Exhibit 10.11
REVOLVING WORKING CAPITAL, LAND ACQUISITION AND
DEVELOPMENT
AND RESIDENTIAL
CONSTRUCTION BORROWING BASE FACILITY
AGREEMENT
| |
|
|
|
Date:
|
|
March 21, 2007 |
|
|
|
|
|
Loan
No.:
|
|
1001839 |
|
|
|
|
|
Borrower:
|
|
LEVITT AND SONS, LLC |
|
|
|
2200 West Cypress Creek Road |
|
|
|
Fort Lauderdale, Florida 33309 |
|
|
|
|
|
Lender:
|
|
OHIO SAVINGS BANK |
|
|
|
200 Ohio Savings Plaza |
|
|
|
Mail Code OH 99-0204 |
|
|
|
1801 East Ninth Street |
|
|
|
Cleveland, Ohio 44114 |
|
|
|
Attn: Frank J. Bolognia, Sr.
Executive Vice President |
|
|
|
|
|
Maximum Facility
Amount:
|
|
$100,000,000.00 |
|
|
|
|
|
Expiration
Date:
|
|
March 20, 2009, as such date may
be extended as set forth below. |
THIS REVOLVING WORKING CAPITAL,
LAND ACQUISITION AND DEVELOPMENT AND RESIDENTIAL CONSTRUCTION
BORROWING BASE FACILITY AGREEMENT (the “ Agreement
”) is entered into as of the date set forth above, by and
between Borrower and Lender, with reference to the following
facts:
A. Lender has approved a
revolving loan facility (the “ Loan
” or the “ Facility
”) for Borrower under which Borrower may request
funding for the acquisition or refinance of land, development
thereof, and the construction of Units (as hereinafter defined)
located in one or more Approved Projects (as hereafter defined) in
the states of Florida, Georgia, North Carolina, South Carolina,
Tennessee and Texas, and for working capital purposes. The
availability of such credit for new projects hereunder is subject
to the Expiration Date identified above.
B. The total amount of the
Facility is the Maximum Facility Amount shown above, the
availability of which is subject to certain sub-limits and
restrictions, including the establishment of a Maximum
Available Amount ” that is determined from
time to time based on the current value of the underlying
collateral and certain other restrictions as set forth on
SCHEDULE 1 .
C. As of the date hereof, Lender
has agreed to advance funds under the Facility in connection with
the Project identified in Section I of
SCHEDULE 1 hereto, which shall constitute an Approved
project, as defined below. The approval by Lender of additional
Approved Projects
Borrowing Base Facility Agreement- Loan
No. 1001839
and the
disbursement of funds in connection therewith shall be upon
Borrower’s request and at Lender’s sole discretion, in
accordance with the provisions hereinafter contained.
D. Except for funds advanced
under the Working Capital Line, funds advanced under the Facility
shall be secured by one or more mortgages and or deeds of trust, as
applicable, in a form satisfactory to Lender (collectively, and as
amended from time to time, the “
Mortgages ”) creating first priority
liens or deeds of trust encumbering the Property (the
“ Property ”) included or
to be included within an Approved Project for which Borrower
anticipates an immediate need for financing hereunder. In lieu of
recording additional Mortgages to encumber additional Properties to
be designated additional Approved Projects, any existing Mortgage
and the legal description therein may be modified and amended, by a
mortgage modification and spreader agreement, in form and content
acceptable to Lender, to encumber such additional Property as funds
under the Facility are advanced in connection with such additional
Property.
E. The repayment of funds
advanced from time to time under the Working Capital Line shall be
(i) guaranteed by the Working Capital Line Guarantor and
(ii) secured by a pledge of, and security interest in and to,
all the equity interests (the “ Working Capital Line
Collateral ”) in Borrower.
F. Any term set forth herein in
quotes shall be as hereinafter defined in this Agreement.
NOW, THEREFORE, the parties agree as
follows:
1. CERTAIN DEFINITIONS .
As used herein, the following terms shall have the meanings set
forth below:
1.1 “A&D Draw” means a “
Draw ” which is made for the acquisition or
refinancing of “A&D Land ” , development of
“A&D Improvements”, or other costs contained in a
“ Budget” for an “ A&D Project
” set forth in an “ A&D Project
Addendum” .
1.2 “A&D Draw Request” means
that portion of the Collateral Verification Certificate
representing the Collateral Basis Amount for A&D Projects
submitted in accordance with the draw procedures set forth in
Section 4 below which shall be accompanied by
(i) an AIA Application and Certificate for Payment signed by
Borrower’s engineer and general contractor, if applicable, of
the A&D Project, or equivalent acceptable to Lender;
(ii) Borrower certifying the status of development and the
percentage of completion; and (iii) a spreadsheet report for
all costs confirmed by an applicable AIA form.
1.3 “A&D Improvements” means
the development improvements being made by Borrower or the
applicable Project Guarantor on A&D Land, as set forth in the
A&D Project Budget.
1.4 “A&D Land” means Property
for which Borrower or the applicable Project Guarantor has in place
or shall obtain all permits and approvals for development, that is
purchased by Borrower or a Project Guarantor for the purpose of
eventual development as an A&D Project.
Borrowing Base Facility Agreement- Loan
No. 1001839
l.5 “A&D Land Acquisition”
means the acquisition or refinance of A&D Land by Borrower or a
Project Guarantor.
1.6 “A&D Land Addendum” means
a document which shall be substantially in the form shown on the
attached EXHIBIT A , executed by an “
Authorized Person” on behalf of Borrower and by
Lender, which shall indicate Lender’s approval of an A&D
Land Acquisition.
1.7 “A&D Land Allocation”
means the portion of the Maximum Facility Amount allocated for a
particular A&D Land Acquisition, as set forth in an A&D
Land Addendum for such A&D Land Acquisition or as set forth on
an A&D Project Budget.
1.8 “A&D Project” means the
A&D Land and the A&D Improvements in or for a particular
Approved Project.
1.9 “A&D Project Addendum”
means a document which shall be substantially in the form shown on
the attached EXHIBIT B , executed by an Authorized
Person on behalf of borrower and by Lender, which shall indicate
Lender’s approval of, and special conditions relating to, an
A&D Project.
1.10 “A&D Project Allocation”
means the portion of the Maximum Facility Amount allocated for a
particular A&D Project, as set forth in an A&D Project
Addendum for such A&D Project.
1.11 “Appraisal” means an
appraisal ordered by Lender from an independent appraiser
acceptable to Lender, that complies with all applicable state and
federal laws and regulations and with the Uniform Standards of
Professional Appraisal Practice; provided, however, that the value
shown in any such Appraisal shall be subject to review and
potential adjustment by Lender’s in-house appraisal review
department, in its sole discretion.
1.12 “Approved Project” means
Property approved by Lender in its sole discretion for inclusion as
collateral for this Facility and for Draws hereunder under one of
the applicable “Eligible Property Types” .
Borrower shall provide Lender with all relevant information for
each prospective or existing Approved Project based on its
applicable Eligible Property Type, including, without limitation
and at Lender’s request, appraisals, surveys, recorded plats,
plans and specifications, copies of all existing permits and
governmental approvals obtained for the Approved Project, insurance
policies in form and amount acceptable to Lender and issued by
insurance companies acceptable to Lender, environmental audits,
project budgets, and all other documents and information that
Lender may require, and that otherwise satisfy the requirements for
approval of a particular Project as set forth in
Section 4 below or on SCHEDULE 1
.
1.13 “Authorized Person” means a
person authorized to execute and deliver the “ Loan
Documents ”, A&D Draw Requests, “ Borrowing
Base Draw Requests ,” “ Working Capital Line
Draw Requests ,” “ Collateral Verification
Certificates ” in the form attached hereto and
incorporated herein as EXHIBIT C , and
“Certificates of Compliance” in the form attached
hereto and incorporated herein as EXHIBIT D , and to
certify financial statements in connection with
Borrowing Base Facility Agreement- Loan
No. 1001839
this
Facility, as set forth in a borrowing resolution or otherwise
designated by Borrower in writing from time to time in a form
acceptable to Lender.
1.14 “Borrower” means,
individually and collectively if more than one, those entities
identified above and on SCHEDULE 1 attached
hereto.
1.15 “Borrowing Base Draw” means a
Draw other than an A&D Draw or a Working Capital Line
Draw.
1.16 “Borrowing Base Draw Request”
means that portion of the Collateral Verification Certificate
representing the Collateral Basis Amount other than A&D
Projects.
1.17 “Borrowing Formula” means the
percentages set forth in SCHEDULE 1 hereto, which
represent the maximum rates at which Draws shall be made hereunder
for the A&D Improvements and for the construction of particular
types of Units on the Property.
1.18 “Budget” means a budget or
series of budgets that cover all “Eligible Costs” for
the acquisition or refinance of A&D Land and/or the development
of an A&D Project with proceeds of this Facility and that have
been reviewed and approved by Lender and/or any third-party
consultant retained by Lender to review such budget(s) prior to the
disbursement of the first A&D Draw to be made hereunder for
such A&D Land Acquisition or A&D Project.
1.19 “Collateral Basis Amount”
means as defined in SCHEDULE 1 .
1.20 “Collateral Verification
Certificate” means a document setting forth each
A&D Land Allocation and associated costs in place, A&D
Project Allocation and associated costs in place, the percentage of
development completed in each such A&D Project, Units (and
related “ Developed Lots” ) securing the
Facility and associated costs in place, the percentage of
construction completed on each such Unit, the marketing status of
each such Unit, and such additional information regarding the
status of construction of each such Unit as Lender, in its sole
discretion, may require, which document shall be in the form shown
on the attached EXHIBIT C , completed by Borrower and
certified by an Authorized Person in a form provided by Lender or a
form otherwise acceptable to Lender, and provided to Lender within
twenty (20) days from month end for the month being
reported.
1.21 “Construction Documents”
means the general construction contract between Borrower or any
applicable Project Guarantor and any general contractor for the
rendering of all services and the furnishing of all materials for
the development and construction of improvements on any portion of
the Property, together with any other or additional contracts
entered into in connection with the construction of the
improvements on any portion of the Property, and all subcontracts,
“Plans and Specifications”, and related documents, in
all cases satisfactory in form and substance to Lender.
1.22 “Curtailment Requirement”
means the minimum required principal repayment schedule, if any,
for a particular A&D Project set forth on the applicable
A&D Project Addendum.
Borrowing Base Facility Agreement- Loan
No. 1001839
1.23 “Debt” means GAAP total
liabilities for the specified Financial Covenant Party(ies), but
excluding Subordinated Debt.
1.24 “Debt-to-Worth Ratio” means
the ratio of the total Debt of the specified Financial Covenant
Party(ies) to its “Tangible Net Worth”.
1.25 “Developed Lot” means a fully
developed, platted, separately conveyable lot developed as part of
an A&D Project.
1.26 “Draw” means a disbursement
of funds under the “Note” in accordance with
Section 4 below and the other terms of this
Agreement.
1.27 “Eligible Costs” means, as
applicable, the expenses of acquiring specific property and
developing an Approved Project, including, without limitation:
interest payments on the Loan, development costs, recording fees,
closing and sale costs, and any other costs that Lender may approve
in its sole discretion.
1.28 “Eligible Property Types”
means A&D Land, A&D Improvements, Developed Lots, and Units
that are located in one or more Approved Projects that secure the
Facility with a first priority lien or trust deed under the
Mortgages (subject only to exceptions approved by Lender) and have
not been included in Borrower’s Collateral Verification
Certificates for longer than the “Maximum Holding
Period” specified in SCHEDULE 1 , if any, for
the particular property type.
1.29 “Equity Funds” means an
amount to be contributed from Borrower’s own funds equal to
the difference between the Eligible Costs and the amounts available
for borrowing under the Facility.
1.30 “Expiration Date” means the
date set forth above, which is the date on which Lender’s
authorization for Borrower to add additional collateral to the
Facility expires and the Term-Out Period begins, as such dates may
be extended as set forth below.
1.31 “Expiration Date Extension”
means as described in Section 2.4 herein.
1.32 “Financial Covenant Party”
and, collectively, “Financial Covenant
Parties” means each of the entities whose financial
performance determines Borrower’s compliance with one or more
of the financial covenants set forth on SCHEDULE 2
attached hereto, as such parties are identified in that
Schedule.
1.33 “Guarantor” means,
individually and collectively, the Working Capital Line Guarantor
and each Project Guarantor.
1.34 “Guaranty” means,
individually and collectively, the Unconditional and Continuing
Limited Guaranty of the Working Capital Line Guarantor and the
Unconditional and Continuing Guaranty and Indemnity Agreements
executed by the Project Guarantors, as required herein.
Borrowing Base Facility Agreement- Loan
No. 1001839
1.35 “Letter of Credit” means a
letter of credit issued by Lender to or for the benefit of Borrower
or any Project Guarantor.
1.36 “Leverage” means the
Debt-to-Worth Ratio.
1.37 “Loan Documents” means the
Note, the Guarantees, the Mortgages, the Working Capital Line
Pledge, this Agreement, and all other agreements and documents
evidencing, securing, or otherwise relating to this Facility or any
Draw under this Facility, all of which shall be in the form
required by Lender.
1.38 “Maturity Date” means the
date which is twenty-four (24) months after the Expiration
Date, as such Expiration Date may be extended as provided for
herein or in the other Loan Documents.
1.39 “Maximum Available Amount”
shall have the meaning given to such term in SCHEDULE
1 .
1.40 “Maximum Holding Period”
means the time period specified in SCHEDULE 1 for
each Eligible Property Type, which time period represents the
maximum amount of time that any particular Property may be included
in Collateral Verification Certificates used in calculating the
Maximum Available Amount in the manner set forth on SCHEDULE
1 .
1.41 “Net A&D Allocations”
means the sum of all A&D Project Allocations less the Per Lot
Amounts for all Developed Lots within such A&D Projects that
are either Released Lots or on which construction of a Unit has
commenced, provided such Unit is included in a Collateral
Verification Certificate.
1.42 “Note” means ,
collectively, one or more Revolving Promissory Notes, in the
aggregate principal amount not exceeding the Maximum Facility
Amount, executed and delivered to Lender by Borrower to evidence
this Facility, as the same may be amended, modified, split,
consolidated or renewed from time to time.
1.43 “Per Lot Amount” means the
per lot amount set forth on the applicable A&D Project
Addendum.
1.44 “Plans and Specifications”
means, as applicable, the final development plans and
specifications and the full set of engineering and architectural
plans and specifications for development or construction in
connection with the applicable Approved Project or Units, all as
reviewed and approved by Lender.
1.45 “Project” means, from time to
time all subdivision development and residential construction work
scheduled or proposed by Borrower to be completed with proceeds of
the Facility with respect to Approved Projects.
1.46 “Project Guarantor” means
each owner of Property to become A&D Land or an Approved
Project, which owner shall have executed and delivered to Lender
(i) an unconditional guaranty, in form and content acceptable
to Lender in its sole discretion, pursuant to which such
Borrowing Base Facility Agreement- Loan
No. 1001839
owner
shall have jointly and severally guaranteed the repayment, in full,
of the Facility, (ii) a Mortgage encumbering such Property as
a first priority lien or deed of trust thereon and (iii) such
other documents as may be reasonably required in connection with
the requested designation of Property owned by such person or
entity as A&D Land or an Approved Project, in accordance with
Section 3 hereof.
1.47 “Qualified Contract” means a
binding contract, in form and content reasonably satisfactory to
Lender, for the sale of a Unit for consideration approved by Lender
to a purchaser unaffiliated with Borrower or Guarantors, under
which (i) Borrower or the applicable Project Guarantor has
received cash deposit(s) in such percentage of the Unit’s
approved sale price as Lender may reasonably require; (ii) the
proposed purchaser is purchasing the Unit for cash or has been
approved for permanent financing by an institutional lender
reasonably satisfactory to Lender; (iii) all contract
contingencies, other than seller’s performance (including
financing contingencies), have been satisfied or waived;
(iv) all applicable cancellation or rescission periods have
expired; and (v) neither Borrower, Guarantor nor any affiliate
thereof is obligated to provide any purchase money financing for
such Unit.
1.48 “Released Lot” means a
Developed Lot which has been released from the lien and encumbrance
of the applicable Mortgage.
1.49 “Sub-Limit” means the Maximum
Available Amount and the related restrictions on the aggregate
amounts outstanding under the Facility for the Working Capital Line
or for particular Eligible Property Types and related limits on
disbursements for certain purposes, all as set forth in
SCHEDULE 1 hereto.
1.50 “Subordinated Debt” means
indebtedness and liabilities of Borrower that have been
subordinated by written agreement in form and substance acceptable
to Lender to indebtedness owed by Borrower to Lender.
1.51 “Tangible Net Worth” means
the aggregate of shareholder equity of the specified Financial
Covenant Party(ies) increased by Subordinated Debt due to parent
and decreased by all intangible assets (i.e., goodwill, trademarks,
organizational expenses, and similar intangible items) and
decreased by obligations due from shareholders and/or affiliates of
the specified Financial Covenant Party(ies).
1.52 “Term-Out Period” means the
twenty four (24) month period immediately following the
Expiration Date, during which the Facility is subject to certain
additional restrictions, all as set forth on SCHEDULE
1 hereto.
1.53 “Unit” means a Developed Lot
and the residential dwelling constructed or to be constructed
thereon, located in an Approved Project including any of the
following, as designated in Borrower’s Collateral
Verification Certificate and confirmed or adjusted by
Lender’s inspections:
1.53.1 “Model Unit” means a Unit
that is under construction or has been constructed for use as a
model for sales and marketing purposes.
Borrowing Base Facility Agreement- Loan
No. 1001839
1.53.2 “ Pre-Sold Unit” means a
Unit with respect to which there exists a Qualified Contract,
subject only to completion, final inspection and closing.
1.53.3 “Spec Unit” means a Unit
that is not pre-sold (or as to which a Qualified Contract has been
terminated), and that will be sold on the open market upon
completion.
1.54 “Unsatisfied Curtailment
Requirement” means the cumulative Curtailment
Requirement for a particular A&D Project as reduced by all Per
Lot Amounts for all Developed Lots within such A&D Project that
are either Released Lots or on which construction of a Unit has
commenced, provided such Unit is included in a Borrowing Base Draw
Request.
1.55 “Working Capital Line” means
a portion of the Facility, in the amount not exceeding
$15,000,000.00 at anyone time, available for disbursement to
Borrower without regard to the Borrowing Formula or any Collateral
Basis Amount, in accordance with the provisions of
Section 2.6 and Section 4
hereof.
1.56 “ Working Capital Line
Collateral” means all of the equity interests in
Borrower, and any successor thereof, which interest shall have been
duly and validly pledged to Lender as collateral security for the
prompt and full satisfaction of all obligations of the Working
Capital Line Guarantor under its Guaranty of the Working Capital
Line.
1.57 “Working Capital Line Draw”
means a Draw made under, and subject to all conditions pertaining
to, the Working Capital Line, in accordance with
Section 4 hereof.
1.58 “Working Capital Line Draw
Requests” means a written request for the
disbursement to Borrower in accordance with the procedures set
forth in Section 4 below.
1.59 “Working Capital Line
Guarantor” shall mean Levitt Corporation a Florida
corporation, and its successors.
1.60 “ Working Capital Line
Pledge” shall mean the Pledge and Security Agreement
of even date herewith, executed by the Working Capital Line
Guarantor in favor of Lender, encumbering the Working Capital Line
Collateral as security for the obligations of the Working Capital
Line Guarantor under its limited guaranty of the Facility.
2. LINE OF CREDIT
PROVISIONS.
2.1
Description of the Facility. The purpose of the Facility is to
fund the Borrower’s working capital needs and the acquisition
or the refinance of A&D Land, the development of A&D Land,
and the construction of Units located in one or more Approved
Projects, and neither Borrower nor any Project Guarantor shall use
Draws for any other purpose. Subject to the terms and conditions of
this Agreement, upon Borrower’s submission of a Working
Capital Line Draw Request or a Collateral Verification Certificate
(comprised of A&D Draw Requests and Borrowing Base Draw
Requests) and subject to Lender’s approval, Lender will
authorize Draws, which shall be subject to the Maximum Facility
Amount, the Maximum Available Amount, and all related Sub-Limits.
Lender will maintain records reflecting the disbursed and
un-disbursed portions of the Maximum Facility Amount and Maximum
Available
Borrowing Base Facility Agreement- Loan
No. 1001839
Amount,
A&D Land Allocations, A&D Project Allocations, Net A&D
Allocations, and payments received and applied to the outstanding
Facility, interest accrued, and other matters related to the
Facility and the Note, which shall be conclusive evidence of
amounts owing thereunder absent manifest error.
2.2
Interest and Payment Provisions.
2.2.1 Interest and Payment Provisions . Interest rates and
payment provisions shall be as set forth in the Note and as further
described in Section 2.2.3.
2.2.2 A&D Project Interest Reserves. If applicable to a
specific A&D Project, that portion of an A&D Land
Allocation or an A&D Project Allocation allocated in the Budget
for the A&D Land Acquisition or A&D Project set forth in
the A&D Land Addendum or A&D Project Addendum, if any, for
the payment of interest (the “Interest Reserve”) shall
be retained by Lender and shall be available for payment of accrued
interest due Lender pursuant to that portion of the outstanding
principal balance of the Note consisting of A&D Draw Requests
for the particular A&D Project. Borrower hereby authorizes
Lender to advance such proceeds on behalf of Borrower directly to
Lender each month to pay such portion of the interest due on the
Note, notwithstanding that Borrower may not have requested an
advance of such amount. Such advance, if made, shall be made by a
bookkeeping entry on Lender’s records, shall be considered an
A&D Draw Request, added to the outstanding principal balance of
the Note and shall be deemed paid to and received by Borrower. The
authorization hereby granted, however, shall not obligate Lender to
make any such advance or prevent Borrower from paying interest from
its own funds. Borrower acknowledges that the payment of interest
by the method described in this section is for its convenience and
benefit. Notwithstanding any term or provision hereof to the
contrary, if from time to time Lender reasonably determines, in its
sole and absolute discretion, that the undisbursed portion of the
interest reserve established pursuant to the Budget for the A&D
Project (the “Undisbursed Reserve Sum”) may not be
sufficient to defray in its entirety the entire amount of interest
allocated to the A&D Project which Lender then anticipates is
likely to accrue during the remainder of the time the A&D Draw
Request for such A&D Project shall be outstanding (the
“Anticipated Interest Sum”), whether as a result of
(a) any existing or anticipated increase in the applicable
interest rate, (b) any existing or anticipated deviation from
sales or income pro-formas or projections, (c) any existing or
anticipated increase in cost of development or delay in
commencement or completion of development, and/or (d) any
other matter Lender deems relevant in assessing the possibility of
any interest reserve insufficiency, then Lender may, at its option,
elect to (i) make no further advances from the Undisbursed
Reserve Sum and require interest payments to be made directly by
Borrower, (ii) require Borrower to deposit in an escrow
account with Lender or such other escrow agent as Lender may
designate, pursuant to an escrow agreement in form and content as
required by Lender, an amount equal to the difference between the
Anticipated Interest Sum and the Undisbursed Reserve Sum, and/or
(iii) require Borrower to provide such other and further
assurances to Lender as Lender may, in its discretion, reasonably
require, it being agreed that Borrower’s failure to fully
comply with any of Lender’s requirements pursuant to this
Section 2.2.2 within ten (10) days from the
delivery to Borrower of Lender’s notice of such requirements
shall, without further notice, constitute an “Event of
Default” under this Agreement and each of the other Loan
Documents.
Borrowing Base Facility Agreement- Loan
No. 1001839
2.2.3 Principal Payments. In addition to the interest and
principal payment requirements of the Note, Borrower shall make
principal payments as needed from time to time in order to ensure
that the principal amount outstanding under the Facility at no time
exceeds the Maximum Facility Amount, that the aggregate outstanding
principal amount of Draws at no time exceeds the Maximum Available
Amount, or any applicable Sub-Limits are exceeded. Further, if
there exists Unsatisfied Curtailment Requirements such that, after
the application of such principal payments, the Collateral Basis
Amounts (as further described in SCHEDULE 1 ) for all
Eligible Property Types included in the Maximum Available Amount
are insufficient to cover all Unsatisfied Curtailment Requirements
and the face amount of all outstanding Letters of Credit, Borrower
shall make an additional principal payment sufficient to satisfy
all Unsatisfied Curtailment Requirements, which shall be applied by
Lender to the Unsatisfied Curtailment Requirements, and to the
outstanding Facility and shall further comply with the provisions
of Section 2.5 below. Provided no Event of
Default shall have occurred (and not been waived, in writing, by
Lender), principal payments received by Lender shall be applied to
the Facility first, to the extent applicable, in accordance with
the preceding sentence and then as directed by Borrower. Following
the occurrence of any Event of Default, which shall not have been
waived, in writing, by Lender, Lender may apply such principal
receipts in such order as Lender may determine, in its sole
discretion.
2.3
Facility Fees and Costs. Borrower shall pay, either from
proceeds of the Facility or from Borrower’s own funds, at
Lender’s discretion, the nonrefundable Facility Fees in the
amounts and in the manner specified in SCHEDULE 1 .
Borrower shall pay, within five (5) business days following
Lender’s demand, all reasonable out-of-pocket costs related
to the Facility, including without limitation: title insurance
premiums, appraisal fees, recording costs, third-party
architect/engineer fees, fees for plan and cost reviews, if any, by
third-party consultants, and attorneys’ fees.
2.4
Extension of Expiration Date. Upon each annual anniversary of
the date hereof, at the sole discretion and option of Lender, the
Expiration Date may be extended in writing for a period of twelve
(12) months, subject to Lender’s review of the latest
annual fiscal year end financial information, and all supplemental
current financial statements provided by Borrower to Lender and
such other information as Lender may deem material, and on such
terms as Lender may require, including payment of any applicable
Facility Fee (See Schedule 1 hereto).
2.5
Letter of Credit. From time to time, upon the request of
Borrower, Lender shall issue Letter(s) of Credit to or for the
benefit of Borrower or any Project Guarantor; provided ,
however , that the issuance of each Letter of Credit by
Lender shall be subject to the approval of Lender in Lender’s
sole discretion. Each such Letter of Credit shall have an expiry
date no later than thirty (30) days prior to the then
applicable Maturity Date. In the event that the sum of (i) the
outstanding principal balance of the Note plus (ii) unadvanced
A&D Land Allocations and unadvanced Net A&D Allocations,
plus (iii) the face amount of all outstanding Letters of
Credit issued to or for the benefit of Borrower or any Project
Guarantor, exceeds the sum of (a) the amount of the Working
Capital Line and (b) the Collateral Basis Amounts for all
Eligible Property Types included in the Maximum Available Amount
after the application of any principal payments required by
Section 2.2.3 above, Borrower shall immediately
deposit with Lender, upon demand therefor, the amount of such
excess, which shall be deposited into an account established with
Lender, which account shall be assigned as additional collateral
for the
Borrowing Base Facility Agreement- Loan
No. 1001839
Note.
Thereafter, Borrower shall maintain a balance in such account in
the amount of such excess, as such excess may increase or decrease
over time in conjunction with changes in the Maximum Available
Amount and availability under the Working Capital Line.
2.6
Working Capital Line. Subject to all of the terms and
conditions set forth in Section 4 or otherwise in
this Agreement, upon Borrower’s submission of Working Capital
Line Draw Requests, Lender shall disburse Draws under the Working
Capital Line without regard to any Collateral Basis Amount,
provided that the amount of any such disbursement shall not exceed
the limitation set forth in Section 4.4.3
hereof. At Borrower’s request at any time during the term of
the Facility, Borrower may irrevocably elect, by written notice to
Lender, to terminate the Working Capital Line. Effective upon
receipt of any such termination notice, Lender’s obligation
to disburse any further Working Capital Line Draws shall cease and
the Working Capital Line shall be reduced to the then outstanding
principal balance thereof, as further reduced by the amount of each
principal payment subsequently received by Lender and applied by
Lender to the Working Capital Line, as provided in this Agreement.
Upon the termination of the Working Capital Line and the repayment,
in full, of the Working Capital Line, Lender shall (a) cancel
the Working Capital Line Guarantor’s Guaranty,
(b) terminate Lender’s security interests in the Working
Capital Line Collateral and (c) cancel and return to the
Working Capital Line Guarantor the Working Capital Line
Guarantor’s Guaranty and the Working Capital Line
Collateral.
3. CONDITIONS TO CLOSING AND
ADVANCEMENT OF FUNDS FOR PROPERTY. Lender’s obligation to
advance any funds under this Facility with respect to any existing
Approved Project or A&D Land, and Lender’s subsequent
obligation to advance funds with respect to any additional
Property, shall be in Lender’s sole and absolute discretion
and subject to approval by Lender’s credit administration
department and (unless waived or deferred by Lender, in writing)
the satisfaction, at Borrower’s sole cost and expense, of
each of the following conditions for the particular Property
providing the basis for which Borrower is requesting funds:
3.1
Approved Project. The additional Property shall either have
been approved as A&D Land by Lender, in its sole discretion, or
shall be located in an Approved Project, and for A&D Projects,
Lender shall have approved Borrower’s plans for the current
stage of development of such A&D Project proposed as additional
Property hereunder. For A&D Land, it shall be sufficient to
indicate Lender’s approval by its execution of an A&D and
Addendum. For an A&D Project, it shall be sufficient to
indicate Lender’s approval by its execution of an A&D
Project Addendum, which may contain special conditions precedent to
any or all advances hereunder.
3.2
Guaranty of Property Owner. The fee owner of the applicable
Property shall have become a Project Guarantor, guaranteeing
repayment (as a direct obligor, and not as a guarantor of
collection) of the Note and all obligations of Borrower under the
Facility.
3.3
Recording of Mortgages. A Mortgage (together with an assignment
of leases, rents, development and similar rights and such other
security documents as are customary in the applicable jurisdiction)
shall have been recorded in the appropriate jurisdiction and
Borrower or the applicable Project Guarantor shall have paid all
recording fees and taxes
Borrowing Base Facility Agreement- Loan
No. 1001839
(excluding real estate taxes not then due and payable) and removed
all encumbrances (a) necessary to perfect the Mortgage as
first lien or first deed of trust (as applicable) on the applicable
Property and (b) not approved by Lender, in its sole
discretion.
3.4
Title Policy. Borrower or the applicable Project Guarantor
shall have procured, before any A&D Draw is made hereunder with
respect to the particular A&D Land or A&D Project, after
the initial recordation of the Mortgage encumbering such Property
or following the recording of any amendments thereto or any
additional Mortgages required to secure the Facility, an ALTA 1970
form extended coverage lender’s policy of title insurance (or
its equivalent acceptable to Lender) in a form and issued by a
title company satisfactory to Lender, in an insured amount of not
less than (a) in those jurisdictions imposing material taxes
on Mortgages based on the amount secured thereby, the Maximum
Available Amount allocated to the applicable Approved Project plus
120%, and (b) in all other jurisdictions, an amount equal to
the Maximum Facility Amount minus the maximum amount of the Working
Capital Line (i.e. $85,000,000.00), insuring the Mortgages as first
liens or first deeds of trust (as applicable) on all Property
securing the Facility, subject only to such exceptions as may be
approved in writing by Lender and including such endorsements as
shall be customary or as Lender may require, including, but not
limited to Tie-In Endorsements, Florida Form 9 (or comparable
comprehensive endorsements in other States), Letter of Credit
Endorsements and Revolving Credit Endorsements (provided issuance
of the requested endorsements is legal in the applicable State).
No work of any character is to be commenced or material
delivered to the applicable Property before the title policy
insuring such Mortgage is furnished to Lender and Lender has
advised Borrower that such policy has been received and is
acceptable to Lender, except to the extent that the title policy
ultimately provided to Lender insures the first lien priority of
such Mortgage subject only to permitted exceptions approved by
Lender despite any such prior work and without exceptions for
construction liens. The intention of the parties hereto is that
every Mortgage granted as security for the Facility is and, to the
extent modified by any modification and spreader thereof, shall
continue to be prior to any construction lien. If any material is
delivered or work performed before Lender has received each such
policy, Lender may, at its option, refuse to make any Draws
hereunder with respect to such Property, other than to pay all
expenses incurred in connection with the Facility and proceed to
exercise any and all remedies available to Lender under the Loan
Documents upon an occurrence of an Event of Default.
3.5
Appraisals and Market Studies. For A&D Land, Lender shall
have obtained an Appraisal setting forth the as-is market value of
the undeveloped A&D Land. For A&D Projects, Lender shall
have obtained an Appraisal setting forth the as-is market value of
the undeveloped A&D Land and the bulk discounted market value
of the Developed Lots to be developed in the A&D Project. For
Units, Lender shall have obtained a master appraisal on base model
types and lots with option value addendum for each Approved Project
which shall be utilized throughout the period of sales of the
Units, but updated if and when requested by Lender at
Borrower’s expense. In addition, Borrower shall deliver to
Lender a then current market study for the Units to be constructed
in such Project. Each such Appraisal and market study shall
demonstrate a market value acceptable to Lender utilizing
Lender’s then current policies and guidelines. Further, at
any time, Lender shall have the right to re-appraise any portion of
the Property at Borrower’s expense and adjust the Collateral
Basis Amounts for such portions of the
Borrowing Base Facility Agreement- Loan
No. 1001839
Property
in the event such re-appraisal indicates a decline in the market
value of the re-appraised portions of the Property.
3.6
Plans/Permits. For A&D Projects (i.e. for Draws other than
simply to finance or refinance A&D Land), Lender shall have
been provided with Plans and Specifications, acceptable to Lender
and its third party consultant, for the applicable phase of
development or construction and, for A&D Land on which Borrower
intends to begin Unit construction, a final plat map, in a form
satisfactory in all respects to Lender, shall have been recorded in
the appropriate jurisdiction. In addition, Borrower shall have
provided Lender with evidence satisfactory to Lender that Borrower
or the applicable Project Guarantor has obtained or will obtain (as
determined in Lender’s reasonable satisfaction) all permits
and approvals necessary to allow Borrower or the applicable Project
Guarantor to proceed with the development of the A&D Project or
the construction of individual Units in accordance with the Plans
and Specifications.
3.7
Third Party Contracts. Borrower or the applicable Project
Guarantor shall have provided Lender with such construction,
development, engineering, and architectural contracts, and major
subcontracts relating to the applicable Approved Project, as Lender
may request and Lender in its sole discretion shall have approved
such contracts in writing.
3.8
Budget. Lender (and its inspecting engineer) shall have
received and approved a cost breakdown and itemization of all hard
and soft costs for the applicable Approved Project and the sources
for payment of such costs from the Borrower or the applicable
Project Guarantor. This itemization shall include: (i) a
summary page indicating costs of land, site work, hard and soft
costs of construction, and (ii) detailed schedules supporting
the construction costs.
3.9
Zoning and Concurrency. Borrower shall have provided Lender
with evidence satisfactory to Lender that the Property has zoning
and concurrency approvals which will permit the development and
construction of the applicable Approved Project.
3.10 Search. Lender shall have received satisfactory federal
and state tax lien, judgment, UCC, and pending litigation search
for Borrower and the applicable Project Guarantor for the state and
county in which Borrower and such Project Guarantor was formed as
well as for the State and county in which the applicable Property
is located in each case, dated not more than sixty (60) days
prior to the date of the first Draw to be disbursed with respect to
such Property.
3.11 Cost Analysis. Lender shall have received a cost
analysis, in form and substance satisfactory to Lender, as
determined in its sole discretion that supports the information in
the Budget submitted by Borrower.
3.12 Insurance. Borrower shall have provided Lender with
evidence acceptable to Lender of the insurance required to be
maintained under Section 8.11 hereof and under
any of the other Loan Documents, which insurance shall be in form
and amount, and issued by companies satisfactory to Lender.
3.13 Utilities. Where applicable, Borrower shall have
delivered to Lender evidence satisfactory to Lender that all
utilities, including water, electric, gas, and telephone, and all
storm and sanitary sewer drainage facilities are or will be
available at the Property for
Borrowing Base Facility Agreement- Loan
No. 1001839
utilization by Borrower or the applicable Project Guarantor for the
development and use of the Approved Project and that the respective
lines and treatment or generating plants are of adequate size and
capacity to serve the Approved Project.
3.14 Survey . At Lender’s request, Borrower shall have
delivered to Lender a current survey (dated note more than ninety
(90) days prior to the date of the first Draw with respect to
such Property), properly certified and in a form acceptable to
Lender, showing such Property to be free from encroachments and
otherwise acceptable to Lender.
3.15 Soil Tests, Environmental Report. Borrower shall have
delivered to Lender copies of all soil analysis reports, all soil
compaction tests, all environmental reports or statements, and all
other tests prepared or performed with respect to Property, all of
which shall be satisfactory to Lender in form and content. In
addition, Lender shall have received a fully completed
environmental questionnaire, in form and content acceptable to
Lender, the answers to which must be acceptable to Lender, in it
sole discretion. Further, Lender shall have received and approved
from an approved engineer hired by Borrower, a Phase I
Environmental Site Assessment together with a Reliance Letter
thereto issued in favor of Lender (if said assessment is not
addressed to Lender), in form and substance satisfactory to Lender,
as determined in its sole and absolute discretion, indicating, that
the Property in the subdivision proposed for approval is free from
risk, in Lender’s sole judgment, from all hazardous
substances, toxic substances, or hazardous wastes as defined by any
federal, state, or local law, statute, ordinance, or regulation and
is free of all other contamination which, even if not so regulated,
is known to pose a hazard to the health of any person on or about
the Property, and unless specifically approved by Lender, that the
subject Property is not located within a “Wetlands” or
“Flood Plain” area, and contains no underground storage
tanks or oil or gas wells.
3.16 Fees and Expenses. Borrower shall have paid all legal,
appraisal, and inspection fees; title insurance and survey costs;
recording and filing fees; documentary stamp, intangible or other
applicable mortgage taxes; real estate commissions; hazard and
liability insurance and property taxes (due and payable) on the
Project; and any and all other charges or expenses reasonably
incurred by Lender in connection with the Loan or the preparation
and recording or filing of the Loan Documents. Borrower shall
indemnify and hold Lender harmless against any and all claims for
such fees, charges, commissions, taxes, or other expenses of any
kind in any way connected with the Loan.
3.17 Notice of Commencement. For each Unit (or building
within which such Unit is situated), Borrower or the applicable
Project Guarantor shall have prepared and recorded a Notice of
Commencement in accordance with Chapter 713, Part I,
Florida Statutes, or any similar requirement under the lien laws of
the State in which the applicable Property is situated.
3.18 Financial Reports and Covenant Compliance. Borrower,
and the reporting parties set forth therein, shall have provided
Lender with current versions of all the financial reports described
in SCHEDULE 2, and Borrower and such reporting
parties shall be in compliance with all reporting requirements and
financial covenants set forth on SCHEDULE 2.
Borrowing Base Facility Agreement- Loan
No. 1001839
3.19 Default. No Event of Default shall have occurred (which
shall not have been waived, in writing, by Lender) and no event
shall have occurred which, with the giving of notice or passage of
time, could become an Event of Default.
3.20 Other Documents. Borrower shall have provided Lender
with such other reports, certificates, documents, and instruments
regarding Borrower, the applicable Project Guarantor and the
applicable Property and Approved Project as may be listed in the
A&D Land Addendum or A&D Project Addendum or as Lender may
otherwise reasonably require.
3.21 Authority Documents.
3.21.1 Organizational Documents. Borrower and each Guarantor
shall have provided Lender with an updated certified copy of each
of their respective Articles of Incorporation, Bylaws and
shareholder agreements or Articles of Organization and Operating
Agreements, together with all amendments and modifications thereto,
and such other organizational documents as Lender may request, and
a certified copy of each assumed name certificate, if any, of
Borrower and/or each Guarantor.
3.21.2 Good Standing Certificates. Borrower and each
Guarantor shall have provided Lender with good standing
certificates, or their equivalent, issued by the Secretary of State
or other appropriate offices within the State of organization of
Borrower and each Guarantor, and evidence satisfactory to Lender of
Borrower’s and each Guarantor’s authorization to do
business in the State wherein the Approved Project is located, if
the State of Borrower’s and/or the Guarantor’s
organization is other than the State of the location of the
applicable Approved Project.
3.21.3 Resolutions and Consents. Borrower shall have
provided Lender with certified resolutions and/or consents
authorizing Borrower and the applicable Guarantor to enter into the
Loan Documents, including but not limited to the Mortgages or any
mortgage modification and spreader agreement amending any then
existing Mortgage (if the applicable Property is not currently
subject to the Mortgage).
3.21.4 Delivery of Loan Documents. Borrower and Guarantors
shall have executed and delivered to Lender all Loan Documents
required by Lender and any other documentation as required by
Lender to carry out the provisions and purposes of this Agreement
and the Facility.
3.21.5 Borrower’s Counsel’s Opinions. Lender
shall have received an opinion letter from counsel to the Borrower
or the applicable Project Guarantor, in form and content
satisfactory to Lender and its counsel, opining to such matters as
Lender may require, including, but not limited to opinions
regarding (a) the due organization, existence and good
standing of Borrower or the applicable Project Guarantor (and any
applicable general partner or manager thereof), (b) the due
power, authorization and execution of the Guaranty, Mortgage and
other applicable Loan Documents executed by such Project Guarantor,
(c) that the form of the Mortgage and other documents to be
recorded or filed are proper for recording or filing in the
applicable State and (d) all documents executed by the
Borrower or the Project Guarantor (as applicable) are valid and
binding (subject to customary qualifications and
assumptions).
Borrowing Base Facility Agreement- Loan
No. 1001839
3.21.6 Other Conditions. Borrower and Guarantors shall have
fulfilled each and every other condition to any initial Draw (i.e.
to finance or refinance A & D Land) or any subsequent Draw set
forth in SCHEDULE 1 attached hereto or the applicable A&D Land
Addendum or A&D Project Addendum.
4. A&D DRAWS/BORROWING
BASE DRAWS/WORKING CAPITAL LINE DRAWS. Lender shall make Draws
available to Borrower for the purposes and in accordance with the
procedures set forth in this Agreement, and in the case of all
Draws other than Working Capital Line Draws, based on
Borrower’s most current Collateral Verification Certificate,
in each case, subject to verification or adjustment based on
Lender’s inspections and review as set forth below, and
provided that the total amount outstanding under the Facility shall
at no time exceed the Maximum Facility Amount and Maximum Available
Amount as defined in SCHEDULE 1 . Lender may impose
such additional conditions on such Draws as Lender may subsequently
determine are necessary to insure that the proceeds of the Facility
are applied to the purposes contemplated hereunder.
4.1
Draw Procedures.
4.1.1 Collateral Verification Certificate Report. Borrower
shall submit periodic Collateral Verification Certificates no less
than one (1) time per month and within twenty (20) days of
month end for the month being reported, on a day Lender is open for
business at the address set forth above, that shall cover all
amounts being requested hereunder for A&D Draws and Borrowing
Base Draws by providing Lender with such information,
authorizations, and documents as Lender may request, including but
not limited to Borrower’s A&D Draw Request, a spreadsheet
report for all A&D Project Budget Costs and related costs
incurred, and a report detailing and listing all costs by category
( “Borrower’s Job Cost Reports” ) by
Approved Project and Borrowing Base Draw Request. If all conditions
to Draws set forth herein and in the applicable Loan Documents have
been satisfied, including each of the conditions set forth in
Section 3 above and in SCHEDULE 1
hereof, Lender will make available the difference between the
current outstanding principal amount of the Facility and the
Maximum Available Amount as directed from time to time by
Borrower.
4.1.2 All Draws. Lender shall not be required to fund any
Draw unless, on the date such Draw is requested to be made (which
shall not be less than 5 business days after Lender’s receipt
of the applicable Draw request), each of the following conditions
are satisfied:
4.1.2.1 Representations and Warranties . All representations
and warranties contained herein or in any of the applicable Loan
Documents shall be true and correct, in all material
respects;
4.1.2.2 No Default. Borrower and Guarantors shall be in full
compliance with all terms, conditions, and covenants set forth
herein or in any of the applicable Loan Documents, no Event of
Default shall have occurred (which shall not have been waived, in
writing, by Lender) and no event shall have occurred which, with
the giving of notice or passage of time would become an Event of
Default;
Borrowing Base Facility Agreement- Loan
No. 1001839
4.1.2.3 No Illegality. No change in applicable Laws, or in
the interpretation of such Laws shall have occurred which would
make it illegal for Lender to perform its obligations under this
Agreement, and the making of any advance hereunder would not cause
Lender to exceed its then current loans-to-one-borrower limitation;
and
4.1.2.4 Title Endorsements. If required by Lender in
accordance with the terms of this Agreement, Lender has received
(i) such continuation endorsements and date-down endorsements
to the title policies issued pursuant to
Section 3.4 hereof, in form and substance
satisfactory to Lender as Lender determines in its sole discretion
necessary to insure the priority of the applicable Mortgages as
valid first liens on the Property described in the most recent
Collateral Verification Certificate or (ii) an unconditional,
irrevocable written commitment by the applicable title insurance
company to issue such endorsements.
4.2
Project Information. Borrower shall provide all information
requested by Lender, in form and content satisfactory to Lender,
prior to any Draw hereunder, including without limitation: Budgets
for all Approved Projects under development or Units under
construction, appraisals, surveys, recorded plats, plans and
specifications, copies of all applicable permits and governmental
approvals obtained for the particular Approved Project, copies of
all recorded declarations or covenants affecting that Approved
Project, insurance policies in form and amount reasonably
acceptable to Lender and issued by insurance companies reasonably
acceptable to Lender, environmental reports, borrowing resolutions,
evidence of corporate or other status, current contractor’s
licenses, lien waivers or subordinations, evidence of all required
surety bonding and insurance coverages, plan and cost reviews
performed by an independent inspection agent, and all other
documents and information that Lender may require. Date down
endorsements to title insurance policies and/or lien releases may
be required as a condition to making any Draw (other than a Working
Capital Line Draw).
4.3
Property Inspections.
4.3.1 A&D Project Inspections. Lender may, at
Lender’s option, inspect A&D Projects at such intervals
and as often as Lender may desire but not less than quarterly, and
Lender will not withhold funding for A&D Draw Requests pending
the inspection report next due. Should inspections of the A&D
Projects indicate that the A&D Draw Requests portion of the
Collateral Verification Certificate overstate the values, costs, or
completion percentages, in addition to any other remedy afforded
Lender, Lender may increase its frequency or scope of its
inspections.
4.3.2 Lot and Unit Inspections. Lender may, at
Lender’s option, inspect Developed Lots and Units securing
the Facility at such intervals and as often as Lender may desire.
Lender shall have sole discretion as to which portion and how much
of the Property to inspect. Should inspections of the Property
indicate that the Collateral Verification Certificates overstate
the values, costs, or completion percentages, in addition to any
other remedy afforded Lender, Lender may increase its sample size,
frequency, or scope of its inspections.
4.3.3 All Inspections. Borrower shall cooperate and shall
cause Guarantors to cooperate with Lender in arranging for
inspections by representatives of Lender or
Borrowing Base Facility Agreement- Loan
No. 1001839
any
third-party consultant retained by Lender of the progress of the
development and construction from time to time, including an
examination of (i) the Approved Project improvements;
(ii) all materials to be used in the development and
construction; (iii) all Plans and Specifications; (iv) any
contract, bill of sale, statement, receipt, or voucher in
connection with the Approved Project improvements; (v) all
work done, labor performed, materials furnished in and about the
Approved Projects; (vi) all books, contracts, and records with
respect to the Approved Projects; and (vii) any other Construction
Document. Borrower shall cooperate and shall cause the Project
Guarantors to cooperate with Lender to enable Lender to perform its
functions hereunder and shall promptly comply with Lender’s
requirements and correct any deficiency regarding the construction
of the Approved Projects or the progress thereof. Draw inspections
shall be made by in-house Lender personnel or by a third-party
architect/engineer, as required by Lender. Borrower shall pay
inspection costs of Lender within twenty (20) days of demand.
If inspections of the Property indicate that the Collateral
Verification Certificate overstates the values, costs, or
completion percentages, in addition to any other remedy afforded
Lender, Lender may increase its sample size, frequency or scope of
its inspections. In such event Borrower shall pay an additional
inspection fee commensurate with the increased inspections.
4.4
Draw Amounts.
4.4.1 A&D Draw Requests. The allowed amount of each
A&D Draw Request shown in the Collateral Verification
Certificate shall be subject to the Maximum Facility Amount and all
applicable Sub-Limits, in accordance with the approved Budget for
the A&D Project set forth on the applicable A&D Project
Addendum and determined by the information provided by Borrower in
its A&D Draw Request, subject to adjustment based on
Lender’s inspections. A&D Draw Requests shall be further
limited by the A&D Limitations set forth in paragraph
K on SCHEDULE 1 or in the applicable A &
D Project Addendum. If applicable, the A&D Draws shall also be
made for the payment of interest in accordance with the provisions
of Section 2.2.2 above (to the extent provided
for in the applicable Budget) and for payment of all other Eligible
Costs shown in the Budget for the particular A&D Project,
payable by or on behalf of Borrower in connection with the
particular A&D Project. The allowed amount of each A&D Draw
Request shall be determined, at Lender’s option: (i) by
Lender’s review of a detailed report listing all invoices and
costs as provided by Borrower and Lender’s confirming
physical inspection; (ii) on a percentage completion basis
with reference to the schedules included in the applicable approved
Budget, as established by a physical inspection of the construction
conducted by Lender or its agent (or, at Lender’s sole
discretion, as disclosed by the information provided by Borrower in
the A&D Draw Request); or (iii) by a combination of the
foregoing methods. Lender shall require that Borrower or the
applicable Project Guarantor contribute any Equity Funds necessary
to pay any portion of Eligible Costs incurred to the date of
Borrower’s Collateral Verification Certificate that are not
covered by the applicable A&D Draw Request which, unless
otherwise agreed to by Lender, in writing, shall be amounts not
less than (a) thirty-five percent (35%) of the cost of the
A&D Land and (b) twenty percent (20%) of all hard and soft
costs incurred from time to time in connection with the applicable
Project. The aggregate amount available shall be the total of such
Eligible Costs actually paid or incurred by Borrower for each of
the cost line items specified in such Budget, but in no event shall
the A&D Draw Request for a particular A&D Project exceed
the total of all sums allocated to such cost line items, being in
the aggregate the A&D Project Allocation. Notwithstanding
anything herein to the contrary, Lender, in its sole discretion,
shall have the right, but shall not be obligated, to increase,
decrease, reallocate, or reapply the amount of the A&D Project
Allocation to be disbursed for each item set forth in the Budget.
Notwithstanding any other provisions contained herein, Borrower
shall
Borrowing Base Facility Agreement- Loan
No. 1001839
maintain
records of all Approved Project invoices and Lender, at its
discretion, may require submission by Borrower of the invoices set
forth on the spreadsheets.
4.4.2 Borrowing Base Draws. The allowed amount of each
Borrowing Base Draw Request shall be subject to the Maximum
Facility Amount, the Maximum Available Amount and all applicable
Sub-Limits and determined by the information provided by Borrower
and Guarantors. Borrower shall not be entitled to any Draws based
on the information in a particular Collateral Verification
Certificate until Lender has had at least five (5) full
business days to review and confirm the information provided by
Borrower in that certificate, subject to adjustment based on
Lender’s inspections; provided , however , that
Lender’s failure to require adjustment within such time frame
shall in no way limit Lender’s right to require adjustments
thereafter prior to the time funds are to be available in order to
allow time for inspection. Borrower acknowledges that the foregoing
disbursement schedule may be different than the disbursement
schedule contained in Borrower’s or the Project
Guarantors’ construction contracts or subcontracts and
Borrower acknowledges that it is its responsibility to resolve any
such differences directly with the applicable contractors or
subcontractors. The Maximum Available Amount is based on the
applicable Collateral Basis Amounts for the Eligible Property Types
calculated as set forth on SCHEDULE 1. In reviewing
Borrower’s Collateral Verification Certificate,
determinations of “value,” “cost,” and
“percentage of completion” shall be made by Lender in
its reasonable discretion and in accordance with its standard
credit procedures. In the event the percentage of completion or
other information relating to a particular Eligible Property Type
as determined by Lender varies from the information provided by
Borrower in its most current Collateral Verification Certificate,
Lender may, at any time and in its sole discretion, use the
information as determined by Lender to calculate the Collateral
Basis Amount.
4.4.3 Working Capital Line Draws. The allowed amount of each
Working Capital Line Draw shall be subject to the Maximum Facility
Amount and shall in no event exceed the difference between
$15,000,000.00 and the outstanding principal balance allocated to
the Working Capital Line from time to time.
4.4.4 Application of Draws. Although Borrowing Base Draws
shall not be made hereunder on a line-item or paid invoice basis,
the parties intend that all such proceeds of the Facility be
applied first to pay all costs incurred for the refinance or
purchase and development of the Property and the construction of
single family residences thereon, as applicable, and that A&D
Draws and Borrowing Base Draws be used to pay all such costs before
being used to repay Borrower or any Guarantor any portion of their
equity in the Property. Working Capital Line Draws may be used by
Borrower for general working capital purposes; provided,
however, that in no event shall proceeds of the Working
Capital Line (or the Facility) be used for (a) personal,
consumer, family, household, educational, agricultural or similar
uses, (b) land banking or land speculation or (c) the
purpose of purchasing or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the
Federal Reserve System or to extend credit to any party for the
purpose of purchasing or carrying any such margin stock, or for any
purpose which violates, or is inconsistent with, Regulation X
of such Board of Governors. Lender shall have no obligation to
ensure that proceeds of the Facility are properly applied to
purposes of the Facility as set forth herein or in the other Loan
Documents. Borrower shall have the sole obligation to ensure proper
allocation of all Draws hereunder. Despite the foregoing, Lender
shall have the right, but not the obligation, to disburse Facility
proceeds directly to any unpaid supplier of labor, materials,
equipment, services, or supplies whose claim
Borrowing Base Facility Agreement- Loan
No. 1001839
has or
may become a lien against any portion of the Property, or to
require that Draws be made in the form of dual-payee checks or
other restricted forms of transfer.
5. MANNER OF
CONSTRUCTION.
5.1
Conformance with Plans and Laws. All work shall be performed
and the Approved Projects and Units shall be developed and
constructed in a good and workmanlike manner, free from all
material defects in materials or workmanship. Development of
Approved Projects and construction and use of the Units shall
conform in all material respects to the applicable Plans and
Specifications and all federal, state, and local laws,
| 
