any such Financial Covenant Carve Out Notice.
Section 1.37. Fixed Charges.
The aggregate consolidated interest incurred of the Borrower and its
Restricted Subsidiaries for the most recently completed four (4) fiscal quarters
for which results have been reported to Lender.
Section 1.38. Force Majeure.
An occurrence outside the control of the Borrower which cannot be avoided by
the exercise of due care by the Borrower which delays performance by the
Borrower in the nature of and including but not limited to strikes, lockouts,
unavailability of materials, power failure, riots, war or destructive natural
causes. The phrase "subject to Force Majeure" as used herein shall mean that the
time period for the Borrower's performance shall be extended by a length of time
equivalent to the period during which the occurrence constituting Force Majeure
shall exist. Notwithstanding the foregoing, in no event shall the Borrower's
obligations to make payments under the Note be delayed or extended.
Section 1.39. Funding Period.
A period commencing on the day immediately following the date that the Loan
Funding Availability is established pursuant to Section 5.1(c) hereof by the
Lender and ending on the date that the Loan Funding Availability next is
established pursuant to Section 5.1(c) hereof by the Lender.
Section 1.40. GAAP.
As in effect as of the Agreement Date, generally accepted accounting
principles consistently applied.
Section 1.41. Governmental Authority.
Any nation or government, any state or other political subdivision thereof
and any entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
Section 1.42. Guaranty or Guaranteed.
As applied to an obligation (each a "primary obligation"), shall mean and
include (a) any guaranty, direct or indirect, in any manner, of any part or all
of such primary obligation, and (b) any agreement, direct or indirect,
contingent or otherwise, the practical effect of which is to assure in any way
the payment or performance (or payment of damages in the event of
non-performance) of any part or all of such primary obligation, including,
without limiting the foregoing, and any obligation of such Person (the Primary
obligor"), whether or not contingent, (i) to purchase any such primary
obligation or any property or asset constituting direct or indirect security
therefor, (ii) to advance or supply funds (1) for the purchase or-payment of
such primary obligation or (2) to maintain working capital, equity capital or
the net worth, cash flow, solvency or other balance sheet or income statement
condition of any other Person, (iii) to purchase property, assets, securities or
services primarily for the purpose of assuring the owner or holder of any
primary obligation of the ability of the primary obligor with respect to such
primary obligation to make payment thereof or (iv) otherwise to assure or hold
harmless the owner or holder of such primary obligation against loss in respect
thereof.
Section 1.43. Guarantors.
DRH CONSTRUCTION, INC., a Delaware corporation
DRH NEW MEXICO CONSTRUCTION, INC., a Delaware corporation
DRHI, INC., a Delaware corporation
▇.▇. ▇▇▇▇▇▇, INC. - ALBUQUERQUE, a Delaware corporation
▇.▇. ▇▇▇▇▇▇, INC. - MINNESOTA, a Delaware corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES HOLDING COMPANY, INC., a California
corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES MANAGEMENT COMPANY, INC., a California
corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES NO. 9, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES NO. 10, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES NO. 11, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES NO. 12, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES NO. 13, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES NO. 14, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES NO. 16, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ LOS ANGELES NO. 17, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ MANAGEMENT COMPANY, LTD., a Texas limited partnership
▇.▇. ▇▇▇▇▇▇ - ROYALTY, LTD., a Texas limited partnership
▇.▇. ▇▇▇▇▇▇, INC. - BIRMINGHAM, an Alabama corporation
▇.▇. ▇▇▇▇▇▇, INC. - GREENSBORO, a Delaware corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO HOLDING COMPANY, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO MANAGEMENT COMPANY, INC., a California
corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 9, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 10, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 11, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 12, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 13, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 14, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 15, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 16, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 17, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 18, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 19, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 20, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ SAN DIEGO NO. 21, INC., a California corporation
▇.▇. ▇▇▇▇▇▇ - TEXAS, LTD., a Texas limited partnership, by ▇.▇. ▇▇▇▇▇▇,
Inc., its authorized agent
▇.▇. ▇▇▇▇▇▇, INC. - NEW JERSEY, a Delaware corporation
▇.▇. ▇▇▇▇▇▇, INC. - DENVER, a Delaware corporation
▇.▇. ▇▇▇▇▇▇ DENVER MANAGEMENT COMPANY, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 10, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 11, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 12, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 13, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 14, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 15, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 16, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 17, INC., a Colorado corporation
▇.▇. ▇▇▇▇▇▇ DENVER NO. 18, INC., a Colorado corporation
▇▇▇▇▇▇▇ I, LTD., a Delaware corporation
▇▇▇▇▇▇▇ II, LTD., a Delaware corporation
▇▇▇▇▇▇▇ III, LTD., a Delaware corporation
▇▇▇▇▇▇▇ IX, INC., a New Jersey corporation
▇▇▇▇▇▇▇ X, INC., a New Jersey corporation
SGS COMMUNITIES AT GRANDE QUAY, L.L.C., a New Jersey limited liability
company, by ▇▇▇▇▇▇▇ IX and ▇▇▇▇▇▇▇ X, New Jersey corporations, as
members
▇.▇. ▇▇▇▇▇▇, INC. - TORREY, a Delaware corporation
▇.▇. ▇▇▇▇▇▇ ATLANTA, LTD., a Georgia corporation
Together with each additional Restricted Subsidiary of Borrower as may from
time to time deliver a Guaranty of the Loan which Guaranty is accepted by
Lender.
Section 1.44. Indebtedness.
With respect to any specified Person, (a) all items, except items of (i)
shareholders' and partners' equity, (ii) capital stock, (iii) surplus, (iv)
general contingency or deferred tax reserves, (v) liabilities for deposits and
(vi) deferred income, which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
of such Person, (b) all direct or indirect obligations secured by any Lien to
which any property or asset owned by such Person is subject, whether or not the
obligation secured thereby shall have been assumed, and (c) all reimbursement
obligations with respect to outstanding letters of credit.
Section 1.45. Indebtedness for Money Borrowed.
With respect to any specified Person, all money borrowed by such Person and
Indebtedness represented by notes payable by such Person and drafts accepted
representing extensions of credit to such Person, all obligations of such Person
evidenced by bonds, debentures, notes, or other similar instruments, all
Indebtedness of such Person upon which interest charges are customarily paid,
and all Indebtedness of such Person issued or assumed as full or partial payment
for property or services, whether or not any such notes, drafts, obligations, or
Indebtedness represent Indebtedness for money borrowed. For purposes of this
definition, interest which is accrued but not paid on the original due date or
within any applicable cure or grace period as provided by the underlying
contract for such interest shall be deemed Indebtedness for Money Borrowed.
Section 1.46. Interest Expense.
In respect of any period, an amount equal to the sum of the interest
incurred during such period based on a stated interest rate with respect to
Indebtedness for Money Borrowed of the Borrower and its Restricted Subsidiaries
on a consolidated basis.
Section 1.47. Interest Period.
Each period commencing on each Interest Rate Adjustment Date and ending on
the next Interest Rate Adjustment Date.
Section 1.48. Interest Rate Adjustment Date.
The 1st day of January, April, July and October of each year commencing July
1, 1997.
Section 1.49. Inventory.
All real and personal property, improvements and fixtures owned by the
Borrower or the Restricted Subsidiaries, including but not limited to all Land
Parcels, Lots Under Development, Developed Lots and Dwelling Lots.
Section 1.50. Land Parcels.
Parcels of land owned by the Borrower or any of its Restricted Subsidiaries
which are, as of the date of determination, not scheduled for commencement of
development into Developed Lots during the twelve (12) calendar months
immediately following such date of determination and which the Borrower has
designated as "Land Parcels." An individual Land Parcel is sometimes referred to
as a "Land Parcel."
Section 1.51. Lender.
▇▇▇▇▇▇▇ Bank, N.A.
Section 1.52. Letters of Credit.
Letters of credit issued for the account of the Borrower to support
obligations of the Borrower or any of its Affiliates, including but not limited
to ▇▇▇▇▇▇▇ money payments under option contracts, project completion performance
or project maintenance (but not credit enhancement). An individual Letter of
Credit is sometimes referred to as a "Letter of Credit".
Section 1.53. Leverage Ratio.
As of the last day of each fiscal quarter of the Borrower, the ratio of (a)
the Net Total Liabilities of the Borrower and its Restricted Subsidiaries on a
consolidated basis on such date to (b) Tangible Net Worth of the Borrower and
its Restricted Subsidiaries on a consolidated basis for the fiscal quarter end
being tested.
Section 1.54. LIBOR Rate.
The offered rate for deposits in United States dollars in the London
Interbank market for a three month period which appears on the Reuters Screen
LIBO Page as of 11:00 a.m. (London time) on the day that is two London Banking
Days (as defined herein) preceding the first Business Banking Day (as defined
herein) of the Interest Period. If at least two such offered rates appear on the
Reuters Screen LIBO Page, the rate will be the arithmetic mean of such offered
rates. The Lender may, in its discretion, use any other publicly available index
or reference rate showing rates offered for United States dollar deposits in the
London Interbank market as of the applicable date. In addition, the Lender may,
in its discretion, use rate quotation for a ninety (90) day period in lieu of a
quotation for a three (3) month period.
Section 1.55. Lien.
With respect to any property, any mortgage, lien, pledge, assignment,
charge, security interest, title retention agreement, levy, execution, seizure,
attachment, garnishment, or other encumbrance of any kind in the nature of any
of the foregoing in respect of such property, whether or not ▇▇▇▇▇▇, vested, or
perfected.
Section 1.56. Loan Amount.
TWENTY FIVE MILLION DOLLARS ($25,000,000.00).
Section 1.57. Loan Documents.
This Agreement, the Note and any and all other documents evidencing the Note
as the same may be amended, substituted, replaced, extended or renewed from time
to time.
Section 1.58. Loan Funding Availability.
The amount of Unsecured Indebtedness and unreimbursed draws under Letters of
Credit which the Borrower may incur as established pursuant to Section 5.1
hereof, at any applicable time, by the Lender based on the Loan Inventory.
Section 1.59. Loan Inventory.
Shall consist of Lots Under Development, Developed Lots, and Dwelling Lots
which are not encumbered by a Lien or Liens (other than any Permitted
Encumbrance) and which have been designated as Loan Inventory to be utilized for
the purpose of calculating Funding Availability under this Agreement.
Section 1.60. Loan.
Collectively, amounts advanced by the Lender to the Borrower under the Loan
Documents evidenced by the Note.
Section 1.61. London Banking Day.
Each day other than a Saturday, a Sunday or any holiday on which commercial
banks in London, England are closed for business.
Section 1.62. Lots Under Development.
Land Parcels which are, as of the date of determination, being developed
into Developed Lots or which are scheduled for the commencement of development
into Developed Lots within twelve (12) calendar months after the date of
determination, and which the Borrower has designated and the Lender has accepted
to be included and are included as "Lots Under Development" in the calculation
of the Funding Availability. An individual Lot Under Development is sometimes
referred to as a "Lot Under Development."
Section 1.63. Maturity Date.
The date when the Loan is due and payable as defined in the Note.
Section 1.64. Models.
A Dwelling Lot containing a dwelling unit which is designated by the
Borrower as a model unit for use in marketing and promoting the sale of Dwelling
Lots.
Section 1.65. ▇▇▇▇▇'▇ Rating.
At any time, with respect to any Person, the rating in effect at such time
assigned by ▇▇▇▇▇'▇ Investors Service, Inc. for the long term senior unsecured
debt of such Person.
Section 1.66. Net Total Liabilities.
At any time, Total Liabilities of the Borrower and its Restricted
Subsidiaries less cash and cash equivalents of the Borrower and its Restricted
Subsidiaries.
Section 1.67. Note.
Consolidated Promissory Note in the principal amount of TWENTY FIVE MILLION
DOLLARS ($25,000,000.00) of even date herewith.
Section 1.68. Note Rate.
The LIBOR Rate plus the Applicable Margin.
Section 1.69. Obligations.
(a) All payment and performance obligations of the Borrower and all other
obligors to the Lender under the Loan Documents, as they may be amended from
time to time, or as a result of making the Loan, and (b) the obligation to pay
an amount equal to the amount of any and all damages which the Borrower is
obligated to pay pursuant to the Loan Documents to, or on behalf of, the Lender,
which they may suffer by reason of a breach by any of the Borrower or any other
obligor of any obligation, covenant, or undertaking with respect to this
Agreement or any other Loan Document.
Section 1.70. Operational Carve Out Notice.
The written notice by the Borrower delivered to the Lender within sixty (60)
days from the end of the fiscal quarter for which this election is made
notifying such Persons of the election by the Borrower to initiate a Financial
Covenant Carve Out as a result of normal operational performance.
Contemporaneously with the delivery of an Operational Carve Out Notice, the
Borrower shall provide to the Lender a plan of action reflecting that the
Borrower will be in compliance with Section 6.9(1) hereof on or prior to the
last day of the applicable Financial Covenant Carve Out, and the failure to
deliver such plan of action shall render such Operational Carve Out Notice
ineffective.
Section 1.71. Operational Suspension Period.
An Operational Suspension Period shall occur upon delivery by the Borrower
to the Lender of an Operational Carve Out Notice and shall continue until the
earlier to occur of (a) the last day of the second fiscal quarter immediately
following the fiscal quarter for which such Operational Carve Out Notice was
delivered, or (b) the last day of the Borrower's fiscal quarter on which the
Leverage Ratio is to be determined in accordance with Section 6.9(1) hereof, if
on such date the Leverage Ratio (determined in accordance with Section 6.9(1)
hereof exceeds 2.5 to 1.0. Notwithstanding the foregoing, the maximum Leverage
Ratio for the Borrower during an Operational Suspension Period shall be 2.5. to
1.0 at the end of each fiscal quarter of the Borrower, and failure to comply
with such Leverage Ratio shall be an Event of Default.
Section 1.72. Permitted Encumbrances.
Liens, encumbrances, easements and other matters which (a) are in favor of
Lender to secure the subject facility, (b) are on real estate for real estate
taxes not yet delinquent, (c) are for taxes, assessments, judgments,
governmental charges or levies or claims the non-payment of which is being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves have been set aside on the Borrower's books (but only so long
as no foreclosure, distraint sale or similar proceedings have been commenced
with respect thereto and remain unstayed for a period for thirty (30) days after
their commencement), (d) are in favor of carriers, warehousemen, mechanics,
laborers and materialmen incurred in the ordinary course of business for sums
not yet past due or being diligently contested in good faith (if adequate
reserves are being maintained by the Borrower with respect thereto), (e) are
incurred in the ordinary course of business in connection with worker's
compensation and unemployment insurance, or (f) are easements, rights-of-way,
restrictions or similar encumbrances on the use of real property which does not
interfere with the ordinary conduct of business of the Borrower or materially
detract from the value of such real property.
Section 1.73. Person.
An individual, corporation, partnership, limited liability company, trust,
or unincorporated organization, or a government or any agency or political
subdivision thereof.
Section 1.74. Plan.
An employee benefit plan within the meaning of Section 3(3) of ERISA
maintained by or contributed to by the Borrower or any ERISA Affiliate.
Section 1.75. Reconciliation Date.
Two (2) Business Days after the Borrower's receipt of notice from the Lender
pursuant to Section 5.1(4) hereof that the outstanding principal balance of the
Unsecured Indebtedness plus unreimbursed draws under Letters of Credit issued
for the account of Borrower exceeds the Loan Funding Availability.
Section 1.76. Reportable Event.
Shall have the meaning set forth in Section 4043(b) of ERISA.
Section 1.77. Request for Advance.
Any certificate signed by an Authorized Signatory of the Borrower requesting
an Advance hereunder which will increase the aggregate amount of the Loan
outstanding, which certificate shall be denominated a "Request for Advance," and
shall be in substantially the form of Exhibit A attached hereto. Each Request
for Advance shall, among other things, (a) specify the date of the Advance,
which shall be a Business Day, (b) specify the amount of the Advance, (c) state
that there shall not exist, on the date of the requested Advance and after
giving effect thereto, a Default or an Event of Default, and (d) state that all
conditions precedent to the making of the Advance have been satisfied.
Section 1.78. Restricted Subsidiaries.
Any Subsidiary of the Borrower which has been designated as a Restricted
Subsidiary by the Borrower and from which the Lender is to receive a Subsidiary
Guaranty, including, without limitation, the Guarantors.
Section 1.79. Speculative Lot.
Any Dwelling Lots having a fully or partially constructed dwelling unit
thereon which Dwelling Lot is not subject to a bona fide contract for the sale
of such Dwelling Lot to a third party, excluding Developed Lots containing
Dwellings used as Models.
Section 1.80. S&P Rating.
At any time, with respect to any Person, the rating in effect at such time
assigned by Standard and Poor's Ratings Group, a division of McGraw Hill, Inc.,
for the long term senior unsecured debt of such Person.
Section 1.81. S&P/▇▇▇▇▇'▇ Rating.
At any time, with respect to any Person, the ratings in effect at such time
assigned by Standard and Poor's Ratings Group, a division of McGraw Hill, and
▇▇▇▇▇'▇ Investors Service, Inc. for the long term senior unsecured debt of such
Person.
Section 1.82. Subsidiary.
As applied to any Person, (a) any corporation of which fifty percent (50%)
or more of the outstanding stock (other than directors' qualifying shares)
having ordinary voting power to elect a majority of its board of directors,
regardless of the existence at the time of a right of the holders of any class
or classes of securities of such corporation to exercise such voting power by
reason of the happening of any contingency, or any partnership of which fifty
percent (50%) or more of the outstanding partnership interests, is at the time
owned by such Persons or by one or more Subsidiaries of such Person, or by such
Person and one or more Subsidiaries of such Person, and (b) any other entity
which is controlled or susceptible to being controlled by such Person, or by one
or more Subsidiaries of such Person, or by such Person and one or more
Subsidiaries of such Person; provided, however, that for purposes of this
Agreement and the other Loan Documents the term "Subsidiary" shall not include
DRH Mortgage Company, Ltd., a Texas limited partnership, SGS Communities at West
Windsor, L.L.C., a New Jersey limited liability company, or SGS Communities at
Battleground, L.L.C., a New Jersey limited liability company. Unless the context
otherwise requires, "Subsidiaries as used herein shall mean the Subsidiaries of
the Borrower. The Subsidiaries of the Borrower as of the Closing Date are the
named Guarantors as set forth in Section 1.41 of this Agreement.
Section 1.83. Subsidiary Guaranty.
A guaranty agreement in form and substance satisfactory to the Lender
whereunder a Restricted Subsidiary guarantees the full and faithful payment and
performance of all of the Obligations of the Borrower hereunder and under the
other Loan Documents.
Section 1.84. Summary Borrowing Base Report.
An aggregate inventory summary of the Loan Inventory in form acceptable to
Lender and certified as true and correct by an Executive Officer of the Borrower
containing, at a minimum, the cost funded to date for all Dwelling Lots,
Developed Lots and Lots Under Development including those elements of cost set
forth in Sections 1.3, 1.6 and 1.22 hereof.
Section 1.85. Tangible Assets.
The difference between total assets of the Borrower and its Restricted
Subsidiaries and all intangible assets of the Borrower and its Restricted
Subsidiaries, all as determined in accordance with GAAP.
Section 1.86. Tangible Net Worth.
With respect to the Borrower and its Restricted Subsidiaries, stockholder's
equity on a consolidated basis less all "intangible assets" as defined under
GAAP and amounts invested in Unrestricted Subsidiaries of such Person.
Section 1.87. Third Party Notes Payable.
With respect to the Borrower and its Restricted Subsidiaries, all
Indebtedness for Money Borrowed other than (a) publicly issued Indebtedness for
Money Borrowed which is pari passu with the Obligations, (b) non-recourse
Indebtedness, (c) Indebtedness owed to the seller of any Inventory acquired by
the Borrower of its Restricted Subsidiaries, (d) Indebtedness which is
structurally subordinate to the Obligations or which is convertible into equity
at the option of the Borrower, (e) Indebtedness for ▇▇▇▇▇▇▇ money and (f) notes
payable for insurance premiums and capitalized lease obligations.
Section 1.88. Total Liabilities.
All items required by GAAP to be set forth as "liabilities" on the
Borrower's and its Restricted Subsidiaries' consolidated balance sheet.
Section 1.89. Unrestricted Subsidiaries.
Affiliated or wholly owned companies of ▇.▇. ▇▇▇▇▇▇, Inc. not providing
guarantees.
Section 1.90. Unsecured Indebtedness.
Indebtedness for Money Borrowed of the Borrower and its Restricted
Subsidiaries which is not secured in whole or in part by any Lien except
Permitted Encumbrances (excluding capitalized lease obligations, notes payable
for insurance premiums, non-recourse promissory notes for seller financing and
promissory notes issued as ▇▇▇▇▇▇▇ money for contracts).
Each definition of an agreement in this Article I shall include such
agreement as modified, amended, or supplemented from time to time with the prior
written consent of the Lender, and except where the context otherwise requires,
definitions imparting the singular shall include the plural and vice versa.
Except where otherwise specifically restricted, reference to a party to a Loan
Document includes that party and its successors and assigns. All terms used
herein which are defined in Article 9 of the Uniform Commercial Code in effect
in the State of Florida on the date hereof and which are not otherwise defined
herein shall have the same meanings herein as set forth therein.
All accounting terms used herein without definition shall be used as defined
under GAAP as of the Agreement Date.
ARTICLE II
AMOUNT AND TERMS OF LOAN
Section 2.1. Line of Credit.
The Lender hereby grants to the Borrower a revolving line of credit not to
exceed the sum of TWENTY FIVE MILLION DOLLARS ($25,000,000.00) to be funded and
disbursed only in accordance with the terms and conditions contained herein.
Subject to the terms, conditions and collateral requirements hereinafter set
forth in this Agreement, at any time and from time to time, the Borrower may
borrow from and repay to and reborrow from the Lender at such time and in such
amounts not exceeding the maximum amount of TWENTY FIVE MILLION DOLLARS
($25,000,000.00) in effect under this Agreement.
Section 2.2. Promissory Note.
2.2(1) Execution of Note. Under the terms of this Agreement, the Borrower
shall execute and deliver to the Lender the Note.
2.2(2) Due Date of Note. The Note is due on demand.
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2.2(3) Grace Period for Payment. Notwithstanding the foregoing, in the
event Lender shall demand repayment of the amounts disbursed pursuant to the
Note, for reasons other than the monetary and/or non-monetary default by the
Borrower, Borrower shall have six (6) months from the date demand is made by the
Lender in which to repay such amounts and any amounts thereafter disbursed.
During the first ninety (90) days of such six (6) month period, the Lender shall
continue to disburse funds pursuant to this Agreement.
Section 2.3. Application of Funds.
The Lender and the Borrower agree that all funds received from the Lender
under this Agreement are to be used as working capital. Nothing herein shall
impose upon the Lender any obligation to see to the proper application of any
Advance.
Section 2.4. Taxes and Assessments on Note.
The Borrower shall promptly pay all taxes and assessments assessed or
levied, under and by virtue of any State, Federal or Municipal law or regulation
now in existence or hereinafter passed, to Lender as a result of its ownership
of the Note.
Section 2.5. Extension of Credit.
Subject to the terms and conditions of this Agreement, and in reliance upon
the representations and warranties made in this Agreement and the other Loan
Documents, and provided that there is no Default or Event of Default, the Lender
agrees to lend and relend to the Borrower amounts which in the aggregate at any
one time outstanding do not exceed the Loan Amount.
Section 2.6. Manner of Borrowing and Disbursement Under Loan.
2.6(1) Request for Advance. The Borrower shall give the Lender irrevocable
written notice for Advances under the Loan not later than 12:00 noon (Eastern
time) on the day immediately preceding the date of the requested Advance in the
form of a Request for Advance, or notice by telephone or telecopy followed
immediately by a Request for Advance; provided, however, that the failure by the
Borrower to confirm any notice by telephone or telecopy with a Request for
Advance shall not invalidate any notice so given. Subsequent to the initial
Advance(s) of the Loan made on the Agreement Date, the Borrower may not request,
in the aggregate, more than two (2) Advances in any calendar month. No
disbursements shall be made more than thirty (30) days after the submission of a
Summary Borrowing Base Report or Detailed Borrowing Base Report, whichever is
applicable.
2.6(2) Disbursement. Prior to 2:00 p.m. (Eastern time) on the date of an
Advance hereunder, the Lender shall, subject to the satisfaction of the
conditions set forth in this Agreement, disburse the amount requested by (i)
transferring the amounts by wire transfer pursuant to the instructions of the
Borrower, or (ii) in the absence of such instructions, crediting the amounts so
made available to the account of the Borrower maintained with the Lender.
2.6(3) No Default. Prior to making any advance under the Loan Documents,
the Lender, in its sole discretion, may verify that the Borrower is not in
default under the Loan Documents and the Lender shall not be obligated to make
any advance unless and until it is reasonably satisfied as to the accuracy of
such information. The Lender shall not be obligated to make any Advances
hereunder: (a) upon this Agreement being deemed to expire as a result of any
law, regulation or regulatory action now or hereafter enacted or adopted; or (b)
upon the making of any such Advance becoming prohibited by any law, regulation
or regulatory action now or hereafter enacted or adopted.
Section 2.7. Interest on Loan.
2.7(1) Loan. Interest shall be computed on the basis of a hypothetical year
of 360 days for the actual number of days elapsed during each calendar month and
shall be payable at a simple interest rate equal to the Note Rate times the
principal balance outstanding from time to time under the Note for the number of
days such principal amounts are outstanding during such calendar month.
2.7(2) Upon Default. Upon the occurrence and during the continuance of a
Default, the Lender shall have the option (but shall not be required to give
prior notice thereof to the Borrower to accelerate the maturity of the Loan or
to exercise any other rights or remedies hereunder in connection with the
exercise of this right) to charge interest on the outstanding principal balance
of the Loan at the Default Rate from the date of such Default. Such interest
shall be payable on the earliest of demand or the next interest payment date
established in the Note, as applicable, and shall accrue until the earlier of
(i) waiver or cure (to the satisfaction of the Lender) of the applicable
Default, (ii) agreement by the Lender to rescind the charging of interest at the
Default Rate, or (iii) payment in full of the Obligations.
Section 2.8. Fees on Loan.
The Borrower agrees to pay to the Lender an unused fee for each calendar
year on the difference between (i) the Loan Amount and (ii) the average daily
outstanding balance of the Loan during the applicable period, at the rate of 20
basis points (.20 %). Such unused fee shall be computed on the basis of a
hypothetical year of 360 days for the actual number of days elapsed, shall be
due and payable quarterly in arrears on the twenty-fifth (25th) day of each
January, April, July, and October for the immediately preceding calendar quarter
and on the Maturity Date, and shall be fully earned when due and non-refundable
when paid.
Section 2.9. Repayment of Loan.
2.9(1) Interest. The Borrower shall pay interest on the Loan as set forth in
the Note.
2.9(2) Reconciliation of Loan Inventory. The Borrower shall repay certain
portions of the outstanding principal of the Loan and accrued and unpaid
interest thereon upon the reconciliation of the Loan Funding Availability
against the outstanding principal balance under the Note as provided in Section
5.1 hereof.
2.9(3) Maturity. In addition to the foregoing, a final payment of all
Obligations then outstanding shall be due and payable by the Borrower on
Maturity Date.
Section 2.10. Manner of Payment.
2.10(1) Time. Each payment (including any prepayment) by the Borrower on
account of the principal of or interest on the Loan, fees, and any other amount
owed to the Lender under this Agreement, the Note, or the other Loan Documents
shall be made not later than 1:00 p.m. (Eastern time) on the date specified for
payment under this Agreement or such other Loan Document in lawful money of the
United States of America in immediately available funds. Any payment received by
the Lender after 1:00 p.m. (Eastern time) shall be deemed received on the next
Business Day for purposes of interest accrual.
2.10(2) Date. If any payment under this Agreement or any of the Note shall
be specified to be made upon a day which is not a Business Day, it shall be made
on the next succeeding day which is a Business Day, and such extension of time
shall in such case be included in computing interest and fees, if any, in
connection with such payment.
2.10(3) Amount. The Borrower may not make payments, in the aggregate, under
this Agreement (excluding any payments specifically required pursuant to the
terms of this Agreement) more than two (2) times in any calendar month.
2.10(4) No Set Off. The Borrower agrees to pay principal, interest, fees,
and all other amounts due hereunder or under the Note without set-off or
counterclaim or any deduction whatsoever.
ARTICLE III
BORROWER'S REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, the Borrower makes the
following representations and warranties which shall be deemed to be continuous
representations and warranties so long as any credit hereunder remains available
or any indebtedness of the Borrower to the Lender remains unpaid:
Section 3.1. Organization and Standing.
The Borrower is a corporation duly organized and existing under the laws of
the State of Delaware and is duly qualified to do business in each jurisdiction
in which the conduct of its business requires such qualification, including the
State of Florida. To the best of the Borrower's knowledge and belief, the
Borrower is in compliance with all applicable laws and regulations governing the
conduct of its business and governing consummation of the transactions.
Section 3.2. Power and Authority.
The execution, delivery and performance hereof by the Borrower are within
its corporate powers and have been duly authorized by all necessary corporate
and shareholder action, are not in contravention of law or the terms of its
Articles of Incorporation or By-Laws or any amend ment thereto, or any
indenture, agreement or undertaking to which it is a party or by which it is
bound.
Section 3.3. Valid and Binding Obligations.
The Loan Documents constitute the legal, valid and binding respective
obligations of the Borrower subject to applicable bankruptcy and insolvency laws
and laws affecting creditors' rights and the enforcement thereof generally.
Section 3.4. Title to Collateral.
The Borrower has, or will have, good and marketable title to all property
from time to time listed in the Summary Borrowing Base Report free and clear of
all mortgages, pledges, liens, security interests or other encumbrances other
than Permitted Encumbrances. The Borrower will warrant and defend the Collateral
against the claims and demands of all persons except for claims and demands
arising from the title exceptions referenced in the preceding sentence.
Section 3.5. Financial Statements and Other Information.
Subject to any limitation stated therein or in connection therewith by the
Borrower in writing, all balance sheets, earnings statements and other financial
data which have been or shall hereafter be furnished to the Lender to induce it
to enter into this Agreement or otherwise in connection herewith do or will
fairly represent the financial condition of the Borrower as of the dates and the
results of its operations for the period for which the same are furnished to the
Lender and have been or will be prepared in accordance with GAAP and all other
information, reports and other papers and data furnished to the Lender are and
or will be, at the time the same are so furnished, accurate and correct in all
material respects and complete insofar as completeness may be necessary to give
the Lender a true and accurate knowledge of the subject matter. There are no
material liabilities of any kind of the Borrower as of the date of the most
recent financial statements which are not reflected therein. There have been no
materially adverse changes in the financial condition or operation of the
Borrower since the date of such financial statements.
Section 3.6. Litigation.
The Borrower warrants and represents to the Lender that as of the Agreement
Date, none of the Borrower nor any Restricted Subsidiary is a party to any
litigation having a reasonable probability of being adversely determined to the
Borrower or any Restricted Subsidiary which, if adversely determined, would
impair the ability of the Borrower to carry on its business substantially as now
conducted or contemplated or would materially adversely affect the financial
condition, business or operations of the Borrower.
Section 3.7. Consent or Filing.
No consent, approval or authorization of, or registration, declaration or
filing with any court, any governmental body or authority or other person or
entity is required in connection with the valid execution, delivery or
performance of this Agreement or any document required by this Agreement or in
connection with any of the transactions contemplated thereby, except the filing
of any financing statements contemplated hereunder.
ARTICLE IV
CONDITIONS PRECEDENT
The effectiveness of this Agreement and the obligations of the Lender to
consummate any of the transactions contemplated hereby shall be subject to the
satisfaction of the following conditions precedent, at or prior to the Closing
Date:
Section 4.1. Opinion of Counsel.
Borrower shall cause to be delivered to Lender an opinion from counsel to
the Borrower addressed to and in form satisfactory to the Lender regarding the
legal matters set forth in Sections 3.1, 3.2, 3.3, 3.6 and 3.7 hereof.
Section 4.2. Documents and Instruments.
The Lender shall have received all the instruments and documents
contemplated to be delivered by the Borrower hereunder, and the same shall be in
full force and effect. This Agreement and all of the instruments and documents
executed in connection therewith are hereinafter referred to as the "Loan
Documents".
Section 4.3. Correctness of Warranties.
All representations and warranties contained herein or otherwise made to the
Lender in connection herewith shall be true and correct.
Section 4.4. Certificate of Resolution.
The Board of Directors, or the Executive Committee thereof, and, if
stockholder approval is necessary, the stockholders of Borrower shall have
passed specific resolutions authorizing the execution and delivery of all
documents and the taking of all actions called for by this Agreement, and the
Borrower shall have furnished to the Lender copies of such resolutions,
certified by the Secretary.
Section 4.5. Borrowing Base Report.
The Borrower shall have delivered to the Lender the appropriate Borrowing
Base Report as required by Section 5.1(2) of this Agreement. Both the Summary
Borrowing Base Report and the Detailed Borrowing Base Report shall contain a
sworn certificate attesting to the accuracy of the representations contained in
said reports.
Section 4.6. Insurance Certificate.
Certificate(s) of insurance required pursuant to Section 6.16 hereof.
Section 4.7. Guarantors.
4.7(1) Authorization. The Board of Directors and, if stockholder approval is
necessary, the stockholders of each of the Guarantors shall have passed specific
resolutions authorizing execution and delivery of the Guarantys and the Borrower
shall have furnished to the Lender copies of such resolutions, certified by the
Secretary of the respective corporations. With respect to the Guaranty by the
limited partnership, the Borrower shall provide the Lender with a certificate of
limited partnership evidencing the approval of the execution of the Guaranty by
the general partner.
4.7(2) Withdrawal/Adding of Guarantors. Provided there is no Default under
any Loan Document, the Guaranty of any Restricted Subsidiary may be released by
the Lender upon the written request of the Borrower. The withdrawal of any
Restricted Subsidiary shall be effective upon the written consent of the Lender.
A Guaranty of any Restricted Subsidiary may be added at any time by the Borrower
delivering to the Lender a continuing and unconditional guaranty in the form and
content of the Guaranty executed by Restricted Subsidiaries simultaneous with
the execution of this Agreement.
Section 4.8. Other Documents.
Such other documents as the Lender may reasonably from time to time require
in order to verify compliance with the Loan Documents.
Section 4.9. Subsequent Disbursements.
Prior to requesting subsequent disbursements under the Loan, (subsequent to
the first disbursement) the Borrower shall execute and deliver to the Lender all
of the following items, in form and substance satisfactory to the Lender. The
Lender shall have no further obligation to make further disbursements until all
such items have been properly executed and delivered to the Lender.
(a) The Summary Borrowing Base Report or the Detailed Borrowing Base Report
as required pursuant to this Agreement for all previous periods of time.
(b) The Request for Advance that the Borrower is required to deliver in
connection with the request of an Advance.
(c) Such other documents as the Lender may reasonably require to insure
compliance with the Loan Documents.
ARTICLE V
DISBURSEMENT AMOUNT AND PROCEDURE
5.1 Loan Funding Availability. At the designated times set forth herein, the
Lender shall establish a Loan Funding Availability for the Loan Inventory.
5.1(1) Calculation of Loan Funding Availability. The Loan Funding
Availability shall be equal to the sum of "A" plus "B" plus "C"; provided, that
at no time may the sum of "A" and "B" exceed thirty percent (30%) of Loan
Funding Availability.
A = seventy-five percent (75%) of the sum of all
Acquisition Costs for all Lots Under Development which are included in the Loan
Inventory. If, after a parcel of land is designated a Lot Under Development,
development of such parcel ceases for thirty (30) calendar days or more (other
than by reason of a Force Majeure), at the discretion of the Lender, the Loan
Funding Availability for such parcel may be reduced to an amount determined by
the Lender (which amount can be zero) until development of such Lot Under
Development is resumed to the satisfaction of the Lender.
B = seventy-five percent (75%) of the sum of all
Acquisition Costs for all Developed Lots included in the Loan Inventory.
C = one hundred percent (100%) of the sum of all
Acquisition Costs and Construction Costs for all Dwelling Lots included in the
Loan Inventory.
5.1(2) Designation of Land Parcels. Lots Under Development. Developed Lots
and Dwelling Lots. On or before the fifteenth (15th) calendar day of each
calendar month (other than a month following the end of a calendar quarter), the
Borrower shall deliver to the Lender a Summary Borrowing Base Report in the form
attached hereto as Exhibit B and incorporated herein. On or before the fifteenth
(15th) calendar day of each month following the end of a calendar quarter, the
Borrower shall deliver to the Lender a Detailed Borrowing Base Report in the
form attached hereto as Exhibit C and incorporated herein which form shall have
been completed and signed by the Borrower. The Summary Borrowing Base Report and
Detailed Borrowing Base Report shall reflect Inventory that the Borrower desires
to have designated as Loan Inventory. Upon the Lender's receipt of the Summary
Borrowing Base Report or Detailed Borrowing Base Report, as the case may be, the
Lender may conduct inspections or reviews of the subject Inventory that the
Lender deems appropriate, at the expense of the Lender except as hereinafter
expressly provided. Based upon the information in the Summary Borrowing Base
Report or Detailed Borrowing Base Report, as the case may be, and the other
information compiled by the Lender, the Lender shall determine, in its
discretion, whether a Lot Under Development, Developed Lot or Dwelling Lot not
previously designated as part of the Loan Inventory shall be designated part of
the Loan Inventory and, if so, whether such Lot Under Development, Developed Lot
or Dwelling Lot shall be designated a Lot Under Development, Developed Lot or
Dwelling Lot.
5.1(3) Periodic Establishment of Loan Funding Availability. Within two (2)
Business Days of the Lender's receipt of an Summary Borrowing Base Report or
Detailed Borrowing Base Report, as the case may be, the Lender shall establish
the Loan Funding Availability based on the Report delivered to the Lender and
information compiled by the Lender. In the event the Borrower does not submit
the Summary Borrowing Base Report or Detailed Borrowing Base Report in the time
and manner set forth above or furnish sufficient information to the Lender to
enable the Lender to establish a new Loan Funding Availability, the Lender will
establish a Loan Funding Availability based on some or all of the previous
information submitted to the Lender by the Borrower in the immediately preceding
Summary Borrowing Base Report or Detailed Borrowing Base Report and the
information compiled by the Lender, as required hereunder, in connection
therewith, as the case may be, or other information available to the Lender.
5.1(4) Reconciliation. In the event that the Loan Funding Availability for a
particular Funding Period is less than the then outstanding principal amount of
all Unsecured Indebtedness and unpaid draws under the Letters of Credit, the
Lender shall notify the Borrower thereof. On or before the Reconciliation Date,
the Borrower shall (i) (A) pay to the Lender a principal payment to be applied
to the Loan; and/or (B) provide to the Lender evidence that the principal amount
of Unsecured Indebtedness has been reduced in an aggregate amount sufficient to
eliminate the excess of the outstanding principal amount of the Unsecured
Indebtedness and unpaid draws under the Letters of Credit over the Loan Funding
Availability, together with any accrued and unpaid interest on such excess; or
(ii) provide a revised Summary Borrowing Base Report or Detailed Borrowing Base
Report designating sufficient additional Inventory (which shall be acceptable to
the Lender, in its discretion) as Loan Inventory to cause the Loan Funding
Availability to equal or exceed the outstanding principal of the Loan.
5.1(5) Removal/Disapproval of Inventory for Loan Funding Availability. If,
at any time, the Lender determines, in its reasonable discretion, that any part
of the Loan Inventory is not acceptable for inclusion in the calculation of the
Loan Funding Availability as a result of an unforeseen material adverse change
in the condition of such portion of the Loan Inventory or as a result of the
existence of hazardous wastes or materials in or on any Inventory which are in
violation of any warranty, representation or covenant of the Loan Documents
regarding such hazardous wastes or materials, the Lender may exclude such
portion of the Loan Inventory from the calculation of the Loan Funding
Availability. If, after such exclusion, the then outstanding principal amount
under the Note would exceed the Loan Funding Availability, the Borrower shall
pay to the Lender on the Reconciliation Date immediately following the exclusion
of such Loan Inventory, a principal payment on the Loan in an amount sufficient
to eliminate such excess of the aggregate outstanding principal balance of the
Loan over the Loan Funding Availability, together with accrued and unpaid
interest on such excess.
Section 5.2. Inspections/Valuations.
The Lender and/or any inspection agent employed by the Lender shall have the
right, during the term of this Agreement to inspect the Property at any
reasonable time to confirm the accuracy of the Borrowing Base Report and to
independently evaluate the units, lots and projects comprising the Loan
Inventory. In the event that the Borrowing Base Report is deemed inaccurate or
in the event that the value of the Loan Inventory in the reasonable
determination of the Lender exceeds the outstanding principal balance of the
Loan, the Loan Funding Availability may be adjusted by the Lender or the
affected portions of the Loan Inventory may be excluded from the Loan Inventory.
In addition, the Lender shall have the right, with reasonable notice to
Borrower, to examine the books of account and other records and files of the
Borrower, and to discuss the affairs, business, finances and accounts of the
Borrower with their respective officers and employees, all at such reasonable
time and as often as the Lender may request provided that Lender shall not
unreasonably interfere or disrupt the conduct of the Borrower's business. It is
agreed that all inspection and valuation services rendered by or for Lender's
officers or agents shall be rendered solely for the protection and benefit of
the Lender and at the Lender's expense.
Section 5.3. Lender Counsel Approval.
At the option and request of the Lender, the Lender may require that counsel
for the Lender review any of the documents or instruments required, executed or
provided in connection with this Agreement to confirm compliance with the terms
and conditions of this Agreement; or to otherwise advise the Lender in its
duties and responsibilities hereunder. The Borrower hereby agrees to reimburse
the Lender for the reasonable fees (based on time spent) and costs associated
therewith.
Section 5.4. Liability of Lender.
5.4(1) To Third Parties. The Lender shall in no event be responsible or
liable to any person other than the Borrower for its disbursement of or failure
to disburse the funds or any part thereof, and neither the contractor nor any
subcontractor nor materialmen or craftsmen nor laborers nor others shall have
any claim or right against the Lender under this Agreement or the Lender's
administration thereof. The Lender shall not be liable to any materialmen,
contractors, craftsmen, laborers or others for goods or services delivered by
them in or upon the Property, nor for debts or claims accruing to any such
parties against the Borrower. Nor shall the Lender be liable for the manner in
which any disbursements under this Agreement may be applied by the Borrower and
the contractor or either of them or for any compliance with the Florida
Construction Lien Law. The Borrower is not and shall not be an agent for Lender
for any purpose.
5.4(2) To the Borrower. The Borrower has accepted and does accept, the full
responsibility for the selection of its own contractor and subcontractors and
all materials, supplies and equipment to be used in the construction of the
improvements contemplated by this Agreement, and the Lender assumes no
responsibility for the completion of the improvements contemplated herein.
Further, the Borrower has accepted and does accept full responsibility for
compliance with the Florida Construction Lien Law and relieves the Lender of any
and all liability with respect to that law and agrees to indemnify and hold the
Lender harmless from any and all liability under it of any nature whatsoever.
Section 5.5. Release of Guaranties.
Contemporaneously with the delivery of a Summary Borrowing Base Report (or a
Detailed Borrowing Base Report), the Borrower may request the release of any
Restricted Subsidiary from the Subsidiary Guaranty. In the event that the Loan
Funding Availability established by the Lender pursuant to Section 5.1(5)
hereof, without consideration of any Inventory owned by such Restricted
Subsidiary, is equal to or greater than the amount otherwise required pursuant
to Section 5.1(4) hereof, then the Lender shall, upon receipt of a certificate
from the Borrower that no Defaults exists before and after giving effect to such
release, release such Restricted Subsidiary from the Subsidiary Guaranty.
ARTICLE VI
BORROWER'S AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that until the Note, together with
interest and all other indebtedness to the Lender under the terms of this
Agreement, are paid in full, unless specifically waived by the Lender in
writing:
Section 6.1. Corporate Existence and Qualification.
The Borrower will do, or cause to be done, all things necessary to preserve,
renew and keep in full force and effect its corporate existence, rights,
licenses and permits and comply with all laws applicable to it, operate its
business in a proper and efficient manner and substantially as presently
operated or proposed to be operated; and at all times maintain, preserve and
protect all franchises and trade names and preserve all property used or useful
in the conduct of its business, and keep the same in good repair, working order
and condition, and from time to time make, or cause to be made, all needful and
proper repairs, renewals, replacements, betterments and improvements thereto,
so that the business carried on in connection therewith may be properly and
advantageously conducted at all times.
Section 6.2. Financial Statements/Status Reports.
The Borrower will keep its books of accounts in accordance with GAAP and
will furnish to the Lender:
6.2(1) 10-K. Within one hundred twenty (120) days after the close of
Borrower's fiscal year the Form 10-K of the Borrower filed with the Securities
and Exchange Commission, together with the audited, consolidated financial
statements of the Borrower prepared by an independent accounting firm of
recognized standing.
6.2(2) 10-Q. Within sixty (60) days after the last day of each quarter in
each fiscal year of the Borrower, except the last quarter of such fiscal year of
the Borrower, the Form 10-Q of the Borrower filed with the Securities and
Exchange Commission containing financial statements of the Borrower and all
entities related to and divisions of the Borrower, on a consolidated basis.
6.2(3) Sales Report. Within sixty (60) days of the end of each fiscal year
commencing with fiscal year end 1997, annual sales and inventory status reports
showing units closed, units in backlog and income summary for all operations in
the State of Florida of the Borrower and its Restricted Subsidiaries.
6.2(4) Other Financial Documentation. The Borrower shall provide to the
Lender such other financial information as the Lender may reasonably request
from time to time to clarify or amplify the information required to be furnished
to the Lender under this Agreement.
Section 6.3. Taxes and Claims.
The Borrower shall properly pay and discharge: (a) all taxes, assessments
and govern mental charges upon or against the Borrower or its assets prior to
the date on which penalties attach thereto, unless and to the extent that such
taxes are being diligently contested in good faith and by appropriate
proceedings and appropriate reserves therefor have been established; and (b) all
lawful claims, whether for labor, materials, supplies, services or anything else
which might or could, if unpaid, become a lien or charge upon the properties or
assets of the Borrower, unless and to the extent only that the same are being
diligently contested in good faith and by appropriate proceedings and
appropriate reserves therefor have been established.
Section 6.4. Pay Indebtedness to Lender and Perform Other Covenants.
The Borrower shall: (a) make full and timely payments of the principal of
and interest, and premium, if any, on the Note and all other indebtedness of the
Borrower to the Lender, whether now existing or hereafter arising and (b) duly
comply with all the terms and covenants contained in each of the instruments and
documents given to the Lender pursuant to this Agree ment at the times and
places and in the manner set forth herein.
Section 6.5. Litigation.
The Borrower will promptly notify the Lender upon the commencement of any
action, suit, claim, counterclaim or proceeding against or investigation of the
Borrower (except when the alleged liability is fully covered by insurance): (a)
which has the reasonable possibility of being concluded adversely to the
Borrower the result of which, in the reasonable opinion of the Borrower, could
materially adversely affect the business of the Borrower; or (b) which questions
the validity of this Agreement or any other document executed in connection
herewith or any action taken or to be taken pursuant to any of the foregoing.
Section 6.6. Defaults.
The Borrower will promptly notify the Lender in writing of: (a) any material
assessment by any taxing authority for unpaid taxes as soon as the Borrower has
knowledge thereof; (b) the existence of any declared default in the payment or
performance of any indebtedness (excluding non recourse indebtedness and
excluding indebtedness incurred in lieu of contract deposits pursuant to
contracts for the acquisition of buildable lots or land) owed by the Borrower to
any other lender within ten (10) days of the declaration of such default which
would materially and adversely affect the Borrower's assets or business.
Section 6.7. Further Assurances.
The Borrower shall, at its sole cost and expense, upon the request of the
Lender, duly execute and deliver or cause to be duly executed and delivered to
the Lender such further instruments and do and cause to be done such further
acts that may be necessary or proper in the opinion of the Lender to carry out
more effectively the intent and purpose of this Agreement.
Section 6.8. Funds Not Assignable.
The proceeds of the Loan shall not be assigned by the Borrower nor subject
to the process of any court upon legal action by or against the Borrower or by
or against anyone claiming under or through Borrower, and for the purpose of
this Agreement, the funds shall remain and be considered the money and property
of the Lender until the Borrower is entitled to have them disbursed as provided
herein. Nothing herein contained shall be considered as in anywise modifying,
or subordinating the Obligations previously given or to be given by the Borrower
as security for the Loan and such Obligations shall be and remain in full force
and effect, this Agreement being intended only as additional security for the
Loan and to insure its use for the purposes intended by the Lender and Borrower.
Section 6.9. Financial Covenants.
Until the Obligations are repaid in full, the Borrower shall adhere to and
certify quarterly as correct, the following financial covenants (after giving
effect to any Financial Covenant Carve Out), all on a consolidated basis with
the Restricted Subsidiaries and determined as of the last day of each fiscal
quarter of the Borrower:
6.9(1) Leverage Ratio. The Borrower shall maintain at all times a Leverage
Ratio of not more than 2.35 to 1.
6.9(2) Ratio of EBITDA. The Borrower shall maintain at all times a ratio of
(i) EBITDA to (ii) Fixed Charges of not less than 2.75 to 1.0.
6.9(3) Minimum Tangible Net Worth. The Borrower shall maintain at all times
a minimum Tangible Net Worth of one hundred sixty million and no/100 dollars
($160,000,000.00), plus fifty percent (50%) of annual net profits for the
preceding fiscal year, plus fifty percent (50%) of any capital paid into the
Borrower (other than stock issued in connection with an employee stock ownership
plan, an employee stock option plan, an employee stock purchase plan or for an
acquisition), plus one hundred percent (100%) of net losses with absolute
minimum Tangible Net Worth of not less than one hundred sixty million and no/100
dollars ($160,000,000.00).
6.9(4) Third Party Notes Payable. The Borrower shall not at any time permit
Third Party Notes Payable to be greater than thirteen percent (13%) of Tangible
Assets on a consolidated basis.
Section 6.10. Inventory Covenants.
During the term of this Agreement, the Borrower shall adhere to the
following Inventory covenants which will be tested by the Lender as of the last
day of each fiscal quarter of the Borrower:
6.10(1) Speculative Lots. The total number of Speculative Lots owned by the
Borrower and its Restricted Subsidiaries at any given time shall not exceed
fifty percent (50%) of all Closed Sales during the immediately preceding twelve
(12) calendar months. Models shall not be considered "Speculative Lots" for
purposes of this Section 6.10(1).
6.10(2) Developed Lots/Lots Under Development. The Borrower shall not permit
the total number of Developed Lots and Lots Under Development, in each case,
then owned by the Borrower and all Restricted Subsidiaries, at any given time to
exceed two and one-half (2 1/2) times the number of Closed Sales during the
immediately preceding twelve (12) calendar months. The Borrower shall not permit
the aggregate cost of all Developed Lots and Lots Under Development, in each
case, then owned by the Borrower and all Restricted Subsidiaries, at any given
time to exceed forty percent (40%) of all Tangible Assets of the Borrower on a
consolidated basis.
6.10(3) Land Cost. The cost of the land owned by Borrower and all Restricted
Subsidiaries at any given time which has not been developed into Developed Lots
and is not scheduled for commencement of development into Developed Lots within
twelve (12) calendar months from the date of determination shall not exceed ten
percent (10%) of all Tangible Assets of the Borrower and its Restricted
Subsidiaries on a consolidated basis. In the event that the Borrower or any
Restricted Subsidiary classifies certain undeveloped land as being scheduled for
development within twelve (12) calendar months for the purpose of this provision
and, as of the last day of such twelve (12) calendar month period, development
of such land has not commenced, such land shall not be classified as scheduled
for development within twelve (12) calendar months until such development is
commenced.
For purposes of Section 6.10(1), 6.10(2) and 6.10(3) only, the terms
"Speculative Lots", "Dwelling Lot", "Models", "Developed Lots", "Lots Under
Development" and "Dwellings" will include all properties of Borrower and
Restricted Subsidiaries that are situated either within or without the State of
Florida.
Section 6.11. Additional Information.
Upon the request of the Lender, the Borrower shall deliver to Lender any
documents or information with respect to the Inventory that the Lender may
reasonably require including, without limitation, and acquisition closing
documentation.
Section 6.12. Compliance Certificates.
Within forty-five (45) days from the end of each fiscal quarter of the
Borrower, the Borrower shall provide to the Lender a certificate signed by an
Authorized Signatory of the Borrower in the form attached hereto as Exhibit D
setting forth such calculations required to establish whether the Borrower was
in compliance with Sections 6.9 and 6.10 hereof.
Section 6.13. Payment of Contractors.
The Borrower shall pay in a timely manner, and shall cause its Restricted
Subsidiaries to pay in a timely manner, any and all contractors and
subcontractors who conduct work in or on the Inventory, subject to the right of
the Borrower to contest any amount in dispute, so long as the contesting of such
amount is pursued diligently and in good faith. The Borrower will advise the
Lender in writing immediately if the Borrower or any of its Restricted
Subsidiaries receives any written notice from any contractor(s),
subcontractor(s) or material furnisher(s) to the effect that said contractor(s)
or material furnisher(s) have not been paid for any labor or materials furnished
to or in the Inventory and such outstanding payment or payments are individually
or collectively equal to or greater than five hundred thousand and no/ 100
dollars ($500,000.00) per subdivision or seven million and no/100 dollars
($7,000,000.00) in the aggregate. The Borrower will further make available to
the Lender, for inspection and copying, on demand, any contracts, bills of sale,
statements, receipted vouchers or agreements, under which the Borrower claims
title to any materials, fixtures or articles used in the development of the Loan
Inventory or construction of improvements on the Loan Inventory including,
without limitation, the Dwellings.
Section 6.14. Bank Group Line.
6.14(1) Default. Borrower shall provide immediate notice to Lender of any
declared default under the Bank Group Line or under any other loan agreement or
creditor agreement with any financial institution.
6.14(2) Notice of Change. Should the Borrower agree to any change or
amendment to the Bank Group Line, it shall give notice to the Lender of such
change prior to making the change, if time permits, and if not within two (2)
Business Days after the making of such change.
Section 6.15. Hazardous Substances.
The Borrower warrants and represents to the Lender that to the best of their
knowledge and belief and based on environmental assessments of the Inventory
commissioned by the Borrower, except to the extent disclosed to the Lender in
environmental assessments or other writings or to the extent that it would not
materially and adversely affect the use and marketability of any Inventory, the
Inventory has not been and is not now being used as a storage facility for any
"Hazardous Substances", nor has it been used in violation of any federal, state
or local environmental law, ordinance or regulation, that no proceedings have
been commenced, or notice(s) received, concerning any alleged violation of any
such environmental law, ordinance or regulation, and that the Inventory is free
of hazardous or toxic substances and wastes, contaminants, oil, radioactive or
other materials the removal of which is required or the maintenance of which is
restricted, prohibited or penalized by any federal, state or local agency,
authority or governmental unit except as set forth in the Site Assessments. The
Borrower covenants that it shall neither permit any such materials to be brought
on to the Inventory, nor shall it acquire real property to be added to the Loan
Inventory upon which any such materials exist, except to the extent disclosed to
the Lender in environmental assessments or other writings or to the extent that
it would not materially and adversely affect the use and marketability of any
Inventory; and if such materials are so brought or found located thereon, such
materials shall be immediately removed, with proper disposal, to the extent
required by applicable environmental laws, ordinances and regulations, and all
required environmental cleanup procedures shall be diligently undertaken
pursuant to all such laws, ordinances and regulations. The Borrower further
represents and warrants that the Borrower will promptly transmit to the Lender
copies of any citations, orders, notices or other material governmental or other
communications received with respect to any hazardous materials, substances,
wastes or other environmentally regulated substances affecting the Inventory.
Notwithstanding the foregoing, there shall not be a default of this provision
should the Borrower store or use minimal quantities of the aforesaid materials,
provided that: such substances are of a type and are held only in a quantity
normally used in connection with the construction, occupancy or operation of
comparable buildings or residential developments (such as cleaning fluids and
supplies normally used in the day to day operation of residential developments),
such substances are being held, stored and used in complete and strict
compliance with all applicable laws, regulations, ordinances and requirements,
and the indemnity set forth below shall always apply to such substances, and it
shall continue to be the responsibility of the Borrower to take all remedial
actions required under and in accordance with this Agreement in the event of any
unlawful release of any such substance.
Borrower hereby agrees to indemnify Lender and hold Lender harmless from and
against any and all losses, liabilities, including strict liability, damages,
injuries, expenses, including reasonable attorneys' fees, costs of any
settlement or judgment and claims of any and every kind whatsoever paid incurred
or suffered by, or asserted against, Lender by any person or entity or
governmental agency for, with respect to, or as a direct or indirect result of,
the presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission, discharging or release from the Inventory of any Hazardous Substance
(including, without limitation, any losses, liabili ties, including strict
liability, damages, injuries, expenses, including reasonable attorneys' fees,
costs of any settlement or judgment or claims asserted or arising under the
Comprehensive Environmental Response, Compensation and Liability Act, any so
called federal, state or local "Superfund" "Superlien" laws, statutes, law
ordinance, code, rule, regulation, order or decree regulating, with respect to
or imposing liability, including strict liability, substances or standards of
conduct concerning any Hazardous Substance), regardless of whether within the
control of Lender.
For purposes of this Agreement, "Hazardous Substances" shall mean and
include those elements or compounds which are contained in the list of hazardous
substances adopted by the United States Environmental Protection Agency ("EPA")
and the list of toxic pollutants designated by Congress or the EPA or defined by
any other federal, state or local statute, law, ordinance, code, rule,
regulation, order or decree regulating, relating to, or imposing liability or
standards of conduct concerning, any hazardous, toxic or dangerous waste,
substance or material as now or at any time hereafter in effect.
If Borrower receives any notice of (i) the happening of any material event
involving the spill, release, leak, seepage, discharge or clean-up of any
Hazardous Substance on any of the Inventory or in connection with Borrower's
operations thereon or (ii) any complaint, order, citation or material notice
with regard to air emissions, water discharges, or any other environ mental,
health or safety matter affecting Borrower (an "Environmental Complaint") from
any person or entity (including without limitation the EPA) then Borrower shall
immediately notify Lender orally and in writing of said notice.
Lender shall have the right but not the obligation, and without limitation
of Lender's rights under this Agreement, to enter onto the Inventory or to take
such other actions as it deems necessary or advisable to clean up, remove,
resolve or minimize the impact of, or otherwise deal with, any such Hazardous
Substance or Environmental Complaint following receipt of any notice from any
person or entity (including, without limitation, the EPA) asserting the
existence of any Hazardous Substance or an Environmental Complaint pertaining to
the Inventory or any part thereof which, if true, could result in an order, suit
or other action against Borrower, which would have a material adverse effect on
the Borrower, and/or which, in the sole opinion of Lender, could jeopardize its
security under this Agreement. All reasonable costs and expenses incurred by
Lender in the exercise of any such rights shall be secured by this Agreement and
shall be payable by Borrower upon demand.
Section 6.16. Insurance.
The Borrower shall keep the Inventory comprising the Loan Inventory insured
by responsible insurance companies in such amounts and against such risks as is
customary for owners of similar businesses and properties in the same general
areas in which the Borrower and its Restricted Subsidiaries operate or, to the
customary extent (and in a manner approved by the Lender) the Borrower may be
self insured. All insurance herein provided for shall be in form and with
companies reasonably approved by the Lender. The Borrower shall also maintain
general liability insurance, ▇▇▇▇▇▇▇'▇ compensation insurance, automobile
insurance for all vehicles owned by them and any other insurance reasonably
required by the Lender, to the extent commercially available at a reasonable
cost. On the Agreement Date, the Borrower shall deliver to the Lender a copy of
a certificate of insurance evidencing the insurance required hereunder. In
addition, on the date of delivery of each report required by Section 4.6 hereof,
the Borrower shall certify to the Lender that all insurance policies required to
be maintained hereunder remain in full force and effect.
Section 6.17. Reportable Event.
Promptly after Borrower receives notice or otherwise becomes aware thereof,
the Borrower shall notify the Lender of the occurrence of any Reportable Event
with respect to any Plan as to which the Pension Benefit Guaranty Corporation
has not by regulation waived the requirement of Section 4043(a) of ERISA that it
be notified within thirty (30) days of the occurrence of such event (provided
that the Borrower shall give the Lender notice of any failure to meet the
minimum funding standards of Section 412 of the Code or Section 302 of ERISA,
regardless of the issuance of any waivers in accordance with Section 412(d) of
the Code.
Section 6.18. Secured Indebtedness.
The Borrower shall not, and shall not permit any of its Restricted
Subsidiaries to, incur or permit to exist any Indebtedness which is (a) secured
in whole or in part by any of the Inventory (other than Permitted Encumbrances);
or (b) contains any provision requiring the Borrower or any Restricted
Subsidiary to grant to the lender thereunder any Lien at a future date or upon
the occurrence of any subsequent event; except that the Borrower and its
Restricted Subsidiaries may incur (i) Indebtedness in favor of a seller of
Inventory to the Borrower which is secured solely by the Inventory
contemporaneously acquired from such seller; (ii) Indebtedness secured solely by
the Borrower's headquarters building located in Arlington, Texas or any other
office building owned by the Borrower or any Restricted Subsidiary, and (iii)
Indebtedness secured by any clubhouse located in any development of the Borrower
or any Restricted Subsidiary.
ARTICLE VII
DEFAULT AND REMEDIES
Section 7.1. Defaults.
Subsequent to any applicable notice and/or cure rights afforded by the Loan
Documents, each of the following shall constitute a Default, whatever the reason
for such event and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment or order of any court or any
order, rule, or regulation of any governmental or non-governmental body:
7.1(1) Payment. Default by the Borrower in the payment of any principal,
interest or payment due to the Lender under the Note or under any of the Loan
Documents;
7.1(2) Performance. Default in the payment or performance of any other
liability, obligation or covenant of the Borrower to the Lender under the Loan
Documents, for a period of ten (10) days after written notice; provided (i) if
Borrower reasonably cannot perform within such (10) day period and, in Lender's
reasonable judgment, Lender's security will not be impaired, Borrower may have
such additional time to perform as Borrower reasonably may require, provided and
for so long as Borrower proceeds with due diligence to cure said default; and
(ii) if Lender's security reasonably will be materially impaired if Borrower
does not perform in less than ten (10) days, Borrower will have only such period
following written notice in which to perform as Lender may reasonably specify.
7.1(3) Representation. Any representation, warranty, statement, certificate,
schedule or report made or furnished by the Borrower that proves to have been
false or erroneous in any material respect at the time of the making thereof, or
to have omitted any substantial liability or claim against the Borrower, or if
on the date of execution of this Agreement there shall have been any materially
adverse change in any of the facts disclosed therein, which change shall not
have been disclosed to the Lender at or prior to the time of such execution;
7.1(4) Litigation. Any litigation or any proceedings which are pending
against the Borrower or Restricted Subsidiaries, the outcome of which would in
Lender's reasonable determination materially adversely affect the continued
operation of the Borrower, and the Borrower failing to take corrective measures
reasonably satisfactory to the Lender within ten (10) days;
7.1(5) Obligations to Others. The failure of the Borrower to pay, when due,
any other indebtedness for borrowed money owed by the Borrower to the Lender, or
default by the Borrower in the performance of the terms of any loan agreement or
indenture relating to such indebtedness, which failure or default would
materially adversely affect the business, operations or financial condition of
the Borrower, and any such default shall not have been remedied within thirty
(30) days thereafter;
7.1(6) Obligations to Lender. Any default by Borrower on any other direct
obligation that Borrower may have to the Lender which continues uncured for
thirty (30) days after notice from Lender;
7.1(7) Other Default. There shall occur any Event of Default in the
performance or observance of any agreement or covenant or breach of any
representation or warranty contained in any of the Loan Documents (other than
this Agreement or as otherwise provided in this Section 7.1 of this Agreement)
or any Subsidiary Guaranty, which shall not be cured to the Lender's
satisfaction within the applicable cure period, if any, provided for in such
Loan Document or ninety (90) days from the date the Borrower receives notice
from the Lender with respect thereto if no cure period is provided in such Loan
Document;
7.1(8) Title 11 Relief. There shall be entered a decree or order for relief
in respect of the Borrower or any of its Restricted Subsidiaries under Title 11
of the United States Code, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy law or other similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator, or similar
official of the Borrower or any of its Restricted Subsidiaries, or of any
substantial part of their respective properties, or ordering the winding-up or
liquidation of the affairs of the Borrower or any of its Restricted
Subsidiaries, or an involuntary petition shall be filed against the Borrower or
any of its Restricted Subsidiaries, and a temporary stay entered, and (i) such
petition and stay shall not be diligently contested, or (ii) any such petition
and stay shall continue undismissed for a period of thirty (30) consecutive
days;
7.1(9) Title 11 Petition. The Borrower or any of its Restricted Subsidiaries
shall file a petition, answer, or consent seeking relief under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
applicable federal or state bankruptcy law or other similar law, or the Borrower
or any of its Restricted Subsidiaries shall consent to the institution of
proceedings thereunder or to the filing of any such petition or to the
appointment or taking of possession of a receiver, liquidator, assignee,
trustee, custodian, sequestrator, or other similar official of the Borrower or
any of its Restricted Subsidiaries, or of any substantial part of their
respective properties, or the Borrower or any of its Restricted Subsidiaries
shall fail generally to pay their respective debts as they become due, or the
Borrower or any of its Restricted Subsidiaries shall take any corporate or
partnership action to authorize any such action;
7.1(10) Judgment. A final judgment shall be entered by any court against the
Borrower or any of its Restricted Subsidiaries for the payment of money which
exceeds $500,000.00, which judgment is not covered by insurance or a warrant of
attachment or execution or similar process shall be issued or levied against
property of the Borrower or any of its Restricted Subsidiaries which, together
with all other such property of the Borrower or any of its Restricted
Subsidiaries subject to other such process, exceeds in value $500,000.00 in the
aggregate, and if, within thirty (30) days after the entry, issue, or levy
thereof, such judgment, warrant, or process shall not have been paid or
discharged or bonded or stayed pending appeal, or if, after the expiration of
any such stay, such judgment, warrant, or process shall not have been paid or
discharged;
7.1(11) ERISA Funding. (1) There shall be at any time any "accumulated
funding deficiency," as defined in ERISA or in Section 412 of the Code, with
respect to any Plan; or (2) a trustee shall be appointed by a United States
District Court to administer any Plan; or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any Plan; or (3) any of the
Borrower and its ERISA Affiliates shall incur any liability to the Pension
Benefit Guaranty Corporation in connection with the termination of any Plan; or
(4) any Plan or trust created under any Plan of any of the Borrower and its
ERISA Affiliates shall engage in a non-exempt "prohibited transactions (as such
term is defined in Section 406 of ERISA or Section 4975 of the Code) which would
subject the Borrower or any ERISA Affiliate to the tax or penalty on "prohibited
transactions" imposed by Section 502 of ERISA or Section 4975 of the Code; and
by reason of any or all of the events described in clauses (1) through (4), as
applicable, the Borrower shall have incurred (and/or is likely to incur) and/or
incurred liability in excess of $1,000,000.00 in the aggregate;
7.1(12) Invalidity of Documents. All or any portion of any Loan Document
shall at any time and for any reason be declared by a court of competent
jurisdiction in a suit with respect to such Loan Document to be null and void,
or a proceeding shall be commenced by any Governmental Authority involving a
legitimate dispute or by the Borrower or any of its Restricted Subsidiaries,
having jurisdiction over the Borrower or any of its Restricted Subsidiaries,
seeking to establish the invalidity or unenforceability thereof (exclusive of
questions of interpretation of any provision thereof), or the Borrower or any of
its Restricted Subsidiaries shall deny that it has any liability or obligation
for the payment of principal or interest purported to be created under any Loan
Document;
7.1(13) Change of Control. There shall occur any Change of Control;
7.1(14) Transfer of Property. Except for conveyances of all or any part of
the Loan Inventory between the Borrower and the Guarantors there occurs any
sale, lease, conveyance, assignment, pledge, encumbrance, or transfer of all or
any part of the Loan Inventory or any interest therein, voluntarily or
involuntarily, whether by operation of law or otherwise, except (i) in
accordance with the terms of this Agreement, (ii) for execution of contracts
with prospective purchasers, (iii) for Permitted Encumbrances, and (iv) in the
ordinary course of business;
7.1(15) Property Change. Except in the normal course of Borrower's
development of inventory into Developed Lots and construction of Dwellings
thereon, without the prior written consent of Lender, Borrower grants any
easement or dedication, files any plat, condominium declaration, or restriction
or otherwise encumbers all or any portion of the Loan Inventory, or seeks or
permits any zoning reclassification or variance, unless such action is expressly
permitted by the Loan Documents or does not affect any Inventory which is part
of the Loan Inventory; or
Notwithstanding anything contained herein to the contrary, the occurrence of any
of the foregoing shall not be a Default or an Event of Default hereunder if: (i)
the occurrence pertains only to specific parcel(s) within the Loan Inventory;
and (ii) the affected parcel(s) is (are) removed from the Loan Inventory on or
before ten (10) days in the case of a monetary occurrence and thirty (30) days
in the case of a non-monetary occurrence after the occurrence or, if the
Borrower is entitled to notice and cure, within the applicable notice and cure
period.
In the event that any such parcel is a Lot Under Development, Developed Lot or
Dwelling Lot, then the Loan Funding Availability shall be immediately calculated
excluding such parcel. If, as the result of such removal, the outstanding
principal balance under the Loan would exceed the Loan Funding Availability, the
Borrower shall pay (X) to the Lender on the Reconciliation Date immediately
following the removal of such Inventory from the Loan Inventory, a principal
payment on the Loan in an amount sufficient to eliminate such excess of the
aggregate outstanding principal balance of the Loan over the Loan Funding
Availability, together with any due and unpaid interest on such excess or (Y)
add additional Inventory to the Loan Inventory (which is acceptable to the
Lender) in an amount sufficient to cause the Loan Funding Availability to equal
or exceed the Loan.
Section 7.2. Remedies.
If a Default shall have occurred and shall be continuing:
7.2(1) Optional Acceleration. With the exception of a Default specified in
Sections 7.1(8), 7.1(9) and 7.1(10), Lender may, by notice to the Borrower (i)
declare the Note, all interest thereon and all other amounts payable under this
Agreement and the other Loan Documents to be forthwith due and payable,
whereupon the Note, all such interest and all such amounts shall become and be
forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the Borrower,
and (ii) terminate this Agreement.
7.2(2) Immediate Acceleration. Upon the occurrence of a Default under
Sections 7. l(8), 7.1(9) or 7.1(10) hereof, this Agreement shall automatically
terminate and such principal, interest (including without limitation, interest
which would have accrued but for the commencement of a case or proceeding under
the federal bankruptcy laws), and other amounts payable under this Agreement or
the Note shall thereupon and concurrently therewith become due and payable, all
without any action by the Lender, all without presentment, demand, protest or
other notice of any kind, all of which are expressly waived, anything in this
Agreement or in the Note to the contrary notwithstanding.
7.2(3) Loan Document Rights. The Lender shall exercise all of the
post-default rights granted to it and to them under the Loan Documents or under
Applicable Law.
7.2(4) Cumulative Rights. The rights and remedies of the Lender hereunder
shall be cumulative, and not exclusive.
Section 7.3. Cross Default.
All of the Note and other Loan Documents are "cross defaulted such that (a)
the occurrence of an Event of Default under any one of the Loan Documents shall
constitute an Event of Default under this Agreement and all of the Loan
Documents and (b) the occurrence of a Default under any one of the Loan
Documents shall constitute a Default under this Agreement and all of the other
Loan Documents.
Section 7.4. Waiver of Default.
The Lender at any time may waive any Default or any Event of Default which
shall have occurred and any of its consequences, in which case the parties
hereto shall be restored to their former positions and rights and obligations
hereunder, respectively; but no such waiver shall extend to any subsequent or
other Default or impair any right consequent thereon, and no such waiver shall
be effective unless it is in a written document executed by a duly authorized
officer.
Section 7.5. Rights and Remedies Not Waived.
No course of dealing between the Borrower and the Lender or any failure or
delay on the part of the Lender in exercising any rights or remedies hereunder
shall operate as a waiver of any rights or remedies of the Lender and no single
or partial exercise of any rights or remedies hereunder shall operate as a
waiver or preclude the exercise of any other rights or remedies hereunder.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Lien; Setoff By Lender.
The Borrower hereby grants to the Lender a continuing lien for all
indebtedness and other liabilities of the Borrower to the Lender upon any and
all moneys, securities, and other property of the Borrower and the proceeds
thereof, now or hereafter held or received by or in transit to, the Lender from
or to the Borrower, whether for safekeeping, custody, pledge, transmission,
collection or otherwise, and also upon any and all deposits (general or special)
and credits of the Borrower with, and any and all claims of the Borrower against
the Lender at any time existing. Upon the occurrence of any Default, the Lender
is hereby authorized at any time and from time to time, without notice to the
Borrower setoff, appropriate, and apply any or all items hereinabove referred to
against all indebtedness and other liabilities of the Borrower to the Lender,
whether under this Agreement, the Loan Documents or otherwise, and whether now
existing or hereafter arising.
Section 8.2. Waivers.
The Borrower waives presentment, demand, protest, notice of default,
nonpayment, partial payments and all other notices and formalities relating to
this Agreement other than notices specifically required hereunder. The Borrower
consents to and waives notice of the granting of indulgences or extensions of
time of payment, the taking or releasing of security, the addition or release of
persons primarily or secondarily liable on or with respect to liabilities of the
Borrower to the Lender, all in such manner and at such time or times as the
Lender may deem advisable. No act or omission of the Lender shall in any way
impair or affect any of the indebtedness or liabilities of the Borrower to the
Lender or rights of the Lender in any security. No delay by the Lender to
exercise any right, power or remedy hereunder or under any security agreement,
and no indulgence given to the Borrower in case of any Default, shall impair any
such right, power or remedy or be construed as having created a course of
dealing or performance contrary to the specific provisions of this Agreement or
as a waiver of any Default by the Borrower or any acquiescence therein or as a
violation of any of the terms or provisions of this Agreement. The Lender shall
have the right at all times to enforce the provisions of this Agreement and all
other documents executed in connection herewith in strict accordance with their
terms, notwithstanding any course of dealing or performance by the Lender in
refraining from so doing at any time and notwithstanding any custom in the
banking trade. No course of dealing between the Borrower and the Lender shall
operate as a waiver of any of the Lender's rights.
Section 8.3. Benefit.
This Agreement is made and entered into for the sole protection and benefit
of the Lender and the Borrower, their successors and assigns, and no other
person or persons other than the Borrower shall have any right of action hereon
or rights to the Loan proceeds at any time. Lender shall not (a) owe any duty
whatsoever to any claimant for labor performed or material furnished in
connection with the construction of any Dwelling or improvement on any
Inventory, or (b) owe any duty to apply any undisbursed portion of the Loan to
the payment of any claim, or (c) owe any duty to exercise any right or power of
the Lender hereunder or arising from any Default by the Borrower.
Section 8.4. Assignment.
The terms hereof shall be binding upon and inure to the benefit of the
heirs, successors, assigns, and personal representatives of the parties hereto;
provided, however, that the Borrower shall not assign this Agreement or any of
its rights, interests, duties or obligations hereunder or any Loan proceeds or
other monies to be advanced hereunder in whole or in part without the prior
written consent of the Lender and any such assignment (whether voluntary or by
operation law) without said consent shall be void and render automatically
terminated any obligation of Lender to advance any further monies pursuant to
this Agreement or any other Loan Document.
Section 8.5. Amendment and Waiver.
This Agreement and the other Loan Documents represent the final agreement
between the Lender and the Borrower and may not be contradicted by evidence of
prior, contemporaneous or subsequent oral or written agreements of the Borrower
and the Lender. Neither this Agreement nor any of the Loan Documents may be
amended orally, nor may any provision hereof be waived orally but only by an
instrument in writing signed by the Lender and the Borrower.
Section 8.6. Terms.
Whenever the context and construction require, all words used in the
singular number herein shall be deemed to have been used in the plural, and vice
versa, and the masculine gender shall include the feminine and neuter and the
neuter shall include the masculine and feminine.
Section 8.7. Governing Law and Jurisdiction.
This Agreement shall be construed in accordance with the laws of the State
of Florida, and such laws shall govern the interpretation, construction and
enforcement hereof.
Section 8.8. Publicity.
Subject-to the Borrower's approval, the Lender shall have the right to
incorporate its name into signage placed upon the Loan Inventory situated in
Florida. Lender shall have the right to secure printed publicity through
newspaper and other media concerning the Inventory and source of financing.
Section 8.9. Expenses of Lender.
The Borrower promises to reimburse the Lender promptly for all reasonable
out-of-pocket expenses of every nature which the Lender may incur in connection
with the Loan Documents, the making of any Loans provided for herein or the
collection of the Borrower's indebtedness, including, but not limited to,
reasonable attorneys' fees of Lender's counsel relating to the preparation of
the Loan Documents, all recording fees, and documentary stamps. Such expenses
shall be paid at closing or in a reasonable time thereafter upon receipt of
written invoices. The Borrower shall also pay reasonable post-closing expenses
incurred by the Lender on behalf of the Borrower. Furthermore, the Borrower
shall be liable for post-closing collection expenses, including, but not limited
to the collection of Obligations of the Borrower hereunder, including reasonable
attorneys' fees, including appellate proceedings, post-judgment proceedings and
bankruptcy proceedings. In the event the Borrower fails to pay such expenses
within a reasonable time, the Lender may either (a) disburse to itself under the
terms of the Note any sums payable to Lender and such disbursement shall be
considered with like effect as if same had been made to Borrower, or (b) pay
such expenses on the Borrower's behalf and charge the Borrower's account.
Section 8.10. Invalidation of Provisions.
In the event that any one or more of the provisions of this Agreement is
deemed invalid by a court having jurisdiction over this Agreement or other
similar authority, Lender may, in its sole discretion, terminate this Agreement
in whole or in part.
Section 8.11. Notices.
All notices, requests, consents, demands and other communications required
or which any party desires to give hereunder or under any other Loan Document
shall, unless other specifically provided in such other Loan Document, be deemed
sufficiently given or furnished if (a) in writing and delivered by personal
delivery, by courier, or by registered or certified United States mail, postage
prepaid, addressed to the party to whom directed at the addresses specified
below (unless changed by similar notice in writing given by the particular party
whose address is to be changed), (b) by telex with confirmation thereof in
writing by sender pursuant to subsection (a) above, (c) facsimile to the
facsimile number specified below with confirmation thereof in writing by sender
pursuant to subsection (a) above, or (d) by oral communication with confirmation
thereof in writing by the notifying party pursuant to subsection (a) above
within three (3) Business Days after such oral communication. Any such notice or
communication shall be deemed to have been given and to be effective either at
the time of personal delivery or, in the case of courier or mail, as of the date
of first attempted delivery at the address and in the manner provided herein,
or, in the case of telex, when transmitted (answer back confirmed), or, in the
case of facsimile, upon receipt or, in the case of oral communication, upon the
effectiveness of written confirmation as hereinabove provided. Notwithstanding
the foregoing, no notice of change of address shall be effective except upon
receipt. This Section shall not be construed in any way to affect or impair any
waiver of notice or demand provided in any Loan Document or to require giving of
notice or demand to or upon any person in any situation or for any reason.
BORROWER:
▇. ▇. ▇▇▇▇▇▇, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
▇▇▇ ▇. Harbour
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
LENDER:
▇▇▇▇▇▇▇ Bank, N.A.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Post Office Box 678267
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Closing Department Manager
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Winderweedle, Haines, ▇▇▇▇ & ▇▇▇▇▇▇▇, P.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
Post ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esquire
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.12. Termination by the Borrower.
The Borrower may terminate this Agreement in its entirety by giving at least
ten (10) days prior written notice of its intention to terminate and by payment
in full of all Obligations. Upon the date of termination, the Borrower's
obligation for the payment of the fee provided for in Section 2.8 hereof shall
terminate.
Section 8.13. Controlling Agreement.
In the event any provision of this Agreement is inconsistent with any
provision of any other document, whether heretofore executed, required or
executed pursuant to this Agreement or otherwise, the provisions of this
Agreement shall be controlling.
Section 8.14. Titles.
Titles to the sections of this Agreement are solely for the convenience of
the parties hereto and are not an aid in the interpretation of this Agreement or
any part thereof.
Section 8.15. Counterparts.
This Agreement may be executed in any number of counterparts and by the
parties hereto on separate counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute one
and the same Agreement.
Section 8.16. Time is of the Essence.
The parties agree that time shall be of the essence in interpreting each and
every term and condition contained herein.
Section 8.17. Waiver of Trial by Jury.
The Borrower and the Lender knowingly, voluntarily and intentionally waive
the right either may have to a trial by jury in respect of any litigation based
hereon, or arising out of, under or in connection with the Loan Documents and
any agreement contemplated to be executed in conjunction therewith, or any
course of conduct, course of dealing, statements (whether verbal or written) or
actions of either party. This provision is a material inducement for the Lender
entering into the Loan evidenced by the Loan Documents.
IN WITNESS WHEREOF, the parties have executed this Agreement the day and
year first above written.
Signed, sealed and delivered
in the presence of:
▇. ▇. ▇▇▇▇▇▇, INC., a Delaware
corporation
/s/ ▇▇▇ ▇. HARBOUR
------------------------------------ By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
------------------------------------ Executive Vice President
"Borrower"
▇▇▇▇▇▇▇ BANK, N.A., a national
banking association
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------ By:/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------ As Its: Closing Officer
"Lender"
REQUEST FOR ADVANCE
On ____________________, ▇.▇. ▇▇▇▇▇▇, INC. (Borrower) requests of ▇▇▇▇▇▇▇ BANK,
N.A. (Lender) an advance of $_____________________; to be deposited into account
number #____________________ maintained with Lender or wire transferred to the
Borrower as follows: ---------------------------------------------------------.
Since the date of the last disbursement, and as of the date of this
disbursement, the Borrower certifies to the Lender and attests that to the best
of its knowledge and belief,
a) there has not been nor does there exist an adverse material change in their
financial condition, on a consolidated basis;
b) there exists no Event of Default or Default as defined in that Restated
Working Capital Line of Credit Agreement dated ____________ prior to or
subsequent to this disbursement;
c) the Borrower, on a consolidated basis, is in compliance with those financial
covenants, representations and warranties contained in that Restated Working
Capital Line of Credit Agreement dated _______________;
d) Construction of the site work for Parcels Under Development and construction
of improvements on the Dwelling Lots is progressing in a satisfactory
manner, pursuant to that Restated Working Capital Line of Credit Agreement
dated ____________________; and
e) all conditions precedent to the Borrower's right to receive the requested
disbursement have been met in accordance with the terms and conditions of
that Restated Working Capital Line of Credit Agreement dated
__________________.
▇.▇. ▇▇▇▇▇▇, INC., a Delaware corporation
By:______________________________________
============================================================= ==================
S&P/▇▇▇▇▇'▇ Rating or Leverage Ratio as of the Applicable
quarter end or most recently completed quarter Margin
------------------------------------------------------------- ------------------
LIBOR +
Level I BBB - Baa3, or better 65
Level II less than 1.25 72.5
Level III between 1.25 and 1.50 80
Level IV between 1.50 and 1.80 85
Level V between 1.80 and 2.35 95
Level VI between 2.35 and 2.60 110
============================================================= ==================